Court Opinion

ID: 4169762
Source: CourtListenerOpinion
Date Created: 2017-05-18 20:12:30.753645+00
Date Added: 2024-06-11T09:21:09.633311
License: Public Domain

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                                      Appellate Court                         Date: 2017.05.09
                                                                              12:07:00 -05'00'

                 Knott v. Woodstock Farm & Fleet, Inc., 2017 IL App (2d) 160329

Appellate Court           TERENCE KNOTT, Plaintiff-Appellant, v. WOODSTOCK FARM
Caption                   & FLEET, INC., d/b/a Blain’s Farm & Fleet, Defendant-Appellee.

District & No.            Second District
                          Docket No. 2-16-0329

Filed                     February 17, 2017

Decision Under            Appeal from the Circuit Court of McHenry County, No. 14-LA-179;
Review                    the Hon. Thomas A. Meyer, Judge, presiding.

Judgment                  Reversed and remanded.

Counsel on                Daniel M. Breen and Christopher J. Goril, of Breen Goril Law, of
Appeal                    Chicago, for appellant.

                          Stuart N. Rappaport and David S. Osborne, of Lindsay, Rappaport &
                          Postel, LLC, of Chicago, for appellee.

                          Jason Nielson, of Peter Francis Geraci Law, LLC, of Chicago, for
                          amicus curiae.
     Panel                     JUSTICE McLAREN delivered the judgment of the court, with
                               opinion.
                               Justices Jorgensen and Burke concurred in the judgment and opinion.

                                                 OPINION

¶1        Plaintiff, Terence Knott, appeals from an order of the circuit court of McHenry County
       granting defendant, Woodstock Farm & Fleet, Inc., doing business as Blain’s Farm & Fleet,
       summary judgment based on the doctrine of judicial estoppel. Because the trial court
       improperly applied the doctrine of judicial estoppel, we reverse and remand.

¶2                                            I. BACKGROUND
¶3          On June 11, 2014, plaintiff filed a three-count complaint alleging premises liability,
       negligence, and spoliation of evidence arising out of an April 7, 2013, accident that occurred at
       defendant’s store.
¶4          Prior to the commencement of plaintiff’s action in the circuit court of McHenry County,
       plaintiff and his wife (represented by Geraci Law L.L.C. (Geraci)) filed a voluntary petition for
       chapter 7 bankruptcy on July 8, 2013. See 11 U.S.C. § 701 et seq. (2012). On schedule B,
       pertaining to personal property, plaintiff stated that he had no “[o]ther contingent and
       unliquidated claims of any nature” and that he had no “other property of any kind not already
       listed.” Plaintiff listed assets of $196,250 and liabilities of $306,301.
¶5          On August 9, 2013, the bankruptcy trustee, James E. Stevens, issued a “Report of
       Distribution,” reporting that “there is no property available for distribution from the estate over
       and above that exempted by law.”
¶6          On October 29, 2013, plaintiff filed amended schedules B and C. On schedule B, regarding
       “[o]ther contingent and unliquidated claims of any nature,” plaintiff listed “[p]ossible claim
       versus” and stated that the “[c]urrent value” was “unknown.” On schedule C, regarding
       exemptions for “[o]ther contingent and unliquidated claims of any nature,” plaintiff listed
       “[p]ossible claim versus” and stated its value at $15,000, citing section 12-1001(h)(4) of the
       Code of Civil Procedure (Code) (735 ILCS 5/12-1001(h)(4) (West 2012) (providing an
       exemption for a debtor to receive payment not to exceed $15,000 on account of personal bodily
       injury of the debtor)). Plaintiff declared under the penalty of perjury that the schedules were
       accurate.
¶7          On November 29, 2013, plaintiff’s counsel in the instant action sent a letter to defendant,
       advising that counsel had been retained to represent plaintiff “in [sic] claim for damages as a
       result of injuries he sustained after a skid of merchandise was pushed into him on April 7,
       2013, in Woodstock, Illinois.” Counsel’s letter advised defendant of counsel’s lien and to
       preserve any and all evidence relating to “the above individual and occurrence.”
¶8          On January 7, 2014, the bankruptcy court entered an order of discharge of plaintiff’s debts.
¶9          On June 11, 2014, plaintiff filed a three-count complaint against defendant alleging that, on
       April 7, 2013, plaintiff was a customer at defendant’s store when another customer drove a
       motorized cart into a display of pizza ovens, knocking them over onto plaintiff, causing an
       injury to plaintiff’s knee. Count I alleged liability on the basis of “Premises Liability,” count II

