Court-Appointed Receivers are Protected by Quasi-Judicial Immunity
Judicial immunity bars civil actions against judges for acts they perform in the exercise of their judicial functions. The reason behind this immunity is straightforward – we don’t want judges getting sued by disgruntled litigants.
“Quasi-judicial immunity” extends judicial immunity to persons other than judges when acting in a judicial or quasi-judicial capacity. Qualified immunity applies to three broad classes of non-judges:
- those performing functions that are usually performed by a judge or who act in a judicial or quasi-judicial capacity, including temporary judges, arbitrators, and prosecutors
- those who function apart from the courts but are engaged in neutral dispute resolution, including arbitrators, referees, and mediators
- others who serve functions integral to the judicial process and “act as arms to the court,” including those appointed by the courts for their expertise (guardians ad litem, therapists, investigators, and bankruptcy trustees) and those not appointed by the courts but whose work product comes into the judicial process (probation officers, psychiatrists).
The rationale for quasi-judicial immunity has been explained as follows: “Without immunity, these persons will be reluctant to accept court appointments or provide work product for the court’s use. Additionally, the threat of civil liability may affect the manner in which they perform their jobs.”
Prior Money and Dirt posts have covered opinions addressing quasi-judicial immunity for deed of trust foreclosure trustees and court-appointed partition brokers.
Until the recently published opinion by California’s Fourth Appellate District in Semaan v. Mosier, no California state court of appeal had squarely decided whether court-appointed receivers are entitled to quasi judicial immunity.
Facts: criminal defendant Semaan sues court-appointed receiver Mosier
The State of California filed a felony criminal complaint against Simon Semaan charging him with seven counts of violating the Insurance Code for allegedly making knowingly false or fraudulent statements of fact material to the determination of a premium rate. The State brought an ex parte application for the appointment of a receiver to preserve Semaan’s assets subject to levy under the Penal Code (which included several TD Ameritrade investment accounts). The court granted the application and appointed Robert Mosier as receiver.
The criminal court later issued an order directing: “the receiver is ordered to liquidate all stock holding[s] into cash as soon as practicable after the signing of this order and hold the cash in the accounts subject to further order of the court.”
Almost two months later, Receiver Mosier had still not liquidated Semaan’s accounts. In a petition for instructions filed with the court, Receiver Mosier explained that TD Ameritrade had demanded, as a requirement on liquidating the accounts, that Mosier use his personal and company tax identifications and his personal information, which would have made the receiver the beneficial owner of the accounts, leading to tax consequences. Mosier described this requirement as “non-standard and unacceptable.” The court issued an order relieving Mosier as receiver and appointing a successor receiver.
Semaan (along with others in his family) later sued Mosier and his company, alleging that as a result of Mosier’s failure to liquidate the investment accounts, the accounts incurred over $1million in losses because the investments held within the accounts went down.
Mosier filed an anti-SLAPP motion to strike the complaint.
Trial court: motion to strike granted; receiver protected by quasi-judicial immunity
The trial court granted Mosier’s anti-SLAPP motion, holding that Semaan’s claims arose out of protected activity because they were based on acts falling within Mosier’s duties as a receiver, and that Semaan could not show a probability of prevailing on the merits because Mosier was protected by quasi-judicial immunity for his actions.
Semaan appealed.
Court of Appeal: affirmed
The Court of Appeal affirmed.
On the first prong of anti-SLAPP analysis, the Court of Appeal agreed with the trial court that the claims arose out of protected activity: “Mosier’s conduct and decisions as a court-appointed receiver were in furtherance of the exercise of a constitutional right of petition — the criminal prosecution of Simon Semaan. … The prosecution of one of the largest workers’ compensation insurance fraud cases in California history certainly raises public issues or is a matter of public interest[.]”
On the second prong of anti-SLAPP analysis, the court held that Semaan could not establish the merit of his claims “because Mosier’s actions as receiver are subject to quasi-judicial immunity.”
The court explained: “We agree that court-appointed receivers should enjoy quasi-judicial immunity. … Without immunity, receivers would be less likely to accept court appointment and the implied threat of liability could affect their decisionmaking process.” Such immunity “is limited to discretionary (nonministerial) acts and decisions, that is, ‘when they use their judgment or discretion in performing their jobs.'” Immunity does not extend to “intentional misconduct, such as self-dealing[.]” The court held that Mosier’s conduct underlying Semaan’s claims fell within the scope of Mosier’s duties as receiver.
The court rejected Semaan’s argument that compliance with the liquidation instructions in the court’s order was ministerial, not discretionary. The court held that this argument failed to appreciate that the order directed the receiver to liquidate the accounts “as soon as practicable,” which required Mosier to exercise discretion. Mosier had described why he failed to liquidate the accounts immediately — TD Ameritrade’s unreasonable requirements, and the ongoing settlement negotiations between Semaan and the State, which could have rendered liquidation unnecessary.
The court concluded:
Whether or not those circumstances actually made liquidating the investment accounts impracticable is not dispositive: It is sufficient to confer quasi-judicial immunity that Mosier, as receiver, had to make a decision about when it was practicable to liquidate. Quasi-judicial immunity protects both right and wrong decisions.
Lesson
Under the Semaan opinion, court-appointed receivers are protected by quasi-judicial immunity.