In the Missouri Court of Appeals Western District KEVIN LABRANCHE, ) ) Appellant, ) ) WD84914 v. ) OPINION FILED: ) APRIL 18, 2023 KANSAS CITY PUBLIC SCHOOLS, ) ) Respondent. )
Appeal from the Circuit Court of Jackson County, Missouri The Honorable Patrick W. Campbell, Judge
Before Division One: Anthony Rex Gabbert, Presiding Judge, W. Douglas Thomson, Judge, Janet Sutton, Judge
Kevin LaBranche appeals the circuit court’s grant of summary judgment to
Kansas City Public Schools and Douglas Bolden (“Employer” collectively) on
Employer’s contention that judicial estoppel bars LaBranche’s employment
discrimination/retaliation claims against Employer. On appeal, LaBranche contends the
circuit court abused its discretion in determining there was no genuine dispute as to the
existence of facts necessary to support judicial estoppel in that, despite LaBranche’s
failure to list the claims named in his First Amended Petition in bankruptcy schedules,
there was no judicial acceptance of an inconsistent position, and LaBranche did not
derive an unfair advantage because the nondisclosure of his claim was inadvertent and resulted from a good faith mistake rather than an attempt to mislead the court. We
reverse and remand.
Background and Procedural Information
On May 12, 2017, LaBranche filed a Charge of Discrimination with the Missouri
Commission on Human Rights (the “Commission”) alleging that Northeast High School
Principal, Douglas Bolden, continuously discussed religion in the workplace and engaged
in other activities regarding religion that offended LaBranche and created a hostile work
environment. LaBranche reported his concerns to his supervisor, as well as the Human
Resources Director and Employer Labor Specialist. LaBranche alleged that, thereafter,
Bolden continued to discuss religion in LaBranche’s presence, although purportedly
having been told to cease such activity, and that LaBranche was retaliated against after
reporting his concerns.
On March 9, 2018, LaBranche filed another Charge of Discrimination with the
Commission alleging that, after filing Charges of Discrimination, he had been retaliated
against and subjected to unwarranted discipline, including being terminated from
employment on September 18, 2017, without just cause and for pretextual reasons.
LaBranche alleged that, as a result of Employer’s actions, LaBranche suffered
humiliation and embarrassment, mental and emotional distress, as well of loss of
employment, pay, benefits, and promotional opportunities. On January 30, 2019,
LaBranche requested “Right to Sue” notices for both Charges of Discrimination.
2 On February 8, 2019, LaBranche filed a Petition for Damages alleging
discrimination and retaliation by Employer. At that point, LaBranche had not yet
received right to sue notices from the Commission for the allegations contained in his
petition, but alleged that he had filed a request for those notices with the Commission.
Right to sue notices were ultimately issued March 19 and 20, 2019.
On April 4, 2019, Employer moved to dismiss LaBranche’s petition arguing that
LaBranche failed to comply with a necessary precondition for a valid claim under the
Missouri Human Rights Act (MHRA) by filing his claim without right to sue notices.
The circuit court granted LaBranche’s request to file an amended petition, and LaBranche
filed his First Amended Petition on May 28, 2019, amending his original petition to
allege that he had received right to sue letters from the Commission. Employer filed an
answer to that First Amended Petition on June 7, 2019.
On September 11, 2020, Employer moved for summary judgment, arguing there
was no genuine dispute as to any material fact showing that LaBranche was barred by
judicial estoppel from asserting his MHRA claims against Employer. Employer alleged
that LaBranche’s failure to disclose his pending charges of discrimination during his
Chapter 13 bankruptcy proceeding showed that LaBranche took inconsistent positions in
the two cases, thereby barring his MHRA suit against Employer. Employer argued that
this was proven by the summary judgment record because LaBranche verified to the
bankruptcy court under penalty of perjury that his bankruptcy schedules were true and
correct, but the schedules did not list his pending charges of discrimination against
3 Employer, and LaBranche failed to amend his schedules to notify the bankruptcy court
when he filed his lawsuit against Employer.
The summary judgment record shows that on October 2, 2018, LaBranche filed a
Chapter 13 petition for bankruptcy. On October 25, 2018, LaBranche filed “Official
Form 106Sum - Summary of Your Assets and Liabilities and Certain Statistical
Information” which included a section titled, “Schedule A/B: Property” (“Schedule”).
Part 4 of the Schedule asks the debtor to “Describe Your Financial Assets,” and “Do you
own or have any legal or equitable interest in any of the following?” Part 4 also asks for
“Money or property owed to you?” and the “Current value of the portion you own?”
