Courtland Props. I, LLC v. Collins

• Decision Date: 24 October 2019
• Docket Number: A19A1437
• Court: Georgia Court of Appeals
• Parties: COURTLAND PROPERTIES I, LLC et al. v. COLLINS

353 Ga.App. 99

835 S.E.2d 319

COURTLAND PROPERTIES I, LLC et al.

v.COLLINS

A19A1437

Court of Appeals of Georgia.

October 24, 2019

Reconsideration Denied November 8, 2019

Freeman Mathis & Gary, Sun S. Choy, Jacob E. Daly, Sara E. Brochstein, for appellants.

Yinka T. Omole, for appellee.

McFadden, Chief Judge.

Appellant Courtland Properties I, LLC contends that it is entitled to summary judgment on appellee Collins’ personal injury claim because a bankruptcy trustee, rather than the appellee, is the real party in interest. While we agree that the trustee is the real party in interest, the appellant is not entitled to summary judgment; rather, the denial of the appellant's summary judgment motion must be vacated and the case remanded with direction that the appellee be given a reasonable amount of time to show ratification by, join, or substitute the trustee as the real party in interest.

1. Facts and procedural posture.

Terique Collins filed suit against Courtland Properties I, LLC, and others, seeking to recover damages allegedly arising out of injuries suffered as a result of a slip and fall in the apartment he leased from Courtland. About a year later, Collins filed a Chapter 7 bankruptcy petition. Courtland moved for summary judgment, claiming, among other things, that due to the bankruptcy filing, the bankruptcy trustee, instead of Collins, has standing to pursue the personal injury claim as the real party in interest. After a hearing, the trial court denied Courtland's motion for summary judgment but issued a certificate of immediate review. We granted Courtland's application for interlocutory review, and this appeal followed.

2. Real party in interest.

Courtland argues that it is entitled to summary judgment because the bankruptcy trustee, rather than Collins, is the real party in interest. While we agree that the bankruptcy trustee is the real party in interest, Courtland is not entitled to summary judgment on that basis.

"Under 11 USC § 541 (a) (1) [,] all legal or equitable interests of a debtor in property as of the commencement of the bankruptcy case becomes property of the bankruptcy estate. This includes causes of action, regardless of whether or not such actions are assignable or transferable by the debtor under state law." United Technologies Corp. v. Gaines , 225 Ga. App. 191, 192, 483 S.E.2d 357 (1997) (punctuation omitted). "Therefore, by the express preemptive operation of federal law, a [debtor's tort] cause of action becomes part of the bankruptcy estate even though OCGA § 44-12-24 normally prohibits the assignment of personal tort causes of action." Denis v. Delta Air Lines , 248 Ga. App. 377, 379, 546 S.E.2d 805 (2001) (citation and punctuation omitted). "Thus, any cause of action that [a debtor] possessed ... prior to his petition in bankruptcy [is] automatically vested in [the bankruptcy] trustee upon filing." Cincinnati Ins. Co. v. MacLeod , 259 Ga. App. 761, 764 (2), 577 S.E.2d 799 (2003). And "the trustee [is] the real party in interest vested automatically with the only right to bring such action." Id. See also Lee v. Owenby & Assoc. , 279 Ga. App. 446, 448 (1), 631 S.E.2d 478 (2006) (debtor's pending legal action is the property of the bankruptcy estate and only the trustee in bankruptcy has standing to pursue it); Gingold v. Allen , 272 Ga. App. 653, 654, 613 S.E.2d 173 (2005) (trustee is the real party in interest of debtor's cause of action).

In this case, Collins’ tort action was pending at the time he filed his bankruptcy petition. The cause of action therefore became property of the bankruptcy estate and the bankruptcy trustee became the real party in interest with standing to prosecute the claim. Nevertheless, Courtland may not be granted summary judgment on that basis because "a real party in interest objection generally does not go to the merits of an action, but instead is a matter in abatement for which summary judgment is inappropriate." First Christ Holiness Church v. Owens Temple First Christ Holiness Church , 282 Ga. 883, 886, 655 S.E.2d 605 (2008) (punctuation omitted). Consequently, "summary judgment cannot properly be granted to a defendant on the basis of a real-party-in-interest objection." Id. (citations and punctuation omitted). Accord Town & Country Dodge v. World Omni Financial Corp. , 261 Ga. App. 503, 504 (1), 583 S.E.2d 182 (2003) ("Summary judgment is not the proper vehicle to decide a real party in interest objection."). "But if a plea in abatement is raised in the trial court, the trial court may ignore the nomenclature assigned to the pleading and dismiss the complaint." Franco v. Cox , 265 Ga. App. 514, 517 (3), 594 S.E.2d 717 (2004).

However, before Collins’ action below can be dismissed, he is entitled to a reasonable time to show ratification by, join, or substitute the real party in interest. OCGA § 9-11-17 (a) provides in pertinent part:

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.

So in this case, "before the [action] could [be] dismiss[ed] based on [Courtland's] motion [raising a real-party-in-interest objection,] a reasonable time must be allowed after [the] motion is heard and before dismissal for [Collins to seek ratification,] joinder or substitution of [the real pa...