[00:00:21] Speaker 00:
You may begin.

[00:00:23] Speaker 03:
Thank you.

[00:00:23] Speaker 03:
May it please the court, I'm Charles Jacob for the appellants, Tammy Phelps and her corporation.

[00:00:31] Speaker 03:
Just a road map, I'm going to start with jurisdiction.

[00:00:34] Speaker 03:
I'm going to talk about this idea of a petition for instructions in a court order.

[00:00:39] Speaker 03:
And then if time allows, getting on to the business judgment rule.

[00:00:44] Speaker 03:
With respect to jurisdiction, at the end of the Castillo case, the last front sentence basically said, because we've decided this case on the notion that quasi-judicial immunity applies, we need not address arguments about the trustee and whether they can be liable for negligence.

[00:01:04] Speaker 03:
Whatever the elements of a breach of fiduciary cause of action are, they're defeated by an affirmative defense of quasi-judicial immunity because it is... Do we have a case that says that for gross negligence or just negligence?

[00:01:19] Speaker 00:
Is there a case on gross negligence because that was one of the issues before the district court?

[00:01:24] Speaker 03:
I have not seen one that says the affirmative defense.

[00:01:27] Speaker 03:
What I've seen is the Clevenger case from the US Supreme Court that says

[00:01:31] Speaker 03:
It doesn't matter how negligent you are, no matter the degree of mistake, it's an absolute defense.

[00:01:37] Speaker 03:
So on that grounds, I see it as closing the case entirely.

[00:01:40] Speaker 00:
Is that a bankruptcy case, Clevinger?

[00:01:42] Speaker 03:
Clevenger, no, but it's based on judicial immunity and quasi-judicial immunity.

[00:01:47] Speaker 00:
So if there's absolute judicial immunity, my research previously showed that as long as we're wearing robes, we're not liable.

[00:01:57] Speaker 00:
But that's not true for a trustee, right?

[00:02:00] Speaker 00:
So that's a quasi-judicial immunity, not absolute judicial immunity.

[00:02:05] Speaker 03:
I think it's quasi-judicial in the sense that they're not judges, but they perform functions that are like,

[00:02:11] Speaker 03:
are supposedly like adjudicatory acts and therefore that's why we extend the immunity to them.

[00:02:20] Speaker 00:
But we don't have a case saying that a trustee has absolute judicial immunity.

[00:02:25] Speaker 00:
It says quasi-judicial immunity.

[00:02:28] Speaker 03:
Okay, so you're saying that Clevenger was about

[00:02:30] Speaker 03:
Judicial immunity right I'm saying that it extends the idea of an absolute defense.

[00:02:35] Speaker 00:
I think is is solid from the cases so there's nothing that the a Think bankruptcy trustee a private trustee could do that would make it liable so no matter what it does If I understood you correctly and maybe I'm getting it wrong

[00:02:53] Speaker 03:
Once the trustee is declared to be entitled to quasi-judicial immunity, that's the end of our case.

[00:02:59] Speaker 03:
That's what we're saying.

[00:03:00] Speaker 00:
And you can't think of a situation where a trustee would have liability.

[00:03:06] Speaker 00:
There is none.

[00:03:11] Speaker 03:
I don't see how a partial, even if they're grossly negligent, I don't see them being liable.

[00:03:20] Speaker 03:
That's a misinterpretation of what the Supreme Court has said about a judicial immunity.

[00:03:24] Speaker 03:
And I think what the appellate courts have said about an absolute immunity extended to bankruptcy trustees.

[00:03:30] Speaker 00:
But we know that a reporter, a court reporter doesn't have that.

[00:03:34] Speaker 00:
So obviously some functions are not protected.

[00:03:40] Speaker 03:
That's a separate category, I guess, those actions that are administrative or mysterious, not adjudicated in nature.

[00:03:47] Speaker 00:
Is that true for a bankruptcy trustee also or no?

[00:03:53] Speaker 03:
I think so, yes, because the courts say that you have to focus on the specific function at issue.

[00:04:00] Speaker 03:
And when we look at the specific function here, I'm saying if you look back in history, this was always like an administrative type of act.

