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In the Court of Appeals of Georgia SECOND DIVISION
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A00A0825
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July 12, 2000
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JOWERS V. ARTHUR.
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Pope, P. J., Smith, P. J., Miller, J.
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The opinion of the court was delivered by: Miller, Judge.
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MI-037
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The issue is whether judicial estoppel bars a state law personal
injury claim not listed as an asset in a Chapter 13 bankruptcy
proceeding (begun after the accident but before the institution of the
personal injury suit), when the plaintiff/debtor dismisses the
incomplete bankruptcy petition (whose reduced payout plan has already
been confirmed) and then refiles a corrected bankruptcy petition that
includes the claim. We hold that judicial estoppel does not bar the
claim.
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Sherry Jowers *fn1
sued Gertrude Arthur in superior court for personal injuries arising out
of an auto collision. Citing judicial estoppel, Arthur moved for summary
judgment against Jowers on the ground that Jowers
had failed to list this claim as an asset in a Chapter 13 bankruptcy
petition that Jowers had filed months after the accident
and after she had consulted an attorney about the accident. With
approval of the federal bankruptcy court, Jowers
immediately dismissed her bankruptcy petition without prejudice (even
though her plan had already been confirmed with a less-than-100-percent
payout), and then filed a new Chapter 13 bankruptcy petition listing the
claim as an asset. Nevertheless, the superior court granted summary
judgment to Arthur, which Jowers appeals.
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Since 1994 we have followed the federal doctrine of judicial estoppel,
which precludes a party from asserting in a judicial proceeding a
position inconsistent with a position successfully asserted by it in a
prior proceeding. *fn2 Applying this
to both Chapter 7 and Chapter 13 bankruptcy petitions, we have held that
in light of the stringent disclosure requirements of bankruptcy law, the
failure to disclose an asset (such as a personal injury cause of action)
in the bankruptcy schedules amounts to a denial that such asset exists
and bars subsequent efforts to pursue the tort claim in a Georgia court.
*fn3
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We have emphasized, however, that if the debtor initially fails to
list the claim as a potential asset but later successfully amends the
bankruptcy filing or reopens the bankruptcy proceeding to include the
claim, judicial estoppel will not bar recovery on the claim. *fn4
Our first case applying this concept, Johnson v. Trust Co. Bank, *fn5
did not accept the rationale that allowing such an amendment or
reopening to cure the omission permits dishonest plaintiff/debtors to
conceal the asset from the bankruptcy court until "'caught'"
by the defendant in the subsequent personal injury action. *fn6
A majority of this Court was not persuaded that a tardy bankruptcy
amendment, spurred by the filing of a summary judgment motion in the
state tort action, represents a plaintiff/debtor's manipulating the
court system by shifting positions when his interests change, which
judicial estoppel is designed to prevent. *fn7
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Rather, focusing on a different analysis, the majority held that the
plaintiff/debtor, who with the permission of the bankruptcy court
reopens his bankruptcy case and amends the asset schedule to include the
tort claim, gains no unfair advantage in the bankruptcy court. *fn8
The majority reasoned that the amendment adds the claim to the
bankruptcy estate and thus inures to the benefit of the debtor's
creditors. *fn9 Moreover, the legal
consequence of the bankruptcy court's decision to reopen the case and to
accept the amendment to the plaintiff/debtor's asset schedule is that
the plaintiff/debtor's position in the tort suit no longer is
inconsistent with a position he successfully and unequivocally asserted
in a prior proceeding. *fn10
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We have since reiterated that amending the bankruptcy petition to
include the claim, even after the bankruptcy case was closed, precludes
judicial estoppel from barring the claim. *fn11
Thus, when we have applied judicial estoppel to bar a claim, there has
been no evidence that the plaintiff ever attempted to amend his
bankruptcy pleadings to include the tort claim. *fn12
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Moreover, while the underlying purpose of judicial estoppel is to
prevent manipulation of the judicial process, it is the bankruptcy court
that primarily is being manipulated in this instance. The creditors lose
the potential to recover where such a claim is not listed. Therefore, if
the bankruptcy court permits an amendment allowing an omitted tort
claim, it stands to reason that the Georgia court in which the tort
claim is asserted should honor the bankruptcy court's actions. To hold
otherwise would produce overly harsh and inequitable results, for then
everyone (except the allegedly culpable tort defendant) would lose,
including the debtor's innocent creditors. *fn13
It is up to the bankruptcy court to consider any sanctions for a
plaintiff's alleged attempts at manipulation under these circumstances.
