Raymond Espinosa v. Aaron's Rents, Inc. ( 2015 )

ACCEPTED
01-14-00843-CV
FIRST COURT OF APPEALS
HOUSTON, TEXAS
4/2/2015 3:40:44 PM
CHRISTOPHER PRINE
CLERK
CASE NO. 01-14-00843-CV FILED IN
1st COURT OF APPEALS
HOUSTON, TEXAS
4/2/2015 3:40:44 PM
IN THE COURT OF APPEALS FOR CHRISTOPHER A. PRINE
Clerk
THE FIRST DISTRICT OF TEXAS
HOUSTON, TEXAS
RAYMOND ESPINOSA,
Appellant,
v.
AARON’S RENTS, INC., AARON’S INC., AARON’S SALES & LEASE
OWNERSHIP, and NICOLE LEE,
Appellees.
On Appeal from the District Court of Harris County, Texas, 129th Judicial
District
Cause Number 2010-70720
BRIEF OF APPELLEES
Dion Y. Kohler Virginia Mixon Swindell
Georgia Bar No. 427715 Texas State Bar No. 00794711
Admitted Pro Hac Vice JACKSON LEWIS P.C.
JACKSON LEWIS P.C. 1415 Louisiana, Suite 3325
1155 Peachtree Street, Suite 1000 Houston, TX 77002-7332
Atlanta, Georgia 30309-3600 (713) 650-0404 [Telephone]
(404) 525-8200 [Telephone] (713) 650-0405 [Facsimile]
(404) 525-1173 [Facsimile]
ATTORNEYS FOR APPELLEES
TABLE OF CONTENTS
TABLE OF CONTENTS……………………………………………………..….ii
TABLE OF AUTHORITIES………………………………………………….....iv
IDENTITY OF PARTIES AND COUNSEL…………………………………....x
STATEMENT OF THE CASE………………………………………………....xii
STATEMENT REGARDING ORAL ARGUMENT………………………....xiv
ISSUES PRESENTED…………………………………………………………..xv
I. STATEMENT OF FACTS………………………………………………...1
A. FACTUAL BACKGROUND……………………………………....1
1. Espinosa’s Employment with Aaron’s………………………1
2. Events Leading up to Espinosa’s Arrest and Prosecution...1
3. Espinosa Files For Chapter 7 Bankruptcy………………….9
B. PROCEDURAL BACKGROUND………………………………..11
C. SUMMARY OF THE ARGUMENT……………………………..14
II. ARGUMENT……………………………………………………………...16
A. ESPINOSA IS ONCE AGAIN ATTEMPTING TO DECEIVE
THE TRUSTEE AND HIS CREDITORS BY BRINGING THIS
APPEAL…………………………………………………………....16
B. ESPINOSA’S CLAIMS AGAINST AARON’S ARE BARRED
UNDER THE DOCTRINE OF JUDICIAL ESTOPPEL……….17
1. Any Reliance By the Trial Court on Federal Law Was
Proper………………………………………………………..17
ii
2. Espinosa Is Judicially Estopped under Both the Texas and
Federal Standards for Judicial Estoppel…………………..23
3. No Alleged Equitable Considerations Weigh against
Application of Judicial Estoppel…………………………....44
C. ESPINOSA’S MALICIOUS PROSECUTION CLAIM FAILS AS
A MATTER OF LAW………………………………………….….45
1. Aaron’s Did Not Act With Malice……………………….....47
2. Espinosa Failed to Rebut the Presumption that Aaron’s
Had Probable Cause to Make a Report to the Police……..48
3. Aaron’s Did Not Initiate or Procure the Prosecution of
Espinosa……………………………………………………..50
D. ESPINOSA’S INTENTIONAL INFLICTION OF EMOTIONAL
DISTRESS CLAIM FAILS AS A MATTER OF LAW………...51
E. ESPINOSA’S DEFAMATION CLAIM FAILS AS A MATTER
OF LAW…………………………………………………………...52
III. CONCLUSION AND PRAYER………………………………………..54
CERTIFICATE OF COMPLIANCE………………………………………....56
CERTIFICATE OF SERVICE………………………………………………..57
APPENDIX
iii
TABLE OF AUTHORITIES
CASES PAGES(S)
Ah Quin v. County of Kauai DOT,
733 F.3d 267 (9th Cir. 2013)............................................................................30
Akin v. Dahl,
661 S.W.2d 917 (Tex. 1983)............................................................................48
Andrews v. Diamond, Rash, Leslie & Smith,
959 S.W.2d 646 (Tex. App.—El Paso 1997, writ denied) .................... 22, 32, 33
Antonov v. Walters,
168 S.W.3d 901 (Tex. App.—Fort Worth 2005) ..............................................11
Arrendondo v. Rodriguez,
No. 14-09-00857-CV, 2011 Tex. App. LEXIS 584 (Tex. Ct. App.---Hou.
[14th Dist.] 2011, no pet.) ................................................................................49
Arrow Marble, LLC v. Killion,
441 S.W.3d 702 (Tex. App.—Hou. [1st Dist.] 2014, no pet.)...........................35
Backman v. J.C. Penney Co.,
No. 14-03-00436-CV, 2004 Tex. App. LEXIS 9003 (Tex. Ct. App.---
Hou. [14th Dist.] 2004, no pet.) .......................................................................48
Bailey v. Barnhart Interest, Inc.,
287 S.W.3d 906 (Tex. App.—Hou. [14th Dist.] 2009, no pet.) ..................22, 30
Balaban v. Balaban,
712 S.W.2d 775 (Tex. App.—Hou. [1st Dist.] 1986, writ ref'd n.r.e) ...............40
Bennett v. Grant,
2014 Tex. App. LEXIS 8849 (Tex. App.—Austin Aug. 13, 2014)...................51
Bhatia v. Woodlands North Houston Heart Center, PLLC,
396 S.W.3d 658 (Tex. App.—Hou. [14th Dist.] 2013, pet. for review
denied).............................................................................................................36
Biesek v. Soo Line Railroad Co.,
440 F.3d 410 (7th Cir. 2006)............................................................................30
iv
Brown v. Swett & Crawford of Tex., Inc.,
178 S.W.3d 373 (Tex. App.—Hou. [1st Dist.] 2005, no pet.)....................passim
Bunnell v. Lewis,
1993 WL 290781 (Tex. App.—Hou. [14th Dist.] July 27, 1993) .....................40
Clear Lake Ctr., L.P. v. Garden Ridge, L.P.,
416 S.W.3d 527 (Tex. App.—Houston [14th Dist.] 2013, no pet.)...................18
Cricket Commc’ns, Inc. v. Trillium Indus. Inc.,
235 S.W.3d 298 (Tex. App.—Dallas 2007, reh'g denied)..........................passim
D.R. Horton-Texas, Ltd. v. Markel Int'l Ins. Co.,
300 S.W.3d 740 (Tex. 2009)............................................................................18
Dallas Sales Co., Inc. v. Carlisle Silver Co., Inc.,
134 S.W.3d 928 (Tex. App.—Waco 2004, pet. for review denied) ......................
....................................................................................................... 19, 23, 34, 43
Davis v. Household International, Inc.,
No. 05-90-01553-CV, 1991 Tex. App. LEXIS 3301 (Tex. App.---Dallas
1991, no writ) ..................................................................................................53
Davis v. Prosperity Bank,
383 S.W.3d 795 (Tex. Ct. App.—Hou. [14th Dist.] 2012, no pet.).......................
....................................................................................................... 47, 50, 51, 53
Dow Chem. Co. v. Francis,
46 S.W.3d 237 (Tex. 2001)..............................................................................46
Dunmore v. U.S.,
358 F.3d 1107 ..................................................................................................31
Erie v. R.R. v. Thompkins,
304 U.S. 64 (1938)...........................................................................................23
Ferguson v. Building Materials Corp. of Am.,
276 S.W.3d 45 (Tex. App.—El Paso 2008, pet. for review granted, rev'd,
remanded).................................................................................................passim
Ferguson v. Building Materials Corp. of Am.,
295 S.W.3d 642 (Tex. 2009).......................................................... 20, 21, 37, 42
v
First Valley Bank of Los Fresnos v. Martin,
55 S.W.3d 172 (Tex. App.—Corpus Christi 2001)...........................................51
First Valley Bank v. Martin,
144 S.W.3d 466 (Tex. 2004)............................................................................51
Flores v. Deutsche Bank Nat’l Trust Co.,
2014 Tex. App. LEXIS 9318 (Tex. App.—Fort Worth Aug. 21, 2014, no
pet.) ...........................................................................................................21, 37
Forbes, Inc. v. Granada Biosciences, Inc.,
124 S.W.3d 167 (Tex. 2003)............................................................................46
Freedom Communications, Inc. v. Coronado,
372 S.W.3d 621 (Tex. 2012)............................................................................11
Galley v. Apollo Associated Servs., Ltd.,
177 S.W.3d 523 (Tex. App.—Hou. [1st Dist.] 2005, no pet.)...........................39
Garcia v. BNSF Railway Co.,
387 S.W.3d 763 (Tex. App.—El Paso 2012, no pet.) ................................passim
Hoffmann-La Roche, Inc. v. Zeltwanger,
144 S.W.3d 438 (Tex. 2004)............................................................................52
In re Coastal Plains,
179 F.3d 197 (5th Cir. 1999).....................................................................passim
In re Superior Crewboats, Inc.,
374 F.3d 330 (5th Cir. 2004).....................................................................passim
Jackson v. Hancock & Canada, L.L.P.,
245 S.W.3d 51 (Tex. App.—Amarillo 2007, pet. for review denied) ........passim
Kane v. Nat’l Union Fire Ins. Co.,
535 F.3d 380 (5th Cir. 2008)......................................................................31, 44
Kroger Tex. L.P. v. Suberu,
216 S.W.3d 788 (Tex. 2006)................................................................ 46, 48, 49
Lewis v. Continental Airlines,
80 F. Supp. 2d 686 (S.D. Tex. 1999)..........................................................50, 51
vi
Long v. Knox,
155 Tex. 581 (Tex. 1956)............................................................... 21, 37, 38, 45
Norris v. Brookshire Grocery Co.,
362 S.W.3d 226 (Tex. App.—Dallas 2012, pet. for review denied) .................35
O'Melveny & Myers v. FDIC,
512 U.S. 79 (1994)...........................................................................................21
Pleasant Glade Assembly of God v. Schubert,
246 S.W.3d 1 (Tex. 2008)................................................................................21
Praytor v. Ford Motor Co.,
97 S.W.3d 237 (Tex. App.—Houston [14th Dist.] 2002, no pet.)......................46
Provident Life & Accident Ins. Co. v. Knott,
128 S.W.3d 211 (Tex. 2003)............................................................................17
Randall’s Food Markets v. Johnson,
891 S.W.2d 640 (Tex. 1995)............................................................................54
Range v. U.S.,
256 B.R. 868 (S.D. Tex. 2000).........................................................................36
Reed v. City of Arlington,
620 F.3d 477 (5th Cir. 2010)............................................................................32
Reed v. City of Arlington,
650 F.3d 571 (2011).........................................................................................32
Richey v. Brookshire Grocery Co.,
952 S.W.2d 515 (Tex. 1997)......................................................................48, 49
Ryan Operations G.P. v. Santiam-Midwest Lumber Co.,
81 F.3d 355 (3rd Cir. 1996) .............................................................................43
Siller v. LPP Mortgage, LTD,
2013 Tex. App. LEXIS 4520 (Tex. App.—San Antonio Apr. 10, 2013,
pet. for review denied) ................................................................... 18, 19, 21, 37
Spera v. Fleming, Hovenkamp & Grayson, P.C.,
25 S.W.3d 863 (Tex. App.—Hou. [14th Dist.] 2000, no pet.) ..........................39
vii
Stallings v. Hussman Corp.,
447 F.3d 1041 (8th Cir. 2006)..........................................................................43
Stephenson v. Leboeuf,
16 S.W.3d 829 (Tex. App.—Hou. [14th Dist.] 2000, pet. for review
denied and subsequent appeal, remanded on other grounds) .....................passim
Thomas v. Ginter,
2014 Tex. App. LEXIS 8183 (Tex. App.—Hou. [1st Dist.] July 29, 2014,
no pet.)......................................................................................................passim
