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FEIST v. CONSOLIDATED FREIGHTWAYS CORP.

March 31, 1999

CHRISTOPHER M. FEIST, PLAINTIFF,
v.
CONSOLIDATED FREIGHTWAYS CORPORATION T/A CF MOTOR FREIGHT, DEFENDANT.



The opinion of the court was delivered by: Robert F. Kelly, J.

MEMORANDUM

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
Bankruptcy.
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
bankruptcy estate.
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
latter.
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
779.

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
  period.
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 ...

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