Opinion ID: 223014
Heading Depth: 2
Heading Rank: 4

Heading: This Result Accords with Other Circuits

Text: The Eleventh Circuit has decided, and the Seventh and Tenth Circuits have opined, that judicial estoppel should not be applied against an innocent trustee with standing to pursue a claim. In Parker v. Wendy's International, Inc., 365 F.3d 1268 (11th Cir.2004), which involved facts virtually identical to this case, the Eleventh Circuit held that judicial estoppel should not be applied against a trustee pursuing a debtor's concealed discrimination claim after the debtor's discharge. Id. at 1272. The Eleventh Circuit reasoned that the claim became an asset of the bankruptcy estate, and the trustee became the real party in interest in that claim, when the debtor filed her petition. Id. The trustee neither abandoned the claim, nor took an inconsistent position with regard to the claim. The Eleventh Circuit therefore concluded that the trustee could not be judicially estopped from pursuing it. Id. In Eastman v. Union Pacific Railroad Co., 493 F.3d 1151 (10th Cir.2007), the Tenth Circuit indicated that it would not apply judicial estoppel against a trustee pursuing a debtor's personal injury claim discovered after the debtor's discharge, because the trustee was the real party in interest and had not engaged in contradictory litigation tactics. Id. at 1155 n. 3 (citations omitted); accord Riazuddin, 363 B.R. at 187-88 (holding that discharged debtors' misconduct in concealing their personal injury claim did not estop the estate's trustee from pursuing the claim on behalf of the estate after the claim was discovered). In Biesek v. Soo Line Railroad Co., 440 F.3d 410 (7th Cir.2006), the Seventh Circuit suggested that a bankruptcy trustee should be able to pursue a claim on behalf of innocent creditors that the debtor himself would be judicially estopped from pursuing. See id. at 413; accord Cannon-Stokes v. Potter, 453 F.3d 446, 448 (7th Cir.2006) ([B]ankruptcy fraud designed to hide an asset from creditors does not prevent the creditors themselves from realizing on the claim after its discovery.). The court noted that [j]udicial estoppel is an equitable doctrine, and using it to land another blow on the victims of bankruptcy fraud [the creditors] is not an equitable application. Biesek, 440 F.3d at 413. We endorse the reasoning of our sister circuits in holding that the district court correctly refused to apply judicial estoppel against the Trustee in this case.