Knott v. Woodstock Farm & Fleet, Inc.

2017 IL App (2d) 160329, 73 N.E.3d 578

• Court: Appellate Court of Illinois
• Decided: February 17, 2017
• Docket: 2-16-0329
• Status: Unpublished

Opinion

2017 IL App (2d) 160329 No. 2-16-0329 Opinion filed February17, 2017 ______________________________________________________________________________

IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT ______________________________________________________________________________

TERENCE KNOTT, ) Appeal from the Circuit Court ) of McHenry County. Plaintiff-Appellant, ) ) v. ) No. 14-LA-179 ) WOODSTOCK FARM & FLEET, INC., ) d/b/a Blain’s Farm & Fleet, ) Honorable ) Thomas A. Meyer, Defendant-Appellee. ) Judge, Presiding. ______________________________________________________________________________

JUSTICE McLAREN delivered the judgment of the court, with opinion. Justices Jorgensen and Burke concurred in the judgment and opinion.

OPINION

¶1 Plaintiff, Terence Knott, appeals from an order of the circuit court of McHenry County

granting defendant, Woodstock Farm & Fleet, doing business as Blain’s Farm & Fleet, summary

judgment, based on the doctrine of judicial estoppel. Because the trial court improperly applied

the doctrine of judicial estoppel, we reverse and remand.

¶2 I. BACKGROUND

¶3 On June 11, 2014, plaintiff filed a three-count complaint alleging premises liability,

negligence, and spoliation of evidence arising out of an April 7, 2013, accident that occurred at

defendant’s store. 2017 IL App (2d) 160329

¶4 Prior to the commencement of plaintiff’s action in the circuit court of McHenry County,

plaintiff and his wife (represented by Geraci Law L.L.C. (Geraci)) filed a voluntary petition for

chapter 7 bankruptcy on July 8, 2013. See 11 U.S.C. § 701 et seq. (2012). On schedule B,

pertaining to personal property, plaintiff stated that he had no “[o]ther contingent and

unliquidated claims of any nature” and that he had no “other property of any kind not already

listed.” Plaintiff listed assets of $196,250 and liabilities of $306,301.

¶5 On August 9, 2013, the bankruptcy trustee, James E. Stevens, issued a “Report of

Distribution,” reporting that “there is no property available for distribution from the estate over

and above that exempted by law.”

¶6 On October 29, 2013, plaintiff filed amended schedules B and C. On schedule B,

regarding “[o]ther contingent and unliquidated claims of any nature,” plaintiff listed “[p]ossible

claim versus” and stated that the “[c]urrent value” was “unknown.” On schedule C, regarding

exemptions for “[o]ther contingent and unliquidated claims of any nature,” plaintiff listed

“[p]ossible claim versus” and stated its value at $15,000, citing section 12-1001(h)(4) of the

Code of Civil Procedure (Code) (735 ILCS 5/12-1001(h)(4) (West 2012) (providing an

exemption for a debtor to receive payment not to exceed $15,000 on account of personal bodily

injury of the debtor)). Plaintiff declared under the penalty of perjury that the schedules were

accurate.

¶7 On November 29, 2013, plaintiff’s counsel in the instant action sent a letter to defendant,

advising that counsel had been retained to represent plaintiff “in [sic] claim for damages as a

result of injuries he sustained after a skid of merchandise was pushed into him on April 7, 2013,

in Woodstock, Illinois.” Counsel’s letter advised defendant of counsel’s lien and to preserve any

and all evidence relating to “the above individual and occurrence.”

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¶8 On January 7, 2014, the bankruptcy court entered an order of discharge of plaintiff’s

debts.

¶9 On June 11, 2014, plaintiff filed a three-count complaint against defendant, alleging that,

on April 7, 2013, plaintiff was a customer at defendant’s store when another customer drove a

motorized cart into a display of pizza ovens, knocking them over onto plaintiff, causing an injury

to plaintiff’s knee. Count I alleged liability on the basis of “Premises Liability,” count II alleged

liability on the basis of “Negligence,” and count III alleged liability on the basis of “Spoliation of

Evidence.” Plaintiff sought damages in excess of $50,000 for each count.

