| [1] | IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON DIVISION II |
| [2] | No. 24413-6-II |
| [3] | 2000.WA.0043117 <http://www.versuslaw.com> |
| [4] | August 4, 2000 |
| [5] | PUGET SOUND NATIONAL BANK, A NATIONAL BANKING CORPORATION, RESPONDENT, V. FRED A. FERGUSON AND JANE DOE FERGUSON, HUSBAND AND WIFE, APPELLANTS. FRED A. FERGUSON, D/B/A YELM PROCESSING COMPANY, AND WILLIAM BEECHER, AS TRUSTEE FOR THE BANKRUPTCY ESTATE OF FREDERICK A. FERGUSON, THIRD-PARTY PLAINTIFFS, V. PUGET SOUND NATIONAL BANK, A NATIONAL BANKING CORPORATION, AND KEY BANK OF WASHINGTON, ITS SUCCESSOR-IN INTEREST, THIRD-PARTY DEFENDANTS. |
| [6] | Source of Appeal: Appeal from Superior Court of Thurston County Docket
No: 91-2-02756-8 Judgment or order under review Date filed: 02/05/1999
Judge signing: Hon. Wm. T. McPhee |
| [7] | Counsel: Counsel for Appellant(s) Charles M. Andersen Winston &
Cashatt Ste 1900 Sea1st Fncl Ctr 601 W Riverside Ave Spokane, WA 99201
Counsel for Respondent(s) Donald L. Anderson Eisenhower & Carlson
Ste 1200 1201 Pacific Ave Tacoma, WA 98402 |
| [8] | Judges: Authored by J. Dean Morgan Concurring: Carroll C. Bridgewater,
J. Robin Hunt |
| [9] | The opinion of the court was delivered by: Morgan, J. |
| [10] | UNPUBLISHED OPINION |
| [11] | Fred A. Ferguson appeals the summary dismissal of his lender-liability
claims against Puget Sound National Bank. We affirm. Between September
1989 and January 1991, Ferguson borrowed $260,000 from Puget Sound
National Bank. He executed two promissory notes secured by deeds of
trust on real property and security interests in personal property. He
did not pay as agreed, and in December 1991 the bank sued him in
Thurston County Superior Court.*fn1 |
| [12] | In February 1992, Ferguson filed a voluntary Chapter 7 petition in the
United States Bankruptcy Court. Although he listed as debts the
bank's claims against him, he did not list as assets the
lender-liability claims that he presently brings against the bank. The bankruptcy
trustee determined that the case was a 'no asset Chapter 7 proceeding'
and 'instruct{ed} the creditors that no proof of claim {was} to be
filed.'*fn2 The bankruptcy
court discharged the listed debts and closed the case in late June 1992. |
| [13] | Two years later, in February 1994, Ferguson moved the bankruptcy
court to reopen the bankruptcy case. He said that he wanted to
pursue lender-liability claims against the bank, and that the proceeds
of such claims should be administered by the bankruptcy trustee.*fn3
The bankruptcy court granted his motion. |
| [14] | In March 1994, Ferguson filed an answer in the dormant Thurston County
action. He included lender-liability counterclaims for breach of
contract, misrepresentation, promissory estoppel, negligent supervision
and emotional distress. He did not join the bankruptcy trustee as
a party. |
| [15] | Four and a half years elapsed. Then, in August 1998, Ferguson moved
the Thurston Count Superior Court to join the bankruptcy trustee
as a party. A month after that, the bank moved the superior court for a
summary judgment of dismissal. It asserted that Ferguson was subject to
res judicata or judicial estoppel because, in the bankruptcy
court, he had discharged the bank's claims against him without listing
or otherwise disclosing his claims against the bank. In October 1998,
the superior court granted both motions. |
| [16] | In December 1998, the bankruptcy trustee moved the bankruptcy
court for leave to abandon all interest in Ferguson's claims against the
bank. In January 1999, the bankruptcy court granted the motion
and authorized the trustee 'to abandon the lawsuit against {the bank} .
