United States District Court, Eastern District of Pennsylvania
March 31, 1999
CHRISTOPHER M. FEIST, PLAINTIFF,
CONSOLIDATED FREIGHTWAYS CORPORATION T/A CF MOTOR FREIGHT, DEFENDANT.
The opinion of the court was delivered by: Robert F. Kelly, J.
This is an action for personal injuries alleged to have been sustained
by the Plaintiff. It was proceeding to trial in the ordinary course when
Defendant, Consolidated Freightways, discovered that Plaintiff brought
this action, in his own name, after having filed a petition in
bankruptcy. The Defendant has filed a Motion to Dismiss contending that
the Plaintiff is not the real party in interest. Plaintiff has filed a
Motion to Substitute the Real Party in Interest, The Trustee in
A. THE EFFECT OF PLAINTIFF'S BANKRUPTCY.
The filing of a bankruptcy petition creates an estate that generally
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). Any causes
of action that accrue to the debtor prior to the filing of the bankruptcy
petition are property interests included in the estate. Integrated
Solutions, Inc. v. Service Support Specialties, Inc., 124 F.3d 487, 491
(3d Cir. 1997); Cain v. Hyatt, 101 B.R. 440, 441-42 (E.D. Pa. 1989). A
cause of action need not be formally filed prior to the commencement of a
bankruptcy case to become property of the estate. Lawrence v. Jackson
Mack Sales, Inc., 837 F. Supp. 771, 779 (S.D. Miss. 1992), aff'd,
42 F.3d 642 (5th Cir. 1994). After a claim becomes part of the
bankruptcy estate, only the bankruptcy trustee, as representative of the
estate, has the authority to prosecute or settle the cause of action.
Chrysler Credit Corp. v. B.J.M., Jr., Inc., 834 F. Supp. 813, 839 (E.D.
Pa. 1993); Cain, 101 B.R. at 442.
There is no dispute in this case that Plaintiff's claim against
Defendant accrued prior to the filing of his bankruptcy petition. When
Plaintiff commenced his bankruptcy case, this claim became the property
of the bankruptcy estate. Therefore, any claim by Plaintiff against
Defendant arising out of the incident that took place on August 23,
1995, no longer belongs to Plaintiff. Rather, it is the property of the
In its Motion for Judgment on the Pleadings, Defendant first argued
that this suit should be dismissed because of Plaintiff's apparent lack
of standing. While there is much confusion surrounding the distinction
between the doctrine of standing and the principle of the real party in
interest, it is clear that this suit presents an issue involving the
Generally, standing involves a determination of "whether the plaintiff
can show an injury in fact traceable to the conduct of the defendant."
Firestone v. Galbreath, 976 F.2d 279, 283 (6th Cir. 1992) (citing Allen
v. Wright, 468 U.S. 737 (1984)). Because Plaintiff was the individual
who suffered the injury alleged in the Complaint, he meets the
requirements of standing. In contrast, the real party in interest
principle requires that "Every action shall be prosecuted in the name of
the real party in interest." Fed. R. Civ. P. 17(a). This principle is a
means to identify the person who possesses the right sought to be
enforced. Firestone, 976 F.2d at 283. Plaintiff is not the real party in
interest because, upon the filing of his bankruptcy petition, this claim
became the property of the bankruptcy estate and now can only be
maintained by the bankruptcy trustee. See Lawrence, 837 F. Supp. at
B. RULE 17(a).
In addition to requiring all actions to be prosecuted in the name of
the real party in interest, Rule 17(a) provides:
No action shall be dismissed on the ground that it is
not prosecuted in the name of the real party in interest
until a reasonable time has been allowed after objection
for ratification of commencement of the action by, or
joinder or substitution of, the real party in interest;
and such ratification, joinder, or substitution shall
have the same effect as if the action had been commenced
in the name of the real party in interest.
