[No. 25445-3-III. Division Three. September 11, 2007.]
[1] Judgment Summary Judgment Review Standard of Review. An appellate court reviews a summary judgment de novo. [2] Judgment Summary Judgment Issues of Law Effect. A summary judgment is proper when the only question before the court is one of law. [3] Estoppel Courts Judicial Estoppel Applicability Review Standard of Review. A trial court's application of the doctrine of judicial estoppel is reviewed for an abuse of discretion. [4] Estoppel Courts Judicial Estoppel What Constitutes Purposes. Judicial estoppel is an equitable doctrine that precludes a party from asserting one position in a court proceeding and later seeking an advantage by taking an inconsistent position in another court. The purposes of the doctrine are to preserve respect for judicial proceedings without the necessity of resort to the perjury statutes and to avoid inconsistency, duplicity, and waste of time. [5] Bankruptcy Assets Disclosure Necessity Failure To Disclose Judicial Estoppel. Judicial estoppel is particularly well suited to protect the integrity of the bankruptcy system, which 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 the debtor's 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 if the disclosure provided by the debtor is incomplete. [6] Bankruptcy Assets Prepetition Personal Injury Claim Disclosure Failure To Disclose Effect Judicial Estoppel In General. A debtor's failure to disclose a personal injury claim in a bankruptcy proceeding generally precludes a later lawsuit on the same claim under the doctrine of judicial estoppel. [7] Estoppel Courts Judicial Estoppel Applicability Factors. A court deciding whether a party's claim or action is subject to dismissal under the doctrine of judicial estoppel is guided by three core factors: (1) whether the party's position is clearly inconsistent with an earlier position taken, (2) whether judicial acceptance of an inconsistent position in the current proceeding would create the perception that either the prior or current court was misled, and (3) whether the party would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped. [8] Bankruptcy Assets Potential Asset Failure To Disclose Judicial Estoppel. A court may apply judicial estoppel to a debtor who fails to list a potential legal claim as an asset in bankruptcy and then later pursues the claim in court after the bankruptcy is discharged. [9] Bankruptcy Assets Prepetition Personal Injury Claim Disclosure Failure To Disclose Inadvertence Effect. While a debtor's inadvertence in failing to list a personal injury claim as an asset in a bankruptcy proceeding is a factor a court may consider in determining whether judicial estoppel should be applied to bar a subsequent action on the claim, it does not necessarily prevent application of the doctrine. The withholding of a claim from the schedule of assets in a bankruptcy proceeding need not be purposeful for judicial estoppel to apply. A debtor's failure to list a legal claim in bankruptcy is inadvertent only when, in general, the debtor either lacked knowledge of the undisclosed claim or had no motive for its concealment. [10] Estoppel Courts Judicial Estoppel Elements Intent To Mislead. Deliberate intent to mislead is not an element of the doctrine of judicial estoppel. [11] Estoppel Courts Judicial Estoppel Applicability Postbankruptcy Petition Damages. When a debtor fails to list a personal injury claim as an asset in a bankruptcy proceeding, the doctrine of judicial estoppel applies to bar a subsequent action on the claim as to any and all damages associated with the claim. The fact that the debtor's injuries may be ongoing does not change the point at which the cause of action accrued. Damages incurred on a prepetition claim after the bankruptcy schedules are filed are not exempt from the reach of judicial estoppel. [12] Bankruptcy Assets Prepetition Personal Injury Claim Disclosure Failure To Disclose Effect Judicial Estoppel Inconsistent Position. Judicial estoppel does not operate to estop a plaintiff's claim that is not stated in the bankruptcy schedules. It operates to estop the plaintiff from assuming the inconsistent position necessary to assert it. [13] Estoppel Courts Judicial Estoppel Elements Prejudice. Judicial estoppel is not a decision on the merits, and harmless error analysis does not apply. Nature of Action: Action for damages for personal injuries sustained in a motor vehicle accident. Superior Court: The Superior Court for Spokane County, No. 05-2-05191-9, Neal Q. Rielly, J., on March 10, 2006, entered summary judgment in favor of the defendant. Court of Appeals: Holding that the plaintiffs, who failed to list the personal injury claim in a prior bankruptcy proceeding, are judicially estopped from asserting the claim in a subsequent action for damages, the court affirms the judgment. Dustin D. Deissner- (of Van Camp & Deissner), for appellants. David B. Hansen-, for