Faison v. Buckeye Pipe Line Services Company

Background

Binor Faison brought claims against Buckeye Pipe Line Services Company under 42 U.S.C. § 1981 and New York Executive Law § 296 concerning his employment and eventual resignation. Buckeye moved to dismiss for lack of subject-matter jurisdiction, or alternatively under the legal doctrine of judicial estoppel.

Faison and his wife filed a voluntary Chapter 13 bankruptcy petition in February 2017. In January 2019, Faison filed an earlier related lawsuit involving nearly identical claims, but he did not disclose that lawsuit in the bankruptcy schedules. After the bankruptcy case was converted to Chapter 7 in April 2019, the schedules still did not disclose the claims. At a May 2019 creditors' meeting, Faison testified that he had no pending lawsuits and no right to sue anyone, although the earlier lawsuit was pending.

Faison later changed the defendant in the earlier lawsuit to Buckeye Pipe Line Services Company and then voluntarily dismissed that lawsuit without prejudice. In July 2019, Faison and his wife amended their bankruptcy schedules to disclose a cause of action, but the schedules listed its value as unknown. The bankruptcy trustee had previously filed a report stating that the estate was fully administered and requested discharge from further duties. The bankruptcy court later issued a final decree, discharged Faison and his wife from bankruptcy, and closed the bankruptcy case.

Standing

Standing is the legal requirement that a person seeking relief have the right to bring the claim. The court explained that a bankruptcy estate includes the debtor's assets, including legal claims, and that a debtor must disclose those claims to the bankruptcy trustee. A claim that is not properly disclosed remains property of the bankruptcy estate unless the trustee administers or abandons it.

Faison argued that the trustee abandoned the claims because Faison eventually amended the schedules, communicated with the trustee, and stated that the trustee decided not to retain counsel to pursue the claims. The court rejected that argument on the record before it. It found that Faison had engaged in conduct designed to conceal, or at least minimize the likelihood that, the trustee would receive proper notice of the claims. The court also found that the later disclosure was substantively insufficient because Faison had not shown that he provided the additional information the trustee requested to evaluate whether the claims were worth pursuing.

The court further concluded that the bankruptcy discharge and closing did not clearly establish abandonment. Nothing on the bankruptcy docket showed that the trustee had reviewed the amended schedules and abandoned the claims. Because Faison did not prove by a preponderance of the evidence that the trustee intended to and did abandon the claims, the court held that the claims remained the exclusive property of the bankruptcy estate. Faison therefore lacked standing to prosecute them in his own name.

Judicial Estoppel

Buckeye also argued that judicial estoppel, a doctrine that can prevent a party from taking an inconsistent position in court, required dismissal. The court stated that a different dismissal rule would generally be the more appropriate procedure for that argument, but it did not reach the merits of judicial estoppel because Faison already lacked standing.

Disposition

The court granted the motion to dismiss. It instructed the Clerk to terminate the motion and close the case. The opinion does not state that the dismissal was with or without prejudice.