May 21, 2018

Tenth Circuit: Failure to Disclose Pending Lawsuit to Bankruptcy Court Resulted in Dismissal of Suit Due to Judicial Estoppel

The Tenth Circuit Court of Appeals published its opinion in Queen v. TA Operating, LLC on Tuesday, August 20, 2013.

Plaintiffs Richard and Susan Queen (“Queens”) sued Defendant TA Operating, LLC (“TA”) in federal district court in Wyoming (“District Court Action”). They brought various claims against TA based on an injury Mr. Queen sustained when he slipped and fell in a parking lot operated by TA. During the course of the District Court Action, the Queens filed for Chapter 7 bankruptcy in California (“Bankruptcy Action”), but did not disclose the District Court Action in their bankruptcy filings. When TA discovered this failure, TA brought it to the attention of the trustee for the Bankruptcy Action (“Trustee”). The Queens subsequently amended their bankruptcy filings to include the District Court Action, but they provided an estimate of its value that was far below what they had indicated in the proceedings before the Wyoming district court, and they claimed that the lawsuit was entirely exempt. Subsequently, the Queens were granted a no-asset discharge in bankruptcy.

The district court granted summary judgment in favor of TA based on the doctrine of judicial estoppel because the Queens had not disclosed the lawsuit in their bankruptcy proceedings.

Because the Queens adopted an inconsistent position that was accepted by the bankruptcy court, and because the Queens would receive an unfair advantage if not estopped from pursuing the District Court Action, the Tenth Circuit held that it was not an abuse of discretion for the court to apply the doctrine of judicial estoppel and grant summary judgment in favor of TA. The court also rejected the Queens’ arguments of mistake and inadvertence, because the record showed that the Queens had knowledge of the claim and a motive to conceal it in their bankruptcy proceedings. The court affirmed the grant of summary judgment to TA.

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