Cable v. Ivy Tech State College

• Decision Date: 28 December 1999
• Docket Number: No. 98-3802,98-3802
• Citation: 200 F.3d 467
• Parties: (7th Cir. 1999) Bruce K. Cable, as Debtor in Possession, <A HREF="#fr1-*" name="fn1-*">* Plaintiff-Appellant, v. Ivy Tech State College, <A HREF="#fr1-**" name="fn1-**">** Defendant-Appellee
• Court: U.S. Court of Appeals — Seventh Circuit

Page 467

200 F.3d 467 (7th Cir. 1999)

Bruce K. Cable, as Debtor in Possession,^* Plaintiff-Appellant, v. Ivy Tech State College,^** Defendant-Appellee.

No. 98-3802

In the United States Court of Appeals For the Seventh Circuit

Argued September 21, 1999

Decided December 28, 1999

Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 96 C 743--John D. Tinder, Judge. [Copyrighted Material Omitted] Before Easterbrook, Kanne and Evans, Circuit Judges.

Kanne, Circuit Judge.

This case concerns a Chapter 13 debtor's right to file, prosecute and appeal a claim for relief that belongs to the bankrupt's estate. After filing for Chapter 7 bankruptcy, Bruce K. Cable ("Cable" or "debtor") sued his former employer under the Americans with Disabilities Act ("ADA") for alleged injuries that occurred before his bankruptcy. Cable subsequently converted his case from Chapter 7 to Chapter 13 and prosecuted the case on his own for the benefit of the estate while the Chapter 7 trustee, Wayne J. Lennington ("Lennington" or "Chapter 7 trustee"), remained nominally as the party plaintiff. The trial court granted summary judgment against the Chapter 7 trustee, and the debtor appealed. The defendant, Ivy Tech State College ("Ivy Tech"), opposed the appeal on jurisdictional grounds, arguing that only Lennington as the named defendant had standing to appeal the ruling. We disagree and hold that a debtor-in-possession has standing to file, prosecute and appeal a chose in action belonging to the estate under Chapter 13. However, we affirm summary judgment for the defendant on the discrimination and retaliation claims.

I. History

Bruce Cable began teaching as an electronics instructor at Ivy Tech's Muncie, Indiana, campus in the fall of 1989. He had been employed by Ivy Tech through a series of one-year contracts, the last of which expired in May 1994 and was not renewed. Ivy Tech claims that the decision not to renew was necessitated by a "reduction in force" and contends that it used neutral, objective criteria to determine which instructors would be laid off. Cable, who is paralyzed from the waist down and uses a wheelchair, counters that the decision resulted from illegal discrimination against people with physical handicaps and constituted retaliation against him for demanding improved working and learning environments for handicapped students and faculty.

Cable's evidence of discrimination attempts to establish two separate facts: that he was an advocate for the rights of handicapped people and that certain administrators disliked handicapped people. First, at the request of an Ivy Tech administrator in 1989, Cable prepared a list of concerns about handicapped accessibility on the Muncie campus, identifying changes in parking, accessibility and bathroom facilities needed to comply with the ADA. Cable also participated in a handicapped awareness group and was a vocal advocate for issues affecting handicapped people. The group, with Cable's participation but not necessarily under his leadership, advocated improvements in handicapped accessibility on the Muncie campus. It disbanded in 1992 or 1993, at least a year before Cable's termination. At the time of his firing, Cable alleges that the Muncie campus still was not fully in compliance with the ADA.

Second, Cable alleges that statements by a school administrator indicate an insensitivity or prejudice toward handicapped people. According to Cable, Executive Dean Thomas Henry referred to handicapped people as "cripples," considered Cable a "pain in the ass" and thought the awareness group was a drain on the school's resources.

By 1994, enrollment at the Ivy Tech campuses had dropped more than 10 percent. Henry requested an enrollment study of various programs offered on each of the campuses in Region Six, which included the Muncie campus. The study showed that enrollment had dropped most dramatically in four programs, including electronics. Henry decided to lay off one instructor from each program and redirect the money to more sought after programs, such as the physical therapy assistant, occupational assistant and general education programs. To decide who would be laid off, Ivy Tech had three objective goals: (1) retain program chairs; (2) retain instructors with the highest educational credentials; and (3) reward seniority. Applying these criteria to the Muncie electronics program, which had four instructors, the college decided to lay off Cable, who was not a program chair, did not have a master's degree and had (by one month) the least seniority. Cable was informed in March 1994 that his contract would not be renewed. The same criteria were applied to the other programs and the other campuses.

