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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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 KHALID N. KHAN, 12 Plaintiff, 13 14 15 No. 2:13-cv-2596 KJM CKD PS v. FINDINGS AND RECOMMENDATIONS U.S. BANK NATIONAL ASSOCIATION, et al., Defendants. 16 17 This matter has been referred to the undersigned pursuant to Local Rule 302(c). Upon 18 19 review of the docket, THE COURT FINDS AS FOLLOWS: In this action, plaintiff alleges claims arising out of the foreclosure of a property located 20 21 at 611 16th Street in Sacramento, California. Plaintiff alleges he entered into a consumer loan 22 transaction for the property in the amount of $430,000 and that in March, 2013, defendants 23 wrongfully failed to credit his account for payments made. Plaintiff alleges that defendants 24 wrongfully foreclosed on the property on September 27, 2013. This action was commenced on December 16, 2013. At that time, plaintiff had a pending 25 26 27 28 bankruptcy proceeding.1 The bankruptcy proceeding was commenced on June 24, 2013. In re: 1 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.) 1 1 Khan, ECF No. 1. At no time during the pendency of the bankruptcy proceedings did plaintiff, 2 who was represented by counsel in the bankruptcy proceedings, list on any schedule the claims 3 raised in the instant action. In re: Khan, ECF No. 11 (Schedule B, filed July 9, 2013, item 21 4 requiring debtor to list “all contingent or unliquidated claims of every nature, including tax 5 refunds, counterclaims of the debtor, and rights to setoff claims” indicated “none”); ECF No. 67 6 (amended Schedule B, filed October 1, 2013, same). The bankruptcy case closed on January 31, 7 2014 with a discharge of debts in the amount of $647,969.35, including the amount of the 8 mortgage which is the subject of the instant action. In re Khan, Chapter 7 Trustee’s Report of No 9 Distribution, ECF No. 96 (Order Approving Final Report and Discharging Trustee), ECF No. 99 10 (Final Decree). The filing of a bankruptcy petition creates an estate, which includes “‘all legal and 11 12 equitable interests of the debtor in property at the commencement of the case,’” including any 13 causes of action. Cusano v. Klein, 264 F.3d 936, 945 (9th Cir. 2001) (quoting 11 U.S.C. § 14 541(a)). The estate includes any causes of action that arise in the period between the filing of the 15 petition and the final discharge. See In re Kottmeier, 240 B.R. 440, 442 (M.D. Fla. 1999); see 16 also Vertkin v. Wells Fargo Home Mortgage, 2010 WL 3619798 at *2 (N.D. Cal. 2010) (if asset 17 comes into being after petition filed, effect of failure to file amended schedule listing asset 18 precludes debtor from later claiming it has been abandoned by trustee in favor of debtor). 19 Because the bankruptcy trustee has the exclusive right to sue on behalf of the estate, the debtor 20 loses the capacity to sue in his own name unless the trustee abandons the claim. See Estate of 21 Spirtos v. One San Bernardino County Superior Court Case, 443 F.3d 1172, 1175 (9th Cir. 2006); 22 see also Lane v. Vitek Real Estate Industries, 713 F.Supp.2d 1092, 1097 (E.D. Cal. 2010). 23 Although a trustee may abandon “worthless or low-value assets, including legal claims,” there is 24 no abandonment without an affirmative act. See Biesek v. Soo Line Railroad Company, 440 F.3d 25 410, 413 (7th Cir.2006); Anokhin v. BAC Home Loan Servicing, LP, 2010 WL 3294367, at *2 26 (E.D. Cal. 2010). Assets that are neither abandoned nor administered remain the property of the 27 estate even after the case is closed. See In re Lopez, 283 B.R. 22, 28 (9th Cir. BAP 2002); see 28 ///// 2 1 also In re Pace, 146 B.R. 562, 564–66 (9th Cir. BAP 1992), (unscheduled property remains in 2 estate after case is closed). 3 In this case, plaintiff never scheduled the claims raised in the instant action in his 4 bankruptcy proceedings. As such, the claims remain the property of the estate unless abandoned 5 by the trustee. Because there has been no affirmative abandonment, plaintiff lacks standing to 6 proceed in this action.2 7 8 Accordingly, IT IS HEREBY RECOMMENDED that this action be dismissed for plaintiff’s lack of standing. 9 These findings and recommendations are submitted to the United States District Judge 10 assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(l). Within fourteen days 11 after being served with these findings and recommendations, any party may file written 12 objections with the court and serve a copy on all parties. Such a document should be captioned 13 “Objections to Magistrate Judge’s Findings and Recommendations.” Failure to file objections 14 within the specified time may waive the right to appeal the District Court’s order. Martinez v. 15 Ylst, 951 F.2d 1153 (9th Cir. 1991). 16 Dated: March 24, 2015 _____________________________________ CAROLYN K. DELANEY UNITED STATES MAGISTRATE JUDGE 17 18 19 4 khan.bk 20 21 22 23 24 25 26 27 28 2 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). 3

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