NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

OPINION

LEVY, Acting P.J.

Appellant, Chad Langworthy, filed various union grievances and claims against his employer, respondent United Parcel Service, Inc. (UPS), regarding what Langworthy considered unfair labor treatment. Langworthy filed the claims with the National Labor Relations Board, the California Labor Commissioner, and the California Department of Fair Employment and Housing (Department). These grievances and claims were unsuccessful. Following an investigation, the Department issued Langworthy a right-to-sue notice on his claim for race and age discrimination, harassment, and retaliation.

Thereafter, Langworthy filed for Chapter 7 bankruptcy. Langworthy did not disclose his potential claim against UPS as an asset of the bankruptcy estate. A few months later, the bankruptcy court discharged Langworthy's debt and closed the case.

Approximately three months after the bankruptcy case closed, Langworthy filed the underlying complaint against UPS for discrimination, harassment and retaliation. UPS filed a summary judgment motion arguing judicial estoppel precluded Langworthy's action. In response, Langworthy reopened the bankruptcy case, disclosed this lawsuit as a potential asset, and amended his complaint to add appellant, Randell Parker, the bankruptcy trustee, as the real party in interest.

The trial court granted summary judgment in favor of UPS on the ground of judicial estoppel.

Langworthy argues the trial court erred. According to Langworthy, the record does not support the trial court's finding that he acted in bad faith. Langworthy further contends judicial estoppel should not apply to the innocent bankruptcy trustee.

The trial court correctly applied judicial estoppel to Langworthy. However, the trial court erred in preventing the trustee from pursuing this complaint to the extent necessary to pay creditors who have timely filed claims. Accordingly, we will affirm the judgment in part and reverse in part.

BACKGROUND

Langworthy has worked as a UPS package car driver since 1987, delivering and picking up packages in the Bakersfield and Porterville areas. From 1987 until 2007, Langworthy began his route at the UPS center in Bakersfield and drove 50 miles before making his first stop in Porterville. After making his last Porterville stop, Langworthy drove another approximately 60 miles back to Bakersfield. Thus, UPS paid Langworthy to commute to and from Porterville.

Langworthy is a member of the International Brotherhood of Teamsters, Local 87, and subject to its collective bargaining agreement. Under the collective bargaining agreement, package car drivers obtain routes based on seniority through a bidding procedure.

In late 2007, UPS opened a satellite facility in Porterville. UPS moved Langworthy's route to this satellite facility from Bakersfield. Thus, instead of driving 50 miles, Langworthy would drive approximately 10 miles before his first stop. At the end of the day, Langworthy would drive approximately 20 miles back to the satellite center instead of driving 60 miles to the Bakersfield center. Langworthy's commute time from Bakersfield to Porterfield was unpaid and he had to use his own car and gas.

Langworthy believed this change to his route was discriminatory and that UPS was not honoring his seniority. Langworthy also objected to the satellite facility's conditions, challenging the cleanliness of the bathrooms and the absence of a structure to protect the drivers when they were loading and cleaning their trucks.

Between 2007 and 2011, Langworthy filed multiple union grievances alleging UPS had improperly transferred his route to the satellite facility. Langworthy also filed grievances alleging the satellite facility's conditions were undignified and unsanitary. As relief, Langworthy requested that UPS return all routes to the Bakersfield center. A labor panel rejected Langworthy's grievances.

In 2011, Langworthy also filed unsuccessful claims with the National Labor Relations Board and the California Labor Commissioner.

In 2012, Langworthy filed a complaint with the Department alleging UPS discriminated against him based on age and race. He also alleged he was harassed and retaliated against for complaining of unlawful employment practices. After an investigation, the Department closed Langworthy's case and issued a right-to-sue notice dated February 28, 2013. The Department advised Langworthy that he had one year to file a lawsuit against UPS.

On July 30, 2013, Langworthy filed for Chapter 7 bankruptcy with the assistance of a bankruptcy lawyer. Langworthy did not disclose his employment claims against UPS as an asset. When asked to list all suits and administrative proceedings to which he was a party within one year immediately preceding filing for bankruptcy, Langworthy checked "none." Similarly, Langworthy did not list these claims when asked to disclose "other contingent and unliquidated claims of every nature."

In his bankruptcy, Langworthy sought discharge of over $100,000 of unsecured debt. In September 2013, the bankruptcy trustee filed a "Report of No Distribution," concluding there was no property available for distribution over and above that exempted by law.

