Cargo v. Kansas City Southern Railway Co.

408 B.R. 631, 2009 WL 1867664
CourtDistrict Court, W.D. Louisiana
DecidedMay 25, 2010
DocketCivil Action 05-2010
StatusPublished
Cited by4 cases

This text of 408 B.R. 631 (Cargo v. Kansas City Southern Railway Co.) is published on Counsel Stack Legal Research, covering District Court, W.D. Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cargo v. Kansas City Southern Railway Co., 408 B.R. 631, 2009 WL 1867664 (W.D. La. 2010).

Opinion

MEMORANDUM RULING

S. MAURICE HICKS, Jr., District Judge.

Before the Court are Defendant’s Motions for Summary Judgment on the claims of Plaintiff-Debtors Pamela Smith, Charles Cockerm, Derek Lamette, Geroal-yn Clark, Ivory Cooper, and Gerald Williams (Record Documents 176,170, 174, & 166). Defendant filed for summary judgment on the theories of: (1) judicial estoppel, with respect to each of the aforementioned Plaintiff-Debtors; and (2) lack of standing, with respect certain of the Plaintiff-Debtors who were or had been proceeding under Chapter 7 of the Bankruptcy Code at the time these motions were filed. Plaintiff-Debtors oppose the motions (see Record Documents 219, 220, 221, 222, 223, 224).

*636 For the reasons which follow, Defendant’s motions for summary judgment numbered 168 and 172 are GRANTED in part, Defendant’s motions for summary judgment numbered 166, 170, and 176 are GRANTED, and Defendant’s motion for summary judgment numbered 174 is DENIED. Plaintiff-Debtor Smith and Plaintiff-Debtor Cockerm’s claims, which the Bankruptcy Court determined belong to Chapter 7 trustees, are DISMISSED. The claims brought by Plaintiff-Debtor Smith, which the Defendant settled with the Chapter 7 Trustee in bankruptcy court, are DISMISSED with prejudice. The claims of Plaintiff-Debtor Cockerm, which this Court understands have not yet been settled with the Chapter 7 Trustee in bankruptcy court, are DISMISSED for lack of standing without prejudice to the ability of a Chapter 7 trustee to reassert the claims. Plaintiff-Debtors Clark, Cooper, and Williams’ claims are DISMISSED with prejudice. An order consistent with this memorandum ruling shall issue contemporaneously herewith.

I. SUMMARY JUDGMENT STANDARD

Summary judgment is proper pursuant to Rule 56 of the Federal Rules of Civil Procedure “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). “Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial.” Stahl v. Novartis Pharm. Corp., 283 F.3d 254, 263 (5th Cir.2002). If the movant demonstrates the absence of a genuine issue of material fact, “the nonmovant must go beyond the pleadings and designate specific facts showing that there is a genuine issue for trial.” Littlefield v. Forney Indep. Sch. Dist., 268 F.3d 275, 282 (5th Cir.2001). Where critical evidence is so weak or tenuous on an essential fact that it could not support a judgment in favor of the nonmovant, then summary judgment should be granted. See Alton v. Tex. A & M Univ., 168 F.3d 196, 199 (5th Cir.1999).

II. LAW

A. Causes of Action that Must be Disclosed to the Bankruptcy Court

Under the Bankruptcy Code, substantially all of a debtor’s existing assets, “including causes of action belonging to the debtor at the commencement of the bankruptcy case, vest in the bankruptcy estate upon the filing of a bankruptcy petition.” Kane v. Nat’l Union Fire Ins. Co. et al., 535 F.3d 380, 385 (5th Cir.2008) (per curiam) (citing 11 U.S.C. § 541(a)(1)); State Farm Life Ins. Co. v. Swift (In re Swift), 129 F.3d 792, 795 (5th Cir.1997); 5 Collier on Bankruptcy § 541.08. A Chapter 7 estate is comprised of “all legal or equitable interests of the debtor in property as of the commencement of the case.” Kane, 535 F.3d at 385. In Chapter 13 cases, the estate also includes legal claims and causes of action that are acquired “after the commencement of the [bankruptcy] case but before the case is closed, dismissed, or converted.” 11 U.S.C. § 1306(a)(1) & § 541(a)(1).

If a case filed under Chapter 13 is converted to a case under another chapter of the Bankruptcy Code, such as Chapter 7, then “the property of the estate in the *637 converted case ... consists] of property in the estate, as of the date of filing the petition, that remains in the possession of or is under the control of the debtor on the date of conversion.” 11 U.S.C. § 348(f)(1)(A). However, if it is determined that a debtor has “converg[ed] a case under Chapter 13 ... to a case under another chapter under [Title 11] in bad faith, the property in the converted case shall consist of the property of the estate as of the date of conversion.” Id. at § 348(f)(1)(B).

The Bankruptcy Code subjects debtors to a “continuing duty to disclose all pending and potential claims.” Kane, 535 F.3d at 384-85. Legal causes of action, including “possible” causes of action, are assets that must be disclosed in bankruptcy. The Fifth Circuit has held that a “debtor need not know all the facts or even the legal basis for the cause of action; rather, if the debtor has enough information ... prior to confirmation to suggest that it may be a possible cause of action, then it is a ‘known’ cause of action such that it must be disclosed.” In re Coastal Plains, 179 F.3d 197, 208 (5th Cir.1999). The appellate court in Coastal Plains went on to note that “[a]ny claim with potential must be disclosed, even if it is contingent, dependent, or conditional.” Id.

B. Treatment of Undisclosed Legal Claims in the Chapter 7 Context: the Standing Rubric

In a Chapter 7 bankruptcy proceeding, any unscheduled property “ ‘that is not abandoned [by the trustee] under § 554 and that is not administered in the bankruptcy proceedings’ ... ‘remains the property of the estate.’ ” Kane, 535 F.3d at 385 (quoting Parker, 365 F.3d at 1272; 11 U.S.C. § 554

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Cite This Page — Counsel Stack

Bluebook (online)
408 B.R. 631, 2009 WL 1867664, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cargo-v-kansas-city-southern-railway-co-lawd-2010.