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Louisiana Court Affirms Finding that Injured Plaintiff Had Not Concealed Personal Injury Claim from Creditors in Post-Confirmation Bankruptcy Proceedings

In a recent decision, the Louisiana Second Circuit Court of Appeal reviewed a judgment in favor of an injured plaintiff who had brought claims against the driver of the vehicle that struck him, as well as her insurance companies. The defendants raised the issue of judicial estoppel, claiming that the plaintiff failed to disclose his personal injury claim in his bankruptcy proceedings and should therefore not be able to recover compensation from the defendants.  In their analysis of whether the trial court erred in holding judicial estoppel did not apply, the appellate court focused on the equitable nature of the doctrine, and whether the injured plaintiff was in fact dishonest and attempting to reap a windfall by concealing his injury claim from the bankruptcy court and creditors.delivery truck

Willie Lee Thomas worked as a delivery driver for Farmers Seafood Company, and while making a delivery, he was struck by a car driven by defendant Wanda Jean Harris. Mr. Thomas was pinned between the rear of his own delivery truck and the vehicle driven by Ms. Harris, and he suffered serious injuries. Mr. Thomas underwent multiple surgeries, but at the time of the lawsuit, he was still unable to work.

Mr. Thomas brought a personal injury lawsuit against Ms. Harris, her automobile insurance company, and her excess liability insurer. Later, the excess uninsured/underinsured insurance carrier for Farmers Seafood was added as a defendant.  The attorney representing Ms. Harris and her insurance companies informed Mr. Thomas’ attorney that they would stipulate that the accident was caused solely by the fault of Ms. Harris.

Before the accident, Mr. Thomas had filed a Chapter 13 bankruptcy proceeding. In a supplemental answer in the personal injury matter, the defendants set forth the affirmative defense of judicial estoppel, claiming that Mr. Thomas should have informed the bankruptcy court of the personal injury claim and list it as an asset. Mr. Thomas had successfully completed his Chapter 13 bankruptcy plan and received a discharge from the bankruptcy court.  Mr. Thomas contended he did not have a duty to disclose this cause of action to the bankruptcy court, since this cause of action arose after the bankruptcy petition had been filed.

The trial court ruled that the judicial estoppel doctrine should not be applied here and granted Mr. Thomas’ motion for partial summary judgment.  The defendants appealed on the ground that the trial court erred in failing to apply judicial estoppel to bar Mr. Thomas’ claim.

The appellate court stated that judicial estoppel is a doctrine by which a party who assumed one position in his pleadings may be estopped from then assuming an inconsistent position.  The doctrine serves to protect the judicial system, but not necessarily the litigants. The court noted that judicial estoppel generally applies when a party intentionally self-contradicts as a means to gain an unfair advantage. Regarding the limits of the judicial estoppel doctrine, the appellate court stated that it applies when the position of the party is clearly inconsistent with a previous one, and when that party already convinced the court to accept the previous position.

Here, the court stated they were not convinced Mr. Thomas took an inconsistent position because at the time of his bankruptcy filing and injury, it was unclear he was under a duty to disclose the claim.  Mr. Thomas’ bankruptcy attorney had stated he did not believe that Mr. Thomas was required to inform the bankruptcy court of a post-petition claim. The policy was to wait until receiving a settlement and then inform the court.

The appellate court stated that Mr. Thomas did not have a duty to disclose the claim against the defendants. Therefore, he had not taken a position inconsistent with a previous one, and he had not convinced the court to accept the previous position.

The court affirmed the ruling granting summary judgment in favor of the plaintiff, Mr. Thomas, and denying summary judgment to the defendants, based on the affirmative defense of judicial estoppel. The court also stated that if Mr. Thomas had a duty to disclose his claim, the record showed his failure to disclose the claim was inadvertent, since he had paid all creditors and did not have a motive to conceal his claim.

The court also noted that since judicial estoppel is an equitable principle, equity must be considered. Applying judicial estoppel here would allow a culpable tortfeasor to escape liability. In this case, the defendants had already admitted liability for causing serious harm to Mr. Thomas.  The court stated that they must be held accountable for the injuries they caused to Mr. Thomas.

Here, the appellate court held the trial court exercised its proper discretion in ruling judicial estoppel was not appropriate. The court affirmed the trial court’s ruling granting summary judgment in favor of the plaintiff, Mr. Thomas.

The Louisiana car accident lawyers at Lavis Law have experience resolving insurance coverage disputes and claims of insurance bad faith.  We provide a free consultation, and our office can be reached by calling 866.558.9151.

More Blog Posts:

Louisiana Appellate Court Upholds Plaintiffs’ Right to Compensation After Car Accident, Louisiana Injury Lawyer Blog,

Louisiana Appellate Court Reverses Finding in Favor of Plaintiff Injured by Employee Regularly Using Work Vehicle, Louisiana Injury Lawyer Blog

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