Burch v. Ameronc Inc
MEMORANDUM OPINION. Signed by Judge R David Proctor on 4/25/2012. (AVC)
2012 Apr-26 AM 08:47
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
Case No.: 7:11-CV-2342-RDP
This matter is before the court on Defendant’s Motion for Summary Judgment. (Doc. # 11).
The matter has been fully briefed. (Docs. # 12, 14, 16). The issue is whether Plaintiff’s claims
against Defendant, her former employer, are precluded by her failure to disclose them in her
On February, 16, 2009, Burch filed a Chapter 13 bankruptcy petition in the Northern District
of Alabama. The Chapter 13 plan was confirmed on June 5, 2009. (U.S. Bankruptcy Court Northern
District of Alabama, Case No. 7:09-bk-70375).
In July 2010, while her bankruptcy case was still pending, Burch believed that she was being
racially discriminated against by AmerOnc with respect to her wages, during a time period stretching
back to March 2010. (Doc. # 15). Burch contacted the EEOC and, on July 14, 2010, completed an
intake questionnaire and submitted it to EEOC. (Doc. # 15).
After doing so, Burch called Rod Shirley, her bankruptcy attorney, and told him she was
filing an EEOC charge and why. (Doc. # 15). Burch claims Shirley told her that the EEOC claim
would be considered post-petition since it occurred after the date of filing her bankruptcy and,
therefore, she did not have to list the claim as an asset in the bankruptcy. (Doc. # 15).
Shortly thereafter, on July 28, 2010, converted her1 Chapter 13 bankruptcy case to Chapter
7 to obtain a discharge of her debts. (Doc. # 15). Burch claims that again, she asked Shirley (her
bankruptcy attorney) about her EEOC claim, and he told her that because it arose post-petition, it did
not need to be listed as an asset. (Doc. # 15).
AmerOnc terminated Burch’s employment on August 9, 2010. Thereafter, Burch contacted
the EEOC, which sent her another intake questionnaire. (Doc. # 15). She completed the documents
and returned them to the EEOC. (Doc. # 15). Burch subsequently retained counsel and filed a
second EEOC charge, regarding her termination. (Doc. # 15).
Burch did not inform Shirley, her bankruptcy attorney, that she had been terminated from
AmerOnc, nor did she tell him about her second EEOC charge. (Doc. # 15). According to Burch,
this was because of what Shirley had previously told her how post-petition claims should be handled.
(Doc. # 15).
The following is a helpful chronology of the events taken from the Rule 56 file (and mostly
supplied by Plaintiff):
Burch files Chapter 13 bankruptcy
Burch’s Chapter 13 confirmed
Burch submits EEOC charge claiming disparate pay since 3/10
Burch converts bankruptcy to Chapter 7
Burch is terminated
The relevant bankruptcy filing was jointly filed by Plaintiff along with her husband.
Burch files second EEOC charge on termination
Burch is discharged from Chapter 7
Chapter 13 Trustee’s Final Report and Account.
Plaintiff files her Complaint in this action.
(Doc. # 14).
Defendant’s motion argues that Plaintiff is judicially estopped from pursuing her claims in
this matter because she knowingly concealed or failed to disclose these claims as assets in her
bankruptcy proceeding. In response, Plaintiff contends that (1) her discrimination claims were not
assets of the bankruptcy estate, and (2) AmerOnc has no evidence that Burch attempted to make a
“mockery” of the judicial system in not disclosing the claims. (Doc. # 14).
“Judicial estoppel is an equitable doctrine invoked at a court’s discretion.” Burnes v. Pemco
Aeroplex, Inc., 291 F.3d 1282, 1285 (11th Cir. 2002) (citing New Hampshire v. Maine, 532 U.S. 742,
750 (2001)). This doctrine “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, 532 U.S.
at 749 (internal quotations omitted). Although there are neither “inflexible prerequisites [n]or an
exhaustive formula for determining the applicability of judicial estoppel,” the Supreme Court has
elucidated several factors which typically inform the decision whether or not to apply judicial
estoppel in a particular case. Id. at 751. “First, a party’s later position must be ‘clearly inconsistent’
with its earlier position.” Id. at 750 (string citation omitted). “Second, courts regularly inquire
whether the party has succeeded in persuading a court to accept that party’s earlier 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. (quoting Edwards v. Aetna Life Ins. Co., 690
F.2d 595, 599 (6th Cir. 1982)). Third, there must be a showing that “the party seeking to assert an
inconsistent position would derive an unfair advantage or impose an unfair detriment on the
opposing party if not estopped.” Id. at 751.
Courts in the Eleventh Circuit consider two additional factors in applying the doctrine of
judicial estoppel to a particular case. “First, it must be shown that the allegedly inconsistent
positions were made under oath in a prior proceeding. Second, such inconsistencies must be shown
to have been calculated to make a mockery of the judicial system.” Burnes v. Pemco Aeroplex, Inc.,
291 F.3d 1282, 1285 (11th Cir. 2002). However, these two factors are not “inflexible or exhaustive,”
and therefore the court must give due consideration to all of the circumstances of a particular case
when considering the applicability of judicial estoppel. Id. at 1286.
Plaintiff’s argument that her claims were not assets of the bankruptcy estate is wholly without
merit. An unliquidated contingent claim is an asset an asset of the estate. Item 21 on Schedule B
requires disclosures of “Other contingent and unliquidated claims of every nature ... .” (Doc. # 13
at 19). Plaintiff’s disparate pay claim existed at the time she converted her Chapter 13 filing to
Chapter 7 and filed amended schedules. Plaintiff failed to disclose her claim on the amended
schedules. (Doc. # 13 at 19). Admittedly, Plaintiff’s termination claim arose after the conversion
to Chapter 7, but she was aware of that claim prior to her bankruptcy discharge on October 4, 2010.
