JULIE A. ROBINSON, District Judge.
Plaintiff Harvey Barker filed this action against Defendant Asset Acceptance, LLC for violations of the Fair Debt Collection Practices Act ("FDCPA"), seeking statutory and emotional distress damages. This matter currently comes before the Court on Defendant's Motion for Summary Judgment (Doc. 21). Defendant seeks summary judgment arguing that Plaintiff lacks standing to prosecute this claim, should be judicially estopped from proceeding, and cannot succeed on the merits of his claim. The Court held an evidentiary hearing on the judicial estoppel issue on June 1, 2012. The Court has thoroughly considered the parties' briefs and the evidence presented at the June 1, 2012 hearing and is now prepared to rule. As explained more fully below, the Court grants Defendant's motion because, based on the uncontroverted facts, no reasonable jury could come to any conclusion other than that Plaintiff intentionally manipulated the judicial system to gain an unfair advantage over his creditors by failing to include this lawsuit on his bankruptcy schedules and therefore application of judicial estoppel is appropriate.
Summary judgment is appropriate if the moving party demonstrates that there is "no genuine dispute as to any material fact" and that it is "entitled to a judgment as a matter of law."
The moving party initially must show the absence of a genuine issue of material fact and entitlement to judgment as a matter of law.
Once the movant has met this initial burden, the burden shifts to the nonmoving party to "set forth specific facts showing that there is a genuine issue for
Finally, summary judgment is not a "disfavored procedural shortcut"; on the contrary, it is an important procedure "designed to secure the just, speedy and inexpensive determination of every action."
For the purposes of Defendant's Motion for Summary Judgment, the following material facts are uncontroverted, deemed admitted, or, where disputed, viewed in the light most favorable to Plaintiff.
Plaintiff acquired debt on a Target National Bank credit card. Target National Bank transferred Plaintiff's debt to Defendant for collection. Plaintiff filed this lawsuit alleging violations of the FDCPA on January 19, 2011, for Defendant's conduct in attempting to collect on that debt. Plaintiff is represented by counsel J. Mark Meinhardt in this action. On June 17, 2011, Plaintiff filed for bankruptcy in the United States Bankruptcy Court for the District of Kansas. Plaintiff is represented by separate counsel in his bankruptcy proceedings. Plaintiff failed to list the instant suit as an asset in his bankruptcy Schedule B or otherwise indicate to the court or the trustee that the present lawsuit existed. Schedule B — Personal Property, Question 21, requested Plaintiff to list; "Other contingent and unliquidated claims of every nature, including tax refunds, counterclaims of the debtor, and right setoff claims. Give estimated value of each."
Defendant filed its motion for summary judgment on September 15, 2011. After requesting an extension of time to respond, Plaintiff filed his response on October 12, 2011. Attached to the response was a letter from Plaintiff's attorney, Mr. Meinhardt, to the bankruptcy trustee notifying the trustee of the pending FDCPA claim. The letter was dated October 12, 2011. This action has since been added to the bankruptcy schedules and the bankruptcy court approved Plaintiff's application to employ Mr. Meinhardt as counsel in this matter.
Defendant asks that the Court grant summary judgment on three separate grounds: (1) the Plaintiff lacks standing to prosecute this action, (2) judicial estoppel bars Plaintiff from proceeding in this action, and (3) the undisputed record demonstrates that Plaintiff cannot succeed on the merits of his claim.
Defendant first argues that the Court should dismiss this case because Plaintiff lacks standing. Plaintiff filed this action against Defendant on January 19, 2011. Plaintiff filed for bankruptcy under Chapter 13 on June 17, 2011. Defendant argues that Plaintiff is not the real party in interest because this action belongs to the bankruptcy estate and therefore the bankruptcy trustee, and not Plaintiff, has standing to prosecute the action.
Federal Rule of Civil Procedure 17(a) requires that "[e]very action shall be prosecuted in the name of the real party in interest." Once a party files for bankruptcy, the claims of that party become the property of the bankruptcy estate.
