IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON JOHN A. URBICK, a single man, Appellant,

THE SPENCER LAW FIRM, LLC, a Washington limited liability company; JOHN R. SPENCER and JANE DOE SPENCER, and the marital community composed thereof, Respondents, PAMELA P. FOLEY and JOHN DOE FOLEY, and the marital community thereof, Defendants. No. 74132-2-1 DIVISION ONE

PUBLISHED OPINION

FILED: February 1,2016 CO
en

Leach, J. — Courts apply the equitable doctrine of judicial estoppel to 

### protectthe integrity ofthejudicial process by precluding a party from gaining an advantage by asserting one position in a court proceeding and later seeking an advantage by taking a clearly inconsistent position. Here, the appellant-debtor knew all of the facts that gave rise to his potential claim of legal malpractice at the time he filed for bankruptcy, yet he failed to disclose it until almost three 

### years after receiving a discharge from the bankruptcy court. While judicial estoppel generally does not apply to the bankruptcy trustee, here no one askedNO. 74132-2-1/2


### the trial court to substitute the bankruptcy trustee as the real party in interest. The trial court did not abuse its discretion by applying the doctrine of judicial 

### estoppel to bar this legal malpracticeclaim. Weaffirmthetrial court. FACTS 

### On January 8, 2013, John Urbick filed a complaint against the Spencer 

### Law Firm for professional negligence andviolations of the Consumer Protection Act, chapter 19.86 RCW. He claimed Spencer failed to provide adequate 

### representation in connection with his financial difficulties, particularly his delinquencies in a loan with Prime Pacific Bank for an auto repair shop he 

### purchased in 2007. Urbickpledged various rental properties to securethis loan. InMay2009, motivatedbyPrimePacific'sthreattolockhimoutoftheauto repair 

### shop, Urbick hired the Spencer Law Firm to help with his financial problems. Shortly after hiring Spencer, Urbick learned that Spencer went to Alaska for several months. Spencer's associate met with Urbick. Spencer's complaint 

### alleges thatthe associate lacked theexperience and skill needed to handle his financial problems. 

### On December 7, 2009, Prime Pacific Bank sent Urbick a notice of foreclosure. Urbick's loan with Prime Pacific was $35,926 inarrears withcosts 

### totaling an additional $9,000. In January 2010, Spencer told Urbick that he wanted to refer him to another attorney.NO. 74132-2-1/3 

### About three months later, on April 13, 2010, Urbick, represented by a 

### different law firm, filed bankruptcy. Urbick did notlist his potential claim against 

## Spencer on his asset schedules or otherwise disclose it in his bankruptcy 

## pleadings. InMay2010, Urbickamendedhisbankruptcyschedulesbutagaindid notinclude this potential claim. Urbickreceived abankruptcy discharge on July 27, 2010. 

### In November 2012, Urbick reopened his bankruptcy to list the possible 

### claim. Urbick filed amendments to his bankruptcy schedules on December 13, 

### 2012. In January2013, hefiled suit against Spencerin superiorcourt. 

### Urbick's complaint "reserve[d] the right to substitute the Trustee in 

## Bankruptcyasthe real partyin interest, asthatissue hasyetto bedetermined." On July 30, 2014, an ex parte orderin the bankruptcy case authorized thethen trustee, Kathryn Ellis, to employUrbick's counsel. 

### On August 29, 2014, Spencer filed a motion for summary judgment dismissal. Urbickdid notmove to substitute orjoin the trustee as a real party in interest. Nordid the trustee evermove to intervene. Thetrial court determined 

## thatjudicial estoppel barred Urbickfrom bringing this action and dismissed his complaint. 

### Urbick moved for reconsideration and submitted the bankruptcy trustee's 

### declaration. It described her as the real party in interest who should beNO. 74132-2-1/4


### substituted as the plaintiff. Neither Urbick nor the trustee filed any motion to substitute the trustee. The trial court denied the motion for reconsideration. Urbick appeals. ANALYSIS 

### This court reviews summaryjudgmentorders de novo, affirming onlyifthe 

### record shows no genuine issues of material fact exist, viewing that record in the 

### lightmostfavorable to thenonmoving party.1 Butthis courtreviews atrial court's 

### decision applying thejudicial estoppel doctrine for abuse ofdiscretion.2 Atrial court abuses its discretion when it bases its decision on untenable or 

### unreasonable grounds.3 

### Judicialestoppel is an equitable doctrine intended to protect the integrity 

### of the judicial process by preventing a party from gaining an advantage by asserting one position in a court proceeding and later seeking an advantageby taking a clearly inconsistentposition.4 On summary judgment, a party can ask the trial court to bar claimsbased on an inconsistent position taken in an earlier proceeding under the doctrine of 

