United States District Court, S.D. California
[Copyrighted Material Omitted]
For Charles Copelan, an individual, Plaintiff: Eric D. Pearson, LEAD ATTORNEY, PRO HAC VICE, Heygood Orr & Pearson, Dallas, TX; Michael E. Heygood, LEAD ATTORNEY, PRO HAC VICE, Heygood Orr Reyes Pearson & Bartolomei, Dallas, TX; Richard J. Sullivan, LEAD ATTORNEY, PRO HAC VICE, Sullivan & Sullivan LLP, Wellesley, MA; Scott C Cummins, LEAD ATTORNEY, Casey Gerry Reed Schenk Francavilla Blatt and Penfield, San Diego, CA; Charles W. Miller, Heygood Orr & Pearson, Dallas, TX.
For Richard Kipperman, U.S. Bankruptcy Trustee, Plaintiff: Charles W. Miller, Heygood Orr & Pearson, Dallas, TX.
For Home Depot USA, Inc., a California Corporation, Defendant: Jeffrey R. Williams, LEAD ATTORNEY, Schiff Hardin, San Francisco, CA; Patrick Mark Mahoney, LEAD ATTORNEY, Schiff Hardin LLP, San Francisco, CA.
For Doe 1, One World Technologies, Inc., One World Technologies, Inc., Defendants: James A Rapore, LEAD ATTORNEY, Kirkland & Ellis LLP, Los Angeles, CA; Jeffrey R. Williams, LEAD ATTORNEY, Schiff Hardin, San Francisco, CA; Patrick Mark Mahoney, LEAD ATTORNEY, Schiff Hardin LLP, San Francisco, CA.
ORDER: (1) GRANTING PLAINTIFF'S MOTION TO SUBSTITUTE (ECF NO. 56); (2) DENYING DEFENDANTS' MOTION TO DISMISS (ECF NO. 41); AND (3) SETTING PRETRIAL AND TRIAL DATES
Hon. Cynthia Bashant, United States District Judge.
Presently before the Court is a motion to substitute U.S. Bankruptcy Trustee Richard Kipperman as the real party in interest filed by Plaintiff Charles Copelan (" Plaintiff" ) and Mr. Kipperman (" Trustee" ) (ECF No. 56), and a motion to dismiss filed by defendants One World Technology, Inc. and Home Depot U.S.A., Inc. (collectively " Defendants" ) (ECF No. 41).
Having reviewed the papers submitted and heard oral argument, for the reasons set forth below, this Court GRANTS the motion to substitute Mr. Kipperman, and DENIES Defendants' motion to dismiss.
Plaintiff filed this personal injury action in state court on November 7, 2011. (ECF No. 1-2.) On January 11, 2012, Plaintiff filed a Chapter 7 bankruptcy petition. (ECF No. 41-2 at Ex. B; ECF No. 43-3.) On May 25, 2012, this personal injury action
was removed to federal court. (ECF No. 1.)
In his bankruptcy petition, under " Statement of Financial Affairs," Plaintiff was asked to " List all suits and administrative proceedings to which the debtor is or was a party within one year immediately preceding the filing of this bankruptcy case." (ECF No. 41-2 at 31; ECF No. 43-3 at 24.) Plaintiff checked a box indicating " none" . ( Id. ) Plaintiff failed to list on the bankruptcy petition that he had filed this personal injury action. On April 10, 2012, the bankruptcy court discharged Plaintiff's debts. (ECF No. 41-2 at p. 20; ECF No. 43-4 at 3.)
During Plaintiff's deposition in this case on September 25, 2013, Plaintiff volunteered that he had previously filed for bankruptcy protection. (ECF No. 43-5.) On April 2, 2014, Plaintiff's counsel filed a motion to reopen Plaintiff's bankruptcy case. (ECF No. 41-2 at 21, 36-42; ECF No. 43-4 at 4; ECF No. 43-6.) On that same date, Plaintiff's counsel notified this court of the bankruptcy case. (ECF No. 36.) On April 22, 2014, the bankruptcy court granted the motion to reopen Plaintiff's bankruptcy case. (ECF No. 43-8.)
Defendants now move to dismiss this action pursuant to Rules 12(b)(1) and/or 12(b)(6) of the Federal Rules of Civil Procedure on the grounds that, based on the foregoing, Plaintiff is judicially estopped from maintaining this action. On February 2, 2015, the Court held a hearing on Defendants' motion to dismiss. (ECF No. 55.) At the hearing, the Court gave the Trustee thirty days to join the lawsuit. Plaintiff and Trustee now move to substitute the Trustee for Plaintiff in this lawsuit. (ECF No. 56.)
II. MOTION TO SUBSTITUTE
A. Legal Standard
Rule 17 of the Federal Rules of Civil Procedure requires that an action " be prosecuted in the name of the real party in interest." Fed.R.Civ.P. 17(a)(1). Where the action is originally brought by a party other than the real party in interest, Rule 17 provides 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). If the real party in interest ratifies, joins, or is substituted, the " action proceeds as if it had been originally commenced by the real party in interest." Id.
" When a plaintiff files for bankruptcy after the initiation of [his] suit, the claims become the property of the bankruptcy estate and the trustee of the estate becomes the real party in interest." Ritz Camera & Image, LLC v. Sandisk Corp., No. C 10-02787, 2013 WL 3387817, at *2 (N.D. Cal. July 5, 2013) (citing Barger v. City of Cartersville, Ga., 348 F.3d 1289, 1292 (11th Cir. 2003); Sierra Switchboard Co. v. Westinghouse Elec. Corp., 789 F.2d 705, 707-09 (9th Cir. 1986)); see also Turner v. Cook, 362 F.3d 1219, 1225-26 (9th Cir. 2004); In re Meehan, 2014 WL 4801328, at *4-6 (B.A.P. 9th Cir. Sept. 29, 2014) (holding the trustee has exclusive standing to pursue prepetition causes of action that have not been formally abandoned); 11 U.S.C. § 541(a)(1) (bankruptcy estate includes " all legal or equitable interests of the debtor in property as of the commencement of the case" ); In re Chappel, 189 B.R. 489, 493 (B.A.P. 9th Cir. 1995) (" [T]he scope of § 541(a)(1) is broad, covering all kinds of property, including tangible or intangible causes of action...." ).
If an interest is transferred, Rule 25(c) of the Federal Rules of Civil Procedure allows a court, on a motion, to order the transferee to be substituted in the action. Fed.R.Civ.P. 25(c). " Rule 25(c) is
not designed to create new relationships among parties to a suit but is designed to allow the action to continue unabated when an interest in the lawsuit changes hands." In re Bernal, 207 F.3d 595, 598 (9th Cir. 2000) (quoting Collateral Control Corp. v. Deal (In re Covington Grain Co., Inc.), 638 F.2d 1362, 1364 (5th Cir. 1981)). Permitting the substitution of a bankruptcy trustee in the place of a debtor is among the transfers of interest that courts have found support substitution under Rule 25(c). See Ritz Camera & Image, LLC, 2013 WL 3387817, at *2 (citing Bauer v. Commerce Union Bank, 859 F.2d 438, 441--442 (6th Cir. 1988)); see also In re Countrywide Fin. Corp. Mortg. Mktg. & Sales Practices Litig., 601 F.Supp.2d 1201, 1222 (S.D. Cal. 2009). The decision to grant or deny substitution under Rule 25(c) rests within the sound discretion of the court. In re Bernal, 207 F.3d at 598. " A Rule 17(a) substitution of plaintiffs should be liberally allowed when ...