Q: I am a health and safety receiver appointed over property that
had numerous code violations and was rat infested. The court ordered me to
bring the property into the code compliance and, eventually, to sell the
property to pay for the repairs and my fees. The owner has now sued the
city and me in federal court alleging her civil rights were violated and
to prevent me from selling the property. What is the best way to get rid
of her federal lawsuit?
A: This seems to happen often in health and safety receivership
cases. The defendants must be reading the same online posts. The normal
method state court receivers use to dispose of these cases is to move to
dismiss the case for lack of subject matter jurisdiction based on the
Barton rule. Barton v. Barbour, 104 U.S. 126 (1881). The
Supreme Court in Barton held federal courts lack jurisdiction to entertain
suits against receivers where permission was not first obtained from the
court appointing the receiver. Barton, however, is not the only way to
deal with such cases.In Hoffman v. City
of San Diego, 2019 WL 1112046 (S.D. Cal. 2019), the property owner
sued the city and receiver under 42 U.S.C. § 1983 for civil rights
violations and to prevent the sale of her property. The city and the
receiver moved to dismiss the case citing Barton, but also asked the court
to abstain under what is known as the Younger doctrine. Younger
v. Harris, 401 U.S. 37 (1971) (criminal); Huffman v. Pursue, Ltd.,
420 U.S. 592 (1975) (civil). Surprisingly, the district court refused to
dismiss under Barton finding the exception to Barton in 28
U.S.C. § 959(a) applied. That section provides that receivers may be sued,
without leave of the appointing court, with “respect to any of their acts
or transactions in carrying on business connected with the property.” In
its opinion the court does not explain why it felt the exception applied
or how the complaint of civil rights violations related to the acts of
receiver “in carrying on business connected with the property.” The court
did, however abstain – relying on the Younger doctrine. The Younger
doctrine requires a federal court to abstain: “if the state proceedings
are (1) ongoing (2) implicate important state interests and (3) provides
an adequate opportunity for the federal plaintiff to assert his federal
claims.” San Remo Hotel v. City & County of San Francisco, 147 F.3d
1095, 1103 (9th Cir. 1998). The court held the Younger conditions
were met because the receivership case was still ongoing, it involved
important state interests (health and safety), and the owner could raise
her constitutional claims before the state court and, if necessary, on
appeal. Therefore, you should move to dismiss the case under the Barton
rule and also, alternatively, ask the court to abstain under the
Younger doctrine.
*Peter A. Davidson is a Partner of Ervin Cohen & Jessup LLP a
Beverly Hills Law Firm. His practice includes representing Receivers and
acting as a Receiver in State and Federal Court.
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