Bargo v. Porter County Indiana et al
OPINION AND ORDER: Pursuant to Rule 17(a)(3) the Court allows time for the trustee to have the bankruptcy case re-opened and to ratify, join, or be substituted into this lawsuit, or for Mr. Bargo to take action (if possible) to enable him to pursue these claims himself. The Court directs the Clerk of Court to terminate the motions to dismiss (DEs 21 and 30 ). If by 9/20/2017 the trustee has not taken any relevant action regarding this lawsuit and Mr. Bargo has not taken any action enabling him to pursue these claims himself, the Court will dismiss this case as to all Defendants without further notice. If by 9/20/2017 the trustee has taken relevant action or if Mr. Bargo has taken action enabling him to pursue these claims himself, th en the Defendants may move for dismissal as set forth in the Opinion and Order. Signed by Judge Joseph S Van Bokkelen on 7/19/17. (cc: Bargo, bankruptcy trustee Michael K. Desmond at 10 South LaSalle, Suite 3600, Chicago, Illinois 60603 and at firstname.lastname@example.org)(jld)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
MICHAEL E. BARGO, JR.,
Case No.: 2:16-CV-177-JVB-JEM
PORTER COUNTY INDIANA, et al.
OPINION AND ORDER
Plaintiff claims various officers of Porter County, Indiana, including two judges,
conspired to deprive him of real property. Defendants moved for dismissal on various grounds,
including Plaintiff’s lack of standing due to his bankruptcy.
On May 19, 2016, Mr. Bargo sued officers of Porter County, Indiana, for a conspiracy to
deprive him of real property.
In Count 1, Mr. Bargo claims he made payments in 2011 and 2012 which were not
properly credited toward his property tax bill. The Porter County Treasurer then notified him it
would sell his property because he had not paid his property taxes. He objected. But Defendant
Judge Harper did not grant him relief at a tax sale hearing on October 11, 2013.
In Count 2, Mr. Bargo claims he sued the Porter County Treasurer in small claims court
on July 2, 2014. Mr. Bargo claims some Defendants mishandled his small claims case, and
violated his rights.
In Count 3, Mr. Bargo claims various Defendants denied him access to certain
documents, denied him an opportunity to make payments, and gave him fraudulent property tax
bills. Mr. Bargo claims Defendant Martin falsified the docket in one of his cases. Mr. Bargo
further claims she and Defendant Judge Chidester violated Indiana’s record retention rules when
they removed three pleadings from the record of one the cases, and returned them to Mr. Bargo
on September 19, 2014. Mr. Bargo also claims Defendants engaged in other acts in furtherance
of the conspiracy.
On October 28, 2015, Mr. Bargo petitioned for Chapter 7 bankruptcy. In the schedule of
assets, Mr. Bargo did not disclose the claims he now alleges had already accrued. The
bankruptcy court issued an order of discharge on February 17, 2016, and closed the bankruptcy
case on October 3, 2016.
Motions to dismiss
Defendants Porter County, Urbanik, Knight, Martin, and Clancy move for dismissal on
many grounds, including the argument that Mr. Bargo lacks standing because he filed for
Chapter 7 bankruptcy on October 28, 2015. It is obviously appropriate to examine whether a
plaintiff has standing to bring claims before determining the merits of those claims. See
Muhammad v. Aurora Loan Servs., No. 13-CV-1915, 2015 WL 1538409, at *3 (N.D. Ill. Mar.
31, 2015). These Defendants do not explicitly distinguish between constitutional, statutory, or
prudential standing. The Court may fairly construe the motion as pursuing all three arguments.
Defendants Harper and Chidester also move for dismissal, but don’t mention standing.
Nevertheless, analysis of Plaintiff’s standing is proper even sua sponte. G & S Holdings v. Cont’l
Cas. Co., 697 F.3d 534, 540 (7th Cir. 2012). Besides, the other Defendants did raise standing,
and Mr. Bargo responded to this issue.
Therefore, the Court will address Mr. Bargo’s standing to bring this lawsuit as the issue
pertains to all Defendants.
