Court Opinion

ID: 810998
Source: CourtListenerOpinion
Date Created: 2012-10-30 14:05:33+00
Date Added: 2024-06-11T18:00:39.813045
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                                   File Name: 12a0373p.06

               UNITED STATES COURT OF APPEALS
                                FOR THE SIXTH CIRCUIT
                                  _________________

                                                 X
                                                  -
 MICHAEL STEPHENSON, as Bankruptcy
                                                  -
 Trustee of SENAN AL-MANSOOB,
                        Plaintiff-Appellant,      -
                                                  -
                                                      No. 11-1671

                                                  ,
                                                   >
                                                  -
           v.

                                                  -
                                                  -
 MATTHEW MALLOY; WILBURN ARCHER
                                                  -
 TRUCKING,
                        Defendants-Appellees, -
                                                  -
 ZISCHLER TRANSPORT; ZEITRANZ TRUCKING; -
                                                  -
                                                  -
 JEURGEN ZISCHLER,
                                  Defendants. N
                   Appeal from the United States District Court
                for the Eastern District of Michigan at Ann Arbor.
            No. 5:09-cv-14527—John Corbett O’Meara, District Judge.
                                   Argued: June 1, 2012
                         Decided and Filed: October 30, 2012
        Before: SILER and WHITE, Circuit Judges; REEVES, District Judge.*

                                   _________________

                                        COUNSEL
ARGUED: Phillip S. Serafini, SERAFINI, MICHALOWSKI, DERKACZ &
ASSOCIATES, P.C., Sterling Heights, Michigan, for Appellant. Aaron D. Wiseley,
HOLMES & WISELEY, P.C., Grand Rapids, Michigan, for Appellees. ON BRIEF:
Phillip S. Serafini, SERAFINI, MICHALOWSKI, DERKACZ & ASSOCIATES, P.C.,
Sterling Heights, Michigan, for Appellant. Aaron D. Wiseley, HOLMES & WISELEY,
P.C., Grand Rapids, Michigan, for Appellees.

        *
        The Honorable Danny C. Reeves, United States District Judge for the Eastern District of
Kentucky, sitting by designation.

                                              1
No. 11-1671              Al-Mansoob v. Malloy, et al.                                             Page 2

                                         _________________

                                               OPINION
                                         _________________

         DANNY C. REEVES, District Judge. Senan Al-Mansoob filed this lawsuit in
July 2009. When he instituted Chapter 7 bankruptcy proceedings two months later, he
did not list his claims against Defendants Matthew Malloy and Wilburn Archer
Trucking, Inc., among his assets. Upon learning of the omission, Defendants sought
summary judgment, arguing that Al-Mansoob was judicially estopped from pursuing the
claims. Relying on a Sixth Circuit case decided a few days before Al-Mansoob filed his
response, the district court granted summary judgment and denied a subsequent motion
for reconsideration by the bankruptcy trustee, who had been substituted as the real party
in interest. On appeal, the trustee contends that judicial estoppel should not apply to him
and that Al-Mansoob’s failure to disclose the case was inadvertent in any event. We find
both arguments persuasive.

                                                     I.

         The parties’ dispute arises out of a traffic accident involving Al-Mansoob and
Matthew Malloy. When the accident occurred, Malloy was driving a truck owned by
Wilburn Archer Trucking, Inc. Al-Mansoob sued Malloy and Wilburn Archer Trucking
for negligence, filing his first amended complaint in Wayne County Circuit Court on
July 19, 2009.1 Defendants timely removed the case to the United States District Court
for the Eastern District of Michigan.

