Plаintiffs-appellants Stuart and Lisa Phillips Kane and trustee-appellant Aaron Caillouet appeal the district court’s grant of summary judgment for defendants-ap-pellees on the grounds that the Kanes were judicially estopped from pursuing their personal injury action after failing to include it in their Chapter 7 bankruptcy schedules, and consequently that the trustee’s motion to be substituted for the Kanes in that action was moot, relying entirely on our decision in
Superior Crewboats, Inc. v. Primary P & I Underwriters (In re Superior Crewboats, Inc.),
I. FACTUAL AND PROCEDURAL BACKGROUND
On April 18, 2002, Stuart Kane was involved in a car accident with a vehicle driven by Daniel Comstock while Com-stock allegedly was acting in the course and scope of his employmеnt with Qwest Communications (“Qwest”). On July 19, 2002, Stuart and Lisa Kane (the “Kanes”) filed this lawsuit in Louisiana state court seeking damages from Comstock and Qwest (collectively, “Defendants”), and Qwest’s insurer, National Union Fire Insurance Company, 1 arising out of the car accident. On October 13, 2005, while their lawsuit was pending in state court, the Kanes filed a Chаpter 7 bankruptcy. They failed to list their personal injury claim on the relevant bankruptcy schedules as is required. The Kanes’ bankruptcy trustee, Aaron Caillouet (the “Trustee”), was never informed of the claim during the pendency of the bankruptcy proceedings. On March 13, 2006, the Kanes’ bankruptcy resulted in a no-asset disсharge.
On July 10, 2006, Defendants filed a motion for summary judgment in state court arguing that the Kanes should be judicially estopped from pursuing their lawsuit due to their failure to list it as an asset in their bankruptcy proceedings. Subsequently, the Kanes filed a motion in the bankruptcy court to reopen their bankruptcy proceedings so that the Trustee could administer this previously undisclosed lawsuit and other undisclosed debts on behalf of the estate and the creditors, which Defendants opposed. The bankruptcy court granted the Kanes’ motion to reopen on September 28, 2006.
Defendants removed the case to federal court on Octobеr 20, 2006, invoking the federal district court’s “related to” bankruptcy jurisdiction under 28 U.S.C. §§ 1334(c)(2) and 1452. On November 22, 2006, Defendants moved for summary judgment in federal district court, again arguing that the Kanes should be judicially estopped from pursuing their claim as a matter of law, citing this court’s decision in
In re Superior Crewboats, Inc.,
II. STANDARD OF REVIEW
“We review a grant of summary judgment dе novo, viewing all evidence in the light most favorable to the nonmoving party and drawing all reasonable inferences in that party’s favor.”
In re Katrina Canal Breaches Litig.,
We also review for abuse of discretion a district court’s denial of a motion to substitute the trustee for the debtor as the party plaintiff.
Wieburg v. GTE Sw. Inc.,
III. DISCUSSION
The district court relied on this court’s decision in
In re Superior Crewboats, Inc.,
A. Background Legal Principles
Pursuant to the Bankruptcy Code, debtors are under a continuing duty
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to disclose all pending and potential claims. 11 U.S.C. § 521(1);
In re Coastal Plains, Inc.,
It is not serendipitous that the Bankruptcy Code has an explicit provision that prevents the loss of assets that a debtor fails to disclose in [bankruptcy [schedules. It happens all the time, especially with claims. And when it does, cases are routinely reopened, in accordance with the statute, to administer those assets.
In re Miller,
Section 541 of the Bankruptcy Code provides that virtually all of a debt- or’s assets, including causes of action belonging to the debtor at the commencement of the bаnkruptcy case, vest in the bankruptcy estate upon the filing of a bankruptcy petition. 11 U.S.C. § 541(a)(1);
In re Swift,
“Once an asset becomes part of the bankruptcy estate, all rights held by the debtor in the asset are extinguished unless the asset is abandoned” by the trustee to the debtor pursuant to § 554.
2
Parker v. Wendy’s Int'l, Inc.,
“Judicial estoppel is a common law doctrine that prevents a party from assuming inconsistent positions in litigаtion.”
In re Superior Crewboats, Inc.,
We have recognized three particular requirements that must be met in order for judicial estoppel to operate: “(1)
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the party is judicially estopped only if its position is clearly inconsistent with the previous one; (2) the court must have aсcepted the previous position; and (3) the non-disclosure must not have been inadvertent.”
Id.
at 335 (citations omitted). In the context of judicial estoppel, “inadvertence” requires either that “the debtor ... lacks knowledge of the undisclosed claim[ ]
or
has no motive for [its] concealment.”
Id.
(emphasis in original). In this circuit, we have applied judicial еstoppel to bar an unscheduled claim when others, the debtors or other insiders, would benefit to the detriment of creditors if the claim were permitted to proceed.