Thereunder is question #33 which asks for “Claims against third parties, whether or not
you have filed a lawsuit or made a demand for payment. Examples: Accidents,
employment disputes, insurance claims, or rights to sue.” In response to question #33,
LaBranche checked “Yes” and listed the following:
Employment Discrimination Claim Case No. 1716-CV21241 – Kevin LaBranche v. American Century Services LLC
Employment Discrimination Claim Case No. 1816-CV18247 – Kevin LaBranche v. AEG Kansas City Arena, LLC f/k/a Anschutz Kansas City Arena, LLC
Personal Injury Claim Case No. 1816-CV23665 – Kevin LaBranche v. City of Kansas City, Missouri.
4 Question #34 asks for, “Other contingent and unliquidated claims of every nature,
including counterclaims of the debtor and rights to set off claims.” LaBranche checked
the “No” box for this question.
LaBranche admitted in response to Employer’s Uncontroverted Statement of
Material Facts that LaBranche’s bankruptcy filings omitted in question #33 any reference
to the May 12, 2017 or March 9, 2018 charges of discrimination, and that the “No” box
was checked in answer to question #34. LaBranche additionally admitted that he had
declared “under penalty of perjury” that the summary and schedules filed with the
declaration were true and correct to the best of his knowledge, information, and belief.
LaBranche filed a Memorandum in Opposition to Defendants Motion for
Summary Judgment arguing that neither the law nor the facts supported judicial estoppel.
LaBranche argued that, he had not been granted the right to sue when he completed the
bankruptcy schedules, he dismissed the bankruptcy case simultaneously with requesting
the right to sue rather than amend the schedules, and he never had any debt discharged in
the bankruptcy case. LaBranche also argued a good faith reliance on his attorney’s
advice, and a good faith belief that his answers were correct as he understood the
questions. Relying on Stallings v. Hussmann Corp., 447 F.3d 1041 (8th Cir. 2006) and
Loth v. Union Pac. R.R. Co., 354 S.W.3d 635, (Mo. App. 2011), LaBranche contended
that summary judgment was inappropriate because whether a party acts in bad faith in
failing to disclose information involves a credibility determination. Further, that the non-
movant is given the benefit of all reasonable inferences, and if the evidence can support
5 any inference other than bad faith, a genuine dispute exists which precludes summary
judgment. 1
LaBranche filed his own Statement of Uncontroverted Material Facts which
included that, during the bankruptcy proceeding, LaBranche was represented by legal
counsel and fully disclosed the Charges of Discrimination and that he had neither
requested nor received notice of a right to sue for those Charges. Further, that LaBranche
disclosed in his Chapter 13 Plan three pending lawsuits. LaBranche’s facts additionally
state that, when he requested a right to sue from the Commission on January 30, 2019, he
chose to dismiss the bankruptcy case rather than file an amendment to the Schedule.
Thereafter, LaBranche’s bankruptcy attorney filed to dismiss the case, and on February 1,
2019, the bankruptcy court entered an order of dismissal. LaBranche attested that he
completed the bankruptcy Schedule in good faith and based upon his understanding of
the form’s instructions and advice of counsel. Further, that he had no intent or motive to
conceal the existence of the Charges of Discrimination. LaBranche included an affidavit
with his Statement of Uncontroverted Material Facts which attested to the
aforementioned.
Argument was heard on Employer’s motion for summary judgment on June 18,
2021. On July 19, 2021, the circuit court issued its order granting summary judgment to
1 Employer asserts on appeal that LaBranche never asserted to the circuit court that there was a genuine dispute as to the facts necessary to support judicial estoppel and, therefore, failed to preserve his claim on appeal. The record shows otherwise.
6 Employer. The court found that LaBranche’s failure to disclose the pending Charges of
Discrimination in the bankruptcy proceeding represented “clear inconsistent positions
taken in the Plaintiff/Debtor’s bankruptcy proceeding and the instant case.” The court
found that, despite LaBranche’s dismissal of the bankruptcy case, an order had been
entered accepting LaBranche’s bankruptcy Plan based on his Schedule, thereby
demonstrating judicial acceptance of LaBranche’s prior inconsistent position. The court
determined that LaBranche’s nondisclosure was not inadvertent or a good faith mistake
because “LaBranche’s only attempt to create a fact issue regarding whether he acted
inadvertently was to state that he filed a dismissal after receiving his right to sue.” The
court found that, LaBranche’s dismissal of his bankruptcy case “tends to further
emphasize that LaBranche did understand the scope of his duty to disclose in his
bankruptcy proceedings[.]” Further, that LaBranche “knew of his duty to disclose
because he did in fact make disclosures of three other pending lawsuits in his Schedules,
none of which represent claims in the present Case.” The court found “no inkling of a
simple good-faith mistake in the aforementioned omission” and that the omission created
“both an unfair advantage for LaBranche and an unfair detriment to his Creditors.” The
court concluded: “Thus, having found inconsistent positions, judicial acceptance,
inadvertence, 2 and that both an unfair advantage and unfair detriment would derive from
2 The court twice mentioned that it found “inadvertence” in LaBranche’s omission of the claims from the Summary of Schedules filed in the bankruptcy proceeding, however the court’s ruling suggests that no inadvertence was found.
