### FI LED U.S . COURT OF APPEALS ELEVENTH CI RCUIT March 31, 2004 THOMAS K. KAHN

CLERK [P UBLI SH]
IN THE UNIT ED STATES COURT OF APPEALS FOR THE ELE VEN TH C IRCU IT

________________________ No. 02-16185

________________________ D. C. Docket N o. 99-00038-CV -N-S VI CK I PA RK ER , Plain tiff, TH OM AS E. R EY NO LD S,
Intervenor-Plai ntiffAp pellan t,
versus W EN DY 'S IN TE RN AT IO NA L, IN C., W EN -A LA BA M A, W en-A labam a, Inc ., De fend ants- Ap pellee s.

________________________ Appeal from the United States Distri ct Court for the Northern Dis tr ic t of Alab ama

_________________________ (March 31, 2004)* Honorable Alfred T. Goodwin, United States Circuit Judge for the Ninth Circuit, sitting

by designa

tion. 2 Before TJOF LAT , BIRCH and GO OD WIN * , Circuit Judges. BIRCH , Circuit

Judge: Ban kru ptcy tr ustee Th om as E . Rey nold s, plain tiff-in terve nor in this emp loyme nt discrim ination ac tion filed b y Vick i Park er again st W endy’s Internati onal, Inc. , and Wen-A labama, Inc. (hereinaft er colle ctively referred t o as “Wendy’s”), appeals the dist rict c ourt’s finding that judi cial e stoppel bars Rey nold s fro m p ursu ing P arke r’s claim on b ehalf of P arke r’s cre ditor s in bankruptc y. The di stri ct cour t appl ied our hol ding in Burnes v. Pemco Aeropl ex, Inc. , 291 F.3d 1282 (11th Cir. 2002), and found that judici al est oppel was proper because Parker fail ed to discl ose the existence of her discrimination cla ims when she file d for Chapter 7 bankruptcy. Because Parker’s actions indicate t hat her omission in the bankruptcy court was inadvertent

and because the equities bala nce in favor of all owing Reynolds to proceed, we RE VER SE the decision of the dis trict
cou rt. I. BACKGRO UND In January 19 99, Parker filed a co mplaint, as amended , against Wend y’s, allegin g rac ial disc rimin ation in the wo rkp lace a nd r etaliatio n in v iolatio n of Title VI I of th e Civ il Rig hts A ct, 42 U.S .C. § 200 0e, et seq . Wendy’s de nied t he3

all egati ons conta ined i n the compl aint , and t he case was set f

or tri al. On 9 February 2001, Parker and her former husband filed a peti tion for rel ief under Chapter 7 of

the Bankruptcy Code in t he United St ates Bankruptcy Court for t

he Northern Division of A labama. The sc hedules in the bank ruptcy case did not list Parker’ s cla im agai nst Wendy’s as a pot enti al as set. On 31 M ay 2001, t he bankruptc y court

enter ed an order

granting a “no as set” discha rge for Par

ker and her f orm er hu sban d. Thereafter, Parker’s attorney in this case request ed a tria l continuance, contending that Parker had inadvertentl y fail ed to discl ose the existence of her discrimination case to t

he trustee of her bankruptcy estate, Reynolds, who needed to be adv ised o f the d iscrim inatio n actio n in o rder to reo pen the b ank rup tcy cas e. The court granted this motion. Reynolds moved to intervene in this case or, alt ernat ively, for

substituti on as the realparty in interest . Reynol ds infor med the distri ct court t

hat Parker had fil ed for reli ef under Chapter 7 on or about 9 February 200 1, an d ha d faile d to d isclos e the e xisten ce of the d iscrim inatio n claim s. Reynolds s tat ed that , after Parker ’s at torney s infor

med him that

the di scri minati on
case e xisted , he in vestig ated a nd th en m ove d to r eop en th e ban kru ptcy c ase to allow for further admini strat ion of the bankruptcy ass ets. The bankruptcy court gran ted h is mo tion to reop en, an d the distric t cou rt gra nted Rey nold s’s m otion to4

