Michael Bargo, Jr. v. Porter County, Indiana

NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted July 30, 2018 *
Decided August 17, 2018
Before
DIANE P. WOOD, Chief Judge
ILANA DIAMOND ROVNER, Circuit Judge
DIANE S. SYKES, Circuit Judge
No. 18-1040
MICHAEL E. BARGO, JR., Appeal from the United States District
Plaintiff-Appellant, Court for the Northern District of Indiana,
Hammond Division.
v.
No. 2:16-cv-177
PORTER COUNTY, INDIANA, et al.,
Defendants-Appellees. Joseph S. Van Bokkelen,
Judge.
ORDER
Michael Bargo sued Porter County, its officials, and two Indiana judges alleging
a conspiracy to deprive him of his property without due process. The district court
dismissed the suit on the ground that Bargo, who had filed for bankruptcy protection
after the events giving rise to this lawsuit, no longer was the real party in interest to any
claim in this suit. See FED. R. CIV. P. 17(a)(1). We affirm the judgment, though we
modify it to reflect that some claims must be dismissed for lack of jurisdiction, as barred
*
We have agreed to decide this case without oral argument because the briefs
and record adequately present the facts and legal arguments, and oral argument would
not significantly aid the court. FED. R. APP. P. 34(a)(2)(C).
No. 18-1040 Page 2
by the Rooker-Feldman doctrine. See D.C. Ct. App. v. Feldman, 460 U.S. 462 (1983); Rooker
v. Fid. Tr. Co., 263 U.S. 413 (1923).
According to Bargo’s complaint, officials in Porter County and two Indiana
judges conspired fraudulently to seize and sell his real property. As he explains, an
auditor and treasurer for the County refused to credit his 2011 and 2012 property tax
payments, and a judge who presided over a subsequent tax-sale hearing “refused to
acknowledge” that Bargo had paid his tax bills. Bargo responded by suing the county
treasurer in small-claims court, seeking to recoup his property and tax payments. But
according to Bargo, the presiding judge in that court dismissed his suit without
providing him notice, a hearing, or an opportunity to respond, and the clerk of the
small-claims court prevented him from filing an appeal when she removed his
pleadings from the docket. The defendants further conspired, he asserted, by producing
a fraudulent tax bill, intimidating him, and refusing to turn over certain court
documents. The defendants’ seizure and sale of Bargo’s property “ruined his credit so
he had to file Chapter 7 bankruptcy.” In this suit, Bargo seeks compensatory damages
measured by the value of his lost property.
The county defendants moved to dismiss Bargo’s complaint under Federal Rule
of Civil Procedure 12(b)(1) for want of subject-matter jurisdiction. They argued that
Bargo lacked “standing” to bring the claims in this suit because, under Federal Rule of
Civil Procedure 17(a)(1), he was not the real party in interest to those claims. Those
claims had become part of Bargo’s bankruptcy estate when he petitioned for
bankruptcy; thus only the bankruptcy trustee had the right to pursue them. Bargo’s
complaint, they added, also was barred under the Rooker-Feldman doctrine because it
sought review of two state-court judgments entered against him before he filed this suit.
The district court dismissed Bargo’s complaint on the ground that he did not
have “standing” under Federal Rule of Civil Procedure 17(a)(1), a rule that requires
suits to “be prosecuted in the name of the real party in interest.” The court, taking
judicial notice of Bargo’s bankruptcy proceedings, agreed with the county defendants
that only the bankruptcy trustee could prosecute the claims in this suit. Nonetheless, the
court invited Bargo under Rule 17(a)(3) to have the trustee, as the real party in interest,
“ratify, join, or be substituted into the action.” Bargo tried to show that the bankruptcy
trustee “abandoned” the bankruptcy estate’s interest in the claims, see 11 U.S.C.
§ 554(a), when the trustee sent him an email forswearing any interest in the litigation.
But the court concluded that none of the statutory requirements for abandonment had
been met and dismissed the suit.
