Oswalt v. Sedgwick Claims Mgmt. Servs., Inc., CIVIL ACTION NO. 3:14cv956-WKW
| Decision Date | 13 March 2015 |
| Docket Number | CIVIL ACTION NO. 3:14cv968-WKW,CIVIL ACTION NO. 3:14cv956-WKW |
| Parties | JONATHAN D. OSWALT, Plaintiff, v. SEDGWICK CLAIMS MANAGEMENT SERVICES, INC., Defendant. JONATHAN D. OSWALT, Plaintiff, v. BELLSOUTH TELECOMMUNICATIONS, LLC, Defendant. |
| Court | U.S. District Court — Middle District of Alabama |
Plaintiff sued his former employer, BellSouth Telecommunications, LLC, and its disability claims insurer, Sedgwick Claims Management Services, Inc.,1 in separate lawsuits filed in the Circuit Court of Russell County, Alabama, for discriminating against him due to his disability. The defendants removed the actions to this court and, on defendants' motion,the actions were consolidated. Thereafter, plaintiff sought to amend his complaint to allege tort and statutory claims arising under state law. Upon review of the proposed amended complaints filed by plaintiff (Docs. ## 32, 39)2 and the court's record of plaintiff's Chapter 7 bankruptcy proceeding,3 the court concludes that the plaintiff lacks prudential standing to prosecute the present claims and, therefore, that both actions are due to be dismissed without prejudice.
Plaintiff commenced the present actions on January 16, 2014, in state court. (See Doc. ## 1-1, 1-2). The state court records reflect a period of dormancy in both cases until August 29, 2014, when plaintiff filed an application for entry of default in the case against Sedgwick and a request for a hearing to determine the amount of his monetary damages. (Doc. # 1-2, pp. 8-9). On September 12, 2014, the defendants removed the actions to this court. (Doc. # 1 in both cases). Plaintiff filed a notice in this court on September 24, 2014, requesting "a jury trial under his seventh amendment rights for monetary damages to be determined." (Doc. # 6).
Five weeks thereafter, on October 29, 2014, plaintiff signed a declaration verifying a bankruptcy petition, statements and schedules; on November 5, 2014, plaintiff's bankruptcyattorney filed plaintiff's voluntary Chapter 7 bankruptcy petition, with accompanying statements and schedules, in the United States Bankruptcy Court for this district. (See Bankruptcy Case No. 14-81497, Doc. # 1 (petition and attachments), Doc. # 4 (debtor's declaration)). The next day, the bankruptcy clerk issued a notice identifying Cecil M. Tipton, Jr., as the trustee of the bankruptcy estate. (Id., Doc. # 7). On February 17, 2015, the bankruptcy court granted plaintiff a "no asset" discharge. (Bankruptcy Proceeding Doc. ## 10, 11). The bankruptcy court issued an order that same day discharging Tipton as trustee of the debtor's bankruptcy estate, cancelling the trustee's bond, and closing the estate. (Id., Doc. # 12).
When a debtor commences a bankruptcy case by filing a petition seeking relief under the bankruptcy code, a bankruptcy estate is created that includes - with limited exception not applicable to the present claims - "all legal or equitable interests of the debtor in property as of the commencement of the case." 11 U.S.C. § 541(a)(1); see also id., § 301. Such property includes all claims or causes of action that accrued to the debtor before he filed the bankruptcy petition. Parker v. Wendy's International, Inc., 365 F.3d 1268, 1272 (11th Cir. 2004). Thus, when plaintiff filed his Chapter 7 petition on November 5, 2014, all of his interest in the causes of action that are pending in this court - both legal and equitable - became property of his Chapter 7 bankruptcy estate and no longer belonged to the plaintiff personally. "[I]n a Chapter 7 case, a trustee is appointed who is charged with the duty ofliquidating the assets in the debtor's bankruptcy estate with the goal of satisfying as many of the creditors' claims as possible." In re Alvarez, 224 F.3d 1273, 1277 n. 9 (11th Cir. 2000). "A trustee in bankruptcy succeeds to all causes of action held by the debtor at the time the bankruptcy petition is filed." Jones v. Harrell, 858 F.2d 667, 669 (11th Cir. 1988). The trustee of a bankruptcy estate may, after notice and a hearing, "abandon" assets of the estate (see 11 U.S.C. § 554(a), (b)) - i.e., transfer ownership of an estate asset back to the debtor. Additionally, unless the bankruptcy court orders otherwise, any estate assets that are "scheduled" by the debtor as required by § 521(1) are abandoned to the debtor if they are not administered by the trustee before the estate is closed. Id., § 554(c); see also § 521(1)("The debtor shall ... file a list of creditors, and unless the court orders otherwise, a schedule of assets and liabilities, a schedule of current income and current expenditures, and a statement of the debtor's financial affairs[.]").
