Sandres v. Corrections Corporation of America, No. 1:2009cv01609 - Document 52 (E.D. Cal. 2010)
Court Description: MEMORANDUM DECISION Regarding 36 Defendants' Motion to Dismiss, signed by Judge Oliver W. Wanger on 10/25/2010. (Gaumnitz, R)
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Sandres v. Corrections Corporation of America Doc. 52 1 2 3 4 UNITED STATES DISTRICT COURT 5 EASTERN DISTRICT OF CALIFORNIA 6 7 8 TERRY M. SANDRES, Plaintiff, 9 10 11 1:09-cv-1609-OWW-DLB v. 12 CORRECTIONS CORPORATION OF AMERICA, et al., 13 Defendants. 14 I. INTRODUCTION. 15 16 17 Plaintiff Terry M. Sanders (“Plaintiff”) proceeds with this action for damages against Corrections Corporation of America and CCA of Tennessee, LLC (“Defendants”). 18 19 20 21 On August 17, 2010 Defendants filed a motion to dismiss the complaint. (Doc. 36). Plaintiff filed opposition to the motion to dismiss on October 8, 2010, (Doc. 49), and Defendants replied on October 15, 2010, (Doc. 50). 22 II. FACTUAL BACKGROUND. 23 24 25 26 27 MEMORANDUM DECISION REGARDING DEFENDANTS’ MOTION TO DISMISS (Doc. 36) Plaintiff’s action arises out of alleged retaliation and discrimination engaged in by Defendants, his former employer. According to the complaint, Defendants retaliated against Plaintiff for taking medical leave and for refusing to provide false statements regarding the origin of an injury sustained during a 28 1 Dockets.Justia.com 1 football game Plaintiff participated in during work hours. 2 result of the harassment he experienced, Plaintiff filed a workers 3 compensation claim in August 2007. 4 to work in December of 2007, but Defendants refused to provide 5 reasonable accommodations to Plaintiff. 6 As a Plaintiff attempted to return On or about August 21, 2008, Plaintiff’s workers compensation 7 claim was resolved, 8 resources department to discuss returning to work. 9 several messages, none of which was returned. On October 28, 2008, 10 Defendant sent Plaintiff a letter falsely stating that Plaintiff 11 had failed to return calls to Defendant and that he was therefore 12 terminated for job abandonment. Plaintiff contacted Defendants human Plaintiff left III. LEGAL STANDARD. 13 14 and Dismissal under Rule 12(b)(6) is appropriate where the 15 complaint lacks sufficient facts to support a cognizable legal 16 theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th 17 Cir.1990). To sufficiently state a claim to relief and survive a 18 12(b) (6) motion, the pleading “does not need detailed factual 19 allegations” but the “[f]actual allegations must be enough to raise 20 a right to relief above the speculative level.” Bell Atl. Corp. v. 21 Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). 22 Mere “labels and conclusions” or a “formulaic recitation of the 23 elements of a cause of action will not do.” Id. Rather, there must 24 be “enough facts to state a claim to relief that is plausible on 25 its face.” Id. at 570. In other words, the “complaint must contain 26 sufficient factual matter, accepted as true, to state a claim to 27 relief that is plausible on its face.” Ashcroft v. Iqbal, --- U.S. 28 ----, ----, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (internal 2 1 quotation marks omitted). 2 The Ninth Circuit has summarized the governing standard, in 3 light of Twombly and Iqbal, as follows: “In sum, for a complaint to 4 survive a motion to dismiss, the nonconclusory factual content, and 5 reasonable 6 suggestive of a claim entitling the plaintiff to relief.” Moss v. 7 U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir.2009) (internal 8 quotation marks omitted). Apart from factual insufficiency, a 9 complaint is also subject to dismissal under Rule 12(b)(6) where it 10 lacks a cognizable legal theory, Balistreri, 901 F.2d at 699, or 11 where the allegations on their face “show that relief is barred” 12 for some legal reason, Jones v. Bock, 549 U.S. 199, 215, 127 S.Ct. 13 910, 166 L.Ed.2d 798 (2007). inferences from that content, must be plausibly 14 In deciding whether to grant a motion to dismiss, the court 15 must accept as true all “well-pleaded factual allegations” in the 16 pleading under attack. Iqbal, 129 S.Ct. at 1950. A court is not, 17 however, “required to accept as true allegations that are merely 18 conclusory, 19 inferences.” Sprewell v. Golden State Warriors, 266 F.3d 979, 988 20 (9th Cir.2001). “When ruling on a Rule 12(b)(6) motion to dismiss, 21 if a district court considers evidence outside the pleadings, it 22 must normally convert the 12(b)(6) motion into a Rule 56 motion for 23 summary 24 opportunity to respond.” United States v. Ritchie, 342 F.3d 903, 25 907 court 26 materials-documents 27 incorporated by reference in the complaint, or matters of judicial 28 notice-without converting the motion to dismiss into a motion for (9th unwarranted judgment, and Cir.2003). “A deductions it must attached of give may, to 3 fact, the unreasonable nonmoving however, the or party consider complaint, an certain documents 1 summary judgment.” Id. at 908. III. DISCUSSION. 