Zwemer v. Production Credit Ass'n of Midlands, 89-221

• Court: United States State Supreme Court of Wyoming
• Writing for the Court: Before CARDINE; MACY; THOMAS, Justice, dissenting, with whom URBIGKIT; URBIGKIT, Justice, dissenting, with whom THOMAS
• Citation: 792 P.2d 245
• Parties: Robert ZWEMER and Sharla Zwemer, husband and wife, and Lillian Zwemer, Appellants (Defendants), v. PRODUCTION CREDIT ASSOCIATION OF MIDLANDS, f/k/a Wyoming P.C.A., Appellee (Plaintiff).
• Docket Number: No. 89-221,89-221
• Decision Date: 23 May 1990

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792 P.2d 245 Robert ZWEMER and Sharla Zwemer, husband and wife, and Lillian Zwemer, Appellants (Defendants),
v.
PRODUCTION CREDIT ASSOCIATION OF MIDLANDS, f/k/a Wyoming P.C.A., Appellee (Plaintiff). No. 89-221. Supreme Court of Wyoming. May 23, 1990.

Lawrence A. Yonkee of Redle, Yonkee & Arney, Sheridan, and Joseph E. Darrah of Joseph E. Darrah, P.C., Powell, for appellants.

Tracy J. Copenhaver of Copenhaver, Kath & Kitchen, Powell, and Jerry A. Yaap of Bishop, Bishop & Yaap, Casper, for appellee.

Before CARDINE, C.J., and THOMAS, URBIGKIT, MACY and GOLDEN, JJ.

MACY, Justice.

Appellants Robert Zwemer and Sharla Zwemer appeal from a summary judgment denying their lender liability claim against Appellee Production Credit Association of Midlands (PCAM). The district court concluded that the Zwemers were judicially estopped from asserting their claim because they failed to properly disclose the claim in a previously filed bankruptcy case.

We affirm.

The Zwemers raise the following issues:

I. The District Court err[ ][ ]ed in granting summary judgment in that there were unresolved material issues of fact pertaining to the issue of judicial estoppel.

II. The District Court err[ ][ ]ed as a matter of law and fact that the Appellants were judicially estopped to pursue their counterclaim by failing to properly apply or consider all elements essential to estoppel.

PCAM filed a complaint alleging that the Zwemers had defaulted in the payment of loans made to them and praying, inter alia, for a judgment for the accelerated amount of the loans. The Zwemers filed an answer and a counterclaim, asserting that PCAM breached the parties' loan agreement, breached its fiduciary duty to the Zwemers, and negligently processed the loans.

The Zwemers subsequently filed a chapter 11 bankruptcy petition. During the pendency of their bankruptcy case, the Zwemers listed their personal property on a B-2 schedule, but they failed to indicate on the schedule that they had filed a counterclaim against PCAM. The schedule specifically required the disclosure of "[c]ontingent and unliquidated claims of every nature, including counterclaims of the debtor (give estimated value of each)." The Zwemers also failed to mention their counterclaim

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against PCAM in their bankruptcy disclosure statement. The federal bankruptcy court modified the automatic stay, allowing PCAM to pursue its claim, and approved the Zwemers' reorganization plan.

PCAM filed an amended complaint alleging that the Zwemers had defaulted in the payment of their loans, that the Zwemers committed fraud during their bankruptcy reorganization, ¹ and that the Zwemers were judicially and equitably estopped from asserting their counterclaim. The Zwemers answered PCAM's amended complaint, generally denying its allegations, and asserted as affirmative defenses that PCAM failed to state a claim upon which relief could be granted, that PCAM was estopped from claiming that the Zwemers could not raise their counterclaim, and that the district court did not have jurisdiction over bankruptcy matters. The Zwemers based their estoppel argument on the contention that PCAM knew of the Zwemers' intention to pursue their counterclaim. PCAM filed a motion to dismiss the Zwemers' counterclaim pursuant to W.R.C.P. 12(b)(6) and (c), claiming that the Zwemers were judicially estopped from asserting the claim because they failed to properly disclose its existence during the pendency of the bankruptcy case.

