IN RE: SKINNER (Bankr.E.D.Pa. 10-8-2014)

IN RE THOMAS SKINNER, DEBTOR. WILLIAM SKINNER, PLAINTIFF, v. THOMAS SKINNER

AND ANNA SKINNER, DEFENDANTS.

CHAPTER 13 BANKRUPTCY NO. 13-13318-MDC, ADVERSARY NO. 13-00405-MDC

United States Bankruptcy Court, E.D. Pennsylvania

October 8, 2014.

Alan B. Kane, Esquire, The Law Office of Alan B. Kane, Norristown, PA

Stuart A. Eisenberg, Esquire, Carol B. McCullough, Esquire, McCullough
Eisenberg, LLC, Warminster, PA

Michael S. Schwartz, Esquire, Law Office of Michael Schwartz, Southampton,
PA

  MEMORANDUM

  Magdeline D. Coleman, Bankruptcy Judge

  INTRODUCTION

  Before the Court for consideration is the Motion to Dismiss dated January
27, 2014 (the "Motion"), filed by Thomas Skinner (the "Debtor") and his wife
Anna Skinner ("Mrs. Skinner," collectively with the Debtor, the
"Defendants") seeking dismissal of the Amended Adversary Complaint (the
"Amended Complaint") filed by the Debtor's brother, William Skinner (the
"Plaintiff"), pursuant to (i) Fed.R.Civ. P. 12(b)(6) for failure to state a
claim upon which relief may be granted, and (ii) Fed.R.Civ. P. 12(b)(1) for
lack of subject matter jurisdiction.

  Following a hearing held by this Court and after due consideration of the
pleadings filed by the parties, this Court will grant the Motion. As
discussed below, Plaintiff is not a creditor of the Debtor's estate. This
Court cannot conceive of any cognizable legal theory that this Court may
rely upon to find the Debtor or his spouse liable to or otherwise obligated
to reimburse the Plaintiff for the Plaintiff's personal obligation to
reimburse Holy Redeemer Hospital d/b/a St. Joseph's Manor ("St. Josephs")
for the cost it incurred in connection with the care provided to the
Plaintiff's mother. See, e.g., Holmes v. Securities Investor Protection
Corp., 503 U.S. 258, 268-270 (1992) (recognizing that "proximate cause"
Page 2
demands a "direct relation between the injury asserted and the injurious
conduct alleged"); Associated General Contractors of California Inc. v.
California State Council of Carpenters, 459 U.S. 519, 533 n.25 (1983)
("Under the common law. . . one who pays the medical expenses of another may
not recover those expenses from the third-party tortfeasor who caused the
damage."); City of Philadelphia v. Philadelphia Rapid Transit Co.,
10 A.2d 434, 435 (Pa. 1940). The Restatement (Second) of Torts § 914 is a
measure of damages and the Plaintiff may not rely on it to create a cause of
action where none otherwise exists.

  With regard to his fraudulent transfer claim, the Plaintiff lacks standing
because (1) the Bankruptcy Code vests exclusive standing to prosecute
fraudulent transfer claims in the trustee, and (2) this Court may not confer
derivative standing upon the Plaintiff because his suit, if successful,
would not confer a benefit upon the Debtor's estate.

  BACKGROUND/PROCEDURAL HISTORY

  This action presents another chapter in the dispute between the Plaintiff,
the Debtor and St. Josephs arising from St. Josephs' attempts to collect the
outstanding balance due to St. Josephs as a result of medical, residential
and daily living services provided to Dorothy C. Skinner (the "Mother")
while she was admitted at the facility of St. Josephs. In the Amended
Complaint Plaintiff alleges that the Mother began residing at an
assisted-living facility run by St. Josephs in 2009 and that on or about
June 4, 2012, the Mother was evicted from the assisted-living facility due
to the Debtor's failure to pay St. Josephs for the services provided to the
Mother. Amended Complaint, ¶¶ 21 & 22.

  The Plaintiff further alleges that beginning in 2007 and using the
Debtor's Power of Attorney over the Mother's bank accounts granted to him in
April of 2005, the Debtor and his spouse began a scheme to use the Mother's
assets, including her interest in long-term care benefits, to fund
approximately $85,000.00 of their personal expenses. Amended Complaint, ¶¶
17 & 20.

  The Plaintiff contends that but for the Debtor's scheme that began in 2007
to divert the Mother's assets the Mother would have had sufficient assets to
make the payment demanded by St. Josephs five years later and three years
after her admission to the facility. Amended Complaint, ¶ 30.

