Cundiff v. Cundiff (In Re Cundiff)Cundiff v. Cundiff (In Re Cundiff)
OPINION
I.ISSUES ON APPEAL
Thе Appellee obtained a judgment in bankruptcy court determining that a debt owed to him by the Debtor for attorney fees in their divorce action is nondischargeable under 11 U.S.C. § 523(a)(5). Although the Debtor raises numerous issues on appeal, this appeal is controlled by the issue of standing. The Panel concludes that the Appellee lacks standing to bring this claim. Accordingly, the Panel vacates the bankruptcy court’s judgment with instructions to dismiss the complaint.
II.JURISDICTION AND STANDARD OF REVIEW
The Bankruptcy Appellate Panel of the Sixth Circuit has jurisdiction to decide this appeal. The United States District Court for the Southern District of Ohio has authorized appeals to the BAP. A “final order” of a bankruptcy court may be appealed by right under 28 U.S.C. § 158(a)(1). For purposes of appeal, an order is final if it “ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.”
Midland Asphalt Corp. v. United States,
“Whether a party has standing is a legal question reviewed de novo.”
Ohio Ass’n of Independent Schools v. Goff,
III.FACTS
The Debtor, Janna W. Cundiff, a.k.a. Janna Boggs (“Boggs”), and Joseph Cundiff (“Cundiff’) are former spouses. The Lawrence County, Ohio Court of Common Pleas issued an Order (“the Order”) which required
In June 1997, Boggs filed a Chapter 7 bankruptcy petition. She scheduled the $10,-000 debt as owing to Cundiffs attorneys and listed Cundiff as a eodebtor.
Within Boggs’ bankruptcy, Cundiff filed a complaint tо determine dischargeability pursuant to § 523(a)(5). Boggs filed an answer denying that the debt was nondisehargeable. She contends that Cundiff does not havе standing to object to the dischargeability in her bankruptcy case because the judgment was an asset of Cundiffs bankruptcy estate, and must bе pursued, if at all, by the Chapter 7 trustee in Cundiffs case.
The bankruptcy court relied on
Mallin v. Mallin,
At oral argument, Cundiffs counsel conceded that the $10,000 judgment became property of Cundiffs estate, that it passed to the trustee, and thаt it was neither administered, abandoned or exempted.
IV. DISCUSSION
Standing is a jurisdictional element which cannot be waived and can be raised аt any time.
See, e.g., United States v. Van,
Rule 4007. Determination of Dis-chargeability of a Debt
(a) PERSONS ENTITLED TO FILE COMPLAINT. A debtor or any creditor may file a complaint to obtain a determination of the dischargeability of any debt.
Fed.R.Bankr.P. 4007(a).
Under this rule a trustee of one bankruptcy estate has standing to file a complaint to determine dischargeability in another bankruptcy case.
See Berkowitz v. Muller (In re Muller),
Unless otherwise authorized, a cause of action which is property of the bankruptcy estate can only be prosecuted by the Trustee on behalf of the еstate.
In re Carson,
Generally, closing a case revests unadministered property in the debtor. 11 U.S.C. § 554(c) (“Unless the court orders otherwise, any proрerty scheduled under section 521(1) of this title not otherwise administered at the time of the closing of a ease is abandoned to the debtоr and administered for purposes of section 350 of this title.”). However, “property of the estate that is not abandoned under [ ] sectiоn [554] and that is not administered in a case remains property of the estate.” 11 U.S.C. § 554(d).
Many courts have held that “when the debtor has failed to disсlose an asset in accordance with § 521(1) of the Code and the Trustee has not otherwise administered it, the asset is not, upon the clоsing of the case, deemed abandoned or administered for purposes of § 350, as it would be if the asset were properly disclosed.”
Dwyer v. Peebles (In re
Peebles),
It is clear that an asset must be properly scheduled in order to pass to the debtor through abandonment under 11 U.S.C. § 554. See Vreugdenhill v. Navistar Int’l Transp. Corp.,950 F.2d 524 , 526 (8th Cir.1991) (refusing to find unscheduled cause of action abandoned even where trustee was awarе of it prior to abandonment); In re Medley,29 B.R. 84 , 86-87 (Bankr.M.D.Tenn.1983) (refusing to abandon unscheduled refund claim to debtor); DiStasio v. United States,22 Cl.Ct. 36 , 52 (1990) (holding claim for refund abandoned only if scheduled); Weiner v. United States,15 Cl.Ct. 43 , 45 (1988) (retaining unscheduled tax refund claim as property of bankrupt estate); see generally 4 Collier on Bankruptcy ¶ 554.03 (15th ed.1994). It is equally clear that since the bankrupt estate retains unscheduled assets, only the bankruptcy trustee has the authority to control them. 11 U.S.C. § 554(d) (“property ... not abandoned under this section ... remains property of the estate”)____ [S]ee also Mindlin v. Drexel Burnham Lambert Group,160 B.R. 508 , 514 (S.D.N.Y.1993) (“By operation of 11 U.S.C. § 554(c) and (d), any asset not scheduled pursuant to 11 U.S.C. § 521(1) remains proрerty of the estate, and the debtor loses all rights to enforce it under his own name.”).
Hutchins v. IRS,
The bankruptcy court’s rationale for denying Boggs’ challenge of Cundiffs standing fails. Standing to pursue the statutory cause of action in § 523(a)(5) is a question of federal law. In this Circuit, standing is determined by application of a three-part test: “(1) has the plaintiff suffered a direct or imminent injury in fact? (2) is there a causal connection between the injury and the defendant’s conduct, or was the injury caused by the independent action of some third party not before the court? and (3) is there a likelihood that the injury will be redressed by a favorable decision?”
DeBolt v. Espy,
V. CONCLUSION
The judgment of the bankruptcy court is vacated with instructions to dismiss the dis-chargeability complaint, as Cundiff lacks standing to pursue the dischargeability action.