In Trinh v. Fineman, No. 20-1727 (3d Cir. Aug. 16, 2021), the Third Circuit has joined seven other Circuit Courts in extending immunity to court-appointed receivers.

The plaintiff in the case was an owner of a business in dissolution in state court in Philadelphia. The Court of Common Pleas of Philadelphia County appointed the defendant as a receiver for purposes of the dissolution. In the federal case, filed in the Eastern District of Pennsylvania, the plaintiff alleged that the receiver did not provide a proper accounting of the escrow account related to the case and accused the receiver of theft. After an initial dismissal for lack of subject matter jurisdiction, the plaintiff amended her complaint, asserting federal question jurisdiction on the basis that the receiver was “abusing his state power.” The District Court dismissed the amended complaint on the basis that the court-appointed receiver should be afforded quasi-judicial immunity.

On appeal, the Third Circuit affirmed, concluding that “the policies underlying judicial immunity similarly support immunity for state court-appointed receivers.” The Court reasoned that receivers function as an “arm of the court” (quoting Hughes v. Long, 242 F.3d 121, 127 (3d Cir. 2001)) and that “a receiver ‘has no powers except such as are conferred upon him by the order of his appointment and the course and practice of the court.’” (quoting Atl. Tr. Co. v. Chapman, 208 U.S. 360, 371 (1908)). The Court also noted that seven other Circuit Courts have concluded that court-appointed receivers are entitled to quasi-judicial immunity (citing Kermit Constr. Corp. v. Banco Credito Y Ahorro Ponceno, 547 F.2d 7 1, 2–3 (1st Cir. 1976); Bradford Audio Corp. v. Pious, 392 F.2d 67, 72–73 (2d Cir. 1968); Davis v. Bayless, 70 F.3d 367, 373 (5th Cir. 1995); Smith v. Martin, 542 F.2d 688, 690–91 (6th Cir. 1976); New Alaska Dev. Corp. v. Guetschow, 869 F.2d 1298, 1303 (9th Cir. 1989); T & W Inv. Co. v. Kurtz, 588 F.2d 801, 802 (10th Cir. 1978); Prop. Mgmt. & Invs., Inc. v. Lewis, 752 F.2d 599, 603–04 (11th Cir. 1985)).

Notable in this case was that the plaintiff alleged theft by the receiver, but apparently the plaintiff was unable to substantiate that allegation. The Court found that the plaintiff had been offered multiple opportunities to inspect the receiver’s books, but she declined to do so, and was otherwise not able to show that the receiver acted outside of his authority.

In short, the Court did not shut the door on all claims against a court-appointed receiver. Proper claims of misappropriation or other improper actions by receivers appear to be preserved.

The Trinh v. Fineman decision is available at:
https://www2.ca3.uscourts.gov/opinarch/201727p.pdf

To discuss commercial litigation matters with this article’s author, please contact:

Jonathan P. Vuotto, Esq.
jpv@mcandrewvuotto.com