White v. Wyndham Vacation Ownership Inc

• Decision Date: 11 August 2010
• Docket Number: No. 09-5626.,09-5626.
• Citation: 617 F.3d 472
• Parties: Betsy WHITE, Plaintiff-Appellant,v.WYNDHAM VACATION OWNERSHIP, INC., Fairfield Resorts, and Gerald Hayes, Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

617 F.3d 472

Betsy WHITE, Plaintiff-Appellant,v.WYNDHAM VACATION OWNERSHIP, INC., Fairfield Resorts, and Gerald Hayes, Defendants-Appellees.

No. 09-5626.

United States Court of Appeals, Sixth Circuit.

Aug. 11, 2010.

ON BRIEF: Michael S. Shipwash, Law Office of Michael S. Shipwash, Knoxville Tennessee, for Appellant. R. Eddie Wayland, King & Ballow, Nashville, Tennessee, Catherine H. Molloy, Waller, Landsden, Dortch & Davis, Nashville, Tennessee, for Appellees. Gerald Hayes, Seviersville, Tennessee, pro se.

Before: CLAY and McKEAGUE, Circuit Judges; POLSTER, District Judge. ^*

McKEAGUE, J., delivered the opinion of the court, in which POLSTER, D.J., joined. CLAY, J. (pp. 484-89), delivered a separate dissenting opinion.

OPINION

McKEAGUE, Circuit Judge.

Plaintiff-Appellant Betsy White appeals the district court's grant of summary judgment to Defendants-Appellees Wyndham Vacation Ownership, Fairfield Resorts, and Gerald Hayes based on a claim of judicial estoppel. White did not disclose her sexual harassment claim against Defendants in her initial bankruptcy filings. Because White's limited attempts to disclose the harassment claim before Defendants filed their motion to dismiss were inadequate, we AFFIRM the district court's grant of summary judgment.

I. BACKGROUND

Around June of 2001, White was hired to work in the office of Defendants Wyndham and Fairfield. On November 15, 2006 White filed a complaint with the Tennessee Human Rights Commission and the Equal Employment Opportunity Commission (“EEOC”) (“harassment claim”) based on allegations that Defendant Hayes subjected White to sexually suggestive and derogatory comments as well as to improper sexual contact at work while she was employed by Defendants Wyndham and Fairfield. On May 27, 2008, White requested that the EEOC issue her a Notice of Right to Sue, which the EEOC granted on July 8, 2008.

On August 8, 2008, assisted by counsel, White filed a Chapter 13 Voluntary Petition and Plan in the United States Bankruptcy Court for the Eastern District of Tennessee. In her bankruptcy filings, White did not mention her harassment claim against the Defendants. White should have listed her claims in two sections of the Voluntary Petition and Plan. First, in the Statement of Financial Affairs, under Section 4, titled “Suits and administrative proceedings, executions, garnishments, and attachments.” This section required White to list all claims and administrative proceedings to which she was a party within one year immediately preceding the filing of her bankruptcy case. Although White failed to list the harassment claim in that section, she did list another proceeding to which she was a party within the preceding year. White also failed to list the harassment claim as a personal asset on her bankruptcy schedules. In particular, Question 21 of “Schedule B-Personal Property” required White to list “other contingent and unliquidated claims of every nature....” Question 21 also required her to give the estimated value of each claim. White swore, under penalty of perjury, that her Statement of Financial Affairs and her answer to Question 21 were both true and accurate.

On August 12, 2008, the bankruptcy court entered an order scheduling the Plan Confirmation Hearing for October 1, 2008 and also ordered White to make payments to the trustee and directed her to attend a meeting of creditors on September 11, 2008. On October 1, 2008 the bankruptcy court conducted the Plan Confirmation Hearing. The harassment claim was not mentioned in the one page official transcript for the hearing.

On October 2, 2008, White filed her lawsuit against Defendants, seeking $250,000 in compensatory damages and $1 million in punitive damages. On October 3, 2008, White filed an “Application to Employ Counsel” with the bankruptcy court for the harassment claim. Her application did not identify whether she was the plaintiff or the defendant in the claim (although it did state that her attorney would be compensated through a 20% contingency fee), when the claim would be filed, the underlying facts giving rise to the claim, or the amount of the claim.¹

On November 6, 2008, Defendants Wyndham and Fairfield filed a motion to dismiss on the grounds of judicial estoppel.² In response, White partially amended her “Statement of Financial Affairs” on November 11, 2008, to reflect her harassment claim under the category of “Suits and administrative proceedings, execution, garnishments and attachments.” Even after amending that statement, White did not disclose the amount of the suit.

