Robinson v. District of Columbia , 10 F. Supp. 3d 181 ( 2014 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
__________________________________________
)
MARK ROBINSON )
)
Plaintiff, )
)
v. ) Civil Action No. 13-1297 (ESH)
)
DISTRICT OF COLUMBIA, )
)
Defendant. )
_______________________________________)
MEMORANDUM OPINION
Plaintiff Mark Robinson, an African-American, has sued the District of Columbia,
alleging unlawful race discrimination and retaliation under Title VII of the Civil Rights Act of
1964, 42 U.S.C. § 2000e et seq., and unlawful retaliation under the District of Columbia
Whistleblower Protection Act. Before the Court is defendant’s motion to dismiss plaintiff’s
complaint as judicially estopped because plaintiff failed to disclose these causes of action during
his now-closed bankruptcy proceeding.1 For the reasons stated below, defendant’s motion will
be granted and the case will be dismissed.
BACKGROUND
The alleged discriminatory and retaliatory actions underlying plaintiff’s complaint
occurred between November 29, 2010 and July 30, 2013. (See generally First Amd. Compl.,
1
Def.’s Mot. to Dismiss (“Mot.”), Nov. 4, 2013 [Dkt. No. 14]; Pl.’s Opp’n to Def.’s Mot. to
Dismiss (“Opp’n”), Nov. 18, 2013 [Dkt. No. 16]; Def.’s Reply in Furtherance of Mot. to Dismiss, Nov.
25, 2013 [Dkt. No. 17]. On January 6, 2014, the Court noted that, based on the amended complaint and
other relevant filings, this case seemed “to be a prime candidate for the application of judicial estoppel.”
(Order, Jan. 6, 2014 [Dkt. No. 18] at 1.) Considering judicial estoppel’s basis in equity, however, the
Court “provide[d] plaintiff with two weeks to produce evidence supporting . . . unsupported factual
assertions in his opposition brief” before considering the merits of defendant’s motion to dismiss. (Id. at
1-2.) On January 20, 2014, Plaintiff produced two affidavits in support of his opposition brief. (Pl.’s
Production of Evid. in Compliance with Order, Jan. 20, 2014 [Dkt. No. 19].)
1
Oct. 18, 2013 [Dkt. No. 11] ¶¶ 7-27.) Plaintiff filed complaints with the Equal Employment
Opportunity Commission (“EEOC”) in August and December of 2011 claiming discrimination
and retaliation, respectively. (Id. ¶ 28.) He received right-to-sue letters for his complaints on
May 30 and June 25, 2013. (Notices of Right to Sue [Dkt. No. 14-3] at 1, 4.) He filed this action
on August 27, 2013, seeking $750,000 in damages. (Compl., Aug. 27, 2013 [Dkt. No. 1] at 7.)
According to his complaint, “[a]s a result of Defendant’s actions against Plaintiff,
[plaintiff] . . . suffered significant monetary losses, which led to his [and his wife’s] filing of
bankruptcy.” (First Amd. Compl. at ¶ 29.) Plaintiff and his wife filed for bankruptcy on July 9,
2012, while both of plaintiff’s complaints before the EEOC remained pending. In re: Mark E.
Robinson & Kimberly A. Robinson, No. 12-22685, Dkt. 1 (Bankr. D. Md. July 9, 2012). In their
joint and voluntary bankruptcy petition, plaintiff did not list the pending EEOC complaints as a
personal asset under Item 21 on Schedule B, which required him to list and estimate the value of
“[o]ther contingent and unliquidated claims of every nature . . . .” (Id. at 13.) Nor did he list the
EEOC complaints on the Statement of Financial Affairs, which required him to “[l]ist all suits
and administrative proceedings to which the debtor is or was a party within one year
immediately preceding the filing of this bankruptcy case.” (Id. at 29.) Plaintiff declared under
penalty of perjury that he had read the bankruptcy petition and that its contents were true and
accurate. (Id. at 35.) The Robinsons were represented by counsel (though not the counsel in this
action) during these proceedings, and plaintiff states that “had [he] known that an EEOC filing
would be relevant, [he] would have immediately disclosed that information.” (Aff. of Mark
Robinson, Jan. 20, 2014 [Dkt. No. 19-2] ¶ 7.)
