DA 07
- 0345 

### IN THE SUPREME COURT OF THE STATE OF MONTANA 2008 MT 350
BRUCE K. DOVEY, Plaintiff and Appellant,
v. BNSF RAILWAY COMPANY, a Delaware Corporation, Defendant and Appellee.

APP EAL FROM: Di strict Court of the Thirteenth Judicial District,

In and For the County

of Yellowstone, Cause No. DV 05

- 1003 Honorable Gregory

R. Todd, Presiding Judge
COUNSEL OF RECORD:

For Appellant: J. Dw aine Ro ybal; Ro ybal & Lee, P.C., Billings, Montana For Appellee : Michelle T. Friend; Phillips, Bohyer & Hedger, P.C. , Billings, Montana
Submitted on Briefs: May 21, 2008 Decided: October 20, 2008 Filed:

__________________________________________ Clerk October 20 20082

Justice W. William Leaphart delivered the Opinion of the Court. ¶1 Bruce K. Dovey (“Dovey”) appeals the District Court’s order granting summary judgment in favor of BNSF Railway Corporation (“BNSF”), p ermitting BNSF to amend its answer, and dismissing Dovey’s claims on the basis of judicial estoppel. W e reverse and remand. ¶2 Dovey raise sseveral issueson appeal , which we recharacterize as follows: ¶3 Did

the District Court err by granting BNS F’s motion for summary judgmentand concluding as a matter of lawthat Dovey was judicially estoppe d from pursuing his claim against BNSF? BACKGROUND ¶4 Dovey had financial difficulties which ultimately led him to file for bankruptcy

. He first met with his bankruptcy attorney Steven Winship( “Winship”) o n June 1, 2004. At this initial meeting, Dovey fill ed out a worksheet lis ting all his debts and assets. ¶5 Two weeks later, Dovey sustained severe injuries to his right knee , allegedlyin the course of performing his duties as a conductor for BNSF. According to Dovey , a knuckle between the cars broke , and when he stepped off the car to investigate, the ballast beneath him gave way. A tendon in Dovey’s right quadriceps ruptured ; three days later, he had surgery. ¶6 Dovey never regained more than 20% of his o riginal strength in his r ight quadri ceps. After twomore surgeriesand more than a year of therapy, Dovey’s doctor declared that he had reached his maximum medical improvement. D ovey could not continue his work as a conductor.3

¶7 On October 21, 2004, Dovey filed a Chapter 7 petition for bankruptcy. In the
attached forms, Dovey failed to list his potential claim against BNSF as an asset. Item 20 on Schedule B directed Dovey to list “[o]ther contingent and unliquidated claims of every nature, including tax refunds, counterclaims of the debtor, and rights to s etoff claims

. ” In response, Dovey checked“n one.”D ovey’s bankruptcy petition was discharged on February 8 , 2005, and later terminated on April 3, 2006. ¶8 On September 8, 2005, Dovey filed this c omplaint against BNSF under the Federal Employers Liability Act (“FELA”). A y ear later, on September 26, 2006, BNSF filed a motion for summary judgment on the grounds that Dovey was judicially estopped from pursuing his claim against the railroad. Since Dovey did not list his potential FELA claim against BNSF as an asset in his bankruptcy proceedings , B NS F argued, his claim against BNSF was barred by judicial estoppel

. ¶9 Kermit Fruechte, Dovey’s attorney for the FELA claim, claimed he was unaware that Dovey had filed for bankruptcy until he read BNSF’s motion. Fruec hte immediately contacted Dovey’s bankruptcy attorney and trustee to notify them of Dovey’s pending FELA lawsuit. D ovey’s bankruptcy claim was reopened on October 20, 2006, and the Bankruptcy Court appointed Fruechte to represent the trustee in the reopen ed claim. ¶10 In response to BNSF’s summary judgment mo tion, Dovey claimed that he did not know that his potential FELA claim was an asset which should have been included in the settlement of his b ankruptcy petition. He argued that s ince his b ankruptcy case w as reopened, any proceeds he gained from the FELA lawsuit would be given over to his creditors. Thus, Dovey contended , judicial estoppel should not bar his F ELA claim.4

Finally, Dovey noted

that judicial estoppel is an affirmative defense which should hav e been raised in BNSF’s answer to his complaint, not on a motion for summary judgment. BNSF subsequently brought a motion to amend its answer to assert judicial estoppel as an affirmative defense. ¶11 TheD istrict Court granted BNSF’s motionf or summary judgment , and dismissed Dovey’s claims on the basis of judicial estoppel. Dovey appeals. STANDARD OF REVIEW ¶12 We review a district court’s grant of summary judgment de novo. Farmer sUnion Mut

