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Lisa Coble, et al v. Mark Derosia

May 13, 2011

LISA COBLE, ET AL.,
PLAINTIFFS,
v.
MARK DEROSIA, ET AL.,
DEFENDANTS.



ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS [Doc. #37]

INTRODUCTION

Plaintiffs Lisa Coble ("Coble") and Randell Parker ("Parker") filed a First Amended Complaint ("FAC") against Defendants Mark DeRosia and the City of Delano on February 14, 2011. Defendants move to dismiss the FAC pursuant to Rule 12(b)(1) and Rule 12(h)(3) of the Federal Rules of Civil Procedure. In their motion, Defendants argue, inter alia, that Coble lacks standing to bring her claims and that Parker, as bankruptcy trustee, is judicially estopped from pursuing Coble's claims. Defendants frame their judicial estoppel argument as part of their motion to dismiss for lack of subject matter jurisdiction under Rules 12(b)(1) and 12(h)(3). Judicial estoppel, however, is an affirmative defense and does not attack jurisdiction. See Fed. R. Civ. P. 8(c). Therefore, Defendants' judicial estoppel argument is more properly considered under Rule 12(b)(6). See Jones v. Bock, 549 U.S. 199, 215 (2007) (a complaint may be subject to dismissal under Rule 12(b)(6) if the face of the pleadings establish the affirmative defense). For the reasons that follow, the motion is granted in part and denied in part.

LEGAL STANDARD

A motion to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) or 12(h)(3) challenges the Court's subject matter jurisdiction. "It is a fundamental precept that federal courts are courts of limited jurisdiction. The limits upon federal jurisdiction, whether imposed by the Constitution or by Congress, must not be disregarded nor evaded." Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 374 (1978). A challenge to jurisdiction "can be either facial, confining the inquiry to allegations in the complaint, or factual, permitting the court to look beyond the complaint." Savage v. Glendale Union High Sch., Dist. No. 205, Maricopa Cnty., 343 F.3d 1036, 1039 n.2 (9th Cir. 2003). Thus, the Court is not restricted to the face of the pleadings and "may review any evidence, such as affidavits and testimony, to resolve factual disputes concerning the existence of jurisdiction." McCarthy v. United States, 850 F.2d 558, 560 (9th Cir. 1988) (citation omitted).

A defendant may raise an affirmative defense by motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure. Jones, 549 U.S. at 215. "When ruling on a Rule 12(b)(6) motion to dismiss, if a district court considers evidence outside the pleadings, it must normally convert the 12(b)(6) motion into a Rule 56 motion for summary judgment, and it must give the nonmoving party an opportunity to respond." United States v. Ritchie, 342 F.3d 903, 907 (9th Cir. 2003). "A court may, however, consider certain materials-documents attached to the complaint, documents incorporated by reference in the complaint, or matters of judicial notice-without converting the motion to dismiss into a motion for summary judgment." Id. at 908.

BACKGROUND

Beginning April 24, 2008, Coble was employed as a jailer with the City of Delano. FAC at ¶ 8. On September 12, 2008, Coble was terminated. Id. at ¶ 8. Subsequently, on October 7, 2008, Coble filed an administrative complaint with the California Department of Fair Employment and Housing. (Doc. 40-1 at 9.) In the administrative complaint, Coble alleged that she was subjected to "sex/pregnancy discrimination" when she was denied accommodations and discharged from her employment by the City of Delano. Id.

On January 9, 2009, Coble filed for bankruptcy. (Doc. 40-2 at 2.) Coble did not disclose in her bankruptcy petition that she had filed the October 7, 2008 administrative complaint. Id. at 31. Thereafter, the Bankruptcy Court issued a Final Decree and Coble's debts were discharged. (Doc. 40-3 at 2 and 5.)

Coble filed a complaint against Defendants on February 15, 2010. (Doc. 1.) In her complaint, Coble again alleged claims related to her termination. Defendants filed a motion to dismiss on January 4, 2011, arguing that Coble lacked standing to bring her claims and was judicially estopped from bringing her claims. (Doc. 21.) Coble filed a motion to amend the complaint on January 5, 2011. (Doc. 24.) In the motion, Coble admitted that she was not a proper party to the litigation and sought to amend her complaint in order to add Parker, bankruptcy trustee of her estate, as a plaintiff. Id. at 1. The Magistrate Judge granted Coble's motion to amend the complaint on February 8, 2011. (Doc. 31.) Coble filed the FAC on February 14, 2011, adding Parker as a plaintiff. (Doc. 32.) Defendants again move to dismiss the FAC based on lack of subject matter jurisdiction and judicial estoppel. (Doc. 37.)

DISCUSSION

1. Coble's Standing

Defendants contend that Coble has no standing to pursue her claims. Motion at 3:20. Specifically, Defendants argue that Coble's claims belong to the bankruptcy estate and only the bankruptcy trustee has standing to assert those claims. Id. at 3:21-22. Coble agrees that the claims belong to the bankruptcy estate and the trustee is the proper party plaintiff to prosecute the claims. Opposition at 9:21-23. Coble "stipulates that she may be dismissed from this case and does not oppose the motion to dismiss as to her." Id. at 9:17-18.

Article III standing is a species of subject matter jurisdiction. Chandler v. State Farm Mut. Auto. Ins. Co., 598 F.3d 1115, 1122 (9th Cir. 2010). "Because standing and ripeness pertain to federal courts' subject matter jurisdiction, they are properly raised in a Rule 12(b)(1) motion to dismiss." Id. "A suit brought by a plaintiff without Article III standing is not a 'case or controversy,' and an Article III federal court therefore lacks subject matter jurisdiction over the suit." Cetacean Cmty. v. Bush, 386 F.3d 1169, 1174 (9th Cir. 2004).

The Court agrees that Coble lacks standing to pursue her claims. Causes of action that exist prior to a bankruptcy filing become assets of the bankruptcy estate. See 11 U.S.C. § 541(a)(1); Sierra Switchboard Co. v. Westinghouse Elec. Corp., 789 F.2d 705, 709 (9th Cir. 1986). Once causes of action become assets of the bankruptcy estate, only bankruptcy trustees, debtors-in-possession, or bankruptcy court authorized entities have standing to sue on behalf of the estate. McGuire v. United States, 550 F.3d 903, 914 (9th Cir. 2008). In this case, Coble's causes of action existed prior to her bankruptcy filing. This is evidenced by the fact that Coble filed her administrative complaint on October 7, 2008 and then filed ...


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