Laura J. Jones v. United States , 467 F. App'x 815 ( 2012 )

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________ FILED
U.S. COURT OF APPEALS
No. 11-13158 ELEVENTH CIRCUIT
MARCH 14, 2012
Non-Argument Calendar
JOHN LEY
________________________
CLERK
D.C. Docket No. 1:11-cv-00771-JOF
LAURA J. JONES,
Plaintiff-Appellant,
CHARLES L. SMITH,
Charles L. Smith as Trustee in Bankruptcy
for the Estate of Laura Jones,
Plaintiff,
versus
UNITED STATES OF AMERICA,
Defendant-Appellee.
________________________
Appeal from the United States District Court
for the Northern District of Georgia
________________________
(March 14, 2012)
Before CARNES, WILSON and COX, Circuit Judges.
PER CURIAM:
I. FACTS
This is a Federal Tort Claims Act (FTCA) case. See 28 U.S.C. §§ 2671–2680.
The facts relevant to this appeal are undisputed. In the 1980s, Jones lived at Camp
Lejeune in North Carolina. She contends that the drinking water at Camp Lejeune
was contaminated and that she developed cancer because of it. In 2007, Jones filed
an administrative claim with the United States Navy under the FTCA. She claimed
$10 million in damages. At that time, her attorney stressed that toxic tort cases are
difficult to win, especially against the Government, but that he would try his best. In
2008, Jones filed a Chapter 13 bankruptcy proceeding. In her bankruptcy schedules,
she did not disclose her administrative claim for $10 million, though she did list a
pending social security claim. The parties agree that Jones should have disclosed her
administrative claim.
In 2009, Jones brought this FTCA lawsuit against the Government, again
claiming $10 million in damages. Jones’s FTCA case was consolidated in a
multidistrict litigation case and transferred to the Northern District of Georgia. The
parties agree that Jones should have updated her bankruptcy schedules to include her
FTCA suit but that she did not. In 2010, Jones converted her Chapter 13 case to a
Chapter 7. The bankruptcy court granted a no-asset discharge and closed Jones’s
bankruptcy case. Debts of about $53,000 remained unpaid.
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Meanwhile, in this FTCA case, the Government sought discovery from Jones.
It asked her to disclose all previous legal proceedings to which she was a party. She
omitted her bankruptcy proceedings, but did list litigation involving the estate of a
deceased relative. The Government later learned of Jones’s bankruptcy from her
medical records. In her March 2011 deposition, Jones admitted that she had not
disclosed this lawsuit to the bankruptcy court. She testified that she omitted her
FTCA suit because she believed it was too speculative to warrant inclusion.
Almost immediately, Jones sought to reopen her bankruptcy case to add her
FTCA claim. The bankruptcy court granted that motion and reappointed the Trustee.
Two days later, the Government filed a motion for summary judgment in this FTCA
case based on judicial estoppel. While that motion was pending, the Trustee moved
to substitute as plaintiff in this case. Without discussing the motion to substitute, the
district court granted the Government’s motion for summary judgment. It concluded
that, under this circuit’s precedent and the circumstances of this case, Jones was
judicially estopped from prosecuting her FTCA toxic tort suit. The court denied the
Trustee’s motion as moot.
Jones filed a timely appeal. The Trustee did not appeal.
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II. STANDARD OF REVIEW
We review a district court’s grant of summary judgment de novo. Burnes v.
Pemco Aeroplex, Inc., 291 F.3d 1282, 1284 (11th Cir. 2002). The parties agree that
we review the district court’s application of judicial estoppel for abuse of discretion.
(Appellant’s Br. at 12; Appellee’s Br. at 3.) Under the abuse of discretion standard,
we will reverse only if “we find that the district court has made a clear error of
judgment, or has applied the wrong legal standard.” United States v. Frazier, 387
F.3d 1244, 1259 (11th Cir. 2004) (en banc) (citation omitted).
III. DISCUSSION
Jones contends that the district court erred in applying judicial estoppel to her
FTCA suit. We find no reversible error and affirm the judgment of the district court.
The parties do not dispute that Jones had a duty to disclose her FTCA suit to
the bankruptcy court. In Burnes v. Pemco Aeroplex, Inc., we explained the
importance of a debtor’s full disclosure in bankruptcy proceedings. We said:
A debtor seeking shelter under the bankruptcy laws must disclose
all assets, or potential assets, to the bankruptcy court. The duty to
disclose is a continuing one that does not end once the forms are
submitted to the bankruptcy court; rather, a debtor must amend his
financial statements if circumstances change. Full and honest disclosure
in a bankruptcy case is crucial to the effective functioning of the federal
bankruptcy system. For example, creditors rely on a debtor’s disclosure
statements in determining whether to contest or consent to a no asset
discharge. Bankruptcy courts also rely on the accuracy of the disclosure
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statements when considering whether to approve a no asset discharge.
