Opinion
No. CV 06-5003587 S
Memorandum Filed March 7, 2007
Bankruptcy — Property of the Estate — Causes of Action — Civil Action for Damages Erroneously Commenced by a Debtor Rather than by the Debtor's Bankruptcy Estate May Be Cured by Substituting the Trustee as Plaintiff, Even After the Bankruptcy Proceeding Has Closed and Even While a Motion to Dismiss for Lack of Standing Is Pending.
Parties — Plaintiffs — Substitution — Civil Action Erroneously Commenced by a Debtor Rather than by the Debtor's Bankruptcy Estate May Be Cured by Substituting the Trustee as Plaintiff, Even After the Bankruptcy Proceeding Has Closed and Even While a Motion to Dismiss for Lack of Standing Is Pending A bankruptcy trustee may be substituted pursuant to the Wrong Plaintiff Statute, CGS § 52-109, and P.B. § 9-20, as the proper plaintiff in a civil action for damages improperly commenced by the bankruptcy debtor in the debtor's personal name, even in an action commenced after the bankruptcy proceeding has been concluded. Furthermore, the "decide jurisdiction first" rule does not bar such a substitution of parties after a motion to dismiss for lack of standing has been filed.
This matter is before the court on a motion to dismiss, brought by the defendant, Somerset Capital Group, Ltd, dated August 14, 2006. The defendant claims the court lacks subject matter jurisdiction, pursuant to the Bankruptcy Reform Act of 1978, 11 U.S.C. § 541 (1994), as the plaintiff failed to disclose the present action during a voluntary petition under Chapter 7 of the United States Bankruptcy Code. The defendant further claims that the doctrine of judicial estoppel prevents the plaintiff from asserting the current cause of action.
The plaintiff, Murielle Christophe, filed this sexual harassment and gender discrimination action on June 1, 2006 against the following defendants, Somerset Capital Group (Somerset), Pedro Wasmer and Peter Wasmer. Christophe alleges the following facts in the complaint. During the period from June 2001 to March 2004, Christophe was employed by Somerset. She was subjected to sexual harassment and gender discrimination by Wasmer, the owner and CEO of Somerset, throughout her tenure at the company. On March 8, 2004, Christophe was terminated from Somerset.
Christophe also alleges that on March 3, 2004, Westport Bank contacted Wasmer regarding a loan she owed to the bank and informed him that she was having trouble paying off the loan. Wasmer told Christophe to sign a promissory note and, in turn, he would pay off the loan and garnish her wages. Christophe refused to sign the note in fear that Wasmer would use the debt as leverage over her to further his sexual advances towards her. Christophe alleges that she was terminated as a result of her failure to sign the note.
On August 15, 2006, the defendants filed a motion to dismiss premised in part on Christophe's alleged lack of standing to bring the action due to her filing of a petition for bankruptcy in 2004. The defendants filed an affidavit and several documents in support of their motion, On November 30, 2006, Roberta Napolitano, the bankruptcy trustee, filed a motion to be added as a party plaintiff. None of the other parties have responded to this motion. Thereafter, on December 7, 2006, Napolitano filed an objection to the motion to dismiss. On January 17, 2007, Christophe filed an objection to the motion to dismiss.
I.
"A motion to dismiss . . . properly attacks the jurisdiction of the court, essentially asserting that the plaintiff cannot as a matter of law and fact state a cause of action that should be heard by the court . . A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction." (Internal quotation marks omitted.) Cox v. Aikon, 278 Conn. 204, 210-11, 897 A.2d 71 (2006). "The motion to dismiss . . . admits all facts which are well pleaded, invokes the existing record and must be decided on that alone . . . Where, however . . . the motion is accompanied by supporting affidavits containing undisputed facts, the court may look to their content for determination of the jurisdictional issue and need not conclusively presume the validity of the allegations of the complaint." (Internal quotation marks omitted.) Ferreira v. Pringle, 255 Conn. 330, 346-47, 766 A.2d 400 (2001). "If a party is found to lack standing, the court is without subject matter jurisdiction to determine the cause." (Internal quotation marks omitted.) Missionary Society of Connecticut v. Board of Pardons Paroles, 278 Conn. 197, 201, 896 A.2d 809 (2006).
II.