. . as burdensome or of inconsequential value.'*fn4
Presumably, the bankruptcy case was then reclosed. |
| [17] | In February 1999, the superior court formally dismissed Ferguson's
claims with prejudice. In March 1999, Ferguson and the bankruptcy
trustee filed a notice of appeal to this court. The notice states, 'Fred
A. Ferguson . . . and William Beecher as Trustee for the bankruptcy
estate of Frederick A. Ferguson . . . seeks {sic} review . . . of the
Order Granting Plaintiff's Motion for Summary Judgment{.}'*fn5 |
| [18] | At the outset, we do not understand how a bankruptcy trustee
can appeal a lawsuit after abandoning all interest in it.*fn6
Accordingly, we view Ferguson as the only proper appellant. |
| [19] | The issue Ferguson raises is whether a person is estopped from
bringing a lender-liability claim because, in an earlier bankruptcy
proceeding, he discharged or otherwise altered*fn7
the lender's claims against him while failing to list or otherwise
disclose his own claims against the lender, even though the lender's
claims and his claims all arise out of the same transaction. |
| [20] | According to the bank, every court that has faced the issue has found
an estoppel of some kind res judicata*fn8
(which is sometimes called 'direct estoppel' or 'estoppel by judgment');
*fn9 judicial estoppel; *fn10
equitable estoppel;*fn11
'quasi-estoppel';*fn12 or estoppel
of an unspecified nature.*fn13 As
one court summarizes, 'Because of the Bankruptcy Code
requirements to disclose the whole spectrum of a petitioner's financial
affairs, 'courts that have considered the effect of a debtor's failure
to disclose a potential lender-liability lawsuit in a bankruptcy
proceeding have universally held that the debtor is equitably estopped,
judicially estopped, or barred by res judicata{.}''*fn14
Ferguson does not cite to any cases that take his position, and we have
found none ourselves. We conclude that the bank's authorities are
persuasive; that Ferguson is estopped from bringing his present claims;
and that the trial court did not err by ruling as it did. |
| [21] | Affirmed. |
| [22] | A majority of the panel having determined that this opinion will not
be printed in the Washington Appellate Reports, but will be filed for
public record pursuant to RCW
2.06.040, it is so ordered. |
| [23] | Morgan, J. |
| [24] | We concur: Bridgewater, J., Hunt, A.C.J. |
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| Opinion Footnotes | |
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| [25] | *fn1 The bank filed two actions
which, for convenience, we will refer to as one. |
| [26] | *fn2 Clerk's Papers at 463. |
| [27] | *fn3 Ferguson did not allege that he
had recently discovered the facts needed to support the claim, although
he did allege that he had recently discovered the applicable law. |
| [28] | *fn4 Clerk's Papers at 848. |
| [29] | *fn5 Clerk's Papers at 856. |
| [30] | *fn6 RAP 3.1 ('Only an aggrieved
party may seek review by the appellate court.'). |
| [31] | *fn7 Ferguson argues at length that
there is a material difference between altering a claim under Chapter 11
of the Bankruptcy Code and discharging it completely under
Chapter 7 of the Bankruptcy Code. We fail to perceive that
difference. Under either chapter, the bankruptcy debtor has a
duty to list his or her claims as assets. 11 U.S.C. sec. 521 (1); see
Youngblood Group v. Lufkin Fed. Sav. & Loan Ass'n., 932 F.2d 859,
867 (E.D. Tex. 1996). |
| [32] | *fn8 E.g.,
In re Baudoin, 981 F.2d 736, 737, 744, (5th Cir. 1993) ('At issue is
whether Chapter 7 debtors may, three years after discharge, bring a
lender liability action in state court against their creditor'; 'state
action is barred by res judicata'); In re Heritage Hotel Partnership I,
160 B.R. 374, 376, 378 (B.A.P. 9th Cir. 1993) ('We hold that the order
confirming {the debtor's} plan of reorganization is a final order which
is res judicata and bars the subsequent assertion by the
{debtor-plaintiffs} of lender liability claims which arose under
prepetition acts.'); Sanders
Confectionery Prods., Inc. v. Heller Financial, Inc., 973 F.2d 474, 485
(6th Cir. 1992) (lender liability claims 'should have been brought
during the bankruptcy proceeding and res judicata prevents them
from being raised now'), cert. denied, 506 U.S. 1079 (1993); Sure-Snap
Corp. v. State Street Bank & Trust Co., 948 F.2d 869, 877 (2d Cir.
