Opinion
Case No. 99-51514-WS.
July 13, 2007
INTRODUCTION
Debtor requested, and the Court held, a hearing on Debtor's Motion Regarding Procedures for Competency Hearing and Related Relief ("Motion").
The Motion is referred to in this Court's May 3, 2007, Opinion and Order Denying Debtor's Motion Regarding Subject Matter Jurisdiction in Relation to Debtor's Competency and Guardian Ad Litem ("GAL") Appointment, ("Jurisdiction Opinion") (Debtor's appeal of that decision was dismissed on June 19, 2007). The Motion specifically requests rulings on certain issues incident to and in advance of, a hearing to determine whether the guardian ad litem appointment should be terminated, namely: (1) who has the burden of proof; (2) what is to be the standard of proof; (3) what is the appropriate definition or articulation of incompetency necessary to support the continuation of the GAL appointment; and (4) whether or not Debtor is entitled to a jury trial in the Bankruptcy Court hearing on the termination of the existing GAL appointment. The Jurisdiction Opinion sets forth a contextual background. Also relevant is this Courts conclusions in its February 12, 2003, Opinion appointing the currently acting Guardian Ad Litem for Debtor ("Appointment Opinion"). The substance of this Court's rulings on the issues before it flows in material measure from what this Court said in the Appointment Opinion. Simply stated, Debtor would have this Court decide the indicated questions as if this Court was a Michigan Probate Court dealing with the issues in proceedings to appoint a guardian or limited guardian, etc., brought under Michigan probate law. Debtor's arguments flow from that premise and perspective.
(A) Burden of Proof
The Court of Appeals in its opinion at 179 Fed. Appx. 262 (6th Cir. 2006) stated that Debtor is entitled to have his request for a hearing on his motion to dismiss the GAL denied or granted in a timely fashion "so that he may appeal should the court determine not to dismiss the GAL in the face of new evidence of competence" and then went on to conclude that "Kloian's failure to come forward with sufficient evidence requires us to affirm the order denying him a second competency hearing." Kloian v. Simon (In re Kloian), 179 Fed. Appx. 262, 266 (6th Cir. 2006). The Court further stated, "With appropriate additional evidence, Kloian is free to seek another competency hearing." Id. at 266. That language is susceptible of somewhat different, though not necessarily inconsistent interpretations. It could mean that Debtor must make at least sufficiently credible and meritorious allegations of new evidence of competency as a precursor to even entitling him to a hearing. Or, it could mean the former, but also, that if the hearing is held, the Debtor has the burden of proof (presumably of showing that he is now sufficiently competent and a Guardian as Litem is no longer justified). A review of the Motion and other relevant documents seen within the framework of the current status of the bankruptcy case requires the conclusion that Debtor is entitled to the hearing.
That said, as noted the Motion also seeks a determination of who has the burden of proof in that hearing. One could interpret the words of the Court of Appeals as also placing that burden on the Debtor. Absent or independent of that interpretation, however, this Court concludes that Debtor does have the burden of proof for various reasons. First, it is logical given the fact that up until now the appointment of the GAL is, and has been, in place and the GAL has been acting on Debtor's behalf since this Court's 2003 Appointment Opinion. It is the Debtor who now wishes to in essence and result terminate that appointment. It is normally and generally required of any moving party that it bear the burden of justifying entitlement to what the moving party seeks, i.e. one who seeks to end or alter an existing and continuing state of affairs should, and normally does, bear the burden of justifying its termination. That would be particularly true in the kind of situation that exists here i.e.: a request to prospectively terminate an existing GAL appointment. This situation does not present an occasion to depart from that norm. This situation is to be differentiated from an original proceeding to have the guardian ad litem appointed in the first place — a proceeding in which whoever is seeking, putting forth or raising the question of the need for such appointment should have the burden of proof. Considerations of reliance and finality and the like necessitate a state of affairs where the finding of incompetence necessary to support the original appointment (and the ongoing and numerous actions of the appointed Guardian ad Litem pursuant to that appointment) should be deemed or presumed to continue until formally found to no longer exist. Were it otherwise the appointed guardian ad litem (and third parties who are or have become involved) would in effect be put to the task in connection with any action he takes, of continually justifying, wondering or being concerned with the continued existence of the basis for his appointment or putting other persons dealing with the Guardian as Litem in a state of having to wonder or be concerned about whether or not that basis still exists with regard to any and all particular actions or transactions incident to the administration of an ongoing bankruptcy estate administration. Rather Debtor should be the one who is required to show that the basis no longer pertains and the status quo thus altered, and consequently bear the burden of proof.
