Michael MILLER, Respondent,
v.
Charles CAMPBELL, as personal representative of the estate of Patrick W. Campbell, Petitioner.
Supreme Court of Washington, En Banc.
*353 Jo-hanna Gladness Read, Law Office of Jo-Hanna Read, Seattle, WA, for Respondent.
Rosemary Jane Moore, Lee Smart PS Inc., Seattle, WA, for Petitioner.
Bryan Patrick Harnetiaux, Attorney at Law, Spokane, WA, Kelby Dahmer Fletcher, Peterson Young Putra, Seattle, WA, Sarah C. Schreck, Attorney at Law, Portland, OR, Amicus Curiae on behalf of Washington State Trial Lawyers Association.
OWENS, J.
¶ 1 We originally granted review of this case to determine whether judicial estoppel should apply to prevent a plaintiff from pursuing a claim of childhood sexual abuse after he failed to disclose the claim as an asset in prior chapter 7 bankruptcy proceedings. However, after accepting review, we granted respondent Michael Miller's motion to substitute the bankruptcy trustee as the real party in interest in this case. The substitution fundamentally changed the posture of this case on review because judicial estoppel does not bar a bankruptcy trustee from pursuing a debtor's claim that was not disclosed during bankruptcy. This court now must determine whether judicial estoppel may still apply to prevent Miller, the bankruptcy debtor, from recovering any part of an award that the bankruptcy trustee might obtain from his claim.
¶ 2 We hold that the doctrine of equitable estoppel no longer applies in this case because the substitution of the trustee leaves Miller with no position to assert in state *354 court. His only ability to recover will arise if and when the trustee obtains a judgment and brings the award to bankruptcy court for distribution. At that point, Miller can seek recovery in bankruptcy court. The bankruptcy court will stand in the best position to consider Miller's interest.
Facts
¶ 3 Miller alleges that he was sexually abused by his stepfather, Patrick Campbell, from the time Miller was 11 years old until he was 18, between 1975 and 1984. Miller alleges that Campbell continually abused him during this period while Campbell lived with Miller and his mother.
¶ 4 Miller filed for chapter 7 bankruptcy in 1998. Those proceedings required him to disclose all of his personal property for administration in bankruptcy court. One schedule instructed him to list all "contingent and unliquidated claims of every nature, including tax refunds, counter claims of the debtor, and the rights to setoff claims." Clerk's Papers (CP) at 297. Under this category, Miller listed two assets: a small estimated tax refund and a possible "lemon law" claim against a car company. Id. He did not list a claim of sexual abuse against Campbell as an asset. The bankruptcy court found that Miller had no assets and discharged his entire debt, totaling $34,220.
¶ 5 Miller claims that he never told anyone about his sexual abuse until the time around Campbell's death in 2002, when his mother began talking to him about Campbell's health problems. He became upset at the mention of Campbell's name and eventually confided in his mother that Campbell had done more than physically beat him. Miller also contacted his half brother, Erik Campbell, during that period to talk about his abuse. Erik told Miller that Campbell also had abused him, and the two discussed the possibility of suing Campbell.
¶ 6 In March 2003, Miller filed a creditor's claim with Campbell's estate (the Estate) for $500,000, alleging physical, mental, and emotional damages caused by Campbell's abuse. The Estate rejected Miller's claim. Miller then filed a complaint in Snohomish County Superior Court against the Estate for various intentional torts arising from Campbell's alleged sexual abuse.
¶ 7 The Estate filed for summary judgment, claiming that the statute of limitations had run on Miller's claim against Campbell. Miller presented evidence that he was unaware of the connection between the abuse and his injuries, including posttraumatic stress syndrome, until after Campbell's death. See RCW 4.16.340 (statute of limitations for claims of childhood sexual abuse). The court denied the Estate's motion.[1] The Estate then moved for dismissal, claiming that Miller was estopped from pursuing his claim because he had failed to list the claim as an asset in his 1998 bankruptcy action. The trial court granted this motion and dismissed the action on grounds of judicial estoppel. Specifically, the court found that Miller knew he had been injured by the abuse at the time that he filed for bankruptcy, even though he may not have known the extent of those injuries. Verbatim Report of Proceedings at 25-26. Miller moved for reconsideration, claiming that while he knew he had been abused at the time he filed for bankruptcy, he did not understand the connection between the abuse and his injuries until he sought counseling. The court denied the motion for reconsideration.
¶ 8 Miller appealed the order of dismissal, and the Court of Appeals reversed the trial court's decision. The court affirmed that Miller had a duty to disclose his potential claim against Campbell in the bankruptcy proceedings. Miller v. Campbell,
¶ 9 Two days after the Court of Appeals issued its decision, the bankruptcy trustee moved to reopen Miller's bankruptcy case. The bankruptcy court granted the motion and appointed the trustee to administer Miller's claim as an asset of the bankruptcy estate. See Decl. of Virginia Burdette.
