Preliminarily, while a representation that the lawsuit has no value would be inappropriate,
see e.g., Schaut & Sons, Inc. v. Mt. Log Homes, Inc., No. 01 C 801, 2004 U.S. Dist. LEXIS 12008,
*13 (E.D. Wis. May 12, 2004) (“[rJepresenting that a claim has no monetary value is hardly different
than denying the existence of the claim altogether”), Thomas stated the value was “unknown.” There
is a distinction between unknown, as opposed to no value. For that reason, Guardsmark’s reliance
on Barger v. City of Cartersville, 348 F.3d 1289 (11th Cir. 2003), is misplaced. In Barger, the
debtor informed the trustee of her pending discrimination suit during the creditors meeting.
However, when asked the monetary value of the lawsuit, she represented she only sought
reinstatement. In fact, she also sought backpay, liquidated damages, and compensatory and punitive
damages. /d. at 1296. In light of her deception, the court determined the trustee could not be faulted
for failing to conduct his responsibility of further investigating the lawsuit as property of the estate.
Id. Clearly, the debtor in Barger made an affirmative misrepresentation that her claim had no
monetary value. There is no evidence here that Thomas wilfully made any false or misleading
statements.

Guardsmark cites some authority to support the proposition that a claim may be considered
improperly scheduled and thus stricken when an unknown value is assigned to the claim. See e.g.,
Westland Oil Dey. Corp. v. Mcorp. Mgmt. Solutions, Inc., 157 B.R. 100, 103 (S.D. Tex. 1993);
Donaldson, Lufkin & Jenrette Securities Corp. v. Mathiansen, 615 N.Y.S.2d 384 (N.Y. App. Div.
1994). However, there is also contrary authority. See e.g., In Re Adair, 253 B.R. 85, 89 (9th Cir.
2000) (“[t]he mere fact that the Debtor indicated that the value of the Lawsuit was essentially
unknown does not mean that she misled the Trustee or that he was deprived of sufficient information

so as to preclude him from performing his duties”).


his duties. See e.g., In Re Adair, 253 B.R. 85, 89 (9th Cir. 2000). Indeed, according to Thomas, the
trustee performed his duties by asking questions about the lawsuit at the October 2004 creditors
meeting, including the identity of the defendant and the status of the case. See Resp. to Mot. at 6.
The trustee was aware of Thomas’ contingent claim, had an opportunity to investigate the claim, and
subsequently issued a finding of no assets. Accordingly, it is reasonable to conclude the trustee
abandoned the claim. See e.g., Helms v. Arboleda, 224 B.R. 640, 645 (Bankr. N.D. Ill. 1998) (upon
entry of the no asset report a trustee effectively abandons any interest the estate had in property);
Wallace v. Enriquez, 22 B.R. 934, 936 (D. Neb. 1982) (abandonment was done knowingly when
claim was listed as contingent and unliquidated, was not hidden from trustee or creditor, and estate
was on notice of its existence); Jn Re Atkinson, 62 B.R. 678, 680 (Bankr. D. Nev. 1986) (“[w]here
the trustee has knowledge that is sufficient to put him upon diligent inquiry as to the subject asset,
the abandonment is held to have been knowingly made and hence is irrevocable”); In Re Adair, 253
B.R. at 89 (“[he Trustee bore the burden of acting if he wanted further updated information about
the Lawsuit”). Because the trustee abandoned the claim, Thomas possesses standing to pursue his
cause of action against Guardsmark. See Nationwide Acceptance, 2000 U.S. Dist. LEXIS 12496 at
*7, Guardsmark’s tardy motion to dismiss for lack of standing must be denied.
III. Discovery Sanctions

Guardsmark seeks sanctions against Thomas for failure to produce bankruptcy filings during
discovery. Specifically, Guardsmark requests: (1) dismissal of Thomas’ claims, or (2) permission
to introduce evidence regarding the bankruptcies and an instruction that the jury may draw an

adverse inference from Thomas’ discovery abuses.



the discharge of any of his debts. Under a “no harm, no foul theory,” no creditor was impacted by
Thomas’ 2003 bankruptcy filing.