Pursuant to Rule 12(b)(1), a defendant may move for dismissal of a claim for lack of
subject matter jurisdiction. Fed. R. Civ. P. 12(b)(1). When considering a Rule 12(b)(1) motion, a
court accepts as true all well-pleaded factual allegations and draws all reasonable inferences in
favor of the plaintiff. Alicea-Hernandez v. Catholic Bishop of Chi., 320 F.3d 698, 701 (7th Cir.
2003). But the plaintiff bears the burden of proving satisfaction of the jurisdictional
requirements. Ctr. for Dermatology & Skin Cancer Ltd. v. Burwell, 770 F.3d 586, 588 (7th Cir.
2014). “The court may look beyond the jurisdictional allegations of the complaint and view
whatever evidence has been submitted on the issue to determine whether in fact subject matter
jurisdiction exists.” Alicea-Hernandez, 320 F.3d at 701.
Pursuant to Rule 12(b)(6), a defendant may move for dismissal for failure to state a
claim. Fed. R. Civ. P. 12(b)(6). The purpose of a motion to dismiss pursuant to Rule 12(b)(6) for
failure to state a claim is to test the sufficiency of the pleadings, not to decide the merits of the
case. See Gibson v. Chi., 910 F.2d 1510, 1520 (7th Cir. 1990). Rule 8(a)(2) provides that a
complaint must contain “a short and plain statement of the claim showing that the pleader is
entitled to relief.” However, “recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell
Atl. Corp v. Twombly, 550 U.S. 544, 555 (2007)).1
As the Supreme Court stated, “the tenet that a court must accept as true all of the
allegations contained in a complaint is inapplicable to legal conclusions.” Id. Rather, “a
complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is
plausible on its face.’” Id. at 678 (quoting Twombly, 550 U.S. at 570). A complaint is facially
plausible if a court can reasonably infer from factual content in the pleading that the defendant is
liable for the alleged wrongdoing. Id. (citing Twombly, 550 U.S. at 556).
The Seventh Circuit synthesized the standard into three requirements. See Brooks v. Ross,
578 F.3d 574, 581 (7th Cir. 2009). “First, a plaintiff must provide notice to defendants of her
claims. Second, courts must accept a plaintiff’s factual allegations as true, but some factual
allegations will be so sketchy or implausible that they fail to provide sufficient notice to
defendants of the plaintiff’s claim. Third, in considering the plaintiff’s factual allegations, courts
should not accept as adequate abstract recitations of the elements of a cause of action or
conclusory legal statements.” Id.
Plaintiff bears the burden of establishing standing. Reid L. v. Ill. State Bd. of Educ., 358
F.3d 511, 515 (7th Cir. 2004). Constitutional standing requires a plaintiff to allege that (1) he
In Twombly, the Supreme Court “retooled federal pleading standards, retiring the oft-quoted
[Conley v. Gibson, 355 U.S. 42, 47 (1957)] formulation that a pleading ‘should not be dismissed
for failure to state a claim unless it appears beyond doubt that the [pleader] can prove no set of
facts in support of his claim which would entitle him to relief.’” Killingsworth v. HSBC Bank
Nevada, N.A., 507 F.3d 614, 618 (7th Cir. 2007).
suffered an injury that is concrete and particularized, and actual or imminent; (2) the injury is
fairly traceable to the challenged action of the defendant; and (3) it is likely that a favorable
decision will redress the injury. Berger v. Nat’l Collegiate Athletic Ass’n, 843 F.3d 285, 289 (7th
Cir. 2016). Plaintiff bears the burden of proof even if the species of standing is classified as
“statutory” or “prudential.” See Sterk v. Best Buy Stores, No. 11-C-1894, 2012 WL 5197901, at
*5 (N.D. Ill. Oct. 17, 2012) (statutory standing); see also Johnson v. Bankers Life and Cas. Co.,
No. 13-CV-144, 2014 WL 4494284, at *5 (W.D. Wisc. Sept. 12, 2014) (prudential standing).
