Gluhic-Popovic v. American Medical Systems. Inc. ( 2019 )

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
ANA GLUHIC-POPOVIC and
SENAD GLUHIC,
Plaintiffs, C.A. No. N14C-06-158 PEL
Vv.
AMERICAN MEDICAL SYSTEMS,
INC.,
Defendant.
Submitted: July 16, 2019
Decided: October 1, 2019
Upon Defendant’s Motion for Summary Judgment
DENIED
OPINION
Robert J. Leoni, Esq. (Argued), Shelsby & Leoni, Stanton, Delaware 19804;
Jeffrey Brinen, Esq. (Argued), Kutner Brinen, P.C., Denver, CO 80264; Shanin
Specter, Esq., Lee B. Balefsky, Esq., Kline & Specter, P.C., Philadelphia, PA,
Attorneys for Plaintiff
Brian M. Rostocki, Esq., Stephen J. McConnell Esq., (Argued), Justin M. Forcier,
Esq., Reed Smith LLP, Wilmington, Delaware, Attorneys for Defendants
JOHNSTON, J.
FACTUAL AND PROCEDURAL CONTEXT
In this products liability action, Plaintiff, Ms. Gluhic-Popovic, alleges
personal injury resulting from surgical implantation of a female pelvic mesh device
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manufactured and sold by Defendant, American Medical Systems, Inc. The
following facts are presumed in favor of Plaintiff for purposes of this motion.
Plaintiff filed a Chapter 13 bankruptcy petition in Colorado on October 5,
2012,! which was confirmed on January 17, 2013. Plaintiffs pelvic mesh
implantation surgery occurred on November 14, 2013. On March 5, 2014, Plaintiff
underwent her first surgery for the purpose of excising the pelvic mesh. On April
30, 2014, Plaintiff modified her Chapter 13 plan.’ Plaintiff underwent another
mesh excision surgery on June 10, 2014. Plaintiff filed this pelvic mesh suit
against Defendant on June 17, 2014. The bankruptcy court again modified
Plaintiff's plan on May 12, 2015.‘ Plaintiff's bankruptcy petition was dismissed
on July 20, 2016, and reinstated on August 30, 2016.° The Chapter 13 trustee
issued a final report on April 7, 2018.
At no time between confirmation and issuance of the final report of her
Chapter 13 bankruptcy case did Plaintiff disclose her case in this Court on her
bankruptcy asset schedule. On January 22, 2019, Defendant filed this Motion for
Summary Judgement seeking dismissal of Plaintiff's vaginal mesh lawsuit.
' See In Re: Ana Gluhic-Popovic and Senad Gluhic, Bankr. D. Colo., Case No. 1:12-bk-30780,
D.I. 1.
* Id. at DI. 41.
3 Td. at D.I. 65.
* Td. at D.I. 86.
> Id. at D.I. 105-108.
Plaintiff reopened her bankruptcy case in March 2019.° In its motion for Summary
Judgment, Defendant argued that Plaintiff: (1) lacks standing; and (2) is judicially
estopped from bringing this cause of action. This Court heard oral argument on
Defendant’s motion on May 7, 2019. The Court requested supplemental briefing
on the issue of Plaintiffs standing.
STANDARD OF REVIEW
Summary judgment is granted only if the moving party establishes that there
are no genuine“issues of material fact in dispute and judgment may be granted as a
matter of law.’ All facts are viewed in a light most favorable to the non-moving
party. Summary judgment may not be granted if the record indicates that a
material fact is in dispute, or if there is a need to clarify the application of law to
the specific circumstances.” When the facts permit a reasonable person to draw
only one inference, the question becomes one for decision as a matter of law.!° If
the non-moving party bears the burden of proof at trial, yet “fails to make a
showing sufficient to establish the existence of an element essential to that party’s
case,” then summary judgment may be granted against that party.!!
6 Td. at 123-25.
T Super. Ct. Civ. R. 56(c).
8 Burkhart v. Davies, 602 A.2d 56, 58-59 (Del. 1991).
? Super. Ct. Civ. R. 56(c).
'0 Wooten v. Kiger, 226 A.2d 238, 239 (Del. 1967).
"! Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
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ANALYSIS
Standing — Chapter 13 Debtor
Whether Plaintiff has standing to bring this action depends on whether a
Chapter 13 debtor in bankruptcy has standing independent of the trustee to bring
claims on behalf of the estate. Defendant argues that Plaintiff lacks standing
because the bankruptcy trustee has exclusive authority to pursue this cause of
action on behalf of the bankrupt estate.
