Haydu v. Tidewater Community College
Haydu v. Tidewater Community College
Opinion of the Court
MEMORANDUM ORDER
This matter is before the court on the Plaintiffs Motion to Stay Pending Action by the Bankruptcy Court or Trustee (“Motion to Stay”), ECF No. 7, and accompanying Memorandum in Support. ECF No. 8. Also before the court is the Defendants’ Motion for Summary Judgment and Opposition to Plaintiffs Motion to Stay (“Motion for Summary Judgment”), ECF No. 9, and accompanying Memorandum in Support. ECF No. 10. The Plaintiff filed a Memorandum in Opposition to Motion for Summary Judgment and Reply Memorandum in Support of Motion to Stay. ECF No. 11. The Defendants filed a Reply Brief in Support of Motion for Summary Judgment, ECF No. 12, and an Amended Reply Brief in Support of Motion for Summary Judgment. ECF No. 13. The Plaintiff then filed a Motion for Leave to File Supplemental Exhibits in Opposition to Motion for Summary Judgment and in Support of Motion to Stay (“Motion for Leave”), ECF No. 14, to which the Defendants did not respond. For the reasons set forth herein, the court addresses and GRANTS the Plaintiffs Motion to Stay and Motion for Leave, but HOLDS IN ABEYANCE the Defendants’ Motion for Summary Judgment.
I. BACKGROUND
The Plaintiff -is a native of Azerbaijan who fled her home country due to persecution during a period of political upheaval. Compl., ECF No. 1, ¶ l.
On January 23, 2015, after the Plaintiff had filed a Charge of Discrimination with the EEOC, but before she filed the Complaint in this court, the Plaintiff and her husband filed a Voluntary Chapter 7 Bankruptcy Petition in the United States Bankruptcy Court for the Eastern District of Virginia. Voluntary Petition, ECF No. 10-3.
On February 2, 2017, the Plaintiff filed her Motion to Stay. In the accompanying Memorandum in Support, ■ the- Plaintiff states that her “charge of discrimination and Title VII claims should have been, but apparently were not, disclosed in her bankruptcy proceedings.”
The Defendants’ Motion for Summary Judgment, filed February 16, 2017, opposes the Motion to Stay oh two grounds. First, the Defendants argue that the court lacks subject matter jurisdiction over this proceeding because' the Plaintiff’s claim belongs to the bankruptcy trustee, and the Plaintiff therefore lacks standing to bring this action.
II. APPLICABLE CASE LAW
The Plaintiff’s discrimination claims. were being considered by the EEOC when she filed her bankruptcy petition, and accordingly they became the exclusive property of the bankruptcy estate when she filed for bankruptcy. See Logan v. JKV Real Estate Servs. (In re Bogdan), 414 F.3d 507, 512 (4th Cir. 2005) ("More specifically, ‘property of the estate’ under § 541(a) has ‘uniformly been interpreted to include causes of action.’ ”) (quoting Polis v. Getaways, Inc. (In re Polis), 217 F.3d 899, 901 (7th Cir. 2000)). Because the Plaintiffs claims were the property of the bankruptcy estate, the trustee alone .had standing to bring them. Nat. Am. Ins. v. Ruppert Landscaping Co., Inc., 187 F.3d 439, 441 (4th Cir. 1999).
The Defendants urge the court to end its inquiry there. They argue that because the “[t]rustee alone has standing to bring any Title VII claims,” the court lacks subject matter jurisdiction, cannot rule on the Motion to Stay, and must grant summary judgment. Mem. Supp. Sum. Judg. at 8. The Defendants argue that, as “in Vanderheyden, there is nothing in this record to show that the bankruptcy trustee abandoned Haydu’s employment claims or that Haydu sought to exempt such'claims from the bankruptcy estate,” and therefore the Plaintiff “clearly lacks standing." Defs.’ Amended Reply at 2; see also. Mem. Supp. Sum. Judg. at 6-7, = .
The Vanderheyden court ultimately concluded that the plaintiff lacked standing to pursue her Title VII claims and could not show that the trustee had abandoned the claims. Vanderheyden v. Peninsula Airport Comm’m No. 4:12-cv-46, 2013 WL 30065, at *9 (E.D. Va. 2013) (Davis, J.). But it did so only after the bankruptcy trustee had an opportunity to intervene in the civil case. Id. at *10. The district court explicitly noted that the magistrate- judge had recommended that the bankruptcy trustee be given a “reasonable time in which to seek to intervene as the real party in interest, pursuant.to the liberal joinder rules of the federal courts.” Id. The magistrate judge’s Report and Recommendation expressly found that if a timely petition to intervene were submitted, it “should be granted to permit the trustee to pursue the claims on behalf of [the plaintifffs creditors.” Vanderheyden v. Peninsula Airport Comm’n, No. 4:12-cv-46, 2012 WL 6760107 at *8 (E.D. Va. Sept. 27, 2012). The magistrate judge recommended allowing approximately four weeks to cure the standing issue. Id. (allowing the trustee to intervene before “the time for objections expires”). Only after the bankruptcy court considered the Plaintiffs request and “denied [the plaintiffs] petition to reopen the bankruptcy action,” which foreclosed any possibility that a new trustee would ever be appointed in the plaintiffs bankruptcy ease, did the court grant summary judgment. Vanderheyden, 2013 WL 30065, at *10.
