Farmer v. Taco Bell Corp.

• Decision Date: 07 December 1999
• Docket Number: No. 98-2283-V.,98-2283-V.
• Citation: 242 BR 435
• Parties: John FARMER and wife, Beth Farmer, Plaintiffs, v. TACO BELL CORPORATION, Defendant.
• Court: U.S. District Court — Western District of Tennessee

242 B.R. 435 (1999)

John FARMER and wife, Beth Farmer, Plaintiffs, v. TACO BELL CORPORATION, Defendant.

No. 98-2283-V.

United States District Court, W.D. Tennessee, Western Division.

December 7, 1999.

Anthony Helm, Law Offices of Anthony Helm, Bartlett, TN, for plaintiffs.

Richard R. Roberts, Randall D. Noel, Armstrong Allen Prewitt Gentry, Johnston & Holmes, John W. Campbell, Hale Headrick Dewey & Wolf, Pllc, Memphis, TN, for defendants.

Jimmy Moore, Circuit Court, 30th Judicial District, Memphis, TN, pro se.

ORDER DENYING DEFENDANT'S MOTION TO DISMISS OR FOR SUMMARY JUDGMENT

VESCOVO, United States Magistrate Judge.

Plaintiffs John and Beth Farmer sued defendant Taco Bell Corporation for injuries that Beth Farmer sustained when she slipped on a floor at one of defendant's restaurants in Bartlett, Tennessee, on March 3, 1997. Before the court is defendant's Motion to Dismiss or for Summary Judgment.¹ For the reasons that follow, defendant's motion is DENIED.

I. BACKGROUND AND UNDISPUTED FACTS

Plaintiff Beth Farmer was a customer in a Taco Bell restaurant on March 3, 1997, when she slipped and fell on the floor, suffering injuries. On March 11, 1997, plaintiffs notified Taco Bell that they had retained an attorney and alleged that they had a claim against Taco Bell. Plaintiffs brought the present action in state court on February 23, 1998, alleging that Beth Farmer was injured as a result of the negligence of defendant's employees and asserting a derivative claim by John Farmer for loss of consortium. Defendants removed the case to federal court on March 25, 1998, pursuant to 28 U.S.C. § 1332.

On August 23, 1995, well before Mrs. Farmer was injured, plaintiffs filed for bankruptcy protection under Chapter 13 of the United States Bankruptcy Code. Following the injuries that led to the present case, plaintiffs voluntarily converted their Chapter 13 bankruptcy to one under Chapter 7 on July 1, 1997. Plaintiffs did not list the present cause of action on their schedule of assets as part of the filing for conversion.

II. ANALYSIS

Defendant asserts three grounds for summary judgment. Defendant first argues that plaintiffs lack standing to bring this lawsuit because this cause of action was part of plaintiffs' bankruptcy estate and thus belonged to the trustee in bankruptcy, not to the plaintiffs. Therefore, defendant contends, only the trustee could bring this action and because the bankruptcy was discharged in January 1998, no one can now bring this suit. As a corollary to its first argument, defendant also contends that plaintiffs' failure to list this personal injury tort claim as an asset on their bankruptcy petition extinguished the cause of action and precludes plaintiffs from suing on it. Finally, defendant insists that if any medical expenses attributable to the personal injury tort claim were discharged in the bankruptcy proceedings, the plaintiffs are barred as a matter of law from recovering those expenses in this lawsuit.

Although defendant styles its motion as one either to dismiss or for summary judgment, the defendant has relied on materials outside of the record, such as the bankruptcy petition and schedules, in support of its motion. Because a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) may not incorporate materials outside of the record but must instead rely strictly on the pleadings, the court analyzes the present motion as one simply for summary judgment.

A. Summary Judgment Standard

A motion for summary judgment is properly granted when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); LaPointe v. United Autoworkers Local 600, 8 F.3d 376, 378 (6th Cir.1993); see also Osborn v. Ashland County Bd. of Alcohol, Drug Addiction and Mental Health Servs., 979 F.2d 1131, 1133 (6th Cir.1992) (per curiam). The moving party has the burden of showing that there are no genuine issues of material fact as to an essential element of the nonmoving party's case. See Celotex Corp. v. Catrett, 477 U.S. 317, 321, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); LaPointe, 8 F.3d at 378; Barnhart v. Pickrel, Schaeffer & Ebeling Co., 12 F.3d 1382, 1389 (6th Cir.1993); Guarino v. Brookfield Township Trustees, 980 F.2d 399, 405 (6th Cir.1992). If the moving party meets this burden, the nonmoving party must then present "significant probative evidence" to demonstrate that "there is more than some metaphysical doubt as to the material facts." Moore v. Philip Morris Co., 8 F.3d 335, 339-40 (6th Cir.1993). The nonmoving party "may not rest upon the mere allegations or denials of the adverse party's pleading, but . . . by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). A mere factual dispute is not enough to preclude the granting of an otherwise proper motion for summary judgment; the key is whether the disputed fact is material and the dispute itself is genuine. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