Plaintiff-asserts that she is “bringing the case for the benefit of their
bankruptcy estate.” Thus, “Plaintiffs are once again debtors, and as debtors, they
are now bringing the case on behalf of their estate[.]”!* It is not disputed that
Plaintiffs cause of action is property of the bankrupt estate.'°
Under 11 U.S.C. § 323(b), the trustee is authorized to pursue the estate’s
causes of action.'* Defendant argues that the trustee has exclusive authority to
pursue the estate’s claims. Defendant supports this assertion with substantial case
" Pls. Supp. Br. at 4 & 6 (Jul. 8, 2019).
'S Because Plaintiff is pursuing the action on behalf of the estate, this Court need not, for
purposes of standing, determine whether the Tenth Circuit would consider assets acquired after
confirmation of a Chapter 13 bankruptcy plan property of the estate or vested in the debtor
pursuant to 11 U.S.C. §§ 1327(b) & 1306(a); see City of Chicago v. Fisher (In re Fisher), 203
B.R. 958, 960-62 (N.D. Ill. 1997).
'4 “The trustee in.a case under this title has capacity to sue and be sued.”
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law establishing that Chapter 7 bankruptcy trustees have such exclusive
authority.'°
Plaintiff.counters that, unlike Chapter 7 debtors, Chapter 13 debtors have
statutorily-preserved standing under 11 U.S.C. §§ 1306(b) and 1303. Section
1306(b) provides that the debtor under Chapter 13 “shall remain in possession of
all property of the estate.”!® Section 1303 also grants the debtor certain rights and
powers to administer the estate in the same way as the trustee.'” Plaintiff filed for
bankruptcy in Colorado. Therefore, the Court looks to that jurisdiction’s law for
the most relevant authority. To clarify how these provisions operate, Plaintiff
references two cases from the The United States Court of Appeals for the Tenth
Circuit: Autos, Inc. v. Gowin,'® and Smith v. Rockett.!°
In Autos, a Chapter 13 debtor brought a cause of action which she failed to
disclose on her bankruptcy schedules. The defendant argued that the plaintiff
'S See In re Taxotere Prods. Liab. Litig., 2018 WL 5016219, at *1 (E.D. La.); see also Grillo v.
J.P. Morgan Chase, 2014 WL 2442534, at *4 (D. Colo.); Yetter v. Wise Power Systems, Inc., 929
F, Supp.2d 329, 332 (D. Del. 2013); In re Sims, 2009 WL 4255555, at *2 (Bankr. D. Kan.);
Ardese v. DC, Inc., 2006 WL 3757916, at *4 (E.D. Okla.); Jn re Marriage of Yates, 148 P.3d
304, 314 (Colo. App. 2006); Anderson v. Acme Markets, Inc., 287 B.R. 624, 628 (E.D. Pa. 2002).
'© 11 U.S.C. § 1306(b) (“Except as provided in a confirmed plan or order confirming a plan, the
debtor shall remain in possession of all property of the estate.”).
'7 Td. § 1303 (“Subject to any limitations on a trustee under this chapter, the debtor shall have,
exclusive of the trustee, the rights and powers of a trustee under sections 363(b), 363(d), 363(e),
363(f), and 363(1) of this title.”).
'8 944 Fed. Appx. 885 (10th Cir. 2007).
19 522 F.3d 1080 (10th Cir. 2008).
lacked standing because only the trustee was authorized to pursue causes of action
on behalf of the estate.” The Tenth Circuit disagreed. Citing both 11 U.S.C. §
1306(b) and Bankruptcy Rule 6009, 7! the Tenth Circuit held that the Autos
plaintiff, a Chapter 13 debtor, had standing to pursue her cause of action.”
In Smith, a Chapter 13 debtor alleged violations of both federal and state
laws. The United States District Court for the Western District of Oklahoma
dismissed the action for lack of standing. On appeal, the Tenth Circuit reversed
the district court’s dismissal. The Tenth Circuit again distinguished debtors under
Chapter 7 from those under Chapter 13.4% The Tenth Circuit noted that legislative
history of bankruptcy provisions also supports the position that Chapter 13 debtors
have “the power to sue and be sued.””4
Defendant relies on Richardson v. United Parcel Service.*> In Richardson, a
Chapter 13 debtor raised employment discrimination claims.*° The defendant
°° Autos, 244 Fed. Appx. at 889.
