Simon PLC Attorneys & Counselors – April 2026 Memorandum
Quasi-Judicial Immunity of Court-Appointed Receivers
Troy, MI – A receiver’s authority is recognized as deriving from the statutes and rules of court and the order of appointment. A court-appointed receiver is a fiduciary of the court for the benefit of all persons appearing in the action or proceeding. Claims against a court appointed receiver for allegations of personal liability in the conduct of their affairs and the discharge of their responsibilities face a high likelihood of dismissal due to the extension of immunity from the judiciary.
Federal Circuit Courts have recently given examination to the issue of a court appointed receiver’s liability for actions and inactions taken during the course of their appointment. In the First Circuit, receivers now enjoy near-absolute protection in the First Circuit when acting under court orders, even for allegedly intentional torts. Whereas many state courts, Michigan for instance, continue to follow a ‘bad faith’ standard. Our memorandum assesses these developments in federal and state courts.
“Quasi-judicial immunity, as the name suggests, is an outgrowth of judicial immunity created to address the fact that certain judicial functions are performed by nonjudicial actors.” In August of 2025 the First Circuit assessed the issue of whether absolute quasi-judicial immunity shields a court-appointed receiver from civil liability for allegedly unlawful conduct undertaken while managing the receivership estate (See, Suny v. KCP Advisory Group, LLC, No. 23-1800 (1st Cir. Aug. 19, 2025). The trial court had ruled that some claims against the receiver could proceed to trial to the extent that they alleged intentional misconduct on the receiver’s part. The district court found that absolute quasi-judicial immunity barred claims “based on imperfect or negligent performance of receivership responsibilities” but not those alleging “that [Receiver] lacked jurisdiction to evict [Tenant], did so contrary to law and contract, and in bad faith.” In an interlocutory appeal the appellate court reversed the trial court and held that all the alleged claims against the Receiver were barred for the reasons that the allegations against the receiver were judicial in nature (and similar to judicial acts within the authority of the judge), were contemplated in the order appointing the receiver, and effectively within the mandate and authority of the receiver. The decision has significantly narrowed even allegations of “bad faith” by the receiver in the circumstance that the actions were taken within the authority of the court and or the order.
In February of 2026 the Sixth Circuit confronted an adjacent issue assessing Rooker and Feldman doctrines wherein the Plaintiff alleged that she had been the victim of an abuse of the legal process itself. (See, HPIL Holding, Inc. v. Harry Zhang, et al, No. 25-1595 (6th Cir. Mar. 6, 2026). The complaint alleged that Defendant and a court appointed Receiver has colluded to seize control of a corporation by intentionally failing to provide the corporation with proper notice of the receivership petition. Thereafter it was alleged that the defendants stole from the corporation and executed a “pump and dump” scheme to fraudulently inflate the share price of its stock. R.4 at 5. The District Court had dismissed the action but the appellate court reversed finding that “[Plaintiff’s first set of claims, like the claims discussed in McCormick, allege injuries from misconduct during the receivership proceeding, not from the receivership order itself.” The appellate court reasoned,
The state court’s order authorized Collette to act as receiver. It did not direct or authorize corporate fraud. See New Alaska Dev. Corp. v. Guetschow, 869 F.2d 1298, 1305 n.9 (9th Cir. 1989) (“Certainly no court is empowered to permit a receiver to steal corporate assets.”); Morley v. Snow, 75 N.W. 466, 467–68 (Mich. 1898) (holding that the “considerable discretion” granted to a receiver “will not be interfered with, except where some abuse and wrong is manifest”). The independent tortious conduct of a third-party breaks the chain of causation. See Powers, 501 F.3d at 606–10; United States v. Speakman, 594 F.3d 1165, 1174 (10th Cir. 2010); VanderKodde, 951 F.3d at 408 (Sutton, J., concurring).
In Michigan, a receiver “derives his authority as . . . receiver from the statutes and rules of court, the order appointing him, and specific orders which may from time to time be made by the court of his appointment.” Woodliff v Frechette, 254 Mich 328, 329; 236 NW 799 (1931). With respect to receivers, the State of Michigan continues to assess that the office of a receiver requires “the exercise of soundest judgment, and always the strictest impartiality . . . .” First Nat’l Bank v E T Barnum Wire & Iron Works, 60 Mich 487, 499; 27 NW 657 (1886). The standard of care applicable to a court-appointed receiver is one of good faith. See Venus Plaza Shopping Ctr, 228 Mich App at 361-362. In 2024 the Michigan Court of Appeals had an opportunity to revisit these principles. (See, In re Paris Academy, unpublished No. 367275, September 23, 2024).
The Michigan Court of Appeals assessed that a trial court does not abuse its discretion by denying a motion for leave to bring suit against a receiver when evidence of bad faith is lacking. In Paris Academy the order appointing receiver provided that the receiver may be held liable for gross negligence. The appellant sought to have this standard applied, but the court was not so inclined,
The receivership order at issue here contained such a clause, limiting Woods’s liability to claims based on his “gross negligence, gross or willful misconduct, malicious acts, and/or the failure to comply with the Court’s orders.” Although that clause limits Woods’s personal liability to certain claims, it does not reduce or enlarge the standard of care required of Woods in performing his receivership duties. Accordingly, contrary to PACE’s argument, bad faith remains a necessary element for an actionable claim against Woods for his actions taken during the receivership. Venus Plaza Shopping Ctr, 228 Mich App at 361-362. PACE may therefore bring an action for gross negligence against Woods, so long as factually supported allegations demonstrate that he acted in bad faith.
The Court of Appeals concluded that a finding of bad faith in a receivership context would require more than negligence; that errors of judgment, not exercising reasonable care or diligence or acting with some measure of carelessness are not sufficient to establish bad faith.
Actions against receivers are and ought to be rare for the reason that a receiver acts with the same dignity of the court granting the appointment. “A receiver is sometimes said to be the arm of the court, appointed to receive and preserve the property of the parties to litigation and in some cases to control and manage it for the persons or party who may be ultimately entitled thereto.” Westgate v Westgate, 294 Mich 88, 91; 292 NW 569 (1940). The foregoing standards ensure that authority is scrutinized but also protected in assuring the ends of the receivership estate.
Frank R. Simon, the Managing Partner of Simon PLC Attorneys & Counselors, has nearly thirty years of experience acting as a Court Appointed Receiver in business, civil, family, and criminal cases.
N.B. Not Legal Advice: Please contact us if you would like to discuss the facts and circumstances of your specific matter. Simon PLC Attorneys & Counselors expressly disclaims all liability in respect to actions taken or not taken based on any or all the contents of this memorandum. The information contained herein may not reflect current legal developments and is provided without any knowledge as to the recipient’s location, industry, identity or specific circumstances. No recipients of this content, clients or otherwise, should act, or refrain from acting, on the basis of any content included in this memorandum without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the jurisdiction for which the recipient’s legal issue(s) involve. The application and impact of relevant laws varies from jurisdiction to jurisdiction, and our attorneys do not seek to practice law in states, territories and foreign countries where they are not properly authorized to do so.
FRANK R. SIMON
Managing Member
Steven A. Morris
Partner
