WHOLE COURT
NOTICE: Motions for reconsideration must be physically received in our clerk’s office within ten days of the date of decision to be deemed timely filed. (Court of Appeals Rule 4 (b) and Rule 37 (b), February 21, 2008) http://www.gaappeals.us/rules/
March 26, 2013
In the Court of Appeals of Georgia A12A1814. RICHARDS v. D. R. HORTON, INC. et al.
MCMILLIAN, Judge.
Mark A. Richards, pro se, filed the present appeal after the trial court dismissed
his claims against his homebuilder D. R. Horton, Inc., various subcontractors and an
insurance company (collectively referred to as appellees).1 We now conclude that the
trial court erred by dismissing Richards’ claims against D. R. Horton, but affirm the
dismissal of his claims against the remaining appellees.
1 The remaining appellees are Murrell’s Construction Company, Andy Lewis Heating & Air-Conditioning, LLC, Raggahianti Foundations II, Inc., Dupree Plumbing Company, Executive Landscaping, Inc. and Grange Mutual Insurance Company. The pertinent facts, insofar as we can glean them from the voluminous record
on appeal,2 show the following: In September 2010, Richards filed suit against D. R.
Horton asserting claims based on the allegedly defective construction of his home.
That case apparently was removed to federal district court, and in January 2011,
Richards filed a voluntary petition for relief under Chapter 7 of the United States
Bankruptcy Code in which he disclosed his “fraud” suit against “D. R. Horton.” In
June 2011, the district court concluded that, because of the bankruptcy filing, the
trustee was now the real party in interest to prosecute the claims asserted in Richards’
negligent construction suit and dismissed the complaint without prejudice.
In late April 2011, the trustee entered a report of no distribution, and the
bankruptcy court approved that report, discharged Richards and the trustee, and
closed the estate by order dated July 19, 2011. On August 25, 2011, Richards filed
a “Complaint for Breach of Contract, Breach of Warranty, Fraud, Bad Intent and
Improper Site Preparation” against the appellees in this appeal. Each of the appellees
answered and moved to dismiss Richards’ claims, based in part on the doctrine of
judicial estoppel and standing. On September 30, 2011, Richards filed a responsive
2 We remind the parties that our rules require that citations to the record and transcripts must be to the appellate record, and must include the specific volume or part. Court of Appeals Rule 25 (a).
2 pleading asserting, among other things, that appellees’ motions to dismiss should be
denied because his bankruptcy case had been closed and his claims against the
appellees abandoned back to him. The trial court rejected these contentions and
dismissed Richards’ complaint, finding that he lacked standing to pursue his claims.
Richards timely filed his notice of appeal from that order on March 13, 2012.
Thereafter, on April 30, 2012, the United States Bankruptcy Court for the
Northern District of Georgia entered an order on Richards’ motion to re-open his
Chapter 7 case and for an order of abandonment. The bankruptcy court refused
Richards’ request to re-open, noting that Richards had disclosed his claim “against
his homebuilder,” the trustee had filed a report of no distribution on April 25, 2011,
and the bankruptcy court discharged Richards and closed his case on July 19, 2011.
Thus, the bankruptcy court concluded “that, by operation of 11 U. S. C. § 554 (c),
[Richards’] cause of action against D. R Horton, Inc. was abandoned to [Richards]
on July 19, 2011, is presently vested in [Richards] and [Richards] alone, and only
[Richards] has the right to pursue this cause of action. The bankruptcy estate has no
further interest in it.”
With this procedural backdrop in place, we now consider whether the trial
court properly dismissed Richards’ complaint.
3 1. In his first, second, third and fifth enumerations of error, Richards makes
various assertions concerning the merits of his underlying claims or other matters
irrelevant to the disposition of the standing issue, which is the only issue before us.
Thus, because these enumerations present nothing for this Court to review, we will
not consider them.
2. We now turn to the pivotal issue in this case, which is whether the trial court
erred by dismissing Richards’ complaint for lack of standing because his claims
remained property of the bankruptcy estate.
