Court Opinion

ID: 3172185
Source: CourtListenerOpinion
Date Created: 2016-01-26 17:00:59.130249+00
Date Added: 2024-06-11T12:02:40.063432
License: Public Domain

United States Court of Appeals
                          For the Eighth Circuit
                      ___________________________

                              No. 15-2068
                      ___________________________

                                 Jerry D. Jones

                     lllllllllllllllllllll Plaintiff - Appellant

                                         v.

       Bob Evans Farms, Inc.; Nick Noble; Joy Willis; Tresa Scroggins

                    lllllllllllllllllllll Defendants - Appellees

                           ------------------------------

          National Association of Consumer Bankruptcy Attorneys

               lllllllllllllllllllllAmicus on Behalf of Appellant(s)
                                     ____________

                  Appeal from United States District Court
             for the Western District of Missouri - Kansas City
                              ____________

                         Submitted: December 16, 2015
                            Filed: January 26, 2016
                                ____________

Before MURPHY, BENTON, and KELLY, Circuit Judges.
                          ____________

MURPHY, Circuit Judge.
      Jerry Jones brought this action against his employer Bob Evans Farms, Inc.
(Bob Evans) and several Bob Evans employees, alleging employment discrimination
in violation of federal and Missouri law. The district court1 granted summary
judgment for Bob Evans, concluding that Jones' failure to disclose his claims in his
Chapter 13 bankruptcy proceedings judicially estopped him from pursuing them.
Jones appeals, and we affirm.

                                           I.

       Jones began working for Bob Evans in June 2009. A few months later he and
his wife Sharron Shores filed for Chapter 13 bankruptcy. The trustee filed a motion
with the bankruptcy court to deny confirmation of their plan because they had not
included Shores' pending workers compensation claim in their bankruptcy schedules.
Jones and Shores amended their schedules to include that claim and agreed to make
any nonexempt proceeds from it available to their unsecured creditors. The
bankruptcy court then confirmed their plan in January 2010. The confirmation order
required Jones and Shores to report to the trustee "any events affecting disposable
income," specifically including lawsuits that were "received or receivable" during the
term of their plan, which would not exceed five years.

       Jones quit his job with Bob Evans in May 2012. Six months later he filed a
charge of employment discrimination against Bob Evans with the Equal Employment
Opportunity Commission (EEOC) and the Missouri Commission on Human Rights,
claiming that he had experienced race discrimination at work beginning in 2009. After
Jones later received a right to sue letter, he filed this lawsuit in Missouri state court
against Bob Evans and several of its employees in 2013, alleging violations of Title VII
of the Civil Rights Act of 1964 and Missouri law. He did not report the lawsuit to the

      1
        The Honorable Ortrie D. Smith, United States District Judge for the Western
District of Missouri.

                                           2
trustee, however. Bob Evans later removed the discrimination case to the federal district
court.

       The bankruptcy court terminated Jones and Shores' bankruptcy in July 2014,
discharging unsecured debts of $146,499.58. Bob Evans and its employees then filed
a motion for summary judgment in Jones' discrimination case which the district court
granted, concluding that Jones was judicially estopped from pursuing his claims
because he had not disclosed them in the bankruptcy court. The court found that
Jones had intentionally failed to disclose his claims to the bankruptcy trustee and
concluded that this failure was tantamount to a representation to the bankruptcy court
that those claims did not exist. The district court thus concluded that Jones was
judicially estopped from pursuing those claims.

       Jones filed a motion with the bankruptcy court to reopen the bankruptcy estate,
which was granted, and he amended his schedules to include his claims in the instant
case. He also filed a motion in the district court, asserting that he had cured his failure
to disclose by amending his schedules and requesting the court amend its prior order and
deny summary judgment for Bob Evans or, alternatively, grant him relief from that order.
The court denied Jones' motion, concluding that his "last minute candor" in reopening
the bankruptcy estate did not prevent the application of judicial estoppel to bar his
claims. Jones appeals.

                                            II.

        We review the order denying Jones' motion to amend the summary judgment order
or, alternatively, for relief from that order for an abuse of discretion. See, e.g., United
States v. Metro. St. Louis Sewer Dist., 440 F.3d 930, 933 (8th Cir. 2006). Motions to
amend "serve the limited function of correcting manifest errors of law or fact." Id.
(internal quotation marks omitted). Here, Jones argues that the district court erred in
concluding that judicial estoppel barred his claims. We review the district court's

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underlying application of judicial estoppel for an abuse of discretion, affirming "unless
it plainly appears that the court committed a clear error of judgment in the conclusion it
reached upon a weighing of the proper factors." Stallings v. Hussmann Corp., 447 F.3d
1041, 1046–47 (8th Cir. 2006) (quoting Alternative Sys. Concepts, Inc. v. Synopsys,
Inc., 374 F.3d 23, 32 (1st Cir. 2004)).

        Judicial estoppel is an equitable doctrine that "prevents a party from asserting a
claim in a legal proceeding that is inconsistent with a claim taken by that party in a
previous proceeding." New Hampshire v. Maine, 532 U.S. 742, 749 (2001) (quoting 18
James Wm. Moore et al., Moore's Federal Practice § 134.30 (3d ed. 2000)). While "the
circumstances under which judicial estoppel may appropriately be invoked are probably
not reducible to any general formulation of principle," three factors inform a court's
decision about whether it should apply. Id. at 750. First, a party's later position must be
"clearly inconsistent" with its prior position. Id. Second, a court should consider
whether a party has persuaded a court to accept its prior position "so that judicial
acceptance of an inconsistent position in a later proceeding would create the perception
that either the first or the second court was misled." Id. (internal quotation marks
omitted). Finally, a court should consider whether the party asserting inconsistent
positions "would derive an unfair advantage or impose an unfair detriment on the
opposing party if not estopped." Id. at 751. A party who has filed for bankruptcy may
be judicially estopped from pursuing a claim not disclosed in his or her bankruptcy
filings. See Stallings, 447 F.3d at 1047. For the following reasons, we conclude that the
district court did not abuse its discretion in applying judicial estoppel to bar Jones' claims
in this case.

