47B.R.

462(1985)

HerbertWEISSMAN,EthelWeissmanandFundways,Ltd.,Plaintiffs, v. JamesP.HASSETT,Individually,andJamesP.Hassett,asTrusteeofO.P.M.Leasing Services,Inc.,Defendant.

No.84Civ.2869(GLG). UnitedStatesDistrictCourt,S.D.NewYork. March13,1985. 464 463 *463*464JeffreyD.Buss,NewYorkCity,forplaintiffs. Wilmer,Cutler&Pickering,Washington,D.C.,andZalkin,Rodin&Goodman,NewYorkCity,fordefendantLynn Bregman,Washington,D.C.,andHenryLewisGoodman,NewYorkCity,ofcounsel.

OPINION
GOETTEL,DistrictJudge: Thisactionforlibel,intentionalinflictionofemotionaldistress,andintentionalinterferencewithbusinessrelations arisesoutofstatementsinthereportofabankruptcytrusteeconcerningwhatsomecallthe"OtherPeople'sMoney" case(drawnfromtheinitialsofthecompanyinvolvedOPM).BeforetheCourtisthebankruptcytrustee'smotionto dismissthecomplaintpursuanttoRule12(b)(6)oftheFederalRulesofCivilProcedureforfailuretostateaclaim uponwhichreliefcanbegranted.Forthereasonsstatedbelow,themotionisgranted. I.Background Between1970and1981,O.P.M.LeasingServices,Inc.("OPM"),acomputerleasingconcern,bilkednumerous financialinstitutionsandcomputerlesseesoutofapproximately$228million.TheOPMbubbleburstinFebruary 1981,whentheUnitedStatesAttorney'sofficeinManhattanconvenedagrandjurytoinvestigateallegationsthat OPMhadperpetratedamassivefraud.OnMarch11,1981,OPMfiledavoluntarypetitionforreorganizationwiththe bankruptcycourtforthisdistrict. Actingontheapplicationofcertaincreditors,pursuantto11U.S.C.151104(a)(1982),[1]thebankruptcycourt directedtheUnitedStatesTrusteeforthisdistricttoappointareorganizationtrusteeforOPM.OnMarch27,1981,the UnitedStatesTrusteeappointedthedefendant,JamesP.Hassettasreorganizationtrustee("theTrustee").The bankruptcycourtapprovedMr.Hassett'sappointment.[2] 465 *465TheTrusteesooncommencedaninvestigationintotheallegedOPMfraudassection1106(a)(3)ofthe BankruptcyCoderequired.Thatsectionmandatesthat,excepttotheextentthecourtordersotherwise,a reorganizationtrusteeshall"investigatetheacts,conduct,assets,liabilitiesandfinancialconditionofthedebtor,the operationofthedebtor'sbusinessandthedesirabilityofthecontinuanceofsuchbusiness,andanyothermatter relevanttothecaseortotheformulationofaplan."11U.S.C.1106(a)(3)(1982).Asthetwoyearinvestigation cametoaclose,theTrusteepreparedareportsummarizinghisfindings.Anticipatingheavypublicdemandforthe report,theTrusteesubmittedaproposeddistributionschemetothebankruptcycourt.OnFebruary14,1983,the bankruptcycourtadoptedtheTrustee'sproposalandissuedanorderdirectinghimtotransmitcopiesofthereportto: [theCourt]theCreditors'Committee...theUnitedStatesTrusteeallpersonswhohavefiledNotices ofAppearanceinthecaseandsuchlawenforcementofficers,agencies,professionalassociations, andpersonsempoweredtomakepolicywithrespecttomattersdiscussedintheReportas

