Martin v. Gladstone

96 Cal.App.5th 681

314 Cal.Rptr.3d 649

Breanne MARTIN, Plaintiff and Appellant,

v.Leslie T. GLADSTONE, as Trustee in Bankruptcy, etc., Defendant and Respondent.

D080534

Court of Appeal, Fourth District, Division 1, California.

Filed October 19, 2023

William Iagmin, Jon R. Williams, San Diego, James S. Iagmin, Carlie M. Bouslaugh and Jennifer French, for Plaintiff and Appellant.

Lewis Brisbois Bisgaard & Smith, Peter L. Garchie, Lann G. McIntyre and James P. McDonald, San Diego, for Defendant and Respondent.

DATO, J.

Plaintiff Breanne Martin alleges that she was injured when a large metal gate fell on her while she was on a residential rental property located in Alpine, California. Martin initially filed claims for negligence and premises liability against the owners of the property. But upon learning that the owners had previously filed a bankruptcy petition, Martin amended her complaint to add the court-appointed bankruptcy trustee, Leslie T. Gladstone, as a defendant.

Gladstone demurred to Martin's complaint, asserting that application of federal statutory and common law demonstrated that Martin could not state a cause of action against her. First, Gladstone argued that a roughly 140-year-old common law rule referred to as the " Barton doctrine"¹ required Martin to seek leave of the court that appointed Gladstone before filing an action against her in a different forum. Second, Gladstone maintained that she could not be held liable for Martin's injuries because two days prior to the accident, she filed a notice of intent to "abandon" the property where the injury is alleged to have occurred and this abandonment was effectuated a few weeks later. According to Gladstone, a trustee's abandonment of property in a bankruptcy estate is effective nunc pro tunc to the date the bankruptcy petition was filed, and reverts all interest in the property to the debtor as if no bankruptcy petition was ever filed. The trial court rejected Gladstone's argument regarding application of the Barton doctrine, but accepted her argument regarding the abandonment of the property at issue; the court sustained Gladstone's demurrer on this ground and entered judgment in favor of Gladstone.

On appeal, Martin contends the trial court erred in concluding that Gladstone's abandonment of the relevant property after the accident prevents Gladstone from being held liable for Martin's injuries. Martin further argues that the trial court correctly determined it could not conclude as a matter of law that the Barton doctrine applies to divest the trial court of subject matter jurisdiction over Martin's claims. According to Martin, the trial court therefore erred in sustaining Gladstone's demurrer and entering judgment in her favor. We agree with Martin's appellate contentions and reverse the trial court's judgment.

FACTUAL AND PROCEDURAL BACKGROUND²

A. Factual Allegations

On October 9, 2018, defendants Christopher Dougherty and Nereida Dougherty filed a voluntary petition with the bankruptcy court under title 11 of the Bankruptcy Code. In that filing, the Doughertys listed JTA Real Estate Holdings, LLC (JTA) as one of their assets. They indicated that JTA owned three real properties, including a residential rental property located on Japatul Spur in Alpine (the Alpine Property).

On April 4, 2019, the bankruptcy court converted the Dougherty defendants' bankruptcy case from a chapter 11 proceeding to a chapter 7 proceeding and appointed Leslie T. Gladstone as the bankruptcy trustee. Roughly six weeks later, the same court granted Gladstone's ex parte application seeking permission to "Operate Business During Chapter 7 Case Pending Sale of Debtors' Assets." The court "authorized" Gladstone to "operate the businesses of the Debtors, accept lease payments, and pay expenses that arise in the ordinary course of the business, until such time as the Estate Properties and the JTA Real Estate Properties can be sold." Gladstone submitted monthly operating reports to the bankruptcy court, which included financial documents related to the operation of the Alpine Property as a residential rental.³

On July 19, 2019, Gladstone filed in the bankruptcy court a document titled "Trustee's Notice of Proposed Abandonment of Property" with respect to the Alpine Property.

(Some capitalization omitted.)⁴ Gladstone indicated that the Alpine Property had a value that was less than the value of the liens against the property, and she specified that after she began marketing the Alpine Property for sale, she became aware of "numerous code violations against the property," including the "failure to obtain building permits, violations of County Building Codes, and grading permit violations," which had caused at least two potential purchasers to withdraw offers they had made.⁵

Two days later, on July 21, Martin was at the Alpine Property when she suffered "serious injuries" as a result of an iron gate "[falling] on her." According to Martin, at the time she sustained her injuries, the defendants knew or should have known that the gate created an unreasonably dangerous condition on their property.