The defendants move to dismiss the current action on the following grounds: the court does not have subject matter jurisdiction because Christophe lacks standing to bring a claim against them in that she filed a bankruptcy action and failed to list the cause of action as an asset in her bankruptcy petition; and Christophe's claims are barred pursuant to the doctrine of judicial estoppel due to her failure to list her claims as an asset in the earlier bankruptcy proceeding.
Christophe and Napolitano object to the motion to dismiss on the basis that Christophe's claims are to be administered by Napolitano because she, as the bankruptcy trustee, steps into Christophe's shoes and prosecutes the lawsuit. Therefore, dismissal is not warranted because either Christophe or Napolitano has standing to pursue the cause of action.
According to the affidavit and documents that the defendants submitted in support of their motion, after Christophe's termination, she sought legal counsel to inquire about filing a complaint with the Connecticut Commission on Human Rights and Opportunites (commission) against the defendants. The attorney informed her, however, that the 180 day period to commence a claim with the commission had expired. Subsequently, on June 17, 2004, Christophe filed a voluntary petition under Chapter 7 of the United States Bankruptcy Code in the United States Bankruptcy Court in the District of Connecticut. Thereafter, Christophe disclosed her attempt to file a complaint with the commission at the meeting of creditors during her bankruptcy petition: she never, however, amended her bankruptcy petition to list the present action as an asset of her bankruptcy estate. On September 20, 2004, Christophe's bankruptcy estate was closed and her debt was discharged. Neither Christophe or Napolitano dispute these facts.
In general, the procedures of a bankruptcy petition are stated in Title 11 of the United States Bankruptcy Code. Specifically, 11 U.S.C. § 541(a)(1) states in relevant part: "The commencement of a [bankruptcy proceeding] creates an estate . . . that is comprised of . . . all legal or equitable interests of the debtor in property as of the commencement of the case." "A debtor or former debtor does not have standing to pursue claims that constitute property of a bankruptcy estate. See, e.g., Seward v. Devine, 888 F.2d 957 (2d Cir. 1989). With certain exceptions not relevant here, a bankruptcy estate is comprised of `all legal or equitable interests of the debtor in property as of the commencement of the case.' 11 U.S.C. § 541 (2005). Any cause of action that a debtor possesses at the time she files for bankruptcy is included in the bankruptcy estate. Seward, supra, 888 F.2d at 963 . . . A cause of action is an asset of the bankruptcy estate regardless of whether the plaintiff schedules it on the bankruptcy petition, Corell v. Equifax Check Services, Inc., 234 B.R. 8, 10 (Bankr.D.Conn. 1997) . . . Causes of action that accrue after the filing of the bankruptcy petition are included in the bankruptcy estate if they accrue before termination of the bankruptcy proceeding. 11 U.S.C. § 541 (a)(7) . . . Even the close of the bankruptcy case does not permit the debtor to assert a claim that has not been properly abandoned. Corell lv. Equifax
Check Services, Inc., supra,] 234 B.R. at 10; Tuttle lv. Equifax Check Services, Inc., United States District Court, Docket No. 96CV 948 (D.Conn. June 17, 1997)]." (Citations omitted.) Tilley v. Anixter, Inc., 332 B.R. 501, 507-08 (Bankr.D.Conn. 2005).
"Unscheduled property not abandoned by the trustee pursuant to §§ 554(a) or (b) remains part of the estate even when the bankruptcy case is closed." Tuttle v. Equifax Check Services, supra, Docket No. 3:97 CV 1522; see also Chilinsky v. Torres, Superior Court, judicial district of Fairfield at Bridgeport, Docket No. CV 02 0388589 (October 7, 2002, Doherty, J.), and Dana Investment Corp. v. Robinson Cole, Superior Court, judicial district of New Britain, Docket No. X03 CV 00 0505126 (March 8, 2001, Aurigemma, J.). "Once a Chapter 7 petition is filed, the [bankruptcy estate] trustee becomes the proper party to maintain a cause of action on behalf of the debtor." New Milford Savings Bank v. Jajer, 44 Conn.App. 588, 592 n. 4, 691 A.2d 598 (1997), rev'd on other grounds, 244 Conn. 251, 708 A.2d 1378 (1998). Accordingly, the bankruptcy estate trustee steps into the shoes of the plaintiff and prosecutes the lawsuit. See Seward v. Devine, supra, 888 F.2d 957.
