WOLFORK et al. v. TACKETT et al.
A99A1602
Court of Appeals of Georgia
December 3, 1999
Reconsideration Denied December 20, 1999
241 Ga. App. 633 | 526 S.E.2d 436
Ellington, Judge.
Gеorgia applies the federal doctrine of judicial estoppel to preclude the prosecution of unliquidated tort claims that discharged debtors failed to list as assets in their federal bankruptcy petitions. Southmark Corp. v. Trotter, Smith &c., 212 Ga. App. 454, 455-456 (442 SE2d 265) (1994). The question in this appeal is whether a debtor‘s failure to supplement a Chapter 13 bankruptcy petition or to reopen the bankruptcy proceedings so as to list a cause of action accruing after the filing оf the petition but before the discharge of the bankruptcy precludes the debtor from pursuing the cause of action in a Georgia state court.
In August 1994, Lucille Wolfork filed a Chapter 13 bankruptcy petition. In November 1995, she and her daughter allegedly suffered injuries in a collision involving autos driven by Tackett and Dunn. On behalf of herself and her daughter, Wolfork sued them in October 1997 for negligence. After the bankruptcy was discharged in March 1998, Dunn moved for summary judgment on Wolfork‘s personal claim on grounds of judicial estoppel. Finding Wolfork had not supplemented her petition or moved to reopen the bankruptcy so as to list the cause of action as an asset of the estate, the trial court granted summary judgment to Dunn.
All legal and equitable interests of the debtor in property as of the filing of the bankruptcy petition are considered property of the bankruptcy estate.
Explaining the federal doctrine of judicial estoppel, Southmark stated that a party may not assert a position in a judicial proceeding which is inconsistent with a position successfully asserted by it in a prior proceeding. Id. at 455. The failure to disclose an asset (such as a cause of action) in a bankruptcy prоceeding amounts to a denial that such a claim exists and bars subsequent attempts to pursue it. Id. at 456. Accordingly, the Court in Southmark affirmed summary judgment in favor of the alleged tortfeasor where the claim, having arisen pre-petition, had not been listed in the schedule of assets in the plaintiff‘s Chapter 11 bankruptcy petition. Accord Byrd, 225 Ga. App. at 508 (failure to list pre-petition tort claim in Chapter 13 petition is grounds for summary judgment).
In a Chapter 13 bankruptcy case, property of the estate also includes all property acquired by the debtor during the bankruptcy proceeding.
The duty to amend Chapter 13 bankruptcy schedules is clear. A debtor may not conceal property belonging to the estate.
Distinguishable are those cases where the debtor moved to reopen the bankruptcy proceeding to amend the asset schedule to include the tort claim, for then the proceeds of the claim would have inured to the benefit of the creditors, and the inconsistency of declaring that no such asset existed would have been cured through amendment. Clark v. Perino, 235 Ga. App. 444, 445-446 (1) (509 SE2d 707) (1998); see Moore v. Bank of Fitzgerald, 225 Ga. App. 122, 124 (1) (483 SE2d 135) (1997); Johnson v. Trust Co. Bank, 223 Ga. App. 650, 651-652 (478 SE2d 629) (1996). Wolfork did not attempt to reopen the case, even though the bankruptcy court had the discretion to grant a reopening under
Because of the potential impact on monetary claims, litigation and bankruptcy attorneys should carеfully review the principles set forth in this opinion and act accordingly.
Judgment affirmed. Johnson, C. J., McMurray, P. J., and Ruffin, J., concur. Andrews, P. J., and Blackburn, P. J., concur fully with the majority and specially, joined by Ellington, J. Barnes, J., dissents.
I concur fully in the opinion and analysis of the majority. I write separately, however, to address issues raised by the dissent, which overlooks both precedent and evidentiary requirements to reach what it deems to be the most equitable result.
Neither of the reasons given by the dissent for reversing the trial court is supported by law or fact in this case. The dissent argues that the plaintiff should be relieved of the consequences of not fulfilling her mandatory duty to update her bankruptcy petition because no evidence in the record shows that the plaintiff successfully asserted a position on her personal injury claim in the bankruptcy proceedings. To reach this conclusion, the dissent makes a series of unfounded assumptions. First, the dissent assumes that no evidence was admitted by the trial court during the summary judgment hearing in this case, despite the fact that the appellant failed to provide this Court with a transcript of that hearing. Then, based on this general assumption, the dissent more specifically assumes that the trial court never received evidence relating to the contents of the bankruptcy pleadings, including the confirmation plan. Next, the dissent theorizes what the terms of the confirmation plan, which may or may not have been placed before the trial court, might have been, and, on the basis of this speculated plan, the dissent reverses the decision of the trial court.