respondents. [As amended by order of the Court of Appeals November 1, 2007.] Ά1 SWEENEY, C.J. Judicial estoppel prohibits a party from taking one position in a court proceeding and then a contrary position in a later proceeding for his own advantage. So a debtor who fails to disclose a claim for personal injuries in a bankruptcy proceeding cannot later assert that claim in a different court. And this is what the plaintiff did here. The trial judge then dismissed his complaint based on judicial estoppel. We conclude that this was a proper application of the doctrine and affirm the dismissal. FACTS Ά2 Crystal Evaneski drove her car into the rear of James McFarling's car on August 27, 2004. Mr. McFarling was injured. Ά3 Mr. McFarling filed a chapter 7 bankruptcy petition on October 27, 2004. He did not list the personal injury claim in the bankruptcy proceeding. The bankruptcy court concluded Mr. McFarling had no assets and discharged his debts on January 26, 2005. Ά4 Mr. McFarling's chiropractor had treated him 31 times by the date of the discharge. Ά5 Mr. McFarling brought this suit for personal injuries on October 26, 2005. Ms. Evaneski moved to dismiss the suit based on judicial estoppel because Mr. McFarling failed to list his personal injury claim as an asset of the bankruptcy estate. The court agreed and summarily dismissed the suit. DISCUSSION JUDICIAL ESTOPPEL FOLLOWING BANKRUPTCY "[T]he 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." Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778, 785 (9th Cir. 2001) (emphasis omitted) (quoting In re Coastal Plains, 179 F.3d 197, 208 (5th Cir. 1999)). Ά9 Mr. McFarling does not argue that judicial estoppel does not apply in the circumstances here. He instead urges us to change the law. Appellant's Br. at 3. SEGREGATING CLAIMS Ά14 Mr. McFarling relies on Johnson, but that case distinguishes between prepetition and postpetition claims, not between prepetition and postpetition damages. Ά15 In Johnson, the plaintiff broke a tooth while eating a McDonald's sandwich after he had filed for bankruptcy. Johnson, 107 Wn. App. at 904. The claim itself arose after he filed his schedules and was therefore considered after-acquired property not subject to the bankruptcy. Id. at 910-11. Ά16 Mr. McFarling has only one personal injury claim, which accrued before his bankruptcy petition. The "cause of action" is the act which occasioned the injury not the damage that flows from the wrong. Sprague v. Adams, 139 Wash. 510, 519, 247 P. 960 (1926). A cause of action accrues at the time the act or omission occurs. Hamilton v. Arriola Bros. Custom Farming, 85 Wn. App. 207, 211, 931 P.2d 925 (1997). The fact that the injured party's damages may be ongoing does not change the point at which the cause of action accrues. Id. at 212. Ά17 Mr. McFarling also argues that Bartley-Williams supports allowing his claim "on a proportional basis." Appellant's Br. at 20. Ά18 In Bartley-Williams, the plaintiffs failed to list a medical malpractice suit among their assets when they filed for a chapter 7 bankruptcy. Bartley-Williams, 134 Wn. App. at 96-97. The case was dismissed on summary judgment after the court refused to substitute the trustee as the named party. Id. at 97. The court reversed the summary judgment and remanded for consideration of the motion to substitute the trustee. Id. at 102-03. The Bartley-Williams court was clear: the plaintiff but not the bankruptcy trustee was estopped from pursuing the claim. Ά19 While Bartley-Williams suggests that judicial estoppel, as an equitable doctrine, allows the trial court broad discretion to allow a claim to go forward for the benefit of bankruptcy creditors, but not the debtor, this does not avail Mr. McFarling. He never sought to reopen bankruptcy proceedings or substitute the trustee as the real party in interest to pursue his claim for the benefit of his creditors. Moreover, the trial court heard Mr. McFarling's request to adjust the recovery on his claim rather than dismiss it entirely, but exercised its discretion in favor of dismissal. Cf. Arkison, 160 Wn.2d at 541 n.2 (noting discretion of trial court or bankruptcy court to determine extent to which to apply judicial estoppel against debtor). This was not an abuse of discretion. PERSONAL EXEMPTION"NO HARM, NO FOUL" Ά21 Finally, Mr. McFarling argues that his recovery on his personal injury claim would have fallen within his $15,000 bankruptcy exemption; creditors would not then have received any of the funds. And so the equitable doctrine of judicial estoppel should not be applied. Ά22 The purpose of judicial estoppel is to encourage respect for the court and to protect the integrity of the judicial process. Johnson, 107 Wn. App. at 906; Boyers, supra, at 1248. And it avoids inconsistency, duplicity, and waste of time. King v. Clodfelter, 10 Wn. App. 514, 519, 518 P.2d 206 (1974). Ά24 We affirm the summary dismissal of his claim. SCHULTHEIS and STEPHENS, JJ., concur.