Khan v. U.S. Bank National Association et al

Filing 31

FINDINGS and RECOMMENDATIONS signed by Magistrate Judge Carolyn K. Delaney on 3/24/2015 RECOMMENDING that this action be dismissed for plaintiff's lack of standing; Referred to Judge Kimberly J. Mueller; Objections due within 14 days after being served with these F & R's. (Reader, L)

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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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KHALID N. KHAN,

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Plaintiff,

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No. 2:13-cv-2596 KJM CKD PS

v.

FINDINGS AND RECOMMENDATIONS

U.S. BANK NATIONAL ASSOCIATION,
et al.,
Defendants.

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This matter has been referred to the undersigned pursuant to Local Rule 302(c). Upon

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review of the docket, THE COURT FINDS AS FOLLOWS:
In this action, plaintiff alleges claims arising out of the foreclosure of a property located

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at 611 16th Street in Sacramento, California. Plaintiff alleges he entered into a consumer loan

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transaction for the property in the amount of $430,000 and that in March, 2013, defendants

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wrongfully failed to credit his account for payments made. Plaintiff alleges that defendants

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wrongfully foreclosed on the property on September 27, 2013.
This action was commenced on December 16, 2013. At that time, plaintiff had a pending

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bankruptcy proceeding.1 The bankruptcy proceeding was commenced on June 24, 2013. In re:
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The court takes judicial notice of the proceedings in in re: Khalid N. Khan, Debtor, case no. 1328431-C-13C, United States Bankruptcy Court (E.D. Cal.)
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Khan, ECF No. 1. At no time during the pendency of the bankruptcy proceedings did plaintiff,

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who was represented by counsel in the bankruptcy proceedings, list on any schedule the claims

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raised in the instant action. In re: Khan, ECF No. 11 (Schedule B, filed July 9, 2013, item 21

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requiring debtor to list “all contingent or unliquidated claims of every nature, including tax

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refunds, counterclaims of the debtor, and rights to setoff claims” indicated “none”); ECF No. 67

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(amended Schedule B, filed October 1, 2013, same). The bankruptcy case closed on January 31,

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2014 with a discharge of debts in the amount of $647,969.35, including the amount of the

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mortgage which is the subject of the instant action. In re Khan, Chapter 7 Trustee’s Report of No

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Distribution, ECF No. 96 (Order Approving Final Report and Discharging Trustee), ECF No. 99

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(Final Decree).
The filing of a bankruptcy petition creates an estate, which includes “‘all legal and

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equitable interests of the debtor in property at the commencement of the case,’” including any

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causes of action. Cusano v. Klein, 264 F.3d 936, 945 (9th Cir. 2001) (quoting 11 U.S.C. §

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541(a)). The estate includes any causes of action that arise in the period between the filing of the

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petition and the final discharge. See In re Kottmeier, 240 B.R. 440, 442 (M.D. Fla. 1999); see

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also Vertkin v. Wells Fargo Home Mortgage, 2010 WL 3619798 at *2 (N.D. Cal. 2010) (if asset

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comes into being after petition filed, effect of failure to file amended schedule listing asset

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precludes debtor from later claiming it has been abandoned by trustee in favor of debtor).

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Because the bankruptcy trustee has the exclusive right to sue on behalf of the estate, the debtor

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loses the capacity to sue in his own name unless the trustee abandons the claim. See Estate of

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Spirtos v. One San Bernardino County Superior Court Case, 443 F.3d 1172, 1175 (9th Cir. 2006);

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see also Lane v. Vitek Real Estate Industries, 713 F.Supp.2d 1092, 1097 (E.D. Cal. 2010).

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Although a trustee may abandon “worthless or low-value assets, including legal claims,” there is

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no abandonment without an affirmative act. See Biesek v. Soo Line Railroad Company, 440 F.3d

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410, 413 (7th Cir.2006); Anokhin v. BAC Home Loan Servicing, LP, 2010 WL 3294367, at *2

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(E.D. Cal. 2010). Assets that are neither abandoned nor administered remain the property of the

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estate even after the case is closed. See In re Lopez, 283 B.R. 22, 28 (9th Cir. BAP 2002); see

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also In re Pace, 146 B.R. 562, 564–66 (9th Cir. BAP 1992), (unscheduled property remains in

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estate after case is closed).

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In this case, plaintiff never scheduled the claims raised in the instant action in his

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bankruptcy proceedings. As such, the claims remain the property of the estate unless abandoned

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by the trustee. Because there has been no affirmative abandonment, plaintiff lacks standing to

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proceed in this action.2

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Accordingly, IT IS HEREBY RECOMMENDED that this action be dismissed for
plaintiff’s lack of standing.

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These findings and recommendations are submitted to the United States District Judge

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assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(l). Within fourteen days

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after being served with these findings and recommendations, any party may file written

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objections with the court and serve a copy on all parties. Such a document should be captioned

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“Objections to Magistrate Judge’s Findings and Recommendations.” Failure to file objections

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within the specified time may waive the right to appeal the District Court’s order. Martinez v.

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Ylst, 951 F.2d 1153 (9th Cir. 1991).

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Dated: March 24, 2015

_____________________________________
CAROLYN K. DELANEY
UNITED STATES MAGISTRATE JUDGE

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4 khan.bk

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Moreover, even if the claims raised herein are abandoned, it appears plaintiff may be judicially
estopped from bringing this action. See generally Hamilton v. State Farm Fire & Cas. Co., 270
F.3d 778, 782-85 (9th Cir. 2001); Gonzalez v. County of Yolo, 2014 WL 5115059 (E.D. Cal.
2014).
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