Skinner v. Skinner (In re Skinner)

• Citation: 519 B.R. 613
• Decision Date: 08 October 2014
• Docket Number: Adversary No. 13–00405–MDC.,Bankruptcy No. 13–13318–MDC.
• Parties: In re Thomas SKINNER, Debtor. William Skinner, Plaintiff, v. Thomas Skinner and Anna Skinner, Defendants.
• Court: United States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Eastern District of Pennsylvania

519 B.R. 613

In re Thomas SKINNER, Debtor.William Skinner, Plaintiff

v.Thomas Skinner and Anna Skinner, Defendants.

Bankruptcy No. 13–13318–MDC.

Adversary No. 13–00405–MDC.

United States Bankruptcy Court, E.D. Pennsylvania.

Signed Oct. 8, 2014.

Alan B. Kane, The Law Office of Alan B. Kane, Norristown, PA, for Plaintiff.

Stuart A. Eisenberg, Carol B. McCullough, McCullough Eisenberg, LLC, Warminster, PA, Michael Seth Schwartz, Law Office of Michael Schwartz, Southampton, PA, for Defendants.

MEMORANDUM

MAGDELINE D. COLEMAN, Bankruptcy Judge.

INTRODUCTION

Before the Court for consideration is the Motion to Dismiss dated January 27, 2014 (the “Motion”), filed by Thomas Skinner (the “Debtor”) and his wife Anna Skinner (“Mrs. Skinner,” collectively with the Debtor, the “Defendants”) seeking dismissal of the Amended Adversary Complaint (the “Amended Complaint”) filed by the Debtor's brother, William Skinner (the “Plaintiff”), pursuant to (i) Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief may be granted, and (ii) Fed.R.Civ.P. 12(b)(1) for lack of subject matter jurisdiction.

Following a hearing held by this Court and after due consideration of the pleadings filed by the parties, this Court will grant the Motion. As discussed below, Plaintiff is not a creditor of the Debtor's estate. This Court cannot conceive of any cognizable legal theory that this Court may rely upon to find the Debtor or his spouse liable to or otherwise obligated to reimburse the Plaintiff for the Plaintiff's personal obligation to reimburse Holy Redeemer Hospital d/b/a St. Joseph's Manor (“St. Josephs”) for the cost it incurred in connection with the care provided to the Plaintiff's mother. See, e.g., Holmes v. Securities Investor Protection Corp., 503 U.S. 258, 268–270, 112 S.Ct. 1311, 117 L.Ed.2d 532 (1992) (recognizing that “proximate cause” demands a “direct relation between the injury asserted and the injurious conduct alleged”); Associated General Contractors of California Inc. v. California State Council of Carpenters, 459 U.S. 519, 533 n. 25, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983) (“Under the common law ... one who pays the medical expenses of another may not recover those expenses from the third-party tortfeasor who caused the damage.”); City of Philadelphia v. Philadelphia Rapid Transit Co., 337 Pa. 1, 10 A.2d 434, 435 (1940). The Restatement (Second) of Torts § 914 is a measure of damages and the Plaintiff may not rely on it to create a cause of action where none otherwise exists.

With regard to his fraudulent transfer claim, the Plaintiff lacks standing because (1) the Bankruptcy Code vests exclusive standing to prosecute fraudulent transfer claims in the trustee, and (2) this Court may not confer derivative standing upon the Plaintiff because his suit, if successful, would not confer a benefit upon the Debtor's estate.

BACKGROUND/PROCEDURAL HISTORY

This action presents another chapter in the dispute between the Plaintiff, the Debtor and St. Josephs arising from St. Josephs' attempts to collect the outstanding balance due to St. Josephs as a result of medical, residential and daily living services provided to Dorothy C. Skinner (the “Mother”) while she was admitted at the facility of St. Josephs. In the Amended Complaint Plaintiff alleges that the Mother began residing at an assisted-living facility run by St. Josephs in 2009 and that on or about June 4, 2012, the Mother was evicted from the assisted-living facility due to the Debtor's failure to pay St. Josephs for the services provided to the Mother. Amended Complaint, ¶¶ 21 & 22.

The Plaintiff further alleges that beginning in 2007 and using the Debtor's Power of Attorney over the Mother's bank accounts granted to him in April of 2005, the Debtor and his spouse began a scheme to use the Mother's assets, including her interest in long-term care benefits, to fund approximately $85,000.00 of their personal expenses. Amended Complaint, ¶¶ 17 & 20.

The Plaintiff contends that but for the Debtor's scheme that began in 2007 to divert the Mother's assets the Mother would have had sufficient assets to make the payment demanded by St. Josephs five years later and three years after her admission to the facility. Amended Complaint, ¶ 30.