         Al-Mansoob sought Chapter 7 bankruptcy protection on September 30, 2009.
In his bankruptcy filings, Al-Mansoob did not list this lawsuit among his assets or as an
action to which he was a party, as required by the bankruptcy code.2 He did, however,
list a suit against State Farm arising out of the same accident. Amendments to his

         1
             Claims against three other Defendants were voluntarily dismissed prior to the case’s removal.
         2
          A debtor has an affirmative duty to disclose all of his assets to the bankruptcy court. 11 U.S.C.
§ 521(a)(1).
No. 11-1671         Al-Mansoob v. Malloy, et al.                                     Page 3

bankruptcy filings on December 31, 2009, and February 18, 2010 did not cure the
omission. The bankruptcy court granted Al-Mansoob a discharge on March 3, 2010.

        In July 2010, Defendants moved for summary judgment, arguing that Al-
Mansoob was judicially estopped from pursuing his claims because he had failed to
disclose them in the bankruptcy proceeding. They cited the three-prong test adopted by
this circuit in Browning v. Levy, 283 F.3d 761 (6th Cir. 2002), for judicial estoppel in the
bankruptcy context. Under that test, judicial estoppel bars a party from (1) asserting a
position that is contrary to one he asserted under oath in a prior proceeding; (2) the prior
court adopted the contrary position either as a preliminary matter or as part of a final
disposition; and (3) the party’s conduct was not inadvertent. Id. at 775-76. Browning
identified “two circumstances under which a debtor’s failure to disclose a cause of action
in a bankruptcy proceeding might be deemed inadvertent”: first, “where the debtor lacks
knowledge of the factual basis of the undisclosed claims,” and second, “where the debtor
has no motive for concealment.” Id. at 776. In their motion, Defendants asserted that
Al-Mansoob’s pursuit of this action was inconsistent with his failure to disclose it in the
bankruptcy proceedings; that the bankruptcy court had adopted the contrary position by
granting him a discharge; and that his omission of the instant claims was not inadvertent
because he knew of them at the time he filed for bankruptcy and had a motive for
concealing them, namely, “want[ing] to keep any settlement, verdict or judgment to
himself.”

        Al-Mansoob responded to the summary-judgment motion on August 16, 2010.
He denied that he had asserted inconsistent positions in the two proceedings. He also
suggested that his failure to disclose this action was inadvertent because he had “lacked
sufficient knowledge of the differences in the factual bas[e]s” of the instant suit and his
suit against State Farm, which had been listed among his assets. Al-Mansoob argued
that, if he had intended to mislead the bankruptcy court, he would have omitted the State
Farm case as well. However, despite citing Sixth Circuit precedent that judicial estoppel
does not apply where the plaintiff has “take[n] affirmative steps to inform the trustee and
No. 11-1671         Al-Mansoob v. Malloy, et al.                                    Page 4

the Bankruptcy Court” of omitted claims, he presented no evidence or argument that the
bankruptcy trustee, Michael Stevenson, had been aware of this action.

       Nor did Al-Mansoob’s response address White v. Wyndham Vacation Ownership,
Inc., 617 F.3d 472 (6th Cir. 2010), which had been decided five days earlier. White
added a bad-faith inquiry to the inadvertence prong of the judicial-estoppel test set out
in Browning. See id. at 478. In White, this bad-faith element was met because the
plaintiff’s “attempts to advise the bankruptcy court and the trustee of her [omitted]
claim” were insufficient. Id. at 484.

       At a motion hearing held on September 23, 2010, counsel for Defendants argued
that White was “directly on point.” With respect to the issue of inadvertence, he
asserted:

       When I filed this motion, and until August 27, the bankruptcy trustee
       never knew anything about this lawsuit. In response to the motion, you
       don’t have an affidavit from Mr. Mansoob’s bankruptcy attorney who
       says yes, I did disclose this. It was just inadvertently left out of the
       schedules. It was left out of the bankruptcy proceeding.
       Even today, [Al-Mansoob’s counsel Phil] Serafini has an affidavit from
       the trustee that he allowed me to review beforehand, as I’m sure he’s
       going to present to the Court, even that doesn’t indicate that the trustee
       knew about this lawsuit at the time Mr. Mansoob was going through his
       bankruptcy proceeding. Based on White, there is zero indication why
       Plaintiff — why Plaintiff’s claim shouldn’t stop today.

