Seaver v. Klein-Swanson
ORDER granting 4 Motion to Dismiss (Written Opinion). Signed by Senior Judge David S. Doty on 8/17/2012. (PJM)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 12-1001(DSD)
Randall L. Seaver,
Michelle Ann Klein-Swanson,
Matthew D. Swanson, Esq. and Fuller, Seaver & Ramette,
P.A., 12400 Portland Avenue South, Suite 132. Burnsville,
MN 55337, counsel for plaintiff.
Barbara J. May, Esq. and Barbara J. May Law Firm, 2780
North Snelling, Suite 102, Roseville, MN 55113, counsel
This matter is before the court upon the motion to dismiss
Counts I and II by plaintiff Randall L. Seaver (Trustee), trustee
of the bankruptcy estate of defendant Michelle Ann Klein-Swanson
and Scott Lawrence Swanson (Debtors) and objection to the March 9,
2012, report and recommendation of the bankruptcy judge.
a review of the file, record and proceedings herein, and for the
following reasons, the motion to dismiss is granted.
This bankruptcy dispute arises out of undeclared bonuses
received by Klein-Swanson.
On January 19, 2009, Debtors filed a
voluntary Chapter 7 petition.
The bankruptcy court entered an
order discharging their debts on April 23, 2009.
Around that time, Klein-Swanson, an executive at IBM, received
two bonuses, which form the basis of the present adversary action.
First, Klein-Swanson received a quarterly Excellence Award of
$8,000 in February 2009, for work performed in the fourth quarter
In March 2009, Klein-Swanson also received an annual
Growth Driven Profit bonus of $16,072 for work performed in 2008.
Klein-Swanson disclosed her potential eligibility for the bonuses,
but did not disclose her receipt of the bonuses to Trustee.
conversion and states: “The $8,000 Excellence Award and $16,072 GDP
Bonus are attributable to work performed prior to the Debtor’s
filing and are accordingly property of the estate pursuant to 11
Compl. ¶ 22.
Minnesota Statutes § 604.14.
Count II alleges civil theft under
Count III alleges theft and treble
damages under Minnesota Statutes § 548.05.
Count IV alleges
avoidable post-petition transfer under 11 U.S.C. § 549 and Count V
seeks revocation of discharge under 11 U.S.C. § 727(d)(2).
On July 20, 2011, the bankruptcy court heard argument on a
motion for partial summary judgment as to Count I by Trustee and a
motion for summary judgment by Klein-Swanson. The bankruptcy court
found that Trustee was “entitled to partial summary judgment on the
first count of his complaint, i.e. the count sounding under 11
Order, Seaver v. Klein-Swanson, No. 11-ADV-4040,
(Bankr. D. Minn. July 21, 2011).
The bankruptcy court also held
that there was no genuine dispute “that the bonuses in the amount
Klein-Swanson are property of the bankruptcy estate.”
Id. at 1.
Thus the bankruptcy court treated this fact as established under
Federal Rule of Civil Procedure 56(g).
Id.; see Fed. R. Civ. P.
56(g); Fed. R. Bankr. P. 7056.
Following trial, the bankruptcy court issued findings of fact,
conclusions of law and an order for judgment on Counts IV and V and
a report and recommendation on Count I and II.1
objected to the report and recommendation.
Trustee moves to
dismiss Counts I and II as duplicative of the relief granted in
Count IV and to avoid possible separation-of-powers issues under
Stern v. Marshall, 131 S. Ct. 2594 (2011).
After an opposing party moves for summary judgment, an action
may be voluntarily dismissed only by a stipulation of dismissal
signed by all parties who have appeared or “by court order, on
terms that the court considers proper.” Fed. R. Civ. P. 41(a)(2).
A district court has broad discretion to grant voluntary dismissal,
and in exercising its discretion considers “whether the party has
Trustee withdrew Count III before trial.
presented a proper explanation for its desire to dismiss, whether
a dismissal would result in a waste of judicial time and effort and
Rhone–Poulenc Rorer Pharm., Inc., 187 F.3d 941, 950 (8th Cir. 1999)
“Likewise, a party is not permitted to
dismiss merely to escape an adverse decision nor to seek a more
Id. (citations omitted).
In the present case, Trustee argues that dismissal has no
effect on the relief awarded and that he seeks dismissal to avoid
an unnecessary constitutional issue.
Klein-Swanson argues that
Trustee is seeking to avoid an adverse ruling, were the court to
bankruptcy court lacked authority to enter a final judgment.
Stern, 131 S. Ct. at 2611 (holding that bankruptcy court lacks
authority to “enter final judgment on a state common law claim”).
But even if the court were to make such a ruling, the determination
that the bonuses are property of the bankruptcy estate is not a
final judgment on a state claim: it is separate from the grant of
partial summary judgment and is purely a question of federal
bankruptcy law under 5 U.S.C. § 541.
As a result, defendant’s
Klein-Swanson next argues that she will be prejudiced because
Trustee “used [Counts I and II] to leverage the proceeding before
the bankruptcy court” and “the condition plaintiff seeks to have
imposed on the dismissal is prejudicial....”
Def’s Mem. Opp’n 6.
The court finds no basis for the assertion that the state-law
claims were somehow used as leverage against the bankruptcy court.
Even if such leverage existed, dismissal of those claims has no
prejudicial effect on Klein-Swanson because each of the claims
reaches the same result as Count IV: the bonuses are the property
of the estate.
Lastly, the court finds that granting the dismissal would not
waste judicial time and effort. Instead, it would save substantial
Therefore, the court finds that voluntary dismissal of Counts I and
II is proper.
Rule 56(g) Ruling
determination that the bonuses are property of the estate under 11
U.S.C. § 541.
That determination is separate from the grant of
partial summary judgment as to Count I because the bankruptcy court
independently found there to be no genuine dispute about whether
the two bonuses at issue are property of the bankruptcy estate.
Therefore, the determination that the bonuses are property of the
bankruptcy estate remains established for purposes of the adversary
Accordingly, based on the above, IT IS HEREBY ORDERED that:
The motion to dismiss [ECF No. 4] is granted;
Counts I and II are dismissed with prejudice;
Dismissal of Counts I and II have no effect on the Rule
56(g) determination that “the bonuses in the amount of $24,072
received postpetition by Defendant Michelle Ann Klein-Swanson are
property of the bankruptcy estate”;
Defendant’s objections to the report and recommendation
are denied as moot; and
This action is remanded to the bankruptcy court for entry
of judgment on Counts IV and V.
LET JUDGMENT BE ENTERED ACCORDINGLY.
August 17, 2012
s/David S. Doty
David S. Doty, Judge
United States District Court
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