Court Opinion

ID: 3193738
Source: CourtListenerOpinion
Date Created: 2016-04-13 20:00:55.955+00
Date Added: 2024-06-11T14:36:17.209785
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                           APR 13 2016
                    UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

ANTHONY WONG, an individual,                     No. 14-55576

              Plaintiff - Appellant,             D.C. No. 2:09-cv-01939-GW-
                                                 AGR
 v.

MICHAELS STORES, INC., a Delaware                MEMORANDUM*
corporation,

              Defendant - Appellee.

                    Appeal from the United States District Court
                       for the Central District of California
                     George H. Wu, District Judge, Presiding

                             Submitted April 8, 2016**
                               Pasadena, California

Before: FARRIS, SENTELLE***, and M. SMITH, Circuit Judges.

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
        **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
        ***
            The Honorable David Bryan Sentelle, Senior Circuit Judge for the
U.S. Court of Appeals for the District of Columbia Circuit, sitting by designation.
      Anthony Wong joined this lawsuit against Michaels Stores, Inc., (“Michaels”)

asserting various wage-and-hour claims. The district court held that because Wong

had failed to disclose his claims against Michaels in two subsequently filed

bankruptcy proceedings, he was judicially estopped from pursuing them. It therefore

granted summary judgment in favor of Michaels. This appeal followed.

      The following facts are undisputed: Wong joined this lawsuit on April 22, 2009.

On October 27, 2010, he filed a voluntary petition for bankruptcy under Chapter 13

of the Bankruptcy Code. He did not list his claims against Michaels on the bankruptcy

schedules he filed with that petition. The bankruptcy court confirmed his

reorganization plan, but eventually dismissed the proceeding because Wong and his

wife failed to make plan payments. On April 26, 2012, Wong filed a second Chapter

13 petition, again without listing his pending claims against Michaels. This time,

Wong obtained an order from the bankruptcy court extending the automatic stay

protecting his property from creditors. Again, however, the proceeding was ultimately

dismissed. Wong never amended his bankruptcy schedules in either proceeding.

      Our precedents in this context are clear. The default rule is that “[i]f a

plaintiff–debtor omits a pending (or soon-to-be-filed) lawsuit from the bankruptcy

schedules and obtains a discharge (or plan confirmation), judicial estoppel bars the

action.” Ah Quin v. Cty. of Kauai Dep’t of Transp., 733 F.3d 267, 271 (9th Cir. 2013);

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Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778, 783 (9th Cir. 2001). The

Supreme Court has observed, however, that judicial estoppel may be inappropriate

“when a party’s prior position was based on inadvertence or mistake.” New

Hampshire v. Maine, 532 U.S. 742, 753 (2001) (quotation marks omitted). In the

bankruptcy context, this escape hatch for inadvertence or mistake is given its broadest

scope when the plaintiff–debtor, upon discovering his mistake, “reopens bankruptcy

proceedings, corrects [the] initial error, and allows the bankruptcy court to re-process

the bankruptcy with the full and correct information.” Ah Quin, 733 F.3d at 273.

When that has happened, we have held that a court must inquire into “whether the

plaintiff’s bankruptcy filing was, in fact, inadvertent or mistaken, as those terms are

commonly understood.” Id. at 276. But where the plaintiff–debtor has not reopened

bankruptcy proceedings and corrected the error, we apply the exception for

inadvertence or mistake narrowly, asking only “whether the debtor knew about the

claim when he or she filed the bankruptcy schedules and whether the debtor had a

motive to conceal the claim.” Ah Quin, 733 F.3d at 271.

      Here, Wong omitted his pending claims for his bankruptcy schedules; he never

attempted to amend those schedules to correct the error; he undisputedly knew of his

pending claim when he filed his schedules; and, as is almost always the case, he had

a motive to conceal his claim: to “get rid of [his] creditors on the cheap, and start over

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with a bundle of rights.” See Payless Wholesale Distribs., Inc. v. Alberto Culver (P.R.)

Inc., 989 F.2d 570, 571 (1st Cir. 1993). Thus, the inquiry Wong urges into his

subjective state of mind is inapposite. In these circumstances, we presume deceit,

rebuttable only with proof that the plaintiff either did not know of the claim or had no

motive to conceal it. See Ah Quin, 733 F.3d at 271. Neither has been shown here. Nor

does it matter that Wong’s bankruptcy proceedings were ultimately dismissed without

a discharge of his debt: We have held that less-final judicial reliance on a debtor’s

nondisclosure of his claims—such as, here, the confirmation of a reorganization plan

and extension of a stay—are sufficient to occasion judicial estoppel. See Hamilton,
270 F.3d at 784. Thus, the district court did not abuse its discretion in holding that

Wong’s action was judicially estopped. Its decision is therefore

AFFIRMED.

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