. I ns. Co. v. Staples , 2004 MT 108, ¶ 18, 321 Mont. 99, ¶ 18, 90 P.3d 381, ¶ 18. Under M. R. Civ. P. 56 (c) , “[t]he moving party must establish both the absence of a genuine issue of material fact and entitlement to judgment as a matter of law.” Farmers Union Mut

. I

ns. Co. , ¶ 1 8 ( citation omitted)

. If this is accomplished, then the burden shifts to the non

- mo ving party to prove , by more than mere denial and speculation, that a genuine issue of material fact does exist. Farmers Union Mut

. I ns. Co. , ¶ 18. I f no genuine issues of material fact exist, then the court must determine whether the mo ving party is entitled to judgment as a matter of law. Farmers Union Mut

. Ins. Co. , ¶ 18. DISCUSSION ¶13 Didthe District Court err by granting BNSF’s motion for summary judgment and concludingas a matter of law that Dovey was judicially estopped from pursuing his claim against BNSF? ¶14 As a general rule, “FELA cases adjudicated in state courts are subject to state procedural rules, but the substantive law governing them is federal.” St. Louis5

Southwestern R

. Co

. v. Dickerson , 470 U.S. 409 , 411, 105 S. Ct. 1347, 1348 (1985). Yet,
as the Ninth Circuit has recognized , “[t]he choice between state and federal law is hard for a doctrinesuch as judicial estoppel, a hybrid between substance and process that on
occas ion affects the outcome.” Rissetto v. Plumbers and Steamfitters Local 343 , 94 F.3d 597, 602 (9th Cir. 1996) ( citation and internal quotation marks omitted)

. In the instant case, the District Court applied federal law. Neither party appeals the court’s application of federal law ; acc ordingly, we will apply federal law

. Wereach no conclusion today as to whether Montana law differs from federal law on the issue of judicial estoppel, or whether Montana law (rather than federal) might govern the issue of judicial estoppel in a future ca se. ¶15 Courts may invoke the equitable doctrine of judicial estoppel to prevent a party from asserting a claim that is incompatible with a position advanced by that party in a previous proceedingin which th e partyp revailed

. New Hampshire v. Maine , 532 U.S. 742, 7 49 , 121 S. Ct. 1808, 1814( 2001). To determine whether a party is judicially estopped from raising a certain claim, the Ninth Circuit considers three distinct factors : (1) whether a party’s later position is “clearly inconsistent” w ith its original position; (2) whether the party has successfully persuaded the court of the earlier position, and (3) whether allowing the inconsistent position would allow the party to “derive an unfair advantage or impose an unfair detriment on the opposing party.” U.S . v. Ibrahim , 522 F.3d 1003, 1009 (9th Cir. 2008) ( citing New H ampshire , 532 U.S. at 750
- 51, 121 S. Ct. at 1815 )

.6

¶16 Befo re reaching these three factors in Ibrahim , the Ninth Circuit first addressed a threshold matter: whether the partyintentionally sought to manipulate the courts by taking inconsistent positions. Judicial estoppel “seeks to prevent the deliberate manipulation of the courts,” the Ninth Circuit emphasized, “and therefore should not apply when a party’s prior position was based on inadverten ce or mistake.” Ibrahim , 522 F.3d at 1009 (citation and internal quotation marks omitted). Accord Wagner v. Professional Eng ’

s in Cal

. Gov ’t, 354 F.3d 1036, 105 4( 9th Cir. 2004) (J. Clifton, concurring in part and dissenting in part) (noting that “ Ninth Circuit precedent

. . . recognizes an exception to the judicial estoppel doctrine where a party advances a good faith, though legally incorrect position and later alters its position in subsequent litigation

. ”); Wyler Summit v. Turner Broadcasting System , 235 F.3d 1184, 1190 (9th Cir. 2000) (judicial estoppel requires“ a knowing antecedent misrepresentation by the person or party alleged to be estopped”) (emphasis added); Johnson v. State of Oregon , 141 F.3d 1361, 1369 (9th Cir. 1998) (“Judicial estoppel applies when a party’s position is tantamount to a knowing misrepresentation to or even fraud on the court. If incompatible positions are based not on chicanery, but only on inadvertence or mistake, judicial estoppel does not apply.”) (citations and internal quotation marks omitted); Hefland v. Gerson , 105 F.3d 530, 536 (9th Cir. 1997) (“Judicial estoppel seeks to prevent the deliberate manipulation of the courts; it is inappropriate, therefore, when a party’s prior position was based on inadvertence or mist ake.”). ¶17 In Ibrahim , the court concluded that the party had made an honest mistake, and that the inconsistency in positions was not b ased on chicanery. Ibrahim , 522 F.3d at7

