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Murphy v. FT Travel Management, LLC

United States District Court, N.D. Illinois, Eastern Division

May 14, 2014



ROBERT M. DOW, Jr., District Judge.

Plaintiff Myriam Murphy filed this complaint alleging race, color, and national origin discrimination in violation of Title VII of the Civil Rights Act of 1964 and 42 U.S.C. § 1981. Defendant moves to dismiss Plaintiff's complaint for lack of standing and judicial estoppel because Plaintiff failed to list her pending claims on her Chapter 7 bankruptcy petition. For the reasons set forth below, the Court grants Defendant's motion to dismiss [21] and dismisses this case with prejudice.

I. Background

On August 22, 2012, Plaintiff initiated an administrative proceeding by filing a charge of discrimination with the Equal Employment Opportunity Commission ("EEOC") against her former employer, Defendant FT Travel Management, LLC, alleging race, color, and national origin discrimination. Plaintiff was represented by the law firm RothMelei in her EEOC proceeding.

On November 9, 2012, Plaintiff filed for Chapter 7 bankruptcy. Plaintiff again hired the law firm RothMelei to handle the bankruptcy. As part of Plaintiff's bankruptcy petition, in Schedule B - Personal Property, paragraph number 21, Plaintiff was required to list all "contingent and unliquidated claims of every nature, including tax refunds, counterclaims of the debtor, and rights to setoff claims." Plaintiff stated that she had no such claims and did not list her recently filed EEOC claim. Also, under the section entitled "Statement of Financial Affairs, " Plaintiff was required to list all suits and administrative proceedings that she is or was a party to within one year prior to filing her bankruptcy case. Plaintiff only listed a wage garnishment claim that was filed against her by Midland Funding LLC. Plaintiff failed to list her EEOC charge as an asset in this section. Plaintiff signed several declarations stating under penalty of perjury that the information in the bankruptcy petition and other bankruptcy filings was true and correct. On February 20, 2013, the Bankruptcy Court ordered a discharge of Plaintiff's debt, which totaled $227, 106.75.

On April 8, 2013, the EEOC dismissed Plaintiff's charge and issued a right to sue notice to Plaintiff. On June 27, 2013, Plaintiff submitted a complaint in federal court alleging the same claims of discrimination that were in her EEOC charge. She initially moved to appear in forma pauperis and have counsel appointed, but the Court denied those motions on July 10, 2013. Thereafter, RothMelei appeared on Plaintiff's behalf in this action, the filing fee was paid, and Plaintiff's form complaint, the same one that she submitted pro se, was filed. Plaintiff's counsel did not request leave to amend Plaintiff's original complaint.

II. Legal Standard

Whether a plaintiff has standing to bring a lawsuit is a jurisdictional requirement that may be challenged through a motion made pursuant to Federal Rule of Civil Procedure 12(b)(1). When deciding a motion to dismiss for lack of standing, the Court accepts as true all material allegations in the complaint and draws all reasonable inferences in the plaintiff's favor. Lee v. City of Chi., 330 F.3d 456, 468 (7th Cir. 2003). There are two types of 12(b)(1) challenges - factual and facial - and they have a "critical difference." Apex Digital Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 443 (7th Cir. 2009). When a defendant argues that "the plaintiffs' complaints, even if true, were purportedly insufficient to establish injury-in-fact, " the challenge is a facial one. Id. at 443-44. "Facial challenges require only that the court look to the complaint and see if the plaintiff has sufficiently alleged a basis of subject matter jurisdiction." Id. at 443 (citing Lawrence v. Dunbar, 919 F.2d 1525, 1529 (11th Cir. 1990)). Factual challenges, however, lie "where the complaint is formally sufficient but the contention is that there is in fact no subject matter jurisdiction.'" Id. (citing United Phosphorus, Ltd. v. Angus Chem. Co., 332 F.3d 942, 946 (7th Cir. 2003)). Courts may look beyond the complaint only when a defendant brings a factual attack against jurisdiction, such as a claim that a plaintiff lacks standing. Id. Here, Defendant brings a factual attack against jurisdiction, and thus the Court looks to the documents attached to Defendant's motion, which are all related to Plaintiff's bankruptcy filing and which are matters of public record. See also Geinosky v. City of Chicago, 675 F.3d 743, 745-46 n.1 (7th Cir. 2012) (in ruling on a motion to dismiss, courts can consider "information that is subject to proper judicial notice"); Henson v. CSC Credit Services, 29 F.3d 280, 284 (7th Cir. 1994) (holding that district court may take judicial notice of matters of public record, including public court documents, when considering a motion to dismiss).