Fed. R. Civ. P. 17(a). While a literal interpretation of this portion of
Rule 17(a) would make it applicable to every case in which an
inappropriate plaintiff was named, the Advisory Committee's Notes make it
clear that this provision "is intended to prevent forfeiture when
determination of the proper party to sue is difficult or when an
understandable mistake has been made."*fn1 Fed. R. Civ. P. 17 Advisory
Committee Notes, 1966 Amendment; see also Nelson v. County of Allegheny,
60 F.3d 1010, 1015 n. 8 (3d Cir. 1995); United States ex rel. Wulff v.
CMA, Inc., 890 F.2d 1070, 1074 (9th Cir. 1989); Hobbs v. Police Jury of
Morehouse Parish, 49 F.R.D. 176, 180 (W.D. La. 1970). When determination
of the correct party to bring the action was not difficult and when no
excusable mistake was made, the last sentence of Rule 17(a) is
inapplicable and the action should be dismissed. 6A Charles Alan Wright
et al., Federal Practice and Procedure § 1555 (1990) ("Wright &
Miller"); see also Advanced Magnetics, Inc. v. Bayfront Partners, Inc.,
106 F.3d 11, 20 (2d Cir. 1997) (noting that the district court retains
discretion to dismiss an action where there was no reasonable basis for
naming an incorrect party); Whitcomb v. Ford Motor Co., 79 F.R.D. 244,
245 (M.D. Pa. 1978) (noting that Rule 17 contemplates dismissal of an
action not prosecuted by the real party in interest). Further,
this portion of Rule 17(a) "should be applied only to cases in which
substitution of the real party in interest is necessary to avoid
injustice." 6A Wright & Miller § 1555; Automated Info. Processing,
Inc. v. Genesys Solutions Group, Inc., 164 F.R.D. 1, 3 (E.D.N.Y. 1995).
Based upon this analysis, it is evident that Rule 17(a) should not be
applied blindly to permit substitution of the real party in interest in
every case. In order to substitute the trustee as the real party in
interest, Plaintiff must first establish that when he brought this action
in his own name, he did so as the result of an honest and understandable
mistake. The Advisory Committee Notes to Rule 17(a) provide examples of
situations in which substitution would not be permissible:
[This provision] does not mean, for example, that,
following an airplane crash in which all aboard were
killed, an action may be filed in the name of John Doe
(a fictitious person), as personal representative of
Richard Roe (another fictitious person), in the hope
that at a later time the attorney filing the action may
substitute the real name of the real personal
representative of a real victim, and have the benefit of
suspension of the limitation period. It does not even
mean, when an action is filed by the personal
representative of John Smith, of Buffalo, in the good
faith belief that he was aboard the flight, that upon
discovery that Smith is alive and well, having missed
the fatal flight, the representative of James Brown, of
San Francisco, an actual victim, can be substituted to
take advantage of the suspension of the limitation
Fed. R. Civ. P. 17 Advisory Committee Notes, 1966 Amendment. Therefore,
it is necessary for this Court to determine whether or not Plaintiff was
acting in good faith when he filed this action in his own name. If
Plaintiff did not make an honest and understandable mistake when he filed
this action in his own name, this Court will not allow substitution of
the real party in interest.
C. FACTUAL BACKGROUND.
On August 23, 1995, Plaintiff was at his place of employment, Jay
Telephone Vending, Inc. While assisting in the unloading of freight
delivered by Defendant, Plaintiff allegedly sustained severe injuries.
Two to three hours later, Plaintiff went home because he was in pain.
After spending four days in bed, he sought medical attention. Plaintiff
never returned to work, and he began receiving worker's compensation
several months later.
On July 21, 1997, Plaintiff filed a complaint against Defendant based
upon the injuries he sustained on August 23, 1995. Trial was set to
commence on July 6, 1998. During May of 1998, Defendant became aware
that Plaintiff had filed a petition in bankruptcy during 1997. On June
3, 1998, this Court granted Defendant leave to engage in limited
discovery on this new issue. This discovery revealed that on January 16,
1997, nearly one year and five months after his injury, Plaintiff filed a
Chapter 7 Petition in Bankruptcy. In his petition, Plaintiff listed 82
creditors holding unsecured non-priority claims in the amount of
$155,887.54. The petition further disclosed personal property in the
amount of $6,125.00. Plaintiff did not, as was required, list his claim
against Consolidated Freightways in his bankruptcy petition. Further,
when asked by the trustee at the meeting of creditors whether he had "any
claims against anyone for any reason whatsoever," Plaintiff replied
"nothing." (See Pl.'s Post Hr'g Br. Ex. 6 at p. 13.) On April 30,
1997, Plaintiff received a discharge of all of his debts, and his
bankruptcy case was closed on May 9, 1997.
Plaintiff immediately sought an attorney to pursue any possible claim
he might have against Defendant. In the weeks following the discharge of
his debts, Plaintiff contacted four attorneys with respect to this
claim. In the second or third week of May, 1997, Plaintiff contacted
attorneys who represented him just prior to trial ("trial counsel").