Although plaintiff and his wife initially filed for bankruptcy under Chapter 13, they
voluntarily converted the petition to one under Chapter 7 on February 11, 2013. In re: Mark E.
2
Robinson & Kimberly A. Robinson, No. 12-22685, Dkt. 32 (Bankr. D. Md. Feb. 11, 2013). The
U.S. Bankruptcy Court for the District of Maryland entered an order granting plaintiff and his
wife a discharge on May 21, 2013, less than a week before the EEOC issued plaintiff his first
right-to-sue letter. In re: Mark E. Robinson & Kimberly A. Robinson, No. 12-22685, Dkt. 52
(Bankr. D. Md. May 21, 2013). After the discharge, plaintiff disclosed this lawsuit to his
bankruptcy attorney, who informed him that the suit “did not matter as a bankruptcy discharge
had already been issued.” (Robinson Aff. ¶ 8.)
In September of 2013, plaintiff received a correspondence from the bankruptcy trustee
regarding “additional potential assets” and assumed that the trustee was referring to this action.
(Id. ¶ 9.) Plaintiff attempted to contact the trustee multiple times to confirm his assumption, but
was referred to his bankruptcy attorney. (Id.) On October 22, 2013, the bankruptcy trustee
submitted a “No Distribution Report,” indicating that there was no property available for
distribution to creditors and stating that the total claims scheduled to be discharged without
payment amounted to $967,633.69. In re: Mark E. Robinson & Kimberly A. Robinson, No. 12-
22685, Dkt. 61 (Bankr. D. Md. Oct. 22, 2013). Two days later, the bankruptcy court issued a
final decree that the estate had been “fully administered,” discharging the trustee and closing the
case. In re: Mark E. Robinson & Kimberly A. Robinson, No. 12-22685, Dkt. 62 (Bankr. D. Md.
Oct. 24, 2013).
Defendant argues that plaintiff should be judicially estopped from bringing this complaint
pursuant to Moses v. Howard University Hospital, 606 F.3d 789 (D.C. Cir. 2010), because he did
not list the underlying causes of action on his bankruptcy petition or otherwise disclose the
causes of action during the bankruptcy proceedings. (Mot. at 2.) Plaintiff declares that “[a]t no
time was [he] trying to hide any information or mislead anyone with regard to this law suit”
3
(Robinson Aff. ¶ 10), and that he “will gladly reopen the bankruptcy case to include this case if
necessary and ha[s] been made aware that any debtors from the bankruptcy case could come
after any judgment or recovery in this case.” (Id. ¶ 11.)
LEGAL STANDARD
I. MOTION TO DISMISS
Defendants concede that the factual allegations in plaintiff’s amended complaint “allege
viable causes of action under Title VII . . . and the District of Columbia Whistleblower
Protection Act” (Mot. at 1), but argue that the allegations also establish that judicial estoppel bars
those claims. (Id. at 1-2.) When ruling on a motion to dismiss pursuant to Rule 12(b)(6), courts
must assume the veracity of all “well-pleaded factual allegations” contained in the complaint and
draw all reasonable inferences in plaintiff’s favor. Ashcroft v. Iqbal, 556 U.S. 662, 678-79
(2009); see also Atherton v. D.C. Office of Mayor, 567 F.3d 672, 681 (D.C. Cir. 2009). In so
doing, a court is not limited to the facts alleged in the complaint, but also may consider
documents attached to or incorporated by reference in the complaint, matters about which the
court may take judicial notice, and any documents appended to a motion to dismiss whose
authenticity is not disputed, if they are referred to in the complaint and are integral to a claim.
