United States District Court, S.D. West Virginia, Huntington Division
MEMORANDUM OPINION AND ORDER
C. CHAMBERS UNITED STATES DISTRICT JUDGE.
before the Court is a Motion for Summary Judgment based upon
judicial estoppel by Defendant Wal-Mart Stores East, LP's
(hereinafter “Wal-Mart”). ECF No. 11. Having
reviewed the pleadings of the parties, the Court
DENIES the motion.
January 31, 2013, Plaintiff Seth Weatherholt filed for
Chapter 13 bankruptcy protection in the Southern District of
Indiana. Plaintiff was put on a five-year plan to pay his
creditors a total of $33, 749.00. In February 2018, Plaintiff
made his final payment and paid off the entire amount. An
Order Discharging the Debtor after Completion of Chapter 13
Plan was entered by the Bankruptcy Court on May 8, 2018.
Subsequently, the case was closed on June 19,
time the payment plan was established, Plaintiff worked at
Lowes, and he listed his 2012 wages as $52, 912.55, which
were considered in establishing his payment
schedule. During the course of his payment plan,
Plaintiff took a different position at Lowes at a lower
salary. Despite the drop in his income, Plaintiff did not
seek to lower his bankruptcy payments. In June 2014,
Plaintiff took a job at Wal-Mart, making $49, 470. Again,
despite it being less than his 2012 wages, Plaintiff made no
effort to have his payment plan adjusted. His payments were
deducted directly from his Wal-Mart paycheck. In November
2017, Plaintiff was terminated from Wal-Mart, but he
continued to make his bankruptcy payments until his
obligation was paid in full.
the time he made his final payment, Plaintiff filed this
action against Wal-Mart, alleging wrongful
discharge. However, Plaintiff did not amend his
schedules in Bankruptcy Court to disclose these claims before
that case was closed. Soon after Wal-Mart filed for summary
judgment in this case, Plaintiff filed a motion to reopen his
bankruptcy case. The motion was granted on July 20, 2018.
Subsequently, on August 13, 2018, Plaintiff's counsel in
this litigation was appointed as special counsel by the
Bankruptcy Court to pursue Plaintiff's employment case
his bankruptcy case has been reopened, Wal-Mart argues that
Plaintiff is judicially estopped from bringing this action
because his claims accrued before his Chapter 13 bankruptcy
proceeding originally was terminated, and he did not notify
the Bankruptcy Court of the claims. “Judicial estoppel
precludes a party from adopting a position that is
inconsistent with a stance taken in prior litigation.”
Minnieland Private Day Sch., Inc. v. Applied Underwriters
Captive Risk Assurance Co., 867 F.3d 449, 457 (4th Cir.
2017), cert. denied sub nom. Applied
Underwriters Captive Risk Assur. Co. v. Minnieland
Private Day Sch., Inc., 138 S.Ct. 926 (2018) (quoting
John S. Clark Co. v. Faggert & Frieden, P.C., 65
F.3d 26, 28 (4th Cir. 1995)). The rationale underlying the
doctrine is to preserve integrity in the judicial process and
prevent a litigant from misleading the court. John S.
Clark Co., 65 F.3d at 29. Nevertheless, given the harsh
consequences of applying the doctrine, a court must use
caution in its application. Id. (citation omitted).
It should not be used to assert a mere technical defense
“to derail potentially meritorious claims, especially
when the alleged inconsistency is insignificant at best and
there is no evidence of intent to manipulate or mislead the
courts. Judicial estoppel is not a sword to be wielded by
adversaries unless such tactics are necessary to
‘secure substantial equity.'” Ryan
Operations G.P. v. Santiam-Midwest Lumber Co., 81 F.3d
355, 365 (3d Cir. 1996) (internal citation omitted).
end, the Fourth Circuit has identified four elements that
must be met before judicial estoppel applies: (1) “the
party sought to be estopped must be seeking to adopt a
position that is inconsistent with a stance taken in prior
litigation;” (2) “the position sought to be
estopped must be one of fact rather than law or legal
theory;” (3) “the prior inconsistent position
must have been accepted by the court;” and (4)
“the party sought to be estopped must have
intentionally misled the court to gain unfair
advantage.” Lowery v. Stovall, 92 F.3d 219,
223-24 (4th Cir. 1996) (internal quotation marks and
citations omitted). Of these factors, the Fourth Circuit has
made it clear that the fourth factor is determinative.
