In Re Kane
628 F.3d 631
| 3rd Cir. | 2010Background
- Kane and Shannon Kane were married in 2004; Shannon filed for New York Chapter 7 in 2007 while divorcing Kane.
- Shannon disclosed divorce proceedings, pending alimony/equitable distribution, and spouse as unsecured creditor with unknown amount.
- Trustee at 341 Meeting found disclosures sufficient with some negligible omissions; estate assets included distributive award as asset.
- Shannon filed amended petition in 2007 disclosing alimony and pending divorce litigation not in the first petition.
- In 2008, Kane filed Chapter 13 in New Jersey; Shannon filed a proof of claim for $398,950.39 in Kane’s bankruptcy.
- The New Jersey bankruptcy court expunged Shannon’s claim but allowed refiling as a post-petition claim, contingent on an equitable distribution award; it also held Shannon was estopped for certain asserted claims not within equitable distribution.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Judicial estoppel application scope | Kane argues estoppel should bar Shannon’s entire claim. | Kane contends Shannon’s disclosures were inconsistent and warrant estoppel. | Estoppel not applied to entire claim; discretionary, fact-specific ruling established by record. |
| Standing to pursue equitable distribution | Kane asserts Shannon lacks standing since ED is not estate property. | Kane argues ED right is an estate asset or disallowed post-discharge claim. | Shannon has standing; ED interest either abandoned to her or remains a contingent inchoate right. |
| Whether ED right is an asset under 541(a)(1) | Disputed whether ED qualifies as an asset possessed by Shannon at filing. | Court should treat ED as contingent/intangible right subject to 541(a)(1) analysis. | ED right is a contingent equitable interest; it falls within 541(a)(1) as a potential asset. |
Key Cases Cited
- Ryan Operations G.P. v. Santiam-Midwest Lumber Co., 81 F.3d 355 (3d Cir. 1996) (debtor's disclosure duties and context for inconsistent statements)
- Krystal Cadillac-Oldsmobile GMC Truck, Inc. v. Gen. Motors Corp., 337 F.3d 314 (3d Cir. 2003) (three-pronged judicial estoppel test and bad-faith considerations)
- Hutchins v. IRS, 67 F.3d 40 (3d Cir. 1995) (disclosure and abandonment principles guiding standing and trustee role)
- Westmoreland Human Opportunities, Inc. v. Walsh, 246 F.3d 233 (3d Cir. 2001) (broad view of 541(a) asset scope and property interests)
- Teleglobe Communications Corp., 493 F.3d 345 (3d Cir. 2007) (inconsistencies may reflect legitimate disagreement rather than bad faith)