Opinion
CIVIL ACTION NO. 02-161, SECTION "L"(1).
May 21, 2003.
ORDER REASONS
Before the Court are the following motions: (1) the Motion for New Trial of Petitioner Superior Crewboats, Inc. ("Superior"); and (2) Motion of Superior for Summary Judgment. For the following reasons, the Court GRANTS the Petitioner's Motion for New Trial and DENIES the Petitioner's Motion for Summary Judgment.
I. BACKGROUND
This Court has previously recounted the lengthy history of this case in its Order Reasons dated January 14, 2003. See In re Superior Crewboats, 2003 WL 133228 (E.D. La. Jan. 14, 2003). However, it is useful to again review the essential events of this case underlying the two motions currently under review. The facts giving rise to this litigation began on August 26, 1999, when Hudspeath was allegedly injured while disembarking the M/V STACEY D, a vessel owned and operated by Superior in Fourchon, Louisiana. Hudspeath was returning from his duties offshore at the time of the accident. Hudspeath took no action as a result of his injuries until January 28, 2001, when he filed a personal injury action in Civil District Court for Orleans Parish against Superior for the injuries received on the STACEY D. On January 18, 2002, Superior filed a petition for exoneration from or limitation of liability for all claims arising out of the accident on August 26, 1999. In connection with the limitation proceeding, the Court issued a monition staying the state court action pending the outcome of the limitation proceeding. Ten days later, Mr. Hudspeath, in his own name, filed a claim in the limitation proceeding.
Other events also transpired during the time in which these claims were filed that have a direct bearing on the motions before this Court. On August 28, 2001, more than one year after Hudspeath's alleged accident but before filing suit in state court, Hudspeath and his wife filed for bankruptcy in the Eastern District of Louisiana under Chapter 13 of the Bankruptcy Code. At the time of their filing, the Hudspeaths declared on a bankruptcy claim form that they had no unliquidated claims. The following month, the Bankruptcy Court confirmed the Chapter 13 plan and ordered the debtors to provide the trustee with a report on the status of any lawsuit to which they may be a party. Such notice was required to be updated every six months.
In May, 2001, the bankruptcy proceeding was converted from Chapter 13 to Chapter 7, upon motion of the Hudspeaths. Thereafter, in July, 2001, the Hudspeaths together with their bankruptcy attorney met with their Chapter 7 Trustee, Willbur Babin. The minutes of that meeting, as well as the transcript of the meeting (both of which are in the record of this case), reveal that the Hudspeaths and Babin discussed the pending action against Superior. The Hudspeaths told Babin that Hudspeath was injured while stepping off a vessel and suit was filed, but, because it was filed over a year from the accident, the claim was prescribed when they filed it. As a result of that representation in which the trustee and Hudspeath's bankruptcy attorney apparently agreed, the trustee listed the lawsuit as property he intended to abandon; and in due course, he did so, describing it as "being unworthy of administration; and, otherwise, as being a burden to the estate to pursue." The transcript also reveals that Babin instructed the Hudspeaths to amend their schedules to reflect the lawsuit; however, this was not done. Finally, on September 19, 2001, the Bankruptcy Court ordered Mr. and Mrs. Hudspeath discharged from bankruptcy as having "no assets." An amended schedule of assets was filed, but the pending action against Superior was not included. The bankruptcy proceeding was then closed on October 1, 2001.
The basis for the apparent confusion is the differing prescriptive periods that may have been applicable to Hudspeath's claims. If Louisiana law governed, the tort action would prescribe in one year. This is allegedly the view taken by the Hudspeaths and the trustee in their meeting. However, the general maritime law governs this case, so the claim did not prescribe for three years from the date of the accident; thus, this lawsuit was timely filed and clearly should have been listed on the schedule of assets form in the bankruptcy proceeding.
During discovery of the instant litigation, counsel for Superior learned of the Hudspeaths' bankruptcy petition and notified the trustee, who thereafter sought to reopen the bankruptcy to include the pending suit as an unliquidated claim. Finally, on September 18, 2002, the Hudspeaths filed an amended Chapter 7 asset schedule listing the claim in the limitation proceeding as property of the estate; it was the first time the schedules included any mention of the claim against Superior.
Superior then moved to dismiss Hudspeath's claims asserting that the proper plaintiff in the matter was the Trustee, Babin, acting on behalf of the bankruptcy estate and not Hudspeath in his own name. Hudspeath countered with a motion for leave to amend his complaint to substitute Babin as plaintiff; he further opposed Superior's motion arguing that if leave to amend was granted, Superior's motion would be rendered moot. In considering these motions, the Court became concerned with additional issues pertaining to standing and relation back under Rule 17 and ordered the parties to file supplemental briefs addressing these issues. The Court scheduled oral arguments on those motions in November, 2002.