On November 11, 2008, White filed her response to Defendants' motion to dismiss on judicial estoppel grounds. She attached an amendment to her bankruptcy filings and included an affidavit from her bankruptcy attorney. The affidavit states in the relevant portion:

5. Betsy White did inform me of her [harassment claim] when I met with her. At no time did Ms. White attempt to conceal, or otherwise, keep that information secret.

6. When I appeared in Court on Ms. White's bankruptcy, this lawsuit was discussed, as well as, any potential claims thereof.

7. I am unsure why documentation filed in her bankruptcy matter did not list this action, however we have subsequently filed an Amendment to cure this oversight.

(R. 12, Ex. A, pp. 1-2.)

II. ANALYSIS

The district court converted the Defendants' motion for failure to state a claim pursuant to FED. R. CIV. P. 12(b)(6) into a motion for summary judgment. The district court then granted summary judgment for the Defendants based on judicial estoppel. See Salehpour v. Univ. of Tenn., 159 F.3d 199, 203-04 (6th Cir.1998).

1. Summary Judgment Standard

This court reviews the district court's decision to grant summary judgment de novo. Smith v. Henderson, 376 F.3d 529, 533 (6th Cir.2004). Summary judgment is appropriate if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c)(2). A genuine issue of material fact exists when, “there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In deciding whether this burden has been met by the movant, this court views the evidence in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). However, to survive summary judgment, the plaintiff must present affirmative evidence sufficient to show a genuine issue for trial. Anderson, 477 U.S. at 249, 106 S.Ct. 2505. Therefore, “[i]f the evidence is merely colorable, or is not significantly probative, summary judgment may be granted.” Id. at 249-50, 106 S.Ct. 2505 (internal citations omitted).

2. Judicial Estoppel

This court reviews de novo the district court's application of judicial estoppel. See Lorillard Tobacco Co. v. Chester, Willcox & Saxbe, LLP, 546 F.3d 752, 757 (6th Cir.2008); Eubanks v. CBSK Financial Group, Inc., 385 F.3d 894, 897 (6th Cir.2004).

The doctrine of judicial estoppel “generally prevents a party from prevailing in one phase of a case on an argument and then relying on a contradictory argument to prevail in another phase.” New Hampshire v. Maine, 532 U.S. 742, 749, 121 S.Ct. 1808, 149 L.Ed.2d 968 (2001) (citation omitted). This doctrine is “utilized in order to preserve ‘the integrity of the courts by preventing a party from abusing the judicial process through cynical gamesmanship.’ ” Browning v. Levy, 283 F.3d 761, 775 (6th Cir.2002); see also Eubanks, 385 F.3d at 897 (“Judicial estoppel, however, should be applied with caution to ‘avoid impinging on the truth-seeking function of the court, because the doctrine precludes a contradictory position without examining the truth of either statement.’ ”).

In the bankruptcy context, this court has previous noted that “judicial estoppel bars a party from (1) asserting a position that is contrary to one that the party has asserted under oath in a prior proceeding, where (2) the prior court adopted the contrary position ‘either as a preliminary matter or as part of a final disposition.’ ” Browning, 283 F.3d at 775-76 (citation omitted). Furthermore Browning noted that, “judicial estoppel is inappropriate in cases of conduct amounting to nothing more than mistake or inadvertence.” Id. at 776; see also New Hampshire, 532 U.S. at 753, 121 S.Ct. 1808. Two circumstances in which a debtor's failure to disclose might be deemed inadvertent are: (1) “where the debtor lacks knowledge of the factual basis of the undisclosed claims,” and (2) where “the debtor has no motive for concealment.” Browning, 283 F.3d at 776 (finding that the debtor there had, “no motive for concealment in light of its role as a debtor-in-possession, having all the rights and duties of a trustee”).

i. Eubanks The absence of bad faith prevents the application of judicial estoppel

In Eubanks, this court examined Browning and noted that the “absence of bad faith,” was also a factor to consider in determining whether it was appropriate to grant judicial estoppel. 385 F.3d at 895. In deciding whether the application of judicial estoppel was appropriate, the court in Eubanks found it particularly significant that the plaintiffs actually made “numerous attempts” through their counsel to advise the bankruptcy court and the trustee of their claim and, therefore, that there was no evidence of “motive or intention” to conceal the potential claim. Id. at 898-99. The court concluded by noting that judicial estoppel was inappropriate, “[b]ecause this Court has previously held that evidence of an inadvertent omission of a claim in a previous bankruptcy proceeding is a reasonable and appropriate factor to consider when analyzing judicial estoppel's applicability.” Id. at 899. Eubanks...