LONG et al v. A-C PRODUCT LIABILITY TRUST et al

Filing 111

MEMORANDUM. SIGNED BY HONORABLE EDUARDO C. ROBRENO ON 1/25/2016. 1/25/2016 ENTERED AND COPIES MAILED TO THE U.S. BANKRUPTCY COURT, S. BEAUDRY AND D. WHITTAKER AND E-MAILED.(ahf)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
WILLARD E. BARTEL, et al.,
:
(Administrators for Estate of :
Felix Long)
:
:
Plaintiffs,
:
:
:
v.
:
:
:
A-C PRODUCT LIABILITY TRUST, :
ET AL.,
:
:
Defendants.
:

CONSOLIDATED UNDER
MDL 875

E.D. PA CIVIL ACTION NO.
2:11-31575-ER

M E M O R A N D U M
EDUARDO C. ROBRENO, J.

January 25, 2016

This case was transferred in January 2011 from the
United State District Court for the Northern District of Ohio to
the United States District Court for the Eastern District of
Pennsylvania, where it became part of the consolidated asbestos
products liability multidistrict litigation (MDL 875). The case
was assigned to the Court’s maritime docket (“MARDOC”). Willard
E. Bartel and David E. Peebles (“Plaintiffs”), Administrators of
the Estate of Felix Long, allege that Mr. Long (“Decedent” or
“Mr. Long”) was exposed to asbestos while working aboard various
ships. Plaintiffs assert that Decedent developed two asbestosrelated illnesses as a result of his exposure to asbestos aboard
those ships.

For the reasons that follow, the Court will deny
Defendants’ motion.

I.

BACKGROUND
In 1998, Mr. Long brought claims for non-malignant

asbestos-related disease (now pursued by Plaintiffs after the
death of Mr. Long) against various defendants, including
shipowners represented by Thompson Hine LLP (“Defendants” or the
“Thompson Hine Shipowners”). By way of Order dated March 14,
1997, Judge Charles Weiner 1 had already dismissed those claims
administratively, leaving open the possibility for the action to
be pursued at a later, unspecified date. 2 Approximately seven

1

Judge Weiner presided over MDL 875 from its inception
in 1991 until his passing in 2005. In 2005, Judge James Giles
was designated to preside over MDL 875, where he remained until
his resignation from the bench in 2008. In October 2008, Judge
Eduardo Robreno, the undersigned, was appointed to succeed Judge
Giles, and he has presided over MDL 875 since that date.
2

On May 2, 1996, Judge Weiner administratively
dismissed all pending MARDOC claims without prejudice, noting
that the claimants had “provide[d] no real medical or exposure
history,” and had been unable to do so for months. In re
Asbestos Prods. Liab. Litig. (No. VI), No. 2 MDL 875, 1996 WL
239863, at *1–2 (E.D. Pa. May 2, 1996). Judge Weiner also
ordered that these “asymptomatic cases” could be activated if
the plaintiffs began to suffer from an impairment and could show
(1) “satisfactory evidence [of] an asbestos-related personal
injury compensable under the law,” and (2) “probative evidence
of exposure” to a defendant’s products. Id. at *5. On March 14,
1997, Judge Weiner applied that dismissal order to all future
MARDOC cases that had not yet been filed (e.g., this case). In
2002, the MDL Court ordered that administratively dismissed
cases remain active for certain purposes (e.g., entertaining
2

years after he filed his asbestos action (and approximately
eight years after it was dismissed), in January of 2005, Mr.
Long filed for bankruptcy pursuant to Chapter 7 of the
bankruptcy code, without listing his asbestos claims as an asset
in the bankruptcy filing. Approximately four months later, in
May of 2005, the bankruptcy case was closed. Thereafter, in
February of 2007, Mr. Long was diagnosed with asbestos-related
lung cancer, giving rise to a claim for a malignant asbestosrelated disease. On January 27, 2011 (approximately six years
after he was discharged from bankruptcy, and approximately
thirteen years after Mr. Long first filed his asbestos action),
the MDL Court reinstated Mr. Long’s asbestos action, which had
been dismissed by Judge Weiner in 1996. A summary of this
timeline of events is as follows:






March 1997 - Asbestos action administratively
dismissed
1998 - Asbestos action filed (non-malignancy claims)
January 2005 - Bankruptcy action filed
May 2005 - Bankruptcy action closed
February 2007 - Cancer diagnosis (malignancy claims)

settlement motions and orders, motions for amendment to the
pleadings, etc.), and in 2003, clarified that the administrative
dismissals were “not intended to provide a basis for excluding
the MARDOC claimants from participating in settlement programs
or prepackaged bankruptcy programs[.]” In re Am. Capital Equip.,
296 Fed. App’x 270, 272 (3d Cir. 2008) (quoting In re Asbestos
Prods. Liab. Litig. (No. VI), Order Granting Relief to MARDOC
Claimants with Regard to Combustion Eng'g, Inc., No. 2 MDL 875
(E.D. Pa. Feb. 19, 2003)).
3



January 2011 - Asbestos action reinstated by MDL Court
The Thompson Hine Shipowners have moved for summary

judgment, arguing that (1) Plaintiffs’ non-malignancy claims are
barred by way of judicial estoppel because Mr. Long failed to
disclose the asbestos action as an asset in his bankruptcy
filing, and (2) Plaintiffs cannot pursue any of the asbestos
claims in the asbestos action (neither the initial nonmalignancy claims nor his post-petition malignancy claims)
because the entire asbestos action is now owned by the
bankruptcy estate.

II.

LEGAL STANDARD
A.

Summary Judgment Standard
Summary judgment is appropriate if there is no genuine

dispute as to any material fact and the moving party is entitled
to judgment as a matter of law. Fed. R. Civ. P. 56(a). “A motion
for summary judgment will not be defeated by ‘the mere
existence’ of some disputed facts, but will be denied when there
is a genuine issue of material fact.” Am. Eagle Outfitters v.
Lyle & Scott Ltd., 584 F.3d 575, 581 (3d Cir. 2009) (quoting
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-248 (1986)).
A fact is “material” if proof of its existence or non-existence
might affect the outcome of the litigation, and a dispute is
4

“genuine” if “the evidence is such that a reasonable jury could
return a verdict for the nonmoving party.” Anderson, 477 U.S. at
248.
In undertaking this analysis, the court views the
facts in the light most favorable to the non-moving party.
“After making all reasonable inferences in the nonmoving party’s
favor, there is a genuine issue of material fact if a reasonable
jury could find for the nonmoving party.” Pignataro v. Port
Auth. of N.Y. & N.J., 593 F.3d 265, 268 (3d Cir. 2010) (citing
Reliance Ins. Co. v. Moessner, 121 F.3d 895, 900 (3d Cir.
1997)). While the moving party bears the initial burden of
showing the absence of a genuine issue of material fact, meeting
this obligation shifts the burden to the non-moving party who
must “set forth specific facts showing that there is a genuine
issue for trial.”

