Stephenson Ex Rel. Al-Mansoob v. Malloy
700 F.3d 265
6th Cir.2012Background
- Al-Mansoob sued Malloy and Wilburn Archer Trucking for negligence in July 2009; Malloy drove a truck owned by Wilburn Archer Trucking.
- Al-Mansoob filed for Chapter 7 bankruptcy on Sep 30, 2009 and did not disclose this suit in schedules; he did disclose a State Farm suit arising from the same accident.
- Bankruptcy discharge entered March 3, 2010.
- Defendants moved for summary judgment in July 2010, arguing judicial estoppel under Browning v. Levy; trustee later substituted as real party in interest.
- District court granted summary judgment and later substituted trustee as real party in interest; trustee appealed arguing no estoppel against him and inadvertence may apply.
- On appeal, court held the trustee is not barred by judicial estoppel and that undisclosed claims may be inadvertent; remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can a bankruptcy trustee be barred by judicial estoppel for debtor’s nondisclosure | Trustee should not be barred; no inconsistent positions by the trustee | Estoppel applies to debtor’s nondisclosure controlling the action | No; trustee not barred by judicial estoppel |
| Whether the omission was inadvertent under White v. Wyndham | Omission is inadvertent due to trustee's knowledge and communications | Omission was not inadvertent and shows bad faith | Evidence supports inadvertence; not dispositive of bad faith |
| Whether White’s bad-faith element controls here | White supports bad-faith finding against debtor | White is distinguishable and not controlling against trustee | White distinguished; adverse bad-faith finding not required for trustee |
| Whether the district court erred by not considering late supplemental evidence | Late affidavits showing trustee’s knowledge were material | Untimely submissions should be struck | Court could consider supplemental evidence; not error to do so |
| Whether remand is appropriate to address the governing estoppel issue | Remand will allow proper evaluation of inadvertence and trustee’s knowledge | Premature to remand after summary judgment | Remand warranted for further proceedings to resolve estoppel issue |
Key Cases Cited
- Browning v. Levy, 283 F.3d 761 (6th Cir. 2002) (three-prong test for judicial estoppel in bankruptcy context)
- White v. Wyndham Vacation Ownership, Inc., 617 F.3d 472 (6th Cir. 2010) (bad-faith inquiry added to inadvertence prong; informs disclosure duty)
- Reed v. City of Arlington, 650 F.3d 571 (5th Cir. 2011) (trustee can pursue assets not disclosed by debtor in certain circumstances)
- Eubanks v. CBSK Financial Group, Inc., 385 F.3d 894 (6th Cir. 2004) (context for bad-faith and inadvertence considerations)
- Lewis v. Weyerhaeuser Co., 141 F. App’x 420 (6th Cir. 2005) (bad-faith/absence-of-bad-faith considerations in estoppel analysis)
- Parker v. Wendy’s Int’l, Inc., 365 F.3d 1268 (11th Cir. 2004) (trustee independence in bankruptcy estoppel contexts)