Revell v. Morrison Supply Co.

Citation501 S.W.3d 255
Decision Date29 August 2016
Docket NumberNO. 02-15-00195-CV,02-15-00195-CV
Parties Terry Revell, Appellant v. Morrison Supply Company, LLC, Appellee
CourtCourt of Appeals of Texas

Brandy M. Austin, Brandy Austin Law Firm, PLLC, Arlington, TX, for Appellant.

Russell E. Wilson, Werstein Cartwright & Wilson, Addison, TX, for Appellee.

PANEL: LIVINGSTON, C.J.; MEIER and GABRIEL, JJ.

OPINION

TERRIE LIVINGSTON, CHIEF JUSTICE

Appellant Terry Revell appeals the trial court's take-nothing judgment in favor of appellee Morrison Supply Company, LLC (Morrison Supply). In two issues, he contends that the trial court erred by granting Morrison Supply's traditional motion for summary judgment on the basis of his alleged lack of standing. We reverse the trial court's judgment and remand this case to that court for further proceedings.

Background Facts

Revell sued Morrison Supply. In his original petition, he pled that in February 2013, while he was at Morrison Supply's business, one of Morrison Supply's employees caused 4,000 pounds of pipe to fall on him, which caused him to suffer severe injuries. He brought a claim for negligence and sought damages.

Morrison Supply answered the suit by pleading that Revell lacked standing. Specifically, Morrison Supply pled in its first amended answer that Revell had previously filed for chapter 13 bankruptcy;1 that his negligence claim against Morrison Supply, which was based on an injury occurring during the bankruptcy case, was property of the bankruptcy estate; and that he therefore had no standing to pursue the claim.

Morrison Supply filed a traditional motion for summary judgment on the standing issue. In the motion, Morrison Supply argued in part,

[Revell] has no standing because any interest he had in the instant action was transferred to his bankruptcy estate before he sued. As such, there is no controversy between [him and] ... Morrison Supply. Further, because [Revell] failed to disclose his claim to the bankruptcy court, despite his affirmative duty to do so, the claim did not return to him when his bankruptcy case was dismissed and closed.

To its summary judgment motion, Morrison Supply attached evidence showing that Revell filed his chapter 13 bankruptcy petition in December 2012, that he filed an amended bankruptcy plan that same month, that creditors objected to the confirmation of the plan, that the trustee filed a motion to dismiss for Revell's failure to obtain timely confirmation of the plan in February 2013, and that the bankruptcy court dismissed the case in April 2013 while explicitly stating that Revell's debts were not discharged.2 The evidence also showed that Revell never formally disclosed his potential claim against Morrison Supply as an asset in any document he filed with the bankruptcy court even though one schedule asked him to list "contingent and unliquidated claims of every nature."

Revell responded to Morrison Supply's summary judgment motion. He argued, in part, that he had met any disclosure requirement because his wife had verbally informed the bankruptcy trustee about his injury at Morrison Supply, that any property vested in the bankruptcy estate was revested in him when the bankruptcy case was dismissed, and that Morrison Supply's motion was based on a "discredited" and "rogue" case from this court, Kilpatrick v. Kilpatrick , 205 S.W.3d 690, 700–03 (Tex.App.—Fort Worth 2006, pet. denied).3 He also contended that Morrison Supply would receive a windfall if the trial court granted summary judgment on the standing argument, stating,

This Court must ask itself: who is prejudiced if this case proceeds? Because there was no bankruptcy plan ever confirmed and the bankruptcy was dismissed, [Revell's] creditors have full collection rights and [Revell] is still obligated to pay each creditor in full. If this case proceeds, [Morrison Supply's] obligations remain exactly the same as they would have had the bankruptcy trustee brought the claims: to pay [Revell] damages only in the event a jury determines they have liability.

Finally, Revell contended that a federal statute11 U.S.C.A. § 349(b)(3) (West 2015)—unambiguously revested all assets (including all potential claims) in him upon dismissal of the bankruptcy case.

To his response, Revell attached summary judgment evidence, including affidavits from him and his wife. Revell testified through his affidavit that his injuries occurred in February 2013 but that he did not realize that he "had a claim at that point." He stated that he learned he had a claim against Morrison Supply well after the dismissal of the bankruptcy case, when his attorney in this case completed the investigation about the incident leading to his injuries. Revell's wife swore that after Revell was injured, she called the bankruptcy trustee to inform the trustee about the injury. She stated,

The Trustee told me that the bankruptcy court has no sympathy for injuries and our case would be dismissed if we were unable to timely make our payments. I told them there was no way to make a payment and thought the case would just be dismissed. I had no idea my husband actually had a claim at that point.
A few days after calling the Trustee, Terry continued to talk about how his injuries occurred[,] and I thought [Morrison Supply] should be held responsible. We met with an attorney a few days later. The attorney took the case under investigation. I was unsure if a case would be filed until after the investigation was complete. After the attorney received all the information, he let us know he was going to file a lawsuit on behalf of Terry. This was about 14 months after the injuries occurred.