       Serafini responded, “as an officer [of] the court,” that the trustee had been aware
of the case since the previous fall. He stated that when the trustee became involved in
the case against State Farm, they (Serafini and the trustee) discussed the instant action
as well. In addition, according to Serafini, he and the trustee “discussed [this lawsuit]
numerous times over the course of the negotiations that took place from that day
forward.”     Nevertheless, his description of the trustee’s affidavit — which was
apparently presented to the district court at the conclusion of the hearing but does not
appear in the record — suggested that it did not contain any information as to when the
trustee learned of Al-Mansoob’s claims against Malloy and Wilburn Archer Trucking.
No. 11-1671         Al-Mansoob v. Malloy, et al.                                     Page 5

        Defendants’ attorney replied:

        Comments about conversations with bankruptcy trustees, there’s nothing
        in front of the Court to substantiate that, other than the statements of
        counsel. We don’t have affidavits and it is not the Defendant[s’]
        responsibility to show that he did this on purpose. It’s simply to show
        that this omission was not inadvertent, that the disclosure [sic] was not
        inadvertent.
        Because he knew of this lawsuit when he filed for bankruptcy, and he
        always has a motive to conceal or otherwise not disclose all his assets,
        the intent is — inadvertence is no longer an issue. All three prongs have
        been met.

        Counsel for Defendants also urged the court to consider the timing of Al-
Mansoob’s eventual disclosure, asserting that he “never disclosed any existence of a
bankruptcy filing until after [Defendants] filed a summary-judgment motion, and under
White, that is a significant factor that the Court should take into consideration.” During
the hearing, the district judge indicated that he believed White was dispositive,
commenting that he was “generally impressed with the strength of the White case as it
affects the decision in this case” and “believe[d] White strongly suggests . . . how th[e]
decision on Defendant[s’] motion should be resolved.”

        The day after the hearing, Al-Mansoob filed a supplemental response to the
summary-judgment motion in which he addressed White and certain misrepresentations
purportedly made by Defendants’ attorney at the hearing. Attached to the supplemental
response were several supporting documents, including an affidavit from the bankruptcy
trustee. In it, the trustee acknowledged that he had “known about this lawsuit, as well
as the claim against State Farm[,] since the fall of 2009,” and that he had received
correspondence from Al-Mansoob’s counsel regarding both cases as early as October
19, 2009. He denied having any “evidence that Mr. Al-Mansoob has ever attempted to
hide either of these liability assets from [his] discovery.” Another affidavit, by Serafini,
likewise averred that the trustee had been aware of this lawsuit since early in the
bankruptcy proceedings.
No. 11-1671           Al-Mansoob v. Malloy, et al.                                            Page 6

          The supplemental response included several documents corroborating these
affidavits, such as the following letter, dated October 19, 2009, from an attorney at
Serafini’s firm to the trustee:

          Please be advised that our firm represents Mr. Almansoob [sic] in both
          a first and third party auto case currently pending in the Court. Given
          Mr. Almansoob’s [sic] bankruptcy, it is my understanding that the firm
          must be retained to continue these lawsuits. I spoke with your assistant
          Faye this afternoon to discuss how we should proceed. Please contact me
          at your earliest convenience to discuss.

In an e-mail three days later, the same attorney forwarded a copy of the firm’s retainer
agreement to the trustee and asked that his e-mail be considered “the firm’s request to
be retained as special counsel to continue the lawsuits (1st and 3rd party cases) on behalf
of the bankruptcy estate.” The e-mail continued: “It is my understanding that the
captions for the pending litigation should be amended to reflect the real party in interest
is now [t]he bankruptcy trustee on behalf of the bankruptcy estate for M[r]. Almansoob
[sic].”

