Parker v. Wendy's International, Inc., 365 F.3d 1268 (Fed. 11th Cir. 4/15/2004)

• Decision Date: 15 April 2004
• Docket Number: No. 02-16185.,02-16185.
• Citation: 365 F.3d 1268
• Parties: VICKI PARKER, Plaintiff, THOMAS E. REYNOLDS, Intervenor-Plaintiff-Appellant, v. WENDY'S INTERNATIONAL, INC., WEN-ALABAMA, Wen-Alabama, Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

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365 F.3d 1268

VICKI PARKER, Plaintiff, THOMAS E. REYNOLDS, Intervenor-Plaintiff-Appellant, v. WENDY'S INTERNATIONAL, INC., WEN-ALABAMA, Wen-Alabama, Inc., Defendants-Appellees.

No. 02-16185.

United States Court of Appeals, Eleventh Circuit.

April 15, 2004.

Appeal from the United States District Court for the Northern District of Alabama, D.C. Docket No. 99-00038-CV-N-S.

Rachel Jackson Moore, Kimberly B. Glass, Robert H. Adams, Scott W. Ford, Najjar Denaburg, P.C., Birmingham, AL, for Reynolds.

J. Patrick Logan, Burr & Forman, Birmingham, AL, for Defendants-Appellees.

Before TJOFLAT, BIRCH and GOODWIN,^* Circuit Judges.

BIRCH, Circuit Judge:

The opinion issued in this case on March 31, 2004 is hereby vacated, the following opinion is entered in lieu thereof.

Bankruptcy trustee Thomas E. Reynolds, plaintiff-intervenor in this employment discrimination action filed by Vicki Parker against Wendy's International, Inc., and Wen-Alabama, Inc. (hereinafter collectively referred to as "Wendy's"), appeals the district court's finding that judicial estoppel bars Reynolds from pursuing Parker's claim on behalf of Parker's creditors in bankruptcy. The district court applied our holding in Burnes v. Pemco Aeroplex, Inc., 291 F.3d 1282 (11th Cir. 2002), and found that judicial estoppel was proper because Parker failed to disclose the existence of her discrimination claims when she filed for Chapter 7 bankruptcy. However, because the party pursuing this case against Wendy's is not Parker, but is instead the bankruptcy trustee — who did not make any inconsistent statements to the courts — we hold that judicial estoppel does not apply. Accordingly, we REVERSE the decision of the district court.

I. BACKGROUND

In January 1999, Parker filed a complaint, as amended, against Wendy's, alleging racial discrimination in the workplace and retaliation in violation of Title VII of the Civil Rights Act, 42 U.S.C. § 2000e, et seq. Wendy's denied the allegations contained in the complaint, and the case was set for trial. On 9 February 2001, Parker and her former husband filed a petition for relief under Chapter 7 of the Bankruptcy Code in the United States Bankruptcy Court for the Northern Division of Alabama. The schedules in the bankruptcy case did not list Parker's claim against Wendy's as a potential asset. On 31 May 2001, the bankruptcy court entered an order granting a "no asset" discharge for Parker and her former husband.

Thereafter, Parker's attorney in this case requested a trial continuance, contending that Parker had inadvertently failed to disclose the existence of her discrimination case to the trustee of her bankruptcy estate, Reynolds, who needed to be advised of the discrimination action in order to reopen the bankruptcy case. The court granted this motion. Reynolds moved to intervene in this case or, alternatively, for substitution as the real party in interest. Reynolds informed the district court that Parker had filed for relief under Chapter 7 on or about 9 February 2001, and had failed to disclose the existence of the discrimination claims. Reynolds stated that, after Parker's attorneys informed him that the discrimination case existed, he investigated and then moved to reopen the bankruptcy case to allow for further administration of the bankruptcy assets. The bankruptcy court granted his motion to reopen, and the district court granted Reynolds's motion to intervene.

Wendy's then moved to dismiss Parker's discrimination claims. Wendy's argued that, under our reasoning in Burnes, Parker's claims for monetary damages were barred by the doctrine of judicial estoppel because she failed to disclose the existence of her discrimination suit to the bankruptcy court. Wendy's contended that Parker had knowledge of her discrimination claims prior to, and during, the bankruptcy proceedings and that she would not have been entitled to a "no asset" complete discharge of all debts had her creditors, Reynolds, or the bankruptcy court known of a lawsuit claiming substantial damages. According to Wendy's, the fact that the bankruptcy court reopened Parker's proceedings was relevant only as an acknowledgment that Parker's failure to disclose resulted in a tangible benefit to Parker in the bankruptcy proceeding.

