An appeal from an order granting summary judgment on grounds of judicial estoppel prompted a split decision from the Court of Appeals for the District of Columbia Circuit.
A consumer filed a chapter 7 petition and received a discharge. In her schedules and lists, she never disclosed pending discrimination claims against three companies. However, she disclosed the claims to her trustee when prompted by one of the trustee’s questions during her Section 341 meeting.
About five years after the bankruptcy filing, and years after the debtor got permission to sue, the defendants learned she had filed bankruptcy and failed to disclose the discrimination claims. The debtor then reopened her bankruptcy and listed the claims among her assets. The trustee was substituted as plaintiff but eventually decided to abandon the claims given the inability to retain counsel on a contingency. The debtor resumed her prosecution of the suit.
The district court granted summary judgment in favor of the defendants on the theory of judicial estoppel.
In the majority opinion on July 12, written by Circuit Judge A. Raymond Randolph, the D.C. Circuit ruled that the district court properly applied the law on judicial estoppel and declined to upset the lower court’s exercise of discretion.
Dissenting, Circuit Judge Thomas B. Griffith said that the debtor’s disclosure of her claims in the Section 341 meeting raised a disputed issue of fact precluding summary judgment. There should have been a trial, he said, because disclosure to the trustee resulted in a “genuine dispute” over the question of whether the debtor “lied or simply made a mistake on her bankruptcy forms.”
The dissent dovetails with the circuit court’s treatment of the standard of review following the grant of summary judgment based on judicial estoppel. In the majority’s opinion, Judge Randolph said that review of an order granting summary judgment ordinarily is de novo.
On the other hand, Judge Randolph said, district courts exercise discretion in granting or denying motions based on judicial estoppel. On discretionary rulings, appellate review invokes an abuse-of-discretion standard, he said.
Judge Randolph said that a “large majority” of circuit courts employ the abuse-of-discretion standard on judicial estoppel appeals. He employed that approach, otherwise discretion of the appellate court would displace discretion of the trial court.
Whether the majority or the dissent have the better overall approach is a matter for debate. Perhaps the majority, without saying so explicitly, imply that the abuse-of-discretion standard loosens the rigor of summary judgment rules when judicial estoppel is in play.