21 FR. Bankr. P. 6009:
Bankruptcy Rule 6009 “trustee or debtor in possession may prosecute or may enter
an appearance and defend any pending action or proceeding by or against the
debtor, or commence and prosecute any action or proceeding in behalf of the estate
before any tribunal.” Jd.
22 Autos, 244 Fed. Appx. at 889.
3 See Smith, 522-F.3d 1080, 1081-82 (citing 11 U.S.C. §§ 1306(b) & 1303; F.R. Bankr. P.
6009).
4 Smith citing Olick v. Parker & Parsley Petr. Co., 145 F.3d 513, 516 (quoting 124 Cong. Rec.
H11, 106 (statement of Rep. Edwards); 124 Cong. Rec. $17, 423 (statement of Sen. DeConcini)).
?5 195 B.R. 737 (E.D. Mo. 1996).
26 Td. at 738.
moved to dismiss for lack of standing.”’ The debtor-plaintiff in Richardson
conceded that he lacked standing.*® The Richardson court omitted any explanation
as to how it concluded that Chapter 13 debtors lack standing. Instead, the court in
Richardson referenced several cases involving Chapter 7 debtors.” The
Richardson court neither addressed, nor mentioned, 11 U.S.C. §§ 1306(b) and
1303.
Defendant also cites In re Bryer2° In Bryer, a Chapter 13 debtor sought
recovery from her ex-husband of monies she alleged were improperly credited
against his support obligations. The court in Bryer entered an order requiring
joinder of the trustee without discussing standing. The Bryer court simply cited
Richardson, arid again, Chapter 7 cases.
While Richardson and Bryer cite only Chapter 7 cases, Autos and Smith
specifically contemplate the impact of 11 U.S.C. §§ 1306(b) and 1303 on the
Chapter 13 debtor’s standing. The weight of the United States Courts of Appeals
27 Id.
28 Id.
” See, e.g., id. at 739 (citing Cain v. Hyatt, 101 B.R. 440, 441 (E.D. Pa. 1989) (holding that a
Chapter 7 debtor did not have standing)).
3° 216 B.R. 755 (E.D. Pa. 1998).
authority overwhelmingly favors standing for Chapter 13 debtors.*! The Tenth
Circuit is no exception.
The Court finds the Tenth Circuit authority most closely on point supports
the position that Plaintiff has standing. Sections 1306(b) and 1303 preserve the
right of the Chapter 13 debtor in bankruptcy to pursue claims, in the debtor’s own
name, on behalf of the bankrupt estate. Therefore, Plaintiff, a debtor in bankruptcy
under Chapter 13, has standing to pursue the present action.
Judicial Estoppel
Defendant argues that Plaintiff is judicially estopped from bringing this
cause of action. “Judicial estoppel bars a party from adopting inconsistent
positions in the same or related litigation.”*” It is a discretionary remedy to
“prevent improper use of judicial machinery.”*3 While the doctrine is “probably
not reducible to any general formulation of principle,”** the Tenth Circuit has
identified three primary factors that inform the analysis:
*! See Wilson v. Dollar Gen. Corp., 717 F.3d 337, 343 (4th Cir. 2013); Crosby v. Monroe Cty.,
394 F.3d 1328, 1331 (11th Cir. 2004); Cable v. Ivy Tech State College, 200 F.3d 467, 472-74
(7th Cir. 1999); Olick v. Parker & Parsley Petr. Co., 145 F.3d 513, 515-16 (2d Cir. 1998); Mar.
Elec. Co. v. United Jersey Bank, 959 F.2d 1194, 1209 n. 2 (3d Cir. 1992).
*? Rascon v. U.S. West Comme’ns, Inc., 143 F.3d 1324, 1330 (10th Cir. 1998).
> New Hampshire v. Maine, 523 U.S. 742, 750 (2001) (internal quotation and citation omitted).
** Johnson v. Lindon City Corp., 405 F.3d 1065, 1069 (10th Cir. 2005) (quoting New Hampshire,
523 U.S. at 750).
(1) The party against whom judicial estoppel is to be invoked seeks to rely on a
position that is clearly inconsistent with its earlier position;
(2) The party has succeeded in persuading a court to accept its earlier position,
such that judicial acceptance of an inconsistent position would create the
impression that either the first or the second court was misled; and
(3) The party seeking to assert the inconsistent position would derive an unfair
advantage or impose an unfair detriment on the opposing party if not
estopped. 7°
Defendant argues that “‘a debtor’s assertion of legal claims not disclosed in
earlier bankruptcy proceedings constitutes an assumption of inconsistent
positions.”°° Plaintiff contends that she had no duty to disclose this action in her
previous bankruptcy proceedings. Additionally, Plaintiff argues that, even if such
a duty applied, she fulfilled that duty upon reopening her bankruptcy case.