In October 2013, Langworthy retained a law firm to pursue his employment claims against UPS. On October 25, 2013, Antony R. Pizarro, the lawyer handling Langworthy's case, sent the first of two demand letters to UPS. In this letter, Pizarro explained that his office represented Langworthy in his prospective lawsuit against UPS for discrimination, harassment and retaliation and set forth the facts supporting Langworthy's claim. Pizarro requested that UPS advise as to whether UPS was "interested in engaging in meaningful settlement negotiations in order to obviate the need for protracted and expensive litigation."

Pizarro sent the second demand letter to UPS on November 6, 2013. In this letter, Pizarro noted that he had discussed the matter with Langworthy and set forth the details of Langworthy's position. Pizarro then outlined the damages that Langworthy claimed he had incurred due to the alleged discrimination. Langworthy sought over $175,000 in reimbursement for mileage and unpaid overtime compensation for the commute from Bakersfield to Porterville. Langworthy further claimed UPS should pay back the loans he took out from his 401(k) and compensate him for his emotional injuries. Pizarro ended this letter with "Given the egregious conduct engaged in by UPS, Mr. Langworthy requests that UPS act reasonably and fairly in any offers UPS intends to make, if any. Any failure by UPS in this regard will result in the immediate termination of settlement negotiations and the subsequent filing of Mr. Langworthy's claims in state court."

Approximately one week later, on November 12, 2013, the bankruptcy court discharged all of Langworthy's debts.

On February 20, 2014, Langworthy filed the underlying complaint against UPS. This complaint alleged causes of action for age and race discrimination, harassing and hostile work environment, and retaliation. Langworthy based these causes of action on the same facts alleged in his complaint filed with the Department and demand letters to UPS. Langworthy sought monetary damages and attorney fees.

In February 2015, UPS took Langworthy's deposition. UPS's attorney asked Langworthy about his bankruptcy and confirmed that he had not disclosed his claims against UPS to the bankruptcy court.

On March 20, 2015, UPS moved for summary judgment. UPS asserted that judicial estoppel precluded Langworthy from pursuing his employment claim against UPS because he did not disclose that claim as a potential asset in his bankruptcy petition.

On April 8, 2015, Langworthy substituted Pizarro's current law firm as counsel in place of Pizarro's former law firm. Langworthy then applied ex parte to continue the summary judgment motion hearing date. The trial court granted Langworthy's application and continued the hearing to September.

In June 2015, Langworthy requested the bankruptcy court to reopen his case. Langworthy disclosed his claim against UPS through amended schedules and declared that it would be in the best interest of the creditors to reopen the case because funds could become available to pay the creditors' claims.

The bankruptcy court found good cause to reopen Langworthy's case and reappointed Parker as the bankruptcy trustee.

On August 18, 2015, Langworthy filed his first amended complaint adding Parker as the real party in interest. On September 1, 2015, upon Parker's application, the bankruptcy court appointed Pizarro as special counsel to the bankruptcy trustee.

Following a hearing, the court granted UPS's summary judgment motion. The trial court found Langworthy cured the standing issue by reopening the bankruptcy proceedings and adding Parker as a party. However, because Langworthy failed to list his claims against UPS in the bankruptcy proceeding, the court concluded judicial estoppel prevented him from asserting those claims in the superior court. The court found the current claim was "inconsistent to a prior position [Langworthy] took in a previous judicial proceeding, and the facts show the omission was in bad faith."

DISCUSSION

1. Standard of review.

The parties disagree on the applicable standard of review. Langworthy asserts we should review the trial court's order granting summary judgment de novo. UPS argues that, because the trial court applied the equitable doctrine of judicial estoppel, we review the trial court's order for an abuse of discretion. Both parties are correct.

Where, as here, the trial court grants summary judgment based on judicial estoppel, we independently determine whether there are triable factual issues. (Minish v. Hanuman Fellowship (2013) 214 Cal.App.4th 437, 449-450.) If we find there are no triable issues of material fact concerning the elements required for judicial estoppel, we review the trial court's decision to apply the doctrine for an abuse of discretion. (Ibid.)

2. The court could properly rule on the summary judgment motion.

Langworthy applied ex parte to file a first amended complaint to add Parker as the real party in interest. Langworthy represented to UPS and the trial court that his first amended complaint would not "substantively change the pleadings" and would not "prejudice" the summary judgment motion or "impact the summary judgment hearing date." Langworthy alleged "the facts of the claims pled" were "not `wholly different' after amendment."