          Still other documents provided with the supplemental response reflect that
Serafini sent copies of both complaints to the lawyer representing Al-Mansoob in his
bankruptcy proceedings and to the trustee in mid-February 2010.3 In the latter
correspondence, Serafini again sought direction regarding the third-party action: “I do
need to know if you intend to proceed on that case. If so, I need you to sign the retainer
and hire me. Otherwise, I need the verification that Mr. Al-Mansoob may proceed on
his own in that case.” A transcribed phone message from the trustee on April 15, 2010,
proposed a date for a meeting among Serafini, Al-Mansoob’s bankruptcy counsel, and
the trustee.

          Defendants moved to strike Al-Mansoob’s supplemental response, arguing that
it was untimely and should not be considered. The court never ruled on the motion to

          3
          Al-Mansoob also submitted the affidavit of his bankruptcy attorney, Afan Bapacker, who
confirmed that he had received a copy of the Amended Complaint in this case in February 2010. Bapacker
declared that when he amended the schedule of assets that month, Al-Mansoob’s negligence claims were
“mistakenly left out,” but that he had discussed these claims with the bankruptcy trustee “on several
occasions.”
No. 11-1671           Al-Mansoob v. Malloy, et al.                                             Page 7

strike, but subsequently granted Defendants’ motion for summary judgment in a five-
page opinion. The court’s recitation of the test for judicial estoppel was taken from
Browning and did not include bad faith as an element of the inadvertence prong.
Nevertheless, the court agreed with Defendants that White was “directly on point.” After
briefly comparing the facts of the two cases, the court concluded: “Al-Mansoob made
no effort to cure the omission before Defendants’ motion for summary judgment was
filed. Therefore, under the holding in White, Defendants are entitled to summary
judgment based on judicial estoppel.” The decision contained no mention of Al-
Mansoob’s supplemental response or the accompanying documents. In the same opinion
and order, however, the court granted Al-Mansoob’s motion to substitute the bankruptcy
trustee as the real party in interest pursuant to 11 U.S.C. §§ 323 and 541(a)(1).

        Twenty-eight days later, the trustee filed a motion for reconsideration pursuant
to Rule 59 of the Federal Rules of Civil Procedure.4 Much of the trustee’s argument for
reconsideration pertained to whether the claims could be barred by judicial estoppel
when he, not Al-Mansoob, was the real party in interest. He further argued that the
omission was inadvertent, pointing out that he had repeatedly been advised of this suit’s
existence. The affidavits and other documents that had been provided with Al-
Mansoob’s supplemental response were also attached to the trustee’s motion for
reconsideration.

        The court denied the motion for reconsideration, finding it to be time-barred
under the local rules because it had not been filed within ten days of the entry of

        4
          Throughout the motion, the trustee variously invoked Rule 59(e) (Motion to Alter or Amend a
Judgment), Rule 60(b) (Grounds for Relief from a Final Judgment, Order, or Proceeding), and Local Rule
7.1(g) (now Local Rule 7.1(h), Motions for Rehearing or Reconsideration). The first paragraph, however,
described the document as a “Motion for Reconsideration pursuant to Fed. R. Civ. P. 59.”
No. 11-1671            Al-Mansoob v. Malloy, et al.                                               Page 8

summary judgment.5 The court further found that the trustee was not entitled to relief
under the federal rules. The sum of that analysis was as follows:

         To the extent Plaintiff seeks relief alternatively under Rules 59 and 60 of
         the Federal Rules of Civil Procedure, no grounds exist for the court to
         grant Plaintiff’s motion. Plaintiff asserts that this court failed to apply
         Prongs 1 and 2 of the judicial estoppel inquiry. However, Prong 1 was
         established by Plaintiff’s repeated failure to list the instant action in his
         bankruptcy proceeding until after Defendants filed their motion for
         summary judgment. Prong 2 was similarly well established, as the
         bankruptcy court discharged Plaintiff and authorized distributions of
         money to Plaintiff, his attorney, and the trustee without any knowledge
         of this lawsuit which Plaintiff now claims is an asset.

