Foster

EEA. CLERK, U.S. BANKRUPTCY COURT

[SZ & &® NORTHERN DISTRICT OF TEXAS

[S/F 82 3 \O)

4 ENTERED

Fi Se THE DATE OF ENTRY IS ON

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The following constitutes the ruling of the court and has the force and effect therein described.

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Signed October 30, 2020 United States Bankruptcy Judge

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE NORTHERN DISTRICT OF TEXAS

FORT WORTH DIVISION

In re: §

§ Case No. 12-43804-ELM

REGINA NACHAEL HOWELL FOSTER, §

§ Chapter 7

Debtor. §

§

REGINA NACHAEL HOWELL FOSTER, §

§

Plaintiff, §

Vv. § Adversary No. 19-04131

§

AREYA HOLDER, et al., §

§

Defendants. §

MEMORANDUM OPINION

(Re: Docket No. 27)

Before the Court in the above-captioned removed adversary proceeding is the Motion to

Dismiss Complaint, Motion for Judgment on the Pleadings or, Alternatively, Motion for Summary

Judgment (the “Combined Motion”) filed by Defendants Areya Holder n/k/a Areya Holder

Aurzada (the “Trustee”), Singer & Levick, P.C. (““SLPC”), Todd A. Hoodenpyle (“Hoodenpyle”)

and Michelle E. Shriro (“Shriro” and together with the Trustee, SLPC and Hoodenpyle, the

Page 1

“Moving Defendants”). In relation to the Moving Defendants’ primary request within the

Combined Motion for dismissal of the Current Complaint (as defined below), the Combined

Motion has been docketed at Docket No. 27 (referred to herein as the “Motion to Dismiss”).1 The

sole focus of this Memorandum Opinion is on the Motion to Dismiss.

Pursuant to the Motion to Dismiss, the Moving Defendants request dismissal of all claims

asserted against them by Plaintiff Regina Nachael Howell Foster (the “Debtor”), the chapter 7

debtor in Case No. 12-43804 (the “Bankruptcy Case”), based upon application of the Barton

doctrine, the protections afforded by various doctrines of immunity, and the res judicata effect of

prior orders of the Court. The Debtor has timely filed an objection in opposition to the Motion to

Dismiss (the “Objection”)2 disputing each of the dismissal grounds advanced by the Moving

Defendants.

At a January 15, 2020 hearing in the adversary proceeding, the Debtor, without opposition

from the Moving Defendants, requested that all pretrial dispositive motions involving the parties

be considered on the parties’ submissions alone without oral argument. The Court granted the

unopposed request and, hence, the parties have waived their right to have oral argument on the

Motion to Dismiss.

Having now reviewed the Debtor’s Current Complaint and reviewed and considered the

Motion to Dismiss and Objection thereto, the Court will grant the Motion to Dismiss for the

reasons set forth below.

1 In relation to the Moving Defendants’ secondary request for judgment on the pleadings, the Combined Motion has

been separately docketed at Docket No. 29. In relation to the Moving Defendants’ alternative request for summary

judgment, the Combined Motion has been separately docketed at Docket No. 28.

2 See Docket No. 33.

FACTUAL BACKGROUND

This removed action presents but the latest chapter in a nearly decade-long saga of

challenges lodged by the Debtor, an attorney,3 to the Trustee’s administration of the Bankruptcy

Case and the Debtor’s bankruptcy estate. To put the current litigation and Motion to Dismiss in

proper context, it is helpful to provide a recap of the events leading up to the current litigation.4

A. The Debtor’s Initiation of the Bankruptcy Case and a Separate Divorce Proceeding

On July 2, 2012, the Debtor filed her voluntary petition for relief under chapter 7 of the

Bankruptcy Code, thereby initiating the Bankruptcy Case. The Trustee was appointed as trustee

of the Debtor’s chapter 7 bankruptcy estate.

Four days after filing for bankruptcy protection, the Debtor initiated a divorce proceeding

(the “Divorce Action”) against her husband Carlos Foster (“Foster”) under Cause No. 322-

518571-12 in Texas state court (the “Family Court”).5 In the Divorce Action, the Debtor “claimed

an interest in three parcels of real property … recognized as important assets in her bankruptcy.”6

In follow-up to that assertion, on October 12, 2012, the Debtor filed amended schedules in her

Bankruptcy Case to identify her claimed community property interest in these three parcels of real

property, described as: (1) commercial real property located at 4716 E. Lancaster Avenue, Fort

Worth, Texas 76103 (the “Lancaster Property”); (2) commercial real property located at 421 S.

3 See Docket No. 1-4, at p.21 (ECF page 22) (signature page of Current Complaint which includes reference to, among

other things, the Debtor’s Texas Bar Number).

4 For purposes of this proceeding, the Court hereby takes notice of each of the filings and orders referenced in the

Factual Background.

5 See Bankruptcy Case Docket No. 41 (amended schedule of personal property, identifying Divorce Action in ¶ 17);

Bankruptcy Case Docket No. 83 (discussing initiation of Divorce Action in ¶ 2). Inasmuch as the Divorce Action

ended up being transferred on one or more occasions from one family judge to another family judge during its

pendency, the Court’s use of the term “Family Court” herein is intended to refer to the particular family judge and

corresponding Judicial District Court of Tarrant County, Texas, in which the Divorce Action was pending at any given

point in time referenced herein.

6 Bankruptcy Case Docket No. 83 (¶ 2).

Edgewood Terrace, Fort Worth, Texas 76103 (the “Edgewood Property” and together with the

Lancaster Property, the “Commercial Properties”); and (3) rental real property located at 936 E.

Powell Avenue, Fort Worth, Texas 76103 (the “Powell Property” and together with the

Commercial Properties, the “Properties”).7

At the same time that the Debtor amended her schedule of assets to reflect her asserted

community property interest in the Properties, the Debtor also amended her schedule of claimed

exemptions.8 Of significance, nowhere within the amended exemptions schedule did she list any

of the Properties as exempt property, and at no time thereafter did she ever assert that any of the

Properties constituted exempt property. Thus, because the amended schedules facially evidenced

that the Properties, or at least the Debtor’s asserted interest in the Properties, constituted non-

exempt property of the bankruptcy estate subject to administration by the Trustee, the Trustee

began to investigate the background of the Properties.

Ultimately, the Trustee learned that the Debtor’s husband, Foster, was claiming the

Properties as his separate property based upon the fact that they had been acquired in the name of

1st Aid Accident Injury & Pain Center, Inc. (“First Aid”), a corporation that Foster had organized

as his wholly-owned business prior to his marriage to the Debtor. With respect to the Debtor’s

claimed interest in the Properties, the Trustee learned that the Debtor was basing her claim of

ownership on arguments of First Aid being the mere alter ego of Foster warranting a piercing of

the corporate veil of First Aid to make the Properties part of the community property estate.9

7 See Bankruptcy Case Docket No. 32 (Schedule A).

8 See id. (Schedule C).

9 See, e.g., Bankruptcy Case Docket No. 69 (¶ 3).

B. The Trustee Retains SLPC as Special Counsel to Assist in Analyzing

and Addressing Matters Involving the Properties

Given the complexities associated with the competing claims of ownership to the

Properties, the Trustee, with Court approval, engaged SLPC as special counsel to assist the Trustee

in further investigating and analyzing the competing claims of ownership and in otherwise

addressing matters involving the Properties.10 Hoodenpyle and Shriro are attorneys with SLPC

who worked on the engagement.

Following further investigation and analysis, the Trustee discovered, among other things,

that First Aid had forfeited its corporate charter roughly eight years prior to the bankruptcy filing

– in or about July 2004. Thus, concluding that the forfeiture resulted in the Debtor and Foster each

owning and controlling an undivided one-half interest in the Properties because the Properties were

acquired in the name of First Aid during the marriage, the Trustee concluded that she had the

responsibility and authority to administer the Properties as property of the bankruptcy estate.11

Accordingly, with the assistance of counsel, she began to explore options with respect to

monetizing the value of the estate’s interest in the Properties.