To collect upon the unpaid amounts, St. Josephs filed a complaint dated September 5, 2012, in the Court of Common Pleas of Montgomery County, Case No. 2012–25014–0 (the “Collection Action”) against the Mother, the Debtor and the Plaintiff. In the Collection Action, St. Josephs seeks payment of the costs of care (the “Support Claim”) from the Plaintiff pursuant to The Support Law, 23 Pa.C.S.A. § 4603 (“The Support Law”)¹ and pursuant to the theory of unjust enrichment.² On February 15, 2013, a default judgment was entered in favor of St. Josephs and against the Debtor in the amount of $32,225.56. On April 16, 2013, the Debtor filed for bankruptcy relief and simultaneously filed a Suggestion of Bankruptcy notifying the Court of Common Pleas of the Debtor's filing for bankruptcy relief. As a result, the Collection Action was placed in suspense and the focus of the parties' dispute shifted to this forum.

On July 19, 2013, the Plaintiff filed a Complaint (the “Original Complaint”) initiating this adversary proceeding. As described by this Court's Order dated December 19, 2013 (the “First Dismissal Order”), the Original Complaint contained two counts. The first count sought a declaration that the Plaintiff's claim against the Debtor and his spouse is nondischargeable. The second count stated the basis of the Plaintiff's alleged claim. For the reasons stated in the First Dismissal Order, this Court dismissed the Original Complaint because of the Plaintiff's failure, inter alia, to include sufficient allegations for this Court to determine whether the Plaintiff held a claim against the Debtor. First Dismissal Order, ¶ 4 (“the insufficiency of the Plaintiff's Complaint prevents this Court from evaluating the nature of the Plaintiff's claim”). Despite its insufficiencies, this Court permitted the Plaintiff to file an amended complaint and specifically instructed the Plaintiff to state “[t]he specific basis of the Plaintiff's claim against the Debtor and Mrs. Skinner.” First Dismissal Order, ¶ 5a.

On January 2, 2014, the Plaintiff filed the Amended Complaint. Rather than lumping several non-dischargeability causes of action within a single count, the Amended Complaint identifies the specific subsections that the Plaintiff believes entitle him to a declaration of non-dischargeability, 11 U.S.C. §§ 523(a)(4) and 523(a)(6), and pleads each in separate counts. Typically, a nondischargeability complaint begins with a statement of the plaintiff's claim. Not here. The Plaintiff states in Count I and Count II his nondischargeability causes of action and waits until Count IV to state his claim and the cause of action upon which it is premised.

In Count I, the Plaintiff seeks a declaration that the Debtor's liability to the Plaintiff is nondischargeable pursuant to 11 U.S.C. § 523(a)(4) (“§ 523(a)(4) ”) because it results from embezzlement or larceny.³ In Count II, the Plaintiff seeks a declaration that his claim is non-dischargeable pursuant to 11 U.S.C. § 523(a)(6) (“§ 523(a)(6) ”) because the Plaintiff's claim results from the Debtor's willful and malicious conduct.⁴

In Count IV, the Plaintiff states the legal basis of his alleged right to payment from the Defendants. Count IV of the Amended Complaint essentially restates Count II of the Original Complaint and this Court's prior description of the Plaintiff's alleged right to payment remains applicable.

[T]he Plaintiff is among the class of person who The Support Law imposes financial responsibility for the care of Dorothy Skinner. 23 Pa.C.S.A. § 4603 (imposes financial responsibility for the care of an indigent person upon: (1) spouse; (2) children; and (3) parents) ... [T]he Complaint alleges that, to the extent the Plaintiff is required to make payment on the Support Claim, the Plaintiff is entitled to seek reimbursement from the Defendants pursuant to the Restatement (Second) of Torts § 914.

First Dismissal Order, p. 4.

In other words, the Plaintiff alleges that to the extent he is required to pay St. Josephs its Support Claim, he is entitled to be reimbursed for such payment from the Defendants. The Amended Complaint does not otherwise supplement the Plaintiff's allegations regarding the theory of the Defendants' liability.

In addition to the allegations regarding the Debtor's alleged liability to the Plaintiff, the Amended Complaint asserts, on behalf of the Debtor's estate, a state law fraudulent transfer claim against the Defendants. In Count III of the Amended Complaint, the Plaintiff alleges that the misappropriation of Dorothy Skinner's funds by the Defendants constitutes a fraudulent transfer under Pennsylvania Uniform Fraudulent Transfer Act, 12 Pa.C.S.A. § 5101. This claim was not asserted in the Original Complaint and therefore not previously addressed by this Court.

THIS COURT'S JURISDICTION

This Court has little difficulty concluding that it has subject matter jurisdiction to hear the Plaintiff's request to have his claim declared non-dischargeable under § 523(a)(4) or § 523(a)(6). 28 U.S.C. § 157(b)(2)(I) ; In re DeMarco, 454 B.R. 343, 347 (Bankr.E.D.Pa.2011) (“non-dischargeability claims are squarely within this Court's core jurisdiction.”).⁵ With regard to the Plaintiff's fraudulent transfer claim, this Court acknowledges that there is some doubt as to its authority to issue a final order adjudicating such claims. See, e.g., Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 56, 109 S.Ct. 2782, 106 L.Ed.2d 26 (1989) ; In re DeMarco, 454 B.R. 343, 348 n. 2 (Bankr.E.D.Pa.2011). However, this Court finds that the issue of this Court's subject matter jurisdiction is not determinative.

Not only must a court have subject matter jurisdiction over the cause of action, the claimant must have standing to assert the cause...