Page 3

  To collect upon the unpaid amounts, St. Josephs filed a complaint dated
September 5, 2012, in the Court of Common Pleas of Montgomery County, Case
No. 2012-25014-0 (the "Collection Action") against the Mother, the Debtor
and the Plaintiff. In the Collection Action, St. Josephs seeks payment of
the costs of care (the "Support Claim") from the Plaintiff pursuant to The
Support Law, 23 Pa. C.S.A. § 4603 ("The Support Law")[fn1] and pursuant to
the theory of unjust enrichment.[fn2] On February 15, 2013, a default
judgment was entered in favor of St. Josephs and against the Debtor in the
amount of $32,225.56. On April 16, 2013, the Debtor filed for bankruptcy
relief and simultaneously filed a Suggestion of Bankruptcy notifying the
Court of Common Pleas of the Debtor's filing for bankruptcy relief. As a
result, the Collection Action was placed in suspense and the focus of the
parties' dispute shifted to this forum.

  On July 19, 2013, the Plaintiff filed a Complaint (the "Original
Complaint") initiating this adversary proceeding. As described by this
Court's Order dated December 19, 2013 (the "First Dismissal Order"), the
Original Complaint contained two counts. The first count sought a
declaration that the Plaintiff's claim against the Debtor and his spouse is
nondischargeable. The second count stated the basis of the Plaintiff's
alleged claim. For the reasons stated in the First Dismissal Order, this
Court dismissed the Original Complaint because of the Plaintiff's failure,
inter alia, to include sufficient allegations for this Court to determine
whether the Plaintiff held a claim against the Debtor. First Dismissal
Order, ¶ 4 ("the insufficiency of the Plaintiff's Complaint prevents this
Court from evaluating the nature of the Plaintiff's claim"). Despite its
insufficiencies, this Court permitted the Plaintiff to file an amended
complaint and specifically instructed the Plaintiff to state "[t]he specific
basis of the Plaintiff's claim against the Debtor and Mrs. Skinner." First
Dismissal Order, ¶ 5a.

  On January 2, 2014, the Plaintiff filed the Amended Complaint. Rather than
lumping several non-dischargeability causes of action within a single count,
the Amended Complaint identifies the specific subsections that the Plaintiff
believes entitle him to a declaration of non-dischargeability,
11 U.S.C. §§ 523(a)(4)
Page 4
and 523(a)(6), and pleads each in separate counts. Typically, a
nondischargeability complaint begins with a statement of the plaintiff's
claim. Not here. The Plaintiff states in Count I and Count II his
nondischargeability causes of action and waits until Count IV to state his
claim and the cause of action upon which it is premised.

  In Count I, the Plaintiff seeks a declaration that the Debtor's liability
to the Plaintiff is nondischargeable pursuant to 11 U.S.C. § 523(a)(4) ("§
523(a)(4)") because it results from embezzlement or larceny.[fn3] In Count
II, the Plaintiff seeks a declaration that his claim is non-dischargeable
pursuant to 11 U.S.C. § 523(a)(6) ("§ 523(a)(6)") because the Plaintiff's
claim results from the Debtor's willful and malicious conduct.[fn4]

  In Count IV, the Plaintiff states the legal basis of his alleged right to
payment from the Defendants. Count IV of the Amended Complaint essentially
restates Count II of the Original Complaint and this Court's prior
description of the Plaintiff's alleged right to payment remains applicable.

      [T]he Plaintiff is among the class of person who The Support Law
    imposes financial responsibility for the care of Dorothy Skinner.
    23 Pa. C.S.A. § 4603 (imposes financial responsibility for the care
    of an indigent person upon: (1) spouse; (2) children; and (3)
    parents). . . [T]he Complaint alleges that, to the extent the
    Plaintiff is required to make payment on the Support Claim, the
    Plaintiff is entitled to seek reimbursement from the Defendants
    pursuant to the Restatement (Second) of Torts § 914.

First Dismissal Order, p.4.

  In other words, the Plaintiff alleges that to the extent he is required to
pay St. Josephs its Support Claim, he is entitled to be reimbursed for such
payment from the Defendants. The Amended Complaint does not otherwise
supplement the Plaintiff's allegations regarding the theory of the
Defendants' liability.

Page 5

  In addition to the allegations regarding the Debtor's alleged liability to
the Plaintiff, the Amended Complaint asserts, on behalf of the Debtor's
estate, a state law fraudulent transfer claim against the Defendants. In
Count III of the Amended Complaint, the Plaintiff alleges that the
misappropriation of Dorothy Skinner's funds by the Defendants constitutes a
fraudulent transfer under Pennsylvania Uniform Fraudulent Transfer Act,
12 Pa. C.S.A. § 5101. This claim was not asserted in the Original Complaint
and therefore not previously addressed by this Court.