Accordingly, the importance of full and honest disclosure cannot be
overstated.
Burnes, 291 F.3d at 1286 (internal citations and quotation marks omitted). It is
undisputed that Jones failed to disclose her FTCA claim for $10 million to the
bankruptcy court. It is also undisputed that Jones deliberately omitted her FTCA
claim from her bankruptcy schedules at least twice: (1) when she filed her Chapter
13 case, and (2) when she converted her case to a Chapter 7.
Judicial estoppel protects the integrity of the judicial system by barring litigants
from deliberately taking inconsistent positions based on the “exigencies of the
moment.” See id. at 1285 (citation omitted). We have, on several occasions, applied
judicial estoppel to claims by plaintiffs who failed to disclose their claims in a prior
bankruptcy case. See, e.g., Robinson v. Tyson Foods, Inc., 595 F.3d 1269 (11th Cir.
2010); Barger v. City of Cartersville, Ga., 348 F.3d 1289 (11th Cir. 2003); Burnes,
291 F.3d at 1287–88. This circuit applies a two part test for judicial estoppel. We
ask: (1) has the party previously adopted an inconsistent position under oath in a
judicial proceeding, and (2) did the party intend to “make a mockery of the judicial
system.” Burnes, 291 F.3d at 1285 (quotation omitted). These two factors “are not
inflexible or exhaustive; rather, courts must always give due consideration to all of
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the circumstances of a particular case when considering the applicability of this
doctrine.” Id. at 1286.
It is undisputed that Jones previously adopted an inconsistent position under
oath by failing to disclose her FTCA claim in her bankruptcy schedules. Only the
intent prong is at issue. “For purposes of judicial estoppel, intent is a purposeful
contradiction—not simple error or inadvertence. [A plaintiff’s intent] can be inferred
from the record, where the [plaintiff] has knowledge of the undisclosed claims and
has motive for concealment.” Barger, 348 F.3d at 1294 (internal quotation marks and
citation omitted); see Robinson, 595 F.3d at 1275.
It is undisputed that Jones knew about her FTCA claim during her bankruptcy.
(See Appellant Br. at 28.) The district court also concluded that Jones had a motive
to conceal her FTCA claim. Jones contends that this conclusion about her motive was
error. First, she contends that the district court failed to give “due consideration to
all of the circumstances of [this] case.” Burnes, 291 F.3d at 1286. In particular, she
says that toxic tort claims are difficult to prove and, therefore, should be viewed
differently from other types of claims. Second, Jones contends that she believed in
good faith that her toxic tort claim had no value, and that the district court ignored
evidence of her good faith belief.
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Jones has not shown that the district court abused its discretion. The court
considered Jones’s argument about the speculative nature of her claim. It concluded
that bankruptcy proceedings warrant full disclosure of claims, even highly speculative
ones . (Dkt. 75 at 9.) The district court also noted Jones’s contention that she had no
motive to conceal her FTCA claim because she had a good faith belief that it had no
value. (Id. at 3, 8, 9 n.1.) The court simply disagreed with Jones’s contention. The
court pointed out that disclosure of her FTCA suit would likely have altered the
outcome of Jones’s bankruptcy case by precluding a no-asset discharge. It also
pointed out Jones’s failure to disclose her bankruptcy proceedings to the Government
during discovery in this suit. On appeal, we will not reweigh the equities de novo.
Curtiss-Wright Corp. v. General Elec. Co., 446 U.S. 1, 10, 100 S. Ct. 1460, 1466
(1980).
We do not conclude that the district court improperly weighed the equities. It
is undisputed that Jones is seeking $10 million in damages in this case and that she
is actively prosecuting it. It is also undisputed that Jones did not disclose her FTCA
claim to the bankruptcy court. Most litigation is somewhat speculative. Jones’s case
may be difficult to prove, but if she did not believe she had at least some chance at
recovering $10 million, she would not be actively prosecuting it. We see no reason
to view her toxic tort claim differently from other types of claims in this context.