U.S. ex rel. Folliard v. CDW Tech. Servs., Inc., 722 F. Supp. 2d 20, 24 (D.D.C.2010); see also
Fed. R. Civ. P. 10(c). For the purposes of this case, the Court also will consider – and presume
the veracity of – the contents of plaintiff’s January 20, 2014 affidavit, which the Court requested
by its January 6, 2014 Order.2
2
There is no need to convert defendant’s motion to dismiss to a motion for summary judgment,
for the Court has concluded that as a matter of law defendant’s explanations for his failure to disclose this
cause of action during his bankruptcy proceedings do not rise to the level of a defense from judicial
estoppel under Moses, and thus, the Court need not determine whether plaintiff’s affidavit is credible.
4
II. BANKRUPTCY CODE’S DUTY TO DISCLOSE
Section 521 of the Bankruptcy Code requires a debtor to file “a schedule of assets and
liabilities; a schedule of current income and current expenditures; [and] a statement of the
debtor's financial affairs.” 11 U.S.C. § 521(a)(1)(B). Pending and potential causes of action are
assets that must be scheduled under section 521. See Eubanks v. CBSK Financial Grp., Inc., 385
F.3d 894, 897 (6th Cir. 2004); In re Coastal Plains, Inc., 179 F.3d 197, 208 (5th Cir.1999).
Thus, “a debtor is under a duty both to disclose the existence of pending lawsuits when he files a
petition in bankruptcy and to amend his petition if circumstances change during the course of the
bankruptcy.” Moses, 606 F.3d at 793. “Viewed against the backdrop of the bankruptcy system
and the ends it seeks to achieve, the importance of this disclosure duty cannot be
overemphasized.” In re Coastal Plains, 179 F.3d at 208.
III. JUDICIAL ESTOPPEL
The doctrine of judicial estoppel “generally prevents a party from prevailing in one phase
of a case on an argument and then relying on a contradictory argument to prevail in another
phase.” New Hampshire v. Maine, 532 U.S. 742, 749 (2001) (internal quotation marks omitted).
As defined by the D.C. Circuit, “[t]here are at least three questions that a court should answer in
deciding whether to apply judicial estoppel: (1) Is a party’s later position clearly inconsistent
with its earlier position? (2) Has the party succeeded in persuading a court to accept that party’s
earlier position, so that judicial acceptance of an inconsistent position in a later proceeding
would create the perception that either the first or the second court was misled? (3) Will the party
seeking to assert an inconsistent position derive an unfair advantage or impose an unfair
detriment on the opposing party if not estopped?” Moses, 606 F.3d at 798. “[A] court may not
invoke judicial estoppel against a party (1) who has engaged in misconduct in a separate judicial
5
proceeding, (2) but there is no meaningful connection between that proceeding and the judicial
proceeding in which judicial estoppel is sought. There must be a discernible connection between
the two proceedings.” Id. at 799. Moreover, the doctrine is inappropriate in cases where
“ommissions [by plaintiff] are the result of mere mistakes or inadvertent conduct.” Eubanks, 385
F.3d at 898 (collecting cases); see also New Hampshire, 532 U.S. at 753.
In the bankruptcy context, “every circuit that has addressed the issue has found that
judicial estoppel is justified to bar a debtor from pursuing a cause of action in district court
where that debtor deliberately fails to disclose the pending suit in a bankruptcy case.” Moses,
606 F.3d at 798 (collecting cases); see Ah Quin v. Cnty. of Kauai Dep’t of Transp., 733 F.3d 267,
271 (9th Cir. 2013) (“[T]he federal courts have developed a basic default rule: If a plaintiff-
debtor omits a pending (or soon-to-be-filed) lawsuit from the bankruptcy schedules and obtains a
discharge (or plan confirmation), judicial estoppel bars the action.”). The doctrine protects the
integrity of the bankruptcy system, see In re Coastal Plains, 179 F.3d at 208, and is meant to
prevent parties from hiding causes of actions during bankruptcy proceedings, thereby obtaining a
“valuable benefit in the discharge of . . . debts,” and then “asserting [the causes of action] in
order to win a second time.” See Cannon-Stokes v. Potter, 453 F.3d 446, 447 (7th Cir. 2006).