¶ 10 On June 15, 2015, defendant filed a motion for summary judgment, contending, in part,

that plaintiff should be judicially estopped because he failed to sufficiently report his personal

injury claim in his bankruptcy case and, in the alternative, that plaintiff had no standing to pursue

this claim because any claim belongs to the bankruptcy estate and must be brought by the trustee.

¶ 11 Plaintiff responded that there were genuine issues of material fact precluding summary

judgment and that judicial estoppel did not apply because he did not intentionally fail to disclose

his personal injury claim. In support of his response, plaintiff submitted his affidavit.

¶ 12 In plaintiff’s affidavit, he stated, inter alia, “[a]t the time [I] filed for bankruptcy, I was

unsure whether I would pursue any litigation regarding the April 7, 2013[,] incident.” Plaintiff

averred that he was unsure because of the “cost of litigation, the uncertainty of potential

recovery, personal and financial cost, the stress and aggravation association [sic] with such

claims and my personal preference to avoid litigation.” Plaintiff stated that he had surgery on his

knee on July 31, 2013, and that, until he filed the amended schedules B and C on October 29,

2013, he “was not aware that a potential cause of action was considered an ‘asset’ for the

purpose of bankruptcy.”

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¶ 13 On January 28, 2016, the trial court granted defendant’s motion for summary judgment,

based solely on judicial estoppel. In doing so, the court relied in part on Seymour v. Collins,

2015 IL 118432. The court found that all of the “elements of judicial estoppel” were present in

the case. The court then found that plaintiff’s “disclosure, quote, possible claim versus, end

quote, with nothing more, satisfies the issue of whether the plaintiff intended to deceive or

mislead as to the existence of this specific claim.”

¶ 14 On February 18, 2016, plaintiff filed a motion to reconsider, which the trial court denied

on April 21, 2016. Plaintiff filed his notice of appeal on May 2, 2016.

¶ 15 On August 9, 2016, Stevens resigned as trustee of plaintiff’s bankruptcy estate, and the

bankruptcy court appointed Joseph D. Olsen as trustee. 1

¶ 16 We note that we have granted Geraci’s motion to file an amicus curiae brief “supporting”

plaintiff and Olsen. Geraci contends, inter alia, that this “appeal should be dismissed and

remanded to the trial court with instructions to vacate the order granting summary judgment, and

allow the Trustee, the real party at interest, to substitute as Plaintiff.” We reject Geraci’s attempt

to raise issues not raised by the parties to this appeal. See Karas v. Strevell, 227 Ill. 2d 440, 450

(2008). An amicus takes a case as he finds it, with the issues framed solely by the parties. Id. at

451. No party has argued for the dismissal of this appeal or for the substitution of the trustee for

plaintiff. Accordingly, we strike the portion of Geraci’s brief that urges dismissal and

substitution. See id.

¶ 17 II. ANALYSIS

1 We may take judicial notice of public documents that are included in the records of

other courts. Seymour, 2015 IL 118432, ¶ 6 n.1. The bankruptcy court’s records contain orders

terminating Stevens as trustee and appointing Olsen.

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¶ 18 Plaintiff argues that the trial court erred in granting summary judgment in favor of

defendant with its application of the doctrine of judicial estoppel.

¶ 19 Summary judgment is appropriate when there are no genuine issues of material fact and

the moving party is entitled to judgment as a matter of law. 735 ILCS 5/2-1005(c) (West 2014).

