Opinion
No. CV08 5004283-S
April 7, 2009
MEMORANDUM OF DECISION RE MOTION TO DISMISS #103
The defendant, Jacek Smigelski, has filed a motion to dismiss a two-count complaint filed against him by the plaintiff, Samuel Lester. For the following reasons, the motion to dismiss is denied.
I. Facts
The plaintiff commenced this action on October 22, 2008. In the complaint, he alleges that in late 2004 he entered into a contingency fee agreement with the defendant, who is an attorney, to prosecute a negligence claim on his behalf. According to the plaintiff, because the events that led to his alleged injuries occurred on October 27, 2004, the statute of limitations, General Statutes § 52-584 required that his action be commenced by October 27, 2006. The plaintiff further alleges that the defendant failed to commence the action on his behalf within the statute of limitations, thus preventing him from making a recovery. Accordingly, count one of the plaintiff's complaint alleges a breach of the contingency fee agreement, and count two sets out a claim for legal malpractice. On January 6, 2009, the defendant filed an answer with special defenses and a counterclaim.
General Statutes § 52-584 provides: "No action to recover damages for injury to the person, or to real or personal property, caused by negligence, or by reckless or wanton misconduct, or by malpractice of a physician, surgeon, dentist, podiatrist, chiropractor, hospital or sanatorium, shall be brought but within two years from the date when the injury is first sustained or discovered or in the exercise of reasonable care should have been discovered, and except that no such action may be brought more than three years from the date of the act or omission complained of, except that a counterclaim may be interposed in any such action any time before the pleadings in such action are finally closed."
The following uncontested facts are also relevant. In October of 2005, the plaintiff filed for bankruptcy pursuant to Chapter 7 of the United States Bankruptcy Code, and was represented by the defendant during the bankruptcy. As part of this proceeding, the plaintiff apparently disclosed the unprosecuted negligence action as property that could be claimed by the bankruptcy estate. Thereafter, on January 20, 2006, the bankruptcy judge entered an order authorizing the bankruptcy trustee to employ the defendant "as attorney for the trustee and the estate in connection with the estate's [legal] claims," including the unprosecuted negligence claim that concerns the present action. By letter sent to the bankruptcy trustee dated April 7, 2006, the defendant placed an estimated value on the relevant negligence action of "less than $1,000." In that same letter, the defendant asked the bankruptcy trustee how he should proceed with the negligence action, as well as two other, separate, outstanding legal claims that accrued prior to the filing of the bankruptcy petition. Apparently, the relevant negligence action was not pursued during the course of the bankruptcy proceedings, and on May 16, 2006 the bankruptcy case was closed. It is not disputed that a few months later, on October 27, 2006, the statute of limitations expired, the negligence action having never been commenced.
Property of a bankruptcy estate is broadly defined by 11 U.S.C. § 541(a)(1) as "all legal or equitable interests of the debtor in property as of the commencement of the case," subject to exceptions laid out in subsections (b) and (c)(2), none of which are relevant in the present case.
On January 7, 2009, the defendant filed the motion to dismiss that is now before the court. He first claims that the court lacks subject matter jurisdiction to hear the plaintiff's claims, since, according to him, the plaintiff lacks standing. The motion to dismiss also argues, in the alternative, that even if the plaintiff does have standing, the doctrine of judicial estoppel bars him from making the arguments necessary to support his complaint, and the action should therefore be dismissed.
In support of the motion to dismiss, the defendant has provided the court with several documents including: a memorandum of law; a document from the United States Bankruptcy Court for the District of Connecticut entitled "Notice of Chapter 7 Bankruptcy Case, Meeting of Creditors, Deadlines," dated October 24, 2005; an application to employ the defendant as an attorney to act on behalf of the bankruptcy trustee and estate, dated January 2, 2006; a letter dated January 2, 2006 from the bankruptcy trustee sent to the United States Bankruptcy Court for the District of Connecticut stating that the trustee expected to recover assets in the plaintiff's bankruptcy proceeding; an order from the bankruptcy judge authorizing the defendant to act as attorney for the bankruptcy trustee and estate in connection with three legal claims, including the unprosecuted negligence action relevant here; a document entitled "Notice of Need to File Proof of Claim Due to Recovery of Assets," dated January 3, 2006 and signed by the bankruptcy judge, instructing creditors to file proof of a claim in order to share in the distribution of funds; a letter dated April 7, 2006 sent by the defendant to the bankruptcy trustee valuing three legal claims that previously belonged to the plaintiff, including the unprosecuted negligence claim relevant to the present action; and a "PACER Service Center" printout of the docket summary from the plaintiff's bankruptcy proceeding. On January 21, 2009, the plaintiff filed an objection to the plaintiff's motion to dismiss and a supporting memorandum of law.
