Beasley v. Personal Finance Corporation, Civ.A. No. 3:01-cv-845BN.

• Decision Date: 17 May 2002
• Docket Number: Civ.A. No. 3:01-cv-845BN.
• Citation: 279 B.R. 523
• Parties: Katie BEASLEY, et al., Plaintiffs, v. PERSONAL FINANCE CORPORATION; American Security Insurance Company; Century Credit Life Insurance Corporation; Bancorp South Bank; and Sheila Kellum, Defendants.
• Court: U.S. District Court — Southern District of Mississippi

279 B.R. 523

Katie BEASLEY, et al., Plaintiffs, v. PERSONAL FINANCE CORPORATION; American Security Insurance Company; Century Credit Life Insurance Corporation; Bancorp South Bank; and Sheila Kellum, Defendants.

Civ.A. No. 3:01-cv-845BN.

United States District Court, S.D. Mississippi, Jackson Division.

May 17, 2002.

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Don John W. Barrett, Brian Kelly Herrington, Barrett Law Offices, Lexington, MS, James C. Patton, Jr., Crawley Law Office, Louisville, MS, Robert J. Hedge, Richard H. Taylor, Taylor, Martino & Hedge, P.C., Mobile, AL, Pieter Teeuwissen, Danks, Simon & Teeuwissen, Anthony R. Simon, Richmond, Simon & Abston, Jackson, MS, for plaintiffs.

Fred Krutz, III, John Chase Bryan, Forman, Perry, Watkins, Krutz & Tardy, Charles E. Griffin, Griffin & Associates, Randy L. Dean, Walter D. Willson, Wells, Marble, & Hurst, Jackson, MS, for defendants.

OPINION AND ORDER

BARBOUR, District Judge.

This cause is before the Court on the Motion of Plaintiffs for Voluntary Dismissal, or in the alternative, for Severance. Having considered the Motion, Response, Rebuttal, attachments to each, and opposing and supporting authority, the Court finds that the Motion is not well taken and should be denied.

Also before the Court is the Motion of Plaintiffs to Remand. Having considered the Motion, Response, Rebuttal, attachments to each, and opposing and supporting authority, the Court finds that the Motion is well taken and should be granted.

I. Background and Procedural History

Plaintiffs entered loan agreements with Defendant Personal Finance Corporation. In conjunction with the loans, Plaintiffs purchased various insurance policies through Defendant Century Credit Life Insurance Corporation and/or Defendant American Security Insurance Company. On August 11, 2000, Plaintiffs filed suit in the Circuit Court of the First Judicial District of Hinds County, Mississippi. Plaintiffs alleged that Defendants conspired to defraud and mislead them in connection with their loans and their purchases of insurance in connection with their loans. Based on this conduct, Plaintiffs asserted causes of action for fraud, negligent misrepresentation, breach of fiduciary duty and negligence.

On October 30, 2001, Defendants removed the case to the United States District Court for the Southern District of Mississippi on the basis that Plaintiff Gerond Allen Sanders ("Sanders") was allegedly involved in bankruptcy proceedings. In response, Plaintiffs filed the instant motions to remand and for voluntarily dismissal of the bankrupt Plaintiff.

II. Analysis

A. Motion of Plaintiff Sanders for Voluntary Dismissal

Plaintiffs seek voluntary dismissal of Sanders' claims pursuant to Rule 41(a)(2) of the Federal Rules of Civil Procedure, which provides in pertinent part: "an action shall not be dismissed at the plaintiff's instance save upon order of the court and upon such terms and conditions as the court deems proper." See Motion. Generally, "[t]he basic purpose of Rule 41(a)(2) is to freely permit the plaintiff, with court approval, to voluntarily dismiss an action so long as no other party will be prejudiced." LeCompte v. Mr. Chip, Inc., 528 F.2d 601, 604 (5th Cir.1976). However, the "right to voluntary dismissal without prejudice is not absolute. Rather, dismissal on Motion under Rule 41(a)(2) is within the sound discretion of the court...." Id. (citing Diamond v. United States, 267 F.2d 23 (5th Cir.1959)).

When considering whether to grant a motion to voluntarily dismiss a complaint under Rule 41(a)(2), "the district court should first ask whether an unconditional dismissal will cause the non-movant to suffer plain legal prejudice. If not, it should generally, absent some evidence of abuse by the movant, grant the motion." Elbaor v. Tripath Imaging, Inc., 279 F.3d 314, 317 (5th Cir.2002). Plaintiffs seek voluntary dismissal of Sanders on ground that he lacks standing to continue this action. See Motion. Plaintiffs argue that Sanders' claims against Defendants are vested in the bankruptcy estate and that the bankruptcy trustee is the real party in interest and therefore the only party with standing to continue this action. See id. Plaintiffs urge the Court to dismiss Sanders without prejudice so that the trustee can determine whether his claims should be prosecuted. See id. Defendants do not dispute Sanders' contention that he lacks standing, but argue, inter alia, that Sanders not only lacks standing to bring this action, but also lacks standing to seek voluntary dismissal. See Response.

