Recent 9th Circuit Court of Appeals Decision re Judicial Estoppel
Recent 9th Circuit Court of Appeals Decision re Judicial Estoppel: Usually, where a debtor fails to list (schedule) a claim/cause of action/lawsuit in which debtor is plaintiff, and in which other persons/entities are defendants, the punishment is that the debtor is NOT allowed to pursue that claim, after the bankruptcy case is over (debtor is estopped to pursue claim after bankruptcy, because debtor failed to schedule the existence of the claim, in debtor’s bankruptcy schedules.
However, in Ah Quin v. County of HI, F.3d, 2013 DAR 9634 (9th Cir. 7/25/13), the 9th Circuit Court of Appeals held that the Debtor/plaintiff was not estopped from pursuing discrimination law suit, despite fact debtor had failed to list that suit as an asset, in debtor’s bankruptcy schedules. 9th Cir., 2-1 decision, reverses summary judgment for Defendant determining that lower court did not apply correct standard as mistake or inadvertence exception to application of judicial estoppel. Perhaps the most relevant fact, not really discussed in the opinion, is that the debtor/plaintiff reopened her case and the Ch 7 trustee abandoned the claim.
If the claim had not been abandoned, by the Trustee, back to the debtor, when the bankruptcy case was reopened, the unscheduled claim would have remained part of the bankruptcy estate, after case was over, forever, and therefore debtor would NOT have been able to pursue the unscheduled claim after debtor’s case was over.