7 these, the Court finds the Doctrine of Judicial Estoppel to be applicable in this Case.”
This appeal follows.
Standard of Review
The standard of review for an appeal challenging the grant of a motion for
summary judgment is de novo. ITT Com. Fin. Corp. v. Mid-Am. Marine Supply Corp.,
854 S.W.2d 371, 376 (Mo. banc 1993). In such cases, we do not defer to the trial court’s
decision, but instead use the same criteria that the trial court should have employed in
initially deciding whether to grant the motion. Barekman v. City of Republic, 232 S.W.3d
675, 677 (Mo. App. 2007). We review the record in the light most favorable to the party
against whom judgment was entered, and accord that party the benefit of all inferences
which may reasonably be drawn from the record. Id. Summary judgment is appropriate
where the moving party has demonstrated, on the basis of facts as to which there is no
genuine dispute, a right to judgment as a matter of law. ITT Com. Fin. Corp., 854 S.W.2d
at 376. A genuine issue that will prevent summary judgment exists where the record
shows two plausible, but contradictory, accounts of the essential facts and the genuine
issue is real, not merely argumentative, imaginary, or frivolous. Id. at 382. “Facts set
forth by affidavit or otherwise in support of a party’s motion are taken as true unless
contradicted by the non-moving party’s response to the summary judgment motion.” Id.
at 376. The moving party bears “the burden of establishing a legal right to judgment and
the absence of any genuine issue of material fact required to support that right to
judgment.” Id. at 378. We review the circuit court’s discretionary application of judicial
8 estoppel to the facts of the case for an abuse of discretion. Vacca v. Missouri Dept. of
Labor and Industrial Relations, 575 S.W.3d 223, 230 (Mo. banc 2019). Legal errors
constitute an abuse of discretion. Baldridge v. Kansas City Public Schools, 552 S.W.3d
699, 712 (Mo. App. 2018). “A trial court can abuse its discretion through the inaccurate
resolution of factual issues or through the application of incorrect legal principles.” State
v. Taylor, 298 S.W.3d 482, 492 (Mo. banc 2009).
Point on Appeal
LaBranche contends on appeal that the circuit court abused its discretion in
determining there was no genuine dispute of as to the existence of facts necessary to
support judicial estoppel in that, despite LaBranche’s failure to list the claims named in
his First Amended Petition in bankruptcy schedules, there was no judicial acceptance of
an inconsistent position, and LaBranche did not derive an unfair advantage because the
nondisclosure of his claim was inadvertent and resulted from a good faith mistake rather
than an attempt to mislead the court.
The seminal case in Missouri discussing the application of judicial estoppel is
Vacca v. Missouri Department of Labor and Industrial Relations, 575 S.W.3d 223 (Mo.
banc 2019). Vacca was a former Administrative Law Judge for the Missouri Division of
Workers’ Compensation who filed for and received long-term disability benefits upon
claiming that he became unable to work as a result of his disability. Id. at 227-229.
Vacca also confirmed under oath in a dissolution proceeding that he was completely
unable to work, which resulted in an award of $1,200 per month maintenance from his
9 former wife. Id. at 228-229. Vacca then claimed in a disability discrimination suit with
his employer that he was able, with reasonable accommodation, to perform the job of an
ALJ. Id. at 229. The employer argued that Vacca’s claims were barred by judicial
estoppel, and the Court held that, because of Vacca’s prior assertions regarding complete
disability, Vacca was estopped from claiming in the disability discrimination suit that he
was able, with reasonable accommodation, to perform the job of an ALJ. Id. at 238.
In deciding Vacca, the Missouri Supreme Court discussed the following judicial
estoppel considerations which were set forth in the United States Supreme Court case,
New Hampshire v. Maine:
First, a party’s later position must be clearly inconsistent with its earlier position. 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. Absent success in a prior proceeding, a party’s later inconsistent position introduces no risk of inconsistent court determinations, and thus poses little threat to judicial integrity. 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.
Vacca, 575 S.W.3d at 232-233 (quoting New Hampshire, 532 U.S. 742, 749, 121 S.Ct.
