Martin v. Clinical Pathology Laboratories Inc.

• Decision Date: 08 June 2011
• Docket Number: No. 05–09–01079–CV.,05–09–01079–CV.
• Citation: 32 IER Cases 683,343 S.W.3d 885
• Parties: Joyce MARTIN, Appellant,v.CLINICAL PATHOLOGY LABORATORIES, INC., Appellee.
• Court: Texas Court of Appeals

343 S.W.3d 885

32 IER Cases 683

Joyce MARTIN, Appellant,

v.CLINICAL PATHOLOGY LABORATORIES, INC., Appellee.

No. 05–09–01079–CV.

Court of Appeals of Texas, Dallas.

June 8, 2011.

Jason C.N. Smith, Art Brender, Law Office of Art Brender, Fort Worth, TX, for Appellant.

Kirte M. Kinser, Brown McCarroll, L.L.P., Dallas, TX, Kurt Howard Kuhn, Kurt Kuhn, PLLC, Austin, TX, for Appellee.Graham Baker, Law Office of Graham Baker, PLLC, San Antonio, for Other Party in Interest.Before Justices FITZGERALD, LANG–MIERS, and FILLMORE.

OPINION

Opinion by Justice FITZGERALD.

Appellant Joyce Martin sued appellee Clinical Pathology Laboratories, Inc. (CPL) for wrongful termination, contending that Texas recognizes a wrongful-termination cause of action against an employer that terminates an at-will employee for exercising her right to vote in a general election. The trial court dismissed the case, and Martin appealed. We affirm.

I. Background

A. Allegations

Appellant alleged the following facts in her original petition. Appellant was an employee of CPL for three years. On November 4, 2008, she requested permission to leave work early to vote in the general election. CPL refused. Appellant left work fifteen minutes early in order to go vote. Two days later, CPL terminated appellant. According to her petition, “[appellant] asserts that [CPL] terminated her for exercising her right to vote,” and that CPL's conduct proximately caused damages to appellant.

B. Procedural history

On March 16, 2009, appellant sued CPL for wrongful termination. CPL answered and filed special exceptions, contending that appellant had failed to assert a viable cause of action under Texas law. Appellant filed a response, and CPL filed a reply brief. The trial judge sustained CPL's special exceptions and ordered appellant to replead within ten days on pain of dismissal. Instead, ten days later appellant filed a notice of appeal. A few weeks later, on October 1, 2009, the trial judge signed an order dismissing the case with prejudice. We treat appellant's notice of appeal as a timely filed notice of appeal from the order of dismissal. See Tex.R.App. P. 27.1(a).

In our review of the record, we discovered the following footnote in appellant's response to CPL's special exceptions:

Due to financial hardship, Plaintiff has recently filed Chapter 13 Bankruptcy proceedings. To date, counsel for Plaintiff has not been retained by the Bankruptcy Trustee to further pursue Plaintiff's claim. However, counsel for Plaintiff files this response in order to protect the rights of Plaintiff. Counsel for Plaintiff would request that the Court postpone this hearing until proper action may be taken in the bankruptcy proceeding.

Because bankruptcy can affect a claimant's standing to sue, we asked the parties to submit additional information regarding appellant's bankruptcy. Appellant filed a letter advising us that she filed for bankruptcy on February 3, 2009, and that the bankruptcy case was dismissed on September 18, 2009. We then invited the parties to file jurisdictional briefs. Appellant filed a letter brief in which she contends that she had and has standing to sue. CPL filed a responsive letter brief, with additional evidence attached, in which it did not take a definite position on the standing question.

II. Standing

A. Standing and bankruptcy

Standing is a component of subject-matter jurisdiction. Douglas v. Delp, 987 S.W.2d 879, 882 (Tex.1999); OAIC Commercial Assets, L.L.C. v. Stonegate Vill., L.P., 234 S.W.3d 726, 735 (Tex.App.-Dallas 2007, pet. denied); see also DaimlerChrysler Corp. v. Inman, 252 S.W.3d 299, 304 (Tex.2008) (“A court has no jurisdiction over a claim made by a plaintiff without standing to assert it.”) (footnote omitted). Thus, standing cannot be waived, and we may examine standing sua sponte if necessary. See OAIC, 234 S.W.3d at 735; see also Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 445–46 (Tex.1993) (noting that standing “may be raised for the first time on appeal by the parties or by the court”). The general test for standing is whether there is a real controversy between the parties that will actually be determined by the judgment sought. Tex. Ass'n of Bus., 852 S.W.2d at 446. “To establish standing, a person must show a personal stake in the controversy.” In re B.I.V., 923 S.W.2d 573, 574 (Tex.1996) (per curiam). Standing must exist at the time a plaintiff files suit; if the plaintiff lacks standing at the time of filing, the case must be dismissed, even if the plaintiff later acquires an interest sufficient to support standing. Doran v. ClubCorp USA, Inc., No. 05–06–01511–CV, 2008 WL 451879, at *2 (Tex.App.-Dallas Feb. 21, 2008, no pet.) (mem. op.); Kilpatrick v. Kilpatrick, 205 S.W.3d 690, 703 (Tex.App.-Fort Worth 2006, pet. denied). And the standing doctrine requires a controversy to continue to exist between the parties at every stage of the legal proceedings, including the appeal. City of Dallas v. Woodfield, 305 S.W.3d 412, 416 (Tex.App.-Dallas 2010, no pet.).

