In re Cibella
| Decision Date | 17 November 2016 |
| Docket Number | CASE NUMBER 08–41807 |
| Citation | 560 B.R. 494 |
| Parties | In re: Michael K. Cibella and Rosemary Cibella, Debtors. |
| Court | U.S. Bankruptcy Court — Northern District of Ohio |
Eric James Ashman, Youngstown, OH, for Debtors.
On June 20, 2008 ("Petition Date"), Debtors Michael K. Cibella ("Michael") and Rosemary Cibella (collectively, "Debtors"), by and through counsel Eric James Ashman, Esq., filed a voluntary petition pursuant to chapter 7 of the Bankruptcy Code. Michael D. Buzulencia ("Trustee") was appointed chapter 7 trustee. The Debtors received a discharge on October 21, 2008 (Doc. 12). This case was closed on October 30, 2008 (Doc. 14).
On June 2, 2016, the Trustee filed Motion to Reopen Case (Doc. 15). The Court held a hearing on the Motion to Reopen Case on June 23, 2016, at which the Trustee appeared. The Trustee stated he had been informed that Michael had received an offer of money relating to personal injury suffered by Michael when he was a minor child ("Personal Injury"). The Court granted the Motion to Reopen Case and entered Order to Reopen Case (Doc. 18) on that same date.1
Thereafter, the Trustee filed Request for Notice to Creditors (Doc. 22) on July 7, 2016. On July 10, 2016, Notice of Need to File Proof of Claim Due to Recovery of Assets ("Claim Notice") (Doc. 25) was sent to all creditors and parties in interest in this case. The Claim Notice set October 17, 2016 as the last date to file claims in this case. To date, only one timely claim—i.e ., Claim No. 1–1 filed by Discover Bank in the unsecured amount of $8,981.42—has been filed in this case.2
The Court had questions concerning whether (i) the Personal Injury cause of action constituted property of the bankruptcy estate under 11 U.S.C. § 541 ; and (ii) reopening this case would cause Michael further injury. This Court had considered what it believes to be a similar situation in In re Wiery , Case No. 05–46229, and had found that the personal injury cause of action and any money relating thereto were not property of the bankruptcy estate. In re Wiery , Case No. 05–46229, Docs. 36–37 (Bankr. N.D. Ohio Oct. 14, 2016). As a consequence, on November 1, 2016, the Court entered Order (Doc. 32), which required the Trustee to file a brief demonstrating why this Court's analysis in Wiery is or is not applicable in this case. In compliance with the Order, the Trustee filed, under seal, Trustee's Brief in Response to Court Order ("Trustee's Brief") (Doc. 36).3
This Court has jurisdiction pursuant to 28 U.S.C. § 1334 and General Order No. 2012–7 entered in this district pursuant to 28 U.S.C. § 157(a). Venue in this Court is proper pursuant to 28 U.S.C. §§ 1391(b), 1408, and 1409. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2). The following constitutes the Court's findings of fact and conclusions of law pursuant to Federal Rule of Bankruptcy Procedure 7052.
The Trustee's Brief is based on the following facts:
1. Michael suffered the Personal Injury from approximately 1986 to 1990 when he was a minor child (from approximately 14 to 18 years of age).
2. The applicable statute of limitations in Ohio governing the Personal Injury cause of action ("Statute of Limitations") provided that a cause of action for the kind of personal injury suffered by Michael had to be filed no later than one year after Michael reached the age of majority (age 18).
3. The Statute of Limitations expired on September 21, 1990 when Michael turned 19 years of age.
4. Michael was barred from filing a lawsuit relating to the Personal Injury after September 21, 1990.
5. Michael never filed a lawsuit relating to the Personal Injury and no lawsuit was ever filed on behalf of Michael relating to the Personal Injury.
6. In 2006, the Statute of Limitations was amended to provide a 12–year period after reaching the age of majority to file a lawsuit based on the kind of personal injury suffered by Michael.
7. At the time the Statute of Limitations was amended in 2006, Michael was 34 years of age; thus, the amendment to the Statute of Limitations did not extend the time in which Michael could file a lawsuit relating to the Personal Injury.