ANALYSIS
This initially seems a classic case for judicial estoppel, as all three of the Moses elements
are met. First, plaintiff’s current position is “clearly inconsistent” with his prior position before
the bankruptcy court. See Moses, 606 F.3d at 799. Plaintiff had two complaints pending before
the EEOC when he (and his wife) filed for bankruptcy on July 9, 2012. Yet, he did not disclose
the EEOC complaints (or the underlying causes of action) as current or potential causes of action
under Schedule B, or as suits or administrative proceedings to which he was a party in the
6
Statement of Financial Affairs. And now, after having his debts discharged on May 21, 2013, he
seeks to assert those undisclosed causes of action before this Court. Second, the bankruptcy
court’s decision to discharge plaintiff from Chapter 7 without consideration of the pending
EEOC complaints and underlying discrimination claims “leaves little doubt that [plaintiff]
succeeded in hiding the inconsistency from the” bankruptcy court and creates the perception that
the bankruptcy court was misled. See id. And, finally, allowing plaintiff’s claims to proceed
would provide an unfair advantage for plaintiff over both creditors of his now-discharged debt,
as well as defendant, with whom plaintiff’s trustee could have settled the matter or dismissed it
had the cause of action been properly disclosed. See id.3
Nonetheless, plaintiff argues that the equitable nature of judicial estoppel, see New
Hampshire, 532 U.S. at 750, should foreclose its application under the specific facts of this case.
Plaintiff offers two reasons. First, plaintiff argues that there is “no meaningful connection”
between plaintiff’s bankruptcy case and this action. (Opp’n at 5.) While it is true that judicial
estoppel may apply only if there exists some “meaningful connection between [the earlier]
proceeding and the judicial proceeding in which judicial estoppel is sought,” Moses, 606 F.3d at
799, the connection demanded does not erect a high bar. As evidenced by the cases cited in
3
Plaintiff asserts that he is willing to reopen his bankruptcy proceeding to disclose his causes of
action (Robinson Aff. ¶ 11) and argues this would alleviate any unfair advantage over his creditors.
(Opp’n at 4.) The Ninth Circuit recently held that the reopening of a bankruptcy proceeding to disclose a
previously undisclosed claim lessens the stringency of the judicial estoppel analysis. See Ah Quin, 733
F.3d at 272-77. Controlling precedent in this jurisdiction forecloses this approach. As the D.C. Circuit
emphasized in Moses, allowing a debtor “‘to back-up, re-open the bankruptcy case, and amend his
bankruptcy filings, only after his omission has been challenged by an adversary, suggests that a debtor
should consider disclosing potential assets only if he is caught concealing them. This so-called remedy
would only diminish the necessary incentive’ for the debtor ‘to provide the bankruptcy court with a
truthful disclosure of [his] assets.’” 606 F.3d at 800 (quoting Burnes v. Pemco Aeroplex, Inc., 291 F.3d
1282, 1288 (11th Cir. 2002)).
Plaintiff’s argument that the District of Columbia faces “no unfair detriment” if the case were
allowed to continue (Opp’n at 4) is also foreclosed by Moses. See id. at 799 (“[Plaintiff’s] inconsistent
positions also adversely affected [defendant]. Had the trustee known of this lawsuit during the Chapter 7
bankruptcy proceedings, she might have settled this case early or decided not to pursue it, actions that
might have benefitted [defendant].”)
