The debtor’s family limited partnership filed an adversary proceeding seeking to except from discharge a $2.865 million judgment it obtained against the debtor. The partners include the debtor, two of his sisters, and a brother-in-law. In response, the debtor filed a counterclaim and third-party complaint regarding his late mother’s trust, alleging causes of action for breach of fiduciary duty, tortious interference with a business expectancy, and conspiracy. The defendants are the sisters, brother-in-law, and the trustee of the mother’s trust. The debtor asserts the defendants have wrongly withheld from him the distribution of funds from his mother’s trust, and that his plan of reorganization is to use those funds to pay the judgment debt.
In granting the third-party defendants’ motion to dismiss, the bankruptcy court found the debtor lacked standing because the claims he asserts belong to the Chapter 11 trustee appointed in this case unless the trustee abandons them.
The bankruptcy court further ruled that the third-party defendants were improperly impleaded. The debtor may bring a permissive counterclaim under Federal Rule of Civil Procedure 13 and implead additional parties liable on the counterclaim under Rule 20. However, joinder requires a valid counterclaim, which is missing in this case. The adversary plaintiff is the family partnership, but the third-party complaint seeks relief against individual members of the partnership, not the partnership itself, which is the real party in interest. “Because the partnership is not a counterclaimant, the counterclaim fails. As the counterclaim falls, so falls the third-party complaint.”
The court dismissed the counterclaim and third-party complaint as not properly before the court. Even if they were properly before the court, the bankruptcy court would abstain from hearing them because the matters concerning the mother’s trust are presently before the probate court.