On April 23, 2020, McKeen & Associates attorneys Brian McKeen, Kenneth Lee and John Malone won a landmark decision in the Michigan Court of Appeals in the case of Laveta Anderson v The Wellness Plan, et al, Oakland County Circuit Court Case No. 16-154143-NH.
Our firm represents a woman whose spinal cord injury was delayed in its diagnosis by the numerous defendants, which led to severe and permanent neurological damage.
During the discovery portion of the medical malpractice lawsuit, it was discovered that prior to filing a case for medical malpractice, the plaintiff had filed for chapter 7 bankruptcy. The defense lawyers, in an attempt to avoid dealing with the merits of the medical malpractice case, which involves strong liability and significant monetary damages, moved to have Plaintiff’s lawsuit dismissed. The arguments raised by the defense were: (1) the plaintiff lacked standing to file suit in her individual capacity; and (2) that plaintiff’s claims should be barred by the doctrine of judicial estoppel. The defense’s main argument was that the Plaintiff’s medical malpractice lawsuit was actually the property of the bankruptcy trustee, and because the suit was filed in her individual name, the case should be dismissed.
At the Circuit Court level, we took several key steps to avoid summary disposition. First, we immediately contacted the plaintiff’s bankruptcy trustee to ensure that the bankruptcy estate was re-opened and that the bankruptcy schedules were amended to add the medical malpractice lawsuit as an asset in the underlying bankruptcy. Second, we moved to have the bankruptcy trustee added as a Plaintiff in the lawsuit.
Finally, we responded to the summary disposition motion by arguing that: (1) the doctrine of judicial estoppel did not apply as Plaintiff had amended her bankruptcy schedules to add the medical malpractice lawsuit as an asset in the underlying bankruptcy, and that the addition of the trustee’s claims related back to the filing of the initial complaint; (2) Plaintiff had standing to pursue the claim in her individual capacity pursuant to 11 USC 522(d)(11)(D), which grants an exemption to a bankruptcy debtor for a certain portion of funds received in a personal injury lawsuit; and (3) the Plaintiff also had standing to bring the suit in her individual capacity pursuant to 11 USC 726(a)(6), which entitles a debtor to the “surplus” of any proceeds from a suit beyond those which would go to her creditors and the cost of the bankruptcy administration.
In the Circuit Court, we won the summary disposition motion on all three arguments. The defense subsequently filed an application for leave to appeal with the Michigan Court of Appeals, which was ultimately denied. However, the defense continued its pursuit of an appeal by filing an application for leave with the Michigan Supreme Court, which was ultimately granted. The Supreme Court remanded the case to the Michigan Court of Appeals and the issues were extensively briefed by all parties.
On April 23, 2020, the Michigan Court of Appeals issued a written opinion and order which resoundingly ruled in Plaintiff’s favor on all issues raised. Ultimately, the Court of Appeals ruled that the Plaintiff had individual standing to pursue her claims based upon the exemption and surplus arguments, which both conferred individual standing for her claims. The Court of Appeals also determined that the Circuit Court was correct in allowing the bankruptcy trustee to be added to the claim as a plaintiff because the trustee’s claims related back to the initial filing of the complaint in the medical malpractice claim.
With this victory, McKeen & Associates now looks forward to continuing the case at the Circuit Court level and ultimately getting the Plaintiff the justice that she deserves.