Morrison Informatics, Inc. v. Members 1st Federal Credit Union
97 A.3d 1233
| Pa. Super. Ct. | 2014Background
- Morrison Informatics, Inc. and two shareholders sued Members 1st Federal Credit Union and others for embezzlement-related harms.
- Zampelli allegedly diverted Morrison Informatics’ funds via unauthorized withdrawals and card charges.
- Morrison Informatics filed Chapter 7 bankruptcy; Trustee Leon P. Haller was appointed.
- Plaintiffs amended the complaint to add the bankruptcy trustee as a party plaintiff.
- Bankruptcy estate acquired Morrison Informatics’ causes of action; issues arose about standing and substitution of parties.
- Trial court sustained preliminary objections, dismissing the amended complaint; the matter is on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Morrison and Grigonis had standing to sue individually | Morrison and Grigonis suffered direct harms | Injuries were indirect, arising from the corporate collapse | Lacked standing; injuries were indirect |
| Whether Morrison Informatics had standing to sue | Corporate injuries belonged to Morrison Informatics | Estate owned the claims due to bankruptcy | Lacked standing; claims belonged to bankruptcy estate |
| Whether the real party in interest could be substituted as plaintiff | Trustee substitution necessary to pursue estate claims | Amendment futile; no standing, no party to sue | Abuse of discretion; substitution allowed; remand for leave to amend |
| Whether the court erred in applying Thompson v. Peck vs. estate substitution | Thompson misapplied; bankruptcy estate not death of plaintiff | Analogous to lack of standing; need substitution | Abused discretion not to substitute; remand for amendment |
Key Cases Cited
- Hill v. Ofalt, 85 A.3d 540 (Pa. Super. 2014) (standing requires direct injury to shareholder)
- Thompson v. Peck, 181 A.2d 597 (Pa. 1935) (death of plaintiff does not permit amendments to substitute)
- In re Emoral, Inc., 740 F.3d 875 (3d Cir. 2014) (bankruptcy estate owns claims; trustee substitutes)
- Graziani v. Randolph, 856 A.2d 1212 (Pa. Super. 2004) (estate recovery rules; substitution considerations)
- Bank of Marin v. England, 385 U.S. 99 (Supreme Court, 1966) (trustee vested with debtor’s rights, defenses)
- Borough of Berwick v. Quandel Group Inc., 655 A.2d 606 (Pa. Super. 1995) (standards for substituting real party in interest after time bar)