Nwachukwu v. Vinfen Corp.

• Decision Date: 21 March 2018
• Docket Number: CIVIL ACTION NO. 16-11815-MPK
• Parties: SOLOMON NWACHUKWU, Plaintiff, v. VINFEN CORPORATION, Defendant.
• Court: U.S. District Court — District of Massachusetts

SOLOMON NWACHUKWU, Plaintiff, v. VINFEN CORPORATION, Defendant.

CIVIL ACTION NO. 16-11815-MPK

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

March 21, 2018

MEMORANDUM AND ORDER ON DEFENDANT'S MOTION TO DISMISS COMPLAINT (#33).

KELLEY, U.S.M.J.

I. Introduction.

Plaintiff Solomon Nwachukwu brings this employment discrimination lawsuit against defendant Vinfen Corporation, alleging he was fired because of his race, color, and national origin. See #26 ¶¶ 5, 14, 16. During the pendency of this case, plaintiff has filed for bankruptcy twice, and did not initially disclose this lawsuit in either filing. As a result, defendant filed a motion to dismiss this case on the grounds of judicial estoppel and lack of standing. (#33.)¹ After defendant moved to dismiss, plaintiff amended his bankruptcy schedule to include this lawsuit as a potential asset. The bankruptcy court accepted the belated disclosure. Judicial estoppel does not apply to the present facts, and defendant's motion to dismiss on the grounds of judicial estoppelis denied. Questions regarding plaintiff's standing remain, therefore defendant's motion on these grounds is denied without prejudice and the bankruptcy trustee is given time to appear.

II. Factual Background.

Plaintiff worked as a Nurse Coordinator for defendant from March 2010 to March 2011. (#26 ¶¶ 5, 14.) After his termination, plaintiff filed an MCAD complaint. Id. ¶ 4. Plaintiff filed his first complaint in this employment discrimination action pro se in Massachusetts state court on May 10, 2016, and defendant removed it to this court on September 6, 2016. (#1.) Now represented by counsel, plaintiff amended his complaint in this case on January 16, 2017. (#26.) Plaintiff alleges in Counts I-III of his amended complaint that the termination of his employment violated Title VII of the Civil Rights Act of 1964 because plaintiff was fired due to his race, color and national origin (#26 ¶ 16), there was a hostile work environment, id. ¶ 20, and plaintiff did not receive compensation and other related reimbursements for his work, id. ¶ 24.

Plaintiff submitted a petition for bankruptcy, pro se, on May 8, 2017, which was dismissed by the bankruptcy court. Order of Dismissal (#42), In Re Solomon C. Nwachukwu, No. 17-11700-FJB (Bankr. D. Mass June 21, 2017.).² Plaintiff filed a second voluntary bankruptcy petition in August 2017, represented by counsel, in a case that is still pending. Chapter 13 Petition (#1), In Re Solomon Nwachukwu, No. 17-12868-FJB (Bankr. D. Mass Aug. 1, 2017).³ It is undisputed that plaintiff did not initially disclose the employment discrimination matter, as required, in either bankruptcy filing.

Defendant moved to dismiss this case, based on arguments arising out of plaintiff's bankruptcy filings, on September 21, 2017. (##33, 34.) After receiving the motion to dismiss, plaintiff amended his bankruptcy schedule A/B and his statement of financial affairs with the bankruptcy court on October 20, 2017. See ##29, 31 In Re Solomon Nwachukwu, No. 17-12868-FJB. No objection by the trustee to plaintiff's having filed an amended Schedule A/B is reflected on the bankruptcy court docket. A meeting of creditors was held on October 24, 2017. Id. #61 at 1. On October 25, 2017, the bankruptcy trustee objected to confirmation of plaintiff's Chapter 13 bankruptcy plan, stating in pertinent part:

On October 20, 2017, the Debtor filed an Amended Schedule B. On line #34, the Debtor lists a possible employment discrimination and termination claim against a former employer for an unknown amount. There is no provision in the Plan that states any nonexempt proceeds will be paid to the unsecured creditors. The Plan does not satisfy the best interest of creditors test set forth in 11 U.S.C. sec 1325(a)(4).

Id. #32 at 1. The trustee repeated the objection in her March 6, 2018 Objection to Confirmation of Debtor's Amended Chapter 13 Plan, stating again that plaintiff's proposed bankruptcy plan did not include a provision for "any non-exempt proceeds" from the "employment discrimination and termination claim" to "be paid to the unsecured creditors" and adding that "[t]he Liquidation Analysis fails to list the potential employment discrimination claim and fails to state that non-exempt proceeds will be turned over to the Trustee for payment to creditors." Id. #61 at 1, 2. The trustee moved to dismiss the case on the same date. Id. #62.