determinedappropriatebytheTrusteeand...toanyotherpersonorentitywhorequeststhem[ata priceof$20each]. Plaintiff'sMemorandumofLawinOppositiontoDefendant'sMotiontoDismisstheComplaint,ExhibitF.OnApril25, 1983,theTrusteeissuedhis600pagereport,InreOPMLeasingServices,Inc.,ReportoftheTrusteeConcerning FraudandOtherMisconductintheManagementoftheAffairsoftheDebtor(the"Report").AmendedComplaint, ExhibitF.TheReportwasdisseminatedincompliancewiththecourt'sorder. ThesubjectofthislawsuitarethreesentencesinasubsectionoftheReportlabeled"PhantomEmployees."That sectiondetailsOPM'spaymentstovariousrelativesofitspresident,MordecaiWeissman.Thethreesentencesread asfollows:"From1976to1980,HerbertWeissmanandFundwaysreceived`commissions'fromOPMaggregating $447,295.ThenatureofanyservicesrenderedbyHerbertWeissmanforthesepaymentsisuncertain.Herbert WeissmanoncetoldanemployeeintheOPMAccountingDepartmentthatthefundswere`loans'fromhisbrother." Reportat190.Theplaintiffs,HerbertWeissman(MordecaiWeissman'solderbrother)andFundways,allegethat thispassagelibeledthemandthattheTrustee'sfilingandpublicationoftheReportinterferedwithanddamaged theirbusinessrelationships.Eachseeksdamagesof$10millionfromtheTrustee,bothinhisofficialcapacityand individually.Basedonthesamefacts,HerbertWeissman'swife,Ethel,andtheirsixchildrenallegethattheTrustee intentionallyinflictedonthememotionaldistress.Eachofthesevenfamilymembersseeksdamagesof$1million fromtheTrustee. TheTrusteeclaimsthat,asafederalquasijudicialofficial,heisabsolutelyimmunefromliabilityonanyclaimarising outofstatementsinhisReport.HealsoassertsthatthestatementsinhisReportweremadeinajudicialproceeding andareabsolutelyprivilegedunderNewYorklaw.TheTrustee,therefore,movestodismissthecomplaintpursuant Weissmanv.Hassett,47BR462Dist.Court,SDNewYork1985 toRule12(b)(6)oftheFederalRulesofCivilProcedureforfailuretostateaclaimuponwhichreliefcanbegranted. Bothpartiesbuttressedtheirargumentsonthismotionwithaffirmations,affidavits,andothermaterialsoutsidethe pleadings.Consequently,wetreatthisasamotionforsummaryjudgmentpursuanttoFed.R.Civ.P.56.Wemay grantthemotiononlyifthememorandaandsupportingmaterialsbeforeus"disclosethatthereisnogenuineissue astoanymaterialfactandthatthemovingpartyisentitledtoajudgmentasamatteroflaw."C.Wright,A.Miller&M. 466 *466Kane,FederalPracticeandProcedure2725(2ded.1983)(quotingFed.R.Civ.P.56(c)).Forthereasons statedbelow,weconcludethatthedefendanthasmetthisdifficultstandard.Hismotionforsummaryjudgmentis, therefore,granted. II.Discussion A.AbsoluteImmunity Publicofficials,judges,andcourtofficialsareabsolutelyimmunefromcommonlawtortliabilityforactionswithinthe scopeoftheirofficialduties.Stumpv.Sparkman,435U.S.349,98S.Ct.1099,55L.Ed.2d331(1978)(judgeimmune fromdefamationsuit)Barrv.Matteo,360U.S.564,79S.Ct.1335,3L.Ed.2d1434(1959)(actingdirectoroffederal officeofrentstabilizationimmunefromdefamationsuit).Absoluteimmunitybarsasuitattheoutset,Grayv.Bell,712 F.2d490,496(D.C.Cir.1983),cert.denied,___U.S.___,104S.Ct.1593,80L.Ed.2d125(1984),excusingeven allegationsofbadfaith,malice,orgrosserror,Stumpv.Sparkman,supra,435U.S.at35556,98S.Ct.at1104. Whetherabankruptcytrusteewhopreparesanddisseminatesareportafterinvestigatingthebankrupt'saffairsis absolutelyimmunefromcommonlawtortliabilityarisingoutofstatementsinhisreportisaquestionoffirst impression. Bankruptcytrusteesserveavarietyoffunctions.Undercurrentlaw,atrusteeisimmunefromliabilityforclaims arisingoutofsomebutnotallofthosefunctions.Atrustee'spositionwillnotimmunizehimfromsuitfortorts