The Court's main focus during oral arguments was the issue of judicial estoppel, which was raised by the petitioner in its motion to dismiss. The petitioner argued that Hudspeath should be estopped from arguing to this Court that he has a valid claim when he previously represented to the bankruptcy court that the claim was worthless and prescribed. Hudspeath contended that he and his wife were in good faith at all times and acted properly when they notified the trustee of their claims against Superior.
In its Order Reasons dated January 14, 2003, the Court found that the record before it did not support a holding of estoppel as a matter of law. The Court concluded that the trustee, an attorney, was aware that Hudspeath's accident had occurred over navigable waters and should have determined the proper statute of limitations to apply in the case. The Court also noted that the bankruptcy court and the Hudspeaths' creditors were aware of the existence of a potential claim against Superior. Finally, although the Court declined to find estoppel as a matter of law, the Court cautioned that "if the facts disclose that there was fraud or specific intent on the part of the Hudspeaths to mislead the trustee, they may well be estopped. But this is a question of fact to be determined at trial and not a matter of law to be decided summarily." In re Superior Crewboats, 2003 WL 13328, at * 6.
Accordingly, the Court denied Superior's motion to dismiss and granted the trustee's motion for leave to file an amended complaint naming himself as a party to the action. The Court did not, however, address the propriety of adding a new party under Civil Procedure Rule 17(a). After the Court's ruling, Superior promptly moved this Court for a new trial asserting that this Court erred in not considering Rule 17(a) when it granted leave to file an amended complaint. Superior also moved for summary judgment on the issue of Rule 17, asserting, first, that Rule 17 did not apply in an admiralty case, and, second, that relation back was not proper in this case because the failure to name the trustee as a proper party in interest was not an honest and understandable mistake. Hudspeath counters first that the motion for summary judgment is repetitive because the issues relating to Rule 17 were already briefed and decided by the Court. Second, Hudspeath asserts that the trustee's motion to amend the pleadings to assert its complaint was timely under the bankruptcy law's provision giving him a two-year extension within which to file claims. Finally, Hudspeath argues that Rule 17 does apply to admiralty cases and that the issue of good faith is a factual issue, precluding summary judgment.
II. SUPERIOR'S MOTION FOR A NEW TRIAL
Superior moves for a new trial under Rule 59 of the Federal Rules of Civil Procedure. The decision to grant a motion under Rule 59 rests within the discretion of the district court. See Edward H. Bohlin Co., Inc. v. Banning Co., 6 F.3d 350, 355 (5th Cir. 1993). Modifying or setting aside a judgment under Rule 59 is an extraordinary remedy; motions for reconsideration should not be avenues for relitigating old matters, raising new arguments, or submitting evidence that could have been presented before. See Theriot v. Parish of Jefferson, 66 F. Supp.2d 1435, 1452 (E.D.La. 1997); Campbell v. St. Tammany Parish School Board, 1999 WL 777720, at * 1 (E.D.La. Sept. 29, 1999).
Although a trial was not technically held, the Court will construe Superior's Motion for a New Trial as on for Reconsideration, which employs the same standard of review.
This Court's January 14, 2003 Order Reasons did not address Rule 17(a) because the issue of judicial estoppel had become the predominant dispute in the case. However, once the Court found that estoppel as a matter of law was not applicable, the Court should have addressed whether leave to amend to add the proper party plaintiff was proper. This would have required an analysis of Rule 17. Hudspeath asserts that the issues pertaining to Rule 17(a) were waived and/or should be considered "law of the case." The Court, however, does not find this to be accurate, and concludes that the issues of relation back and Rule 17 was not decided and should be addressed at this time. Accordingly, the Court will grant Superior's Motion for a New Trial for the purpose of determining whether leave to amend was proper.
III. HUDSPEATH'S ARGUMENT THAT THE TRUSTEE'S FILING WAS TIMELY
Before addressing the merits of Superior's motion for summary judgment, the Court must first address an issue raised by Hudspeath in a supplemental memorandum, which if correct will moot the summary judgment issue. Hudspeath argues that the trustee's intervention in this case is timely because it was made within two years of the date the Hudspeaths converted their bankruptcy from Chapter 13 to Chapter 7. Hudspeath refers this Court to two sections of the bankruptcy code: 11 U.S.C. § 108 and 11 U.S.C. § 348.
Section 108(a) provides in pertinent part: "If applicable nonbankruptcy law . . . fixes a period within which the debtor may commence an action, and such period has not expired before the date of the filing of the petition, the trustee may commence such action only before the later of — . . . (2) two years after the order for relief." Id.