[00:04:09] Speaker 03:
The Charles Tab document which discusses the history of bankruptcy laws was mentioned in the papers.

[00:04:17] Speaker 03:
explains that that's

[00:04:19] Speaker 03:
what this is about as opposed to some sort of adjudicatory act.

[00:04:24] Speaker 00:
So we would ignore Continental Coin which says that case law of the Ninth Circuit, many other circuits does not release a trustee from personal liability if her actions are a breach of duty of loyalty such as self-dealing or are due to gross negligence or to deliberate or willful breach for duty of care.

[00:04:43] Speaker 00:
You would reject that?

[00:04:46] Speaker 03:
No.

[00:04:48] Speaker 03:
What I have said, and I'll just move on to this next issue, is that we cited the McKinsey case from the Sixth Circuit as saying that we've cited what I've called the comfort rule order.

[00:05:05] Speaker 03:
In probate terms, they call it a petition for instructions.

[00:05:09] Speaker 03:
When a trustee has a difficult issue, they can protect themselves from liability by a certain type of

[00:05:17] Speaker 03:
motion to get judicial approval.

[00:05:20] Speaker 03:
And in McKinsey it says that that still applies in the Sixth Circuit where there's a breach of fiduciary duty in a case, a BFD case, like a first party case, as here.

[00:05:32] Speaker 03:
And that was the thrust of our argument in the trial court and also in the district court.

[00:05:41] Speaker 03:
that this sort of our order was never procured by the bankruptcy trustee and the Bennett case says it must be satisfied to for immunity to attach and this lives on and uh... of course i found it in the record practice guide where else and uh... it's never been addressed it's been just scuttled off to the side and this is why we say that not only was the district court wrong not to reverse the trial court for uh...

[00:06:12] Speaker 03:
failing to reverse it for not giving us a chance to amend at least, but also because she absolutely, the trustee absolutely cannot have judicial immunity because she did not get that order as required by those cases starting with... So what action should the bankruptcy trustee have taken in this case?

[00:06:36] Speaker 04:
What action should the trustee have sanitized by going to the district court

[00:06:41] Speaker 04:
and seeking an order?

[00:06:44] Speaker 03:
Well, initially she could have any time moved for abandonment of properties that she wasn't preserving.

[00:06:51] Speaker 04:
And does the court have to approve that?

[00:06:56] Speaker 03:
Yes, because if you look at the statute in the Reed case, the statute is designed, and I don't know whether this is for all fiduciary duties, but for the duty to preserve and protect property of the estate, it says the decision maker is the judge.

[00:07:13] Speaker 03:
Here's the judge.

[00:07:14] Speaker 04:
It's not the call of the the the I thought I didn't didn't the didn't that didn't do didn't we have at least one?

[00:07:22] Speaker 03:
Notice of intent to abandon property that was that was approved by the court later and in fact that that was much later, and it was after we made After we had complained vociferously and My fear is that this is a sort of abandonment motion prompted by the fact that

[00:07:43] Speaker 04:
If you look back at... But if we had one approved by the court, doesn't that satisfy the condition that you've urged us?

[00:07:49] Speaker 03:
That the damage has already been done.

[00:07:51] Speaker 03:
And the argument of the trustee is that what the Supreme Court seems to be called as Orwellian.

[00:07:58] Speaker 03:
She takes some language from the Catalano case which says when the bankruptcy, when property is abandoned, the

[00:08:05] Speaker 03:
Interest, ownership interests of the original owner are returned, non protunt.

[00:08:10] Speaker 03:
And she tries to build that into a holding that once an abandonment occurs, everything that happened in history is forgotten.

[00:08:18] Speaker 03:
And I suggested that perhaps that is false because in one instance, I'm sure that trustees sometimes invest money in preserving a property and then they later decide to abandon it.

[00:08:29] Speaker 03:
And then they go back and probably claim costs, administrative costs for having preserved

[00:08:34] Speaker 03:
that property.

[00:08:36] Speaker 03:
So my guess is that probably this argument is routinely disregarded by trustees.

[00:08:41] Speaker 03:
And in any event, Catalano doesn't stand for that proposition, and the Supreme Court would look at that after that case, recent case, as being something that's an Orwellian argument.

