110 F. Supp. 3d 579
E.D. Pa.2015Background
- James T. McQueen (decedent) filed an asbestos suit in Sept. 1996 that was administratively dismissed in Mar. 1997; the MDL court reinstated the case in Jan. 2011.
- McQueen filed a Chapter 7 bankruptcy petition in Oct. 2005; the bankruptcy case closed in Mar. 2006.
- McQueen did not list the administratively dismissed asbestos claims on his bankruptcy schedules.
- Defendants (Thompson Hine shipowners) moved for summary judgment asserting (1) judicial estoppel for nondisclosure in bankruptcy and (2) that the bankruptcy trustee (not the estate/administrator) is the real party in interest.
- District court denied summary judgment on judicial estoppel (no bad faith) but concluded the unscheduled claims remained estate property; the trustee must be given opportunity to act before plaintiff may proceed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiff is judicially estopped from pursuing asbestos claims because McQueen did not disclose them in bankruptcy | McQueen's claims were administratively dismissed and not assets at bankruptcy; omission was a good-faith mistake | The omission is an inconsistent position that supports judicial estoppel and a presumption of bad faith | Denied — court found irreconcilable positions but no bad faith; estoppel inappropriate under the circumstances |
| Whether the asbestos claims belong to the bankruptcy estate (real party in interest/standing) | Because the claims were dismissed at the time of filing, they were not property of the estate | Unsold pre-petition claims automatically became estate property under §541; failure to schedule means trustee remains real party in interest | Denied without prejudice — court held claims are estate property; trustee given 60 days to elect to reopen/prosecute, otherwise plaintiff given chance to seek abandonment; case may be dismissed if no action taken |
Key Cases Cited
- Ryan Operations G.P. v. Santiam-Midwest Lumber Co., 81 F.3d 355 (3d Cir. 1996) (judicial estoppel doctrine and federal transferee court law application)
- Krystal Cadillac-Oldsmobile GMC Truck, Inc. v. Gen. Motors Corp., 337 F.3d 314 (3d Cir. 2003) (duty to disclose potential claims in bankruptcy and test for judicial estoppel)
- In re Kane, 628 F.3d 631 (3d Cir. 2010) (trustee, not debtor, has capacity to pursue debtor’s claims; unscheduled claims may remain estate property)
- Oneida Motor Freight, Inc. v. United Jersey Bank, 848 F.2d 414 (3d Cir. 1988) (debtor’s duty of disclosure in bankruptcy)
- Anderson v. Liberty Lobby, 477 U.S. 242 (U.S. 1986) (summary judgment standard)