Guay v. Burack
| Decision Date | 19 April 2012 |
| Docket Number | No. 10–2513.,10–2513. |
| Citation | 56 Bankr.Ct.Dec. 89,677 F.3d 10 |
| Parties | Lorraine GUAY, Plaintiff,Kevin Guay, Plaintiff, Appellant, v. Thomas BURACK, Commissioner of the Department of Environmental Services for the State of New Hampshire; Concord Police Department; Michael A. Delaney, NH Attorney General; Sean Ford, Detective, Concord Police Department; Concord, NH, Defendants, Appellees. |
| Court | U.S. Court of Appeals — First Circuit |
OPINION TEXT STARTS HERE
Barbara Goodwin, with whom Murray, Plumb & Murray was on brief, for appellants.
Erik G. Moskowitz, with whom Charles P. Bauer and Gallagher, Callahan & Gartrell were on brief, for appellees.
Before BOUDIN, SELYA, and LIPEZ, Circuit Judges.
This case requires us to apply the doctrine of judicial estoppel in somewhat unusual circumstances. While engaged in a Chapter 7 bankruptcy action, the appellant, Kevin Guay, brought numerous claims against the appellees, government officials and a police officer, seeking damages for an allegedly illegal search of his property. Guay, however, failed to amend his bankruptcy schedules, as required, to disclose the existence of his claims as newly acquired assets prior to obtaining a discharge from bankruptcy. As a result, the appellees moved for summary judgment on the basis of judicial estoppel, even though appellant's failure to disclose his claims did not give him an unfair advantage in this proceeding. It was enough, appellees argued, that appellant successfully adopted a position in the bankruptcy proceeding inconsistent with the position he takes here. Agreeing, the district court granted summary judgment for appellees. We affirm.
We recount the facts in the light most favorable to the party opposing summary judgment, in this case, the appellant. Agusty–Reyes v. Dep't of Educ. of P.R., 601 F.3d 45, 48 (1st Cir.2010). For clarity's sake, our recitation of the facts is divided into subsections that describe the chronology of events in two parallel actions.
On September 28, 2008, Kevin Guay and his wife filed a Chapter 11 bankruptcy petition in the United States Bankruptcy Court for the District of New Hampshire. On June 23, 2009, the case was converted to a Chapter 7 proceeding. The claims advanced here did not appear as an asset on the Guays' initial bankruptcy schedules, as the events giving rise to the claims had not yet occurred.
In early 2009, while still in bankruptcy, the Guays were subjects of a police investigation into alleged violations of state environmental protection laws. 1 On March 25, 2009, defendant Sean Ford, a Concord, New Hampshire police detective, secured search warrants allowing extensive excavation of two properties owned by the Guays. During execution of the warrants on March 25 and 26, officers also searched the Guays' home, which was not included in either warrant. The officers also denied the Guays and their tenants access to other properties the couple owned for which no warrant was obtained. The search caused extensive damage to the Guays' properties and was widely reported in television and print media.
On June 26, 2009, Kevin Guay, acting pro se, filed suit in federal court under 42 U.S.C. § 1983 against Ford and various other defendants claiming a violation of his Fourth, Fifth and Fourteenth Amendment rights.2 He also raised state law claims of malicious prosecution, malicious abuse of process, and intentional and negligent infliction of emotional distress. A month later, Lorraine Guay, also pro se, filed a substantially similar suit and the district court ordered the two actions consolidated.
Throughout their bankruptcy proceeding, the Guays failed to file amended asset schedules identifying their lawsuits as assets, as required by 11 U.S.C. § 521(a)(1) and § 541(a)(1) & (7). During an August 12, 2009 meeting of the Guays' creditors, an attorney for the State of New Hampshire asked the Guays about various civil lawsuits in which they were plaintiffs, including those at issue here. The lawsuits were discussed among the Guays, their counsel, counsel for the State, and the bankruptcy Trustee, and the Guays' counsel offered to provide the Trustee with copies of all the relevant filings. It is unclear whether these documents were ever provided, but the Guays never formally disclosed the existence of the claims by amending their asset schedules.