intervene. W endy’s th en m oved to dism iss Park er’s discrim ination claim s. W endy’s argued t hat, under our re asoning in Burnes , Parker’s cl aims for monetary damages were barre d by the doc tri ne of judi cialestoppe l beca use she f ail ed to di sclos e the existence of her discri mination suit to the bankruptcy court . Wendy’s contended that Parker had knowle dge of her di scri minati on claims prior to, and during, the ban kru ptcy p roce edin gs an d tha t she w ould not h ave b een e ntitled to a “n o ass et” complete discharge of all debt s had her credit ors, Reynolds, or t he bankruptcy court know n of a lawsu it claiming substantial damages. Acco rding to W endy’s, the fa ct that th e ban kru ptcy c our t reop ened Par ker’s pro ceed ings wa s relev ant o nly
as an ackn ow ledg men t that P arke r’s failu re to d isclos e resu lted in a tang ible b enef it to P arke r in th e ban kru ptcy p roce edin g. The dist rict court gr anted Wendy’ s motion to dismis s, cons trued a s a moti on for jud gme nt on th e pleadin gs. Th e district cou rt foun d that “this cas e [w a]s fac tua lly an d pro ced

ura lly i ndi st ing uis habl e” f rom Burnes because Parker had fail ed to di sclos e the e xist ence of he r disc rimination c lai m when she fil ed for Chapter 7 ba

nkruptcy and the ba

nkruptcy proceeding resul ted i n the di scharge of her d ebts. R 1-3 0 at 2 . As a resu lt, the d istrict co urt h eld th at Pa rker wa s jud icially estop ped from brin ging her d iscrim inatio n claim and dism issed her c om plain t with5

prejudice. Reynolds then moved for reconsiderati on, arguing that t his case was dis ti ngui shable fro m Burnes . Firs t, Rey nold s po inted out th at, wh ere th e rea l party in interest

in Burnes wa s the d ebto r actin g on his o wn beh alf, he re the real p arty in interes t is t

he trustee , Reynolds, acting on behalf of Parker’s cre ditors. Moreover, Reynolds a

rgued that Parker

and her at

torney s infor

med Reynolds of

the cl aim and Reynolds reo pened the ban kruptcy case befo re We ndy’s had m oved to dism iss based on jud icial estoppel. Reynolds contended that this sequence of even ts also dis ti ngui she d th is cas e fr om Burnes because the debtor in Burnes only mo ved to reopen hi s bankrupt cy cas e aft er the defendant argued j udici al es toppel . Reynol ds argued t hat j udici al es toppelshould not apply be cause Par

ker “ha [d] done t

he right thing f or the c reditors of t

he bankrupt cy cas e by reope ning the case and att empting to recover som e value to be paid ag ainst their claims.” R1-32 at 3. Finally, Rey nold s con tend ed th at imp osin g jud icial esto ppe l wo uld r esult in an in justice to the i nnocent c reditors who would be denie d “the possibi lit y of act ually recove ring
som e mo ney” and wo uld g rant a win dfall to W end y’s w ho w ould be ab le to “esc ape the ir own li abil ity at t he expense of the innocent [ credi tors] in the bankruptcy case. ” Id. at 4. The dist rict court de nied Reynol ds’s motion for r econsi derat ion, c oncludi ng1 Because we reverse the district court’s grant of judgment on the plea dings, we do not reach the issue of whether the district court prope rly denied Rey

nolds’s motion for reconsideration. 6 that the di sti ncti ons between t his ca se and Burnes were not det erminative. The district court found that neither Reyno lds’s intervention as the real party in interest nor the f act t hat Reynol ds reopene d the bankr uptcy c ase pri or to Wendy’s asser tion of judi cialestoppe l change d the fa ct t hat Parke r, who remai ned a part y to t he discrimination action, a sserted a cl aim that was inc onsistent wit h the position s he took in t he bankrupt cy proce eding. Reynolds timely appeal ed. II . DI SCUSSI ON Reynolds now appea ls t he dist rict court’ s grant

of judgment

on the pl eadings to Wendy’s and its denialof Reynolds ’s moti on for rec onsider ati on. 1 Specifically, Reynolds argues that t

he distri ct court abused i ts discr etion when it appli ed judicia l estoppel. We re view a judg ment on the p leadings de novo . Cannon v. Cit y of West Palm Beach , 25 0 F. 3d12 99 , 13 01 (1 1th Cir. 20 01 ). “ Add i t i on al l y, we review the dist

rict c ourt’s appli cation of j udicialestoppel for abuse of di screti on.” Burnes , 291 F.3 d at 1 284 . “Th e abu se of discr etion stand ard in clud es rev iew to determine that

the discre tion was not guided by erroneous legalconclusions.” Tala vera v. S cho ol B d. of Palm Bea ch C oun ty , 129 F.3d 1214, 1216 (11th C ir. 199 7).7

