Karen Auday v. Wet Seal Retail, Inc.

698 F.3d 902, 68 Collier Bankr. Cas. 2d 641, 2012 WL 5259002, 2012 U.S. App. LEXIS 22180, 57 Bankr. Ct. Dec. (CRR) 34, 96 Empl. Prac. Dec. (CCH) 44,661, 117 Fair Empl. Prac. Cas. (BNA) 1095
CourtCourt of Appeals for the Sixth Circuit
DecidedOctober 25, 2012
Docket12-5057
StatusPublished
Cited by48 cases

This text of 698 F.3d 902 (Karen Auday v. Wet Seal Retail, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Karen Auday v. Wet Seal Retail, Inc., 698 F.3d 902, 68 Collier Bankr. Cas. 2d 641, 2012 WL 5259002, 2012 U.S. App. LEXIS 22180, 57 Bankr. Ct. Dec. (CRR) 34, 96 Empl. Prac. Dec. (CCH) 44,661, 117 Fair Empl. Prac. Cas. (BNA) 1095 (6th Cir. 2012).

Opinion

OPINION

SUTTON, Circuit Judge.

Karen Auday had a bad week. To start, her employer, Wet Seal Retail, fired her, a decision she believes was based on age. Four days later, she and her husband filed for bankruptcy. Auday now attempts to sue Wet Seal for age discrimination, but the claim became property of her estate when she entered bankruptcy. We thus must vacate the judgment and return the case to the district court either to allow Auday to dismiss the action without prejudice or to allow Auday to amend the complaint.

In December 2008, according to the complaint, Auday started work at a Wet Seal store in Chattanooga, Tennessee. Wet Seal markets clothing to young women, and Auday was 47 years old. Before long, her supervisor (a woman in her twenties) began expressing “displeasure” about Auday’s age and attire “in a store for young people.” R. 1-1 ¶ 8. Other Wet Seal employees made similar comments, saying she should look for a “more age appropriate” job. Id. ¶ 11. On September 17, 2009, Wet Seal fired Auday. Upset, she wrote a letter to the company’s corporate office and told them her firing was “premeditated and deliberate, and nothing more than the culmination of 10 months of constant harassment, discrimination, and unlawful labor practices.” R. 6-1. She also stated that she was consulting an attorney and would “not rest until this matter is resolved in a lawful and equitable manner.” Id.

Four days after she lost her job, Auday and her husband filed for Chapter 7 bankruptcy, listing $510,725 in liabilities. In re Auday, No. 1:09-bk-16044, ECF No. 1 at 18 (Bankr.E.D.Tenn. Sept. 21, 2009). They declared $204,370 in assets but did not include Auday’s age-discrimination claim against Wet Seal, id. at 22, as required, see 11 U.S.C. § 521(a)(1)(B)(i); In re Cottrell, 876 F.2d 540, 543 (6th Cir.1989).

On December 17, 2009, nearly three months after Auday filed her bankruptcy petition, her lawyer wrote a letter to the bankruptcy trustee, Jerrold Farinash, to tell him that Auday “has a possible age *904 discrimination case” and to ask “[w]hat do we need to get to be hired?” R. 16-3 at 4. Neither the Trustee nor Auday’s lawyer shared this information with the bankruptcy court, and the bankruptcy court discharged Auday from her debts on January 5, 2010. On February 8, 2010, the Trustee applied to the bankruptcy court for authority to hire Auday’s lawyer, Frank Pinchak, to pursue the claim against Wet Seal. In re Auday, ECF No. 23 (Feb. 8, 2010). Notice of this application and opportunity to object was sent to Auday’s creditors as part of the Trustee’s application. Even though the bankruptcy court and creditors were notified of the claim, the schedule was never amended. The bankruptcy court granted the Trustee’s application, appointing Pinchak as “special counsel for the Trustee” to pursue the age-discrimination claim. In re Auday, ECF No. 25 (Mar. 5, 2010).

For reasons of his own, the Trustee did not follow this path. Five months later, Auday, as opposed to the Trustee, sued Wet Seal in state court, seeking $500,000 in damages and reinstatement. Wet Seal removed the case based on diversity jurisdiction. The district court granted judgment on the pleadings to Wet Seal, holding that Auday’s failure to list a potential claim on her bankruptcy petition barred her from bringing the claim later. Wet Seal also argued that Auday lacked standing because the claim belonged to the Trustee. The district court did not address the latter argument, holding that because the estoppel issue was clear, it did not need to address Auday’s standing.

We need not decide whether the district court properly barred Auday from litigating a claim that she failed to list in the bankruptcy court schedule. For in reaching this conclusion, the district court (with some assistance from the parties) did not address a threshold question: Is Auday capable of bringing this lawsuit? See Bie-sek v. Soo Line R.R. Co., 440 F.3d 410, 413 (7th Cir.2006); Fed.R.Civ.P. 17(a).

When Auday filed for bankruptcy, her estate became the owner of all of her property, including tort claims that accrued before she filed her bankruptcy petition. See 11 U.S.C. § 541(a)(1) (defining the estate as “all legal or equitable interests of the debtor in property” when the debtor files for bankruptcy); In re Cottrell, 876 F.2d at 543. Her agediscrimination claim against Wet Seal is no different. It accrued when the company fired her on September 17, 2009, and became the property of her estate when she filed for bankruptcy four days later. See Bauer v. Commerce Union Bank, 859 F.2d 438, 440-41 (6th Cir.1988). This means that, absent abandonment, only the Trustee may bring the age-discrimination claim, and Auday “has no standing to pursue” it alone. Id. at 441; see also Davis v. Ford Motor Co., 978 F.2d 1258, 1992 WL 322377 at *3 (6th Cir.1992) (unpublished table decision); Estate of Spirtos v. One San Bernardino Cnty. Superior Ct. Case Numbered SPR 02211, 443 F.3d 1172, 1175-76 (9th Cir.2006); Biesek, 440 F.3d at 413 (describing the debtor as “an interloper, trying to prosecute a claim that belongs to his estate in bankruptcy”); Wieburg v. GTE Southwest, Inc., 272 F.3d 302, 306 (5th Cir.2001) (“Because the claims are the property of the bankruptcy estate, the Trustee is the real party in interest with exclusive standing to assert them.”).

The proceedings below show as much. The Trustee, not Auday, sought permission from the bankruptcy court to appoint counsel to pursue the claim, and the court’s order granting that permission authorizes “Frank Pinchak to act as special counsel for the Trustee.” In re Auday, ECF No. 25 (Mar. 5, 2010) (emphasis added). That Pinchak also happened to be Auday’s lawyer for the claim against Wet *905 Seal makes no difference. Parties, not lawyers, possess claims.

The Trustee, it is true, could have abandoned the claim against Wet Seal, and doing so would have returned it to Auday. See 11 U.S.C. § 554. But abandonment requires the Trustee to give notice to the creditors and, if any object, the bankruptcy court must hold a hearing. 11 U.S.C.

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698 F.3d 902, 68 Collier Bankr. Cas. 2d 641, 2012 WL 5259002, 2012 U.S. App. LEXIS 22180, 57 Bankr. Ct. Dec. (CRR) 34, 96 Empl. Prac. Dec. (CCH) 44,661, 117 Fair Empl. Prac. Cas. (BNA) 1095, Counsel Stack Legal Research, https://law.counselstack.com/opinion/karen-auday-v-wet-seal-retail-inc-ca6-2012.