Plaintiff cites 11 U.S.C. § 1327, which states: “(b) Except as otherwise
provided in the plan or the order confirming the plan, the confirmation of a plan
vests all of the property of the estate in the debtor.” Based on this provision,
Plaintiff contends that confirmation of her plan terminated the bankrupt estate.
*5 Td.; see also Eastman v. Union Pacific Railroad Co., 493 F.3d 1151, 1156-57 (10th Cir.
2007).
36 Autos, 244 Fed.Appx. at 890 (citing Eastman, 493 F.3d at 1158-59).
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Thus, this cause of action was not estate property because it did not exist at the
time of confirmation, and Plaintiff had no duty to disclose it.
Defendant responds that Section 1327(b) does not nullify Section 1306(a),
which provides that property of the estate includes: “(1) all property[...] that the
debtor acquires after the commencement of the case but before the case is closed,
dismissed, or converted[.]’?’ Defendant contends that Plaintiff was required and
failed to disclose this action to the bankruptcy court between confirmation and
closing. Defendant argues that Plaintiffs alleged failure would render this suit an
inconsistent representation, before a different court.
It is not disputed that Plaintiff “acquired” this cause of action after
confirmation of her plan, as mentioned in Section 1327, but before its closing or
dismissal, pursuant to Section 1306. The question raised is whether, pursuant to
Sections 1327 and 1306, Plaintiffs suit is an asset of the bankrupt estate, which
required disclosure, or belongs to Plaintiff, “free and clear of any claim or interest
provided for by the plan[.]”*8
Various courts have addressed this issue, and reached different results
regarding the apparent conflict between these Chapter 13 provisions.*”? The Tenth
37 (emphasis added).
3811 U.S.C. § 1327(c).
°° See City of Chicago v. Fisher (In re Fisher), 203 B.R. 958, 960-62 (N.D. Ill. 1997) (setting
out competing views of the effect of Section 1327(b)’s vesting provision).
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Circuit has not resolved this issue.*? This Court need not speculate as to what
approach the Tenth Circuit might embrace. The Court finds that the uncertainty in
statutory interpretation prevents Defendant from establishing that Plaintiff
represented “clearly inconsistent” positions before different courts. The Court
concludes that it is unclear whether Plaintiff was required to disclose this action
following confirmation, but prior to closing.*!
Defendant contends that, based on the Autos decision, Plaintiff is
nevertheless judicially estopped. The Court finds Autos distinguishable.” In
Autos, the Tenth Circuit stated: “[Plaintiff]’s nondisclosure might have been
mitigated by evidence that she discovered her claims against [defendant] after plan
“° Plaintiff asserts that the Tenth Circuit adopted the “estate termination” approach, which would
eliminate any duty to disclose her cause of action. Plaintiff is incorrect. Plaintiff cites Jn re
Froehlich, 2018 WL 4693928, at *2 (Bankr. D. Colo.). The Froehlich court appears to have
incorrectly relied upon a Tenth Circuit decision, stating that “[t]he Tenth Circuit adopted the
estate termination approach in the case of In re Talbot, 124 F.3d 1201, 1208 (10th Cir. 1997).”
The Talbot Court never considered post-confirmation asset ownership, because the Trustee in
that case “[did] not contest the premise that §1327(b)’s vesting provision operates to grant
ownership rights[.|” (see Talbot, 124 F.3d at 1209 n. 7). The Tenth Circuit continued that “it is
not without question that the vesting provisions of § 1327(b) operate to grant ownership of estate
property to the debtor upon confirmation of a Chapter 13 plan.” (/d.; see also Rael v. Wells
Fargo Bank, N.A. (In re Rael), 527 B.R. 799, *8 n. 17 (B.A.P. 10th Cir. 2015) (“The Tenth
Circuit has recognized the split in the Chapter 13 case law concerning the Chapter 13 vesting
provisions and property of the estate, but has not indicated which approach it will follow.”)).
*! See Choice Genetics USA, LLC y. Peetz Coop. Co., 2017 WL 3086608, at *8—9 (D. Colo.)
