Judicial estoppel; Paschke v Retool Indus; A bankruptcy debtor’s duty to disclose all of his or her assets; Spohn v Van Dyke Pub Sch; Application of judicial estoppel in bankruptcy proceedings

Holding that the trial court did not err in finding the elements of judicial estoppel were met, or in its application of the doctrine, the court affirmed its grant of summary disposition for defendants-driver and employer. Plaintiff sued defendants for injuries she suffered when the driver rear-ended her. However, she failed to notify the court in her separate bankruptcy case of her potential claim. The trial court granted summary disposition for defendants on the basis of judicial estoppel. On appeal, the court agreed with the trial court. First, when she filed suit against defendants “she ‘assumed a position that was contrary to the one that she asserted under oath at the bankruptcy proceedings.’” And the fact that her answer “on the bankruptcy questionnaire, at the time of filing, was truthful does not mean that her failure to disclose the potential negligence claim once the accident occurred was excusable or excepts her from the application of judicial estoppel.” Second, the bankruptcy court, “relying on plaintiff’s representations in her bankruptcy filing, adopted the contrary position—that there were no other potential claims—when it adopted plaintiff’s bankruptcy petition and plan.” Lacking all of the relevant information, it “was unable to make a proper determination of how to proceed and the creditors received nothing and were given no additional options, and were further precluded from pursuing their interests since plaintiff’s bankruptcy filing imposed an automatic stay preventing the creditors from enforcing their rights against plaintiff.” Third, the trial court did not err by finding plaintiff “had knowledge of the factual basis of the undisclosed claim, and under her continuing duty to disclose, should have amended her bankruptcy filing to reflect that knowledge.” In addition, the evidence suggested she had a motive for concealment, and did not support a finding of an absence of bad faith. Finally, the court noted that “defendants’ lack of involvement in the bankruptcy proceedings” and plaintiff’s “familiarity with the legal field” were irrelevant, and that “plaintiff’s creditors may still pursue payment from plaintiff, regardless of the dismissal of the civil litigation in favor of defendants, without the restrictions imposed by the Chapter 13 bankruptcy plan limiting payment or a stay of proceedings.”