To the extent that Defendant's judicial estoppel arguments fall more appropriately in the realm of Rule 12(b)(6), the standard is familiar: in reviewing a motion to dismiss under Rule 12(b)(6), the Court takes as true all factual allegations in a plaintiff's complaint and draws all reasonable inferences in her favor. Killingsworth v. HSBC Bank Nevada, 507 F.3d 614, 618 (7th Cir. 2007). To avoid dismissal, a plaintiff must plead sufficient facts to state a claim of relief that is plausible on its face. See Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009); Bell Atlantic v. Twombly, 550 U.S. 544, 555, (2007).

III. Analysis

Defendant contends that this lawsuit should be dismissed because Plaintiff's claims are the property of her Chapter 7 bankruptcy estate and thus she does not have standing to bring this lawsuit. Defendant also maintains that judicial estoppel forecloses the action. Plaintiff does not address any of the authority cited in Defendant's motion to dismiss.

A plaintiff must have standing in order for the Court to entertain her suit. See Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 443 (7th Cir. 2009) (citing Warth v. Seldin, 422 U.S. 490, 498 (1975)). When a debtor files a bankruptcy petition, generally all of his or her property becomes property of the estate. See Matter of Yonikus, 996 F.2d 866, 869 (7th Cir. 1993) (abrogated on other grounds by Law v. Siegel, 134 S.Ct. 1188, 1196 (U.S. Mar. 4, 2014)). The Bankruptcy Code defines property to include all of the debtor's legal and equitable interests. See 11 U.S.C. § 541; see also Yonikus, 996 F.2d at 869. This includes causes of action. See In re Polis, 217 F.3d 899, 901 (7th Cir. 2000) ("Although a cause of action is perhaps not personal property' in the usual sense, the definition in the Bankruptcy Code of property belonging to the debtor's estate as including (with irrelevant exceptions) "all legal or equitable interests of the debtor in property as of the commencement of the case, " 11 U.S.C. § 541(a)(1), has uniformly been interpreted to include causes of action * * *."). Therefore, once a party files a Chapter 7 petition, only the trustee for the bankruptcy estate has the capacity to sue or be sued. See Cable v. Ivy Tech State College, 200 F.3d 467, 472 (7th Cir. 1999) (citing In re New Era, Inc., 135 F.3d 1206, 1209 (7th Cir. 1998)).

The only way that a debtor can then assert a claim in her own name that arose prior to the filing of the petition is if the trustee abandons the debtor's claims. If this happens, title to the claim reverts to the debtor as if the debtor "had owned them continuously and the bankruptcy never happened." Matthews v. Potter, 316 Fed.Appx. 518, 521-22 (7th Cir. 2009) (citing COLLIER ON BANKRUPTCY, ¶ 554.02 (Alan N. Resnick & Henry J. Sommer eds., 16th ed.)); see also 11 U.S.C. § 554. The question then is whether abandonment cannot occur if the debtor fails to disclose the claim to the trustee.

On August 22, 2012, Plaintiff and her attorney filed a charge at the EEOC. Just a few months later, on November 9, 2012, Plaintiff and the same attorney filed a Chapter 7 petition in bankruptcy court. Plaintiff claims that the bankruptcy trustee orally waived his right to sue and allowed her to bring this complaint on her own. See Pl.'s Resp. at ¶¶ 2-4. Abandonment of ...

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