Opinion
2:22-cv-01459-JAM-JDP
10-27-2023
VICTORIA THOMPSON INDIVIDUALLY AND ON BEHALF OF DECEDENT RUSSELL GENE THOMPSON, Plaintiff, v. UNITED STATES OF AMERICA, Defendant.
ORDER DENYING DEFENDANT UNITED STATES OF AMERICA'S MOTION FOR SUMMARY JUDGMENT
JOHN A. MENDEZ, SENIOR UNITED STATES DISTRICT JUDGE
This matter is before the Court on Defendant United States of America's (“Defendant”) motion for summary judgment under Rule 56(a) of the Federal Rules of Civil Procedure. Def.'s Mot. for Summary Judgment, ECF No. 37. Defendant's motion is based on two grounds: (1) Plaintiff Victoria Thompson, individually and on behalf of decedent Russell Gene Thompson, (“Plaintiff”) is judicially estopped from asserting the claims in the Second Amended Complaint (“SAC”); and (2) Plaintiff cannot maintain this action under Rule 17 of the Federal Rules of Civil Procedure because she is not a real party in interest. Def.'s Memorandum of Points and Authorities (“Mot.”), ECF No. 37-1 at 1-2. Defendant's motion stems from Plaintiff's nondisclosure of an administrative tort claim filed against the Department of Veteran Affairs (“VA”) during the pendency of Plaintiff's earlier bankruptcy. Id. at 1-2.
For the reasons set forth below, the Court DENIES Defendant's motion for summary judgment on both grounds.
This motion is determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearing was previously scheduled for September 26, 2023, and was vacated by this Court on September 19, 2023. ECF No. 42.
I. DEFENDANT'S REQUEST FOR JUDICIAL NOTICE
Defendant requests the Court take judicial notice of six documents in support of its motion under Rule 201 of the Federal Rules of Evidence. See Def.'s Req. for Judicial Notice (“RJN”), ECF No. 37-3. The documents consist of Plaintiff's underlying administrative tort claim filed against the Department of Veterans Affairs on October 6, 2021 (Exhibit 7) and documents from Plaintiff's chapter 13 bankruptcy proceeding that are in the court's records (Exhibits 4-6, 8-10) . Id. Plaintiff does not oppose Defendant's requests. See Opp'n, ECF No. 40.
As documents that “can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned,” and in the absence of Plaintiff's objection, see Opp'n, the Court takes judicial notice of exhibits four through ten, inclusive, as requested. See Fed.R.Evid. 201(b); Harris v. Cty. of Orange, 682 F.3d 1126, 1132 (9th Cir. 2012) (documents filed in federal court are a matter of public record that may be judicially noticed when undisputed); In re Calder, 907 F.2d 953, 955 n.2 (10th Cir. 1990) (Rule 201 permits judicial notice of the contents of bankruptcy schedules and statements of financial affairs but not the truth of those contents); Duke Energy Trading & Mktg., L.L.C. v. Davis, 267 F.3d 1042, 1048 n.3 (9th Cir. 2001) (granting requests for judicial notice of documents filed with California administrative agencies). The Court only takes judicial notice of the contents, or lack of contents, within the matters noticed but not the truth of those contents. See In re Calder, 907 F.2d at 955 n.2; Lee v. City of Los Angeles, 250 F.3d 668, 690 (9th Cir. 2001).
II. BACKGROUND AND UNDISPUTED FACTS
Russell Gene Thompson (“Decedent”) was a patient at (1) the VA medical facility in Martinez, California from March 19, 2021, to May 7, 2021, and (2) the VA medical center in San Francisco, California from August 19, 2021 to October 6, 2021. Pl.'s Resp. to Def.'s Statement of Undisputed Facts (“SUF”) No. 1, ECF No. 40-4. Decedent passed away on October 6, 2021. SUF No. 12. The same day, Plaintiff, as Decedent's surviving spouse, submitted an administrative tort claim with the VA to recover damages for the injuries allegedly sustained in connection with Decedent's care and treatment at both facilities (the “VA Claim”). SUF Nos. 12, 13.
Approximately five years earlier, on June 20, 2016, Plaintiff and Decedent filed for chapter 13 bankruptcy in the Bankruptcy Court for the Eastern District of California, Case No. 16-23970. SUF No. 5. Plaintiff and Decedent filed a statement of financial affairs and schedules of assets with their chapter 13 bankruptcy petition. SUF No. 7. The bankruptcy court confirmed Plaintiff and Decedent's chapter 13 plan on September 14, 2016. RJN No. 5 at 24. On July 30, 2019, Decedent was dismissed as a debtor from the bankruptcy case, leaving Plaintiff as the only remaining debtor. SUF No. 14. On March 7, 2022, the bankruptcy court entered an order of discharge for Plaintiff, SUF No. 15, and the case was closed on March 22, 2022. RJN No. 5 at 19.
Plaintiff and Decedent did not disclose the VA Claim in their initial bankruptcy filings, and Plaintiff never amended the filings to disclose the VA claim during the pendency of the bankruptcy case. SUF Nos. 7, 11, 16.