The court then cited the standard for reconsideration under the local rules (“palpable
defect”) and concluded: “In this case the court finds no palpable defect. Plaintiff has
merely presented the same issues previously ruled upon by the court.” Again, the court
gave no indication that it had considered the evidence regarding the trustee’s knowledge
of this litigation. Nor did it acknowledge his argument that judicial estoppel was
inapplicable because he had demonstrated an absence of bad faith. Finally, despite the
fact that the trustee had been substituted as the real party in interest, the court’s decision
on the motion to reconsider, like its summary-judgment opinion, was directed at Al-
Mansoob, referring to the bankruptcy court’s discharge of “Plaintiff” and authorization
of “distributions of money to Plaintiff, his attorney, and the trustee.”

         The trustee timely appealed, seeking reversal of the summary judgment.

                                                   II.

         A district court’s decision to grant summary judgment is reviewed de novo.
White, 617 F.3d at 475. Summary judgment is required when the moving party shows,
using evidence in the record, “that there is no genuine dispute as to any material fact and

         5
           Local Rule 7.1 was amended effective March 1, 2010, to provide that motions for
reconsideration must be filed within fourteen days after entry of the relevant judgment or order. See E.D.
Mich. LR 7.1(h)(1). Although this amendment was in effect at the time of the district court’s decision, Al-
Mansoob’s motion would still have been untimely under the local rules. However, because it was filed
within twenty-eight days of the summary judgment, it was not time-barred under Rule 59. See Fed. R. Civ.
P. 59(e) (“A motion to alter or amend a judgment must be filed no later than 28 days after the entry of the
judgment.”).
No. 11-1671            Al-Mansoob v. Malloy, et al.                                                Page 9

the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); see Fed.
R. Civ. P. 56(c)(1). In deciding whether the movant has met this burden, the court views
all the facts and inferences drawn from the evidence in the light most favorable to the
nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587
(1986).

          The trustee maintains that he should not be subject to judicial estoppel based on
Al-Mansoob’s failure to disclose this action. He further contends that judicial estoppel
does not apply here because the omission was inadvertent. We examine these issues de
novo. See White, 617 F.3d at 476.

          A.      Judicial Estoppel Does Not Apply to the Bankruptcy Trustee

          As in his motion for reconsideration, the trustee’s primary argument on appeal
is that judicial estoppel cannot apply in this case because he became the real party in
interest once the bankruptcy proceedings had begun. Several circuits have concluded
that judicial estoppel does not bar a bankruptcy trustee from pursuing claims that the
debtor failed to disclose. See Reed v. City of Arlington, 650 F.3d 571, 578-79 (5th Cir.
2011) (en banc); Eastman v. Union Pac. R.R. Co., 493 F.3d 1151, 1155 n.3 (10th Cir.
2007); Parker v. Wendy’s Int’l, Inc., 365 F.3d 1268, 1272 (11th Cir. 2004); see also
Kane v. Nat’l Union Fire Ins. Co., 535 F.3d 380, 387 (5th Cir. 2008) (per curiam). In
Parker, for example, the Eleventh Circuit determined that judicial estoppel was
inappropriate because the claim at issue “belong[ed] to the bankruptcy estate and its
representative, the trustee,” who had “made no false or inconsistent statement under oath
in a prior proceeding and [was] not tainted or burdened by the debtor’s misconduct.”
365 F.3d at 1273. The Fifth Circuit has likewise refused to estop trustees based on
debtors’ misconduct, holding that “absent unusual circumstances, an innocent trustee can
pursue for the benefit of creditors a judgment or cause of action that the debtor fails to
disclose in bankruptcy.”6 Reed, 650 F.3d at 573. And in Eastman, the Tenth Circuit

