       Third District Court of Appeal
                               State of Florida

                        Opinion filed November 22, 2017.
         Not final until disposition of timely filed motion for rehearing.

                               ________________

                               No. 3D17-1517
                         Lower Tribunal No. 16-31938
                             ________________


          Asset Recovery Group, LLC, and Wayne Ginter,
                                   Petitioners,

                                        vs.

                           Lazaro Cabrera, et al.,
                                  Respondents.



     A Case of Original Jurisdiction – Prohibition.

       BeharBehar, and Jaclyn Ann Behar and Sharita R. Young (Sunrise), for
petitioners.

     Law Offices of Stephen M. Cohen, P.A., and Stephen M. Cohen (Palm
Beach Gardens), for respondent Lazaro Cabrera.


Before ROTHENBERG, C.J., and LAGOA and SCALES, JJ.

     ROTHENBERG, C.J.
      The defendants below, Asset Recovery Group, LLC, and Wayne Ginter

(collectively, “the Receiver”), petition this Court for a writ of prohibition,

challenging the trial court’s non-final order denying the Receiver’s motion to

dismiss for lack of subject matter jurisdiction Counts IV and V of the amended

complaint filed by Lazaro Cabrera (“Cabrera”).1 Because Cabrera was required to

obtain leave of court from the trial court appointing the Receiver prior to filing his

negligence action against the Receiver, we grant the petition for writ of

prohibition, quash the order under review, and remand with directions to enter an

order granting the motion to dismiss without prejudice.2

                   I. FACTS AND PROCEEDINGS BELOW

      The petition relates to two cases filed in the Miami-Dade Circuit Court.

First, Case No. 11-38747 (Judicial Section CA05) is a commercial foreclosure

action, during which the trial court (Judge Schumacher) appointed the Receiver

and ordered the Receiver to take control of the mortgaged property—an apartment

complex located in Homestead, Florida (“the apartment complex”). Second, Case

No. 16-31938 (Judicial Section CA06) is a premises liability action filed by


1 Counts IV and V asserted claims for negligence. Count IV was against Asset
Recovery Group, LLC, and Count V was against Wayne Ginter.
2 The Receiver filed a petition for writ of certiorari, or in the alternative, a petition

for writ of prohibition. Without further discussion, we dismiss the petition for writ
of certiorari. See Stockinger v. Zeilberger, 152 So. 3d 71, 73 (Fla. 3d DCA 2014)
(“The establishment of irreparable harm is a condition precedent to invoking
certiorari jurisdiction.”).

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Cabrera against the owners of the apartment complex and the Receiver for injuries

sustained during a stabbing that occurred at the apartment complex on May 7,

2013, prior to the discharge of the Receiver in Case No. 11-38747. The facts in

each case are as follows:

      A. Case No. 11-38747—Commercial Foreclosure

      In November 2011, U.S Century Bank filed a commercial foreclosure action

against 1200 Homestead 72, LLC (“1200 Homestead”). Thereafter, U.S. Century

Bank filed an emergency motion to appoint a receiver, or in the alternative, a

motion for sequestration of rent.     In February 2012, the trial court (Judge

Schumacher) granted the motion and appointed the Receiver.             The order

appointing the Receiver provides that the Receiver shall take possession, custody,

and control of the mortgaged real property—the apartment complex. Paragraph 16

of the appointing order provides:

      Judicial Immunity. The Receiver and the Receiver’s attorneys and
      agents: . . . (iii) shall not be liable to anyone for their good faith
      compliance with the duties and responsibilities as a receiver, or as
      attorney or agent for Receiver; and (iv) shall not be liable to anyone
      for their acts or omissions, except upon a finding by this Court that
      such acts or omissions were outside the scope of their duties or were
      grossly negligent.

      Samjack Homestead, LLC (“Samjack”), was substituted as the plaintiff for

U.S. Century Bank. In March 2013, a final judgment of foreclosure was entered in

favor of Samjack and against defendant 1200 Homestead and others. In April



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2013, the apartment complex was sold at the foreclosure sale to Samjack, and on

July 9, 2013, the Receiver was discharged.

      B. Case No. 16-31938—Premises Liability Action

      On December 14, 2016, Cabrera filed a negligence (premises liability)

action against Samjack and 1200 Homestead, asserting that on May 7, 2013, he

was stabbed at the apartment complex while he was an invitee and that Samjack

and 1200 Homestead were negligent by failing to maintain the premises in a

reasonably safe condition by not keeping it free from third party criminal conduct.

Two days after filing his complaint, Cabrera filed a motion to amend the complaint

to add the Receiver as a defendant, explaining that the apartment complex was in

receivership when Cabrera was stabbed. The trial court granted the motion to

amend, and thereafter, in January 2017, Cabrera filed an amended complaint

adding the Receiver as a named defendant and asserting negligence claims against

the Receiver (Count IV as to Asset Recovery Group, LLC, and Count V as to

Wayne Ginter).

