Chrysler Group, L.L.C. v. Dixon

2017 Ohio 1161

• Court: Ohio Court of Appeals
• Decided: March 30, 2017
• Docket: 104628
• Status: Published

Opinion

[Cite as Chrysler Group, L.L.C. v. Dixon, 2017-Ohio-1161.]

Court of Appeals of Ohio EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA

JOURNAL ENTRY AND OPINION No. 104628

CHRYSLER GROUP, L.L.C. PLAINTIFF-APPELLEE

vs.

DARLENE DIXON DEFENDANT-APPELLANT

JUDGMENT: AFFIRMED

Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-10-743352

BEFORE: E.T. Gallagher, J., Kilbane, P.J., and Jones, J.

RELEASED AND JOURNALIZED: March 30, 2017 ATTORNEY FOR APPELLANT

Richard O. Mazanec Richard O. Mazanec Co., L.P.A. 1422 Euclid Avenue, Suite 500 Cleveland, Ohio 44115

ATTORNEYS FOR APPELLEE

Russell T. Rendall Bruce G. Hearey Ogletree, Deakins, Nash, Smoak & Stewart, P.C. 127 Public Square, Suite 4100 Cleveland, Ohio 44114 EILEEN T. GALLAGHER, J.:

{¶1} Defendant-appellant, Darlene Dixon (“Dixon”), appeals an order granting

summary judgment in favor of plaintiff-appellee, Chrysler Group, L.L.C. She raises two

assignments of error:

1. The trial court erred in granting Chrysler’s motion for summary judgment holding that Dixon’s counterclaim is barred by the doctrines of judicial and equitable estoppel and that Dixon lacks standing to bring her counterclaim.

2. The trial court erred in granting Chrysler’s motion for summary judgment holding that Dixon’s counterclaim fails as a matter of law because Dixon cannot prove a prima facie case of wrongful discharge based on Dixon’s disability.

{¶2} We find no merit to the appeal and affirm the trial court’s judgment.

I. Facts and Procedural History

{¶3} Dixon started her employment with Chrysler at a plant in Twinsburg, Ohio in

1997. In January 2010, Chrysler closed the Twinsburg plant, and Dixon signed a

“Relocation Repayment Agreement,” in which she agreed to move to Warren, Michigan

to work as a production control supervisor at Chrysler’s Warren Truck Assembly Plant.

(Pardun Affidavit ¶ 3.) The agreement provided, in relevant part:

I understand that the relocation benefits that have been and/or are extended by Chrysler to me or on my behalf are conditional upon my continued employment with Chrysler for a minimum of one (1) year from my effective transfer date to the new location.

I understand that in the event that I am separated from Chrysler’s employ for any reason other than death, layoff, or retirement within this one year period from my effective transfer date, I hereby promise to reimburse Chrysler for the relocation expenses paid to me or on my behalf for my relocation within 30 days after I have terminated my employment. Pursuant to the agreement, Chrysler paid Dixon $41,873.95 in relocation benefits in

January 2010. In February 2010, Chrysler issued a second payment to Dixon in the

amount of $36,866.25 by mistake. This sum was not included in the parties’ relocation

agreement.

{¶4} Dixon began working at the Michigan plant on January 11, 2010. However,

on January 25, 2010, Dixon went on a short-term medical leave under Chrysler’s

Disability Absence Plan (“DAP”). Both her physician and Chrysler’s doctor approved

the medical leave, and an independent medical examiner later cleared Dixon to return to

work in May 2010. Accordingly, Chrysler informed Dixon that (1) she must report to

work by November 2010, and (2) she must bring a certified check in the amount of

$36,866.25 to repay the amount Chrysler paid to Dixon by mistake.

{¶5} Desiree Nash (“Nash”), a Human Resources Generalist at Chrysler, averred in

an affidavit submitted in support of Chrysler’s motion for summary judgment that “Dixon

failed to report to work as instructed.” (Nash Affidavit ¶ 9.) Nevertheless, Chrysler

extended her report date to December 6, 2010. (Nash Affidavit ¶ 9.) Dixon reported for

work on December 6, 2010, but failed to repay the $36,866.25. Accordingly, Chrysler

terminated her employment. (Nash Affidavit ¶ 10.)