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       alleged liability on the basis of “Negligence,” and count III alleged liability on the basis of
       “Spoliation of Evidence.” Plaintiff sought damages in excess of $50,000 for each count.
¶ 10       On June 15, 2015, defendant filed a motion for summary judgment, contending, in part,
       that plaintiff should be judicially estopped because he failed to sufficiently report his personal
       injury claim in his bankruptcy case and, in the alternative, that plaintiff had no standing to
       pursue this claim because any claim belonged to the bankruptcy estate and must be brought by
       the trustee.
¶ 11       Plaintiff responded that there were genuine issues of material fact precluding summary
       judgment and that judicial estoppel did not apply because he did not intentionally fail to
       disclose his personal injury claim. In support of his response, plaintiff submitted his affidavit.
¶ 12       In plaintiff’s affidavit, he stated, inter alia, “[a]t the time [I] filed for bankruptcy, I was
       unsure whether I would pursue any litigation regarding the April 7, 2013[,] incident.” Plaintiff
       averred that he was unsure because of the “cost of litigation, the uncertainty of potential
       recovery, personal and financial cost, the stress and aggravation association [sic] with such
       claims and my personal preference to avoid litigation.” Plaintiff stated that he had surgery on
       his knee on July 31, 2013, and that, until he filed the amended schedules B and C on October
       29, 2013, he “was not aware that a potential cause of action was considered an ‘asset’ for the
       purpose of bankruptcy.”
¶ 13       On January 28, 2016, the trial court granted defendant’s motion for summary judgment
       based solely on judicial estoppel. In doing so, the court relied in part on Seymour v. Collins,
       2015 IL 118432. The court found that all of the “elements of judicial estoppel” were present in
       the case. The court then found that plaintiff’s “disclosure, quote, possible claim versus, end
       quote, with nothing more, satisfies the issue of whether the plaintiff intended to deceive or
       mislead as to the existence of this specific claim.”
¶ 14       On February 18, 2016, plaintiff filed a motion to reconsider, which the trial court denied on
       April 21, 2016. Plaintiff filed his notice of appeal on May 2, 2016.
¶ 15       On August 9, 2016, Stevens resigned as trustee of plaintiff’s bankruptcy estate, and the
       bankruptcy court appointed Joseph D. Olsen as trustee.1
¶ 16       We note that we have granted Geraci’s motion to file an amicus curiae brief “supporting”
       plaintiff and Olsen. Geraci contends, inter alia, that this “appeal should be dismissed and
       remanded to the trial court with instructions to vacate the order granting summary judgment,
       and allow the Trustee, the real party at interest, to substitute as Plaintiff.” We reject Geraci’s
       attempt to raise issues not raised by the parties to this appeal. See Karas v. Strevell, 227 Ill. 2d
       440, 450 (2008). An amicus takes a case as he finds it, with the issues framed solely by the
       parties. Id. at 451. No party has argued for the dismissal of this appeal or for the substitution of
       the trustee for plaintiff. Accordingly, we strike the portion of Geraci’s brief that urges
       dismissal and substitution. See id.

           1
             We may take judicial notice of public documents that are included in the records of other courts.
       Seymour, 2015 IL 118432, ¶ 6 n.1. The bankruptcy court’s records contain orders terminating Stevens
       as trustee and appointing Olsen.