B.

Anderson, 477 U.S. at 250.

The Applicable Law
The parties appear to assume that Defendants’ legal

arguments regarding “judicial estoppel” and the “real party in
interest” are matters of federal law that should be decided in
the first instance by the Court. The Court agrees with this
approach. See Ryan Operations G.P. v. Santiam-Midwest Lumber

5

Co., 81 F.3d 355, 358 (3d Cir. 1996). 3 In matters of federal law,
the MDL transferee court applies the law of the circuit where it
sits, which in this case is the law of the U.S. Court of Appeals
for the Third Circuit. Various Plaintiffs v. Various Defendants
(“Oil Field Cases”), 673 F. Supp. 2d 358, 362–63 (E.D. Pa. 2009)
(Robreno, J.). Therefore, the Court will apply Third Circuit law
in deciding the issues raised by Defendants’ motion.

III. THE PARTIES’ ARGUMENTS
A.

Judicial Estoppel (Non-Malignancy Claims)
Defendants contend that Plaintiffs’ non-malignancy

claims are barred on grounds of judicial estoppel. Specifically,
they contend that Mr. Long took irreconcilably inconsistent
positions in his bankruptcy proceeding and the instant
proceeding. Defendants state that Mr. Long concealed the
existence of his non-malignancy asbestos claims when filing for
bankruptcy by not reporting them as pending or likely claims on
Schedule B (“Personal Property”), while simultaneously asserting
such claims in the current (and then-already-pending) asbestos
action. They further assert that a finding of bad faith is

3

“A federal court’s ability to protect itself from
manipulation by litigants should not vary according to the law
of the state in which the underlying dispute arose.” Ryan
Operations, 81 F.3d at 358 n.2.
6

warranted because Mr. Long had knowledge of the non-malignancy
asbestos claims at the time that he filed for bankruptcy and had
a motive to conceal the claims from the Bankruptcy Court (i.e.,
to keep any proceeds of the claims while reducing the amount of
assets available for distribution amongst the creditors - a
motive Defendants assert is common to nearly all debtors in
bankruptcy).
Finally, Defendants contend that no lesser remedy is
warranted because the sanction of barring the non-malignancy
asbestos claims is necessary to (1) keep Plaintiffs from
profiting from the omission and (2) preserve the integrity of
the bankruptcy proceedings.
Plaintiffs contend that the non-malignancy asbestos
claims are not barred on grounds of judicial estoppel. First,
Plaintiffs contend that Mr. Long did not take inconsistent
positions between his bankruptcy filing and the present asbestos
action because at the time of his bankruptcy filing – and
throughout the entire duration of that action – his nonmalignancy asbestos claims were dismissed, such that he was not
required to list them as an asset in his bankruptcy action.
Moreover, Plaintiffs argue that even if Mr. Long should have
identified the non-malignancy asbestos claims, the failure to do

7

so was a good faith mistake such that judicial estoppel is not
warranted.
Second, Plaintiffs assert that Defendants bear the
burden of establishing bad faith, but have no evidence that Mr.
Long acted in bad faith when he did not list his non-malignancy
asbestos claims as an asset in his bankruptcy filing.
Additionally, Plaintiffs assert that bad faith cannot be proven
in light of the fact that those claims were dismissed long
before he filed for bankruptcy and were only reinstated by the
MDL Court long after the bankruptcy was closed.

B.

Real Party in Interest/Standing
1.

Non-Malignancy Claims (Initial Claims)

In the alternative (as to the non-malignancy claims
initially asserted in Mr. Long’s asbestos action), Defendants
contend that Plaintiffs have no right to pursue the nonmalignancy claims because the claims no longer belong to
Plaintiffs and instead belong to the bankruptcy trustee.
Specifically, Defendants argue that, even though Mr. Long did
not report these asbestos claims as assets in the bankruptcy
filing, as required by 11 U.S.C. § 541(a)(1), those claims
automatically became part of the bankruptcy estate when the

8

bankruptcy petition was filed. As a result, they assert that
only the bankruptcy trustee can administer the claims.
Defendants also argue that, because Mr. Long did not
reveal the non-malignancy asbestos claims, such that they were
never properly scheduled as assets, the trustees were incapable
of passing those claims back to Mr. Long through abandonment of
any remaining assets not administered (as would normally happen
pursuant to 11 U.S.C. § 554). As such, Defendants assert that,
even though the bankruptcy action has closed, the rights to the
non-malignancy asbestos claims did not revert back to Mr. Long
upon that closure and instead remain with the trustee, such that
Plaintiffs may not now pursue them. 4
Plaintiffs assert that, because the non-malignancy
asbestos claims were dismissed during the entire pendency of the
bankruptcy action, they were never assets of the bankruptcy
estate – regardless of whether or not Mr. Long disclosed them.
In short, Plaintiffs argue that the bankruptcy estate could not

4

Defendants also assert that Plaintiffs may only pursue
claims held by Mr. Long at the time of his death and that,
because the claims belonged to the bankruptcy trustee at the
time of Mr. Long’s death, there is no way Plaintiffs can salvage
those claims now. In support of this argument, Defendants rely
upon two decisions regarding FELA: Flynn v. New York, N.H., &
H.R. Co., 283 U.S. 53, 56 (1931), and Michigan Central R. Co. v.
Vreeland, 227 U.S. 59, 70 (1913).
9

have an asset that was not in existence at the time of the
bankruptcy.

2.