III. Legal Standards.

A. Judicial Estoppel.

Defendant does not bring this motion to dismiss under any particular rule. See ##33, 34. The equitable doctrine of judicial estoppel is generally considered an affirmative defense. See Payless Wholesale Distributors, Inc. v. Alberto Culver (P.R.) Inc., 989 F.2d 570, 571 (1st Cir.1993); see also Sutliffe v. Epping Sch. Dist., 627 F. Supp. 2d 41, 44 (D.N.H. 2008), aff'd, 584 F.3d 314 (1st Cir. 2009) ("Although res judicata, collateral and judicial estoppel, and the statute of limitations are affirmative defenses, they may be adjudicated on a motion to dismiss under Rule 12(b)(6).") (footnote and citations omitted). Affirmative defenses may form the bases for motions to dismiss. Greene v. Rhode Island, 398 F.3d 45, 48-49 (1st Cir. 2005); see also Payless Wholesale, 989 F.2d at 571 ("The court should have recognized the defense of judicial estoppel and dismissed the complaint at the outset."). The 12(b)(6) standard for failure to state a claim upon which relief can be granted applies to motions to dismiss on the basis of affirmative defenses. Sutliffe, 627 F. Supp. 2d at 44:

Consistent with Rule 12(b)(6) standards, however, dismissal can occur only when facts that "conclusively establish the affirmative defense" are "definitively ascertainable from the allegations of the complaint, the documents (if any) incorporated therein, matters of public record, or other matters of which the court may take judicial notice," including the records of prior judicial proceedings.

(quoting In re Colonial Mtg. Bankers Corp, 324 F.3d 12, 16 (1^st Cir. 2003)); see also Greene, 398 F.3d 45 at 48-49 (describing same standard). The court must, therefore, determine whether facts establishing judicial estoppel may be gleaned from the complaint and records of the bankruptcy court.

B. Standing.

A motion to dismiss based on lack of standing may be evaluated under 12(b)(1) if it relates to constitutional Article III standing, or 12(b)(6) if it relates to prudential/statutory standing. See Katz v. Pershing, LLC, 806 F. Supp. 2d 452, 456 (D. Mass. 2011), aff'd, 672 F.3d 64 (1st Cir. 2012):

"Unlike a dismissal for lack of constitutional standing, which should be granted under Rule 12(b)(1), a dismissal for lack of prudential or statutory standing is properly granted under Rule 12(b)(6)." Harold H. Huggins Realty, Inc. v. FNC, Inc., 634 F.3d 787, 795 n. 2 (5th Cir. 2011). See also Maio v. Aetna, Inc., 221F.3d 472, 482 n. 7 (3d Cir. 2000) ("Generally speaking, motions to dismiss on the grounds of a failure to allege an 'injury in fact' implicate constitutional standing principles and thus are predicated on Rule 12(b)(1) rather than Rule 12(b)(6).").

However, courts are not uniform in drawing such distinctions. See, e.g., McInnis-Misenor v. Maine Med. Ctr., 319 F.3d 63, 67 (1st Cir. 2003) (evaluating constitutional and prudential standing under Rule 12(b)(6)); see also Puerto Rico Diary Farmers Ass'n v. Pagan, 35 F. Supp. 3d 210, 215, n.12 (D. P.R. 2014) (evaluating lack of standing under Rule 12(b)(6) while citing constitutional and prudential requirements).

Here, defendant does not argue that plaintiff suffered no cognizable injury, but rather that "Plaintiff no longer has standing to proceed as the 'cause of action' in this case belongs to the bankruptcy trustee in Petition #17-12868." (#34 at 9.) Therefore, the motion would most properly be considered under 12(b)(6). The issue is not critical, however, because "the same standard applies to both subsections" 12(b)(1) and 12(b)(6). Roman-Oliveras v. Puerto Rico Elec. Power Auth., 655 F.3d 43, 45 (1st Cir. 2011) (citation omitted). Under 12(b)(1) and 12(b)(6), "'the court must take all of plaintiff's allegations as true and must view them, along with all reasonable inferences therefrom, in the light most favorable to plaintiff.'" Gonzalez v. Ritz Carlton Hotel Co. of Puerto Rico, 241 F. Supp. 2d 142, 144 (D.P.R. 2003) (quoting Freiburger v. Emery Air Charter, Inc., 795 F. Supp. 253, 257 (N.D. Ill., 1992)) (additional citation omitted).

IV. Discussion.

A. Judicial Estoppel Does Not Apply.

"The equitable doctrine of judicial estoppel is ordinarily applied to 'prevent[ ] a litigant from pressing a claim that is inconsistent with a position taken by that litigant either in a prior legal proceeding or in an earlier phase of the same legal proceeding.'" Guay v. Burack, 677 F.3d10, 16 (1st Cir. 2012) (quoting Alternative Sys. Concepts v. Synopsis, 374 F.3d 23, 32-33 (1^st Cir. 2004)). Judicial estoppel is meant to "protect the integrity of the judicial process" and "prevent improper use of judicial machinery." New Hampshire v. Maine, 532 U.S. 742, 749-50 (internal quotations and citations omitted). It is an "equitable doctrine invoked by a court at its discretion." Id. at 750 (quoting Russell v. Rolfs, 893 F.2d 1033, 1037 (9^th Cir. 1990)).

The First Circuit has utilized a two-prong test to apply judicial estoppel:

"First, the estopping position and the estopped position must be directly inconsistent, that is, mutually exclusive." Alternative Sys. Concepts, 374 F.3d at 33. "Second, the responsible party must have succeeded in persuading a court to accept its prior position." Id.

Guay, 677 F.3d at 16.⁴ A good faith exception to judicial estoppel has been identified by, but not invoked by, the First Circuit. See id. at 20, n.7 ("[D]eliberate dishonesty is not a prerequisite to the application of judicial estoppel. . . .") (citation omitted); Graupner v. Town of Brookfield, 450 F. Supp. 2d 119, 128 (D. Mass. 2006) (discussing...