Section 348(a) provides in pertinent part: "Conversion of a case from a case under one chapter of this title to a case under another chapter of this title constitutes an order for relief under the chapter to which the case is converted, but, except as provided in subsections (b) and (c) of this section, does not effect a change in the date of the filing of the petition, the commencement of the case, or the order for relief."
Hudspeath contends that under Sections 108 and 348 the trustee had two years from the date of conversion within which to timely file a claim. Since the date of conversion was May 10, 2001, Hudspeath argues, the trustee's claim is timely. Unfortunately for Hudspeath, however, the Fifth Circuit rejected that reasoning in Independent Fire Insurance Co. v. Pender (In re Phillip), 948 F.2d 985 (5th Cir. 1991). In Phillip, the court held that § 348(a) controls because § 108 is not listed as an exception in subsections (b) and (c). Id. at 987-88. Furthermore, subsection (a) explicitly provides that conversion form one chapter to another does not change the date of the filing of the petition or the order of relief. Id. at 988. Thus, for purposes of § 108, the two-year time period commenced on the date of the filing of the bankruptcy petition. Accordingly, Hudspeaths' argument is without merit; the trustee's claims are timely only if Rule 17 applies.
III. SUPERIOR'S MOTION FOR SUMMARY JUDGMENT ON THE ISSUE OF RULE 17(A)
A. Summary Judgment Standard
A district court can grant a motion for summary judgment only when the "'pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.'" Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (quoting Fed.R.Civ.P. 56(c)). When considering a motion for summary judgment, the district court "will review the facts drawing all inferences most favorable to the party opposing the motion." Reid v. State Farm Mut. Auto. Ins. Co., 784 F.2d 577, 578 (5th Cir. 1986). The court must find "[a] factual dispute . . . [to be] 'genuine' if the evidence is such that a reasonable jury could return a verdict for the nonmoving party . . . [and a] fact . . . [to be] 'material' if it might affect the outcome of the suit under the governing substantive law." Beck v. Somerset Techs., Inc., 882 F.2d 993, 996 (5th Cir. 1989) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).
"If the moving party meets the initial burden of showing that there is no genuine issue of material fact, the burden shifts to the non-moving party to produce evidence or designate specific facts showing the existence of a genuine issue for trial." Engstrom v. First Nat'l Bank of Eagle Lake, 47 F.3d 1459, 1462 (5th Cir. 1995) (citing Celotex, 477 U.S. at 322 — 24, and Fed.R.Civ.P. 56(e)). The mere argued existence of a factual dispute will not defeat an otherwise properly supported motion. See Anderson, 477 U.S. at 248. "If the evidence is merely colorable, or is not significantly probative," summary judgment is appropriate. Id. at 249 — 50 (citations omitted).
B. Whether Rule 17(a) applies in admiralty
Superior argues that Rule 17(a) and the principles of relation back are not applicable in an admiralty proceeding because application of the rule would interrupt the uniformity of general maritime law. Superior argues that based on the Supreme Court's repeated teachings about a uniform application of admiralty law, the result reached in this Court can not differ from the result reached in a Louisiana court. Further, since a Louisiana court would not apply Rule 17 to permit the addition of a proper party plaintiff, the result reached in a Louisiana court would be inconsistent with the result reached in this Court, were the amendments allowed. Superior, however, ignores Rule 1, which provides that the Rules of Civil Procedure govern "all suits of a civil nature whether cognizable at cases at law or in equity or in admiralty, with the exceptions stated in Rule 81." FED. R. CIV. P. 1. Superior brings this case pursuant to the Limitation of Liability Act, 46 U.S.C. § 181, et seq. The Limitation of Liability Act is not listed as one of the exceptions listed in Rule 81. Accordingly, under the terms of Rule 1, Rule 17 governs this case.
Furthermore, in Unilever (Raw Materials), Ltd. v. M/T STOLET BOEL, 77 F.R.D. 384 (S.D.N.Y. 1977), the court looked to the legislative history of Rule 17(a) and noted that, according to the original advisory committee notes, Rule 17 was originally applied in admiralty cases. Id. at 389 (citations omitted). The court went on to conclude that "the application to all civil cases of a rule first developed to meet the special needs of maritime law in no way diminishes its applicability to the area of law from which it springs." Id. See also, P.S. International Limited v. Caribbean Sealift Limited, 1996 WL 531838, at * 1 (E.D. La. Sept. 17, 1996) (quoting the Unilever court's holding with approval). Finally, the 1966 Advisory Committee Notes to Rule 17 state that the application of the rule should be tempered with leniency in the event of an honest mistake "in both maritime and non-maritime cases." 1966 Advisory Committee Notes, FED. R. CIV. P. 17.