D. R. Horton argues on appeal that there was no evidence in the record before
the trial court that the trustee had abandoned the cause of action against it. Pertinent
to this issue, the record shows that Richards’ claims against D. R. Horton were clearly
disclosed in the schedules he filed with his bankruptcy petition and, under well-
settled law, became part of the bankruptcy estate. Parker v. Wendy’s Int’l, Inc., 365
F3d 1268 (11th Cir.) (2004) (causes of action belonging to the debtor at the
commencement of the bankruptcy case vest in the bankruptcy estate upon filing of the
petition). Further, those claims were not “otherwise administered” by the trustee, who
entered a report of no distribution. Cf. Period Homes, Ltd. v. Wallick, 275 Ga. 486
(569 SE2d 502) (2002) (bankruptcy estate closed by successful distribution).
4 Based on this record, the starting point of our analysis is 11 U. S. C. § 554,
which governs the abandonment of property of the bankruptcy estate. Subsection (c)
provides in relevant part: “Unless the court orders otherwise, any property scheduled
under section 521 (a) (1) of this title . . . not otherwise administered at the time of the
closing of a case is abandoned to the debtor and administered for purposes of section
350 of this title . . . .” Thus, pursuant to 11 USC § 554 (c), Richards’ claims against
D. R. Horton were abandoned back to him at the time his bankruptcy case was closed
in July 2011. We, therefore, agree with the bankruptcy court that Richards, and
Richards alone, had standing from that date forward to pursue this cause of action.3
Accordingly, at the time he filed the present action in August 2011, Richards had
standing to pursue his claims against D. R. Horton and the trial court erred by
dismissing his claims against that defendant.
But we reach a different result concerning the dismissal of Richards’ claims
against the remaining appellees. These claims, like Richards’ claims against D. R.
Horton, all related to the negligent construction of his home, clearly accrued prior to
the filing of his bankruptcy petition, and therefore became an asset of the bankruptcy
3 We are mindful that the trial court did not have the benefit of the bankruptcy court’s order when it dismissed Richards’ claims.
5 estate when Richards filed his petition. Parker v. Wendy’s Intl, 365 F3d at 1272.
However, unlike his claims against D. R. Horton, Richards did not list his claims
against these appellees on his bankruptcy schedule, and this “[f]ailure . . . leaves that
interest in the bankruptcy estate.” Id. Further, Richards’ attempt to re-open the case
after it was closed was unsuccessful. Thus, it appears that Richards only had standing
to pursue his claims against D. R. Horton, and his claims against the remaining
appellees were properly dismissed. Kittle v. Conagra Poultry Co., 247 Ga. App. 102,
106-107 (1) (543 SE2d 411) (2000); see also Sevostiyanova v. Tempest Recovery
Svcs., Inc., 307 Ga. App. 868, 870-871 (1) (705 SE2d 878) (2011); Zahabiuon v.
Automotive Finance Corp., 281 Ga. App. 55, 56 (1) (635 SE2d 342) (2006); Battle
v. Liberty Mutual Fire Ins. Co., 276 Ga. App. 434, 436 (623 SE2d 541) (2005);
Cochran v. Emory Univ., 251 Ga. App. 737, 738-739 (1) (2) (555 SE2d 96) (2001).
Judge McFadden argues in his dissent, however, that instead of affirming the
dismissal of Richards’ claims against the other defendants, “[w]e should vacate and
remand for the trial court to conduct a hearing to determine whether Richards
sufficiently itemized his claims to put the trustee on notice to investigate further, . .
. , and whether Richards had a motive to conceal his claims.” But, unlike the cases
cited by the dissent, this case does not involve the use of a mere “misnomer,” which
6 nevertheless clearly identified the defendant (Kuehn v. The Cadle Co., 2007 U.S.
Dist. LEXIS 18387 (M.D. Fla. 2007)), or an expansive identification of a claim
related to a certain incident (In re Bonner, 2005 Bankr. Lexis 1683 (BAP 6th Cir.
2005)), or actual notice of a claim (Donarumo v. Furlong, 660 F. 3d 81, 87 (1st Cir.