Malignancy Claims (Post-Petition Claims)

In their reply brief (as to the malignancy claims that
arose post-petition), Defendants assert that Mr. Long’s claims
for malignant asbestos-related disease (based upon his postpetition diagnosis of lung cancer) are property of the estate,
such that Plaintiffs also lack standing to pursue these claims –
despite the fact that the diagnosis of lung cancer did not occur
until after Mr. Long’s bankruptcy action was filed (and closed)
– because those claims are sufficiently rooted in his prebankruptcy past to constitute property of the estate. 5
Specifically, Defendants argue that, under Segal, any new claim
that is “sufficiently rooted in the pre-bankruptcy past” should
be included in the debtor's bankruptcy estate, 382 U.S. at 380,
and that, since the asbestos exposures (and the non-malignant
asbestos injury) arose pre-bankruptcy, any claims for injuries
5

In support of this contention, Defendants rely
primarily upon Segal v. Rochelle, 382 U.S. 375, 380 (1966), and
In re Richards, 249 B.R. 859, 861 (Bankr. E.D. Mich.
2000)(involving a post-petition asbestos claim). In addition,
Defendants also cite to a number of cases that did not involve
an asbestos claim: In re Webb, 484 B.R. 501 (Bankr. M.D. Ga.
2012); In re Salander, 450 B.R. 37, 46 (Bankr. S.D.N.Y. 2011);
In re Strada Design Assocs., Inc., 326 B.R. 229, 236 (Bankr.
S.D.N.Y. 2005); and In re Patterson, 2008 WL 2276961 (Bankr.
N.D. Ohio June 3, 2008).
10

arising therefrom (such as Mr. Long’s lung cancer claims) should
be considered part of the bankruptcy estate because they are
“sufficiently rooted in the pre-bankruptcy past.”
Plaintiffs assert that Mr. Long’s claims for malignant
asbestos-related disease (based upon his post-petition diagnosis
of lung cancer) are not property of the estate – and never were
– because they did not even arise until after Mr. Long was
discharged from bankruptcy. In support of this argument,
Plaintiffs cite to this Court’s decision, Nelson v. A.W.
Chesterton, 2011 WL 6016990 (E.D. Pa. Oct. 27, 2011) (Robreno,
J.), which held that maritime law follows the “two-disease rule”
such that Mr. Long’s lung cancer diagnosis was a second and
separate malignant disease, which gave rise to a second and
separate cause of action distinct from the cause of action on
which his asbestos action was initially filed. As such,
Plaintiffs contend that, even if the Court should determine that
Mr. Long’s non-malignancy claims are property of the bankruptcy
estate that Plaintiffs are now barred from pursuing, the postpetition malignancy claims (for lung cancer) are not property of
the estate (and never were), such that Plaintiffs may still
pursue those claims free and clear of any debts not fully paid
to creditors in the bankruptcy action.

11

IV.

DISCUSSION
The bankruptcy code requires debtors seeking benefits

under its terms to schedule, for the benefit of creditors, all
his or her interests and property rights. Oneida Motor Freight,
Inc. v. United Jersey Bank, 848 F.2d 414, 416 (3d Cir. 1988); 11
U.S.C. §§ 521, 1125. This duty of disclosure includes not only
pending lawsuits or lawsuits the debtor intends to bring, but
even any potential and likely causes of action. See Krystal
Cadillac-Oldsmobile GMC Truck, Inc. v. Gen. Motors Corp., 337
F.3d 314, 322 (3d Cir. 2003); Oneida, 848 F.2d at 417 (providing
that “[i]t has been specifically held that a debtor must
disclose any litigation likely to arise in a non-bankruptcy
contest”). However, debtors are not required to list “every
‘hypothetical,’ ‘tenuous,’ or ‘fanciful’ claim on an asset
disclosure form.” Freedom Med., Inc. v. Gillespie, No. 06-3195,
2013 WL 2292023, at *23 (E.D. Pa. May 23, 2013) (quoting Krystal
Cadillac, 337 F.3d at 323).
Once the debtor has filed his bankruptcy petition, the
bankruptcy estate - which in a Chapter 7 case is controlled by
the trustee - “encompasses everything that the debtor owns upon
filing a petition, as well as any derivative rights, such as
property interests the estate acquires after the case
commences.” In re O'Dowd, 233 F.3d 197, 202 (3d Cir. 2000).
12

“While a bankruptcy case is pending, it is the trustee, and not
the debtor, who has the capacity to pursue the debtor’s claims.”
In re Kane, 628 F.3d at 637 (internal quotation marks and
citations omitted). Additionally, “[p]ursuant to 11 U.S.C. §
554(d), a cause of action which a debtor fails to schedule,
remains property of the estate because it was not abandoned and
not administered.” Allston-Wilson v. Philadelphia Newspapers,
Inc., No. 05-4056, 2006 WL 1050281, at *1 (E.D. Pa. Apr. 20,
2006); see also In re Kane, 628 F.3d at 637 (“an asset must be
properly scheduled in order to pass to the debtor through
abandonment under 11 U.S.C. § 554”) (quoting Hutchins v. IRS, 67
F.3d 40, 43 (3d Cir. 1995)).
Typically, the only interests that a bankruptcy estate
owns are those that a plaintiff has at the time the petition is
filed. In re O'Dowd, 233 F.3d 197, 202 (3d Cir. 2000)
(concluding that the bankruptcy "estate encompasses everything
that the debtor owns upon filing a petition") (emphasis added);
11 U.S.C. § 541(a)(1). However, any new, post-petition interest
(such as a legal claim) that is “sufficiently rooted in the prebankruptcy past” can also constitute part of the debtor's
bankruptcy estate. See Segal v. Rochelle, 382 U.S. 375 (1966).
Judicial estoppel is a “doctrine that seeks to prevent
a litigant from asserting a position inconsistent with one that
13

she has previously asserted in the same or in a previous
proceeding.” Ryan Operations G.P. v. Santiam-Midwest Lumber Co.,
81 F.3d 355, 358 (3d Cir. 1996) (internal quotation marks and
citations omitted). At the heart of judicial estoppel is the
idea that “absent any good explanation, a party should not be
allowed to gain an advantage by litigation on one theory, and
then seek an inconsistent advantage by pursuing an incompatible
theory.” Id. (quoting 18 Charles A. Wright, Arthur R. Miller &
Edward H. Cooper, Federal Practice and Procedure § 4477 (1981),
p. 782). However, this doctrine is “not intended to eliminate
all inconsistencies no matter how slight or inadvertent they may
be.” Id. It “should only be applied to avoid a miscarriage of
justice” and “is only appropriate when the inconsistent
positions are tantamount to a knowing misrepresentation to or
even fraud on the court.” Krystal Cadillac, 337 F.3d at 319, 324
(internal quotation marks and citations omitted). The “doctrine
of judicial estoppel does not apply ‘when the prior position was
taken because of a good faith mistake rather than as part of a
scheme to mislead the court.’” Ryan Operations, 81 F.3d at 362
(quoting Konstantinidis v. Chen, 626 F.2d 933, 939 (D.C. Cir.
1980)). “It is a fact-specific, equitable doctrine, applied at
courts’ discretion.” In re Kane, 628 F.3d 631, 638 (3d Cir.
2010).
14