In its reply to Revell's response, Morrison Supply contended, in part, that although Revell may have disclosed his injury during the bankruptcy case, he had not disclosed a potential cause of action formally through schedules as required. Morrison Supply also argued that section 349(b)(3) did not revest the potential claim in Revell after the bankruptcy's dismissal because the potential claim arose during the pendency of the bankruptcy (rather than before its commencement) and because section 349(b)(3) does not apply when a party fails to disclose an asset in the bankruptcy court.

The trial court granted Morrison Supply's summary judgment motion and ordered that Revell take nothing. Revell brought this appeal.

Revell's Standing

In his two issues, Revell contends that the trial court erred by granting Morrison Supply's summary judgment motion based on his alleged lack of standing because his chapter 13 bankruptcy case was dismissed,4 the property subject to the bankruptcy revested in him, there is no prejudice to the creditors or Morrison Supply by allowing him to proceed on his claim in this suit, and a genuine issue of material fact exists concerning whether he adequately disclosed his potential claim in the bankruptcy case by verbally informing the trustee about his injuries. Morrison Supply contends that Revell's negligence claim is the property of his bankruptcy estate and that he therefore lacks standing to assert the claim in this suit. Morrison Supply also contends that while Revell may have disclosed his injuries to the trustee, he did not properly disclose the potential claim in the bankruptcy case by amending his personal property schedule, and the dismissal of Revell's bankruptcy case did not revest in him property that he had failed to disclose.

We review a summary judgment de novo. Travelers Ins. Co. v. Joachim , 315 S.W.3d 860, 862 (Tex.2010). A defendant that conclusively negates a plaintiff's standing is entitled to summary judgment. See Bland ISD v. Blue , 34 S.W.3d 547, 553–54 (Tex.2000) ; Duque v. Wells Fargo, N.A. , 462 S.W.3d 542, 550 (Tex.App.—Houston [1st Dist.] 2015, no pet.). Standing is a component of subject matter jurisdiction that focuses on who may properly bring a claim. Lake v. Cravens , 488 S.W.3d 867, 885, 888 (Tex.App.—Fort Worth 2016, no pet.) (op. on reh'g); City of Arlington v. Centerfolds, Inc. , 232 S.W.3d 238, 244 (Tex.App.—Fort Worth 2007, pet. denied) ("The issue of standing focuses on whether a party has a sufficient relationship with the lawsuit so as to have a justiciable interest in its outcome."). A court must have subject matter jurisdiction to adjudicate a dispute, and without it, the merits of a case may not be reached. Norris v. Brookshire Grocery Co. , 362 S.W.3d 226, 231 (Tex.App.—Dallas 2012, pet. denied).

As both parties focus their briefing and their contentions concerning standing, in part, on our prior decision in Kilpatrick , we will begin by discussing that decision. There, the plaintiff in a state case concerning the ownership of certain stock had filed separate federal bankruptcy petitions in 1990, 1995, and 1996 without disclosing his ownership of the stock as an asset in any of the bankruptcy cases. Kilpatrick , 205 S.W.3d at 693–95. The plaintiff received a discharge in the first bankruptcy, while the second and third bankruptcies were dismissed. Id. at 695. The defendants in the state litigation obtained a summary judgment on the basis that the stock was the property of the bankruptcy estates created by the bankruptcy filings and that, therefore, only the bankruptcy trustees had standing to bring claims related to the stock. Id. at 699. We upheld the summary judgment, stating,

When a debtor files a bankruptcy petition, all of his property, including all legal and equitable interests, instantly becomes part of the bankruptcy estate. Antonov v. Walters , 168 S.W.3d 901, 904–05 (Tex.App.—Fort Worth 2005, pet. denied). When property passes into the bankruptcy estate, the debtor loses all right, title, and interest in the property. 11 U.S.C.A. § 541(a) (West [2016] ).[5 ]When this occurs, a debtor also loses standing to pursue claims held by the bankruptcy estate. [Douglas v. Delp , 987 S.W.2d 879, 882 (Tex.1999).] The trustee, as the representative of the estate, gains exclusive standing to assert any claim arising from the violation
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