Following the Trustee’s receipt of an offer from an entity affiliated with Foster’s mother

to purchase the bankruptcy estate’s interest in the Properties, the Trustee filed a motion to sell the

Properties.12 The Debtor objected to the motion, asserting, among other things, that the disputed

ownership rights to the Properties had not yet been determined, that a determination with respect

to the division of the marital estate had not yet been made in the Divorce Action, and that approval

10 See Bankruptcy Case Docket No. 57 (order approving engagement).

11 See, e.g., Bankruptcy Case Docket No. 79 (¶ 28).

12 See Bankruptcy Case Docket No. 68.

of the sale to an entity affiliated with Foster’s mother was unwarranted given that the proposed

sales price was allegedly significantly less than the previously listed valuation of the Properties.13

Following a hearing on the motion, the Court declined to approve the sale for two reasons.

First, the Court was concerned that negotiations with respect to the terms of the sale had been

predicated on the assumption that the estate held no more than a 50% interest in the Properties,

whereas the division of the marital estate in the Divorce Action could conceivably lead to the estate

obtaining a greater than 50% interest. Second, the Court was concerned that approval of the sale

could have the unintended consequence of effecting a de facto division of the marital estate without

the involvement of the Family Court.14

C. The Trustee Initiates Litigation Against Foster and First Aid to Determine

Ownership and Intervenes in the Divorce Action

To resolve the ownership dispute with Foster, on May 22, 2014, the Trustee initiated

litigation against Foster and First Aid under Adversary Proceeding No. 14-04054 to seek the

Court’s entry of judgment declaring the Properties to constitute property of the bankruptcy estate

and ordering turnover of the Properties to the Trustee (the “Property Ownership Lawsuit”).15

13 See Bankruptcy Case Docket No. 70.

14 See Bankruptcy Case Docket No. 84 (order denying sale motion). The Trustee’s subsequent request for

reconsideration of the order denying approval of the sale was also denied. See Bankruptcy Case Docket No. 104.

15 See Property Ownership Lawsuit Docket No. 1. Prior to the initiation of the Property Ownership Lawsuit, a flurry

of additional activity took place in the Bankruptcy Case. In December 2013, the Debtor filed a motion for relief from

the automatic stay of 11 U.S.C. § 362(a) to, among other things, allow the Family Court to determine all issues of

ownership, apportionment and division of the Properties. See Bankruptcy Case Docket No. 83. The Trustee responded

in opposition to the motion, asserting that disputes with respect to what interests in property constitute property of the

estate and the distribution of estate property are matters to be decided by the bankruptcy court alone. See Bankruptcy

Case Docket No. 86. Given the expansive scope of the requested relief in the lift stay motion and the stage of the

proceedings in the Bankruptcy Case at that point in time, the Court entered an order denying the motion. See

Bankruptcy Case Docket No. 105. The Debtor then appealed the order on behalf of her children, as their next friend,

which was subsequently dismissed as untimely. See Bankruptcy Case Docket Nos. 111 and 120. Thereafter, the

Debtor filed a motion on behalf of her children, as their next friend, for the District Court’s withdrawal of the reference.

See Bankruptcy Case Docket No. 123. Following the issuance of a report and recommendation to the District Court

recommending against the withdrawal, the District Court entered an order denying the motion. See Bankruptcy Case

Docket Nos. 146 and 149.

Foster and First Aid filed a joint answer in opposition.16 Upon the commencement of the Property

Ownership Lawsuit, notice of the action and of the Trustee’s complaint was provided to, among

others, the Debtor by and through her then-counsel of record.17

Separately, the Trustee also filed a plea in intervention in the Divorce Action to put the

Family Court on notice of the proceedings in the Bankruptcy Case and to protect what the Trustee

believed to be the bankruptcy estate’s interest in the Properties, noting in the plea that the

bankruptcy estate includes any community property of the Debtor and Foster under the Debtor’s

joint management and control as of the date of the bankruptcy filing pursuant to 11 U.S.C. §

541(a)(2)(A).18

Approximately five months into the litigation in the Property Ownership Lawsuit, the

Trustee reached an agreement with Foster for resolution of the lawsuit – or so she thought. On

October 24, 2014, the Trustee filed a motion in the Bankruptcy Case for approval of the

settlement.19 Under the terms of the proposed compromise, Foster would transfer all of his alleged

right, title and interest in the Commercial Properties to the bankruptcy estate in exchange for the

Trustee’s transfer and conveyance of all of the bankruptcy estate’s alleged right, title and interest

in the Powell Property to Foster, and the parties would exchange releases (excluding, for the

avoidance of doubt, claims by the Debtor against Foster for spousal support, child support and

16 See Property Ownership Lawsuit Docket Nos. 11 and 18.

17 See Bankruptcy Case Docket No. 151 (reflecting initiation of Property Ownership Lawsuit and including a link to

the Trustee’s original complaint; noticed via the Court’s ECF facilities to all registered ECF users as of 5/22/2014,

including the Debtor’s then-counsel of record in the Bankruptcy Case); see also Bankruptcy Case Docket No. 81

(notice of appearance filed by counsel for the Debtor on 12/2/2013, thereby registering counsel for ECF notice in the

case); Bankruptcy Case Docket No. 195 (Debtor’s counsel’s motion to withdraw, not filed until 11/13/2014).

18 See Bankruptcy Case Docket No. 161, Exh. C (copy of plea in intervention); see also 11 U.S.C. § 541(a)(2)(A)

(providing that property of the estate includes “[a]ll interests of the debtor and the debtor’s spouse in community

property as of the commencement of the case that is … under the sole, equal, or joint management and control of the

debtor”).

19 See Bankruptcy Case Docket No. 167.

alimony).20 The compromise would also resolve a corollary lawsuit (Adversary Proceeding No.

14-04068) filed by the Trustee against Foster for the avoidance and recovery of rental payments

generated by the Properties (the “Foster Avoidance Lawsuit”).21

The Debtor filed an objection to the motion to compromise on behalf of herself and her

children, as their next friend.22 Pursuant to the objection, the Debtor, in essence, asserted that

because Foster had been claiming the Properties as his separate property, which the Debtor

construed as indirectly also constituting a claim to sole management and control of the Properties

to the extent that they might be determined to be community property instead of separate property,

then such claims called into question whether the bankruptcy estate actually had an interest in the

Properties under section 541(a)(2) of the Bankruptcy Code.23 And, thus, because these ownership

issues had not yet been determined, and because a division of the martial estate had not yet

occurred in the Divorce Action, the Debtor argued that the settlement constituted a “collusive,”

“illusory” agreement designed to deprive the Debtor and her children of their rights under

20 See id. (¶ 4).

21 See Foster Avoidance Lawsuit Docket No. 1 (copy of complaint). Upon the commencement of the Foster Avoidance

Lawsuit, notice of the action and of the Trustee’s complaint was similarly provided to, among others, the Debtor by

and through her then-counsel of record. See Bankruptcy Case Docket No. 153 (reflecting initiation of Foster

Avoidance Lawsuit on 7/2/2014 and including a link to the Trustee’s original complaint; noticed via the Court’s ECF

facilities to all registered ECF users as of 7/2/2014, including the Debtor’s then-counsel of record in the Bankruptcy

Case).

22 See Bankruptcy Case Docket No. 203. With respect to the standing of the Foster children to object, on June 12,

2013, the Debtor filed a proof of claim in the Bankruptcy Case (Claim No. 8) on behalf of her children, as their next

friend, to assert a claim by the children against herself for breach of fiduciary duty and failure to pay property taxes.

On November 25, 2014, the Trustee filed an objection to the claim. See Bankruptcy Case Docket No. 206. On

December 29, 2014, the Debtor filed a response on behalf of the children. See Bankruptcy Case Docket No. 236.

Following an evidentiary hearing on the objection on January 5, 2015, the Court entered an order sustaining the

objection and disallowing the claim in full. See Bankruptcy Case Docket No. 334. On appeal to the District Court,

the order was affirmed. See Bankruptcy Case Docket Nos. 382 and 383. On further appeal to the Fifth Circuit, the

Fifth Circuit dismissed the appeal as frivolous. See Bankruptcy Case Docket Nos. 390 and 391.

