Court Opinion

ID: 2666732
Source: CourtListenerOpinion
Date Created: 2014-04-04 12:36:21.130968+00
Date Added: 2024-06-11T12:37:04.996311
License: Public Domain

UNITED STATES DISTRICT COURT
                   FOR THE DISTRICT OF COLUMBIA
_____________________________
                               )
SANDRA MARSHALL,               )
                               )
          Plaintiff,           )
                               )
          v.                   )   Civil Action No. 05-2502 (RWR)
                               )
HONEYWELL TECHNOLOGY           )
SOLUTIONS, INC. et al.,        )
                               )
          Defendants.          )
                               )

                        MEMORANDUM OPINION

     Plaintiff Sandra Marshall brought employment-related claims

against defendants Honeywell Technology Solutions, Inc.

(“Honeywell”), L-3 Communications Government Services, Inc.

(“GSI”), and SGT, Inc. (“SGT”).   The defendants each move to

dismiss Marshall’s claims, arguing that Marshall lacks standing

to bring this action because she had filed for bankruptcy and

only the bankruptcy trustee would have been the true party in

interest with standing to sue.    Because Marshall lacks standing

to bring the instant action, the motions to dismiss will be

granted without prejudice to the real party in interest timely

moving to reinstate the complaint.

                            BACKGROUND

     The background of this case is discussed fully in Marshall

v. Honeywell Tech. Solutions, Inc., 536 F. Supp. 2d 59, 62-64

(D.D.C. 2008).   Briefly, Marshall alleges that during the
                                -2-

25 years she worked for either Honeywell or its subcontractor

GSI, she was subjected to race, sex, and age discrimination in

the form of slurs and harassment by supervisors and other

employees, and limitations on her authority.   In December 2003,

Honeywell replaced GSI with a new subcontractor, SGT.    Marshall

alleges that SGT refused to employ her in the position she had

with GSI, and instead employed a significantly less experienced

younger white male to perform the duties Marshall had performed

for GSI.

      In February 2004, Marshall filed pro se three administrative

charge of discrimination forms with the Prince George’s County

Human Relations Commission alleging race and sex discrimination

against all three defendants.   Marshall, 536 F. Supp. 2d at 63-

64.   In September 2005, Marshall filed in the District of

Columbia a petition for bankruptcy under Chapter 7 of the United

States Bankruptcy Code, 11 U.S.C. § 301(a).    (Honeywell’s Mem. in

Supp. of Mot. to Dismiss (“Honeywell’s Mem.”), Ex. B (“Bankruptcy

Petition”).)   She was required to supply, among other things, a

schedule disclosing all assets and liabilities, 11 U.S.C.

§ 521(a)(1)(B)(i), including all equitable or future interests

exercisable for her benefit, and any other contingent and

unliquidated claims for her benefit.   (Honeywell’s Mem., Ex. F.)

Marshall did not list her administrative discrimination claims

against any of the defendants on her schedule.   (Id.)   Marshall
                                -3-

was also required to file a statement of her financial affairs,

11 U.S.C. § 521(a)(1)(B)(iii), declaring under the penalty of

perjury all suits and administrative proceedings to which she “is

or was” a party within one year immediately preceding the filing

of her bankruptcy petition.   (Honeywell’s Mem., Ex. D.)     Marshall

listed only three actions on her statement, and she did not list

the then-pending administrative proceeding she had initiated

against these three defendants the previous year.    (Id.)

     In November 2005, Marshall appeared at a hearing before

bankruptcy trustee William D. White.   At that hearing, Marshall

orally informed the trustee about her pending discrimination

claims and provided to the trustee the name and telephone number

of the attorney who represented her in that administrative

proceeding.   (Pl.’s Am. Opp’n to Honeywell’s Mot. to Dismiss

(“Pl.’s Opp’n to Honeywell’s Mot.”) at 6-7; Pl.’s Combined Opp’n

to SGT and L-3's Mots. to Dismiss, Ex. 2 at 9-10.)    Further,

according to Marshall, the trustee telephoned Marshall’s attorney

and discussed Marshall’s discrimination claims.   (Pl.’s Opp’n to

Honeywell’s Mot. at 7.)   While Marshall did not formally amend

her bankruptcy schedule or her statement of financial affairs to

include the discrimination claims, Marshall alleges that she did

so informally by orally informing the trustee of her claims, and
                                -4-

by disclosing them in written answers to interrogatories

propounded by the trustee.1   (Id. at 7, 18-20.)

     In December 2005, while the bankruptcy case was still

active, Marshall filed her complaint in this action against the

defendants.   Marshall, 536 F. Supp. 2d at 63.     Marshall did not

formally amend her bankruptcy schedule or her statement of

financial affairs to include this civil action against the

defendants.   (See Honeywell’s Mem. at 4; Ex. D.; Ex. F.)

