KING, Circuit Judge:
The district court granted summary judgment dismissing Willie E. Love's lawsuit against Tyson Foods, Inc. It held that Love was judicially estopped from bringing his claims against Tyson because he had failed to disclose them in his Chapter 13 bankruptcy proceeding. We AFFIRM.
Tyson Foods, Inc. ("Tyson") hired Willie E. Love ("Love") as a truck driver on July 23, 2007, but fired Love three days into his orientation after he disclosed that he had tested positive for drug use in 2001. Tyson cited safety concerns as the reason for dismissing Love. However, Love asserted that, because Tyson's employment application only required applicants to disclose positive drug tests within three years of applying for employment, Tyson had discriminated against him on the basis of his race by terminating him for drug use that occurred prior to the time frame listed in his employment application. Tyson subsequently rehired Love but required him to take monthly drug tests. Tyson terminated Love again on April 2, 2008, when Love tested positive for drug use. Love contended that an antibiotic he was taking caused a false positive result on the drug test, but Tyson declined to consider the results of any subsequent testing.
On May 30, 2008, Love filed a charge of discrimination with the Equal Employment Opportunity Commission ("EEOC"), asserting that Tyson subjected him to racial discrimination and that his second termination was in retaliation for his prior complaints of racial discrimination related to his first termination. The EEOC issued a notice of right to sue on December 16, 2008, and Love filed the present action on March 12, 2009. He asserted federal claims under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., and under 42 U.S.C. § 1981, as well as a state-law claim for intentional infliction of emotional distress.
At the time Love filed both his EEOC charge and his complaint initiating the instant case, Love was a debtor in a Chapter 13 proceeding, having filed a petition
On July 16, 2009, Tyson moved for summary judgment, arguing that Love should be judicially estopped from pursuing his claims against Tyson because he failed to disclose those claims to the bankruptcy court. On July 22, 2009, Love filed an amended schedule in his bankruptcy case listing his claims against Tyson. On January 7, 2010, the district court granted Tyson's motion for summary judgment and dismissed Love's case. Love timely appealed.
The doctrine of judicial estoppel is equitable in nature and can be invoked by a court to prevent a party from asserting a position in a legal proceeding that is inconsistent with a position taken in a previous proceeding. See Reed v. City of Arlington, 650 F.3d 571, 573-74 (5th Cir. 2011) (en banc). The aim of the doctrine is to "protect the integrity of the judicial process." New Hampshire v. Maine, 532 U.S. 742, 749-50, 121 S.Ct. 1808, 149 L.Ed.2d 968 (2001) (citation and internal quotation marks omitted). "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." In re Coastal Plains, Inc., 179 F.3d at 205 (citation omitted). Moreover, "`the integrity of the bankruptcy system depends on full and honest disclosure by debtors of all of their assets.'" Id. at 208 (emphasis omitted) (quoting Rosenshein v. Kleban, 918 F.Supp. 98, 104 (S.D.N.Y.1996)).