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The question then becomes whether Jowers's "without
prejudice" dismissal of her bankruptcy proceeding (whose plan for a
reduced payout had been confirmed) and subsequent refiling of a new
petition that included the personal injury claim accomplishes the same
result, for judicial estoppel purposes, that amending the asset schedule
of the ongoing proceeding would have achieved. We hold that it does, for
we have held that judicial estoppel does not apply if a plaintiff
reopens a closed case (where discharge has already occurred) and amends
the asset schedule. *fn14 We have
reasoned that such does not constitute taking a position inconsistent
with one successfully and unequivocally asserted in a prior proceeding. *fn15
Dismissing an ongoing proceeding before discharge and refiling an
amended petition is even less like a successful and unequivocal
assertion of an inconsistent position. Dismissal effectively vacates a
confirmed plan, returns the debtor and her creditors to the status quo
ante, and revests the estate's property in the debtor, with the debtor
again liable for his debts and with the creditors free to pursue all
legal remedies against the debtor. *fn16
It can hardly be said that the debtor's failure to list the tort claim
successfully inured to her benefit in the dismissed case. *fn17
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The superior court erred in applying judicial estoppel to grant Arthur
summary judgment.
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Judgment reversed.
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Pope, P. J., concurs and Smith, P. J., concurs specially.
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SMITH, Presiding Judge, concurring specially.
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Although I believe this case shares many similarities with cases such
as Byrd v. JRC Towne Lake, Ltd., 225 Ga. App. 506 (484 SE2d 309) (1997),
in which we concluded that the doctrine of judicial estoppel precluded
the plaintiff from asserting a tort claim, I concur in the result
reached by the majority. At least a subtle distinction exists between
this case and Byrd. Jowers in effect amended her
bankruptcy petition by successfully seeking its dismissal and filing
another petition listing the potential tort claim in her schedule of
assets. This distinction avoids the harsh result that would obtain from
a purely technical application of the doctrine of judicial estoppel.
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Opinion Footnotes |
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*fn1 Asserting a claim for loss of
consortium, her husband joined in the suit, but later dismissed his
claim without prejudice.
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*fn2 Southmark Corp. v. Trotter,
Smith & Jacobs, 212 Ga. App. 454, 455 (442 SE2d 265) (1994); see
Smalls v. Walker, - Ga. App. - (Case No. A99A2020, decided March 24,
2000).
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*fn3 Smalls, supra, slip op. at (2)
(Chapter 13); Reagan v. Lynch, 241 Ga. App. 642, 643-644 (524 SE2d 510)
(1999) (Chapter 7); Byrd v. JRC Towne Lake, Ltd., 225 Ga. App. 506, 507
(484 SE2d 309) (1997) (Chapter 13).
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*fn4 Smalls, supra, slip op. at (2);
see Clark v. Perino, 235 Ga. App. 444, 446 (1) (509 SE2d 707) (1998).
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*fn5 223 Ga. App. 650 (478 SE2d 629)
(1996) (whole court).
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*fn6 Id. at 652.
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*fn7 Id. at 653.
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*fn8 Id. at 651-652. Notably, this
ground for requiring the reversal of summary judgment in Johnson was
separate from and independent of the majority's reasoning that the
disputed evidence of the plaintiff/debtor's intent to manipulate the
court system also required reversal of summary judgment. Id. at 651.
Since under Johnson either ground alone is sufficient for not applying
judicial estoppel, we do not address the factual question of Jowers's
intent. See, e.g., Smalls, supra, slip op. at (2); Wolfork v. Tackett,
241 Ga. App. 633, 634 (526 SE2d 436) (1999) (whole court); compare
Clark, supra, 235 Ga. App. at 446 (1).
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*fn9 Id.
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*fn10 Id. at 652.
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*fn11 See Smalls, supra, slip op.
at (2); Wolfork, supra, 241 Ga. App. at 634; Reagan, supra, 241 Ga. App.
at 644-645; Clark, supra, 235 Ga. App. at 446 (1); see generally Jones
v. United States, 1997 U. S. Dist. LEXIS 18356 (II) (N.D. Ga. 1997)
(tort action stayed 60 days to permit plaintiff to apply to the
bankruptcy court to reopen bankruptcy and add tort claim as asset,
despite detrimental effect on defendant's judicial estoppel argument);
In re Daniel, 205 B.R. 346, 348 (Bankr. N.D. Ga. 1997) (bankruptcy court
allowed debtor to reopen Chapter 7 bankruptcy to add personal injury
tort claim as asset of estate, noting that the Bankruptcy Rules accord
the debtors the right to amend bankruptcy schedules "as a matter of
course" and to liberally reopen a case). But see Scoggins v. Arrow
Trucking Co., 2000 U.S. Dist. LEXIS 5233 (S.D. Ga. 2000) (amendment to
add a pre-petition tort claim spurred by summary judgment motion did not
preclude operation of judicial estoppel).
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*fn12 See Byrd v. JRC Towne Lake,
Itd., 225 Ga. App. 506, 507-508 (484 SE2d 309) (1997); Southmark, supra,
212 Ga. App. at 456-457.
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*fn13 See In re Griner, 240 B.R.
432, 439 (3) (Bankr. S.D. Al. 1999).
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*fn14 Clark, 235 Ga. App. at
445-446 (1).
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*fn15 Id. at 446 (1).
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*fn16 Moore v. Bank of Fitzgerald,
225 Ga. App. 122, 124 (1) (483 SE2d 135) (1997).
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*fn17 See id. at 124-125 (1).
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