Bone v. Taco Bell of Am., LLC

956 F.Supp.2d 872

Patricia BONE, Plaintiff,

v.TACO BELL OF AMERICA, LLC, Defendant.

No. 2:12–cv–02984–JPM–dkv.

United States District Court,

W.D. Tennessee,

Western Division.

July 24, 2013.

Stanley H. Less, Law Office of Stanley H. Less, Memphis, TN, for Plaintiff.

R. Scott Vincent, Frank L. Day, Leitner Williams Dooley & Napolitan, Memphis, TN, for Defendant.

ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

JON P. McCALLA, Chief Judge.

Before the Court is Defendant's Motion for Summary Judgment on Basis of Judicial Estoppel, which was filed on May 9, 2013. ( See ECF No. 12.) Plaintiff responded in opposition on June 24, 2013. ( See ECF No. 22.) Defendant filed a Reply on July 8, 2013. ( See ECF No. 25.)

For the reasons stated below, Defendant's Motion for Summary Judgment on Basis of Judicial Estoppel (ECF No. 12) is GRANTED. The above-captioned case is hereby DISMISSED.

I. BACKGROUND

In the instant action, Plaintiff Patricia Bone (“Plaintiff” or “Bone”) claims that the negligence of Defendant Taco Bell of America, LLC (“Defendant” or “Taco Bell”), caused personal injuries that entitle her to compensation in the amount of $500,000. ( See ECF No. 1–2 at PageID 10–12.) ¹ Unless otherwise noted, the following relevant facts are undisputed for the purposes of the instant Motion for Summary Judgment.²

“On July 18, 2007, [ ] Bone allegedly slipped and fell on a floor mat in a Taco Bell restaurant located ... [in] Memphis, Tennessee.” (ECF No. 14 ¶ 1.)

“On December 7, 2007, [Bone] and her husband filed a Voluntary Petition under Chapter 7 [of the Bankruptcy Code] in the United States Bankruptcy Court for the Northern District of Mississippi.” ( Id. ¶ 2 (footnote omitted).) “On February 1, 2008, [Bone] filed a Statement of Financial Affairs in the [bankruptcy case]” ( id. ¶ 3), “which is dated January 4, 2008, [and] executed by Plaintiff under oath” ( id. ¶ 4). “On [the form entitled] ‘Schedule B—Personal Property,’ [Bone] identified her claim against Defendant as a joint, contingent, unliquidated claim.” ( Id. ¶ 8; see also ECF No. 14–3 at PageID 87.) “[Bone] stated under oath in Schedule B that her claim against Defendant was worth zero dollars.” (ECF No. 14 ¶ 9; see also ECF No. 14–3 at PageID 87.) On the form entitled “Schedule C—Property Claimed As Exempt,” Bone asserted that her claim was exempt from her bankruptcy estate pursuant to title 85, section 85–3–17 of the Mississippi Code (“ § 85–3–17”).³ (ECF No. 14–3 at PageID 89.) “On [the form entitled] ‘Schedule F—Creditors Holding Unsecured Nonpriority Claims,’ [Bone] identified the medical providers who provided her treatment for the injuries that she allegedly sustained as a result of her slip-and-fall ... and she itemized the value of each of these medical bills....” (ECF No. 14 ¶ 10.)

“[Bone] never amended the Statement of Financial Affairs or the schedules she filed ... to advise the bankruptcy court that she believed her claim against Defendant had value....” ( Id. ¶ 11.)

“On May 27, 2008, the [bankruptcy court] issued a Discharge of Debtor for the benefit of [Bone], but the bankruptcy case remained pending thereafter while the Court addressed additional issues between [Bone] and her creditors.” ⁴ ( Id. ¶ 12.) “On July 18, 2008, [Bone] initiated a lawsuit in the General Sessions Court of Shelby County [sic] Tennessee [ (the “General Sessions Court”) ] ... for her alleged slip and fall at the Taco Bell restaurant ... seeking damages up to the jurisdictional limits of up to $25,000.” ( Id. ¶ 14.) “[Bone initiated that case] exactly one year after the alleged slip and fall incident had occurred back on July 18, 2007.” ( Id. ¶ 15.) “[Bone] did not file any amended documents with the [bankruptcy court] to disclose the fact that she had initiated a lawsuit and was a party to a lawsuit.” ( Id. ¶ 16.)

“On September 23, 2008, the [bankruptcy court] issued its Final Decree/Order, closing the [bankruptcy case].” ( Id. ¶ 17.) “On September 25, 2008, [Bone] submitted a settlement demand packet to [Taco Bell] that included documentation to support her settlement demand of $500,000.” ( Id. ¶ 18; see also ECF No. 14–7.)

“On October 17, 2008, [Bone] allowed a defense verdict to be entered in [the General Sessions Court], and, on October 27, 2008, Plaintiff appealed the case to the Circuit Court [of Tennessee] which is not subject to the jurisdictional limits that were applicable in the General Sessions [Court].” (ECF No. 14 ¶ 19.) The appeal “was dismissed without prejudice on November 15, 2011.” ( Id. ¶ 20.)

“On September 21, 2012, [Bone] filed another complaint in the Circuit Court of Tennessee ... to reassert her slip and fall claim against Defendant.” ( Id. ¶ 21; see also ECF No. 1–2 at PageID 10–12.) “[Bone's] Complaint of September 21, 2012 [sic] seeks damages in the amount of $500,000.” (ECF No. 14 ¶ 22; see also ECF No. 1–2 at PageID 11–12.)