In determining whether to apply judicial estoppel, we primarily look for the presence of the following criteria: "(1) the party against whom judicial estoppel is sought has asserted a legal position which is plainly inconsistent with a prior position; (2) a court accepted the prior position; and (3) the party did not act inadvertently." Reed, 650 F.3d at 574 (citations omitted). However, judicial estoppel is not governed by "inflexible prerequisites or an exhaustive formula for determining [its] applicability," and numerous considerations "may inform the doctrine's application in specific factual contexts." New Hampshire, 532 U.S. at 751, 121 S.Ct. 1808. This court has noted that "[j]udicial estoppel is particularly appropriate where . . . a party fails to
"We review a judicial estoppel determination for abuse of discretion." Id. at 599-600; see also Kane v. Nat'l Union Fire Ins. Co., 535 F.3d 380, 384 (5th Cir. 2008) (explaining that a district court's application of judicial estoppel is reviewed for abuse of discretion, even when the district court granted summary judgment on that basis). "[D]eference . . . is the hallmark of abuse-of-discretion review." Gen. Elec. Co. v. Joiner, 522 U.S. 136, 143, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997). Nonetheless, "[a] district court abuses its discretion if it: (1) relies on clearly erroneous factual findings; (2) relies on erroneous conclusions of law; or (3) misapplies the law to the facts." McClure v. Ashcroft, 335 F.3d 404, 408 (5th Cir.2003). Whether a debtor's failure to disclose claims was inadvertent presents a question of fact. See Robinson v. Tyson Foods, Inc., 595 F.3d 1269, 1275 (11th Cir. 2010); cf. Cont'l Cas. Co. v. McAllen Indep. Sch. Dist., 850 F.2d 1044, 1046 (5th Cir.1988). As discussed above, the district court granted summary judgment in Tyson's favor, finding that Love had made no effort to demonstrate inadvertence. Reversal of this finding is proper if we find that there is a genuine factual dispute regarding whether Love failed to disclose his claims inadvertently. See FED. R. CIV. P. 56(a) ("The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law."); Buffalo Marine Servs. Inc. v. United States, 663 F.3d 750, 753 (5th Cir.2011) ("We review a grant of summary judgment de novo, applying the same standard as the district court.").
Love's sole argument on appeal is that his failure to disclose his claims was inadvertent. "[I]n considering judicial estoppel for bankruptcy cases, the debtor's failure to satisfy its statutory disclosure duty is `inadvertent' only when, in general, the debtor either lacks knowledge of the undisclosed claims or has no motive for their concealment." In re Coastal Plains, Inc., 179 F.3d at 210 (emphases omitted). Love concedes that he knew about the undisclosed claims against Tyson, but he argues that he had no motive to conceal his claims.
In its motion for summary judgment, Tyson set forth a motivation for Love to keep his claims concealed—the prospect that Love could keep any recovery for himself. As one court has stated, "the motivation sub-element is almost always met if a debtor fails to disclose a claim or possible claim to the bankruptcy court. Motivation in this context is self-evident because of potential financial benefit resulting from the nondisclosure." Thompson v. Sanderson Farms, Inc., No. 3:04CV837-WHB-JCS, 2006 U.S. Dist. LEXIS 48409, at *12-13 (S.D.Miss. May 31, 2006) (citation omitted). Similarly, this court has found that debtors had a motivation to conceal where they stood to "reap a windfall had they been able to recover on the undisclosed claim without having disclosed it to the creditors." Superior Crewboats, Inc. v. Primary P & I Underwriters (In re Superior Crewboats, Inc.), 374 F.3d 330, 336 (5th Cir.2004). After Tyson set out this motivation to conceal, it fell to Love to show that the omission of his claims from his schedule of assets was inadvertent. See Jethroe, 412 F.3d at 600-01.
Critically, Love's arguments before the district court did nothing to refute Tyson's allegations or explain why Love did not disclose his claims when his disclosure obligations first arose. His first two arguments clearly do not speak to his motive to conceal his claims against Tyson. With respect to Love's third argument, whether Tyson or Love would accrue an unfair detriment or benefit if the lawsuit were allowed to go forward after Tyson forced Love to disclose his claims is an entirely different issue than whether Love had a financial motive to conceal his claims against Tyson at the time Love failed to meet his disclosure obligations, which is the relevant time frame for the judicial estoppel analysis. See In re Superior Crewboats, Inc., 374 F.3d at 336; Robinson, 595 F.3d at 1276 ("When reviewing potential motive, the relevant inquiry is intent at the time of non-disclosure." (citing Casanova v. Pre Solutions, Inc., 228 Fed.Appx. 837, 841 (11th Cir.2007))). Regarding Love's fourth argument, Love did state that he would pay his creditors before collecting any money from his claims against Tyson, but he made this assertion only after Tyson brought his nondisclosure to light. Love's disclosure obligations arose long beforehand, and his statement about his post-disclosure conduct again fails to speak to his motivations while he was obligated to disclose his claims but had not yet done so. Consequently, we agree with the district court's conclusion that Love ultimately provided "no basis for concluding that [the] failure to disclose th[e] litigation [against Tyson] to the bankruptcy court was `inadvertent.'" Thus, the district court did not abuse its discretion by applying judicial estoppel to Love's claims.