The Third Circuit Court of Appeals has formulated this
test to help determine if judicial estoppel is appropriate:
First, the party to be estopped must have taken two
positions
that
are
irreconcilably
inconsistent.
Second, judicial estoppel is unwarranted unless the
party changed his or her position “in bad faith i.e., with intent to play fast and loose with the
court.” Finally, a district court may not employ
judicial estoppel unless it is “tailored to address
the harm identified” and no lesser sanction would
adequately remedy the damage done by the litigant’s
misconduct.
Krystal Cadillac, 337 F.3d at 319-20 (quoting Montrose Med. Grp.
Participating Sav. Plan v. Bulger, 243 F.3d 773, 779-80 (3d Cir.
2001)). The Third Circuit has further concluded that a
“rebuttable inference of bad faith arises when averments in the
pleadings demonstrate both knowledge of a claim and a motive to
conceal that claim in the face of an affirmative duty to
disclose.” Id. at 321 (citing Oneida Motor Freight, 848 F.2d at
416-18); Ryan Operations, 81 F.3d at 363. However, the
application of this inference does not arise “from the mere fact
of nondisclosure.” Ryan Operations, 81 F.3d at 364. Third
Circuit precedent makes clear that a court should conduct an
individualized factual assessment regarding, inter alia,
knowledge and motive of the debtor surrounding disclosure of
assets in a bankruptcy action. See id. at 363-64 (concluding
that the inference did not apply where the creditors were most

15

likely unaffected by the failure to disclose, the debtor
received no benefit from its non-disclosure, and that there was
no evidence that the debtor sought to conceal the claims
deliberately); Krystal Cadillac, 337 F.3d at 321-324 (applying
estoppel after analyzing the facts regarding knowledge and
motive).

V.

ANALYSIS
A.

Judicial Estoppel (Non-Malignancy Claims)
Defendants contend that, because the dismissal of Mr.

Long’s asbestos claims was merely administrative (such that the
claims could be reinstated by Mr. Long or the MDL Court at some
point in the future), the claims were assets whose omission from
Schedule B of the bankruptcy action constituted an inconsistent
position between the two lawsuits and creates an inference of
bad faith. Plaintiffs contend that because the claims had been
in a dismissed stage for years at the time of the bankruptcy
filing, they were not in essence assets and did not need to be
disclosed – and that, if they did constitute assets that should
have been disclosed, the failure to disclose them was a good
faith mistake.

i.

Step One: Has Plaintiff Taken Two Irreconcilably
Inconsistent Positions?

16

It is undisputed that Mr. Long did not list his nonmalignancy asbestos claims (or any other legal claims) as assets
in his bankruptcy filing. His duty of disclosure included
identifying pending lawsuits, lawsuits he intended to bring, and
any potential and likely lawsuits. See Krystal CadillacOldsmobile, 337 F.3d at 322. By failing to include his nonmalignancy asbestos claims as an asset in his bankruptcy
filings, Mr. Long initially represented to the Bankruptcy Court
that such an asset did not exist. Now, in the present action,
Plaintiffs are pursuing those same claims that Mr. Long
represented did not exist. Accordingly, the two positions are
irreconcilably inconsistent. See id. at 319-320.

ii.

Step Two: Did Plaintiff Change His Position In
Bad Faith

It is difficult to divine, through a prism of twenty
years later, the exact nature and scope of the “administrative
dismissals.” See Bartel v. Various Defendants, 965 F. Supp. 2d
612, 617 (E.D. Pa. 2013) (Robreno, J.) (explaining the
difficulty in attempting to discern orders that were entered
over twenty years ago in the context of personal jurisdiction in
the MARDOC cases). 6 While Judge Weiner’s orders appear to invite
6

“Now, some 25 years later, the Court, with the
assistance of counsel, is called upon to divine the meaning of
less-than-pellucid orders entered long ago by prior courts, and
17

reinstatement subject to certain conditions, none of the cases
that were administratively dismissed was ever reinstated from
1997 to 2009, until this Court, sua sponte, did so en masse.
That a layman would have had the foresight to know in 2005 when
he filed for Chapter 7 bankruptcy, that six years later a new
presiding Judge of the MDL would reopen his asbestos case,
albeit thirteen years after it was filed, would have required
unrealistic power of prescience. Rather, for all practical
purposes, the entire MARDOC litigation in the MDL Court including Mr. Long’s case - was in a “black hole,” uncertain to
ever emerge again. See Hon. Eduardo C. Robreno, The Federal
Asbestos Product Liability Multidistrict Litigation (MDL-875):
Black Hole or New Paradigm?, 23 Widener L. J. 97, 126 (2013).
Under these circumstances, the Court finds that the
failure to disclose the non-malignancy asbestos claims was not
in bad faith, nor an attempt to play “fast and loose” with the
Bankruptcy Court. See Krystal Cadillac, 337 F.3d at 319-20. 7

to disentangle the parties from a web of procedural knots that
have thwarted the progress of this litigation.” Bartel, 965 F.
Supp. 2d at 614.
7

While the Third Circuit has said that, a “rebuttable
inference of bad faith arises when averments in the pleadings
demonstrate both knowledge of a claim and a motive to conceal
that claim in the face of an affirmative duty to disclose,”
Krystal Cadillac, 337 F.3d at 321, the Third Circuit has also
noted that an inference of bad faith does not always arise from
“the mere fact of non-disclosure.” Ryan Operations, 81 F.3d at
18

Accordingly, the Court does not find that Mr. Long changed his
position “in bad faith” such that it warrants the application of
judicial estoppel. See Ryan Operations, 81 F.3d at 363. 8
Accordingly, Defendants’ motion for summary judgment on grounds
of judicial estoppel will be denied. See Anderson, 477 U.S. at
248-50.