This analysis is problematic. As we have long held,
[w]hen an appellant omits evidence necessary for determination of issues on appeal[,] affirmation is required. It is well established that the burden is on the party alleging error to show it by the record and that whеre the proof necessary for determination of the issues on appeal is omitted from the record, an appellate court must assume that the judgment below was correct and affirm.
(Citation and punctuation omitted.) Griffin v. Travelers Ins. Co., 230 Ga. App. 665, 666 (497 SE2d 257) (1998).
Under these circumstances, we must rely on the presumption in favor of the regularity of all proceedings in a court of competent jurisdiction (Siegal v. Gen. Parts Corp., 165 Ga. App. 339 (301 SE2d 292) (1983)), assume that the evidence was sufficient to support the trial court‘s ruling, and affirm the judgment. Acker v. Jenkins, 178 Ga. App. 393, 394 (343 SE2d 160) (1986). See also Thomas v. Bartlett, 183 Ga. App. 412 (359 SE2d 156) (1987). When there is nothing in thе record to support the contention of error, there is nothing
(Punctuation omitted.) City of Atlanta v. Starke, 192 Ga. App. 267, 268-269 (1) (c) (384 SE2d 419) (1989).
In reaching its opinion, the dissent not only fails to presume the regularity of the proceedings below, but it speculates what the evidence could possibly show and presumes that the trial court acted improperly on the basis of this imagined evidence. The result is that, although the burden on appeal belongs to the appellant, the dissent construes evidentiary omissions in the аppellate record to benefit the appellant and hinder the appellee. This result is inapposite to our review of cases on appeal, and, as such, it cannot provide a basis for reversal of the trial court.
To support its position, the dissent cites Seamans v. True, 247 Ga. 721 (279 SE2d 447) (1981). Contrary to the dissent‘s position, Seamans is factually distinguishable and does not require a different result in this case. In Seamans, the Supreme Court held:
The trial court‘s order granting the defendants’ motion for summary judgment states that the grant was based upon the pleadings of the parties and the affidavit of Arthur True. Accordingly, we do not assume that evidence was presented at the motion for summary judgment hearing.
(Emphasis supplied.) Id. at 723. Therefore, in Seamans, the trial court limited its review to specifically enumerated and distinct pieces of evidence. In this case, on the other hand, the trial court‘s order states that its findings were based upon “argument and citations of authority.” The dissent argues, therefore, that the trial court did not consider other documents or testimony. Contrary to the dissent‘s contentions, the trial court in this case did not state that it was limiting its decision to matters in the record, as implied by the dissent. At the summary judgment hearing, the trial court may have properly considered documents which were never formally introduced into evidence or included in the appellate record, as well as testimony which may have included admissions or stipulations and other such items not before us. That is why the burden lies with the appellant to provide a transcript of the hearing or otherwise establish what occurred at the hearing. The record may also be shown as provided in
Alternatively, the dissent concludes that the trial сourt must be reversed because an issue of fact remains as to whether the plaintiff intentionally asserted a contradictory position in her bankruptcy pleadings. While the dissent correctly indicates that the failure to disclose an accrued cause of action when initially filing for bankruptcy must be treated as a denial that the claim exists, it argues, without citation to any authority, that a different standard should be applied to claims acquired after the initial pleadings are made. In the latter situation, the dissent proposes to apply judicial estoppel to those making affirmative misrepresentations but not to those who passively fail to supplement their bankruptcy petitions. This distinction, however, is not supported by precedent.
In Southmark Corp. v. Trotter, Smith &c., 212 Ga. App. 454, 455-456 (442 SE2d 265) (1994), a case involving a filing under Chapter 11 of the Bankruptcy Code, this Court discussed the necessity to strictly enforce reporting procedures in bankruptcy cases.