          6
           The Reed court acknowledged the general rule that a trustee is subject to any defenses that could
have been asserted against the debtor but explained that “courts are to evaluate these defenses as they
existed at the commencement of the bankruptcy.” 650 F.3d at 575 (citing Parker, 365 F.3d at 1272 n.3).
Thus, where the defense of judicial estoppel arises from a debtor’s failure to disclose a claim in his
No. 11-1671             Al-Mansoob v. Malloy, et al.                                                  Page 10

noted that the district court’s application of judicial estoppel was “[q]uite
likely . . . inappropriate, at least to the extent [the debtor]’s personal injury claims were
necessary to satisfy his debts,” because “the trustee as the real-party-in-interest had not
engaged in contradictory litigation tactics.” 493 F.3d at 1155 n.3. These cases thus
stand for the proposition that a debtor’s errors or omissions should not be attributed to
the trustee for purposes of judicial estoppel.7

         Here, the trustee has been the real party in interest since September 30, 2009,
when Al-Mansoob filed for bankruptcy. See 11 U.S.C. § 323 (bankruptcy trustee “is the
representative of the estate” and may “sue and be sued”); 11 U.S.C. § 541(a)(1) (estate
consists of “all legal or equitable interests of the debtor in property as of the
commencement of the case”). Defendants allege no wrongdoing by the trustee; it was
Al-Mansoob who omitted the lawsuit from the bankruptcy filings. The trustee’s pursuit
of this action is therefore not contrary to a position he previously asserted under oath.
See White, 617 F.3d at 476. Accordingly, we adopt the reasoning of the Fifth, Tenth,
and Eleventh Circuits and find that Al-Mansoob’s failure to disclose his claims does not
bar the trustee from pursuing them.

         B.        White Is Distinguishable

         Even if the trustee were deemed to stand in Al-Mansoob’s shoes for judicial-
estoppel purposes, White would not dictate dismissal of this case. In White, the district
court ruled that the plaintiff was judicially estopped from pursuing her sexual-
harassment claim, which she had failed to disclose in her initial bankruptcy filings. Id.

bankruptcy filings and his subsequent pursuit of that claim, “the [t]rustee receive[s] the . . . asset free of
this affirmative defense.” Id.
         7
            Several courts have found it significant that this rule ultimately protects creditors. See Reed, 650
F.3d at 574 (“[J]udicial estoppel must be applied in such a way as to deter dishonest debtors . . . while
protecting the rights of creditors to an equitable distribution of the assets of the debtor’s estate.”); Biesek
v. Soo Line R.R. Co., 440 F.3d 410, 413 (7th Cir. 2006) (“Judicial estoppel is an equitable doctrine, and
using it to land another blow on the victims of bankruptcy fraud is not an equitable application.”). In the
Sixth Circuit, however, recovery by creditors has not been of paramount concern in judicial-estoppel cases.
See White, 617 F.3d at 482 n.10 (rejecting dissent’s argument that the case should be allowed to continue
for creditors’ benefit and observing that “this court has previously applied judicial estoppel in similar
circumstances, even though the result prevented recovery by bankruptcy creditors.” (citing Lewis v.
Weyerhaeuser Co., 141 F. App’x 420, 420-27 (6th Cir. 2005))).
No. 11-1671          Al-Mansoob v. Malloy, et al.                                   Page 11

at 475. After examining Lewis and an earlier case, Eubanks v. CBSK Financial Group,
Inc., 385 F.3d 894 (6th Cir. 2004), the White court announced a slightly expanded
version of the three-prong test:

          [T]o support a finding of judicial estoppel, we must find that: (1) [the
          plaintiff–debtor] assumed a position that was contrary to the one that [he]
          asserted under oath in the bankruptcy proceedings; (2) the bankruptcy
          court adopted the contrary position either as a preliminary matter or as
          part of a final disposition; and (3) [the] omission did not result from
          mistake or inadvertence. In determining whether [the plaintiff’s] conduct
          resulted from mistake or inadvertence, this court considers whether:
          (1) [he] lacked knowledge of the factual basis of the undisclosed claims;
          (2) [he] had a motive for concealment; and (3) the evidence indicates an
          absence of bad faith.

