Title: Kocher v. Campbell
Citation: N/A
Docket Number: 100399
State: Virginia
Issuer: Virginia Supreme Court
Date: June 9, 2011

PRESENT: Kinser, C.J., Lemons, Goodwyn, Millette, and Mims, JJ., 
and Russell and Lacy, S.JJ. 
 
ROBIN M. KOCHER 
 
 
 
OPINION BY 
v.  Record No. 100399        SENIOR JUSTICE CHARLES S. RUSSELL 
 
 
 
June 9, 2011 
RICHARD EUGENE CAMPBELL 
 
 
FROM THE CIRCUIT COURT OF SPOTSYLVANIA COUNTY 
J. Howe Brown, Judge Designate 
 
 
This appeal presents the question whether the plaintiff in 
an action to recover damages for personal injuries had standing 
to maintain his action after filing a petition for bankruptcy, 
causing his claim to become an asset of his bankruptcy estate.  
To answer the question, we must determine whether the 
plaintiff’s cause of action was exempted or abandoned in the 
bankruptcy proceeding. 
Facts and Proceedings 
 
The factual background is undisputed, although the parties 
differ as to the legal consequences of the facts.  On April 6, 
2004, Edward Eugene Campbell (the plaintiff) was involved in a 
motor vehicle collision with Robin M. Kocher (the defendant) in 
Spotsylvania County.  On October 1, 2005, after the collision 
but before filing any action against the defendant, the 
plaintiff filed a voluntary Chapter 7 petition in bankruptcy in 
the United States Bankruptcy Court for the Eastern District of 
Virginia.  His petition made no mention of his personal injury 
claim.  It was not listed as an asset in Schedule B or claimed 
as exempt property in Schedule C of the petition.  On January 6, 
2006, the plaintiff received a standard discharge in bankruptcy. 
 
On February 3, 2006, the plaintiff filed a complaint 
against the defendant to recover damages for injuries sustained 
as a result of the 2004 collision.  The defendant was never 
served with process and the plaintiff took a nonsuit.  In April 
2006, the plaintiff filed a second complaint on the same cause 
of action, but the defendant was not served until April 3, 2007.  
The defendant filed a motion for summary judgment on the ground 
that the plaintiff lacked standing to bring the action.  On 
January 4, 2008, during a hearing on the defendant’s motion, the 
plaintiff took another nonsuit.  
 
The trustee, with the plaintiff's concurrence, filed a 
motion in the bankruptcy court to reopen his bankruptcy case, 
which that court granted on February 14, 2008.  In the reopened 
proceeding, the plaintiff obtained leave to file amended 
schedules, listed the personal injury claim as an asset and 
claimed it as exempt property.  On May 29, 2009, the bankruptcy 
court entered an order holding that the plaintiff had “properly 
exempted” the cause of action.1 
                     
 
1 Attested copies of relevant parts of the record in the 
bankruptcy case were made an exhibit and are a part of the 
record in the present case. 
 
2
 
On May 27, 2008, the plaintiff filed his third complaint on 
the 2004 cause of action, but did not serve the defendant with 
process until March 2009.  The defendant filed a motion for 
summary judgment asserting lack of standing and the statute of 
limitations.  On December 10, 2009, the circuit court denied the 
defendant’s motion for summary judgment, and on February 19, 
2010 it certified the issue for an interlocutory appeal pursuant 
to Code § 8.01-670.1.  We awarded the defendant an appeal. 
Analysis 
 
The appeal presents pure questions of law.  We apply a de 
novo standard of review to such questions.  Jones v. 
Commonwealth, 276 Va. 121, 124, 661 S.E.2d 412, 414 (2008). 
 
Article I, § 8 of the Constitution of the United States 
empowers Congress to establish “uniform laws on the subject of 
bankruptcy throughout the United States.”  Congress has 
exercised that power and, accordingly, federal statutes, 
bankruptcy rules and the decisions of the federal courts are 
dispositive in deciding all questions of bankruptcy law.  
Questions concerning the standing of litigants to maintain 
actions in the courts of Virginia, however, are governed by the 
law of Virginia, as are issues involving non-federal statutes of 
limitations. 
 
The Federal Bankruptcy Code provides that upon the filing 
of a petition in bankruptcy, a bankruptcy estate is created by 
 
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operation of law and a trustee is appointed to administer it.  
All the legal and equitable interests in property that the 
debtor had before the petition was filed pass to and become a 
part of the bankruptcy estate, under the control of the trustee. 
11 U.S.C. § 541.  Koch Refining v. Farmers Union Central 
Exchange, Inc., 831 F.2d 1339, 1343-44 (7th Cir. 1987).  The 
effect of Section 541 of the Bankruptcy Code extends to not only 
those causes of action which are pending in court, but also to 
those which are only inchoate claims at the time of filing.  See 
e.g., Sierra Switchboard Co. v. Westinghouse Elec. Corp. 789 
F.2d 705, 707-08 (9th Cir. 1986); U.S. ex rel. Gebert v. Trans. 
Admin. Servs., 260 F.3d 909, 913 (8th Cir. 2001).  Therefore, as 
a result of the plaintiff’s filing a petition in bankruptcy, his 
inchoate personal injury claim passed to his bankruptcy estate 
on October 1, 2005.  Thereafter, the cause of action was one 
that could only be asserted by the trustee in bankruptcy, Koch 
Refining, 831 F.2d at 1342, unless and until it was restored to 
the plaintiff by the bankruptcy court.  We must therefore 
determine when, or if, such a restoration occurred in the 
present circumstances. 
 