B. 2004 Bankruptcy

The real focus of Guardsmark’s motion is Thomas’ 2004 petition. It is clear that disclosure
of pending lawsuits during bankruptcy is required. However, Guardsmark acknowledges Thomas
did in fact list a “lawsuit for wrongful termination” in his 2004 bankruptcy filing. Guardsmark
complains that Thomas failed to identify: (1) parties to the lawsuit; (2) when the claim was filed; (3)
the court or tribunal where the claim was pending; (4) case number; and (5) cause of action asserted.'
But Guardsmark provides no authority that suggests disclosure of these facts was required.

Guardsmark further asserts by merely listing the current market value of the suit as

“unknown,” Thomas effectively represented the suit had no value. Guardsmark contends any
purported inability to estimate the value of his claim is belied by Thomas’: (1) complaint, which
seeks $250,000 in compensatory damages and more than $1 million in punitive damages (filed
before the petition); (2) Rule 26 disclosures, which listed lost wages of $23,850 plus unspecified
hardship, emotional distress and punitive damages (served before the petition); and (3) amended
Rule 26 disclosures, which listed lost wages as $63,850 plus unspecified lost benefits, emotional

distress and punitive damages (served four days after he attended the meeting of creditors). These

arguments are rejected.

'Guardsmark contends the reference to “lawsuit for wrongful termination” is capable of
applying to a second claim for wrongful termination that Thomas filed against a prior employer -
Intertech. This argument is specious. Thomas’ petition refers to a “lawsuit for wrongful
termination.” According to Guardsmark’s motion, Thomas did not file a lawsuit against
Intertech. Rather, he filed a charge with the Illinois Human Rights Commission after he was laid
off.


Moreover, this circuit subscribes to the notion that “intentional wrongdoing is the focus of
judicial estoppel.” Cannon-Stokes v. Potter, No. 03 C 1942, 2004 U.S. Dist. LEXIS 3272, *15-17
(N.D. Ill. Mar. 4, 2004). In Cannon-Stokes, the debtor disclosed her lawsuit to her bankruptcy
attorney, but the lawsuit was completely omitted from her scheduling petition. While explicitly
refusing to condone the non-disclosure, the court determined: (1) the debtor’s motive to conceal was
not self-evident; (2) the debtor professed an innocent reason for the non-disclosure (that she was
misinformed); and (3) the debtor credibly asserted she relied on her attorney’s expertise in preparing
her petition. /d. at *13-16. Further, the court noted that “the trustee is authorized under 11 U.S.C.
§ 350 and Federal Rule of Bankruptcy Procedure 5011 to reopen the bankruptcy case to administer
assets in order to capture any monetary recovery she might obtain in her lawsuit.” /d. at *14, While
reopening the case may not cure a failure to disclose where there is sufficient evidence to infer
intentional manipulation by the debtor, the court concluded “the circumstances here are quite
different.” /d. atn.3. Accordingly, the court was not persuaded that judicial estoppel served the
interests of justice where there was little evidence of intentional wrongdoing and in light of the
trustee’s capacity to reopen the bankruptcy case if deemed prudent. /d. at *15-16.

The reasoning of Cannon-Stokes seems equally appropriate here. Indeed, unlike Cannon-
Stokes where the claim itself was not disclosed, Thomas scheduled the pending lawsuit. There is no
evidence of bad faith. Listing an unknown value of the claim does not reflect bad faith, particularly
in light of Cannon-Stokes where bad faith was not found and nothing was disclosed. See also In Re
Adair, 253 B.R. at 89. The damages Thomas sought in the complaint or detailed in his Rule 26
disclosures do not alter the analysis because damages sought do not necessarily reflect the value of

the claim. This is not, for example, a breach of contract case where the amount at issue is defined.