Torres v. GSC Enters., Inc.,
242 S.W.3d 553 (Tex. Ct. App.---El Paso 2007, no pet.) .................................52
Tow v. Pagano,
312 S.W.3d 751 (Tex. App.—Hou. [1st Dist.] 2009, no pet.)............... 19, 21, 37
Travelers Ins. Co. v. Joachim,
315 S.W.3d 860 (Tex. 2010)............................................................................17
Trostle v. Combs,
104 S.W.3d 206 (Tex. App.---Austin 2003, no pet.) ..................................52, 53
U.S. v. 162 Megamania Gambling Devices,
231 F.3d 713 (10th Cir. 2000)..........................................................................22
Valence Operating Co. v. Dorsett,
164 S.W.3d 656 (Tex. 2005)............................................................................17
Vinson & Elkins v. Moran,
946 S.W.2d 381 (Tex. App.—Hou. [14th Dist.] 1997, writ dism'd by agr.
and mot. dismissed) .........................................................................................39
Vitale v. Keim,
1997 Tex. App. LEXIS 4719 (Tex. App.—Hou. [1st Dist.] Aug. 29,
1997, review denied)........................................................................................39
Wal-Mart Stores, Inc. v. Medina,
814 S.W.2d 71 (Tex. Ct. App.---Corpus Christi 1991, writ denied and
reh’g of writ of error overruled) .......................................................................46
Western Invs., Inc. v. Urena,
162 S.W.3d 547 (Tex. 2005)............................................................................17
viii
WFAA-TV, Inc. v. McLemore,
978 S.W.2d 568 (Tex. 1998)............................................................................53
OTHER AUTHORITIES
Eric Hilmo, Bankrupt Estoppel: The Case for a Uniform Doctrine of
Judicial Estoppel As Applied Against Former Bankruptcy Debtors, 81
Fordham L. Rev. 1353 (2012)..........................................................................30
Tex. R. App. P. 53.2(f)..........................................................................................15
Tex. R. Civ. P. 166a(i) ..........................................................................................46
Tex. R. Civ. P. 166a(c) ..................................................................................passim
ix
IDENTITY OF PARTIES AND COUNSEL
The following constitutes a list of all parties and the names and
addresses of all trial and appellate counsel:
Appellant/Plaintiff: Raymond Espinosa
Appellant’s Trial Counsel: Mark T. Murray
Stevenson & Murray
Texas State Bar No. 14724810
24 Greenway Plaza, Suite 750
Houston, Texas 77046
(713) 622-3223 [Telephone]
(713) 622-3224 [Facsimile]
Appellant’s Appellate Counsel: Robert Teir
Robert Teir, PLLC
845 FM 517 W, Suite 200
Dickinson, Texas 77539
(832) 365-1191 [Telephone]
(832) 550-2700 [Facsimile]
Appellees/Defendants: Aaron’s Rents, Inc., Aaron’s, Inc., Aaron’s
Sales and Lease Ownership, and Nicole Lee
Appellees’ Appellate Counsel: Virginia Mixon Swindell
Texas State Bar No. 00794711
JACKSON LEWIS P.C.
1415 Louisiana, Suite 3325
Houston, TX 77002-7332
(713) 650-0404 [Telephone]
(713) 650-0405 [Facsimile]
x
Dion Y. Kohler
Georgia Bar No. 427715
JACKSON LEWIS P.C.
1155 Peachtree Street, Suite 1000
Atlanta, Georgia 30309-3600
(404) 525-8200 [Telephone]
(404) 525-1173 [Facsimile]
Defendant/Third-Party Plaintiff : J. Norris.1
1
Mr. Norris was dismissed from this case by Appellant/Plaintiff Raymond Espinosa at the trial
court.
xi
STATEMENT OF THE CASE
Appellant/Plaintiff Raymond Espinosa (“Espinosa”) brought suit against
Appellees/Defendants Aaron’s Rents, Inc., Aaron’s, Inc., Aaron’s Sales & Lease
Ownership, and Nicole Lee (collectively, “Aaron’s) on December 3, 2010, alleging
claims for malicious prosecution, defamation, and intentional infliction of
emotional distress based on allegedly false accusations of theft by Aaron’s
following the termination of Espinosa’s employment. Espinosa also brought
claims for fraud and breach of fiduciary duty in connection with Aaron’s alleged
failure to pay him a quarterly bonus. On October 20, 2010, just six weeks before
bringing his claims against Aaron’s, Espinosa filed for Chapter 7 bankruptcy.
Espinosa was granted a “no asset” discharge and his bankruptcy case was closed
on January 31, 2011. Espinosa never disclosed his claims against Aaron’s to the
bankruptcy court while his bankruptcy case was pending during the approximately
two months after this lawsuit was initiated.
On December 13, 2013, Aaron’s filed a Motion for Summary Judgment as to
all of Espinosa’s claims, on the grounds that Espinosa’s claims were barred by the
doctrine of judicial estoppel due to his failure to disclose them to the bankruptcy
court. Aaron’s also asserted other meritorious grounds for summary judgment
with respect to the substantive elements of all of Espinosa’s claims. On September
16, 2014, the court issued an Order granting summary judgment on all of
xii
Espinosa’s claims and awarding Aaron’s its costs. On October 14, 2014, Espinosa
filed a notice of appeal with this Court.
xiii
STATEMENT REGARDING ORAL ARGUMENT
This case does not present novel issues that require oral argument. The
record before the trial court clearly shows that summary judgment was properly
granted for Appellees.
xiv
ISSUES PRESENTED
1. Whether the trial court properly granted summary judgment to Aaron’s
based on judicial estoppel due to Espinosa’s failure to disclose his claims during
his bankruptcy proceedings.
2. Whether the trial court properly granted summary judgment to Aaron’s on
Espinosa’s malicious prosecution claim.
4. Whether the trial court properly granted summary judgment to Aaron’s on
Espinosa’s intentional infliction of emotional distress claim.
5. Whether the trial court properly granted summary judgment to Aaron’s on
Espinosa’s defamation claim.
xv
IV. STATEMENT OF FACTS
A. FACTUAL BACKGROUND
1. Espinosa’s Employment with Aaron’s
Aaron’s is a specialty retailer serving consumers through the sale and lease
ownership of furniture, consumer electronics, computers, home appliances, and
accessories in over 2,100 Company-operated and franchised stores in the United
States and Canada. Espinosa was employed by Aaron’s from February 6, 2002
until January 9, 2006. (CRS 59, 65.)2 On October 21, 2002, Espinosa became the
General Manager (GM) at store C0020 located in Monroe, Texas. (CRS 21.) He
reported to Regional Manager (RM) Roger Hooker. (Id.) One of Espinosa’s
primary duties as GM was to protect company assets such as store inventory sold
and leased to customers. (CRS 66-67.) On January 9, 2006, Espinosa’s
employment ended. (CRS 59.) Espinosa contends he resigned and Hooker claims
Espinosa was terminated for performance reasons. (CRS 60.)
2. Events Leading Up to Espinosa’s Arrest and Prosecution
On February 11, 2006, Aaron’s sent a truck to customer Jimmie Norris’
residence to work with Norris to obtain payment or to collect rental furniture due
to delinquent lease payments. (CRS 95-100.) The Aaron’s drivers told Norris they
understood he had rented a keyboard, 3 refrigerators, a washer/dryer, a big screen
2
References to the Clerk’s Record are identified as “CR.” References to the First Supplemental
Clerk’s Record are identified as “CRS.”
1
TV and a Bose home theater system from Aaron’s. (Id.) Norris told them he had
never rented anything or signed a rental contract. (Id.)
Aaron’s, through Vice-President Internal Security (Loss Prevention) Danny
Walker, former Legal Counsel for Southwest Operations Nicole Lee, who is a
named Defendant, and Hooker conducted an investigation of this incident. (CRS
185.) Ultimately, its investigation included: 1) interviewing Norris, Customer
Service Representative (CSR) Tina Duhon, CSR Dawnisha Collier, Product
Technician (PT) William Rogers, PT James Hebert, and Customer Accounts
Manager (CAM) Joe Mermella; 2) conducting an audit of missing merchandise at
the Monroe store; 3) reviewing documents related to lease agreements which
appeared to be bogus; and 4) contacting customers who appeared to have bogus
lease agreements. (CRS 188.)
On February 15, 2006, Norris provided a handwritten statement to Aaron’s.
(CRS 95-100.) According to the statement, Norris met Espinosa at a gym in 2002
and ran into him again in late 2003 or early 2004. Norris inquired about
purchasing a big screen TV and Espinosa said the store did not have one to sell at
the time but he would keep an eye out for one. (Id.) Norris later saw Espinosa at
the gym and Espinosa told him he had a big screen TV coming in he could sell
Norris for cash. (Id.) A couple of days later, Espinosa called Norris and said he
had a 52” RCA TV he could sell him for $400 cash. (Id.) Norris agreed, but
2
Espinosa told him not to come by the store to pick it up, he would have it delivered
instead. (Id.) Espinosa later called Norris and asked him if he was still interested
in leather furniture, which Norris had seen at a tent sale. (Id.) Norris said he was
interested and Espinosa agreed to sell Norris the furniture and TV for $1200 and
have it delivered to him. (Id.) The next night, according to Norris, a large black
male in an Aaron’s truck delivered the TV and brown leather sofa, chair and
ottoman; Norris gave him a check for $1200 payable to Aaron Rents. (Id.)
Subsequently, Norris called Espinosa about buying a washer, dryer and side by
side refrigerator. (Id.) Espinosa called Norris a couple of days later and said he
had these items available for between $500-700 cash, which Norris said was
acceptable depending on their quality. (Id.) On December 28, 2004, Espinosa
delivered to Norris a Maytag refrigerator with no shelves and a GE washer/dryer
with no hoses or cords. (Id.) Norris paid Espinosa $500 cash. (Id.)
On February 17, 2006, Duhon also provided a written statement to Aaron’s.
(CRS 102.) Duhon worked at the Monroe store under Espinosa as a CSR. (Id.)
She stated that in mid-February, 2006, she discovered her brother had a big screen
TV on his account she did not believe he had rented. (Id.) She contacted her
brother who confirmed he did not rent the TV. (Id.) According to Duhon, she
called Espinosa and they spoke on February 15, 2006. (Id.) Espinosa told Duhon
he knew about the TV and would have the money dropped off to pay for it. (Id.)
3
Espinosa also asked Duhon about the whereabouts of customer Marese Butler’s
folder and she replied that she did not know. (Id.) Espinosa called Duhon back
and said he had just gotten out of a meeting with Aaron’s Vice President Dave
Buck and he was not going to drop anything off until he met with Buck to discuss
the “bogus deals” that had been written up. (Id.) According to Duhon, Espinosa
also said “the guys would back up his story” rather than her. (Id.)
Duhon also told Aaron’s in her statement she had created a lease folder for
Norris and 3 other customers at the request of Espinosa, but he told her not to
process them because they were “related to him and were good.” (CRS 102.)
Duhon also reported Espinosa dealt with certain customers and Espinosa took their
lease payments directly. (Id.) Customers also told her they paid Espinosa directly
and their accounts were paid. (Id.) Duhon reported other irregularities and stated
she believed that Espinosa had merchandise which belonged to Aaron’s. (Id.) The
manner in which these transactions were handled by Espinosa as reported by
Duhon were irregular and in violation of Aaron’s policies and procedures.
Collier reported to Aaron’s during her investigation interview that Espinosa
called her after the investigation of Espinosa’s practices began and said he was
sending in a customer to get two big screen TV sets and two LCD monitors. (CRS
162.) According to Collier, Espinosa asked her to fill out an order form with false
4
information and schedule it for delivery. (Id.) Espinosa then asked Collier what
she wanted out of the deal---money or product. (Id.)
The investigation also included an audit comparing the store’s inventory
versus merchandise which was recorded as on-lease or purchased since September
2005; this audit revealed approximately 30 items of merchandise which could not
be accounted for. This included washers and dryers, large televisions, computers,
Bose stereos and various items of furniture having a retail value in the amount of
approximately $63,556.32. (CRS 111.) Customers whom Aaron’s was able to
contact denied renting the merchandise listed on their lease agreement(s) and much
of the information on the lease agreements was false. (CRS 110-111, 194.) Also
as part of the investigation, Hooker looked at the route sheets for the delivery
drivers and the transactions which appeared to be phony were not listed. (CRS
193.) Further, GM Scott Newton reported to Hooker that Espinosa told him to
“free time” Norris’s delinquent lease accounts because he assisted him with
collections.3 (CRS 188.) In total, approximately 11 lease agreements were
identified as fraudulent. (See CRS 95-100.)
On February 22, 2006, Lee and Walker contacted the Houston Police
Department (“HPD”). Officer Hernandez was dispatched and prepared a police
report which stated Espinosa appropriated property illegally over the last 1 ½ years
3
When a lease is “free timed” the customer is not charged their normally due rental payment.