2 3 Defendants contend that Plaintiff lacks standing to prosecute 4 this action because Plaintiff failed to adequately disclose the 5 claim underlying this lawsuit in his Chapter 7 Bankruptcy petition. 6 In a related argument, Defendants contend that Plaintiff’s law suit 7 is 8 properly 9 proceeding.1 10 subject to judicial identify his estoppel claim as because an asset Plaintiff in his failed to bankruptcy A. Standing 11 An "estate" is created when a bankruptcy petition is filed. 12 See 11 U.S.C. § 541(a). Property of a bankruptcy estate includes 13 "all legal or equitable interests of the debtor in property as of 14 the commencement of the case." § 541(a)(1). 15 law suit constitutes property that belongs to the bankruptcy 16 estate. See, e.g., Sierra Switchboard Co. v. Westinghouse Electric 17 Corp., 789 F.2d 705, 709 (9th Cir. 1986) (debtor’s emotional 18 distress claim was property of bankruptcy estate). A debtor has no 19 standing to prosecute a law suit that is property of the bankruptcy 20 estate. 21 1451 n.2 (9th Cir. 1994); Estate of Spirtos v. One San Bernardino 22 County Superior Court Case, 443 F.3d 1172, 1176 (9th Cir. 2006) 23 (bankruptcy code endows the bankruptcy trustee with the exclusive 24 right to sue on behalf of the estate). A debtor’s potential E.g., Moneymaker v. CoBen (In re Eisen), 31 F.3d 1447, 25 Where a debtor properly identifies a law suit as an asset in 26 her bankruptcy petition, the trustee’s failure to administer the 27 28 1 Judicial notice is taken of Plaintiff’s bankruptcy petition and the Bankruptcy Court’s docket. 4 1 law suit effects abandonment of the asset. 2 253 B.R. 85, 89 (B.A.P 9th Cir. 2000) (citing 11 U.S.C. § 554(c) 3 (because debtor scheduled the asset, it was abandoned upon closure 4 of debtors bankruptcy case)). 5 Code provides: 6 Section 554(c) of the Bankruptcy Unless the court orders otherwise, any property scheduled under section 521(1) of this title not otherwise administered at the time of the closing of a case is abandoned to the debtor and administered for purposes of section 350 of this title. 7 8 9 E.g. Vasuez v. Adair, 11 U.S.C. § 554(c). 10 referred 11 DeVore v. Marshack (In re DeVore), 223 B.R. 193, 197 (B.A.P. 9th 12 Cir. 1998). 13 debtor and is effectively beyond the reach and control of the 14 trustee. 15 section 554(c), the asset must have been properly scheduled. 16 e.g., id. at 198 (discussing cases in which asset was not properly 17 scheduled and thus section 554(c)’s requirement was not met). 18 to as Abandonment under section 554(c), commonly “technical abandonment,” occurs automatically. Once an asset has been abandoned, it reverts to the Id. In order for an asset to be abandoned pursuant to See, A debtor’s disclosure of her interest in a law suit on her 19 bankruptcy schedules 20 information to conduct a proper investigation of the law suit. 21 E.g. Cusano v. Klein, 264 F.3d 936, 946 (9th Cir. 2001) (citation 22 omitted). A debtor filing for bankruptcy relief has a duty to 23 prepare schedules carefully, completely, and accurately, but there 24 are "no bright-line rules for how much itemization and specificity 25 is required.” 26 reasonable under the circumstances in scheduling an interest in a 27 potential law suit. 28 /// Id. must provide the trustee sufficient Rather, a debtor must be as particular as is Id. See id. 5 1 It is undisputed that Plaintiff identified his law suit 2 against Defendants in an amended Schedule B to his bankruptcy 3 petition. 4 amended Schedule B: 5 6 7 8 Plaintiff provided the following information on his Terry Roberts v. CA City Correctional Center (nothing has been filed yet the debtor has only consulted with this attorney) 213.487.4727 Robert Dexter Neman [sic] Attorney at Law Attorney: Robert Newman, Los Angeles Wstrn Ctr on Law & Poverty 3701 Wilshire Blvd #208 Los Angeles, CA 90010-2809 9 10 (Defs. Request for Judicial Notice, Ex. 3). Plaintiff’s amended 11 Schedule B indicated that his claim was worth $25,000.00. (Id.). 12 Defendants argue that although Plaintiff identified his law 13 suit in his amended Schedule B, Plaintiff’s identification was 14 deficient because Plaintiff failed to include the specific cause of 15 action underlying the lawsuit. 16 proposition that “[c]auses of action are separate assets which must 17 be formally listed.” 18 reliance on Cusano is misplaced. 