Based on these representations, the trial court granted Langworthy's ex parte application and gave Langworthy five days to file his first amended complaint. The trial court's order states:

Thereafter, the parties treated the summary judgment motion as applying to Langworthy's first amended complaint. In his opposition to the motion, Langworthy argued that UPS's judicial estoppel and standing claims failed as a matter of law because the first amended complaint added Parker as a party and Parker intended to proceed on the debtor estate's behalf. Similarly, in ruling on the motion, the trial court noted that Langworthy acknowledged that he lacked standing to pursue his claims and that he "recognized this defect and cured it by reopening his bankruptcy case and amending his Complaint in this case to include the bankruptcy trustee. However, this only cured the issue of Standing, not Judicial Estoppel."

Langworthy argues that, because the first amended complaint superseded the original complaint, the trial court erroneously entered summary judgment on an inoperative complaint. Langworthy asserts the trial court's summary judgment order is therefore void. According to Langworthy, UPS was required to renotice the summary judgment motion after Langworthy filed the first amended complaint.

However, Langworthy never objected to UPS's failure to renotice its summary judgment motion in the trial court. Rather, Langworthy proceeded with the summary judgment hearing as if the motion applied to the first amended complaint. After representing to the court and UPS that the first amended complaint made no substantive changes, Langworthy opposed summary judgment on the ground that the addition of Parker defeated the motion as a matter of law.

To preserve an issue for appeal, a party ordinarily must raise the objection in the trial court. (K.C. Multimedia, Inc. v. Bank of America Technology & Operations, Inc. (2009) 171 Cal.App.4th 939, 948.) "The purpose of this rule is to encourage parties to bring errors to the attention of the trial court, so that they may be corrected." (In re S.B. (2004) 32 Cal.4th 1287, 1293.) Although application of the forfeiture rule is not automatic, the appellate court's discretion to excuse forfeiture should be exercised rarely and only in cases presenting an important legal issue. (Ibid.)

Here, contrary to Langworthy's position, there is no justification for excusing his failure to object. The case does not present an important legal issue. Moreover, Langworthy has not suffered any prejudice by not having the summary judgment motion renoticed. Comparing the complaint and the first amended complaint, there are no substantive changes or new causes of action. Langworthy simply added the bankruptcy trustee as a real party in interest. Further, in opposing the summary judgment motion, Langworthy referred to the first amended complaint.

The cases relied on by Langworthy to support his position are not persuasive. In those cases, the courts held the summary adjudication or judgment orders were void because the amended complaints asserted new claims, allegations, or defendants. For example, in State Compensation Ins. Fund v. Superior Court (2010) 184 Cal.App.4th 1124 (State Compensation Ins. Fund), the court held the filing of an amended complaint rendered the defendant's motion for summary adjudication moot where the amendment added a defendant and a number of new factual allegations. (State Compensation Ins. Fund, supra, 184 Cal.App.4th at pp. 1128, 1131.) Moreover, the plaintiff objected to the defect in the trial court and argued that a ruling on the summary adjudication motion would be void. (Id. at p. 1129.) Similarly, in Hejmadi v. AMFAC, Inc. (1988) 202 Cal.App.3d 525 the amended complaint added new claims. (202 Cal.App.3d at pp. 535-537.)

In sum, by failing to object to the alleged defect, Langworthy forfeited his claim that the summary judgment order is void.

3. Judicial estoppel applies to Langworthy.

The judicial estoppel doctrine prevents a party from asserting a position in a judicial proceeding that is contrary or inconsistent with a position asserted in a prior proceeding. (International Engine Parts, Inc. v. Feddersen & Co. (1998) 64 Cal.App.4th 345, 350.) The primary purpose of judicial estoppel is to protect the integrity of the judiciary, not the litigants. Therefore, reliance or prejudice is not required. (Id. at p. 351.)

Judicial estoppel applies to federal bankruptcy proceedings. Thus, courts of various jurisdictions have held that a debtor who asserts a legal claim in a civil action that he or she did not disclose in earlier bankruptcy proceedings has assumed inconsistent positions. (Gottlieb v. Kest (2006) 141 Cal.App.4th 110, 137 (Gottlieb).)

These holdings stem from the requirement that a debtor seeking federal bankruptcy protection disclose legal or equitable property interests to the bankruptcy court. (Gottlieb, supra, 141 Cal.App.4th at p. 137.) The debtor must list all personal property of whatever kind. Such property includes "`contingent and unliquidated claims of every nature.'" "`Claim' means a `right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured....'" (Id. at p. 133.) "`The omission of a cause of action or claim "from ... mandatory bankruptcy filings is tantamount to a representation that no such claim existed."'" (Id. at p. 137.)