Without standing, a plaintiff cannot bring or maintain a lawsuit. The issue of standing
concerns whether a plaintiff “is entitled to have the court decide the merits of the dispute or of
particular issues.” Warth v. Seldin, 422 U.S. 490, 498 (1975).
Plaintiff bears the burden of proving standing. At this procedural posture, the Court
construes the complaint in the light most favorable to Mr. Bargo, accepting all well-pleaded
allegations as true and construing all reasonable inferences in his favor.
Neither Defendants nor Plaintiff explicitly distinguish between constitutional, statutory,
or prudential standing. Indeed, the Supreme Court in a different context recently questioned the
utility of the labels “statutory standing” and “prudential standing,” and described them as
misleading. Lexmark Intern. v. Static Control Components, 134 S.Ct. 1377, 1386, 1387–88 n.4
The validity and parameters of the prudential standing and statutory standing doctrines
remain open questions in various contexts. See Bank of Am. Corp. v. City of Miami, Fla., 137
S.Ct. 1296, 1302–03 (2017); In re GT Automation Grp., Inc., 828 F.3d 602, 605 n.1 (7th Cir.
2016); United States v. Funds in the Amount of $239,400, 795 F.3d 639, 645 (7th Cir. 2015).
For present purposes, it suffices to hold:
Pursuant to the bankruptcy code, Mr. Bargo’s claims became part of the
bankruptcy estate when he filed for Chapter 7 relief;
The bankruptcy trustee never abandoned these claims; and, therefore,
Only the bankruptcy trustee has standing to prosecute these claims;
Under Rule 17, Mr. Bargo is not the real party in interest.
With exceptions inapplicable here, all property belonging to a debtor—including all legal
claims—becomes part of the bankruptcy estate once the debtor files a bankruptcy petition. 11
U.S.C. § 541(a). A legal claim arising from events that occurred before a debtor files for
bankruptcy is included in the bankruptcy estate. United States v. Whiting Pools, Inc., 103 S.Ct.
2309, 2313 n.9 (1983); Cannon-Stokes v. Potter, 453 F.3d 446, 448 (7th Cir. 2006).
Mr. Bargo’s claims accrued before he filed for bankruptcy.1
With the few exceptions noted here, Plaintiff’s complaint only references dates before October
28, 2015, when he filed for bankruptcy. In paragraph 38 of the complaint, Mr. Bargo claims the
“conspiracy was also perpetuated by denying Plaintiff official Court Documents he requested by
APRA (Indiana Access to Public Records Act) requests filed in 2015 through 2016 as noted in
APPENDICES G, H.” (Compl., DE 1 at 15.) But neither appendix G nor H reference or seem to
involve dates after October 28, 2015. In paragraph 50 of the complaint, Mr. Bargo claims “Clerk
Martin continued the conspiracy until January 27, 2016 by once again alleging that the ruling to
Dismiss his claim on September 15, 2014 was lawful and in compliance with all applicable
Indiana Court Rules.” (Id. at 19.) But the alleged denial on January 27, 2016, does not delay the
accrual of any cause of action stemming from the dismissal on September 15, 2014. Besides, on
January 27, 2016, Mr. Bargo’s bankruptcy was still pending. Yet by the time it closed on
October 3, 2016, he still hadn’t scheduled these claims. In sum, all the claims raised by Mr.
Therefore, Mr. Bargo’s claims became the property of the bankruptcy estate. The Court
takes judicial notice of the filings in Mr. Bargo’s bankruptcy case: Northern District of Illinois
bankruptcy petition # 15-36611. Defendants attached some of these bankruptcy filings to their
briefing in this case. These bankruptcy filings, and the rest of Mr. Bargo’s bankruptcy filings, are
matters of public record. A district court may take judicial notice of matters of public record
without converting a motion to dismiss into a motion for summary judgment. Henson v. CSC
Credit Servs., 29 F.3d 280, 284 (7th Cir. 1994).
Mr. Bargo marshals two arguments in favor of his standing. Both arguments contest the
scope of the bankruptcy estate.