II. Standard
"A motion to dismiss . . . properly attacks the jurisdiction of the court, essentially asserting that the plaintiff cannot as a matter of law and fact state a cause of action that should be heard by the court . . . A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction." (Internal quotation marks omitted.) Beecher v. Mohegan Tribe of Indians of Connecticut, 282 Conn. 130, 134, 918 A.2d 880 (2007); Pedro v. Miller, 281 Conn. 112, 116, 914 A.2d 524 (2007). "The grounds which may be asserted in [a motion to dismiss] are: (1) lack of jurisdiction over the subject matter; (2) lack of jurisdiction over the person; (3) improper venue; (4) insufficiency of process; and (5) insufficiency of service of process." Zizka v. Water Pollution Control Authority, 195 Conn. 682, 687, 490 A.2d 509 (1985), citing Practice Book § 10-31. "The issue of standing implicates subject matter jurisdiction and is therefore a basis for granting a motion to dismiss." St. George v. Gordon, 264 Conn. 538, 544, 825 A.2d 90 (2003).
"[T]he plaintiff bears the burden of proving subject matter jurisdiction, whenever and however raised." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. New London, 265 Conn. 423, 430 n. 12, 829 A.2d 801 (2003). "The burden rests with the party who seeks the exercise of jurisdiction in his favor . . . clearly to allege facts demonstrating that he is a proper party to invoke judicial resolution of the dispute." (Internal quotation marks omitted.) Goodyear v. Discala, 269 Conn. 507, 511, 849 A.2d 791 (2004). "[I]n determining whether a court has subject matter jurisdiction, every presumption favoring jurisdiction should be indulged." (Internal quotation marks omitted.) Connor v. Statewide Grievance Committee, 260 Conn. 435, 443, 797 A.2d 1081 (2002).
III. Discusion
At the outset, the plaintiff argues that by filing the present motion to dismiss after first filing an answer and special defenses, the defendant failed to plead in the order established by Practice Book § 10-6, and that Practice Book § 10-7 therefore dictates that the defendant has waived his right to file a motion to dismiss.
"The use of a motion to dismiss is ordinarily limited by Practice Book §§ 10-6, 10-7, 10-30 and 10-32, which together require that a motion to dismiss be the first pleading filed in response to the complaint and that it be filed within thirty days of the filing of an appearance. If the motion to dismiss is not filed according to those requirements, then any challenges on the grounds of lack of jurisdiction over the person, improper venue, insufficiency of process or insufficiency of service of process are deemed waived. See Practice Book §§ 10-7 and 10-32." Manifold v. Ragaglia, 94 Conn.App. 103, 116, 891 A.2d 106 (2006). However, "a subject matter jurisdictional defect may not be waived . . . [or jurisdiction] conferred by the parties, explicitly or implicitly . . . [The question of subject matter jurisdiction] . . . once raised, either by a party or by the court itself . . . must be answered before the court may decide the case." (Internal quotation marks omitted.) Batte-Holmgren v. Commissioner of Public Health, 281 Conn. 277, 283, 914 A.2d 996 (2007). Therefore, inasmuch as a portion of the defendant's motion to dismiss challenges the plaintiff's standing in this action and, thus, the court's subject matter jurisdiction, it is of no effect that the defendant pled out of order. The court must consider the defendant's argument that the court lacks subject matter jurisdiction. See id.
On the other hand, the portion of the defendant's motion that seeks dismissal on the basis of the doctrine of judicial estoppel does not present a subject matter jurisdictional question. Thus, even assuming that judicial estoppel may be properly raised in a motion to dismiss — which this court does not believe is the case; see Practice Book § 10-31(a) (listing the appropriate grounds for a motion to dismiss) — the defendant has pled out of order and thereby waived his right to seek dismissal on this basis. As such, this court's inquiry is limited to whether the plaintiff has standing to bring this suit.