5
resulting in a total loss of $63,556.32. (CRS 104, 110-112.) Lee and Walker only
reported information to Hernandez they believed to be true at the time. (CRS 186.)
Officer Chapman was assigned by HPD to investigate the case. (CRS 104-105,
113-114.) Officer Chapman interviewed Lee and Walker and was told about the
investigation Aaron’s conducted and Aaron’s provided a partial list of customer
names used on fake rental agreements. (Id.) Officer Chapman personally
attempted to contact the customers named on the rental agreements, but none of
telephone numbers were valid. (Id.) Officer Chapman noted some of the
agreements had the same address or included addresses for motels. (Id.) Officer
Chapman told Assistant District Attorney Shipley that Aaron’s records showed the
merchandise for the bogus agreements amounted to approximately $31,000. (Id.)
Officer Chapman was able to interview “customer” Leo Cardenas who stated he
had borrowed the large TV listed in a bogus rental agreement to watch an election
and then he purchased it. (CRS 105, 115.) Espinosa handled the transaction with
Cardenas. (Id.) However, Aaron’s had no record of the sale of this merchandise to
Cardenas. (CRS 105.)
The Harris County District Attorney’s office was also involved in the
investigation. Norris was interviewed by Assistant District Attorney (“ADA”)
Layne Thompson, and stated he (Norris) purchased a refrigerator, washer and dryer
from Espinosa for $500 cash. (CRS 105.) Again, Aaron’s had no record of this
6
sale. (Id.) ADA Thompson reported Norris said that when he contacted Espinosa
about the bogus lease agreements, Espinosa acted as if he knew about them and
said he would contact Hooker and “straighten everything out.” (CRS 105-106.)
ADA Thompson also interviewed Duhon and she confirmed that the
signature on 2 pages of a bogus lease agreement was Espinosa’s. (CRS 106, 180.)
Duhon also confirmed the information in the statement she had given to Aaron’s
during their investigation. (CRS 106.) ADA Thompson also interviewed Collier,
who confirmed her report to Aaron’s that Espinosa asked her to facilitate a theft of
merchandise by filing out an order form with false information and scheduling the
products to be delivered. (CRS 107.) Collier told ADA Thompson that Espinosa
said she could either get money or product out of the deal. (Id.)
ADA Thompson also interviewed Marese Butler, who denied ever leasing
merchandise but had a false lease agreement showing she had leased merchandise
which could not be located by Aaron’s. (CRS 106.) Butler stated she went to
Espinosa’s store, looked at some merchandise and completed paperwork, but did
not rent anything. (Id.) About a year later, Aaron’s came to collect different
merchandise they claimed she had rented. (Id.)
Based on the investigation conducted by his office, ADA Thompson
concluded that Espinosa had stolen the merchandise from Aaron’s, but ADA
Thompson had concerns whether he could prove Espinosa’s guilt beyond a
7
reasonable doubt to a jury. (CRS 107.) ADA Thompson was confident he could
prove the transaction with Norris by Espinosa was theft but was concerned about
not being able to conclusively prove Espinosa was responsible for the other
transactions. (Id.) In addition, the value of the merchandise involved in the Norris
transaction alone did not rise to the level of a felony. (Id.)
After the police and DA’s office spent over 3 months investigating, a grand
jury issued a felony theft indictment on May 31, 2006 (filed July 7, 2006) against
Espinosa for appropriating 10 televisions, 4 refrigerators, 2 washers, 2 dryers and
furniture with a value of approximately $20,100. (CRS 201-202.) The charges
were filed by Officer Chapman after conducting his own investigation of the initial
report made by Aaron’s. Espinosa was arrested on a warrant obtained by Officer
Chapman. (CRS 108.) The decision to file the charges and proceed with the
prosecution was based upon the DA’s investigation of the case. (Id.) No one at
Aaron’s pressured or attempted to influence the police or the DA’s office to pursue
the matter. (CRS 108, 186.) Importantly, Aaron’s did not provide any false
information to HPD or the DA’s office during their investigation. (CRS 107.)
Ultimately, the grand jury issued a “no bill” to the charges. (CRS 107.)
While ADA Thompson’s office disagreed with the decision and was convinced of
Espinosa’s guilt, it was the policy of the District Attorney at the time not to pursue
8
prosecution when the grand jury issues a no bill. (Id.) On or about August 4, 2008,
the charges against Espinosa were dismissed. (CRS 219-220.)
3. Espinosa Files For Chapter 7 Bankruptcy
On October 20, 2010, Espinosa filed a petition for a Chapter 7 bankruptcy in
the United States Bankruptcy Court for the Southern District of Texas. (CRS 227-
229.) Espinosa was represented by attorney Jared Brent Ynigez in his bankruptcy.
(CRS 222.) In his Statement of Financial Affairs and Schedule B (in which he was
required to list personal property), Espinosa did not list his claims against Aaron’s.
(CRS 30-31, 223, 235.) Question 21 of Schedule B of Espinosa’s bankruptcy
petition asked him to list “[o]ther contingent and unliquidated claims of every
nature.” (CRS 235.) In response to Question 21, Espinosa checked “none.” (Id.)
With respect to Schedule B, Espinosa signed a “Declaration Concerning Debtor’s
Schedules” indicating that “I declare under penalty of perjury that I have read the
foregoing summary and schedules consisting of 17 sheets, and that they are true
and correct to the best of my knowledge, information, and belief.” (CRS 247.)
On or about November 29, 2010, a creditors meeting was held and Espinosa
also attended. (CRS 224.) On November 30, 2010, the trustee of Espinosa’s
bankruptcy estate, Rodney Tow, issued a “Report of No Distribution” indicating
that there was no property available for distribution from the estate over and above
9
that exempted by law and that $267,745.48 in claims were scheduled to be
discharged without payment. (CRS 224-225.)
On December 3, 2010, just 6 weeks after filing for bankruptcy, Espinosa
filed his First Amended Original Petition against Aaron’s. (CR 4-12.) Espinosa’s
bankruptcy petition remained pending for approximately two months after this
lawsuit was initiated against Aaron’s, but Espinosa never amended his listing of
assets to include his claims against Aaron’s. On January 31, 2011, Espinosa was
granted a discharge and his bankruptcy case was closed. (CRS 225, 256-257.)
Aaron’s filed its Motion for Summary Judgment on December 13, 2013,
asserting that Espinosa’s claims were barred due to, among other reasons, his
failure to disclose his claims during his bankruptcy proceeding and because
Espinosa lacked standing to bring his claims because they were property of the
bankruptcy estate. (CRS 19-53.)
Trustee Rodney Tow subsequently filed a Motion to Reopen Espinosa’s
bankruptcy case, which the bankruptcy court granted on January 7, 2014. (CR
197.) On March 25, 2014, Mark Murray, Espinosa’s trial counsel, was authorized
by the trustee to act as special counsel for the bankruptcy estate in connection with
Espinosa’s case against Aaron’s. (CR 195-197.) The trustee never intervened in
Espinosa’s case against Aaron’s or moved to substitute himself as the real party in
interest.
10
The trial court granted summary judgment to Aaron’s on all of Espinosa’s
claims on September 14, 2014. (CR 312-313.) Subsequently, on February 4,
2015, Trustee Tow filed a “Report of No Distribution” stating that that there was
no property available for distribution from the estate over and above that exempted
by law and indicating that $167,270.00 in assets were abandoned and $267,745.48
were scheduled to be discharged without payment.4 (Appendix, Bankruptcy
Docket Sheet, Entry Dated February 4, 2015.) The bankruptcy court closed
Espinosa’s case for a second time on March 9, 2015. (Appendix, Doc. 45, Order
Closing Case.)
B. PROCEDURAL BACKGROUND
On October 26, 2010, Espinosa filed an Original Petition against Jimmie
Norris in the District Court of Harris County, 129th Judicial District. (CRS 4-6.)
On November 4, 2010, Norris filed an Agreed Motion for Leave to designate
Appellees Aaron Rents, Inc., Aaron’s, Inc., Aaron’s Sales & Lease Ownership, and
Nicole Lee as responsible third parties. (CR 30-33.) The Court issued an Order on
November 11, 2010 granting Norris’ motion. (CRS 9.) Espinosa moved to nonsuit
4
Although these subsequent events in Espinosa’s bankruptcy case are not part of the trial court’s
record, Aaron’s believes this updated information will assist the Court in understanding the
procedural posture of this case and in making a determination as to the issues raised in
Espinosa’s appeal, and asks the Court to take judicial notice of these documents. See Freedom
Communications, Inc. v. Coronado, 372 S.W.3d 621, 623 (Tex. 2012) (“a court will take judicial
notice of another court's records if a party provides proof of the records”); Antonov v. Walters,
168 S.W.3d 901, 903 n.1 (Tex. App.—Fort Worth 2005) (taking judicial notice of facts set forth
in records from bankruptcy proceedings filed by appellees as an appendix).
11
Norris without prejudice and Norris was dismissed from the case on March 22,
2011. (CRS 11.) Espinosa used this legal maneuver because otherwise his claims
against Aaron’s and Lee would have been time-barred.
Espinosa’s First Amended Original Petition was filed December 3, 2010,
alleging claims for malicious prosecution, defamation, and intentional infliction of
emotional distress in connection with allegedly false accusations of theft by
Aaron’s. (CR 4-12.) Espinosa also asserted claims for fraud and breach of
fiduciary duty in connection with Aaron’s alleged failure to pay him a quarterly
bonus for the last quarter he worked. (Id.)
On December 13, 2013, Aaron’s and Lee filed a Motion for Summary
Judgment as to all of Espinosa’s claims.5 (CRS 19-53.) Aaron’s Motion for
Summary Judgment was based on the following grounds: (1) Espinosa’s claims are
barred under the doctrine of judicial estoppel due to his failure to disclose them
during his bankruptcy proceedings; (2) Espinosa lacked standing to bring his
claims because they are property of the bankruptcy estate; (3) Espinosa’s malicious
prosecution claim fails as a matter of law because, among other things, Aaron’s did
not knowingly provide false information to the authorities; (4) Espinosa’s
defamation claim fails as a matter of law because Espinosa had no admissible
5
Aaron’s also filed an earlier Motion for Summary Judgment on June 6, 2012 on the grounds
that Espinosa’s claims were barred by the applicable statutes of limitation. (CR 15-24.) The
court denied this Motion for Summary Judgment on October 15, 2012. (CRS 16.)
12
evidence of a defamatory statement, there was no evidence Aaron’s acted
negligently, and the alleged statements were subject to a qualified privilege; (5)
Espinosa’s intentional infliction of emotion distress (IIED) claim fails as a matter
of law because he could not establish the necessary elements of an IIED claim and
Espinosa could not bring an IIED claim, which is a “gap-filler” tort, because it was
based on the same alleged actions as his other tort claims; and (6) Espinosa failed
to establish claims for fraud and breach of fiduciary duty. (Id.)
Espinosa filed a Response in Opposition to Aaron’s Motion for Summary
Judgment on September 8, 2014. (CR 170-183.) Aaron’s filed a Reply in Support
of its Motion for Summary Judgment on September 11, 2014. (CR 298-311.) The
court held a hearing on September 14, 2014. On September 16, 2014, the court
issued an Order granting summary judgment on all of Espinosa’s claims and
awarding Aaron’s and Lee their costs. (CR 312.) On October 14, 2014, Espinosa
filed a notice of appeal with this Court. (CR 320.)
13
C. SUMMARY OF THE ARGUMENT
This case raises two important public issues. First, the Court should affirm
the trial court’s grant of summary judgment because Espinosa is judicially
estopped from asserting his claims against Aaron’s due to his failure to disclose his
claims during the bankruptcy proceedings. This doctrine is necessary to protect the
integrity of the judicial system and was properly applied by the trial court. While
Espinosa waived any argument regarding the application of Texas law versus
federal law on judicial estoppel because he failed to raise that issue before the trial
court, Texas courts look to federal law when applying judicial estoppel in the
context of inconsistent statements made in a prior bankruptcy proceeding.
Furthermore, judicial estoppel applies to Espinosa under both federal and Texas
law.
