Giddens v. Kreutzer (In Re Kreutzer)

FILED
United States Court of Appeals
Tenth Circuit
UNITED STATES CO URT O F APPEALS
October 3, 2007
Elisabeth A. Shumaker
TENTH CIRCUIT Clerk of Court
In re: REBECCA KREUTZER;
M ICHAEL KREUTZER,
Debtors,
JIM M Y GID DENS, M .D.,
Appellant,
No. 06-5127
v. (D.C. No. 05-CV-0725-CVE-FHM )
(N .D. Okla.)
REBECCA K REU TZER; M ICH AEL
KREUTZER; FELICIA S. TURNER,
as U.S. Trustee,
Appellees,
KATHERINE M . VANCE, Bankruptcy
Trustee; STEVEN W . SOULE,
Trustees.
OR D ER AND JUDGM ENT *
Before M cCO NNELL, M cKA Y, and TYM KOVICH, Circuit Judges.
Rebecca and M ichael Kreutzer petitioned for Chapter 7 bankruptcy relief
*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
Cir. R. 32.1.
after post-surgical complications allegedly caused M rs. Kreutzer to lose her
employment and incur extensive medical bills. At the time they filed their
bankruptcy petition, the Kreutzers failed to list their accrued but not-yet-filed
medical malpractice claim against Appellant, Dr. Jimmy Giddens, as a potential
estate asset. Even after later filing a malpractice action against Dr. Giddens, the
Kreutzers neglected to supplement their bankruptcy petition to include the
malpractice claim. They thereafter received a no-asset discharge, and their
bankruptcy case was closed.
In defending the state court malpractice action, Dr. Giddens filed a motion
to dismiss arguing, inter alia, that the Kreutzers should be judicially estopped
from pursuing the malpractice claim. According to Dr. Giddens, by not listing the
malpractice claim as an asset in the bankruptcy case, the Kreutzers manipulated
the courts by taking inconsistent positions and prejudiced Dr. G iddens.
In an apparent attempt to undercut the force of Dr. Giddens’ motion to
dismiss, the Kreutzers returned to the bankruptcy court and filed a motion to
reopen their bankruptcy case in order to add the malpractice claim as an
unadministered asset of their estate w hile simultaneously arguing for its
exemption. Dr. G iddens objected to that motion, but his objection was overruled.
He appealed the bankruptcy court’s decision to reopen the Kreutzers’ bankruptcy
case to the district court. The district court, following the magistrate judge’s
detailed report and recommendation, concluded that Dr. Giddens lacked standing
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to appeal and, in the alternative, that judicial estoppel did not apply to the
bankruptcy proceedings. Dr. Giddens now appeals to this court.
ANALYSIS
W e review issues of standing de novo. Vermejo Park Corp. v. Kaiser Coal
Corp. (In re Kaiser Steel Corp.), 998 F.2d 783, 788 (10th Cir. 1993). W hile the
Bankruptcy Code does not articulate a standard for appellate standing, the Tenth
Circuit consistently has adopted the “person aggrieved” standard, under which
appellate review is available only to “those persons whose rights or interests are
directly and adversely affected pecuniarily by the decree or order of the
bankruptcy court.” Holmes v. Silver Wings Aviation, Inc., 881 F.2d 939, 940
(10th Cir. 1989) (internal quotation marks omitted). This narrow standing
requirement “is more stringent . . . than the ‘case or controversy’ standing
requirement of Article III,” Nintendo Co. v. Patten ( In re Alpex Computer Corp.),
71 F.3d 353, 357 n.6 (10th Cir. 1995) (internal quotation marks omitted), because
it is designed to limit appellate standing “in order to avoid endless appeals
brought by a myriad of parties who are indirectly affected by every bankruptcy
court order,” Lopez v. Behles (In re Am. Ready M ix, Inc.), 14 F.3d 1497, 1500
(10th Cir. 1994) (internal quotation marks omitted).
Accordingly, to qualify as a person aggrieved, Dr. Giddens w ould have to
show that the bankruptcy order at issue “diminish[ed his] property, increas[ed his]
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burdens, or impair[ed his] rights.” Id. (internal quotation marks omitted). Dr.
Giddens argues that he qualifies as a “person aggrieved” because “the bankruptcy
court’s order directly ‘impaired’ [his] substantive right to present a judicial
estoppel defense in the underlying [medical malpractice] litigation.” (A plt.’s
Opening Br. at 18.) However, “[t]he mere act of reopening a closed
bankruptcy . . . is a purely ministerial act with no legal significance for the
underlying bankruptcy,” Quarles v. M alloy (In re Quarles), 2007 W L 171913, at
*5 (N.D. Okla. Jan. 18, 2007), let alone for an independent tort action. M oreover,
while “[t]he bankruptcy court’s decision to reopen the case has an indirect effect
on [Appellant’s] defense in a separate lawsuit, . . . this does not mean that [he
has] a ‘particular and direct stake’ in the underlying bankruptcy proceedings.”
Id.; see Riazuddin v. Schindler Elevator Corp. (In re Riazuddin), 363 B.R. 177,
183 (B.A.P. 10th Cir. 2007) (“Under the analysis of [In re Alpex, 71 F.3d 353],
Appellee’s claim that its defense in the personal injury case may be affected by
the reopening is insufficient to give it a direct interest in the Debtors’ bankruptcy
case, and therefore, it lacked standing to oppose the motions to reopen.”); see
also Lopez v. Specialty Rests. Corp. (In re Lopez), 283 B.R. 22, 27 n.9 (B.A.P.
9th Cir. 2002) (expressing doubt that defendant in sexual harassment claim that
was not listed in bankruptcy filing would have standing to intervene on motion to
reopen).
Rather, Dr. Giddens’ judicial estoppel defense was properly presented to
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the state court, which must resolve the matter after the bankruptcy court decides
whether the claim is an asset of the estate and after the Chapter 7 trustee decides
whether or not to pursue the claim. And while the trustee’s decision may affect
the viability of that defense, 1 Dr. Giddens has failed to show that reopening the
Kreutzers’ bankruptcy case “will disrupt any defense to the merits” of the medical
malpractice claim. In re Quarles, 2007 W L 171913, at *5. Indeed, at this time
Dr. Giddens’ liability is undetermined, rendering him “at most, a potential ‘debtor
of a debtor.’” In re Riazuddin, 363 B.R. at 183 (emphasis added). W e conclude
that the bankruptcy court order will have no direct effect on Dr. Giddens and that
he therefore fails to qualify as a “person aggrieved.” W e accordingly do not
decide whether the Kreutzers should be judicially estopped in either the
bankruptcy court or state court proceedings. W e note that the bankruptcy court
order merely reopened the case; the bankruptcy court maintains the authority to
assess any penalties it deems appropriate for the Kreutzers’ failure to inform the
court of the medical malpractice claim.
Lastly, we find no merit to Dr. Giddens’ contention that the Kreutzers lack
1
Depending on the trustee’s decision, Dr. Giddens’ supplemental citation
to Eastman v. Union Pac. R.R. Co., --- F.3d ----, 2007 W L 1954031 (10th Cir.
July 6, 2007), may impact the state court tort litigation.
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standing to reopen their own bankruptcy case. See Fed. R. Bankr. P. 5010; In re
Alpex, 71 F.3d at 356. The order of the district court is affirmed.
Entered for the Court
M onroe G. M cKay
Circuit Judge
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