United States District Court, E.D. Michigan, Southern Division
ORDER DENYING MOTION FOR RECONSIDERATION
TERRENCE G. BERG UNITED STATES DISTRICT JUDGE.
26, 2019, this Court issued an Order granting Plaintiff's
Motion to Substitute the Bankruptcy Trustee as named
plaintiff in this matter. ECF No. 28. Six days later,
Defendants filed a Motion for Reconsideration of two aspects
of the Court's Order. ECF No. 29. For the reasons set
forth below, Defendants' Motion is
Local Rule 7.1, the Court may grant a motion for
reconsideration if the movant satisfactorily shows: (1) the
existence of a palpable defect that misled the parties and
the Court; and (2) that the correction of such defect would
result in a different disposition of the case. E.D. Mich.
L.R. 7.1(h)(3). A defect is palpable if it is “obvious,
clear, unmistakable, manifest, or plain.” Olson v.
Home Depot, 321 F.Supp.2d 872, 874 (E.D. Mich. 2004).
Further, the Court will not grant a motion for
reconsideration “that merely present[s] the same issues
ruled upon by the court, either expressly or by reasonable
first argue that this Court bucked Sixth Circuit precedent
when it found that the Constitution conferred standing upon
Ms. McLeod-Wisienski such that the Court could consider her
request to substitute the trustee for herself in this action.
Though they cite numerous cases in their motion,
Defendants' primary case law support for their argument
is Bauer v. Commerce Union Bank, 859 F.2d 438 (6th
Cir. 1988). While Bauer does use the word
“standing” to express the idea that only the
bankruptcy trustee may bring suit to vindicate a legal claim
that is part of the bankruptcy estate, the Bauer
Court goes on to affirm the lower court's grant
of the original plaintiff's motion to substitute the
trustee as the plaintiff. See Bauer, 859 F.2d at
442. Whatever the Bauer Court meant when it said
“standing, ” it could not have meant that the
original plaintiff was precluded from asking the Court to
substitute in the trustee as the proper party in
interest. The Court's conclusion that Ms.
McLeod-Wisienski's motion should be granted is supported
by Bauer, which affirms the lower court's order
substituting the trustee in that case. Similarly,
Defendants' rely on Auday v. Wet Seal Retail,
Inc., but that case also supports the Court's
determination that it had jurisdiction to review
Plaintiff's Rule 17 request. 698 F.3d 902, 905 (6th Cir.
2012). In Auday, the debtor failed to disclose an
accrued workplace discrimination claim to the trustee and
bankruptcy court. When the debtor then tried to bring the
claim on her own, the Sixth Circuit held that the trustee,
and not the debtor, “owned” the claim, and
remanded to the district court to decide whether to allow the
debtor to substitute the trustee as the plaintiff.
Auday, 698 F.3d at 905 (Citing Fed.R.Civ.P. 17(a)(3)
and noting that “[u]nder the Civil Rules, a district
court under some circumstances may join or substitute the
real party in interest- here, the Trustee.”).
also cite Zurich Insurance Company v. Logitrans,
Incorporated, which does deny a motion to substitute the
proper party in interest because the original party did not
have constitutional Article III standing due to not suffering
a concrete injury. 297 F.3d 528 (6th Cir. 2002).
Zurich has no bankruptcy element however, and
answers only the question of whether a party who has not been
harmed at all by a defendant's conduct can ask to
substitute the name of a plaintiff who has been
harmed. As the Court noted in its Order, Ms. McLeod-Wisienski
plausibly alleges that she was harmed by Defendants'
conduct. Thus, Ms. McLeod-Wisienski has plausibly
alleged Article III standing. This distinguishes her case
from the facts of Zurich. The issue in this case, as
opposed to the standing issue presented in Zurich,
is whether Ms. McLeod-Wisienski is the real party in
interest-not whether she has Article III standing.
do not address the numerous cases on which the Court relied,
from the Sixth Circuit and the Eastern District of Michigan,
in which courts approve of the practice of substituting
bankruptcy trustees for original plaintiffs where the legal
claim was an asset of the bankruptcy estate. If lack of
“standing” did not prevent these courts from
granting motions to substitute in factually similar cases,
there is no reason it should in Ms. McLeod-Wisienksi's
case. As the Court wrote in its Order, “Courts
routinely grant motions to substitute a bankruptcy trustee
‘where a statute of limitations would bar the trustee
from later bringing the claim if dismissed.'”
Barefield, 521 B.R. at 810-11 (collecting cases).
Defendant has not shown that Barefield or the
numerous cases it cites have been overturned, or even
questioned, based on the original plaintiff's lack of
while the Sixth Circuit, and others, have concluded that a
plaintiff such as Ms. McLeod-Wisienski cannot vindicate a
legal claim that belongs to the bankruptcy estate, that has
not stopped these courts from granting motions to substitute
the bankruptcy trustee as the proper party in interest.
Regardless of the terminology used-“standing” or
“real party in interest”-the substance of the
Court's order is in conformity with Sixth Circuit
precedent and decisions of sister courts in the Eastern
District of Michigan that approve of granting motions to
substitute in situations such as this.
second item on which they request reconsideration requires
only brief discussion. The Court declined to limit the amount
that the trustee can recover to no more than the amount Ms.
McLeod-Wisienski owes her creditors. Such a limitation would
be premature. Defendants present no new arguments in their
motion for reconsideration, asking instead that they be
permitted to take this issue to the bankruptcy court for a
determination of whether judicial estoppel precludes the
trustee from recovering more than Ms. McLeod-Wisienski owes
her creditors. As the Court said in its July 26, 2019 Order,
that motion is properly brought before the bankruptcy court
after any damage award has been assessed against Defendants.
Motion for Reconsideration (ECF No. 29) is
 As the Sixth Circuit has noted,
“there is a degree of confusion in drawing a line
between Article III standing and the real-party-in-interest
requirement. Lawyers, and courts, often fail to distinguish
between these two distinct issues.” Cranpark, Inc.
v. Rogers Grp., Inc., 821 F.3d 723, 732 (6th Cir. 2016).
An individual has Article III standing when she has suffered
an injury in fact that is fairly traceable to the
defendant's conduct and is redressable by judicial
decision. Id. at 730. On the other hand, “the
real party in interest is the person who is entitled to
enforce the right asserted under the governing substantive
law. The real party in interest analysis turns on whether the
substantive law creating the right being sued upon affords
the party bringing suit a substantive right to relief.”
Id. (quoting Certain Interested Underwriters at
Lloyd's, London, Eng. v. Layne, 26 F.3d 39, 42-43
(6th Cir. 1994) (citations omitted)). Thus, it is possible-as
it is in this case-for “[a] plaintiff [to] have
standing in the Article III sense but not be the real party
in interest.” Id. at 732; see Kimberlin v.
Dollar Gen. Corp., 520 Fed.Appx. 312, 314 (6th Cir.
2013) (debtor who failed to disclose ...