See id.; In re Coastal Plains, Inc.,
B. Application to the Case at Bar
The district court held as a matter of law that our decision in
In re Superior Crewboats, Inc.,
In In re Superior Crewboats, Inc., we were asked only to consider whether debtors could pursue claims for thеir own benefit that they failed to disclose in their bankruptcy schedules. Id. at 334. In that case, one of the debtors was allegedly injured disembarking a ship owned and operated by the defendant. Id. at 333. Subsequently, he and his wife filed for Chapter 13 bankruptcy and failed to disclose their potential claim. Id. While their bankruptcy cаse was pending, the debtors sued the defendant in state court without amending their bankruptcy schedules to include the claim. Id. The debtors’ bankruptcy was converted from Chapter 13 to Chapter 7. Id. And, at the creditors’ meeting required under 11 U.S.C. § 341, the debtors told the bankruptcy trustee about their claim against the defendant, but reprеsented that it was proscribed by the statute of limitations. Id.
Shortly after the meeting, the trustee formally abandoned the claim pursuant to 11 U.S.C. § 554,
id.,
and the interest in the claim reverted to the debtors as though the bankruptcy had never been filed,
see
§ 554; 5 CollieR on BaNKruptcy § 554.02[3];
see also In re Lair,
There, because the trustee had abandoned the claim, he was not the real party in interest and was not entitled to be substituted as such. Rather, following the trustee’s abandonment, the interest in the claim had reverted to the debtors, who then stood to collect a windfall from their failure to schedule the asset at the expense *387 of their creditors. In the case before us, the Kаnes’ personal injury claim became an asset of their bankruptcy estate when they filed their Chapter 7 petition. The Trustee became the real party in interest in the Kanes’ lawsuit at that point and never abandoned his interest therein. Thus, unlike in In re Superior Crewboats, Inc. — where the debtors stood to benefit directly from pursuing their claim at the expense of their creditors, and the district court’s dismissal of the claim against the debtors mooted the trustee’s motion to substitute as a matter of law — here, the Trustee is the real party in interest and has reopened the Kanes’ Chapter 7 bankruptcy to pursue the Kanes’ claim for the benefit of the estatе’s creditors.
Moreover, the Kanes stand to benefit only in the event that there is a surplus after all debts and fees have been paid. As the bankruptcy court aptly observed in
In re Miller,
“There is a statutorily explicit difference between cases in which property is not listed in the [bankruptcy [schedules but is disclosed and administеred (as in the
Superior Crewboats
case ...) and the instant case in which property was not disclosed and was not administered.”
Similarly, neither does it follow from our decision in
In re Coastal Plains, Inc.,
Coastal [Plains, Inc.] avoided paying its debts by filing bankruptcy. Yet [Industrial Clearinghouse, Inc.], formed by Coastal’s CEO, purchased Coastal’s assets, including the undisclosed $10 million claim against [the defendant], for only $1.24 million, and continued to sell [the defendant’s] former inventory at discounted prices, then obtained a net judgment of $3.6 million against [the defendant] on the undisclosed claims. For facts similar to those at hand, the bankruptcy court’s interpretation of the “inadvertence” exception for judicial es-toppel [(accepting reliance on the advice of counsel as an excuse for failing to schedule the claim in bankruptcy)] would encourage bankruptcy debtors to conceal claims, write off debts, purchase debtor assets at bargain prices, and then sue on undisclosed claims аnd possibly recover windfalls ....
Needless to say, judicial estoppel is intended to prevent just such a process.
Id. at 213.
In this ease, no such equitable concerns inhere. Rather, the only way the Kanes’ creditors would be harmed is if judicial estoppel were applied to bar the Trustee from pursuing the claim agаinst Defendants on behalf of the estate. In this case, equity favors the Trustee. For as Judge Easterbrook noted in a Seventh Circuit case suggesting that a bankruptcy trustee should be able to pursue a claim on behalf of the creditors that the debtor himself would be judicially estopped from pursuing:
[The debtor’s] nondisclosurе in bankruptcy harmed his creditors by hiding assets from them. Using this same nondisclosure to wipe out [the debtor’s claim against the defendant] would complete the job by denying creditors even the *388 right to seek some share of the recovery. Yet the creditors have not contradicted themselves in court. They were not awаre of what [the debtor] has been doing behind their backs. Creditors gypped by [the debtor’s] maneuver are hurt a second time by the district judge’s decision. Judicial estoppel is an equitable doctrine, and using it to land another blow on the victims of bankruptcy fraud is not an equitable application.
Biesek v. Soo Line R.R. Co.,
With respect to Defendants’ argument that even if the Kanes’ claim is not barred by judicial estoppel, our decision in
Wieburg,
IV. CONCLUSION
For the reasons stated above, we hold that
In re Superior Crewboats, Inc.,
Notes
. National Union Fire Insurance Company was dismissed from the Kanes’ personal injury action on January 6, 2005, prior to Qwest’s removal of this case to federal court.
. Property may also be exempted from the bankruptcy estate notwithstanding § 541, see § 522(b), but the exemption provisions are not at issue in this case.