B.

Real Party in Interest/Standing
1.

Non-Malignancy Claims (Initial Claims)

Defendants next contend that, despite Mr. Long’s
failure to list the non-malignancy asbestos claims on his
bankruptcy petition, the claims now belong to the bankruptcy
trustee (pursuant to 11 U.S.C. § 541(a)(1)) such that Plaintiffs
have no right to pursue them. They assert that, because Mr. Long
did not properly schedule those claims as assets, the trustees
were incapable of passing those claims back to Mr. Long through

364. Under the facts of this case, the Court need not decide
whether there was a lack of bad faith on the part of Mr. Long,
or whether the inference of bad faith was rebutted, in that in
either event, the same result is obtained.
8

Additionally, the Court has reviewed the bankruptcy
petition filed by Mr. Long, see ECF No. 66-2, and concludes
that, to the extent the law generally requires disclosures of
the type of claims that were pending at the time of the
bankruptcy filing, an omission of those claims may very well
have been based on a good faith mistake of what was required by
the documents, or a simple incorrect assessment of the viability
of his long-dormant claims. See Ryan Operations, 81 F.3d at 362.
19

abandonment of any remaining and unpursued assets as would
normally happen pursuant to 11 U.S.C. § 554. Here, the
Defendants’ position has some initial merit.
It is true that, once a debtor has filed his
bankruptcy petition, the bankruptcy estate, which is controlled
by the trustee, “encompasses everything that the debtor owns
upon filing a petition, as well as any derivative rights, such
as property interests the estate acquires after the case
commences,” In re O'Dowd, 233 F.3d 197, 202 (3d Cir. 2000), and
that “it is the trustee, and not the debtor, who has the
capacity to pursue the debtor’s claims.” In re Kane, 628 F.3d at
637 (internal quotation marks and citations omitted). It is also
true that, “[p]ursuant to 11 U.S.C. § 554(d), a cause of action,
which a debtor fails to schedule, remains property of the estate
because it was not abandoned and not administered.” AllstonWilson, No. 05-4056, 2006 WL 1050281, at *1; In re Kane, 628
F.3d at 637 (quoting Hutchins, 67 F.3d at 43).
In the instant case, Mr. Long erred by failing to
disclose his administratively dismissed non-malignancy asbestos
claims when he filed his bankruptcy petition. While the Court
has held that this error was not in bad faith and thus not
barred by judicial estoppel, these claims are nonetheless part
of the bankruptcy estate as they were not only potential claims,
20

but were realized claims technically held in abeyance by the
Court, and thus needed to be disclosed. Under these
circumstances, the claims remain part of the bankruptcy estate
and the trustee remains the real party in interest for such
claims, even after the bankruptcy was closed. See Killmeyer v.
Oglebay Norton Co., 817 F. Supp. 2d 681, 689 (W.D. Pa. 2011)
(granting the trustee’s motion to substitute for the plaintiff
as the real party in interest since the debtor’s unscheduled
pre-petition claim could only be administered by the trustee);
Saellam v. Norfolk S. Corp., No. 06-123, 2007 WL 1653737, at *4
(W.D. Pa. June 6, 2007) (concluding that “[b]ecause Plaintiff’s
cause of action is part of the bankruptcy estate, and has not
been abandoned by the trustee, I hold Plaintiff is not the real
party in interest and that only the trustee in bankruptcy, as
sole representative of Plaintiff’s estate, has standing to
pursue the instant lawsuit”); Allston-Wilson, 2006 WL 1050281,
at *1 (holding that where it was undisputed that the plaintiffs
cause of action arose before her bankruptcy and that she failed
to list the claim on her bankruptcy schedule, only the trustee
could pursue the claim); see also Biesek v. Soo Line R. Co., 440
F.3d 410, 413-14 (7th Cir. 2006) (concluding that the trustee
was the real party in interest for plaintiff’s pre-bankruptcy
claim which he failed to list as a bankruptcy asset and
21

upholding the dismissal of the case since the claim did not
belong to the plaintiff and the trustee had not sought to
intervene).
Having held that the trustee, and not Plaintiffs, is
the real party in interest of the instant non-malignancy
asbestos claims, the Court must determine the appropriate
remedy. Given that the claims belong to the estate and that,
therefore, distributions of any recovery by the trustee should
be made in accordance with the priorities set forth in the
Bankruptcy Code, the trustee shall be given the opportunity to
decide, in the first instance, whether he/she will prosecute the
non-malignancy claims.
The Court does not underestimate the practical
difficulties involved. The bankruptcy case is now closed in the
Bankruptcy Court for the Southern District of Ohio, and the
identity and whereabouts of the trustee are unknown to this
Court. To expedite the process of putting the trustee on notice
of the claims, the Court will direct the Clerk of this Court to
(1) create a copy of this memorandum and accompanying order
to be filed on the docket of Mr. Long’s bankruptcy case in the
Bankruptcy Court for the Southern District of Ohio (No. 2:05-bk51212-BJS); (2) ascertain the identity of the trustee; and (3)
have served upon the trustee a copy of said memorandum and order
22

at his/her last known address. The trustee will have sixty (60)
days from the date of the filing of the order on the docket of
the Bankruptcy Court to seek to reopen the Bankruptcy action and
to advise this Court that he/she intends to prosecute the
instant non-malignancy asbestos claims. 9 In such event, the Court
will stay the instant proceedings while the bankruptcy estate is
reopened (providing monthly updates to the Court on the status
of the petition to reopen). Once the bankruptcy estate is
reopened, the trustee will have thirty (30) days from the date
of the reopening of the estate to move this Court to have
himself/herself added as the party-plaintiff in this case (with
respect to the non-malignancy claims only, with current
Plaintiffs continuing as the named plaintiffs with respect to
the malignancy claims).
In the event that (1) the trustee fails to advise this
Court within sixty (60) days from the date the order is filed on
the docket of the Bankruptcy Court that he/she intends to
proceed with the instant claims, 10 (2) he/she declines to do so,
9

