Opinion ID: 202234
Heading Depth: 2
Heading Rank: 1

Heading: Enjoined-or-Abated Clause

Text: 9 Appellants claim that their commencement of this litigation was timely because their respective bankruptcies enjoined them from filing suit or action upon the Policy until the trustees abandoned their claims. 1 They rely upon the enjoined-or-abated clause in Mass. Gen. Laws ch. 175, § 99, which provides as follows: 10 If suit or action upon this policy is enjoined or abated, suit or action may be commenced at any time within one year after the dissolution of such injunction, or the abatement of such suit or action, to the same extent as would be possible if there was no limitation of time provided herein for the bringing of such suit or action. 11 Mass. Gen. Laws ch. 175, § 99 (emphasis added). Charter Oak argues — and the district court agreed — that appellants were neither enjoined nor abated from commencing suit against Charter Oak in the manner contemplated by § 99. 12 Appellants first contend that the plain language of the enjoined-or-abated clause of § 99 clearly includes bankruptcy proceedings within its ambit. They argue in their brief to this Court that the common meaning and fair reading of the enjoined-or-abated clause makes plain that their respective bankruptcies operated to enjoin the assertion of their claims on the policy and thus that they qualify for an extension of the limitation period under § 99. This argument fails. 13 Appellants' position is predicated on the erroneous assumption that bankruptcy proceedings created an automatic stay that enjoined or abated their suit against Charter Oak. They correctly note that the filing of a bankruptcy petition triggers an automatic stay under § 362(a) of the bankruptcy code. See In re Jamo, 283 F.3d 392, 398 (1st Cir.2002). However, that section provides that a petition in bankruptcy stays the commencement or continuation of all nonbankruptcy judicial proceedings against the debtor. 11 U.S.C. § 362(a). The stay is designed to give breathing room to the debtor, In re Jamo, 283 F.3d at 398, and has absolutely no effect on the debtors' ability to bring suit against other parties. Further, the actual language of § 99 permits an extension of the limitation period only [i]f suit or action . . . is enjoined or abated. We agree with the district court's conclusion that, by its own plain language, § 99 is not personal to appellants, but rather speaks generally to their suit or action. The question is thus whether, at any point during the extended limitation period, appellants' suit against Charter Oak was enjoined or abated. 14 As an initial matter, DiMaio did not file for bankruptcy until December 27, 2001 — more than one year after the fire — and he could have initiated suit against Charter Oak at any time before that date. Once trustees were appointed for both bankruptcies, appellants argue that they were enjoined from bringing suit against Charter Oak because their rights were transferred to their respective trustees, who alone had standing to initiate suit. Indeed, when appellants filed for bankruptcy under Chapter 11, all legal or equitable interests . . . in property as of the commencement of the case and [a]ny interest in property that the estate acquire[d] after the commencement of the case became the property of their respective bankruptcy estates. 11 U.S.C. § 541(a)(1),(7). The parties agree that appellants' claim against Charter Oak became part of their respective bankruptcy estates and that their bankruptcy trustees acquired exclusive standing to assert those claims. Although appellants were thus without standing to initiate suit, their suit against Charter Oak was not enjoined or abated. When a trustee is appointed, the trustee steps into the shoes of the debtor for the purposes of asserting or maintaining the debtor's causes of action[]. In re Rare Coin Galleries, Inc., 862 F.2d 896, 901 (1st Cir.1988). During their representation of appellants' respective bankruptcy estates, the trustees had the right to initiate suit against Charter Oak. 15 Although they requested and received from Charter Oak two extensions of the suit limitation period, the bankruptcy trustees never initiated suit. However, the trustees' failure to exercise that right does not mean that the suit itself was enjoined or abated. Furthermore, appellants were not without any rights during this period. The Bankruptcy Code allows [a]ny party [to] petition the bankruptcy court to compel the trustee either to bring suit or to abandon the claim. Koch Ref v. Farmers Union Cent. Exch., Inc., 831 F.2d 1339, 1347 n. 9 (7th Cir.1987); see also In re Dawnwood Props./78, 209 F.3d 114, 117 (2d Cir.2000) (If not satisfied with the trustee's [failure to pursue a claim], plaintiffs were free to bring the matter to the attention of the Bankruptcy Court for whatever directions or relief the Court thought appropriate, including a direction to the trustee either to initiate the action in question or to abandon the claims within the limitation period so as to allow the plaintiffs to pursue the claims on their own.). Upon abandonment, interest in the claim would have reverted to the appellants. See In re Charles George Land Reclamation Trust, 30 B.R. 918, 923 (Bankr.D.Mass.1983). 16 In sum, we find that § 99 does not apply to extend appellants' limitation period. Their suit against Charter Oak was not enjoined or abated by appellants' bankruptcy proceedings because at no point during the limitation period was there an abatement or injunction against appellants' rights to initiate suit against Charter Oak; further, we also note that there was no abatement or injunction against the trustees. There is no unfairness here.