Trial counsel was retained on May 30, 1997.
At a deposition, Plaintiff testified that after his bankruptcy
discharge, but prior to retaining trial counsel, he met with the three
other attorneys to discuss possible claims against Defendant in this
action. He further testified that he never informed any of the three
attorneys that he had recently filed a bankruptcy petition.*fn2 (Dep.
of Christopher Feist, 6/12/98, at pp. 112-35.) When asked whether he had
informed any attorney from the trial counsel firm of his bankruptcy,
Plaintiff asserted the attorney-client privilege and refused to answer.
(Id. at pp. 126-27.) Similarly, at the deposition of trial counsel,
Plaintiff (through other counsel) again asserted the attorney-client
privilege when his trial counsel was asked if Plaintiff had ever informed
him of the bankruptcy petition.*fn3 (Dep. of trial counsel at pp.
Plaintiff gave various reasons at his depositions and at the
evidentiary hearing as to why he waited until nearly two years after the
date of his accident to see an attorney. When asked at his first
deposition why he decided to see an attorney in May of 1997, Plaintiff
responded that it was because he "got to a point of just utter
frustration and realizing I wasn't getting better and the doctors weren't
able to do anything for me and I just realized that my life could be like
this for as long as I'm alive." (Dep. of Christopher Feist, 3/18/98, at
pp. 143-44.) At his later deposition, Plaintiff testified that he did not
pursue a claim against Defendant sooner because "[t]he whole concept of
having a claim against Consolidated Freightways didn't even enter my mind
at that point." (Dep. of Christopher Feist, 6/12/98, at p. 93.) At the
hearing, Plaintiff testified "I had no idea I could sue anybody. I
mean, first of all, that wasn't my main focus, and secondly, I just
thought I was receiving workers' comp and that was my rights, that was
it." (N.T. 11/19/98 at pp. 25-26.)
In evaluating the evidence relevant to the issue of whether or not
Plaintiff filed this Complaint in good faith, the timing of particular
events plays a crucial role. Plaintiff incurred the majority of his debt
prior to 1994. While his Chapter 7 petition filed in 1997 lists claims in
excess of $155,000.00, more than $145,000.00 of that amount was incurred
in 1993 or earlier. It is remarkable that, given this substantial amount
of debt, Plaintiff waited until 1997 to file his bankruptcy petition.
When asked what led him to file the bankruptcy petition, Plaintiff
testified at his deposition: "Well, I had planned on maybe applying for
relief under the bankruptcy law for a couple of years before this. . . .
I kept putting it off because I thought maybe some how, some way, I'd get
things together and be able to take care of it." (Dep. of Christopher
Feist, 6/12/98, at pp. 10-11.) At the evidentiary hearing, Plaintiff's
If Mr. Feist wanted to get rid of his creditors from `91
to `93, and if it only takes four, five months to get
rid of them, he would have gone and filed the bankruptcy
in 1993 or 1994 or 1995, and there never would have been
a creditor problem later. Instead what he did was the
other thing. He tried to pay them.
(N.T. 11/19/98 at p. 112.) Thus, Plaintiff contends that despite the
fact that the vast majority of his debt was incurred prior to 1994, he
delayed filing bankruptcy until 1997 because he was attempting to repay
But Plaintiff's own testimony casts doubt upon this purported reason
for the delay. At his deposition, Plaintiff testified that he had
stopped making payments to
the vast majority of his creditors in 1992 or 1993. (Dep. of Christopher
Feist, 6/12/98, at p. 29.) Plaintiff shed further light upon his
intentions regarding his debts when he was asked if he had notified his
creditors of a change in his address:
Q: I guess what I want to know, though, Mr. Feist, is to
the extent the creditors were corresponding with you in
Vegas, at some point you left Vegas and you moved back
home to Philadelphia. Did you notify those creditors so
that they could continue to correspond with you in
A: Well, by that time I had already talked to my
creditors and told them that I can't pay the debts.
Q: So is the answer no, that you didn't notify them?
A: I don't recall if I did or not, because I never
actually changed anything beyond talking to them and
telling them I couldn't pay the debts. Mostly all of
them got in touch with me.
Q: I'm sure they did.
A: And I told them all the same thing. I can't pay the
Q: And this would be in 1992-'93?