  THIS COURT'S JURISDICTION

  This Court has little difficulty concluding that it has subject matter
jurisdiction to hear the Plaintiff's request to have his claim declared
non-dischargeable under § 523(a)(4) or § 523(a)(6).
28 U.S.C. § 157(b)(2)(I); In re DeMarco, 454 B.R. 343, 347 (Bankr. E.D. Pa.
2011) ("nondischargeability claims are squarely within this Court's core
jurisdiction.").[fn5] With regard to the Plaintiff's fraudulent transfer
claim, this Court acknowledges that there is some doubt as to its authority
to issue a final order adjudicating such claims. See, e.g., Granfinanciera,
S.A. v. Nordberg, 492 U.S. 33, 56 (1989); In re DeMarco, 454 B.R. 343, 348
n.2 (Bankr. E.D. Pa. 2011). However, this Court finds that the issue of this
Court's subject matter jurisdiction is not determinative.

  Not only must a court have subject matter jurisdiction over the cause of
action, the claimant must have standing to assert the cause of action.
Without standing, the Plaintiff may not invoke the subject matter
jurisdiction of this Court. Steel Co. v. Citizens for a Better Env't,
523 U.S. 83, 102 (1998) (noting that standing is "threshold jurisdictional
question"); In re Sullivan, 455 B.R. 829, 835-36 (1st Cir. BAP 2011)
(addressing whether plaintiff in § 523(a) proceeding lacked standing because
she was not a creditor of the debtor"); In re Oakley, 503 B.R. 407, 421
(Bankr. E.D. Pa. 2013); In re Gronczewski, 444 B.R. 526, 532 n. 4 (Bankr.
E.D. Pa. 2011) ("Questions of standing, if they exist, must be considered
sua
Page 6
sponte, as they are akin to subject matter jurisdiction."). As discussed
below, this Court has determined that the Plaintiff lacks standing to
initiate a nondischargeability action and his alleged fraudulent transfer
suit.

  The Plaintiff's Standing to Initiate a Non-Dischargeability Action, Counts
I, II and IV

  Among the Defendants' reasons for dismissal[fn6] is their argument that
the Plaintiff lacks standing because the Amended Complaint fails to set
forth sufficient facts from which this Court may infer that the Plaintiff is
a creditor of the Debtor. Section 523(c) provides the procedure for the
objection to the discharge of a specific debt and provides that, upon
request of a creditor, this Court may determine whether a debt owed to that
creditor may be excepted from discharge. 11 U.S.C. § 523(c)(1) (stating that
"on request of a creditor" a court may determine a debt is excepted from
discharge); see also Fed.R.Bankr. P. 4007(a) ("A debtor or any creditor may
file a complaint to obtain a determination of the dischargeability of any
debt."). Therefore, whether the Plaintiff has standing to object to the
Debtor's discharge is intertwined with the merits of the Plaintiff's cause
of action against the Debtor. Stanley v. Vahlsing (In re Vahlsing),
829 F.2d 565 (5th Cir. 1987) (remanding with instruction to dismiss
adversary proceeding because plaintiff who lacked an enforceable claim did
not have standing to object to a debtor's discharge); In re Kulzer Roofing,
Inc., 150 B.R. 134, 138-39 (E.D. Pa. 1992) ("only a party to whom a debt is
owed under the Bankruptcy Code has standing to challenge the
dischargeability of that debt"); In re Bell, 498 B.R. 463, 485 (Bankr. E.D.
Pa. 2013) ("a determination of the validity of those claims is necessary in
the exercise of the core bankruptcy court function of determining the
dischargeability of the underlying debt."); The Sherwin Williams Co. v.
Grasso (In re Grasso), 497 B.R. 434, 441-42 (Bankr. E.D. Pa. 2013) (finding
that plaintiff is the holder of a contingent claim and therefore has
standing to maintain non-dischargeability action); In re August,
448 B.R. 331, 346-47 (Bankr. E.D. Pa. 2010) (recognizing that for a debt to
be declared non-dischargeable, the plaintiff must be the holder of a valid
claim); In re Bagen, 185 B.R. 691, 694 (Bankr. S.D. N.Y. 1995) ("A party
objecting to
Page 7
a debtor's discharge and dischargeability has standing if that the party is
a 'creditor' within the meaning of the Code sections 727(c)(1) and 523.").