As a thre sho ld issu e, w e mu st dete rmin e w heth er the se issu es w ere p rop erly preser ved for appe al. Wendy’s argue s that Reynolds f

ail ed to pre serve t

he iss ue of whether j udici al es toppelappli es for a ppell ate r eview beca

use, prior t o the ent

ry of the district co urt’s ord er dism issing the case, he f ailed to resp ond to W endy’s
mo tion to dism iss in w hich it first ra ised th e issu e of ju dicial e stop pel. W endy’s argument fails because the j udicialestoppel i ssue was raised in t he distri ct court–by Wendy’s in its moti on to dis miss. Moreover, j udici al es toppelwas the preci se is sue the dist

rict court a ddresse d in it s dismi ssalorder and t he iss ue presented in this appeal is wh ether that application was app ropriate. Accord ingly, the iss ue o f jud icial esto ppe l is sub ject to o ur re view
. “Judi cialestoppe l is an equitable c oncept invoked at a court’ s disc reti on” and designed “to prevent the perversi on of the judici al process . ” Burnes , 291 F.3d at 1285 (c itation omi tte d). Alt hough the Supreme Court has note d that

“the circumstances under which judicial e stoppel may appropriat ely be invoked are probably not reducibl e to any generalformulation of principle,” New H ampshire v. Maine , 53 2 U. S. 74 2, 75 0, 12 1 S. Ct
. 18 08 , 18 15 (2 00 1) (c i t ati on s o mi t t ed ), we gen erally c ons ider tw o fac tors. “F irst, it m ust b e sho wn that th e alleg edly inconsist ent positi ons were made und er oath in a pri or proceeding. Second, such inconsi stenc ies must

be shown to have be en cal culated to make a mockery of t

he8

judicia l syst em.” Burnes , 291 F.3d at 1285 (citation omitted). The district court correctly determined that the firs t prong of this t est was met; however, the di stric t
cou rt erre d in c onc ludin g tha t the se con d pr ong wa s also met. Reynolds concedes that Parker took inconsistent positions in bankruptcy
cou rt and distric t cou rt. Re yno lds ar gue s that P arke r’s inc ons istent s tatem ents should not be attributed to him and that , even if j udicialestoppel would bar Parker, it should not bar R eynolds from pursuing this claim on behalf of Par ker’s creditors. Reynolds contends that j udicialestoppel should not apply to him, as bankruptcy trustee , because he did not know of the discrimination cla im during the bankruptcy pro ceed ings and , there fore , did n ot tak e inco nsiste nt po sition s in th e cou rts. Moreover, Reynol ds posit s that applying judic ialestoppe l to him would not serve the policy

of encouraging honest discl osure to the court s because Reynolds was
nev er dis hon est w ith the cou rts. This argument fails because general bankruptcy law requires that

the trust ee in bankruptcy does not have any more right s than the debtor has and cannot reach
mo re ass ets tha n the deb tor ca n. Bank of Marin v. Engl and , 385 U.S. 99, 101, 87 S. Ct. 274, 276 (1966) (“ The trustee succ eeds only to suc h right s as t he bankrupt possess ed; and t

he trus tee i s subje ct t o allclaims and defens es which might have been asser ted ag ainst th e ban kru pt bu t for th e filing of th e petitio n.”); see also In re9

Halabi , 184 F.3d 1335, 1337 (11th C ir. 1999) (“[ T]he trustee ’s powers are
necess arily li mited to the ac tualor potentialpropert y of the bankruptc y est ate. The trustee’s strong a

rm reache s only s o far as to enabl e him to avoid ‘a ny tra nsfer of prop ert y of the debtor or

anyobl igati on i ncur

red by t he debto r. 11 U.S. C. §544(a).’” (citati on omitted)). Because Parker made inconsistent state ments under oath to the di stric t court and to t he bankruptcy court, t

he first prong of our general test fo r jud icial esto ppe l is me t. Whether Parker’s inconsist ent statements were “calcul ated to make a
mo cker y of th e jud icial sys tem,” as req uired by th e seco nd p ron g, is n ot as c lear. Th is pro ng r equ ires th at Pa rker inten ded to m islead the b ank rup tcy co urt. “[J] udici al es toppelappli es in s ituations involving inte ntiona l cont radic tions , not simple error or inadvertence.” Burnes , 291 F.3d at 1286. In Burnes , we deter min ed th at inten t can b e infe rred from the re cord and that su ch an infer ence is appropriate when the evidence shows that t he debtor knew about the undisclosed claim s and had mo tive to con ceal th em f rom the b ank rup tcy co urt. Id. at 12 87. Alth oug h the se fac tors, w hen pres ent, ca n cre ate an infer ence of in tent, w e no te that t hey create only an inference and are not conclusi ve proof of intent. The other circ umstance s of the case may negate that

infer ence. In Burnes , we noted that “courts must always give due considerati on to all of t he circumstances of a2 Parker does not deny that she knew of her discrimination claim before and during the bankruptcy pr

