Court Opinion

ID: 4707826
Source: CourtListenerOpinion
Date Created: 2021-07-30 09:08:08.99922+00
Date Added: 2024-06-11T08:06:46.145634
License: Public Domain

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
                 revision until final publication in the Michigan Appeals Reports.

                          STATE OF MICHIGAN

                             COURT OF APPEALS

SHARR GARZA,                                                        UNPUBLISHED
                                                                    July 29, 2021
               Plaintiff-Appellant,

v                                                                   No. 354310
                                                                    Oakland Circuit Court
CHASE WILLARD REICHE,                                               LC No. 2019-177038-NF

               Defendant-Appellee,

and

AUTO CLUB INSURANCE ASSOCIATION,
MEMBERSELECT INSURANCE COMPANY, and
AUTO CLUB GROUP INSURANCE COMPANY,

               Defendants.

Before: TUKEL, P.J., and SAWYER and CAMERON, JJ.

PER CURIAM.

        In this automobile negligence action, plaintiff Sharr Garza appeals the trial court’s order
granting summary disposition in favor of defendant Chase Willard Reiche. We reverse and remand
for further proceedings consistent with this opinion.

                                       I. BACKGROUND

       On October 3, 2016, Garza and Reiche were involved in a motor vehicle accident in which
Garza allegedly sustained injuries. The accident occurred after Reiche turned his vehicle in front
of Garza’s oncoming vehicle. In October 2019, Garza filed a complaint, in relevant part, asserting

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that Reiche’s negligent conduct caused her injuries.1 Reiche answered the complaint and generally
denied liability. Discovery commenced. During a May 15, 2020 deposition, Garza revealed that
she and her spouse had filed a Chapter 13 bankruptcy petition in September 2016. Although Garza
had filed several amendments to the asset schedules after the accident, she did not identify the
negligence claim until May 20, 2020.

        On June 4, 2020, Reiche filed a motion for summary disposition. Reiche argued that
judicial estoppel should be employed to bar Garza’s negligence claim because, prior to the May
2020 amendment, Garza had affirmatively denied that she had any claims against third parties
during her bankruptcy proceeding. Reiche also argued that Garza was unable to pursue the claim
herself because the cause of action was the property of the estate. Garza opposed the motion,
arguing that Reiche had failed to meet all of the requirements of judicial estoppel and that she had
concurrent authority with the trustee to bring and maintain the negligence suit.

       The trial court dispensed with oral argument. On July 16, 2020, the trial court entered an
opinion and order granting Reiche’s motion for summary disposition under MCR 2.116(C)(7). In
making its ruling, the trial court concluded that the doctrine of judicial estoppel should be
employed on the basis of Garza’s representations in the bankruptcy proceeding.2 This appeal
followed.

                                 II. STANDARDS OF REVIEW

        This Court reviews the application of the doctrine of judicial estoppel de novo. Szyszlo v
Akowitz, 296 Mich App 40, 46; 818 NW2d 424 (2012). “We [also] review de novo a trial court’s
decision on a motion for summary disposition.” El-Khalil v Oakwood Healthcare, Inc, 504 Mich
152, 159; 934 NW2d 665 (2019). “Summary [disposition] on the basis of collateral estoppel is
properly granted under MCR 2.116(C)(7)[.]” Lichon v American Universal Ins, 435 Mich 408,
427 n 14; 459 NW2d 288 (1990). “A party may support a motion under MCR 2.116(C)(7) by
affidavits, depositions, admissions, or other documentary evidence.” Maiden v Rozwood, 461
Mich 109, 119; 597 NW2d 817 (1999). “This Court must consider the documentary
evidence . . . in a light most favorable to the nonmoving party. If there is no relevant factual
dispute, whether a plaintiff’s claim is barred under a principle set forth in MCR 2.116(C)(7) is a
question of law for the court to decide.” Snead v John Carlo, Inc, 294 Mich App 343, 354; 813
NW2d 294 (2011) (citation omitted). “If, however, a pertinent factual dispute exists, summary
disposition is not appropriate.” Id.

1
  Auto Club Insurance Association, MemberSelect Insurance Company, and Auto Club Group
Insurance Company were also named as defendants. Upon the stipulation of Garza and Reiche,
the trial court ordered all claims against Auto Club Insurance Association, MemberSelect
Insurance Company, and Auto Club Group Insurance Company to be dismissed.
2
  While the trial court stated that Garza was “likely correct in arguing that under the terms of the
bankruptcy plan . . . she had the authority to maintain th[e] suit,” the trial court found that it was
inconsequential because that argument only related to standing, as opposed to judicial estoppel.

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                                         III. ANALYSIS

        “Judicial estoppel is an equitable doctrine, which generally prevents a party from prevailing
in one phase of a case on an argument and then relying on a contradictory argument to prevail in
another phase.” Spohn v Van Dyke Pub Sch, 296 Mich App 470, 479; 822 NW2d 239 (2012)
(quotation marks and citations omitted). The doctrine is invoked “to preserve the integrity of the
courts by preventing a party from abusing the judicial process through cynical gamesmanship.” Id.
at 479-480 (quotation marks and citations omitted). In Opland v Kiesgan, 234 Mich App 352,
363-364; 594 NW2d 505 (1999), this Court explained that “[t]he doctrine of judicial estoppel is to
be applied with caution.” The doctrine serves to prevent litigants from deliberate manipulation of
the courts by arguing opposing positions “to suit an exigency of the moment.” Id. at 364 (citations
omitted). Furthermore, “[j]udicial estoppel is an extraordinary remedy to be invoked when a
party’s inconsistent behavior will otherwise result in a miscarriage of justice.” Id. (quotation
marks and citations omitted). Judicial estoppel “is not meant to be a technical defense for litigants
seeking to derail potentially meritorious claims[.]” Id. (quotation marks and citations omitted).