  When the issue of this Court's jurisdiction is intertwined with the merits
of a plaintiff's cause of action, this Court must accept as true all factual
allegations contained in the complaint and construe all reasonable
inferences drawn therefrom in the light most favorable to the Plaintiff.
Petruska v. Gannon University, 462 F.3d 294, 302 (3d Cir. 2006) (construing
Fed.R.Civ. P. 12(b)(1) as a Fed.R.Civ. P. 12(b)(6) motion because the
inquiry entailed a challenge to the sufficiency of the plaintiff's claim);
Cilio v. Wezner (In re Wezner), 470 B.R. 344, 349-52 (Bankr. E.D. Pa. 2012)
(addressing merits of claim to determine whether court had jurisdiction to
adjudicate it); see also Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009); Morse v.
Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997); Jordan v. Fox,
Rothschild, O'Brien & Frankel, 20 F.3d 1250, 1261 (3d Cir. 1994); Rogin v.
Bensalem Township, 616 F.2d 680, 685 (3d Cir. 1980). However, application of
the pleading requirements of Fed.R.Civ. P. 8 prevents this Court from
affording legal conclusions couched as factual allegations a presumption of
truth. Iqbal, 129 S.Ct. at 1951; American Casein Company, et al v. Geiger
(In re Geiger), Adv. No. 10-0228, 2010 WL 3932274, at *1 (Bankr. E.D. Pa.
Sept. 29, 2010). "Threadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice." Iqbal,
129 S.Ct. at 1949.

  The Bankruptcy Code defines a "creditor" as an "entity that has a claim
against the debtor that arose at the time of or before the order for relief
concerning the debtor." 11 U.S.C. § 101(10) (emphasis added). In turn, the
Bankruptcy Code defines a "claim" as a:

      (A) right to payment, whether or not such right is reduced to
    judgment, liquidated, unliquidated, fixed, contingent, matured,
    unmatured, dispute, undisputed, legal, equitable, secured, or
    unsecured; or

      (B) right to an equitable remedy for breach of performance if such
    breach gives rise to a right to payment, whether or not such right
    to an equitable remedy is reduced to judgment, fixed, contingent,
    matured, unmatured, disputed, undisputed, secured, or unsecured.

11 U.S.C. § 101(5).

  With regard to Counts I, II and IV of the Amended Complaint, the Plaintiff
invokes this Court's
Page 8
jurisdiction to obtain, inter alia, a declaration that the Plaintiff is a
holder of a claim against the Debtor in the amount of $25,094.00, plus
interest and attorneys' fees, and that this claim is nondischargeable. As
this Court has previously observed, the Plaintiff then states in Count IV
the basis of the alleged Debtor's alleged liability for this amount. In
Count IV, the Plaintiff alleges that, to the extent that he is required in
the Collection Action to make payment to St. Josephs on the Support Claim,
he is entitled to reimbursement from the Defendants. As the legal foundation
for the Plaintiff's alleged right to reimbursement, he cites the Restatement
(Second) of Torts § 914. The Plaintiff argues that his injury, namely his
potential liability for St. Josephs' Support Claim, was caused by the
Defendants' tortious conduct consisting of their scheme to embezzle the
Mother's assets. The Amended Complaint does not contain, and the Plaintiff
has not otherwise offered, any other premise for the Plaintiff's alleged
right to reimbursement from the Defendants.

  The Defendants argue that the Plaintiff does not have standing to sue the
Defendants based upon tortious conduct directed at a third party. The
Plaintiff does not dispute that the Amended Complaint only references
conduct directed at the Mother's property.[fn7] However, the Plaintiff
argues that to the extent he is forced to incur litigation expenses as a
result of the Defendants' tortious conduct, the Restatement (Second) of
Torts § 914 provides a cause of action that entitles him to recover such
expenses from the Defendants.

