Ottinger v. Prudential Insurance Company of America

Filing 22

MEMORANDUM AND ORDER, denying 17 MOTION for Judgment on the Pleadings filed by Prudential Insurance Company of America. Signed by Judge J. Phil Gilbert on 2/2/2016. (jdh)

UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
CATHIE S. OTTINGER,
Plaintiff,
v.

Case No. 15-cv-522-JPG-PMF

PRUDENTIAL INSURANCE COMPANY
OF AMERICA,
Defendant.
MEMORANDUM AND ORDER
This matter comes before the Court on defendant Prudential Insurance Company of
America’s (“Prudential”) motion for judgment on the pleadings (Doc. 17). Plaintiff Cathie S.
Ottinger (“Ottinger”) has responded to the motion (Doc. 20), and Prudential has replied to that
response (Doc. 21).
I.

Judgment on the Pleadings Standard
A motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c)

is governed by the same standards as a Rule 12(b)(6) motion to dismiss for failure to state a claim,
that is, whether the pleadings contain facts that allow the reasonable inference that the defendant is
liable for the misconduct alleged. Adams v. City of Indianapolis, 742 F.3d 720, 727-28 (7th Cir.
2014) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009)). In ruling on a motion for judgment on the pleadings, the Court considers the
complaint, answer and any written instruments attached to those pleadings, accepts all
well-pleaded allegations in the complaint as true and draws all inferences in favor of the plaintiff.
See Pisciotta v. Old Nat’l Bancorp, 499 F.3d 629, 633 (7th Cir. 2007); Forseth v. Village of Sussex,
199 F.3d 363, 368 (7th Cir. 2000).

II.

Facts
As a preliminary matter, a number of the facts relevant to this case are evidenced by

documents filed in Ottinger’s Chapter 13 bankruptcy proceeding, Case No. 14-30302-lgk (Bankr.
S.D. Ill. Feb. 28, 2014). Ordinarily, when considering a Rule 12(b)(6) motion to dismiss or a Rule
12(c) motion for judgment on the pleadings, the Court may not consider matters outside the
pleadings unless it converts the motion to a motion for summary judgment. See Fed. R. Civ. P.
12(d). There is an exception to this rule, however, when the additional material is something of
which the Court may take judicial notice. See Menominee Indian Tribe of Wisc. v. Thompson,
161 F.3d 449, 456 (7th Cir. 1998). The Court may take judicial notice of public records, see Pugh
v. Tribune Co., 521 F.3d 686, 691 n. 2 (7th Cir. 2008) (publicly reported stock price), including
judicial proceedings, see Henson v. CSC Credit Services, 29 F.3d 280, 284 (7th Cir. 1994) (state
court filings); United States v. Wood, 925 F.2d 1580, 1582 (7th Cir. 1991) (bankruptcy filings).
The public records exception applies in this case, so the Court will consider the filings in
Ottinger’s bankruptcy case when determining the facts of this case. It will not, however, consider
other materials submitted in connection with the motion that are not part of the pleadings or the
bankruptcy case.
The relevant events begin with Ottinger’s bankruptcy proceeding. She and her husband
Terry Ottinger, who is now deceased, filed a voluntary petition under Chapter 13 of the
Bankruptcy Code on February 28, 2014. The Schedule B attached to the petition for listing of
personal property listed no contingent claims of any kind, and the statement of financial affairs
(“SOFA”) listed no either debtor had been a party in the preceding year. Less than two months
later, Terry Ottinger was in a motor vehicle accident and died on April 23, 2014. Less than two

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weeks later, Ottinger filed a suggestion of the death of Terry Ottinger in the bankruptcy
proceeding.
On May 25, 2014, Ottinger made a claim for benefits from an accidental death and
dismemberment (“AD&D”) policy provided to her by her employer and underwritten by
defendant Prudential.
In June 2014, Ottinger filed an amended distribution plan and an amended SOFA in the
bankruptcy proceeding, and in August 2014, she filed a second amended plan, none of which
disclosed or accounted for any claim for benefits from the AD&D policy. The Bankruptcy Court
confirmed the second amended plan on August 26, 2014.
In the meantime, in July 2014, Prudential denied Ottinger’s claim under the AD&D policy.
Ottinger appealed the decision, and Prudential issued a final denial in March 2015. On May 7,
2015, Ottinger filed this lawsuit seeking payment of the benefits she believes she is due under the
policy. She did not amend her Schedule B to list her claim for AD&D policy benefits until
October 19, 2015.1 On October 30, 2015, the Bankruptcy Court appointed Ottinger’s counsel in
this lawsuit to pursue this claim on behalf of Ottinger’s bankruptcy estate, and on January 27,
2016, the Bankruptcy Court confirmed Ottinger’s third amended plan that accounts for benefits
that may be paid pursuant to the AD&D policy.
Prudential now asks the Court for judgment on the pleadings on the grounds of judicial
estoppel because Ottinger failed to timely disclose the AD&D insurance policy benefits claim in
her bankruptcy proceeding. Ottinger argues that any omission has been cured by amending her
Schedule B and by proposing a third amended plan, which has been confirmed since her response
Prudential suggests that Ottinger amended her Schedule B because its counsel had made her
aware just before filing its amended answer that it would be asserting a judicial estoppel defense.
However, since this support for this suggestion is not contained within the pleadings or the public
record, the Court does not consider it.
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to Prudential’s motion, and by the Bankruptcy Court’s appointment of counsel to pursue
Ottinger’s claim on behalf of the estate.
III.

