Pruitt v. Hancock Medical Center
Pruitt v. Hancock Medical Center
Opinion
¶ 1. The complaint of Charles and Catherine Elizabeth Pruitt ("Pruitts") alleges that on April 9, 2002, Charles suffered third-degree burns during knee surgery at Hancock Medical Center ("HMC"). However, their Notice of Claim letter alleges the injury occurred on April 11, 2002, and the nature of the injury was discovered the following day, April 12, 2002.
¶ 2. On August 21, 2002, the Pruitts filed a voluntary petition for Chapter 7 bankruptcy, and the bankruptcy court entered *Page 798
an order giving notice of bankruptcy and instituting an automatic stay against "certain acts and proceedings against the debtor and his property . . . as provided in
¶ 3. On December 19, 2002, the bankruptcy court granted the Pruitts a discharge of debt under
¶ 4. Thirty-three (33) days later, the Pruitts sent a "Notice of Claim" letter to HMC. The notice was authored by the same attorney who represented the Pruitts in the bankruptcy proceedings.1 Following denial of their claim, the Pruitts filed a complaint alleging that "[HMC's] breaches of the standard of care were a proximate cause or proximate contributing cause to Charles Pruitt's injuries and damages[,]" along with a separate allegation of loss of consortium. Subsequently, HMC was granted a stay of proceedings due to the insolvency of its insurer.
¶ 5. Ultimately, HMC filed its answer which included an affirmative defense that "the Plaintiff'S herein are the improper parties and have no standing to bring this action[,]" and filed a motion for summary judgment. HMC specifically alleged that:
3. [The Pruitts] declared, under penalty of perjury, in their bankruptcy petition, that they had no contingent or unliquidated claim of any nature.
4. Accordingly, [the Pruitts] have judicially admitted that they have suffered no damages in this matter.
5. Because [the Pruitts] cannot prove damages, an essential element of their claim . . . HMC is entitled to judgment as a matter of law.
6. [The Pruitts] lack standing to sue because this action became the property of the bankruptcy estate at the time of the bankruptcy filing and can only be prosecuted by the trustee of the bankruptcy estate who is the real party in interest.
The Pruitts filed a "Motion for Additional Time Pursuant to Rule 56(f) to Respond to Motion for Summary Judgment." They argued that:
5. At this time, the Pruitts' attorney for the bankruptcy proceeding . . . Olen Anderson, is in the process of filing the necessary paperwork to reopen the Chapter 7 bankruptcy proceeding. The Trustee, Tom Anderson, is aware [that] this proceeding will be reopened. Once this has occurred, the necessary pleadings will be filed in both Bankruptcy Court and in this Court, including the Amended Schedule listing this case as a contingent or unliquidated claim. . . .
8. For this reason, [the Pruitts] respectfully request that they be granted additional time pursuant to Rule 56(f) to permit the Bankruptcy Court to rule on the Plaintiff'S' amendments to their schedule of unliquidated or contingent *Page 799 claims. At that time, the Plaintiff'S will be in a position to respond to the Defendant's Motion for Summary Judgment.
In an affidavit attached to the Pruitts' motion, counsel stated "[i]t is anticipated that the Bankruptcy Court will allow the Pruitts to amend their schedule of unliquidated or contingent claims. At that time, the Defendant's argument will be moot and there will be no basis for summary judgment." In response to the Pruitts' motion, HMC reiterated that "[t]he instant case, having accrued on April 9, 2002, could have been raised by the Plaintiff'S as of the August 21, 2002 commencement of their bankruptcy proceeding and, therefore, constitutes property of the bankruptcy estate." On March 1, 2004, HMC filed an "Amended Motion to Dismiss Pursuant to Rule 12(b)(1) and Motion for Summary Judgment." HMC syllogistically contended that:
5. If a plaintiff lacks standing, a court is without subject matter jurisdiction.
6. If a court lacks subject matter jurisdiction, it must dismiss the action.
7. While [the Pruitts] lack standing to assert this claim and this Court therefore lacks subject matter jurisdiction, should this Court deny HMC's Motion to Dismiss pursuant to Rule 12(b)(1), HMC is entitled to summary judgment on the grounds that [the Pruitts] cannot prove damages, an essential element of their claim.
¶ 6. On March 11, 2004, the bankruptcy court entered an order reopening the Pruitts' bankruptcy estate and allowing amendment to "Schedule B — Personal Property." Additionally, the bankruptcy court ordered "that the Office of Trustee shall appoint a Trustee to administer the bankruptcy estate accordingly." On March 16, 2004, the Pruitts filed their amended "Schedule B — Personal Property" listing"Charles Pruitt and Catherine Elizabeth Pruitt v. HancockMedical Center and John Doe Defendants, A-D; Hancock County Circuit Court, Civil Action No. 03-0289. . . ." Furthermore, the affidavit of the Pruitts' former counsel stated "[a]t this time, a Trustee has not been appointed. Once a Trustee is appointed, I will ask him to seek to Amend the Complaint to name himself as the Plaintiff."2
¶ 7. On March 18, 2004, the Pruitts filed their response to the motion for summary judgment. They argued:
2. At the time [the Pruitts] filed this Complaint, their bankruptcy had been discharged. [The Pruitts] were therefore the proper parties to file this claim to ensure that all statute of limitations were met . . . .