committedinconductingthebusinessaffairsofabankruptcompany.See,e.g.,Mosserv.Darrow,341U.S.267,71 S.Ct.680,95L.Ed.927(1951)InreCochiseCollegePark,703F.2d1339,1357n.26(9thCir.1983)4Collieron Bankruptcy721.05(L.King,Ed.1984).Ontheotherhand,trusteesandreceiversactingasofficersofthecourtto conservethebankruptestate'sassetsareimmunefromsuit.Boullionv.McClanahan,639F.2d213,214(5th Cir.1981)(Trusteeabsolutelyimmunefromsuitfor,interalia,"(1)recommendinganinexperiencedappraiser(2) allowingthefilingofanincorrectappraisal(3)improperlyhandlingsalesoftheestateproperty....")Kermit

ConstructionCorp.v.BancoCreditoYAhorroPonceno,547F.2d1(1stCir.1976)BradfordAudioCorp.v.Pious, 392F.2d67(2dCir.1968)Smallwoodv.UnitedStates,358F.Supp.398(E.D.Mo.),aff'd,486F.2d1407(8th Cir.1973). NeithertheTrustee'sinvestigationnortheReportrelatedinanywaytotheongoingoperationofabusinessrather, theinvestigationwaspartoftheTrustee'sdutytoassemblethebankruptestate.Uponcompletinghisinvestigation,a trusteemust"fileastatementofanyinvestigationconducted...,includinganyfactascertainedpertainingtofraud, dishonesty,incompetence,misconduct,mismanagement,orirregularityinthemanagementoftheaffairsofthe debtor,ortoacauseofactionavailabletotheestate...."11U.S.C.1106(a)(4)(A)(1982).Thus,theissuanceofa reportisanecessaryconcomitanttoatrustee'sinvestigation.[3]Justasreceiversandtrusteesareimmunefromsuit foractionstakentoassembleabankruptestate'sassets,sotooareorganizationtrusteeshouldbeimmuneforan investigationandreportfurtheringthesamepurposes. Althoughnoprecedentimmunizesabankruptcytrusteewhoinvestigatesandissuesareport,courtshaveheld publicandjudicialofficialswhoactinthatcapacityimmunefromsuit.InSprecherv.Graber,716F.2d968(2d Cir.1983),theSecondCircuitheldanSECstaffattorneyimmunefromsuitforstatementsmadeduringan investigationintopossibleviolationsoftheantifraudprovisionsofthefederalsecuritieslaws.Anothercourtgranted absoluteimmunitytoaprobationofficerwho,atthecourt'srequest,investigatedandfiledapresentencereport. 467 CrosbyBeyv.Jansson,586F.Supp.96(D.D.C.1984).Likewise,*467acourtappointedreceiverwasheldabsolutely immunefromasuitarisingoutofstatementsinareporttotheappointingcourt.Blumv.Campbell,355F.Supp.1220, 122425(D.Md.1972).Theseprecedents,standingunopposed,counselustoholdtheTrusteeabsolutelyimmune fromsuitsarisingoutofhisinvestigationandReport. However,theplaintiffsarguethattheTrustee,bydistributinghisReporttopressandpublicalike,forfeitedany absoluteimmunitytowhichhemightotherwisehavebeenentitled.Insocontending,theyignoreanimportant functionoftheReport:toexposethenatureandextentoftheOPMfraud,andtherebypreventsimilarfrauds.See Austrianv.Williams,198F.2d697,702(2dCir.),cert.denied,344U.S.909,73S.Ct.328,97L.Ed.701(1952)(" [O]neofthepurposesforconferringuponthetrusteeinreorganizationbroadinvestigatorypowers"is"theexposure ofcorporateabuses....").Thecourtsrecognizethatdisseminationofajudicialopinionorreportmayservean importantpublicpurpose.Theyhave,therefore,immunizedthosewhodothedisseminating.SeeLowenschussv. WestPublishingCo.,542F.2d180(3dCir.1976)(publishingservice'sverbatimpublicationanddisseminationof judicialopiniontothepublicservesanimportantjudicialpurposeandofficialpublishermayclaimabsolutejudicial