IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF INDIANA

FORT WAYNE DIVISION

BAYSAH J. KORTI, )

)

Plaintiff, )

)

vs. ) CAUSE NO. 1:13-CV-63

)

A.W. HOLDINGS, LLC, )

d/b/a Anthony Wayne )

Services, )

)

Defendant. )

OPINION AND ORDER

This matter is before the Court on the Defendant’s Motion for

Summary Judgment, filed by Defendant, A.W. Holdings, LLC d/b/a

Anthony Wayne Services, on July 8, 2013 (DE #25). For the reasons

set forth below, the motion is DENIED. 

BACKGROUND

Defendant first argued that Plaintiff, Baysah J. Korti

(“Korti”) is judicially estopped from pursuing his race and

national origin claims against Defendant, A.W. Holdings, LLC d/b/a

Anthony Wayne Services (“AWS”) under Title VII of the Civil Rights

Act of 1964, 42 U.S.C. § 2000(e) et seq. and 42 U.S.C. § 1981

because he failed to identify his purported claim as a potential

asset in his sworn declaration of assets that he submitted in a

Chapter 13 bankruptcy proceeding. Defendant originally contended
that, because Plaintiff failed to disclose the potential asset,

Korti should be estopped from pursuing this lawsuit and summary

judgment is appropriate. What proceeds next is the product of many

rounds of briefs.

Plaintiff filed a response in opposition (DE #32) arguing that

when Plaintiff’s original bankruptcy case was filed on November 3,

2011, he honestly believed he did not have an interest in any

pending or potential lawsuit. On April 4, 2012, Plaintiff was

terminated from his employment with AWS (which termination is the

basis for his discrimination claims) and he could not sustain his

bankruptcy petition, so he dismissed his bankruptcy petition. After

dismissal, Korti received his right to sue letter from the EEOC. 

Then, Plaintiff filed a second Chapter 13 bankruptcy on February

14, 2013. During the second bankruptcy proceeding, Korti disclosed

his claim to the Trustee at a meeting of the creditors and his

counsel drafted an amendment and modification to his bankruptcy

Plan, agreeing to turn over any proceeds from any settlement or

disposition of this litigation. Thus, Plaintiff believes he should

not be estopped because he contends his initial failure to disclose

was not done in bad faith, and in the current bankruptcy

proceeding, he informed the Trustee of the lawsuit and filed an

amendment and modification to the Plan. 

In its reply, Defendant argues for the first time that

Plaintiff should be judicially estopped from bringing the present

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claims for his own benefit, and that any and all damages recovered

should go toward paying Korti’s creditors and the bankruptcy

Trustee, capping the amount of damages at the amount owed in the

bankruptcy proceeding. (DE #35.) 

Plaintiff then argues in his sur-response that Defendant

seemingly concedes that Korti may proceed with his current claim

and that Defendant’s argument that Korti’s damages should be capped

and he cannot personally benefit from any recovery is an argument

improperly set forth for the first time in a reply brief, and the

Bankruptcy Court should be the entity to hear that argument. (DE

#38.) 

Defendant then filed a sur-reply (DE #42). Defendant argues

that Korti only belatedly amended his Schedule B to his second

bankruptcy petition after Defendant filed the instant motion for

summary judgment based upon judicial estoppel. Once again,

Defendant argues that Korti is judicially estopped from recovering

any damages for his personal benefit, or any more than he may owe

to his creditors, but states that Rainey v. UPS, 466 F. App’x, 542

(7th Cir. 2012) “does permit the present lawsuit to proceed.” (DE

#42, p. 5.) 

Then, Plaintiff filed a sur-sur-response, and quoted recent

case law while continuing to argue that Korti’s claims should not

be dismissed on the theory of judicial estoppel. (DE #45.)

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Finally, in the last brief submitted to this Court, Defendant

conceded that in light of Rainey, Korti is not judicially estopped

from proceeding with this case. AWS then “withdr[ew] its request

that the Court dismiss this case in its entirety on the grounds of

judicial estoppel because Korti rectified his nondisclosure of this

litigation.” (DE #46, p. 2.) AWS then argues that Korti should

still be precluded from recovering any damages for his personal

benefit and that AWS could not have raised that issue before its

reply brief because Korti did not disclose the lawsuit to his

bankruptcy counsel until after the motion for summary judgment was

filed. Id. 