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¶ 17                                            II. ANALYSIS
¶ 18       Plaintiff argues that the trial court erred in granting summary judgment in favor of
       defendant with its application of the doctrine of judicial estoppel.
¶ 19       Summary judgment is appropriate when there are no genuine issues of material fact and the
       moving party is entitled to judgment as a matter of law. 735 ILCS 5/2-1005(c) (West 2014).
       Summary judgment is a drastic measure and should be granted only if the movant’s right to
       judgment is clear and free from doubt. Seymour, 2015 IL 118432, ¶ 42. Where a reasonable
       person could draw divergent inferences from undisputed facts, summary judgment should be
       denied. Pielet v. Pielet, 2012 IL 112064, ¶ 53. In determining the existence of a genuine issue
       of material fact, courts must consider the pleadings, depositions, admissions, exhibits, and
       affidavits on file in the case and must construe them strictly against the movant and liberally in
       favor of the opponent. Adams v. Northern Illinois Gas Co., 211 Ill. 2d 32, 42-43 (2004).
¶ 20       Judicial estoppel is an equitable doctrine invoked by the court at its discretion. Seymour,
       2015 IL 118432, ¶ 36. The purpose of the doctrine is to protect the integrity of the judicial
       process by prohibiting parties from “deliberately changing positions” according to the
       exigencies of the moment. (Internal quotation marks omitted.) New Hampshire v. Maine, 532
       U.S. 742, 749-50 (2001).
¶ 21       The analytical framework for determining whether judicial estoppel should bar a claim is a
       two-step process. Seymour, 2015 IL 118432, ¶ 47. First, the trial court must determine whether
       the party to be estopped has (1) taken two positions, (2) that are factually inconsistent, (3) in
       separate judicial or quasi-judicial administrative proceedings, (4) intending for the trier of fact
       to accept the truth of the facts alleged, and (5) succeeded in the first proceeding and received
       some benefit. Id. Judicial estoppel must be proved by clear and convincing evidence. Id. ¶ 39.
¶ 22       Second, even if the trial court finds that all five factors are present, it must exercise its
       discretion in deciding whether to apply judicial estoppel. Id. ¶ 47. Multiple factors may inform
       the court’s decision, including the significance or impact of the party’s action in the first
       proceeding and whether the party intended to deceive or mislead, as opposed to inadvertently
       or mistakenly taking the prior position. Id. Notably, the question of whether the party intended
       to deceive or mislead is a “critical factor” in deciding whether to apply judicial estoppel. Id.
       ¶ 54. Thus, even if all five prerequisites are found, the intent to deceive or mislead is not
       necessarily present, because inadvertence or mistake may account for positions taken or facts
       asserted in the prior proceeding. Id. ¶ 47.
¶ 23       The parties dispute the applicable standard of review. Plaintiff argues for both the de novo
       and the abuse-of-discretion standards, and defendant urges us to apply only de novo review.
¶ 24       With respect to the applicable reviewing standard, we review a trial court’s exercise of
       discretion for an abuse of discretion. Id. ¶ 48. “However, where the exercise of that discretion
       results in the termination of the litigation, and that result is brought about via the procedural
       mechanism of a motion for summary judgment, it follows, as well, that we review that ruling
       de novo.” Id. ¶ 49.
¶ 25       Here, plaintiff argues that the trial court erred by finding that he took factually inconsistent
       positions. Defendant argues that plaintiff’s statement “possible claim versus” contained in his
       bankruptcy disclosure is indisputably inconsistent with plaintiff’s personal injury claim.
¶ 26       We determine that plaintiff’s positions are not factually inconsistent. In the bankruptcy
       proceeding, plaintiff disclosed that he had a “[p]ossible claim versus,” and by citing section