oceedings. Moreover, Parker would have motive to conceal this claim from the bankruptcy c ourt–to receive a “no asset” discharge. 10 partic ular c ase w hen con sider ing th e app licability ” of ju dicial e stop pel. Id. at 1286. We conclude that simply asking whet

her the re was knowledge and motive to conce al, without c onsidering al l of t he other circ umstance s of the case, as the dist rict court di d here, was error. Moreover, t he error in thi s case was not harmless because t

he total ity of t

he circumstances in this c ase shows that, even thou gh P arke r had kno wle dge and mo tive to con ceal, 2 her omiss ion was not inten tiona l. This cas e i s di st ing uis habl e fr om Burnes beca use th e timin g of even ts indicat e that Parker’ s omission of her discriminati on claim from her bankruptcy estate sc hedule was inadvert ent. In Burnes , the debtor did not attempt to disclose his discrimination claim to the bankru ptcy court or to reop en his bankru ptcy case untilafte r the de fendant in his discrimination action moved to di smiss ba sed on judic ial esto ppe l. In co ntras t, Par ker d isclos ed h er dis crim inatio n claim to Reynolds a

nd the bankr

uptcy c ourt as soon as she real ized it was rel evant to the bankruptc y procee ding and bef ore Wendy’s moved to dismis s. The t iming of
even ts ind icates th at Pa rker wa s no t trying to ga in an adv antag e fro m h er om ission
. If P arke r w ere try ing to gain such an ad van tage, s he w ould hav e tried to settle with11

W end y’s qu ietly, ke epin g he r no asset d ischa rge a nd a ll of th e settlem ent p roce eds. Therefore, Parker does not appear t o have been acting int entionally or with bad faith w hen she o mitted this cla im d urin g the orig inal b ank rup tcy pr ocee ding s. The language in Burnes sup por ts ou r con clusio n tha t timin g m atters in deter mining whethe r judi cialestoppe l is proper. In Burnes , we focused on the fact that t he debtor att empted to reopen his bankruptcy ca se “only afte r his omi ssion ha[d ] been challe nge d by an ad vers ary,” a nd w e no ted th at allow ing th e case to proceed at that

point “suggest s that a debt or should consider discl osing potentia l assets only if he is caught concealing them.” Id. at 1288. Moreover, in a simil ar case in which we upheld the application of judici al est oppel we focused on the fact that t he debtor “did not amend his bankruptcy documents to add a potentia l employment

discrimination cl aim unti l after [t he defendant] r eli ed on [the omission] in i ts motion to dis miss.” De Leon v . Comcar Indus., Inc. , 321 F.3d 128 9, 129 2 (11 th Cir. 2 003 ). Becau se the seq uence of eve nts sho ws th at Park er’s
om ission wa s inad verte nt an d tha t her in con sisten t statem ents w ere n ot inte nde d to “make a mockery of the judic ial sy stem,” t he second requirement for j udicial estop pel is n ot m et. W e also note that ju dicial e stop pel is a n eq uitab le con cept. T here fore , wh ile considering the totali ty of the circumstances, we must als o ask how the equities12

balance . In this case , equity fav ors allow ing the tru stee to pu rsue P arker’s discrim ination claim for thre e reaso ns. Firs t, we ag ain no te that the P arker’s omission was unintentionaland was not done in bad faith. Second, if we bar Rey nold s fro m p ursu ing th is claim , Par ker’s cred itors, th e on ly com pletely innocent parti es in t

his ca se, wil l be deni ed a chanc e at r ecovery . Final ly, all owing the ca se to g o fo rw ard d oes n ot m ean th at Pa rker ’s inco nsiste nt state men ts w ill
necess arily be rewarde d. The bankruptcy court may choose to sanct ion Parker for her omission by revocati on of her discharge, or ot her acti ons. Because the equities balanc e in favor of le tting Reynolds pr oceed wit h this claim, we conclude that the distric t cou rt erre d w hen he ap plied judic ial esto ppe l to ba r this s uit. II I. CONCLUSI ON Because t

he evide nce shows that Parker did not intend “ make a mockery of the j udici al sy stem” a

nd because the equitie s bala nce in f avor of al lowing Reynol ds t o p ur su e P ar

ke r’ s d i sc rimi nat i oncl aim onbe ha l f o f P ar ke r’ s c re di t or s, we conclude that the district court erred in applying jud icial estoppel. Accordingly, we R EV ER SE the district co urt’s gran t of judg men t on the p leading s to W endy’s and RE M AN D th is case to the distric t cou rt for furth er pr ocee ding s con sisten t with this o pinio n.