Defendant next argues that the Court should judicially estop Plaintiff from proceeding in this case because Plaintiff failed to include this lawsuit in his bankruptcy schedules or otherwise notify the bankruptcy court or the trustee about this lawsuit. Judicial estoppel is an equitable doctrine, which protects "`the integrity of the judicial process by prohibiting parties from deliberately changing positions according to the exigencies of the moment.'"
In a number of cases, the Tenth Circuit has addressed the use of judicial estoppel against a plaintiff who failed to include a lawsuit as an asset on the bankruptcy schedules.
In Higgins v. Potter, the Tenth Circuit affirmed application of the doctrine when the bankruptcy proceedings were still underway but the bankruptcy court had already approved the bankruptcy plan based on the plaintiff's misrepresentation about her assets.
Here, Plaintiff also put himself in a position to gain an unfair advantage over his creditors by failing to include this lawsuit on the bankruptcy schedules. Like the plaintiff in Higgins, Plaintiff only amended his schedules in response to the motion for summary judgment based on judicial estoppel. But one key difference between this case and Higgins is that here Plaintiff's bankruptcy plan had not yet been approved when Defendant filed for summary judgment based on judicial estoppel. Thus, Plaintiff was able to amend his schedules before the plan was confirmed. This distinction is important because it touches on the second factor that courts typically consider for judicial estoppel: whether the party succeeded in persuading the court to accept their position. Because no plan had been approved in the bankruptcy court before Plaintiff amended his schedules, it is not clear that Plaintiff succeeded in persuading the bankruptcy court to accept his misrepresentation. Although the court had held a meeting with the creditors on August 31, 2011, there is no evidence that the bankruptcy court took any action based on Plaintiff's statements in his schedule. Thus, the evidence suggests that the second element of the typical judicial estoppel test has not been met. Still, as an equitable doctrine, judicial estoppel requires a case-by-case analysis, and the court is not limited to the three-factor test used in Eastman.
Unfortunately, the Tenth Circuit has not yet determined whether a court may use judicial estoppel without a showing that Plaintiff succeeded in persuading a bankruptcy court to accept the earlier position because it has only addressed cases where that factor has been met. Other courts, however, have addressed this situation, and as acknowledged by the Colorado District Court in Archuleta v. Wagner
Similarly, the court in Traylor v. Ford, LLC judicially estopped a plaintiff who only amended his schedules in response to a summary judgment motion based on judicial estoppel.
And although the Tenth Circuit has not commented on the correctness of this line of cases,
Additionally, Plaintiff gave no explanation in his brief for his failure to include the lawsuit in the schedules other than saying: "Bankruptcies are often filed in haste to stop collection actions and schedules are routinely amended without leave of the court."
Even more telling is the fact that Plaintiff failed to disclose Defendant as one of his creditors, which would have certainly resulted in the bankruptcy court becoming aware of this pending civil litigation. Thus, Plaintiff did not just fail to include his claim on the schedules but also any other information that would allow the bankruptcy court or trustee to discover his claim. And there is no dispute that Plaintiff knows Defendant is a creditor. In his deposition, Plaintiff testified that he knew that Target National Bank transferred its debt to Defendant. Yet, he listed Target National Bank as a creditor instead of Defendant. And only a few days after Plaintiff gave this testimony in his deposition, the bankruptcy court held a meeting of the creditors in Plaintiff's bankruptcy case. Still, Plaintiff did not inform the bankruptcy court or the trustee of his pending civil lawsuit. Indeed, he only informed the trustee of the lawsuit in response to a motion for summary judgment based on judicial estoppel.
Based on the uncontroverted facts, the Court finds that no reasonable juror could come to any conclusion other than that Plaintiff's actions were a deliberate attempt to deceive the bankruptcy court and manipulate the judicial system to gain an unfair advantage over his creditors, including Defendant, which is exactly what judicial estoppel is designed to prevent. Consequently, the Court finds application of judicial estoppel is appropriate, and the Court judicially estops Plaintiff from proceeding in this matter. As Harvey Barker is the sole Plaintiff in this action,