Less than a month later, Gladstone filed a "Report of Abandonment of Property." Gladstone indicated that the time for filing a request for hearing on an objection to her notice of intent to abandon the Alpine Property had expired without an objection. In the document Gladstone states, "The Trustee hereby abandons and forever disclaims any further interest in and to the following described real property of the debtor, namely: .... [¶] [The remaining] interest after transfer of easement to SDG&E for [the Alpine Property]," and later continues, "[t]he right of possession of the abandoned property is hereby relinquished to the debtor, to be assumed at no cost to the undersigned."

B. The Demurrer

Martin filed a form complaint asserting causes of action for general negligence and premises liability (the Complaint). It included an allegation that each of the defendants "owned, leased, occupied, maintained, or controlled" the Property. At the time of the initial filing, Martin identified Christopher D. Dougherty, Nereida I. Dougherty, and JTA Real Estate Holdings, LLC as named defendants. She later filed a form amendment to the Complaint, replacing a Doe defendant with "Leslie T. Gladstone, Chapter 7 Trustee for Christopher & Nereida Dougherty Bankruptcy."

Gladstone demurred to the Complaint, raising two arguments as to why Martin was unable to state a cause of action against her. Gladstone's main argument was that a common law rule referred to as the " Barton doctrine" deprived the trial court of subject matter jurisdiction to adjudicate Martin's claims against Gladstone if Martin failed to show she obtained permission from the bankruptcy court to file the claims. She set out as an alternative basis for her demurrer the argument that her abandonment of the Property operated to divest her of title to the Alpine Property—and Gladstone argued, of "all possession, ownership, and control" over the property—nunc pro tunc to the date the Doughertys' bankruptcy petition was filed. According to Gladstone, she therefore "lacked any ownership, possession, or control over the subject property at the time of [the injury-causing] incident."⁶

Martin opposed the demurrer, contending that a statutory exception to the Barton doctrine applies in this case because Gladstone had sought and obtained from the bankruptcy court the authority to carry on the business of the Doughertys during the pendency of the bankruptcy case, including continuing to operate the Alpine Property as a residential rental by accepting lease payments and paying expenses. Martin also opposed the demurrer with respect to the alternative ground asserted, contending that the nunc pro tunc reversion of title to and a possessory interest in the Alpine Property did not overcome judicially noticeable facts the demonstrated Gladstone's actual possession and control over the property during the relevant time period.

After a hearing on Gladstone's demurrer and granting Gladstone's request for judicial notice in full, the trial court rejected Gladstone's argument that Martin failed to sufficiently allege subject matter jurisdiction under the Barton doctrine theory. At the same time, the court agreed with Gladstone's contention that Martin could not state claims for negligence or premises liability against her as a result of the legal effect of Gladstone's abandonment of the Alpine Property under bankruptcy law. As a result, the court sustained Gladstone's demurrer without leave to amend, entering judgment in her favor.

DISCUSSION

We review an order sustaining a demurrer by applying well-established principles. "[W]e examine the operative complaint de novo to determine whether it alleges facts sufficient to state a cause of action under any legal theory." ( T.H. v. Novartis Pharmaceuticals Corp. (2017) 4 Cal.5th 145, 162, 226 Cal.Rptr.3d 336, 407 P.3d 18.) "For purposes of reviewing a demurrer, we accept the truth of material facts properly pleaded in the operative complaint, but not contentions, deductions, or conclusions of fact or law. We may also consider matters subject to judicial notice." ( Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 924, 199 Cal.Rptr.3d 66, 365 P.3d 845 ( Yvanova ).)⁷

Martin asserts causes of action for negligence and premises liability against Gladstone and the other defendants. "The elements of a negligence claim and a premises liability claim are the same: a legal duty of care, breach of that duty, and proximate cause resulting in injury." ( Kesner v. Superior Court (2016) 1 Cal.5th 1132, 1158, 210 Cal.Rptr.3d 283, 384 P.3d 283.) Section 1714 of the Civil Code sets forth "the basic policy of this state" with respect to injuries caused by a dangerous condition on land, which "is that everyone is responsible for an injury caused to another by his want of ordinary care or skill in the management of his property."...