  Whether the Plaintiff possesses a right to payment is determined according
to applicable state law. Pennsylvania Dep't of Public Welfare v. Davenport,
495 U.S. 552, 559 (1990) (concluding that a right to payment "is nothing
more nor less than an enforceable obligation. . . ."); In re Bagen,
185 B.R. 691, 694-95 (Bankr. S.D. N.Y. 1995) (addressing plaintiff's status
as a creditor as a prerequisite to plaintiff's capacity to bring
non-dischargeability suit). Under Pennsylvania law, a party is generally not
entitled to
Page 9
recover fees or costs incurred in connection with the prosecution or defense
of a cause of action. Seaboard Sur. Co. v. Permacrete Const. Corp.,
221 F.2d 366, 371 (3d Cir. 1955); Corace v. Balint, 418 Pa. 262, 271-72
(1965). However, consistent with the Restatement of Torts (Second) § 914 and
as recognized by the Third Circuit, Pennsylvania courts recognize an
exception to this general rule that permits a party to recover from a
tortfeasor the party's fees and costs incurred by it in defending itself
against a suit caused by the tortfeasor. Fleck v. KDI Sylvan Pools, Inc.,
981 F.2d 107, 117 (3d Cir. 1992); Seaboard Sur. Co. v. Permacrete Const.
Corp., 221 F.2d 366, 371-72 (3d Cir. 1955); De Lage Landen Financial
Services, Inc. v. Miramax Film Corp., Civ. No. 06-2319, 2008 WL 4348074,
*14-15 (E.D. Pa. Sept. 23, 2008); Corace v. Balint, 418 Pa. 262, 273-74
(1965).

  Contrary to the Plaintiff's understanding, the right to "contribution"
recognized by the Restatement of Torts (Second) § 914 is a remedy and not a
separate and independent cause of action. Travelers Cas. And Sur. Co. v.
Dormitory Authority-State of New York, 734 F.Supp.2d 368, 386 (S.D. N.Y.
2010) (recognizing that recovery of attorneys' fees and costs incurred in
defending earlier litigation is contingent upon "prevailing either on a
breach-of-contract or tort claim"). As a remedy, the Restatement of Torts
(Second) § 914 extends the scope of consequential damages an injured party
may recover from a tortfeasor. Dairy Farmers of Am., Inc. v. Travelers Ins.
Co., 391 F.3d 936, 944-45 (8th Cir. 2004) (recognizing that the Restatement
of Torts (Second) § 914 extends the scope of damages for certain tort
actions); In re Kroh Bros. Development Co., 91 B.R. 525, 536 (Bankr. W.D.
Mo. 1988) (recognizing that the Restatement of Torts (Second) § 914 permits
recovery of "attorney fees from prior litigation. . . as actual damages if
they were the natural and proximate result of defendant's actions");
Shindler v. Lamb, 211 N.Y.S.2d 762, 765 (N.Y. Sup. 1959) (stating that right
to reimbursement is "treated as a legal consequence of defendants' alleged
original wrongful act and recoverable as an item of damages."). Section 914
recognizes that an injured party's consequential damages may include, in
addition to the injured party's personal damages caused by the tortfeasor's
conduct, attorneys' fees and
Page 10
costs[fn8] incurred when defending itself in a prior action that relates to
the same conduct of the tortfeasor that caused the injured party's personal
damages. Travelers Cas. And Sur. Co. v. Dormitory Authority-State of New
York, 734 F.Supp.2d 368, 386 (S.D. N.Y. 2010) ("Attorney's fees incurred in
prior litigation may only be recovered, however, if they were the natural
and necessary consequences of the defendant's acts."). The subject matter of
the prior action must have been the tortfeasor's tortious conduct and the
tortious conduct must have been "the legal cause of the action [in the prior
action]." Corace v. Balint et al., 210 A.2d 882, 888 (Pa. 1965) (denying §
914 relief because defendant's tortious conduct was not the subject matter
of the prior action).

  In determining that § 914 provides for the measure of a party's damages
and is not the source of an independent cause of action, this Court makes
reference to the doctrine of proximate cause. The Plaintiff's reading of a
fairly obscure law would upend centuries of jurisprudence. Proximate cause
requires a plaintiff to plead a direct link between the alleged injury and
the alleged conduct. City of Philadelphia v. Beretta U.S.A. Corp.,
277 F.3d 415, 423 (3d Cir. 2002). If the alleged injury is too remote, then
a plaintiff may not recover. See, e.g., Mazzagatti v. Everingham by
Everingham, 516 A.2d 672, 676 (Pa. 1986) (stating "jurisprudential concept
that at some point along the causal chain, the passage of time and the span
of distance mandate a cut-off point for liability."); Palsgraf v. Long
Island R. Co., 162 N.E. 99, 103 (N.Y. 1928) ("the law arbitrarily declines
to trace a series of events beyond a certain point").