In May 1994, after Cable had been laid off, Ivy Tech posted an "opening" with the Indiana Department of Workforce Development ("IDWD") for an electronics instructor in Region 6. The position was not actually "open," but was at the time filled by Obrin Griffin, an immigrant from Africa. Griffin, who was one of the three instructors retained in Cable's department, was ultimately retained in the position. Ivy Tech contends that the IDWD requested Griffin's position be posted as a formality so that the IDWD could comply with an immigration regulation. The job description, hours and pay matched Griffin's job, not Cable's former job.

Cable and his wife filed a joint petition for bankruptcy under Chapter 7 of the Bankruptcy Code after the 1994 school year, and Lennington was appointed as trustee. At about the same time, Cable filed a complaint with the Equal Employment Opportunity Commission and, in February 1996, received a "right to sue" letter. Cable filed a complaint on May 22, 1996, in the United States District Court for the Southern District of Indiana, and an amended complaint on August 1, 1996, accusing Ivy Tech of several constitutional violations along with discrimination and retaliation under the ADA.

The district court granted summary judgment on the constitutional claims in February 1998. The dismissal of these claims was not appealed. In April 1998, the Chapter 7 trustee was substituted as the proper party, and soon thereafter Cable, unhappy with Lennington's proposed settlement of the suit, exercised his statutory right to convert from Chapter 7 to Chapter 13 bankruptcy. Bankruptcy Judge Frank J. Otte granted the motion to convert on April 30, 1998, causing Lennington to lose standing as trustee. The bankruptcy court appointed Robert A. Brothers, the standing trustee for Chapter 13 in the Southern District of Indiana, as trustee. On July 30, 1998, Judge Otte approved the confirmation order in Cable's Chapter 13 bankruptcy and ordered that Cable turn over the "net proceeds from their pending chose in action . . . to effect 100 percent payment to all creditors."

However, Brothers was not made a party to the ADA suit. For reasons that are unclear, the court and possibly the defense remained unaware that the bankruptcy action had been converted. Cable, who was prosecuting the suit through retained counsel approved by the bankruptcy court, apparently did not notify the district court of the conversion. Despite Lennington's lack of standing in the case, the district court granted summary judgment on the ADA claims against Lennington on September 30, 1998. Brothers was formally substituted as party to the ADA action by this Court on December 2, 1998.

Cable appealed, pro se, the grant of summary judgment. The defendant opposed on substantive grounds and also challenged the debtor's standing to bring an appeal in his own name. Although neither the Chapter 7 or Chapter 13 trustee filed notices of appeal, this court asked Brothers and Ivy Tech to brief the issue of standing. Brothers strongly supported on both legal and policy grounds the right of debtors to prosecute and appeal their own choses in action. Brothers noted that as a practical matter, the standing trustee manages about 6,000 active estates involving hundreds of suits that potentially could benefit the creditors.

Because an appellant's standing is foundational to our ability to hear an appeal, we asked the bankruptcy trustee and defendant to brief this issue in addition to the substantive challenge to the summary judgment order, which was briefed by plaintiff Bruce Cable and defendant Ivy Tech.

II. Analysis

We first address the issue of whether a debtor has standing to appeal an adverse judgment in a claim for relief owned by the bankrupt estate in which the pre-conversion Chapter 7 trustee was incorrectly listed as the named party plaintiff. Ivy Tech would answer that question negatively on two grounds. First, it contends that only the Chapter 13 trustee can bring a claim for the benefit of the estate and second, because the Chapter 7 trustee was listed (incorrectly) as the plaintiff, only the Chapter 7 trustee can appeal.

A. Debtor Standing

Both parties marshal some support for the question of whether a Chapter 13 debtor can bring a claim on behalf of the estate. Admittedly, the decisions of the lower courts are not uniform. Brothers contends that Chapter 13 establishes the debtor-in-possession as a proper party to bring legal claims, which facilitates the prompt and efficient payment of creditors. Ivy Tech uses the decisions of some bankruptcy courts to argue that the trustee must act as the sole legal representative of the estate who alone can sue and be sued over its debts.

Ivy Tech mistakes a fundamental difference between Chapter 7 and Chapter 13. Chapter 7 establishes a much more radical solution to indebtedness, requiring the liquidation of the debtor's property, to which end Congress granted the trustee broad powers without interference from the debtor. The trustee has sole authority to dispose of property, including managing litigation related to the estate. See 11 U.S.C. sec.sec. 541(a)(1), 704(1). Chapter 13, on the other hand, encourages the...