Id. at 224 (citations omitted). As the goal of
judicial estoppel is to prevent a court from being
manipulated, “[i]t is inappropriate, therefore, to
apply the doctrine when a party's prior position was
based on inadvertence or mistake.” John S. Clark
Co., 65 F.3d at 29 (citations omitted). Here, Plaintiff
asserts his failure to amend his bankruptcy was an
inadvertent mistake, and there is no evidence he attempted to
manipulate the Court or used it to gain any unfair advantage.
Upon review, the Court agrees.
does not dispute that his claims arose after confirmation,
but prior to discharge of his Chapter 13 bankruptcy plan.
“The United States Code imposes a duty on bankruptcy
debtors to disclose all assets, including contingent and
unliquidated claims.” Casto v. Am. Union Boiler Co.
of W.Va., No. CIV.A. 2:05-CV-00757, 2006 WL 660458, at
*2 (S.D. W.Va. Mar. 14, 2006) (Goodwin, J.) (citations
omitted)). Therefore, Plaintiff should have amended his
schedule and declared his claims as assets of the bankruptcy
estate. See In re Murphy, 474 F.3d 143, 153 (4th
Cir. 2007) (“By providing that the bankruptcy estate
continues to be replenished by post-petition property until
the case is closed, dismissed, or converted under Chapter 7,
11, or 12 of the Bankruptcy Code, § 1306(a) provides for
the continued existence of the bankruptcy estate until the
earliest of any of the above-mentioned events occur.”).
Nevertheless, it is clear to the Court that Plaintiff had no
intent to mislead the Bankruptcy Court or gain any unfair
advantage by failing to make a timely disclosure.
the Court recognizes that Plaintiff was at the very end of
his five-year payment schedule when his claims arose and this
action was filed. Approximately one month after this action
was brought, Plaintiff made his final payment and fulfilled
his entire obligation under the plan. Second, despite taking
jobs at a lower salary after the payment plan was
established, Plaintiff never asked the Bankruptcy Court to
lower his payments. Likewise, after Plaintiff was fired, he
never sought any adjustment in his payment schedule. Instead,
during the entire period, Plaintiff kept making his payments
as they were originally ordered. Third, as Plaintiff never
adjusted his salary with the Bankruptcy Court, his attempt to
collect his lost past wages by virtue of this litigation is
not a new asset. Plaintiff is merely attempting to recoup an
asset he already had disclosed. Fourth, to the extent
Plaintiff is seeking damages beyond his lost past income,
Plaintiff had his bankruptcy case reopened. Although the
Court agrees with Plaintiff that it is uncertain whether any
additional moneys that may be collected through this
litigation will make a difference in the bankruptcy case
because he completed all his payments, the Bankruptcy Court
will have to power to make a decision on that issue. Fifth,
the Court finds no evidence Plaintiff failed to timely
disclose this litigation to gain any unfair advantage.
Similarly, based upon the facts, there was virtually no
reason for Plaintiff to purposefully conceal this action.
given the Court's findings that Plaintiff did not
intentionally mislead, attempt to take unfair advantage,
manipulate, or purposefully conceal this lawsuit, the Court
concludes that applying judicial estoppel in this case is
inappropriate. Therefore, the Court DENIES
Wal-Mart's Motion for Summary Judgment based upon
judicial estoppel. ECF No. 11.
Court DIRECTS the Clerk to send a copy of
this Order to counsel of record and any unrepresented
Plaintiff actually overpaid
the amount due and was refunded ...