2011)).4
We are also unpersuaded that Richards’ motive or intent is relevant here. The
trial court dismissed these claims based on lack of standing, not the doctrine of
judicial estoppel, which, as the dissent acknowledges, is an equitable doctrine
invoked at the court’s discretion. Thus, cases such as Reciprocal Merchandising Svcs.
v. All Advertising Assoc., 163 B.R. 689 (S.D.N.Y. 1994), in which the court invoked
that doctrine and then considered the debtor’s motive in failing to list the claim, are
likewise unavailing.
Further, unlike the plaintiff/debtor in Gingold v. Allen, 272 Ga. App. 653, 654
(613 SE2d 173) (2005), which Presiding Judge Miller cites in her separate dissent,
Richards has already filed one motion to reopen in the bankruptcy court, and he did
4 This Court has specifically considered and rejected the assertion that an unlisted claim may be deemed abandoned by operation of law even if the trustee has actual notice of the unlisted claim. Kittle v. Conagra Poultry, 247 Ga. App. at 106- 107 (1). See also Wright v. Vanderbilt Mortgage & Finance, Inc., 2009 Bankr. Lexis 3565 *11, n. 8 (Bankr. NM 2009).
7 so after the trial court dismissed his claims based on lack of standing. Thus, we see
no need to halt and delay the trial court proceedings to give Richards an additional
opportunity to pursue another motion to reopen.
However, we are mindful that Richards’ motion to reopen the bankruptcy
estate was not included in the record on appeal. Thus, it is unclear to us whether
Richards, who by all appearances was proceeding pro se in filing that motion,
appreciated the different positions occupied by D. R. Horton versus the other
appellees based on how he listed his claims in his bankruptcy schedule, and it is
likewise unclear to us whether his request to reopen would have alerted the
bankruptcy court that he had additional claims against these defendants and that he
was also seeking to have those claims abandoned back to him. Thus, while, unlike the
dissents, we would not vacate the trial court’s dismissal of these claims to allow
Richards to pursue an evidentiary hearing in the trial court or stay the proceedings to
ensure that Richards gets another bite at the apple in the bankruptcy court, we would
emphasize that nothing we say here prevents Richards from returning to the
bankruptcy court and seeking clarification concerning the status of his claims against
these defendants. It may well be that if these claims have not been adequately
assessed by the trustee, the bankruptcy court will allow the case to be reopened for
8 the purpose of either allowing the trustee to pursue those claims or abandoning the
claims back to Richards, at which point he could seek to add the claims to his state
court case. Otherwise, however, and based on clear authority, e.g., Kittle v. Conagra
Poultry, 247 Ga. App. at 106-107 (1), we find these claims were properly dismissed
and no further proceedings are mandated on this issue.
Judgment affirmed in part and reversed in part. Doyle, P. J., Ray and Branch,
JJ., concur. Barnes, P. J., Miller, P. J., and McFadden, J., concur in part and dissent
in part.
9 A12A1814. RICHARDS v. D. R. HORTON, INC. et al.
MILLER, Presiding Judge, concurring in part and dissenting in part.
I concur with the majority’s opinion to reverse the trial court’s dismissal of
Richards’s claims against D. R. Horton, Inc., because he does in fact have standing
to raise these claims. I respectfully dissent from the majority’s conclusion that we
affirm the trial court’s dismissal of Richards’s claims against the other defendants.
While I agree with Judge McFadden that the trial court’s order should be reversed
with respect to Richards’s claims against the additional defendants. I write separately
because I would reverse on this point for a different reason and remand with
instructions.
As noted by the majority, a cause of action arising before the filing of a
bankruptcy petition is the property of the Chapter 7 bankruptcy estate, “and only the
trustee in bankruptcy has standing to pursue it.” (Citation and punctuation omitted.)