Summary judgment is a drastic measure and should be granted only if the movant’s right to

judgment is clear and free from doubt. Seymour, 2015 IL 118432, ¶ 42. Where a reasonable

person could draw divergent inferences from undisputed facts, summary judgment should be

denied. Pielet v. Pielet, 2012 IL 112064, ¶ 53. In determining the existence of a genuine issue

of material fact, courts must consider the pleadings, depositions, admissions, exhibits, and

affidavits on file in the case and must construe them strictly against the movant and liberally in

favor of the opponent. Adams v. Northern Illinois Gas Co., 211 Ill. 2d 32, 42-43 (2004).

¶ 20 Judicial estoppel is an equitable doctrine invoked by the court at its discretion. Seymour,

2015 IL 118432, ¶ 36. The purpose of the doctrine is to protect the integrity of the judicial

process by prohibiting parties from “deliberately changing positions” according to the exigencies

of the moment. (Internal quotation marks omitted.) New Hampshire v. Maine, 532 U.S. 742,

749-50 (2001).

¶ 21 The analytical framework for determining whether judicial estoppel should bar a claim is

a two-step process. Seymour, 2015 IL 118432, ¶ 47. First, the trial court must determine

whether the party to be estopped has: (1) taken two positions; (2) that are factually inconsistent;

(3) in separate judicial or quasi-judicial administrative proceedings; (4) intending for the trier of

fact to accept the truth of the facts alleged; and (5) succeeded in the first proceeding and received

some benefit. Id. ¶ 47. Judicial estoppel must be proved by clear and convincing evidence. Id. ¶

39.

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¶ 22 Second, even if the trial court finds that all five factors are present, it must exercise its

discretion in deciding whether to apply judicial estoppel. Id. ¶ 47. Multiple factors may inform

the court’s decision, including the significance or impact of the party’s action in the first

proceeding and whether the party intended to deceive or mislead, as opposed to inadvertently or

mistakenly taking the prior position. Id. Notably, the question of whether the party intended to

deceive or mislead is a “critical factor” in deciding whether to apply judicial estoppel. Id. ¶ 54.

Thus, even if all five prerequisites are found, the intent to deceive or mislead is not necessarily

present, because inadvertence or mistake may account for positions taken or facts asserted in the

prior proceeding. Id. ¶ 47.

¶ 23 The parties dispute the applicable standard of review. Plaintiff argues for both the de

novo and the abuse-of-discretion standards and defendant urges us to apply only de novo review.

¶ 24 With respect to the applicable reviewing standard, we review a trial court’s exercise of

discretion for an abuse of discretion. Id. ¶ 48. “However, where the exercise of that discretion

results in the termination of the litigation, and that result is brought about via the procedural

mechanism of a motion for summary judgment, it follows, as well, that we review that ruling de

novo.” Id. ¶ 49.

¶ 25 Here, plaintiff argues that the trial court erred by finding that he took factually

inconsistent positions. Defendant argues that plaintiff’s statement “possible claim versus”

contained in his bankruptcy disclosure is indisputably inconsistent with plaintiff’s personal

injury claim.

¶ 26 We determine that plaintiff’s positions are not factually inconsistent. In the bankruptcy

proceeding, plaintiff disclosed that he had a “[p]ossible claim versus” and, by citing section 12-

1001(h)(4) of the Code, he indicated that it was a personal bodily injury claim. Whether plaintiff

could have provided more information regarding this possible claim is not the question here.

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The question is whether, with the facts viewed in the light most favorable to him, plaintiff clearly

and convincingly took inconsistent positions. Because the answer to that question is no, the trial

court erred by finding all of the factors of judicial estoppel. Accordingly, the trial court erred by

entering summary judgment in favor of defendant.

¶ 27 Defendant cites Berge v. Mader, 2011 IL App (1st) 103778, to support its argument. In

Berge, the plaintiff sustained an injury in a car accident in 2006 and filed a personal injury action

in 2007. Id. ¶ 3. In 2009 the plaintiff converted her existing chapter 13 bankruptcy claim into a

chapter 7 bankruptcy claim without disclosing her personal injury claim. Id. The appellate court

affirmed summary judgment in the defendant’s favor on the basis of judicial estoppel. Id. ¶ 21.