A: And I told them to stop calling me and harassing me,
things of that nature. And by law, they had to stop
(Id. at pp. 38-39.) Based upon his own testimony, Plaintiff did not
notify his creditors that he had moved to Philadelphia.*fn4 Indeed, he
had informed his creditors that he was unable to repay them. It seems
rather unlikely, then, that Plaintiff intended to repay his creditors
when he had already informed them that he would not pay his debts and had
failed to notify them of his change of address. Further, the fact that
Plaintiff told his creditors to stop calling him because he knew that "by
law, they had to stop doing that" shows a certain amount of
sophistication on his part regarding management of his debts.
Thus, it is doubtful that Plaintiff delayed his bankruptcy petition
because he was attempting to repay his creditors. It is more likely that
Plaintiff never previously filed for bankruptcy because he had no assets
to protect. When he was injured on August 23, 1995, Plaintiff acquired
what he believed was a valuable asset — his claim against
Defendant. Despite any previous occasions on which Plaintiff considered
filing a bankruptcy petition, it was only after his acquisition of this
asset that he actually sought relief in bankruptcy court.
The aggressiveness with which he pursued this litigation immediately
after his bankruptcy case was closed also raises questions about
Plaintiff's intent. Plaintiff testified that within the three weeks
following the close of his bankruptcy case he spoke with four different
attorneys regarding a possible claim against Defendant. Within just a
few weeks he had retained counsel and filed a lawsuit. In contrast,
during the first one year and eight months following his injury, he did
not speak with a single attorney regarding potential claims against
Defendant. It was only after his substantial debts were discharged by the
bankruptcy court that Plaintiff actively pursued this claim.
The questions that are naturally raised by the swiftness with which
Plaintiff sought legal representation after his bankruptcy case was
closed are not fully answered by Plaintiff's testimony. When asked at
his first deposition what led him to seek an attorney, Plaintiff
A: Well, it was mostly the fact what that guy did that
day with the trucking company, the whole way he
orchestrated what we were going to do, how we were going
to do it, how much of a hurry he was in. . . .
Q: I understand what you're saying and your reasons for
pursuing the claim. I guess my question goes to the
timing of it. Why in May of `97 were you making that
A: Well, by May of `97 it had already been close to
well past a year, and my first reaction to this whole
thing which dominated what happened to me, which
dominated how I felt after it happened to me, was just
to hide in the corner and just isolate myself and just
try to handle it myself. When I got to a point of
just utter frustration and realizing I wasn't getting
better and the doctors weren't able to do anything for
me and I just realized that my life could be like this
for as long as I live. . . .
Q: At some point in time you came to the conclusion that
this trucker orchestrated the situation?
A: I knew that from the beginning. The thing was I was
hoping to get better and as time went on I got so
depressed and isolated myself to such an extent. I
didn't want to try to get involved in the courts or go
(Dep. of Christopher Feist, 3/18/98, at pp. 142-45.) At his second
deposition, Plaintiff stated that he did not list this claim on his
bankruptcy petition because he "had no knowledge of having any claim
against anybody other than receiving workers' comp." (Dep. of
Christopher Feist, 6/12/98, at p. 91.) Plaintiff went on to testify that
he did not believe he had any claim against Defendant until May of 1997,
following a conversation with his uncle. (Id. at pp. 93-98.) At the
evidentiary hearing, Plaintiff gave more details as to the events leading
up to his decision to seek an attorney after his worker's compensation
carrier scheduled an independent medical examination:
Once I found out about that [the medical examination], I
talked to my uncle when I had seen him one day or talked
to him on the phone one day and I said to him, said, you
know, what am I going to do about workers' comp? I
said, you know, I don't know what they are going to try
to do to me or what, and I'm really scared because I'm
not getting any better. I said and I have read about
this in like this thing I saw, this pamphlet, and I said
what do I do, what should I do. And he said it might be
a good idea to call an attorney and start asking some
questions about that and the other — and the other
thing. And I said to him what other thing, and he said
the trucking company, the third-party thing or something
like he said. And I said what are you talking about,
and he said maybe you have a third-party case or
something to that effect. And I said do you really think
I do? And I was very surprised, you know that he said
that and he said, it doesn't hurt to ask.
(N.T. 11/19/98 at p. 32.) Thus, Plaintiff maintained at the hearing that
actions taken by his worker's compensation carrier prompted a
conversation with his uncle that led him to interview attorneys.