¶ 10 The Estate appealed to this court in June 2007. We granted review on March 4, 2008.
Analysis
I
¶ 11 We review a trial court's application of judicial estoppel under an abuse of discretion standard. Cunningham v. Reliable Concrete Pumping, Inc.,
II
¶ 12 We granted Miller's motion to substitute the bankruptcy trustee as the real party in interest in recognition of the bankruptcy court's order reopening Miller's bankruptcy to allow the trustee to pursue Miller's claim. See Bartley-Williams v. Kendall,
¶ 13 According to CR 17(a), every action must be prosecuted by the real party in interest. However, the rule goes on to state that:
No action shall be dismissed on the ground that it is not prosecuted in the name of the real party in interest until a reasonable time has been allowed after objection for ratification of commencement of the action *356 by, or joinder or substitution of, the real party in interest; and such ratification, joinder, or substitution shall have the same effect as if the action had been commenced in the name of the real party in interest.
CR 17(a). Furthermore, CR 15(c) generally allows amended pleadings to relate back to the date of original filing if the amendment relates to conduct, transaction, or occurrence in the original pleading. We have recently summarized that "the test for relation back under CR 17(a) and CR 15(c) is ... whether the defendant had notice of the lawsuit and accordingly was not prejudiced, and whether the real party plaintiff in interest ratified the lawsuit or sought to be substituted as plaintiff within a reasonable time after objection by the adversary." Kommavongsa v. Haskell,
¶ 14 This court has held that a plaintiff may amend a complaint to name the real party in interest even after the statute of limitations has run on a claim "where the only change is a change in the representative capacity in which suit is brought, and there is no prejudice to the defendant." Beal v. City of Seattle,
¶ 15 Following our precedent and the decisions of other courts regarding the substitution of a bankruptcy trustee, we hold that the substitution in this case should relate back to the time of the original filing. The Estate will not be prejudiced by relation back because the substitution changes only the representative capacity of the parties, not the nature of the claims against which the Estate must defend. See Sprague,
¶ 16 Furthermore, the motion for substitution was not untimely for purposes of relation back. In its opposition to Miller's motion to substitute, the Estate argued that Miller did not substitute the real party in interest within a reasonable time because he waited until after trial to move for substitution.[2] Answer of Pet'r to Mot. for Substitution of Real Party in Interest at 17-19. However, the reasonable time permitted for the substitution of the real party in interest relates to the period after an objection has been made for not prosecuting in the name of the real party. CR 17(a). Here, the Estate did not object to the absence of the trustee as the real party in interest at trial.[3] Instead, the Estate pursued a motion to dismiss for lack of standing on a theory of judicial estoppel, focusing on Miller's own personal claim. Therefore, the motion for substitution was not untimely raised after trial because the Estate failed to object to the absence of the bankruptcy trustee at trial.
¶ 17 For these reasons we order that the substitution of the bankruptcy trustee relate back to the time of the original filing.
*357 III
¶ 18 Next, we must consider what effect our decision to allow substitution of the bankruptcy trustee has on the trial court's order to dismiss on grounds of judicial estoppel. The Court of Appeals decision addressed the application of judicial estoppel only as to Miller because the issue of substitution did not arise until after that court entered its decision. Therefore, before we review the Court of Appeals decision we must determine whether judicial estoppel continues to have any application in this case in light of the substitution of the bankruptcy trustee as the real party in interest.
¶ 19 The doctrine of "`[j]udicial estoppel is an equitable doctrine that precludes a party from asserting one position in a court proceeding and later seeking an advantage by taking a clearly inconsistent position.'" Arkison v. Ethan Allen, Inc.,
(1) whether "a party's later position" is "`clearly inconsistent' with its earlier position"; (2) whether "judicial acceptance of an inconsistent position in a later proceeding would create `the perception that either the first or the second court was misled'"; and (3) "whether the party seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped."