The district court granted Wendy's motion to dismiss, construed as a motion for judgment on the pleadings. The district court found that "this case [wa]s factually and procedurally indistinguishable" from Burnes because Parker had failed to disclose the existence of her discrimination claim when she filed for Chapter 7 bankruptcy and the bankruptcy proceeding resulted in the discharge of her debts. R1-30 at 2. As a result, the district court held that Parker was judicially estopped from bringing her discrimination claim and dismissed her complaint with prejudice.

Reynolds then moved for reconsideration, arguing that this case was distinguishable from Burnes. First, Reynolds pointed out that, where the real party in interest in Burnes was the debtor acting on his own behalf, here the real party in interest is the trustee, Reynolds, acting on behalf of Parker's creditors. Moreover, Reynolds argued that Parker and her attorneys informed Reynolds of the claim and Reynolds reopened the bankruptcy case before Wendy's had moved to dismiss based on judicial estoppel. Reynolds contended that this sequence of events also distinguished this case from Burnes because the debtor in Burnes only moved to reopen his bankruptcy case after the defendant argued judicial estoppel. Reynolds argued that judicial estoppel should not apply because Parker "ha[d] done the right thing for the creditors of the bankruptcy case by reopening the case and attempting to recover some value to be paid against their claims." R1-32 at 3. Finally, Reynolds contended that imposing judicial estoppel would result in an injustice to the innocent creditors who would be denied "the possibility of actually recovering some money" and would grant a windfall to Wendy's who would be able to "escape their own liability at the expense of the innocent [creditors] in the bankruptcy case." Id. at 4.

The district court denied Reynolds's motion for reconsideration, concluding that the distinctions between this case and Burnes were not determinative. The district court found that neither Reynolds's intervention as the real party in interest nor the fact that Reynolds reopened the bankruptcy case prior to Wendy's assertion of judicial estoppel changed the fact that Parker, who remained a party to the discrimination action, asserted a claim that was inconsistent with the position she took in the bankruptcy proceeding. Reynolds timely appealed.

II. DISCUSSION

Reynolds now appeals the district court's grant of judgment on the pleadings to Wendy's and its denial of Reynolds's motion for reconsideration.¹ Specifically, Reynolds argues that the district court abused its discretion when it applied judicial estoppel. We review a judgment on the pleadings de novo. Cannon v. City of West Palm Beach, 250 F.3d 1299, 1301 (11th Cir. 2001). "Additionally, we review the district court's application of judicial estoppel for abuse of discretion." Burnes, 291 F.3d at 1284. "The abuse of discretion standard includes review to determine that the discretion was not guided by erroneous legal conclusions." Talavera v. School Bd. of Palm Beach County, 129 F.3d 1214, 1216 (11th Cir. 1997).

As a threshold issue, we must determine whether these issues were properly preserved for appeal. Wendy's argues that Reynolds failed to preserve the issue of whether judicial estoppel applies for appellate review because, prior to the entry of the district court's order dismissing the case, he failed to respond to Wendy's motion to dismiss in which it first raised the issue of judicial estoppel. Wendy's argument fails because the judicial estoppel issue was raised in the district court — by Wendy's in its motion to dismiss. Moreover, judicial estoppel was the precise issue the district court addressed in its dismissal order and the issue presented in this appeal is whether that application was appropriate. Accordingly, the issue of judicial estoppel is subject to our review.

"Judicial estoppel is an equitable concept invoked at a court's discretion" and designed "to prevent the perversion of the judicial process." Burnes, 291 F.3d at 1285 (citation omitted). Although the Supreme Court has noted that "the circumstances under which judicial estoppel may appropriately be invoked are probably not reducible to any general formulation of principle," New Hampshire v Maine, 532 U.S. 742, 750, 121 S.Ct. 1808, 1815 (2001) (citations omitted), we generally consider two factors. "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." Burnes, 291 F.3d at 1285 (citation omitted). The district court determined that both the first and second prong of this test were met.

Trustee Reynolds concedes that Parker took inconsistent positions in bankruptcy court and district court. Reynolds argues that Parker's inconsistent statements should not be attributed to him and that, even if judicial estoppel would bar Parker, it should not bar Reynolds from pursuing this claim on behalf of Parker's creditors. Reynolds contends that judicial estoppel should not apply to him, as bankruptcy trustee, because he did not know of the discrimination claim during the bankruptcy proceedings and, therefore, did not take inconsistent positions in the courts. Moreover,...