23 See 11 U.S.C. § 541(a)(2)(A) (providing that in the case of community property owned by a debtor and the non-

debtor spouse of such debtor, the debtor’s estate includes, among other things, all such community property that is

under the sole, equal, or joint management and control of the debtor – omitting any reference to community property

under the sole management and control of the non-debtor spouse).

applicable Texas marital laws. The Debtor additionally questioned the authenticity of Foster’s

signature to the settlement agreement, thereby calling into question whether Foster had even

actually agreed to it.24

Following a hearing on the motion, the Court declined to approve the compromise based

upon the lack of evidence of Foster’s agreement to the settlement.25 While not the basis for denial

of the motion, the Court also voiced concerns with respect to the continuing dispute as to the

character of the Properties, the shifting positions being taken by the Debtor and Foster in

proceedings, and the overlay and impact of the pending Divorce Action to the division of the

marital estate. Based upon such concerns and the Trustee’s report that the costs of administering

the estate were being exponentially driven up by the shifting, litigious positions being taken by the

Debtor and Foster, the Court sua sponte issued an order of abstention in the Property Ownership

Lawsuit on January 20, 2015.26 Pursuant to the abstention order, the Court abstained in favor of

the Family Court with respect to the determination of (1) whether the Properties were Foster’s

separate property or instead the community property of the Debtor and Foster, (2) if community

property, whether the Properties were under the sole management and control of Foster or subject

to joint management and control by both Foster and the Debtor, and (3) the fair and equitable

division of the Properties under the provisions of the Texas Family Code taking into account such

determinations; provided, however, that the Court retained authority over the distribution of any

24 In this regard, the Trustee filed the motion to compromise after receiving a copy of the settlement agreement signed

by Foster’s counsel in the name of Foster, coupled with Foster’s counsel’s assurance that it would be followed up with

a copy of the agreement actually signed by Foster. After Foster’s counsel failed to timely deliver on such assurance,

the Trustee disclosed the lack of an originally signed agreement to the Court. This resulted in the Court’s issuance of

a show cause order to Foster and his counsel. See Bankruptcy Case Docket No. 181. Ultimately, Foster and his

counsel failed to produce a copy of the agreement signed by Foster, thereby calling into question whether there had

ever been an actual meeting of the minds between the parties.

25 See Bankruptcy Case Docket No. 306.

26 A similar order of abstention was also entered in the Foster Avoidance Lawsuit. See Foster Avoidance Lawsuit

Docket No. 10.

property constituting property of the estate and the right to approve any compromise that might be

reached between the Debtor, Foster and First Aid in relation to such matters.27 The order also

modified the automatic stay of 11 U.S.C. § 362(a) to enable the Family Court to make such

determinations.28

Notably, the order did not preclude the Trustee from making an appearance in the Divorce

Action. To the extent that the Trustee deemed it necessary or advisable to appear in the action to

protect or preserve what the Trustee reasonably believed to be property of the bankruptcy estate,

such action was permissible and within the scope of statutory authority provided to the Trustee.29

D. The Debtor Requests Removal of the Trustee

On October 15, 2014, following the Trustee’s intervention in the Divorce Action, the

Debtor filed a motion on behalf of her children, as their next friend, to remove the Trustee as the

chapter 7 trustee in the Bankruptcy Case.30 Pointing to the Trustee’s prior request to sell the

Properties, the initiation of the Property Ownership Lawsuit and the Foster Avoidance Lawsuit,

the Trustee’s intervention in the Divorce Action, and the fact that the Trustee had been in extended

negotiations with Foster with respect to ownership of the Properties, the Debtor (on behalf of her

children) asserted that cause existed for removal of the Trustee because such conduct allegedly

evidenced a conspiracy between the Trustee and Foster to defraud the community estate, to defeat

a just and equitable division of the marital estate, and to deprive the rights of the Foster children

under the Texas Family Code. Additionally, the Debtor (on behalf of her children) asserted that

the Trustee was incurring unnecessary administrative costs to the detriment of creditors.

27 See Property Ownership Lawsuit Docket No. 23.

28 See id.

29 See 11 U.S.C. §§ 323, 704(a)(1).

30 See Bankruptcy Case Docket No. 161.

Curiously, despite complaints with respect to the Trustee’s initiation of the Property Ownership

Lawsuit and Foster Avoidance Lawsuit and the estate’s incurrence of administrative expenses, the

Debtor (on behalf of her children) also asserted that the Trustee was knowingly conspiring with

Foster to allow all rental income from the Properties to be “stolen” by Foster while expenses of

the Properties were going unpaid.

Following the Trustee’s filing of a response in opposition to the motion31 and the filing of

a reply by the Debtor (this time both individually and on behalf of her children),32 the Court

conducted an evidentiary hearing. At the conclusion of the hearing, the Court issued an oral ruling,

determining that the motion should be denied for lack of merit. Based upon the ruling, on

December 23, 2014, the Court entered an order denying the motion (the “Order Denying

Removal of the Trustee”).33 Both the Debtor, individually, and the Debtor, on behalf of her

children as their next friend, filed appeals from the order.34 The appeals were subsequently

consolidated and dismissed by the District Court.35 On further appeal to the Fifth Circuit, the

appeal was dismissed by the Fifth Circuit as frivolous.36

E. The Property Ownership Lawsuit Resumes

For over two years after the Court’s entry of the abstention order in the Property Ownership

Lawsuit, proceedings in the Divorce Action lingered on without any resolution.37 Ultimately, on

31 See Bankruptcy Case Docket No. 186.

32 See Bankruptcy Case Docket No. 194. In the reply, the Debtor, individually and on behalf of her children, raised

even more serious allegations, claiming that the Trustee had intentionally misled the Court, asserted frivolous claims,

and obstructed justice, warranting the issuance of sanctions in addition to removal.

33 See Bankruptcy Case Docket No. 226.

34 See Bankruptcy Case Docket Nos. 234 and 235.

35 See Bankruptcy Case Docket Nos. 369-371.

36 See Bankruptcy Case Docket Nos. 388 and 399.

37 See Property Ownership Lawsuit Docket Nos. 26, 29 and 31 (status reports filed by the Trustee with respect to the

Divorce Action).

February 28, 2017, the Family Court dismissed the Divorce Action for want of prosecution. Thus,

on March 14, 2017, the Trustee requested a status conference in the Property Ownership Lawsuit

to bring the dismissal to the Court’s attention and discuss a potential termination of the previously

ordered abatement.38 Following the status conference, upon motion of the Trustee for the Court

to withdraw the order of abstention based upon such changed circumstances, the Court entered an

order withdrawing the abstention and setting the Property Ownership Lawsuit for trial.39 On June

27, 2017, following trial, the Court entered a Final Judgment declaring the Properties to constitute

property of the bankruptcy estate (the “Property Ownership Judgment”).40

F. The Trustee Sells the Properties

On August 3, 2017, the Trustee filed a motion to sell the Commercial Properties to SAI

Reed Properties, Inc. (“SAI”) free and clear of all liens, claims and encumbrances.41 The Debtor

objected to the sale.42 Pursuant to the objection, the Debtor argued, in essence, that because the

alleged value of the Properties exceeded the alleged aggregate amount of community claims that

could be charged against the Properties, then, contrary to the Property Ownership Judgment, the

Properties did not constitute property of the bankruptcy estate pursuant to the provisions of 11

U.S.C. § 541(a)(2)(B).43 Then, based upon her conclusion that the Properties did not constitute

38 See Property Ownership Lawsuit Docket No. 33; see also Docket No. 33, at p.13 (Debtor’s acknowledgment of the

dismissal on 2/28/2017). Subsequent to the dismissal, the Debtor initiated another divorce action; however, the Debtor

nonsuited the second action in April 2017.

39 See Property Ownership Lawsuit Docket Nos. 35 and 37. A similar order was entered into the Foster Avoidance

Lawsuit, see Foster Avoidance Lawsuit Docket No. 24, and the Property Ownership Lawsuit and Foster Avoidance

Lawsuit were set for a combined trial in June 2017.

40 See Property Ownership Lawsuit Docket No. 43; see also Foster Avoidance Lawsuit Docket No. 30 (Final

Judgment).

41 See Bankruptcy Case Docket No. 399.

42 See Bankruptcy Case Docket No. 408.

43 See 11 U.S.C. § 541(a)(2)(B) (providing that in the case of community property owned by a debtor and the non-

debtor spouse of such debtor, the debtor’s estate includes, among other things, all such community property that is

property of the estate, the Debtor argued that the Court did not have subject matter jurisdiction to

approve the proposed sale of the Commercial Properties.

