Summary
declining to allow a debtor to move to substitute the bankruptcy trustee when the trustee had taken no action to reopen estate and merely acquiesced in debtor's suit
Summary of this case from Lane v. DanielOpinion
No. 4:03-CV-1337-A.
March 4, 2004
MEMORANDUM OPINION and ORDER
Came on for consideration the motion of defendants, EFW, Inc., ("EFW") and J.D. McAllister ("McAllister"), to dismiss. The court, having considered the motion, the response of plaintiff, Mollie Griffin, the reply, the record, and applicable authorities, finds that the motion should be granted.
On October 3, 2003, plaintiff filed her original petition in the 48th Judicial District Court of Tarrant County, Texas. On November 10, 2003, defendants filed their notice of removal, bringing the action before this court. Plaintiff asserts claims against defendants under the Family Medical Leave Act, 29 U.S.C. § 2601-54 ("FMLA").
On November 10, 2003, defendants also filed their motion to dismiss for lack of subject matter jurisdiction. Defendants allege: Plaintiff is a former employee of EFW, whose director of human resources is McAllister. Plaintiff's employment was terminated on April 29, 2002, as a result of excessive unexcused absences. On August 8, 2002, plaintiff filed a voluntary petition under Chapter 7 in the United States Bankruptcy Court for the Northern District of Texas, Fort Worth Division, under cause number 02-45941-BJH. Plaintiff did not list in her schedules any claim of any kind against defendants. Thereafter, on September 10, 2002, plaintiff filed an administrative claim with the Department of Labor alleging that she had been terminated in violation of the FMLA. On October 21, 2002, plaintiff amended her bankruptcy schedules, but never disclosed that she had any claim against defendants. On December 16, 2002, plaintiff received her discharge in bankruptcy on the basis of her estate having no assets.
Defendants maintain that plaintiff lacks standing to pursue the claims asserted in this action, because they were not disclosed in her bankruptcy proceeding. On December 8, 2003, plaintiff filed a response to the motion and also a motion for stay so that she could seek leave to reopen her bankruptcy case. By order signed December 11, 2003, the court granted plaintiff's motion for stay and ordered that the action be stayed until February 12, 2004. The court cautioned plaintiff that further extensions of the stay would not likely be granted. The court further ordered that by 4:30 p.m. on February 12, 2004, plaintiff file: (1) an appropriate written notice that she would be proceeding with her claims in this action; (2) a document identifying the bankruptcy trustee or other person who would proceed with the claims in this action, along with an appropriate motion that such person be granted leave so to proceed; or (3) a motion to dismiss the claims in this action.
On February 12 plaintiff filed documents titled "Plaintiff's Notice of Intent and Motion for Authorization to Proceed" and "Ratification of Commencement of Action by Trustee." The former document gave notice that plaintiff intended to proceed with her claims in this action, stating that on January 13, 2004, she had filed a motion to reopen her bankruptcy case and that the motion was pending. The latter document provided:
Pursuant to Rule 17(a) of the Federal Rules of Civil Procedure, Carey D. Ebert, in her capacity as trustee of the bankruptcy estate of Mollie Griffin, ratifies commencement of the above action by Mollie Griffin, agrees to be bound by the judgment entered in the case, and consents to continued prosecution of this case by Mollie Griffin for herself and the estate, subject to appropriate orders by the bankruptcy court permitting retention of special counsel and making disposition of a judgment between the debtor and the estate.
Pl.'s Ratification at 1. The second page of the document bore the following paragraph and the signature of Ms. Ebert:
I ratify commencement of the above action by the debtor Mollie Griffin, agreed [sic] to be bound by the judgment entered in the case, and consent to prosecution of the case by the debtor Mollie Griffin on behalf of herself and the estate, subject, however, to entry of appropriate orders by the bankruptcy court permitting retention of special counsel and any [sic] making disposition of the [sic] any judgment as between the debtor and the estate[.]Id. at 2.
On February 25, 2004, plaintiff filed a "Notice to the Court" that the January 13 motion to reopen the bankruptcy case had been dismissed, because plaintiff's bankruptcy attorney did not attend the hearing he himself had set. On February 27, 2004, defendants filed their reply in further support of their motion to dismiss and a response to plaintiff's motion for authorization to proceed.
