Ah Quin v. County of Kauai Department of Transportation

733 F.3d 267, 69 Collier Bankr. Cas. 2d 1561, 2013 WL 3814916, 2013 U.S. App. LEXIS 15076, 97 Empl. Prac. Dec. (CCH) 44,881, 119 Fair Empl. Prac. Cas. (BNA) 321
CourtCourt of Appeals for the Ninth Circuit
DecidedJuly 24, 2013
Docket10-16000
StatusPublished
Cited by144 cases

This text of 733 F.3d 267 (Ah Quin v. County of Kauai Department of Transportation) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Ah Quin v. County of Kauai Department of Transportation, 733 F.3d 267, 69 Collier Bankr. Cas. 2d 1561, 2013 WL 3814916, 2013 U.S. App. LEXIS 15076, 97 Empl. Prac. Dec. (CCH) 44,881, 119 Fair Empl. Prac. Cas. (BNA) 321 (9th Cir. 2013).

Opinions

Opinion by Judge GRABER; Dissent by Judge BYBEE.

OPINION

GRABER, Circuit Judge:

Plaintiff Kathleen M. Ah Quin contends that her employer, Defendant County of Kauai Department of Transportation, discriminated against her because she is a woman. While pursuing this action, however, Plaintiff filed for Chapter 7 bankruptcy protection and initially failed to list this action in her bankruptcy schedules. The district court held that judicial estoppel prohibits her from proceeding and, therefore, granted summary judgment to Defendant. We hold that the district court applied the wrong legal standard in determining whether Plaintiffs bankruptcy omission was “mistaken” or “inadvertent.” Accordingly, we vacate the judgment and remand for further proceedings.

FACTUAL AND PROCEDURAL HISTORY

Plaintiff initiated this employment-discrimination action on November 10, 2008. She alleges that, because of her gender, Defendant reduced her work hours and denied her full-time status, in violation of various discrimination statutes and under the common law. On December 18, 2009, the district court denied Defendant’s motion for summary judgment on the merits. The court scheduled the case for a jury trial in April 2010.

Meanwhile, Plaintiff had obtained bankruptcy protection. Represented by a different lawyer than her lawyer in this case, Plaintiff filed for Chapter 7 bankruptcy on April 4, 2009. A debtor must list all pending lawsuits in the bankruptcy schedules, but Plaintiff checked the box “None” next to this line item: “List 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:” (Emphasis omitted.) At a bankruptcy hearing, Plaintiff testified that she had listed all of her assets and that the answers in her petition and schedules are “true and correct.” She did not mention this pending action. During a colloquy concerning her husband’s losing his job, Plaintiff responded to a question about whether she had a claim by saying: “No. No.” 1 On September 1, 2009, the bankruptcy court issued an order of discharge and closed the case.

At some point, Plaintiffs lawyer in this case became aware of the potential effect of Plaintiffs bankruptcy proceeding. At a settlement conference on December 21, 2009, Plaintiffs lawyer informed Defendant of Plaintiffs bankruptcy filing.

On December 29, 2009, Defendant wrote a letter to the district court setting forth [270]*270the position that it could move to dismiss the action under the doctrine of judicial estoppel. The next day, the district court vacated all dates and deadlines, and it scheduled a status conference for January 14, 2010.

On January 13, 2010, Plaintiff moved to reopen her bankruptcy case and to set aside the discharge. The motion, accompanied by declarations from her bankruptcy lawyer’s staff and from Plaintiff, explained that Plaintiff had never disclosed the pending lawsuit to her bankruptcy lawyer or his staff and that Plaintiffs failure to list the lawsuit as an asset stemmed from Plaintiffs misunderstanding of what she was required to do. The bankruptcy court reopened the case the same day. Plaintiff amended her bankruptcy schedules to list this pending claim as an asset.

On February 10, 2010, Defendant filed a motion for summary judgment in the discrimination action, on the ground that judicial estoppel prohibits Plaintiff from proceeding. The district court agreed and granted summary judgment in an order dated April 1, 2010. Plaintiff timely appeals.

On June 20, 2010, the bankruptcy trustee filed a report that abandoned the trustee’s interest in the pending discrimination action. Plaintiffs unsecured creditors did not object to that action by the trustee. On July 21, 2010, the bankruptcy court closed the reopened case.

STANDARDS OF REVIEW

We review de novo a grant of summary judgment. Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778, 782 (9th Cir.2001). We review “the district court’s application of the doctrine of judicial estoppel to the facts of [a] case for an abuse of discretion.” Id. “The district court ... necessarily abuses its discretion when it bases its decision on an erroneous legal standard.... ” Farris v. Seabrook, 677 F.3d 858, 864 (9th Cir.2012) (internal quotation marks omitted).

DISCUSSION

“[J]udieial estoppel is an equitable doctrine invoked by a court at its discretion.” New Hampshire v. Maine, 532 U.S. 742, 750, 121 S.Ct. 1808, 149 L.Ed.2d 968 (2001) (internal quotation marks omitted). “[I]ts purpose is to protect the integrity of the judicial process by prohibiting parties from deliberately changing positions according to the exigencies of the moment.” Id. at 749-50, 121 S.Ct. 1808 (citation and internal quotation marks omitted).

Although judicial estoppel is “probably not reducible to any general formulation of principle, ... several factors typically inform the decision whether to apply the doctrine in a particular case.” Id. at 750, 121 S.Ct. 1808 (citations and internal quotation marks omitted). “First, a party’s later position must be ‘clearly inconsistent’ with its earlier position.” Id. “Second, courts regularly inquire whether the party has succeeded in persuading a court to accept that party’s earlier position, so that judicial acceptance of an inconsistent position in a later proceeding would create the perception that either the first or the second court was misled.” Id. (internal quotation marks omitted). “A third consideration is whether the party seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped.” Id. at 751, 121 S.Ct. 1808. “In enumerating these factors, we do not establish inflexible prerequisites or an exhaustive formula for determining the applicability of judicial estoppel. Additional considerations may inform the doctrine’s [271]*271application in specific factual contexts.” Id.

In the bankruptcy context, the federal courts have developed a basic default rule: If a plaintiff-debtor omits a pending (or soon-to-be-filed) lawsuit from the bankruptcy schedules and obtains a discharge (or plan confirmation), judicial estoppel bars the action. See, e.g., Payless Wholesale Distribs., Inc. v. Alberto Culver (P.R.) Inc., 989 F.2d 570, 571 (1st Cir.1993) (“Conceal your claims; get rid of your creditors on the cheap, and start over with a bundle of rights. This is a palpable fraud that the court will not tolerate, even passively.”); Hay v. First Interstate Bank of Kalispell, N.A., 978 F.2d 555, 557 (9th Cir.1992) (holding that “[fjailure to give the required notice [to the bankruptcy court] estops [the plaintiff-debtor] and justifies the grant of summary judgment to the defendants”).

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733 F.3d 267, 69 Collier Bankr. Cas. 2d 1561, 2013 WL 3814916, 2013 U.S. App. LEXIS 15076, 97 Empl. Prac. Dec. (CCH) 44,881, 119 Fair Empl. Prac. Cas. (BNA) 321, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ah-quin-v-county-of-kauai-department-of-transportation-ca9-2013.