Following an evidentiary hearing on the motion, the Court entered an order granting the

motion to sell (the “Commercial Property Sale Order”)44 and thereafter also entered an order

denying the Debtor’s motion for reconsideration.45 No appeal was taken from the Commercial

Property Sale Order or the order denying reconsideration. On or about November 2, 2017, the sale

of the Commercial Properties to SAI closed,46 and in connection with recording the transfer of the

property, on November 7, 2017, a copy of the Property Ownership Judgment was recorded in the

Tarrant County, Texas property records at document D217258279 (the “Recorded Property

Ownership Judgment”).47

Separately, on December 6, 2017, the Trustee filed a motion to sell the Powell Property

free and clear of all liens, claims and encumbrances.48 Once again, the Debtor objected, raising

the same arguments as set forth in her objection to the sale of the Commercial Properties.49

Following an evidentiary hearing on the motion, the Court entered an order granting the motion to

sell (the “Powell Property Sale Order”).50 No appeal was taken from the Powell Property Sale

Order.

liable for an allowable claim against the debtor, or for both an allowable claim against the debtor and an allowable

claim against the non-debtor spouse of the debtor, to the extent that such community property is so liable).

44 See Bankruptcy Case Docket No. 419.

45 See Bankruptcy Case Docket No. 457.

46 See Bankruptcy Case Docket No. 479 (Exhibit A – seller’s statement dated 11/2/2017).

47 The Court takes judicial notice of such filing.

48 See Bankruptcy Case Docket No. 434.

49 See Bankruptcy Case Docket No. 442.

50 See Bankruptcy Case Docket No. 455.

G. The Applications for Compensation and Reimbursement of Expenses

On March 19, 2018, SLPC filed its application for the allowance of compensation and the

reimbursement of expenses in the Bankruptcy Case.51 The Debtor filed an untimely objection to

the application on April 13, 2018.52 Pursuant to the objection, the Debtor made the following,

among other, assertions in support of her request for denial of the application, notwithstanding the

Court’s previously issued Property Ownership Judgment, Commercial Property Sale Order and

Powell Property Sale Order:53

● “[N]either the bankruptcy trustee nor her legal counsel should be paid for

pursuing property that was not property of the bankruptcy estate under 11

USC 541(a)(2)(B)….” (page 26)

● “In the instant case, [ ] trustee knowingly and intentionally sought property

claimed by the debtor in an ongoing state divorce proceeding under Tex.

Fam. Code 7.009 beyond the extent that such property was liable under

Texas Law for an allowed claim against the debtor or liable for a joint

community claim for which both the debtor and the debtor’s non-filing

spouse would be liable under the plain meaning of Texas law.” (page 28)

● “Service is not reasonable nor necessary for arguments that time spent

arguing that the trustee was the sole party with standing to bring the debtor’s

state divorce claims against real property that was under the sole

management and control of the debtor’s non-filing spouse….” (page 30)

● “Bankruptcy Courts cannot usurp the statutorily imposed limits of their

limited subject matter jurisdiction under 11 U.S.C. 541(a)(2)(B) simply to

make the property and money under the debtor’s non-filing spouse sole

management and control available to pay the a bankruptcy trustee and the

bankruptcy trustee’s alleged legal fees in accordance with 11 USC 330….”

(page 34)

● “The trustee and her legal counsel can show no control precedent to support

the trustee fee application pursuant to 11 USC 330 for pursuing property

that was not liable under Texas law for an allowed claim of a creditor under

the plan meaning of 11 USC 541(a)(2)(B)” (page 37)

51 See Bankruptcy Case Docket No. 468.

52 See Bankruptcy Case Docket No. 471.

53 The Debtor was also under the mistaken impression that the Court was without authority to award compensation

under section 330 of the Bankruptcy Code because such an award would violate the American Rule. See, e.g., id. at

pp. 10-12, 32.

● “Where the record clearly reveals that the instant panel trustee has breached

her duty the U.S. Trustee should act.” (page 39)

● “Regina Nachael Howell Foster party in interest[], prays that the application

for fees be denied [t]o the extent that the application is for disloyal service,

prays that the US trustee intervene as of right in the interest of justice and

D[u]e Process and in accordance with the duties imposed on the US trustee

under the bankruptcy code, and for such other further and additional relief

required by law and equity for which is shown in the interest of justice and

Due Process.” (pages 39-40).

On April 24, 2018, the Court entered an order approving the SLPC application (the “SLPC Fee

Order”).54 In rejecting the Debtor’s objection as untimely, the Court added that even if the Debtor

had asked for an extension of time to object, the requested extension would have been denied due

to the lack of any merit to the objection:55

Even if [Debtor] had filed a timely motion to enlarge the period for objections, I

would have denied it. … [E]nlarging the time to object and then conducting a

hearing on the application would only prolong a pattern of conduct that has brought

unnecessary delay and expenses to the administration of this estate. I will not

catalogue here all of the actions of [Debtor] over the past five and one-half years

that have drawn on the resources of my court, two U.S. district court judges, at least

three Texas district court judges, at least one panel of judges from the Fifth Circuit

Court of Appeals, and the Fort Worth Court of Appeals. [Debtor] makes the same

or similar arguments in the objection as those she made to me and those other courts

in countless filings and hearings. These arguments include, but are not limited to,

the assertion that the property at issue was never property of her estate (even though

[Debtor] scheduled it as such), that the Chapter 7 trustee committed fraud on the

estate, and that my court has no jurisdiction over the property. I have rejected these

arguments and entered final orders that effectuate my rulings.

On May 10, 2018, the Debtor filed a motion for reconsideration which was denied by the Court.56

The Debtor then appealed.57 The appeal was thereafter dismissed by the District Court for want

of prosecution.58

54 See Bankruptcy Case Docket No. 476.

55 Id. at p. 2.

56 See Bankruptcy Case Docket Nos. 480 and 494.

57 See Bankruptcy Case Docket No. 503.

58 See Bankruptcy Case Docket No. 525.

Separately, on June 14, 2018, the Trustee filed her application for the allowance of

compensation and the reimbursement of expenses in the Bankruptcy Case.59 Notice of the

application and of the deadline to object was timely and properly provided to the Debtor.60 The

Debtor did not object and on July 10, 2018, the Court entered an order approving the application

(the “Trustee Fee Order”).61 No appeal was taken from the Trustee Fee Order.

H. The Trustee’s Proposed Final Distribution of the Estate

On June 13, 2018, the Trustee filed her final report and proposed distribution with respect

to administration of the estate (the “Proposed Final Distribution Report”).62 Notice of the

Proposed Final Distribution Report and of the deadline to object to the same was timely and

properly provided to the Debtor.63 Neither the Debtor nor any other party in interest objected.

Thus, the Trustee made all final distributions and filed her final account and distribution report.64

On September 27, 2018, the Court entered an order approving the Trustee’s final report and

discharging the Trustee (the “Final Distribution and Discharge Order”),65 whereupon the

Bankruptcy Case was closed.66 No appeal was taken from the Final Distribution Order.

59 See Bankruptcy Case Docket No. 499.

60 See Bankruptcy Case Docket No. 500.

61 See Bankruptcy Case Docket No. 523.

62 See Bankruptcy Case Docket No. 497.

63 See Bankruptcy Case Docket Nos. 498, 501 and 502.

64 See Bankruptcy Case Docket No. 527.

65 See Bankruptcy Case Docket No. 528.

66 See Bankruptcy Case Docket (docket entry of 9/27/2018 reflecting closing of Bankruptcy Case).

I. The Debtor Initiates a New Round of Attacks

Nearly a year later, following the retirement of Judge Nelms and the appointment of the

above-signed judge in his place, the Debtor commenced a new round of filings to seek yet another

bite at the apple.

First, the Debtor filed a “Motion to Reopen & Motion to Vacate Pursuant to Fed. Rule

60(b)(4)” in the Property Ownership Lawsuit.67 Pursuant to the motion, the Debtor requested a

reopening of the Property Ownership Lawsuit and entry of an order vacating the Property

Ownership Judgment pursuant to Rule 60(b)(4) of the Federal Rules of Civil Procedure.