The trustee will be ordered to provide a signed letter
certifying his/her (a) filing of a petition with the Bankruptcy
Court to reopen Mr. Long’s bankruptcy proceedings and (b)
intention to be added as party-plaintiff in the instant case
(with respect to the non-malignancy claims only).
10

It is not clear whether the trustee’s failure to
respond to the Court’s order would constitute an express or
implied abandonment of the instant claims under 11 U.S.C. § 554.
23

(3) he/she fails to provide a monthly status update, or (4)
he/she fails to move to be added as party-plaintiff (with
respect to the non-malignancy claims only) within thirty (30)
days of the reopening of the bankruptcy action, the Court will
give Plaintiffs an additional thirty (30) days 11 to provide this
Court with notice that they intend to (1) pursue only the
malignancy claims, or (2) petition the Bankruptcy Court for the
Southern District of Ohio to reopen the bankruptcy proceedings

See Mele v. First Colony Life Ins., Co., 127 B.R. 82, 85-86
(D.D.C. 1991) (noting that the mere fact the trustee was
notified of the pending lawsuit, but failed to administer it,
would not necessarily mandate a finding of implied abandonment).
Importantly, however, the party seeking to demonstrate
abandonment bears the burden of persuasion. Hanover Ins. Co. v.
Tyco Industries, Inc., 500 F.2d 654, 657 (3d Cir. 1974). In
bankruptcy proceedings, the trustee’s position is similar to
that of a fiduciary to both the debtor and creditors. Under the
bankruptcy code, the trustee must “investigate the financial
affairs of the debtor,” 11 U.S.C. § 704(a)(4), and “collect and
reduce to money the property of the estate,” 11 U.S.C. §
704(a)(1). Moreover, the trustee “has the duty to maximize the
value of the estate,” Commodity Futures Trading Comm’n v.
Weintraub, 471 U.S. 343, 353 (1985), and “in so doing is bound
to be vigilant and attentive in advancing the estate’s
interests.” In re Martin, 91 F.3d 389, 394 (3d Cir. 1996). “In
sum, it is the trustee’s duty to both the debtor and the
creditor to realize from the estate all that is possible for
distribution among the creditors.” Id. (citing 4 Collier,
Bankruptcy ¶ 704.01 (15th ed.)).
11

This would be ninety (90) days from the date the
memorandum and order are filed on the Bankruptcy Court’s docket
(for events pursuant to (1) or (2)); or thirty (30) days from
the date of the pertinent failure pursuant to (3) or (4).
24

and move in that court to compel abandonment of the instant nonmalignancy claims. See 11 U.S.C. § 554(b). 12
If notice is not received from either the trustee or
Plaintiffs in the specified timeframe, the Court will dismiss
Plaintiffs’ case for failure to substitute the real party in
interest. See Fed. R. Civ. P. 17(a)(3) (“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.”). At this time, however, and under
these circumstances, summary judgment in favor of Defendants on
grounds of the real party in interest/standing will be denied
without prejudice as to Plaintiffs’ non-malignancy claims.
Anderson, 477 U.S. at 248-50.

2.

Malignancy Claims (Post-Petition Claims)

Defendants assert that Mr. Long’s claims for malignant
asbestos-related disease (based upon his post-petition diagnosis
12

In the event that Plaintiffs choose to pursue the nonmalignancy claims, they will be ordered to provide a signed
letter certifying their intention to petition the Bankruptcy
Court to reopen Mr. Long’s bankruptcy proceedings and move the
Bankruptcy Court to compel abandonment of those claims. The
Bankruptcy Court for the Southern District of Ohio is the court
in the best position to provide the proper parties (including
any potential creditors) with sufficient notice of Plaintiffs’
motion to compel abandonment of the instant non-malignancy
claims. See 11 U.S.C. § 554(b).
25

of lung cancer) are also property of the estate, 13 such that
Plaintiffs also lack standing to pursue these claims – despite
the fact that the diagnosis did not occur until after Mr. Long
had been discharged from bankruptcy – because those claims are
sufficiently rooted in his pre-bankruptcy past to constitute
property of the estate.
Because Mr. Long’s lung cancer was not diagnosed until
after he was discharged from bankruptcy (and there is no
evidence in the record that he knew of his lung cancer prior to
his discharge from bankruptcy), it is clear that he was not
required to schedule his malignancy asbestos claims in the
bankruptcy action. The question then, with respect to the postpetition malignancy claims, is whether the claims were
nonetheless property of the bankruptcy estate by operation of
law.
A bankruptcy estate typically owns only those
interests that a plaintiff has at the time a petition is filed,
In re O'Dowd, 233 F.3d at 202 , and 11 U.S.C. § 541(a)(1).
13

This Court has ruled that, under maritime law, a
Plaintiff’s non-malignant asbestos related disease and
subsequent malignant asbestos-related disease give rise to two
separate and distinct causes of action. See Nelson v. A.W.
Chesterton, 2011 WL 6016990 (E.D. Pa. Oct. 27, 2011) (Robreno,
J.). As such the bankruptcy estate’s ownership of a nonmalignancy claim is entirely separate and distinct from its
potential ownership of a second and subsequent malignancy claim.
Defendants appear to acknowledge and accept both of these
principles.
26

However, the Supreme Court has held that, when a cause of action
arises after the filing of a bankruptcy petition, the claim
belongs to the bankruptcy estate only if it is “sufficiently
rooted in the pre-bankruptcy past.” Segal, 382 U.S. at 380.
Therefore, the Court must determine whether Mr. Long’s
malignancy claims were sufficiently rooted in the pre-bankruptcy
past. Id. In doing so, it will consider the cases relied upon by
the Thompson Hine Shipowners to support their contention that
the malignancy claims are sufficiently rooted in the prebankruptcy estate to constitute property of the estate.
In Segal, the Supreme Court concluded that a tax
refund originating from a tax return filed before the bankruptcy
petition was property of the estate, even though the refund was
not payable until after the petition was filed. Segal, 382 U.S.
at 379-82. In explaining its rationale in Segal, the Supreme
Court stated:
The main thrust of [the relevant section of the
bankruptcy code] is to secure for creditors everything
of value the bankrupt may possess in alienable or
leviable form when he files his petition. To this end
the term “property” has been construed most generously
and an interest is not outside its reach because it is
novel or contingent or because enjoyment must be
postponed. E.g., Horton v. Moore, 6 Cir., 110 F.2d 189
(contingent, postponed interest in a trust);
Kleinschmidt v. Schroeter, 9 Cir., 94 F.2d 707
(limited interest in future profits of a joint
venture); see 3 Remington, Bankruptcy ss 1177—1269
(Henderson ed. 1957). However, limitations on the term
27

do grow out of other purposes of the Act; one purpose
which is highly prominent and is relevant in this case
is to leave the bankrupt free after the date of his
petition to accumulate new wealth in the future.