immunity).DistributionoftheTrustee'sreportfurtheredanimportantpublicpurposeandshouldnotrenderhim subjecttosuit,particularlysinceheactedpursuanttocourtorderandstatutoryauthorization.Moreover,thedecisions thatabsolutelyimmunizereceiversandtrusteesstressthattheyactedatthecourt'sbehestorunderitssupervision andsubjecttoitsorders.See,e.g.,Boullionv.McClanahan,supra,639F.2dat214("[A]trusteeactingatthedirection ofabankruptcyjudgeisclothedwithabsoluteimmunityagainsttortactionsgroundedonhisconductastrustee.").A reorganizationtrusteeshouldnotbesubjecttosuitforhisactionsinasimilarcapacity.[4] Soundpolicyalsocounselsimmunizingthedefendant.Absoluteimmunityisessentialbecause,asJudgeLearned Handnoted,"tosubmitallofficials,theinnocentaswellastheguilty,totheburdenofatrialandtotheinevitable dangerofitsoutcome,woulddampentheardorofallbutthemostresolute,orthemostirresponsible,inthe unflinchingdischargeoftheirduties."Gregoirev.Biddle,177F.2d579,581(2dCir.1949),cert.denied,339U.S.949, 70S.Ct.803,94L.Ed.1363(1950).Theplaintiffshereseekmorethan$25millionindamagesandcontendthatthe Trusteecanbepersonallyliableforthatamount.Evenaremoteprospectofpersonalliabilityofsuchamagnitude couldnothelpbutlessenthevigorwithwhichfuturereorganizationtrusteeswillpursuetheirobligationstouncover wrongdoingandreportonpotentialclaimsheldbyabankruptestate. Ontheotherhand,theCourt'sholdingwillnotencouragevindictiveandoverzealousbankruptcytrusteestoabuse theirpowers.SafeguardswithintheBankruptcyCodeeffectivelychecksuchabuses.Forexample,section107(b)(2) oftheBankruptcyCode,11U.S.C.107(b)(2)(1982),authorizesbankruptcycourtstoprotectapersonwithrespect toscandalousordefamatorymattercontainedinatrustee'sreport.Inaddition,thebankruptcycourtmustapprovethe trustee'scompensation.11U.S.C.326(1982).Finally,section324oftheBankruptcyCode,11U.S.C.324(1982),

authorizesabankruptcyjudgetoremoveatrusteeforcause. TheBankruptcyCodeprotectsagainstanycollusionbetweenthebankruptcycourtandthetrusteethatmightlimitthe effectivenessofthesesafeguards.Ofparticularimportanceisthatanindependent*468UnitedStatestrustee,the officialresponsiblefortheadministrationofbankruptcycasesinthisdistrict,appointsallreorganizationtrustees.11 U.S.C.151104(a)(1),(2),(c)(1982).Whereasbankruptcyjudgesoncereviewedtheordersoftheirappointees,the newbankruptcysystemensuresthatanimpartialjudgereviewsthetrustee'sdecisions.H.R.Rep.No.595,95th Cong.,2dSess.88116(1978),reprintedin1978U.S.CodeCong.&Ad.News5787,5963,604976.[5]We, therefore,havenomisgivingsaboutholdingtheTrusteeimmunefromsuitsarisingoutofstatementsinhisReport. B.PrivilegeforStatementsinJudicialProceedings Inadditiontoassertingthatheisimmunefromsuitasafederaljudicialofficial,theTrusteealsocontendsthatthe ReportitselfisabsolutelyprivilegedunderNewYorklaw.