Reiterating virtually all of the same arguments that she had previously made, the Debtor asserted,

among other things, that the Property Ownership Judgment was void because “the bankruptcy

court lacked subject matter [jurisdiction] of the real property under 11 USC 541(a)(2)(B) because

the chapter 7 trustee acted outside of the scope of her jurisdiction in seeking property under the

debtor’s non-filing spouse that was not under the bankruptcy court’s subject matter jurisdiction

because such real property was not liable under Texas for the pre-petition claims assert[ed] against

the debtor.”68 She further argued that the Bankruptcy Case “was never about paying the debtor’s

creditor[s] or any valid enforceable creditor’s claim against the bankruptcy estate, this case was

always about fraudulently obtaining administrative fees. In the instant case, the trustee conspired

to obstruct the administration of justice in both the State Court Family proceeding and to

knowingly and intentionally wholly ignoring state law for the sole purpose of receiving

compensation in violation of 18 U.S.C. § 152(6)….”69

67 See Property Ownership Lawsuit Docket No. 45.

68 See id. at ECF p. 31.

69 See id. at ECF p. 27.

On June 26, 2019, the Court entered an order denying the motion (the “Judgment Vacatur

Denial Order”).70 The Debtor then appealed the Judgment Vacatur Denial Order71 and the appeal

was later dismissed by the District Court for want of prosecution.72

Second, on July 10, 2019, the Debtor filed a “Motion to Reopen Bankruptcy Case to Hear

Motion for Leave to File Lawsuit Against Panel Trustee for Ultra Vires Acts, In Violation of 18

U.S.C. § 152(6), 11 USC 704 and 11 U.S.C. § 328(c), By Seeking Property That Was Not Under

the Subject Matter Jurisdiction Under 11 USC 541(A)(2)(B) to Pay Compensation Under 11 USC

326 and 11 USC 330 & Motion to Vacate Judgment Under Fed. R. Civ. P. 60(B)(4) For Lack of

Subject Matter Jurisdiction” in the Bankruptcy Case.73 Pursuant to the motion, the Debtor

requested the reopening of the Bankruptcy Case (a) for the purpose of having the Court enter an

order vacating the Commercial Property Sale Order, the Powell Property Sale Order, the SLPC

Fee Order and the Trustee Fee Order based upon the Court’s alleged lack of subject matter

jurisdiction to enter such orders, and (b) to pursue litigation against the Trustee for her alleged

improper interference with the Divorce Action, alleged improper disbursement of estate funds and

alleged improper pursuit of administration of the estate resulting in excess costs to the estate. The

Trustee responded in opposition to the motion and the Debtor filed a reply thereto.74

On August 1, 2019, the Court conducted an evidentiary hearing on the motion, at the

conclusion of which the Court announced that the motion would be denied based upon the findings

and conclusions orally read into the record.75 On August 27, 2019, the Court entered the order

70 See Property Ownership Lawsuit Docket No. 46.

71 See Property Ownership Lawsuit Docket No. 48.

72 See Property Ownership Lawsuit Docket No. 74.

73 See Bankruptcy Case Docket No. 531.

74 See Bankruptcy Case Docket Nos. 540 and 543.

75 See Bankruptcy Case Docket No. 547 (transcript of ruling).

denying the Debtor’s motion.76 The Debtor’s subsequent request for reconsideration of the order

was also denied.77 No appeal was taken from either of the orders.

J. The Debtor Files the Current Complaint in State Court

At no point in time did the Debtor ever seek or obtain permission from the Court to pursue

litigation against the Trustee or her counsel in any other forum. Notwithstanding same, on

November 7, 2019, the Debtor filed her Original Complaint (the “Current Complaint”) against

the Trustee, SLPC, Hoodenpyle and Shriro in the 153rd Judicial District Court, Tarrant County,

Texas (the “State Court”) under Cause No. 153-313162-19 (the “Removed Lawsuit”).78 The

Debtor also named Foster and SAI as defendants under the Current Complaint (Foster, SAI and

the Moving Defendants are collectively referred to as the “Defendants”).

In the Current Complaint, the Debtor delivers a repackaged version of the same complained

of actions, asserting, for example, the following:

● “[I]n an affidavit filed on January 6, 2014 in the bankruptcy proceeding, the

trustee and her counsel began to conspire to wrongfully interfere with the

Divorce Proceeding…” (page 6)

● Trustee’s counsel “argued in the bankruptcy case hearing, that the Trustee

as Intervenor, in the divorce proceeding, would need assistance from the

Bankruptcy Court in conspiring to commit fraud upon the state divorce

court and circumvent Due Process….” (page 8)

● “[A]n order was entered by the bankruptcy court on January 10, 2014 …

purporting to expressly Stay the state divorce court’s ability to ‘determine

what would be a just and equitable division of property under Tex. Fam.

Code 7.001.’ The January 10, 2014 Order purport[ed] to stay the division

of community property, over one 2 months after the automatic stay of

proceedings terminated by operation of law under 11 USC 362(c)(2)(C),

which is a violation of 28 USC 2283, which prohibits a federal court from

staying a state court proceeding, unless expressly authorized by

Congress….[T]he subject matter jurisdiction of a bankruptcy court, over

76 See Bankruptcy Case Docket No. 549.

77 See Bankruptcy Case Docket No. 564.

78 See Docket No. 1 (Exhibit A (Part 1) (docket from State Court Lawsuit) and Exhibit A (Part 2) (copy of the Current

Complaint)).

community property under the non-bankruptcy filing spouse, in a

community property state, is limited to the extent that such property would

be liable for the claims of the community creditors for which both spouses

would be liable under state law.” (pages 9-10 and n.27)

● The Trustee “and her counsel(s) of record did knowingly and willfully

conspire with Carlos Foster to violate Texas Penal Code § 32.46 by causing

another to sign or execute any document affecting property, causing and/or

inducing a public servant to file or record any purported judgment in the

County Records of Tarrant county on or about November 7, 2017, as

D217258279,79 with the sole intent of causing Regina Nachael Howell

Foster, and her minor Children, retaliatory harm in violation of Texas Penal

Code § 36.04.” (pages 13-14)

● “On June 13, 2018, [the Trustee] filed her final interim report showing how

she and her conspirators had been paid with community property that had

been wrongfully seized by the trustee by the November 7, 2017,

D217258279 filing in the Tarrant County Property Records….” (page 14)

● The Trustee “as an appointed Chapter 7 panel Trustee and Defendant Singer

Levick, acting by and through, defendant Michelle Shiroo [sic] and/or Todd

Hoodenpyle, as appointed counsel for the Chapter 7 Panel trustee, as public

servants under the purported authority 11 USC 704 and 11 USC 327 did

knowingly conspire to commit an offense under Texas Penal Code Sec.

39.02(a), with intent to obtain a benefit of undue compensation by

knowingly wrongfully intervening in an ongoing divorce proceeding [and

taking actions therein]” (pages 16-17)

● “Obtaining a judgment by fraud makes the judgment void and subject to

collateral attack” (page 20)

● “Defendant [SAI] was a straw purchaser for Carlos Foster as part of the

conspiracy and as such title should be quieted against Defendant [SAI] as a

void pretend sale and against public policy of this state.” (page 20)

Based upon the above and similar allegations, the Debtor asserts the following causes of action

against the Moving Defendants pursuant to the Current Complaint (collectively, the “Subject

Claims”):80

(1) Conspiracy to interfere with Debtor’s “right under the Open Courts

Provision of the Texas Constitution to seek spousal support and child

support from [Foster] in violation of [Debtor’s] rights under the Texas

Constitution” by allegedly (a) enabling Foster “to evade his lawfully

79 Referring to the Recorded Property Ownership Judgment.

80 The Debtor has also asserted a quiet title claim against SAI to attack the Trustee’s court-approved sale of the

Commercial Properties to SAI as an allegedly “void pretend sale.” See Current Complaint, ¶¶ 28-29.