(B) Standard of Proof
There is a number of theoretically possible standards of proof, i.e.: preponderance, clear and convincing, or beyond a reasonable doubt. Presumably if it is those who seek continuation of the guardian ad litem who have the burden of proof of showing the facts justify the continuation of the guardian ad litem appointment, Debtor would argue for a higher and more difficult to meet standard of proof. On the other hand if, as the Court has indicated, it is the Debtor who has the burden of proof to show that the guardian ad litem appointment should be terminated, Debtor would likely argue for a lesser, easier to meet, standard. In this Court's view, it is both consistent and appropriate that this Court apply the same standard it used in the Jurisdiction Opinion, irrespective of the fact that now it is Debtor who has the burden of proof, and the Court will do so. Furthermore, once a hearing is held and proofs are presented, it could very well be that those proofs are such that they meet whichever of the indicated possible standards might be applicable and no definitive opinion would need be given on the subject.
(C) Definition of Incompetency
This Court defined incompetency in its original Appointment Opinion using the Michigan state law definition. The District Court and the Court of Appeals affirmed that decision albeit on various grounds which did not specifically deal with that question. The affirmances leave in place the definition this Court used and thus that definition, at least so far, became and is the law of the case. As noted by this Court, "`incompetent person' in Rule 17(c) refer[s] to a person without the capacity to litigate under the laws of his state of domicile." Appointment Opinion, @ p4, citing Neilson v. Colgate-Palmolive Co., 199 F.3d 642, 651 (2d Cir. 1999). This Court in that Appointment Opinion referred to Michigan law, M.C.L. § 700.1105(a), which defined an incapacitated individual as one "who is impaired by reason of mental illness, mental deficiency . . . to the extent of lacking sufficient understanding or capacity to make or communicate informed decisions," importantly keeping in mind that the competency involved is one to be viewed and determined in the very limited and narrow sense of Debtor's ability or competency to now protect his interests in what is left of the administration of his bankruptcy case in a reasonably efficient and timely manner. Consistency in these circumstances as well as what this Court believes is a correct application of law requires the Court to use the same definition and frame of reference it used in its Appointment Opinion. Further, this Court would note that the indicated definition previously set out by the Court does not appear to be at material variance from what Debtor is requesting.
(D) Entitlement to a Jury Trial
Debtor argues that he is entitled to have the matter of the termination of the existing guardian ad litem determined by way of a jury trial — essentially arguing that such is required under Michigan law and the Bankruptcy Court is bound by that law.
This Court has concluded that (1) Michigan law likely does not provide for a jury trial in these circumstances; and (2) even if it did, this Court in any event is not bound by that law; and (3) the circumstances of this case militate against affording debtor a jury trial on the issue.
Michigan Probate law does provide for a right of jury trial in connection with the appointment of a guardian, limited guardian or a conservator. See M.C.L. 700.5304(5). It also appears to provide such a right incident to the termination of the appointment of any such. See M.C.L. 700.5310.
However, what is before this Court now, is whether or not an existing guardian ad litem should be determined to be no longer justified. A guardian ad litem, however, is not specifically statutorily included among those representatives the appointment of which is subject to a jury trial right. Michigan Probate law, however, does make a reference to the appointment of a guardian ad litem. But that reference is very limited and only pertains to the required appointment by the Probate Court of a guardian ad litem, incident to, and after the filing of a petition for the appointment of a guardian, limited guardian or conservator, to represent the interests of the object of the petition, incident to and while the underlying appointment proceedings go forward to their conclusion. M.C.L. § 700.5303. Other than going on to describe the duties of such a guardian ad litem in M.C.L. § 700.5305, the Michigan Probate statute does not either further or materially refer anywhere to such a guardian ad litem. In any event, it contains nothing as to the procedures to be utilized to effect guardian ad litem appointment, the criteria to be applied etc. — let alone anything about such incident to replacement or termination of such an existing guardian ad litem. Clearly once the underlying guardianship proceeding is concluded (whether by approval of what is sought or its denial) the need for a guardian ad litem is automatically ended. The point here is that Debtor's argument fails to make the needed distinction between the procedures under state law relative to appointment (or termination) of a general or limited guardian or conservator, on the one hand, and the appointment of a guardian ad litem in connection with, and incident to, and circumscribed by that same larger proceeding, on the other.
More importantly, however, state law on the subject, whatever it is, is not, in this Court's view, controlling. As noted in the prior opinions of this Court, FRCivP 17(c) and the inherent power of the Court are the sources and parameters of this Court's authority to appoint a guardian ad litem. While FRCivP 17(b) relating to capacity to sue or be sued refers to the law of the state in which the Court is sitting, FRCivP 17(c) does not. Utilizing the latter, in the case of Gibbs v. Carnival Cruise Lines, 314 F.3d 125, 135-36 (3d Cir. 2002), the Court said:
A district court need not look to the state law, however, in determining what factors or procedures to use when appointing the guardian ad litem. Rather, its polestar appears to be protection of the infant's interests." [internal citations omitted].