1009. Thus , the court concluded , before it even reached the New Hampshiretest , that judicial estoppel was not applicable. Ibrahim , 522 F. 3d at 1009. ¶18 Here, the District Court erroneously held that “under persuasive 9th [sic] Circuit precedent, this C ourt need not address the issue of intent.” “However,” the court continued, “evenconsidering intent, the result would have been the same

. . . . Dovey
. . . had knowledge of [his] claim[] prior to filing for bankruptcy and failed to amend [his] schedule []. . .
. Dovey
. . . did not ‘ fess up ’ about his potential claim against BNSF until
one year after filing and serving his complaint

. . . . The facts do not add up to allow Dovey to claim that he had no idea that he should list his potential claim against BNSF in his bankruptcy filings.” ¶19 TheD istrict Court erred as a matter of law in failing to consider whether the inconsistent positions advanced by Dovey were attributable to mistake or inadvertence, or whether he deliberately attempted to manipulate the courtsb y failing to report his FELA claim

. ¶20 The District Court also erred by failing to view the facts in the light most favorable to Dovey. Our Lady of the Rockies, Inc. v. Peterson , 2008 MT 110, ¶ 14, 342 Mont. 393, ¶ 14, 181 P.3d 631, ¶ 14. On a motion for summary judgment, all reasonable inferences must bedrawn in favor of then on - mo vant. Our Lady of the Rockies , ¶ 14. Furthermore, “a district court makes no factual findings and resolvesn o factual disputes at the summaryj udgment stage.” Richards v. Knuchel, 2005 MT 133, ¶ 25, 327 Mont. 249, ¶ 25, 115 P.3d 189, ¶ 25. TheD istrict Court , however, dismissed Dovey’s and Winship’s affidavits as “self

- serving protestations of innocent intent,” and found that they8

were “not persuasive of Dovey’s alleged innocent intent.” Dovey claimed that he did not initially plan to sue BNSF, because he thought he would recover fully from his injuries and return to work. Y et the District Court found that in October 2004, “Dovey certainly
was contemplating a lawsuit.” In sum, the District Court erred in making these findings of fact on a motio n for summary judgment, and by failing to view the facts pre sented in the light most favorable to Dovey. ¶21 Dovey raised a genuine issue of material fact a s to whether his unscheduled claim
was the product of a good faith mistake or an inadvertent omission, o r whether he deliberately attempted to manipulate the courts. Dovey claimed his failure to list his suit against BNSF as an asset was an honest mistake. D ovey met with Winship and made a list of his assets and debts beforeh e was injured. As discussed above, Dovey presented evidence , including his m edical records, in support of his cl aim that he did not even consider suing BNSF until after he filed for bankruptcy. Of course, once Dovey realized he had a potential claim against BNSF, he had a duty to update his bankruptcy schedule accordingly. Hamilton v. State Farm Fire & Cas

. Co

. , 270 F.3d 778, 785 (9th Cir. 2001)

. Dovey claims that he did not intentionally omit his claim against BNSF, but rather, that he misunderstoo d the legal jargon used on thef orms. Both o f Dovey’s attorneys submitted affidavits in support of Dovey’s assertions. At Dovey’s request, the B ankruptcy C ourt re - opened the case . In short, Dovey has presented more than enough evidence to establish that a genuine issue of material fact exists as to whether he intentionally omitted his FELA c laim from his bankruptcy petition

. Thus, the District Court erred in granting summary judgment in favor of BNS F. We draw no conclusions9

today as to whether Dovey intentionally or mistakenly omitted his FELA c laim: that issue must be decided

on remand by the fact

- finder.

CONCLUSION ¶22 In sum , the District Court erred by granting BNSF’s motion for summary judgment , and dismissing Dovey’s claim

. A g enuine issue of material fact exists as to whether Dovey ’s failureto list his claim against BNSF as an asset in his b ankruptcy petitionw as intentional

. W e reverse and remand for further proceeding sc onsistent with this opinion. In light of this decision, w e do not reach the question of whether the District Court erred by granting BNSF’s motion to amend its answer since it is not a final judgment that is a

ppealable under M. R. App . P. 4 (1) (a).

/S/ W. WILLIAM LEAPHART

We concur:
/S/ KARLA M. GRAY /S/ JAMES C. NELSON /S/ PATRICIA COTTER /S/ BRIA N MORRIS /S/ JOHN WARNER /S/ JIM RICE