These cases involve primarily the obligation placed upon the debtor in a Chapter 11 bankruptcy case to file a list of assets in which it must disclose any litigation which might arise from pre-bankruptcy matters. Compliance with disclosure requirements is essential to maintaining a bankruptcy case. In re Roberts, 117 B.R. 677; In re Hubbard, 96 B.R. 739. In the light of the stringent disclosure requirements under Chapter 11, the failure to disclose such information is viewed as amounting to a deniаl that such claims exist. This de facto denial triggers the application of several types of issue preclusion to bar subsequent attempts to prosecute such actions. See Oneida Motor Freight v. United Jersey Bank, 848 F2d 414; Westland Oil Dev. Corp. v. MCORP Mgmt. Solutions, 157 B.R. 100, 102; In re Standfield, 152 B.R. 528.
The mere fact that a cause of action accrues after the initial filing of a bankruptcy petition is not a sufficient reason to modify our application of judicial estoppel. Whether the property is acquired before or after thе initial filing, the duty imposed on a debtor to disclose it remains the same, and compliance with disclosure requirements after the initial filing remains crucial to the maintenance of a bankruptcy case. Southmark, supra. The dissent provides neither a compelling reason for contravening the historical adherence to disclosure compliance nor any distinctions in federal law relating to such compliance which would support the result it esрouses.
I am authorized to state that Presiding Judge Andrews and Judge Ellington join in this special concurrence.
BARNES, Judge, dissenting.
I respectfully dissent.
The purpose and justificаtion for judicial estoppel are “to prevent the use of intentional self-contradiction as a means of obtaining unfair advantage in a forum provided for suitors seeking justice.” (Punctuation omitted; emphasis supplied.) Southmark Corp. v. Trotter, Smith &c., 212 Ga. App. 454, 455 (442 SE2d 265) (1994). It is “directed against those who would attempt to manipulate the court system through the calculated assertion of divergent sworn positions in judicial proceedings.” (Punctuation omitted; emphasis supplied.) Johnson v. Trust Co. Bank, 223 Ga. App. 650, 651 (478 SE2d 629) (1996). Finally, it can be applied only to preclude “a party from asserting a position in a judicial proceeding which is inconsistent with a position previously successfully asserted by it in a prior proceeding.” (Emphasis supplied.) Southmark, supra, 212 Ga. App. at 455.
We should not apply judicial estoppel in this case for two reasons: (1) no evidence shows a previous position successfully asserted by the plaintiff; and (2) an issue of fact exists as to whether the plaintiff intentionally asserted a contradictory position.
The first reason precluding the appliсation of judicial estoppel is rooted in the evidentiary burden placed on a party moving for summary judgment. If a defendant moves for summary judgment based upon a defense, as opposed to a lack of evidence supporting an essential element of the plaintiff‘s case, the defendant must provide the trial court with evidence supporting application of the defense.1 See
A de novo standard of review applies to an appeal from a grant of summary judgment, and we view the evidence, and all reasonable conclusions and inferences drawn from it, in the light most favorable to the nonmovant. Rice v. Huff, 221 Ga. App. 592, 593 (472 SE2d 140) (1996). In this case, we have been provided with the entire record of the evidence before the trial court at the time it ruled on the defendant‘s summary judgment motion.3 This record fails to show an essential requirement for application of judicial estoppel — that the plaintiff‘s previous position was successfully asserted. Evidence that a plaintiff‘s Chapter 13 bankruptcy case has been discharged, does not, standing alone, establish that the plaintiff “successfully asserted” an inconsistent position in the bankruptcy. A debtor‘s confirmation plan could require a debtor to pay her creditors 100 percent of the money owed; in this circumstance, a failure to disclose a personal injury action would not benefit the debtor or harm the creditors. See, e.g., Donato v. Metro. Life Ins. Co., 230 B.R. 418, 424 (N.D. Cal. 1999); Elliott v. ITT Corp., 150 B.R. 36, 39 (N.D. Ill. 1992).
Federal courts recognize the necessity of the debtor‘s “success” in this context and refuse to apply judicial estoppel when a Chapter 13 confirmation plan requires the debtor to pay 100 percent of the debt owed. Elliott, supra, 150 B.R. at 39. We should follow their lead and refuse to presume, as a mаtter of law, that a Chapter 13 bankruptcy discharge, standing alone, fulfills the defendant‘s burden of proving the plaintiff‘s successful assertion of an inconsistent position.