       In Spohn, 296 Mich App at 480-481, this Court explained the application of the doctrine in
the context of bankruptcy proceedings:

       [T]o support a finding of judicial estoppel, [a reviewing court] must find that:
       (1) [the plaintiff] assumed a position that was contrary to the one that she 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 plaintiff’s] omission did not result from mistake or inadvertence.
       [Alterations in original; quotation marks and citation omitted.]

         With respect to the first requirement, Garza was unable to include her potential negligence
claim in her original petition because the accident had not yet occurred. Although Garza amended
the bankruptcy schedules twice after the October 2016 accident, she did not list the negligence
claim until May 2020. Regardless, the record establishes that Garza did amend her asset schedules
to include the negligence claim. Although delayed, Garza ultimately complied with her
responsibilities under the bankruptcy code and corrected her otherwise contrary position by filing
the May 2020 amendment. In light of the amended filing and the fact that the bankruptcy matter
remained pending when the amendment was filed, we conclude that Reiche failed to establish the
first requirement for the application of judicial estoppel. Cf. Spohn, 296 Mich App at 481-483
(finding that “the first requirement for the application of judicial estoppel was demonstrated”
because it was “undisputed that Spohn did not include her potential sexual harassment lawsuit on
her bankruptcy petition and did not amend that petition to list the possible cause of action while
the bankruptcy remained pending”).

        The record also supports that Garza’s failure to disclose the potential asset in the
bankruptcy court arose from mistake or inadvertence, as opposed to some ulterior motive to
deliberately manipulate the courts through cynical gamesmanship. In this regard, the Spohn Court
explained:

       In determining whether [the plaintiff’s] conduct resulted from mistake or
       inadvertence, [the reviewing] court considers whether: (1) [the plaintiff] lacked

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       knowledge of the factual basis of the undisclosed claims; (2) [the plaintiff] had a
       motive for concealment; and (3) the evidence indicates an absence of bad faith. In
       determining whether there was an absence of bad faith, [the reviewing court] will
       look, in particular, at [the plaintiff’s] “attempts” to advise the bankruptcy court of
       [the plaintiff’s] omitted claim. [Spohn, 296 Mich App at 481 (alterations in
       original; quotation marks and citation omitted).]

       The record establishes that Garza was involved in the motor vehicle accident on October 3,
2016, which was after the bankruptcy petition was filed. The record supports that Garza had
informed her first bankruptcy attorney that her vehicle had been totaled in a motor vehicle accident
and that the attorney filed a stipulation and order on December 5, 2016, which allowed credit for
Garza to purchase or lease a new vehicle. In October 2017, Garza retained a personal injury
attorney. On October 26, 2017, Garza’s personal injury attorney wrote a letter to Garza’s second
bankruptcy attorney, requesting that the bankruptcy attorney advise him as to whether any steps
needed to be taken with the bankruptcy court. Thus, the record supports that Garza advised her
bankruptcy attorneys of the accident and her potential claim. As already discussed, the May 2020
amendment was filed when the bankruptcy matter was still pending. Cf. Spohn, 296 Mich App at
486-487 (finding evidence of bad faith where “there [was] no dispute that Spohn did not inform
the bankruptcy court of the potential sexual harassment lawsuit or make any attempts to amend
her bankruptcy petition”).

        Additionally, declining to apply the doctrine of judicial estoppel under the circumstances
of this case advances the general purpose of the doctrine. Garza identified the negligence claim
as a potential asset of her bankruptcy estate while the bankruptcy proceeding was still pending.
Furthermore, application of the doctrine is not necessary to avoid a miscarriage of justice. See
Opland, 234 Mich App at 364. Garza’s initial failure to disclose her potential claim in the
bankruptcy court placed her creditors, not Reiche, in jeopardy. Moreover, application of judicial
estoppel in this case has the potential of causing a miscarriage of justice by preventing Garza from
pursuing her claim, which would be to the detriment of her creditors. Indeed, application of the
judicial estoppel doctrine and dismissal of Garza’s claim could deprive Garza’s creditors of
recovery of some of the amounts owed to them by Garza. Therefore, because Reiche cannot
establish all the requirements necessary for application of the judicial estoppel doctrine and
because application of the doctrine under the circumstances of this case would not further the
doctrine’s purpose, we conclude that the trial court erred by granting summary disposition on
judicial estoppel grounds.

        Reiche also argues that summary disposition was proper because there was no factual
dispute that Garza “lacked the legal capacity to file her lawsuit[.]” This argument was not decided
by the trial court when the court granted Reiche’s motion for summary disposition. Furthermore,
after reviewing the record, we conclude that it would be beneficial for the trial court to address the

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issue. Consequently, we decline to consider the argument and reverse and remand to the trial court
for proceedings consistent with this opinion. We do not retain jurisdiction.

                                                            /s/ Jonathan Tukel
                                                            /s/ David H. Sawyer
                                                            /s/ Thomas C. Cameron

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