Berge is distinguishable from this case because in Berge the plaintiff filed a personal injury

complaint during the pendency of her bankruptcy proceeding and then failed to disclose anything

about that claim to the bankruptcy court. Here, plaintiff filed his personal injury complaint after

discharge from bankruptcy, he disclosed to the bankruptcy court that he had a “possible claim,”

and he indicated that it was a personal bodily injury claim.

¶ 28 Defendant also cites Krystal Cadillac-Oldsmobile GMC Truck, Inc. v. General Motors

Corp., 337 F.3d 314 (3d Cir. 2003), to support its argument. In Krystal, a General Motors dealer

filed chapter 11 bankruptcy after General Motors Corporation terminated its franchise. Id. at

317. In its disclosure to the bankruptcy court, the dealer stated, “the status of this franchise is

now in litigation.” (Internal quotation marks omitted.) Id. at 318. The dealer then filed an

action against General Motors Corporation for, inter alia, breach of contract. Id. The court of

appeals affirmed the district court’s affirmance of the bankruptcy court’s dismissal of the claim,

based on judicial estoppel. Id. at 319. This case is distinguishable from Krystal because there

the dealer failed to inform the bankruptcy court that it had a claim or to inform the court of the

nature of the “litigation.” In contrast, plaintiff in this case informed the bankruptcy court that he

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had a possible claim and also informed the court of the nature of the claim, i.e., personal bodily

injury.

¶ 29 Plaintiff also argues that the trial court erred by ruling that he intended to deceive or

mislead the bankruptcy court. Defendant responds that the trial court properly determined that

the phrase “possible claim versus” was intended to deflect a claim of judicial estoppel.

According to defendant, plaintiff had a duty to fully and completely disclose his claim and his

failure to do so established an intent to deceive or mislead. We need not reach this issue because

we have determined that the record does not establish by clear and convincing evidence that

plaintiff took two factually inconsistent positions. However, we shall discuss this issue as an

alternative basis for reversal.

¶ 30 At this point we find Seymour, 2015 IL 118432, instructive. In Seymour, the plaintiffs,

Terry and Monica Seymour, filed a petition for chapter 13 bankruptcy in 2008. Id. ¶ 4. In 2011

the plaintiffs filed a personal injury action arising from injuries Terry sustained in a June 2010

car accident. Id. The plaintiff filed for modifications of the bankruptcy plan. Id. ¶¶ 4-6. The

bankruptcy court granted the plaintiffs an order of discharge in July 2012. Id. ¶ 8. The plaintiffs

never disclosed to the bankruptcy court that Terry had been injured in June 2010, that he

believed he had personal injury claims against multiple defendants as a result of the June 2010

accident, or that he had filed suit against those defendants in May 2010. Id. The trial court

entered summary judgment in favor of the defendants, based on judicial estoppel. Id. ¶¶ 15-19.

A divided panel of this court affirmed the judgment of the trial court. Id. ¶ 20. Our supreme

court reversed the judgments of this court and the trial court. Id. ¶ 64. The supreme court

rejected the trial court’s inference that Terry intended to deceive or mislead based on his failure

to disclose his personal injury claim to the bankruptcy court. Id. ¶¶ 54-62. In particular, the

court explained:

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“We are not willing, as appears to be the case in prevailing federal authority given the

circumstances [citation], to presume that the debtors’ failure to disclose was deliberate

manipulation. We do not find that inference or presumption controlling in Illinois, much

less the facts of this case.” (Emphasis omitted.) Id. ¶ 62.

