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Robson v. Texas Eastern Corp.8/15/2005
ch provides that an "inference" of bad faith arises when the party asserting judicial estoppel demonstrates that a debtor-plaintiff had knowledge of an unscheduled claim and motive for concealment in the face of a duty to disclose. See 81 F.3d at 363; see also Burnes, 291 F.3d at 1287-88. If the party asserting judicial estoppel establishes knowledge of a claim and motive for concealment, the debtor-plaintiff then has the burden of coming forth with evidence indicating that the nondisclosure was made in good faith. Krystal Cadillac-Oldsmobile GMC Truck, Inc. v. Gen. Motors Corp., 337 F.3d 314, 321 (3rd Cir. 2003) (the inference of bad faith is rebuttable).
Accordingly, although knowledge and motive are very important in establishing judicial estoppel, the inquiry does not end there if the debtor-plaintiff comes forth with evidence indicating that the non-disclosure was conducted in good faith. See Burnes, 291 F.3d at 1286 (courts must always give due consideration to all of the circumstances of a particular case when considering the applicability of judicial estoppel). Furthermore, while applying this test, it is important to remember that the ultimate purpose of the test is to determine the actual presence of bad faith. See Ryan, 81 F.3d at 365 (judicial estoppel is not meant to be a technical defense for litigants seeking to derail potentially meritorious claims).
A. The Robsons' Disclosures
TEC claims that the Robsons' scheduling of their cause of action was deceptive because the phrase " ollution lawsuit for environmental damages todebtors' residential property" is indicative of an intention to misled the Robsons' creditors into believing the Robsons were not pursuing damages for personal injuries. Br. of Appellee at 11.
TEC asserts that Krystal Cadillac's application of judicial estoppel is directly on point with the case at bar. Br. of Appellee at 16. We disagree. In Krystal Cadillac, the debtor-plaintiff filed the following amended disclosure statement:
Debtor also holds an Automobile Franchise Agreement with General Motors Corporation. However, the status of this franchise is now in litigation. General Motors terminated the franchise prior to the commencement of the case and the matter was in litigation at the time the Chapter 11 petition was filed. General Motors nevertheless proceeded with termination and the matter is now on appeal in the Commonwealth Court. Debtor takes the position, which is vigorously contested by General Motors, that this franchise agreement remains an asset of the [estate].
337 F.3d at 318 (emphasis added). Krystal Cadillac concluded that, in the absence of an indication that the plaintiff-debtor's suit was for damages and was capable of providing income for the bankruptcy estate, this statement evidenced an attempt by the plaintiff-debtor to play fast and loose with the courts. Id. at 325.
The Robsons' disclosure statement indicated that the Robsons had a cause of action for damages and that the suit could potentially provide revenue to their bankruptcy estate. Appellants' App. p. 150. The amended disclosure statement in Krystal Cadillac did not. Rather, the Krystal Cadillac amended disclosure statement merely indicated that the debtor-plaintiff's franchise agreement might be subject to termination.
As stated by Krystal Cadillac:
When [the Plaintiff] filed its Amended Disclosure Statement, it knew about each of the claims [for damages] it has now included in this action. However, as quoted above, the Amended Reorganization Plan and Amended Disclaimer Statement merely referenced [the Plaintiff's] position that the dealer agreements were part of the bankruptcy estate
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