Contributing author: David M. Tanabe, Winthrop & Weinstine, P.A.
In Hughes v. Wisconsin Central Limited, 2023 WL 1477835 (D. Minn. Feb. 2, 2023), the district court held that the chapter 13 debtor lacked standing to pursue personal injury claims solely for his own benefit.
In May 2012, the debtor filed a petition for chapter 13 relief. The debtor/plaintiff allegedly was injured on the job in railroad accidents in 2016 and 2017. He failed to disclose the personal injury claims before his chapter 13 bankruptcy discharge was granted in February 2018.
In October 2019, the plaintiff filed the pending lawsuit for personal injury claims. In August 2021, the bankruptcy court granted the plaintiff’s motion to reopen the bankruptcy case, and the plaintiff amended his schedules to disclose the personal injury claims. In October 2021, the district court denied defendants’ motions for summary judgment without prejudice and stayed the lawsuit pending a decision by the bankruptcy court on a motion by the plaintiff to approve a stipulation with the trustee to reopen the bankruptcy case and allow the plaintiff to schedule the lawsuit as a contingent unliquidated claim. To read the Bankruptcy Bulletin’s summary of the district court’s prior opinion, click here. The bankruptcy court denied the motion, and defendants refiled their present motions for summary judgment.
For the present motions, the plaintiff argued he had standing to bring the claims because the bankruptcy court held the lawsuit vested in the debtors upon the bankruptcy discharge. In holding a lack of standing, the district court noted that the bankruptcy court ruled it was too late to modify the chapter 13 plan; and therefore, it was now clear that the plaintiff was unable to pursue his claims on behalf of the estate and therefore lacked standing.
Further, the district court applied the doctrine of judicial estoppel because the bankruptcy court for the chapter 13 plan and discharge adopted the position that the personal injury claims did not exist, and it would be an unfair advantage for proceeds from the damages for the lawsuit to go directly to the plaintiff and not the creditors.
The district court granted defendants’ motions for summary judgment and dismissed the lawsuit with prejudice.
To read the full opinion, click here.
C.J. Harayda, Stinson LLP
David M. Tanabe, Winthrop & Weinstine, P.A.