19 Defendants cite Cusano for the (Motion to Dismiss at 4). Defendants Cusano says nothing about the level of specificity with which 20 a debtor must schedule her interest in a law suit. 21 concerned the issue of whether identification of “songrights” in an 22 asset schedule was sufficiently detailed to cause ownership of the 23 debtor’s pre-petition compositions to revert to the debtor upon 24 confirmation of his Chapter 11 plan. 25 although the debtor failed to properly value the asset and failed 26 describe the songs, albums, and dates of and parties to royalty and 27 copyright agreements, the “listing was not so defective that it 28 would forestall a proper investigation of the asset.” 6 Rather, Cusano The Cusano Court held that 264 F.3d at 1 946. 2 of debtor’s vague asset description: “The ‘songrights’ asset as 3 described...can reasonably be interpreted to mean copyrights and 4 rights to royalty payments for songs written for the band KISS 5 pre-petition.” 6 standing to pursue post-petition royalty claims based on his 7 ownership of the songrights, but held that pre-petition claims for 8 royalties were barred as the debtor failed to identify the claims 9 in his bankruptcy petition: 10 11 12 13 14 15 16 17 The Cusano Court afforded the debtor a broad interpretation Id. The Court concluded that the debtor had The district court erred when it applied to Cusano's case the general rule that post-petition revenues based on pre-petition services or agreements belong to the bankruptcy estate. The rule is simply not applicable here, because the actual pre-petition service or agreement at issue in this case, "songrights," reverted to Cusano's ownership. Unpaid pre-petition royalties and other damages which accrued pre-petition, on the other hand, did not revert to Cusano with the "songrights" asset, because these were subject to a separate scheduling requirement as accrued causes of action. Causes of action are separate assets which must be formally listed. Simply listing the underlying asset out of which the cause of action arises is not sufficient. 18 Id. at 947 (citations omitted). As the Court’s reasoning makes 19 clear, Cusano does not support the proposition that, in order to 20 properly identify a law suit in a bankruptcy petition, each cause 21 of action contained in the suit must be separately described. 22 Rather, Cusano simply restates the unremarkable rule that an asset 23 is distinct from accrued causes of action related to the asset. 24 See id. (citing Vreugdenhill v. Navistar Int’l Trans. Corp., 950 25 F.2d 524, 525, 526 (8th Cir. 1991) (holding that cause of action 26 arising out of sale of harvester parts was a distinct asset from 27 28 7 1 the harvester parts themselves)).2 Moreover, all Plainiff’s claims 2 relate to his alleged wrongful termination of employment. 3 Defendants cite no authority that requires a debtor to parse 4 out specific causes of action in order to properly schedule a law 5 suit as an asset in a bankruptcy proceeding, and existing Ninth 6 Circuit authority is to the contrary.3 7 (articulating standard based on whether disclosure of claim was so 8 deficient that investigation would be impeded); see also In re 9 Johnson, 361 B.R. 903, 904, 906 (B.A.P. 9th Cir. 2007) (disclosure 10 of “Class Action Suit” with “unknown” value sufficient where 11 disclosure was not misleading and provided trustee sufficient basis 12 to conduct investigation); Vasquez v. Adair, 253 B.R. 85, (B.A.P. 13 9th Cir. 2000) (disclosure of “slip and fall personal injury 14 accident at work” with estimated worth of $20,000 held sufficient). 15 In Johnson, a debtor filed a Chapter 7 bankruptcy petition and 16 See, e.g, id. at 946 disclosed an interest in a law suit as follows: 17 CLASS ACTION SUIT AGAINST ASSOCIATES...Current Market Value: Unknown 18 19 361 B.R. at 904. The Johnson Court held that the trustee abandoned 20 the law suit and rejected the trustee’s argument that the debtor 21 had not sufficiently disclosed it as an asset. 22 debtor’s case to those of Cusano and Adiar, the Johnson Court held: 23 the information provided...was not misleading to the Analogizing the 24 2 26 In Vreugdenhill, the debtor listed the harvester parts as assets on his schedules but did not list the law suit arising out of the transaction in which he purchased the parts. The Court held that, because the law suit was not formally scheduled, it was not subject to technical abandonment. Id. at 526. 27 3 25 28 Each of the cases cited by Defendants concern instances in which the debtor completely omitted an interest in a law suit from the petition and are inapposite. (See Opposition at 6-8). 8 1 2 3 4 5 6 7 trustee and he was not deprived of sufficient information to prevent him from performing his duties of investigation. 361 B.R. 909. Similarly, in Adair, a debtor disclosed her interest in a personal injury lawsuit as follows: Debtor . . . was involved in a slip and fall personal injury accident at work. Recovery is uncertain at this time. $ 20,000 is listed herein for exemption purposes only. 8 9 253 B.R. 87. After the debtor obtained her discharge, she settled 10 her personal injury suit for $430,000. 