TEDESCO et al v. CIRCLE K et al
ORDER ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT - Defendant's motion for summary judgment [Filing No. 57 ] is denied, and Plaintiffs' request to take judicial notice of bankruptcy filings [Filing No. 66 ] is granted (se e Order for Details). This matter remains set for a final pretrial conference at 1:30 p.m. on November 7, 2022, and a two-day jury trial on damages only beginning at 9 a.m. November 17, 2022. Signed by Magistrate Judge Tim A. Baker on 9/15/2022. (SWM)
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
GARY F. SEITZ Trustee of the Bankruptcy Estate )
of Theodore Joseph Tedesco,
MAC'S CONVENIENCE STORES LLC
d/b/a CIRCLE K,
ORDER ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
Defendant Mac's Convenience Stores argues that it is entitled to summary judgment
because Theodore Joseph Tedesco, a Plaintiff in this case at the time Defendant moved for
summary judgment, failed to disclose his known claim against Defendant when he filed for
Chapter 7 bankruptcy. However, in response to Defendant's summary judgment motion,
Tedesco's counsel moved to substitute the Bankruptcy Trustee, Gary F. Seitz, as the real party in
interest in this litigation. The Court approved this request and substituted Trustee Seitz as a
Plaintiff in these proceedings in place of Tedesco1. [Filing No. 75.] Now that the proper real
party in interest—Trustee Seitz—has been identified and named a Plaintiff in this matter, the
Trustee is entitled to pursue this litigation as an asset of the estate in bankruptcy. Thus,
Defendant's motion for summary judgment is denied. [Filing No. 57.]
As discussed below, Mr. Tedesco's wife, Barbara Cross-Tedesco, is also a Plaintiff.
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On January 19, 2019, fuel from a gasoline hose at a Circle K gas station operated by
Defendant sprayed on Tedesco, resulting in injuries. [Filing No. 57-1.] In March 2019, Tedesco
consulted with an attorney at a law firm. That firm initiated a claim and began communicating
with Defendant's third-party administrator. [Filing No. 57-2.] Nearly ten months later, on
November 14, 2019, Tedesco filed a voluntary Chapter 7 petition in the United States
Bankruptcy Court for the Eastern District of Pennsylvania. [Filing No. 57-3.] As part of
Tedesco's voluntary petition, he filed a Schedule 106A/B listing his assets and liabilities. [Filing
No. 57-4.] Tedesco, proceeding pro se at that time, failed to list his claims against Defendant in
his schedule of assets. [Filing No. 57-4, at ECF p. 8.] On July 23, 2020, the bankruptcy court
entered an order of discharge pursuant to 11 U.S.C. § 727. [Filing No. 57-5.]
On January 15, 2021, Tedesco initiated this action in Indiana state court. [Filing No. 1.]
Defendant removed the matter to this Court two months later, and on April 15, 2022, filed its
motion for summary judgment. [Filing No. 57.] Counsel for the Tedesco Plaintiffs filed a
response in June 2022. [Filing No. 64.] In that response, Plaintiffs' lawyers indicated that they
first learned of Tedesco's bankruptcy in April 2022, when Defendant filed its motion for a status
conference to extend the summary judgment deadline and, if necessary, amend the Case
Management Plan. [Filing No. 64, at ECF p. 3 (citing Filing No. 54).] Plaintiffs' counsel
contends that once counsel learned about Tedesco's bankruptcy, counsel promptly began
investigating the circumstances and taking steps to substitute the Bankruptcy Ttrustee as the real
party in interest in this matter. [Filing No. 64, at ECF p. 3.]
On May 4, 2022, the United States Trustee filed its motion to reopen Tedesco's
bankruptcy case. [Filing No. 65-1.] The Court granted that motion on June 9, 2022. [Filing No.
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65-2.] The following day, the United States Trustee reappointed Seitz as Trustee for Tedesco's
bankruptcy estate. [Filing No. 65-3.] On June 13, 2022, Trustee Seitz filed in the bankruptcy
court his Application of the Chapter 7 Trustee for Authority to Employ Lance Ladendorf and
Pavlack Law as Special Counsel. [Filing No. 65-4.]2
On June 21, 2022, in the underlying action, Plaintiffs filed a motion to substitute Trustee
Seitz as the real party in interest in lieu of Tedesco. [Filing No. 69.] The Court granted this
request. [Filing No. 75.] Nevertheless, Defendant continues to argue that it is entitled to
summary judgment in its favor. [Filing No. 83.]