This case is fully briefed and ripe for adjudication.

Undisputed Facts

The undisputed facts in this case are straightforward. On

November 3, 2011, Korti filed a Voluntary Petition for Chapter 13

bankruptcy. Schedule B listed his personal property, and Korti

swore under penalty of perjury that he did not have any “contingent

and unliquidated claims of every nature, including tax refunds,

counterclaims of the debtor, and right to set offs.” (Def.’s Ex.

B, Not. Of Bankr. Case Filing, 11-14138.) 

While that claim was pending, on April 4, 2012, Plaintiff was

terminated from his employment with Defendant. Plaintiff claims

the termination was wrongful, and it is the basis for the wrongful

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termination claims in the present suit. Korti then filed a Charge

of Discrimination against AWS on April 9, 2012. (Pl.’s Ex. C.) In

his Charge of Discrimination, Korti alleges that AWS terminated him

and discriminated against him on the basis of his race and national

origin. 

Plaintiff notified his bankruptcy attorney of his job loss and

she explained to Korti that he must have consistent income to

sustain his bankruptcy and that without a job, his bankruptcy would

likely fail. (Pl.’s Ex. A, Korti Aff. ¶ 7.) Indeed, the

Bankruptcy Trustee moved to dismiss the original bankruptcy

petition because Korti failed to make payments as required by the

terms of the Chapter 13 plan. (Def.’s Ex. C.) Korti tried to find

gainful employment, but he was unsuccessful. Consequently, Korti

moved to dismiss the Petition because he could no longer make the

required payments. (Def.’s Ex. D.) The original bankruptcy

petition was dismissed on October 17, 2012 without a discharge. 

(Def.’s Ex. E.) 

About two months after his first bankruptcy petition was

dismissed, Korti received a Right to Sue letter in connection with

his Charge of Discrimination on December 10, 2012. (Def.’s Ex. F.)

Korti then filed a second Voluntary Petition for Chapter 13

bankruptcy on February 14, 2013. (Def.’s Ex. G.) Korti did not

list his EEOC Charge of Discrimination or any potential claims

against AWS anywhere on Schedule B. Every creditor who asserted a

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claim in Plaintiff’s original bankruptcy is currently listed in

Plaintiff’s pending bankruptcy. (Pl.’s Ex. G.) Korti filed the

present lawsuit alleging race and national origin discrimination on

March 4, 2013. (DE #1.) 

During Plaintiff’s 341 Meeting of Creditors, held on March 28,

2013, Plaintiff disclosed his claim to the Trustee. (Korti Aff. ¶

18.) On approximately June 6, 2013, a letter regarding an upcoming

deposition in this case was sent to Korti from Christopher C. Myers

& Associates. (Id. ¶ 19.) Shortly thereafter, Plaintiff took the

letter to his bankruptcy attorney, Laura Boyer-King (over one month

before Defendant’s Motion for Summary Judgment was filed). (Id. ¶

20.) Ms. King drafted an Amendment and Notice of Amendment to

Plaintiff’s Schedule B and a Modification to Plan with accompanying

Motion, in which Plaintiff agreed to “turn over any proceeds from

the settlement, award or other disposition of the litigation

pending before the United States District Court for the Northern

District of Indiana.” (Pl.’s Ex. L.) Those documents were filed

with the Bankruptcy Court on August 19, 2013. Id.

The Chapter 13 Trustee has consented to Plaintiff’s

modification to the Plan, and on September 12, 2013, Judge Robert

E. Grant granted the modification. (DE #36-5.) The Modification

states Plaintiff agrees to turn over any proceeds from his civil

action to the Trustee as additional funding to the Plan. Id.

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DISCUSSION

Pursuant to Rule 56(a) of the Federal Rules of Civil

Procedure, summary judgment is proper only if it is demonstrated

that there is no genuine issue as to any material fact and that the

moving party is entitled to judgment as a matter of law. See

Nebraska v. Wyoming, 507 U.S. 584, 590 (1993); Celotex Corp. v.