1808, 149 L.Ed. 2d 968 (2001) (internal quotation marks and citations omitted).
Vacca went on to discuss that, judicial estoppel is not a cause of action with
elements that must be proven and that are prerequisites to its application, but instead is a
flexible, equitable doctrine. Id. at 235. The Court held that the only fixed prerequisite to
application of judicial estoppel is that a party must have taken “inconsistent positions.”
10 Id. at 225. The Court did not dispense with the additional New Hampshire
considerations, but clarified that the additional considerations are not necessary elements
or absolute prerequisites to finding judicial estoppel. Id. at 235. “All factors that are
relevant should be considered by the Court, but once a party takes truly inconsistent
positions, there are no ‘inflexible prerequisites or an exhaustive formula for determining
the applicability of judicial estoppel.”’ Id. (quoting New Hampshire, 532 U.S. at 751, 121
S.Ct. 1808). “The factors identified in New Hampshire are guideposts, not elements,
intended to assist courts in identifying when judicial estoppel should be applied to
preserve the integrity of the judicial process and prevent litigants from playing ‘fast and
loose’ with the courts.” Vacca, 575 S.W.3d at 236. Judicial estoppel protects the integrity
of the judicial process by “prohibiting parties from deliberately changing positions
according to the exigencies of the moment.” Id. at 232 (internal citations and quotation
marks omitted). The doctrine of judicial estoppel operates differently than an affirmative
defense in that it does not set out “additional facts that defeat the claim of the pleader,”
but rather “is in the nature of a sanction for misuse of the courts.” Id. at 229 n.4.
In applying the New Hampshire factors to the facts in Vacca, the Court found all
factors “clearly present,” but noted that the Vacca case also presented the kind of
“specific factual situation” that calls for application of judicial estoppel under the analysis
set out for discrimination cases in Cleveland v. Policy Management Systems Corp., 526
U.S. 795, 802-03, 119 S.Ct. 1597, 143 L.Ed.2d 966 (1999). Vacca, 575 S.W.3d at 237.
Cleveland held that judicial estoppel can be applied to prevent a party from making
11 specifically conflicting assertions, first in an administrative application for disability
benefits and then in a suit for disability discrimination. Vacca, 575 S.W.3d at 237.
Here, to have been entitled to summary judgment on the grounds of judicial
estoppel, Employer first had to prove there was no genuine dispute that LaBranche’s
filing of his discrimination cases against Employer on February 8, 2019, was “clearly
inconsistent” with his failure to list his MHRA complaints as “claims against third
parties” or as “other contingent and unliquidated claims of every nature” in his
bankruptcy Schedule.
The record shows that, in response to Employer’s motion for summary judgment,
LaBranche did not dispute that his failure to report his MHRA Charges of Discrimination
against Employer in his bankruptcy case represented an inconsistent position with his
MHRA case filing. 3 We, therefore, take no position on this factor other than to find that
the circuit court did not abuse its discretion in concluding there were no material facts in
dispute with regard to LaBranche taking an inconsistent position in the two cases.
This does not end our inquiry, however, as the facts surrounding any
“inconsistency” in this case do not present the kind of “specific factual situation” that
3 LaBranche argued in his Memorandum in Opposition to Defendant’s Motion for Summary Judgment that the facts of his case are “closely akin to those in Stallings v. Hussmann Corp., 447 F.3d 1041 (8th Cir. 2006)” where the court found that Stallings’s “failure to disclose in bankruptcy the subsequent filing of the pending cause of action was an inconsistent position, however the second and third prongs of the equitable estoppel doctrine were not met.” LaBranche makes no claim on appeal that the circuit court erred in concluding that he took inconsistent positions.
12 calls for application of judicial estoppel as set out in Cleveland, nor do they so glaringly
evidence a purposeful scheme to manipulate the judicial system such as was present in
Vacca to warrant judicial estoppel on inconsistency alone.
In ruling on Employer’s summary judgment motion, the circuit court considered
the additional New Hampshire factors of “judicial acceptance” and “unfair advantage or
detriment.” As noted above, the “judicial acceptance” factor involves consideration into
“whether the party has succeeded in persuading a court to accept the earlier position, so
that judicial acceptance of an inconsistent position in a later proceeding would create the
perception that either the first or second court was misled.” New Hampshire, 532 U.S. at
750. Concerns in this regard surround the risk of inconsistent court determinations which
threaten judicial integrity, and success in a prior proceeding is indicative of such risk. Id.
at 750-751. The “unfair advantage or detriment” factor entails consideration into
“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. Traditionally, the doctrine of judicial estoppel has not been applied “when a party’s
prior position was taken because of a good-faith mistake rather than as a part of a scheme
to mislead and manipulate the court.” Loth, 354 S.W.3d at 638. New Hampshire stated
that, “it may be appropriate to resist application of judicial estoppel when a party’s prior
position was based on inadvertence or mistake.” 532 U.S. at 753 (internal quotation
marks and citations omitted).
