United States: The 'Barton' Doctrine Is Alive And Well

The Barton doctrine, established by the U.S. Supreme Court over a century ago, provides that "before a lawsuit is brought against a receiver[,] leave of the court by which he was appointed must be obtained." Barton v. Barbour, 104 U.S. 126, 128 (1881). At least six federal circuits have recognized and ruled that the Barton doctrine is still valid in holding that leave of the bankruptcy court is required before instituting an action against a bankruptcy trustee in the trustee's official capacity. The Third Circuit so ruled in In re VistaCare Group, 678 F.3d 218 (3d Cir. 2012). Likewise, in a series of recent holdings, other federal courts have decided that the Barton doctrine has continued validity. 

Villegas v. Schmidt

In Villegas, et al. v. Schmidt, 788 F.3d 156 (5th Cir. 2015), cert. denied, No. 15-407, (U.S. Dec. 7, 2015), BFG Investments, through its president John Villegas, filed for bankruptcy and Schmidt was appointed as the trustee to liquidate BFG's estate. The case was later closed and Schmidt's fees were approved. Four years later, Villegas and BFG sued Schmidt under 28 U.S.C. §1334(c), which allows district courts to hear proceedings arising under Title 11. Villegas and BFG alleged that Schmidt committed gross negligence and breached his fiduciary duty while acting as BFG's trustee. The district court dismissed the case, and the plaintiffs appealed. 

The Fifth Circuit affirmed the district court's dismissal based on the Barton doctrine. It rejected the plaintiffs' argument that the U.S. Supreme Court's recent decision in Stern v. Marshall limited the Barton doctrine by implication. Nor did the Fifth Circuit accept the plaintiffs' argument that the Barton doctrine does not apply when a party sues in a court exercising supervisory authority over the bankruptcy court that appointed the trustee. Every other circuit addressing the issue has held that the debtor must obtain leave of the bankruptcy court before initiating an action in the district court against a trustee. The U.S. Supreme Court denied the plaintiffs' Petition for Writ of Certiorari,Villegas v. Schmidt, 2015 U.S. LEXIS 7787; 84 U.S.L.W. 3320 (2015). 

Carroll v. Abide

In Carroll v. Abide, 788 F.3d 502 (5th Cir. 2015), the Fifth Circuit had an opportunity to clarify its holding in Villegas  as it pertains to Barton. In Carroll v. Abide, a married couple filed for personal bankruptcy, as well as filing a bankruptcy case for their closely held corporation. The bankruptcy court appointed a trustee to serve for both the personal and company bankruptcy estates. Following a dispute between the debtors' children and the trustee over who owned certain movable property, the district court withdrew the reference on the case from the bankruptcy court, prompted by jurisdictional concerns as a result of Stern v. Marshall. The district court then issued an order for the debtors and their children to deliver all of the records and computers of the debtor company's estate to the trustee. The trustee searched the debtors' home and confiscated multiple items, including a computer, which the debtors claimed were personal property. The district court issued another order permitting the trustee to keep the computer for forensic examination. When the computer was returned to the debtors, they determined that the trustee had accessed the computer several times. The debtors sued the trustee in the district court, contending that she had violated their Fourth Amendment rights by seizing the debtors' computer and searching the debtors' home. The district court dismissed the action under Barton, holding that the debtors were required to seek leave of the bankruptcy court to sue the trustee. 

The Fifth Circuit Court of Appeals disagreed, finding a limited exception to the Barton doctrine where the action arose from actions taken by the trustee pursuant to the district court's own order. Although the district court had not appointed the trustee, it had authorized the trustee to take the actions at issue. Thus, according to the Fifth Circuit, the district court had the same "strong interest in protecting Abide from personal liability for acts taken within the scope of official duties under the supervision of the district court" as the appointing bankruptcy court. 

The Fifth Circuit distinguished its decision in VillegasVillegas held that the Barton doctrine applies even when a bankruptcy court lacks jurisdiction under Stern, and the doctrine is not altered or limited merely because a district court has supervisory authority over the bankruptcy court. According to the Fifth Circuit, this is not inconsistent with its holding in Abide, in which it held that, where a trustee acts pursuant to a district court's order, and such actions become the basis of a claim, Barton does not prevent that district court from entertaining a suit without leave of the bankruptcy court below. 

Third Circuit Analysis: In re VistaCare

There has been some uncertainty in recent years as to the continued relevance and operation of theBarton doctrine, in light of significant changes in bankruptcy law that have occurred since Bartonwas decided in 1881. However, as the above cases show, that uncertainty has mostly been resolved in favor of the doctrine's continued applicability in the Fifth Circuit and elsewhere. This is also the case in the Third Circuit. 

In In re VistaCare Group, 678 F.3d 218 (3d Cir. 2012), a purchaser of land from a bankruptcy estate tried to sue the Chapter 7 trustee who sold the property. The estate had owned 45 real property lots, 44 of which had mobile homes on them, and the 45th of which was the site of a retirement home. The subdivision plan stated that title to the 44 lots could not be transferred to the individual lots' residents but must remain with the developer. CGL purchased the retirement home lot from the Chapter 7 trustee believing that the sale restriction would remain in place. However, the Chapter 7 trustee subsequently convinced the township to remove the sale restriction, allowing the trustee to sell certain lots to individual mobile home residents. CGL was not happy about this and sought permission from the bankruptcy court to sue the trustee in state court. The trustee asserted that, under Barton, the suit could not go forward without the bankruptcy court's express permission, which the trustee urged the bankruptcy court to withhold. Calling the Barton doctrine "antiquated and probably not controlling," the bankruptcy court granted CGL's motion and the district court thereafter affirmed. 

On appeal by the trustee, the Third Circuit held that Barton was still applicable, and that certain changes in bankruptcy law, such as the addition of section 959(a), merely created statutory exceptions to Barton in limited circumstances, rather than rendering the doctrine obsolete. Likewise, the Third Circuit rejected the bankruptcy court's argument that Barton was no longer a valid doctrine because trustees are now appointed by the United States Trustee, rather than by any "appointing court" under Barton. The Third Circuit also disagreed with the bankruptcy court that the existence of the automatic stay, under Section 362, rendered Barton unnecessary from a policy standpoint. Instead, according to the Third Circuit, Barton serves more specific policy concerns than does the automatic stay, such as protecting trustees from frivolous litigation and thereby ensuring that qualified individuals will be willing to serve as trustees. 

ABI Commission Notes

In addition to the federal circuits, the American Bankruptcy Institute (ABI) has supported the ongoing relevance of the Barton doctrine. The ABI's Commission to Study the Reform of Chapter 11 issued its final report on Dec. 8, 2014, in which it recommended clarifying and codifying the Bartondoctrine, including extending it to any professionals retained by a bankruptcy trustee, estate or statutory committee, to the extent the litigation involves such professionals' representation of such parties in a fiduciary capacity. 

This article originally appeared in the New Jersey Law Journal.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions