3 Fla. L. Weekly Supp. 148a
Civil procedure — Where party filed claim in county court to recover value of ring which had been consigned to jeweler for resale and subsequently filed for bankruptcy but failed to declare the claim against jeweler as an asset, bankruptcy trustee was real party in interest — Procedure for substitution of parties in state court is controlled by rules of civil procedure, which permits transfer of interest or substitution of parties upon proper motion — Case brought by debtor plaintiff may be dismissed without prejudice so that trustee may bring action to recover the value of the unscheduled property — County court erred in granting summary judgment in favor of jeweler
Additional ruling in this case at 4 Fla. L. Weekly Supp. 763a
ALBERT E. FORD, Appellant, vs. TOM FERGUSON, d/b/a CARROLLWOOD JEWELRY & REPAIR CENTER, Appellee. 13th Judicial Circuit in and for Hillsborough County, General Civil Division. Case No. 94-2513, Division “B”. Lower Court No. 93-2065 SC Division “I”. April 18, 1995. Manuel Menendez, Jr., Judge. Counsel: Albert E. Ford, Land O’ Lakes, Pro Se. Stevan T. Northcutt, Tampa, for Appellee.
APPEAL FROM THE COUNTY COURT, HILLSBOROUGH COUNTY, FLORIDA JUDGE DON CASTOR OPINION
This matter is before the Circuit Court, pursuant to Rule 9.030(c)(1)(A) Fla. R. App. P., on appeal following a final order of the County Court in favor of the Appellee, Tony Ferguson, d/b/a Carrollwood Jewelry and Repair Center. Appellant Albert Ford seeks review of the county court’s Order Granting Defendant Ferguson’s Motion for Summary Judgment and Final Judgment in Favor of Defendant Ferguson and Against Alfred E. Ford, Dismissal of Third Party Suit and Dismissal of Counterclaim. Upon review the court concludes that the matter should be reversed and remanded to the County Court for further proceedings consistent with this opinion.
According to the record below, on February 12, 1993, Appellant filed a Statement of Claim in the court below demanding from Appellee the value of a diamond engagement ring which was purchased in April 1989 from Appellant’s business, Carrollwood Jewelry and Repair Center, and later returned to be sold on consignment in December 1989. Appellant’s ex-fiance, Beverly Densler, was subsequently included as a third party defendant, as the record showed that she, not the Appellant, returned the ring to the store to be sold. According to the record, Appellant intended to recover the amount he originally paid for the ring, $4,724.40 from the sale on consignment. Appellee filed a counterclaim in the sum of $1,151.00, contending that although he was in possession of the ring, he had not returned it because he was owed money for other merchandise. He claimed that after the purchase of the ring, Beverly Densler placed a wedding band and gold chain on layaway and subsequently picked up the merchandise, but failed to pay the balance owed.
After discovering that Appellant filed for bankruptcy under Chapter 11 in 1992, Appellee filed a Motion for Summary Judgment, contending that Appellant lacked standing to bring an action for the value of the ring, due to the fact that the claim was never declared as an asset of the debtor during the bankruptcy proceedings. The court thereafter entered an order granting final summary judgment and dismissing the third party suit and counterclaim. Appellant’s appeal of this order was timely filed on April 11, 1994.
Appellant asks this court to reserve the lower court’s order granting final summary judgment in favor of Tony Ferguson, d/b/a Carrollwood Jewelry and Repair Center. Appellant contends that the lower court erred in granting summary judgment, as such relief was not proper upon the facts of the case. Although he acknowledges his failure to schedule in his bankruptcy proceeding the claim against Appellee which arose in 1989, Appellant argues that such inaction should not preclude him from recovering the value of the ring. Urging the court to apply principles of equity, Appellant maintains that Appellee has been unjustly enriched by the lower court’s decision.
Analyzing the single case relied upon by Appellee in his affidavit in support of the motion for summary judgment, Appellant argues that under Harris v. St. Louis University, 114 B.R. 647 (E.D. Mo. 1990), the court should have dismissed his case rather than grant summary judgment. In Harris, the plaintiff failed to schedule an employment discrimination claim at the time of filing for Chapter 7 bankruptcy. When she later brought suit subsequent to the bankruptcy dismissal, the court dismissed her action for lack of standing, as the claim was considered property of the bankruptcy estate, not the plaintiff. Although the debtor plaintiff could regain standing to sue, the cause of action would first have to be formally abandoned by the estate. Id. at 648-649. Appellant argues that since the Harris plaintiff’s failure to schedule the claim was not fatal to the merits of her case, the county court in this case erred in granting final summary judgment, as his lack of standing is curable.
Alternatively, Appellant contends that the law in Harris is inconsistent with other binding precedent which this court must follow, and that equitable considerations should be applied to allow him to pursue his action. While the law cited by Appellant is sound, he seeks to misapply these decisions.
Upon filing for bankruptcy, a debtor must disclose all property interests, including ` “all legal or equitable interests of the debtor in property as of the commencement of the case,” ‘ Jones v. Harrell, 858 F.2d 667 (11th Cir. 1988), citing 11 U.S.C. § 541(a)(1). Under bankruptcy laws, a cause of action is considered a property right which passes to the trustee, regardless of whether the action is scheduled at the time of bankruptcy filing. Carlock v. Pillsbury Co., 719 F.Supp 791, 856 (D. Minn. 1989); Bankruptcy Estate of B.J. McAdams, Inc. v. Ralston Purina Co., 154 B.R. 809, 811 (N.D. Ga. 1993). Therefore, once a trustee has been appointed, the debtor no longer has standing to bring a cause of action which existed at the time the debtor filed for bankruptcy. Harris at 648. In the present case, Appellant’s potential cause of action arose at the time the ring was returned to the store for resale on consignment. The $4,724.40 claim that Appellant asserts against Appellee was an asset which should have been scheduled.
As equitable ownership of the debtor’s properties passes to the trustee, and the debtor is unable to file suit upon previously existing causes of action, the trustee becomes the real party in interest in any action related to the bankruptcy estate. In Re Raymond Construction Co. of Florida, 6 B.R. 793 (M.D. Fla. 1980). However, in the event that a trustee abandons a claim, the debtor may regain title to the cause of action and bring suit. Adams v. Manown, 615 A.2d 611 (Ct. App Md.); In Re Lake, 49 B.R. 715 (S.D. Fla. 1985). Appellant argues that since it was determined that there were no assets in the bankruptcy estate, and a final decree was subsequently ordered by the bankruptcy court, the claim should be considered abandoned.
However, property which has not been scheduled is not abandoned by the trustee merely because the estate has already closed. Adams at 617. Property can only be abandoned after the trustee has had the opportunity to determine its worth to the estate (Id.); such abandonment must be clear and equivocal by the trustee. B.J. McAdams, Inc. at 811. A debtor should not be allowed to omit certain property from scheduling and then take action upon it after the bankruptcy case is closed. Adams at 617-618. It cannot be said that Appellant’s standing was revived by the closing of the bankruptcy estate in 1993.
Finally, Appellant entreats the court to consider the inequitable outcome of the lower court’s decision, which resulted in Appellee keeping Appellant’s property. This issue was considered by the bankruptcy court in Adams, where the plaintiff debtor Adams filed suit attempting to recover a $43,000.00 loan which he had failed to schedule at the time of bankruptcy filing. The defendant argued that the alternatives were either to allow Adams to benefit from his fraud, or to give the defendant a windfall. However, the court recognized that neither party was the appropriate beneficiary of such a judicial determination; rather, it was the creditors who should receive the proceeds. Adams at 617.
While Appellee should not be permitted to benefit from Appellant’s failure to schedule the claim, neither should Appellant recover the value of an asset which should have been made available to his creditors to satisfy his debts. In order to resolve such an issue, the case brought by the debtor plaintiff may be dismissed without prejudice, so that the real party in interest, the trustee, may bring action to recover the value of the unscheduled property. Adams at 619; Raymond Constr. Co. at 796. As recognized by our own bankruptcy district court in Raymond Constr. Co., the procedure for substitution of parties in state court is controlled by Fla. R. Civ. P. 1.260(c), which permits a transfer of interest or substitution of parties upon proper motion.
Accordingly, the order appealed from is reversed and the matter is remanded to the County Court for further proceedings consistent with this opinion.
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