(reasoning that Defendant’s failure to establish disclosure requirements for plaintiffs post-
confirmation claims prevents the court from finding plaintiff's subsequent suit “clearly
inconsistent”); see also New Hampshire, 523 U.S. at 751.
” Autos, 244 Fed. Appx. at 890-91 (finding a debtor judicially estopped due to “repeated” and
“deliberate nondisclosure” of a cause of action that arose prior to the debtor’s bankruptcy
petition).
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confirmation....”" The fact that the plaintiff in Autos knew her cause of action
had accrued “well before her plan was confirmed”“* was a heavily weighted factor.
The Autos Court emphasized that the “integrity of the bankruptcy proceedings is
compromised|...] if substantial known assets come to light after the court has
confirmed a plan of distribution.”*° Here, no such “substantial known asset”
existed, until after Plaintiff's plan confirmation.
Plaintiff also suggests that, even if she had a duty to disclose this action, she
has since fulfilled it. Plaintiff reopened her bankruptcy case on March 11, 2019.
Defendant points out that Plaintiff only reopened her bankruptcy case following
Defendant’s Motion for Summary Judgment.
Defendant further argues that Plaintiff “would derive an unfair advantage or
impose an unfair detriment on the opposing party if not estopped.”*° The Court
must consider how the alleged inconsistency caused a detriment to defendant,
creditors, and/or the judicial system.*” Without a clear inconsistency, the element
of unfairness is diminished, if not entirely eliminated.
43 Td. (emphasis added).
44 Id.
45 Td. at 891
46 Td. at 1069; see also Eastman, 493 F.3d at 1156-57.
‘7 Autos, 244 Fed.Appx. at 891 (citing USinterworking, Inc. v. Gen. Growth Mgmt. (In re
USinternetworking, Inc.), 310 B.R. 274, 284 (Bankr. D. Md. 2004)).
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Plaintiff has arranged with the bankruptcy trustee for the damages to be
distributed to the estate in the event of recovery.*® Thus, the detriment, if any, to
the creditors of the bankrupt estate would be mitigated. The exact harm suffered
by Defendant is unclear, as “Defendant might have faced exactly the same claims
and potential judgment in a suit brought on behalf of the estate.”””
The Court finds no unfair detriment to the creditors or the Defendant, or
unfair advantage to the Plaintiff.
Considering the Tenth Circuit’s silence on a fundamental issue of law,*° and
viewing the facts in the light most favorable to Plaintiff,*! the Court finds that
judicial estoppel is not appropriate. Plaintiff's nondisclosure was not “clearly
inconsistent” such that she created the “impression that either the first or the
second court was misled.”°* Defendant did not establish any unfair detriment to
the Defendant or Plaintiff's creditors, or unfair advantage to Plaintiff.
48 See Pls. Br. at 6 (Jul. 8, 2019).
? See Choice Genetics, 2017 WL 3086608 at *9 (finding that the defendant had not
demonstrated that present litigation was unfair because Plaintiff could have pursued the cause of
action as a Chapter 13 debtor).
°° See Super. Ct. Civ. R. 56(c).
5! See Burkhart, at 58-59 (Del. 1991) (requiring the court to view the facts in the light most
favorable to the non-moving party).
>? Johnson, 405 F.3d at 1069; (quoting New Hampshire, 523 U.S. at 750).
13
CONCLUSION
The weight of authority supports Plaintiffs standing. Sections 1306(b) and
1303 of Title 11 of the United States Code preserve the right of the Chapter 13
debtor in bankruptcy to pursue claims, in the debtor’s own name, on behalf of the
bankrupt estate. Plaintiff, a debtor in bankruptcy under Chapter 13, has standing to
pursue the present action.
The Court finds that the law is unclear whether Plaintiff was required to
disclose this action following confirmation, but prior to closing of her bankruptcy
case. Viewing the facts in the light most favorable to Plaintiff, the Court finds that
judicial estoppel is not appropriate. Plaintiff's nondisclosure was not “clearly
inconsistent” such that she created the “impression that either the first or the
second court was misled.”*? Defendant did not establish any unfair detriment to
the Defendant or Plaintiff's creditors, or unfair advantage to Plaintiff. Thus,
Defendant has not demonstrated that Plaintiff should be judicially estopped, such
that Defendant is entitled to judgment as a matter of law. THEREFORE,
Defendant’s Motion for Summary Judgment is hereby DENIED.
IT IS SO ORDERED.
a
The Hénorable Mary M. Johnston
53 Johnson, 405 F.3d at 1069; (quoting New Hampshire, 523 U'S. at 750).
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