Opinion ID: 1399098
Heading Depth: 1
Heading Rank: 2

Heading: Bibbs's standing.

Text: We first address the appellants' contention that Bibbs's claim accrued after he filed for Chapter 7 bankruptcy. If true, his cause of action would not be the property of the bankruptcy estate and, thus, Bibbs would have standing to file his complaint against Community Bank on August 8, 2005. The crux of Bibbs's lender-liability complaint is that Community Bank's actions concerning the repayment of the $375,000 loan forced him to declare bankruptcy. This necessarily implicates pre-bankruptcy conduct on Community Bank's part. Bibbs, moreover, admits as much in both his complaint and his deposition testimony. As one example, during his deposition, Bibbs testified: It is my belief that the bank forced me into bankruptcy. If the bank would not have done all the things I complain of in my lawsuit, I would not have had to file bankruptcy. Bibbs's assertion that some of Community Bank's alleged misconduct occurred after he filed bankruptcy does not change this conclusion. It is well established that a cause of action accrues the moment the right to commence an action comes into being. Quality Optical of Jonesboro, Inc. v. Trusty Optical, L.L.C., 365 Ark. 106, 225 S.W.3d 369 (2006). It is clear to this court that Bibbs's cause of action arose out of the alleged misconduct of Community Bank concerning its strict enforcement of the loan agreement's April 25, 2003 due date, which, by his own assertion, forced Bibbs into bankruptcy. In short, because his cause of action accrued before Bibbs's bankruptcy filing, the cause of action is the property of his bankruptcy estate. We hold that, as a result, Bibbs lacked standing to file the lender-liability lawsuit. The appellants also contend that Bibbs had standing to sue because the filing of the suit against Community Bank was ratified for administrative purposes by his trustee, Mr. Dowden, as set forth in his affidavit, and through the filing of the amended complaint joining the trustees as plaintiffs on March 22, 2007. Appellants' authority for this point is the following language from Bratton: In this case, there is no evidence that the bankruptcy trustee abandoned this claim or that the trustee joined in or ratified Bratton's filing of this complaint in circuit court. In fact, the evidence in the record indicates the contrary. 302 Ark. at 309, 788 S.W.2d at 956 (emphasis added). The appellants also cite Rule 17(a) of the Arkansas Rules of Civil Procedure, which reads in part that no action shall be dismissed until a reasonable time has been given for the real party in interest to ratify commencement of the action. We first address ratification by the trustee under the Bankruptcy Code. As already noted, the Bankruptcy Code provides that the trustee has the exclusive right to prosecute lawsuits belonging to the estate in a Chapter 7 bankruptcy. See 11 U.S.C. §§ 323, 704(a)(1). The only exception exists in cases of abandonment by the trustee in a Chapter 7 bankruptcy after a potential claim has been scheduled as an asset. See 11 U.S.C. § 554; Bratton, supra . The appellants point to no provision in the Bankruptcy Code supporting ratification by the trustee in an amended complaint after an original complaint is filed by the debtor and the statute of limitations has passed. Hence, we hold that any subsequent ratification of Bibbs's lender-liability suit under these facts did not cure the standing deficiency under the Bankruptcy Code. There is another reason why the ratification argument fails. This court has held that a complaint filed by a party without standing in a wrongful-death action is a nullity. See Hubbard v. Nat'l Healthcare of Pocahontas, Inc., 371 Ark. 444, 267 S.W.3d 573 (2007) (wrongful death complaint filed by administratrix two weeks before her appointment was a nullity because administratrix did not have standing to pursue the claim prior to appointment); St. Paul Mercury Ins. Co. v. Circuit Court of Craighead County, 348 Ark. 197, 73 S.W.3d 584 (2002)(a survival complaint filed by patient's family was a nullity where the family lacked standing to pursue the survival action after administrator had been appointed). At the time the lawsuit against Community Bank was filed on August 8, 2005, Bibbs lacked standing under the Bankruptcy Code and the complaint, under the reasoning of Hubbard and St. Paul Mercury Insurance Company, was therefore a nullity with no legal force or effect. It is illogical to conclude that a trustee can ratify something that, as far as the law is concerned, is void and never existed. We are mindful of the fact that Rule 17(a) of the Arkansas Rules of Civil Procedure, which provides for suits being prosecuted in the name of the real party in interest, contemplates ratification. Rule 17(a) provides in pertinent part: No action shall be dismissed on the ground that it is not prosecuted in the name of the real party in interest until a reasonable time has been allowed after objection for ratification of commencement of the action by, or joinder or substitution of, the real party in interest; and such ratification, joinder or substitution shall have the same effect as if the action had been commenced in the name of the real party in interest. Ark. R. Civ. P. 17(a) (emphasis added). Yet, even if the original complaint was not deemed to be a nullity for lack of the debtors' standing, we disagree that Mr. Dowden, as trustee, could ratify Bibbs's original complaint after the fact and thereby legitimize his debtors' standing under these facts. Because the Arkansas Rule of Civil Procedure 17(a) mirrors Federal Rule 17(a), we turn to the Federal Advisory Committee's notes for guidance. According to the Advisory Committee Note to Fed.R.Civ.P. 17, Rule 17(a) should not be misunderstood or distorted. It is intended to prevent forfeiture when determination of the proper party to sue is difficult or when an understandable mistake has been made.  Fed.R.Civ.P. 17, Advisory Committee's Notes to the 1966 Amendments (emphasis added). Accordingly, most courts have applied this part of Rule 17(a) only when the plaintiff brought the action in his or her own name because determination of the real party in interest was difficult or when an understandable mistake was made. See, e.g., Crowder v. Gordons Transports, Inc., 387 F.2d 413 (8th Cir.1967) (plaintiff's mistake was understandable and excusable where case involved a conflicts-of-law question with respect to whether Arkansas or Missouri law applied, and each state's wrongful-death statute designated a different person as the real party in interest). See also Advanced Magnetics, Inc. v. Bayfront Partners, Inc., 106 F.3d 11 (2d Cir. 1997) (holding district court erred in failing to permit substitution of plaintiffs to relate back under Rule 15(c) and 17(a) where Advanced Magnetics was mistaken about the legal effect of a shareholder assignment). This court has recognized the understandable mistake requirement of Rule 17(a) by inference. See Rhuland v. Fahr, 356 Ark. 382, 392, 155 S.W.3d 2, 9 (2004) (Rules 15 and 17 were inapplicable where no such understandable mistake occurred). In the instant case, when the original complaint was filed on August 8, 2005, the real parties in interest were Bibbs's and Mason's bankruptcy trustees. We have held in this opinion that the Bankruptcy Code clearly provides that a trustee, and only a trustee, has standing to prosecute causes of action that are property of the Chapter 7 bankruptcy estate. 11 U.S.C. §§ 323, 701(1). The determination of the real party in interest was not difficult for the appellants in this case; nor was there an understandable or excusable mistake by Bibbs and Mason in this regard. See Rhuland, supra (not understandable mistake when wrongful-death statute specifically detailed who may bring suit). Accordingly, ratification by Bibbs's trustee did not cure Bibbs's standing deficiency under Rule 17(a) or breathe new life into his defunct pleading. We conclude for this additional reason that Bibbs clearly lacked standing at the time the original complaint was filed.