  Problematically, the Amended Complaint does not allege any tortious
conduct that was directed at the Plaintiff. By the Plaintiff's admission,
the alleged tortious conduct was directed at the Mother. The Plaintiff
alleges that the Defendants embezzled the property of the Mother. Later, the
Mother became infirm and obtained medical care from St. Josephs who in turn
bore the cost of providing such care. Later still, St. Josephs sued the
Plaintiff and the Debtor, pursuant to The Support Law, to recover the cost
of the
Page 11
Mother's medical care. In this chain of events, remoteness would have,
absent the cause of action supplied by The Support Law, barred St. Josephs
from recovering its Support Claim from the Defendants. See, e.g., Allegheny
General Hosp. v. Philip Morris, Inc., 228 F.3d 429, 445 (3d Cir. 2000)
(recognizing that, under common law, hospitals do not have "standing to sue
any company that causes a nonpaying patient's disease or illness"); Anthony
v. Slaid, 52 Mass. 290, 291 (1846) (recognizing that common law prevents a
party who voluntary pays medical expenses of party injured by a tortfeasor
may not seek recovery from the tortfeasor). If remoteness would have barred
St. Josephs, it certainly bars the Plaintiff from stating an actionable
injury based upon the Defendants' conduct that the Plaintiff admits to have
been directed at a third party.

  While the allegations of the Amended Complaint do suggest that the Mother
was injured by the Defendants' tortious conduct, that conduct was directed
at the Mother and her property. The conduct was not directed at the
Plaintiff. The Plaintiff may not invoke a cause of action that belongs to
his Mother to remedy the Plaintiff's liability for the Support Claim. See,
e.g., Holmes v. Securities Investor Protection Corp., 503 U.S. 258, 268-269
(1992) ("a plaintiff who complained of harm flowing merely from the
misfortunes visited upon a third person by the defendant's acts was
generally said to stand at too remote a distance to recover."); City of
Philadelphia v. Beretta U.S.A. Corp., 277 F.3d 415, 423 (3d Cir. 2002).
Absent allegations that the Defendants' conduct was directed at the
Plaintiff, the causal chain may not be extended to include the Plaintiff's
liability to Saint Josephs. Beretta, 277 F.3d at 423 ("a plaintiff who
cannot establish some direct relation between the injury asserted and the
injurious conduct alleged fails to plead a key element for establishing
proximate causation, independent of and in addition to other traditional
elements of proximate cause."). Even if any connection can be inferred, the
remoteness of the causal connection between the Defendants' conduct and the
Plaintiff's alleged injury appears clearly from the facts alleged by the
Amended Complaint and therefore warrants dismissal. Allegheny General Hosp.
v. Philip Morris, Inc., 228 F.3d 429, 445 (3d Cir. 2000) ("When an injury is
indirect, remote, and many steps away from the alleged cause, it is
unadvisable to allow a case to proceed."). In establishing whether he has
suffered actionable injury, the Plaintiff may not rely upon § 914 to
otherwise escape the
Page 12
requirements of proximate cause. See, e.g. Lexmark Intern., Inc. v. Static
Control Components, Inc., 134 S.Ct. 1377, 1390 (2014) ("the proximate-cause
requirement generally bars suits for alleged harm that is 'too remote' from
the defendant's unlawful conduct."); Holmes v. Securities Investor
Protection Corp., 503 U.S. 258, 268-69 (1992) (discussing the concept of
"proximate cause"); City of Philadelphia v. Beretta U.S.A. Corp.,
277 F.3d 415, 423 (3d Cir. 2002) (stating that a plaintiff who fails to
plead a direct relation between a defendant's conduct and a plaintiff's
injury "fails to plead a key element for establishing proximate causation").

  Absent a theory of liability, this Court cannot infer that the Plaintiff
is the holder of a claim. The Restatement of Torts (Second) § 914 does not
provide the Plaintiff an independent cause of action and the Amended
Complaint otherwise fails to state a plausible theory of the Debtor's
liability to the Plaintiff.[fn9] Therefore, this Court must dismiss Counts
I, II and IV because the Plaintiff lacks standing to object to the Debtor's
discharge.

  Standing to Assert Fraudulent Transfer Claim, Count III

  In Count III of the Amended Complaint, the Plaintiff alleges that the
Defendants' misappropriation of the Mother's assets constitutes a fraudulent
transfer within the meaning of 12 Pa. C.S.A. § 5101 et seq. ("PAUFTA"). Once
again, this Court may determine that the Plaintiff lacks standing to assert
this cause of action. The Bankruptcy Code vests exclusive standing to
prosecute fraudulent transfer claims, including PAUFTA claim, in the
trustee. 11 U.S.C. §§ 522(h) &544(b)(1); Weyandt v. Federal Home Loan
Mortgage Corp. (In re Weyandt), App. No. 11-4565, 2013 WL 6052130, *2 (3d
Cir. Nov. 18, 2013); Official Committee of Unsecured Creditors of
Cybergenics Corp. ex rel. Cybergenics Corp. v. Chinery, 330 F.3d 548, 581
(3d Cir. 2003) ("The plain text of § 544 makes clear that only the
Page 13
trustee may invoke the remedies under the statute."); In re Gronczewski,
444 B.R. 526, 533-34 (Bankr. E.D. Pa. 2011). As with most rules, an
exception exists. A bankruptcy court is empowered to confer derivative
standing upon another party only if (1) the trustee failed to bring suit in
disregard of her fiduciary duties, and (2) the suit, if successful, would
confer a benefit upon the estate. Weyandt v. Federal Home Loan Mortgage
Corp. (In re Weyandt), App. No. 11-4565, 2013 WL 6052130, *2 (3d Cir. Nov.
18, 2013).

