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In 2004, Campbell was involved in a motor vehicle collision with Kocher. In 2005, Campbell filed for bankruptcy and received a notice of discharge a year later. In 2006, Campbell filed two personal injury actions against Kocher and took nonsuits on both of them. In 2008, Campbell filed his third complaint on the same cause of action. Earlier in 2008 the bankruptcy court reopened Campbell's bankruptcy case, and in the proceeding Campbell listed the personal injury claim as an asset and claimed it as exempt property. In 2009 the court held the cause of action to be exempt. During trial for the personal injury action, Kocher filed a motion for summary judgment, asserting lack of standing and the statute of limitations. The circuit court denied the motion. The Supreme Court reversed and dismissed, holding that (1) Campbell's cause of action became a part of the bankruptcy estate in 2005 and remained an asset of the estate until it was exempted in 2009, and therefore all three complaints were filed when Campbell lacked standing; and (2) because the complaints were legal nullities, they had no tolling effect on the two-year statute of limitation.
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PRESENT: Kinser, C.J., Lemons, Goodwyn, Millette, and Mims, JJ.,
and Russell and Lacy, S.JJ.
ROBIN M. KOCHER
SENIOR JUSTICE CHARLES S. RUSSELL
June 9, 2011
Record No. 100399
RICHARD EUGENE CAMPBELL
FROM THE CIRCUIT COURT OF SPOTSYLVANIA COUNTY
J. Howe Brown, Judge Designate
This appeal presents the question whether the plaintiff in
an action to recover damages for personal injuries had standing
to maintain his action after filing a petition for bankruptcy,
causing his claim to become an asset of his bankruptcy estate.
To answer the question, we must determine whether the
plaintiff’s cause of action was exempted or abandoned in the
Facts and Proceedings
The factual background is undisputed, although the parties
differ as to the legal consequences of the facts.
On April 6,
2004, Edward Eugene Campbell (the plaintiff) was involved in a
motor vehicle collision with Robin M. Kocher (the defendant) in
On October 1, 2005, after the collision
but before filing any action against the defendant, the
plaintiff filed a voluntary Chapter 7 petition in bankruptcy in
the United States Bankruptcy Court for the Eastern District of
His petition made no mention of his personal injury
It was not listed as an asset in Schedule B or claimed
as exempt property in Schedule C of the petition.
On January 6,
2006, the plaintiff received a standard discharge in bankruptcy.
On February 3, 2006, the plaintiff filed a complaint
against the defendant to recover damages for injuries sustained
as a result of the 2004 collision.
The defendant was never
served with process and the plaintiff took a nonsuit.
2006, the plaintiff filed a second complaint on the same cause
of action, but the defendant was not served until April 3, 2007.
The defendant filed a motion for summary judgment on the ground
that the plaintiff lacked standing to bring the action.
January 4, 2008, during a hearing on the defendant’s motion, the
plaintiff took another nonsuit.
The trustee, with the plaintiff's concurrence, filed a
motion in the bankruptcy court to reopen his bankruptcy case,
which that court granted on February 14, 2008.
In the reopened
proceeding, the plaintiff obtained leave to file amended
schedules, listed the personal injury claim as an asset and
claimed it as exempt property.
On May 29, 2009, the bankruptcy
court entered an order holding that the plaintiff had “properly
exempted” the cause of action. 1
Attested copies of relevant parts of the record in the
bankruptcy case were made an exhibit and are a part of the
record in the present case.
On May 27, 2008, the plaintiff filed his third complaint on
the 2004 cause of action, but did not serve the defendant with
process until March 2009.
The defendant filed a motion for
summary judgment asserting lack of standing and the statute of
On December 10, 2009, the circuit court denied the
defendant’s motion for summary judgment, and on February 19,
2010 it certified the issue for an interlocutory appeal pursuant
to Code § 8.01-670.1.
We awarded the defendant an appeal.
The appeal presents pure questions of law.
novo standard of review to such questions.
We apply a de
Commonwealth, 276 Va. 121, 124, 661 S.E.2d 412, 414 (2008).
Article I, § 8 of the Constitution of the United States
empowers Congress to establish “uniform laws on the subject of
bankruptcy throughout the United States.”
exercised that power and, accordingly, federal statutes,
bankruptcy rules and the decisions of the federal courts are
dispositive in deciding all questions of bankruptcy law.
Questions concerning the standing of litigants to maintain
actions in the courts of Virginia, however, are governed by the
law of Virginia, as are issues involving non-federal statutes of
The Federal Bankruptcy Code provides that upon the filing
of a petition in bankruptcy, a bankruptcy estate is created by
operation of law and a trustee is appointed to administer it.
All the legal and equitable interests in property that the
debtor had before the petition was filed pass to and become a
part of the bankruptcy estate, under the control of the trustee.
11 U.S.C. § 541.
Koch Refining v. Farmers Union Central
Exchange, Inc., 831 F.2d 1339, 1343-44 (7th Cir. 1987).
effect of Section 541 of the Bankruptcy Code extends to not only
those causes of action which are pending in court, but also to
those which are only inchoate claims at the time of filing.
e.g., Sierra Switchboard Co. v. Westinghouse Elec. Corp. 789
F.2d 705, 707-08 (9th Cir. 1986); U.S. ex rel. Gebert v. Trans.
