Bowie v. ROSE SHANIS FINANCIAL SERV., LLC
| Decision Date | 09 December 2004 |
| Docket Number | No. 2602,2602 |
| Citation | 862 A.2d 1102,160 Md. App. 227 |
| Parties | L.A. BOWIE v. ROSE SHANIS FINANCIAL SERVICES, LLC. |
| Court | Court of Special Appeals of Maryland |
Charles W. Ayres, Jr., Glen Burnie, for Appellant.
Brian L. Moffet (Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC on the brief), Baltimore, for Appellee.
Panel: KENNEY, ADKINS and CHARLES E. MOYLAN, JR. (retired, specially assigned), JJ.
CHARLES E. MOYLAN, Jr., Judge, retired, specially assigned.
This appeal raises the question of what happens to the ownership of a law suit that once vests in the trustee of a bankruptcy estate after the estate subsequently closes with the law suit yet unpursued. Is ownership in limbo? How, if at all, may a trustee, through inaction, abandon such an asset, thus permitting it to revest in the original debtor? Is there a difference between the fate of a law suit that has been formally scheduled as an asset of the estate and the fate of one that has not?
On March 25, 2003, the appellant, L.A. Bowie ("Bowie"), filed a five-count complaint against the appellee, Rose Shanis Financial Services, LLC ("Rose Shanis"), in the Circuit Court for Baltimore City. On December 2, 2003, Rose Shanis filed a Motion to Dismiss or, in the Alternative, a Motion for Summary Judgment. The second paragraph of that motion well states the dominant issue before us on this appeal.
2. Approximately one year after the alleged events giving rise to this lawsuit occurred, Plaintiff filed for bankruptcy protection on December 21, 2001. As a result, the claims alleged against Rose Shanis do not belong to Plaintiff, but rather to his bankruptcy estate. Because the alleged claims were neither exempted from the estate nor abandoned by the bankruptcy trustee, Plaintiff is without standing to bring or pursue this action. Accordingly, Rose Shanis is entitled to the dismissal of the Complaint for lack of subject matter jurisdiction.
(Emphasis supplied).
Following a full hearing, including extensive argument by both parties, on January 12, 2004, Judge Kaye Allison granted summary judgment in favor of Rose Shanis on the ground that there was a "lack of subject-matter jurisdiction." This appeal timely followed. In it, Bowie raises two issues.
The question of whether the Circuit Court for Baltimore City had subject matter jurisdiction over the underlying suit was essentially the question of whether the plaintiff, Bowie, had standing to bring the suit, to wit, 1) Did the cause of action belong to Bowie when he filed the suit on March 25, 2003? or, more significantly, 2) Did the cause of action belong to Bowie when Judge Allison granted summary judgment motion on January 12, 2004? The chronology of events is critically important.
On June 12, 2000, Bowie obtained a loan of $30,024.88 from Rose Shanis. The loan was secured by two vehicles owned by Bowie, a 1998 Ford Expedition and a 2000 Ford Excursion. When Bowie failed to make his August and September 2000 payments on the loan, Rose Shanis exercised its contractual right under the terms of the loan agreement and repossessed the two vehicles. Rose Shanis advised Bowie of its intent to sell both vehicles. On October 31, 2000, the 2000 Ford Excursion was sold at public auction. Rose Shanis did not sell the 1998 Ford Expedition. It relinquished possession of that vehicle to Arcadia Financial, Ltd., upon learning that Arcadia was the senior lienholder. Shortly thereafter, Arcadia caused the 1998 Ford Expedition to be sold.
Bowie filed its five-count complaint against Rose Shanis on March 25, 2003. The complaint alleged 1) fraud, 2) negligence, 3) breach of contract, 4) conversion, and 5) interference with a contract. Our concern is not with the merits of that suit, but only with the dates of its underlying events. Every event alleged in the five-count complaint occurred between June 12, 2000, and November 3, 2000.