8. When the Debtors filed this bankruptcy case on June 20, 2008, Michael could not assert a cause of action for the Personal Injury because the Statute of Limitations had expired on September 21, 1990.4
9. Michael may suffer ongoing and continuing emotional distress as a result of the Personal Injury.
The Court finds that its reasoning and analysis in Wiery apply equally in this case. The Trustee's only argument that any money relating to Michael's Personal Injury constitutes property of the bankruptcy estate is that "the acts arising [sic] to the claim, such as it was, and any right to recovery for those acts, existed at the time the Bankruptcy was filed." (Trustee's Br. at 4.) As set forth below, however, pre-petition conduct or facts alone will not necessarily root a claim in the past such that it becomes property of the bankruptcy estate.
11 U.S.C. § 704(a)(1) provides, "(a) The trustee shall— (1) collect and reduce to money the property of the estate for which such trustee serves, and close such estate as expeditiously as is compatible with the best interests of parties in interest[.]" 11 U.S.C. § 704(a)(1) (2016). Property of the bankruptcy estate is defined in 11 U.S.C. § 541 :
11 U.S.C. § 541(a)(1), (6) (2016).
The Trustee's duties are limited to administering property of the bankruptcy estate. The Trustee argues that, because the conduct that caused the Personal Injury to Michael occurred prior to the Petition Date, any money relating to the Personal Injury constitutes property of the estate. However, in order for any money relating to the Personal Injury cause of action to be property of the estate, the Personal Injury cause of action has to be property of the bankruptcy estate. Thus, the question before the Court is whether the Personal Injury cause of action constitutes property of the bankruptcy estate. For the following reasons, the Court finds that the Personal Injury cause of action is not property of the bankruptcy estate.
Whether a cause of action constitutes property of the bankruptcy estate depends on whether the debtor had an enforceable legal or equitable interest in such cause of action as of the commencement of the bankruptcy case.
Under § 541(a) of the Bankruptcy Code, the commencement of a bankruptcy case results in the creation of a bankruptcy estate that includes all legal or equitable property interests of the debtor, except as provided in subsections (b) and (c)(2). The estate created pursuant to § 541 includes causes of action belonging to the debtor at the time the case is commenced, including causes of action or claims for personal or bodily injury.
In re Hamlett , 304 B.R. 737, 740 (Bankr. M.D.N.C. 2003) (emphasis added); see also Holbrook v. Country Mut. Ins. Co. (In re Burnett) , 447 B.R. 634, 642 (Bankr. W.D. Okla. 2011) () (emphasis added) ("A debtor's bankruptcy estate includes all causes of action of the debtor, including without limitation, all claims for personal injury, which could have been brought on the petition date.").
To determine whether Michael had a legal or equitable interest in the Personal Injury cause of action as of the Petition Date, this Court first examines the definition of cause of action. A cause of action is "[a] group of operative facts giving rise to one or more bases for suing; a factual situation that entitles one person to obtain a remedy in court from another person[.]" BLACK'S LAW DICTIONARY 266 (10th ed. 2014). A debtor may, however, be barred from asserting a cause of action by a statute of limitations, which is defined as "[a] law that bars claims after a specified period; specif., a statute establishing a time limit for suing in a civil case, based on the date when the claim accrued (as when the injury occurred or was discovered)[.]" Id. at 1636.
Court of Appeals addressed whether a cause of action arose when a lawsuit against the debtor was filed (pre-petition) or when the debtor was served (post-petition). The lawsuit against the debtor allegedly violated the Fair Debt Collection Practices Act ("FDCPA") when it attempted to collect a pre-petition debt. The court first held that it was not sufficient that the debt upon which the alleged FDCPA violation was based was pre-petition. "First, pre-petition conduct or facts alone will not ‘root’ a claim in the past; there must be a pre-petition violation." Id. at 462 (). The court noted:
Determining the time at which a cause of action becomes bankruptcy property is not straightforward. The nature and extent of property rights in bankruptcy are determined by the "underlying substantive law." Raleigh v. Ill. Dep't of Rev. , 530 U.S. 15, 20, 120 S.Ct. 1951, 147 L.Ed.2d 13 (2000). But "once that determination is made, federal bankruptcy law dictates to what extent that interest is property of the estate" for the purposes of § 541. Bavely v. United States (In re Terwilliger's Catering Plus, Inc.) , 911 F.2d 1168, 1172 (6th Cir. 1990).
Id. at 461 (n.4 omitted) (emphasis added). The court held that the debtor had a pre-petition right to assert a cause of action when the lawsuit was filed; thus, the cause of action...
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