.

.

.

Temporally, two key elements pointing toward
realization of a refund existed at the time these
bankruptcy petitions were filed: taxes had been paid
on net income within the past three years, and the
year of bankruptcy at that point exhibited a net
operating loss.
382 U.S. at 379-80 (emphasis added). The facts of Segal are
distinguishable from those of the present situation because,
unlike the expected tax refund in Segal, there is no evidence
that Mr. Long knew of his lung cancer claim at the time he filed
for bankruptcy. As the Supreme Court noted in Segal, whether an
asset is “property” of the bankruptcy estate must be determined
by the purposes behind the Bankruptcy Act, and one of the
primary purposes of allowing Chapter 7 bankruptcy filings and
limiting the forfeiture of assets to those existing at the time
of the filing is to allow the bankrupt to start afresh and
accumulate new wealth in the future. In short, the rationale of
Segal (and the bankruptcy law interpreted by the Supreme Court
therein) does not support a decision to preclude Mr. Long from
obtaining a financial recovery on a claim that did not exist at
the time he filed for bankruptcy. Id. This is true despite the
28

fact that the alleged asbestos exposure giving rise to the claim
occurred long before that bankruptcy petition was filed – a
factual scenario considered by a bankruptcy court in Michigan in
In re Richards, 249 B.R. 859, 861 (Bankr. E.D. Mich. 2000), upon
which Defendants rely.
In re Richards involved an asbestos claim for an
illness that was diagnosed after a debtor had filed for
bankruptcy, and while the bankruptcy action was still pending.
The court held (in accord with Segal) that, “in determining
whether a claim is property of the bankruptcy estate, the test
is not the date that the claim accrues under state law” but
“whether the claim is ‘sufficiently rooted in the pre-bankruptcy
past’.” 249 B.R. at 861. The court concluded that the debtor’s
asbestos-related cancer claim was sufficiently rooted in his
pre-petition past and should therefore be considered part of the
bankruptcy estate based on the two facts that: (1) “All of the
allegedly wrongful conduct giving rise to the debtor's claim
occurred prepetition,” and (2) “although the diagnosis was made
seven months after the petition was filed, that timing appears
to have been more a result of happenstance than of medical
necessity. It appears likely that both the onset of the debtor's
disease and a greater portion of its progress occurred before he
filed his petition.” Id. (emphasis added). The Court notes that
29

In re Richards is not binding on this court and, in addition,
involved claims that were governed by Michigan law (under which
the causes of action accrued when the plaintiff “knew or should
have known” of his asbestos-related illness, id.) rather than
maritime law (under which an asbestos cause of action accrues
when the illness manifests itself, or when the plaintiff has
knowledge of the injury and its cause, Nelson, 2011 WL 6016990
(E.D. Pa. Oct. 27, 2011)).
The bankruptcy court in In re Richards found that the
onset of the debtor’s disease and most of its progress had
occurred prior to the filing of the bankruptcy petition (as the
disease was diagnosed only seven months after the petition had
been filed – and while the petition was still pending). In the
case at hand, Mr. Long was not diagnosed with lung cancer until
over two years after his bankruptcy petition was filed (and
almost two years after the bankruptcy action was closed) - and
there is no evidence in the record that Mr. Long knew of his
lung cancer, or experienced any symptoms of that illness prior
to the date on which the bankruptcy petition was filed (or the
date on which he was discharged from bankruptcy). As such,
unlike In re Richards (where an asbestos claim accrued under the
applicable law when a plaintiff “should have” known of his
illness), it cannot be concluded that Mr. Long’s malignancy
30

asbestos claim accrued (under maritime law) prior to the filing
of his bankruptcy petition. Moreover, without evidence in the
record to the contrary, the Court is unwilling to conclude that
the onset of Mr. Long’s lung cancer – or any of its progress occurred prior to the date of the filing of his bankruptcy
petition. This is because mere pre-petition exposure to asbestos
did not necessarily result in lung cancer. It was not until that
illness actually manifest itself that the exposure gave rise to
a claim – and an interest over which the bankruptcy trustee
could potentially have ownership. Therefore, even when applying
the rationale of In re Richards, the Court must conclude that
although the alleged asbestos exposure giving rise to Mr. Long’s
lung cancer occurred prior to the filing of his bankruptcy
petition, the post-petition malignancy claims are not
“sufficiently rooted” in his pre-bankruptcy past to be deemed
property of the bankruptcy estate.
Defendants also cite to a number of cases that did not
involve an asbestos claim. In re Webb is factually analogous
insofar as it involved a claim based upon a latent physical
injury. 484 B.R. 501 (Bankr. M.D. Ga. 2012). In that case, a
debtor received a post-petition class action settlement for
congestive heart failure he was believed to have suffered as a
result of having taken a particular medication years earlier.
31

Although the congestive heart failure occurred two years prior
to the filing of the bankruptcy petition, the debtor did not
know that there was any link between the medication and
congestive heart failure until well after his bankruptcy action
had been filed and closed. Upon the bankruptcy trustee’s
petitioning for a reopening of the bankruptcy action to recover
this class action settlement from the debtor in order to
administer it as part of the bankruptcy estate, the court
concluded that the product liability claim was property of the
bankruptcy estate despite the fact that the debtor did not
become aware of the claim until after his bankruptcy action was
filed (and closed). Importantly, however, the court’s decision
turned entirely on its reluctant acknowledgment that, under the
law applicable therein, the “discovery rule” did not apply to
the debtor’s product liability cause of action. Specifically,
that court explained:

But after reconsidering Alvarez, the Court concludes
that the inapplicability of the discovery rule was
necessary to the Eleventh Circuit's holding. The
alleged malpractice was advising and filing a Chapter
7 bankruptcy instead of a Chapter 11 bankruptcy and
failing to convert, resulting in the trustee selling
assets at a price disagreeable to the debtor. See In
re Alvarez, 224 F.3d at 1275; In re Alvarez, 228 B.R.
762, 763 (Bankr. M.D. Fla. 1998). The fight over
ownership of the claim (malpractice arising from
mishandling a bankruptcy case) occurred in the very
bankruptcy proceeding that was the subject of the
32

malpractice claim. Under these facts, the debtor
necessarily discovered the injury and cause postpetition. The discovery rule not applying is essential
for the holding — that the cause of action accrued as
of the filing and thus was property of the estate —
because there is no logical way the discovery rule
could apply and the Court's holding stay the same.