      In March 2017, the Receiver filed a motion to dismiss Counts IV and V of

the amended complaint for lack of subject matter jurisdiction, arguing that the trial

court lacked subject matter jurisdiction because, prior to filing suit, Cabrera had

not sought leave of court from the court that had appointed the Receiver, as

required by Barton v. Barbour, 104 U.S. 126, 128 (1881), in which the Supreme



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Court of the United States held that “before suit is brought against a receiver[,]

leave of the court by which he was appointed must be obtained.”              (“Barton

doctrine”).

      Cabrera filed a memorandum in opposition, arguing that he was not required

to seek leave from the appointing court based on two applicable exceptions to the

Barton doctrine. First, a receiver may be personally liable and not claim the

protection of the court if he “steps outside the authority granted by the court or

does things in his personal capacity and not as a receiver.” Murtha v. Steijskal,

232 So. 2d 53, 55 (Fla. 4th DCA 1970).3 Second, Cabrera contended that he was

not required to seek leave from the appointing court based on the “carrying on

business” exception to the Barton doctrine, which is set forth in 28 U.S.C. § 959(a)

and provides as follows:

      (a) Trustees, receivers or managers of any property, including debtors
      in possession, may be sued, without leave of the court appointing
      them, with respect to any of their acts or transactions in carrying on
      business connected with such property. Such actions shall be subject
      to the general equity power of such court so far as the same may be
      necessary to the ends of justice, but this shall not deprive a litigant of
      his right to trial by jury.




3 Our review of the amended complaint reflects that it does not contain any
allegations that the Receiver had “step[ped] outside the authority granted by the
court or [did] things in his personal capacity and not as a receiver.” Accordingly,
without further discussion, we conclude that the exception set forth in Murtha is
inapplicable to the instant case.

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      Following a hearing in Case No. 16-31938, the trial court (Judge Cohen)

denied the Receiver’s motion to dismiss. Although the trial court’s order simply

states that the motion to dismiss is denied, the transcript of the hearing indicates

that it was denied based on Murtha and Patco Energy Express, LLC. v. Lambros,

353 Fed. App’x 379 (11th Cir. 2009).           The Receiver’s petition for writ of

prohibition followed. See Floridian Cmty. Bank, Inc. v. Bloom, 25 So. 3d 43 (Fla.

4th DCA 2009) (“Prohibition lies where a petitioner has demonstrated that a trial

court lacks subject matter jurisdiction over a lawsuit.”).

                                 II. ANALYSIS

      In seeking the petition for writ of prohibition, the Receiver claims that the

trial court erred by denying the motion to dismiss the amended complaint because

the “carrying on business” exception to the Barton doctrine does not apply to

receivers appointed by state courts, and therefore, Cabrera was required to seek

leave from the appointing court prior to filing suit against the Receiver. We agree.

      In Barton, Barbour was appointed as the receiver of a railroad company. Id.

at 126-27. While Barbour was acting as receiver, Barton was injured when he was

aboard a railroad car. Id. at 127. Barton filed suit against the receiver, Barbour.

Id. at 126. The Supreme Court of the United States held that “before suit is

brought against a receiver[,] leave of the court by which he was appointed must be

obtained.” Barton, 104 U.S. at 128.



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      The Barton doctrine has been recognized in Florida, see One S. Ocean Drive

2000, Ltd. v. One Ocean Boca, LLC, 182 So. 3d 872 (Fla. 4th DCA 2016), and

“applies equally whether a state court appointed receiver is sued in state court . . .

[or] in federal court.” Patco Energy, 353 Fed. App’x at 381. Further, even when

the receiver has been discharged, as in the instant case, leave from the court that

had appointed the receiver must still be obtained to file suit against the receiver.

See Murtha, 232 So. 2d at 55. The requesting party must demonstrate a prima

facie case of liability before the appointing court may grant leave to file suit. Id.

      An exception to the Barton doctrine—the “carrying on business”

exception—which is currently set forth in section 959(a), was enacted six years

after Barton. As the Third Circuit explained in In re VistaCare Group, LLC, 678

F.3d 218, 226 (3d Cir. 2012), it appears that section 959(a) was enacted in

response to Justice Miller’s dissent in Barton. The Third Circuit explained as

follows:

      This provision, originally enacted in 1887, just six years after Barton,
      seems to have been in direct response to the concerns raised in Justice
      Miller’s dissent in Barton. Criticizing the scope of the Court’s
      holding, Justice Miller noted that the role of a receiver had expanded
      well beyond winding up the affairs of a defunct corporation and
      liquidating its assets, to in some situations, essentially running the
      company.                   Barton, 104 U.S. at 137-38 (Miller, J.,
      dissenting). Justice Miller opined that it would be fundamentally
      unfair to require a party to obtain court permission to pursue claims
      against the receiver arising out of the receiver’s operation of the
      business. Id. at 138. Such a system would render the everyday


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      operations of the corporation “exempt[ ] from the operation of
      common law” and deprive potential litigants of the right “to have their
      complaints tried by [a] jury or by the ordinary courts of justice.” Id.
      Rather, a party’s only remedy against the corporation would be in “the
      hands of . . . the court which appointed [the receiver].” Id.