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       12-1001(h)(4) of the Code, he indicated that it was a personal bodily injury claim. Whether
       plaintiff could have provided more information regarding this possible claim is not the
       question here. The question is whether, with the facts viewed in the light most favorable to
       him, plaintiff clearly and convincingly took inconsistent positions. Because the answer to that
       question is no, the trial court erred by finding all of the factors of judicial estoppel.
       Accordingly, the trial court erred by entering summary judgment in favor of defendant.
¶ 27       Defendant cites Berge v. Mader, 2011 IL App (1st) 103778, to support its argument. In
       Berge, the plaintiff sustained an injury in a car accident in 2006 and filed a personal injury
       action in 2007. Id. ¶ 3. In 2009, the plaintiff converted her existing chapter 13 bankruptcy
       claim into a chapter 7 bankruptcy claim without disclosing her personal injury claim. Id. The
       appellate court affirmed summary judgment in the defendant’s favor on the basis of judicial
       estoppel. Id. ¶ 21. Berge is distinguishable from this case because in Berge the plaintiff filed a
       personal injury complaint during the pendency of her bankruptcy proceeding and then failed to
       disclose anything about that claim to the bankruptcy court. Here, plaintiff filed his personal
       injury complaint after discharge from bankruptcy, he disclosed to the bankruptcy court that he
       had a “possible claim,” and he indicated that it was a personal bodily injury claim.
¶ 28       Defendant also cites Krystal Cadillac-Oldsmobile GMC Truck, Inc. v. General Motors
       Corp., 337 F.3d 314 (3d Cir. 2003), to support its argument. In Krystal, a General Motors
       dealer filed chapter 11 bankruptcy after General Motors Corporation terminated its franchise.
       Id. at 317. In its disclosure to the bankruptcy court, the dealer stated, “the status of this
       franchise is now in litigation.” (Internal quotation marks omitted.) Id. at 318. The dealer then
       filed an action against General Motors Corporation for, inter alia, breach of contract. Id. The
       court of appeals affirmed the district court’s affirmance of the bankruptcy court’s dismissal of
       the claim based on judicial estoppel. Id. at 319. This case is distinguishable from Krystal
       because there the dealer failed to inform the bankruptcy court that it had a claim or to inform
       the court of the nature of the “litigation.” In contrast, plaintiff in this case informed the
       bankruptcy court that he had a possible claim and also informed the court of the nature of the
       claim, i.e., personal bodily injury.
¶ 29       Plaintiff also argues that the trial court erred by ruling that he intended to deceive or
       mislead the bankruptcy court. Defendant responds that the trial court properly determined that
       the phrase “possible claim versus” was intended to deflect a claim of judicial estoppel.
       According to defendant, plaintiff had a duty to fully and completely disclose his claim and his
       failure to do so established an intent to deceive or mislead. We need not reach this issue
       because we have determined that the record does not establish by clear and convincing
       evidence that plaintiff took two factually inconsistent positions. However, we shall discuss this
       issue as an alternative basis for reversal.
¶ 30       At this point we find Seymour, 2015 IL 118432, instructive. In Seymour, the plaintiffs,
       Terry and Monica Seymour, filed a petition for chapter 13 bankruptcy in 2008. Id. ¶ 4. In 2011,
       the plaintiffs filed a personal injury action arising from injuries Terry sustained in a June 2010
       car accident. Id. ¶ 3. The plaintiff filed for modifications of the bankruptcy plan. Id. ¶¶ 4-6.
       The bankruptcy court granted the plaintiffs an order of discharge in July 2012. Id. ¶ 8. The
       plaintiffs never disclosed to the bankruptcy court that Terry had been injured in June 2010, that
       he believed he had personal injury claims against multiple defendants as a result of the June
       2010 accident, or that he had filed suit against those defendants in May 2010. Id. The trial court
       entered summary judgment in favor of the defendants based on judicial estoppel. Id. ¶¶ 15-19.

