M. PAGE KELLEY, Magistrate Judge.
Plaintiff Solomon Nwachukwu brings this employment discrimination lawsuit against defendant Vinfen Corporation, alleging he was fired because of his race, color, and national origin. See #26 ¶¶ 5, 14, 16. During the pendency of this case, plaintiff has filed for bankruptcy twice, and did not initially disclose this lawsuit in either filing. As a result, defendant filed a motion to dismiss this case on the grounds of judicial estoppel and lack of standing. (#33.)
Plaintiff worked as a Nurse Coordinator for defendant from March 2010 to March 2011. (#26 ¶¶ 5, 14.) After his termination, plaintiff filed an MCAD complaint. Id. ¶ 4. Plaintiff filed his first complaint in this employment discrimination action pro se in Massachusetts state court on May 10, 2016, and defendant removed it to this court on September 6, 2016. (#1.) Now represented by counsel, plaintiff amended his complaint in this case on January 16, 2017. (#26.) Plaintiff alleges in Counts I-III of his amended complaint that the termination of his employment violated Title VII of the Civil Rights Act of 1964 because plaintiff was fired due to his race, color and national origin (#26 ¶ 16), there was a hostile work environment, id. ¶ 20, and plaintiff did not receive compensation and other related reimbursements for his work, id. ¶ 24.
Plaintiff submitted a petition for bankruptcy, pro se, on May 8, 2017, which was dismissed by the bankruptcy court. Order of Dismissal (#42), In Re Solomon C. Nwachukwu, No. 17-11700-FJB (Bankr. D. Mass June 21, 2017.).
Defendant moved to dismiss this case, based on arguments arising out of plaintiff's bankruptcy filings, on September 21, 2017. (##33, 34.) After receiving the motion to dismiss, plaintiff amended his bankruptcy schedule A/B and his statement of financial affairs with the bankruptcy court on October 20, 2017. See ##29, 31 In Re Solomon Nwachukwu, No. 17-12868-FJB. No objection by the trustee to plaintiff's having filed an amended Schedule A/B is reflected on the bankruptcy court docket. A meeting of creditors was held on October 24, 2017. Id. #61 at 1. On October 25, 2017, the bankruptcy trustee objected to confirmation of plaintiff's Chapter 13 bankruptcy plan, stating in pertinent part:
Id. #32 at 1. The trustee repeated the objection in her March 6, 2018 Objection to Confirmation of Debtor's Amended Chapter 13 Plan, stating again that plaintiff's proposed bankruptcy plan did not include a provision for "any non-exempt proceeds" from the "employment discrimination and termination claim" to "be paid to the unsecured creditors" and adding that "[t]he Liquidation Analysis fails to list the potential employment discrimination claim and fails to state that nonexempt proceeds will be turned over to the Trustee for payment to creditors." Id. #61 at 1, 2. The trustee moved to dismiss the case on the same date. Id. #62.
Defendant does not bring this motion to dismiss under any particular rule. See ##33, 34. The equitable doctrine of judicial estoppel is generally considered an affirmative defense. See Payless Wholesale Distributors, Inc. v. Alberto Culver (P.R.) Inc., 989 F.2d 570, 571 (1st Cir. 1993); see also Sutliffe v. Epping Sch. Dist., 627 F.Supp.2d 41, 44 (D.N.H. 2008), aff'd, 584 F.3d 314 (1st Cir. 2009) ("Although res judicata, collateral and judicial estoppel, and the statute of limitations are affirmative defenses, they may be adjudicated on a motion to dismiss under Rule 12(b)(6).") (footnote and citations omitted). Affirmative defenses may form the bases for motions to dismiss. Greene v. Rhode Island, 398 F.3d 45, 48-49 (1st Cir. 2005); see also Payless Wholesale, 989 F.2d at 571 ("The court should have recognized the defense of judicial estoppel and dismissed the complaint at the outset."). The 12(b)(6) standard for failure to state a claim upon which relief can be granted applies to motions to dismiss on the basis of affirmative defenses. Sutliffe, 627 F. Supp. 2d at 44:
may take judicial notice," including the records of prior judicial proceedings. (quoting In re Colonial Mtg. Bankers Corp, 324 F.3d 12, 16 (1st Cir. 2003)); see also Greene, 398 F.3d 45 at 48-49 (describing same standard). The court must, therefore, determine whether facts establishing judicial estoppel may be gleaned from the complaint and records of the bankruptcy court.