7
Moses, all that is required is that a plaintiff “failed to list his claims against [a party] as assets on
his bankruptcy schedules, and then later sued [that party] on the same claims.” Hamilton v. State
Farm Fire & Cas. Co., 270 F.3d 778, 784 (9th Cir. 2001); see also Cannon-Stokes, 453 F.3d at
447; U.S. ex rel. Gebert v. Transp. Admin. Servs., 260 F.3d 909, 918 (8th Cir. 2001); Payless
Wholesale Distrib., Inc. v. Alberto Culver (P.R.) Inc., 989 F.2d 570, 571 (1st Cir. 1993).
Because it is undisputed that those criteria are met in this case, the requisite “meaningful
connection” between the relevant actions exists here. See Moses, 606 F.3d at 800.
Second, plaintiff argues that his failure to disclose his EEOC claims (and underlying
causes of action) should be excused as “purely inadvertent.”4 (Opp’n at 4-6; Robinson Aff. ¶
10.) The Supreme Court has instructed that “it may be appropriate to resist application of
judicial estoppel when a party’s prior position was based on inadvertence or mistake.” New
Hampshire, 532 U.S. at 753 (internal quotation marks omitted). However, the Courts of Appeals
“generally have interpreted [inadvertence] narrowly,” Ah Quin, 733 F.3d at 271, such that “[t]he
failure to comply with the Bankruptcy Code’s disclosure duty is ‘inadvertent’ only when a party
either lacks knowledge of the undisclosed claim or has no motive for their concealment.” Barger
v. City of Cartersville, 348 F.3d 1289, 1295 (11th Cir. 2003); see also In re Coastal Plains, 179
F.3d at 210 (“[T]he debtor’s failure to satisfy its statutory disclosure duty is ‘inadvertent’ only
4
Plaintiff attempts to bolster his “inadvertence” argument by asserting that he at all times relied
on the advice of his bankruptcy counsel. (See Opp’n at 4, 6.) Aside from the fact that plaintiff did not
disclose to his bankruptcy attorney the existence of any potential causes of action until after the
bankruptcy court granted a discharge from bankruptcy (Robinson Aff. ¶ 8), courts have routinely held that
reliance on an attorney’s advice – bad or not – “does not relieve the client of the consequences of her own
acts” for the purposes of judicial estoppel. Cannon-Stokes, 453 F.3d at 449; see also Eastman v. Union
Pac. R.R. Co., 493 F.3d 1151, 1159 (10th Cir. 2007) (“Gardner’s assertion that he simply did not know
better and his attorney ‘blew it’ is insufficient to withstand application of the doctrine.”); Barger v. City of
Cartersville, 348 F.3d 1289, 1295 (11th Cir. 2003) (“Although it is undisputed that Barger’s attorney
failed to list Barger’s discrimination suit on the schedule of assets despite the fact that Barger specifically
told him about the suit, the attorney’s omission is no panacea.”). For plaintiff not only “voluntarily
chose” his bankruptcy attorney, see Link v. Wabash R.R. Co., 370 U.S. 626, 633 (1962), but also “swore,
under penalty of perjury, that the [bankruptcy] filing was accurate.” White v. Wyndham Vacation
Ownership, Inc., 617 F.3d 472, 483 (6th Cir. 2010).
8
when, in general, the debtor either lacks knowledge of the undisclosed claims or has no motive
for their concealment.”). But see Dzakula v. McHugh, -- F.3d ---, 2014 WL 128605, *2 (9th Cir.
Jan. 15, 2014) (interpreting “inadvertence,” after Ah Quin, based on the “ordinary
understanding” of the term). “Where a debtor has both knowledge of the claims and a motive to
conceal them, courts routinely, albeit at times sub silentio, infer deliberate manipulation.”
Eastman v. Union Pac. R.R. Co., 493 F.3d 1151, 1157 (10th Cir. 2007). This prevailing
“interpretation of ‘inadvertence’ is narrow in part because the motive to conceal claims from the
bankruptcy court is . . . nearly always present.” Ah Quin, 733 F.3d at 271.