Further, the debtor has a continuing duty to notify the bankruptcy court of his or her assets, including all potential causes of action. (Gottlieb, supra, 141 Cal.App.4th at p. 133.) It is not necessary for the debtor to know all the facts or even the legal basis for the potential cause of action. If the debtor has enough information to suggest that he or she may have a possible cause of action, then that is a known cause of action that the debtor must disclose. (Ibid.)

A court will apply judicial estoppel when: "`(1) the same party has taken two positions; (2) the positions were taken in judicial or quasi-judicial administrative proceedings; (3) the party was successful in asserting the first position (i.e., the tribunal adopted the position or accepted it as true); (4) the two positions are totally inconsistent; and (5) the first position was not taken as a result of ignorance, fraud or mistake.'" (Aguilar v. Lerner (2004) 32 Cal.4th 974, 986-987 (Aguilar).)

Here, Langworthy did not originally disclose his potential claim against UPS to the bankruptcy court. Thus, when Langworthy filed the civil action against UPS, he took inconsistent positions in judicial proceedings. Langworthy's receipt of a no asset discharge in the bankruptcy proceeding demonstrates that he was successful in asserting his first position. Therefore, the first four judicial estoppel factors are satisfied. The remaining question is whether Langworthy's original position in the bankruptcy court "`was not taken as a result of ignorance, fraud or mistake,'" i.e., whether he acted in bad faith when he failed to list the UPS claim as an asset. (Aguilar, supra, 32 Cal.4th at pp. 986-987.) Langworthy cannot individually prosecute this action if the undisputed facts demonstrate he was fully aware of his claim and intentionally contradicted himself to obtain an unfair advantage. (Haley v. Dow Lewis Motors, Inc. (1999) 72 Cal.App.4th 497, 509.)

The record demonstrates that Langworthy was well aware of the basis for his potential claim against UPS. Before the bankruptcy, Langworthy filed multiple grievances with the union against UPS seeking back pay for the drive from Bakersfield to Porterville plus mileage. He also filed charges against UPS with both the National Labor Relations Board and the California Labor Commissioner seeking the same relief. Finally, Langworthy filed a complaint with the Department based on the same allegations as his previous grievances and charges but rephrased in terms of race and age discrimination. Thereafter, he received a right-to-sue notice from the Department. Given the tenacity with which Langworthy pursued his claims for compensation and mileage, the only reasonable inference is that he was fully aware of his potential claim against UPS when he filed for bankruptcy.

Langworthy gave two reasons for his failure to disclose his potential claim against UPS in the bankruptcy proceeding. In his declaration filed in opposition to UPS's summary judgment motion, Langworthy stated that, when he filed for bankruptcy, he "was so overwhelmed with everything going on that I failed to disclose this case as an asset" and that he "was discharged from bankruptcy without the asset being disclosed." This reason does not explain why Langworthy did not disclose the potential claim or demonstrate that his nondisclosure was the product of ignorance, fraud or mistake. Rather, it appears Langworthy was attempting to justify omitting a claim that he knew he should have disclosed.

In a later declaration filed in support of his motion to reopen the bankruptcy, Langworthy offered a second excuse for not disclosing the potential UPS claim. Langworthy declared, "I had no intention of filing a lawsuit at the time I filed my case. Since I had no intention to sue my employer at the time I filed my case, it did not occur to me to list the potential cause of action as an asset." This explanation indicates Langworthy was aware of the potential claim. According to Langworthy, he thought the complaint filed with the Department would "cause my employer to fix the problems." Although Langworthy asserts that he did not intend to pursue his claim against UPS, the record demonstrates otherwise.

In October 2013, before he was discharged in bankruptcy, Langworthy contacted "an attorney to see what could be done" about his claim against UPS because he had been "unsuccessful in [his] attempts to get these problems fixed." However, as of March 2012, Langworthy was no longer on the satellite route. He took a leave of absence in March 2012 and when he returned, received a new route leaving from the Bakersfield center. Thus, when Langworthy filed for bankruptcy, the "problems" he wanted fixed no longer existed. Rather, Langworthy's claim was limited to monetary damages.

Pizarro, the attorney Langworthy contacted to handle his civil litigation against UPS, sent the two demand letters to UPS dated October 25, 2013 and November 6, 2013. As outlined above, Pizarro made it clear that he had discussed the claim with Langworthy. Langworthy also testified in deposition that he was familiar with these letters.

Pizarro demanded over $175,000 in damages on Langworthy's behalf and threatened litigation if UPS refused to engage in settlement negotiations. The bankruptcy court discharged Langworthy's debts on November 12, 2013. Thus, it is clear that Langworthy knew about the potential claim against UPS and actively pursued that claim while the bankruptcy was pending.

