Csx Transp., Inc. v. Howell

• Decision Date: 12 March 2009
• Docket Number: No. A08A2172.,A08A2172.
• Citation: 296 Ga. App. 583,675 S.E.2d 306
• Parties: CSX TRANSPORTATION, INC. v. HOWELL et al.
• Court: Georgia Court of Appeals

675 S.E.2d 306

296 Ga. App. 583

CSX TRANSPORTATION, INC. v. HOWELL et al.

No. A08A2172.

Court of Appeals of Georgia.

March 12, 2009.

Casey, Gilson & Williams, James E, Gilson, Sandra Gray, Atlanta, for appellant.

Warshauer, Poe & Thornton, Michael J. Warshauer, Atlanta, for appellee.

ADAMS, Judge.

We granted CSX Transportation, Inc.'s (CSXT) application seeking interlocutory review of the trial court's order denying its motion for reconsideration of an order denying summary judgment. At issue in this appeal is whether judicial estoppel bars this action which was filed under the Federal Employers' Liability Act, 45 U.S.C. § 51 et seq. (FELA) in the State Court of Fulton County; resolution of that issue in this particular case turns on whether state or federal law applies. The trial court, in an extensive and well-reasoned order, ruled that the issue of whether judicial estoppel acted as a bar to litigation in this case was procedural in nature and thus governed by Georgia, not federal, law. Applying Georgia law, the trial court ruled that judicial estoppel did not bar the FELA claim. We now affirm the trial court's order.

The following background facts are pertinent here: In November 2001, Jimmy Howell filed a FELA action against CSXT for injuries he allegedly received during the course of his railroad employment. In his complaint, he sought a recovery in excess of one million dollars, including damages for lost wages and benefits and medical expenses, as well as general damages. In October 2002, Howell and his wife filed a Chapter 7 bankruptcy action. On Schedule B, under "[o]ther contingent and unliquidated claims" Howell indicated his right to receive disability benefits as a result of being injured on the job with CSXT; however, he failed to specifically identify his FELA claim under that section or under the section requiring disclosure of "all suits and administrative proceedings to which the debtor is or was a party within one year immediately preceding the filing of this bankruptcy case." However, according to an affidavit filed by Howell's bankruptcy attorney, Howell did disclose at the 341 hearing that he had a lawsuit against CSXT on account of being injured. On January 17, 2003, Howell received a "no asset" discharge, meaning that his creditors received nothing, and his bankruptcy case was closed.

When CSXT subsequently learned of Howell's bankruptcy case during discovery in the FELA case, it filed a motion for summary judgment contending that under Georgia law, Howell was judicially estopped from pursuing his FELA claim because he did not disclose that claim or his contingent right of recovery in his bankruptcy proceeding. In response, Howell successfully petitioned the bankruptcy court to reopen his case so that he could amend his schedules to reflect the pending FELA lawsuit. Howell then amended the bankruptcy petition to reflect the FELA action, but listed it only as a right to receive disability benefits and lost future earnings with a current market value of zero dollars; he also indicated that any amount he received up to $10,000 would be exempt under OCGA § 44-13-100(a)(2) and (11). Because he represented his claim to be fully exempt, the bankruptcy court did not appoint a trustee to pursue the claim. On December 9, 2003, the trial court in this case denied CSXT's motion for summary judgment. And on January 2, 2004, the bankruptcy case was once again closed.

On June 4, 2004, CSXT again moved for summary judgment on the basis, inter alia, that Howell was judicially estopped from pursuing his FELA claims because he had failed to disclose the true value and nature of the FELA claim when he amended his bankruptcy petition. Again, CSXT relied exclusively on Georgia case law governing judicial estoppel in its initial brief filed in support of its motion. However, CSXT filed a supplemental brief in support of its motion on January 11, 2005, arguing that the issue of judicial estoppel was governed by federal law and that federal law, unlike the controlling precedent in Georgia, did not allow a plaintiff in this situation to avoid judicial estoppel by amending his bankruptcy schedules to include the omitted claim. On January 12, 2005, the trial court denied CSXT's motion.