There are two methods by which assets of a bankruptcy 
estate may be restored to a debtor after a petition in 
bankruptcy has been filed.  The first method allows the trustee 
to abandon the assets after notice and hearing pursuant to 11 
 
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U.S.C. § 554 because he deems them to be burdensome to the 
estate or of inconsequential value.  The record does not 
indicate that any such proceedings ever took place in the 
plaintiff’s bankruptcy case.  Parker v. Wendy’s Int’l., Inc., 
365 F.3d 1268, 1272 (11th Cir. 2004).  Abandonment also occurs 
when listed assets remain unadministered when the bankruptcy 
case is closed.  11 U.S.C. § 554(C). 
 
The second method allows the  bankruptcy court to exempt 
the assets pursuant to 11 U.S.C. § 522.  In the absence of 
abandonment or exemption, the assets remain a part of the 
bankruptcy estate.  Federal law provides for certain exemptions, 
but permits the states to “opt out” of those provisions by 
substituting their own exemption laws.  11 U.S.C. 522(d).  
Virginia is a state that has done so.  Code § 34-3.1; see also 
Shirkey v. Leake, 715 F.2d 859, 861 (4th Cir. 1983).  Code § 34-
28.1 provides that causes of action for personal injury “shall 
be exempt from creditor process against the injured 
person. . . .”  That exemption is therefore applicable in 
bankruptcy proceedings.  
 
In order to claim the exemption, the debtor must list the 
cause of action as an asset in his schedule B and then claim it 
as exempt property on his schedule C using forms prescribed by 
the bankruptcy rules.  The bankruptcy court may thereafter enter 
an order exempting the listed property.  Until such an order is 
 
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entered, the property remains a part of the bankruptcy estate.  
Tavenner v. Smoot, 257 F.3d 401, 407 (4th Cir. 2001).  See 
Parker, 365 F.3d at 1272.  If the debtor fails to follow this 
procedure, the cause of action, having become a part of the 
bankruptcy estate by virtue of 11 U.S.C 541, remains so, and is 
enforceable solely by the trustee.  Koch Refining, 831 F.2d at 
1342. 
 
Applying those principles to the facts of this case, it 
becomes apparent that the plaintiff’s 2004 cause of action 
became a part of the bankruptcy estate on October 1, 2005 when 
his petition for bankruptcy was filed and that it remained an 
asset of the estate until May 29, 2009 when the bankruptcy court 
ordered it exempted.  Therefore, all three of the complaints the 
plaintiff filed in the circuit court against the defendant, in 
February 2006, in April 2006, and in May 2008, (the subject of 
this appeal) were filed during the period when the plaintiff 
lacked standing to assert the cause of action because it 
remained in the bankruptcy estate, enforceable only by the 
trustee. 
 
The plaintiff contends that the final order closing the 
reopened bankruptcy case in 2009 had the effect of abandoning 
all property remaining in the estate and left “unadministered by 
the trustee.”  The plaintiff argues that abandonment, unlike 
exemption, causes the abandoned property to revert back to the 
 
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debtor retroactively, as if the bankruptcy had never occurred, 
citing Brown v. O’Keefe, 300 U.S. 598, 602 (1937).  We do not 
agree, however, with the plaintiff’s argument that the final 
order in the bankruptcy case has an effect on the present case 
for two reasons.  First, the exemption that preceded the final 
order had already removed the plaintiff’s cause of action from 
the bankruptcy estate and restored it to the debtor.  It was no 
longer an asset remaining in the estate but “unadministered by 
the trustee.”  Second, as noted above, the effect of the 
plaintiff's lack of standing at the time of filing this action 
is a question governed by Virginia law. 
 
In Johnston Memorial Hospital v. Bazemore, 277 Va. 308, 
312, 672 S.E.2d 858, 860 (2009), we held that an action filed by 
a party who lacks standing is a legal nullity.  It has no 
tolling effect on the statute of limitations and furnishes no 
basis for a nonsuit.  Standing acquired after the statute of 
limitations has run cannot be retroactively applied to cure the 
lack of standing that existed when the action was filed.  Id.; 
Fowler v. Winchester Medical Center, Inc., 266 Va. 131, 134, 580 
S.E.2d 816, 817 (2003).2 
                     
 
2 The Federal courts similarly hold that an exemption 
granted by the bankruptcy court does not relate back to the time 
of filing so as to toll the statute of limitations by conferring 
standing retroactively.  In re Wilmoth, 412 B.R. 791, 799 
(Bankr. E.D. Va. 2009). 
 
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Virginia provides a two-year limitation period for causes 
of action for personal injury.  Code § 8.01-243.  The 
plaintiff’s cause of action was therefore time-barred after 
April 6, 2006.  Because all three complaints filed against the 
defendant were legal nullities filed by a party who lacked 
standing, they, and the several purported nonsuits, had no 
tolling effect. 
Conclusion 
 
Because the present action was a nullity at the time of its 
filing and the statute of limitations had run before it was 
filed, the circuit court erred in denying the defendant’s motion 
for summary judgment.  Accordingly, we will reverse the judgment 
appealed from and dismiss the case. 
Reversed and dismissed. 
 
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