[6]UnderthelawofNewYork,statementsthatariseinthe courseofajudicialproceeding,andarerelevantandpertinentthereto,areabsolutelyprivileged.ParkKnoll Associatesv.Schmidt,59N.Y.2d205,209,451N.E.2d182,464N.Y.S.2d424(1983).Theprivilegeprotects statementsregardlessofthespeaker'sstateofmind,knowledgeoffalsity,ortheinjurythestatementscause.Id.W. Prosser,HandbookoftheLawofTorts114,at776(4thed.1971).Theprivilege"embracesanythingthatmay possiblybepertinentorwhichhasenoughappearanceofconnectionwith[ajudicialproceeding]sothata reasonablemanmightthinkitrelevant.Alldoubtshouldberesolvedinfavorofitsrelevancyorpertinency...." Seltzerv.Fields,20A.D.2d60,63,244N.Y.S.2d792(1stDep't1963),aff'd,14N.Y.2d624,249N.Y.S.2d174,198 N.E.2d368(1964).Giventhisflexiblepertinencyrequirement,ourtaskistodeterminewhethertheinvestigationand issuanceofabankruptcytrustee'sreportconstitute"judicialproceedings."Webelievetheydo. InNewYork,itissettledlawthatabankruptcyproceedingisajudicialproceeding.Marshv.Ellsworth,50N.Y.309 469 (1872)Friedmanv.Alexander,79A.D.2d627,628,433N.Y.S.2d627,628(2dDep't1980)Schwartzv.Bartle,49 Misc.2d848,268N.Y.S.2d715(Sup.Ct.1966)Abramsv.CromptonRichmondCo.,7Misc.2d461,*469164 N.Y.S.2d124(Sup.Ct.1957),aff'd,5A.D.2d811,170N.Y.S.2d981(1stDep't1958).Actionstoaugmenttheassetsof abankruptestateareconsideredpartofajudicialproceeding.Thus,aletterfromabankruptcompany'scourt appointedoperatingofficertovariouscreditorsthatpurportedtorecountanothercreditor'sallegedimproprietieswas heldprivilegedaspartofsuchaproceeding.Friedmanv.Alexander,supra,79A.D.2dat628,433N.Y.S.2dat628. Letterswrittenbymembersofaninformalcreditors'committeecharginganindividualwithdealingfraudulentlywith thebankruptcompanyarealsoprivileged.Schwartzv.Bartle,supra,49Misc.2dat849,268N.Y.S.2d715.The statementshereinatissue,likethestatementsnotedabove,concernedthepossibleimproprietiesofonehaving businessdealingswiththebankruptestate.Atrustee'sstatementssuchasthesearesocentraltotheproceedings thattheydeserveprotectionatleastequalto,ifnotgreaterthan,thataccordedstatementsbyotherinterestedparties.
[7]

468

ApplicationofNewYork'slawofprivilegeinthiscaseisconsistentwiththepoliciesthatunderlytheprivilege.The doctrineinsulatespartiestojudicialproceedingsfromharrassmentandfearoffinancialhazardandthereby encouragesthemtospeakfreely.ParkKnollAssociatesv.Schmidt,supra,59N.Y.2dat209,451N.E.2d182,464 N.Y.S.2d424.Therulethusaids"thesearchfortruthwhichistheheartofanyandalljudicialproceedings."Starv. Simonelli,76A.D.2d861,428N.Y.S.2d617,618(2dDep't1980).FreeingtheTrusteefromliabilitypromotes thoroughinvestigationandcomprehensivereportingbyonewhoseaimistoseekthetruthaboutcorporatefraudand mismanagement. TheplaintiffscontendthattheTrusteewaivedhisprivilegewhenhedisseminatedtheReport.Theplaintiffscite Murrayv.Brancato,[8]290N.Y.52,48N.E.2d257(1943),tosupporttheircontention.Inthatcase,theplaintiffalleged thatajudgemaliciouslycomposedtwoopinionsandcausedthemtobereportedinunofficialreporters,withthe intenttodefametheplaintiffandtoinjurehislawpractice.Acceptingtheseallegationsastrue,thecourtheldthatthe judge'sallegedpublicationofhisdecisionsinanunofficialreporterwasbeyondthescopeofhisjudicialfunctionand capacity.Accordingly,thejudge'sstatementswerenotabsolutelyprivileged.Theplaintiffsattempttoextendthe Murrayholdingtothiscase.However,thecasesdifferinanessentialrespect.WhereasthejudgeinMurraydidnot

