Hamm v. Norfolk Southern Ry. Co.

• Decision Date: 30 June 2010
• Docket Number: 1060935.
• Citation: 52 So.3d 484
• Parties: Daniel G. HAMM and Leo Paul Brooks v. NORFOLK SOUTHERN RAILWAY COMPANY.
• Court: Alabama Supreme Court

52 So.3d 484

Daniel G. HAMM and Leo Paul Brooks

v.NORFOLK SOUTHERN RAILWAY COMPANY.

1060935.

Supreme Court of Alabama.

June 30, 2010.

Joel F. Alexander III of Pittman, Dutton, Kirby & Hellums, P.C., Birmingham, for appellants.

Crawford S. McGivaren, Jr., Steve A. Tucker, and John M. Graham of Cabaniss, Johnston, Gardner, Dumas & O'Neal, LLP, Birmingham, for appellee.

MURDOCK, Justice.

Leo Paul Brooks and Daniel G. Hamm, a trustee in bankruptcy for Brooks, appeal from a summary judgment entered in favor of Norfolk Southern Railway Company ("Norfolk Southern") in a personal-injury action Brooks filed in the Talladega Circuit Court pursuant to the Federal Employers' Liability Act, 45 U.S.C. § 51 et seq. ("FELA"). We affirm in part, reverse in part, and remand.

I. Facts and Procedural History

Brooks worked as a conductor and brakeman for Norfolk Southern from 1971 to 2004. On October 21, 2004, Brooks filed a petition for Chapter 7 bankruptcy (11 U.S.C. § 701 et seq.) in the United States Bankruptcy Court for the Middle District of Alabama. Brooks was represented in the bankruptcy proceedings by attorney Mark Cavanaugh. Along with his petition, Brooks filed schedules listing his debts and assets as well as a statement of financial affairs. He did not list among his assets a cause of action against Norfolk Southern.

On January 14, 2005, Brooks filed the present FELA action in the Talladega Circuit Court seeking $750,000 for injuries he allegedly had sustained to his "back, hips, and body as a whole" as a result of being "continuously and repeatedly exposed to numerous vibrations and other stresses to his cervical and lumbar spine" in the course of his career with Norfolk Southern. Brooks was and is represented in the FELA action by attorney Joel Alexander. Brooks did not amend his bankruptcy schedules or otherwise inform the bankruptcy court of the FELA claim he had filed against Norfolk Southern.

On March 2, 2005, Brooks received a complete discharge of his debts in the bankruptcy proceeding as a "no-assets" case. According to the briefs on appeal, both Norfolk Southern and Alexander learned of Brooks's bankruptcy during Brooks's deposition in the FELA action on January 31, 2006. On March 6, 2006, Norfolk Southern filed an amended answer to Brooks's complaint asserting the affirmative defense of judicial estoppel. On May 1, 2006, Norfolk Southern filed a motion for a summary judgment on the ground that Brooks's FELA action was barred by the doctrine of judicial estoppel because he had failed to disclose the FELA cause of action in his bankruptcy proceeding either at the time he filed the bankruptcy petition or at any time after he filed his complaint against Norfolk Southern.

On September 28, 2006, Brooks filed a response to the motion for a summary judgment, arguing first that Norfolk Southern had failed to cite any evidence indicating that Brooks knew before he filed his complaint that his injuries were related to his job with Norfolk Southern and therefore would provide the basis for a claim against Norfolk Southern. Brooks also contended that "a debtor has no obligation to amend his schedules to notify the bankruptcy court of claims that are not part of the bankruptcy estate." Alexander avers that at the time the argument was made in response to Norfolk Southern's summary-judgment motion he believed it to be a correct statement of law, but he unequivocally acknowledges in Brooks's brief to this Court that the argument was mistaken. The Bankruptcy Code provides, in 11 U.S.C. § 541(a)(7), that the bankruptcy estate includes "[a]ny interest in property that the estate acquires after the commencement of the case." Alexander explains that he believed when he made the argument that § 541(a)(7) was part of the 2005 amendments to the Bankruptcy Code and thus did not apply to Brooks's bankruptcy proceeding. Norfolk Southern points out that it cited both § 541(a)(7) and Burnes v. Pemco Aeroplex, Inc., 291 F.3d 1282 (11th Cir.2002), a case that cites § 541(a)(7) for authority, in its motion for a summary judgment, so Brooks and Alexander should have been aware of the applicability of § 541(a)(7) at that time.