The dissent would hold that the district court should not have estopped Love from asserting his claims because Tyson failed to carry its burden to establish that judicial estoppel should apply. According to the dissent, Tyson's assertion that Love stood to gain personally by concealing his claims was incorrect as a matter of law, and thus Love could not have been motivated by a desire to conceal his claims. As a consequence, the dissent contends that the summary judgment burden never shifted to Love to explain his nondisclosure.
There are several key problems with the dissent's analysis. Despite precedent calling for consideration of a debtor's inadvertence or lack thereof, the dissent essentially eliminates consideration of a debtor's motives from the calculus. See Reed, 650 F.3d at 574. The dissent concludes that, because Love's claims against Tyson were the property of his bankruptcy estate and Love was obligated to pursue these claims on his creditors' behalf, Love was necessarily acting for the benefit of his creditors from the inception of his lawsuit against Tyson and thus had no motive to conceal his claims. However, the dissent fails to acknowledge that Love did have a strong incentive to keep his claims concealed. If Tyson had not brought Love's claims to light, Love could have kept any recovery for himself, even though the claims belonged to the bankruptcy estate. Thus, the dissent's assumption that Love was discharging his duties under the law supplants the inadvertence analysis and automatically attributes good motives to Love despite very real incentives for Love to conceal his claims and Love's utter failure to explain why he failed to meet his disclosure obligations.
Moreover, even after Love disclosed his claims, it is unclear whether his creditors would ultimately share in any recovery. Although Love amended his schedule of assets to list his claims against Tyson, his plan was not amended to provide that his creditors would be paid out of any recovery. Thus, there is nothing of record that presently requires Love to pay his creditors. Consequently, if Love were to recover any money from Tyson after his discharge (currently scheduled for late 2013) without any amendment to his plan, the recovery would go to Love to the exclusion of his creditors. See 11 U.S.C. §§ 554(c), 1329. In fact, Love's failure to disclose his claims when he was required to do so has caused considerable delay, increasing the likelihood that his lawsuit against Tyson would continue past the date his discharge is scheduled to occur. The possibility that Love's creditors might not benefit from any recovery again demonstrates that the dissent is incorrect to assume that Love would be acting in the interest of his creditors if allowed to continue pursuing his claims against Tyson.
Further, the dissent curiously limits its examination of Love's motivations to conceal his claims to those that existed after Tyson had forced disclosure. This examination, however, assesses Love's motives from the wrong point in time and completely overlooks the relevant inquiry, which analyzes Love's motives as he was potentially concealing his claims (i.e., failing to disclose his claims despite a legal obligation to list them in his schedule of assets). See In re Superior Crewboats, Inc., 374 F.3d at 336; Robinson, 595 F.3d at 1276. The proper analysis would give heed to the potential windfall Love could have reaped if his claims had remained undisclosed. Moreover, the key advantage of concealment—the debtor's ability to collect any recovery on claims without his creditors' knowledge—will be removed in
The dissent further contends that Love created a fact issue regarding inadvertence by asserting that he would "not derive any unfair advantage or impose any unfair detriment on any opposing party if not estopped." The dissent's analysis, however, improperly conflates the issues of whether a debtor acted inadvertently when concealing his claims and whether a party would enjoy an unfair advantage or suffer an unfair detriment if judicial estoppel were not applied. The dissent cites New Hampshire v. Maine, 532 U.S. 742, 121 S.Ct. 1808, 149 L.Ed.2d 968 (2001), and Hall v. GE Plastic Pacific PTE Ltd., 327 F.3d 391 (5th Cir.2003), for the proposition that the inadvertence analysis turns on the advantages or disadvantages judicial estoppel would cause the litigants. However, these are distinct issues, and the New Hampshire and Hall courts treat them as such. See New Hampshire, 532 U.S. at 751, 753-54, 121 S.Ct. 1808; Hall, 327 F.3d at 399-400. Thus, Love's assertion that he would not gain an unfair advantage if not estopped does not speak to the issue of inadvertence and, as a consequence, does not create a fact issue regarding Love's motive to conceal.