### judicial estoppel. The failure to disclose a cause of action in a bankruptcy 1 Cunningham v. Reliable Concrete Pumping. Inc., 126 Wn. App. 222, 226-27, 108 P.3d 147 (2005). 2Arkison v. Ethan Allen. Inc., 160 Wn.2d 535, 538, 160 P.3d 13 (2007); 

### Harris v. Fortin, 183 Wn. App. 522, 526-27, 333 P.3d 556 (2014). 3Harris, 183 Wn. App. at 527. 4Arkison, 160Wn.2d at 538. -4-NO. 74132-2-1/5

schedule constitutes an inconsistent prior position if the debtor later seeks 

### recovery from that cause of action.5 Schedules, amendments, and the meeting of the creditors all provide the debtor an opportunity to disclose assets and liabilities. A debtor makes the statements inthese pleadings and atthis meeting under penalty ofperjury. Ifthe courtgrants a discharge based on them, the court accepts them as the debtor's position for purposes of judicial estoppel.6 To defeat summaryjudgment, the nonmoving party must presentevidence raising an issue of fact about one of the factors guiding a court's application of judicial estoppel or show that the trial court abused its discretion when applying
the doctrine. 

### In Arkison v. Ethan Allen, Inc.,7 our Supreme Court set forth three fundamental factors to guide a court's application ofjudicial estoppel: (1) whether "a party's later position" is "clearly inconsistent with its earlier position"; (2) whether "judicial acceptance of an inconsistent position in a later proceeding would create the perception that either the first or the second court was misled"; and (3) "whether the party seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair detriment on the opposing party ifnotestopped."

5 Bartlev-Williams v. Kendall, 134 Wn. App. 95, 98-99, 138 P.3d 1103 (2006).6 Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778, 784 (9th Cir. 2001). 7 160 Wn.2d 535, 538-39, 112 P.3d 13 (2007) (internal quotation marks omitted) (quoting New Hampshire v. Maine, 532 U.S. 742, 750-51, 121 S. Ct. 1808, 149 L. Ed. 2d 968 (2001)). -5-NO. 74132-2-1/6 

### Washington courts have consistently held that a debtor's failure to disclose a 

### potential claim or other asset in a bankruptcy proceeding bars the debtor from later asserting the claim or seeking recovery of the asset after discharge. Even when a debtor lists a claim but asserts that ithas no value, the doctrine bars the 

### debtorfrom bringing a later suit to recover thatclaim.8 "A bankruptcy debtor has an affirmative duty under the bankruptcy code 

### 'to disclose all assets, including contingent and unliquidated claims.'"9 The debtor obtains an unfair advantage by obtaining a discharge without giving the 

### creditors a fair opportunity to lay claim to the hidden assets.10 The doctrine protects the integrity of the bankruptcy courts11 and prevents partiesfrom hiding
causes of actions during bankruptcy proceedings, obtaining a "valuable benefit in the discharge of. . . debts," and then asserting a claim in a different forum to win.12 Courts applyjudicial estoppel at their own discretion, determining on a 

### case-by-casebasisifapplying thedoctrine isappropriate.13
8Harris, 183 Wn. App. at 529-30. 9 Arkison, 160 Wn.2d at 539 n.1 (internal quotation marks omitted) 

### (quoting Cunningham, 126 Wn. App. at 229-30). 10Ah Quin v. County of Kauai Dep'tofTransp., 733 F.3d 267, 271 (9th Cir. 2013). 11 In re Coastal Plains, Inc., 179 F.3d 197, 208 (5th Cir. 1999). TMCannon-Stokes v. Potter, 453 F.3d 446, 447-48 (7th Cir. 2006) (citing 

### six appellate courts holding "that a debtor in bankruptcy who denies owning an 

### asset, including a chose in action or other legal claim, cannot realize on that concealed asset after the bankruptcyends. See Pavless Wholesale Distributors, Inc. v. Alberto Culver (P.R.) Inc., 989 F.2d 570 (1st Cir. 1993); Krvstal CadillacOldsmobile GMC Truck, Inc. v. General Motors Corp., 337 F.3d 314 (3d Cir. -6-NO. 74132-2-1/7

Urbick argues thatjudicial estoppel should not bar his claim both because he amended his bankruptcy schedules and the trustee employed his counsel to pursue Urbick's claim. He further contends that he is the appropriate party inthe action because he would be entitled to any surplus over and above what he owed his creditors. Urbick cites several cases from otherjurisdictions to support his position that his reopening ofthe bankruptcy case overcomesjudicial estoppel. But none ofthose cases help him. InJaegerv. ClearWing Productions, Inc.,14 the federal district court found genuine issues of material fact existed on whether Jaeger's failure to disclose was calculated or inadvertent. But, as this court noted in Cunningham v. Reliable Concrete Pumping, Inc.,15 failure to list an asset is "'"inadvertent" only when, in general, the debtor either lacks knowledge of the undisclosed claims or has no motive for their concealment.'" Here, Urbick knew all thefacts supporting the undisclosed claim.

