Opinion ID: 76072
Heading Depth: 3
Heading Rank: 3

Heading: Motion to Amend to Add the Bankruptcy Trustee

Text: 42 Steger argues that the district court abused its discretion by denying her motion to amend her complaint to add the bankruptcy trustee because, at the time of her motion, the bankruptcy trustee was the real party in interest and essential to the court's jurisdiction. Steger filed for bankruptcy protection in December 1999, two months before the district court set this case for trial on the 13 March 2000 calendar. Steger moved to amend the complaint on 24 February 2000, to add the bankruptcy trustee as a party based on the bankruptcy court's approval of the appointment of Steger's counsel and another attorney to represent the Trustee in this action. 13 R8-121 at 1. She indicated that she sought to add the Trustee, rather than substitute him, in that the value of the case is such that-after payment of all indebtedness-there will be substantial assets remaining and that she thus retained an interest in the case. Id. 43 The matter was considered by the court during the pretrial conference. At the conference, Steger's attorney explained that he had filed the motion to amend in order to protect the bankruptcy estate. GE acknowledged that the Trustee owned the claim but argued that the Trustee was not a necessary party to the civil action because he was aware of the claim, was represented by the same attorney as Steger, and that, if there were any recovery in the action, the bankruptcy estate was protected. The district court stated that it was not inclined to grant the motion because the estate was clearly adequately represented. Their counsel is a part of the case and both GE and the district court were on notice that the bankruptcy trustee had a claim. R16 at 42-43. The district court noted that neither Steger nor GE was adamant in their positions and that, since everyone was adequately protected, perhaps we're better off just letting the jury deal with the parties who started this. Id. at 43. The district court then denied the motion with the understanding that everyone was on notice that the bankruptcy court had a claim that needed to be addressed and which survived in spite of the Trustee not being added as a party. After Steger's attorney suggested that the motion be carried with the case, instead of denied, the district court agreed and took the matter under advisement to permit the Trustee to be added after judgment. However, the district court subsequently entered a written order denying the motion to amend. 44 We review the district court's denial of a motion to amend a complaint for abuse of discretion. Henson v. Columbus Bank & Trust Co., 770 F.2d 1566, 1574 (11th Cir.1985). All federal actions are required to be prosecuted in the name of the real party in interest, Fed.R.Civ.P. 17(a), to protect the defendant against a subsequent action by the party actually entitled to recover, and to insure generally that the judgment will have its proper effect as res judicata. Rule 17 advisory committee notes (1966). The rule, therefore, is for the benefit of a defendant, and... may be deemed waived. Audio-Visual Mktg. Corp. v. Omni Corp., 545 F.2d 715, 719 (10th Cir.1976); Fox v. McGrath, 152 F.2d 616, 618 (2nd Cir.1945) (the real-party-in-interest defense ... is not jurisdictional, but is, indeed, freely waivable). Although in bankruptcy, the trustee succeeds to all causes of action held by the debtor at the time the bankruptcy petition is filed, Miller v. Shallowford Cmty. Hosp., Inc., 767 F.2d 1556, 1559 (11th Cir. 1985) (per curiam) (permitting the bankruptcy trustee to pursue a claim on behalf of the debtor as to whether the debtor had a cause of action when the bankruptcy proceedings commenced), the debtor's standing to pursue the claim is not abandoned where she is asserting her own legal rights and interests rather than the legal rights and interests of third parties. Saladin v. City of Milledgeville, 812 F.2d 687, 690 (11th Cir.1987). Because [t]he bankruptcy trustee is the legal representative of the bankruptcy estate, the debtor may not pursue a cause of action which is the property of the bankruptcy estate unless the trustee abandons the claim or participates in the cause of action. In re Alvarez, 224 F.3d 1273, 1279-80 (11th Cir. 2000), cert. denied, 531 U.S. 1146, 121 S.Ct. 1083, 148 L.Ed.2d 959 (2001). 45 The district court did not abuse its discretion in denying the motion to amend. Because the bankruptcy court had appointed Steger's counsel to represent the Trustee, the bankruptcy estate was adequately represented and participated in the action. The parties and the district court were aware of the Trustee's claim.