Anderson v. Seven Falls Company
696 F. App'x 341
10th Cir.2017Background
- In June 2010 Amber Davies injured her ankle at Seven Falls; she consulted counsel in August 2010 and counsel prepared a notice of claim and settlement demand before she and her husband filed Chapter 7 in July 2011.
- Davies’ bankruptcy petition (signed under penalty of perjury) did not list the personal-injury claim as an asset; the case was treated as a no-asset Chapter 7 and debts were discharged in October 2011.
- Davies’ CRPS diagnosis was confirmed in 2012; she sued Seven Falls in June 2012 for over $5 million, and only then disclosed the suit to the bankruptcy court; the case was reopened in March 2013 and the trustee (Anderson) intervened as real party in interest.
- Seven Falls moved for summary judgment arguing judicial estoppel barred recovery beyond amounts necessary to satisfy creditors; the district court limited recovery to creditors’ claims plus trustee/attorney fees and entered judgment accordingly.
- On appeal the Tenth Circuit reviewed whether judicial estoppel properly applied, including whether Davies’ affidavits created a genuine dispute and whether reopening the bankruptcy cured the estoppel problem.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether judicial estoppel bars full recovery for an asset omitted from bankruptcy schedules | Davies/Trustee: omission was inadvertent; reopening and amendment cured any defect | Seven Falls: omission was inconsistent and misled the bankruptcy court, so judicial estoppel applies | Court: Estoppel applies; omission was inconsistent and trustees’ recovery limited to estate creditors/fees |
| Whether Davies’ post-hoc affidavits create a genuine factual dispute about her knowledge/advice received | Davies: counsel/paralegal told her she didn’t need to disclose; affidavits show lack of duty knowledge | Seven Falls: affidavits are conclusory, hearsay, and uncorroborated; insufficient on summary judgment | Court: Affidavits insufficient — hearsay and self-serving statements not probative; no genuine issue created |
| Whether reopening the bankruptcy and amending schedules cures judicial estoppel | Davies: reopening and amended filings correct omission and negate estoppel | Seven Falls: reopening does not erase the fact the court relied on original no-asset petition to discharge debts | Court: Reopening does not cure estoppel; discharge based on original filings persuaded the bankruptcy court and estoppel stands |
| Whether mistake/inadvertence exception applies (subjective intent) | Davies: subjective belief and later disclosure show inadvertence; courts should consider subjective intent | Seven Falls: debtor knew or had motive to conceal; objective inferences of knowledge/motive justify estoppel | Court: No inadvertence — objective inferences (knowledge and motive) support estoppel; decline to adopt rigid subjective-intent rule |
Key Cases Cited
- New Hampshire v. Maine, 532 U.S. 742 (2001) (articulates flexible three-factor judicial estoppel framework)
- Eastman v. Union Pac. R.R. Co., 493 F.3d 1151 (10th Cir. 2007) (failure to disclose a claim in bankruptcy is inconsistent with later pursuing it; reopening does not necessarily cure estoppel)
- Queen v. TA Operating, LLC, 734 F.3d 1081 (10th Cir. 2013) (compare position taken in the filing relied on for discharge to later litigation position when evaluating inconsistency)
- Gillman v. Ford, 492 F.3d 1148 (10th Cir. 2007) (inadvertence exception requires lack of knowledge or lack of motive to conceal)
- In re Coastal Plains, 179 F.3d 197 (5th Cir. 1999) (discusses inference of deliberate concealment when debtor knows of claim and benefits from nondisclosure)
- Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778 (9th Cir. 2001) (discharge can establish a basis for judicial estoppel even if later vacated)