1991) ('We rule today, that in the context of lender liability
claims that could have been brought before a final plan for
reorganization was confirmed, but weren't, the prior bankruptcy
order was res judicata to the later action.');
In re Howe, 913 F.2d 1138, 1140 (5th Cir. 1990) (appellate court
affirmed bankruptcy court's 'holding that, under the principles
of res judicata, the confirmation order barred the debtors' claims'); Southmark
Properties v. Charles House Corp., 742 F.2d 862, 869 (5th Cir. 1984)
(bankruptcy orders under former Chapter 10 'are res judicata as
to {lender liability} claims asserted by appellants'); Jungkunz v. Fifth
Third Bank, 650 N.E.2d 134, 137 (Ohio Ct. App. 1994) ('All the elements
of res judicata having been met, we hold that the judgment in bankruptcy
on appellants' bankruptcy petition bars the suit filed . . . in
the trial court.'); see Siegel
v. Federal Home Loan Mortg. Corp., 143 F.3d 525, 529 (9th Cir. 1998). |
| [33] | *fn9 46 Am.Jur.2d Judgments sec.
517; 18 Charles Alan Wright, Arthur R. Miller & Edward H. Cooper,
& Miller, Federal Practice & Procedure, sec. 4402; Philip A.
Trautman, 60 Wn. L. Rev. at 805. |
| [34] | *fn10 Oneida
Motor Freight, Inc. v. United Jersey Bank, 848 F.2d 414, 419 (3rd Cir.)
('Oneida's failure to list its claim against the bank worked in
opposition to preservation of the integrity of the system which the
doctrine of judicial estoppel seeks to protect'), cert. denied, 488 U.S.
967 (1988); Payless
Wholesale Distribs., Inc. v. Alberto Culver, Inc., 989 F.2d 570, 571
(1st Cir. 1993) ('Payless, having obtained judicial relief on the
representation that no claims existed, can not now . . . obtain relief
on the opposite basis{;} . . . {this} is an unacceptable abuse of
judicial proceedings'); Luna v. Dominion Bank, Inc., 631 So.2d 917, 919
(Ala. 1993) ('The doctrine of judicial estoppel applies, where a debtor
in bankruptcy proceedings fails to disclose any claim that may be
presented in a non-bankruptcy contest, to estop the debtor from
presenting the claim.') (citing Oneida,
848 F.2d 414). See also Sprague
v. Sysco Corp., 97 Wn. App. 169, 180 n.4, 982 P.2d 1202 (1999)
(noting but declining to apply judicial estoppel), review denied, 140
Wn.2d 1004 (2000). |
| [35] | *fn11 Oneida,
848 F.2d at 417 ('The result of a failure to disclose such claims
triggers application of the doctrine of equitable estoppel, operating
against a subsequent attempt to prosecute the actions.'); Heritage
Hotel, 160 B.R. at 379 ('We hold that the failure to disclose any
potential lender liability claims . . . during the pendency of the bankruptcy
case equitably estops {the debtor} from subsequently asserting such
claims.'). |
| [36] | *fn12 Wright v. State, 824 P.2d
718, 721 (Alaska 1992) ('{Q}uasi estoppel was properly applied because
Wright's lawsuit is not consistent with his bankruptcy
position.'). |
| [37] | *fn13 Hay
v. First Interstate Bank, 978 F.2d 555, 557 (9th Cir. 1992)
('Failure to give the required notice estops {the bankruptcy
debtor/lender-liability claimant}.'); Conrad
v. Bank of America, 53 Cal.Rptr.2d 336, 348 (1996) ('{W}hile the
issue-preclusion terminology that is employed is variable, it appears to
be a universal rule that the failure to disclose the potential lender
liability claim in a bankruptcy action precludes subsequent
prosecution of such action.') (citing and following Oneida,
848 F.2d 414). |
| [38] | *fn14 Billmeyer v. Plaza Bank of
Commerce, 50 Cal. Rptr.2d 119, 121 (1995) (citation omitted). |
