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DeAtley v. Barnett5/17/2005
ompany, was denied.
The Barnetts were partially successful in asking for attorney fees under the contract. The trial court limited the fees and costs to those associated with the motion to dismiss. The DeAtleys appeal the dismissal, the denial of their request for partial summary judgment regarding the final road issues, and the denial of their request to amend their complaint. The Barnetts cross-appeal the initial summary judgment order, regarding the DeAtleys' breach of contract claims and the partial award of attorney fees. The appeals have been consolidated.
ANALYSIS
A. Impact of Bankruptcy
The dispositive issue is whether the trial court erred in dismissing the DeAtleys' complaint based upon its conclusion that the bankruptcy discharge of the Barnett-DeAtley contract obligation precluded the DeAtleys' right of first refusal claims. We review questions of law de novo. Wolstein v. Yorkshire Ins. Co., 97 Wn. App. 201, 206, 985 P.2d 400 (1999).
The DeAtleys were required to disclose all assets, including potential causes of action in their bankruptcy petition. 11 U.S.C.A. sec. 521(1), Fed. R. Bankr. P. 1007. A discharged debtor lacks legal capacity to pursue an unscheduled claim simply because the trustee, having no knowledge of the claim, took no action with respect to the claim. Linklater v. Johnson, 53 Wn. App. 567, 570, 768 P.2d 1020 (1989); Marks v. Benson, 62 Wn. App. 178, 184-85, 813 P.2d 180 (1991). Even so, the DeAtleys contend their contract right assignment to AD3 Company before filing for bankruptcy effectively saved the first right of refusal.
However, if the DeAtleys wanted to assume the benefits of the allegedly triggered right of first refusal, they would have to assume the underlying obligation, the contract obligation to complete the road. Since the DeAtleys chose to discharge the burdens of that contract obligation and did not list their allegedly matured right of first refusal as an asset, we reason they lost their right to claim benefits under the right of first refusal. Accordingly, we conclude the DeAtleys lacked standing to commence their breach of contract complaint.
Moreover, judicial integrity, finality of judgments and respect for the judicial process bar the DeAtleys' claim. Together these considerations are referred to as the Washington doctrine of judicial estoppel. See, e.g., Markley v. Markley, 31 Wn.2d 605, 614-15, 198 P.2d 486 (1948); Johnson v. Si-Cor, Inc., 107 Wn. App. 902, 906, 28 P.3d 832 (2001).
Nonexclusive factors promote court discretion in applying judicial estoppel: '(1) The inconsistent position first asserted must have been successfully maintained; (2) a judgment must have been rendered; (3) the positions must be clearly inconsistent; (4) the parties and questions must be the same; (5) the party claiming estoppel must have been misled and have changed his position; (6) it must appear unjust to one party to permit the other to change.' Falkner v. Foshaug, 108 Wn. App. 113, 125 n.35, 29 P.3d 771 (2001) (quoting Raymond, 47 Wn. App. at 785). The focus is upon the inconsistent position. Falkner, 108 Wn. App. at 125.
Judicial estoppel has been recently applied in a similar bankruptcy context. Cunningham v. Reliable Concrete Pumping, Inc. Wn. App. , 108 P.3d 147 (2005). In Cunningham, Division One of this court invoked judicial estoppel to approve the summary dismissal of a personal injury claim when the plaintiffs had previously petitioned for bankruptcy , but failed to list in their bankruptcy schedules a third-party personal injury claim arising out of a workplace injury.
On the federal level judicial estoppel is well entrenched. In New Ha
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