[00:08:55] Speaker 03:
It's like taking a picture from the Soviet Union and you're brushing out Trotsky.

[00:08:59] Speaker 00:
You want to save some time for rebuttal?

[00:09:01] Speaker 03:
Yeah, well, I might as well go a minute here.

[00:09:07] Speaker 03:
Just to say that affirmative defenses have to be to work and get rid of a cause of action on a motion to dismiss.

[00:09:16] Speaker 03:
There has to be no doubt about it, and there's plenty of doubts here all along.

[00:09:21] Speaker 03:
And the Bennett case says that you have to exercise the care of a reasonable person.

[00:09:30] Speaker 03:
And that means monitoring property.

[00:09:34] Speaker 03:
I'll reserve for 47 seconds.

[00:09:36] Speaker 00:
All right.

[00:09:36] Speaker 00:
Thank you.

[00:09:38] Speaker 00:
We'll hear from the other side.

[00:09:50] Speaker 02:
Good morning, Your Honors.

[00:09:51] Speaker 02:
May it please the court, Lon McIntyre, appearing on behalf of the

[00:09:54] Speaker 02:
Defendant Napoli Amy Goldman, who is the bankruptcy trustee in this case.

[00:09:59] Speaker 02:
I think that the critical issue to focus on is well analyzed, thoughtfully and thoroughly analyzed in the Continental Coin case, which this court is familiar with.

[00:10:13] Speaker 02:
That case does establish that bankruptcy trustees may be held liable for gross negligence but are subject to quasi-judicial immunity for ordinary or simple negligence.

[00:10:26] Speaker 00:
But we're not bound by Continental Coinness as a bankruptcy court action.

[00:10:30] Speaker 00:
Is there any Ninth Circuit or other circuit case saying that?

[00:10:33] Speaker 02:
Not that I have discovered, Your Honor, but I do think that because the bankruptcy court did such a thorough analysis

[00:10:42] Speaker 02:
That it is very persuasive authority for this proposition.

[00:10:46] Speaker 01:
What do you do with the Supreme Court's decision in Moser that says that bankruptcy trustees are liable for breach of fiduciary duty?

[00:10:53] Speaker 02:
That the bankruptcy trustee is not liable?

[00:10:56] Speaker 01:
Are liable.

[00:10:56] Speaker 02:
Oh, are liable?

[00:10:57] Speaker 01:
They don't have immunity for that kind of thing.

[00:10:59] Speaker 02:
I think that's an overly broad reading of Moser.

[00:11:02] Speaker 02:
Moser talked about potential liability being protected either or being protected from liability either through a comfort order

[00:11:12] Speaker 02:
or alternatively suggested accountings that could be done on a regular basis that would avoid the liability of the trustee, but did not require a comfort order in order to provide protection on this quasi-judicial immunity basis.

[00:11:28] Speaker 01:
Well, following on on Moser, our court in Bennett said that bankruptcy trustees are liable for intentional or negligent violations of duties imposed by law.

[00:11:37] Speaker 01:
What do we do with that?

[00:11:39] Speaker 02:
I think that again Bennett did not address specifically the exact issue that we have here.

[00:11:47] Speaker 01:
Bennett did not address the... Both of these cases that I'm citing to deal with bankruptcy trustees specifically.

[00:11:55] Speaker 01:
So we're not dealing with other kinds of actors and we can't glean from them principles that would apply generally.

[00:12:01] Speaker 02:
I don't think so.

[00:12:02] Speaker 02:
I think because they didn't, are not specific enough to what was involved in this case.

[00:12:07] Speaker 02:
In Bennett, the court talked about that trustees can do things like should do something like get a comfort order or provide some other options to them to obtain absolute immunity.

[00:12:21] Speaker 02:
But I don't think it addressed head on this issue that we have in this case which is that there should not be and I think

[00:12:29] Speaker 02:
Continental coin is a very persuasive explanation of why there should not be liability for pure simple negligence that that Quasi-judicial immunity should apply to acts of simple Negligence, but not gross negligence and in this context.

[00:12:45] Speaker 04:
What's the difference between simple negligence and gross negligence?