11 the trustee’s attempt to revoke his abandonment of the asset: 12 13 14 15 16 17 18 The Adair Court rejected The Trustee argues that he was misled because Debtor falsely valued the Lawsuit at $ 20,000 in her Schedule B. The Trustee's factual premise is incorrect. Although Debtor's Schedule B indicated in the value column that the value of the Lawsuit was $ 20,000, it also clearly stated in the description column that the recovery was uncertain and that the reference to $ 20,000 was for exemption purposes only. Debtor, in effect, stated that the value of the Lawsuit was unknown as of the date she signed her schedules. The mere fact that Debtor indicated that the value of the Lawsuit was essentially unknown does not mean that she misled the Trustee or that he was deprived of sufficient information so as to preclude him from performing his duties. 19 Id. at 89 (emphasis added) (citing In re Atkinson, 62 B.R. 678, 680 20 (B.A.P. 9th Cir. 1986). 21 Finally, in Atkinson, the Court held that a debtor’s 22 disclosure of an interest in a law suit was sufficient where the 23 debtor’s notice did not “deprive the trustee of adequate knowledge 24 of the pending litigation so as to preclude her from performing her 25 duties.” 62 B.R. at 680. In Atkinson: 26 27 28 [the] litigation was listed in the debtors' Statement of Financial Affairs as "John H. Atkinson vs. Corporation of the President of the Church of Jesus Christ of Latter Day Saints, et al., Superior Court of California, County of 9 1 Orange." Further, in Schedule B-2, Property of the Debtor, the litigation was referred to as "cause of action against the Church of Jesus Christ of Latter Day Saints", with an "unknown" value 2 3 4 Id. at 679. 5 Plaintiff’s identification of his potential law suit against 6 Defendants was sufficient to provide the trustee with all 7 information necessary to conduct a proper investigation of the 8 asset, particularly in light of the fact that Plaintiff provided 9 an estimated value of the law suit and contact information for the 10 attorney with whom Plaintiff had discussed his case. 11 disclosure 12 acceptable in Johnson, Atkinson, and Adair, none of which provided 13 information regarding the specific cause of causes of actions 14 entailed by the law suits, and some of which omitted valuation of 15 the claims entirely. 16 instances, disclosure of specific causes of action is required to 17 provide the trustee sufficient information to investigate a law 18 suit, it is axiomatic that such a requirement in inappropriate 19 where, as here, a debtor is merely involved in the consultation 20 phase of a litigation at the time the debtor files a bankruptcy 21 petition. 22 particularity that is reasonable under the circumstances. 23 264 F.3d at 946. 24 was The at least as complete as the Plaintiff’s disclosures held Further, assuming arguendo that, in rare Bankruptcy code requires only a level of Cusano, Plaintiff’s properly scheduled interest in his potential law 25 suit against 26 closure 27 therefore has standing to prosecute this action. Defendants motion 28 to dismiss for lack of standing is DENIED. of Defendants Plaintiff’s was automatically bankruptcy 10 abandoned proceeding, and upon the Plaintiff 1 B. Judicial Estoppel 2 Judicial estoppel will be imposed when the debtor has 3 knowledge of enough facts to know that a potential cause of action 4 exists during the pendency of the bankruptcy, but fails to amend 5 his schedules or disclosure statements to identify the cause of 6 action as a contingent asset. 7 Co., 270 F.3d 778, 784 (9th Cir. 2001).4 8 Plaintiff adequately disclosed his claim against Defendant in his 9 bankruptcy petition. 10 Plaintiff’s action. As discussed above, Accordingly, judicial estoppel does not bar Defendants motion is DENIED. ORDER 11 12 13 Hamilton v. State Farm Fire & Cas. For the reasons stated, Defendants’ Motion to Dismiss is DENIED in its entirety. 14 15 IT IS SO ORDERED. 16 17 Dated: hkh80h October 25, 2010 /s/ Oliver W. Wanger UNITED STATES DISTRICT JUDGE 18 19 20 21 22 23 24 25 26 27 28 4 Although Hamilton references a debtor’s duty to disclose a “cause of action,” it lends no support to Defendants’ contention that, in order to properly schedule an interest in a law suit, a debtor must describe each specific legal claim entailed by the law suit. In Hamilton, the debtor had at least two distinct claims: (1) breach of contract; and (2) breach of the covenant of good faith and fair dealing. 270 F.3d at 781. Nevertheless, the court employed singular term “cause of action” in describing the debtor’s duty of disclosure. 11
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