REVISED AUGUST 4, 2008

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 07-30611

STUART KANE; LISA PHILLIPS KANE

Plaintiffs - Appellants

v.

NATIONAL UNION FIRE INSURANCE COMPANY; QWEST

COMMUNICATIONS INC; DAVID A COMSTOCK

Defendants - Appellees

v.

AARON CAILLOUET

Trustee - Appellant

Appeal from the United States District Court

for the Eastern District of Louisiana

Before KING, WIENER, and ELROD, Circuit Judges.

PER CURIAM:

Plaintiffs-appellants Stuart and Lisa Phillips Kane and trustee-appellant

Aaron Caillouet appeal the district court’s grant of summary judgment for

defendants-appellees on the grounds that the Kanes were judicially estopped

from pursuing their personal injury action after failing to include it in their

Chapter 7 bankruptcy schedules, and consequently that the trustee’s motion to

be substituted for the Kanes in that action was moot, relying entirely on our

United States Court of Appeals

Fifth Circuit

F I L E D

July 14, 2008

Charles R. Fulbruge III

Clerk
No. 07-30611

1 National Union Fire Insurance Company was dismissed from the Kanes’ personal

injury action on January 6, 2005, prior to Qwest’s removal of this case to federal court.

2

decision in Superior Crewboats, Inc. v. Primary P & I Underwriters (In re

Superior Crewboats, Inc.), 374 F.3d 330 (5th Cir. 2004). We REVERSE and

REMAND.

I. FACTUAL AND PROCEDURAL BACKGROUND

On April 18, 2002, Stuart Kane was involved in a car accident with a

vehicle driven by Daniel Comstock while Comstock allegedly was acting in the

course and scope of his employment with Qwest Communications (“Qwest”). On

July 19, 2002, Stuart and Lisa Kane (the “Kanes”) filed this lawsuitin Louisiana

state court seeking damages from Comstock and Qwest (collectively,

“Defendants”), and Qwest’s insurer, National Union Fire Insurance Company,1

arising out of the car accident. On October 13, 2005, while their lawsuit was

pending in state court, the Kanes filed a Chapter 7 bankruptcy. They failed to

list their personal injury claim on the relevant bankruptcy schedules as is

required. The Kanes’ bankruptcy trustee, Aaron Caillouet (the “Trustee”), was

never informed of the claim during the pendency ofthe bankruptcy proceedings.

On March 13, 2006, the Kanes’ bankruptcy resulted in a no-asset discharge.

On July 10, 2006, Defendants filed a motion for summary judgment in

state court arguing that the Kanes should be judicially estopped from pursuing

their lawsuit due to their failure to list it as an asset in their bankruptcy

proceedings. Subsequently, the Kanes filed a motion in the bankruptcy court to

reopen their bankruptcy proceedings so that the Trustee could administer this

previously undisclosed lawsuit and other undisclosed debts on behalf of the

estate and the creditors, which Defendants opposed. The bankruptcy court

granted the Kanes’ motion to reopen on September 28, 2006. 

Defendants removed the case to federal court on October 20, 2006,

invoking the federal district court’s “related to” bankruptcy jurisdiction under
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3

28 U.S.C. §§ 1334(c)(2) and 1452. On November 22, 2006, Defendants moved for

summary judgment in federal district court, again arguing that the Kanes

should be judicially estopped from pursuing their claim as a matter of law, citing

this court’s decision in In re Superior Crewboats, Inc., 374 F.3d 330. On January

30, 2007,the Trustee moved to substitute himself for the Kanes as the real party

in interest in the lawsuit. On May 29, 2007, the district court granted

Defendants’ motion for summary judgment, applying judicial estoppelto bar the

Kanes from pursuing their claim and summarily dismissing as moot the

Trustee’s motion to be substituted as the real party in interest, a result the

district court perceived In re Superior Crewboats, Inc. prescribed. This timely

appeal followed.