No. 18-1040 Page 3
On appeal Bargo maintains that his case should not have been dismissed,
because he is the real party in interest. This prompts us to begin with a correction. To
the extent that the district court based its dismissal on Rule 17’s real-party-in-interest
requirement, that ruling was not jurisdictional. Rule 17 does not limit the subject-matter
jurisdiction of federal courts. See Knopick v. Jayco, Inc., 895 F.3d 525, 529 (7th Cir. 2018)
(citing Rawoof v. Texor Petroleum Co., 521 F.3d 750, 756–57 (7th Cir. 2008)); Norris v.
Causey, 869 F.3d 360, 366–67 (5th Cir. 2017). Although we treat the real-party-in-interest
requirement similarly to the rule that bars litigants from asserting the legal rights of
others, G & S Holdings LLC v. Cont'l Cas. Co., 697 F.3d 534, 540–41 (7th Cir. 2012), rules of
this genre do not deprive courts of subject-matter jurisdiction; they are flexible rules for
deciding when a case should not go forward. See United States v. Windsor, 570 U.S. 744,
757 (2013); Doermer v. Callen, 847 F.3d 522, 526–27 n.1 (7th Cir. 2017); see also RK Co. v.
See, 622 F.3d 846, 851–52 (7th Cir. 2010) (distinguishing Rule 17 and prudential-standing
doctrine).
The defendants, for their part, continue to assert that some of Bargo’s claims are
jurisdictionally barred by Rooker-Feldman because they seek review of state-court
judgments. Indeed, jurisdiction to review state-court judgments is vested exclusively in
the Supreme Court. 28 U.S.C. § 1257; Skinner v. Switzer, 562 U.S. 521, 531–32 (2011).
Under the Rooker-Feldman doctrine, federal courts other than the Supreme Court must
dismiss a party’s claims asserting injuries from a judgment that a state court issued
against the party before the federal suit. Exxon Mobil Corp. v. Saudi Basic Indus. Corp.,
544 U.S. 280, 284 (2005). Bargo attacked the state-court judgments ordering the sale of
his property and denying him relief from that sale when he asked the district court to
order the defendants to compensate him for their role in the improper sale of his
property.
As for Bargo’s claims that are not barred by Rooker-Feldman, they were properly
dismissed under Rule 17. Bargo’s complaint includes claims for conspiracy, fraud, and
intimidation, all of which attack not the state-court judgment but the unlawful conduct
that led the state courts to rule against him. See Iqbal v. Patel, 780 F.3d 728, 729–31
(7th Cir. 2015); Jones v. Brennan, 465 F.3d 304, 305 (7th Cir. 2006). These claims were
properly dismissed under Rule 17(a)(1), however, because the bankruptcy trustee, not
Bargo, was the real party in interest. These claims arose before Bargo filed for
bankruptcy, and thus they are part of the bankruptcy estate and may be prosecuted
only by the bankruptcy trustee. See 11 U.S.C. § 541(a)(1); Biesek v. Soo Line R.R. Co.,
440 F.3d 410, 413 (7th Cir. 2006); In re Polis, 217 F.3d 899, 902 (7th Cir. 2000).
No. 18-1040 Page 4
Bargo also reiterates that the bankruptcy estate’s “abandonment” of any interest
in this suit is reflected in the email he received from the bankruptcy trustee. But the
bankruptcy statute requires more to establish abandonment: a trustee must provide
notice to Bargo’s creditors and the opportunity for a hearing before an abandonment
will occur. See 11 U.S.C. § 554(a); Biesek, 440 F.3d at 411.
Lastly, Bargo says that the district judge should have recused himself because he
worked from 1969 to 1972 in the Indiana Attorney General’s Office, which is a party to
this appeal. But this contention is frivolous, even if we construe it as an argument under
28 U.S.C. § 455(a), which requires judges to disqualify themselves from any proceeding
in which their impartiality might reasonably be questioned. “Our judicial system would
hardly function if judges were potentially obliged to disqualify themselves” in every
case involving a former employers, without more, let alone employers from 40 years
ago. Nicholson v. City of Peoria, 860 F.3d 520, 525 n.6 (7th Cir. 2017), cert denied, 138 S. Ct.
981 (2018).
The district court’s judgment is modified to reflect that Bargo’s claims alleging an
injury from the outcomes of the tax sale and small-claims case are dismissed for lack of
jurisdiction. As modified, the judgment is
AFFIRMED.