After several pleadings and a consolidation of cases, Plaintiff filed the operative second amended complaint in this action on June 28, 2023, individually and as the personal representative of Decedent's estate, to recover damages for the injuries allegedly sustained in connection with the care and treatment Decedent received at both facilities. Second Am. Compl. (“SAC”), ECF No. 33; SUF Nos. 2-4. ,
While SUF Nos. 2-4 are disputed, they are neither factual nor material. Fed.R.Civ.P. 56(a).
Also pending before the Court is Defendant's motion to dismiss Plaintiff's SAC. Def.'s Mot. to Dismiss, ECF No. 34. That motion will be decided by separate Order.
III. OPINION
A. Legal Standard
A Court must grant a party's motion for summary judgment “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(a). The movant bears the initial burden of “informing the district court of the basis for its motion, and identifying [the documents] which it believes demonstrate the absence of a genuine issue of a material fact.” Celotex Corp v. Catrett, 477 U.S. 317, 323 (1986). A fact is material if it “might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Once the movant makes this initial showing, the burden rests upon the nonmoving party to “set forth specific facts showing that there is a genuine issue for trial.” Id. An issue of fact is genuine if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. All reasonable inferences are drawn in favor of the nonmoving party. In re Oracle Corp. Sec. Litig., 627 F.3d 376, 387 (9th Cir. 2010) (citing Anderson, 477 U.S. at 255).
B. Analysis
1. Defendant fails to show Plaintiff is judicially estopped.
Defendant argues Plaintiff is judicially estopped from bringing this action because she failed to disclose the VA Claim during the pendency of her chapter 13 bankruptcy. Mot. at 1-2.
The doctrine of judicial estoppel ‘“prevents a party from prevailing in one phase of a case on an argument and then relying on a contradictory argument to prevail in another phase.”' New Hampshire v. Maine, 532 U.S. 742, 749 (2001) (quoting Pegram v. Herdrich, 530 U.S. 211, 227 n.8 (2000)). The purpose of the doctrine is to protect the integrity of the judicial process. Id. at 750.
In New Hampshire, the Court identified three factors that “firmly tip the balance of equities in favor of” estopping a party: (1) a party's later position is clearly inconsistent with an earlier position; (2) the earlier court accepted the party's prior position; and (3) the inconsistent positions would give the party an unfair advantage or unfairly disadvantage an opposing party. Id. at 750-51.
District courts have adopted a default rule of applying judicial estoppel in matters involving bankruptcy given the critical importance of full disclosure in those proceedings: “If a plaintiff-debtor omits a pending (or soon-to-be-filed) lawsuit from the bankruptcy schedules and obtains a discharge (or plan confirmation), judicial estoppel bars the action.” Ah Quin v. Cnty. of Kauai Dep't of Transp., 733 F.3d 267, 271, 273-74 (9th Cir. 2013) (citing In re Coastal Plains, Inc., 179 F.3d 197, 208 (5th Cir. 1999)). However, despite the default rule, “[j]udicial estoppel is a discretionary doctrine, applied on a case-by-case basis.” Id. at 272 (citing New Hampshire, 532 U.S. at 751). Upon closer review of Ah Quin and the cases relied upon to articulate this default rule, the Court finds that the rule should not be applied here given that the undisclosed claim was neither pending nor soon-to-be-filed as of the commencement of the bankruptcy action but rather did not exist until five years after the chapter 13 plan was confirmed. RJN No. 5; SUF Nos. 12.
Turning to the three New Hampshire factors, even if Defendant's SUF establishes the first two, Defendant has not shown Plaintiff obtained an unfair advantage, or that an opposing party was unfairly disadvantaged, when she failed to disclose the VA Claim on October 6, 2021. Defendant asserts Plaintiff received an unfair advantage when she obtained a “discharge without allowing the creditors to learn of the pending lawsuit.” Mot. at 5. However, Defendant's authority does not support that a lack of knowledge amounts to an unfair advantage. Rather, the unfair advantage exists in these circumstances only if the already-confirmed plan could be modified to allow the creditors to receive greater payments under the plan. Thus, Defendant must show that the already-confirmed chapter 13 plan could have been modified on or after October 6, 2021. Defendant has not made this showing.
A chapter 13 bankruptcy plan may be modified after confirmation but before completion of plan payments. 11 U.S.C. § 1329(a); In re Flores, 735 F.3d 855, 859 (9th Cir. 2013) (en banc). Payments under a chapter 13 plan cannot exceed five years from the date the first payment is due, whether or not the plan is later modified after confirmation. 11 U.S.C. §§ 1322(d), 1325(b)(4), 1329(c); In re Mrdutt, 600 B.R. 72, 83 (B.A.P. 9th Cir. 2019). The first payment is due 30 days after the chapter 13 bankruptcy petition is filed, unless otherwise ordered by the bankruptcy court. 11 U.S.C. § 1326(a); In re Mrdutt, 600 B.R. At 83; In re Profit, 283 B.R. 567, 575 (B.A.P. 9th Cir. 2002) .