[00:12:48] Speaker 02:
Well gross negligence has been defined as reckless disregard or willful intentional conduct

[00:12:55] Speaker 02:
That and that's cited by the district court in the city of Santa Barbara case in California But also that standard is described in a number of federal cases the the The the appellant here has pled gross negligence They use the term gross negligence in their in their complaint.

[00:13:18] Speaker 04:
Is that sufficient to to get them over the hump?

[00:13:21] Speaker 02:
I don't believe so, because I don't think that's a pleading of the underlying facts that constitute gross negligence.

[00:13:26] Speaker 02:
The allegations of the complain are very conclusory in saying with gross negligence, the bankruptcy trustee did X, Y, and Z. So what is it you would like this court to hold?

[00:13:37] Speaker 02:
I would like this court to hold that a bankruptcy trustee is not liable for negligence, ordinary negligence, and that in this particular case, the plaintiff has not adequately alleged

[00:13:49] Speaker 02:
Gross negligence to survive a motion to dismiss.

[00:13:53] Speaker 04:
It's a pleading case So you want it you want you want to do this on a on a on a nickball Twombly?

[00:13:59] Speaker 02:
Yes, yes, I think that's accurate.

[00:14:02] Speaker 04:
I mean there do have to be specific facts that underline You can see that they that they have used the words gross negligence that you just want us to say that the facts won't Don't support it even if they could be proved

[00:14:12] Speaker 02:
I do agree, they do use the word gross negligence.

[00:14:15] Speaker 04:
So does quasi-judicial immunity enter in here?

[00:14:19] Speaker 04:
Does that have any role to play here?

[00:14:22] Speaker 02:
Yes, because without adequate pleading of gross negligence, the facts constituting gross negligence

[00:14:29] Speaker 02:
This complaint cannot move forward.

[00:14:30] Speaker 04:
I have to say I'm really really Possible first of all I think I think our cases are kind of all over the map sometimes We said negligence is sufficient sometimes you said gross negligence is sufficient Sometimes we said you've got quasi judicial immunity and it's a historical functional test another time We've got these four-factor tests, so I'm scratching my head trying to figure out what's going on here if

[00:14:57] Speaker 04:
If the trustee, if we've alleged, I'm sorry, if we've got quasi-judicial immunity, that's quasi-judicial.

[00:15:06] Speaker 04:
That means that she's a quasi-judicial officer entitled to judicial immunity, which is absolute immunity.

[00:15:14] Speaker 04:
And in the context of like Stump versus Sparkman, a case which does deal flat out with judicial immunity, the court said it doesn't matter what they do.

[00:15:23] Speaker 04:
It can be malicious.

[00:15:25] Speaker 04:
And the judge is protected.

[00:15:29] Speaker 04:
But this doesn't extend that far?

[00:15:31] Speaker 04:
So it doesn't really mean it's not really quasi-judicial immunity?

[00:15:34] Speaker 02:
I think it doesn't extend as far as absolute immunity.

[00:15:38] Speaker 02:
But I believe that it does apply to that quasi-judicial immunity can apply to the actions of a bankruptcy trustee who's undertaking the functions of deciding an authoritative manner the private rights to this estate.

[00:15:54] Speaker 04:
So some of the cases dealt with things like noticing a hearing.

[00:16:02] Speaker 04:
And noticing a hearing is something that courts do.

[00:16:06] Speaker 04:
We do this quite routinely.

[00:16:08] Speaker 04:
That seems to make sense, then, that somebody would be entitled to quasi-judicial air and acting in a quasi-judicial role by giving notice to a hearing.

[00:16:16] Speaker 04:
If they give negligent notice or even grossly negligent notice, that seems like that's quasi-judicial.

[00:16:23] Speaker 04:
The management of property doesn't strike me as a judicial function.

[00:16:30] Speaker 04:
That's what they're complaining about here is the mismanagement of property.

[00:16:35] Speaker 04:
And the trustee then steps into a fiduciary role, which is different from a judicial role, and therefore may be subject to the ordinary rules to which fiduciaries are subject.

[00:16:44] Speaker 04:
That would be negligence, gross negligence, and so on.

[00:16:47] Speaker 04:
I just don't understand how to reconcile all of the things we've said.