Plaintiff clearly had knowledge of the undisclosed claims he now brings before this Court
when he filed for bankruptcy. Although he asserts in his opposition that he did not have “actual
knowledge that he possessed a potential cause of action against the Defendant prior to or during
the pendency of his bankruptcy proceeding” (Opp’n at 3), his argument fails as a matter of law
and is belied by undisputed facts of the case. Contrary to plaintiff’s argument regarding his
actual knowledge, “[t]he debtor need not know all the facts or even the legal basis for the cause
of action; rather, if the debtor has enough information . . . to suggest that it may have a possible
cause of action, then that is a ‘known’ cause of action such that it must be disclosed.” In re
Coastal Plains, 179 F.3d at 208 (emphasis added) (internal quotation marks omitted). Plaintiff’s
filing of two EEOC claims less than a year before filing for bankruptcy shows that he clearly
had “knowledge of enough facts to know that [the] potential cause[s] of action” that he now
seeks to bring “exist[ed] during the pendency of the bankruptcy.” See Hamilton, 270 F.3d at
784.
Moreover, plaintiff’s two charges before the EEOC – because they were pending when he
and his wife filed for bankruptcy – independently triggered his duty of disclosure, regardless of
9
when he received his right-to-sue letters.5 See Jethroe v. Omnova Solutions, Inc., 412 F.3d 598,
600 (5th Cir. 2005) (“[Plaintiff] was under a duty both to disclose the existence of her pending
EEOC complaint when she filed her petition and to disclose her potential legal claims throughout
the pendency of that petition”); see also Casanova v. Pre Solutions, Inc., 228 F. App’x 837, 841
(11th Cir. 2007) (“Even though Plaintiff did not file a lawsuit before or during the pendency of
his bankruptcy petition, the pending EEOC charges constitute ‘administrative proceedings’ and
‘[o]ther contingent and unliquidated claims’ that Plaintiff was required to disclose on his
[Statement of Financial Affairs].”); Kamont v. West, 83 F. App’x 1, 3 (5th Cir. 2003)
(“[Plaintiff’s] first three complaints filed with the EEOC were pending when she filed for
bankruptcy, and they are estopped.”).
While plaintiff may not have understood that his EEOC claims were required to be
disclosed in the bankruptcy filings,6 he clearly had actual knowledge that he had filed the charges
with the EEOC. Indeed, plaintiff claims that defendant’s allegedly discriminatory conduct
underlying his EEOC claims (and the instant case) also contributed to his and his wife’s
bankruptcy. (First Amd. Compl. ¶ 29.) When a plaintiff admits that the factual basis for an
undisclosed claim also contributed to his bankruptcy, courts have had little problem finding that
5
Plaintiff and defendant take different positions on when the bankruptcy proceeding – and thus
plaintiff’s continuing duty to disclose, see Moses, 606 F.3d at 793 – ended. Plaintiff proceeds under the
assumption that the proceeding and his duty to disclose ended upon the discharge of debts on May 21,
2013, and thus his subsequent right-to-sue letters did not trigger a duty to disclose. (See Opp’n at 6
(“Plaintiff did not have his right to sue letters until after he was issued a discharge order in his bankruptcy
case. Thus, there was nothing to disclose.”).) Defendant, in contrast, takes the more persuasive position
that the proceedings and plaintiff’s duty ended only once the case was closed on October 24, 2013. (See
Mot. at 4 & n.3.) The Court need not resolve this debate, because, as explained above, even assuming
plaintiff is correct that his duty to disclose ended upon discharge of his debts (and therefore before he
received his right-to-sue letters), judicial estoppel still applies because plaintiff failed to disclose his
pending EEOC charges.
6
Importantly, plaintiff’s actual knowledge of the duty to disclose (see Robinson Aff. ¶ 7) is
irrelevant. See In re Coastal Plains, 179 F.3d at 212 (“Duke’s claimed lack of awareness of Coastal's
statutory disclosure duty for its claims against Browning is not relevant.”).