Parker v. Wendy’s International, Inc., 365 F.3d 1268, 1272 (II) (11th Cir. 2004); see also Baillie Lumber Co. v. Thompson, 391 F.3d 1315, 1319 (II) (11th Cir. 2004)
(providing that a debtor’s assets include potential legal causes of action). The failure
to list an interest on a bankruptcy schedule leaves that interest in the bankruptcy
estate until it has been either administered or abandoned by the trustee. See Parker,
supra, 365 F.3d at 1272 (II). Therefore, the trustee is the proper party in interest and
has exclusive standing to prosecute Richards’s undisclosed causes of action. Id.; see
also Gingold v. Allen, 272 Ga. App. 653, 654 (613 SE2d 173) (2005).
“Nevertheless, when an action is not prosecuted by the real party in interest, the
trial court should not dismiss the action until a reasonable time has been allowed after
objection for ratification of commencement of the action by, or joinder or substitution
of, the real party in interest.” (Citations and punctuation omitted.) Gingold, supra, 272
Ga. App. at 656; see also OCGA § 9-11-17 (a). In circumstances similar to those
presented in the instant appeal, we remanded a case to the trial court with instructions
to allow the plaintiff “a reasonable amount of time to take affirmative steps in the
bankruptcy court to either secure an abandonment by the bankruptcy trustee or to
substitute the trustee as the plaintiff.” Gingold, supra, 272 Ga. App. at 656. Indeed,
Richards may return to bankruptcy court for a reopening of his bankruptcy case in
2 order to add the undisclosed claims.1 See In re Upshur, 317 B.R. 446, 450, 452
(Bankr. N.D. Ga. 2004). The bankruptcy court would be authorized to reopen the case
and appoint a trustee to administer or abandon Richards’s undisclosed claims. See id.
at 451 (providing that bankruptcy courts have “a duty to reopen the [bankruptcy]
estate whenever there is proof that it has not been fully administered”). Unless these
undisclosed claims are administered or abandoned to Richards, however, the trustee
retains the exclusive right to prosecute those claims. See Parker, supra, 365 F.3d at
1272 (II).
Although I agree with Judge McFadden that we should remand the case, I
would not do so for the purpose of having the trial court determine whether Richards
1 Although the majority notes that Richards has unsuccessfully attempted to reopen his bankruptcy case, it does not appear that he did so for the purposes of adding the undisclosed causes of action against the subcontractors and the insurance company. Richards’s motion to reopen was not included in the record before us, but the bankruptcy court’s order denying his motion makes no mention of whether Richards sought to add the undisclosed claims relating to the subcontractors and the insurance company. Rather, the bankruptcy court’s order shows that Richards filed the motion to reopen for the purpose of obtaining an order of abandonment as to his claims against D. R. Horton. The bankruptcy judge declined to reopen the bankruptcy case, finding that Richards’s claims against D. R. Horton were abandoned to him by operation of law when his bankruptcy case was closed, as this cause of action was listed in his bankruptcy schedule. See 11 U.S.C. § 554 (c). In other words, the motion to reopen to pursue an order of abandonment was unnecessary because Richards’s claims against D. R. Horton had already been abandoned to him.
3 sufficiently apprised the trustee of his additional claims or had a motive to conceal
them. This misses the point that only the bankruptcy trustee has standing to pursue
the undisclosed claims, and Richards does not. Whether judicial estoppel should
apply is not relevant until the undisclosed claims have been administered or
abandoned to Richards.2 See In re Upshur, supra, 317 B.R. at 454. To address any
questions as to whether Richards acted in good faith, understood his disclosure
obligations, or intentionally omitted the claim from his bankruptcy schedule is simply
premature at this point. See id.; In re Phelps, 329 B.R. 904, 909 (Bankr. M.D. Ga.
2005).
Therefore, I conclude that the trial court’s order should be reversed in whole,
and the case should be remanded with instructions for the trial court to “give
[Richards] a reasonable amount of time to take affirmative steps in the bankruptcy
court to either secure an abandonment by the bankruptcy trustee or to substitute the
trustee as the plaintiff.” Gingold, supra, 272 Ga. App. at 656.
2 Judicial estoppel would not apply to the trustee in the event the trustee was substituted as the plaintiff in this case. See Parker, supra, 365 F.3d at 1272 (II) (holding that trustee cannot be judicially estopped from prosecuting debtor’s undisclosed claims).