A motion to dismiss based on lack of standing may be evaluated under 12(b)(1) if it relates to constitutional Article III standing, or 12(b)(6) if it relates to prudential/statutory standing. See Katz v. Pershing, LLC, 806 F.Supp.2d 452, 456 (D. Mass. 2011), aff'd, 672 F.3d 64 (1st Cir. 2012):
However, courts are not uniform in drawing such distinctions. See, e.g., McInnis-Misenor v. Maine Med. Ctr., 319 F.3d 63, 67 (1st Cir. 2003) (evaluating constitutional and prudential standing under Rule 12(b)(6)); see also Puerto Rico Diary Farmers Ass'n v. Pagan, 35 F.Supp.3d 210, 215, n.12 (D. P.R. 2014) (evaluating lack of standing under Rule 12(b)(6) while citing constitutional and prudential requirements).
Here, defendant does not argue that plaintiff suffered no cognizable injury, but rather that "Plaintiff no longer has standing to proceed as the `cause of action' in this case belongs to the bankruptcy trustee in Petition #17-12868." (#34 at 9.) Therefore, the motion would most properly be considered under 12(b)(6). The issue is not critical, however, because "the same standard applies to both subsections" 12(b)(1) and 12(b)(6). Roman-Oliveras v. Puerto Rico Elec. Power Auth., 655 F.3d 43, 45 (1st Cir. 2011) (citation omitted). Under 12(b)(1) and 12(b)(6), "`the court must take all of plaintiff's allegations as true and must view them, along with all reasonable inferences therefrom, in the light most favorable to plaintiff.'" Gonzalez v. Ritz Carlton Hotel Co. of Puerto Rico, 241 F.Supp.2d 142, 144 (D.P.R. 2003) (quoting Freiburger v. Emery Air Charter, Inc., 795 F.Supp. 253, 257 (N.D. Ill., 1992)) (additional citation omitted).
"The equitable doctrine of judicial estoppel is ordinarily applied to `prevent[] a litigant from pressing a claim that is inconsistent with a position taken by that litigant either in a prior legal proceeding or in an earlier phase of the same legal proceeding.'" Guay v. Burack, 677 F.3d 10, 16 (1st Cir. 2012) (quoting Alternative Sys. Concepts v. Synopsis, 374 F.3d 23, 32-33 (1
The First Circuit has utilized a two-prong test to apply judicial estoppel:
Guay, 677 F.3d at 16.
In this case, plaintiff originally put forth a different position in his bankruptcy actions than he has put forth in this case by failing to reveal his employment discrimination claims in his bankruptcy actions. However, plaintiff has since amended his bankruptcy filings to describe the pending case. See ##29, 31 In Re Solomon Nwachukwu, No. 17-12868-FJB (Oct. 20, 2017).
Judicial estoppel requires that a party successfully asserted the inconsistent position in the earlier matter, which plaintiff here did not. "Judicial estoppel is not implicated unless the first forum accepted the legal or factual assertion alleged to be at odds with the position advanced in the current forum. . . ." Gens v. Resolution Trust Corp., 112 F.3d 569, 572 (1st Cir. 1997). If a debtor obtains relief, which could include discharging the bankruptcy, that is an indication the bankruptcy court has accepted the position the debtor took in their bankruptcy schedules. Guay, 677 F.3d at 18 (affirming dismissal of plaintiff's claim based on judicial estoppel where plaintiff did not amend bankruptcy schedule before discharge). Here, Plaintiff's second bankruptcy case is still pending, and now plaintiff has disclosed this civil action to the bankruptcy court. There has been no discharge, and therefore no "success" using the prior inconsistent position. Rather, the bankruptcy trustee accepted plaintiff's belated disclosure, as recognized in her objections to the Chapter 13 plans.