¶ 31 In this case, plaintiff disclosed to the bankruptcy court, in an incomplete manner, that he

had a “[p]ossible” personal bodily injury claim. The trial court presumed that plaintiff intended

to deceive or mislead, based on his incomplete disclosure. In Seymour, the supreme court held

that a court may not presume or infer intent to deceive or mislead based solely on a plaintiff’s

complete failure to disclose. Id. ¶ 63 (“we find the failure to disclose the personal injury action

insufficient, in itself, to warrant application of judicial estoppel”). Similarly, we determine that

the fact that plaintiff in this case had a legal duty to disclose more information about this suit and

failed to do so “does not, given the facts of this case, establish the intent to deceive and/or

manipulate the bankruptcy court.” Id. ¶ 64. To be clear, we do not condone plaintiff’s failure to

disclose additional information to the bankruptcy court. However, the trial court erred by

inferring, based solely on this failure, that plaintiff intended to deceive or mislead the bankruptcy

court. Accordingly, we determine that the application of judicial estoppel was not warranted

here.

¶ 32 Finally, defendant argues that we may affirm the trial court’s summary judgment based

on its alternative argument that plaintiff lacks standing to pursue this claim because the claim is

part of the bankruptcy estate and, therefore, only the bankruptcy trustee has standing. Although

the trial court did not base its judgment on this argument, we address the argument because we

may affirm on any basis supported by the record whether or not the trial court relied on that

basis. See Miller v. Lawrence, 2016 IL App (1st) 142051, ¶ 22.

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¶ 33 Standing is established simply by demonstrating some injury to a legally cognizable

interest. Village of Chatham v. County of Sangamon, 216 Ill. 2d 402, 419 (2005). The doctrine

of standing is designed to preclude persons who have no interest in a controversy from bringing

suit. Raintree Homes, Inc. v. Village of Long Grove, 209 Ill. 2d 248, 262 (2004). A plaintiff

need not allege facts establishing standing. Alpha School Bus Co. v. Wagner, 391 Ill. App. 3d

722, 745 (2009). Rather, lack of standing is an affirmative defense, and the burden of pleading

and proving the defense is on the party asserting it. Lebron v. Gottlieb Memorial Hospital, 237

Ill. 2d 217, 252 (2010).

¶ 34 Generally, “[o]nce a debtor files for bankruptcy, any unliquidated lawsuits become part

of the bankruptcy estate, and, even if such claims are scheduled, a debtor is divested of standing

to pursue them upon filing his petition.” Dailey v. Smith, 292 Ill. App. 3d 22, 25 (1997).

However, where a debtor shows that due to a lawsuit or claim he has a reasonable possibility of a

surplus after satisfying all debts, the debtor has shown a pecuniary interest and therefore has

standing. In re Andreuccetti, 975 F.2d 413, 417 (7th Cir. 1992). In addition, where a debtor is

entitled to exempt part of a claim, he has an interest in the litigation and therefore has standing.

In re Polis, 217 F.3d 899, 904 (7th Cir. 2000).

¶ 35 Here, the assets of plaintiff’s estate consisted of $196,250 in nonexempt property, and the

liabilities of the estate consisted of $306,301 ($121,657 of unsecured claims and $184,644 of

secured claims). Plaintiff’s complaint against defendant seeks in excess of $50,000 for each of

three counts. If plaintiff and/or the trustee on behalf of the estate is completely successful in the

action against defendant, there will be a surplus for plaintiff. Further, plaintiff exempted $15,000

of this claim, pursuant to section 12-1001(h)(4) of the Code. Thus, plaintiff possesses a legally

cognizable interest in the exempt portion and the potential surplus and, therefore, has standing,

along with the trustee. See Polis, 217 F.3d at 904; Andreuccetti, 975 F.2d at 417.

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¶ 36 III. CONCLUSION

¶ 37 For the reasons stated, we reverse the judgment of the circuit court of McHenry County,

which granted defendant summary judgment based on judicial estoppel, and we remand the case

for further proceedings. We order the clerk of this court to serve a copy of this opinion

personally upon the successor trustee in bankruptcy.

¶ 38 Reversed and remanded.

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