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Additionally, the district court did not err in inferring Jones’s motive to conceal
from the undisputed facts in this case. In Burnes, the plaintiff sued his employer for
discrimination. 291 F.3d at 1284. Previously, he had filed a Chapter 13 bankruptcy
which remained pending at the time he sued for discrimination. The plaintiff failed
to update his bankruptcy schedules to include his discrimination lawsuit. Later, the
plaintiff converted his Chapter 13 case to a Chapter 7 liquidation. Again, he did not
disclose his discrimination lawsuit. The bankruptcy court approved the conversion
and granted a no-asset discharge. When the plaintiff’s employer discovered the
omission, it moved to dismiss the plaintiff’s discrimination suit as barred by judicial
estoppel. Burnes, 291 F.3d at 1284. The district court granted that motion, and we
affirmed. Id. at 1288. We said that, given the undisputed facts, “the district court
correctly concluded that [the plaintiff] possessed the requisite intent to mislead the
bankruptcy court and correctly [applied judicial estoppel].” Id. We noted that the
plaintiff had a clear motive to conceal his claim. If the plaintiff had properly
disclosed it, that disclosure would probably have prevented him from obtaining a no-
asset discharge. Id. Additionally, we said the plaintiff’s attempt to reopen his
bankruptcy case to add his undisclosed discrimination claim was an implicit
admission that properly disclosing his claim would have altered the outcome of his
bankruptcy case. Id.8
In this case, the district court reached the same conclusion on essentially the
same facts. (Dkt. 75 at 9.) Jones knew of her administrative claim when she first
filed her Chapter 13 proceeding. When she converted her Chapter 13 case to a
Chapter 7 case, she knew she had filed this FTCA suit requesting $10 million in
damages. But she again failed to disclose that fact to the bankruptcy court. In this
case, the Government asked Jones to disclose all legal proceedings to which she had
been a party. But she did not disclose her bankruptcy proceedings. (Dkt. 75 at 8.)
Finally, after the Government learned of Jones’s omission, Jones sought, like the
plaintiff in Burnes, to reopen her bankruptcy case. Based on Burnes, we cannot say
the district court abused its discretion in concluding that Jones had a motive to
conceal her FTCA claim. Thus, Jones omission was not inadvertent, and the district
court did not err in inferring Jones’s intent to make a mockery of the judicial system.1
Jones also contends that the district court erred in denying the Trustee’s motion
to substitute as the plaintiff in this case. The Government counters that Jones has no
standing to challenge this order. We agree with the Government.
1
In the alternative, Jones claims that the court in Burnes wrongly decided that intent can be
inferred from the record and, therefore, Burnes should be overruled. Jones acknowledges that this
circuit’s prior panel rule forecloses this argument. See, e.g., Glazner v. Glazner, 347 F.3d 1212,
1214 (11th Cir. 2003) (en banc). She raises it only to preserve it for future proceedings.
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Jones contends that the district court should have ruled on the Trustee’s motion
to substitute before granting the Government’s motion for summary judgment. She
points out that, under this circuit’s binding precedent, the Trustee is not subject to the
Government’s defense of judicial estoppel. See Parker v. Wendy’s Int’l, Inc., 365
F.3d 1268, 1272 (11th Cir. 2004). But, the Trustee did not appeal the district court’s
denial of his motion to substitute, apparently deciding not to pursue this claim. Jones
lacks standing to challenge that denial.
Jones contends she has standing because she is a party “aggrieved by” the
district court’s final judgment, which includes the court’s denial of the Trustee’s
motion to substitute. See Wolff v. Cash 4 Titles, 351 F.3d 1348, 1354 (11th Cir.
2003) (citation omitted). But, a losing party does not necessarily have standing to
appeal every order of the district court. Id. (“[I]t is entirely possible that named
defendants in a trial proceeding, who would doubtless have appellate standing for the
purposes of challenging some final rulings by the trial court, could lack standing to
appeal other trial court rulings that do not affect their interests.”); see Dairyland Ins.
Co. v. Makover, 654 F.2d 1120, 1123 (11th Cir. 1981). Here, Jones is not a party
aggrieved by the district court’s denial of the Trustee’s motion to substitute. Jones
is judicially estopped from recovering any damages; only the Trustee would have had
a claim for damages had the prosecution of this case continued. Jones cannot put
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herself in the position of the innocent Trustee. And judicial estoppel can bar a
debtor’s recovery on a claim without barring the Trustee’s recovery on that claim.
See Parker, 365 F.3d at 1273 n.4 (suggesting this result); Reed v. City of Arlington,
650 F.3d 571, 579 (5th Cir. 2011) (en banc) (same). Because Jones is judicially
estopped from recovering on her FTCA claim, she has no interest in having the
Trustee substituted as the plaintiff in this case. Thus, she lacks standing to challenge
the denial of the motion to substitute.
IV. CONCLUSION
The district court did not abuse its discretion in applying judicial estoppel to
Jones’s FTCA claim. Jones lacks standing to challenge the district court’s denial of
the Trustee’s motion to substitute.
AFFIRMED.
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