First, he argues that the residence—the real property involved in his complaint—never
became part of the bankruptcy estate because he did not own the residence when he filed for
bankruptcy in October 2015. But this argument is unavailing. The issue is not whether the
residence belonged to the bankruptcy estate. The issue is whether Mr. Bargo’s claims (regarding
the residence or otherwise) accrued before he filed for bankruptcy, in which case the claims
became part of the bankruptcy estate. They did, so they did.
Second, he argues that his complaint is a § 1983 civil rights complaint, and that since
Defendants violated his civil rights, and not the trustee’s civil rights, he has standing, not the
trustee. Mr. Bargo cites no support for this proposition. To the contrary, courts have routinely
held that a pre-petition civil rights claim becomes part of a bankruptcy estate upon petitioning for
bankruptcy. See, e.g., Kleven v. Walgreen Co., 373 Fed. Appx. 608, 611 (7th Cir. 2010); Phillips
v. EEOC, No. 3:15-CV-565, 2016 WL 8719050, at *6 (N.D. Ind. Sept. 9, 2016); Burruss v. Cook
Bargo in his complaint became part of the bankruptcy estate, even without a “sufficiently rooted”
analysis. See Segal v. Rochelle, 382 U.S. 375, 380 (1966).
Cty. Sheriff’s Office, No. 8-C-6621, 2013 WL 3754006, at *14 (N.D. Ill. July 15, 2013); Cowling
v. Rolls Royce Corp., No. 1:11-CV-1719, 2012 WL 4762143, at *5 (S.D. Ind. Oct. 5, 2012);
Lujano v. Town of Cicero, No. 7-C-4822, 2012 WL 4499326, at *5 (N.D. Ill. Sept. 28, 2012).
So this argument fails as well.
Only the bankruptcy trustee has standing to prosecute Mr. Bargo’s claims, because they
became part of the bankruptcy estate. Cable v. Ivy Tech State Coll., 200 F.3d 467, 472 (7th Cir.
1999) (“In liquidation proceedings, only the trustee has standing to prosecute or defend a claim
belonging to the estate.”), overruled on other grounds by Hill v. Tangherlini, 724 F.3d 965, 967
n.1 (7th Cir. 2013).
Generally, the only way a debtor can assert a pre-petition claim in his own name is if the
trustee abandons the claim, in which case title to the claim reverts to the debtor as if he always
held it and as if the bankruptcy never occurred. See Matthews v. Potter, 316 Fed. Appx. 518,
521–22 (7th Cir. 2009).
By statute, the trustee can abandon property of the estate three ways.
One, the trustee can abandon property that is burdensome or of inconsequential value and
benefit to the estate after notice and a hearing. 11 U.S.C. § 554(a). No such notice or hearing
Two, the court can order the trustee to abandon property that is burdensome or of
inconsequential value and benefit to the estate after notice and a hearing. 11 U.S.C. § 554(b). No
court entered such an order here.
Three, “any property scheduled under section 521(a)(1) . . . not otherwise administered at
the time of the closing of a case is abandoned to the debtor . . . .” 11 U.S.C. § 554(c) (emphasis
added). But Mr. Bargo never scheduled the claims in his bankruptcy filings. Indeed, he explicitly
denied having such claims by checking “NONE” next to “Other contingent and unliquidated
claims of every nature . . . .” on Schedule B. (Schedule B, DE 22-1 at 10.)
The trustee did not abandon claims he never knew about. The abandonment requirements
are “exacting” because they are designed to ensure that creditors can benefit from all available
property. Morlan v. Universal Guar. Life Ins. Co., 298 F.3d 609, 618 (7th Cir. 2002). A trustee
cannot abandon assets not scheduled. See In re Green, 42 Fed. Appx. 815, 820 (7th Cir. 2002).
Without satisfaction of the statutory requirements for abandonment, assets remain in the
Chapter 7 estate permanently, even after the debtor receives discharge: “Unless the court orders
otherwise, property of the estate that is not abandoned under this section and that is not
administered in the case remains property of the estate.” 11 U.S.C. § 554(d).
Here, the trustee did not abandon the claims. No one pursued or satisfied any of the
statutory means of abandonment. Therefore, the claims remain part of the bankruptcy estate.