The defendants note the absence of a transcript оf the hearing on the motion for summary judgment and argue that this court must assume that evidence was presented at said hearing and that such evidence was sufficient to support the trial court‘s grant of summary judgment. The trial court‘s order granting the defendants’ motion for summary judgment states that the grant was based upon the pleadings of the parties and the affidavit of Arthur True. Accordingly, we do not assume that evidence was presented at the motion for summary judgment hеaring. This argument is without merit.
In this case, the order granting summary judgment to the defendant states that the trial court‘s findings were based upon “argument and citations of authority,” not evidence submitted during the hearing. It does not recite facts supporting the conclusion that Wolfork successfully asserted an inconsistent position in her Chapter 13 bankruptcy and neglects to analyze this prerequisite to the application of judicial estoppel. The only facts recited by the trial court are those included in the written arguments submitted to it by the parties. Under these circumstances, we cannot assume evidence was presented at the summary judgment hearing that supports a conclusion that is not contained in the trial court‘s written order granting summary judgment. Id.
The facts and circumstances of this case are distinguishable from cases in which the trial court‘s order demonstrates that it relied upon evidence not included in the record on appeal, when it ruled on a summary judgment motion. See, e.g., Lee v. Trust Co. Bank, 204 Ga. App. 28, 29 (2) (418 SE2d 407) (1992) (trial court‘s order recites that evidence was presented at the summary judgment hearing, and the hearing transcript was not part of the record on appeal); Ga. Recovery v. Danley, 215 Ga. App. 236, 238 (2) (450 SE2d 263) (1994) (trial court‘s order shows that evidence was presented at the summary judgment hearing, and the hearing transcript was not part of the record on appeal).
The defendant has apparently recognized the problem caused by her failure to meet her burden of proof below. After the plaintiff filed her notice of appeal on March 11, 1999, the defendant filed a “Sup-
Because the defendant failed to meet her burden of proving the “success” component of judicial estoppel, the trial court erred when it concluded this doctrine barred the plaintiff‘s claim. Our analysis does not end here, however, because judicial estoppel should not have been applied for a second, alternative reason.
In this case, we are addressing, for the first time,4 whether a debtor‘s failure to supplement her bankruptcy petition to disclose a personal injury cause of action that accrues over a year after she filed the bankruptcy petition warrants the application of judicial estoppel as a matter of law. When analyzing this issue, we must keep in mind the purpose behind judicial estoppel — preventing intentional or calculated “assertion of divergent sworn positions.” Johnson, supra, 223 Ga. App. at 651. See also Southmark, supra, 212 Ga. App. at 455.
It is well established that a failure to disclose an accrued cause of action in response to a direct question should be treated as a denial that the claim exists and, thus, a “position” for purposes of judicial estoppel. Southmark, 212 Ga. App. at 456; Byrd v. JRC Towne Lake, Ltd., 225 Ga. App. 506, 507-508 (484 SE2d 309) (1997). These cases, however, do not govern the result in this case because the plaintiff honestly answered the direct question put to her in her Chapter 13 petition.
Although she did have a duty to later supplement her bankruptcy petition to include the after-acquired cause of action, Chandler v. Samford Univ., 35 FSupp.2d 861, 864 (N.D. Ala. 1999), we should draw a distinction between affirmative misrepresentations and passive failures to supplement for purposes of judicial estoрpel. An affirmative misrepresentation about an existing cause of action supports the inference, as a matter of law, that the person making
Justice will not be served by automatically punishing a party who honestly represented that she had no personal injury causes of action at the time she filed a bankruptcy petition. Instead, a windfall is bestowed upon an undeserving party. While it is true that we are not “a court of equity” with power, for example, to issue injunctions, the principles of justice and equity should guide us when carrying out our duty to apply the law to the facts before us.
For the above-stated reasons, I respectfully dissent from the majority opinion.
DECIDED DECEMBER 3, 1999 —
RECONSIDERATION DENIED DECEMBER 20, 1999 —
Graylin C. Ward, for appellants.
Cobb & Walton, Bobby L. Cobb, Harper, Waldon & Craig, Russell D. Waldon, Janice M. Wallace, Jonathan M. Adelman, for appellees.