What appears to drive the dissent is a desire to change the law in a way that would prevent nearly every application of judicial estoppel in the bankruptcy context. Time and time again, however, judicial estoppel has been applied by this court and others far more broadly than the dissent's reasoning would allow. See, e.g., In re Superior Crewboats, Inc., 374 F.3d 330; In re Coastal Plains, Inc., 179 F.3d 197; Kamont v. West, 83 Fed.Appx. 1 (5th Cir. 2003). Although the dissent attempts to distinguish our precedent applying judicial estoppel in the bankruptcy context, the distinctions do not hold up when the dissent's rationale is followed to its logical end. Under the dissent's analysis, if it is theoretically possible that a non-disclosing debtor is pursuing claims for the benefit of his creditors (because the claims are property of the estate), then a court must assume that the debtor is, in fact, acting on his creditors' behalf and that any nondisclosure of those claims was inadvertent. However, under this rationale, a dishonest debtor could, in almost every case, conceal his claims from his creditors and assert them without his creditors' knowledge unless an opponent forced disclosure. Upon being forced to disclose his claims, a debtor could then amend his schedules to include the claims, as Love did here, or take other corrective action, and his nondisclosure would be considered inadvertent.
Despite the dissent's assertions to the contrary, our decisions in Reed and Kane do not require us to reach a different result. Most glaringly, the equities in Reed were very different than those in the instant case. In Reed, the debtor was prevented from realizing any gains at all on claims he had not timely disclosed to his creditors. 650 F.3d at 573. Thus, unlike the instant case where Love could potentially share in the gains from his lawsuit, only the creditors stood to benefit in Reed.
Finally, the dissent correctly notes that the effect of judicial estoppel on creditors is a consideration that could discourage courts from applying the doctrine. See Reed, 650 F.3d at 576; Kane, 535 F.3d at 387-88. We do not mean to diminish the weight that courts should give to creditors' interests when determining whether judicial estoppel should apply. We merely hold that the district court did not abuse its discretion in applying judicial estoppel to Love's claims after finding that Love failed to create a fact issue regarding his purported inadvertence.
For the reasons stated above, we AFFIRM the judgment of the district court. Costs shall be borne by Love.
HAYNES, Circuit Judge, dissenting:
I respectfully dissent. The majority opinion improperly places the summary judgment burden of this affirmative defense on Love. To the extent we need to
Judicial estoppel is an affirmative defense. See, e.g., Reed v. City of Arlington, 650 F.3d 571, 576 (5th Cir.2011) (en banc) (citations omitted). When a party moves for summary judgment on an affirmative defense, it "bear[s] the burden of proof at trial and therefore must show that it has produced enough evidence to support the findings of fact necessary to win." El v. Se. Pa. Transp. Auth., 479 F.3d 232, 237 (3d Cir.2007). Therefore, even to reach the question of whether Love has shown that judicial estoppel does not apply, Tyson must have proven that it does. See, e.g., Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (stating that summary judgment is proper "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial").
We have required that a party asserting judicial estoppel must show that: "(1) the party against whom judicial estoppel is sought has asserted a legal position which is plainly inconsistent with a prior position; (2) a court accepted the prior position; and (3) the party did not act inadvertently." Reed, 650 F.3d at 574. It is important to note, however, that these three elements only limit judicial estoppel's application; they are necessary but not always sufficient. See, e.g., Kane v. Nat'l Union Fire Ins. Co., 535 F.3d 380, 385-86 (5th Cir. 2008); Browning Mfg. v. Mims (In re Coastal), 179 F.3d 197, 206 (5th Cir.1999).
Love does not take issue with the first two estoppel factors on appeal, focusing instead on the inadvertence prong. A
Love's knowledge
On this third prong, Tyson's sole "proof" was its summary judgment contention that "Love had a motive to conceal [his claim] because any recovery he might receive from this litigation would go to him free and clear of any claims of his creditors, particularly his unsecured creditors who receive nothing under his confirmed plan." This statement is untrue as a matter of law and, thus, did not shift the summary judgment burden to Love to do anything.