The Court notes that the cases upon which both Plaintiffs and Defendants rely involved Chapter 7 debtors, who without question lose their standing to pursue prepetition causes of action upon filing petitions for bankruptcy. See Wieburg v. GTE Southwest Inc., 272 F.3d 302, 306 (5th Cir.2001); In re MortgageAmerica Corp., 714 F.2d 1266 (5th Cir.1983); In re Raymond Const. Co. of Florida, Inc., 6 B.R. 793 (Bankr.M.D.Fla.1980). The rule is different for Chapter 13 debtors, however. A Chapter 13 debtor does not lose his right to sue upon filing his petition for bankruptcy.¹ See Olick v. Parker & Parsley Petroleum Co., 145 F.3d 513, 515-16 (2d Cir.1998); In re James, 210 B.R. 276, 278 (Bankr.S.D.Miss.1997) (holding that a Chapter 13 debtor may sue and be sued and controls whether and on what terms to settle his lawsuit). Rather, a Chapter 13 debtor "retains possession of and may use all the property of his estate, including his prepetition causes of action." Maritime Elec. Co., Inc. v. United Jersey Bank, 959 F.2d 1194, 1209 n. 2 (3d Cir.1991). See also 11 U.S.C. § 1303 (providing that "subject to any limitations on a trustee under this chapter, the debtor shall have, exclusive of the trustee, the rights and powers of the trustee under [the] sections 363(b), 363(d), 363(e), 363(f), and 363(l) [sections dealing with use, sale and lease of property of the debtor's estate] of this title"). The Court therefore finds that Sanders has standing to pursue the instant cause of action. Accordingly, the Court finds that the Motion of Plaintiffs for Voluntary Dismissal on ground that Sanders lacks standing to continue this action is not well taken and should be denied.

The Court additionally finds that the Motion of Plaintiffs for Voluntary Dismissal is not well taken and should be denied on ground of abuse. Sanders filed his petition for Chapter 13 bankruptcy under Title 11 of the United States Bankruptcy Code on March 23, 2001, more than seven months after filing the instant cause of action against Defendants. However, Sanders did not disclose his pending cause of action against Defendants, as he was duty-bound.² Sanders, in fact, affirmatively stated under penalty of perjury that he had not been a party to any suit or administrative proceedings within one year immediately preceding the filing of his bankruptcy case. See Motion for Summary Judgment, Exhibit "B-1," Statement of Financial Affairs, Question "4." These facts, taken together with the instant Motions for Voluntary Dismissal, Severance, and Remand, lead the Court to conclude that Sanders seeks dismissal to (1) avoid litigating his cause of action until such time as he is no longer required to pay his creditors their due if he is awarded or receives any payment from Defendants, and (2) increase his co-Plaintiffs' chances of success in their Motion to Remand. This kind of manipulation is nothing if not abuse. Therefore, without ruling on whether "unconditional dismissal will cause the non-movant to suffer plain legal prejudice," the Court finds that, under the circumstances of this case, Sanders abuses the Federal Rules of Civil Procedure and this Court with the instant Motion for Voluntary Dismissal. See Elbaor, 279 F.3d at 317. Accordingly, the Court finds that the Motion of Sanders for Voluntary Dismissal is not well taken and should be denied.

B. Motion of Plaintiffs to Remand

1. Must All Defendants Join in a Notice of Removal Under 28 U.S.C. § 1452?

Plaintiffs argue that the Notice of Removal filed by Defendants is "fatally defective" because all Defendants did not properly join in the Notice of Removal. See Motion. Notwithstanding the fact that all Defendants did, in fact, join in the Notice of Removal, the Court finds Plaintiffs' argument regarding the Rule of Unanimity to be without merit. While it is true that, under the rule of unanimity, all properly served defendants must join in a petition by which a case is removed to federal court pursuant to 28 U.S.C. § 1441, see e.g. Doe v. Kerwood, 969 F.2d 165, 167 (5th Cir.1992), the case sub judice, was removed under 28 U.S.C. § 1452. Section 1452 provides, in pertinent part, that "[a] party may remove a claim or cause of action to the district court for the district where such civil action is pending, if such district court has jurisdiction of such claim or cause of action under section 1334 of this title." Therefore, by its plain language, section 28 U.S.C. § 1452 differs from 28 U.S.C. § 1441(a) in that the former permits "a party" to remove a lawsuit to federal court while the latter permits removal by the "defendant or defendants" in the case. Accordingly, the Court finds that all of the Defendants to this action were not required to join in the notice of removal filed by Defendant American Security Insurance Company under 28 U.S.C. § 1452. See Creasy v. Coleman Furniture Corp., 763 F.2d 656, 660 (4th Cir.1985) (holding that in bankruptcy-related matters, any one party may remove the state court action without the consent of the other parties). See also Daleske v. Fairfield Cmtys., Inc., 17 F.3d 321, 323 (10th Cir.1994); Sommers v. Abshire, 186 B.R. 407, 408 (S.D.Tex.1995) (finding that "section 1452 of the bankruptcy removal statute permits an individual defendant in a multi-defendant case to remove an action from state court without the joinder or consent of the other defendants when the lawsuit...