In re Lewis, A97-70635-ADK.

• Decision Date: 02 October 2001
• Docket Number: No. A97-70635-ADK.,A97-70635-ADK.
• Citation: 273 B.R. 739
• Parties: In re Pamela G. LEWIS.
• Court: U.S. Bankruptcy Court — Northern District of Georgia

273 B.R. 739

In re Pamela G. LEWIS.

No. A97-70635-ADK.

United States Bankruptcy Court, N.D. Georgia, Atlanta Division.

October 2, 2001.

COPYRIGHT MATERIAL OMITTED

James H. Howard, The Howard Law Firm, Tucker, GA, J.R. Gray, Tucker, GA, for debtor.

Jason H. Watson, Lisa Farmer, Bernard Taylor, Alston & Bird, LLP, Atlanta, GA, Rolfe M. Martin, Owen, Gleaton, Egan, Jones, et al., Atlanta, GA, for Wrongful Death Defendants.

Robert Trauner, Trauner, Cohen & Thomas, Atlanta, GA, Chapter 7 Trustee.

ORDER

W. HOMER DRAKE, Jr., Bankruptcy Judge.

Before the Court is the Motion of Pamela G. Lewis (hereinafter the "Debtor") to reopen her Chapter 7 case. After a hearing on July 25, 2001, the Court took the case under advisement. This matter is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), and the Court has jurisdiction over it pursuant to 28 U.S.C. § 157(b)(1) and 28 U.S.C. § 1334. Based on the record in this case, the testimony of the Debtor at the hearing, and for cause shown, the Court's findings and conclusions are as follows.

FINDINGS OF FACT

The Debtor filed a petition for relief under Chapter 7 of the United States Bankruptcy Code on June 13, 1997. On August 22, 1997, the Chapter 7 Trustee filed his report of no distribution and on December 16, 1997, the Debtor received her discharge. On June 5, 2001, the Debtor filed a motion to reopen her case for the purpose of disclosing a pre-petition asset. According to the Debtor's motion, she seeks to reopen her case because she "has learned of a pre-petition wrongful death cause of action in which she has a partial interest" (Debtor's Motion to Reopen, June 5, 2001). The cause of action for wrongful death arises from the pre-petition death of the Debtor's spouse in September 1996. In August 1998, subsequent to the entry of discharge in the Debtor's case, the Debtor commenced an action for her spouse's alleged wrongful death in the State Court of Fulton County, Georgia against Sherman Hoover, M.D., Southeast Permanente Medical Group, Inc. and Kaiser Foundation Health Plan of Georgia, Inc., Linda Guydon, M.D., Scott Carroll M.D., and Atlanta Allergy Clinic, P.A. (the "Wrongful Death Defendants").

The Wrongful Death Defendants oppose the reopening of the Debtor's case. On May 4, 2001, the Wrongful Death Defendants filed a motion for summary judgment in the Debtor's state court action to bar the Debtor's claim on the grounds of "judicial estoppel." As part of their judicial estoppel defense, the Wrongful Death Defendants argue that the Debtor is barred from pursuing her claim because she has taken a position in her bankruptcy case (that she had no unliquidated pre-petition tort claim), inconsistent with the position taken in her state court case (that she has a pre-petition wrongful death claim). The Wrongful Death Defendants allege that the Debtor did not recently learn of the potential claim, but in fact, knew that she had a claim as early as September 1997 when her attorney sent a demand letter to the Wrongful Death Defendants.

On July 25, 2001, the Court held a hearing on the Debtor's motion to reopen. In addition to the issues raised by the parties in their briefs, the Court inquired into the issue of whether the Wrongful Death Defendants had standing to contest the reopening of the Debtor's bankruptcy case. Following the hearing, the Wrongful Death Defendants and the Debtor filed supplemental briefs as directed by the Court.

CONCLUSIONS OF LAW

As a preliminary matter, the Court must determine whether the Wrongful Death Defendants have standing to appear in this bankruptcy matter and oppose the reopening of the Debtor's case. Standing is defined as "a party's right to make a legal claim or seek judicial enforcement of a duty or right." BLACK'S LAW DICTIONARY 1413 (7th ed.1999). A court may consider the issue of a party's standing sua sponte. Bischoff v. Osceola County, Florida, 222 F.3d 874 (11th Cir.2000). "[T]he question of standing is not subject to waiver.... The federal courts are under an independent obligation to examine their own jurisdiction, and standing is perhaps the most important of [the jurisdictional] doctrines." United States v. Hays, 515 U.S. 737, 115 S.Ct. 2431, 132 L.Ed.2d 635 (1995).

The United States Supreme Court has articulated a three-factor test for meeting the constitutional requirements of standing: 1) the party asserting standing must have suffered actual injury or threatened injury; 2) the injury must be fairly traceable to the conduct at issue; and 3) a demonstration must be made that the requested relief is likely to redress the injury. Valley Forge Christian College v. Americans United for Separation of Church & State, Inc., 454 U.S. 464, 472, 102 S.Ct. 752, 70 L.Ed.2d 700 (1982); see also E.F. Hutton & Co., Inc. v. Hadley, 901 F.2d 979, 984 (11th Cir.1990). Essentially, a party asserting standing must have a "personal stake in the outcome" of a case. Baker v. Carr, 369 U.S. 186, 204, 82 S.Ct. 691, 7 L.Ed.2d 663 (1962).