Guardsmark provides no evidence that Thomas committed discovery abuses. Guardsmark
complains that Thomas only produced two pages of documents in response to its specific discovery
request for all documents filed with any bankruptcy court on or after November 16, 2001. First,
Thomas asserts he disclosed all documents that were in his possession, and that his bankruptcy
attorney did not give him copies of any additional documents. Second, if Guardsmark was
dissatisfied with Thomas’ response, it had multiple avenues at its disposal for pursuing more
adequate disclosure months ago. For example, Guardsmark could have pursued the matter further
with Thomas and his counsel, as required by Local Rule 37.2, and, if unsuccessful, filed a motion
to compel. Thomas indicates the two pages produced identified the bankruptcy case captions. Given
Guardsmark’s request for documents related to bankruptcy proceedings, which implies a suspected
link between bankruptcy proceedings and this lawsuit, it is curious that Guardsmark’s suspicions of
incomplete disclosure were not raised long ago. Having notice of Thomas’ bankruptcy, including
case captions, in December 2004, Guardsmark certainly could have obtained the public records
before now. Its failure to do so resulted in an unnecessary “emergency” motion. The motion for
discovery sanctions is denied.

CONCLUSION
For the foregoing reasons, Guardsmark’s emergency motion to dismiss is denied.

July 7, 2005 ENTER:

United States District Judge



IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

CARL E. THOMAS, »)
Plaintiff, } No. 02 C 8848
Vv. } Suzanne B. Conlon, Judge
GUARDSMARK, INC. }
Defendant. }

MEMORANDUM OPINION AND ORDER

Carl Thomas (“Thomas”), a security guard, claims Guardsmark, Inc. wrongfully terminated
his employment in violation of public policy. Guardsmark’s summary judgment motion and motions
in limine were denied. See 06/24/05 Order, Dkt. Nos. 70-71;Thomas v. Guardsmark, No. 02 C 9948,
2005 U.S. Dist. LEXIS 7407 (N.D. Ill. Mar. 16, 2005). A mere two days before trial, Guardsmark
files an emergency motion to dismiss based on judicial estoppel and lack of standing or,
alternatively, dismissal as a discovery sanction. Guardsmark contends in December 2004, Thomas
only disclosed two pages of documents related to bankruptcy proceedings in response to its request
for all documents filed with any bankruptcy court. Guardsmark asserts it learned of the grounds for
this motion on Saturday, July 2, 2005, when Guardsmark’s counsel directed his firm’s docket
manager to search for copies of Thomas’ bankruptcy filings. Given Guardsmark’s knowledge of
Thomas’ bankruptcy proceedings in December 2004, the emergency motion on the eve of trial raises
questions of Guardsmark’s lack of due diligence or possible bad faith in disrupting Thomas’ trial

preparations. In any event, the purported emergency motion must be denied.


Judicial estoppel does not serve the interests of justice here because there is no evidence of
intentional wrongdoing. The motion to dismiss on judicial estoppel grounds is denied.
i. Standing

Guardsmark next contends Thomas is no longer the party in interest in this lawsuit because
the claim against Guardsmark became part of the bankruptcy estate. Thus, Guardsmark contends
Thomas lacks standing to pursue this claim and the lawsuit must be administered by the trustee.

Claims that exist prior to bankruptcy become property of the bankruptcy estate. See ¢.g.,
Cable v. Ivy Tech State Coll., 200 F.3d 467, 472-73 (7th Cir. 1999); Nationwide Acceptance Corp.
vy. Markhoff, No. 99 C 5632, 2000 U.S. Dist. LEXIS 12496, *6-7 (N.D. Ill. Aug. 23, 2000).
However, a debtor may regain standing to pursue his cause of action if it has been abandoned by the
trustee. See Nationwide Acceptance, 2000 U.S. Dist. LEXIS 12496 at *7. Pursuant to 11 U.S.C. §
554, the trustee may abandon estate property affirmatively, if ordered to do so by the bankruptcy
court, or if the scheduled property is not administered at the time of the estate. See 11 U.S.C. §
554(a)-(c); see also Williams v. United Techs. Carrier Corp., 310 F. Supp. 2d 1002, 1010 (S.D. Ind.
2004). Unscheduled property may not be abandoned to the debtor. /d.