Accordingly, dismissal based upon a debtor’s lack of standing is appropriate when there is no possibility that the trustee will intervene. Id. Here, by contrast, the bankruptcy court has recently ordered the appointment of a trustee. Order Granting Motion to Reopen Case, In re Haydu, No. 15-70216-SCS, (Bankr. E.D. Va. Apr. 25, 2017), ECF No. 38. The Federal Rules require that the court “not dismiss an action for failure to prosecute in the name of the real party in interest until, after an
In a similar context, a district court initially dismissed a plaintiffs undisclosed discrimination claims when it found that the claims were assets of her bankruptcy estate that only the trustee had standing to assert. Ruffin v. Lockheed Martin Corp., No. WQD-13-2744, 2015 WL 127827, at *3 (D. Md. Jan. 7, 2015). The court did not immediately dismiss the action; it dismissed the action only after five months elapsed without any response from the trustee. Id. Moreover, upon the plaintiffs subsequent “motion for- reconsideration,” the court realized that a successor trustee had only recently been appointed when it had made its prior ruling, and granted the motion. Id. at *3-*4. Here, the trustee has not yet decided whether to intervene. A decision from this court that assumes that the trustee will not intervene would be premature.
Ruffin is not an outlier. In the same district, a court later faced a similar situation and declined to dismiss the plaintiffs action; it instead afforded the plaintiff “a reasonable time to seek to reopen the bankruptcy case so as to amend the petition, and to afford the trustee the opportunity to intervene in [the] action, ratify it, or abandon the claim.” Jones v. Safeway, Inc., No. ELH-12-03547, 2014 WL 6871586, at *6 (D. Md. Dec. 3, 2014). This approach, which affords the trustee the opportunity to intervene, is less drastic than dismissal and favors the interests of the debtor’s creditors. Id. The court granted the plaintiff thirty (30) days to cure the standing issue. Id.
With these legal principles in mind, the court considers the outstanding motions, namely the Plaintiffs Motion for Leave, the Plaintiffs Motion to Stay, and the Defendants’ Motion for Summary Judgment.
III. CONCLUSION
The Plaintiffs Motion for Leave seeks to supplement her Motion to Stay with the Motion to Reopen Case, ECF No. 14-1, and Notice of Motion to Reopen, ECF No. 14-2, that were filed in the bankruptcy court and submitted with her Motion for Leave. These exhibits support the Motion to Stay by demonstrating that the Plaintiff did in fact seek to reopen the bankruptcy case. Accordingly, the court GRANTS the Motion for Leave and DIRECTS that the record here be so supplemented.
Further, the court finds that the trustee should be afforded a reasonable opportunity to intervene in this action. However, if the standing issue is not timely cured, the court will rule upon the Motion for Summary Judgment. Additionally, the court need not determine, at this juncture, whether the Plaintiff is estopped from pursuing her discrimination claims. See Jones, 2014 WL 6871586, at *7 n.4 (declining to address estoppel until the standing issue was resolved). The court GRANTS the Plaintiffs. Motion to Stay and STAYS these proceedings for sixty (60) days from the date of entry of this Memorandum Order to allow the trustee to decide whether to intervene and thereby cure the Plaintiffs lack of standing. At this juncture, the Defendants’ Motion for Summary Judgment is HELD IN ABEYANCE, pending the trustee’s decision.
The Clerk is DIRECTED to forward a copy of this Memorandum Order to counsel for the parties; to the bankruptcy
IT IS SO ORDERED.
. The facts recited herein are taken as alleged in the Plaintiffs Complaint, which at this juncture the court accepts as true for the purposes of ruling herein.
. The Complaint was filed within ninety (90) days of the Plaintiff's receipt of the Notice of Right to Sue, as extended by agreement with the Defendants. Compl, ¶ 12.
. The. Plaintiff’s, counsel in the bankruptcy proceeding was Ronald J. Berg, who was associated with Berg & Associates, PC, in Norfolk, Virginia. See Declaration of , Sabina Haydu (“Haydu Declaration"), ECF Ño. 11-1, ¶ 6.
. The Plaintiff states that she. informed Berg of her Title VII claims and EEOC charge, and that he advised her that she did not need to disclose them in the bankruptcy proceeding. Haydu Deck ¶ 8.
. The Defendants assert this argument as part of their Motion for Summary Judgment under Rule 56, but a motion to dismiss for lack of subject matter jurisdiction is properly brought
Reference
- Full Case Name
- Sabina M. HAYDU v. TIDEWATER COMMUNITY COLLEGE, and The State Board of Community Colleges, a/k/a The Virginia Community College System
- Status
- Published