In re Vasquez

Decision Date23 February 2018
Docket NumberCase # 10–10806
Citation581 B.R. 59
CourtU.S. Bankruptcy Court — District of Vermont
Parties IN RE: Brenda L. VASQUEZ, Debtor.

John P. Riley, Esq., Montpelier, Vermont, For the Debtor

Raymond J. Obuchowski, Esq., Bethel, Vermont, As Former Chapter 7 Trustee

MEMORANDUM OF DECISION

DENYING TRUSTEE'S MOTION TO REOPEN CASE

Colleen A. Brown, United States Bankruptcy Judge

The former chapter 7 trustee has filed a motion asking the Court to reopen the instant case, which was closed approximately seven years ago, so he can administer a previously undisclosed personal injury claim recovery, based on a defective medical device, in the estimated amount of $45,000. The trustee argues all the essential elements of the Debtor's causes of action leading to the recovery existed prior to the date she filed her bankruptcy case, the claim was fully accrued as of the petition date, and her recovery is thus property of the bankruptcy estate. The Debtor opposes the trustee's motion. She argues, first, she had no knowledge of any defect in the device, and hence no interest in the personal injury recovery at the time she filed her chapter 7 bankruptcy petition and, second, the damages, pain, and suffering that gave rise to her monetary award occurred after she filed her bankruptcy case. In sum, the Debtor insists neither the trustee nor her creditors are entitled to the funds she received through her personal injury claim and consequently, no purpose that would be served by reopening the case.

On December 13, 2017, the Court held an evidentiary hearing at which the Debtor testified.

Based upon the record in this case, and for the reasons set forth below, the Court concludes the Debtor's recovery from her personal injury suit is not property of the bankruptcy estate and therefore, denies the trustee's motion to reopen this case.

JURISDICTION

The Court has jurisdiction over this contested matter pursuant to 28 U.S.C. §§ 157 and 1334, and the Amended Order of Reference entered on June 22, 2012. The Court declares the trustee's motion to reopen, and the Debtor's objection to the motion, create a core proceeding for purposes of 28 U.S.C. § 157(b)(2)(A) and (E), over which this Court has constitutional authority to enter a final judgment.

LEGAL ISSUE PRESENTED

The legal issue presented in this contested matter is whether the Debtor had a sufficient interest in the defective medical device lawsuit on the date she filed this chapter 7 case to render it an asset of the bankruptcy estate and justify reopening this case.

STIPULATED FACTS

On November 30, 2017, the parties filed a joint statement of uncontested facts (doc. # 22, the "JSUF"), which the Court hereby adopts. The Court finds the following facts from the JSUF to be uncontested and material to the trustee's motion to reopen (doc. # 14):

BANKRUPTCY CASE PROCEDURAL HISTORY

1. On June 14, 2010, Brenda L. Vasquez (the "Debtor") filed for petition for relief under chapter 7 title 11 of the United States Code (the "Bankruptcy Code")1 (JSUF # 1).

2. On or about June 14, 2010, Raymond Obuchowski was appointed interim trustee (the "Trustee") and served in that capacity until the case was closed on November 19, 2010 (JSUF # 2).

3. On June 14, 2010, the Debtor filed schedules and statements (doc. # 1, the "Schedules") setting forth her assets and liabilities, as required under Bankruptcy Rule 1007 and the Bankruptcy Code. She also filed a declaration concerning those documents, signed under the penalty of perjury, in which the Debtor declared she had read the Schedules and they were true and correct to the best of her knowledge, information, and belief (JSUF # 3).

4. On July 12, 2010, the Debtor testified at the meeting of creditors that she was personally familiar with the information contained in the Schedules, that she had read and signed the Schedules, that they were true and accurate, that she had disclosed all of her assets and liabilities, and that she did not have any claims against anyone and there was no one against whom she could seek a money recovery (JSUF ## 4, 5).

5. Based upon the Debtor's Schedules, and her testimony at the meeting of creditors, the Trustee filed a report of no distribution on July 12, 2010 (JSUF # 6).

6. On November 3, 2010, the Court granted the Debtor a discharge (doc. # 10) and the case was closed by final decree (doc. # 12) on November 19, 2010 (JSUF # 7).

MEDICAL AND DEFECTIVE DEVICE LITIGATION HISTORY

7. On or about October 24, 2005, physicians implanted in the Debtor a device known as a tension free vaginal tape

(the "Defective Device") as a treatment for stress incontinence (JSUF # 8).

8. Following the surgery in October 2005, the Debtor continued to have issues relative to frequency, incontinence, and recurrent infection (JSUF # 9).

9. On June 2, 2009, approximately one year prior to filing her chapter 7 bankruptcy case, the Debtor sought medical treatment at Gifford Medical Center, regarding ongoing issues with stress and urge incontinence (JSUF # 9).

10. The Debtor's condition required further examination in March 2010. At that examination, her physicians recommended the Debtor return for a follow up visit in 3 months, but she failed to keep that latter appointment (JSUF # 9).

11. Beginning March 10, 2011, and continuing thereafter, the Debtor sought further medical advice regarding her recurring issues of urinary tract infection

, urge incontinence, and other conditions, until physicians surgically removed a segment of the Defective Device on May 20, 2015 (JSUF # 10).