Preliminarily, the trustee is not arguing that he inadvertently abandoned the claim. Instead,
Guardsmark argues that the trustee was provided insufficient information to decide whether to
pursue the claim and he may therefore reopen the bankruptcy to administer the lawsuit. The court
is not convinced that the trustee had insufficient information to decide whether to pursue Thomas’
claim. Thomas scheduled the lawsuit as an asset and the trustee had an obligation to investigate the
lawsuit’s value for the benefit of the estate. The fact that Thomas listed the value of the asset as

unknown does not necessarily mean the trustee was deprived of sufficient information to perform


BACKGROUND

Thomas filed this lawsuit in December 2002. According to the motion, on August 13, 2003,
Thomas filed a petition for Chapter 13 bankruptcy. He did not disclose the pending lawsuit in his
bankruptcy petition. See Mot. Ex. A. In November 2003, after a meeting of creditors, the
bankruptcy court confirmed Thomas’ Chapter 13 plan. Thomas voluntarily dismissed his Chapter
13 bankruptcy on May 19, 2004.

On September 13, 2004, Thomas filed a petition for Chapter 7 bankruptcy. Thomas was
represented by counsel in his bankruptcy petition. The petition lists $4,950 in assets, including an
automobile, household goods, clothing, and a “lawsuit for wrongful termination.” See Mot. Ex. B.
The petition states the current market value of the lawsuit is “unknown.” Jd. On October 22, 2004,
the trustee conducted a meeting of creditors and entered a “Finding of No Assets.” The bankruptcy
court issued a discharge order on December 23, 2004. Thomas received a discharge of debt in excess
of $26,000.

In November 2004, Guardsmark requested that Thomas produce “[a]ll documents . . . filed
with any bankruptcy court on or after November 16, 2001.” On December 7, 2004, Thomas
responded, with no objections, that “[aJll documents responsive to this request are produced
herewith. The Plaintiffs investigation continues for other responsive documents.” Thomas
produced two pages related to bankruptcy proceedings.

DISCUSSION
I Judicial Estoppel
Guardsmark contends Thomas is judicially estopped from pursuing his lawsuit because he

did not properly disclose the existence or value of this lawsuit in his bankruptcy filings. “The


doctrine of judicial estoppel precludes a plaintiff from pursuing claims about which [he] had
knowledge, but did not disclose, during bankruptcy proceedings.” Tidemann v. Schiff, Hardin &
Waite, No. 03 C 998, 2005 U.S. Dist. LEXIS 5607, *20-21 (N.D. Ill. Feb. 14, 2005). When a debtor
fails to disclose a cause of action, he is judicially estopped from pursuing that cause of action after
emerging from bankruptcy. /d. at *21. Several courts have barred claims that debtors failed to
schedule during bankruptcy proceedings. See e.g., Barger v. City of Cartersville, 348 F.3d 1289,
1296 (1 1th Cir. 2003); Krystal Cadillac-Oldsmobile GMC Truck, Inc. v. GMC, 337 F.3d 314 (3d Cir.
2003); Schaut & Sons, Inc. v. Mt. Log Homes, Inc., No. 01 C 801, 2004 U.S. Dist. LEXIS 12008
(E.D. Wis. May 12, 2004). “The rule is considered necessary to preserve the integrity of the
bankruptcy system, which depends on full and honest disclosure by debtors.” Jd. “Judicial estoppel
generally prevents a party from prevailing in one phase of a case on an argument and then relying
on a contradictory argument to prevail in another case.” Cannon-Stokes v. Potter, No. 03 C 1942,
2004 U.S. Dist. LEXIS 3272, *6-7 (N.D. Ill. Mar. 4, 2004). Judicial estoppel only applies where
“intentional self-contradiction is being used as a means of obtaining unfair advantage ...” /d. at
*10. “Intentional wrongdoing is the focus of judicial estoppel.” Jd. at *15-16.

A. 2003 Bankruptcy

While Guardsmark contends Thomas’ motive to conceal is evidenced by his failure to
schedule the pending lawsuit in his 2003 bankruptcy filing, it does not seriously pursue this claim.
Indeed, it is difficult to see how Thomas gained an unfair advantage by not disclosing his pending
lawsuit in the 2003 petition. See id. at *9. Although the bankruptcy court confirmed Thomas’

Chapter 13 plan, Thomas voluntarily dismissed his bankruptcy on May 19, 2004 without obtaining