2003); Jethroe v. Omnova Solutions, Inc., 412 F.3d 598 (5th Cir. 2005); United States ex rel. Gebert v. Transport Administrative Services, 260 F.3d 909, 917-19 (8th Cir. 2001); Hamilton v. State Farm Fire & Casualty Co., 270 F.3d 778 (9th Cir. 2001); Bargerv. Cartersville, 348 F.3d 1289, 1293-97 (11th Cir. 2003)."). 13 Arp v. Rilev. No. 72613-7-1, 2015 WL 9461609, at *5 (Wash. Ct. App. Dec. 28,2015). 14465 F. Supp. 2d 879, 882 (S.D. III. 2006). 15 126 Wn. App 222, 234, 108 P.3d 147 (2005) (internal quotation marks omitted) (quoting Burnes v. Pemco Aeroplex, Inc., 291 F.3d 1282, 1287 (11th Cir. 2002)). -7-NO. 74132-2-1/8

Nor does Old Republic Insurance Co. v. Farmer16 support Urbick's 

### position. Unlike here, the claim in Old Republic was not an asset of the 

### bankruptcy estate because it did not arise until after plan confirmation in a chapter 13 bankruptcy proceeding. 

### Judicial estoppel usually does not apply when the bankruptcy trustee has 

### been substituted as the real party in interest.17 In this circumstance, the claim 

### belongs to the trustee, and therefore the "debtor has no interest left to pursue 

### once the bankruptcy trustee has been substituted."18 Thus, no party has asserted an inconsistent positionbecause the debtor has no position in the latter lawsuit.19 Urbick asserts that the trustee's declarations sufficiently established her 

### as the real partyin interest. ButneitherUrbick nor the trustee everfiled a motion to make the trustee the real party in interest. Although the debtor's complaint alluded to the trustee as a possible intervenor, no one ever did anything to 

### accomplish that. In fact, quite the opposite occurred. Urbick obtained an ex 

### parte order to reopen the bankruptcy case in November of 2012. Eight months

16 324 B.R. 918, 922 (M.D. Ga. 2005). 17 Millerv.Campbell, 164Wn.2d 529, 542, 192 P.3d 352 (2008). 18Miller, 164Wn.2d at 542. 19Miller, 164Wn.2d at 542. -8-NO. 74132-2-1/9
later, the parties filed a confirmation ofjoinder in which they represented to the 

### court that no additional parties would bejoined.20 Ayear later, Urbickobtained an ex parte orderauthorizing an appointment of special counsel for the trustee. That order authorized the trustee to employ Urbick's counsel "as special counsel for the Trustee with respect to the prosecution ofthe debtor's malpractice claims." In opposition to the summary judgment proceeding, Urbick submitted a declaration of Kathryn Ellis, dated October 14, 2014. In that declaration, Ellis stated that neither she nor any creditor objected to the amended schedules that 

### included "a potential malpractice action againstformer attorney." The declaration also stated that Urbick would receive any surplus proceeds left after payment of all costs of administration and creditor claims. Ellis also stated that the claim 

### might result in an amount inexcess ofthe creditor claims and costs. Yet again,
no motion to substitute the trustee as real party in interest occurred. Indeed, at oral argument, Urbick's counsel admitted thatthe trustee was not yet a party. 

### Only after the court dismissed the lawsuit did Urbick submit the second declaration of Ellis supporting his motion for reconsideration. In that second declaration, Ellis stated that she was the real party in interest and should be
20 Pierce County Local Rule 19(b) provides that no additional parties may 

### be joined and no additional claims or defenses may be raised after the date designated inthe case schedule. -9-NO. 74132-2-1/10


### substituted as the plaintiff. Yet no motion was everfiled. The trial court denied the motion forreconsideration withoutargumentorresponsefrom the defendant.
Conclusion 

### Here, because Urbick benefited from the asserted inconsistent claims 

### accepted by the bankruptcy court, the trial courtdid not abuse itsdiscretion in determining thatjudicialestoppel barred hisclaim. Weaffirm.

WE CONCUR: 

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