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       A divided panel of this court affirmed the judgment of the trial court. Id. ¶ 20. Our supreme
       court reversed the judgments of this court and the trial court. Id. ¶ 64. The supreme court
       rejected the trial court’s inference that Terry intended to deceive or mislead based on his failure
       to disclose his personal injury claim to the bankruptcy court. Id. ¶¶ 54-62. In particular, the
       court explained:
                     “We are not willing, as appears to be the case in prevailing federal authority given
                the circumstances [citation], to presume that the debtors’ failure to disclose was
                deliberate manipulation. We do not find that inference or presumption controlling in
                Illinois, much less the facts of this case.” (Emphasis omitted.) Id. ¶ 62.
¶ 31        In this case, plaintiff disclosed to the bankruptcy court, in an incomplete manner, that he
       had a “[p]ossible” personal bodily injury claim. The trial court presumed that plaintiff intended
       to deceive or mislead based on his incomplete disclosure. In Seymour, the supreme court held
       that a court may not presume or infer intent to deceive or mislead based solely on a plaintiff’s
       complete failure to disclose. Id. ¶ 63 (“we find the failure to disclose the personal injury action
       insufficient, in itself, to warrant application of judicial estoppel”). Similarly, we determine that
       the fact that plaintiff in this case had a legal duty to disclose more information about this suit
       and failed to do so “does not, given the facts of this case, establish the intent to deceive and/or
       manipulate the bankruptcy court.” Id. ¶ 64. To be clear, we do not condone plaintiff’s failure to
       disclose additional information to the bankruptcy court. However, the trial court erred by
       inferring, based solely on this failure, that plaintiff intended to deceive or mislead the
       bankruptcy court. Accordingly, we determine that the application of judicial estoppel was not
       warranted here.
¶ 32        Finally, defendant argues that we may affirm the trial court’s summary judgment based on
       its alternative argument that plaintiff lacks standing to pursue this claim because the claim is
       part of the bankruptcy estate and, therefore, only the bankruptcy trustee has standing. Although
       the trial court did not base its judgment on this argument, we address the argument because we
       may affirm on any basis supported by the record whether or not the trial court relied on that
       basis. See Miller v. Lawrence, 2016 IL App (1st) 142051, ¶ 22.
¶ 33        Standing is established simply by demonstrating some injury to a legally cognizable
       interest. Village of Chatham v. County of Sangamon, 216 Ill. 2d 402, 419 (2005). The doctrine
       of standing is designed to preclude persons who have no interest in a controversy from
       bringing suit. Raintree Homes, Inc. v. Village of Long Grove, 209 Ill. 2d 248, 262 (2004). A
       plaintiff need not allege facts establishing standing. Alpha School Bus Co. v. Wagner, 391 Ill.
       App. 3d 722, 745 (2009). Rather, lack of standing is an affirmative defense, and the burden of
       pleading and proving the defense is on the party asserting it. Lebron v. Gottlieb Memorial
       Hospital, 237 Ill. 2d 217, 252 (2010).
¶ 34        Generally, “[o]nce a debtor files for bankruptcy, any unliquidated lawsuits become part of
       the bankruptcy estate, and, even if such claims are scheduled, a debtor is divested of standing
       to pursue them upon filing his petition.” Dailey v. Smith, 292 Ill. App. 3d 22, 25 (1997).
       However, where a debtor shows that due to a lawsuit or claim he has a reasonable possibility of
       a surplus after satisfying all debts, the debtor has shown a pecuniary interest and therefore has
       standing. In re Andreuccetti, 975 F.2d 413, 417 (7th Cir. 1992). In addition, where a debtor is
       entitled to exempt part of a claim, he has an interest in the litigation and therefore has standing.
       In re Polis, 217 F.3d 899, 904 (7th Cir. 2000).

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¶ 35       Here, the assets of plaintiff’s estate consisted of $196,250 in nonexempt property, and the
       liabilities of the estate consisted of $306,301 ($121,657 of unsecured claims and $184,644 of
       secured claims). Plaintiff’s complaint against defendant seeks in excess of $50,000 for each of
       three counts. If plaintiff and/or the trustee on behalf of the estate is completely successful in the
       action against defendant, there will be a surplus for plaintiff. Further, plaintiff exempted
       $15,000 of this claim pursuant to section 12-1001(h)(4) of the Code. Thus, plaintiff possesses a
       legally cognizable interest in the exempt portion and the potential surplus and, therefore, has
       standing, along with the trustee. See id.; Andreuccetti, 975 F.2d at 417.

¶ 36                                      III. CONCLUSION
¶ 37       For the reasons stated, we reverse the judgment of the circuit court of McHenry County,
       which granted defendant summary judgment based on judicial estoppel, and we remand the
       case for further proceedings. We order the clerk of this court to serve a copy of this opinion
       personally upon the successor trustee in bankruptcy.

¶ 38       Reversed and remanded.

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