13 In reviewing the circuit court’s analysis with regard to these factors, we first
address “unfair advantage or detriment” and find that the circuit court abused its
discretion in finding no material facts in dispute with regard to this factor. The circuit
court failed to give LaBranche the benefit of all reasonable inferences, and the facts
viewed in the light most favorable to LaBranche could result in a different conclusion
regarding the application of judicial estoppel.
The summary judgment record shows that, question #33 in LaBranche’s
bankruptcy Schedule asks for “claims against third parties, whether or not you have filed
a lawsuit or made a demand for payment,” with examples listed as “accidents,
employment disputes, insurance claims, or rights to sue.” LaBranche listed three lawsuits
pending in circuit court (two involving employment discrimination), but did not list the
two MHRA Charges of Discrimination against Employer which were on file with the
Commission. Question #34 asks for “Other contingent and unliquidated claims of every
nature, including counterclaims of the debtor and rights to set off claims.” LaBranche
checked the “No” box.
LaBranche’s Statement of Uncontroverted Material Facts, supported by an
affidavit by LaBranche, states that LaBranche was represented by legal counsel during
the bankruptcy proceeding, and that he disclosed to Counsel that he had filed charges of
discrimination against Employer but had not requested or received a “Right to Sue.”
LaBranche states that, question #33 specifically cites “rights to sue” as an example of
14 “claims against third parties,” and the Schedule was completed in good faith based on
LaBranche’s understanding of the form’s instructions and advice of counsel.
In considering whether LaBranche’s omissions were inadvertent or based on a
good-faith mistake, rather than a scheme to mislead the court, the circuit court ruled that,
LaBranche’s statement that he did not yet have the right to sue insufficiently explained
why he failed to disclose the charges of discrimination, and LaBranche “failed to offer
any other explanation as to why he did not disclose his ‘employment disputes”’ with
Employer or in response to the Schedule’s request for disclosure of “other contingent and
unliquidated claims of every nature.” The court found that, LaBranche’s “only attempt to
create a fact issue regarding whether he acted inadvertently was to state that he filed a
dismissal after receiving his right to sue.” The court concluded that, “this tends to further
emphasize that LaBranche did understand the scope of his duty to disclose in his
bankruptcy proceedings[.]” The court found that, LaBranche’s dismissal of the
bankruptcy action, rather than amendment to the bankruptcy Schedules, showed a lack of
inadvertence and that, “LaBranche knew of his duty to disclose because he did in fact
make disclosures of three other pending lawsuits in his Schedules[.]” The court found “no
inkling of a simple good-faith mistake in the aforementioned omission” which the court
concluded created both an unfair advantage for LaBranche and unfair detriment to his
creditors, thus supporting the application of judicial estoppel.
15 Yet, the circuit court could have only reached these conclusions by drawing
factual inferences, and making credibility determinations, unfavorable to LaBranche. 4
Giving LaBranche the benefit of all reasonable inferences, it can be equally inferred from
the summary judgment record that LaBranche believed if he did not yet have a “right to
sue,” he had no “claim” to report in the bankruptcy action. 5 Such a belief cannot be
completely discounted as unreasonable given that “rights to sue” is listed as an example
of “claim” under question #33. Under the Missouri Human Rights Act, a person
aggrieved by an unlawful discriminatory practice cannot file a civil action without first
filing a complaint
4 Notably, the circuit court’s Judgment states that, “Whether a debtor’s failure to disclose claims was inadvertent presents a question of fact.” (Citing Robinson v. Tyson Foods, Inc., 595 F.3d 1269, 1275 (11th Cir. 2010)). 5 The term “claim” in bankruptcy is defined as:
(A) a right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured; or
(B) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured.
11 U.S.C. § 101(5).
16 with the Commission. § 213.075.1, RSMo Cum. Supp. 2022. 6 If the Commission has
not completed its administrative processing after one hundred eighty days from the filing
of an employment discrimination complaint, the complainant may then request a letter
which communicates the right to bring a civil action. § 213.111, RSMo Cum. Supp.
2022.
