Court Opinion

ID: 9478360
Source: CourtListenerOpinion
Date Created: 2023-08-05 06:47:26.538766+00
Date Added: 2024-06-11T17:46:23.747031
License: Public Domain

KENNEDY, Circuit Judge,
dissenting.
Because I would not apply the doctrine of judicial estoppel to settlements in the absence of judicial factfinding, I respectfully dissent.
The Commissioner of Internal Revenue withdrew his objection to the plan of reorganization after Mrs. Reynolds and the Commissioner reached a settlement of her tax obligations for several prior years. As the Bankruptcy Court noted, the plan had been accepted in writing by the creditors whose acceptance was required by law. The Bankruptcy Court recited that each holder of a claim had accepted the plan and would receive the amount the holder would *475receive if the debtor were liquidated under Chapter 7 (Joint Appendix 697). The only claims against the estate, aside from administrative expenses (which were provided for in the plan), were those of the Commissioner and of the State of Tennessee (also for taxes). The claim of Mr. Reynolds, the only other creditor, had previously been settled. The State of Tennessee would appear to have received its entire claim. At least under these circumstances, the Bankruptcy Court need only determine, as it did, that all parties in interest were satisfied with the plan. The settlement here, then, affected only the Commissioner and Mrs. Reynolds.
Two theories underlie the doctrine of judicial estoppel. One is the sanctity of the oath, clearly not at issue here. The other is the successfully asserted or “prior success” rule, and is applicable only where an earlier court accepted a party’s contrary position. Mr. Reynolds has not established that the Bankruptcy Court was apprised of the basis for the $440,150 tax figure for 1977-1978, or for any of the other figures to which the parties had agreed. Certainly there is nothing in the record before us that implies judicial acceptance of the Commissioner’s position that the income was Mrs. Reynolds’. Even if the court had known the basis for the claim, it was not accepting that position which had been deeply compromised in the settlement, as had other tax claims for other years. Settlements should be encouraged. Parties to settlements should not be required to consider how they will be adversely affected vis-a-vis non-parties by reason of the manner in which a settlement is structured.