Because In re Alvarez is binding on this Court, and
thus all necessary elements of that decision are
binding on this Court, the Court can only conclude
that the discovery rule does not apply to the present
circumstances. The Court will look to whether the
elements of the product liability claim occurred
before or after filing. It is undisputed that
everything, except for knowledge of cause, occurred
prepetition. The Court thus holds that the product
liability claim accrued prepetition and is estate
property.

484 B.R. at 504-05 (emphasis added). Significantly, however,
maritime law recognizes the “discovery rule” in determining the
accrual of an asbestos-related claim. See Nelson, 2011 WL
6016990 (E.D. Pa. Oct. 27, 2011) (Robreno, J.). For this reason,
the rationale of In re Webb is inapplicable to the case at hand,
which is governed by maritime law (and under which, as explained
earlier herein, Mr. Long’s claim did not accrue prior to the
filing of his petition and is not sufficiently rooted in his
pre-bankruptcy past to constitute property of the bankruptcy
estate).
In re Salander involved a debtor’s effort to pursue a
claim against one of her creditors after her bankruptcy action
33

was closed. 450 B.R. 37 (Bankr. S.D.N.Y. 2011). The court held
that the claim was property of the bankruptcy estate for either
or both of two reasons: First, the court determined that, under
New York law, her claim had accrued pre-petition (because she
knew of the alleged forgery giving rise to her claim prior to
the filing of her petition) and was, therefore, property of the
bankruptcy estate. Id. at 46. In this regard, this case is
inapplicable to Mr. Long’s situation, which is governed by
maritime law, and for which there is no evidence of accrual of
his lung cancer claim until after the bankruptcy action was
filed and closed. See Nelson, 2011 WL 6016990 (E.D. Pa. Oct. 27,
2011) (Robreno, J.). Second, the court found (without much
explanation) that, even if the debtor had not discovered the
extent of the alleged forgery at issue, the actions giving rise
to her claims (alleged fraudulent signing of documents) occurred
prior to the petition and were, therefore, “sufficiently rooted
in the pre-bankruptcy past.” The factual scenario therein is
distinguishable from that of Mr. Long’s insofar as the fraud
(and accompanying harm) had occurred and existed pre-petition
regardless of whether and when they were discovered by Mrs.
Salander. In contrast, Mr. Long’s pre-petition asbestos exposure
did not necessarily result in an injury at all and, instead,
only resulted in injury upon the later manifestation of his
34

illness. As such, based upon the evidence in the record, the
crucial element of development of his asbestos illness occurred
post-petition. Therefore, the rationale of In re Salander does
not lead to a conclusion that Mr. Long’s asbestos claims are
property of the bankruptcy estate – despite that fact that the
alleged asbestos exposure giving rise to them occurred prior to
the filing of the bankruptcy petition.
In re Strada Design Assocs., Inc. followed the same
rationale as In re Salander and its analysis explicitly turned
on the decision that formed the basis of In re Webb (Alvarez,
224 F.3d 1273). 326 B.R. 229, 236 (Bankr. S.D.N.Y. 2005). Thus,
for the same reasons that In re Salander and In re Webb did not
lead to the conclusion that Mr. Long’s asbestos claims are
property of the bankruptcy estate, In re Strada does not either.
In re Patterson involved three claims that a trustee
sought to pursue on behalf of the bankruptcy estate. 2008 WL
2276961 (Bankr. N.D. Ohio June 3, 2008). In that case, the court
concluded that the claims belonged to the debtor (and not to the
estate) because, “[t]he three claims brought by the Trustee stem
entirely from a single, post-petition event [because] all the
elements necessary to sustain the Trustee's three claims arose
post-petition.” Id. at *5. As such, the facts of the case are
35

entirely different from those of Mr. Long (whose asbestos
exposure occurred pre-petition, while his lung cancer diagnosis
occurred post-petition) and have no bearing on the case at hand.
In short, none of the cases relied upon by Defendants
support the conclusion that Mr. Long’s malignancy asbestos
claims are property of the bankruptcy estate. Applying the
rationale of Segal, the Court concludes that, given the facts of
the present case, and the standard set forth by maritime law for
determining accrual of an asbestos cause of action (including,
specifically, its utilization of the “discovery rule”), Mr.
Long’s malignancy asbestos claims are not “sufficiently rooted
in his pre-bankruptcy past to constitute property of the
bankruptcy estate (pursuant to the exception to 11 U.S.C. §
541(a)(1) set forth in In re O'Dowd). Instead, the general rule
of § 541(a)(1), as discussed in In re O'Dowd, 233 F.3d at 202
(limiting bankruptcy estate property to that in existence at the
time of the filing of the petition), is applicable. Mr. Long’s
malignancy asbestos claims (which did not accrue until after the
bankruptcy petition was filed and after Mr. Long was discharged
from bankruptcy) are, therefore, not property of the bankruptcy
trustee (and not subject to pursuit by creditors in the
bankruptcy action). Accordingly, Defendants’ motion for summary
judgment on grounds of the real party in interest/standing will
36

be denied as to Plaintiffs’ post-petition malignancy claims.
Anderson, 477 U.S. at 248-50.

VI.

CONCLUSION
For all of the reasons stated above, Defendants’

motion for summary judgment will be denied. 14

14

With respect to Plaintiffs’ initial non-malignancy
claims: Defendants’ motion for summary judgment on grounds of
judicial estoppel will be denied; Defendants’ motion for summary
judgment on grounds that the bankruptcy trustee is the real
party-in-interest with ownership of these claims will be denied
without prejudice (pending proof that the trustee has sought to
reopen the bankruptcy action).
With respect to Plaintiffs’ post-petition malignancy
claims, Defendants’ motion for summary judgment will be denied.
37