Burnes v. Pemco Aeroplex, Inc., No. 01-13865.

• Decision Date: 20 May 2002
• Docket Number: No. 01-13865.
• Parties: Walter BURNES, et al., Plaintiffs, Levi A. Billups, III, Plaintiff-Appellant, v. PEMCO AEROPLEX, INC., Precision Standard, Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

291 F.3d 1282

Walter BURNES, et al., Plaintiffs Levi A. Billups, III, Plaintiff-Appellant, v. PEMCO AEROPLEX, INC., Precision Standard, Inc., Defendants-Appellees.

No. 01-13865.

United States Court of Appeals, Eleventh Circuit.

May 20, 2002.

Kenneth O. Simon, Birmingham, AL, for Plaintiff-Appellant.

Mitchell G. Allen, Maynard, Cooper, Frierson & Gale, P.C., Jeffrey A. Lee, Maynard, Cooper & Gale, P.C., Birmingham, AL, for Defendants-Appellees.

Appeal from the United States District Court for the Northern District of Alabama.

Before CARNES and FAY, Circuit Judges, and HUNT^*, District Judge.

HUNT, District Judge:

This appeal, involving an issue of first impression in this Circuit, concerns the applicability of the doctrine of judicial estoppel in this employment discrimination case. The district court decided that judicial estoppel barred Plaintiff Billups' employment discrimination claims against Defendants Pemco Aeroplex, Inc. and Precision Standard, Inc. (together referred to as "Pemco") because of his failure to disclose the claims in his concurrent bankruptcy proceedings. Billups appeals the grant of summary judgment in favor of Pemco and, for the reasons that follow, we affirm in part and reverse in part. Specifically, Billups is judicially estopped from asserting any claims for monetary damages against Pemco, but he may continue to pursue his claims for injunctive relief.

I. Factual and Procedural Background

The facts of this case are straightforward. Billups began working for Pemco in November of 1992. On July 3, 1997, he filed for Chapter 13 relief in the United States Bankruptcy Court for the Northern District of Alabama.¹ Billups had a lawyer for the entirety of his bankruptcy proceedings. Pemco, his employer, did not participate in the bankruptcy. The Chapter 13 schedule of assets form specifically asked Billups to report any contingent or unliquidated claims of any kind.² Additionally, the statement of financial affairs form, filed in the Chapter 13 case, asked Billups to list all suits to which he is or was a party within one year of filing for bankruptcy. At the time that he filled out these forms, Billups was not participating in a lawsuit and indicated that on his forms. Then, on January 30, 1998 (six months later), Billups filed a charge of discrimination with the EEOC against Pemco. On December 9, 1999, Billups, along with thirty-five (35) other individuals, filed an employment discrimination suit against Pemco in the Northern District of Alabama seeking both monetary and injunctive relief. Billups never amended his Chapter 13 schedule of assets or statement of financial affairs to include his lawsuit against Pemco.

In October of 2000, Billups requested that his Chapter 13 bankruptcy petition be converted to a Chapter 7 case. As part of the conversion, the bankruptcy court ordered Billups to file amended or updated schedules to the Chapter 7 trustee reflecting any financial changes since he first filed schedules with the bankruptcy court. However, Billups did not report the pending lawsuit against Pemco. When he filed the amended schedules, he certified to the bankruptcy court that the schedules were true and accurate. On January 23, 2001, Billups received a "no asset," complete discharge of his debts, totaling over $38,000. The parties agree that the bankruptcy court, the bankruptcy trustee, and Billups' creditors never knew about the pending lawsuit.

Pemco moved for summary judgment on all of Billups' claims on May 3, 2001, asserting that the doctrine of judicial estoppel barred Billups from pursuing his claims against Pemco because he failed to disclose the claims to the bankruptcy court. Billups appeals the district court's grant of summary judgment.

II. Standard of Review

We review the granting of summary judgment de novo, and the district court's findings of fact for clear error. Levinson v. Reliance Standard Life Ins. Co., 245 F.3d 1321, 1325 (11th Cir.2001). Additionally, we review the district court's application of judicial estoppel for abuse of discretion. Talavera v. School Bd. of Palm Beach County, 129 F.3d 1214, 1216 (11th Cir.1997).

III. Discussion

A. Application to Monetary Claims

Billups argues that the district court erred in applying the doctrine of judicial estoppel in this case because: (1) Pemco was not a party to the bankruptcy proceedings (2) Pemco was not prejudiced by the omission of the claim in the bankruptcy proceedings; and (3) Billups did not have the requisite intent to manipulate the judicial system.