In deciding a motion for summary judgment, "this court must determine whether `the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.'" Patton v. Bearden, 8 F.3d 343, 346 (6th Cir.1993) (quoting Anderson, 477 U.S. at 251-52, 106 S.Ct. 2505). The evidence, all facts, and any inferences that permissibly may be drawn from the facts must be viewed in the light most favorable to the nonmoving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). However, "the mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for plaintiff." Anderson, 477 U.S. at 252, 106 S.Ct. 2505. Finally, a court considering a motion for summary judgment may not weigh evidence or make credibility determinations. See Adams v. Metiva, 31 F.3d 375, 378 (6th Cir.1994).

B. Standing and the Effect of the Chapter 7 Bankruptcy Conversion

The sole issue on plaintiffs' standing to pursue this personal injury lawsuit is whether a tort claim which arises after a debtor files a Chapter 13 bankruptcy petition but before the debtor converts to a Chapter 7 bankruptcy is property of the bankruptcy estate which can only be prosecuted by the trustee in bankruptcy. Defendant argues that property, including specifically a tort claim, which is acquired by the debtor prior to filing a Chapter 7 bankruptcy petition is property of the debtor's bankruptcy estate pursuant to 11 U.S.C. § 541(a)(1), and therefore the trustee becomes the owner of the cause of action once the petition for bankruptcy is filed and is the only person who has standing to pursue the cause of action. Plaintiffs respond that defendant's argument might be meritorious in an ordinary Chapter 7 bankruptcy, but in the case of a conversion from Chapter 13 to Chapter 7, such as here, any property, including specifically a tort claim, acquired by the debtor after the date of the filing of a Chapter 13 petition but prior to the date of the conversion is property of the debtor, not of the bankruptcy estate, pursuant to 11 U.S.C. § 348(f)(1)(A).

Prior to 1994, courts differed as to what property was included in the bankruptcy estate where the bankruptcy was originally filed under Chapter 13 and later converted to Chapter 7. See In re Sargente, 202 B.R. 1023, 1024 (Bkrtcy.S.D.Fla.1996) (recognizing split among courts and citing In re Lybrook, 951 F.2d 136 (7th Cir.1991) and In re Bobroff, 766 F.2d 797 (3d Cir.1985) as the representative cases for the competing views). Some courts, following the so-called "Lybrook approach," held that any property acquired after a Chapter 13 filing became property of the bankruptcy estate and remained in the estate upon conversion to Chapter 7. In re Lybrook, 951 F.2d 136 (7th Cir.1991). In Lybrook, the debtors, an Indiana farming couple who filed a Chapter 13 petition, later received an inheritance of farmland worth $70,000. They then converted their bankruptcy to Chapter 7 because of a "bad farming year." Id. at 136-137. The Seventh Circuit held that the debtors were required to turn over the inherited farmland to the bankruptcy trustee upon conversion to Chapter 7. The court reasoned that if debtors could exclude from the bankruptcy estate any property acquired between the original Chapter 13 filing and the Chapter 7 conversion, they would be tempted to engage in "strategic, opportunistic behavior that hurts creditors. . . ." Id. at 137. Essentially, the Seventh Circuit was concerned that such an approach would encourage debtors to abuse the bankruptcy process by filing under Chapter 13 to delay the point when their assets could be seized (after conversion to Chapter 7), while hoping for a windfall inheritance or lottery winnings that they would then not have to share with creditors.

The Third Circuit, in Bobroff, took a position contrary to Lybrook. In re Bobroff, 766 F.2d 797 (3d Cir.1985). Under the "Bobroff approach," property that was acquired after the Chapter 13 filing but before conversion to Chapter 7 was not part of the bankruptcy estate. In Bobroff, the court examined the rather complicated situation of a debtor who initially filed a petition for bankruptcy under Chapter 7, but then converted to Chapter 13. Subsequently, a tort cause of action arose after which the bankruptcy court converted the Chapter 13 bankruptcy back to Chapter 7. Holding that the tort cause of action did not become part of the Chapter 7 bankruptcy estate, the Third Circuit stated:

This result is consonant with the Bankruptcy Code\'s

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