forwardhisdecisionspursuanttoastatutorydirectiveoracourtorder,theTrusteedistributedhisReportpursuantto statutorydirectiveandthebankruptcycourt'sorder.Moreover,theplaintiffs'waiverargumentignoresthepublic interestintheexposureofcorporateabusesthroughbankruptcyproceedings.Atrustee'sreportontheresultsofhis investigationintoamassivefraudisprivilegedwhendistributedinaccordancewithanorderdesignatingan appropriatemethodofdistribution. III.Conclusion TheplenaryactionbytheTrusteetorecoverthefundsinquestionmayresolvetheproprietyofFundway'sand 470 Weissman's*470receiptofOPMfunds.Seesupranote3.Evenifitshouldbeshownthatthetransactionswere valid,theresultherewouldstillbeappropriate.AsJudgeLearnedHandsoeloquentlystated,somethirtyyearsago, Itdoesindeedgowithoutsayingthatanofficial,whoisinfactguiltyofusinghispowerstoventhis spleenuponothers,orforanyotherpersonalmotivenotconnectedwiththepublicgood,shouldnot escapeliabilityfortheinjurieshemaysocauseand,ifitwerepossibletopracticetoconfinesuch complaintstotheguilty,itwouldbemonstroustodenyrecovery.Thejustificationfordoingsoisthatit isimpossibletoknowwhethertheclaimiswellfoundeduntilthecasehasbeentried,andthatto submitallofficials,theinnocentaswellastheguilty,totheburdenofatrialandtotheinevitable dangerofitsoutcome,woulddampentheardorofallbutthemostresolute,orthemostirresponsible, intheunflinchingdischargeoftheirduties.Againandagainthepublicinterestcallsforactionwhich mayturnouttobefoundedonamistake,inthefaceofwhichanofficialmaylaterfindhimselfhardput toittosatisfyajuryofhisgoodfaith.Theremustindeedbemeansofpunishingpublicofficerswho havebeentruanttotheirdutiesbutthatisquiteanothermatterfromexposingsuchashavebeen honestlymistakentosuitbyanyonewhohassufferedfromtheirerrors.Asissooftenthecase,the answermustbefoundinabalancebetweentheevilsinevitableineitheralternative.Inthisinstanceit hasbeenthoughtintheendbettertoleaveunredressedthewrongsdonebydishonestofficersthan tosubjectthosewhotrytodotheirdutytotheconstantdreadofretaliation. Gregoirev.Biddle,supra,177F.2dat581. Thedefendant'smotiontodismissthecomplaintisgranted.TheClerkwillenterjudgmentaccordingly. SOORDERED.
[1]Atanytimeafterthecommencementofthecasebutbeforeconfirmationofaplan,onrequestofapartyininterestortheUnited Statestrustee,andafternoticeandahearing,the[bankruptcy]courtshallordertheappointmentofatrustee (1)forcause,includingfraud,dishonesty,incompetence,orgrossmismanagementoftheaffairsofthedebtorbycurrent management,eitherbeforeorafterthecommencementofthecase,orsimilarcause,butnotincludingthenumberofholdersof securitiesofthedebtorortheamountofassetsorliabilitiesofthedebtor.... (2)ifsuchappointmentisintheinterestsofcreditors,anyequitysecurityholders,andotherinterestsoftheestate,withoutregard tothenumberofholdersofsecuritiesofthedebtorortheamountofassetsorliabilitiesofthedebtor. 11U.S.C.151104(a)(1982). [2]11U.S.C.151104(c)(1982)prescribestheappointmentprocedure.Itstates,"Ifthecourtorderstheappointmentofatrustee oranexaminer,...thentheUnitedStatestrustee,afterconsultationwithpartiesininterest,shallappoint,subjecttothecourt's approval,onedisinterestedpersonotherthantheUnitedStatestrusteetoserveastrustee...inthecase." [3]Indeed,asaresultofhisinvestigation,theTrusteeisnowpursuingafraudulentconveyanceclaimagainstplaintiffsHerbert