Catrett, 477 U.S. 317, 322-23 (1986). In other words, the record

must reveal that no reasonable jury could find for the nonmovant.

Karazanos v. Navistar Int’l Transp. Corp., 948 F.2d 332, 335 (7th

Cir. 1991); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

250 (1986). In deciding a motion for summary judgment, a court

must view all facts in the light most favorable to the nonmovant.

Anderson, 477 U.S. at 255; NUCOR Corp. v. Aceros Y Maquilas de

Occidente, 28 F.3d 572, 583 (7th Cir. 1994).

The burden is upon the movant to identify those portions of

“the pleadings, depositions, answers to interrogatories, and

admissions on file, together with the affidavits,” if any, that the

movant believes “demonstrate the absence of a genuine issue of

material fact.” Celotex, 477 U.S. at 323. Once the movant has met

this burden, the nonmovant must support its assertion that a fact

is genuinely disputed by citing to particular parts of materials in

the record. Fed. R. Civ. P. 56(c); Becker v. Tenenbaum-Hill

Assoc., Inc., 914 F.2d 107, 110 (7th Cir. 1990); Schroeder v.

Lufthansa German Airlines, 875 F.2d 613, 620 (7th Cir. 1989). 

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“Whether a fact is material depends on the substantive law

underlying a particular claim and ‘only disputes over facts that

might affect the outcome of the suit under governing law will

properly preclude the entry of summary judgment.” Walter v.

Fiorenzo, 840 F.2d 427, 434 (7th Cir. 1988) (emphasis in original)

(citing Anderson, 477 U.S. at 248).

“A party who bears the burden of proof on a particular issue

may not rest on its pleading, but must affirmatively demonstrate,

by specific factual allegations, that there is a genuine issue of

material fact which requires trial.” Beard v. Whitley Country

REMC, 840 F.2d 405, 410 (7th Cir. 1988) (emphasis in original); see

also Hickey v. A.E. Staley Mfg., 955 F.2d 1385, 1391 (7th Cir.

1993). Therefore, if a party fails to establish the existence of

an essential element on which the party bears the burden of proof

at trial, summary judgment will be appropriate. In this situation,

there can be “’no genuine issue as to any material fact,’ since a

complete failure of proof concerning an essential element of the

nonmoving party’s case necessarily renders all other facts

immaterial.” Celotex, 477 U.S. at 323.

Judicial Estoppel

In its opening brief, AWS argued that the doctrine of judicial

estoppel precludes Korti from maintaining this suit based upon his

failure to disclose it in his previous Chapter 13 bankruptcy, and

8
when he first filed his current bankruptcy petition. Of course, it

is undisputed that Korti did inform the Trustee and his bankruptcy

attorney during his 341 Meting of Creditors, and then filed an

Amended Schedule B and Notice of Amendment to include his civil

claim in his Schedule B and Modification of Plan. In the Plan

Modification, Plaintiff agreed to “turn over any proceeds from the

settlement, award or other disposition of the litigation.” (Pl.’s

Ex. I.) 

Judicial estoppel is an equitable doctrine used in the court’s

discretion to prevent litigants from gaining by taking inconsistent

positions in separate proceedings. See, e.g., Cannon-Stokes v.

Potter, 453 F.3d 446, 448 (7th Cir. 2006). Courts may apply the

doctrine where:

(1) the later position is clearly inconsistent with

the earlier position; (2) the facts at issue are

the same in both cases; (3) the party to be

estopped convinced the first court to adopt its

position; and (4) the party seeking to assert an

inconsistent position would derive an unfair

advantage or impose an unfair detriment on the

opposing party if not estopped.

United States v. Christian, 342 F.3d 744, 747 (7th Cir. 2003). 

Estoppel “is to be applied where intentional self-contradiction is

being used as a means of obtaining [an] unfair advantage.” Medcom

Holding Co. v. Baxter Travenol Labs., Inc., 106 F.3d 1388, 1396

(7th Cir. 2997) (internal quote and citation omitted). In

contrast, courts should not apply the doctrine where the debtor’s

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failure to disclose was the result of mistake or inadvertence. 