In addition, the trial court’s grant of summary judgment on Plaintiff’s
malicious prosecution claim was proper and consistent with the public policy of
the state of Texas to encourage citizens to report suspected crimes to the
authorities. Even assuming arguendo that judicial estoppel does not apply to bar
Espinosa’s claims, summary judgment was properly granted due to Espinosa’s
failure to raise a genuine dispute of material fact as to the essential substantive
elements of his claims for malicious prosecution as well as his claims for
14
intentional infliction of emotional distress and defamation. Espinosa has failed to
articulate any valid basis for reversing the trial court’s grant of summary judgment
with respect to the substantive elements of these claims.6
6
Apart from his general challenge to the application of judicial estoppel, Espinosa has not raised
any specific arguments challenging the trial court’s grant of summary judgment on his claims for
fraud and breach of fiduciary duty. Therefore, they are deemed abandoned. See Tex. R. App. P.
53.2(f).
15
II. ARGUMENT
A. ESPINOSA IS ONCE AGAIN ATTEMPTING TO DECEIVE THE
TRUSTEE AND HIS CREDITORS BY BRINGING THIS APPEAL.
After Aaron’s raised its judicial estoppel defense on summary judgment,
Espinosa disclosed his claims against Aaron’s to the bankruptcy court and the
trustee authorized Espinosa’s trial counsel to act as special counsel for the
bankruptcy estate in connection with Espinosa’s case against Aaron’s. (CR 195-
197.) Following the trial court’s grant of summary judgment to Aaron’s on
September 14, 2014, the trustee issued a report of no distribution, abandoned the
remaining assets in Espinosa’s bankruptcy case, and Espinosa’s bankruptcy case
was closed. (Appendix, Bankruptcy Docket Sheet, Entry Dated February 4, 2015
and Doc. 45, Order Closing Case.) Apparently, unbeknownst to the trustee and the
bankruptcy court,7 however, Espinosa has brought this appeal through a different
attorney, Robert Teir, who was never authorized by the trustee to act on behalf of
the bankruptcy estate. It appears that Espinosa is now attempting to dupe the
trustee and his creditors a second time by bringing this appeal without their
knowledge or authorization. Since the trustee has abandoned the assets in
Espinosa’s bankruptcy estate, any proceeds from Espinosa’s claims against
7
The record of Plaintiff’s bankruptcy case does not indicate any filing providing notice to the
bankruptcy court or his trustee of the filing of this appeal. (See Appendix, Bankruptcy Docket
Sheet.)
16
Aaron’s would go directly to Espinosa, and not to his creditors. For this reason
alone, the Court should dismiss Espinosa’s appeal.
B. ESPINOSA’S CLAIMS AGAINST AARON’S ARE BARRED UNDER
THE DOCTRINE OF JUDICIAL ESTOPPEL.
A trial court’s grant of summary judgment is reviewed de novo on appeal.
Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010); Valence
Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). Summary judgment
should be affirmed if there is no genuine issue of material fact, and the moving
party is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Western
Invs., Inc. v. Urena, 162 S.W.3d 547, 550 (Tex. 2005). Because the trial court
granted Aaron’s motion for summary judgment without specifying the grounds
relied on, summary judgment may be upheld on appeal if any of the grounds
presented to the trial court is meritorious. Provident Life & Accident Ins. Co. v.
Knott, 128 S.W.3d 211, 216 (Tex. 2003).
To the extent the trial court granted summary judgment on the grounds that
Espinosa’s claims are barred by judicial estoppel due to his failure to disclose them
during the bankruptcy proceedings, the trial court’s grant of summary judgment
was proper.
1. Any Reliance By the Trial Court on Federal Law Was Proper.
As an initial matter, Espinosa has waived any argument that reliance on
federal law in applying judicial estoppel based on non-disclosure in a bankruptcy
17
proceeding was improper. He failed to raise this argument in response to Aaron’s
Motion for Summary Judgment, and did not cite any Texas law on judicial
estoppel in his Response. (CR 173-174.) See D.R. Horton-Texas, Ltd. v. Markel
Int'l Ins. Co., 300 S.W.3d 740, 743 (Tex. 2009) (“A non-movant must present its
objections to a summary judgment motion expressly by written answer or other
written response to the motion in the trial court or that objection is waived [on
appeal].”); Clear Lake Ctr., L.P. v. Garden Ridge, L.P., 416 S.W.3d 527, 542 (Tex.
App.—Houston [14th Dist.] 2013, no pet.) (In the summary judgment context,
“[i]ssues not expressly presented to the trial court by written motion, answer or
other response shall not be considered on appeal as grounds for reversal.”) (quoting
Tex. R. Civ. P. 166a(c)).
Regardless, any reliance by the trial court on federal law regarding judicial
estoppel was entirely proper. Texas courts have consistently applied federal law
when a party invokes judicial estoppel based on a prior bankruptcy proceeding.
See Thomas v. Ginter, 2014 Tex. App. LEXIS 8183, at *6 (Tex. App.—Hou. [1st
Dist.] July 29, 2014, no pet.) (“When a party invokes judicial estoppel in the
context of a bankruptcy proceeding, we apply federal law to determine whether the
doctrine applies.”); Siller v. LPP Mortgage, LTD, 2013 Tex. App. LEXIS 4520, at
*10 (Tex. App.—San Antonio Apr. 10, 2013, pet. for review denied) (“A majority
of Texas courts do apply federal judicial estoppel law when the prior proceeding
18
was in bankruptcy court.”) (citing cases); Tow v. Pagano, 312 S.W.3d 751, 756
(Tex. App.—Hou. [1st Dist.] 2009, no pet.) (“Because this issue arises in the
bankruptcy context, we apply federal law to decide whether judicial estoppel bars
Tow’s claims.”); Cricket Commc’ns, Inc. v. Trillium Indus. Inc., 235 S.W.3d 298,
304 (Tex. App.—Dallas 2007, reh'g denied) (applying federal law where judicial
estoppel was raised in the context of a prior bankruptcy proceeding involving a
party’s duty to disclose under the bankruptcy code); Brown v. Swett & Crawford of
Tex., Inc., 178 S.W.3d 373, 380-81 (Tex. App.—Hou. [1st Dist.] 2005, no pet.)
(applying federal law); Stephenson v. Leboeuf, 16 S.W.3d 829, 841 (Tex. App.—
Hou. [14th Dist.] 2000, pet. for review denied and subsequent appeal, remanded on
other grounds) (same).
Since “the primary purpose of judicial estoppel is to preserve the integrity of
the prior judicial proceeding . . . it makes sense to apply the law applicable to the
prior proceeding.” Dallas Sales Co., Inc. v. Carlisle Silver Co., Inc., 134 S.W.3d
928, 931 (Tex. App.—Waco 2004, pet. for review denied);8 see also Siller, 2013
Tex. App. LEXIS 4520, at *10. This Court has also reasoned that application of
federal law is appropriate to “promote the goal of uniformity and predictability in
8
The court in Dallas Sales also reasoned that it was appropriate to apply federal law when
judicial estoppel is invoked based on a prior bankruptcy proceeding by comparing it to the Texas
Supreme Court’s long-standing holding that federal law governs in determining the res judicata
effect of a prior federal judgment on a state court claim. See Dallas Sales Co, Inc., 134 S.W.2d
at 931.
19
bankruptcy proceedings.” Jackson v. Hancock & Canada, L.L.P., 245 S.W.3d 51,
55 (Tex. App.—Amarillo 2007, pet. for review denied).
Espinosa miscites this Court’s decision in Ferguson v. Building Materials
Corp. of Am., 276 S.W.3d 45 (Tex. App.—El Paso 2008, pet. for review granted,
rev'd, remanded). It does not stand for the proposition that state law applies in this
context. Rather, this Court stated in that case that the purpose of judicial estoppel
“is to protect the integrity of the judicial process by preventing parties from
playing ‘fast and loose’ with the courts for their own self interests . . . [t]hus, the
doctrine is intended to protect the judicial system rather than litigants.” Id. at 49
(citing In re Coastal Plains, 179 F.3d 197, 205 (5th Cir. 1999)).
The Texas Supreme Court’s decision in Ferguson v. Building Materials
Corp. of Am., 295 S.W.3d 642 (Tex. 2009), did not alter the long-standing practice
of Texas courts of applying federal law on judicial estoppel when the prior
inconsistent statement was made in a bankruptcy proceeding. While the Ferguson
decision did not cite to federal law regarding judicial estoppel, the Texas Supreme
Court did not state that the Court of Appeals erred in any way in relying on federal
judicial estoppel law in rendering its decision. See id. at 643-644. Rather, the
Texas Supreme Court reversed the Court of Appeals’ decision on its facts and held
that judicial estoppel did not apply to bar the Fergusons’ claim because they fully
disclosed the pending lawsuit in one section of their bankruptcy filings and simply
20
omitted to list the lawsuit in another section, unlike Espinosa. Id. The Fergusons
also participated in a creditors meeting at which they again disclosed the pending
personal injury suit to the trustee and the trustee acknowledged the pending
litigation in his report and notified the bankruptcy court and creditors. Id. at 643.
In contrast, Espinosa never made any such disclosure while his bankruptcy case
was pending. (See CRS 30-31, 223, 235.) In Ferguson, the Fergusons fully
apprised the bankruptcy court of their claims and there were no inconsistent
statements upon which to base an application of judicial estoppel. Id. at 643-644.
Furthermore, Texas courts have continued to apply federal law on judicial
estoppel with respect to prior bankruptcy proceedings after the Ferguson decision.9
See Flores v. Deutsche Bank Nat’l Trust Co., 2014 Tex. App. LEXIS 9318, at *13
(Tex. App.—Fort Worth Aug. 21, 2014, no pet.); Thomas, 2014 Tex. App. LEXIS
8183, at *6; Siller, 2013 Tex. App. LEXIS 4520, at *10; Tow, 312 S.W.3d at 756.
Appellant also incorrectly argues that judicial estoppel is a common law
doctrine and therefore, compels the application of state law. Although there “is no
federal general common law,” O'Melveny & Myers v. FDIC, 512 U.S. 79, 83
(1994) (emphasis added), judicial estoppel is a doctrine based in common law that
9
The other two Texas Supreme Court cases Espinosa cites did not involve judicial estoppel
based on a prior bankruptcy proceeding. See Pleasant Glade Assembly of God v. Schubert, 246
S.W.3d 1 (Tex. 2008); Long v. Knox, 155 Tex. 581 (Tex. 1956). Aaron’s is unaware of any
Texas Supreme Court cases, other than Ferguson, addressing judicial estoppel in the context of
bankruptcy proceedings.
21
has been developed by the federal courts. See In re Coastal Plains, 179 F.3d at
205. Texas courts relying on federal law and not state law when applying judicial
estoppel have repeatedly noted that judicial estoppel is a common law doctrine.
Cricket Commc’ns, Inc., 235 S.W.3d at 304 (quoting In re Coastal Plains, 179
F.3d at 205); Andrews v. Diamond, Rash, Leslie & Smith, 959 S.W.2d 646, 649
(Tex. App.—El Paso 1997, writ denied) (citing federal law).
There is no support for Espinosa’s assertion that federal law on judicial
estoppel “would be far more difficult to follow.” On the contrary, as evidenced by
the cases cited supra, Texas courts have relied on federal law on judicial estoppel
without any difficulty for years. While federal circuits may vary with respect to
the application of judicial estoppel,10 Texas courts have consistently looked to Fifth
Circuit law on judicial estoppel in the bankruptcy context. See Ferguson, 276
S.W.3d at 49 (“Application of the doctrine is a matter of regional circuit law.”);
Bailey v. Barnhart Interest, Inc., 287 S.W.3d 906, 910 (Tex. App.—Hou. [14th
Dist.] 2009, no pet.) (“This court has applied Fifth Circuit law with regard to the
elements of judicial estoppel and the proof required to establish the doctrine in the
bankruptcy context.”).
Texas courts have rejected Espinosa’s contention that Texas law should
10
As noted in U.S. v. 162 Megamania Gambling Devices, 231 F.3d 713, 726 (10th Cir. 2000),
the Tenth Circuit’s express rejection of the doctrine of judicial estoppel is a minority viewpoint
on this issue.
22
apply with respect to judicial estoppel based on bankruptcy proceedings because
the state courts are “trying to police their own processes.” Rather, in the
bankruptcy context, Texas courts have indicated that “the primary purpose of
judicial estoppel is to preserve the integrity of the prior judicial proceeding” and
thus the law applicable to the prior proceeding – i.e. federal law – applies. Dallas
Sales Co., Inc., 134 S.W.3d at 931; see also Jackson, 245 S.W.3d at 55 (use of
federal law on judicial estoppel is appropriate to “promote the goal of uniformity
and predictability in bankruptcy proceedings”).11
2. Espinosa Is Judicially Estopped under Both the Texas and
Federal Standards for Judicial Estoppel.