II. STANDARD OF REVIEW

“We review a grant of summary judgment de novo, viewing all evidence in

the light most favorable to the nonmoving party and drawing all reasonable

inferences in that party’s favor.” In re Katrina Canal Breaches Litig., 495 F.3d

191, 205–06 (5th Cir. 2007) (citing Crawford v. Formosa Plastics Corp., 234 F.3d

899, 902 (5th Cir. 2000)), cert. denied, Xavier Univ. of La. v. Travelers Cas. Prop.

Co. of Am., 128 S. Ct. 1230 (2008) and Chehardy v. Allstate Indem. Co., 128 S.Ct.

1231 (2008). Summary judgment is proper when “the pleadings, the discovery

and disclosure materials on file, and any affidavits show thatthere is no genuine

issue as to any material fact and that the movant is entitled to judgment as a

matter of law.” FED. R. CIV. P. 56(c). But, because “judicial estoppel is an

equitable doctrine, and the decision whether to invoke it [is] within the court’s

discretion, we review for abuse of discretion” the lower court’s decision to invoke

it. Browning Mfg. v. Mims (In re Coastal Plains, Inc.), 179 F.3d 197, 205 (5th

Cir. 1999). “However, an abuse of discretion standard does not mean a mistake

of law is beyond appellate correction, because [a] district court by definition

abuses its discretion when it makes an error of law.” In re Superior Crewboats,

Inc., 374 F.3d at 334 (internal citations and quotation marks omitted).
No. 07-30611

4

“Accordingly,the abuse of discretion standard includes review to determine that

the discretion was not guided by erroneous legal conclusions.” In re Coastal

Plains, Inc., 179 F.3d at 205 (internal quotation marks omitted).

We also review for abuse of discretion a district court’s denial of a motion

to substitute the trustee for the debtor as the party plaintiff. Wieburg v. GTE

Sw. Inc., 272 F.3d 302, 308 (5th Cir. 2001) (addressing a motion to substitute as

the proper party in interest under Rule 17(a) of the Federal Rules of Civil

Procedure) (citing Collateral Control Corp. v. Deal (In re Covington Grain Co.),

638 F.2d 1357, 1360 (5th Cir. 1981) (holding that a Rule 25 motion to substitute

the real party in interest following a transfer of interest while the litigation is

pending is reviewed for abuse of discretion)). Questions of law, including

interpretation and application of the Bankruptcy Code, are reviewed de novo.

State Farm Life Ins. Co. v. Swift (In re Swift), 129 F.3d 792, 795 (5th Cir. 1997).

III. DISCUSSION

The district court relied on this court’s decision in In re Superior

Crewboats, Inc., 374 F.3d 330, to conclude as a matter of law that the equitable

doctrine of judicial estoppel should apply to bar the Kanes from pursuing their

claim, and as a result, that the Trustee’s motion to substitute himself as the real

party in interest is moot. Also, Defendants argue for the first time on appeal

that even if the Trustee’s motion to substitute himself as the real party in

interest was improperly denied as moot, relying on our decision in Wieburg, 272

F.3d 302, it should be denied as untimely under Rule 17(a). Because we

conclude that the district court asked too much of our decision in In re Superior

Crewboats, Inc., we reverse and remand. Defendants’ Rule 17(a) argument

should be presented first to the district court.

A. Background Legal Principles

Pursuant to the Bankruptcy Code, debtors are under a continuing duty to

disclose all pending and potential claims. 11 U.S.C. § 521(1); In re Coastal
No. 07-30611

2 Property may also be exempted from the bankruptcy estate notwithstanding § 541,

see § 522(b), but the exemption provisions are not at issue in this case.