[00:16:52] Speaker 02:
I understand.

[00:16:53] Speaker 02:
It's a difficult question.

[00:16:54] Speaker 02:
I agree.

[00:16:55] Speaker 02:
But I do think in terms of the function issue, which was discussed in Antoine and the U.S.

[00:17:02] Speaker 02:
Supreme Court starting in Antoine, which decided that court reporters did not really have judicial functions, you look at the function, not the title.

[00:17:10] Speaker 02:
But here in Castillo, the case I believe you were referencing, Your Honor, about scheduling a hearing and a confirmation,

[00:17:17] Speaker 02:
hearing and not giving adequate notice, the court said that that was conduct undertaken by a bankruptcy trustee, and the court found that that was a function integral to the authoritative adjudication of private rights.

[00:17:31] Speaker 04:
And that would make sense to me.

[00:17:32] Speaker 04:
And if we were talking about negligence or even gross negligence in the scheduling of a hearing, this would make sense to me.

[00:17:40] Speaker 04:
That's not their complaint.

[00:17:41] Speaker 04:
Their complaint is, you mismanaged the property.

[00:17:44] Speaker 04:
That's not what courts do.

[00:17:46] Speaker 04:
I'm not sure why somebody should be entitled to quasi-judicial immunity in the mismanagement of property.

[00:17:51] Speaker 02:
I think the distinction here is that whatever the bankruptcy trustee is doing in exercising their broad business judgment,

[00:18:04] Speaker 02:
They're evaluating things that on behalf of the court, and that's the whole trustee system, is to provide officers to the court who can undertake some of these things so that they don't have to.

[00:18:18] Speaker 02:
But she's adjudicating and evaluating whether the cost and expense of managing this property or improving property or collecting property is outweighed by the cost of doing that after administration costs, et cetera.

[00:18:33] Speaker 02:
That ultimately results in the act of filing, as she did here, a request, a report of no distribution.

[00:18:41] Speaker 00:
If the trustee had not been appointed, how would those functions have been carried out?

[00:18:48] Speaker 02:
My understanding is back many, many, many years ago, a judge would have to do it.

[00:18:53] Speaker 02:
And that's why the trustee system was created to provide that service or, you know, that work.

[00:19:01] Speaker 00:
So you understand the trustee to be like a special magistrate or something like that?

[00:19:08] Speaker 00:
Well, certainly an agent of the court.

[00:19:12] Speaker 00:
Okay, because trustee, as Judge Baillie points out, sounds more like someone who has fiduciary duty to the estate.

[00:19:19] Speaker 00:
Why isn't that the case?

[00:19:21] Speaker 02:
Well, I do think they have a fiduciary duty not to engage in gross negligence, but I think striking that balance and saying, acknowledging that trustees have very complicated and complex decisions to make and need some protection from their ordinary decisions that they're making as part of that judicial, quasi-judicial function, striking the balance and providing them with protection from negligence claims, but also protects,

[00:19:48] Speaker 02:
the creditors and other third parties that are interested in the estate from acts of gross negligence.

[00:19:55] Speaker 02:
I think it's really an appropriate balance that has been struck.

[00:19:58] Speaker 04:
So if we went to sort of a pre-trustee theory of a case in which a bankruptcy court was responsible for managing and deciding how to dispose of assets, would a bankruptcy judge have a fiduciary duty that could be violated and for which the judge could be sued, or is the judge covered by judicial immunity?

[00:20:18] Speaker 02:
I think that the judge will be covered by judicial immunity, and I think that's why quasi-judicial immunity applies to the conduct of the trustee.

[00:20:24] Speaker 04:
But we seem to have an exception for gross negligence, which the judge would not be subject to, so the trustee is subject to something the judge is not subject to?

[00:20:33] Speaker 04:
Yes.

[00:20:34] Speaker 04:
I'm not sure how then the theory of quasi-judicial, the quasi doesn't attach to immunity, it's not quasi-immunity, it's quasi-judicial.

[00:20:43] Speaker 04:
I'm a quasi-judicial officer by being a trustee.

[00:20:46] Speaker 04:
I stand in the shoes of the bankruptcy judge.