{¶6} Chrysler subsequently commenced this action to recover the $41,873.95 that

it paid to relocate Dixon to Warren, Michigan, claiming it was entitled to reimbursement

of funds paid for a job relocation that Dixon never exercised. Chrysler also sought to

recover the $36,866.25 that Chrysler paid to Dixon in error. Dixon filed counterclaims for breach of implied contract, promissory estoppel, wrongful termination based on

disability, and intentional infliction of emotional distress.

{¶7} Chrysler filed a motion for summary judgment on all claims. However,

before the court could rule on the motion, Dixon filed a Chapter 7 Voluntary Petition in

the United States Bankruptcy Court, Northern District of Ohio. The bankruptcy petition

automatically stayed this litigation in the common pleas court.

{¶8} As part of Dixon’s bankruptcy proceedings, Dixon filed a schedule known as

“Schedule B – Personal Property,” which required her to list all personal property she

owned as well as any “other contingent and unliquidated claims of every nature.” Dixon

listed items on the schedule according to several enumerated categories such as checking

accounts, personal jewelry, and things of that nature. In response to category 21, which

asked Dixon to estimate the value of “[o]ther contingent and unliquidated claims of every

nature, including * * * counterclaims of the debtor,” she indicated that she had “none.”

Dixon did not identify her counterclaims against Chrysler as a “contingent and

unliquidated claim.”

{¶9} In response to “Schedule F – Creditors Holding Unsecured Nonpriority

Claims,” Dixon identified Chrysler’s claims against her as a “2010 dispute w/past

employer over funds paid for relocation.” She estimated the value of Chrysler’s claim

against her as $75,000.

{¶10} Dixon signed a declaration under penalty of perjury indicating that the

information in the schedules submitted with her bankruptcy petition was true and correct. Based on Dixon’s representations, the bankruptcy court granted her petition and

discharged her debts, including Chrysler’s claims for repayment of both the relocation

funds and the mistaken payment. Ten months after the discharge in bankruptcy, Dixon

filed an “Amended Summary of Schedules” in the bankruptcy court. Dixon listed her

counterclaims against Chrysler in the amended schedules. The bankruptcy court never

responded to her untimely attempt to amend her bankruptcy filings after her debts had

been discharged.

{¶11} Following the discharge in bankruptcy, the common pleas court lifted the

stay in this case. Because the bankruptcy court had discharged Chrysler’s claims against

Dixon, Dixon’s counterclaims were all that remained. Chrysler filed a supplement to its

previously filed motion for summary judgment, arguing that Dixon’s counterclaims were

barred by the doctrines of judicial and equitable estoppel because she failed to timely

identify her counterclaims against Chrysler as “other contingent and unliquidated claims

of every nature, including * * * counterclaims of the debtor” in her schedule of personal

property. Chrysler also argued Dixon lacked standing to pursue her counterclaims

against Chrysler because they became part of the bankruptcy estate and only the trustee in

bankruptcy had standing to bring those claims. The trial court agreed and granted

Chrysler’s motion for summary judgment. Dixon now appeals the trial court’s judgment.

II. Law and Analysis

A. Standard of Review {¶12} We review an appeal from summary judgment de novo. Grafton v. Ohio

Edison Co., 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996). The party moving for

summary judgment bears the burden of demonstrating the absence of a genuine issue of

material fact as to the essential elements of the case with evidence of the type listed in

Civ.R. 56(C). Dresher v. Burt, 75 Ohio St.3d 280, 292, 662 N.E.2d 264 (1996).

{¶13} Once the moving party demonstrates entitlement to summary judgment, the

burden shifts to the nonmoving party to produce evidence related to any issue on which

the party bears the burden of production at trial. Civ.R. 56(E). Summary judgment is

appropriate when, after construing the evidence in a light most favorable to the party

against whom the motion is made, reasonable minds can only reach a conclusion that is

adverse to the nonmoving party. Zivich v. Mentor Soccer Club, 82 Ohio St.3d 367,

369-370, 696 N.E.2d 201 (1998).