Id. at 538-39,
¶ 20 We have recognized that judicial estoppel can be used to prevent a party from pursuing a claim that he or she had an obligation to disclose in bankruptcy and failed to do so. Id. at 539 ("Courts may generally apply judicial estoppel to debtors who fail to list a potential legal claim among their assets during bankruptcy proceedings and then later `pursue the claims after the bankruptcy discharge.'" (quoting Bartley-Williams,
¶ 21 While judicial estoppel may prevent a debtor from recovering for a previously undisclosed claim, we recently declined to apply the doctrine to prevent the bankruptcy trustee from pursuing a debtor's claim for the benefit of the bankruptcy estate. Id. at 541,
¶ 22 The bankruptcy trustee pursues the claim for the benefit of the bankruptcy estate, not the debtor, and therefore the trustee's position is not inconsistent with the debtor's own failure to disclose the claim in bankruptcy. Id. Indeed, preventing the bankruptcy trustee from pursuing a debtor's claim would harm the debtor's creditors and others who have an interest in the claim as part of the bankruptcy estate. See Bartley-Williams,
¶ 23 In this case, we granted Miller permission to substitute the trustee as the real party in interest because the bankruptcy court reopened Miller's bankruptcy action in order for the bankruptcy trustee to pursue his claim for the benefit of the bankruptcy estate. See id. at 101,
¶ 24 The Estate concedes that judicial estoppel cannot prevent the bankruptcy trustee from pursuing Miller's claim. Nevertheless, the Estate urges us to reverse the Court of Appeals because judicial estoppel can still bar Miller from ever seeking to recover from a judgment in this case. The Estate relies on Bartley-Williams, in which the Court of Appeals decided that judicial estoppel was inapplicable to prevent a bankruptcy trustee who had been substituted to pursue a debtor's claim on behalf of the bankruptcy estate but affirmed the trial court's application of the doctrine to bar the debtor from receiving any benefit from the suit in the event of a recovery.
¶ 25 We now hold that the doctrine of judicial estoppel generally has no application against a debtor when the bankruptcy trustee has been substituted as the real party in interest. As the bankruptcy trustee is the real party in interest, the claim belongs to the trustee who has the right to pursue the debtor's entire claim. See, e.g., Hammes,
¶ 26 This issue was examined in Cloud v. Northrop Grumman Corp.,
¶ 27 If the bankruptcy trustee obtains a judgment against the Estate, that award will become part of the bankruptcy estate and will be distributed in bankruptcy court in accordance with federal bankruptcy law. The bankruptcy court will be in the best position to determine Miller's right to recover damages in light of his initial failure to disclose the claim in bankruptcy court. See id. at 1021,
¶ 28 Our refusal to apply the judicial estoppel in this case will not impose an unfair detriment on the Estate. As the substitution allows the bankruptcy trustee to pursue Miller's claim as if pursued by Miller himself, the Estate already is exposed to full liability for the alleged sexual abuse claim. See id. ("Once the trustee has either abandoned the claim or substituted in, no possibility of unfair advantage is apparent."). In essence, the Estate asks us to use judicial estoppel to limit its liability to the extent that Miller would receive any benefit from a judgment. However, the doctrine of judicial estoppel protects the integrity of the judicial process, not the interest of a defendant attempting to avoid liability. Ryan Operations G.P. v. Santiam-Midwest Lumber Co.,
¶ 29 The substitution of the bankruptcy trustee eliminates Miller's interest in this case and allows the trustee to pursue Miller's claim in the trial court. The substitution of the bankruptcy trustee leaves us no opportunity to review the Court of Appeals decision in this case. Therefore, we vacate the trial court's order of dismissal and remand for further proceedings.
WE CONCUR: GERRY L. ALEXANDER, C.J., CHARLES W. JOHNSON, BARBARA A. MADSEN, RICHARD B. SANDERS, TOM *360 CHAMBERS, MARY E. FAIRHURST, JAMES M. JOHNSON, JJ., and JOEL M. PENOYAR, J. Pro Tem.
NOTES
Notes
[1] The Estate also filed a second motion for summary judgment based on the dead man statute. See RCW 5.60.030. The court denied that motion as well, finding that the Estate waived protection under the statute by failing to object to the admission of Miller's deposition regarding the abuse. Miller filed his own motion for partial summary judgment as to liability. The court denied the motion because Campbell's death prevented the Estate from procuring an affidavit to defend its position.
[2] Miller maintains that he did not move to substitute the bankruptcy trustee at trial because the nature of his injuries did not manifest until after the bankruptcy case was dismissed. He moved to substitute only after the Court of Appeals expressly rejected this theory and held that he had a duty to disclose his claim in bankruptcy court. Miller,
[3] While the Estate pointed out that the bankruptcy trustee had not been "given the opportunity to participate in these proceedings in any way," Br. of Resp't to Amicus at 2, it could have objected to the trustee's absence at trial.
[4] In Arkison, we did not apply the elements relating to privity, originally established in Markley v. Markley,
[5] While the Cloud court referred to the status of the real party in interest as an issue of standing, courts have distinguished between these terms. See Dunmore,
[6] Federal courts have applied the doctrine of judicial estoppel in bankruptcy cases. See Coastal Plains,
[7] The Estate cites to Lopez in support of its argument that the trial court is the appropriate forum to apply judicial estoppel against the debtor. However, the issue in Lopez concerned only whether judicial estoppel should prevent the bankruptcy court from reopening a bankruptcy case in order for the trustee to pursue the debtor's previously undisclosed claim. While the bankruptcy court declined to use judicial estoppel to prevent the trustee from reopening the case, it speculated that the trial court could determine whether judicial estoppel should limit the recovery of the claim beyond what was necessary to pay the bankruptcy creditors. Lopez,