12. On or around March 1, 2013, the Debtor came to believe she might have a claim against all responsible parties, including, but not limited to, manufacturers and distributors of the Defective Device that was surgically implanted in the Debtor in October 2005, based on an advertisement she saw on television (JSUF # 11).

13. Later in March of 2013, the Debtor entered into a contract to retain three law firms to investigate, prepare, and prosecute any viable claim or suit the Debtor had for the injuries she suffered as a consequence of the Defective Device implanted in her (JSUF # 12).

14. On May 27, 2014, the Debtor, through her attorneys, The Potts Law Firm, filed a short form complaint against certain defendants (Ethicon, Inc. and Johnson & Johnson) in Civil Action No. 2:14–cv–17006 in the U.S. District Court for the Southern District of West Virginia. That short form complaint incorporated by reference the first amended master complaint in In re: Ethicon, Inc., Pelvic Repair System Products Liability Litigation, Case No. 2327(the "MDL case"), originally filed in November 2011 (JSUF # 13).

15. On June 26, 2014, the Debtor's case was transferred and incorporated into the MDL (JSUF # 14).

14. Ultimately, an agreement was reached in the MDL case to settle the claims against certain parties who manufactured transvaginal mesh and bladder sling products, including the type of device implanted in the Debtor (JSUF # 15).

15. The Debtor received a letter dated March 18, 2017, informing her of this settlement. Based upon certain criteria (including a product implant date of October 24, 2005, and a surgical removal date of May 20, 2015), the Debtor was offered a gross settlement of $45,000 in exchange for a release of her claim (JSUF # 15).

16. The Debtor took no steps to notify the Trustee of the settlement or to amend her Schedules to disclose the anticipated recovery for her Defective Device claim after receiving the March 2017 notice of settlement (JSUF # 17).

17. On May 31, 2017, the Trustee learned of the Debtor's claim against the Defective Device manufacturers, through The Settlement Alliance (JSUF # 16).

18. On July 28, 2017, the Trustee filed a motion to reopen the case (the "Trustee's Motion") based upon the Debtor's failure to schedule the Defective Device recovery as an asset (doc. # 14). On August 25, 2017, the Debtor filed an Objection (doc. # 15) to the Trustee's Motion (JSUF # 18).

THE MEDICAL RECORDS AND TESTIMONY

In addition to the JSUF, the parties also filed a joint list of documents for admission (doc. # 26). The admitted documents include the Debtor's medical records (Ex. 3), bankruptcy schedules (Ex. 4), contract of employment with Pulaski & Middleman, LLC, (Ex. 1), and the short form complaint (Ex. 1) and first amended complaint for the MDL case (Ex. 2).

The Court conducted an evidentiary hearing on December 13, 2017. The Debtor testified for approximately thirty minutes and answered questions regarding both her overall medical history and her specific symptoms and experience related to the Defective Device (audio available at doc. ## 27, 28).

The Debtor testified, "[her] health is not very good, and [she] sees a lot of doctors" for a wide range of ailments, including liver, kidney, heart, and lung disease (doc. # 27, at 19:04). The admitted medical records cover the period from June 2009 to April 2017, and document the Debtor's gynecological ailments, treatments, and diagnoses from a number of medical centers and practitioners (doc. # 26, Ex. 3). The medical records indicate that in June 2009, about one year before she filed her bankruptcy case, the Debtor was being treated for ongoing urinary incontinence

(doc. # 26, Ex. 3, at A1). She testified she had dealt with this type of medical ailment "for many moons." (Id. ) Despite having the Defective Device implanted "as a treatment for stress incontinence," the medical records indicate the Debtor experienced "chronic incontinence and urge incontinence since having her sling done ... a few years ago" (doc. ## 22, 26, Ex. 3, at A9). During subsequent medical appointments, between 2010 and 2014, she described to her health care providers persistent issues with incontinence and urinary tract infections (Id. at A1–A45). These issues caused her to need intermittent catheterization beginning in August of 2013. (Id. at A41).

The Debtor testified that during the period in which she reported ongoing issues with incontinence and urinary tract...

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3 cases
  • In re McCaffrey
    • United States
    • U.S. Bankruptcy Court — Northern District of New York
    • August 30, 2023
    ... ... to the Trustee all property of the estate. 11 U.S.C. § ... 521(a)(4). "Where the turnover of property does not ... occur ... voluntarily, the Trustee has the authority to compel the ... Debtor to turnover the property ... " In re ... Vasquez , 581 B.R. 59, 65 (Bankr. Vt. 2018) (quotation ... omitted); see 11 U.S.C. § 542(a) ...          In a ... motion for turnover under Section 542, "the burden of ... proof ... is at all times on the party seeking turnover ... [and] [t]hat party must ... ...
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    • United States
    • U.S. Bankruptcy Court — Eastern District of Louisiana
    • July 24, 2019
    ...not incurred any damages, did not exhibit any symptoms pre-petition, and did not purposely delay any medical evaluation; In re Vasquez, 581 B.R. 59 (Bankr.D. Vt. 2018) (defective medical device implanted pre-petition, but debtor did not discover that device was cause of medical problems unt......
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    • United States
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    ...not incurred any damages, did not exhibit any symptoms pre-petition, and did not purposely delay any medical evaluation; In re Vasquez , 581 B.R. 59 (Bankr.D. Vt. 2018) (defective medical device implanted pre-petition, but debtor did not discover that device was cause of medical problems un......

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