  Even if the Plaintiff was a creditor of the Debtor,[fn10] this Court is
precluded from exercising its equitable powers to confer derivative standing
upon the Plaintiff. This Court has no difficulty understanding why, in full
observance of her fiduciary duties, the Chapter 13 trustee would have
declined to bring this suit. The Plaintiff seeks to avoid transfers of
assets from the Mother to the Defendants, a transfer that allegedly enriched
the Debtor. If successful, the avoidance of the alleged transfers would
cause the divestiture of estate assets and necessarily fail to benefit the
Debtor's estate. The Plaintiff has not offered and cannot offer any
explanation of how the avoidance of the alleged transfers would benefit the
Debtor's creditors. For this reason, this Court is not authorized to confer
derivate standing upon the Plaintiff. In re National Forge Co.,
326 B.R. 532, 543 (W.D. Pa. 2005) (stating creditor asserting derivative
standing must have "alleged a colorable claim that would benefit the
estate") (emphasis added); In re Yes! Entertainment Corp., 316 B.R. 141, 145
(D. Del. 2004) (stating creditor must have "asserted colorable claims which
may yield substantial recovery to the estate."). This Court can conceive of
no "salutary effects" of conferring derivative standing upon a creditor to
bring a suit that would exclusively benefit that creditor to the detriment
of all other creditors. See, e.g., Official Committee of Unsecured Creditors
of Cybergenics Corp. ex rel. Cybergenics Corp. v. Chinery, 330 F.3d 548,
572-73 (3d Cir. 2003) (discussing "salutary effects" of conferring
derivative standing).

Page 14

  CONCLUSION

  Count IV of the Plaintiffs Amended Complaint fails to state a plausible
basis for this Court to infer that the Debtor is liable to the Plaintiff for
the Support Claim or any other amount. As a result, the Plaintiff lacks
standing to assert the objections to the Debtor's discharge pled in Count I
and Count II of the Amended Complaint. Finally, the Plaintiff lacks standing
to assert the PAUFTA claim pled in Count III of the Amended Complaint
because his suit, if successful, would not confer a benefit upon the
Debtor's estate. Having afforded the Plaintiff a second attempt to set forth
a plausible cause of action against the Defendant, this Court is convinced
that further amendment would be futile and will dismiss the Amended
Complaint with prejudice.

  An order consistent with this Memorandum will be entered.

[fn1] The Plaintiff is among the class of person who The Support Law imposes
personal financial responsibility for the care of Dorothy Skinner.
23 Pa. C.S.A. § 4603 (imposing financial responsibility, including the
obligation to reimburse providers, for the care of an indigent person upon:
(1) spouse; (2) children, and (3) parents).

[fn2] St. Josephs did not rely upon or otherwise make reference to the
alleged tortious conduct that the Plaintiff now relies as the grounds for
his request for a determination of the dischargeability of his alleged
claim.

[fn3] Even if this Court were to find that the Plaintiff held a claim
against the Debtor, the Amended Complaint fails to state the Debtor
misappropriated the Plaintiff's property and therefore does not state a
basis to declare the alleged debt non-dischargeable pursuant to § 523(a)(4).
See, e.g., In re Meyers, Bky. No. 09-09310, 2010 WL 5475650, *4 (Bankr. M.D.
Pa. Dec. 29, 2010) (holding that a creditor could not prove embezzlement
claim because the creditor did not own the property that the debtor
allegedly embezzled).

[fn4] As with Count I, Count II would be deficient even if the Plaintiff had
stated a viable basis for its alleged claim. The tortious conduct alleged by
the Amended Complaint was not directed at the Plaintiff and therefore cannot
be the basis for a declaration of non-dischargeability pursuant to §
523(a)(6). The Sherwin Williams Co. v. Grasso (In re Grasso), 497 B.R. 434,
447 (Bankr. E.D. Pa. 2013) (stating that the debtor's conduct must have had
the purpose of harming the § 523(a)(6) plaintiff); In re Jacobs,
381 B.R. 128, 138 (Bankr. E.D. Pa. 2008) ("the debtor's actions either must
have been taken with the specific goal of causing harm to the creditor").

