Unpublished Disposition, 928 F.2d 409 (9th Cir. 1990)

MEMORANDUM^* 

Alfred Skistimas ("Skistimas") appeals pro se the district court's order granting summary judgment in favor of Richard Marschak ("Marschak"), the Chapter 7 bankruptcy trustee, and remanding the remaining causes of action to the Los Angeles Superior Court. We affirm.

Skistimas filed a petition for Chapter 11 bankruptcy on April 13, 1987. At some point, the action was converted to Chapter 7, and Marschak was appointed trustee.

As a result of his investigation into the available assets of the estate, Marschak determined that Skistimas' real property consisting of a parcel of land and a 19-unit apartment building ("the Brynhurst property") was of inconsequential value and was burdensome to the estate. This determination was based on the fact that the encumbrances on the property exceeded the property's market value, and the fact that a high vacancy rate in the apartment created a lack of sufficient income to meet current payments. On July 15, 1988, Marschak sent a notice to all interested parties, including Skistimas, advising that he intended to abandon the property as a bankruptcy asset. No objections were filed, and the bankruptcy court entered an order authorizing the abandonment on August 15, 1988.

Bank of America and Barclay's Bank, two of Skistimas' creditors, filed motions for relief from the automatic stay imposed by 11 U.S.C. § 362(a) in order to foreclose on their deeds of trust on the Brynhurst property. The bankruptcy court granted both motions over the objections of Skistimas, and the property was subsequently foreclosed.

As the result of a previously-occurring fire at the Brynhurst property, an insurance check was issued, jointly payable to Skistimas and Bank of America. The bank refused to endorse the check over to Marschak, and instead filed a motion to compel Marschak to turn the funds over to the bank. Ultimately, the parties compromised, with $12,500 to be paid to the bank, and $1,876.72 to be paid to the bankruptcy estate. Skistimas objected to the compromise on the ground that no money should be paid to the bank. The bankruptcy court approved the settlement, without prejudice to Skistimas' right to seek a return of the funds paid to the bank.

Skistimas filed a motion to dismiss his Chapter 7 proceeding in February 1989. Marschak opposed the motion, but stipulated to the dismissal on the grounds that Skistimas pay the administrative costs of the trustee.

On June 23, 1989, this action was filed in Los Angeles Superior Court. Marschak removed the action to the federal district court. The complaint sought damages against Marschak in his capacity as a trustee because he abandoned the Brynhurst property as a bankruptcy asset, and because he retained a portion of the fire insurance proceeds.

On November 6, 1989, Marschak filed a motion for summary judgment. That motion was granted and the remaining causes of action were remanded to the Los Angeles Superior Court at an oral hearing on May 14, 1990; an order was filed on May 29. Judgment was entered on June 15, 1990, and an order denying Skistimas' motions for reconsideration, to amend the court's factual findings, and to reopen the case was filed on June 29, 1990. Skistimas filed a timely notice of appeal on July 17, 1990.

In reviewing an order granting summary judgment, we review the evidence in the light most favorable to the nonmoving party to determine whether any genuine issues of material fact exist, and whether the district court applied the relevant substantive law. Tzung v. State Farm Fire Casualty Co., 837 F.2d 1338, 1339-40 (9th Cir. 1989).

A bankruptcy trustee is "entitled to broad immunity from suit when acting within the scope of [his] authority and pursuant to court order." Bennett v. Williams, 892 F.2d 822, 823 (9th Cir. 1989). The discretionary acts of a trustee, when performed with the informed approval of the court and notice to the debtor, receive quasi-judicial immunity. Id. at 825; see also Lonneker Farms, Inc. v. Kloubucher, 804 F.2d 1096, 1097 (9th Cir. 1986) (bankruptcy trustee receives "derived judicial immunity" because he performs "integral part of the judicial process"). This immunity, however, does not protect a trustee from intentional or negligent violations of his legal duties. 892 F.2d at 823.

In the case before us, Marschak provided Skistimas with notice that he intended to abandon the Brynhurst property; Skistimas made no objection. The bankruptcy court thereafter entered an order authorizing the abandonment of the property. With respect to the fire insurance proceeds, the settlement was approved by the bankruptcy court, and the settlement proceeds were retained by Marschak as a portion of the administrative costs Skistimas was required to pay when the Chapter 7 proceeding was dismissed.

Marschak's actions in both matters were within his duties as trustee, and, no negligence having been shown, the actions are protected.

Alternatively, the district court lacked authority to entertain a suit for damages against Marschak. A bankruptcy trustee is an officer of the bankruptcy court, and any official act carried out within the trustee's authority is not actionable without leave of the appointing court. In re Jacksen, 105 Bankr. 542, 545 (9th Cir. BAP 1989); In re Balboa Improvements, Ltd., 99 Bankr. 966, 970 (9th Cir. BAP 1989).

A limited exception to this rule is created by 28 U.S.C. § 959(a), which allows a trustee to be sued without leave of the bankruptcy court with respect to transactions "in carrying on business connected with such property." See Jacksen, 105 Bankr. at 545. The abandonment of nonproductive property and the receipt of insurance money are clearly not actions connected with the carrying on of a debtor's business. Therefore, the exception has no application here.

The district court had no jurisdiction to maintain this action, as Marschak was immune from suit, and could not have been sued in any event without the approval of the appointing court. The district court properly granted summary judgment in favor of Marschak.¹ 

AFFIRMED.