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Grau v. Provident Life and Accident Insurance Co.3/30/2005
Dr. Gerard Grau appeals from a summary final judgment entered in favor of Provident Life & Accident Insurance Company and Unum Life Insurance Company of America. Both Provident and Unum insured Grau under disability policies. Grau sued both companies for breach of contract for their failure to provide disability benefits. Applying the doctrine of judicial estoppel, the circuit court granted summary judgment in favor of the insurance companies. The basis for the estoppel was Grau's conduct during an earlier bankruptcy proceeding.
We reverse, holding that judicial estoppel was not applicable to this case.
Grau practiced plastic surgery in the Fort Lauderdale area from 1981 to August, 2000. During his career, Grau was sued for medical malpractice on a number of occasions, which resulted in at least two adverse judgments. See, e.g., Grau v. Wells, 795 So. 2d 988 (Fla. 4th DCA 2001) (affirming entry of default judgment entered against Grau as a sanction based on Grau's bad faith investigation of a plaintiff's medical malpractice claim); Grau v. Branham, 761 So. 2d 375 (Fla. 4th DCA 2000) (affirming a jury verdict in favor of another plaintiff in a separate medical malpractice action).
Grau filed for Chapter 11 bankruptcy in 1998 shortly after the entry of one of those judgments. Among the nonexempt assets Grau claimed on his Chapter 11 summary of schedules were the two "own occupation" disability insurance policies from Provident and Unum. Each policy provided Grau with long-term benefits if a total disability prevented him from continuing his career. Grau valued the policies at $0.00 on the summary of schedules in the bankruptcy proceeding because he was unsure whether he was "disabled" when he filed bankruptcy. Grau could have claimed these policies as entirely exempt from his creditors under section 222.18, Florida Statutes (1998), but instead classified them as nonexempt as a showing of good faith to his creditors and to avoid the cost of potential litigation over the exemption.
In August, 2000, Grau converted his Chapter 11 proceeding to a Chapter 7. This conversion meant Grau took the position that the Chapter 11 reorganization had failed and he was seeking total liquidation and discharge under Chapter 7. The liquidation could have extended to all Grau's nonexempt property, including the disability policies. See Sherry Fowler Chancellor, Chapter 7 Bankruptcy Straight Liquidation for the Debtor, C7B FL-CLE 1 § I.A.1. (2003).
A section 341 meeting of creditors followed the conversion to a Chapter 7 proceeding. A section 341 meeting is an informal proceeding presided over by the United States trustee, at which creditors and others have the "opportunity to examine the debtor under oath. The scope of inquiry is broad, permitting a party in interest to examine any area involving the debtor's assets or liabilities." William C. Hillman and Margaret M. Crouch, Bankruptcy Deskbook, PLIREF-BKRCY § 4:1 (2001); see also 11 U.S.C. § 341 (2000).
Among the creditors present at the section 341 meeting was attorney Donald A. Tobkin, who was plaintiff's counsel in the Branham and Wells malpractice cases. In response to questioning by Tobkin and others, Grau testified that: (1) his then current occupation was "recently disabled"; (2) he stopped practicing plastic surgery after undergoing orthopedic surgery to his left shoulder on August 18, 2000; and (3) he was "working on" filing a claim for disability benefits.
In November, 2001, Grau moved to amend his summary of schedules in the Chapter 7 proceeding to exclude the policies from liquidation by claiming them as exempt. Tobkin filed an objection, which was followed by a hearing on June 1
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