[fn5] This Court acknowledges that the Amended Complaint also named the
Debtor's wife as a defendant. As this Court has previously recognized, "this
Court's possible jurisdiction over the Plaintiff's claims against the
nondebtor entities is dependent upon the scope of its related-to
jurisdiction." DeMarco, 454 B.R. at 347-48 (observing that bankruptcy courts
likely lack jurisdiction to hear a non-debtor plaintiff's claims against
non-debtor defendants). However, because this Court has determined that the
Plaintiff lacks standing to assert the claims pled in the Amended Complaint,
this Court need not reach the issue of whether its related-to jurisdiction
extends to the nondebtor wife.

[fn6] The Motion seeks dismissal pursuant to Fed.R.Civ. P. 12(b)(1) and
Fed.R.Civ. P. 12(b)(6). Because this Court is required to address its
jurisdiction first and this issue is determinative of the Motion, this Court
will not address Fed.R.Civ. P. 12(b)(6). See, e.g., In re Summit Metals,
Inc., 477 B.R. 484, 494 (Bankr. D. Del. 2012) (recognizing that when
confronted by a motion to dismiss that challenges a court's jurisdiction as
well as the merits of a plaintiff's claims, "the correct procedure is to
consider dismissal on the jurisdictional ground first").

[fn7] Despite the allegation by the Plaintiff that the Defendants' tortious
conduct began in 2007, more than six (6) years prior to the Debtor's
bankruptcy filing, the parties curiously failed to address the application
of 42 Pa. C.S.A. § 5524 to the Plaintiff's capacity to state claim based on
such conduct. See, e.g., In re Canoe Mfg. Co., Inc., 466 B.R. 251, 265-66
(Bankr. E.D. Pa. 2012) (discussing "limitation problems" implicated by
attempt to file tort claims after expiration of relevant statute of
limitations); In re Fellheimer, 443 B.R. 355, 376 n.18 (Bankr. E.D. Pa.
2010) (discussing application § 108(c) to a party's capacity to file a
nondischargeability complaint based causes of action that may be barred by
application of a relevant statute of limitation).

[fn8] The exception is limited to the recovery of litigation expenses.
Goldberg v. Mallinckrodt, Inc., 792 F.2d 305, 309 (2d Cir. 1986) (stating
that the exception recognized by Restatement of Torts (Second) § 914 is
"suggestive of traditional litigation costs such as filing fees or fees paid
to expert witnesses"); In re Kroh Bros. Development Co., 91 B.R. 525, 536
(Bankr. W.D. Mo. 1988) ("plaintiffs can recover legal expenses incurred in
collateral litigation").

[fn9] Even if the Amended Complaint contained allegations that could
establish that the Plaintiff's alleged injury was proximately caused by the
Defendants' conduct, the Plaintiff's potential personal liability for the
Support Claim as well as any attorneys' fees or costs that the Plaintiff may
incur in connection the Collection Action are not within the scope damages
contemplated by the Restatement of Torts (Second) § 914. The Amended
Complaint contains no allegation from which this Court may infer that the
alleged torts committed by the Defendants were the subject matter of the
Collection Action. Travelers Ins. Co. v. Bank Bldg. & Equipment Corp. of
America, 307 F.Supp. 510, 512 (W.D. Pa. 1969) ("it must be shown that the
prior suit against this plaintiff was proximately caused by some tortious
act of the present defendant directed at the present plaintiff") (emphasis
added); Corace v. Balint et al., 210 A.2d 882, 888 (Pa. 1965) (denying § 914
relief because defendant's tortious conduct was not the subject matter of
the prior action) (emphasis added). The Plaintiff's liability for the
Support Claim is the Plaintiff's personal obligation to reimburse St.
Josephs for the costs St. Josephs incurred in connection with the care
provided for the Plaintiff's mother.

[fn10] Absent § 544(b)'s grant of exclusive standing to the trustee and even
if the avoidance of the alleged transfer would benefit the estate, this
Court notes that its determination that the Plaintiff does not hold a
colorable claim against the Debtor would be determinative of the Plaintiff's
standing to assert a PAUFTA claim. See, e.g., In re Blatstein, 260 B.R. 698
712 (E.D. Pa. 2001) ("Under [PAUFTA], a creditor is empowered to bring an
action to have a fraudulent transfer set aside.") (emphasis added).