Unlike the procedural posture of other cases we have had on this subject, any recovery from Love's cause of action would not be "free and clear of his creditors." Rather, it belongs to the bankruptcy estate. At the time he filed his original schedules, he had a not-yet filed EEOC claim. That "claim" became part of the bankruptcy estate the moment Love filed his petition for bankruptcy by operation of 11 U.S.C. § 541(a)(1).
Finally, because Love is obliged to recover on behalf of the estate, any judgment does not belong to him. Even if Love had not disclosed the claim, that asset would belong to the estate under 11 U.S.C. § 554(c)-(d)—at least unless his recovery is greater than all his debts. See COLLIER ON BANKRUPTCY ¶ 554.03 (Matthew Bender, 16th ed. 2011) ("[I]f property was not properly scheduled by the debtor, it is not automatically abandoned at the end of the case . . . . Even after the case is closed, the estate continues to retain its interest in unscheduled property."); see also Kane, 535 F.3d at 387 (citing In re Miller, 347 B.R. 48, 53 (Bankr.S.D.Tex. 2006), for the proposition that unscheduled claims that belong to the estate may be administered through a reopened bankruptcy case).
The majority opinion faults this analysis, stating that it improperly assumes that Love was "acting for the benefit of his creditors from the inception of his lawsuit. . . and automatically attributes good motives to Love despite very real incentives for Love to conceal his claims." I do not make this attribution, however. Rather, I approach the analysis from the viewpoint of the movant's burden: a movant who raised an affirmative defense and appropriately bears the burden at trial. I do not reason that Love "necessarily" had good motives, only that Tyson has not shown as a matter of law that he "necessarily" had "bad" ones.
Accordingly, Tyson cannot discharge its affirmative summary judgment burden merely by arguing—incorrectly as a matter of law—that Love stood to recover on his claim "free and clear of any claims of his creditors" at the time he failed to amend his bankruptcy schedules. Tyson thus failed to establish an element essential to its affirmative defense in the district court, and summary judgment should have been denied. In response to the majority opinion's argument that this dissenting opinion removes judicial estoppel as an option, I reply that to hold that summary judgment in Tyson's favor is inappropriate is not tantamount to saying that summary judgment should be granted to Love.
We should stop here, as I have shown that no summary judgment burden "shifted" to Love. However, even if it did, I disagree that Love failed to respond in kind, creating a material factual dispute on whether he had motive to conceal. Love's summary judgment response set forth the Supreme Court's judicial estoppel standard from New Hampshire v. Maine, 532 U.S. 742, 751, 121 S.Ct. 1808, 149 L.Ed.2d
Thus, if Tyson's mere allegation that Love's motive was to gain an unfair personal advantage by taking money "free and clear of creditors" is enough to satisfy its summary judgment burden on "motive," then Love's statement that any monies paid "would go into the bankruptcy to pay Plaintiff's creditors first" should similarly discharge his non-movant's burden.
The majority opinion contends that whether the claim is "free and clear" or not, a potentially deviant debtor may always
The Sixth Circuit's reasoning in Browning v. Levy supports my conclusion. 283 F.3d 761, 775-76 (6th Cir.2002). After citing our decision in In re Coastal, 179 F.3d at 210, on the issue of inadvertence, the court considered whether a debtor (NW) had motive to conceal where it failed to disclose its legal claim, but was acting as a debtor-in-possession, similar to a trustee:
283 F.3d at 775-76 (emphasis added). Importantly, the court also pointed out that the Defendant "provide[d] no evidence that NW intended to `have its cake and eat it too.'" Id. at 776. Similarly, the Defendant "presented no proof to show that NW intended to convince the bankruptcy court that it had no claims against SSD. NW's omission [was] as consistent with inadvertence as it [was] with an affirmative assertion." Id. at 775.