See, e.g., In re Cassidy, 892 F.2d 637, 642 (7th Cir. 1990). 

In this case, Defendant has cited to nothing in the record to

indicate that Korti intentionally omitted the litigation from his

first filing, or at the beginning of the second petition, or that

he possessed a bad motive. In his affidavit, Korti attested that

“[a]t no time was I under the knowledge, impression or belief that

I was required to notify the Court of my Charge of Discrimination”

and that he never “purposefully withh[e]ld information from [his]

bankruptcy attorney, Chapter 13 Trustee or the Bankruptcy Court.”

(Korti Aff. ¶¶ 14, 15, 23.) When Korti filed his second Chapter 13

Bankruptcy, he notified the Trustee at the 341 Meeting of Creditors

that he “may have a lawsuit” and then later had his attorney draft

an amendment to the Schedule B and a Modification to the Plan. 

(Id. ¶¶ 18, 20.) 

In their response memorandum, Korti cites to Rainey v. United

Parcel Serv., Inc., 466 F. App’x 542, 544 (7th Cir. 2012). Rainey

also involved a debtor who omitted an EEOC charge from a Chapter 13

petition. After the bankruptcy case closed, the EEOC issued a

right to sue letter and the debtor sued his employer. The lower

court dismissed the lawsuit because the debtor lacked standing, the

bankruptcy case was closed, and the trustee did not have a chance

to administer or abandon the claims so they remained part of the

estate. Id. at 543-44. However, the court ruled the debtor could

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pursue the litigation claims if the bankruptcy court reopened his

case. Id. at 544. On appeal, the debtor sought to vacate the

dismissal as he had succeeded in reopening his Chapter 13 case and

amended the schedule of personal property to include the

discrimination claims. Id. The Seventh Circuit specifically

rejected the employer’s argument that the debtor was barred from

pursuing the claims because he had not disclosed them earlier,

reasoning as follows:

[A]s long as the bankruptcy proceedings are ongoing

- which is now the situation as to Rainey - a

Chapter 13 debtor can inform the trustee of

previously undisclosed legal claims, and unless the

trustee elects to abandon that property, the debtor

may litigate the claims on behalf of the estate and

for the benefit of the creditors without court

approval. . . . Preventing Rainey from bringing his

claims would undermine the interests of his

creditors . . . .”

Rainey, 466 F. App’x at 544-45; see also Aikens v. Soul Circus,

Inc., No. 09 C 6678, 2011 WL 2550828, at *4 n. 5 (N.D. Ill. June

24, 2011 (emphasis in original) (citations omitted) (“The ‘own

benefit’ distinction is important: judicial estoppel is an

equitable doctrine, and the Seventh Circuit has stated that it

would be inequitable to use the doctrine to harm creditors . . . . 

Thus, unless the bankruptcy estate itself engages in ‘contradictory

litigation tactics,’ there is no estoppel on behalf of the

estate.”). 

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This Court believes, along with the rationale stated in Comein

v. City of Country Club Hills, No. 11 C 5766, 2013 WL 5408640, at

*3 (N.D. Ill. Sept. 26, 2013), that the holding in Rainey:

[I]s particularly appropriate where, as here, the

debtor’s inadvertence or mistake, as opposed to

intentional concealment designed to mislead, is the

reason for nondisclosure in a bankruptcy petition. 

See New Hampshire v. Maine, 532 U.S. 742, 753

(2001) (“We do not question that it may be

appropriate to resist application of judicial

estoppel where a party’s prior position was based

on inadvertence or mistake.”); Lujano, 2012 WL

4499326, at *10 (“[C]ourts should not apply the

doctrine where the debtor’s failure to disclose was

the result of mistake or inadvertence. Instead,

estoppel is to be applied where intentional selfcontradiction is being used as a means of obtaining

an unfair advantage.”). 