Significantly, LaBranche did list under question #33 three pending lawsuits, two
of which are employment discrimination claims. We can presume that LaBranche had
been granted right to sue notices on those claims. Although the circuit court found these
other reported cases evidence that LaBranche “knew of his duty to disclose because he
did in fact make disclosures of three other pending lawsuits in his Schedules,” the
opposite could also be true. Because LaBranche listed suits for which he had a right to
sue and the Summary used “rights to sue” as an example of a “claim,” a fact finder
entrusted with making credibility determinations could conclude that, LaBranche
reasonably believed that he was not required to report MHRA complaints for which he
6 After the filing of the complaint, the executive director along with Commission staff is to investigate the complaint and, if probable cause is found to credit the allegations, endeavor to eliminate the unlawful discriminatory practice by “conference, conciliation and persuasion.” Given this, it is conceivable that some complainants may not be seeking monetary damages or to file a civil suit at all, and may simply desire an investigation and corrective action by the Commission. § 213.075.3.
17 had not received a right to sue notice. 7
Question #34 of LaBranche’s bankruptcy schedules, like question #33, uses the
term “claim.” While LaBranche may very well have been attempting to conceal his
MHRA complaints when responding “No” to whether he had “[o]ther contingent and
unliquidated claims of every nature, including counterclaims of the debtor and rights to
set off claims,” if LaBranche’s belief that question #33 defined “claim” as requiring a
right to sue, and without a right to sue there was no “claim,” then LaBranche’s failure to
list his pending MHRA charges on his bankruptcy Schedule could be perceived as
inadvertent or a good-faith mistake by a finder of fact.
The circuit court additionally found that LaBranche’s failure to amend his
Schedule to add the MHRA claims after receiving right to sue notices evidenced a lack of
inadvertence by LaBranche. The court cited 8 Stallings, 447 F.3d at 1048, stating:
A Chapter 13 debtor who receives a right to sue letter from the EEOC while his bankruptcy case is pending, and then fails to amend his bankruptcy petition to add his lawsuit against his employer as a potential asset, is estopped from bringing the lawsuit because the debtor knew about the undisclosed claims and had a motive to conceal his employment discrimination claims from that court.
7 And, while “employment disputes” is also listed as an example under question #33 and LaBranche’s MHRA charges did involve “employment disputes,” because an employment dispute under the MHRA requires a right to sue notice before a civil action can commence, only a finder of fact reaching credibility determinations can determine if LaBranche’s Schedule was completed in good faith based on his understanding of the form’s instructions and attorney advice, or if it was unreasonable for LaBranche to believe that a “claim” as described in the Schedules’s instruction did not require a “right to sue” notice to be considered such. 8 The court purported to quote Stallings, however did so inaccurately. 18 First, this Stallings reference tends to support LaBranche’s purported belief that a
right to sue notice triggers the necessity to report an MHRA complaint to the bankruptcy
court since it discusses the debtor’s obligation to report after a right to sue notice is
issued. Second, if LaBranche was justified in his belief that a right to sue notice triggers
reporting the claim to the bankruptcy court, or that this belief was reasonable and in good
faith based on his understanding of the forms and attorney advice, then the summary
judgment record does not unequivocally support that LaBranche’s dismissal of the
bankruptcy case, rather than amendment of the Schedule, proves bad faith or a motive to
conceal his claims.
In response to Employer’s motion for summary judgment, LaBranche attests in his
affidavit that, when LaBranche’s attorney requested a right to sue notice on the MHRA
claims, LaBranche decided to dismiss the bankruptcy case rather than amend the
Schedule. The bankruptcy court docket sheet, filed by Employer to support its motion for
summary judgment, shows in relevant part that, LaBranche’s bankruptcy petition was
filed October 2, 2018. LaBranche’s Schedule and Chapter 13 Plan was filed October 25,
2018. The bankruptcy Trustee filed “Trustees Motion to Dismiss Case” on November 16,
2018. A hearing was set for January 14, 2019, to address that motion. The Trustee
withdrew the motion on December 27, 2018, and LaBranche’s Chapter 13 Plan was
confirmed by the bankruptcy court on January 4, 2019. LaBranche requested right to sue
notices on the MHRA charges against Employer on January 30, 2019. LaBranche
requested dismissal of his bankruptcy case on January 31, 2019, and the bankruptcy court
19 entered an “Order Dismissing Case on Debtor’s Motion” on February 1, 2019. On
February 8, 2019, LaBranche filed his petition on the MHRA claims. On March 5, 2019,
the Trustee filed a “Chapter 13 Trustee Final Report and Account due to Dismissal,” and
on March 6, 2019, the court approved the Trustee’s Final Account and discharged the
Trustee. Right to sue notices on the MHRA charges were issued March 19 and 20, 2019.
On April 22, 2019, “Bankruptcy Case Closed” was entered on the docket sheet.
