11th Circuit Affirms Judicial Estoppel
This post doesn't deal directly with creditors rights in bankrutpcy. It is, however, an important decision for practitioners in this Circuit, and bears mention.
The Issue: debtor files bankruptcy, but does not disclose in his or her schedules an accrued claim or cause of action. Some time goes by, and debtor files suit is state or federal court on the claim.
The Argument: because the debtor, in one court proceeding, failed to disclose the claim or cause of action as an asset, he or she should be estopped to raise it in a subsequent proceeding. In part, the rule is intended to insure some degree of finality, and to prevent abusive use of the legal system.
The Decision: the case is Robinson v. Tyson Foods, Inc., . The plaintiff had filed a Chapter 13 case, but did not list an employment claim against Tyson. The debtor's plan was confirmed, she completed her payments, and received her discharge. She never, however, amended her schedules to reflect the claim against Tyson.
The Eleventh Circuit affirmed summary judgment for Tyson, holding that plaintiff was barred by the doctrine of judicial estoppel from pursuing her undisclosed claim. The court noted that while each case will be evaluated on its merits, there are typically three factors enumerated by the Supreme Court in New Hampshire v. Maine, 532 U.S. 742 (2001) which are controlling: (1) whether the present position is clearly inconsistent with the former position; (2) whether the party persuaded an earlier court to accept the position then asserted, indicating that the court was misled; and (3) whether the party advancing the inconsistent position would gain an unfair advantage. Essentially, the court in Robinson was satisfied that plaintiff had intentionally deceived the earlier court by not disclosing the employment law claim against Tyson, and also not disclosing a workers' compensation claim. Had the plaintiff amended fairly early on, and explained here omission as inadvertent, the result would surely have been different.
The Robinson case is, of course, applicable only in Federal court. The Alabama Supreme Court has been, shall we say, a little more tolerant of plaintiffs who have failed to disclose claims in their bankruptcy petitions. You will just need to look at your particular case on its merits, but certainly, the Robinsonposition should be persuasive.