The doctrine of judicial estoppel, which is designed to prevent a party from taking inconsistent positions in subsequent legal proceedings, has never been officially recognized in Connecticut. See SKW Real Estate Ltd. Partnership v. Mitsubishi Motor Sales of America, Inc., 56 Conn.App. 1, 8, 741 A.2d 4 (1999), cert. denied, 252 Conn. 931, 746 A.2d 793 (2000) (discussing doctrine and stating, "We do not have to determine whether Connecticut recognizes the doctrine of judicial estoppel because there is no factual basis to apply any estoppel principles here"). Courts that have recognized judicial estoppel have noted that "there are two elements to the doctrine: `First, the party against whom the estoppel is asserted must have argued an inconsistent position in a prior proceeding; and second, the prior inconsistent position must have been adopted by the court in some manner.' Bates v. Long Island R.R. Co., 997 F.2d 1028, 1038 (2d Cir.), cert. denied, 510 U.S. 992, 114 S.Ct. 550, 126 L.Ed.2d 452(1993)." Id., 8 n. 6.
The defendant argues that the plaintiff lacks standing to bring his claims. He notes that "on or about October 16, 2005, the plaintiff and his wife . . . filed a petition under Chapter 7 of the [United States] Bankruptcy Code . . ." Because of this, the defendant asserts that all of the plaintiff's legal claims that were outstanding at the time of the bankruptcy filing — including the unprosecuted negligence claim that serves as the basis for the present action — became property of the bankruptcy trustee. Although the bankruptcy proceedings were closed on May 16, 2006 without the negligence claim in question having been administered by the estate, the defendant contends that 11 U.S.C. § 554 (2006) controls and that that provision, particularly subsection (d), mandates that the yet-to-be prosecuted negligence claim remains the property of the bankruptcy estate. Thus, the defendant argues the plaintiff does not have standing to bring this breach of contract/malpractice action and that the court does not have subject matter jurisdiction.
11 U.S.C. § 554 provides: "Abandonment of property of the estate. (a) After notice and a hearing, the trustee may abandon any property of the estate that is burdensome to the estate or that is of inconsequential value and benefit to the estate. (b) On request of a party in interest and after notice and a hearing, the court may order the trustee to abandon any property of the estate that is burdensome to the estate or that is of inconsequential value and benefit to the estate. (c) Unless the court orders otherwise, any property scheduled under [§]521(1) of this title not otherwise administered at the time of the closing of a case is abandoned to the debtor and administered at the time of the closing of a case is abandoned to the debtor and administered for purposes of [§]350 of this title. (d) Unless the court orders otherwise, property of the estate that is not abandoned under this section and that is not administered in the case remains the property of the estate."
11 U.S.C. § 521(a)(1) requires the debtor to "file a list of creditors . . . a schedule of assets and liabilities . . . a schedule of current income and current expenditures . . . [and] a statement of the debtor's financial affairs . . ."
While the defendant focuses on subsection (d) of § 554, the plaintiff focuses on subsection (c) and claims that because the unprosecuted negligence claim was not administered at the close of the bankruptcy case, and because there was no judicial order to the contrary, it was automatically abandoned and passed directly back to him as debtor. On the evidence provided, the court agrees.
"Section 554 of the Bankruptcy Code provides three methods by which property of the estate may be abandoned by the trustee . . . After notice and a hearing, property that is burdensome to the estate may be abandoned by the trustee either on his own motion [pursuant to § 554(a)], or by order of the [c]ourt at the request of a party in interest, [pursuant to § 554(b)]. But without notice and a hearing, and unless the [c]ourt orders otherwise, `any property scheduled under [§]521(1) of this title not otherwise administered at the time of the closing of a case is abandoned to the debtor and administered for purposes of [§]350 of this title' [as provided by § 554(c)]. This is generally referred to as a `technical abandonment.'" (Citation omitted.) In re Shelton, 201 B.R. 147, 155 (Bankr.E.D.Va. 1996).
