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Smith-Taylorr v. Bridgecrest Credit Co.LLC

United States District Court, S.D. Illinois

June 22, 2018




         This matter is before the Court on a Motion to Dismiss for Lack of Jurisdiction filed by Defendant Bridgecrest Credit Company, LLC (“Bridgecrest”) (Doc. 9). On February 5, 2018, Plaintiff Taquela Bernice Smith-Taylor (“Smith-Taylor”) filed a response in opposition to the motion (Doc. 14), and seven days later, Bridgecrest filed a reply brief (Doc. 15). For the reasons set forth below, the motion is denied.


         Smith-Taylor filed this lawsuit on October 31, 2017, alleging that Bridgecrest repeatedly used an automatic telephone dialing system, without Smith-Taylor's consent, in violation of the Telephone Consumer Protection Act (“TCPA”) (Doc. 1). Two days later, on November 2, 2017, Smith-Taylor filed for Chapter 7 bankruptcy in the United States Bankruptcy Court for the Eastern District of Missouri (Doc. 9-1). Smith-Taylor failed to disclose this lawsuit on her bankruptcy petition, and answered “No” to the question: “Within 1 year before you filed for bankruptcy, were you a party in any lawsuit, court action, or administrative proceeding?” (Doc. 9-2, p. 36).

         On November 27, 2017, Bridgecrest filed a Motion to Dismiss (Doc. 9) raising this issue and arguing that Smith-Taylor lacks standing to assert her claims in this lawsuit by virtue of the rules of bankruptcy. Specifically, Section 541 of the Bankruptcy Code creates a bankruptcy estate comprised of “all legal or equitable interests of the debtor in property as of the commencement of the case.” 11 U.S.C. § 541(a)(1). This includes a cause of action that accrued prior to filing the petition, such as this lawsuit. See In re Polis, 217 F.3d 899, 901 (7th Cir. 2000) (stating that 11 U.S.C. § 541(a)(1) “has uniformly been interpreted to include causes of action”); see also Gulley v. Winnebago County Forest Preserve District, No. 91 C 20231, 1992 WL 185938, at *2 (N.D. Ill. 1992) (“The point in time to look at is when Plaintiff's cause of action accrued.”). The Bankruptcy Code further provides that the trustee in a Chapter 7 case “has sole authority to dispose of property, including managing litigation related to the estate.” Cable v. Ivy Tech State College, 200 F.3d 467, 472 (7th Cir. 1999) overruled on other grounds by Hill v. Tangherlini, 724 F.3d 965, 967 n. 1 (7th Cir. 2013). As this TCPA lawsuit was filed prior to the initiation of the bankruptcy proceeding, it would belong to the bankruptcy estate, and the real party in interest would be the trustee of the bankruptcy estate. See Cable, 200 F.3d at 472 (“In liquidation proceedings, only the trustee has standing to prosecute or defend a claim belonging to the estate.”).

         On December 4, 2017, presumably in response to Bridgecrest's motion, Smith-Taylor amended her bankruptcy schedules to include this lawsuit (Doc. 14, p. 2). On January 2, 2018, Smith-Taylor filed a Motion for Extension of Time to respond to Bridgecrest's Motion to Dismiss (Doc. 10). In support of the motion, Smith-Taylor explained that Tracy A. Brown, her bankruptcy Trustee, “should be filing a No. Asset/No Distribution Report and/or Notice of Abandonment in short order.” (Doc. 10, ¶11). In light of that representation, the Court granted the motion and permitted an extension of time for Smith-Taylor to respond to the Motion to Dismiss (See Doc. 13).

         On February 5, 2018, Smith-Taylor filed a Response to the Motion to Dismiss (Doc. 14). It does not appear that the Trustee ever filed a No. Asset/No Distribution Report and/or Notice of Abandonment. Instead, Smith-Taylor's Response indicates that, on February 2, 2018, the bankruptcy trustee filed in the bankruptcy court a Motion for Approval of Employment of Attorneys (Doc. 14-1, ¶5), indicating that the bankruptcy trustee intends to prosecute this matter against Bridgecrest. Nevertheless, neither Smith-Taylor nor the bankruptcy trustee has acted on this matter in this Court. Additionally, Smith-Taylor has not requested supplemental briefing in order to apprise the Court of the status of the bankruptcy matter or any change of course with respect to the bankruptcy Trustee's intentions.

         Legal Standard

         “When ruling on a motion to dismiss for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1), the district court must accept as true all well-pleaded factual allegations and draw reasonable inferences in favor of the plaintiff.” Ezekiel v. Michel, 66 F.3d 894, 897 (7th Cir. 1995). District courts may, however, “properly look beyond the jurisdictional allegations of the complaint and view whatever evidence has been submitted on the issue to determine whether in fact subject matter jurisdiction exists.” Evers v. Astrue, 536 F.3d 651, 656-657 (7th Cir. 2008). “In all cases, the party asserting federal jurisdiction has the burden of proof to show that jurisdiction is proper.” Travelers Prop. Cas. v. Good, 689 F.3d 714, 722 (7th Cir. 2012) (citing McNutt v. Gen. Motors Acceptance Corp., 289 U.S. 178, 189 (1936)).

         When a debtor files for Chapter 7 bankruptcy protection, the Bankruptcy Code creates a bankruptcy estate that includes “all legal or equitable interests of the debtor in property as of the commencement of the case.” 11 U.S.C. §541(a)(1). “[T]he estate in bankruptcy, not the debtor, owns all pre-bankruptcy claims.” Cannon-Stokes v. Potter, 453 F.3d 446, 448 (7th Cir. 2006).

         Rule 17 of the Federal Rules of Civil Procedure requires that “[a]n action must be prosecuted in the name of the real party in interest. Fed.R.Civ.P. 17(a)(1). Rule 17 further instructs that “[t]he 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) (emphasis added). “What constitutes a “reasonable time” for purposes of Rule 17 is a matter of judicial discretion that depends on the facts of each case.” Tate v. Snap-On Tools Corp., No. 90 C 4436, 1997 WL 106275, at *8 (N.D. Ill. 1997).


         Bridgecrest argues in its Motion to Dismiss that Smith-Taylor's case cannot proceed because she lacks standing; in other words, the claim properly belongs to the bankruptcy Trustee (Doc. 9). Smith-Taylor agrees with Bridgecrest that the bankruptcy Trustee is the proper plaintiff, and therefore Smith-Taylor lacks standing (Doc. 14). Nonetheless, Smith-Taylor argues that the Court should allow the Trustee to join, ratify, or be substituted into this action (Doc. 14, p. 3). Bridgecrest argues: (1) that Smith-Taylor should not be allowed to rectify the error because it does not constitute an excusable mistake, and (2) that even if the Trustee intends to prosecute the claims, this Court should deny the Trustee an opportunity to because the Trustee has not acted towards this goal since she was notified of the action (Doc. 9, p. 7; Doc. 15, p. 2).

         The Court first addresses Bridgecrest's argument that failing to reveal the existence of this lawsuit should not be considered an honest and excusable mistake. The Advisory Committee's notes on Rule 17(a) state that decisions are intended to be “lenient when an honest mistake has been made” and that “[i]t is intended to prevent forfeiture when determination of the proper party to sue is difficult or when an understandable mistake has been made.” Fed.R.Civ.P. 17(a). Courts have interpreted this language to excuse only honest mistakes or when ...

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