[00:20:48] Speaker 04:
The judge has appointed me to do things that the bankruptcy judge doesn't wish to do.

[00:20:54] Speaker 04:
And so I should get, I would think, quasi-judicial immunity, which would mean, I think, absolute immunity, including immunity from even gross negligence.

[00:21:04] Speaker 04:
That's why I don't understand our cases.

[00:21:05] Speaker 04:
I'm sorry, this is a frustration with our cases, not with you.

[00:21:08] Speaker 04:
But I don't know what to do with this, because I don't know how the gross negligence thing fits into this at all.

[00:21:16] Speaker 04:
Unless we're talking about somebody, a trustee who's acting outside of their authority, and that's the exception to Stump versus Sparkman.

[00:21:24] Speaker 01:
So if we assume that immunity applies, I have a question about the test that we should apply to that.

[00:21:33] Speaker 01:
So with that premise, we had the Bennett case originally, which we had the four-factor test, and then the Supreme Court decided, Antoine, and said, no, this is a common law functionality test.

[00:21:43] Speaker 01:
And then our first case after that was Harris, which did that analysis, just a historical functionality analysis.

[00:21:50] Speaker 01:
which seem to displace Bennett and then after Harris it's all a mess and we're going back and forth between Bennett and Harris.

[00:21:57] Speaker 01:
So what in your view is the right test for us to apply?

[00:22:03] Speaker 02:
I think the correct test is the test in Harris but I think that

[00:22:12] Speaker 02:
Because I have it take issue with the Bennett, the four factor test in Bennett which requires a prior court order in order to qualify for immunity.

[00:22:23] Speaker 02:
So I think there can be a combination of those two tests that would apply here and perhaps provide guidance.

[00:22:30] Speaker 01:
Do you think that they can be reconciled, that you can combine the two, they're not inconsistent with each other?

[00:22:34] Speaker 02:
I think so, yeah.

[00:22:36] Speaker 01:
Thank you.

[00:22:38] Speaker 04:
Well, if I could just ask, so tell me,

[00:22:42] Speaker 04:
Was it where the trustees actions approved here by the Bankruptcy Court or weren't they they ultimately the trustees?

[00:22:49] Speaker 04:
Decided to abandon the properties and they were approved by that was approved by the okay And we have it up we had a first R&D and a second R&D correct and and the first one was in what year?

[00:22:59] Speaker 04:
2011 so we have a 2011 R&D That feels like ancient history, and then the second one was the was approved in

[00:23:11] Speaker 02:
Okay.

[00:23:15] Speaker 02:
Sometime in 2021.

[00:23:16] Speaker 02:
Okay.

[00:23:16] Speaker 04:
All right.

[00:23:17] Speaker 04:
That accords with my recollection.

[00:23:18] Speaker 04:
Thank you.

[00:23:19] Speaker 00:
Thank you.

[00:23:20] Speaker 00:
All right.

[00:23:20] Speaker 00:
Thank you.

[00:23:22] Speaker 00:
You have a few seconds for rebuttal.

[00:23:28] Speaker 03:
Thank you.

[00:23:30] Speaker 03:
The second R&D was actually withdrawn, I believe, and the abandonment motion took place on July 20th,

[00:23:40] Speaker 03:
was granted on July 27, 2021.

[00:23:42] Speaker 03:
But the point I've made in some request for judicial notices or said elsewhere is that the abandonment motion was wrongly decided.

[00:23:53] Speaker 03:
We're not calling it early tech.

[00:23:54] Speaker 03:
I'm just saying that the problem is that you took it as a premise to drop in value because the property had depreciated.

[00:24:02] Speaker 03:
So it was going to be an easy outcome from an abandonment perspective.

[00:24:07] Speaker 03:
And that's what we're complaining about.

[00:24:09] Speaker 04:
So help me understand, if the trustee has filed an RND and whether or not the property's been at least negligently mismanaged, if the trustee steps into the shoes of the bankruptcy judge, then why isn't she entitled to quasi-judicial immunity?