Given this timeline of events, we are not left with the overwhelming impression
that LaBranche’s failure to amend his Schedule on a case he had already been granted a
dismissal proves lack of inadvertence, as the court found, or that LaBranche was
attempting to mislead any court. We find this particularly true where LaBranche had not
yet received right to sue notices on his MHRA claims when he dismissed the bankruptcy
case, and the case relied upon by the circuit court discusses the necessity of amending
Schedules after receiving a right to sue notice. Immediately following the above
statement relied upon by the circuit court in Stallings, the Stallings court states:
Notably, judicial estoppel does not apply when a debtor’s prior position was taken because of a good-faith mistake rather than as part of a scheme to mislead the court. Although it may generally be reasonable to assume that a debtor who fails to disclose a substantial asset in bankruptcy proceedings gains an advantage, the specific facts of a case may weigh against such an inference. A rule that the requisite intent for judicial estoppel can be inferred from the mere fact of nondisclosure in a bankruptcy proceeding would unduly expand the reach of judicial estoppel in post-bankruptcy proceedings and would inevitably result in the preclusion of viable claims on the basis of inadvertent or good-faith inconsistencies. Careless or inadvertent disclosures are not the equivalent of deliberate manipulation. Courts should only apply the doctrine as an
20 extraordinary remedy when a party’s inconsistent behavior will result in a miscarriage of justice.
447 F.3d at 1049 (internal quotation marks and citations omitted).
Because the circuit court relied heavily on its determination that there was no
inadvertence or mistake by LaBranche in applying judicial estoppel, and there is a
genuine dispute as to whether the underlying facts show inadvertence or mistake, the
circuit court abused its discretion in finding that the facts applied to the “unfair advantage
or detriment” factor supported summary judgment to Employer on the issue of judicial
estoppel.
Using similar reasoning, the circuit court additionally found there was “judicial
acceptance” by the bankruptcy court of LaBranche’s inconsistent position, which
supported application of judicial estoppel. While the circuit court acknowledged that,
“[m]any Courts have determined ‘acceptance’ based on whether the bankruptcy court has
actually discharged the debt of the debtor,” citing Stallings, the circuit court nevertheless
found that lack of debt discharge did not preclude judicial estoppel on LaBranche’s facts,
stating that a bankruptcy court must simply have accepted a party’s position that his
claims in the present case did not exist, citing Jones v. Bob Evans Farms, Inc., 811 F.3d
1030, 1034 (2016). The circuit court found that, LaBranche failed “to offer any reason
for his omission” of the MHRA charges in the bankruptcy case and instead “attempts to
justify this omission by dismissing his bankruptcy proceedings.” Because an order was
issued accepting LaBranche’s bankruptcy Plan based on his bankruptcy Schedule, the
21 circuit court found that, “the case law, while limited, seems to prefer that a debtor in
similar circumstances file an amendment to their summary of schedules, not merely
dismiss the action.” The court concluded that, because LaBranche’s bankruptcy Plan was
accepted by the bankruptcy court and a stay remained in effect on the creditors until the
case was closed, the “judicial acceptance” factor weighed in favor of judicial estoppel.
First, Jones does not state what the circuit court’s Judgment suggests. Jerry Jones
filed for bankruptcy in 2009 and filed a discrimination lawsuit against an employer in
2013. Id. at 1031-1032. Jones did not report the discrimination suit to the bankruptcy
court, and had his debts discharged in bankruptcy in 2014. Id. at 1032. After the
employer was granted summary judgment on the grounds of judicial estoppel, Jones
reopened the bankruptcy case, amended his schedules to include his discrimination
claims, and then asked for the judicial estoppel ruling to be set aside. Id. On appeal, the
Jones court found judicial acceptance “because the bankruptcy court, by discharging
Jones’ unsecured debts, adopted the position that his discrimination claims did not exist.”
Id. at 1033 (emphasis added). Jones stated that, despite Jones later reopening the
bankruptcy estate to add his discrimination claims to his schedules, because the court had
previously discharged his debt, ‘“the [bankruptcy] court’s original discharge of the debt is
sufficient acceptance of the debtor’s position to provide a basis for judicial estoppel.”’
Id. (quoting Stallings, 447 F.3d at 1048). No debt was discharged in LaBranche’s
bankruptcy case, and given the circuit court’s reliance on Jones for an inaccurate
22 premise, we cannot say if the circuit court would have reached the same conclusion with
regard to “judicial acceptance” if it had properly understood Jones.