While Plaintiff's testimony at the second deposition and his testimony
at the hearing do not directly contradict his testimony at the first
deposition, it is somewhat puzzling that the only reason he originally
gave for his delay in seeking an attorney was that he "didn't want to try
to get involved in the courts or go after anybody." Yet, after Defendant
discovered that Plaintiff had filed a bankruptcy petition, Plaintiff
testified at the second deposition and at the hearing that his delay was
also caused by the fact that he did not believe he had any claim against
Defendant until May of 1997. He further testified that a conversation
with his uncle prompted his search for an attorney, a fact that he did
state at his first deposition despite the fact that he was asked what led
him to seek an attorney.
Evaluating all of the evidence presented, it is clear that Plaintiff
has not sustained his burden of proving that when he filed this action in
his own name, he did so in good faith. Plaintiff's lack of interest in
filing a petition in bankruptcy for several years until after he had
acquired what he believed was a significant asset makes his stated
intentions appear dubious. His subsequent failure to list this claim as
an asset in his bankruptcy petition further adds to suspicions about his
motivation. Moreover, Plaintiff began an aggressive search for an
attorney immediately after his bankruptcy case was closed. The timing of
these actions by Plaintiff certainly gives the Court reason to doubt that
when he finally did bring this action in his own name, he did so as the
result of an honest mistake.
Plaintiff's explanations fail to eliminate these doubts. His testimony
as to the reason for his delay in filing bankruptcy is contradicted by
other testimony in the record. He offered additional reasons to explain
his delay in filing this case only after Defendant discovered his
bankruptcy. Further, while Plaintiff readily provided testimony that he
never told the three attorneys he previously interviewed in May of 1997
about his bankruptcy case, he did not answer that question as to his
present counsel. Thus, I find that Plaintiff has failed to carry his
burden to prove that the filing of this case in his own name was an
honest mistake. Plaintiff will not be permitted to substitute the
trustee as the real party in interest. To allow a substitution where a
plaintiff cannot establish that he was acting as the result of an honest
mistake would contravene the purpose of Rule 17(a).
The bankruptcy trustee contends (along with Plaintiff) that if
substitution is not permitted in this case, it is Plaintiff's creditors
who will suffer most, as they received nothing during his original
bankruptcy case and could receive nothing now. These concerns were
raised by Judge Stapleton in Oneida Motor Freight, Inc. v. United Jersey
Bank, 848 F.2d 414, 422 (3d Cir. 1988) (Stapleton, J., dissenting). The
Oneida case is similar in some ways to the case now before this Court.
In Oneida, a Chapter 11 debtor failed to disclose to the bankruptcy court
a potential claim against one of its creditors. After the court
confirmed the debtor's reorganization plan, the debtor brought an action
against the creditor. The court of appeals, in affirming dismissal of
the case, found that the debtor's failure to disclose its potential claim
during its bankruptcy case precluded a later independent action on the
claim by the debtor. Id. at 419. Further, the court held that the debtor
was judicially estopped from bringing its claim because its suit
indicated a position contrary to that taken by the debtor in its Chapter
11 case. Id. Despite the concerns raised by the dissent that it
produced a harsh result for the creditors, the court held that the debtor
was not permitted to bring its claim. Id. at 420. Thus, the interest of
Plaintiff's creditors in recovering some of the debts owed to them is not
sufficient to justify substitution of the bankruptcy trustee as the real
party in interest in this case.
Plaintiff has failed to sustain his burden of proof which required that
he demonstrate that when he filed this action in his own name it was the
result of an honest mistake. This Court will not come to the aid of a
plaintiff under circumstances such as this where plaintiff cannot prove
that his prior actions were done in good faith. Because the Plaintiff is
not the real party in interest, he is unable to state a claim upon which
relief can be granted. Therefore,
Defendant's Motion for Judgment on the Pleadings will be Granted.
I therefore enter the following Order.
AND NOW, this ___ day of March, 1999, upon consideration of Plaintiff's
Motion to Substitute the Trustee in Bankruptcy as the Real Party in
Interest, and all responses thereto, and Defendant's Motion for Judgment
on the Pleadings, and all responses thereto, it is hereby ORDERED that:
1. Plaintiff's Motion is DENIED;
2. Defendant's Motion is GRANTED;
3. all other outstanding Motions are DENIED as moot;
4. the Clerk of Court is directed to mark this case CLOSED.