The effect of the majority opinion is to make judicial estoppel virtually mandatory in all cases of non-disclosure where a party could be said to "know the facts of" his claim, In re Coastal, 179 F.3d at 212, and essentially concludes that any debtor who fails to disclose a claim has a nefarious motive to do so. This reasoning, however improperly presumes fraudulent intent from the outset.
We should reverse and remand for further proceedings based upon the summary judgment posture outlined above. Because the majority opinion reaches the question of whether the district court abused its discretion, however, I will address it as well.
Though "we have applied judicial estoppel to bar an unscheduled claim when others, the debtors or other insiders, would benefit to the detriment of creditors if the claim were permitted to proceed," Kane, 535 F.3d at 387 (citing Superior Crewboats, Inc. v. Primary P & I Underwriters (In re Superior Crewboats), 374 F.3d 330, 333 (5th Cir.2004); In re Coastal, 179 F.3d at 203), those are not the circumstances we have before us. That Love was a Chapter 13 debtor obligated to act on behalf of the estate distinguishes this case from In re Superior Crewboats, 374 F.3d at 333, and In re Coastal, 179 F.3d at 203. Indeed, both were Chapter 7 liquidation cases in which the debtor had already obtained a complete discharge of its debts before seeking to recover on undisclosed claims purely for its own benefit.
The court in Kane distinguished In re Superior Crewboats, 374 F.3d at 333, on facts much like these, where the Chapter 7 bankruptcy was reopened to pursue the Kanes' claim for the benefit of the estate's creditors. 535 F.3d at 387. In contrast to In re Superior Crewboats, where the estate had "reverted to the debtors as though the bankruptcy had never been filed" and the debtors stood to benefit directly from pursuing their claim, we stated:
Id. (quoting In re Miller, 347 B.R. at 53). Jethroe is similarly distinguishable. 412 F.3d at 599 (5th Cir.2005). There, the bankruptcy court had confirmed the debtor's Chapter 13 plan, but dismissed the bankruptcy proceeding before the plan was completed. Id. Therefore, it would have been impossible for the creditors in Jethroe to benefit from the claim because there was no longer a bankruptcy estate.
This case, though different in kind, is controlled by our decisions in Reed and Kane. Both concerned whether a Chapter 7 trustee is estopped from pursuing unscheduled claims on behalf of the estate where the debtor had wrongly concealed
It makes no difference under the circumstances of this case that Love is not a trustee as were the parties seeking to avoid estoppel in Reed and Kane. For our purposes, his role as essentially a debtor in possession puts him in an analogous position to a trustee.
It is true, as the majority opinion points out, that the claims in Reed and Kane were pursued by "innocent Chapter 7 trustees, and not by the debtors themselves." But Love's role as both debtor and protector does not make the analogy any less apt. The only real implication of the majority opinion's distinction is that the trustees in Reed and Kane were "innocent." This distinction is irrelevant, however, because the debtors in those cases were in the same position as Love, and the characterization of the trustee's role as "innocent" has nothing to do with the imposition of judicial estoppel where that trustee's duty, imposed post-disclosure, is to act on behalf of the estate.
Reed and Kane—where creditors stand to be harmed in the event judicial estoppel is imposed—bind us here. In contrast, the cases relied upon by the district court and the majority opinion—In re Coastal, Jethroe, and In re Superior Crewboats—do not involve application of judicial estoppel to the detriment of the estate's creditors, and should not have been the basis for the district court's application of judicial estoppel as an equitable remedy.
Finally, Reed highlighted the equitable nature of this analysis in light of the bankruptcy forum in which we find ourselves. Therefore, we must
Reed, 650 F.3d at 574 (citations omitted).
In this case there were (and are) other avenues for discouraging potentially deviant bankruptcy litigants. We noted two of them in Reed: "revoking [or denying, as the case would be here] the debtors' discharges and referring them . . . for criminal prosecution." Id. at 576 (quoting Biesek, 440 F.3d at 413). Perhaps more importantly, the resolution here has no deterrent effect. Judicial estoppel would
To whatever extent Love may have intended to make illicit use of funds that belong to the estate, judicial estoppel is an inappropriate remedy where it will inhere to the detriment of Love's creditors. In Reed, we highlighted Judge Easterbrook's eloquent analysis of this problem:
Reed, 650 F.3d at 576 (quoting Biesek, 440 F.3d at 413).
