Legal Memorandum: Judicial-estoppel Defense

Issue: Can the judicial-estoppel defense be applied in the bankruptcy and personal injury context?

The judicial-estoppel defense provides that: “where a party assumes a certain position in a legal proceeding, and succeeds in maintaining that position, he may not thereafter, simply because his interests have changed, assume a contrary position, especially if it be to the prejudice of the party who has acquiesced in the position formerly taken by him.”  Johnson v. Lindon City Corp., 405 F.3d 1065, 1069 (10th Cir. 2005).  The seminal Tenth Circuit case applying the judicial-estoppel doctrine in the bankruptcy/personal injury context is Eastman v. Union Pacific R.R., 493 F.3d 1151 (10th Cir. 2007).  There the court discussed and decided the issue of whether a personal-injury plaintiff (named Gardner) who recently filed bankruptcy may be “judicially estopped from pursuing his personal-injury claims against Defendants because he failed to disclose his pending claims to the bankruptcy court in the context of his chapter 7 bankruptcy.”  Id. at 1152.

In Eastman, one of the plaintiff’s principal arguments was that his failure to disclose his personal-injury claims in the bankruptcy was inadvertent, and primarily the fault of his bankruptcy attorney.  The court noted:

Gardner asserts his failure to disclose in no uncertain terms his pending personal injury action to the bankruptcy court resulted from “[m]istake, inadvertence, confusion, lack of understanding, lack of legal sophistication, and the like[.]”  Gardner places the blame on his bankruptcy attorney whom Gardner claims he informed of the pending lawsuit early in the bankruptcy proceedings.

Id. […]