Indeed, this line of case law is so fitting, and so ironclad,

that Defendant actually concedes in his reply memorandum (in

contrast to his original argument in support of summary judgment)

that Korti’s claims “should not be dismissed” (DE #35, p. 3) and

then specifically states in its sur-sur reply that AWS withdraws

its request that the Court dismiss this case in its entirety on the

grounds of judicial estoppel. (DE #46, p. 2.) This Court agrees

that Plaintiff should not be judicially estopped from pursuing the

instant litigation against AWS. There is no evidence suggesting

that Korti’s nondisclosure was in bad faith, and because the

creditors in this second proceeding are the same as the first, they

will not suffer any prejudice either.

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The last issue, though, is one that the Defendant inserted for

the first time in its reply memorandum. Defendant contends that

Korti should be judicially estopped from recovering more than he

owes his creditors and that the “available damages in this case

should be capped to the amount owed in Korti’s bankruptcy

proceeding.” (DE #35, p. 3.) Plaintiff has directed this Court to

the analogous case of Osterhout v. Wal-Mart Stores East, LP, No.

2:10 CV 363, 2012 WL 1434842 (N.D. Ind. Apr. 25, 2012), in which

the Defendant filed a motion to dismiss, but then conceded in their

reply that their argument of judicial estoppel was foreclosed based

upon Rainey. (Id. at *1.) Defendants withdrew their request to

dismiss the plaintiff’s claim, but raised the new issue of asking

the court to limit Plaintiff’s damages to the amount owed to her

creditors in her bankruptcy case, arguing “she should not be

rewarded for attempting to defraud her creditors by her delay in

notifying the trustee of this lawsuit.” (Id. at *2.) Defendants

also asked the court to “declare that [Plaintiff] may only pursue

her case on behalf of the bankruptcy estate.” Id. The court

denied the request, noting that arguments raised for the first time

in a reply brief are waived. Id. (citing Broaddus v. Shields, 665

F.3d 846, 854 (7th Cir. 2011); Mendez v. Perla Dental, 646 F.3d

420, 423-24 (7th Cir. 2011)). But it also rationalized that: 

[E]ven if the Court considered the arguments, the

Court must defer their resolution to the expertise

of the Bankruptcy Court. If, as the Defendants

suggest, the Plaintiff intended to defraud her

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creditors and the Bankruptcy Court makes such a

finding, it may determine the appropriate remedy

for that conduct. Similarly, whether [Plaintiff]

may only pursue her case for the benefit of the

bankruptcy estate is within the jurisdiction of the

bankruptcy court.

Osterhout, 2012 WL 11434842, at *2. 

This Court agrees with all of the reasoning set forth in

Osterhout - it was improper for Defendant to set forth the new

issue of whether Korti’s damages should be capped at the amount he

owes to his creditors for the first time in its reply brief.1

Moreover, even if this Court considered the merits of the argument,

the bankruptcy court is the proper entity to determine this issue. 

The Chapter 13 Trustee has consented to Plaintiff’s Modification

Plan, and Judge Robert E. Grant granted the Modification. (Pl.’s

Ex. D.) The Modification states that Plaintiff will turn over any

proceeds from his civil action to the Trustee as additional funding

to the Plan. Whether Korti’s damages should be limited to the

amount owed to his creditors in his bankruptcy case is an issue

within the jurisdiction of the bankruptcy court. 

1

Defendant argues that AWS could not have addressed this

issue in its original summary judgment motion because Korti did

not list the lawsuit as a bankruptcy asset until after the motion

for summary judgment was filed. Nevertheless, at the time the

instant motion was filed, on July 8, 2013, Korti had already

disclosed to the Trustee at the 341 Meeting of Creditors, that he

may have a lawsuit, and had already consulted with his bankruptcy

attorney. (Korti Aff. ¶¶ 18, 20.) Even assuming, arguendo, AWS

did not waive this argument, the Court additionally finds it

fails on the merits. 

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CONCLUSION

For the aforementioned reasons, Defendant’s Motion for Summary

Judgment, filed by Defendant, A.W. Holdings, LLC d/b/a Anthony

Wayne Services (DE #25), is DENIED.

DATED: February 26, 2014 /s/ RUDY LOZANO, Judge

United States District Court

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