10
the debtor-turned-plaintiff had knowledge of the undisclosed claim during the bankruptcy
proceedings, see, e.g., Okan’s Foods, Inc. v. Windsor Assocs. Ltd. P’ship, 217 B.R. 739, 756
(Bankr. E.D. Pa.1998), and that therefore judicial estoppel applied. See Barger, 348 F.3d at
1291 (applying judicial estoppel where defendant’s alleged wrong caused bankruptcy); Payless
Wholesale Distrib., 989 F.2d at 571 (same); Oneida Motor Freight, Inc. v. United Jersey Bank,
848 F.2d 414, 420 (3d Cir. 1988) (same). Accordingly, the Court concludes that the only
reasonable inference to be drawn from the undisputed facts in this case is that plaintiff knew of
the factual bases for his causes of action against defendant throughout his bankruptcy
proceedings.7
Thus, the only remaining question in this case is whether plaintiff had a motive to conceal
the claims he had pending before the EEOC and now brings before this Court. “[T]he
motivation sub-element is almost always met if a debtor fails to disclose a claim or possible
claim to the bankruptcy court.” Love v. Tyson Foods, Inc., 677 F.3d 258, 262 (5th Cir. 2012)
(internal quotation marks omitted). For “[m]otivation in this context is self-evident because of
potential financial benefit resulting from the nondisclosure.” Id. (internal quotation marks
7
Some courts have held that a bankruptcy trustee’s knowledge of the existence of a cause of
action during the pendency of the bankruptcy proceeding “precludes the application of judicial estoppel”
as it shows “the plaintiff was obviously not trying to defraud the court.” See, e.g., Eubanks, 385 F.3d at
898-99 & n.1 (so holding in case where plaintiff put the court and trustee on notice “through
correspondence, motions, and status conference requests”). But see Guay v. Burack, 677 F.3d 10, 19-20
(1st Cir. 2012) (“[O]ral disclosure [of assets] does not meet the requirements of the bankruptcy code.”);
Hamilton, 270 F.3d at 784 (“[N]otifying the trustee by mail or otherwise [of a pending claim] is
insufficient to escape judicial estoppel.”). Plaintiff seeks to take advantage of this purported “trustee
knowledge” exception to judicial estoppel by asserting in his opposition that he “told the trustee about
this suit being filed.” (Opp’n at 5.) Unfortunately for plaintiff, neither his complaint nor his affidavit
supports this factual assertion. Instead, plaintiff’s affidavit, interpreted in the light most favorable to him,
indicates only that he attempted to inform the bankruptcy trustee of this case. (Cf. Robinson Aff. ¶ 9.)
Accordingly, even assuming the application of a broad “trustee knowledge” exception, the Court cannot
deny defendant’s motion on the ground that the bankruptcy trustee had knowledge of the instant causes of
action. The Court also notes that it is unclear whether informing a bankruptcy trustee of a pending or
potential cause of action after the bankruptcy discharge would be sufficient. Indeed, plaintiff’s position
that he attempted to inform the trustee after discharge is inconsistent with his position elsewhere that he,
upon discharge, had no duty to disclose. See supra n.5.
11
omitted). Nonetheless, courts have been reticent to hold that the obvious (and general) benefits
of a debtor’s non-disclosure in a bankruptcy proceeding produce an irrebuttable presumption that
the debtor-turned-plaintiff harbored a motive to conceal during that proceeding. Instead, a court
must weigh the generally reasonable assumption that non-disclosing debtor gains an advantage
(and thus has a motive) against “the specific facts of a case.” See Stallings v. Hussmann Corp.,
447 F.3d 1041, 1049 (8th Cir. 2006). To hold otherwise “would unduly expand the reach of
judicial estoppel in post-bankruptcy proceedings and would inevitably result in the preclusion of
viable claims on the basis of inadvertent or good-faith inconsistencies.” Ryan Operations G.P. v.
