Anne Spaine v. Community Contacts, Inc.
756 F.3d 542
7th Cir.2014Background
- Plaintiff Anne Spaine worked seasonally for Community Contacts and sued under 42 U.S.C. § 1981 for race-based harassment/termination in July 2012. She had filed (and later refiled) Chapter 7 bankruptcy in November 2012, proceeding pro se in bankruptcy while represented in the discrimination suit.
- On bankruptcy schedules Spaine failed to list her pending discrimination suit; the meeting of creditors occurred about five weeks after the schedules were filed.
- Spaine later averred (in an affidavit) that she orally disclosed the lawsuit during the bankruptcy proceedings and was not told to amend her schedules; a partial creditors’ meeting transcript indicates she told the trustee about the suit but that transcript was not before the district court.
- The trustee treated the case as a no-asset case, the bankruptcy closed and Spaine received a discharge; the trustee later told Spaine’s civil counsel he would not reopen the estate or pursue the asset.
- Community Contacts moved for summary judgment arguing Spaine lacked standing or, alternatively, should be judicially estopped from pursuing the discrimination suit because she failed to list it; Spaine moved to reopen and amend her bankruptcy schedules after the motion, and the bankruptcy court allowed amendment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing/Real party in interest — whether Spaine still has capacity to pursue suit | Spaine: trustee abandoned claim and estate was closed/reopened leaving claim to debtor, so she has standing | Community Contacts: the claim belonged to the bankruptcy estate so Spaine lacks standing | Held: Spaine has standing; trustee’s actions and abandonment returned the claim to her (11 U.S.C. § 554(c)) |
| Judicial estoppel — whether failure to list suit warrants estoppel | Spaine: she orally disclosed the suit to the bankruptcy court/trustee before discharge and never intentionally concealed it | Community Contacts: omission from schedules shows concealment and justifies estoppel to prevent manipulation | Held: Summary judgment inappropriate — Spaine’s affidavit (and transcript) create a genuine dispute about intent; estoppel not established on this record |
| Effect of later amendment/reopening — whether curing omission after motion undermines defendant’s position | Spaine: oral disclosure and subsequent reopening/amendment cured any omission and allowed trustee to assess value | Community Contacts: reopening after motion suggests strategic correction and should not preclude estoppel | Held: Oral disclosure before discharge and trustee’s handling distinguish this case from deliberate concealment cases; curing omission here does not automatically permit estoppel |
| Burden to prove subjective intent to conceal on summary judgment | Spaine: mere nondisclosure is insufficient; defendant must prove subjective intent to deceive | Community Contacts: nondisclosure supports inference of intent | Held: Defendant failed to produce evidence of subjective intent; courts require more than nondisclosure to invoke judicial estoppel at summary judgment |
Key Cases Cited
- New Hampshire v. Maine, 532 U.S. 742 (2001) (describes doctrine of judicial estoppel)
- Cannon-Stokes v. Potter, 453 F.3d 446 (7th Cir. 2006) (debtor’s concealment of claim can justify judicial estoppel)
- Ah Quin v. County of Kauai Dep’t of Transp., 733 F.3d 267 (9th Cir. 2013) (corrections that permit trustee assessment can defeat presumption of deceit)
- Ryan Operations G.P. v. Santiam-Midwest Lumber Co., 81 F.3d 355 (3d Cir. 1996) (cautions against inferring intent from nondisclosure alone)
- In re Superior Crewboats, Inc., 374 F.3d 330 (5th Cir. 2004) (estoppel where debtor made affirmative misrepresentations about claim)
- Stephenson v. Malloy, 700 F.3d 265 (6th Cir. 2012) (judicial estoppel not applied where debtor orally disclosed claim to trustee)
- Waldron, 536 F.3d 1239 (11th Cir. 2008) (bankruptcy rules complement continuing duty to disclose)