5

Plains, Inc., 179 F.3d at 207–08. Generally, if a debtor fails to schedule an asset,

and the trustee later discovers it, the trustee may reopen the bankruptcy case

to administer the asset on behalf of the creditors. 11 U.S.C. § 350(b); 3 COLLIER

ON BANKRUPTCY § 350.03[1] (Alan N. Resnick & Henry J. Sommer eds., 15th ed.

rev. 2008). As one of our bankruptcy courts has observed:

It is not serendipitous that the Bankruptcy Code

has an explicit provision that prevents the loss of assets

that a debtor fails to disclose in [b]ankruptcy

[s]chedules. It happens all the time, especially with

claims. And when it does, cases are routinely reopened,

in accordance with the statute, to administer those

assets.

In re Miller, 347 B.R. 48, 53 (Bankr. S.D. Tex. 2006) (citations omitted).

Section 541 ofthe Bankruptcy Code provides that virtually all of a debtor’s

assets, including causes of action belonging to the debtor at the commencement

of the bankruptcy case, vest in the bankruptcy estate upon the filing of a

bankruptcy petition. 11 U.S.C. § 541(a)(1); In re Swift, 129 F.3d at 795; 5

COLLIER ON BANKRUPTCY § 541.08. Thus, a trustee, as the representative of the

bankruptcy estate, is the real party in interest, and is the only party with

standing to prosecute causes of action belonging to the estate once the

bankruptcy petition has been filed. 11 U.S.C. §§ 323, 541(a)(1); Wieburg, 272

F.3d at 306. 

“Once an asset becomes part of the bankruptcy estate, all rights held by

the debtor in the asset are extinguished unless the asset is abandoned” by the

trustee to the debtor pursuant to § 554.2 Parker v. Wendy’s Int’l, Inc., 365 F.3d

1268, 1272 (11th Cir. 2004); see 11 U.S.C. § 554; 5 COLLIER ON BANKRUPTCY

§§ 541.04, 541.08. In a Chapter 7 case, “[a]t the close of the bankruptcy case,

property of the estate that is not abandoned under § 554 and that is not
No. 07-30611

6

administered in the bankruptcy proceedings”—including property that was

never scheduled—“remains the property of the estate.” Parker, 365 F.3d at

1272; 11 U.S.C. § 554(d); 5 COLLIER ON BANKRUPTCY § 541.08. But, “upon

abandonment . . . the trustee is . . . divested of control of the property because

it is no longer part of the estate . . . . Property abandoned under [§] 554 reverts

to the debtor, and the debtor’s rights to the property are treated as if no

bankruptcy petition was filed.” 5COLLIERON BANKRUPTCY§ 554.02[3]; 11 U.S.C.

§ 554; see In re Lair, 235 B.R. 1, 22 (Bankr. M.D. La. 1999). 

“Judicial estoppel is a common law doctrine that prevents a party from

assuming inconsistent positions in litigation.” In re Superior Crewboats, Inc.,

374 F.3d at 334 (citing Brandon v. Interfirst Corp., 858 F.2d 266, 268 (5th Cir.

1988)). “‘The purpose of the doctrine is to protect the integrity of the judicial

process by preventing parties from playing fast and loose with the courts to suit

the exigencies of self interest.’” Id. (quoting In re Coastal Plains, Inc., 179 F.3d

at 205). As an equitable doctrine, “[g]enerally, judicial estoppel is invoked where

‘intentional self-contradiction is being used as a means of obtaining unfair

advantage in a forum provided for suitors seeking justice.’” Id. at 334–35

(quoting Scarano v. Cent. R.R. Co., 203 F.2d 510, 513 (3d Cir. 1953)). 

We have recognized three particular requirements that must be met in

order for judicial estoppel to operate: “(1) the party is judicially estopped only

if its position is clearly inconsistent with the previous one; (2) the court must

have accepted the previous position; and (3) the non-disclosure must not have

been inadvertent.” Id. at 335 (citations omitted). In the context of judicial

estoppel, “inadvertence” requires either that “the debtor . . . lacks knowledge of

the undisclosed claim[ ] or has no motive for [its] concealment.” Id. (emphasis

in original). In this circuit, we have applied judicial estoppel to bar an

unscheduled claim when others, the debtors or other insiders, would benefit to

the detriment of creditors if the claim were permitted to proceed. See id.; In re

Coastal Plains, Inc., 179 F.3d 197.
No. 07-30611

7

B. Application to the Case at Bar

The district court held as a matter of law that our decision in In re

Superior Crewboats, Inc., 374 F.3d 330, controls the outcome of the case before

us. We disagree.

