Opinion ID: 1858467
Heading Depth: 2
Heading Rank: 1

Heading: Whether the Pruitts had standing to assert a medical malpractice claim in state court.

Text: ¶ 12. The Pruitts insist that at the time the Complaint was filed . . . there was no bankruptcy estate and there was no trustee. As such, they contend that they had standing to assert their claim because [ a ] t the time of the institution of action . . . [the Pruitts] were the only parties who had any existent actionable interest in this proceeding. ¶ 13. In response, HMC argues that [t]he instant case, having accrued on April 9, 2002, could have been raised by the Plaintiffs as of the August 21, 2002 commencement of their bankruptcy proceedings and, therefore, constitutes property of the bankruptcy estate. 11 U.S.C. Section 541(a)(1). Moreover, HMC insists that the cause of action remains property of the estate to this day. Therefore, HMC asserts that as [t]he bankruptcy trustee has `exclusive' standing to bring this action, the Pruitts cannot have standing even under the most liberal interpretation. HMC concludes that [d]ue to the Pruitts' lack of standing to bring the present action, this Court does not have subject matter jurisdiction and this action must be dismissed. ¶ 14. As this case requires the analysis of bankruptcy law and federal statutes, we analyze this issue under federal law. A lack of standing robs the court of jurisdiction to hear the case. McNair v. United States Postal Service, 768 F.2d 730, 737 (5th Cir.1985). [T]he filing of a bankruptcy petition creates a bankruptcy estate. Lawrence v. Jackson Mack Sales, Inc., 837 F.Supp. 771, 779 (S.D.Miss.1992). The bankruptcy estate is comprised of all the following property, wherever located and by whomever held: (1) Except as provided in subsections (b) and (c)(2) of this section, all legal or equitable interests of the debtor in property as of the commencement of the case.  11 U.S.C. § 541(a)(1) (emphasis added). See also Louisiana World Exposition v. Fed. Ins. Co., 858 F.2d 233, 245 (5th Cir.1988) ([The bankruptcy] estate is comprised of all the property listed under section 541, wherever located and by whomever held, including `all legal or equitable interests of the debtor in property as of the commencement of the case.' . . . The scope of the term `property of the estate' is very broad.). Regarding causes of action, [c]ourts have uniformly held that the phrase `legal or equitable interest' encompasses [them]. Lawrence, 837 F.Supp. at 779 (citations omitted). See also In re Educators Group Health Trust, 25 F.3d 1281, 1283 (5th Cir. 1994); Louisiana World, 858 F.2d at 245 (Section 541(a)(1)'s reference to `all legal or equitable interests of the debtor in property' includes causes of action belonging to the debtor at the time the case is commenced.). Moreover: [c]auses of action need not be formally filed prior to the commencement of a bankruptcy estate to become property of the bankruptcy estate. . . . Accordingly, a cause of action belonging to a debtor that existed at the time of the filing of a bankruptcy petition becomes property of the bankruptcy estate and may only be prosecuted by the trustee of the bankruptcy estate, the real party in interest under Rule 17(a) of the Federal Rules of Civil Procedure. Lawrence, 837 F.Supp. at 779 (citations omitted). See also Educators Group, 25 F.3d at 1286 ([i]t is well-established that the bankruptcy estate succeeds to the causes of action which the debtor could have brought as of the commencement of the case, subject to any defenses the debtor may have faced.) (emphasis added). ¶ 15. This Court concludes that the Pruitts' cause of action accrued prior to the filing of the Pruitts' voluntary petition for Chapter 7 bankruptcy on August 21, 2002. As this Court finds that the cause of action existed at the time of filing the bankruptcy petition, the cause of action became property of the bankruptcy estate under 11 U.S.C. § 541(a)(1). ¶ 16. If a cause of action belongs to the [bankruptcy] estate, then the trustee has exclusive standing to assert the claim. Educators Group, 25 F.3d at 1284 (emphasis added). See also Parker v. Wendy's Int'l, Inc., 365 F.3d 1268, 1272 (11th Cir.2004) (a trustee, as the representative of the bankruptcy estate, is the proper party in interest, and is the only party with standing to prosecute causes of action belonging to the estate.); Bauer v. Commerce Union Bank, 859 F.2d 438, 441 (6th Cir.1988) (`It is well-settled that the right to pursue causes of action formerly belonging to the debtora form of property under the Bankruptcy Codevests in the trustee for the benefit of the estate.' Jefferson v. Mississippi Gulf Coast YMCA, 73 B.R. 179, 181-82 (S.D.Miss. 1986). The debtor has no standing to pursue such causes of action.). ¶ 17. Such exclusive standing exists even when the cause of action was not disclosed on the schedules of assets filed under Chapter 7. In Parker, the Eleventh Circuit stated: [o]nce an asset becomes part of the bankruptcy estate, all rights held by the debtor in the asset are extinguished unless the asset is abandoned back to the debtor pursuant to § 554 of the Bankruptcy Code. See 11 U.S.C. § 554(a)-(c). At the close of the bankruptcy case, property of the estate that is not abandoned under § 554 and that is not administered in the bankruptcy proceedings remains the property of the estate. 11 U.S.C. § 554(d). Failure to list an interest on a bankruptcy schedule leaves that interest in the bankruptcy estate. 365 F.3d at 1272. See also 11 U.S.C. § 554(d) (property of the bankruptcy estate that is not abandoned under this section and that is not administered in the case remains property of the estate.); Stein v. United Artists Corp., 691 F.2d 885, 891 (9th Cir.1982) ([c]ourts . . . generally have not permitted parties asserting title to unlisted causes of action to enforce the claim, because they cannot demonstrate abandonment by the trustee.). The rationale, according to the United States Supreme Court in First National Bank of Jacksboro v. Lasater, 196 U.S. 115, 25 S.Ct. 206, 49 L.Ed. 408 (1905), is that: [i]t cannot be that a bankrupt, by omitting to schedule and withholding from his trustee all knowledge of certain property, can, after his estate in bankruptcy has been finally closed up, immediately thereafter assert title to the property on the ground that the trustee had never taken any action in respect to it. If the claim was of value . . . it was something to which the creditors were entitled, and this bankrupt could not, by withholding knowledge of its existence, obtain a release from his debts and still assert title to the property. Id. at 119, 25 S.Ct. 206. ¶ 18. This Court finds that the cause of action at issue, even though originally unscheduled, remains the property of the bankruptcy estate. See Parker, 365 F.3d at 1272. As property of the bankruptcy estate, controlling federal law mandates that the bankruptcy trustee has  exclusive standing to assert the claim. Educators Group, 25 F.3d at 1284 (emphasis added). Accordingly, the circuit court correctly determined that the Pruitts lack standing to assert the claim.