Analysis
The doctrine of judicial estoppel prevents a party from adopting a position in one legal

proceeding after having taken a contrary position – and prevailed – in another legal proceeding.
Zedner v. United States, 547 U.S. 489, 504 (2006). The intent of the doctrine is to prevent a
litigant from manipulating the judicial system by taking inconsistent positions when it suits her.
Spaine v. Community Contacts, Inc., 756 F.3d 542, 547 (7th Cir. 2014). For judicial estoppel to
apply, the party’s later position must be clearly inconsistent with the earlier position, the court
must have accepted the earlier position, and accepting the later position must be unfair. Zedner,
547 U.S. at 504. Whether to apply judicial estoppel is within the discretion of the Court. Id.
Ordinarily, judicial estoppel will prevent a debtor from manipulating the Court and her
creditors by deliberately concealing an asset in a bankruptcy petition, obtaining a discharge of her
debts, and then claiming ownership of that asset for her own benefit. Spaine, 756 F.3d at 547;
Cannon-Stokes v. Potter, 453 F.3d 446, 448 (7th Cir. 2006). However, where the omission of an
asset from a bankruptcy schedule is not deliberately deceitful, judicial estoppel may not be
appropriate. See, e.g., Spaine, 756 F.3d at 547 (summary judgment not warranted where evidence
shows omission from schedule may not have been deceitful because it was corrected through oral
disclosure). Correction of an inaccurate bankruptcy schedule to permit the Bankruptcy Court to
proceed with full and accurate information about the debtor’s assets and financial affairs does not,
by itself, suggest the deceit required for judicial estoppel to apply. Id. (citing Ah Quin v. County
of Kauai Dep’t of Transp., 733 F.3d 267, 272-73 (9th Cir. 2013)).

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More importantly, the application of judicial estoppel in this kind of situation is designed to
protect the Court and the debtor’s creditors, not those against whom the debtor has a claim.
Spaine, 756 F.3d at 547; see Metrou v. N.A. Mortenson Co., 781 F.3d 357, 360 (7th Cir. 2015).
Judicial estoppel will not be used to prevent the bankruptcy estate from benefitting from the denied
asset for the benefit of the debtor’s creditors so long as the estate played no part in the wrongful
denial of the asset and has not abandoned the asset. Cannon-Stokes, 453 F.3d at 448; see Metrou,
781 F.3d at 360; Parker v. Wendy’s Int’l, Inc., 365 F.3d 1268, 1272 (11th Cir. 2004). It would be
a different story if the estate had abandoned the claim and left the debtor to pursue it on her own
behalf. At that point, she would be left with the consequences of any deceptive representations
she made in her bankruptcy petition or its schedules. See Cannon-Stokes, 453 F.3d at 448-49
(debtor’s suit foreclosed by judicial estoppel because Trustee had abandoned her claim).
Applying the foregoing, the Court concludes that the pleadings, supplemented by the
judicial record of Ottinger’s bankruptcy proceedings, do not allow the reasonable inference that
Ottinger’s failure to list her claim for benefits under the AD&D policy on her Schedule B until
October 2015 was a deliberate attempt to conceal this asset. The circumstances of that omission
are not reflected in the pleadings, so the inference of deceit necessary for judicial estoppel to apply
is not warranted.
Furthermore, the Court will not exercise its discretion to apply judicial estoppel to deprive
Ottinger’s creditors of their appropriate share of any recovery the estate may obtain from
Prudential by virtue of the AD&D policy. As of right now, Ottinger’s debts have not been
discharged, the Trustee has not abandoned Ottinger’s claim for benefits from Prudential, the
Bankruptcy Court has appointed Ottinger’s counsel in this case to pursue that claim on behalf of

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the estate, and Ottinger’s distribution plan accounts for any such recovery. The Court will not
apply judicial estoppel to protect Prudential at the expense of Ottinger’s creditors.
IV.

Conclusion
For the foregoing reasons, the Court DENIES Prudential’s motion for judgment on the

pleadings (Doc. 17).
IT IS SO ORDERED.
DATED: February 2, 2016
s/ J. Phil Gilbert
J. PHIL GILBERT
DISTRICT JUDGE

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