Second, while the circuit court found it significant that “the Bankruptcy
proceeding continued for some time after the dismissal was filed, and, until that later
date, a stay remained in effect on the creditors in said Bankruptcy proceeding,” pursuant
to 11 U.S.C. § 362(c)(2)(B), the stay ended when the dismissal was granted, which was
prior to LaBranche receiving right to sue notices on the MHRA claims. We cannot say if
the circuit court would have reached the same conclusion with regard to “judicial
acceptance” if it had understood that the bankruptcy stay was lifted when the dismissal
was granted and not the “later date” of case closure.
Third, the summary judgment record shows that, the same day LaBranche filed his
Schedule with the bankruptcy court, he also filed his proposed “Chapter 13 Plan.” This
Plan, signed by LaBranche and included as Exhibit 2 with his Statement of
Uncontroverted Facts, states in Section 5.1 that, “If debtor has a pending or potential
lawsuit or other administrative proceeding, whether or not such cause of action is listed
on Schedule A/B, any net, non-exempt proceeds which become liquidated shall be turned
over to the trustee absent other court order or other agreement with the trustee.”
(Emphasis added). Hence, in the light most favorable to LaBranche, the Plan submitted
by LaBranche and approved by the bankruptcy court included an averment by LaBranche
that he would relinquish to the bankruptcy trustee any future proceeds from potential
23 lawsuits against Employer. The facts therefore, viewed in this light, do not unequivocally
show that the bankruptcy court accepted an inconsistent position by LaBranche.
Fourth, while the circuit court found that LaBranche failed to offer any reason for
omitting the MHRA charges from his bankruptcy Schedules, the record reflects that
LaBranche did offer a reason, which was that the Schedule gave “rights to sue” as an
example of a “claim,” and he did not yet have a right to sue on his MHRA Charges of
Discrimination. Further, that he completed his Schedule in good faith “based upon my
understanding of the form’s instructions, and advice of counsel,” and decided to dismiss
the bankruptcy case rather than amend the Schedule when the right to sue notices were
requested. While the circuit court did not find LaBranche’s justifications for omitting the
MHRA complaints and dismissing the case as credible, this credibility determination was
improper in a summary judgment proceeding. “When a court is faced with a credibility
determination on an issue material to the cause of action, summary judgment is not
24 proper.” Loth, 354 S.W.3d at 642. 9
Moreover, when considering both the “judicial acceptance” and “unfair advantage
or detriment” factors of New Hampshire, we find that the circuit court failed to draw
inferences in the light most favorable to LaBranche, and improperly reached credibility
determinations. Because the summary judgment record supports two plausible but
contrary inferences as to whether the material facts warrant judicial estoppel, a genuine
dispute of material fact exists. ITT Commercial Finance, 854 S.W.2d at 382 (holding a
“genuine issue” exists where the record contains competent evidence supporting “two
plausible, but contradictory, accounts” of the facts). Accordingly, Employer is not
9 LaBranche filed with his Motion to Vacate, Correct, Amend, or Modify Judgment an affidavit by his bankruptcy attorney, Hunter Gould. While this was not part of the summary judgment record and we need not rely upon it for our conclusions herein, it further exemplifies that a fact finder could reach different conclusions as to the material facts and their implications with regard to judicial estoppel. Gould attests that he was informed by LaBranche on December 4, 2018 of the administrative filings against Employer. Gould states that, at that time, the Trustee’s motion to dismiss the bankruptcy case was pending, and “no amendments to the schedules were filed as typically amendments are directly related to overcoming the threat of dismissal.” The same day the Trustee withdrew the motion to dismiss, the Trustee certified LaBranche’s bankruptcy Plan for confirmation. Pursuant to Section 5.1 of that Plan, LaBranche was required to turn over any proceeds from the MHRA claims against Employer. Gould was informed by LaBranche on January 15, 2019, by email, that LaBranche wished to dismiss the bankruptcy case and work with creditors outside of bankruptcy. No amendments to the Schedule were filed as they would have made no practical difference in the administration of the soon to be dismissed case, and would have incurred unrecoverable attorney fee costs. On January 29, 2019, LaBranche signed an affidavit instructing Gould to dismiss the bankruptcy case, which was filed January 31, 2019, and granted February 1, 2019.
25 entitled to summary judgment. Id.; Green v. Fotoohighiam, 606 S.W.3d at 113, 115 (Mo.
banc 2020) (“[G]enuine disputes as to material facts preclude summary judgment”).
LaBranche’s point on appeal is granted.
Conclusion
The circuit court abused its discretion in concluding there were no material facts in
dispute and that Employer was entitled to summary judgment on the issue of judicial
estoppel. The circuit court’s judgment is reversed and the cause remanded for further
proceedings not inconsistent with this opinion.
_______________________ Anthony Rex Gabbert, Judge
All concur.