Opinion ID: 2343398
Heading Depth: 1
Heading Rank: 5

Heading: Suit Pursued by Trustee

Text: Dupwe argues that affirming the trial court will unjustly deny the creditors possible just compensation. The purpose behind judicial estoppel or the doctrine against inconsistent positions is preservation and protection of the judicial process by stopping parties from gaining an advantage by playing fast and loose with the courts. Barton, supra ; Rudolph, supra ; Barton, supra . This court has made it clear that the courts have a right to rely on representations and statements that parties make to the court. International Harvester, supra . The doctrines are applied to knowing misrepresentations and fraud on the court. Arboireau, supra . They are applied to prevent a miscarriage of justice. Krystal, supra . The Nixes are accused by First State of playing fast and loose with the courts in failing to list the causes of action against First State on the bankruptcy petition. The Nixes are also accused of attempting to keep any proceeds for themselves rather than allowing any assets gained by suit to go to the creditors. Thus, First State argues that the lawsuit against it must be estopped to preserve the integrity of the courts. However, the Nixes are no longer parties to this action. Justice would neither be preserved nor protected by estopping trustee Dupwe from pursuing this action. Proceeds from this suit would go to satisfy the claims of secured and perhaps unsecured creditors. The duty of the Chapter 7 bankruptcy trustee is to collect the property of the estate and reduce it to money. 11 U.S.C. 704 (2003). Further, what creditors receive from the case will often be in direct relation to how well the trustee takes control of the estate.... Norton Bankruptcy Law & Practice, § 65:8 (2ndEd.1997). In the case before us, the only party who will substantially benefit from the application of the doctrine of judicial estoppel and the doctrine against inconsistent positions is First State, the party accused of being liable in tort for causing the bankruptcy. If we allow this suit to go forward, the parties who may benefit will be the creditors whom the Nixes are accused of having attempted to deprive of assets due them. Thus, under the facts of this case, the court is unaffected by allowing the suit to go forward, and justice is preserved. Dupwe correctly cites Taylor v. Comcast Cablevision of Arkansas, Inc., 252 F.Supp.2d 793 (E.D. Ark.2003), An overly strict application of judicial estoppel has been criticized as providing a windfall to the alleged wrongdoer and possibly depriving creditors, who are not parties to the nonbankruptcy action of a potential bankruptcy asset. Taylor, 252 F.Supp.2d at 798 (citing Hon. William Houston Brown, Lundy Carpenter, and Donna T. Snow, Debtor's Counsel Beware; Use of the Doctrine of Judicial Estoppel in Nonbankruptcy Forums, 75 Am. Bankr.L.J. 197, 216 (2001)). The district court in Taylor also justly criticizes the use of judicial estoppel as a technical defense for litigants seeking to derail potentially meritorious claims. Taylor, 252 F.Supp.2d at 799. Judicial estoppel is intended to protect the integrity of the courts, not to provide a sword to be wielded by adversaries in an attempt to avoid potential liability. Id. Ryan Operations G.P. v. Santiam-Midwest Lumber Co., 81 F.3d 355 (3rd Cir.1996). Justice is best served by allowing Dupwe to pursue this suit against First State. Reversed and remanded. BROWN and IMBER, JJ., concurring. DICKEY, C.J., not participating.