- No. 11-8090 and 11-8098 (10th Cir. August 20, 2013).
- Affirming the lower court decision, the Tenth Circuit concluded that, where the debtor sought damages in a personal injury lawsuit in an amount that far exceeded the value of the claim as disclosed in the debtor’s schedules, the doctrine of judicial estoppel nevertheless barred the entire claim—not just that portion that exceeded the value stated in the debtor’s schedules. By this ruling, the Tenth Circuit seems to impose a “strict liability” standard on debtors that should be carefully considered by any debtor—or debtor’s counsel—as they attempt to assign values to litigation claims identified in their schedules and statement of financial affairs.
- Procedural context:
- Appeal of the district court’s order granting summary judgment in favor of the appellee and dismissing appellant’s claim with prejudice on the ground that the doctrine of judicial estoppel applied to bar appellant’s claims.
- Debtor Richard Queen sustained an injury in a parking lot operated by TA Operating, LLC (TA) and brought various claims against TA in federal district court in Wyoming to recover damages sustained as a result of his injuries. In the lawsuit, the Queens alleged damages of approximately $1,500,000. During the pendency of the lawsuit, the Queens filed for chapter 7 bankruptcy protection in California. The lawsuit was neither disclosed nor claimed as an exempt asset in the Queens’ original schedules of assets and liabilities or statement of financial affairs. After TA became aware of the bankruptcy and notified the trustee, the Queens filed amended Schedules B and C identifying the personal injury lawsuit with a total value of $400,000 and claiming it as entirely exempt. Neither the trustee nor any creditor objected to the claimed exemption, and the Queens were subsequently granted a no-asset discharge. Thereafter, TA file a motion for summary judgment in the district court action asserting that the Queens’ claims were barred in their entity by the doctrine of judicial estoppel. Affirming the district court’s ruling, the court of appeals applied a three-factor test and concluded that the district court properly dismissed the Queens’ claims against TA with prejudice. Acknowledging that the Queens had amended their schedules to disclose the existence of the lawsuit, and acknowledging further that neither the trustee nor any other party had objected to the claim of exemptions, the court of appeals nevertheless concluded that “[t]he Queens’ representations to the bankruptcy court regarding the value of the lawsuit and the exemptions are not consistent with what the Queens represented before the district court.” Rather than bar only that portion of the claim that exceeded the $400,000 value disclosed by the Queens in their amended schedules, however, the court of appeals rejected the Queens’ contention that the stated value “is simply an estimated value of the Queens’ claims against TA” and concluded instead that the inconsistency barred the claim in its entirety.
- Tymovich, Ebel, and O’Brien.
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