5. `Schedule B — Personal Property' as it exists in the reopened Bankruptcy case, clearly lists [the Pruitts] claim against [HMC] as a contingent and unliquidated claim.
6. For this reason, [HMC's] Motion for Summary Judgment is moot and without merit.
In their response to the motion to dismiss, the Pruitts contended:
[HMC's] objection to [the Pruitts'] standing, or lack of being `real party in interest' was first filed on February 27, 2004. At this time, a Trustee has not *Page 800 even been appointed in Bankruptcy Court. This Court should, therefore, deny the Defendant's Motion to Dismiss to allow time for a Trustee to actually be appointed, and time for the Trustee to petition this Court. See Wieburg v. GTE Southwest Inc., 272 F.2d[3d] 302 (5th Cir. 2001). . . .
In reply, HMC argued that "Rule 17(a) does not contemplate allowing a party that completely lacks standing to stand in the place of a proper party until the proper party can be found. Such an interpretation of Rule 17(a) would render the doctrine of standing meaningless. . . . [the Pruitts] never reacquired standing to pursue this action."
¶ 8. At the March 19, 2004 motion hearing, both parties agreed that "if this motion were granted to dismiss . . . the bankruptcy trustee on an amended petition of this contingent asset would be . . . time barred, from prosecuting this claim." Four months later, the trustee had not made an appearance, and on July 19, 2004, the circuit court granted HMC's motion to dismiss and dismissed the action without prejudice.
¶ 9. The circuit court determined that "[t]his cause of action was a contingent claim at the time of the bankruptcy filing and therefore property of the bankruptcy estate. . . . This is true even if the action has not been formally filed." As such, "[w]hen a cause of action is property of the bankruptcy estate, the bankruptcy trustee has `exclusive standing' to assert the claim. In re Educators Group HealthTrust, 25 F.3d [. . . at] 1284 [. . .]. [The Pruitts] did not have standing to assert this claim." The Pruitts then filed their notice of appeal.
(1) Whether the Pruitts had standing to assert a medical malpractice claim in state court.
(2) Whether the trial court erred in dismissing the case before a Bankruptcy Trustee had been appointed and could petition the Court for appropriate relief.
However, the trial court never ruled on Issue (2), and neither shall this Court, as the ruling on Issue (1) moots any further discussion.
I. Whether the Pruitts had standing to assert a medical malpractice claim in state court.
¶ 12. The Pruitts insist that "at the time the Complaint was filed . . . there was no bankruptcy estate and there was no trustee." As such, they contend that they had standing to assert their claim because "[a] t the time of theinstitution of action . . . [the Pruitts] were theonly parties who had any existent actionable interest in this proceeding."
¶ 13. In response, HMC argues that "[t]he instant case, having accrued on April 9, 2002, could have been raised by the Plaintiff'S as of the August 21, 2002 commencement of their bankruptcy proceedings and, therefore, constitutes property of the bankruptcy estate.
¶ 14. As this case requires the analysis of bankruptcy law and federal statutes, we analyze this issue under federal law. A lack of standing "robs the court of jurisdiction to hear the case." McNair v. United States Postal Service,
Lawrence,[c]auses of action need not be formally filed prior to the commencement of a bankruptcy estate to become property of the bankruptcy estate. . . . Accordingly, a cause of action belonging to a debtor that existed at the time of the filing of a bankruptcy petition becomes property of the bankruptcy estate and may only be prosecuted by the trustee of the bankruptcy estate, the real party in interest under Rule
17 (a) of the Federal Rules of Civil Procedure.
¶ 15. This Court concludes that the Pruitts' cause of action accrued prior to the filing of the Pruitts' voluntary petition for Chapter 7 bankruptcy on August 21, 2002. As this Court finds that the cause of action existed at the time of filing the bankruptcy petition, the cause of action became property of the bankruptcy estate under
¶ 16. "If a cause of action belongs to the [bankruptcy] estate, then the trustee has exclusive standing to assert the claim." Educators Group,
¶ 17. Such "exclusive standing" exists even when the cause of action was not disclosed on the schedules of assets filed under Chapter 7. In Parker, the Eleventh Circuit stated:
[o]nce 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 § 554 of the Bankruptcy Code. See
11 U.S.C. § 554 (a)-(c). 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.11 U.S.C. § 554 (d). Failure to list an interest on a bankruptcy schedule leaves that interest in the bankruptcy estate.
[i]t cannot be that a bankrupt, by omitting to schedule and withholding from his trustee all knowledge of certain property, can, after his estate in bankruptcy has been finally closed up, immediately thereafter assert title to the property on the ground that the trustee had never taken any action in respect to it. If the claim was of value . . . it was something to which the creditors were entitled, and this bankrupt could not, by withholding knowledge of its existence, obtain a release from his debts and still assert title to the property.Id. at 119,
¶ 18. This Court finds that the cause of action at issue, even though originally un-scheduled, remains the property of the bankruptcy estate. See Parker,
¶ 20. AFFIRMED.
SMITH, C.J., WALLER AND COBB, P.JJ., EASLEY, CARLSON AND DICKINSON, JJ., CONCUR. DIAZ, J., CONCURS IN RESULT ONLY. GRAVES, J., DISSENTS WITHOUT SEPARATE WRITTEN OPINION.
Reference
- Full Case Name
- Charles Pruitt and Catherine Elizabeth Pruitt v. Hancock Medical Center.
- Cited By
- 20 cases
- Status
- Published