Supreme Court Enforces Prior-Leave Requirement for Suing Court-Appointed Receivers - Parks Chesin & Walbert
2300
post-template-default,single,single-post,postid-2300,single-format-standard,ajax_fade,page_not_loaded,,select-theme-ver-4.1,wpb-js-composer js-comp-ver-5.3,vc_responsive

Supreme Court Enforces Prior-Leave Requirement for Suing Court-Appointed Receivers

In Considine v. Murphy, No. S14G1202, 2015 WL 3447839 (Ga. June 1, 2015), the Georgia Supreme Court decided that trial courts lack jurisdiction to decide a “separate lawsuit” brought against a court-appointed receiver without prior leave of the court by which the receiver was appointed.

In Considine, a business dispute resulted in Considine suing her business partner in the Superior Court of Cherokee County.  After the court entered a consent order determining that appointment of a receiver was necessary to preserve the property of the business during litigation, Murphy was appointed as receiver.  The Consent Order specified that:

The Receiver shall not be liable to the parties hereto for any losses, liabilities, expenses, claims, damages, or demands arising out of or in connection with said performance, except for gross negligence or willful misconduct, as determined by a Court of competent jurisdiction.

While Considine’s lawsuit was still pending and without obtaining prior approval from the Cherokee County Superior Court, Considine filed a separate lawsuit in the same court against Murphy alleging claims of gross negligence and breach of fiduciary duty, among others, based on Murphy’s alleged mismanagement of the receivership.  Considine initially dismissed the lawsuit voluntarily, but then re-filed the lawsuit in the same court, again without seeking prior approval.  Murphy moved to dismiss for lack of subject matter jurisdiction, arguing that as a court-appointed receiver, he was entitled to official immunity.  After the trial court dismissed Considine’s claims and the Court of Appeals reversed and remanded on notice grounds, the trial court again granted Murphy’s motion to dismiss based on official immunity, which Considine again appealed.  This time around, the Court of Appeals affirmed, noting that Murphy, as a court-appointed receiver, was performing discretionary duties and Considine had not overcome that immunity by showing Murphy acted with actual malice.

Thereafter, the Supreme Court granted Certiorari to address two questions with which it was “particularly concerned”:

(1) Under what circumstances is a court-appointed receiver entitled to immunity from suit?, and (2) Did the Court of Appeals err in affirming the trial court’s order granting the motion to dismiss based on a failure to present evidence of actual malice?

The Court ultimately decided it need not address either question to resolve the case.  After beginning its discussion by noting that that pursuant to O.C.G.A. § 9-8-8(a), a receiver is an “an officer and servant of the court appointing him, is responsible to no other tribunal than the court, and must in all things obey its direction,” the court dusted off the 140 year-old “Barton doctrine,” under which “[i]t is a general rule that before suit [of any kind] is brought against a receiver leave of the court by which he was appointed must be obtained.”  See id. at *2 (citing Barton v. Barbour, 104 U.S. 126, 128, 26 L.Ed. 672 (1881); Bugg v. Consol. Grocery Co., 155 Ga. 550, 555, 118 S.E. 56 (1923)).

Explaining that the Barton doctrine’s prior-leave requirement is an issue of subject matter jurisdiction in Georgia courts, the Court held that Considine’s failure to obtain prior leave to sue Murphy, even in the same court by which he was appointed, stripped the court of subject matter jurisdiction over a “separate lawsuit” against the receiver.  The Court rejected Considine’s argument that the trial court’s Consent Order pre-authorized leave to sue the receiver, noting that the order only contemplated the types of claims that the business owners might be able to bring against the receiver, rather than authorization to bring a separate lawsuit against the receiver without leave.  Thus, the Court found it unnecessary to reach the issue of official immunity and affirmed the decision as right-for-any-reason.

As archaic as they may seem, certain procedural laws can condemn a lawsuit at its inception.  The Considine opinion is a prime example of why it is highly recommended to seek the advice of an experienced attorney who can make sure your lawsuit is properly filed.  The attorneys at Parks, Chesin & Walbert are here to make sure your rights are protected – contact our firm today at (404) 873-8000 or firm@pcwlawfirm.com.