Even assuming the trial court should have applied Texas law on judicial
estoppel, which Aaron’s disputes for the reasons discussed above, Espinosa has not
articulated any meaningful difference between Texas and federal law that would
have compelled a different result in this case. Aaron’s was entitled to summary
judgment under both the Texas and federal law on judicial estoppel.
a. Judicial Estoppel Applies to Espinosa Under Federal Law.
Under federal law, judicial estoppel applies in the bankruptcy context if the
following elements are met: (1) the party to be estopped has asserted a legal
position that is clearly inconsistent with its prior position; (2) a court accepted the
11
The Erie doctrine articulated by the U.S. Supreme Court in Erie v. R.R. v. Thompkins, 304 U.S.
64, 78 (1938), cited by Espinosa, applies in actions in federal court based on diversity
jurisdiction, and is not applicable here.
23
prior position; and (3) the party to be estopped did not act inadvertently. Cricket
Commc’ns, Inc., 235 S.W.3d at 304 (citing In re Coastal Plains, 179 F.3d at 206-
07). The undisputed evidence presented at summary judgment established these
three elements; therefore, the Court’s entry of summary judgment on Aaron’s
judicial estoppel defense was proper.
i. Espinosa Asserted A Clearly Inconsistent Position.
The United States Bankruptcy Code and rules “impose upon bankruptcy
debtors an express, affirmative duty to disclose all assets, including contingent and
unliquidated claims.” Cricket Commc’ns, Inc., 235 S.W.3d at 305 (citing In re
Coastal Plains, 179 F.3d at 207-08). The debtor’s duty to disclose potential claims
“does not end when the debtor files schedules, but instead continues for the
duration of the bankruptcy proceedings.” Id. (citing In re Coastal Plains, 179 F.3d
at 208). The undisputed evidence establishes that Espinosa failed to disclose his
claims against Aaron’s in his Statement of Financial Affairs or Schedule B (in
which he was required to list personal property). (CRS 30-31, 235.) Accordingly,
Aaron’s established that Espinosa took a clearly inconsistent position in the
bankruptcy proceeding. See Garcia v. BNSF Railway Co., 387 S.W.3d 763, 767
(Tex. App.—El Paso 2012, no pet.) (holding that BNSF met its burden of
establishing that Garcia took a clearly inconsistent position where “[t]he evidence
conclusively establishes that Garcia did not disclose his personal injury suit against
24
BNSF in the Schedule of Personal Property or the Statement of Financial Affairs”).
Espinosa argues that he did not take an inconsistent position because his
failure to disclose his claims against Aaron’s in his bankruptcy filings was an
omission, rather than an affirmative statement, and because it was inadvertent.
Contrary to Espinosa’s argument, judicial estoppel in the bankruptcy context
clearly covers omissions. See Jackson, 245 S.W.3d at 55 (“The omission of a
known cause of action from the debtor’s mandatory bankruptcy filings is
tantamount to a representation that no such claim existed.”); In re Coastal Plains,
179 F.3d at 210 (holding that the inconsistent positions prong was satisfied when
the party to be estopped omitted the claims from its schedules and stipulations with
the bankruptcy court). Furthermore, while inadvertence of the omission is
considered under a separate prong, “the debtor’s failure to disclose assets is
inadvertent only when the debtor lacks knowledge of the undisclosed claim or has
no motive for their concealment.” Jackson, 245 S.W.2d at 57 (citing In re Coastal
Plains, 179 F.3d at 208). Since Espinosa had knowledge of his claims and a
motive to conceal his claims from creditors since the proceeds would not go to the
creditors if they were concealed, but to him instead, his failure to disclose cannot
be considered to be inadvertent. See id.
ii. The bankruptcy court accepted Espinosa’s prior
position.
Espinosa does not appear to dispute that the bankruptcy court accepted his
25
prior position under the federal standard, nor could he under the undisputed facts
of this case. Based on the trustee’s determination that there were no assets
available for distribution, the bankruptcy court granted Espinosa a discharge of
$267,745.48 in creditor claims without payment and his bankruptcy case was
closed. (CRS 224-225, 256.) Accordingly, it is clear that the bankruptcy court
accepted Espinosa’s prior position that he had no contingent or unliquidated
claims. See Brown, 178 S.W.2d at 381 (holding that where the bankruptcy case
was dismissed based on a finding that there are no assets available for distribution,
the bankruptcy court accepted Brown’s inconsistent position); Stephenson, 16
S.W.3d at 842 (rejecting argument that the party did not successfully maintain her
inconsistent position in bankruptcy court where the party’s debt “was discharged
on the bankruptcy trustee’s finding that she had no assets”).
iii. Espinosa Did Not Act Inadvertently.
As an initial matter, Espinosa never argued in response to Aaron’s Motion
for Summary Judgment that his omission was inadvertent, and thus he has waived
this argument and it should not be considered by this Court. (CR 173-174.) See
Tex. R. Civ. P. 166a(c) (“Issues not expressly presented to the trial court by written
motion, answer or other response shall not be considered on appeal as grounds for
reversal.”) Now, after the fact and for the first time, Espinosa blames one of his
prior attorneys, which of course, even if true, would not make the non-disclosure
26
inadvertent. Brown, 16 S.W.3d at 841-842 (holding that reliance on an attorney’s
advice does not bar application of judicial estoppel); see also Garcia, 387 S.W.3d
at 768 (rejecting Garcia’s argument that the disclosure was inadvertent because he
informed his attorney about the personal injury suit and the attorney failed to
include it in the bankruptcy documents).
As discussed, “[i]n considering judicial estoppel in the context of a prior
bankruptcy case, the debtor’s failure to disclose assets is inadvertent only when the
debtor lacks knowledge of the undisclosed claim[s] or has no motive for their
concealment.” Jackson, 245 S.W.2d at 57 (citing In re Coastal Plains, 179 F.3d at
208). It is undisputed Espinosa had knowledge of the undisclosed claims because
he initiated the present action only six weeks after filing for Chapter 7 bankruptcy
protection. (CR 4-12, CRS 227-229.) Further in a conversation with Norris after
his criminal proceeding ended but before Espinosa filed for bankruptcy, Espinosa
told Norris “now it’s my turn,” a reference to his intent to pursue a claim against
Aaron’s. (CRS 61-62.)
Espinosa does not dispute that he had knowledge of his claims against
Aaron’s while his bankruptcy proceeding was pending, but alleges, citing to his
Affidavit submitted in response to Aaron’s Motion for Summary Judgment, that he
discussed his potential claim against Aaron’s with his bankruptcy attorney, but his
attorney told him that he did not have a viable claim against Aaron’s because the
27
statute of limitations had passed and it was not until later that he learned from his
trial counsel that there was a way to pursue his claims against Aaron’s. The first
problem with this argument, however, is that this purported testimony by Espinosa
was never included in any of the affidavits submitted to the trial court, and
Espinosa never provided this explanation for his failure to disclose in his
opposition to summary judgment.12 (See CR 173-174, 184-188.)
Even if this purported testimony were submitted to the trial court, which it
was not, Texas courts have rejected the argument that a non-disclosure was
inadvertent based on reliance on advice from an attorney. See Brown, 16 S.W.3d
at 841-842; see also Garcia, 387 S.W.3d at 768. Furthermore, even if Espinosa
truly believed that his claims against Aaron’s were worthless because they were
barred by the statute of limitations, he still had an obligation to report it in his
bankruptcy filings. Brown, 178 S.W.3d at 380 (“debtors in a bankruptcy action
have an absolute duty to report whatever interests they hold in property, even if
they believe the asset is worthless or unavailable to the bankruptcy estate”);
Stephenson, 16 S.W.3d at 841; see also Cricket Commcn’s, Inc., 235 S.W.3d at
307 (“Any claim with potential must be disclosed, even if it is ‘contingent,
12
Espinosa’s characterization of his alleged discussions with his bankruptcy attorney and trial
attorney also misrepresents the relevant timeline. Espinosa filed his bankruptcy petition on
October 20, 2010, filed his Original Petition against Norris on October 26, 2010, and filed the
First Amended Original Petition against Aaron’s on December 3, 2010, all within a span of
approximately six weeks. (CR 4-6, CRS 4-6, 227-229.) Thus, his bankruptcy proceeding had
not been “going on for some time” (as alleged by Espinosa) before his attorney found a way to
pursue Aaron’s.
28
dependent, or conditional.’”) (citing In re Coastal Plains, 179 F.3d at 208); In re
Superior Crewboats, Inc., 374 F.3d 330, 335 (5th Cir. 2004) (“Alleged confusion
as to a limitations period does not evince a lack of knowledge as to the existence of
the claim.”)
It cannot be seriously argued that Espinosa lacked a motive to conceal his
claims against Aaron’s from his creditors in the bankruptcy proceeding because
any proceeds from the undisclosed claims would have gone to Espinosa rather than
to his creditors. See Cricket Commcn’s, Inc., 235 S.W.3d at 307 (“If a debtor’s
undisclosed claim would have added assets to the bankruptcy estate . . . a debtor
will usually be deemed to have a motive to conceal those claims.”); Jackson, 245
S.W.3d at 57 (holding that “the Jacksons had a motive to conceal their claims . . .
as their failure to disclose the claims would prevent any future recovery from
inuring to the benefit of their creditors”); In re Superior Crewboats, Inc., 374 F.3d
at 336 (finding that the plaintiffs “had the requisite motivation to conceal the claim
as they would certainly reap a windfall had they been able to recover on the
undisclosed claim without having disclosed it to the creditors.”).
The fact that the bankruptcy court was later apprised of Espinosa’s claims
against Aaron’s after Aaron’s moved for summary judgment on the issue of
judicial estoppel does not cure his prior act of non-disclosure or alter the analysis
for purposes of judicial estoppel. See In re Superior Crewboats, Inc., 374 F.3d at
29
336 (applying judicial estoppel despite the fact that the debtors later reopened their
bankruptcy case and disclosed their claims because “[j]udicial estoppel was
designed to prevent such abuses”). Thus, even assuming Espinosa’s creditors
would stand to benefit from any proceeds resulting from his claims against Aaron’s
(which is not the case because the trustee formally abandoned Espinosa’s assets
and Espinosa is pursuing this appeal without the authorization or apparent
knowledge of the bankruptcy trustee), any such benefit is inconsequential at this
juncture.
iv. Fifth Circuit Precedent Supports the Application of
Judicial Estoppel.
Espinosa argues that this Court should look to other federal circuits in its
application of judicial estoppel; however, it is clear that Texas courts should apply
Fifth Circuit law when analyzing judicial estoppel in the bankruptcy context. See
Ferguson, 276 S.W.3d at 49; Bailey, 287 S.W.3d at 910. Moreover, there is no
support for Espinosa’s assertion that Fifth Circuit law on judicial estoppel
represents a minority viewpoint. Numerous other federal circuits apply judicial
estoppel under a framework substantially similar to that articulated by the Fifth
Circuit in In re Superior Crewboats.13 See Eric Hilmo, Bankrupt Estoppel: The
13
The Ninth Circuit in Ah Quin v. County of Kauai DOT, 733 F.3d 267 (9th Cir. 2013) discussed
In re Coastal Plains in the context of the Fifth Circuit’s narrow interpretation of the
“inadvertence element,” which it noted was similar to the approach used by the Sixth, Tenth, and
Eleventh Circuits. The Seventh Circuit in Biesek v. Soo Line Railroad Co., 440 F.3d 410 (7th
Cir. 2006) did not specifically discuss In re Coastal Plains, and ultimately held that Biesek could
30
Case for a Uniform Doctrine of Judicial Estoppel As Applied Against Former
Bankruptcy Debtors, 81 Fordham L. Rev. 1353 (2012) (noting that the standard
articulated by the Fifth Circuit in In re Coastal Plains “has become the de facto
standard for federal courts applying judicial estoppel to claims previously
undisclosed in bankruptcy brought by former debtors” and citing cases).
The two cases cited by Appellant do not establish that In re Coastal Plains
and In re Superior Crewboats are no longer good law in the Fifth Circuit. Both
cases are easily distinguished. The Fifth Circuit in Kane v. Nat’l Union Fire Ins.