4 A12A1814. RICHARDS v. D. R. HORTON, INC. et al.
MCFADDEN, Judge, concurring in part and dissenting in part.
I concur with the reversal of the trial court’s dismissal of Richards’ claims
against D. R. Horton, Inc. based on a finding of abandonment by the bankruptcy
trustee. I respectfully dissent to the affirmance of the trial court’s dismissal of
Richards’ claims against the other defendants. We should vacate and remand for the
trial court to conduct a hearing to determine whether Richards sufficiently itemized
his claims to put the trustee on notice to investigate further, Donarumo v. Furlong,
660 F.3d 81, 87 (1st Cir. 2011), and whether Richards had a motive to conceal the
claims. Barger v. City of Cartersville, 348 F.3d 1289, 1296 (C) (1) (11th Cir. 2003).
Upon the filing of a bankruptcy petition, virtually all of a debtor’s assets, both
tangible and intangible, vest in the bankruptcy estate. 11 U.S.C. § 541 (a) (1)
(providing that the bankruptcy estate includes “all legal or equitable interest of the
debtor in property as of the commencement of the case”). That property includes causes of action belonging to the debtor at the commencement of the bankruptcy case. Thus, a trustee, as the representative of the bankruptcy estate, is the proper party in interest, and is the only party with standing to prosecute causes of action belonging to the estate. Once an asset becomes part of the bankruptcy estate, all rights held by the debtor in the asset are extinguished unless the asset is abandoned back to the debtor pursuant to [11 U.S.C.] § 554 of the Bankruptcy Code. At the close of the bankruptcy case, property of the estate that is not abandoned under § 554 and that is not administered in the bankruptcy proceedings remains the property of the estate. Failure to list an interest on a bankruptcy schedule leaves that interest in the bankruptcy estate.
Parker v. Wendy’s Intl., 365 F.3d 1268, 1272 (II) (11th Cir. 2004).
A debtor has a statutory duty to fully disclose all assets and this is a continuing
duty of complete and honest disclosure. Robinson v. Tyson Foods, 595 F.3d 1269,
1274 (A) (11th Cir. 2010). “Failure to list an interest on a bankruptcy schedule leaves
that interest in the bankruptcy estate,” depriving the debtor of standing to pursue that
interest. Parker, 365 F.3d at 1272 (II). Alternatively, a debtor who has failed to
disclose claims in his bankruptcy proceeding may be judicially estopped from
pursuing those claims. Burnes v. Pemco Aeroplex, 291 F.3d 1282 (11th Cir. 2002).
But “[w]hile a debtor has a duty to prepare schedules carefully, completely, and
accurately, . . . [a]s investigation is part of the [t]rustee’s duties . . . , a debtor is
2 required only to do enough itemizing to enable the trustee to determine whether to
investigate further.” (Citations and punctuation omitted.) Donarumo v. Furlong, 660
F.3d 81, 87 (1st Cir. 2011).
There are no bright-line rules for how much itemization and specificity is required for bankruptcy schedules. What is required is reasonable particularization under the circumstances. The Official Forms themselves have generally been regarded as subject to a rule of substantial compliance. It would be silly to require a debtor to itemize every dish and fork, but every bankrupt must do enough itemizing to enable the trustee to determine whether to investigate further.
(Citations and punctuation omitted.) Kuehn v. Cadle Co., 2007 U.S. Dist. LEXIS
18387 at *13 (M.D. Fla. 2007). “[D]ebtors can list lawsuits on their bankruptcy
schedules in the most general of terms, even without identifying any defendants, and
still satisfy the filing requirements of § 521 (a) (1) (B) (i) and the abandonment
requirements of § 554 (c).” Id. (holding that debtor who listed in bankruptcy a lawsuit
naming one defendant was not barred from pursuing same lawsuit against a different
defendant). See also In re Bonner, 2005 Bankr. LEXIS 1683 (BAP 6th Cir. 2005)
(debtors’ scheduling of an asset labeled “Auto Accident Claim” without identifying
any potential defendants “plainly and unambiguously included any claim that the
debtors may have had for any personal injury arising out of the automobile
3 accident”); Reciprocal Merchandising Services. v. All Advertising Assoc., 163 B.R.
