Devon Russell Poesnecker, 5:07-bk-50507

Background

Debtor Devon R. Poesnecker filed a Chapter 13 petition in 2007 and proposed a 100% payout plan; the plan was confirmed and provided that estate property would vest in the Debtor on confirmation.
After confirmation but before the bankruptcy case was closed (and before discharge), the Debtor suffered an injury and later commenced a state-court personal-injury lawsuit against a defendant allegedly responsible for the slip-and-fall.
The postconfirmation personal-injury claim was not disclosed to the bankruptcy court or listed in the bankruptcy case docket prior to case closure.
The state-court defendant raised judicial estoppel as a defense and asked the bankruptcy court to decide whether the Debtor had a duty to disclose the claim to the bankruptcy court and, if so, whether nondisclosure was in bad faith.
The parties agreed to bifurcate the questions; the bankruptcy court was asked only whether there was a legal duty to disclose (the bad-faith question reserved).
The bankruptcy court concluded, based on Code text and Third Circuit precedent emphasizing full disclosure, that the Debtor had a duty to disclose the postconfirmation personal-injury claim to the bankruptcy court.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a postconfirmation personal-injury claim acquired before case closure had to be disclosed in the Chapter 13 case	Poesnecker: the claim was not estate property after vesting; therefore not reportable	State-court defendant: §1306(a)(1) makes postpetition acquisitions property of the estate and disclosure is required; nondisclosure can trigger estoppel	Court held Debtor had a duty to disclose the postconfirmation claim to the bankruptcy court
Whether §1306(a)(1) or §1327(b) governs postconfirmation acquisitions	Poesnecker: §1327(b) vests estate property in debtor on confirmation, cutting off reporting duty	Defendant: §1306(a)(1) plainly includes property acquired before case closure; vesting under §1327(b) should be read temporally at confirmation	Court treated §1306(a)(1) as controlling for property acquired before case closure and read §1327(b) as temporal; disclosure required
Whether uncertainty about estate status of postconfirmation assets negates disclosure duty	Poesnecker: ambiguity about whether asset remained estate property, so no duty	Defendant: even uncertainty imposes statutory duty to disclose potential assets under Third Circuit practice	Court held uncertainty does not excuse nondisclosure; duty to disclose remains
Whether a completed 100% plan eliminates duty to disclose postconfirmation assets	Poesnecker: fully performing plan renders additional assets irrelevant; no need to report	Defendant: additional assets can affect administration, claims, modifications, and distributions; disclosure remains necessary	Court rejected the ‘‘100% plan’’ argument and held disclosure required

Key Cases Cited

Trowbridge v. Scranton Artificial Limb Co., 747 A.2d 862 (Pa. 2000) (defines judicial estoppel under Pennsylvania law)
Krystal Cadillac–Oldsmobile GMC Truck, Inc. v. Gen. Motors Corp., 337 F.3d 314 (3d Cir. 2003) (bankruptcy context; debtors must fully disclose interests)
In re Kane, 628 F.3d 631 (3d Cir. 2010) (Third Circuit emphasizes full disclosure by debtors)
Ryan Operations G.P. v. Santiam–Midwest Lumber Co., 81 F.3d 355 (3d Cir. 1996) (disclosure obligations in bankruptcy proceedings)
In re Myers, 491 F.3d 120 (3d Cir. 2007) (liquidation outside bankruptcy of estate property is futile while stay and estate rights exist)
Conn. Nat'l Bank v. Germain, 503 U.S. 249 (U.S. 1992) (statutory interpretation: court begins and ends with unambiguous text)