A hearing on the summary-judgment motion was held on September 29, 2006. The trial court permitted the parties additional time following the hearing to submit legal authorities supporting their respective positions. On October 3, 2006, Norfolk Southern filed a letter brief with copiesof cases, including Burnes, as well as the text of § 541(a)(7). Alexander avers that, upon reviewing those materials, he realized that Brooks had had a responsibility to amend his bankruptcy schedules to reflect the claim against Norfolk Southern as an asset of the bankruptcy estate. To that end, Alexander contacted Cavanaugh to have him reopen the bankruptcy proceeding, but Alexander did not relate to the trial court that he had done so. Alexander states that he "felt he had time to get the bankruptcy case reopened before he reported back to the trial court ... because the trial court had verbally stated it would permit [Brooks] to file supplemental materials before ruling on summary judgment motion." The record indicates that Alexander asked for and received two extensions for filing supplemental materials, requiring him to file by November 10, 2006.¹

On October 11, 2006, Cavanaugh filed a motion on behalf of Brooks seeking to reopen Brooks's bankruptcy estate on the ground that Brooks had "filed a Chapter 7 Petition on 11/15/04 and failed to disclose a cause of action that existed on that date." ² Brooks then amended his bankruptcy schedules to list the FELA claim against Norfolk Southern as a potential asset of the bankruptcy estate. The bankruptcy court granted the motion to reopen the proceeding on November 7, 2006.

On November 16, 2006, not having received any supplemental material from Brooks, the trial court granted Norfolk Southern's motion for a summary judgment, finding that Brooks was "barred by the doctrine of judicial estoppel pursuant to the holding in Ex parte First Alabama, 883 So.2d 1236 (Ala.2003)." On December 11, 2006, Brooks filed three separate, but related, motions with the trial court. First, Brooks filed a motion to substitute the bankruptcy trustee, Daniel G. Hamm, as the real party in interest to the case. Second, Brooks filed a motion to vacate the summary judgment on the ground that the bankruptcy proceeding had been reopened and Brooks's schedules had been amended to reflect the FELA claim as a potential asset. Third, Brooks filed a motion for the trial court to consider the pleadings and orders from the bankruptcy court in reconsidering the motion for a summary judgment.

On December 13, 2006, Hamm filed a motion in the bankruptcy court asking the court to approve the employment of Alexander as the bankruptcy trustee's attorney for the FELA action. On January 24, 2007, the bankruptcy court authorized Alexander's employment as Hamm's attorney for the FELA claim.

The trial court issued a blanket order denying Brooks's postjudgment motions on February 6, 2007. Brooks and Hamm appealed from that order on March 20, 2007. On May 2, 2007, Norfolk Southern filed a motion to dismiss the appeal or, in the alternative, to strike Hamm as an appellant. Norfolk Southern contended that Hamm was never a party to the judgment below and thus could not be a party to the appeal. Brooks and Hamm filed a response asking this Court to deny the motion or to consider it with the merits of the appeal. This Court later informed the parties that Norfolk Southern's motionwould be considered with the merits of the appeal.

II. Standard of Review

This Court reviews a trial court's rulings on postjudgment motions to determine whether the trial court exceeded its discretion. See Flagstar Enters., Inc. v. Foster, 779 So.2d 1220, 1221 (Ala.2000). We also find helpful the following explanation of the standard of review in Parker v. Wendy's International, Inc., 365 F.3d 1268, 1271 (11th Cir.2004):

" '[W]e review the district court's application of judicial estoppel for abuse of discretion.' Burnes [ v. Pemco Aeroplex, Inc.], 291 F.3d [1282,] 1284 [ (11th Cir.2002) ]. 'The abuse of discretion standard includes review to determine that the discretion was not guided by erroneous legal conclusions.' Talavera v. School Bd. of Palm Beach County, 129 F.3d 1214, 1216 (11th Cir.1997)."

III. Analysis

A. Norfolk Southern's Motion to Dismiss the Appeal

Norfolk Southern contends that this Court should dismiss this appeal or at least strike Hamm as an appellant because he was not a party to the judgment below. Norfolk Southern notes that this Court has stated that, " '[u]nless a person is a party to a judgment, he can not appeal from that judgment.' " Boschert Merrifield Consultants, Inc. v. Masonite Corp., 897 So.2d 1048, 1051 (Ala.2004) (quoting Daughtry v. Mobile County Sheriff's Dep't, 536 So.2d 953, 954 (Ala.1988)).

In this case, however, Brooks and Hamm moved to substitute Hamm as the real party in interest. Included in that motion is the following statement:

"The undersigned [Alexander] is authorized to represent to this Court that Trustee Hamm joins in this motion, that Trustee Hamm has no intent of abandoning the claim, and that Trustee Hamm has asserted and will continue to assert to resolution an interest in the proceeds. The undersigned further represents that Trustee Hamm has agreed to engage the undersigned as counsel, and that the undersigned's petition to approve said representation has been, or soon will be, presented to the Bankruptcy Court for approval."

Hamm did, in fact, request and obtain from the bankruptcy court permission to employ Alexander as his counsel in prosecuting the FELA action before the trial court's denial of the motion to substitute Hamm as the real party in interest. Hamm then joined in the notice of appeal, which included appealing the trial court's denial of the motion to substitute Hamm as the real party in interest.

Und...