Marshall v. Honeywell Technology Systems Inc ( 2009 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
_____________________________
)
SANDRA MARSHALL, )
)
Plaintiff, )
)
v. ) Civil Action No. 05-2502 (RWR)
)
HONEYWELL TECHNOLOGY )
SOLUTIONS, INC. et al., )
)
Defendants. )
)
MEMORANDUM OPINION
Plaintiff Sandra Marshall brought employment-related claims
against defendants Honeywell Technology Solutions, Inc.
(“Honeywell”), L-3 Communications Government Services, Inc.
(“GSI”), and SGT, Inc. (“SGT”). The defendants each move to
dismiss Marshall’s claims, arguing that Marshall lacks standing
to bring this action because she had filed for bankruptcy and
only the bankruptcy trustee would have been the true party in
interest with standing to sue. Because Marshall lacks standing
to bring the instant action, the motions to dismiss will be
granted without prejudice to the real party in interest timely
moving to reinstate the complaint.
BACKGROUND
The background of this case is discussed fully in Marshall
v. Honeywell Tech. Solutions, Inc., 536 F. Supp. 2d 59, 62-64
(D.D.C. 2008). Briefly, Marshall alleges that during the
-2-
25 years she worked for either Honeywell or its subcontractor
GSI, she was subjected to race, sex, and age discrimination in
the form of slurs and harassment by supervisors and other
employees, and limitations on her authority. In December 2003,
Honeywell replaced GSI with a new subcontractor, SGT. Marshall
alleges that SGT refused to employ her in the position she had
with GSI, and instead employed a significantly less experienced
younger white male to perform the duties Marshall had performed
for GSI.
In February 2004, Marshall filed pro se three administrative
charge of discrimination forms with the Prince George’s County
Human Relations Commission alleging race and sex discrimination
against all three defendants. Marshall, 536 F. Supp. 2d at 63-
64. In September 2005, Marshall filed in the District of
Columbia a petition for bankruptcy under Chapter 7 of the United
States Bankruptcy Code, 11 U.S.C. § 301(a). (Honeywell’s Mem. in
Supp. of Mot. to Dismiss (“Honeywell’s Mem.”), Ex. B (“Bankruptcy
Petition”).) She was required to supply, among other things, a
schedule disclosing all assets and liabilities, 11 U.S.C.
§ 521(a)(1)(B)(i), including all equitable or future interests
exercisable for her benefit, and any other contingent and
unliquidated claims for her benefit. (Honeywell’s Mem., Ex. F.)
Marshall did not list her administrative discrimination claims
against any of the defendants on her schedule. (Id.) Marshall
-3-
was also required to file a statement of her financial affairs,
11 U.S.C. § 521(a)(1)(B)(iii), declaring under the penalty of
perjury all suits and administrative proceedings to which she “is
or was” a party within one year immediately preceding the filing
of her bankruptcy petition. (Honeywell’s Mem., Ex. D.) Marshall
listed only three actions on her statement, and she did not list
the then-pending administrative proceeding she had initiated
against these three defendants the previous year. (Id.)
In November 2005, Marshall appeared at a hearing before
bankruptcy trustee William D. White. At that hearing, Marshall
orally informed the trustee about her pending discrimination
claims and provided to the trustee the name and telephone number
of the attorney who represented her in that administrative
proceeding. (Pl.’s Am. Opp’n to Honeywell’s Mot. to Dismiss
(“Pl.’s Opp’n to Honeywell’s Mot.”) at 6-7; Pl.’s Combined Opp’n
to SGT and L-3's Mots. to Dismiss, Ex. 2 at 9-10.) Further,
according to Marshall, the trustee telephoned Marshall’s attorney
and discussed Marshall’s discrimination claims. (Pl.’s Opp’n to
Honeywell’s Mot. at 7.) While Marshall did not formally amend
her bankruptcy schedule or her statement of financial affairs to
include the discrimination claims, Marshall alleges that she did
so informally by orally informing the trustee of her claims, and
-4-
by disclosing them in written answers to interrogatories
propounded by the trustee.1 (Id. at 7, 18-20.)
In December 2005, while the bankruptcy case was still
active, Marshall filed her complaint in this action against the
defendants. Marshall, 536 F. Supp. 2d at 63. Marshall did not
formally amend her bankruptcy schedule or her statement of
financial affairs to include this civil action against the
defendants. (See Honeywell’s Mem. at 4; Ex. D.; Ex. F.)
In February 2006, the bankruptcy court discharged Marshall’s
debts, and in June 2006, the bankruptcy trustee issued a report
of no distribution, which stated that the trustee received no
funds or property from the estate. The bankruptcy court
discharged the trustee and closed the case. (Honeywell’s Mem. at
4; SGT’s Mem. in Supp. of Mot. to Dismiss (“SGT.’s Mem.”) at 2.)
