Wilcox v. Parker (In re Parker)

Summarized by Richard Tisdale , M&T Bank
13 years 9 months ago

Citation:

Wilcox v. Parker (In re Parker), BAP No. NC-11-1566-JuKiJo (9th Cir. BAP May 29, 2012)

Tag(s):

Ruling:

The Bankruptcy Appellate Panel of the Ninth Circuit AFFIRMED the bankruptcy court's denial of a motion for summary judgement on judicial estoppel grounds. Before the bankruptcy court, the appellant-creditor had taken the position that because the debtor had sought equitable indemnity from a third-party, that itself was a judicial admission that the debtor had committed fraud and should be estopped from seeking a discharge of the appellant-creditor's alleged debt under section 523(a)(2)(A).

Procedural context:

Apellant-creditor appealled the bankruptcy court's order denying his motion for summary judment on a section 523(a)(2)(A) fraud claim against a chapter 7 debtor in an adversary proceeding commenced by the appellant-creditor.

Facts:

Bill Parker is a real estate broker and owner of a company (collectively, "Parker") who also arranged loans for real estate purchasers. In 2007, Parker arranged loans from Albert Wilcox ("Wilcox") to a couple, the Taylors, who purchased properties as fixer-uppers and later resold them. After the Taylors did not repay Wilcox, Wilcox sued Parker in California state court. In turn, Parker filed a cross-complaint against the Taylors, seeking indemnification from the Taylors if Parker were found liable to the lender, Wilcox. Though not particularly relevant to the opinion, the Parkers subsequently filed for bankruptcy protection under chapter 7. Because the Taylors did not answer the cross-complaint, Parker obtained a default judgment, but that was later set aside. After Parker himself filed a chapter 7 petition and listed potential liability to Wilcox in his Schedule F, Wilcox commenced an adversary proceeding and argued that Parker should be judicially estopped from denying he defrauded Wilcox, since Parker had sought and obtained a judgment seeking indemnity from the borrowers, the Taylors, if Parker were found liable to Wilcox. Wilcox's reasoning was that a judgment based on equitable indemnity was not available absent Parker's joint and several liability for fraud. The bankruptcy court denied Wilcox's motion for summary judgment on judicial estoppel grounds and later ruled for the debtor on the section 523 claims after trial. After Wilcox appealed the order denying the motion for summary judgment, the Ninth Circuit BAP affirmed the bankruptcy court. The Ninth Circuit BAP found that Parker had asserted a conditional, or contingent, claim for indemnity against the Taylors, which could not constitute an admission of fraud. Thus, the Ninth Circuit BAP found that judicial estoppel did not apply since Parker did not assert inconsisent positions in his cross-complaint against the Taylors and in the adversary proceeding against Wilcox.

Judge(s):

Hon. Meridith Jury, Hon. Ralph Kirscher, and Hon. Wayne Johnson (Bankruptcy Judge for Central District of California, sitting by designation)

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