Accordingly, this Court sees no reason to treat this case any differently because it is a suit in admiralty. The rules of civil procedure were designed to apply in all cases, except where otherwise noted. Thus, assuming that the pre-requisites of Rule 17 were satisfied, the amendment is proper.
C. Whether amendment under Rule 17(a) was proper
Rule 17(a) provides, in pertinent part:
Every action shall be prosecuted in the name of the real party in interest. . . . No action shall be dismissed on the ground that it is not prosecuted in the name of the real party in interest until a reasonable time has been allowed after objection for ratification of commencement of the action by, or joinder or substitution of, the real party in interest; and such ratification, joinder, or substitution shall have the same effect as if the action had been commenced in the name of the real party in interest.
As noted above, Rule 17 should apply where an honest mistake has been made regarding the proper party plaintiff or the determination of that party is difficult. See 1966 Advisory Committee Notes, FED. R. CIV. P. 17. Such was the holding of the Fifth Circuit in Wieburg v. GTE Southwest Inc., 272 F.3d 302, 308 (5th Cir. 2001), which interpreted Rule 17(a) in the context of a bankruptcy proceeding. Thus, the question for this Court is whether the Hudspeaths made an honest mistake or had difficulty determining the proper party plaintiff at the time they filed a claim in this limitation proceeding in their own name.
To answer this question, the Court must first review the facts and holding of Wieburg. The plaintiff in Wieburg was fired by the defendant in August, 1996 and filed for Chapter 7 bankruptcy nearly three months later. A few months after that, plaintiff wrote the EEOC stating that she was discharged on the basis of age and sex. In April, 1997, the plaintiff was discharged in bankruptcy, and then brought formal charges against the defendant with the EEOC. Thereafter, she filed suit in the district court. When the trustee learned of the pending claim, he sought to reopen the bankruptcy. The trustee and the plaintiff entered into an agreement permitting her to pursue her claims. The defendant, however, moved to dismiss the case, arguing that the proper party plaintiff was not in the case. The district court granted the motion, and the plaintiff and trustee appealed.
The Fifth Circuit concluded that because the plaintiffs cause of action arose prior to filing for Chapter 7 bankruptcy, the trustee was the proper party with "exclusive standing" to bring suit. Id. at 306. The court went on to consider whether the trustee's failure to bring the suit warranted dismissal or whether the pleadings could be amended under Rule 17(a) to permit the trustee to become proper party plaintiff. The Fifth Circuit noted that the district court had failed to address whether the plaintiff had a reasonable time to obtain joinder or substitution of the trustee after the defendant's objection and whether the decision to pursue the action in the plaintiffs own name was the result of "understandable mistake." Id. at 308. Accordingly, the Fifth Circuit remanded the case for determination of whether Rule 17(a) would permit the ratification or joinder of the trustee. Id. at 309.
On remand, the district court concluded that the plaintiffs failure to include the trustee in her lawsuit was not the result of understandable mistake. See Wieburg v. GTE Southwest Inc., 2002 WL 31156431 (N.D. Tex. Sept. 26, 2002). The Court noted that the plaintiff never mentioned her pending claims to the trustee, even when pressed by the defendants to do so. In fact, it was the defendants who notified the trustee for the first time of the claims. The court further found that plaintiff failed to act in a reasonable time to obtain the joinder or ratification of the trustee. Accordingly, the district court dismissed the plaintiffs complaint.
The facts of the instant case are distinguishable from Wieburg. The Court has already noted that Hudspeath lost standing to pursue the claim in his own name in May, 2001 when the bankruptcy was converted from Chapter 13 to Chapter 7. Furthermore, it is not disputed that the trustee first became aware of the existence of the state court action in July, 2001 at the time of the meeting between the trustee and the Hudspeaths. In the Court's January 14, 2003 ruling, it noted that these facts preclude a summary disposition of this case because there is a question as to whether Hudspeath's failure to amend his bankruptcy schedules was due to a good faith understandable mistake, or intent to mislead creditors and the bankruptcy court. The Court is still unable to make that conclusion at this time. Several issues of fact remain regarding the Hudspeath's good faith, and summary judgment is inappropriate at this time.
IV. CONCLUSION
For the reasons set forth above, IT IS ORDERED that the petitioner's Motion for a New Trial be GRANTED to address the issues of relation back and standing under Rule 17(a). IT IS FURTHER ORDERED that the petitioner's Motion for Summary Judgment be DENIED, the Court finding an issue of material fact exists as to the claimant's good faith.