In the present case, it is undisputed that Christophe's cause of action accrued before she filed her bankruptcy action, and that she did not list it as an asset of her bankruptcy estate. Moreover, there is no evidence that the estate abandoned the action. Therefore, Christophe does not have standing to pursue the present action. In general, "[w]henever the absence of jurisdiction is brought to the notice of the court or tribunal, cognizance must be taken and the matter passed upon before it can move one further step in the cause; as any movement is necessarily the exercise of jurisdiction." (Internal quotation marks omitted.) FDIC v. Peabody, N.E., Inc., 239 Conn. 93, 99, 680 A.2d 1321 (1996).
Nonetheless, the "Appellate Court [has] established that in spite of the `decide jurisdiction first' rule, a case can be saved from dismissal for lack of subject-matter jurisdiction by the granting of a proper motion to substitute under General Statutes § 52-109.
General Statutes § 52-109, often referred to as the "wrong plaintiff statute," is substantially similar to Practice Book § 9-20. It provides: "When any action has commenced in the name of the wrong person as plaintiff, the court may, if satisfied that it was so commenced through mistake, and that it is necessary for the determination of the real matter in dispute so to do, allow any other person to be substituted or added as plaintiff."
"For example, in Wickes Mfg. Co. v. Currier Electric Co., 25 Conn.App. 751, 760, 596 A.2d 1331 (1991), the Appellate Court upheld a trial court's order permitting the substitution of a new plaintiff for the original plaintiff in a breach of contract action even though the record clearly showed that the original plaintiff had never had standing to bring the action." Carpinella v. Shield, Superior Court, judicial district of Waterbury, Docket No. CV 00 0160901 (October 10, 2003, Alvord, J.). Moreover, "a court may order addition or substitution of plaintiffs in lieu of dismissal whenever the conditions of the substitution statute are met . . . [T]he legislature's provision of this statutory remedy would be completely undermined by any rule requiring the immediate dismissal for lack of subject-matter jurisdiction of any action commenced in the name of the wrong person as plaintiff." Id.
In the present case, Napolitano, the bankruptcy trustee, has filed a motion to be added as a party plaintiff pursuant to Practice Book §§ 9-19 and 9-20 in order to pursue Christophe's claim against the defendants. In the present circumstances, "[t]he court has subject matter jurisdiction for the limited purpose of deciding the plaintiff's motion to substitute [a bankruptcy trustee as a party] plaintiff." Nygren, Jr. v. Steier, Superior Court, judicial district of Waterbury, Docket No. CV 000156706 (January 10, 2001, Doherty, J.) (28 Conn. L. Rptr. 699, 700). As such, the court will consider Napolitano's motion before ruling on the defendants' motion to dismiss.
Section 9-19 states in relevant part that "[n]ew parties may be added or summoned in . . . by order of the judicial authority, at any stage of the cause, as it deems the interests of justice require." See also General Statutes § 52-108. Section 9-20 states that "[w]hen any action has been commenced in the name of the wrong person as plaintiff, the court may, if satisfied that it was so commenced through mistake, and that it is necessary for the determination of the real matter in dispute so to do, allow any other person to be substituted or added as plaintiff." See also § 52-109. Napolitano's motion has not been opposed by any party. Furthermore, the defendants do not maintain that Christophe's failure to list her claim against them absolves them of liability. Indeed, they acknowledge that "[t]he trustee, as the representative of the bankruptcy estate, is the real party in interest with exclusive standing to assert claims which are property of the bankruptcy estate." (Defendants' Memorandum, p. 5.) Accordingly, the court will consider Napolitano's motion to be added as a party plaintiff as a motion to substitute her as the sole plaintiff. Further, as it is apparent that Christophe mistakenly filed this action on her own behalf and that the interests of justice and the need for determining the matter in dispute support the granting of Napolitano's motion. See Nygren, Jr. v. Steier, supra, 28 Conn. L. Rptr 702; and Dilieto v. County Obstetrics and Gynecology Group, Superior Court, judicial district of Waterbury, Docket No. X02 CV 970150435 (January 31, 2000, Sheldon, J.) (26 Conn. L. Rptr 345, 356).
Therefore, the court grants Napolitano's motion to be added as party plaintiff and orders that as bankruptcy trustee be substituted to pursue Christophe's claim on behalf of the estate. As such, the court has jurisdiction to hear this matter and the defendants' motion to dismiss is denied.