B. Judicial Estoppel, Equitable Estoppel, and Standing

{¶14} In the first assignment of error, Dixon argues the trial court erred in finding

(1) that her counterclaim is barred by the doctrines of equitable and judicial estoppel, and

(2) that Dixon lacked standing to bring her counterclaim.

{¶15} The doctrine of judicial estoppel prevents a party from taking a position

inconsistent with one successfully and unequivocally asserted by the same party in a prior

proceeding. Greer-Burger v. Temesi, 116 Ohio St.3d 324, 2007-Ohio-6442, 879

N.E.2d 174, ¶ 25. In Reynolds v. Commr. of Internal Revenue Serv., 861 F.2d 469 (6th

Cir.1988), the court explained: The purpose of the doctrine is to protect the courts “from the perversion of judicial machinery.” Courts have used a variety of metaphors to describe the doctrine, characterizing it as a rule against “‘playing ‘fast and loose with the courts,’” “blowing hot and cold as the occasion demands,” or “hav[ing] [one’s] cake and eat[ing] it too.”

Id. at 472, quoting Edwards v. Aetna Life Ins. Co., 690 F.2d 595, 599 (6th Cir.1982);

Scarano v. Central R.R., 203 F.2d 510, 513 (3d Cir.1953); Allen v. Zurich Ins. Co., 667

F.2d 1162, 1167, fn. 3 (4th Cir.1982); Duplan Corp. v. Deering Milliken, Inc., 397

F.Supp. 1146, 1177 (D.S.C.1974), respectively. In other words, judicial estoppel

preserves the integrity of the courts “‘by preventing a party from abusing the judicial

process through cynical gamesmanship, achieving success on one position, then arguing

the opposing to suit an exigency of the moment.’” Greer-Burger at ¶ 25, quoting

Reynolds at 472-473.

{¶16} In order to apply the doctrine of judicial estoppel, the proponent must show

that his opponent “(1) took a contrary position; (2) under oath in a prior proceeding; and

(3) the prior position was accepted by the court.” Id.

{¶17} A debtor seeking shelter under the bankruptcy laws must disclose all assets,

or potential assets, to the bankruptcy court. 11 U.S.C.S. 521(1), 541(a)(7). A cause of

action is an asset that must be scheduled under section 521(1). See Eubanks v. CBSK

Fin. Group, Inc., 385 F.3d 894, 897 (6th Cir.2004); Cusano v. Klein, 264 F.3d 936, 945

(9th Cir.2001).

{¶18} Courts have routinely held that pursuing an undisclosed cause of action

creates an inconsistency sufficient to warrant application of judicial estoppel. Eubanks at 898; Lewis v. Weyerhaeuser Co., 141 Fed.Appx. 420, 425 (6th Cir.2005). However,

courts have also held that judicial estoppel should not be applied where the conduct

amounts to nothing more than mistake or inadvertence. Browning v. Levy, 283 F.3d 761,

775 (6th Cir.2002). In Browning, the court held that there are two circumstances where a

debtor’s failure to disclose a cause of action in a bankruptcy proceeding may be

inadvertent: (1) where the debtor lacks knowledge of the factual basis of the undisclosed

claims, and (2) where the debtor has no motive for concealment. Id. at 776.

{¶19} Motive may be inferred from knowledge. Felix v. Dow Chemical, S.D.

Ohio No. 2:07-cv-971, 2008 U.S. Dist. LEXIS 8946, 6 (Jan. 23, 2008); Tyler v. Fed.

Express Corp., 420 F.Supp.2d 849, 858 (W.D.Tenn.2005), aff’d, 206 Fed. Appx. 500 (6th

Cir.2006). Knowledge does not require “the debtor * * * know all the facts or even the

legal basis for the cause of action, rather, if the debtor has enough information * * * to

suggest that it may have a possible cause of action, then it is a ‘known’ cause of action

such that it must be disclosed.” In re Costal Plains, Inc., 179 F.3d 197 (5th Cir.1999).