On November 13, 2012, Taco Bell removed the action from the Circuit Court of Tennessee to this Court on the basis of diversity jurisdiction.⁵ ( See ECF No. 1 ¶¶ 7–8.) On March 26, 2013, Taco Bell filed its First Amended Answer “with the written permission of [Bone]” ( see ECF No. 11 at 1) to include the defense of judicial estoppel ( see id. at 3). On May 9, 2013, Taco Bell filed the instant Motion for Summary Judgment on Basis of Judicial Estoppel. ( See ECF No. 12.)

II. STANDING AND CHOICE OF LAW

This Court has diversity jurisdiction over Plaintiff's state-law negligence claim because the parties are “citizens of different States” and “the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs.” See28 U.S.C. § 1332(a)(1) (2006); (ECF No. 1 ¶¶ 7–8).

The Court first considers whether the Plaintiff has standing to bring this action and then considers whether state or federal law should be applied to this diversity action.

A. Plaintiff Has Standing to Bring This Action.

“Article III of the Constitution gives federal courts subject matter jurisdiction over actual cases or controversies, neither of which exists unless a plaintiff establishes his standing to sue.” Murray v. U.S. Dep't of Treasury, 681 F.3d 744, 748 (6th Cir.2012). “If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action.” Fed.R.Civ.P. 12(h)(3).

When a person files for Chapter 7 bankruptcy, “[i]t is well settled that the right to pursue causes of action formerly belonging to the debtor—a form of property under the Bankruptcy Code—vests in the trustee for the benefit of the estate. The debtor has no standing to pursue such causes of action.” Bauer v. Commerce Union Bank, Clarksville, Tenn., 859 F.2d 438, 441 (6th Cir.1988) (citation omitted) (internal quotation marks omitted); accord Auday v. Wet Seal Retail, Inc., 698 F.3d 902, 904 (6th Cir.2012) (“When Auday filed for [Chapter 7] bankruptcy, her estate became the owner of all of her property, including tort claims that accrued before she filed her bankruptcy petition.”). “This means that, absent abandonment, only the Trustee may bring [a claim that accrued before the bankruptcy petition was filed], and [the debtor] ‘has no standing to pursue’ it alone.” Auday, 698 F.3d at 904 (quoting Bauer, 859 F.2d at 441).

A person that files for Chapter 7 bankruptcy, however, may exempt certain property from her bankruptcy estate. Pursuant to 11 U.S.C. § 522( l ), “[t]he debtor shall file a list of property that the debtor claims as exempt.... Unless a party in interest objects, the property claimed as exempt on such list is exempt.” 11 U.S.C. § 522( l ) (2006). “[A] party in interest may file an objection to the list of property claimed as exempt within 30 days after the meeting of creditors held under § 341(a) is concluded or within 30 days after any amendment to the list or supplemental schedules is filed, whichever is later,” unless the bankruptcy court grants an extension of time. Fed. R. Bankr.P. 4003(b)(1). In addition, “[t]he trustee may file an objection to a claim of exemption at any time prior to one year after the closing of the case if the debtor fraudulently asserted the claim of exemption.” Fed. R. Bankr.P. 4003(b)(2). “If an interested party fails to object within the time allowed, a claimed exemption will exclude the subject property from the estate even if the exemption[ ] [is invalid].” Schwab v. Reilly, 560 U.S. 770, 130 S.Ct. 2652, 2658, 177 L.Ed.2d 234 (2010). “[C]ourts may not impose a good faith requirement on debtors who list property in the bankruptcy schedule as exempt pursuant to 11 U.S.C. § 522( l ).” In re Trident Assocs. Ltd., 52 F.3d 127, 130 (6th Cir.1995) (citing Taylor v. Freeland & Kronz, 503 U.S. 638, 641–44, 112 S.Ct. 1644, 118 L.Ed.2d 280 (1992)).

Plaintiff's claim against Defendant appears to have been excluded from her bankruptcy estate. Plaintiff's claim against Defendant accrued before she filed for Chapter 7 bankruptcy: Plaintiff's claim accrued on the date of her injury, July 18, 2007 ( see ECF No. 1–2 ¶¶ 3, 5), and Plaintiff filed for Chapter 7 bankruptcy on December 7, 2007 (ECF No. 14–1 at PageID 68). On January 4, 2008, however, Plaintiff signed documents in which she asserts that she has a contingent and unliquidated “Claim against Taco Bell” with an “estimated value” of “[$]0.00” ( see ECF No. 14–3 at PageID 87) that was exempt from the bankruptcy estate pursuant to § 85–3–17 ( see id. at PageID 89).

Plaintiff's claimed exemption appears to be invalid. The exemption is invalid under Mississippi law because Plaintiff had not obtained a judgment when she claimed the exemption. See In re Bragg, 334 B.R. 195, 196 (Bankr.N.D.Miss.2005) (“The Mississippi exemption statute[, § 85–3–17,] requires that a judgment be obtained. If this cannot be undertaken prior to the filing of a bankruptcy case, then the debtor has no way to utilize this particular statute.”). Furthermore, Plaintiff appears to have made a material misstatement of fact in claiming the exemption under §...