Exercising discretion in granting judicial estoppel must be done only when the remedy does not do "inequity in the name of equity." 27A AM.JUR.2D EQUITY § 84 (2012); see also Krystal Cadillac-Oldsmobile GMC Truck, Inc., 337 F.3d 314, 319 (3d Cir.2003) ("[A] district court may not employ judicial estoppel unless it is tailored to address the harm identified and no lesser sanction would adequately remedy the damage done by the litigant's misconduct." (citation and internal quotation marks omitted)). A judicial estoppel remedy here that allows Tyson to win based upon "bad conduct" in a case to which it was not even a party would merely transform an alleged windfall for Love into an inevitable windfall for the alleged wrongdoer Tyson—at the expense of Love's creditors.
Unlike the litigants in our prior decisions concerning judicial estoppel, Love gains no potential legal advantage from his failure to disclose the claim against Tyson to the bankruptcy court. As Love explained to the district court—albeit somewhat ineloquently—the recovery sought against Tyson would aid his creditors, not defraud them. In this vein, Tyson has not established Love's motive to conceal. Our precedent counsels against judicial estoppel in these circumstances.
Moreover, the court's equitable discretion must be used against the backdrop of the bankruptcy system and the goals it espouses. The outcome affirmed by the majority opinion does not further those goals—either in dissuading future deviant bankruptcy litigants or in protecting third party creditors' rights. At the very least, the remedy espoused in Reed could be utilized here in preventing unnecessary harm to creditors while preventing an allegedly deviant debtor from "playing fast and loose" with the courts.
None of the above represents some effort to "change the law." Rather it seeks to hold alleged tortfeasors who would reap an admitted windfall to their summary judgment burden of proof. Further, while judicial estoppel certainly should be available in some circumstances, it should not be mechanically applied. It is an equitable doctrine, demanding nuance, not absolutes.
The majority opinion discusses a very real concern, that debtors may defraud the bankruptcy system by failing to schedule their claims. Using judicial estoppel to curtail this potential problem, however, is
Accordingly, I respectfully dissent.
As the Seventh Circuit explained, "[t]he chose in action, here a discrimination case, belongs to the estate and was being prosecuted for the benefit of its creditors. It would frustrate the essential purpose of [§] 1306 to grant the debtor possession of the chose in action yet prohibit him from pursuing it for the benefit [of] the estate." Cable v. Ivy Tech State Coll., 200 F.3d 467, 473 (7th Cir.1999). That is precisely the case here.
Indeed, other circuits have introduced the theory of inadvertence into New Hampshire's third prong, indicating that the two ideas are not entirely separate. See, e.g., Stallings v. Hussmann Corp., 447 F.3d 1041, 1048 (8th Cir.2006); Ryan Operations G.P. v. Santiam-Midwest Lumber Co., 81 F.3d 355, 362 (3d Cir.1996). Moreover, in propounding the third consideration, the Court in New Hampshire cited language indicating that judicial estoppel forbids use of "intentional self-contradiction. . . as a means of obtaining unfair advantage." 532 U.S. at 751, 121 S.Ct. 1808 (emphasis added).
If Love's explained lack of motive is insufficient to create a fact issue as to inadvertence, I am concerned as to what would be required. Setting aside the unfairness in crediting the defendant's blanket allegation while discounting the plaintiff's blanket denial, the majority opinion's approach effectively creates a presumption in favor of the defendant asserting the affirmative defense. A defendant would simply need to allege knowledge and motive, while the plaintiff needs to prove the negative—that he lacked motive. How would he do so? By filing an affidavit that says "I didn't mean it" or "I had a pure heart"? Would the majority opinion find that type of affidavit useful or appropriate? Moreover, to the extent that the majority opinion contends that this case should be about subjective intent, Tyson put on no evidence about Love's mental state and, therefore, did not satisfy its summary judgment burden.
81 F.3d at 364-65 (citations and internal quotation marks omitted).
