KING, Circuit Judge:
Plaintiffs-Appellants Helen and Robert Allen filed a personal injury suit against Defendants for alleged workplace injuries to Helen Allen. Defendants moved for summary judgment, contending that the suit should be barred by judicial estoppel because the Allens failed to disclose the personal injury claim during their concurrent Chapter 13 bankruptcy proceeding. The district court granted the motion for summary judgment, and the Allens appeal. As modified herein, we AFFIRM the judgment of the district court.
On July 14, 2009, Robert and Helen Allen filed for Chapter 13 bankruptcy. The bankruptcy court confirmed the original Chapter 13 Plan (the Plan) on September 29, 2009. In the nearly five years that the bankruptcy court administered the Allens' bankruptcy, the Allens amended the Plan three times, first on January 11, 2011, then on December 19, 2011, and finally on January 17, 2013. On April 21, 2014, the bankruptcy court closed the Allens' Chapter 13 bankruptcy case without discharge because the Allens failed to file required documentation showing that they had completed an instructional course on personal financial management.
On October 21, 2010, the Allens filed an unrelated personal injury suit against C & H Distributors, K + K America Corporation, Ergocraft, Inc., and Travelers Property Casualty Company of America (Defendants
On February 9, 2011, the State of Louisiana moved for leave to intervene in the personal injury suit because it had made workers' compensation payments to Helen Allen. The district court denied the State's motion to intervene, noting that allowing the State to intervene as a party
On September 2, 2014, Defendants moved for leave to file a late supplemental motion for summary judgment in the personal injury suit. Defendants contended that on August 29, 2014, they first learned of the Allens' Chapter 13 bankruptcy proceeding. However, the Allens failed to disclose the existence of the prior bankruptcy in response to interrogatories. The district court granted Defendants leave to file, and Defendants subsequently moved for summary judgment, contending that the Allens' personal injury claim was barred by judicial estoppel because the Allens had never disclosed the personal injury suit to the bankruptcy court. On December 3, 2014, the Allens moved to strike the supplemental motion for summary judgment, contending that counsel for Ergocraft had acknowledged that he knew of the Allens' bankruptcy as early as March 28, 2012, even though Defendants alleged in their motion that they had first learned of the bankruptcy case on August 29, 2014.
On March 26, 2015, the district court granted Defendants' supplemental motion for summary judgment, finding that judicial estoppel barred the Allens from pursuing their personal injury claim. Accordingly, the court dismissed the Allens' claims with prejudice. The court noted, however, that the dismissal was without prejudice "to the rights of a Chapter 7 trustee to pursue the claims if the Allens' bankruptcy case is reopened and converted to a Chapter 7 liquidation." The district court also denied the Allens' motion to strike. The Allens timely appealed the district court's final judgment and the denial of their motion to strike.
"We review a grant of summary judgment de novo, applying the same standard as the district court." Buffalo Marine Servs. Inc. v. United States, 663 F.3d 750,
"Judicial estoppel is a common law doctrine that prevents a party from assuming inconsistent positions in litigation." Superior Crewboats Inc. v. Primary P & I Underwriters (In re Superior Crewboats, Inc.), 374 F.3d 330, 334 (5th Cir.2004); accord 18 Moore's Federal Practice § 134.30 (3d ed. 2015). The doctrine's purpose "is `to protect the integrity of the judicial process', by `prevent[ing] parties from playing fast and loose with the courts to suit the exigencies of self interest.'" In re Coastal Plains, Inc., 179 F.3d at 205 (quoting Brandon v. Interfirst Corp., 858 F.2d 266, 268 (5th Cir.1988)). "Judicial estoppel has three elements: (1) The party against whom it is sought has asserted a legal position that is plainly inconsistent with a prior position; (2) a court accepted the prior position; and (3) the party did not act inadvertently." Flugence v. Axis Surplus Ins. Co. (In re Flugence), 738 F.3d 126, 129 (5th Cir. 2013). We address each of those elements in turn and find that each element is satisfied in this case.