The defendants have moved to dismiss Marshall’s complaint,
arguing that only the bankruptcy trustee had standing to file
this complaint, and since Marshall failed to formally list these
claims on her bankruptcy schedule or statement, these claims
cannot be ones the trustee abandoned leaving Marshall free to
pursue them on her own.2 Marshall opposes, arguing that she has
1
Marshall did not provide a copy of her written answers to
the trustee’s interrogatories with either opposition to the
motions to dismiss.
2
L-3 and SGT also argue that judicial estoppel bars this
action. (See L-3's Mem. in Supp. of Mot. to Dismiss or in the
Alternative for Summ. J. at 1, 5; SGT’s Mem. at 3, 6.) Marshall
-5-
standing because the trustee did abandon her claims against the
defendants.
DISCUSSION
“Before a court may address the merits of a complaint, it
must assure that it has jurisdiction to entertain the claims.”
Osserian v. Int’l Fin. Corp., 498 F. Supp. 2d 139, 143 (D.D.C.
2007) (quoting Rodriguez v. Nat’l Ctr. for Missing & Exploited
Children, Civil Action No. 03-120 (RWR), 2005 WL 736526, at *6
(D.D.C. Mar. 31, 2005)). “Lack of standing is a defect in
subject matter jurisdiction.” Teva Pharm. USA, Inc. v. Sebelius,
638 F. Supp. 2d 42, 54 (D.D.C. 2009) (citing Haase v. Sessions,
835 F.2d 902, 906 (D.C. Cir. 1987)). When assessing a motion to
dismiss for lack of subject matter jurisdiction, a court may
consider the complaint and any undisputed facts in the record.
Coalition for Underground Expansion v. Mineta, 333 F.3d 193, 198
(D.C. Cir. 2003).
Section 541 of the Bankruptcy Code provides that at the time
a bankruptcy case is begun, all legal or equitable interests,
including causes of action on behalf of the debtor, are
transferred from the debtor to the bankruptcy estate.
argues that judicial estoppel is inapplicable because she
divulged the existence of her EEOC claim to the trustee,
demonstrating that she did not intend to deceive the trustee or
the bankruptcy court. Because Marshall’s case will be dismissed
for lack of jurisdiction, the defendants’ judicial estoppel
arguments need not be addressed.
-6-
See 11 U.S.C. § 541(a)(1); United States v. Inslaw, Inc., 932
F.2d 1467, 1471 (D.C. Cir. 1991) (stating that it is “undisputed”
that “all legal or equitable interests of the debtor” includes
“causes of action that belong to the debtor”). Once a cause of
action becomes the property of the bankruptcy estate, the
bankruptcy trustee assumes the status of the real party in
interest in whose name Federal Rule of Civil Procedure 17
requires an action to be brought, and the debtor no longer has
standing to pursue that cause of action. See 11 U.S.C. § 323(b);
Toussaint v. Howard University, Civil Action No. 03-1395 (JDB),
2005 U.S. Dist. LEXIS 38738, at *5-7 (D.D.C. November 8, 2005);
Parker v. Wendy's Int'l, Inc., 365 F.3d 1268, 1272 (11th Cir.
2004); Cain v. Hyatt, 101 B.R. 440, 442 (E.D. Pa. 1989) (“[A]fter
appointment of a trustee, a Chapter 7 debtor no longer has
standing to pursue a cause of action which existed at the time
the Chapter 7 petition was filed. Only the trustee, as
representative of the estate, has the authority to prosecute
and/or settle such causes of action.”); Banks v. County of
Allegheny (In re Banks), 223 Fed. Appx. 149, 151 (3d Cir. 2007)
(holding that a “Chapter 7 trustee was the only person with
authority to bring . . . a cause of action” after the appointment
of a trustee).
Here, the discrimination cause of action asserted in this
complaint already existed by the time Marshall filed her
-7-
bankruptcy petition in September 2005, since she had asserted it
in her administrative charge in 2004. Her bankruptcy petition
transferred away from her and to the bankruptcy trustee standing
to bring this action. See 11 U.S.C. § 541(a)(1).
Marshall argues, though, that the trustee abandoned any
interest in this cause of action and thereby returned to her
standing to sue. Section 554 of the Bankruptcy Code describes
the ways that property is abandoned by a trustee. Estate
property that is burdensome to the estate or is of
inconsequential value and benefit to the estate may be abandoned
by the trustee or by court order after notice and a hearing, and
estate property may be abandoned if the property was listed on
the debtor’s bankruptcy schedules and was not otherwise
administered when the case was closed. 11 U.S.C. § 554(a)-(c).