Co., 535 F.3d 380, 386-388 (5th Cir. 2008), distinguished In re Superior
Crewboats and In re Coastal Plains because in Kane, the bankruptcy trustee
(rather than the debtors themselves) was pursuing the claim as the real party in
interest and the Fifth Circuit reasoned it was inequitable to apply judicial estoppel
against the trustee, who had not himself made any inconsistent statements. Since
the trustee is not a party to the instant action and has abandoned Espinosa’s claims
against Aaron’s, no such equitable considerations apply and the trial court properly
applied judicial estoppel as to Espinosa.
not pursue his claim because it belonged to the bankruptcy estate. The Ninth Circuit in Dunmore
v. U.S., 358 F.3d 1107, 1113 n.3, commented only that Dunmore’s omission of certain claims
during his Chapter 7 bankruptcy “would ordinarily act as judicial estoppel against his asserting
those very same claims against the Government,” but that the district court judge had allowed
him to remedy his inconsistent assertions by reopening his bankruptcy case which “was a
permissible alternative to judicial estoppel.”
31
Similarly, in Reed v. City of Arlington, 650 F.3d 571 (2011),14 the Fifth
Circuit held that while the debtor himself was properly estopped for his dishonesty,
the judicial estoppel defense did not apply to the bankruptcy trustee who had
substituted into the case as the real party in interest. In contrast, the trustee never
substituted into this case and he has abandoned the claims against Aaron’s, and
thus judicial estoppel was properly applied as to Espinosa under the Fifth Circuit’s
reasoning in Reed.
b. Judicial Estoppel Applies to Espinosa Under Texas Law.
Even if the Court applies Texas rather federal law as argued by Espinosa, his
claims are nonetheless barred under the doctrine of judicial estoppel. The elements
of judicial estoppel under Texas law are: (1) a sworn, inconsistent statement made
in a prior judicial proceeding; (2) which was successfully maintained in the prior
proceeding; (3) the absence of inadvertence, mistake, fraud, or duress in the
making of the prior statement; and (4) the statement was deliberate, clear and
unequivocal. Ferguson, 295 S.W.3d at 634; Garcia, 387 S.W.3d at 766 n.1;
Andrews, 959 S.W.2d at 650 n.2. The undisputed evidence before the trial court
supports the application of judicial estoppel to Espinosa under Texas law.
14
Reed v. City of Arlington, 620 F.3d 477 (5th Cir. 2010), cited by Espinosa, was subsequently
vacated by the Fifth Circuit’s opinion in Reed v. City of Arlington, 650 F.3d 571 (2011).
32
i. Espinosa Made a Sworn, Inconsistent Statement in
the Bankruptcy Proceeding.
This Court has noted that the most significant difference between Texas and
federal law on judicial estoppel is that Texas courts require that the statement in
the prior proceeding be a sworn statement. See Andrews, 959 S.W.2d at 650 n.2.
It is undisputed that the statements made by Espinosa in the bankruptcy proceeding
were sworn statements made under penalty of perjury. (CRS 247.)
Espinosa’s representation, made under oath, to the bankruptcy court that he
had no contingent or unliquidated claims and his later assertion of his claims
against Aaron’s after filing for bankruptcy are clearly inconsistent. (CRS 30-31,
235.) Espinosa argues, citing the Texas Supreme Court’s decision in Ferguson,
that he did not make any statements that were inconsistent. However, Ferguson is
plainly distinguishable. In Ferguson, the court found that the Fergusons had not
taken a clearly inconsistent position because they disclosed the pending lawsuit,
including the caption and style of the suit, nature of the claim, cause number, and
the court in which it had been filed, to the bankruptcy court in the Statement of
Financial Affairs. 295 S.W.3d at 643-644. The Fergusons also disclosed the
lawsuit at a creditors meeting to the bankruptcy trustee. Id. Based on these facts,
the court reasoned that judicial estoppel should not apply because they had clearly
made the bankruptcy court aware of the lawsuit. Id at 643-644.
In contrast, Espinosa completely failed to put the bankruptcy court on notice
33
of his claims against Aaron’s, despite having years to do so. Espinosa did not list
the lawsuit in either his Statement of Financial Affairs or Schedule of Personal
Property (Schedule B) and never informed the bankruptcy trustee about the lawsuit
at the creditor’s meeting at which he appeared. (CRS 30-31, 224, 235.) Based on
Espinosa’s representations, Espinosa was granted a “no asset” discharge and his
bankruptcy case was closed. (CRS 224-225, 256.) Thus, Ferguson is inapplicable.
See Dallas Sales Co., 134 S.W.3d at 932 (holding that where the appellant did not
list any of the claims asserted in the later lawsuit in his bankruptcy schedules,
“[i]t’s pursuit of these claims is clearly inconsistent with the position it took in
bankruptcy court”).
ii. Espinosa Successfully Maintained His Position in the
Prior Proceeding.
Espinosa successfully maintained his position in the bankruptcy proceeding
because the bankruptcy trustee determined that Espinosa had no assets available
for distribution, he was granted a discharge of $267,745.48 in creditor claims
without payment, and his bankruptcy case was closed. (CRS 224-225, 256.) See
Ginter, 2014 Tex. App. LEXIS 8183, at *6 (“Examples of a bankruptcy court
‘accepting’ a debtor's claims for judicial estoppel purposes include cases where the
debtor receives a discharge based on information he gives about his bankruptcy
estate, and where the court issues a ‘no asset’ discharge.”); Brown, 178 S.W.2d at
381 (holding that Brown successfully maintained his prior position because the
34
bankruptcy case was dismissed based on a finding that there are no assets available
for distribution); Stephenson, 16 S.W.3d at 842 (rejecting argument that the party
did not successfully maintain her inconsistent position in bankruptcy court where
the party’s debt “was discharged on the bankruptcy trustee’s finding that she had
no assets”).
Contrary to Espinosa’s assertion, the court in Ferguson did not comment on
the issue of whether the Fergusons successfully maintained their prior position, but
rather held that judicial estoppel did not apply because they did not take a clearly
inconsistent position and did not gain any unfair advantage in their bankruptcy
proceeding because the bankruptcy court was fully apprised of their claims at the
outset. See 295 S.W.2d at 634-644. While the court in Ferguson did state that “a
party cannot be judicially estopped if it did not prevail in the prior action,” this
Court has held that for purposes of judicial estoppel, this does not mean that “the
party against whom the judicial estoppel doctrine is to be invoked must have
prevailed on the merits.” Norris v. Brookshire Grocery Co., 362 S.W.3d 226, 230
(Tex. App.—Dallas 2012, pet. for review denied). Rather, it is sufficient “that the
first court has adopted the position urged by the party, either as a preliminary
matter or as part of final disposition.”15 Id.
15
Espinosa cites to several cases discussing the prevailing party for purposes of attorneys’ fees
awards which are inapplicable in the context of judicial estoppel based on bankruptcy
proceedings. See Arrow Marble, LLC v. Killion, 441 S.W.3d 702 (Tex. App.—Hou. [1st Dist.]
35
iii. Espinosa’s Statements Were Not Inadvertent.
Espinosa waived any argument that the omission of his claims against
Aaron’s in the bankruptcy proceeding was inadvertent because he failed to raise
this argument at the trial court.16 See Tex. R. Civ. P. 166a(c). In any event,
Espinosa’s failure to disclose his claims against Aaron’s to the bankruptcy court
was not inadvertent. It is undisputed that Espinosa knew about his claims against
Aaron’s while his bankruptcy case was pending and did not disclose them to the
bankruptcy court in any manner until after Aaron’s raised the issue on summary
judgment. Further, as discussed above, Espinosa’s explanation that he did not
disclose his claims against Aaron’s to the bankruptcy court because he believed
that the statute of limitations had passed is not included in any of the affidavits
submitted to the trial court and is nowhere in the record. (See CR 173-174, 184-
188.) Accordingly, Espinosa’s purported testimony (which is nowhere to be found
in the record) cannot be considered as grounds for reversal. Regardless, as
discussed above, reliance on his attorney’s alleged “advice” does not make the
non-disclosure inadvertent.
Again, the Texas Supreme Court’s decision in Ferguson is factually
2014, no pet.); Bhatia v. Woodlands North Houston Heart Center, PLLC, 396 S.W.3d 658 (Tex.
App.—Hou. [14th Dist.] 2013, pet. for review denied); Range v. U.S., 256 B.R. 868 (S.D. Tex.
2000).
16
Espinosa also did not argue at the trial court (and does not argue in this appeal) that his
misrepresentations to the bankruptcy court were due to mistake, fraud, or duress. See Garcia,
387 S.W.3d at 766 n.1.
36
distinguishable from this case because the Fergusons clearly intended to and did
disclose their claims to the bankruptcy court in their bankruptcy filings and at the
creditor’s meeting, but omitted to list the claims in one portion of the bankruptcy
filings. 295 S.W.2d at 643. Thus, there was no non-disclosure in that case. As
discussed, Espinosa never disclosed his claims against Aaron’s anywhere in his
bankruptcy filings or otherwise made the bankruptcy court aware of his claims
while his case was pending. Thus, the trial court’s decision to apply judicial
estoppel in this case is entirely consistent with Ferguson.
Furthermore, the Ferguson decision did not reject the notion of applying
judicial estoppel based on failure to disclose claims in bankruptcy filings, as
suggested by Espinosa. Rather, the court in Ferguson held that judicial estoppel
did not apply because the Fergusons did not take an inconsistent position in that
they did disclose their claims to the bankruptcy court. See 295 S.W.3d at 643-633.
Since Ferguson, this Court has continued to apply judicial estoppel in the context
of bankruptcy proceedings. See Flores, 2014 Tex. App. LEXIS 9318, at *13;
Thomas, 2014 Tex. App. LEXIS 8183, at *6; Siller, 2013 Tex. App. LEXIS 4520,
at *10; Tow, 312 S.W.3d at 756.
Application of judicial estoppel in this case likewise does not conflict with
the Texas Supreme Court’s decision in Long v. Knox, 155 Tex. 581 (Tex. 1956).
Knox convinced his creditors in a prior proceeding that he owned no interest in
37
certain properties and asserted in a subsequent proceeding that he owned a one-half
interest in those properties. Id. at 584-585. Similarly, Espinosa represented to the
bankruptcy court that he had no contingent or unliquidated claims and then
subsequently brought claims against Aaron’s.17 Thus, the trial court’s decision is
consistent with Long.
iv. Espinosa’s statements to the bankruptcy court were
deliberate, clear, and unequivocal.
Espinosa characterization of his statements to the bankruptcy court as
“omissions” rather than deliberate, clear, and unequivocal statements is highly
inaccurate. Question 21 of Schedule B of Espinosa’s bankruptcy petition asked
him to list “[o]ther contingent and unliquidated claims of every nature.” (CRS
235.) In response to Question 21, Espinosa checked “none.” (Id.) With respect to
Schedule B, Espinosa signed a “Declaration Concerning Debtor’s Schedules”
indicating that “I declare under penalty of perjury that I have read the foregoing
summary and schedules consisting of 17 sheets, and that they are true and correct
to the best of my knowledge, information, and belief.” (CRS 247.) Thus, Espinosa
deliberately, clearly, and unequivocally represented to the bankruptcy court that he
had no contingent or unliquidated claims of any nature and that the information in
17
As discussed above, Espinosa’s creditors do not stand to benefit from his claims against
Aaron’s because the trustee did not intervene in the case and subsequently abandoned Espinosa’s
claims against Aaron’s. Espinosa has brought this appeal without the apparent knowledge or
authorization of the trustee.
38
his schedules was true and correct, with the knowledge that he had potential claims
against Aaron’s.
Even assuming arguendo that Espinosa’s representation to the bankruptcy
court is characterized as an omission rather than a statement, Texas courts make no
distinction between the two. See Cricket Commcn’s, Inc., 235 S.W.3d at 306
(holding that appellees conclusively established that Cricket failed to disclose his
claim to the bankruptcy court, “which is the equivalent of an affirmative
representation that no such claim existed”). None of the cases cited by Espinosa
stand for the proposition that judicial estoppel cannot be applied to a purported
omission (nor do any of the cases cited discuss judicial estoppel in the context of a
bankruptcy proceeding). See, e.g., Galley v. Apollo Associated Servs., Ltd., 177
S.W.3d 523, 529 (Tex. App.—Hou. [1st Dist.] 2005, no pet.) (judicial estoppel did
not apply because the contrary position was asserted in the same proceeding);
Spera v. Fleming, Hovenkamp & Grayson, P.C., 25 S.W.3d 863, 871-872 (Tex.
App.—Hou. [14th Dist.] 2000, no pet.) (judicial estoppel not applied because
statement was not sworn); Vinson & Elkins v. Moran, 946 S.W.2d 381, 396-397
(Tex. App.—Hou. [14th Dist.] 1997, writ dism'd by agr. and mot. dismissed)
(judicial estoppel not applied because statement not made under oath, statement
was not unequivocal, and statement was made by attorney as an alternative
argument in response to the possibility that assignments were valid); Vitale v.