[00:24:32] Speaker 03:
Wasn't it the judge would be entitled to immunity right if the judge were managing this and mismanaged the property we're not we're not making a decision about We're talking about an administrative prom administration issue that caused the damage to the house we haven't argued about the fact that ultimately they all the Permitted abandonment they ultimately permitted abandonment though as you can tell that

[00:24:58] Speaker 03:
because the value of the house was so damaged that there was less money available that could be used for purposes of the bankruptcy.

[00:25:06] Speaker 04:
The negligence that you're alleging occurs long before the decision to abandon it.

[00:25:09] Speaker 03:
Sure, sure.

[00:25:10] Speaker 03:
And that's not even a possible exception of rents, the separate issue, because those are property of the estate and the trustee has never gone after those to collect those.

[00:25:19] Speaker 04:
But if we didn't have a trustee and the bankruptcy court was trying to manage this on its own,

[00:25:25] Speaker 04:
and the bankruptcy court mismanaged the property, the bankruptcy judge would not be liable.

[00:25:31] Speaker 04:
Is that correct?

[00:25:33] Speaker 03:
Yeah, but the problem, I think, is that that's not what judges do.

[00:25:37] Speaker 03:
There's a distinction between administrative processes and a judiciary court.

[00:25:41] Speaker 00:
So assuming that no trustee was appointed, who would be managing the estate?

[00:25:46] Speaker 00:
Is that the debtor in possession, or is it the court?

[00:25:50] Speaker 03:
It might be the US trustee.

[00:25:51] Speaker 03:
I don't know.

[00:25:53] Speaker 03:
But if we're talking about ancient history, I can't really shed lights on it.

[00:25:58] Speaker 03:
I think that the idea is that in modern times, we have a bankruptcy code that appoints trustees to do the administrative functions.

[00:26:05] Speaker 03:
And the courts have said again and again,

[00:26:07] Speaker 03:
Trustee actually has different functions and some of them are administrative and some of them are judicial or quasi-judicial.

[00:26:14] Speaker 00:
So one last question.

[00:26:16] Speaker 00:
Judge Bobby suggests that we understand the term quasi-judicial immunity to mean quasi-judicial and then the word immunity is separate.

[00:26:27] Speaker 00:
Why is it quasi-judicial immunity as a single entity, as a single word, so that the judicial immunity is qualified the way we have qualified immunity?

[00:26:37] Speaker 03:
I'm going to follow you.

[00:26:40] Speaker 03:
I know that what we call judicial immunity is absolute.

[00:26:44] Speaker 00:
But what the trustee doesn't have that sort of absolute, at least according to our case law.

[00:26:49] Speaker 00:
So it would be quasi absolute immunity, which would be not absolute.

[00:26:56] Speaker 03:
I'm not sure that our case law says that.

[00:26:58] Speaker 00:
It doesn't really address that either way.

[00:27:02] Speaker 03:
I don't think, I think there's, if you are suggesting

[00:27:06] Speaker 03:
It's not absolute because it can be held liable for gross negligence.

[00:27:10] Speaker 03:
That's not the law of the Ninth Circuit, as I understand it, from the Cochise case and Colliers and other authorities say, no, Ninth Circuit is one of these circuits that says simple negligence is the standard.

[00:27:24] Speaker 03:
And I've asserted that that's consistent with what the Supreme Court has said, like in that Apache case, preservation of property, preservation of

[00:27:34] Speaker 03:
A property is in a traditional common law of trust.

[00:27:38] Speaker 03:
You can be liable for negligence.

[00:27:40] Speaker 03:
And then in this bankruptcy context, I said in a case called Willoughby, which said, albeit from 1938, it talks about the same thing.

[00:27:49] Speaker 03:
It uses the ordinary negligence standard.

[00:27:51] Speaker 03:
And you have a case called Leite, which says we don't

[00:28:00] Speaker 03:
If Congress has not done anything with the case, with the standard for a long time, I think we show respect for it.

[00:28:06] Speaker 00:
You're way over time.

[00:28:07] Speaker 00:
Does anyone have any follow-up questions?

[00:28:10] Speaker 00:
No, thank you.

[00:28:11] Speaker 00:
Thank you very much.

[00:28:11] Speaker 00:
We have your argument.

[00:28:13] Speaker 00:
The case of Phillips v. Goldman is submitted.