On December 21, 2001, a little more than a year after the last of the events that ultimately gave rise to the cause of action in this case, Bowie filed a Voluntary Petition for Chapter 7 Bankruptcy. Along with the bankruptcy petition, Bowie filed a Statement of Financial Affairs and Schedules of Assets and Liabilities. Bowie did not list as an asset or otherwise identify any alleged cause of action against Rose Shanis. Bowie never thereafter amended any of his bankruptcy statements or schedules to include his potential claim against Rose Shanis.
In an affidavit filed by Bowie on December 18, 2003, moreover, Bowie acknowledged 1) that, at the time of filing for bankruptcy, he was fully aware of his potential claim against Rose Shanis; 2) that he discussed with his lawyer the pros and cons of listing the claim in his bankruptcy schedules and exemptions; and 3) that he refrained from listing the claim with "the intention that all matters relating to Rose Shanis Financial, LLC, claims would be dealt with outside of the Bankruptcy" and not by the bankruptcy trustee. Implicit in that decision was that any possible recovery on the claim would accrue to the benefit of Bowie personally and not to the benefit of the creditors of the bankrupt estate.
I discussed the possible claim against Rose Shanis Financial, LLC, the Defendant in this case with my Bankruptcy Attorney David L. Ruben, Esquire. I was advised that it would not be necessary to list the possible claims against Rose Shanis Financial, LLC, in my Bankruptcy Schedules or exemptions. Also, it was determined that we would not list any possible claim by Rose Shanis Financial, LLC, against me for the remaining balance of the Loan which is the subject matter of the pending litigation. This was done with the intention that all matters relating to Rose Shanis Financial, LLC, claims would be dealt with outside of the Bankruptcy.
(Emphasis supplied).
(Emphasis supplied). The bankruptcy proceeding was closed on April 23, 2002, and Bowie was discharged from bankruptcy, without there having been any distribution of assets to creditors whatsoever.
The present claim was filed on March 25, 2003. On December 2, 2003, six weeks before the hearing before Judge Allison on the motion for summary judgment, Rose Shanis filed its Motion for Summary Judgment. In the accompanying 13-page memorandum of law in support of that motion, Rose Shanis raised and argued in full detail, citing extensive case law and statutes, the fact that the cause of action no longer belonged to Bowie but to the bankrupt estate. That memorandum pointed out that Bowie had neither scheduled the potential claim as an asset nor attempted to have it exempted from the bankruptcy estate. The conclusion alleged in that Memorandum of Law could not have been more clear.
Because Plaintiff lacks standing to sue Rose Shanis as a result of his filing for bankruptcy, this Court does not have subject matter jurisdiction over this case. Accordingly, Rose Shanis is entitled to the dismissal of the Complaint with prejudice.
(Emphasis supplied).
Notwithstanding that "red alert," Bowie, in the intervening two months before the granting of summary judgment, did nothing by way of seeking to amend his complaint or by way of making any reference to the bankrupt estate or to the former bankruptcy trustee as a possibly interested party. It was during that period at the very latest, if not indeed as much as five months before the beginning of that period, that any three-year limitations period for the filing of the claim would have run. Indeed, it may already have been too late for Bowie to have taken any curative action and he is in no position to fault Judge Allison in this regard.
Any possible limitations problem for a bankruptcy trustee was a fait accompli well before Judge Allison was called upon to make any sort of a ruling in this case. If a potential refiling of this claim by anyone represented a possible alternative remedy in this case, it was Bowie who allowed its viability to lapse at some time before November 3, 2003. Our concern, therefore, is with the legal entitlement of Bowie in his own right and not with the entitlement of a possibly resurrected bankruptcy estate.
Bowie does not seriously dispute the fact that, with his filing for bankruptcy, the owner of this suit became the bankruptcy estate and was no longer Bowie himself. 11 United States Code, § 541(a)(1) provides:
(Emphasis supplied).
In Pacific Mortgage and Investment Group, Ltd. v. Horn, 100 Md.App. 311, 319, 641 A.2d 913 (1994), Judge Cathell held squarely:
While the bankruptcy was open, the estate was the owner of the suit. 11 U.S.C. § 541(a)(1) provides that, an "estate is comprised of ... all legal or equitable interests of the...
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