Later in August 2009, the State of New Hampshire filed a motion seeking an order requiring the Guays to demonstrate why they should not be held in contempt for failing to file required monthly operating statements and amended bankruptcy schedules. The motion noted that these filings were required both by Federal Rule of Bankruptcy Procedure 1019 and by the bankruptcy court's order converting the bankruptcy matter from a Chapter 11 to a Chapter 7 proceeding. In response to this motion, the bankruptcy court ordered the Guays to file the additional information required by Bankruptcy Rules 1019 and 1007, including information concerning any property interest acquired subsequent to the filing of the bankruptcy petition. The order required the Guays to file this information by October 29, 2009.
Before that deadline arrived, the bankruptcy court granted the Guays a discharge on October 27 pursuant to 11 U.S.C. § 727. This order discharged all debts eligible for discharge in a Chapter 7 bankruptcy, but did not dismiss the case or end the Trustee's responsibility for the estate. Accordingly, in response to the court's earlier order, the Guays filed an affidavit with the bankruptcy court on October 29 stating that no amendments to their petition or asset schedules were necessary.
Several days later, the State of New Hampshire filed another motion in the bankruptcy proceeding seeking an order finding the Guays in contempt for failing to file monthly operating reports and the disclosures required by Bankruptcy Rule 1019. The Guays filed an opposition to this motion, stating that “the Debtors have filed an affidavit stating that the information provided in their bankruptcy schedules as amended was accurate and there are no changes,” and again affirming the completeness and accuracy of their bankruptcy schedules and failing to identify their lawsuits as assets.
Shortly thereafter, in a December 2009 order, the magistrate judge handling this civil action ordered the parties to submit additional briefing on the issue of whether the bankruptcy Trustee, and not the Guays, was the real party in interest in this lawsuit. In doing so, the court noted that the Trustee had not abandoned the action. In their supplemental brief, the defendants raised the issue of judicial estoppel for the first time. Subsequently, on January 15, 2010, the Guays filed with the bankruptcy court a Report of Unpaid Chapter 11 Obligations in which they identified their claims in this lawsuit.3 The Chapter 7 Trustee then filed a Notice of Abandonment with respect to the Guays' lawsuits, explaining that she had determined that “the Lawsuits are burdensome and of inconsequential value to the estate.” This Notice was served on the Guays' creditors, who were given the opportunity to object to the Trustee's action if they believed the lawsuits had significant value. None objected.
The appellees moved to dismiss the Guays' claims on multiple grounds, including judicial estoppel. They argued that, because the Guays failed to disclose their claims to the bankruptcy court, they were barred from bringing the same claims in this action. Deferring resolution of the judicial estoppel issue until the factual record was better developed, the district court adopted in March 2009 the report and recommendation of the magistrate judge and dismissed most of the Guays' claims for failure to allege facts supporting the claims. The only surviving claims were Kevin Guay's malicious abuse of process claim against Ford, the City of Concord, and the Concord Police Department, and the Fourth Amendment claims of both Guays against Ford in his personal capacity.
After several months of discovery, the remaining defendants moved for summary judgment, again raising the judicial estoppel defense. On November 16, 2010, after de novo review, the district court adopted the recommended decision of the magistrate judge and granted the motion on the basis of the Guays' failure to disclose their claims in their bankruptcy proceeding.
Typically, a district court's grant of summary judgment is reviewed de novo. Velez v. Thermo King de P.R., Inc., 585 F.3d 441, 446 (1st Cir.2009). However, when reviewing application of the doctrine of judicial estoppel “the applicable rubric is abuse of discretion.” Alternative Sys. Concepts, Inc. v. Synopsys, Inc., 374 F.3d 23, 30 (1st Cir.2004). In Alternative System Concepts, we explained that the abuse of discretion standard is appropriate even when reviewing a judicial estoppel ruling on a motion for summary judgment. Id. at 31. We identified several reasons for applying the standard in this context, including: 1) the discretionary nature of judicial estoppel, 2) the district court's closer relationship to the facts of the case and the litigants' conduct, 3) the flexibility of the abuse of discretion standard, and 4) the fact that other circuits that have addressed the question have unanimously settled on abuse of discretion as the appropriate standard. Id. at 30–31. We concluded that “[t]he fact that this case arises in the summary judgment context does not affect our decision to review the trial court's determination for abuse of discretion.” Id. at 31; see also Thore v. Howe, 466 F.3d 173, 185 (1st Cir.2006) ().
Under the abuse of discretion standard, “we...
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