Admin. Servs., 260 F.3d 909, 913 (8th Cir. 2001).
a result of the plaintiff’s filing a petition in bankruptcy, his
inchoate personal injury claim passed to his bankruptcy estate
on October 1, 2005.
Thereafter, the cause of action was one
that could only be asserted by the trustee in bankruptcy, Koch
Refining, 831 F.2d at 1342, unless and until it was restored to
the plaintiff by the bankruptcy court.
We must therefore
determine when, or if, such a restoration occurred in the
There are two methods by which assets of a bankruptcy
estate may be restored to a debtor after a petition in
bankruptcy has been filed.
The first method allows the trustee
to abandon the assets after notice and hearing pursuant to 11
U.S.C. § 554 because he deems them to be burdensome to the
estate or of inconsequential value.
The record does not
indicate that any such proceedings ever took place in the
plaintiff’s bankruptcy case.
Parker v. Wendy’s Int’l., Inc.,
365 F.3d 1268, 1272 (11th Cir. 2004).
Abandonment also occurs
when listed assets remain unadministered when the bankruptcy
case is closed.
11 U.S.C. § 554(C).
The second method allows the
bankruptcy court to exempt
the assets pursuant to 11 U.S.C. § 522.
In the absence of
abandonment or exemption, the assets remain a part of the
Federal law provides for certain exemptions,
but permits the states to “opt out” of those provisions by
substituting their own exemption laws.
Virginia is a state that has done so.
11 U.S.C. 522(d).
Code § 34-3.1; see also
Shirkey v. Leake, 715 F.2d 859, 861 (4th Cir. 1983).
Code § 34-
28.1 provides that causes of action for personal injury “shall
be exempt from creditor process against the injured
person. . . .”
That exemption is therefore applicable in
In order to claim the exemption, the debtor must list the
cause of action as an asset in his schedule B and then claim it
as exempt property on his schedule C using forms prescribed by
the bankruptcy rules.
The bankruptcy court may thereafter enter
an order exempting the listed property.
Until such an order is
entered, the property remains a part of the bankruptcy estate.
Tavenner v. Smoot, 257 F.3d 401, 407 (4th Cir. 2001).
Parker, 365 F.3d at 1272.
If the debtor fails to follow this
procedure, the cause of action, having become a part of the
bankruptcy estate by virtue of 11 U.S.C 541, remains so, and is
enforceable solely by the trustee.
Koch Refining, 831 F.2d at
Applying those principles to the facts of this case, it
becomes apparent that the plaintiff’s 2004 cause of action
became a part of the bankruptcy estate on October 1, 2005 when
his petition for bankruptcy was filed and that it remained an
asset of the estate until May 29, 2009 when the bankruptcy court
ordered it exempted.
Therefore, all three of the complaints the
plaintiff filed in the circuit court against the defendant, in
February 2006, in April 2006, and in May 2008, (the subject of
this appeal) were filed during the period when the plaintiff
lacked standing to assert the cause of action because it
remained in the bankruptcy estate, enforceable only by the
The plaintiff contends that the final order closing the
reopened bankruptcy case in 2009 had the effect of abandoning
all property remaining in the estate and left “unadministered by
The plaintiff argues that abandonment, unlike
exemption, causes the abandoned property to revert back to the
debtor retroactively, as if the bankruptcy had never occurred,
citing Brown v. O’Keefe, 300 U.S. 598, 602 (1937).
We do not
agree, however, with the plaintiff’s argument that the final
order in the bankruptcy case has an effect on the present case
for two reasons.
First, the exemption that preceded the final
order had already removed the plaintiff’s cause of action from
the bankruptcy estate and restored it to the debtor.
It was no
longer an asset remaining in the estate but “unadministered by
Second, as noted above, the effect of the
plaintiff's lack of standing at the time of filing this action
is a question governed by Virginia law.
In Johnston Memorial Hospital v. Bazemore, 277 Va. 308,
312, 672 S.E.2d 858, 860 (2009), we held that an action filed by
a party who lacks standing is a legal nullity.
It has no
tolling effect on the statute of limitations and furnishes no
basis for a nonsuit.
Standing acquired after the statute of
limitations has run cannot be retroactively applied to cure the
lack of standing that existed when the action was filed.
Fowler v. Winchester Medical Center, Inc., 266 Va. 131, 134, 580
S.E.2d 816, 817 (2003). 2
The Federal courts similarly hold that an exemption
granted by the bankruptcy court does not relate back to the time
of filing so as to toll the statute of limitations by conferring
standing retroactively. In re Wilmoth, 412 B.R. 791, 799
(Bankr. E.D. Va. 2009).
Virginia provides a two-year limitation period for causes
of action for personal injury.
Code § 8.01-243.
plaintiff’s cause of action was therefore time-barred after
April 6, 2006.
Because all three complaints filed against the
defendant were legal nullities filed by a party who lacked
standing, they, and the several purported nonsuits, had no
Because the present action was a nullity at the time of its
filing and the statute of limitations had run before it was
filed, the circuit court erred in denying the defendant’s motion
for summary judgment.
Accordingly, we will reverse the judgment
appealed from and dismiss the case.
Reversed and dismissed.