imposed duties” under the Texas Family Code and (b) filing the Recorded

Property Ownership Judgment. (Referred to herein as the “Support

Conspiracy Claim”).81

(2) Conspiracy to commit an offense under Texas Penal Code § 39.02(a) with

an intent to obtain the benefit of undue compensation by allegedly

knowingly and wrongfully intervening in the Divorce Action and taking

certain actions therein. (Referred to herein as the “Compensation

Conspiracy Claim”).82

(3) Violation of Texas Civil Practices and Remedies Code 10 and 1283 by

allegedly obtaining a judgment by fraud.84 (Referred to herein as the

“Judgment by Fraud Claim”).85

On December 4, 2019, the Trustee filed an emergency motion to reopen the Bankruptcy

Case for the purpose of removing the Removed Lawsuit to this Court.86 The Debtor filed an

objection to the motion.87 Following a hearing on the motion, the Court entered an order on

December 13, 2019, granting the motion and reopening the Bankruptcy Case for the limited

purpose of addressing the Removed Lawsuit, if removed, and issues related thereto.88

On December 17, 2019, the Moving Defendants filed their Notice of Removal, thereby

removing the Removed Lawsuit to this Court and initiating the current adversary proceeding. The

Debtor then filed two motions for remand, one challenging the timeliness of the removal (the

“Timeliness Motion”) and one challenging the Court’s jurisdiction of the Removed Lawsuit (the

81 See id., ¶ 21 (first ¶ 21). The Debtor has also asserted the Support Conspiracy Claim against Foster and SAI.

82 See id., ¶¶ 21-22 (second ¶ 21 and first ¶ 22).

83 Debtor appears to be referring to chapters 10 (titled “Sanctions for Frivolous Pleadings and Motions”) and 12 (titled

“Liability Related to a Fraudulent Court Record or a Fraudulent Lien or Claim Filed Against Real or Personal

Property”) of the Texas Civil Practice and Remedies Code.

84 The Debtor fails to specifically identify any of the Defendants in this portion of the Current Complaint. Based upon

the Debtor’s introductory assertion that a lawyer may be held accountable for improper actions under the Texas Civil

Practices and Remedies Code, however, the Court construes the claim as being against the Trustee’s lawyers – SLPC,

Hoodenpyle and Shriro.

85 See Current Complaint, ¶¶ 22 (second ¶ 22) - 27.

86 See Bankruptcy Case Docket No. 555.

87 See Bankruptcy Case Docket No. 558.

88 See Bankruptcy Case Docket No. 566.

“Jurisdictional Motion”).89 The Court recently issued a Memorandum Opinion (the “Remand

Opinion”) and orders denying the Timeliness Motion and denying the Jurisdictional Motion with

respect to the Subject Claims asserted against the Moving Defendants.90

JURISDICTION

For reasons previously explained within the Remand Opinion,91 the Court has jurisdiction

of this proceeding with respect to the Subject Claims pursuant to 28 U.S.C. §§ 1334 and 157 and

the Order of Reference of Bankruptcy Cases and Proceedings Nunc Pro Tunc (Miscellaneous Rule

No. 33) of the United States District Court for the Northern District of Texas. Venue of the

proceeding in the Northern District of Texas is proper under 28 U.S.C. § 1409. For reasons again

set forth within the Remand Opinion,92 the proceeding involving the Subject Claims is core in

nature pursuant to 28 U.S.C. § 157(b)(2). As such, the Court has the authority to enter a final order

or judgment on the Subject Claims pursuant to 28 U.S.C. § 157(b)(1).93

DISCUSSION

A. Standards Applicable to a Rule 12(b)(6) Motion for Dismissal

For pleading purposes, Rule 8 of the Federal Rules of Civil Procedure (the “Federal

Rules”), made applicable to adversary proceedings by Rule 7008 of the Federal Rules of

Bankruptcy Procedure (the “Bankruptcy Rule”), simply requires a complaint to include “a short

and plain statement of the claim showing that the pleader is entitled to relief,” with each allegation

89 See Docket Nos. 10 (Jurisdictional Motion) and 12 (Timeliness Motion).

90 See Docket Nos. 49 (Remand Opinion), 50 (order on Jurisdictional Motion) and 51 (order on Timeliness Motion).

91 See Remand Opinion, at pp.27-31 (such portion of the Remand Opinion is incorporated herein by reference).

92 See id. at pp.32-34 (such portion of the Remand Opinion is incorporated herein by reference).

93 In the event of a subsequent determination on appeal that the proceeding involving the Subject Claims is, in whole

or in part, non-core in nature for purposes of 28 U.S.C. § 157(b)(1) and (b)(2), then the above-signed bankruptcy judge

respectfully submits this Memorandum Opinion to The Honorable United States District Court for the Northern

District of Texas as the above-signed bankruptcy judge’s report and recommendation in accordance with 28 U.S.C. §

157(c)(1) with respect to disposition of the Motion to Dismiss.

in support thereof to be “simple, concise and direct.”94 That said, pursuant to Federal Rule

12(b)(6), made applicable to adversary proceedings by Bankruptcy Rule 7012(b), on motion of a

defendant filed prior to the filing of the defendant’s answer, a complaint is subject to dismissal

against the defendant if the complaint fails to state a claim against the defendant upon which relief

can be granted.95

As a general proposition, “[m]otions to dismiss are viewed with disfavor and are rarely

granted.”96 “To survive a motion to dismiss, [however,] a complaint must contain sufficient factual

matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”97 “A claim has

facial plausibility when the plaintiff pleads factual content that allows the court to draw the

reasonable inference that the defendant is liable for the misconduct alleged.”98 In assessing facial

plausibility, a court is to accept as true all well-pleaded factual allegations set forth within the

complaint, even if doubtful in fact.99 But the allegations must consist of more than mere labels

and conclusions.100 “Threadbare recitals of the elements of a cause of action, supported by mere

conclusory statements, do not suffice.”101 Additionally, the well-pleaded complaint rule is

94 Fed. R. Civ. P. 8(a)(2), (d)(1); Fed. R. Bank. P. 7008.

95 See Fed. R. Civ. P. 12(b)(6); Fed. R. Bankr. P. 7012(b).

96 Test Masters Educ. Servs., Inc. v. Singh, 428 F.3d 559, 570 (5th Cir. 2005), cert. denied, 547 U.S. 1055 (2006).

97 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); Baron

v. Sherman (In re Ondova Ltd. Co.), 914 F.3d 990, 992-93 (5th Cir. 2019).

98 Iqbal, 556 U.S. at 678.

99 Twombly, 550 U.S. at 555; Allen v. Walmart Stores, LLC, 907 F.3d 170, 177 (5th Cir. 2018).

100 Twombly, 550 U.S. at 555.

101 Iqbal, 556 U.S. at 678; see also Allen, 907 F.3d at 177 (explaining that “‘naked assertion[s]’ devoid of ‘further

factual enhancement’” are not sufficient to prevent dismissal) (quoting Iqbal, 556 U.S. at 678 (quoting Twombly, 550

U.S. at 557)).

inapplicable to legal conclusions.102 Courts “are not bound to accept as true ‘a legal conclusion

couched as a factual allegation.’”103

Subject to application of the foregoing principles, the determination of facial plausibility

is a “context-specific task that requires the reviewing court to draw on its judicial experience and

common sense.”104 While “[t]he plausibility standard is not akin to a ‘probability requirement,’

[ ] it asks for more than a sheer possibility that a defendant has acted unlawfully.”105 Thus, to

avoid dismissal, the “[f]actual allegations must be enough to raise a right to relief above the

speculative level[.]”106

B Dismissal for Violation of the Barton Doctrine

Turning now to the Moving Defendants’ first argument for dismissal, because the Debtor

never obtained leave of this Court to pursue the Subject Claims in State Court, the Moving

Defendants assert that dismissal of the Subject Claims is required because the Subject Claims are

barred by the Barton doctrine. In fact, with respect to the claims asserted against the Trustee, the

Moving Defendants highlight the fact that the Debtor brought those claims after this Court had

expressly refused to reopen the Bankruptcy Case for the purpose of enabling the Debtor to pursue

them in this Court.107

The Debtor does not dispute the fact that she did not obtain leave to pursue the Subject

Claims in State Court. Instead, she argues that the Barton doctrine is inapplicable for two reasons.