WeissmanandFundways. [4]InissuinganddisseminatinghisReport,theTrusteealsofulfilledhisstatutorydutyto"transmitacopyorasummaryofany [report]toanycreditors'committeeorequitysecurityholders'committee,toanyindenturetrustee,andtosuchotherentityasthe courtdesignates."11U.S.C.1106(a)(4)(1982). [5]Theplaintiffspresentadditionalargumentsinanattempttodefeatthismotion.Theyfirstassertthatthecourt'sauthorization cannotimmunizetheTrusteebecausethecourtneverauthorizedhimtodefameanyone.Thiscontentionismeritless.Acceptingit

wouldrendertheabsoluteimmunitydoctrinemeaningless,foronlythosewhohadnotcommittedatortwouldbeentitledto immunity,whichtheywouldneverneedtoinvoke.Thedoctrinewouldthenservenopurpose. Inaddition,accordingtotheplaintiffs,theTrusteeshouldhavesubmittedtheReporttothecourtforprepublicationreviewor requestedagrantofabsoluteimmunityorprivilege.TheBankruptcyCodenowheresanctionssuchprepublicationreviewandhas nopowertocloaktheTrusteewithabsoluteimmunity.Indeed,thecourt'sonlyfunctionwastodirectthemanneroftheReport's distribution. Finally,theplaintiffsattempttoskirttheTrustee'simmunitydefensetotheclaimsofintentionalinflictionofemotionaldistressand tortiousinterferencewithbusinessrelations.Theyarguethatthoseclaimsarebased,inpart,ontheTrustee'smaliciousfailureto carefullyinvestigateandthattheTrusteeisnotimmunefromsuitforsuchconduct.Theplaintiffscannotavoidtheruleofabsolute immunityinthismanner.Todistinguishtheimproperlyconductedinvestigationfromtheotherwiseproperexerciseofquasijudicial authoritywould"`emasculatetheimmunitydefensebyapplyingitonlytoconductforwhichitisnotneeded.'"McManusv. McCarthy,586F.Supp.302,304(S.D.N.Y.1984)(quotingWallenv.Domm,700F.2d124,126(4thCir.1983)).Allthreeclaims ariseoutoftheinvestigationandReport.Absoluteimmunityforthatconductattachestoeachclaim. [6]Rule501oftheFederalRulesofEvidenceprovidesthat"incivilactionsandproceedings,withrespecttoanelementofaclaim ordefenseastowhichStatelawsuppliestheruleofdecision,theprivilegeofawitness,person,government,State,orpolitical subdivisionthereforshallbedeterminedinaccordancewithStatelaw."Fed.R.Evid.501.Sincethecomplaintallegescausesof actionunderNewYorklaw,theNewYorklawofprivilegeappliesinthiscase.Thislawofprivilegesupplementstheimmunitythat protectsfederalofficialsregardlessofthenatureoftheactionbroughtagainstthem.SeeSprecherv.Graber,716F.2d968,975 (2dCir.1983)(applyingfederalofficialimmunitytocommonlawtortclaims). [7]AlthoughnoAmericancourtshaveconsideredwhetherstatementsinatrustee'sreportareprivileged,theEnglishcourtshave appliedthedoctrineofabsoluteprivilegetoofficialreportsofthereceiversofbankruptcompanies.Bottomleyv.Brougham(Eng) [1908]1KB584Burrv.Smith(Eng)[1909]2KB306,16Manson210CA. [8]TheplaintiffsalsoarguethatWilliamsv.Williams,23N.Y.2d592,246N.E.2d333,298N.Y.S.2d473(1969),supportstheir position.ThatdecisionexaminedanattempttoapplyN.Y.CivilRightsLaw74(McKinney1976),whichpreventscivilactions againstanyperson"forthepublicationofafairandtruereportofanyjudicialproceeding."N.Y.Civ.RightsLaw74(McKinney 1976).Thedefendantshavenotclaimedthattheyareentitledtoaprivilegeunderthisstatute.Thus,anycasesdecided thereunderareinapposite.

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