The court's record of plaintiff's bankruptcy proceeding reflects no abandonment of any estate asset by the trustee while the bankruptcy case was pending. (See Docket in Bankruptcy Case No. 14-81497; id. at Doc. # 10 (Trustee's Report of No Distribution)). Additionally, plaintiff did not include the causes of action set forth in his complaints and proposed amendments on his schedule of assets (see Schedule B to Bankruptcy Petition, Bankruptcy Proceeding Doc. # 1 at pp. 17-19; id. at p. 18 ¶ 21); neither did he list the present lawsuits in his statement of financial affairs (id. at pp. 7-15; id. at p. 9, ¶ 4 ()). Thus, the causesof action plaintiff that seeks to assert in this court were not abandoned to the debtor by operation of law upon the closing of his bankruptcy case. 11 U.S.C. § 554(d)("Unless the court orders otherwise, property of the estate that is not abandoned under this section and that is not administered in the case remains property of the estate."); Parker, 365 F. 3d at 1272 ().
The fact that the causes of action alleged in plaintiff's complaint and proposed amendments belong to the Chapter 7 bankruptcy estate presents the issue of whether plaintiff has standing to prosecute them. Upon review of the relevant appellate decisions rendered on this issue - both published and unpublished - the court concludes that he does not.
In Burkett v. Shell Oil Company, 448 F.2d 59 (5th Cir. 1971)(per curiam), the district court concluded that a cause of action alleged to have arisen before the plaintiff filed for bankruptcy did not belong to the plaintiff but belonged, instead, to the trustee in bankruptcy. The Fifth Circuit affirmed the decision of the district court which had held, in granting the defendant's motion for summary judgment, "that [the plaintiff] did not have standing to sue Shell on his own behalf." Id.4 On a subsequent appeal in the same lawsuit, the Fifth Circuitreiterated that - in rendering the judgment it had affirmed in the earlier appeal - the district court had "concluded that title to the antitrust claims passed to the trustee in bankruptcy, which transfer deprived [the plaintiff] of standing to sue." Burkett v. Shell Oil Company, 487 F.2d 1308, 1310 (5th Cir. 1973).5,6 The court further explained the underlying facts, including that plaintiff "did not include among his assets any claims against Shell Oil Company" when he filed his bankruptcy petition and, also, that he was discharged in bankruptcy 22 months before he commenced the antitrust action against Shell Oil. Id.
More recently, the Eleventh Circuit has also concluded that a plaintiff lacks standing to pursue, on his or her own behalf, causes of action that arose before the plaintiff filed a Chapter 7 bankruptcy petition and that have not been abandoned by the trustee. In Webb v. City of Riverdale, 472 F. App'x. 884 (11th Cir. 2012), the defendants sought summaryjudgment on the basis of judicial estoppel after they discovered that the plaintiff had filed a Chapter 7 bankruptcy petition during the pendency of his civil action against them, and had not disclosed the existence of the lawsuit. Id. The district court denied the summary judgment motion but dismissed the action without prejudice "on the ground that only the Trustee ... had standing to pursue the action." Id. The Eleventh Circuit found no error in the district court's dismissal without prejudice on the basis of the plaintiff's lack of standing. Id. However, it vacated the district court's order denying the summary judgment; the appeals court concluded that the district court should have refrained from ruling on the motion for summary judgment "because Webb did not have standing to prosecute the case," and - absent the trustee's abandonment of the claim to Webb - the question of judicial estoppel was not properly before the court. Id. at 884-85. In Chen v. Siemens Energy Inc., 467 F. App'x. 852 (11th Cir. 2012), "[t]he district court dismissed Chen's claim for lack of standing, upon learning that Chen, after filing her Title VII claim, had filed a petition for bankruptcy under Chapter 7, and thus, the bankruptcy trustee was the only party with standing to prosecute the Title VII claim." Id. at 853. The Eleventh Circuit determined Id. at 854. The Eleventh Circuit affirmed the district court's judgment dismissing the action for lack of standing. Id. In Baxley v. Pediatric Services of America, Inc., 147 F. App'x. 59 (11th Cir. 2005), the district court entered summaryjudgment on the plaintiff's FMLA and ERISA claims against...
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