First, she attempts to skirt the issue altogether by arguing that the Moving Defendants’ removal of

102 Iqbal, 556 U.S. at 678.

103 Ondova Ltd. Co., 914 F.3d at 993 (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)).

104 Iqbal, 556 U.S. at 679.

105 Id. at 678.

106 Twombly, 550 U.S. at 555.

107 See Bankruptcy Case Docket Nos. 549 and 564.

the Removed Lawsuit from State Court was improper and that this Court lacks jurisdiction to

address any of the Subject Claims – the same arguments made by the Debtor in her Timeliness and

Jurisdiction Motions for remand. Because the Court has already rejected each of these arguments

in the Remand Opinion, the Court will not address them again herein, instead simply incorporating

by reference the Court’s reasoning from the Remand Opinion. Second, the Debtor asserts that the

Subject Claims are not barred by the Barton doctrine because they fall within the ultra vires

exception to the Barton doctrine. For reasons that follow, the Court disagrees.

In Barton v. Barbour,108 the Supreme Court held that before suit may be brought against a

court-appointed receiver in a forum other than the appointing court for actions taken in connection

with the receiver’s administration of the receivership estate, leave of the appointing court must be

obtained.109 This same principle has been applied to both bankruptcy trustees and court-approved

professionals employed by a bankruptcy trustee, such that leave of the bankruptcy court must be

obtained before suit may be commenced against any of these estate fiduciaries in a forum other

than the bankruptcy court for actions taken by them in connection with administering a bankruptcy

case and bankruptcy estate.110 An exception to the doctrine has been recognized, however, where

the receiver or estate fiduciary wrongfully takes possession of property that does not belong to the

receivership or bankruptcy estate. In that instance, where the action taken was outside of the

authority conferred by order or statute and wrongful, and thus ultra vires, the wronged third party

108 104 U.S. 126 (1881).

109 Id. at 128.

110 See Carroll v. Abide, 788 F.3d 502, 505 (5th Cir. 2015); Villegas v. Schmidt, 788 F.3d 156, 158-59 (5th Cir.), cert.

denied, 136 S. Ct. 588 (2015); Coen v. Stutz (In re CDC Corp.), 610 Fed. Appx. 918, 921 (11th Cir. 2015); McDaniel

v. Blust, 668 F.3d 153, 156-57 (4th Cir. 2012); Lowenbraun v. Canary (In re Lowenbraun), 453 F.3d 314, 321 (6th Cir.

2006).

may pursue litigation against the receiver or estate fiduciary in his or her personal, as opposed to

official, court-appointed or court-approved, capacity.111

Predicated upon the Debtor’s belief that the Properties could never legally have become

part of the bankruptcy estate, the Debtor claims that the Property Ownership Judgment, the

Commercial Property Sale Order and the Powell Property Sale Order are all void orders of the

Court due to the Court’s alleged lack of subject matter jurisdiction to issue any orders with respect

to the Properties. Then, predicated upon her assertion that each of the orders involving the

Properties is void, the Debtor claims that all of the actions taken by the Moving Defendants in

administering the Properties consistent with such orders are assailable as ultra vires acts. Taking

it one step further, because the Moving Defendants were paid in the bankruptcy proceedings from

proceeds of the sale of the Properties, then irrespective of the SLPC Fee Order and the Trustee Fee

Order, the Debtor appears to take the position that she is also free to assert claims against the

Moving Defendants for wrongful compensation based upon the Moving Defendants’ alleged ultra

vires acts in pursuing and obtaining such compensation. Each of these arguments is utterly

baseless.

First, the Debtor’s underlying predicate conclusion that each of the Property Ownership

Judgment, Commercial Property Sale Order and Powell Property Sale Order is void for lack of

subject matter jurisdiction is faulty. While it is true that a party to a proceeding is free at any stage

of a proceeding, including during an appeal, to attack the court’s authority to issue an order with

respect to a contested claim for lack of subject matter jurisdiction, that right is not tantamount to a

license to engage in endless collateral attacks of the order until the party gets the ruling that she

111 See Barton, 104 U.S. at 134; Baron v. Sherman (In re Ondova Ltd. Co.), U.S.D.C. No. 3:16-CV-00947-M, 2018

WL 580151, at *2 (N.D. Tex. Jan. 26, 2018), aff’d, 914 F.3d 990 (5th Cir. 2019).

wants. As explained by the Supreme Court, “[e]ven [determinations of] subject-matter jurisdiction

… may not be attacked collaterally.”112

Here, the Debtor has previously, on multiple occasions, had the opportunity to challenge

the Court’s determinations with respect to both the bankruptcy estate’s ownership interest of the

Properties and the Court’s subject matter jurisdiction over proceedings involving the Properties.

In fact, the Debtor has previously challenged such determinations on the exact same grounds as

set forth in the Current Complaint and Objection.113 Similarly, the Debtor has already either

directly attacked or had the opportunity to directly attack the actions of the Moving Defendants in

administering the bankruptcy estate and in seeking compensation in relation thereto as part of the

proceedings instituted with the filing of SLPC’s and the Trustee’s final fee applications in the

Bankruptcy Case and with the filing of the Trustee’s Proposed Final Distribution Report. Those

proceedings concluded with the entry of the SLPC Fee Order (which the Debtor unsuccessfully

appealed), the Trustee Fee Order and the Final Distribution and Discharge Order. Thus, because

the Debtor’s underlying predicate conclusion with respect to the invalidity of the above-referenced

orders of the Court is faulty, so is her characterization of the Moving Defendants’ actions as ultra

vires acts. Courts “are not bound to accept as true a legal conclusion couched as a factual

allegation.”114

Even so, perhaps most relevant to the consideration of the Debtor’s ultra vires assertions

is the fact that all of the Moving Defendants’ actions were taken in accordance with, in furtherance

112 See Travelers Indem. Co. v. Bailey, 557 U.S. 137, 152 (2009) (quoting Kontrick v. Ryan, 540 U.S. 443, 455 n.9

(2004)).

113 For example, the Debtor has made the same or substantially similar assertions and arguments in connection with

the proceedings that ultimately concluded in the Court’s issuance of the Commercial Property Sale Order, the Powell

Property Sale Order and the Judgment Vacatur Denial Order.

114 Papasan, 478 U.S. at 286.

of, in reliance upon, or consistent with orders of this Court, irrespective of the Debtor’s attack of

the orders. In other words, there was nothing ultra vires about the Moving Defendants’ actions at

all. Indeed, nowhere within the Current Complaint is there a single reference to the term “ultra

vires.” Instead, as illustrated by the following language from the Current Complaint, the Debtor

goes to great strides to actually highlight the official capacity in which the Moving Defendants

took action:

● “Defendant, Areya Holder is an individual acting under the color of law as

a contract employee of the United States Trustee Program for the US

Department of Justice as the chapter 7 panel trustee assigned pursuant to 11

USC 704 to the matter styled in re Regina Nachael Howell Foster, and

numbered 12-43804-RFN-7.” (page 2, ¶ 2)

● “Defendant, Singer Levick, P.C., is a Texas corporation, acting under the

color of law as a contract employee legal counsel of appointed Chapter 7

Panel Trustee of the United States Trustee Program for the US Department

of Justice….” (page 2, ¶ 3)

● “Defendant, Todd A. Hoodenpyle, an individual, licensed attorney and

individual employee of Singer Levick, P.C., who at all times acted under

the color of law in the course of his employment for Singer Levick, P.C. as

the counsel retained to represent the appointed chapter 7 panel trustee

pursuant to 11 USC 327 to the matter styled in re Regina Nachael Howell

Foster, and numbered 12-43804-RFN-7.” (page 3, ¶ 4)

● “Defendant, Michelle E. Shriro, is a licensed attorney an individual

employee of Singer Levick, P.C., who at all times acted under the color of

law in the course of his [sic] employment for Singer Levick, P.C. as the

counsel retained to represent the appointed chapter 7 panel trustee pursuant

to 11 USC 326 [sic] to the matter styled in re Regina Nachael Howell Foster,

and numbered 12-43804-RFN-7.” (page 3, ¶ 5)

● “Defendant, Areya Holder, as an appointed Chapter 7 panel Trustee and

Defendant Singer Levick, acting by and through, defendant Michelle Shiroo

[sic] and/or Todd Hoodenpyle, as appointed counsel for the Chapter 7 Panel

trustee, as public servants under the purported authority 11 USC 704 and 11

USC 327 did knowingly conspire to commit an offense….” (pages 15 and

16, ¶¶ 21 and 22)

Thus, the Debtor’s pivot in the Objection to now argue ultra vires conduct on the part of the

Moving Defendants is patently frivolous.