The court notes that plaintiff has not submitted the declaration or affidavit of her bankruptcy attorney in support of her motion to proceed. Thus, there is no explanation under oath for the omission of plaintiff's claims from her bankruptcy schedules in the first place or for the dismissal of her motion to reopen the bankruptcy case. Plaintiff's February 25 notice to the court says that Jan Barto, her bankruptcy lawyer, "stated that because he thought the bankruptcy judge would sign the order without a hearing and the order had already been presented for signature and because the hearing date of February 18 was beyond the deadline set by this court, he did not attend the hearing." Pl.'s Notice at 1 n. 1. The court finds it more likely that Mr. Barto did not appear for the hearing because he did not wish to stand before Judge Houser and explain that he had knowingly omitted plaintiff's FMLA claims from plaintiff's bankruptcy schedules.
Plaintiff does not dispute any of the facts alleged by defendants in support of their motion. She admits that she knew of her FMLA claim prior to the time she filed her petition in bankruptcy; that the claim should have been listed on her schedules; that she informed her bankruptcy attorney of the claim; and, that her bankruptcy attorney made the decision not to list the claim, although he now concedes that it should have been listed. Pl.'s Resp. at 2. Plaintiff contends that her failure to list the claim was "mere inadvertence" and not an attempt to mislead. Id.
Defendants refer to an affidavit of plaintiff in which she makes these admissions. The affidavit was stricken by order signed December 9, 2003, because it did not bear an original signature of plaintiff. Nor was it accompanied by a completed certificate of service.
Rule 17(a) of the Federal Rules of Civil Procedure requires that every action be prosecuted in the name of the real party in interest. Because plaintiff's claims were property of the bankruptcy estate and should have been disclosed on her schedules, the bankruptcy trustee is the real party in interest.Wieburg v. GTE Southwest, Inc., 272 F.3d 302, 306 (5th Cir. 2001); Harris v. St. Louis Univ., 114 B.R. 647, 648 (E.D. Mo. 1990) (after appointment of a trustee, debtor no longer has standing to pursue any cause of action that existed when the bankruptcy was filed). Rule 17(a) provides a limited right of joinder or substitution of the real party in interest or of ratification of the plaintiff's prosecution of the case if the plaintiff "brought the action in her own name as the result of understandable mistake, because the determination of the correct party to bring the action [was] difficult." Wieburg, 272 F.3d at 308. Such is not the case here, where plaintiff acknowledges that she and her bankruptcy attorney knew of the claims and chose not to disclose them on her bankruptcy schedules as required. There was no honest and understandable mistake, but rather a conscious concealment. See Feist v. Consol. Freightways Corp., 100 F. Supp.2d 273 (E.D. Pa. 1999),aff'd, 216 F.3d 1075 (3d Cir. 2000); Lans v. Gateway 2000, Inc., 84 F. Supp.2d 112 (D.D.C. 1999), aff'd, 252 F.3d 1320 (Fed. Cir. 2001).
Plaintiff cannot avoid the consequences of having failed to disclose her claims on her bankruptcy schedules by saying that she relied on the advice of her bankruptcy attorney. Link v. Wabash R.R. Co., 370 U.S. 626, 633-34 (1962). Keeping a suit alive merely because the plaintiff should not be penalized for omissions of her own attorney would be visiting the sins of plaintiff's lawyer upon defendants. Id. at 634 n. 10.
Another way of analyzing the case would be to say that plaintiff is judicially estopped from now pursuing the claims she failed to disclose in the bankruptcy proceeding. Barger v. City of Cartersville, Ga., 348 F.3d 1289 (11th Cir. 2003); In re Coastal, 179 F.3d 197, 210 (5th Cir. 1999).
Even if one were to conclude that substitution of the real party in interest should be allowed, the bankruptcy trustee has made no effort to participate in prosecution of this action. At most, she has said that she will acquiesce in prosecution of the action by plaintiff, provided, however, that the bankruptcy court approves her actions. No such approval has been sought, despite plaintiff's having known since the filing of the motion to dismiss on November 10, 2003, that the bankruptcy case would have to be reopened, and having known since the court's December 11, 2003, order that she would have to act expeditiously. Accordingly, the court concludes that the motion to dismiss should be granted.
There is no indication that the trustee has taken or intends to take any action on her own to pursue plaintiff's claims. Presumably, she would have taken more of an interest if she believed the claims had merit and pursuit of them would benefit the estate.
The court ORDERS that defendants' motion to dismiss be, and is hereby, granted, and that plaintiff's claims against defendants be, and are hereby, dismissed for lack of jurisdiction.