Marshall asserts that her discrimination cause of action was
listed and not otherwise administered because she informally
amended her bankruptcy schedules and her statement of financial
affairs by informing the trustee of the claim, both in responses
to interrogatories and orally. (See Pl.’s Opp’n to Honeywell’s
Mot. at 10-18.) However, Marshall fails to point out any
statute, regulation, or opinion establishing that a debtor may
amend her statement of financial affairs and bankruptcy schedules
informally. Indeed, cases hold that “property that is not
formally scheduled is not abandoned and therefore remains part of
-8-
the estate.” Kunica v. St. Jean Fin., Inc., 233 B.R. 46, 53
(S.D.N.Y. 1999); Jeffrey v. Desmond, 70 F.3d 183, 186-187 (1st
Cir. 1995) (“[T]he burden is on the debtors to list the asset
and/or amend their schedules, and . . . in order for property to
be abandoned by operation of law pursuant to 11 U.S.C. § 554(c),
the debtor must formally schedule the property . . . before the
close of the case.”); Callihan v. Costello (In re Costello), 255
B.R. 110, 113 (Bankr. E.D.N.Y. 2000). Assets that Marshall had,
as of the date of filing, but that she did not add to her
schedule, were not abandoned to her when the case was closed,
regardless of whether the failure to formally schedule the cause
of action was innocent. See Locapo v. Colsia, 609 F. Supp. 2d
156, 159 (D.N.H. 2009) (“[O]nce a bankruptcy case closes through
administration of the estate, the debtor loses his rights in a
cause of action he had at the time he sought bankruptcy
protection but nevertheless failed to list on his schedule.”).
Where nothing in the record shows that a trustee abandoned a
debtor’s cause of action, dismissing a complaint brought by the
debtor for lack of standing is proper. See Becker v. Verizon
North, Inc., No. 06-2956, 2007 WL 1224039, at *4 (7th Cir.
Apr. 25, 2007) (affirming the district court’s dismissal of the
plaintiff’s action for lack of standing where the plaintiff
failed to disclose a pending employment discrimination cause of
-9-
action on her bankruptcy schedules). The defendants’ motions to
dismiss, then, will be granted.3
While Marshall does not have standing to bring this action,
Federal Rule of Civil Procedure 17 states that a “court may not
dismiss an action for failure to prosecute in the name of the
real party in interest until, after an objection, a reasonable
time has been allowed for the real party in interest to ratify,
join, or be substituted into the action.” Fed. R. Civ.
P. 17(a)(3). Marshall’s bankruptcy case has closed, the trustee
has been discharged, and Marshall had numerous opportunities to
request that her bankruptcy trustee be substituted in her place.
See Hopkins v. Foothill Mountain, Inc. (In re Hopkins), 346 B.R.
294, 306 (Bankr. E.D.N.Y. 2006) (dismissing for lack of
jurisdiction and denying an opportunity for joinder, ratification
3
Marshall argues that the Seventh Circuit’s opinion in
Matthews v. Potter, 316 Fed. Appx. 518, 519 (7th Cir. March 23,
2009), supports the proposition that “[c]ourts have allowed and
accepted a Debtor’s and their [sic] counsel’s oral and written
additions, omissions and/or amendments to their schedules and/or
financial statements,” and that “[a]mendments are supposed to be
freely given and allowed by the Courts.” (Pl.’s Opp’n to
Honeywell’s Mot. at 11-12.) In Matthews, the Seventh Circuit
reversed a district court’s order granting summary judgment to
the defendant that was based on judicial estoppel, not lack of
standing. The court of appeals found that the plaintiff had
standing because the plaintiff successfully moved the bankruptcy
court to re-open her bankruptcy case in order for her to amend
her bankruptcy schedules and her statement of financial affairs.
Matthews, 316 Fed. Appx. at 521-22. Marshall has not alleged or
shown that she ever formally moved to re-open her bankruptcy case
to amend her financial statement and her bankruptcy schedules
during the four-year pendency of this case. Matthews, then,
provides her no support.
-10-
or substitution because the “debtor had more than ample
opportunity to seek ratification of this action by, or joinder or
substitution of, the real party in interest” yet had not done
so). However, a final opportunity will be provided to revive the
case in the event the trustee may want to participate.
CONCLUSION
Because the plaintiff lacks standing to bring this action,
the defendants’ motions to dismiss the amended complaint will be
GRANTED without prejudice to the real party in interest moving to
reinstate the complaint. An appropriate Order accompanies this
memorandum opinion.
SIGNED this 18th day of December, 2009.
/s/
RICHARD W. ROBERTS
United States District Judge