     In February 2006, the bankruptcy court discharged Marshall’s

debts, and in June 2006, the bankruptcy trustee issued a report

of no distribution, which stated that the trustee received no

funds or property from the estate.    The bankruptcy court

discharged the trustee and closed the case.    (Honeywell’s Mem. at

4; SGT’s Mem. in Supp. of Mot. to Dismiss (“SGT.’s Mem.”) at 2.)

     The defendants have moved to dismiss Marshall’s complaint,

arguing that only the bankruptcy trustee had standing to file

this complaint, and since Marshall failed to formally list these

claims on her bankruptcy schedule or statement, these claims

cannot be ones the trustee abandoned leaving Marshall free to

pursue them on her own.2   Marshall opposes, arguing that she has

     1
       Marshall did not provide a copy of her written answers to
the trustee’s interrogatories with either opposition to the
motions to dismiss.
     2
       L-3 and SGT also argue that judicial estoppel bars this
action. (See L-3's Mem. in Supp. of Mot. to Dismiss or in the
Alternative for Summ. J. at 1, 5; SGT’s Mem. at 3, 6.) Marshall
                                -5-

standing because the trustee did abandon her claims against the

defendants.

                            DISCUSSION

     “Before a court may address the merits of a complaint, it

must assure that it has jurisdiction to entertain the claims.”

Osserian v. Int’l Fin. Corp., 498 F. Supp. 2d 139, 143 (D.D.C.

2007) (quoting Rodriguez v. Nat’l Ctr. for Missing & Exploited

Children, Civil Action No. 03-120 (RWR), 2005 WL 736526, at *6

(D.D.C. Mar. 31, 2005)).   “Lack of standing is a defect in

subject matter jurisdiction.”   Teva Pharm. USA, Inc. v. Sebelius,

638 F. Supp. 2d 42, 54 (D.D.C. 2009) (citing Haase v. Sessions,

835 F.2d 902, 906 (D.C. Cir. 1987)).     When assessing a motion to

dismiss for lack of subject matter jurisdiction, a court may

consider the complaint and any undisputed facts in the record.

Coalition for Underground Expansion v. Mineta, 333 F.3d 193, 198

(D.C. Cir. 2003).

     Section 541 of the Bankruptcy Code provides that at the time

a bankruptcy case is begun, all legal or equitable interests,

including causes of action on behalf of the debtor, are

transferred from the debtor to the bankruptcy estate.

argues that judicial estoppel is inapplicable because she
divulged the existence of her EEOC claim to the trustee,
demonstrating that she did not intend to deceive the trustee or
the bankruptcy court. Because Marshall’s case will be dismissed
for lack of jurisdiction, the defendants’ judicial estoppel
arguments need not be addressed.
                               -6-

See 11 U.S.C. § 541(a)(1); United States v. Inslaw, Inc., 932

F.2d 1467, 1471 (D.C. Cir. 1991) (stating that it is “undisputed”

that “all legal or equitable interests of the debtor” includes

“causes of action that belong to the debtor”).    Once a cause of

action becomes the property of the bankruptcy estate, the

bankruptcy trustee assumes the status of the real party in

interest in whose name Federal Rule of Civil Procedure 17

requires an action to be brought, and the debtor no longer has

standing to pursue that cause of action.    See 11 U.S.C. § 323(b);

Toussaint v. Howard University, Civil Action No. 03-1395 (JDB),

2005 U.S. Dist. LEXIS 38738, at *5-7 (D.D.C. November 8, 2005);

Parker v. Wendy's Int'l, Inc., 365 F.3d 1268, 1272 (11th Cir.

2004); Cain v. Hyatt, 101 B.R. 440, 442 (E.D. Pa. 1989) (“[A]fter

appointment of a trustee, a Chapter 7 debtor no longer has

standing to pursue a cause of action which existed at the time

the Chapter 7 petition was filed.    Only the trustee, as

representative of the estate, has the authority to prosecute

and/or settle such causes of action.”); Banks v. County of

Allegheny (In re Banks), 223 Fed. Appx. 149, 151 (3d Cir. 2007)

(holding that a “Chapter 7 trustee was the only person with

authority to bring . . . a cause of action” after the appointment

of a trustee).

     Here, the discrimination cause of action asserted in this

complaint already existed by the time Marshall filed her
                                 -7-

bankruptcy petition in September 2005, since she had asserted it

in her administrative charge in 2004.    Her bankruptcy petition

transferred away from her and to the bankruptcy trustee standing

to bring this action.    See 11 U.S.C. § 541(a)(1).

     Marshall argues, though, that the trustee abandoned any

interest in this cause of action and thereby returned to her

standing to sue.    Section 554 of the Bankruptcy Code describes

the ways that property is abandoned by a trustee.     Estate

property that is burdensome to the estate or is of

inconsequential value and benefit to the estate may be abandoned

by the trustee or by court order after notice and a hearing, and

estate property may be abandoned if the property was listed on

the debtor’s bankruptcy schedules and was not otherwise

administered when the case was closed.    11 U.S.C. § 554(a)-(c).