{¶20} In Tyler, the court held that a motive to conceal could be inferred from the

fact that when the plaintiff filed her bankruptcy petition “she was aware of, yet failed to

disclose, a then pending claim.” Id. at 858. The court reasoned that “‘by omitting the

claims, she could keep any proceeds for herself and not have them become part of the

bankruptcy estate.’” Id., quoting Barger v. Cartersville, 348 F.3d 1289, 1296 (11th

Cir.2003). {¶21} It is undisputed that Dixon knew of her counterclaims against Chrysler when

she filed her bankruptcy petition because her claims against Chrysler had been pending

for almost two years. Therefore, the trial court could reasonably infer that Dixon

intended to conceal her counterclaims in hopes of keeping any potential proceeds to

herself rather than making them part of the bankruptcy estate. The fact that her

counterclaims were pending before she filed the bankruptcy petition vitiates her claim

that her failure to disclose the counterclaims was nothing more than a mistake or

inadvertence.

{¶22} The bankruptcy code’s disclosure requirements are crucial to the effective

functioning of the federal bankruptcy system. Ryan Operations G.P. v. Santiam-Midwest

Lumber Co., 81 F.3d 355, 362 (3d Cir.1996). Indeed, the bankruptcy code’s disclosure

requirements are intended, in part, to protect those creditors who would be prejudiced by

a debtor’s failure to disclose hidden assets. Oneida Motor Freight, Inc. v. United Jersey

Bank, 848 F.2d 414 (3d Cir.1988) (Stapelton, J., dissenting). In Rosenheim v. Kleban,

918 F.Supp. 98, 104 (S.D.N.Y.1996), the court explained:

The rationale for * * * decisions [invoking judicial estoppel to prevent a party who failed to disclose a claim in bankruptcy proceedings from asserting that claim after emerging from bankruptcy] is that the integrity of the bankruptcy system depends on full and honest disclosure by debtors of all of their assets. The courts will not permit a debtor to obtain relief from the bankruptcy court by representing that no claims exist and then subsequently to assert those claims for his own benefit in a separate proceeding. The interests of both the creditors, who plan their actions in the bankruptcy proceeding on the basis of information supplied in the disclosure statements, and the bankruptcy court, which must decide whether to approve the plan of reorganization on the same basis, are impaired when the disclosure provided by the debtor is incomplete. {¶23} Chrysler’s claims against Dixon were discharged based on the schedule of

assets Dixon submitted to the bankruptcy court under penalty of perjury. The outcome of

the bankruptcy proceedings could have been different if Dixon had disclosed her

counterclaims in her schedule of personal property. It is possible the trustee in

bankruptcy would have litigated Dixon’s counterclaims in order to recoup more assets in

the estate for the benefit of creditors such that Chrysler might have recovered some

portion of its claims against Dixon. For this reason, Dixon’s failure to disclose her

counterclaims as assets in the bankruptcy court not only warrants application of judicial

estoppel, it also triggers application of equitable estoppel, which also bars subsequent

attempts to prosecute undisclosed claims. Bruck Mfg. Co. v. Mason, 84 Ohio App.3d

398, 399, 616 N.E.2d 1168 (8th Dist.1992). The doctrine of judicial estoppel is distinct

from that of equitable estoppel, in that “[j]udicial estoppel looks to the connection

between the litigant and the judicial system while equitable estoppel focuses on the

relationship between the parties to the prior litigation.” Oneida Motor Freight at 419.

{¶24} Dixon filed her voluntary bankruptcy petition under Chapter 7. In a

Chapter 7 bankruptcy, only the trustee may litigate the debtor’s claims on behalf of the

bankruptcy estate. 11 U.S.C. 541(a)(1), 704(1); Cadle Co. v. Mangan (In re Flanagan),

503 F.3d 171 (2d Cir.2007); 3 Resnick, Collier on Bankruptcy, Section 323.03, .03[1],

323-7 to-9 (15th Ed. Rev.2007) (“The trustee, as representative of the estate, has the

exclusive capacity to sue and be sued on behalf of the estate, and is charged by law with

representing the interest of the estate.”). {¶25} Dixon admits she did not amend her schedule of assets to include her

counterclaims against Chrysler until ten months after her debts were discharged. She

contends, however, that she disclosed the counterclaim to the bankruptcy trustee before

the discharge of her debts as part of settlement negotiations. In an affidavit submitted in

support of Dixon’s brief in opposition to Chrysler’s motion for summary judgment, her

lawyer averred, in relevant part:

5. I spoke with the trustee on July 23, 2013 and discussed Darlene Dixon’s counterclaim against Chrysler. I discussed the damage she was seeking, and he informed me that he would speak with Chrysler’s counsel in an attempt to settle the counterclaim.