       The first New Hampshire factor supports the district court's application of judicial
estoppel because Jones took inconsistent positions between his bankruptcy case and this
case. Jones' failure to amend his bankruptcy schedules to include his discrimination
claims "represented to the bankruptcy court that no such claims existed," and his
assertion of those claims in this case is inconsistent with that prior position. Id. at 1049.
The National Association of Consumer Bankruptcy Attorneys (NACBA) as amicus

                                              4
argues that Jones' failure to disclose his claims was not a representation that they did not
exist because a Chapter 13 debtor has no obligation under the Bankruptcy Code or Rules
to disclose causes of action arising after the filing of his bankruptcy petition. Our court
has previously concluded, however, that a Chapter 13 debtor who does not amend his
bankruptcy schedules to reflect a post petition cause of action adopts inconsistent
positions in the bankruptcy court and the court where that cause of action is pending.
See id.; see also E.E.O.C. v. CRST Van Expedited, Inc., 679 F.3d 657, 679 (8th Cir.
2012).

       Furthermore, in its order confirming Jones' bankruptcy plan the bankruptcy court
had expressly required him to report any future lawsuits to the trustee. We conclude that
Jones' failure to report his claims to the trustee represented to the bankruptcy court that
those claims did not exist regardless of whether he had an independent legal duty to
amend his schedules. Jones contends that the bankruptcy court's order only required him
to report legal claims to the extent that those claims resulted in disposable income, such
as the proceeds from a settlement. We disagree, particularly because the order referred
specifically to "lawsuits" rather than "judgments" or "settlements." Indeed, Jones
concedes in his opening brief that "the cause of action [against Bob Evans]
unquestionably should have been included [in amended schedules]" and that "his failure
to amend was a mistake." We conclude that Jones' assertion of inconsistent positions in
the courts supports the district court's application of judicial estoppel to bar his claims.

       The second New Hampshire factor also supports the district court's application of
judicial estoppel because the bankruptcy court, by discharging Jones' unsecured debts,
adopted the position that his discrimination claims did not exist. See, e.g., E.E.O.C., 679
F.3d at 679. NACBA argues that the bankruptcy court did not adopt Jones' position that
he had no pending legal claims because it eventually reopened his bankruptcy estate and
allowed him to add his discrimination claims to his schedules, but "the [bankruptcy]
court's original discharge of the debt is sufficient acceptance of the debtor's position to
provide a basis for judicial estoppel." Stallings, 447 F.3d at 1048. We therefore
conclude that the bankruptcy court accepted Jones' position that his claims in this case
did not exist.

                                             5
       The third New Hampshire factor similarly favors the application of judicial
estoppel because Jones could have derived an unfair advantage in the bankruptcy
proceedings by concealing his claims. If Jones had disclosed his claims, for example,
the trustee could have moved the bankruptcy court to order him to make the proceeds
from any potential settlement available to his unsecured creditors.2 See, e.g., In re
Waldron, 536 F.3d 1239, 1245 (11th Cir. 2008). NACBA argues that Jones did not in
fact benefit from his failure to disclose his claims because as a Chapter 13 debtor he
paid his creditors solely out of his income, and he received no income from those
claims during his bankruptcy. "[J]udicial estoppel does not require that the
nondisclosure must lead to a different result in the bankruptcy proceeding," however,
and may apply based on a litigant's intent to mislead the court. Robinson v. Tyson
Foods, Inc., 595 F.3d 1269, 1275 (11th Cir. 2010).

        Jones asserts that his failure to disclose his claims was inadvertent and that he did
not intend to mislead the court, which would make the application of judicial estoppel
improper. See Stallings, 447 F.3d at 1049. Nevertheless, "[a] debtor's failure to satisfy
its statutory disclosure duty is 'inadvertent' only when, in general, the debtor either lacks
knowledge of the undisclosed claims or has no motive for their concealment." Id. at
1048 (emphasis omitted) (quoting In re Coastal Plains, Inc., 179 F.3d 197, 210 (5th Cir.
1999)). Here, it is undisputed that Jones had knowledge of his claims while his
bankruptcy case was pending. In addition, our court has previously recognized that a
Chapter 13 debtor who receives a right to sue letter from the EEOC while his bankruptcy
case is pending has a motive to conceal his employment discrimination claims from that
court. Id. at 1048. Moreover, even if a debtor's decision to reopen his bankruptcy estate
and amend his schedules could show inadvertence, in this case Jones knew he had to
disclose pending legal claims because the trustee had previously moved to deny plan
confirmation after he failed to include Shores' workers compensation claim. The district
court thus did not err in finding that Jones' failure to disclose his claims was intentional.
Accordingly, and based on this analysis of the New Hampshire factors, we conclude that

       2
     Notably, that is similar to what the trustee did with respect to Shores' workers
compensation claim.

                                             6
the district court did not abuse its discretion in applying judicial estoppel to bar Jones'
claims.

                                           III.

       For these reasons we affirm the order of the district court.
                                 _______________

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