In this case, judicial estoppel is raised in the context of a bankruptcy proceeding and a federal employment discrimination case; therefore, federal law governs our analysis. See Chrysler Credit Corp. v. Rebhan, 842 F.2d 1257, 1261 (11th Cir.1988), abrogated on other grounds by, Grogan v. Garner, 498 U.S. 279, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991); In re Coastal Plains, Inc., 179 F.3d 197, 205 (5th Cir. 1999). Judicial estoppel is an equitable doctrine invoked at a court's discretion. New Hampshire v. Maine, 532 U.S. 742, 750, 121 S.Ct. 1808, 1815, 149 L.Ed.2d 968 (2001) (internal citations and quotations omitted). Under this doctrine, a party is precluded from "asserting a claim in a legal proceeding that is inconsistent with a claim taken by that party in a previous proceeding. Judicial estoppel is an equitable concept intended to prevent the perversion of the judicial process." 18 James Wm. Moore et al., Moore's Federal Practice § 134.30, p. 134-62 (3d ed.2000). The purpose of the doctrine, "is to protect the integrity of the judicial process by prohibiting parties from deliberately changing positions according to the exigencies of the moment." New Hampshire, 532 U.S. at 749-50, 121 S.Ct. at 1814 (internal citations and quotations omitted). This Circuit has explained that, "[j]udicial estoppel is applied to the calculated assertion of divergent sworn positions. The doctrine is designed to prevent parties from making a mockery of justice by inconsistent pleadings." American Nat'l Bank of Jacksonville v. Federal Dep. Ins. Corp., 710 F.2d 1528, 1536 (11th Cir.1983) (internal citation omitted); see also, Coastal Plains, 179 F.3d at 205 (explaining that, "[t]he purpose of the doctrine is to protect the integrity of the judicial process by preventing parties from playing fast and loose with the courts to suit the exigencies of self interest.")(internal quotations omitted). In the Eleventh Circuit, courts consider two factors in the application of judicial estoppel to a particular case. Salomon Smith Barney, Inc. v. Harvey, M.D., 260 F.3d 1302, 1308 (11th Cir.2001). "First, it must be shown that the allegedly inconsistent positions were made under oath in a prior proceeding. Second, such inconsistencies must be shown to have been calculated to make a mockery of the judicial system." Id.

Recently, the Supreme Court observed that, "the circumstances under which judicial estoppel may appropriately be invoked are probably not reducible to any general formulation of principle;" nevertheless, the Court went on to enumerate several factors that inform a court's decision concerning whether to apply the doctrine in a particular case. New Hampshire, 532 U.S. at 750-51, 121 S.Ct. at 1815 (internal citations omitted). Courts typically consider: (1) whether the present position is "clearly inconsistent" with the earlier position; (2) whether the party succeeded in persuading a tribunal to accept the earlier position, so that judicial acceptance of the inconsistent position in a later proceeding creates the perception that either court was misled; and (3) whether the party advancing the inconsistent position would derive an unfair advantage on the opposing party. Id. This list is by no means exhaustive, however, because the Court went on to explain that "[i]n enumerating these factors, we do not establish inflexible prerequisites or an exhaustive formula for determining the applicability of judicial estoppel. Additional considerations may inform the doctrine's application in specific factual contexts." Id. We conclude that the two factors applied in the Eleventh Circuit are consistent with the Supreme Court's instructions referenced above, and provide courts with sufficient flexibility in determining the applicability of the doctrine of judicial estoppel based on the facts of a particular case. We recognize that these two enumerated factors are not inflexible or exhaustive; rather, courts must always give due consideration to all of the circumstances of a particular case when considering the applicability of this doctrine. With these principles in mind, we turn to the issue at hand.

There is no debate that Billups' financial disclosure forms were submitted under oath to the bankruptcy court; therefore, the issue becomes one of intent. Before turning to the question of intent, however, we first outline a debtor's duty to disclose under the bankruptcy laws and address some of Billups' other arguments.

A debtor seeking shelter under the bankruptcy laws must disclose all assets, or potential assets, to the bankruptcy court. 11 U.S.C. § 521(1), and 541(a)(7). The duty to disclose is a continuing one that does not end once the forms are submitted to the bankruptcy court; rather, a debtor must amend his financial statements if circumstances change. See Coastal Plains, 179 F.3d at 208. Full and honest disclosure in a bankruptcy case is "crucial to the effective functioning of the federal bankruptcy system." Ryan Operations G.P. v. Santiam-Midwest Lumber Co. et al., 81 F.3d 355, 362 (3d Cir.1996). For example, creditors rely on a debtor's disclosure statements in determining whether to contest or consent to a no asset discharge. Bankruptcy courts also rely on the accuracy of the disclosure statements when considering whether to approve a no asset discharge. Accordingly, "the importance of full and honest disclosure cannot be overstated." Id.

Objecting to the...