This case is like Vidal v. Doral Bank Corp., 363 F.Supp.2d 19, 21 (D. P.R. 2005). In Vidal, plaintiff initiated a lawsuit for age discrimination, and then filed for bankruptcy without revealing the discrimination lawsuit to the bankruptcy court. The defendant responded by filing a motion to dismiss on the grounds of judicial estoppel and lack of standing. Id. After receiving the motion to dismiss, plaintiff amended her bankruptcy schedule to include the lawsuit. Id. The court denied the defendant's motion to dismiss based on judicial estoppel, given that the plaintiff amended her bankruptcy schedule to list the lawsuit as an asset apparently before her bankruptcy case closed. Id. at 22 ("Accordingly the court will not dismiss the claim on judicial estoppel grounds given that Vidal [the plaintiff], in filing her amended schedule, is no longer "asserting a position in one legal proceeding which is contrary to a position it has already asserted in another.") (alteration in original) (quoting Patriot Cinemas, Inc. v. General Cinema Corp., 834 F.2d 208, 212 (1st Cir. 1987). Like the plaintiff in Vidal, plaintiff in this case no longer takes inconsistent positions, and has not had success using a prior inconsistent position. Therefore, judicial estoppel does not apply. Defendant's motion to dismiss on this basis is denied.
Defendant argues plaintiff lacks standing to continue this employment discrimination lawsuit, because it is an asset of the bankruptcy estate for only the bankruptcy trustee to pursue. (#34 at 9-10.) Viewing plaintiff's allegations and the public record in the light most favorable to plaintiff, it may be inferred that the bankruptcy trustee has conferred standing on plaintiff to pursue his claim by acknowledging the lawsuit and objecting to the fact that its potential proceeds have not been included in the proposed Chapter 13 plans. See ##32, 61 In Re Solomon Nwachukwu, No. 17-12868-FJB. According to plaintiff, at the 341 meeting with the bankruptcy trustee on October 24, 2017, plaintiff testified that his actions were not intentional as he did not believe his employment discrimination case was an asset, and the bankruptcy trustee stated she could not be the party to pursue the employment discrimination case. (#38-B ¶¶ 11, 12, 14).
"As a general rule, a debtor's claims that have accrued as of the date the bankruptcy case commences become property of the bankruptcy estate." Graupner v. Town of Brookfield, 450 F.Supp.2d 119, 121 (D. Mass. 2006) (citing 11 U.S.C. § 541(a)(1)) (additional citations omitted). If the debtor acquires additional interests or assets during the bankruptcy proceedings, those become part of the bankruptcy estate as well. 11 U.S.C.A. § 541(a)(7). "The debtor is responsible for disclosing all assets to the bankruptcy court, including all contingent claims." Graupner, 450 F. Supp. 2d at 124 (citing 11 U.S.C. § 521(a)(1)) (additional citations omitted). Plaintiff has amended his bankruptcy schedule A/B and his statement of financial affairs to include the pending lawsuit. See ##29, 31 In Re Solomon Nwachukwu, No. 17-12868-FJB. The employment discrimination lawsuit is considered an asset of the bankruptcy estate, as it would have been even if plaintiff had not amended his bankruptcy filings.
The bankruptcy trustee is considered the "real party in interest" with standing to pursue legal claims that are property of the bankruptcy estate. Vidal, 363 F. Supp. 2d at 22 ("Courts have held that a Trustee is the real party in interest with exclusive standing to assert claims which are property of the bankruptcy estate.") (citations omitted). The bankruptcy trustee may choose to abandon property of the bankruptcy estate expressly that is "burdensome" or "of inconsequential value and benefit." 11 U.S.C.A. § 554(a). An asset listed on the bankruptcy schedules, but "not otherwise administered at the time of the closing of a case is abandoned to the debtor. . . ." 11 U.S.C.A. § 554(c). Here, there has been no explicit or by-law abandonment, and therefore the bankruptcy trustee has standing to pursue the employment discrimination lawsuit.