689 (S.D.N.Y. 1994) (Chapter 11 debtor was not judicially estopped from pursuing
claims for unjust enrichment and breach of alleged oral contract even though he failed
to name the defendants or detail the nature of the claims in prior bankruptcy
proceeding, where there was no evidence that debtor deliberately intended to mislead
bankruptcy court or to obtain unfair advantage, and debtor did not conceal during
proceedings that it had claims arising out of wrongful transfer of assets).
Here, the trial court ruled that “[t]he subject matter of [the] earlier case is
identical to the matter [at hand], with the exception that [Richards] now sues
additional defendants.” Given this finding, the trial court should reconsider whether
Richard’s listing of his lawsuit satisfied the filing requirements of § 521 (a) (1) (B)
(i) and the abandonment requirements of § 554 (c) to determine whether he has
standing to pursue his action against the defendants other than D. R. Horton.
In addition to arguing that Richards lacked standing, at least one of the
appellees argued that Richards’ claims are barred by judicial estoppel. “Judicial
estoppel is an equitable doctrine invoked at a court’s discretion.” (Citation omitted.)
Burnes, 291 F.3d at 1285 (III) (A). It is “intended to be a flexible rule in which courts
must take into account all of the circumstances of each case in making [their]
4 determination[s].” (Citation omitted.) Ajaka v. BrooksAmerica Mortg. Corp., 453
F.3d 1339, 1344 (11th Cir. 2006). The “two primary factors in determining whether
to apply judicial estoppel . . . [are whether] the allegedly inconsistent positions [were]
taken under oath in a prior proceeding, and [whether] they [were] calculated to make
a mockery of the judicial system.” (Citations omitted.) Id. The court looks to see if
the debtor (1) knew about the cause of action that should have been listed; and (2) if
the debtor had a motive to conceal the cause of action. Barger, 348 F.3d at 1296 (C)
(1).
It is undisputed that Richards did not list the additional defendants on his
schedule. So the questions become whether his disclosure was “full enough” to put
the trustee on notice to inquire further and whether he had a motive to conceal his
cause of action against these defendants. As noted previously, the trial court ruled that
“[t]he subject matter of [the] earlier case is identical to the matter [at hand], with the
exception that [Richards] now sues additional defendants.” He made no finding about
Richards’ intent. The trial court should consider these questions upon remand.
The cases upon which the majority relies are distinguishable. In Kittle v.
ConAgra Poultry Co., 247 Ga. App. 102 (543 SE2d 411) (2000), Zahabiuon v. Auto.
Fin. Corp., 281 Ga. App. 55 (635 SE2d 342) (2006) and Sevostiyanova v. Tempest
5 Recovery Svs., 307 Ga. App. 868 (705 SE2d 878) (2011), we held that the plaintiffs
were judicially estopped from pursuing their complaints when their claims accrued
before they filed for bankruptcy yet they never listed them on any bankruptcy
schedules at any time. In Cochran v. Emory Univ., 251 Ga. App. 737 (555 SE2d 96)
(2001), we held that the plaintiff was judicially estopped from pursuing a medical
malpractice claim when she did not list it on her bankruptcy schedule and only sought
to re-open her bankruptcy to amend the schedule once the defendant was granted
summary judgment on judicial estoppel grounds. In Battle v. Liberty Mut. Fire Ins.
Co., 276 Ga. App. 434 (623 SE2d 541) (2005), we held that the plaintiff was
judicially estopped from pursuing his claim for fire insurance benefits because he
failed to list the insured property in his bankruptcy. Here, on the other hand, Richards
listed the identical lawsuit on his schedule, albeit with only one of the defendants.
Whether the fact that the trustee had before her the “identical” case should have
placed her on notice as to these other defendants and whether Richards had a motive
to conceal the claims are questions the trial court should resolve within its discretion.
I am authorized to state that Presiding Judge Barnes joins in this opinion.