Santiam-Midwest Lumber Co., 81 F.3d 355, 364 (3d Cir. 1996). As a result, courts have refused
to apply judicial estoppel in instances where the benefits of any recovery on the non-disclosed
claims would not have accrued to the non-disclosing party, see Browning v. Levy, 283 F.3d 761,
776-77 (6th Cir. 2002); where faultless trustees attempt to pursue a non-disclosed claim on
behalf of the bankruptcy estate’s creditors, see, e.g., Kane v. Nat’l Union Fire Ins. Co., 535 F.3d
380, 387 (5th Cir. 2008); or where “[t]here is no evidence that the nondisclosure played any role
in the confirmation of the [reorganization] plan or that disclosure of the potential claims would
have led to a different result.” See Ryan Operations, 81 F.3d at 355.
But none of those situations apply here. In this case, plaintiff had over $900,000 in debts
discharged through Chapter 7 and seeks a $750,000 judgment in this action.8 Had plaintiff
disclosed his claims, his creditors may have objected to discharge of debts, see In re Coastal
8
Plaintiff asserts in his opposition that through his EEOC complaints “[h]e was not seeking
monetary compensation, [but] was seeking justice.” (Opp’n at 2.) This assertion lacks support in
plaintiff’s amended complaint, his affidavit, or the documents attached to or incorporated by reference in
his amended complaint. But even if the Court were to accept plaintiff’s representation, it would not
change the outcome in this case. While undisclosed claims for injunctive relief are typically not barred by
judicial estoppel, see Burnes, 291 F.3d at 1288-89, plaintiff’s decision to pursue only injunctive relief
before the EEOC would not change the fact that when he filed for bankruptcy he knew of the factual
bases for claims for monetary relief – potential claims that, upon filing for bankruptcy, became property
of the bankruptcy estate. Moses, 606 F.3d at 795.
12
Plains, 179 F.3d at 212-13, and it would have been the trustee, not the plaintiff, who would have
determined whether to pursue the claims through the EEOC, withdraw them and file suit in
federal court, or seek settlement. See Moses, 606 F.3d at 793, 799. And plaintiff’s creditors
likely would have been the beneficiaries of any resolution of the claims in plaintiff’s favor;
indeed, even assuming judgment in the full amount requested, plaintiff may not have received
any portion of the judgment. Considering the benefits of non-disclosure under the facts of this
case, there can be no doubt that plaintiff had a motive to conceal this action from the bankruptcy
court, see, e.g., Cannon-Stokes, 453 F.3d at 448; Jethroe, 412 F.3d at 601; Barger, 348 F.3d at
1296; In re Coastal Plains, 179 F.3d at 213, and thus, plaintiff’s failure to disclose his claims
against defendant does not constitute inadvertence. Accordingly, plaintiff, “having obtained
judicial relief on the representation that no claims existed, cannot now resurrect them and obtain
relief on the opposite basis.” Payless Wholesale Distrib., 989 F.2d at 571.9
CONCLUSION
For these reasons, the Court will GRANT defendant’s motion to dismiss this case as
judicially estopped [Dkt. No. 14]. An Order consistent with this Memorandum Opinion will be
filed on this day.
/s/
ELLEN SEGAL HUVELLE
United States District Judge
Date: January 29, 2014
9
The Court recognizes that the Ninth Circuit has recently interpreted “inadvertence” more
favorably to the debtor-plaintiff based on its belief that alternative mechanisms exist to more equitably
protect the integrity of the bankruptcy system (and prevent undue benefit to the debtor) than the harsh rule
imposed by judicial estoppel as generally construed. See Dzakula v. McHugh, -- F.3d ---, 2014 WL
128605 at *1-2; Ah Quin, 733 F.3d at 274-278. The Court, however, is not free to adopt this approach,
since it is bound by Circuit precedent, see Moses, 606 F.3d 789, including the holding that reopening a
bankruptcy proceeding will not cure a debtor-turned-plaintiff’s wrongful non-disclosure. Id. at 800.
13