United States District Court, W.D. New York
ORDER AND MEMORANDUM
LAWRENCE J. VILARDO UNITED STATED DISTRICT JUDGE.
November 4, 2016, this Court issued a 30-day stay “for
the limited purpose of allowing the plaintiff to file an
amended petition in the U.S. Bankruptcy Court (Case No.
14-10069) in order to: (1) list this litigation as an asset
of the Bankruptcy Estate, and (2) allow . . . the trustee to
be substituted as plaintiff in this case.” Docket Item
42. Pursuant to that order, the plaintiff filed both an
amended petition in the related bankruptcy proceeding and an
optimistically entitled “Unopposed Motion to Substitute
Party.” See Docket Items 45, 46. The accuracy
of that motion's title was short lived: On January 26,
2017, the defendant filed a response opposing the motion, to
which the plaintiff replied on February 2, 2017. Docket Items
reasons that follow, this Court GRANTS the plaintiff's
filed this action in December 2013, alleging violations of
the Fair Debt Collection Practices Act (“FDCPA”),
15 U.S.C. § 1692, et seq., and the Telephone
Consumer Protection Act of 1991 (“TCPA”), 47
U.S.C. § 227, et seq. A short time later, in
January 2014, Jeziorowski filed a voluntary Chapter VII
petition in Bankruptcy Court. At the § 341(a) meeting of
creditors, Jeziorowski mentioned his pending FDCPA/TCPA
lawsuit, which he valued at about $1, 000 (the statutory
FDCPA cap per claim). Docket Item 29-1 at 1 (¶ 3);
Docket Item 29-2 at 1 (¶ 4). The United States Bankruptcy
Trustee (“trustee”) instructed him to have his
attorney report to the Bankruptcy Court if his case had more
significant value. After the meeting, the trustee reported
that the debtor lacked assets; Jeziorowski received a
discharge from Bankruptcy Court in April 2014; and the
bankruptcy case was closed shortly thereafter. The FDCPA/TCPA
lawsuit, however, remained pending.
2015 or early 2016, Jeziorowski's attorney contacted the
trustee to learn how to reopen the bankruptcy case so as to
include the pending federal litigation in an amended
petition. On January 27, 2016, the Bankruptcy Court reopened
the plaintiff's petition.
discovery was completed in this case, on February 1, 2016,
the plaintiff moved to stay the proceedings so that the
Bankruptcy Estate, as administered by the trustee, could be
substituted as the plaintiff. Docket Item 29. In response,
the defendant asked this Court to deny the plaintiff's
motion to stay and to dismiss the plaintiff's complaint
with prejudice. Docket Item 32. On March 12, 2016, this case
was reassigned from the Honorable John T. Curtin to the
undersigned. Docket Item 39. After a status update, this
Court issued the above-mentioned stay, setting the stage for
the instant motion.
Chapter VII Voluntary Petition: Disclosure
Chapter VII, a bankruptcy trustee can liquidate a
debtor's assets and distribute the proceeds to creditors.
Once a debtor files under Chapter VII, the debtor's
assets, including any pending lawsuits or claims, can become
the property of the bankruptcy estate. See 11 U.S.C.
§ 541(a)(1); Chartschlaa v. Nationwide Mut. Ins.
Co., 538 F.3d 116, 122 (2d Cir. 2008) (“Every
conceivable interest of the debtor, future, nonpossessory,
contingent, speculative, and derivative, is within the reach
of § 541.”) (per curiam) (internal quotation marks
and citation omitted).
the complete disclosure of assets is “essential to the
proper functioning of the bankruptcy system . . . .”,
Chartschlaa, 538 F.3d at 122, the law includes
strict requirements. See Fed. R. Bankr. P. 1007(b)
(listing mandatory schedules, statements, and other
documents). For example, a “Statement of Financial
Affairs” requires the debtor to “[l]ist all suits
and administrative proceedings to which the debtor is or was
a party within one year immediately
preceding the filing of this bankruptcy case.” Docket
Item 33-1 at 32. And the failure to disclose can result in
severe penalties: unlike disclosed property that the trustee
does not administer, which reverts to the debtor,
“undisclosed assets automatically remain property of
the estate after the case is closed . . . .”
Chartschlaa, 538 F.3d at 122; 11 U.S.C. § 554.
“oral disclosure of [a] lawsuit [is] insufficient to
satisfy [a debtor's] disclosure obligations under the
bankruptcy code, which requires a debtor to file complete and
accurate schedules relating to his finances.” Ibok
v. SIAC-Sector Inc., 470 F. App'x 27, 29 (2d Cir.
2012) (summary order) (citing Chartschlaa, 538 F.3d
at 122-23); see also Guay v. Burack, 677 F.3d
10, 19-20 (1st Cir. 2012); Lewis v. Weyerhaeuser
Co., 141 F. App'x. 420, 424-27 (6th Cir. 2005);
Hamilton v. State Farm Fire & Cas. Co., 270 F.3d
778, 784 (9th Cir. 2001); Barger v. City of Cartersville,
348 F.3d 1289, 1295 (11th Cir. 2003). As a result, when
the only disclosure is oral disclosure, a debtor later
seeking to profit from an otherwise undisclosed claim may
lack standing, or the court may impose judicial estoppel to
preclude him from pursuing it, or both.