Thus, "[w]hen there is no court order directing abandonment, and unless the court orders otherwise, the language of [§ 554](c) deems abandoned to the debtor any scheduled property of the estate that is unadministered at the close of the case." (Emphasis in original.) 5 L. King, Collier on Bankruptcy (15th Ed. 2008) § 554.02[7], p. 554-11. "Under § 554(c), a technical abandonment is necessarily the effect of the closing order, regardless of the trustee's intentions." In re Woods, 173 F.3d 770, 776 (10th Cir.), cert. denied, 528 U.S. 878, 120 S.Ct. 187, 145 L.Ed.2d 157 (1999). In sum, at the time of the closing of a bankruptcy proceeding, if the bankruptcy court does not "order otherwise," a legal claim properly scheduled by the debtor but not administered by the trustee is deemed technically abandoned pursuant to § 554(c). See id. ("At the time of closing, the [bankruptcy] court had not `order[ed] otherwise; ` the property was scheduled; and the property, although in the process of administration, had not been `otherwise administered.' ")
It appears the federal courts are not in agreement regarding what happens to property that is technically abandoned under § 554(c) when the case is subsequently reopened pursuant to 11 U.S.C. § 350(b), which provides that "[a] case may be reopened in the court in which such case was closed to administer assets, to accord relief to the debtor, or for other cause." See, e.g., In re Balzone, 336 B.R. 160, 167-71 (Bankr.D.Conn. 2006) (discussing varying conclusions reached by federal courts faced with this dilemma). Regardless, the court has not been presented with any evidence demonstrating that the bankruptcy case has been reopened in the present case.
However, "[a]bandonment presupposes knowledge. There can, as a rule, therefore be no abandonment by mere operation of law of property that was not listed in the debtor's schedules or otherwise disclosed to the creditors. This principle is recognized in [§]554(c) which provides that, unless the court orders otherwise, property of the estate that is neither abandoned nor administered in the case remains property of the estate. Likewise, property which is improperly or ineffectively abandoned remains property of the estate pursuant to [§]554(d).
"Thus, if property was not properly scheduled by the debtor, it is not automatically abandoned at the end of the case. Section 554(c) provides for automatic abandonment only for property that was `scheduled under [§]521(1).' Even after the case is closed, the estate continues to retain its interest in unscheduled property." 5 L. King, supra, pp. 554-13-554-14.
In the present case, the defendant readily admits the unprosecuted negligence claim was not administered. Furthermore, this court has not been provided with any evidence that would suggest the bankruptcy court, as allowed by § 554(c), entered an order stipulating that the unprosecuted negligence claim would remain the property of the bankruptcy estate after the case was closed. Thus, so long as the unprosecuted negligence claim was "scheduled" as required by § 521(a)(1), it was technically abandoned upon the closing of the bankruptcy case, as provided by § 554(c).
The defendant argues that "[u]nder the facts of this case, pursuant to the order of the bankruptcy court, the defendant was ordered to prosecute the [pertinent negligence claim] on behalf of the trustee in bankruptcy. That claim was therefore not abandoned; however, it was not administered, therefore it remains the property of the estate." The order referred to by the defendant is the bankruptcy court's January 25, 2006 order authorizing the bankruptcy trustee to employ the defendant to prosecute the legal claims inherited by the estate from the debtor, including the unprosecuted negligence claim relevant to the present action. This order was entered almost four months prior to the closing of the case and clearly was not designed to ensure that the unadministered negligence claim in question avoid technical abandonment and remain the property of the bankruptcy estate after the close of the case.
Although the actual schedules from the earlier bankruptcy proceeding have not been provided to the court, it is apparent from the evidence that has been submitted that the unprosecuted negligence claim was scheduled in the bankruptcy proceeding, and that the bankruptcy court and trustee were aware of it. Both the bankruptcy trustee's January 2, 2006 application to employ the defendant as attorney for the estate, and the bankruptcy court's January 25, 2006 order approving that application reference the negligence claim in question. Furthermore, the defendant's April 7, 2006 letter sent to the bankruptcy trustee expressly references the unprosecuted negligence claim, describes its general nature, estimates its value at "less than $1,000," and reveals that the defendant previously discussed the negligence claim with the trustee. Given that this court is to make "every presumption favoring jurisdiction; " Connor v. Statewide Grievance Committee, supra, 260 Conn. 443; this evidence, taken together, is sufficient to demonstrate that the unprosecuted negligence claim was scheduled and that the bankruptcy court and trustee were aware of it. Therefore, upon the closing of the bankruptcy proceeding, the claim was technically abandoned and passed back to the plaintiff as debtor. Section 554(d), of course, is therefore inapplicable, since that subsection only concerns "property of the estate that is not abandoned under" the other provisions of § 554.
IV. Conclusion
For the reasons outlined above, the plaintiff has standing to pursue this action, and all other grounds for the defendant's motion to dismiss were waived by failing to plead in due order. As such, the court has subject matter jurisdiction and the defendant's motion to dismiss must be denied.