Sandra Marshall v. Honeywell Technology Systems
2016 U.S. App. LEXIS 12759
| D.C. Cir. | 2016Background
- Sandra Marshall filed a Chapter 7 petition in Sept. 2005 and failed to list three pending EEOC/state human-rights administrative discrimination charges on her bankruptcy schedules or amend them when circumstances changed. She signed schedules under penalty of perjury.
- At the § 341 meeting Marshall orally told the trustee about at least one EEOC claim (Honeywell); her attorney later spoke with the trustee and allegedly informed him of the other two claims.
- Marshall filed a federal suit (initially alleging age discrimination, later amended to add race/sex/retaliation claims) while her Chapter 7 case was open; defendants only discovered the prior bankruptcy years later.
- The bankruptcy court discharged Marshall and closed the estate as a no‑asset case; she reopened the bankruptcy five years later and amended schedules to list the lawsuit and to list her attorney as a secured creditor.
- The district court granted summary judgment for defendants based on judicial estoppel, concluding Marshall’s nondisclosure deprived the trustee/creditors of rights, the omission was inconsistent with her later position as plaintiff, and oral disclosure did not cure the written omissions. The D.C. Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether judicial estoppel bars Marshall's suit because she omitted pending claims from bankruptcy schedules | Marshall contends omission was inadvertent/mistake and she orally disclosed claims to the trustee, so estoppel is inappropriate | Defendants argue the omission was a deliberate concealment that misled courts and creditors; judicial estoppel prevents asserting inconsistent claims | Court: Judicial estoppel applies; omission and failure to amend were inconsistent and disadvantaged creditors; oral disclosure did not cure written nondisclosure |
| Proper standard of appellate review for district court's application of judicial estoppel | N/A (issue framed by court) | N/A | Court: Abuse of discretion standard applies rather than de novo review |
| Whether oral disclosure to the trustee negates judicial estoppel or suffices to notify creditors | Marshall says oral disclosure to trustee and conversation by counsel put trustee on notice and supports inadvertence | Defendants say oral disclosure does not satisfy statutory disclosure duties or notify creditors; written schedules control | Court: Oral disclosure insufficient to avoid estoppel; trustee’s knowledge did not replace duty to list claims and notify creditors via schedules and notices |
| Whether later amendment (after reopening) cures earlier nondisclosure | Marshall argues amended schedules in 2010 cured the omission | Defendants/majority: Allowing cure would undermine incentive to disclose initially and weaken estoppel’s deterrent purpose | Court: Late amendment does not cure the earlier concealment for purposes of judicial estoppel |
Key Cases Cited
- New Hampshire v. Maine, 532 U.S. 742 (2001) (judicial estoppel is an equitable doctrine to prevent inconsistent positions that mislead courts)
- Moses v. Howard Univ. Hosp., 606 F.3d 789 (D.C. Cir. 2010) (judicial estoppel justified where debtor deliberately fails to disclose pending suit in bankruptcy; sets factors to consider)
- Cannon-Stokes v. Potter, 453 F.3d 446 (7th Cir. 2006) (debtor who denies owning an asset cannot later realize on the concealed asset after bankruptcy)
- First Nat’l Bank v. Lasater, 196 U.S. 115 (1905) (early Supreme Court precedent condemning omission of valuable claims from bankruptcy schedules)
- Guay v. Burack, 677 F.3d 10 (1st Cir. 2012) (oral disclosure to trustee does not satisfy bankruptcy schedule requirements for notice to creditors)