Unlike a traditional two-party lawsuit, determining whether a party has standing in a bankruptcy proceeding is a somewhat esoteric question. A bankruptcy proceeding is not about just the interests of a plaintiff and a defendant whereby one party alleges an injury caused by conduct of another party. A bankruptcy proceeding involves the rights and obligations of a debtor, creditors, and trustee, among others. Moreover, bankruptcy involves the administration of an estate's property and necessarily affects other parties rights and interests vis-a-vis that property. Thus, while the Wrongful Death Defendants have an "interest" in Debtor's bankruptcy case in a general sense, the Court must determine whether their interest rises to a level which warrants their ability to appear and be heard in the bankruptcy case.

Chapter 11 of the Bankruptcy Code refers to a party who may appear and be heard as a "party in interest." 11 U.S.C. § 1109(b). While the term is confined to Chapter 11, and this is a Chapter 7 proceeding, the Court finds guidance in its determination of the Wrongful Death Defendants standing by looking to the definition of the term and the interpretation of the term "party in interest." Section 1109(b) provides

A party in interest, including the debtor, the trustee, a creditors' committee, an equity security holders' committee, a creditor, an equity security holder, or any indenture trustee, may raise and may appear and be heard on any issue in a case under this chapter.

11 U.S.C. § 1109(b).

Who may be a party in interest is non-exclusive. See 11 U.S.C. § 102(3) ("`includes' and `including' are not limiting"). One court has noted that the "circumstances of the case determines who qualifies as a party in interest." In re Koch, 229 B.R. 78, 82 (Bankr.E.D.N.Y.1999) (citing In re American Motor Club, Inc., 149 B.R. 317, 322 (Bankr.E.D.N.Y.1993)). In addition, courts have found that a party in interest is "generally understood to include all persons whose pecuniary interests are directly affected by the bankruptcy proceedings." Nintendo Co., Ltd. v. Patten (In re Alpex Computer Corp.), 71 F.3d 353, 356 (10th Cir.1995); Yadkin Valley Bank & Trust Co. v. McGee (In re Hutchinson), 5 F.3d 750, 756 (4th Cir.1993).

Based on the circumstances of this case, the Court is persuaded that the Wrongful Death Defendants have standing to appear and be heard on the Debtor's motion to reopen her case. While the Wrongful Death Defendants are potentially indebted to the Debtor (or, perhaps, more appropriately, the Debtor's estate), this factor alone is not sufficient to create standing in this case. For example, had the Debtor properly disclosed her unliquidated tort claim at the time she filed her bankruptcy case, the Wrongful Death Defendants would not have had standing to move for dismissal of her case or object to her discharge. However, the current procedural posture of both the bankruptcy case and the state court case give the Wrongful Death Defendants standing to appear and be heard on the Debtor's motion to reopen because of the potential impact her motion has in both forums, and particularly because of the impact it may have on the continuation of the state court action. Having determined that the Wrongful Death Defendants have standing to raise their objection, the Court now turns to the Debtor's motion to reopen her case.

Bankruptcy Rule 5010 states that a case may be reopened on motion of the debtor or other party in interest pursuant to Section 350(b) of the Bankruptcy Code. Section 350(b) of the Bankruptcy Code provides, "[A] case may be reopened in the court in which such case was closed to administer assets, to accord relief to the debtor, or for other cause." 11 U.S.C. § 350. This court has broad discretion in determining whether to reopen a case under § 350(b). See Faden v, Insurance Co. of N. Am. (In re Faden), 96 F.3d 792, 796 (5th Cir.1996); In re Bianucci, 4 F.3d 526, 528 (7th Cir.1993); In re McDaniel, 217 B.R. 348, 352 (Bankr.N.D.Ga.1998). "The bankruptcy court should exercise its discretion, based upon the peculiar facts present and determine if cause exists and how ultimately to dispose of the case." In re Koch, 229 B.R. 78, 88 (Bankr.E.D.N.Y.1999).

A newly discovered unadministered asset is a basis for reopening a bankruptcy case. A pre-petition asset which was not properly disclosed in a debtor's schedules is not deemed abandoned and remains property of an estate which can be administered if the case is reopened. 11 U.S.C. § 554(d) ("property of the estate that is not abandoned under [§ 554] and that is not administered in the case remains property of the estate"); see In re Arboleda, 224 B.R. 640 (Bankr.N.D.Ill.1998); In re Peebles, 224 B.R. 519 (Bankr.D.Mass.1998); In re Winburn, 167 B.R. 673 (Bankr.N.D.Fla.1993).

Section 521(1) of Title 11 requires a debtor to "file a ... schedule of assets and liabilities ... and a statement of the debtor's financial affairs." 11 U.S.C. § 521(1...