(footnotes omitted; alterations in In re VistaCare Group); see also Fin. Indus. Ass’n

v. Sec. & Exch. Comm’n, 2013 WL 11327681 (M.D. Fla. 2013) (explaining that

the “‘carrying on business’ exception in section § 959(a) is intended to permit

actions redressing torts committed in furtherance of the debtor’s business, such as

the common situation of a negligence claim in a slip and fall case where a

bankruptcy trustee, for example, conducted a retail store”) (emphasis omitted);

Carter v. Rodgers, 220 F.3d 1249, 1254 (11th Cir. 2000) (same).

      As stated above, the trial court relied on the Eleventh Circuit’s opinion in

Patco Energy, which involved a state court appointed receiver who was sued in

federal court. Lambros—the state court appointed receiver—moved to dismiss the

federal lawsuit for lack of subject matter jurisdiction. Patco Energy, 353 Fed.

App’x at 380-81. The district court dismissed the case, and Patco Energy appealed

to the Eleventh Circuit.

      The Eleventh Circuit recognized that the Barton doctrine “applies equally

whether a state court appointed receiver is sued in state court . . . [or] in federal

court.” Id. at 381. The Eleventh Circuit noted that Patco Energy’s complaint did

not allege that it sought leave of the state court to file suit against the receiver in



                                          8
federal court, and therefore, unless an exception to the Barton doctrine applies, the

case was properly dismissed for lack of subject matter jurisdiction. The Eleventh

Circuit acknowledged the “carrying on business” exception set forth in section

959(a), and explained as follows:

      This exception contemplates actions redressing torts committed in
      furtherance of the debtor’s business. For example, if a customer of a
      gas station operated by a receiver slips and falls while shopping and
      alleges the fall was caused by negligence attributable to the receiver,
      the customer could bring suit against the receiver without first seeking
      permission from the appointing court.

Id. at 381 (citations and quotation marks omitted). The Eleventh Circuit found that

section 959(a) did not apply because “Patco’s allegations arise from liquidation of

gas station assets, not the operation of the gas stations.” Id.            Thus, the

Eleventh Circuit affirmed the dismissal of the complaint filed against the state

court appointed receiver. The Eleventh Circuit, however, did not explicitly address

whether section 959(a) applies to state court appointed receivers.

      This issue, however, was explicitly addressed by a federal district court in

Minnesota in Republic Bank of Chicago v. Lighthouse Management, 829 F. Supp.

2d 766 (D. Minn. 2010), approximately seven months after Patco Energy was

issued. In Republic Bank, the court held:

      Section 959(a) applies to receivers appointed by federal courts.
      See S.E.C. v. Lincoln Thrift Ass’n, 557 F.2d 1274, 1277 n.1 (9th
      Cir.1977) (“[I]t has been held that, absent statutory authorization, a
      federal receiver cannot be sued without leave of the court which


                                           9
      appointed him.”). Republic cites no authority in support of its
      argument that § 959(a) applies to receivers appointed by state courts,
      and the Court determines that it does not.            Section 959(a)
      does not permit maintenance of this action against Lighthouse
      because Lighthouse was appointed by a state court.

(emphasis added). Following Republic Bank, other courts have similarly held that

section 959(a) applies only to receivers appointed by federal courts, not state

courts. See Freeman v. Cty. of Orange, 2014 WL 12668679 (C.D. Cal. 2014)

(concluding that 28 U.S.C. § 959(a) “has no application to a receiver appointed by

a state court,” and therefore, the Barton doctrine was applicable to the plaintiff’s

claims); In re Jefferson County, Alabama, 484 B.R. 427, 456-458 (Bankr. N.D.

Ala. 2012); Republic Bank of Chi. v. Lighthouse Mgmt. Grp., Inc., 829 F. Supp.

2d 766 (D. Minn. 2010) (holding that section 959(a) only applies to receivers

appointed by federal courts, not state courts).

      Based on the above cited cases, we conclude that section 28 U.S.C. § 959(a)

is not applicable to receivers appointed by state courts. In the instant case, as the

Receiver was appointed by a state court, the exception to the Barton doctrine, 28

U.S.C. § 959(a), is not applicable. Therefore, pursuant to Barton, prior to filing

suit, Cabrera was required to seek leave of court from the court that appointed the

Receiver. Thus, we grant the petition for writ of prohibition, quash the order

under review, and remand with instructions for the trial court in Case No. 16-

31938 to enter an order granting the Receiver’s motion to dismiss counts IV and V


                                          10
of the amended complaint without prejudice to allow Cabrera to move to amend

his complaint in an attempt to sufficiently allege that the acts or the omissions of

the Receiver were outside the authority granted to him by the appointing court, or

to seek leave to file the negligence action from the court that appointed the

Receiver. Considine v. Murphy, 773 S.E.2d 176, 179 (Ga. 2015) (“In states like

Georgia that treat the rule [set forth in Barton] as jurisdictional, the prior-leave

requirement applies even to a separate lawsuit filed in the same court that

appointed the receiver.”).

      Petition granted; order quashed; remanded with instructions.




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