617 F.3d at 478. With respect to bad faith, the court noted that “‘under Eubanks, even
if the debtor has knowledge of a potential cause of action and a motive to conceal it, if
[he] does not actually conceal it and instead takes affirmative steps to fully inform the
trustee and the bankruptcy court of the action, it is highly unlikely that the omission in
the bankruptcy petition was intentional.’” Id. at 477 (quoting Lewis, 141 F. App’x at
426).

          The first two prongs were easily met. White’s omission of her harassment claim
from her bankruptcy filings was tantamount to a statement that the claim “did not exist”
and thus “was contrary to [her] later assertion of the harassment claim before the district
court,” and the bankruptcy court, in ordering White to make payments to the trustee, had
adopted that position. Id. at 479. Additionally, there was no question that White knew
of the basis for her harassment claim when she filed for bankruptcy, because she had
already filed a complaint with the EEOC and received notice of her right to sue. See id.
at 474, 479. Her motive for concealment was likewise clear: “if the harassment claim
became a part of her bankruptcy estate, then the proceeds from it could go towards
paying White’s creditors, rather than simply to paying White.” Id. at 479. This court
then turned to “the more difficult question” whether White had acted in bad faith. Id.
at 480.
No. 11-1671             Al-Mansoob v. Malloy, et al.                                                  Page 12

         White offered three pieces of evidence to show that she had not: an affidavit by
her bankruptcy attorney, an application to employ counsel that she had filed in the
bankruptcy court, and an amendment to her bankruptcy filings to add the omitted claim.
See id. The bankruptcy attorney’s affidavit stated only that “‘[w]hen [he] appeared in
[c]ourt on Ms. White’s bankruptcy,’” the harassment claim “‘was discussed.’” Id. The
affidavit thus “provided no evidence as to what, exactly, was discussed, whom it was
discussed with, or whether the omission from the initial filings was discussed or
emphasized.” Id. Furthermore, the transcript of that court appearance did not reflect any
discussion of White’s harassment claim.                    Id. at 481.        The panel was similarly
unimpressed by the application to employ counsel:

         This filing did provide some notice to the bankruptcy court that White
         had a harassment claim. However, her application did not identify
         whether she was the plaintiff or the defendant in the lawsuit . . . , the
         amount of the lawsuit, the facts giving rise to the lawsuit, or even when
         the actions giving rise to the lawsuit took place. It also did not indicate
         that the harassment claim had been omitted from her initial filings and it
         did not appear to trigger any request for additional information from the
         bankruptcy court or the trustee. Furthermore, it did not cause White to
         update her inaccurate filing statements. Consequently, the application
         did not adequately inform the court, the trustee, or White’s creditors of
         the initial omission and it does not show an absence of bad faith or that
         White’s omission resulted from mistake or inadvertence.

Id. Nor would the panel “consider favorably the fact that White updated her initial
filings after the motion to dismiss was filed,” since “[t]o do so would encourage
gamesmanship.” Id.; see id. at 480. The timing of White’s lawsuit was also suspect: she
had waited to file her harassment claim until the day after the confirmation hearing on
her bankruptcy plan.8 Id. at 482; see id. at 474-75. Because White’s “limited and
ineffective” attempts to correct the omission did not demonstrate an absence of bad faith,
617 F.3d at 482, the element of inadvertence was met. See id. at 483.

         8
          Similarly, in Lewis, the facts indicated that the plaintiff had “acted intentionally and in bad faith”
because, inter alia, she “began the process of filing her discrimination claim with the EEOC only one
month after the bankruptcy plan was approved, which tends to show that she waited until the plan was
approved before pursuing her discrimination action.” 141 F. App’x at 428.
No. 11-1671         Al-Mansoob v. Malloy, et al.                                     Page 13