In In re Superior Crewboats, Inc., we were asked only to consider whether

debtors could pursue claims for their own benefit that they failed to disclose in

their bankruptcy schedules. Id. at 334. In that case, one of the debtors was

allegedly injured disembarking a ship owned and operated by the defendant. Id.

at 333. Subsequently, he and his wife filed for Chapter 13 bankruptcy and failed

to disclose their potential claim. Id. While their bankruptcy case was pending,

the debtors sued the defendant in state court without amending their

bankruptcy schedules to include the claim. Id. The debtors’ bankruptcy was

converted from Chapter 13 to Chapter 7. Id. And, at the creditors’ meeting

required under 11 U.S.C. § 341, the debtors told the bankruptcy trustee about

their claim against the defendant, but represented that it was proscribed by the

statute of limitations. Id. 

Shortly after the meeting, the trustee formally abandoned the claim

pursuant to 11 U.S.C. § 554, id., and the interest in the claim reverted to the

debtors as though the bankruptcy had never been filed, see § 554; 5 COLLIER ON

BANKRUPTCY § 554.02[3]; see also In re Lair, 235 B.R. at 22; In re CVA Gen.

Contractors, Inc., 267 B.R. 773, 780 n.7 (Bankr. W.D. Tex. 2001). A few months

after the debtors received their discharge, they responded to an admiralty

limitation of liability proceeding filed by the defendant with a complaint to

recover damages for the one debtor’s alleged injury. In re Superior Crewboats,

Inc., 374 F.3d at 333. The defendant in that case informed the trustee that the

debtors were continuing to pursue their prepetition claim, and the trustee moved

to reopen the bankruptcy. Id. The defendant filed a motion to dismiss arguing

thatthe debtors’“claim was barred by judicial estoppel and Federal Rule of Civil
No. 07-30611

8

Procedure 17(a), which requires a suit to be brought by the real party in

interest.” Id. at 334. In response to the defendant’s motion for summary

judgment, the trustee filed a motion to substitute himself as the proper party in

interest under Rule 17(a). Id. at 333–34. We concluded, on those facts, that the

debtors were barred from pursuing their claim by the equitable doctrine of

judicial estoppel, and that the trustee’s Rule 17(a) motion was moot after we

granted summary judgment for defendants. Id. at 336. 

There, because the trustee had abandoned the claim, he was not the real

party in interest and was not entitled to be substituted as such. Rather,

following the trustee’s abandonment, the interest in the claim had reverted to

the debtors, who then stood to collect a windfall from their failure to schedule

the asset at the expense of their creditors. In the case before us, the Kanes’

personal injury claim became an asset oftheir bankruptcy estate when they filed

their Chapter 7 petition. The Trustee became the real party in interest in the

Kanes’ lawsuit at that point and never abandoned his interest therein. Thus,

unlike in In re Superior Crewboats, Inc.—where the debtors stood to benefit

directly from pursuing their claim at the expense of their creditors, and the

district court’s dismissal of the claim against the debtors mooted the trustee’s

motion to substitute as a matter of law—here, the Trustee is the real party in

interest and has reopened the Kanes’ Chapter 7 bankruptcy to pursue the Kanes’

claim for the benefit of the estate’s creditors. 

Moreover, the Kanes stand to benefit only in the event that there is a

surplus after all debts and fees have been paid. As the bankruptcy court aptly

observed in In re Miller, “There is a statutorily explicit difference between cases

in which property is not listed in the [b]ankruptcy [s]chedules but is disclosed

and administered (as in the Superior Crewboats case . . .) and the instant case

in which property was not disclosed and was not administered.” 347 B.R. at 53.