Federal Rule of Civil Procedure 17 provides: “An action must be prosecuted in the name
of the real party in interest.” Fed. R. Civ. P. 17(a)(1).
Because the subject claims are property of the bankruptcy estate, Mr. Bargo is not the
real party in interest under Rule 17. Rather, the bankruptcy trustee is the real party in interest,
and only he can bring these claims. Cable, 200 F.3d at 472.
Mr. Bargo cannot go forward with this case as is. The question becomes whether to
dismiss this case or to allow the trustee an opportunity to do something.
Rule 17(a)(3) forbids hasty dismissals for failure to prosecute in the name of the real
party in interest:
The court may not dismiss an action for failure to prosecute in the name of
the real party in interest until, after an objection, a reasonable time has been
allowed for the real party in interest to ratify, join, or be substituted into the
action. After ratification, joinder, or substitution, the action proceeds as if it
had been originally commenced by the real party in interest.
Fed. R. Civ. P. 17(a)(3).
But courts have not applied this provision every time the wrong party files a lawsuit. See
6A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice & Procedure §
1555 at 570–71 (3d ed. 2010). The provision does not apply when “the determination of the right
party to bring the action was not difficult and when no excusable mistake had been made.” Id. at
571; see also Metalworking Lubricants Co. v. U.S. Fire Ins. Co., 460 F. Supp. 2d 897, 902 (S.D.
Ind. 2006). In such a case, simple dismissal would not be hasty, and would not offend Rule
There are non-binding examples of courts simply dismissing cases in circumstances
similar to those here. One court observed that the law clearly forbids a Chapter 7 debtor from
pursuing pre-petition legal claims, and so held Rule 17(a)(3) to be irrelevant and no bar to
dismissal. In re Peregrin, No. 12-B-26800, 2012 WL 5939266, at *5 (Bankr. N.D. Ill. Nov. 28,
2012); see also Putzier v. Ace Hardware Corp., No. 13-C-2849, 2016 WL 1337295, at *9 (N.D.
Ill. Mar. 30, 2016); Van Sickle v. Fifth Third Bancorp, No. 12-11837, 2012 WL 3230430, at *3
(E.D. Mich. Aug. 2, 2012).
There are also non-binding examples of courts in similar circumstances allowing
bankruptcy trustees reasonable time to ratify, join, or be substituted as parties, before potential
dismissal. See, e.g., Sparks v. Norfolk S. Ry. Co., No. 2:14-CV-40, 2016 WL 5394459, at *1
(N.D. Ind. Sept. 27, 2016); Muhammad, 2015 WL 1538409, at *6.
Mr. Bargo lacks standing to maintain this case. He is not the real party in interest. The
Court also notes Defendants raise many other arguments for dismissal.
In an abundance of caution, pursuant to Rule 17(a)(3), the Court allows a reasonable time
for the trustee to have the bankruptcy case re-opened and to ratify, join, or be substituted into this
lawsuit, or for Mr. Bargo to take action (if possible) to enable him to pursue these claims
The Court directs the Clerk of Court to terminate the motions to dismiss (DEs 21 and 30).
If by September 20, 2017, the trustee has not taken any relevant action regarding this
lawsuit and Mr. Bargo has not taken any action enabling him to pursue these claims himself, the
Court will dismiss this case as to all Defendants, without further notice, and without the
necessity of any further filings by the parties.
If by September 20, 2017, the trustee has taken relevant action regarding this lawsuit, or
if Mr. Bargo has taken action enabling him to pursue these claims himself, then the Defendants
may move for dismissal, incorporating their prior motions and adding any new grounds as
appropriate, and the Court will rule on Defendants’ many other arguments for dismissal, as
The Court directs the Clerk of the Court to send a copy of this order to bankruptcy trustee
Michael K. Desmond at 10 South LaSalle, Suite 3600, Chicago, Illinois 60603 and at
SO ORDERED on July 19, 2017.
s/ Joseph S. Van Bokkelen
JOSEPH S. VAN BOKKELEN
UNITED STATES DISTRICT JUDGE
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