        In this case, as in White, the first two prongs of the judicial-estoppel test pose
little difficulty. It is undisputed that Al-Mansoob’s bankruptcy filings did not include
any mention of his claims against Defendants until August 27, 2010. This omission was
equivalent to a statement that there were no such claims and was therefore inconsistent
with his pursuit of the instant action. See id. at 479. Furthermore, when the bankruptcy
court granted Al-Mansoob’s discharge on March 3, 2010, it acted in reliance on the
representations he had made concerning his assets — including the representation that
this lawsuit did not exist. The bankruptcy court’s approval of the State Farm settlement
and the resulting distribution of that settlement also represented adoption of the contrary
position. See id. (“‘[W]hen a bankruptcy court — which must protect the interests of all
creditors — approves a payment from the bankruptcy estate on the basis of a party’s
assertion of a given position, that . . . is sufficient judicial acceptance to estop the party
from later advancing an inconsistent position.’” (quoting Lewis, 141 F. App’x at 425)
(other internal quotation marks omitted)).

        Moreover, as the district court found, Al-Mansoob had knowledge of the instant
claims when he filed for bankruptcy, because this action was already pending at that
time. And he presumably had a motive to conceal the claims: “wanting to keep any
settlement or judgment to himself.” However, notwithstanding the district court’s
conclusion that he had “made no effort to cure the omission before Defendants’ motion
for summary judgment was filed,” Al-Mansoob presented substantial evidence — albeit
belatedly — that the bankruptcy trustee was told of this lawsuit long before Defendants
sought summary judgment on judicial-estoppel grounds.

        Although the district court had discretion to disregard Al-Mansoob’s late
submissions, it failed to even acknowledge them. See Hooks v. Hooks, 771 F.2d 935,
946 (6th Cir. 1985) (“While it is within the discretion of the district courts whether to
consider affidavits submitted in an untimely fashion, the court below never gave any
indication that it was declining to consider plaintiff’s affidavit on rehearing because it
was untimely or for any other reason.”). It is appropriate for this court to consider them,
however. First, the affidavits and correspondence clearly establish an issue of material
No. 11-1671          Al-Mansoob v. Malloy, et al.                                   Page 14

fact with respect to whether Al-Mansoob’s omission was in bad faith. Furthermore,
White was decided less than a week before Al-Mansoob’s summary-judgment response
was due. While his counsel certainly could have done a better job, both in his initial
summary-judgment response and at oral argument, his failure to focus on the bad-faith
factor is understandable given that White was the first case to clearly announce bad faith
as part of the judicial-estoppel inquiry. Finally, the trustee timely sought reconsideration
of the summary judgment under Rule 59(e). Under these circumstances, we may
properly take the supplemental evidence into account. See id. (where plaintiff’s late-
filed affidavit “was sufficient to alert the court to the presence of an issue of material
fact, and counsel offered a plausible explanation for its untimeliness and filed a timely
motion for reconsideration,” the appellate court was “obliged . . . to consider” it (citation
and internal quotation marks omitted)).

        The strength and nature of that evidence distinguish this case from White.
Whereas White’s actions indicated an intent to hide her harassment claim, there is
simply nothing to suggest that Al-Mansoob tried to conceal this case from the
bankruptcy court or trustee. The suit was already pending when he filed for bankruptcy,
and his attorney communicated freely about it with the trustee from nearly the inception
of the bankruptcy proceeding, repeatedly seeking the trustee’s guidance as to how the
litigation should be handled. In light of those communications, the fact that Al-
Mansoob’s bankruptcy filings were not amended until after Defendants moved for
summary judgment is significantly less damning. See Eubanks, 385 F.3d at 898 n.1
(noting that “various courts in other jurisdictions have held that a trustee’s knowledge
of the claim precludes the application of judicial estoppel since the plaintiff was
obviously not trying to defraud the court if they [sic] placed the trustee on notice.”). In
short, the record contains ample evidence that Al-Mansoob’s omission of this lawsuit
from his bankruptcy filings was inadvertent. Consequently, the suit is not barred by
judicial estoppel.
No. 11-1671      Al-Mansoob v. Malloy, et al.                             Page 15

                                       III.

       For the foregoing reasons, we REVERSE the district court’s grant of summary
judgment and remand for further proceedings.