Under Rule 17(a), the bankruptcy trustee could substitute herself for plaintiff as the real party in interest, or allow plaintiff to pursue the case himself through ratification. "[S]ome courts have allowed the real party in interest to `ratify' the commencement of the action in order `to validate an arrangement by which the real party in interest authorizes the continuation of an action brought by another and agrees to be bound by its result, thereby eliminating any risk of multiple liability.'" GE HFS Holdings, Inc. v. Nat'l Union Fire Ins. Co., 2008 WL 2246673, at *5 (D. Mass. May 29, 2008) (citing 6A Wright, Miller & Kane, Federal Practice and Procedure § 1555 at 418 (2d ed. 1990)) (additional citations omitted).
As stated above, the trustee may have implied, though various filings in the bankruptcy case, that she is allowing the plaintiff to pursue the case. Nonetheless, a definitive statement from the bankruptcy trustee is required before the court can determine whether or not dismissal is proper. This is similar to Graupner, where Graupner did not list a pending civil claim when he and his wife filed for bankruptcy. 450 F. Supp. 2d at 121. The bankruptcy case was subsequently discharged due to a lack of assets. Id. Defendants moved for summary judgment in Graupner's civil case, asserting, in part, that he lacked standing because he failed to disclose the asset to the bankruptcy court. Id. Graupner asked the bankruptcy court to reopen the bankruptcy case; however, once the reopening was granted, Graupner did not accurately describe his civil claims in his amended Schedule B. Id. at 123-26. As a result the district court determined that Graupner did not have standing to pursue the civil claims. Id. at 126. Yet, the court ruled dismissal of Graupner's claim was not the correct remedy. The court, citing Vidal and Rule 17(a), stayed the litigation for 60 days, "to allow for a reasonable time for the bankruptcy court to consider whether to reopen the case and, if so, whether to appoint a trustee, and for any such trustee to decide whether to pursue the claim as the real party in interest on behalf of the estate." Id. at 129. In the meantime, the motion for summary judgment was denied without prejudice.
Similarly, in Vidal, the court ruled that the bankruptcy trustee was the real party in interest with exclusive standing to pursue the civil case at issue. 363 F. Supp. 2d at 22. Nonetheless, under Rule 17(a), the court granted the bankruptcy trustee 45 days to determine whether to pursue the claim. Id. The motion to dismiss was denied, but the court stated that it would dismiss the case for lack of standing if the bankruptcy trustee did not make an appearance. Id. at 23.
This court will give the bankruptcy trustee 45 days to make a definitive statement whether she intends to 1) abandon Mr. Nwachukwu's claim in this litigation, thereby excluding it from the bankruptcy estate, 2) pursue the claim as the real party in interest, or 3) explicitly ratify plaintiff's ability to pursue the claim himself.
Defendant's motion to dismiss on the basis of judicial estoppel is DENIED. Although plaintiff did not initially reveal the pending employment discrimination lawsuit to the bankruptcy court, it has now been revealed to and accepted by the bankruptcy court. Moreover, plaintiff has not had his debts discharged in bankruptcy; he has not had success based on any inconsistent position.
Standing is less certain. The bankruptcy trustee retains exclusive standing to pursue the employment discrimination case. The court requires a "clear and unequivocal" indication as to the trustee's intentions regarding the employment discrimination lawsuit. The defendant's motion to dismiss on the basis of standing is DENIED without prejudice. The bankruptcy trustee will be given 45 days to respond, otherwise the case will be dismissed due to lack of standing. A copy of this opinion will be provided to the bankruptcy court.
Id. at 16-17 (internal citations and citation omitted). In this case, plaintiff would not receive an unfair advantage if the case is not dismissed on the basis of judicial estoppel because of his (belated) disclosure in bankruptcy and this court's decision regarding standing. Allowing the case to proceed imposes no unfair detriment to the defendant; rather, dismissing the case arguably provides defendant with an unfair advantage.
