STATE OF NEW JERSEY VS. CHARLES P. MCCOY(11-03-0187, CUMBERLAND COUNTY AND STATEWIDE), A-5467-14T1

On Sept. 13, 2011 Lorraine Bryant was injured as a passenger in a truck driven by John H. Goven; she sought PIP and UM benefits under her mother’s auto policy and sued Goven for tort damages.
Plaintiff had no auto or health insurance; she collected $10,000 from Goven’s minimal policy and later applied to her mother’s policy for benefits in Aug. 2013.
Plaintiff filed Chapter 7 bankruptcy on June 7, 2013 and did not list the accident-related claim on her schedules; she received a discharge and the bankruptcy case was closed in Sept. 2013.
In Feb. 2015 plaintiff moved for declaratory relief and summary judgment asserting she was a resident relative in her mother’s household and timely notified the insurer; defendants moved for summary judgment asserting judicial estoppel/Trustee ownership and other defenses.
The trial court denied plaintiff’s summary judgment, granted defendants’ cross-motion and dismissed plaintiff’s claims as judicially estopped for failure to disclose in bankruptcy; the court later entered a $400,000 default judgment against Goven after a proof hearing with no notice to insurers.
The Appellate Division vacated the dismissal, holding the Trustee (not the trial court) should be given notice/opportunity to decide whether to pursue the claim; it affirmed that insurers were not in privity with Goven because they received no notice of the proof hearing and therefore may relitigate damages.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Standing to sue for accident-related claims	Bryant has a financial interest (exemption and possible abandonment) and may prosecute	Claims are part of bankruptcy estate; only Trustee has standing	Bryant has standing to pursue; but Trustee owns estate claims and must be notified so it can decide whether to pursue them
Dismissal by judicial estoppel for failure to disclose in bankruptcy	Dismissal was premature; case can be reopened and Trustee notified later	Nondisclosure bars prosecution; judicial estoppel applies	Dismissal was premature—trial court should have notified Trustee and allowed Trustee to decide; dismissal vacated
Summary judgment on insured status (household/resident)	Bryant lived with her mother and is a resident relative under the policy	Insurers say plaintiff failed to prove household membership	Genuine issue of material fact exists as to whether Bryant was a household resident; summary judgment properly denied
Validity/effect of proof hearing/default judgment against Goven without insurer notice	Plaintiff proceeded to judgment; insurers argue they were entitled to notice and should be bound	Insurers contend lack of notice undermines preclusive effect; should vacate judgment vis-à-vis insurers	Insurers were not given notice and therefore are not in privity with Goven for preclusion; they may relitigate damages in future UM proceedings; default judgment against Goven need not be vacated

Grogan v. Garner, 498 U.S. 279 (U.S. 1991) (bankruptcy discharge and fresh-start purpose)
Ryan Operations G.P. v. Santiam-Midwest Lumber Co., 81 F.3d 355 (3d Cir. 1996) (judicial estoppel doctrine and limits on inconsistent positions)
Kimball Int'l, Inc. v. Northfield Metal Prods., 334 N.J. Super. 596 (App. Div. 2000) (judicial estoppel is an extraordinary remedy to prevent injustice)
Zirger v. Gen. Accident Ins. Co., 144 N.J. 327 (N.J. 1996) (insured must notify UM/UIM carrier of suit to create carrier’s privity with tortfeasor)
Vaccaro v. Pa. Nat'l Mut. Cas. Ins. Co., 349 N.J. Super. 133 (App. Div. 2002) (lack of carrier notice precludes claim/issue preclusion against insurer)