6. The trustee contacted me in late August 2013 and informed me that he had spoken to counsel for Chrysler about the counterclaim of Darlene Dixon, and he indicated that Chrysler was not interested in settling the counterclaim.

{¶26} However, “the duty to disclose is a continuing one that does not end once

the forms are submitted to the bankruptcy court.” Tennyson v. Challenge Realty (In re

Tennyson), 313 B.R. 402 (Bankr.W.D.Ky. 2004). Moreover, informal, oral disclosures

are insufficient and do not substitute for the mandatory filing of formal schedules, as

required by Bankruptcy Rule 1007(b). See In re Fetner, 218 B.R. 262 (Bankr.D.D.C.

1997) (holding that oral disclosure regarding property exemptions at a Section 341

meeting of creditors did not substitute for the mandatory disclosure under Bankruptcy

Rule 1007(b)); In re Moore, 175 B.R. 13, 17 (Bankr.S.D.Ohio 1994) (“[T]he

[bankruptcy] code does not authorize debtors, or their counsel, to simply present words on

the wind at a § 341 meeting or in any other circumstance * * *.”). {¶27} Therefore, counsel’s alleged oral disclosure to the trustee of Dixon’s

counterclaims against Chrysler does not prevent application of equitable or judicial

estoppel. “To hold otherwise would ‘suggest[ ] that a debtor should consider disclosing

potential assets only if he is caught concealing them’ and would ‘diminish the necessary

incentive to provide the bankruptcy court with a truthful disclosure of the debtors’

assets.’” Nettles v. State Farm Fire & Cas. Co., M.D. Ga No. 4:10-CV-106 (CDL), 2011

U.S. Dist. LEXIS 64335, (June 17, 2011), quoting Burnes v. Pemco Aeroplex, Inc., 291

F.3d 1282, 1288 (11th Cir.2002). Accord De Leon v. Comcar Indus., 321 F.3d 1289,

1292 (11th Cir.2003).

{¶28} Dixon nevertheless contends she is entitled to 75 percent of the wage

earnings and benefits Chrysler owed to her because she listed these claims as being

exempt in her amended schedules. However, as previously stated, she filed the amended

schedules after her debts were discharged and the bankruptcy court never responded to

them. Therefore, because they were not disclosed prior to the discharge of her debts,

they are also barred by judicial estoppel and equitable estoppel for the reasons previously

explained.

{¶29} Furthermore, Dixon lost standing to pursue her claims against Chrysler

when she filed her bankruptcy petition under Chapter 7. As previously explained, only

the trustee in bankruptcy has standing to pursue the debtor’s claims on the debtor’s behalf

because the debtor’s claims are property of the bankruptcy estate. Bauer v. Commerce

Union Bank, 859 F.2d 438, 441 (6th Cir.1988) (“Property of the estate that is not abandoned * * * and that is not administered in the case remains the property of the

estate.”); Auday v. Wet Seal Retail, Inc., 698 F.3d 902, 904 (6th Cir.2012) (Only the

trustee, and not the debtor have standing to pursue debtor’s claims that existed at the time

the bankruptcy petition was filed.).

{¶30} Having determined that Dixon lacked standing to pursue her counterclaims

against Chrysler and that her counterclaims against Chrysler were barred by the doctrines

of equitable and judicial estoppel, Dixon’s remaining arguments, which relate to the

merits of her counterclaims are moot. The first assignment of error is overruled, and the

second assignment of error is moot.

{¶31} Judgment affirmed.

It is ordered that appellee recover from appellant costs herein taxed.

The court finds there were reasonable grounds for this appeal.

It is ordered that a special mandate be sent to the common pleas court to carry this

judgment into execution.

A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of

the Rules of Appellate Procedure.

EILEEN T. GALLAGHER, JUDGE MARY EILEEN KILBANE, P.J., and LARRY A. JONES, SR., J., CONCUR