The district court converted PCAM's motion to a motion for summary judgment and granted a summary judgment in favor of PCAM. In its decision letter, the court stated that the Zwemers were judicially estopped from asserting their counterclaim because they maintained "(1) two positions contrary to each other (2) both of which [were] asserted by the same party (3) in different judicial proceedings." This appeal followed.

A district court's decision to grant a summary judgment is proper "if no genuine issue of material fact exists and if the prevailing party is entitled to a judgment as a matter of law." Ware v. Converse County School District No. 2, 789 P.2d 872, 874 (Wyo.1990). See also St. Paul Fire and Marine Insurance Co. v. Albany County School District No. 1, 763 P.2d 1255 (Wyo.1988); and Teton Plumbing and Heating, Inc. v. Board of Trustees, Laramie County School District Number One, 763 P.2d 843 (Wyo.1988). The question in this case is whether the Zwemers were judicially estopped from asserting a counterclaim against PCAM because they did not adequately disclose their intent to pursue the claim during the pendency of their bankruptcy case.

This Court has previously applied the doctrine of judicial estoppel. Anderson v. Sno-King Village Association, Inc., 745 P.2d 540 (Wyo.1987), appeal dismissed and cert. denied 488 U.S. 801, 109 S.Ct. 29, 102 L.Ed.2d 9 (1988); Texas West Oil and Gas Corporation v. First Interstate Bank of Casper, 743 P.2d 857 (Wyo.1987), reconfirmed 749 P.2d 278 (Wyo.1988); AMFAC Mechanical Supply Co. v. Federer, 645 P.2d 73 (Wyo.1982); Allen v. Allen, 550 P.2d 1137 (Wyo.1976). Those cases established the principle that a party is judicially estopped from asserting inconsistent positions in different judicial proceedings. We stated in Allen, 550 P.2d at 1142:

[J]udicial estoppel[ ] is sometimes referred to as a doctrine which estops a party [from] play[ing] fast and loose with the courts or to trifle with judicial proceedings. It is an expression of the maxim that one cannot blow hot and cold in the same breath.

We must now determine whether the Zwemers maintained a position during the pendency of their bankruptcy case which was inconsistent with the counterclaim they asserted in the district court proceedings. The parties do not dispute that the Zwemers failed to mention their counterclaim in their asset schedule and disclosure statement. 11 U.S.C. § 521(1) (1988) requires a person ² or municipality who has

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filed a bankruptcy petition to "file a list of creditors, and unless the court orders otherwise, a schedule of assets and liabilities, a schedule of current income and current expenditures, and a statement of the debtor's financial affairs." (Emphasis added.) In addition, 11 U.S.C. § 1125(b) (1988) requires a debtor to file a disclosure statement containing adequate information. Adequate information is defined as

information of a kind, and in sufficient detail, as far as is reasonably practicable in light of the nature and history of the debtor and the condition of the debtor's books and records, that would enable a hypothetical reasonable investor typical of holders of claims or interests of the relevant class to make an informed judgment about the plan * * *.

11 U.S.C. § 1125(a)(1) (1988).

In two recent cases, the United States Court of Appeals for the Third Circuit and the United States District Court for the Northern District of Iowa addressed situations in which bankruptcy debtors failed to meet the disclosure requirements of 11 U.S.C. §§ 521 and 1125 (1988). In addition, both debtors in those cases failed to report potential claims in the proposed reorganization plans. Both courts held that the debtors were estopped from asserting lender liability claims after the bankruptcy court confirmed their reorganization plans because the debtors failed to adequately disclose the existence of those claims during the pendency of their bankruptcy cases. ³ Hoffman v. First National Bank of Akron, Iowa, 99 B.R. 929 (N.D. Iowa 1989); Oneida Motor Freight, Inc. v. United Jersey Bank, 848 F.2d 414 (3d Cir.), cert. denied 488 U.S. 967, 109 S.Ct. 495, 102 L.Ed.2d 532 (1988). The Hoffman court...