39
Keim, 1997 Tex. App. LEXIS 4719, at *31-35 (Tex. App.—Hou. [1st Dist.] Aug.
29, 1997, review denied) (judicial estoppel not appropriate because none of the
statements were clearly inconsistent); Balaban v. Balaban, 712 S.W.2d 775, 778-
779 (Tex. App.—Hou. [1st Dist.] 1986, writ ref'd n.r.e) (judicial estoppel not
applied because statements not made under oath).
The decision in Bunnell v. Lewis, 1993 WL 290781 (Tex. App.—Hou. [14th
Dist.] July 27, 1993), cited by Espinosa, is also distinguishable. In Bunnell, this
Court held that Bunnell’s failure to disclose a partnership agreement in his
bankruptcy proceedings was not deliberate, clear, and unequivocal in light of the
absence of controlling authority on whether the agreement should have been
disclosed. Id. at *4.
In the instant case, Espinosa does not dispute that his claims against Aaron’s
should have been disclosed to the bankruptcy court. Furthermore, Espinosa cannot
rely on his alleged belief that his claims against Aaron’s did not need to be
disclosed to the bankruptcy court because they were barred by the statute of
limitations, since there was no evidence or argument to that effect in the record
before the trial court and because this alleged explanation would not bar the
application of judicial estoppel in any event.
v. Espinosa gained an unfair advantage by failing to
disclose his claims against Aaron’s.
Espinosa gained an unfair advantage because his creditors were prevented
40
from attempting to collect on their debts before his bankruptcy case was closed.
See Jackson, 245 S.W.3d at 51 (holding that “the Jacksons derived an unfair
advantage by their failure to disclose their claims against H&C because, while the
bankruptcy was pending, the Jacksons’ creditors were prevented from attempting
to collect on their debts”); Brown, 178 S.W.3d at 381 (holding that “Brown
benefitted, at least temporarily, by filing the inconsistent bankruptcy petition”
because “while the bankruptcy was pending, Brown’s creditors were prevented
from attempting to collect on their debts”).
Espinosa asserts that judicial estoppel should not apply because neither the
creditors nor Aaron’s were harmed or prejudiced by his failure to disclose his
claims to the bankruptcy court. However, prejudice to the parties is not a
necessary element with respect to application of judicial estoppel. See Thomas,
2014 Tex. App. LEXIS 8183, at *7 (“Because the doctrine of judicial estoppel is
intended to protect the judicial system, rather than the litigants, detrimental
reliance by the opponent of the party against whom the doctrine is applied is not
necessary.”). The fact that Espinosa later disclosed his claims against Aaron’s to
the bankruptcy court (after Aaron’s filed its Motion for Summary Judgment
arguing judicial estoppel) likewise does not bar the application of judicial estoppel.
See Cricket Commcn’s, Inc., 235 S.W.3d at 309 (rejecting argument that judicial
estoppel should not apply because the non-disclosure was later corrected where the
41
correction occurred almost two months after the reorganization plan was confirmed
by the bankruptcy court.)
Again, Ferguson is distinguishable because the Fergusons’ claims were
disclosed to the bankruptcy court in their initial bankruptcy filings. See 295
S.W.3d at 643-644. Moreover, there is no evidence that the trustee, creditors, and
bankruptcy court were “indifferent” to Espinosa’s disclosure of his claims against
Aaron’s. The bankruptcy case was reopened and the trustee expressed his intent to
continue to pursue Espinosa’s claims against Aaron’s after Espinosa disclosed his
claims. (CR 195-196, 199.) In fact, the trustee participated in mediation held by
the parties. It was not until after the trial court granted summary judgment that the
reopened bankruptcy case was closed based on a finding that there were no assets
available for distribution. Presumably, this occurred because Espinosa’s claims
were dismissed by the trial court, however, it now appears that Espinosa has duped
the trustee and the creditors once again by pursuing this appeal (apparently without
the trustee’s knowledge) and for his own benefit.
Espinosa also argues that summary judgment was inappropriate because
there was no evidence of a motive to deceive the bankruptcy court. Motive or
intent to deceive is not a necessary element for the application of judicial estoppel
42
under Texas law.18 See Ferguson, 295 S.W.3d at 634; Garcia, 387 S.W.3d at 766
n.1. Furthermore, the undisputed facts show that Espinosa had a motive to conceal
his claims against Aaron’s from the bankruptcy court because any proceeds from
the undisclosed claims would have gone to Espinosa rather than to his creditors.
See Cricket Commcn’s, Inc., 235 S.W.3d at 307 (“If a debtor’s undisclosed claim
would have added assets to the bankruptcy estate . . . a debtor will usually be
deemed to have a motive to conceal those claims.”) Espinosa relies on his
purported testimony about his belief that his claims were barred by the statute of
limitations as alleged evidence precluding a grant of summary judgment; however
as discussed, no such testimony was ever submitted to the trial court on summary
judgment. It was entirely appropriate for the trial court to grant summary
judgment based on the undisputed facts in the record. See Dallas Sales Co., 134
S.W.3d at 932 (upholding grant of summary judgment based on judicial estoppel);
Jackson, 245 S.W.3d at 55 (affirming trial court’s grant of summary judgment on
judicial estoppel defense).
18
Ryan Operations G.P. v. Santiam-Midwest Lumber Co., 81 F.3d 355 (3rd Cir. 1996) and
Stallings v. Hussman Corp., 447 F.3d 1041 (8th Cir. 2006), cited by Espinosa, are not in accord
with Texas or Fifth Circuit law on judicial estoppel and are factually distinguishable. In Ryan
Operations G.P., the Third Circuit held that the debtor’s actions did not support a finding of a
deliberate motive to conceal his claims because the bankruptcy court had specifically authorized
the debtor to pursue certain types of claims and the debtor submitted evidence to the bankruptcy
court in the form of fee requests showing that he was pursuing those claims. 81 F.3d at 364. In
Stallings, the Eighth Circuit held that judicial estoppel did not apply because the bankruptcy
court never discharged Stallings’ debts based on the information he provided in his bankruptcy
schedules and there was no evidence that Stallings clearly knew he had a viable claim at the time
his bankruptcy was pending. 447 F.3d at 1049.
43
3. No Alleged Equitable Considerations Weigh against Application
of Judicial Estoppel.
None of the alleged equitable considerations advanced by Espinosa prevent
the application of judicial estoppel. Espinosa’s disclosure of his claims against
Aaron’s to the bankruptcy court after Aaron’s moved for summary judgment is not
an appropriate basis to deny application of judicial estoppel because “[j]udicial
estoppel was designed to prevent such abuses.” See In re Superior Crewboats,
Inc., 374 F.3d at 336; see also In re Coastal Plains, 179 F.3d at 205 (the purpose
of judicial estoppel is to “protect the integrity of the judicial process by preventing
parties from playing fast and loose with the courts to suit the exigencies of self
interest” and pleading “inconsistent positions”).
There was no evidence that the trustee or creditors lacked interest in
Espinosa’s claims against Aaron’s while they were pending at the trial court – on
the contrary, the bankruptcy trustee expressed his intent to continue to pursue
Espinosa’s claims against Aaron’s and authorized Espinosa’s trial counsel, Mark
Murray, to act as special counsel for the bankruptcy estate in connection with
Espinosa’s case against Aaron’s. (CR 195-196, 199.) Moreover, Espinosa’s
creditors do not stand to benefit from his claims against Aaron’s at this juncture
because the trustee abandoned Espinosa’s claims after the trial court granted
summary judgment and Espinosa is pursuing this appeal for his own benefit. See
Kane v. Nat’l Union Fire Ins. Co., 535 F.3d 380, 386-387 (5th Cir. 2008)
44
(distinguishing that case, where the trustee was pursuing the claims on behalf of
the Kane’s creditors, from In re Superior Crewboats where the trustee had
formally abandoned the debtor’s claims and the interest had reverted to the
debtors).
Moreover, even assuming that Espinosa’s creditors could potentially benefit
if his claims against Aaron’s were allowed to move forward, this is not a relevant
equitable consideration with respect to judicial estoppel according to this Court.
See Cricket Commcn’s, Inc., 235 S.W.3d at 309 (rejecting Cricket’s argument that
applying judicial estoppel would be inequitable because it would prejudice his
creditors). Likewise, the fact that Espinosa’s omission of his claims against
Aaron’s before the bankruptcy did not affect Aaron’s is irrelevant. See id. (“the
law of judicial estoppel in a bankruptcy context is to protect the integrity of courts,
not to punish adversaries or protect litigants”) (citing In re Coastal Plains, 179
F.3d at 213); see also Long, 155 Tex. at 585 (judicial estoppel “is to be
distinguished from equitable estoppel . . . because the elements of reliance and
injury essential to equitable estoppel need not be present”).
C. ESPINOSA’S MALICIOUS PROSECUTION CLAIM FAILS AS A
MATTER OF LAW.
None of the issues raised by Espinosa on appeal warrant reversal of a grant
of summary judgment on the substantive elements of his malicious prosecution
claim. Aaron’s is entitled to summary judgment if it establishes that there is no
45
evidence of one or more of the elements of a pleaded claim. See Tex. R. Civ. P.
166a(i). Once Aaron’s identifies elements for which there is no evidence, the non-
movant (Espinosa) bears the burden of proof to raise a genuine issue of material
fact as to each challenged element. See id.; see also Dow Chem. Co. v. Francis, 46
S.W.3d 237, 242 (Tex. 2001); Praytor v. Ford Motor Co., 97 S.W.3d 237, 241
(Tex. App.—Houston [14th Dist.] 2002, no pet.). Espinosa’s evidence must be
sufficient to allow reasonable and fair-minded people to differ in their conclusions
on whether the challenged fact exists; evidence that raises only a speculation or
surmise is insufficient. See Forbes, Inc. v. Granada Biosciences, Inc., 124 S.W.3d
167, 172 (Tex. 2003).
To establish a claim for malicious prosecution, the plaintiff must show: (1) a
criminal prosecution was commenced against him; (2) the defendant initiated or
procured that prosecution; (3) the prosecution terminated in the plaintiff’s favor;
(4) the plaintiff was innocent of the charges; (5) the defendant lacked probable
cause to initiate the prosecution; (6) the defendant acted with malice; and (7) the
plaintiff suffered damages. Kroger Tex. L.P. v. Suberu, 216 S.W.3d 788, 793 n.3
(Tex. 2006). Actions for malicious prosecution are not traditionally favored in
Texas based on the public policy interest favoring the exposure of crime. Wal-
Mart Stores, Inc. v. Medina, 814 S.W.2d 71, 73 (Tex. Ct. App.---Corpus Christi
1991, writ denied and reh’g of writ of error overruled). Furthermore, and most
46
significantly, when the decision to prosecute is based upon an independent
investigation by the authorities, the plaintiff must show that defendant intentionally
provided false information and the decision to prosecute would not have been
made absent such false representation. Davis v. Prosperity Bank, 383 S.W.3d 795,
803 (Tex. Ct. App.—Hou. [14th Dist.] 2012, no pet.) [Emphasis added.]
1. Aaron’s Did Not Act With Malice.
Espinosa failed to raise a genuine issue of material fact as to the element of
malice. In response to Aaron’s Motion for Summary Judgment, Espinosa
contended he threated to report Aaron’s to the Texas Workforce Commission
(“TWC”) for not paying him his bonus and speculated that these threats were the
reason Aaron’s went to the police. (See CR 187-188.) Even assuming Espinosa’s
allegation that he made these threats as true for purposes of the Motion for
Summary Judgment, there is an insufficient nexus between any dispute over his
bonus and reporting Espinosa to the police. According to Espinosa’s Wage Claim
filed with the TWC, Espinosa stated he was told he would not receive his bonus
because of too many non-paying accounts at his store, which is not even related to
the theft of merchandise. (CR 189-191.) Further, Espinosa acknowledged in his
Wage Claim that his claim had been partially paid by Aaron’s. (Id.) Further, when
the information known to Aaron’s about Espinosa’s potential involvement in theft
is considered, it is clear no reasonable jury could find this minor disagreement over
47
a bonus rather than the theft issue was the reason Aaron’s went to the police. (See
CRS 40-44.) Espinosa’s speculation was insufficient to raise a genuine issue of
material fact on the issue of malice. See Backman v. J.C. Penney Co., No. 14-03-
00436-CV, 2004 Tex. App. LEXIS 9003, at *9 (Tex. Ct. App.---Hou. [14th Dist.]
2004, no pet.) (holding that summary judgment was properly granted because the
plaintiff failed to raise a genuine issue of fact on the element of malice).