In Travelers Indemnity v. Bengtson, 231 F.2d 263 (5th Cir. 1956) a tort action was brought in the federal district court by the brother of the plaintiffs who were minors, the brother having been appointed as their guardian ad litem by the Federal Court under FRCivP 17(c). As a defense to a judgment obtained against them the defendants in that case argued that under Louisiana law, such a case was required to be brought by a "tutor" and not a guardian ad litem. The Court of Appeals, at page 265 said that defense:
. . . does not reckon either with the fact of the suit being filed in the Federal Court, or the existence of the Federal Rules of Civil Procedure, 28 U.S.C.A. The situation here meets the precise conditions of the second sentence of FRCP17(c) since the minor plaintiffs did not have any duly appointed representative. Upon this condition being satisfied the rule provides that the minor ". . . may sue by his next friend or by a guardian ad litem." This is unconditional, in no way dependent upon the capacity, under the law of the domicile for a party, or under the law of the state in which the district court is held for parties acting in a representative capacity as is expressed in FRCP 17(b), or a similar limitation implied under the first sentence of 17(c) where the action is brought by an appointed guardian, conservator, or similar fiduciary. Id. at 265.
In the case of In re Murray, 199 B.R. 165 (Bankr. M.D. Tenn. 1996), the bankruptcy court adopted and reiterated the holding in Bengtson, though also referring to other possible interpretations of the rule; See also 4 Moore's Federal Practice 17.21(3)(a) (3d Ed. 2006) where the authors state that when the proceeding reaches the stage where a guardian ad litem needs to be appointed "the court is not guided by state law but rather should be guided by the protection of the individual's interest" (citing Gibbs, supra).
Most, if not all, of the cited cases have to do with guardian ad litems for infants, but that is not a reason to distinguish them for purposes of deciding the jury trial issue in a situation involving an incompetent adult rather than an infant. The language of FRCivP 17(c) itself lumps infants and incompetents, and makes no distinction, either in its title or its substance. As the cases and authorities note, unlike FRCivP 17(b) which makes specific reference to state law, FRCivP 17(c) does not.
Furthermore, the nature and context of this case militate against construing the rule or the law in a way that mandates affording a jury trial in a proceeding to terminate an existing guardian ad litem. This is a Chapter 7 bankruptcy proceeding designed to liquidate those assets which make up the bankruptcy estate for the benefit of those creditors whose claims are determined and allowed as claims entitled to a distribution, and incident thereto to pay appropriate expenses of administration. The debtor is certainly "a" party in interest and entitled to be heard, as are numerous others who have financial interests at stake in this bankruptcy. The debtor is not, however, "the" party in interest in the same sense as would be the case if the proceeding involved for instance a standard plaintiff vs. defendant lawsuit, and, the object of the proposed guardian ad litem appointment was either the plaintiff or the defendant (though even in that circumstance this Court does not feel a jury trial is warranted). Furthermore, in this situation, the administration of the case is in its latter stages of being wound up after having been pending since 1999. The nature and extent of the major questions involved (certainly as to the claims) are essentially defined by the state of the facts as they existed as of that filing date, and only as they pertain to the administration of the bankruptcy estate. Not in any way involved are any of the debtor's past, present, or future affairs that are not relevant to the administration of the bankruptcy estate, such as would be impacted by the appointment of a general or limited guardian or conservator. The much narrower focus of the inquiry here is or will be debtor's interest in the remaining administration of this bankruptcy case. As has been noted, what is largely left in the administration of this estate is disposition of two claims by litigation or settlement and possible disputes over amounts an payments of administrative expenses, and even in respect to those, the Court has indicated its willingness to consider affording Debtor standing to participate notwithstanding the presence of the existing guardian ad litem.
The need or basis for the continued existence of the guardian ad litem is indeed a question of fact but under the recited circumstances, there appear to be no fundamental public policy or overriding due process reasons why that question of fact cannot be appropriately handled by way of a proper bench hearing, conducted in accordance with this Court's referred to decisions and otherwise applicable procedural and substantive law.
(E) Conclusion
These are the Courts conclusions on the posed questions, presented in advance of a hearing, for the purpose of making known to the participating parties the Court's views on those questions. They are in essence akin to decisions in response to pre-trial motions in limine within the scope of FRCiv P 16. As such they are preliminary rulings designed to guide and potentially simplify the anticipated hearing, and as such are subject to whatever occurs at the hearing itself. That includes whether or not it will turn out to even be ultimately necessary to decisions emanating from that hearing that a definitive and final ruling be made on each or any of such matters, given the content and substance of the actual hearing itself. By reason of the foregoing, and consistent with it, the Court is contemporaneously issuing an appropriate scheduling order designed to promptly achieve disposition of the matter of the termination of the guardian ad litem appointment.