The first element of judicial estoppel requires that a party "assert[ ] a legal position that is plainly inconsistent with a prior position." Id. As we have previously recognized, "Chapter 13 debtors have a continuing obligation to disclose post-petition causes of action." Id. Moreover, "debtors have a duty to disclose to the bankruptcy court" whether post-confirmation assets are treated as property of the estate or vested in the debtor. See id. at 130 (noting that this duty is "notwithstanding uncertainty"). This is because "[w]hether a particular asset should be available to satisfy creditors is often a contested issue, and the debtor's duty to disclose assets—even where he has a colorable theory for why those assets should be shielded from creditors—allows that issue to be decided as part of the orderly bankruptcy process." Id. Here, the Allens never disclosed the existence of their personal injury suit to the bankruptcy court, even though they amended the Plan three separate times after filing the personal injury suit. "Because [the Allens] had an affirmative duty to disclose [their] personal-injury claim to the bankruptcy court and did not do so, [they] impliedly represented that [they] had no such claim." Id.; see also In re Superior Crewboats, Inc., 374 F.3d at 335 ("[T]he [debtors'] omission of the personal injury claim from their mandatory bankruptcy filings is tantamount to a representation that no such claim existed."). Thus, "[s]uch blatant inconsistency readily satisfies the first prong of the judicial estoppel inquiry." In re Superior Crewboats, Inc., 374 F.3d at 335.
The second element of judicial estoppel, judicial acceptance, is also satisfied in this case. The judicial acceptance element "ensures that judicial estoppel is
Finally, the third element of judicial estoppel is met in this case. Judicial estoppel does not apply if the party acted inadvertently. Jethroe v. Omnova Solutions, Inc., 412 F.3d 598, 600-01 (5th Cir.2005). The Allens can establish inadvertence by proving "either that [they] did not know of the inconsistent position or that [they] had no motive to conceal it from the court." Id. at 601.
To prove lack of knowledge, the Allens "must show not that [they were] unaware that [they] had a duty to disclose [their] claims but that . . . [they were] unaware of the facts giving rise to them." In re Flugence, 738 F.3d at 130. Consequently, the "controlling inquiry . . . is the know[ledge] of facts giving rise to inconsistent positions." Id. (quoting Jethroe, 412 F.3d at 601 n. 4). The Allens contend that when they filed their original bankruptcy petition in July 2009, they were unaware of the personal injury claim because the incident underlying that claim occurred in October 2009. However, the Allens subsequently amended the Plan several times post-confirmation when they had "a continuing obligation to disclose post-petition causes of action." Id. at 129. Moreover, that the Allens "did not know that bankruptcy law required disclosure . . . is, according to our precedents, irrelevant." Id. at 131. Because the Allens knew of the facts underlying the personal injury claim during the pendency of the bankruptcy proceedings, they cannot satisfy the "lack of knowledge" element of inadvertence.
A debtor's failure to disclose assets is also inadvertent if the debtor "has no motive for their concealment." In re Coastal Plains, 179 F.3d at 210. To determine whether a motive existed, the inquiry focuses on whether the Allens had a "motive to conceal [their] claims" during
Although judicial estoppel can apply to the Allens' personal injury suit, the Allens and the State argue that the district court should not have applied it here because that doctrine leads to an inequitable result.
We have recognized that judicial estoppel is appropriate when "a party fails to disclose an asset to a bankruptcy court, but then pursues a claim in a separate tribunal based on that undisclosed asset." Jethroe, 412 F.3d at 600. However, "judicial estoppel must be applied in such a way as to deter dishonest debtors, whose failure to fully and honestly disclose all their assets undermines the integrity of the bankruptcy system, while protecting the rights of creditors to an equitable distribution of the assets of the debtor's estate." Reed, 650 F.3d at 574. "Accordingly, where a debtor is judicially estopped from pursuing a claim he failed to disclose to the bankruptcy court, the trustee, consistent with Reed, may pursue the claim without any limitation not otherwise imposed by law."
Here, the district court expressly dismissed the personal injury claim without prejudice to the rights of a trustee to pursue the claim, permitting the trustee to litigate the claim if the Allens' bankruptcy case is reopened. The Allens and the State are therefore incorrect insofar as they argue that judicial estoppel is inequitable because the Allens' creditors are harmed and that the State's "only remaining avenue to seek redress" for its reimbursement claim is the stipulation entered into with the Allens. We are, of course, in no position to foretell the future outcome if a Chapter 7 trustee pursues the personal injury claim. But as to the district court's actions in the present matter, our precedent clearly establishes that the district court did not abuse its discretion when it dismissed the Allens' claims based on judicial estoppel and provided a trustee with the opportunity to "pursue for the benefit of creditors a judgment or cause of action that the debtor fails to disclose in bankruptcy." Reed, 650 F.3d at 573.
One clarification to the district court's judgment is in order. Pursuant to Reed, the district court permitted a Chapter 7 trustee to pursue the personal injury claim if the Allens' bankruptcy case is reopened and converted to a Chapter 7 liquidation. However, the trustee would likely not be able to pursue the claims in a separate suit because of the same timeliness problems that barred the State's attempt to intervene