Tuesday, July 14, 2009

JUDICIAL ESTOPPEL DID NOT BAR PERSONAL INJURY CLAIM

Ferguson v. Building Materials Corp. of America (Tex. 2009)

JUDICIAL ESTOPPEL HELD INAPPLICABLE

In this summary judgment appeal, the Texas Supreme Court holds that the Plaintiffs should not be prevented (estopped) from pursuing a personal injury claim against the Defendant because they had not included their cause of action as an asset in their bankruptcy. The omission appears to have been inadvertent as the Plaintiffs had disclosed the law suit in other bankruptcy court filings. The error was apparently corrected and no prejudice was caused thereby to an adverse party. Nor did the Plaintiffs benefit from the conduct which the Defendant made the basis of its motion for summary judgment on estoppel grounds. The Court accordingly disapproved the trial court's grant of summary judgment based on judicial estoppel, reversed it, and sent the case back to the trial court.

FROM THE PER CURIAM OPINION:

At issue in this appeal is whether the plaintiffs in a personal injury suit should be estopped from pursuing their claim because they initially omitted it as a listed asset in a pending bankruptcy.The court of appeals, in a divided opinion, concluded that the doctrine of judicial estoppel should apply and affirmed the trial court’s dismissal of the plaintiffs’ personal injury claim. 276 S.W.3d 45.

The court of appeals reasoned that the doctrine applied because of the plaintiffs failure to add the personal injury claim as an asset in their bankruptcy proceeding before the personal-injury defendant pointed out the omission and moved for dismissal.

Because we disagree that the doctrine is invoked under the circumstances of this case, we reverse and remand the personal injury claim to the trial court.
* * *
A few months after filing the personal injury suit against Building Materials, the Fergusons filed for
bankruptcy, which required them to disclose their income, assets, and liabilities to the bankruptcy court, the bankruptcy trustee, and their creditors. See 11 U.S.C. § 521 (a)(1)(A) & (B)(i),(ii),(iii). To comply with these disclosures, the Fergusons completed several forms, including a Statement of Financial Affairs and a Schedule of Personal Property. The Fergusons disclosed the pending lawsuit in the Statement of Financial Affairs, providing the caption and style of the suit, nature of the claim, cause number, and the court in which it had been filed. The Fergusons, however, failed to include it on their Schedule of Personal Property.
* * *
The Fergusons have neither taken a clearly inconsistent position nor gained an unfair advantage in their bankruptcy proceeding. As the dissenting justice in the court of appeals noted, the Fergusons never attempted to conceal the existence of the personal injury suit. 276 S.W.3d at 54. Rather, the Fergusons listed it on their Statement of Financial Affairs and also disclosed it to the trustee at the creditors meeting, at which time they acknowledged the suit and directed the trustee to contact plaintiffs’ counsel if the trustee needed additional information. And, although the Fergusons omitted it from the bankruptcy plan initially confirmed by the court, when the omission was called to their attention, they amended their bankruptcy plan to include its value and agreed to recalculate the amount owed to the creditors. Thus, even assuming the existence of an inconsistent position, the Fergusons have gained no advantage and more importantly, neither Building Materials in the pending personal injury suit nor the creditors in the bankruptcy have suffered any disadvantage.

The doctrine of judicial estoppel simply does not apply under these circumstances. See Pleasant Glade Assembly of God, 264 S.W.3d at 6-8.We review a grant of summary judgment de novo. Tex. Mun. Power Agency v. Pub. Util. Comm’n of Tex., 253 S.W.3d 184, 192 (Tex. 2007).

Because the Fergusons have taken neither a clearly inconsistent position nor obtained an unfair advantage, the court of

appeals erred in affirming the dismissal of their personal injury claim under the doctrine of judicial estoppel. We accordingly grant the petition for review and, without hearing oral argument, reverse the court of appeals’ judgment and remand the case to the trial court for further proceedings.
CASE DETAILS AND LINKS TO OPINIONS AND BRIEFS FOR Ferguson v. Building Materials Corp. of America, No. 08-0589 (Tex. Jul. 3, 2009)(per curiam) (judicial estoppel based on failure to list lawsuit as asset in bankruptcy proceeding does not apply; summary judgment granted on the basis of judicial estoppel reversed)
JASON FERGUSON AND BOBBIE FERGUSON v. BUILDING MATERIALS CORPORATION OF AMERICA, CPC LOGISTICS, INC., AND ROBERT JAMES MADDOX; from Dallas County; 8th district (
08-07-00051-CV, 276 SW3d 45, 06-12-08 Opinion of the Eight Court of Appeals below)
Pursuant to Texas Rule of Appellate Procedure 59.1, after granting the petition for review and without hearing oral argument, the Court reverses the court of appeals' judgment and remands the case to the trial court.
Per Curiam Opinion [pdf] Electronic Briefs in Tex. 2009 No. 08-0589 FERGUSON v. BUILDING MATERIALS CORP. OF AM.


1 comment:

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Julie

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