Peter Meyer v. Northwest Trustee Servs., Inc.
15-35560
| 9th Cir. | Aug 29, 2017Background
- Peter and Sharee Meyer sued Northwest Trustee Services (NWTS) after NWTS initiated nonjudicial foreclosure under a deed of trust; the Meyers sought relief under Washington’s Deed of Trust Act (DTA) and Consumer Protection Act (CPA).
- The Meyers filed for bankruptcy in 2010; their bankruptcy case remained pending and they were not discharged until 2016.
- The Meyers asserted their DTA and CPA claims in 2012 while the bankruptcy case was still pending but did not amend their bankruptcy schedules or disclosure statements to list those claims as assets.
- The bankruptcy court found NWTS had violated the DTA and CPA after a three-day bench trial; NWTS appealed and the district court reversed.
- The Ninth Circuit affirmed the district court, holding the Meyers are judicially estopped from pursuing the DTA and CPA claims because they failed to disclose them during the bankruptcy proceeding.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether judicial estoppel bars the Meyers’ DTA and CPA claims | Meyers: claims arose in 2012 and were actively litigated before the bankruptcy court; they did not intentionally withhold assets and the court/creditors were not misled | NWTS: Meyers failed to disclose claims during the pendency of bankruptcy, deceiving the court and creditors; judicial estoppel applies | Court: Judicial estoppel applies—Meyers’ failure to amend schedules while bankruptcy pending bars the claims |
| Whether inadvertent omission or subsequent disclosure excuses nondisclosure | Meyers: omission was not deceptive; they litigated the claims in the bankruptcy adversary proceeding before discharge, so substance, not form, controls | NWTS: debtor must comply with form-driven disclosure duties under §521; failing to amend schedules cannot be excused without reopening bankruptcy | Court: Mere litigation before discharge did not satisfy statutory disclosure duties; absence of amended schedules or reopening means estoppel remains appropriate |
| Whether equitable principles (e.g., no prejudice to creditors) outweigh estoppel | Meyers: equitable principles and lack of creditor deception counsel against estoppel; invoking estoppel would unjustly favor the defendant | NWTS: equitable considerations are addressed by requiring disclosure; permitting nondisclosure would undermine creditor reliance | Court: Bound by Ninth Circuit precedent (Hamilton); equitable arguments insufficient to overcome nondisclosure and duty to amend |
Key Cases Cited
- Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778 (9th Cir. 2001) (establishes that debtors who fail to disclose claims in bankruptcy may be judicially estopped from pursuing them)
- New Hampshire v. Maine, 532 U.S. 742 (2001) (explains purpose and equitable nature of judicial estoppel; focuses on whether a party misled the court)
- Ah Quin v. Cnty. of Kauai Dep’t of Transp., 733 F.3d 267 (9th Cir. 2013) (holds reopening bankruptcy and amending schedules can negate estoppel where omission was inadvertent)
- Pepper v. Litton, 308 U.S. 295 (1939) (articulates equitable principle that substance and justice prevail over technical formalities)