Notwithstanding these undisputed facts, her schedules were not amended to disclose that additional
contingent and unliquidated claim. (Doc. # 13 at 19).
The duty to disclose all assets and potential assets to the bankruptcy court is a continuing duty
that does not end once the debtor’s forms are submitted. Robinson v. Tyson Foods, Inc., 595 F.3d
1269, 1274 (11th Cir. 2010) (citing Burnes, 291 F.3d at 1286). This duty applies to proceedings
under both Chapter 13 and Chapter 7 of the Bankruptcy Code. Id. “[A]ny distinction between the
types of bankruptcies available is not sufficient enough to affect the applicability of judicial estoppel
because the need for complete and honest disclosure exists in all types of bankruptcies.” Id. (quoting
DeLeon v. Comcar Industries, Inc., 321 F.3d 1289, 1291 (11th Cir.2003)); accord Mason v.
Mitchell’s Contracting Service, LLC, 816 F.Supp.2d 1178, 1186 (S.D. Al. 2011).
Plaintiff further argues that she should not be subject to judicial estoppel because she is not
responsible for the statements that were submitted to the bankruptcy court in her name. Specifically,
in her Declaration, Plaintiff states that she made her bankruptcy attorney aware of her first EEOC
charges and that he told her she did not have to disclose them. (Doc. # 15 at 4). She did not inform
him of her second EEOC charge. Interestingly, Plaintiff admits that, in July 2010, she and her
husband “completed and signed all documents for the conversion [to Chapter 7].” (Doc. # 15 at 4).
Those documents (i.e., the amended schedules) were filed with the Bankruptcy Court with a
Declaration bearing Plaintiff’s electronic signature which states, “I declare under penalty of perjury
that I have read the foregoing amended information and it is true and correct to the best of my
knowledge, information and belief.” (Doc. # 13 at 14).
Plaintiff has neither argued nor offered any evidence that her bankruptcy counsel signed her
name electronically to the declaration without her permission. She merely asserts that she relied on
her attorney’s advice that she did not need to disclose the claims against Defendant. Thus, there is
no real dispute that Plaintiff has taken inconsistent positions under oath. The Bankruptcy Court
discharged Plaintiff from bankruptcy unaware of the two contingent and unliquidated claims against
Defendant that are asserted in this case. There is no question that the Bankruptcy Court was misled
by Plaintiff’s position regarding item number 21 on Schedule B. (Doc. # 13 at 19). Moreover,
Plaintiff derived unfair advantage to the extent that any portion of any creditor’s claim was
discharged when Plaintiff had undisclosed contingent asserts. (See Doc. # 13 at 50). Therefore, the
matter turns upon the question of intent.
Plaintiff argues that judicial estoppel should not be applied in this situation because she did
not attempt to “game” the system, and any error was attributable to her bankruptcy attorney, not to
her. Even assuming the accuracy of Plaintiff’s version of what transpired between her and her
bankruptcy attorney (and to be clear the court must so assume that on a Rule 56 Motion), just as in
Mason, “[t]his argument does not forestall the application of judicial estoppel.” Mason, 816
F.Supp.2d at 1188. Plaintiff “voluntarily chose h[er] attorney as h[er] representative in the
bankruptcy action and, therefore, cannot escape any deficiencies in h[er] case even if they are the
result of negligence or omissions on h[er] attorney’s part.” Mason, 816 F.Supp.2d at 1188 (citing
Link v. Wabash Railroad Co., 370 U.S. 626, 633 (1962) and Barger v. City of Cartersville, 348 F.3d
1289, 1293 (11th Cir. 2003)). In Barger, under similar circumstances, the Eleventh Circuit stated,
“Although it is undisputed that Barger’s attorney failed to list Barger’s discrimination suit on the
schedule of assets despite the fact that Barger specifically told him about the suit, the attorney’s
omission is no panacea.” Barger, 348 F.3d at 1295. “[I]f an attorney’s conduct falls substantially
below what is reasonable under the circumstances, the client’s remedy is against the attorney in a suit
for malpractice. But keeping [the employment] suit alive merely because plaintiff should not be
penalized for the omissions of h[er] own attorney would be visiting the sins of plaintiff’s lawyer
upon the defendant.” Id., (citing Link, 370 U.S. at 634, n.10). Moreover, “[e]ven if [Plaintiff’s]
failure to disclose could be blamed on her attorney, the nondisclosure could not in any event be
considered inadvertent. The failure to comply with the Bankruptcy Code’s disclosure duty is
‘inadvertent’ only when a party either lacks knowledge of the undisclosed claim or has no motive
for their concealment.” Id. Furthermore, “[o]mitting the discrimination claims from the schedule
of assets appeared to benefit Plaintiff because, by omitting the claims, she could keep any proceeds
for herself and not have them become part of the bankruptcy estate.” Id.
Based on the foregoing, the court finds that application of the doctrine of judicial estoppel
is appropriate in this case. Plaintiff failed to disclose her pay and termination claims to the
Bankruptcy Court. See Mason, 816 F.Supp.2d at 1189. Therefore, Plaintiff is estopped from
collecting monetary damages2 from Defendant in the instant action. A separate order will be entered.
DONE and ORDERED this
day of April, 2012.
R. DAVID PROCTOR
UNITED STATES DISTRICT JUDGE
Obviously, this ruling does not have any effect on Plaintiff’s claims for declaratory and
injunctive relief. Barger, 348 F.3d at 1297.
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