On April 27, 2005, the bankruptcy trustee petitioned the bankruptcy court to once again reopen the bankruptcy case and to be allowed to withdraw his no asset report on the basis that the description of the FELA claim on the amended schedule, which included only "disability benefits" or "future loss of earnings" was incomplete, false and misleading. On July 8, 2005, the bankruptcy court reopened the case and granted the request to withdraw the report of no distribution. The trustee was subsequently added as a party plaintiff to the FELA action.

In November 2007, CSXT moved the trial court in the FELA case to reconsider the denial of its previous motions for summary judgment, again arguing that federal, not state law, governed the issue of whether Howell was judicially estopped from pursuing his FELA claim.¹ It is the trial court's denial of that motion that is presently before this Court for review.

In this appeal, CSXT enumerates three related errors: The trial court erred in ruling that judicial estoppel is a procedural rule and not substantive law in a FELA case; the trial court erred in following Georgia judicial estoppel precedent, rather than federal case law the trial court erred in denying CSXT's motions for summary judgment.

1. CSXT argues that the trial court erred in ruling that the doctrine of judicial estoppel is a procedural rule governed by the law of the forum rather than federal substantive law. Thus, CSXT further argues, in its related second enumeration of error, that the trial court erred in following Georgia judicial estoppel precedent, rather than federal case law to decide if judicial estoppel should bar Howell from pursuing his FELA claim.

"Since 1994 we have followed the federal doctrine of judicial estoppel, which precludes a party from asserting in a judicial proceeding a position inconsistent with a position successfully asserted by it in a prior proceeding." Jowers v. Arthur, 245 Ga.App. 68, 69, 537 S.E.2d 200 (2000). As we recently explained:

[T]he essential function and justification of judicial estoppel is to prevent the use of intentional self-contradiction as a means of obtaining unfair advantage in a forum provided for suitors seeking justice. The primary purpose of the doctrine is not to protect the litigants, but to protect the integrity of the judiciary. The doctrine is directed against those who would attempt to manipulate the court system through the calculated assertion of divergent sworn positions in judicial proceedings and is designed to prevent parties from making a mockery of justice through inconsistent pleadings.

(Footnote omitted.) Nat. Bldg. Maintenance Specialists v. Hayes, 288 Ga.App. 25, 26-27, 653 S.E.2d 772 (2007).

Thus, "`[t]his equitable doctrine is invoked by a court at its discretion, and intended to prevent abuse of the judicial process. The circumstances under which it is appropriate are not reduced to any general formula or rule. (Cit.)' [Cit.]" Benton v. Benton, 280 Ga. 468, 469, 629 S.E.2d 204 (2006).

Both the state and federal courts have commonly applied [the doctrine] to preclude a bankruptcy debtor from pursuing a damages claim that he failed to include in his assets in the bankruptcy petition (because a) failure to reveal assets, including unliquidated tort claims, operates as a denial that such assets exist, deprives the bankruptcy court of the full information it needs to evaluate and rule upon a bankruptcy petition, and deprives creditors of resources that may satisfy unpaid obligations.

(Footnote omitted.) Nat. Bldg. Maintenance Specialists v. Hayes 288 Ga.App. at 26-27, 653 S.E.2d 772. See also De Leon v. Comcar Indus., 321 F.3d 1289, 1291-1292 (11th Cir. 2003); Burnes v. Pemco Aeroplex, Inc., 291 F.3d 1282 (11th Cir.2002).

However, courts sometimes differ in the application of the doctrine. For example, the federal courts generally do not allow a plaintiff who has failed to list a tort or other claim that could be considered an asset of the estate on a bankruptcy petition to avoid judicial estoppel by amending the petition or reopening the bankruptcy case to include the claim. As the Eleventh Circuit explained in Burnes v. Pemco Aeroplex, Inc., 291 F.3d at 1288: "The success of our bankruptcy laws requires a debtor's full and honest disclosure. Allowing [a plaintiff] to back-up, re-open the bankruptcy case, and amend his bankruptcy filings, only after his omission has been challenged by an adversary, suggests that a debtor should consider disclosing potential assets only if he is caught concealing them." In contrast,

"this court has ... held that if the debtor initially fails to list the claim as a potential asset but later amends the bankruptcy filing or moves to reopen the bankruptcy...