Defendant argues that it is entitled to summary judgment in this action because Tedesco's
claims are barred by his failure to disclose them in his bankruptcy action. [Filing No. 57, at ECF
p. 4.] Summary judgment is appropriate where the submissions of the parties taken together
"show that there is no genuine issue as to any material fact and that the moving party is entitled
to a judgment as a matter of law." Fed. R. Civ. P. 56. The moving party bears the burden of
demonstrating the absence of a material factual dispute, and the Court "views the evidence, and
draws all reasonable inferences, in the light most favorable to the nonmoving party." Driveline
Sys., LLC v. Artic Cat, Inc., 936 F.3d 576, 579 (7th Cir. 2019).
Plaintiffs have also filed a request for judicial notice of bankruptcy filings, which are attached
to Plaintiffs' request. This request appears on the docket as a pending motion. [Filing No. 66.]
Defendant has not objected to Plaintiffs' request. Accordingly, this request is granted.
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The doctrine of judicial estoppel
Defendant's argument rests predominately on the fact that the bankruptcy code required
Tedesco to disclose this claim on his schedule of assets, and by failing to do so, judicial estoppel
bars his claim. [Filing No. 57, at ECF p. 8.] However, Tedesco is not the real party in interest in
this litigation. Eleven months after Tedesco's claim accrued, he filed for bankruptcy. [Filing No.
57-3.] "Pre-bankruptcy claims are part of debtors' estates; this  claim therefore belongs to the
Trustee, for the benefit of [Tedesco]'s creditors." Biesek v. Soo Line R. Co., 440 F.3d 410, 413
(7th Cir. 2006). As a result, the real party in interest is Trustee Seitz, and the bankruptcy estate
is not subject to judicial estoppel. See, e.g., Cannon-Stokes v. Potter, 453 F.3d 446, 448 (7th Cir.
2006) ("Judicial estoppel is an equitable doctrine, and it is not equitable to employ it to injure
creditors who are themselves victims of the debtor's deceit. Moreover, as a technical matter the
estate in bankruptcy, not the debtor, owns all pre-bankruptcy claims, and unless the estate itself
engages in contradictory litigation tactics the elements of judicial estoppel are not satisfied.").
Tedesco's counsel and Trustee Seitz have taken appropriate steps to rectify the situation.
Following the filing of Defendant's motion for summary judgment, Tedesco's bankruptcy estate
was reopened and the bankruptcy court reappointed Trustee Seitz. Trustee Seitz then
successfully moved to substitute for Tedesco as the real party in interest in this litigation related
to Tedesco's underlying injury claim. [Filing No. 75.] Seventh Circuit caselaw clarifies that a
trustee is not held responsible for the mistakes or actions of a plaintiff. See, e.g., Metrou v. M.A.
Mortenson Co., 781 F.3d 357, 360 (7th Cir. 2015) ("The Trustee is entitled to pursue this
litigation as an asset of the estate in bankruptcy. Whether or not Matichak should have disclosed
the claim in bankruptcy does not matter to a suit maintained by the Trustee, who is not even
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arguably culpable for any misconduct. Reducing the stakes in the tort suit could injure the
creditors along with the debtor.").
The analysis might be different if the claim had been abandoned by Tedesco's bankruptcy
estate, but that is not the case here. See, e.g., Cannon-Stokes, 463 F.3d at 448 ("But if the estate
(through the trustee) abandons the claim, then the creditors no longer have an interest, and with
the claim in the debtor's hands the possibility of judicial estoppel comes to the fore."); Kumar v.
Tata Consultancy Servs., No. 1:17-cv-1500-JMS-DML, 2018 WL 419985, at *3 (S.D. Ind. Jan.
16, 2018) (only if claim abandoned by estate and returned to debtor can judicial estoppel be
considered). Defendant relies in part on the unpublished case of Novotny v. Plexus Corp., 777
Fed. App'x 164, 165 (7th Cir. 2019), cert. denied, 141 S. Ct. 287 (2020), rehrng. denied, 141 S.
Ct. 2289 (2021), to argue that judicial estoppel is appropriate where the district court finds the
plaintiff's omission of a claim in bankruptcy proceedings was intentional.
