In re Peoples

Summarized by J. Debbeler , Bricker Graydon LLP
13 years 2 months ago

Citation:

Case No. 11-30146

Tag(s):

Ruling:

Bankruptcy court ruling approving the terms of a settlement agreement entered into by the chapter 7 trustee was affirmed.

Procedural context:

Chapter 7 trustee's motion to settle debtor's employment discrimination claims was granted by the bankruptcy court. The debtor appealed.

Facts:

Debtor filed bankruptcy fifteen days after signing an EEOC charge. Debtor failed to disclose his potential claims against his former employer on his bankruptcy schedules. Debtor received a discharge. After learning of the EEOC litigation, the trustee requested that the bankruptcy court reopen the case, which request was granted. The Trustee unsuccessfully attempted to retain an employment attorney to pursue the discrimination claims on a contingency basis and the debtor's estate lacked the funds to hire an attorney. The Trustee negotiated a settlement offer of $8,000.00, which the court approved. The reason the Trustee was unable to hire counsel is that the debtor's former employer raised the issue of judicial estoppel in the district court case. The Sixth Circuit previously issued a holding that estopped a debtor from litigating an employment discrimination claim in district court because she failed to disclose it in her bankruptcy. At the time the bankruptcy court approved the motion to settle, it was unclear whether judicial estoppel applied to a bankruptcy trustee if the trustee prosecutes a debtor's employment discrimination claims. After the bankruptcy court approved the settlement, the Sixth Circuit held that judicial estoppel based on the debtor's representations to the bankruptcy court should not apply to a bankruptcy trustee.

Judge(s):

Emerson, Harris, Shea-Stonum

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