Accordingly, because the Debtor has failed in the Current Complaint to set forth any ultra

vires, individual liability claims, much less any plausible ultra vires, individual liability claims,

against any of the Moving Defendants, and because the Debtor did not obtain leave of court to

pursue any of the Subject Claims against any of the Moving Defendants in State Court, then this

action, insofar as involving the Subject Claims, lacks all legitimacy and will be dismissed for

violation of the Barton doctrine.

C. Dismissal on Immunity Grounds

Relying upon the Fifth Circuit’s recent opinion in Baron v. Sherman (In re Ondova Ltd.

Co.),115 the Moving Defendants additionally assert that the Subject Claims are barred by applicable

doctrines of immunity. The Debtor fails to directly address this assertion at all in the Objection.

As explained in Ondova Ltd. Co., there are differing types of immunity that come into play

to protect a trustee and her court-approved counsel in administering a bankruptcy case and

bankruptcy estate. First, a bankruptcy trustee is “entitled to absolute immunity for all actions taken

pursuant to a court order[.]”116 Second, a bankruptcy trustee is “entitled to qualified immunity for

personal harms caused by actions that, while not pursuant to court order, fall within the scope of

[the trustee’s] official duties.”117 Finally, in the case of the bankruptcy trustee’s attorneys

employed with court approval, the trustee’s immunity “extends to [the trustee’s] attorneys under

both a derivative theory of judicial immunity and under the separate doctrine of attorney

immunity[.]”118

115 914 F.3d 990 (5th Cir. 2019).

116 Id. at 993.

117 Id.

118 Id. at 994 (citing Troice v. Proskauer Rose, LLP, 816 F.3d 341, 349 (5th Cir. 2016) and Allard v. Weitzman (n re

DeLorean Motor Co.), 991 F.2d 1236, 1241 (6th Cir. 1993)).

Here, all of the complained of actions of the Trustee alleged in the Current Complaint were

taken by the Trustee either pursuant to express order of the Court (i.e. the Property Ownership

Judgment, the Commercial Property Sale Order, the Powell Property Sale Order, the SLPC Fee

Order, the Trustee Fee Order and/or the Final Distribution and Discharge Order) or in performing

her official duties as a chapter 7 trustee (e.g., intervening in the Divorce Action to put the Family

Court on notice of the Bankruptcy Case and of the bankruptcy estate’s asserted interest in the

Properties).119 Therefore, all of the Subject Claims asserted against the Trustee are barred by either

absolute or qualified immunity. “Only ultra vires actions – actions that fall outside the scope of

[the trustee’s] duties as trustee[ ] – are not entitled to immunity.”120 And as previously indicated,

the Debtor has not plausibly alleged any ultra vires conduct on the part of the Trustee.

Turning next to the Trustee’s court-approved counsel, as asserted in the Current Complaint,

all of the complained of actions of SLPC, Hoodenpyle and Shriro alleged in the Current Complaint

involved the provision of legal services to or for the benefit of the Trustee taken in their capacity

as counsel for the Trustee. Therefore, all of the Subject Claims asserted against SLPC, Hoodenpyle

and Shriro are barred by either a derivative application of the judicial immunity enjoyed by the

Trustee or by attorney immunity.

Thus, because the Debtor has failed to plausibly allege facts sufficient to state a basis for

relief against any of the Moving Defendants in the face of the above described immunity doctrines,

the Subject Claims will also be dismissed on the basis of immunity.

119 See, e.g., 11 U.S.C. §§ 323(a) (“The trustee in a case under this title is the representative of the estate”), 323(b)

(“The trustee in a case under this title has capacity to sue”), 704(a)(1) (“The trustee shall … collect and reduce to

money the property of the estate”).

120 Ondova Ltd. Co., 914 F.3d at 993.

D. Dismissal on Res Judicata Grounds

Finally, the Moving Defendants also assert that the Subject Claims should be dismissed on

res judicata grounds. In particular, highlighting the fact that each of the Subject Claims is

predicated and dependent upon the alleged voidness of the Court’s prior orders addressing the

Properties, the Moving Defendants assert that each of the Subject Claims is subject to dismissal

because the Court’s prior orders are entitled to res judicata effect. In response, the Debtor asserts

that res judicata is an affirmative defense that must be plead as such in a defendant’s answer

pursuant to Federal Rule 8(c).121 Thus, because the Moving Defendants have not yet answered the

Current Complaint and affirmatively plead the defense of res judicata, the Debtor asserts that the

Court may not consider the defense.

“Although res judicata generally cannot be raised in a motion to dismiss and should instead

‘be pleaded as an affirmative defense,’ dismissal under Rule 12(b)(6) is appropriate if the res

judicata bar is apparent from the complaint and judicially noticed facts and the plaintiff fails to

challenge the defendant’s failure to plead it as an affirmative defense.”122 Here, while the res

judicata bar is apparent from the Current Complaint and judicially noticed facts, the Debtor has

challenged application of the defense based upon the Moving Defendants’ failure to specifically

plead it as such in answer to the Current Complaint. Recognizing, of course, that the Moving

Defendants have not yet technically failed to plead the res judicata defense, inasmuch as the

121 See Fed. R. Civ. P. 8(c)(1) (“In responding to a pleading, a party must affirmatively state any avoidance or

affirmative defense, including … res judicata ….”); Fed. R. Bankr. P. 7008 (providing for the application of Federal

Rule 8 to adversary proceedings); see also Arizona v. California, 530 U.S. 392, 410 (2000) (recognizing res judicata

as an affirmative defense that may be lost if not timely raised).

122 Anderson v. Wells Fargo Bank, N.A., 953 F.3d 311, 314 (5th Cir. 2020) (citing Test Masters Educ. Servs., 428 F.3d

at 570 n.2).

deadline to answer has not yet passed,123 because the Moving Defendants have not technically pled

the res judicata defense in answer to the Current Complaint, ostensibly it is inappropriate for the

Court to consider res judicata as a basis for dismissal under Federal Rule 12(b)(6).

Ultimately, while there is additional case law suggesting that certain exceptions exist to the

general rule that res judicata should not be considered at the dismissal stage in the face of an

objection,124 it is unnecessary for the Court to consider the applicability of any exceptions given

that dismissal has already been shown to be warranted under the alternative grounds of violation

of the Barton doctrine and immunity. Therefore, the Court declines to consider dismissal on res

judicata grounds.

CONCLUSION

For the reasons set forth above, the Court finds that the Current Complaint fails to contain

sufficient factual allegations in support of the Subject Claims to state a claim to relief that is

plausible on its face against any of the Moving Defendants. Therefore, the Court will grant the

Motion to Dismiss. A separate order providing for such dismissal will be issued by the Court.

# # # END OF MEMORANDUM OPINION # # #

123 See Fed. R. Bankr. P. 7012(a) (providing for a 14-day period to answer the complaint after denial of a Federal Rule

12(b) motion to dismiss if the Federal Rule 12(b) motion to dismiss has been presented before the filing of an answer).

124 See, e.g., Mowbray v. Cameron County, Tex., 274 F.3d 269, 281 (5th Cir. 2001) (“Generally, res judicata is an

affirmative defense that must be pleaded, not raised sua sponte. We recognize two limited exceptions to this rule;

both apply here. The first exception allows ‘[d]ismissal by the court sua sponte on res judicata grounds … in the

interest of judicial economy where both actions were brought before the same court.’…. The second exception holds

that ‘where all of the relevant facts are contained in the record before us and all are uncontroverted, we may not ignore

their legal effect, nor may we decline to consider the application of controlling rules of law to dispositive facts, simply

because neither party has seen fit to invite our attention by technically correct and exact pleadings.’”) (quoting Boone

v. Kurtz, 617 F.2d 435, 436 (5th Cir. 1980) and American Furniture Co. v. International Accommodations Supply, 721

F.2d 478, 482 (5th Cir. Unit A Mar. 1981)), cert. denied, 535 U.S. 1055 (2002); see also McIntyre v. Ben E. Keith Co.,

754 Fed. Appx. 262, 264-65 (5th Cir. 2018).