Consequently, In re Superior Crewboats, Inc. does not require the application of

the equitable doctrine of judicial estoppel in this case as a matter of law.
No. 07-30611

9

Similarly, neither does it follow from our decision in In re Coastal Plains,

Inc., 179 F.3d 197, that judicial estoppel should apply in this case. Key to our

decision in that case was the fact that an insider—the CEO of the debtor

corporation who formed a new corporation and purchased the assets of the

debtor corporation at a fraction of their value due to his own failure to disclose

claims at issue in the case—would benefit in great disproportion to the estate.

Id. at 202–03, 212. In deciding that the equitable doctrine of judicial estoppel

should apply in that case, we observed:

Coastal [Plains, Inc.] avoided paying its debts by

filing bankruptcy. Yet [Industrial Clearinghouse, Inc.],

formed by Coastal’s CEO, purchased Coastal’s assets,

including the undisclosed $10 million claim against [the

defendant], for only $1.24 million, and continued to sell

[the defendant’s] former inventory at discounted prices,

then obtained a net judgment of $3.6 million against

[the defendant] on the undisclosed claims. For facts

similar to those at hand, the bankruptcy court’s

interpretation of the “inadvertence” exception for

judicial estoppel [(accepting reliance on the advice of

counsel as an excuse for failing to schedule the claim in

bankruptcy)] would encourage bankruptcy debtors to

conceal claims, write off debts, purchase debtor assets

at bargain prices, and then sue on undisclosed claims

and possibly recover windfalls . . . . 

Needless to say, judicial estoppel is intended to

prevent just such a process.

Id. at 213. 

In this case, no such equitable concerns inhere. Rather, the only way the

Kanes’ creditors would be harmed is if judicial estoppel were applied to bar the

Trustee from pursuing the claim against Defendants on behalf of the estate. In

this case, equity favors the Trustee. For as Judge Easterbrook noted in a

Seventh Circuit case suggesting that a bankruptcy trustee should be able to

pursue a claim on behalf of the creditors that the debtor himself would be

judicially estopped from pursuing:
No. 07-30611

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[The debtor’s] nondisclosure in bankruptcy harmed his

creditors by hiding assets from them. Using this same

nondisclosure to wipe out [the debtor’s claim against

the defendant] would complete the job by denying

creditors even the right to seek some share of the

recovery. Yet the creditors have not contradicted

themselves in court. They were not aware of what [the

debtor] has been doing behind their backs. Creditors

gypped by [the debtor’s] maneuver are hurt a second

time by the district judge’s decision. Judicial estoppel

is an equitable doctrine, and using it to land another

blow on the victims of bankruptcy fraud is not an

equitable application.

Biesek v. Soo Line R.R. Co., 440 F.3d 410, 413 (7th Cir. 2006).

With respect to Defendants’ argument that even if the Kanes’ claim is not

barred by judicial estoppel, our decision in Wieburg, 272 F.3d 302, requires that

the Trustee’s motion to substitute as party plaintiff must be denied under Rule

17(a) of the Federal Rules of Civil Procedure, we are initially unpersuaded. But

Defendants did not raise this issue in the district court. The district court

should have the first crack atit. See Jethroe v. Omnova Solutions, Inc., 412 F.3d

598, 601 (5th Cir. 2005). Also unpersuasive, and raised for the first time on

appeal, is Defendants’ argument that the Trustee’s motion to substitute was

untimely because it was not filed until after Defendants moved for summary

judgment on judicial estoppel grounds. The district court should address this

first.

IV. CONCLUSION

For the reasons stated above, we hold that In re Superior Crewboats, Inc.,

374 F.3d 330, does not control the outcome of this case, and that the district

court abused its discretion by concluding as a matter of law that it does.

Consequently, we REVERSE and REMAND for further proceedings consistent

with this opinion.