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Vaughn v. Cannizzaro

United States District Court, E.D. Louisiana

March 13, 2019

NETRIC VAUGHN
v.
LEON CANNIZZARO

         SECTION “H” (2)

          ORDER AND REASONS ON MOTION

          JOSEPH C. WILKINSON, JR. UNITED STATES MAGISTRATE JUDGE

         Plaintiff has filed a Motion to Amend Complaint (2nd Motion to Amend). Record Doc. No. 46. This motion seeks to join the trustee of plaintiff's bankruptcy estate as a party in this case, apparently in addition to maintaining herself as a named plaintiff.[1]Record Doc. No. 46-1 at p. 2. Defendant filed a timely opposition memorandum. Record Doc. No. 48. Defendant previously filed a motion to dismiss this case on grounds that the bankruptcy trustee, not plaintiff, was the real party in interest. Record Doc. No. 33. The motion to dismiss is pending before the district judge. For the following reasons, plaintiff's motion is DENIED, subject to the Rule 17 order set out below.

         Fed. R. Civ. P. 17(a)(1) and (3) provide in pertinent part:

An action must be prosecuted in the name of the real party in interest. The following may sue in their own names without joining the person for whose benefit the action is brought: . . . (g) a party authorized by statute . . . The 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.

(emphasis added).

         Plaintiff concedes that she failed to include the claim asserted in the instant lawsuit in her summary of assets and liabilities schedules when she filed her Chapter 7 bankruptcy proceedings in the United States Bankruptcy Court in the Middle District of Louisiana. Record Doc. Nos. 46-2; 6, 14 in Bkrtcy. No. 15-11535 (M.D. La.). When a plaintiff files for bankruptcy relief after the events that are asserted in a lawsuit have occurred, the claim is not properly pursued by the plaintiff. Instead, the claim becomes the property of the bankruptcy estate, and "the [t]rustee is the real party in interest with exclusive standing to" pursue the claim. Wieberg v. GTE Southwest, Inc., 272 F.3d 302, 306 (5th Cir. 2001) (citing 11 U.S.C.§ 541(a) (defining property of the bankruptcy estate) (emphasis added); In re Coastal Plans, Inc., 179 F.3d 197, 207-08 (5th Cir. 1999), cert. denied, 528 U.S. 1117 (2000) (finding that it is the debtor's duty to disclose all potential causes of action); Matter of Educators Group Health Trust, 25 F.3d 1281, 1283 (5th Cir. 1994) (finding that causes of action are included in the property of a bankruptcy estate)). Thus, plaintiff has no standing in this matter at this time and cannot prosecute this suit.

         On motion of the bankruptcy trustee, Record Doc. No. 46-2, plaintiff's bankruptcy case has been reopened, and Dwayne M. Murray was re-appointed by court order on February 11, 2019, as trustee in that case in the Middle District of Louisiana. Record Doc. No. 28 in Bkrtcy. No. 15-11535 (M.D. La.).

         Sections 323, 541(a)(1) and 554 of the Bankruptcy Code provide:

(a) The trustee in a case under this title is the representative of the estate.
(b) The trustee in a case under this title has capacity to sue and be sued.
(a) The commencement of a case under section 301, 302, or 303 of this title creates an estate. Such estate is comprised of all the following property, wherever located and by whomever held:
(1) . . . all legal or equitable interests of the debtor in property as of the commencement of the case.
(a) After notice and a hearing, the trustee may abandon any property of the estate that is burdensome to the estate or that is of ...

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