Marshall asserts that her discrimination cause of action was

listed and not otherwise administered because she informally

amended her bankruptcy schedules and her statement of financial

affairs by informing the trustee of the claim, both in responses

to interrogatories and orally.    (See Pl.’s Opp’n to Honeywell’s

Mot. at 10-18.)    However, Marshall fails to point out any

statute, regulation, or opinion establishing that a debtor may

amend her statement of financial affairs and bankruptcy schedules

informally.   Indeed, cases hold that “property that is not

formally scheduled is not abandoned and therefore remains part of
                                -8-

the estate.”   Kunica v. St. Jean Fin., Inc., 233 B.R. 46, 53

(S.D.N.Y. 1999); Jeffrey v. Desmond, 70 F.3d 183, 186-187 (1st

Cir. 1995) (“[T]he burden is on the debtors to list the asset

and/or amend their schedules, and . . . in order for property to

be abandoned by operation of law pursuant to 11 U.S.C. § 554(c),

the debtor must formally schedule the property . . . before the

close of the case.”); Callihan v. Costello (In re Costello), 255

B.R. 110, 113 (Bankr. E.D.N.Y. 2000).    Assets that Marshall had,

as of the date of filing, but that she did not add to her

schedule, were not abandoned to her when the case was closed,

regardless of whether the failure to formally schedule the cause

of action was innocent.   See Locapo v. Colsia, 609 F. Supp. 2d

156, 159 (D.N.H. 2009) (“[O]nce a bankruptcy case closes through

administration of the estate, the debtor loses his rights in a

cause of action he had at the time he sought bankruptcy

protection but nevertheless failed to list on his schedule.”).

     Where nothing in the record shows that a trustee abandoned a

debtor’s cause of action, dismissing a complaint brought by the

debtor for lack of standing is proper.   See Becker v. Verizon

North, Inc., No. 06-2956, 2007 WL 1224039, at *4 (7th Cir.

Apr. 25, 2007) (affirming the district court’s dismissal of the

plaintiff’s action for lack of standing where the plaintiff

failed to disclose a pending employment discrimination cause of
                                -9-

action on her bankruptcy schedules).   The defendants’ motions to

dismiss, then, will be granted.3

     While Marshall does not have standing to bring this action,

Federal Rule of Civil Procedure 17 states that a “court may not

dismiss an action for failure to prosecute in the name of the

real party in interest until, after an objection, a reasonable

time has been allowed for the real party in interest to ratify,

join, or be substituted into the action.”   Fed. R. Civ.

P. 17(a)(3).   Marshall’s bankruptcy case has closed, the trustee

has been discharged, and Marshall had numerous opportunities to

request that her bankruptcy trustee be substituted in her place.

See Hopkins v. Foothill Mountain, Inc. (In re Hopkins), 346 B.R.

294, 306 (Bankr. E.D.N.Y. 2006) (dismissing for lack of

jurisdiction and denying an opportunity for joinder, ratification

     3
       Marshall argues that the Seventh Circuit’s opinion in
Matthews v. Potter, 316 Fed. Appx. 518, 519 (7th Cir. March 23,
2009), supports the proposition that “[c]ourts have allowed and
accepted a Debtor’s and their [sic] counsel’s oral and written
additions, omissions and/or amendments to their schedules and/or
financial statements,” and that “[a]mendments are supposed to be
freely given and allowed by the Courts.” (Pl.’s Opp’n to
Honeywell’s Mot. at 11-12.) In Matthews, the Seventh Circuit
reversed a district court’s order granting summary judgment to
the defendant that was based on judicial estoppel, not lack of
standing. The court of appeals found that the plaintiff had
standing because the plaintiff successfully moved the bankruptcy
court to re-open her bankruptcy case in order for her to amend
her bankruptcy schedules and her statement of financial affairs.
Matthews, 316 Fed. Appx. at 521-22. Marshall has not alleged or
shown that she ever formally moved to re-open her bankruptcy case
to amend her financial statement and her bankruptcy schedules
during the four-year pendency of this case. Matthews, then,
provides her no support.
                                -10-

or substitution because the “debtor had more than ample

opportunity to seek ratification of this action by, or joinder or

substitution of, the real party in interest” yet had not done

so).    However, a final opportunity will be provided to revive the

case in the event the trustee may want to participate.

                             CONCLUSION

       Because the plaintiff lacks standing to bring this action,

the defendants’ motions to dismiss the amended complaint will be

GRANTED without prejudice to the real party in interest moving to

reinstate the complaint.    An appropriate Order accompanies this

memorandum opinion.

       SIGNED this 18th day of December, 2009.

                                                 /s/
                                       RICHARD W. ROBERTS
                                       United States District Judge