Damon J. Baldone, LLC v. Starr Surplus Lines Insurance Company, et al.

Summary

The United States District Court for the Eastern District of Louisiana grants Dwayne M. Murray, Chapter 11 Trustee of Chateau Creole Apartments, LLC, leave to substitute as plaintiff for Damon J. Baldone, LLC with respect to claims concerning Chateau Creole Apartments. The court concludes that the trustee is the real party in interest under Federal Rule of Civil Procedure 17 and that the original plaintiff made an understandable, good-faith mistake in identifying the proper insured and plaintiff. The court also addresses intervention as an alternative basis for relief.

Holdings

1. Because the insurance claims concerning Chateau Creole are property of its bankruptcy estate, the Chapter 11 trustee is the real party in interest with exclusive standing to assert those claims.
2. Substitution of Trustee Murray for Damon J. Baldone, LLC is proper under Rule 17(a)(3) because the original plaintiff made a good-faith, nonfrivolous, and understandable mistake concerning the proper insured and plaintiff, and substitution does not alter the factual claims or prejudice defendants.
3. Although the court did not need to reach intervention after granting substitution, Trustee Murray demonstrated that intervention would be proper both as of right and permissively.

Questions Presented

1. Whether Dwayne M. Murray, as Chapter 11 trustee for Chateau Creole Apartments, LLC, is the real party in interest with exclusive authority to prosecute claims belonging to Chateau Creole's bankruptcy estate.
2. Whether substitution of the trustee for Damon J. Baldone, LLC is proper under Federal Rule of Civil Procedure 17(a)(3) when the original plaintiff mistakenly asserted claims concerning property and insurance rights belonging to a separate entity.
3. Whether the trustee alternatively qualifies for intervention as of right or permissive intervention under Federal Rule of Civil Procedure 24.

Disposition

other