However, Defendant fails to note the critical difference in facts between the present
situation and Novotny. In Novotny, "[t]he trustee for Novotny's bankruptcy estate eventually
abandoned the added claims, and the bankruptcy judge closed the case again." Id. Here, the
claim has not been abandoned by Tedesco's bankruptcy estate. In fact, the opposite has
occurred—the bankruptcy estate has been reopened specifically to pursue the claim. [Filing No.
65-1.] With the claim being pursued by Trustee Seitz, rather than Tedesco, judicial estoppel
does not bar this litigation. While Defendant makes many arguments surrounding whether
Tedesco, as the debtor, took inconsistent positions and had an intention to deceive, his intention
has no bearing on the standing of Trustee Seitz to pursue this claim on behalf of the bankruptcy
estate. The bankruptcy court is the proper forum to address questions regarding Tedesco's
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Defendant also devotes a portion of its reply brief to arguing that Plaintiffs no longer
have standing to pursue their civil action against Defendant because their claims are now
property of Tedesco's bankruptcy estate. [Filing No. 71, at ECF p. 12.] Thus, Defendant argues
that summary judgment ought to be granted based on a lack of standing.
This argument faces several hurdles. First, Defendant raised this argument for the first
time in its reply brief. "[A]rguments raised for the first time in a reply brief are waived." Darif
v. Holder, 739 F.3d 329, 336 (7th Cir. 2014). Therefore, this argument is waived. Moreover,
Defendant does not elaborate on the type of standing it contends is lacking. Plaintiffs adequately
identified that Tedesco has Article III standing, and the substitution of Trustee Seitz as the real
party in interest satisfies prudential standing. [Filing No. 74-1, at ECF p. 1.] Decisions from
other district courts within the Seventh Circuit support the conclusion that Trustee Seitz has
standing to pursue Tedesco's claims. See, e.g., Bushberger v. Midland Credit Mgmt., No. 17-cv1468, 2019 WL 2271043, at *4-5 (E.D. Wis. May 28, 2019) ("The Court of Appeals for the
Seventh Circuit has made it clear that a failure to prosecute an action by the real party in interest
is not a jurisdictional defect. . . . Bushberger was entitled to the opportunity to cure the realparty-in-interest problem."); Stephens v. C&K Trucking, LlC, No. 20-cv-4305, 2021 WL
4978451, at *2 (N.D. Ill. May 17, 2021) ("[T]he original complaint's failure to name the true
parties in interest as plaintiffs did not create a jurisdictional problem, but merely resulted in a
curable defect. And here, the original plaintiffs remedied the defect by amending the complaint
to substitute the real parties in interest—the companies—as the new Plaintiffs.").
In sum, the proper solution to the standing issue was to substitute Trustee Seitz and
continue the action as if it had been originally commenced by Trustee Seitz. That is precisely the
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course of action Plaintiffs pursued. Thus, Defendant's request for summary judgment is denied
on this basis as well.
Barbara Cross-Tedesco's loss of consortium claim
Defendant's motion for summary judgment requests "summary judgment as to all of
Plaintiff's claims and dismissing this action with prejudice and with costs awarded to
Defendant." [Filing No. 57, at ECF p. 9.] The motion does not articulate any basis for obtaining
judgment against Barbara Cross-Tedesco's claim for loss of consortium. Defendant later argues
in its reply brief that Cross-Tedesco's loss of consortium claim is also invalid "on the same
grounds" as Theodore Tedesco's claims due to Tedesco lacking standing. [Filing No. 71, at ECF
p. 15.] However, as noted above, Trustee Seitz is not barred by judicial estoppel and can
continue to pursue the underlying injury claim on behalf of the bankruptcy estate. Thus, there is
similarly no basis to dismiss Cross-Tedesco's claim on summary judgment.
For these reasons, Defendant's motion for summary judgment [Filing No. 57] is denied,
and Plaintiffs' request to take judicial notice of bankruptcy filings [Filing No. 66] is granted.
This matter remains set for a final pretrial conference at 1:30 p.m. on November 7, 2022, and a
two-day jury trial on damages only beginning at 9 a.m. November 17, 2022.
Tim A. Baker
United States Magistrate Judge
Southern District of Indiana
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