2. Espinosa Failed to Rebut the Presumption that Aaron’s Had
Probable Cause to Make a Report to the Police.
Espinosa failed to present evidence to raise a genuine issue of material fact
as to probable cause. The probable cause element “asks whether a reasonable
person would believe that a crime had been committed given the facts as the
complainant honestly and reasonably believed them to be before the criminal
proceedings were instituted.” Kroger Tex. L.P., 216 S.W.3d at 792-93 (quoting
Richey v. Brookshire Grocery Co., 952 S.W.2d 515, 517 (Tex. 1997)); Akin v.
Dahl, 661 S.W.2d 917, 921 (Tex. 1983). There is a presumption that the defendant
acted reasonably and had probable cause to initiate criminal proceedings. Kroger
Tex. L.P., 216 S.W.2d at 793. The plaintiff can rebut this presumption only by
producing evidence that “the motives, grounds, beliefs, or other information upon
which the defendant acted did not constitute probable cause.” Id. If the plaintiff
produces such evidence, then the defendant has the burden to offer proof of
probable cause. Richey, 952 S.W.2d at 518. When the facts underlying the
48
plaintiff’s arrest and prosecution are undisputed, the question of probable cause is a
question of law to be decided by the court. Id.
Espinosa contended in response to Aaron’s Motion for Summary Judgment
that Aaron’s lacked probable cause to go to the police because it conducted what
Espinosa describes as a “minimal investigation” and did not interview Espinosa.
Aaron’s engaged in a significant amount of investigative activities before calling
the police. (See CRS 25-26.) Regardless, any failure on the part of Aaron’s to
conduct a more complete internal investigation prior to contacting the police does
not demonstrate a lack of probable cause. See Kroger Tex. L.P., 216 S.W.3d at
794 (holding that the fact that no one investigated the plaintiff’s explanation before
initiating criminal proceedings against the plaintiff is not evidence of a lack of
probable cause). The Texas Supreme Court has stated “[i]t is well settled that a
private citizen has no duty to investigate a suspect’s alibi or explanation before
reporting a crime.” Id.
In sum, the undisputed facts established Aaron’s had a reasonable belief
Espinosa had stolen merchandise at the time it reported the incident to the police
and summary judgment was appropriate on the element of probable cause. See
Arrendondo v. Rodriguez, No. 14-09-00857-CV, 2011 Tex. App. LEXIS 584, at
*20-22 (Tex. Ct. App.---Hou. [14th Dist.] 2011, no pet.) (affirming grant of
49
summary judgment because “the undisputed evidence conclusively shows that
appellees had probable cause to initiate or procure the prosecution” of plaintiff).
3. Aaron’s Did Not Initiate or Procure the Prosecution of
Espinosa.
Espinosa failed to raise a genuine issue of material fact showing that
Aaron’s initiated or procured the prosecution against him. A defendant “initiates”
a criminal prosecution by making a “formal charge” to law enforcement
authorities. Lewis v. Continental Airlines, 80 F. Supp. 2d 686, 699 (S.D. Tex.
1999) (quoting Browning-Ferris Indus. v. Lieck, 881 S.W.2d 288, 292 (Tex.
1994)). Where the decision to prosecute is left to another individual, to establish
the defendant “procured” the prosecution, the plaintiff must show that the
defendant knowingly provided false information and that the decision to prosecute
would not have been made but for the false information. Davis, 383 S.W.3d at 803
(emphasis added).
Espinosa does not contend on appeal that Aaron’s knowingly provided false
information to the authorities, but rather asserts that Aaron’s initiated the chain of
events that resulted in Espinosa’s prosecution by reporting their suspicions to the
police. This is insufficient to raise a genuine issue of material fact as to whether
Aaron’s initiated or procured the prosecution. It is undisputed that Aaron’s did not
file formal charges against Espinosa and that the decision to prosecute Espinosa
was made by the police and District Attorneys’ office. Over a period of months,
50
the police and DA conducted an independent investigation which involved
interviewing numerous witnesses and examining voluminous documents relating to
the allegations. Therefore, as a matter of law, naming Espinosa as a suspect to the
police cannot be what initiated or procured the charges against him.19 See Lewis v.
Continental Airlines, 80 F. Supp. 2d 686, 699 (S.D. Tex. 1999); Davis, 383 S.W.3d
at 80.
D. ESPINOSA’S INTENTIONAL INFLICTION OF EMOTIONAL
DISTRESS CLAIM FAILS AS A MATTER OF LAW.
Espinosa does not dispute that intentional infliction of emotional distress
(IIED) is a “gap-filler” tort and is duplicative of his malicious prosecution claim,
but argues that if the grant of summary judgment on his malicious prosecution
claim is upheld, this would create a gap to allow him to assert an IIED claim. As
an initial matter, Espinosa waived this argument because he did not assert it in
response to Aaron’s Motion for Summary Judgment. (See CR 180-181.) Tex. R.
Civ. P. 166a(c). Moreover, this argument is illogical and contrary to Texas law.
19
Espinosa argues, relying on Bennett v. Grant, 2014 Tex. App. LEXIS 8849 (Tex. App.—
Austin Aug. 13, 2014) and First Valley Bank of Los Fresnos v. Martin, 55 S.W.3d 172 (Tex.
App.—Corpus Christi 2001), that it is sufficient to show that the defendant’s conduct is “the
determining factor in the prosecutor's decision to prosecute” without showing that the defendant
knowingly provided false information to the authorities. The Texas Supreme Court, however,
reversed the Court of Appeals’ decision in First Valley Bank of Los Fresnos. In so doing, the
Texas Supreme Court noted that “[w]e have expressly held that fair disclosure is relevant to
malice and causation, ‘but has no bearing on probable cause.’ Once a citizen has probable cause
to report a crime, there can be no malicious prosecution, even if the subsequent report fails to
fully disclose all relevant facts.” First Valley Bank v. Martin, 144 S.W.3d 466, 470 (Tex. 2004).
Thus, Espinosa would have to show that Aaron’s affirmatively and knowingly made false
statements to the authorities, which he cannot do.
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The Texas Supreme Court has held that where the gravamen of a plaintiff’s
complaint is another claim (in this case, malicious prosecution), plaintiff cannot
maintain an IIED claim regardless of whether he succeeds on, or even asserts that
claim. Hoffmann-La Roche, Inc. v. Zeltwanger, 144 S.W.3d 438, 448 (Tex. 2004).
Thus, Espinosa is not entitled to assert an IIED claim even if he does not ultimately
succeed on his malicious prosecution claim.20
E. ESPINOSA’S DEFAMATION CLAIM FAILS AS A MATTER OF LAW.
Espinosa argues that any grant of summary judgment on the substantive
merits of his defamation claim was in error because the alleged defamatory
statements were not hearsay since he claims they were not offered for the truth of
the matter asserted. The Court should reject this argument. The only evidence
submitted by Espinosa in support of his defamation claim – his own testimony
about what others allegedly heard and reported to him – is not admissible summary
judgment evidence. See Trostle v. Combs, 104 S.W.3d 206, 213-214 (Tex. App.---
Austin 2003, no pet.) (holding affidavit stating that “Mr. Shields told me that he
had a telephone conversation with Susan Combs and had been told that [Plaintiffs]
20
In addition, “[t]here is no liability for intentional infliction of emotional distress when an actor
does no more than insist on his legal rights.” Torres v. GSC Enters., Inc., 242 S.W.3d 553, 563
(Tex. Ct. App.---El Paso 2007, no pet.) (affirming grant of summary judgment on IIED claim
where the evidence established the defendants merely asserted their legal right when they
reported to law enforcement authority that they believed a crime had been committed).
Reporting a suspected crime to the police absent showing that false information was intentionally
provided for the purpose of harming plaintiff is not the type of outrageous conduct reserved for a
claim of IIED.
52
committed a crime” was hearsay and not competent evidence to support
defamation claim on summary judgment); Davis v. Household International, Inc.,
No. 05-90-01553-CV, 1991 Tex. App. LEXIS 3301, at *5-7 (Tex. App.---Dallas
1991, no writ) (holding that plaintiff’s testimony that another individual told the
plaintiff what a third person had said about plaintiff was inadmissible hearsay that
could not support defamation claim on summary judgment).21
Furthermore, as discussed in Aaron’s summary judgment brief, even if these
statements were not hearsay, the facts known to Aaron’s at the time establish
Aaron’s acted without negligence, which defeats Espinosa’s defamation claim.
(See CRS 40-44.) WFAA-TV, Inc. v. McLemore, 978 S.W.2d 568, 571 (Tex. 1998)
(to establish a defamation claim, the plaintiff must show, among other things, that
“the defendant acted with negligence regarding the truth of the statement”).
Espinosa also argues that Aaron’s alleged statements to its employees during
its internal investigation were not subject to a qualified privilege. Espinosa waived
this argument since he did not assert it in his Response to Aaron’s Motion for
Summary Judgment. (See CR 180-181.) Tex. R. Civ. P. 166a(c). Furthermore,
since these statements were made during the course of an internal investigation to
individuals who had a direct interest in the investigation as possible witnesses,
21
Although Espinosa apparently could not find any Texas appellate decision upholding or
rejecting a grant of summary judgment on the basis of hearsay, both Trostle and Davis upheld
the grant of summary judgment on defamation claims on the grounds that the only evidence
submitted in support of those claims was based on inadmissible hearsay.
53
these statements are subject to a qualified privilege. See Randall’s Food Markets
v. Johnson, 891 S.W.2d 640, 646-647 (Tex. 1995) (“an employer has a conditional
or qualified privilege that attaches to communications made in the course of an
investigation following a report of employee wrongdoing”).
Espinosa’s assertion that malice for purposes of the qualified privilege is not
an appropriate determination to make on summary judgment is also incorrect. A
defendant can invoke the qualified privilege on summary judgment when it
establishes that the statements were made with an absence of malice. See id. at
646. Aaron’s presented evidence on summary judgment that Hooker and Newton,
the individuals who allegedly defamed Espinosa during Aaron’s internal
investigation, did not act with malice and were simply investigating suspected theft
by Espinosa and were required to inform relevant witnesses about what Aaron’s
believed Espinosa had done. (CRS 189.) Espinosa failed to rebut this evidence.
III. CONCLUSION AND PRAYER
For the foregoing reasons, the Court should affirm the trial court’s grant of
summary judgment to Aaron’s on all of Espinosa’s claims and award costs because
Espinosa is judicially estopped from pursuing his claims against Aaron’s based on
his failure to disclose them during his bankruptcy proceedings. In the alternative,
the Court should affirm the trial court’s grant of summary judgment and costs to
Aaron’s with respect to the substantive elements of Espinosa’s claims for
54
malicious prosecution, intentional infliction of emotional distress, and defamation.
In sum, Appellees respectfully request that the judgment be affirmed in all respects
and for such additional and further relief, at law or in equity, to which they are
justly entitled.
Respectfully submitted,
JACKSON LEWIS P.C.
/s/ Virginia Mixon Swindell
Virginia Mixon Swindell
Texas Bar No. 00794711
Wedge International Tower
1415 Louisiana, Suite 3325
Houston, TX 77002-7332
(713) 650-0404 (Telephone)
(713) 650-0405 (Facsimile)
swindelv@jacksonlewis.com
Dion Y. Kohler
Admitted Pro Hac Vice
Georgia Bar No. 427715
1155 Peachtree Street, Suite 1000
Atlanta, Georgia 30309-3600
(404) 525-8200 (Telephone)
(404) 525-1173 (Facsimile)
ATTORNEYS FOR APPELLEES
55
CERTIFICATE OF COMPLIANCE
As required by Texas Rule of Appellate Procedure 9.4(i), I certify that
this document was produced on a computer using Microsoft Word 2010 and
contains 13,401 words, as determined by the computer software’s word-count
function, excluding the sections of the document listed in Texas Rule of Appellate
Procedure 9.4(i)(1).
/s/ Virginia Mixon Swindell
Virginia Mixon Swindell
56
CERTIFICATE OF SERVICE
I certify that on April 2, 2015, I served a copy of this document, Brief
of Appellees, on the parties listed below by electronic service and that the
electronic transmission was reported as complete. My email address is
virginia.swindell@jacksonlewis.com.
Robert Teir
Robert Teir, PLLC
845 FM 517 W, Suite 200
Dickinson, Texas 77539
(832) 365-1191 [Telephone]
(832) 550-2700 [Facsimile]
/s/ Virginia Mixon Swindell
Virginia Mixon Swindell
4841-7319-1714, v. 3
57