04-4070 & 05-3960 Biesek v. Soo Line Railroad Co.

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“Decisions that have relied on judicial estoppel assume that the tort claim belongs to the debtor. Only then is one person on both sides of the same issue. Yet why would Biesek own this chose in action? Pre-bankruptcy claims are part of debtors’ estates; this FELA claim therefore belongs to the Trustee, for the benefit of Biesek’s creditors. See 11 U.S.C. §541(a)(1); Pease v. Production Workers Local 707, 386 F.3d 819, 821-22 (7th Cir. 2004). Looking at the subject this way makes estoppel seem less appropriate—but it also raises the question: Where’s the Trustee? This litigation is captioned Biesek v. Soo Line R.R., not Michael E. Kepler, Trustee in Bankruptcy v. Soo Line. Attorney Steven P. Garmisa, who filed the notice of appeal and the appellate briefs, represents Biesek rather than Kepler. So the threshold issue is not whether to apply an estoppel but whether Biesek is the real party in interest. He appears to be an interloper, trying to prosecute a claim that belongs to his estate in bankruptcy.

“A Trustee in bankruptcy may abandon worthless or lowvalue assets, including legal claims, see 11 U.S.C. §554, and if the Trustee had abandoned this claim then Biesek could have prosecuted the suit in his own name. Then it would have been necessary to consider judicial estoppel. But this claim is not worthless, and the Trustee (who has known about the claim since 2003) has not abandoned it—a step that requires notice to the creditors, which has never been given, and the opportunity for a hearing. 11 U.S.C. §554(a). Instead of abandoning the claim, the Trustee has asserted an interest in the proceeds.”

Affirmed.

Appeals from the United States District Court for the Western District of Wisconsin, Shabaz, J., Easterbrook, J.