Here, Plaintiff filed her chapter 13 petition on June 20, 2016, SUF No. 5, making the first payment due 30 days later on July 20, 2016. 11 U.S.C. § 1326(a). More than five years had passed by the time Plaintiff filed the VA Claim on October 6, 2021. At that point, Plaintiff completed her payments under the plan, Opp'n at 4, and the plan could no longer be modified. 11 U.S.C. § 1329(a).
In deciding Defendant's summary judgment motion, the Court is required to draw all reasonable inferences in Plaintiff's favor. In re Oracle Corp. Sec. Litig., 627 F.3d at 387 (citing Anderson, 477 U.S. at 255). Doing so, the Court finds Defendant has not demonstrated that the already confirmed chapter 13 plan could have been modified such that Plaintiff obtained an unfair advantage by failing to disclose the VA Claim on October 6, 2021. Accordingly, the Court finds the balance of equities are not firmly tipped in Defendant's favor and Plaintiff is not judicially estopped from bringing her claims in this case.
2. Defendant fails to show Plaintiff lacks prudential standing to maintain this action.
Defendant next argues the VA Claim was and remains property of the bankruptcy estate because Plaintiff failed to disclose this claim during her chapter 13 bankruptcy. Mot. at 2, 7-8. If a debtor fails to disclose property belonging to the bankruptcy estate, that property does not revest to the debtor but remains with the bankruptcy estate. See 11 U.S.C. § 554(d); Cusano v. Klein, 264 F.3d 936, 945-46 (9th Cir. 2001). As a result, Defendant contends the bankruptcy trustee is the only real party in interest, and Plaintiff cannot maintain this action under Rule 17(a) of the Federal Rules of Civil Procedure (“An action must be prosecuted in the name of the real party in interest.”). Mot. at 2, 7-8.
Defendant claims the VA Claim was property of the bankruptcy estate under 11 U.S.C. section 541(a)(1). Mot. at 7-8. Under section 541(a)(1), anything of value, including causes of action, that belong to the debtor at the commencement of the bankruptcy case are property of the bankruptcy estate. 11 U.S.C. § 541(a)(1); Gladstone v. U.S. Bancorp, 811 F.3d 1133, 1139 (9th Cir. 2016); Cusano, 264 F.3d at 945-46. State law determines when a cause of action accrues for purposes of defining the scope of the bankruptcy estate. Cusano, 264 F.3d at 947. Under California law, a claim accrues “when the cause of action is complete with all of its elements.” Norgart v. Upjohn Co., 21 Cal.4th 383, 397 (1999). Defendant elected to use the date Plaintiff filed the VA Claim, i.e., October 6, 2021, as a proxy for date of accrual, even though the claim, or part of the claim, may have accrued earlier. SUF No. 12. Based on Defendant's undisputed facts, the Court finds the VA Claim did not accrue at any other time but October 6, 2021-over five years after Plaintiff filed her bankruptcy petition.
Accordingly, the VA Claim was not property of the bankruptcy estate under section 541(a) because it did not exist “as of the commencement of the case.” 11 U.S.C. § 541(a)(1). Defendant's own authority similarly limits the scope of the bankruptcy estate under section 541(a) to prepetition causes of action. See Cusano, 264 F.3d at 948 (holding the debtor lacks standing for undisclosed claims accruing prepetition but retains standing for undisclosed claims accruing postpetition); Runaj v. Wells Fargo Bank, 667 F.Supp.2d. 1199, 1206 (S.D. Cal. 2009) (holding prepetition causes of action to be property of the bankruptcy estate); Griffin v. Allstate Ins. Co., 920 F.Supp. 127, 130 (C.D. Cal. 1996) (same).
Defendant's reliance on Moralez v. Vilsack, No. 116CV00282AWIBAM, 2017 WL 4652730 (E.D. Cal. Oct. 17, 2017) in support of its argument is misplaced. Mot. at 2, 8. Although the District Court in Moralez held the bankruptcy estate included postpetition claims, that holding was reached on grounds not raised here in Defendant's motion or reply. See Moralez, 2017 WL 4652730 at *5 (finding the bankruptcy estate in a chapter 12 bankruptcy included postpetition property under 11 U.S.C. section 1207). Moreover, Moralez involved a chapter 12 rather than chapter 13 bankruptcy proceeding. See id. Even if the Court were to consider the holding in Moralez, its persuasiveness is undermined by other authority relied upon by Defendant. See In re Berkley, 613 B.R. 547, 552-53 (B.A.P. 9th Cir. 2020) (holding a chapter 13 bankruptcy estate does not include postconfirmation property).
In sum, Defendant has failed to show that the VA Claim was property of the bankruptcy estate under section 541(a). Absent this showing, Defendant cannot establish Plaintiff's nondisclosure affected her status as the real party in interest. Whether the VA Claim is considered community property, Reply, ECF No. 41 at 2-4, is inconsequential because it nevertheless did not exist at the commencement of the case. 11 U.S.C. § 541(a).
IV. ORDER
For the reasons set forth above, the Court DENIES Defendant's motion for summary judgment.
IT IS SO ORDERED.