Bankruptcy can affect a debtor's standing to sue. When a person files a bankruptcy petition, she loses all right, title, and interest in all of her property, and her property is then vested in her bankruptcy estate. See 11 U.S.C.A. § 541(a)(1) (West 2004); Douglas, 987 S.W.2d at 882; Kilpatrick, 205 S.W.3d at 701. The bankruptcy estate includes any legal claims the debtor owned when she filed the bankruptcy petition. Douglas, 987 S.W.2d at 882. The bankruptcy trustee is the representative of the estate. 11 U.S.C.A. § 323(a) (West 2004). In a case involving a Chapter 11 bankruptcy, the Texas Supreme Court has held that the bankruptcy trustee has exclusive standing to assert claims that are owned by the estate. Douglas, 987 S.W.2d at 881, 882.

But appellant filed for bankruptcy under Chapter 13, and Chapter 13 bankruptcies have some distinctive features. Although a Chapter 13 debtor loses all right, title, and interest in her property under § 541(a)(1), she “remain[s] in possession of all property of the estate” under § 1306. See 11 U.S.C.A. § 1306(b) (West 2004). Thus, every federal circuit court that has addressed the issue has concluded that Chapter 13 debtors retain standing to sue on claims that are owned by the bankruptcy estate. Smith v. Rockett, 522 F.3d 1080, 1081–82 (10th Cir.2008); Crosby v. Monroe Cnty., 394 F.3d 1328, 1331 n. 2 (11th Cir.2004); Cable v. Ivy Tech State Coll., 200 F.3d 467, 472–74 (7th Cir.1999); Olick v. Parker & Parsley Petroleum Co., 145 F.3d 513, 515–16 (2d Cir.1998); Maritime Elec. Co. v. United Jersey Bank, 959 F.2d 1194, 1209 n. 2 (3d Cir.1992). Other courts and commentators agree that Chapter 13 debtors have standing to sue. Jackson v. Marlette (In re Jackson), 317 B.R. 573, 578–80 (Bankr.D.Mass.2004); Ex parte Moore, 793 So.2d 762, 765 (Ala.2000); Kelsey v. Waste Mgmt. of Alameda Cnty., 76 Cal.App.4th 590, 90 Cal.Rptr.2d 510, 514 (Cal.Ct.App.1999); Dance v. La. State Univ. Med. Ctr., 749 So.2d 870, 873 (La.Ct.App.1999); 8 Collier on Bankruptcy ¶ 1303.04 (16th ed.2011, Alan N. Resnick & Henry J. Sommer, eds. in chief) (“Certain rights, such as the right to bring a lawsuit ..., are implicit in section 1306(b), which allows the debtor to retain possession of all property of the estate....”). A few bankruptcy courts have concluded that a Chapter 13 debtor lacks standing to prosecute claims held by the bankruptcy estate. See Jackson, 317 B.R. at 579 n. 8 (collecting cases).

The courts adopting the majority rule that Chapter 13 debtors retain standing to sue have reasoned that it would frustrate the purpose of § 1306(b) to grant the debtor possession of legal claims but deny the debtor the authority to pursue those claims for the benefit of the estate. See, e.g., Smith, 522 F.3d at 1081 (citing Cable, 200 F.3d at 473). Moreover, under Chapter 13, creditors draw their recoveries from the debtor's earnings, not the assets of the bankruptcy estate, so the trustee's participation in the prosecution of a legal claim by the debtor is generally not needed to protect the creditors' rights. Olick, 145 F.3d at 516. Additionally, some legislative history supports the propriety of a Chapter 13 debtor's standing to sue. Smith, 522 F.3d at 1081–82.

Chapter 13 of the Bankruptcy Code includes another provision that is potentially relevant in this case. Under § 1327, “the confirmation of a plan vests all of the property of the estate in the debtor” except as otherwise provided in the plan or the order confirming the plan. 11 U.S.C.A. § 1327(b) (West 2004). Section 1327(b) “implements a major theme of chapter 13 by preserving to the debtor ownership, as well as possession, of all property, whether acquired before or during the chapter 13 case, except as otherwise required to effectuate the confirmed plan.” 8 Collier on Bankruptcy, supra, at ¶ 1327.03 (footnotes omitted).

Notwithstanding the special features of Chapter 13 bankruptcy, the Fort Worth Court of Appeals has held that a plaintiff's prior filing and dismissal of a Chapter 13 bankruptcy deprived him of standing to assert certain claims. Kilpatrick, 205 S.W.3d at 701–03. In that case, the debtor filed two different Chapter 13 bankruptcies, both of which were dismissed. Id. at 695. He later filed a lawsuit in Texas state court. He had never disclosed the existence of his claims in his Chapter 13 bankruptcies. Id. at 702. The Fort Worth Court of Appeals held that the debtor's claims passed into his bankruptcy estate when he filed his first Chapter 13 bankruptcy case, and that the claims did not revest in the debtor when the bankruptcy was dismissed because he never disclosed his claims in that bankruptcy proceeding. Id. at 703. The debtor pointed out that his bankruptcy case was under Chapter 13, but the court of appeals held that he still lacked standing because “[f]ull disclosure of assets is required regardless of the chapter under which the bankruptcy was brought.” Id. at 703.

B...