Monday, November 10, 2025
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Ninth Circuit Will Decide Breadth of Trustee’s Immunity
En Banc Review of District Court Decision Ordered Sua Sponte
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals announced Friday that it will decide, en banc, the breadth of a trustee in bankruptcy’s quasi-judicial immunity from liability for breach of duties, under California law.
In a rare move, the court, by a vote of the majority of non-recused judges, decided sua sponte to review a decision of the District Court.
The decision the judge will consider was rendered Jan. 25, 2024, by District Court Judge Michael W. Fitzgerald of the Central District of California. Agreeing with the Bankruptcy Court—and rejecting contentions by plaintiffs Tammy R. Phillip and her law corporation—he determined that the defendant, attorney Amy L. Goldman, is cloaked with quasi-judicial immunity in connection with her conduct as trustee of a bankruptcy estate.
He declared:
“The case is remanded to determine whether amending the Complaint would be futile.”
Phillips and her firm obtained an attorney fee award against Kevin Harry Gilman (now deceased) who declared Chapter 7 bankruptcy; Goldman was the trustee; she opted not to attempt to preserve an asset; she was sued for an alleged breach of her fiduciary duties.
Fitzgerald said that such a breach, under California law, requires a showing of gross negligence or willful misconduct. Under the California Supreme Court’s 2007 decision in City of Santa Barbara v. Superior Court, he noted, there must be “a want of even scant care or an extreme departure from the ordinary standard of conduct” which, the judge observed, is not reflected by the plaintiff’s pleadings.
Goldman’s Law Firm
The Ninth Circuit ordered briefing by the parties. On Sept. 29, the Los Angeles office of Lewis Brisbois—in which Goldman is a partner—filed a brief signed by Lann G. McIntyre.
He noted that there are four bases for an en banc review, the first three being premises on a three-judge panel having rendered a decision in the case, The lawyer continued:
“Here, no panel decision has been filed yet. However, the remaining basis for seeking en banc review—”the proceeding involves one or more questions of exceptional importance”—is applicable….That basis for en banc review is satisfied here as the issue of quasi-judicial immunity for Chapter 7 trustees is of exceptional importance to ensure that trustees can serve the vital roles they play in the bankruptcy system.”
Discretionary Acts
McIntyre went on to say:
“Goldman’s alleged conduct in failing to collect the subject rents from and maintain certain Estate property and ultimately abandoning those real properties (which was approved of by court order) are acts consisting of the Trustee’s discretionary management of the Estate. Goldman’s judgment not to utilize Estate resources to try to collect minimal assets that would not benefit the Estate and unsecured creditors was an adjudicatory determination in nature and within the scope of Goldman’s authority and discretionary judgment. Quasi-judicial immunity applies to Goldman’s discretionary acts in administering the Estate. This Court should determine that quasi- judicial immunity is appropriate here.”
He added:
“This Court’s decision is likely to have significance not only for bankruptcy trustees and the bankruptcy system in California, but nationwide. Imposing liability on Chapter 7 trustees for their handling of the bankruptcy estate can have a significant impact on trustees, including personal financial consequences, removal from the case, reputational damage and legal costs.”
Plaintiffs’ View
Represented by attorney Charles Q. Jakob, Goldman said in an Oct. 2 brief:
“This case does not involve trustee action. It involves inaction—a failure to ‘collect and protect’ estate assets.
“While trustees may have some authority to act or not act without Court oversight, the Bankruptcy Code contradicts any suggestion bankruptcy trustees may abandon property without court approval. The Court should eschew Goldman’s continuing efforts here, as in her motion to dismiss, to argue about facts by asserting inaction was the product of reasonable and purposeful decision-making. Were that the case, Goldman would have responded to correspondence explaining so much.”
Goldman remarked:
“Without seeing a decision, Appellants do not know whether they would seek a rehearing en banc.”
The case is Phillips v. Goldman, 24-2249.
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