Langworthy had a continuing duty to notify the bankruptcy court of his assets during the bankruptcy proceeding, including this potential claim. (Gottlieb, supra, 141 Cal.App.4th at p. 133.) Considering the detailed settlement demands that Langworthy admitted he was aware of, Langworthy's self-serving excuse that he failed to notify the bankruptcy court because he did not intend to sue UPS does not ring true. Rather, Langworthy's conduct demonstrates he intentionally concealed his potential claim against UPS from the bankruptcy court.

Langworthy argues that, when he "discovered his inadvertent omission he quickly corrected the mistake." A review of the timeline highlights the disingenuousness of this claim.

Langworthy filed his complaint in February 2014. In March 2015, over one year later, UPS moved for summary judgment on the ground that Langworthy was judicially estopped from prosecuting his action. Only then, nearly two years after Langworthy filed for bankruptcy, did he move to reopen the bankruptcy proceeding and amend his schedules to reflect his claim against UPS. As discussed above, his omission was not "inadvertent." Further, waiting to amend the bankruptcy schedules until after UPS filed its motion is not a quick correction.

In sum, Langworthy's conduct reveals that his original position in the bankruptcy court was not the result of ignorance, fraud or mistake. Rather, the record demonstrates that Langworthy acted in bad faith as a matter of law. Accordingly, all elements needed to invoke judicial estoppel against Langworthy are present. Under these circumstances, the trial court did not abuse its discretion in granting summary judgment to UPS against Langworthy.

4. Parker may pursue the action for the benefit of the unsecured creditors.

The goals of the bankruptcy system "are to `bring about an equitable distribution of the bankrupt's estate among creditors holding just demands,' [citation], and to `grant a fresh start to the honest but unfortunate debtor.'" (Reed v. City of Arlington (5th Cir. 2011) 650 F.3d 571, 574 (Reed).) "Therefore, 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." (Ibid.)

Upon the filing of a bankruptcy petition, the debtor's assets, including causes of action belonging to the debtor at the commencement of the bankruptcy case, vest in the bankruptcy estate. (Kane v. National Union Fire Ins. Co. (5th Cir. 2008) 535 F.3d 380, 385.) Once a cause of action becomes part of the bankruptcy estate, the debtor's rights to that cause of action are extinguished unless the trustee abandons that asset. (Parker v. Wendy's Intern., Inc. (11th Cir. 2004) 365 F.3d 1268, 1272.) The bankruptcy trustee becomes the real party in interest and has the authority and duty to pursue the cause of action as an asset of the bankruptcy estate. (Reed, supra, 650 F.3d at p. 575.) Neither the debtor's failure to disclose the asset nor the conclusion of the bankruptcy case affects this duty. (Ibid.)

The general principle that a trustee receives causes of action subject to defenses that could have been raised against the debtor is limited to pre-petition defenses. (Reed, supra, 650 F.3d at p. 575.) Thus, any postpetition conduct by the debtor does not affect the merits of a cause of action. (Parker v. Wendy's Intern., Inc., supra, 365 F.3d at p. 1273, fn. 3.) Accordingly, Langworthy's bad faith failure to disclose his claim against UPS, which failure resulted in Langworthy being precluded from pursuing that claim, does not in and of itself estop Parker. (Reed, supra, 650 F.3d at p. 576.)

As discussed above, judicial estoppel does not apply to a party who acted out of ignorance, fraud, or mistake. (Aguilar, supra, 32 Cal.4th at pp. 986-987.) There is no evidence that Parker was aware of Langworthy's omission of his potential claim against UPS. There is also no evidence that Parker abandoned this asset. Therefore, on the record before us, the trial court erred in applying judicial estoppel to Parker. Estopping Parker from pursuing the claim against UPS would thwart the bankruptcy goal of obtaining a maximum and equitable distribution for the innocent creditors. (Reed, supra, 650 F.3d at p. 576.)

In sum, Parker is not estopped from pursuing the complaint against UPS on behalf of Langworthy's creditors. However, judicial estoppel prevents Langworthy from receiving any amount from whatever Parker may recover from UPS. Parker will be limited to pursuing damages in the amount necessary to repay the unsecured creditors with timely filed claims. (Reed, supra, 650 F.3d at p. 573.)1

DISPOSITION

The summary judgment entered against Langworthy is affirmed. The summary judgment entered against Parker is reversed. However, the damages recovered by Parker against UPS, if any, will be limited to the amount necessary to repay the unsecured creditors with timely filed claims. The parties shall bear their own costs on appeal.

PEÑA, J. and SMITH, J., concurs.