SW Legal studies in Business

Bankrupt Had No Duty to Reveal Plans to Sue in Tort After Bankruptcy
Description Appeals court held that a party who incurred a tort claim while in bankruptcy proceedings, but intentionally waited to file the suit until he was discharged from bankruptcy, is not estopped from pursuing the tort claim, even though it occurred while he was in bankruptcy.
Topic Bankruptcy
Key Words Personal Injury Action; Estoppel
C A S E   S U M M A R Y
Facts Three weeks after Robert Johnson filed a petition for relief as a Chapter 13 debtor, he claimed to have broken a tooth on a small stone contained in a McDonalds sandwich. When he was treated by a dentist, he discussed his intention to sue McDonalds, but he did not tell the Chapter 13 trustee or his creditors. Months later, Johnson's bankruptcy was converted to Chapter 7; more than a year later, the proceeding was closed as a "no asset" case. Then Johnson sued McDonalds, which learned of Johnson's failure to disclose the pending action to the trustee and creditors. McDonalds claimed Johnson was estopped from brining his claim for damages due to his failure to list his claim as an asset during the bankruptcy case. The trial court held in McDonalds' favor. Johnson appealed.
Decision

Reversed. Judicial estoppel precludes a party from taking a position inconsistent with a position that the party previously took in litigation or from gaining an advantage by taking one position and then seeking a second advantage by taking an incompatible position in a subsequent action. Johnson's failure to amend his bankruptcy schedules to reveal his post-petition claim against McDonalds did not warrant the imposition of judicial estoppel, as Johnson was not obligated to amend his bankruptcy schedules to disclose his claim. There is no evidence that he received a benefit by not disclosing his forthcoming claim against McDonalds.

Citation Johnson v. SI-COR, Inc., 28 P.2d 832 (Ct. App., Wash., 2001)

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