Seymour v. Collins
Ill.
Illinois Official Reports
Supreme Court
Seymour v. Collins, 2015 IL 118432
Caption in Supreme TERRY L. SEYMOUR et al., Appellants, v. BRADLEY A.
Court: COLLINS et al., Appellees.
Docket No. 118432
Filed September 24, 2015
Decision Under Appeal from the Appellate Court for the Second District; heard in that
Review court on appeal from the Circuit Court of Winnebago County, the
Hon. J. Edward Prochaska, Judge, presiding.
Judgment Reversed and remanded.
Counsel on William T. Cacciatore and Eileen J. McCabe, of Rockford, for
Appeal appellants.
Jeffrey J. Zucchi, of Clark, Justen, Zucchi & Frost, Ltd., of Rockford,
for appellee Bradley A. Collins.
Lori E. McGirk, of Guyer & Enichen, P.C., of Rockford, and Jennifer
A. Moriarty, of Grant & Fanning, of Chicago, for appellees Rockford
Country Club et al.
Michael Resis and Marcie Thorp, of SmithAmundsen LLC, of
Chicago, for amicus curiae Illinois Association of Defense Trial
Counsel.
Justices JUSTICE KARMEIER delivered the judgment of the court, with
opinion.
Chief Justice Garman and Justices Freeman, Thomas, Kilbride, Burke,
and Theis concurred in the judgment and opinion.
OPINION
¶1 The overarching issue presented in this appeal is whether the circuit court erred in granting
defendants summary judgment, dismissing plaintiffs’ personal injury action, pursuant to the
court’s application of the doctrine of judicial estoppel. A divided panel of the appellate court
affirmed the judgment of the circuit court. 2014 IL App (2d) 140100, ¶ 50. We granted
plaintiffs’ petition for leave to appeal (Ill. S. Ct. R. 315 (eff. July 1, 2013)) and now reverse the
judgments of the appellate court and circuit court.
¶2 BACKGROUND
¶3 Plaintiffs, Terry L. Seymour and Monica Seymour, filed this personal injury action in the
circuit court of Winnebago County on May 20, 2011, alleging negligence and loss of
consortium, and seeking money damages, initially from two defendants, Bradley A. Collins
and Rockford Country Club (Rockford). Terry’s alleged injuries were said to have been
sustained in a June 3, 2010, automobile accident. Plaintiffs alleged, on that date, Terry was
being transported in an ambulance owned by ATS Medical Services, Inc. (ATS), and driven by
Shaun P. Branney—and in which Terry was attended by Leo Verzani—when the ambulance
collided with a vehicle driven by Bradley A. Collins, who was allegedly operating his vehicle
within the scope of his employment with Rockford. Plaintiffs subsequently amended their
complaint to claim that defendants, ATS, Branney, and Verzani were also legally responsible
for Terry’s alleged injuries.
¶4 Also pertinent to the issue before us is the bankruptcy proceeding the Seymours had
previously commenced on April 24, 2008, with the filing of a petition for chapter 13
bankruptcy (11 U.S.C. § 1301 (2006)) in the United States District Court for the Northern
District of Illinois. The record indicates that a chapter 13 plan was confirmed on September 19,
2008, though the plan itself does not appear in this record. Docket entries from the bankruptcy
proceeding were submitted as evidence in this case and show multiple motions filed by the
Seymours to modify the plan. The motions have not been made a part of the record.
¶5 The first motion was filed on January 7, 2009. A docket entry indicates that the motion was
granted on January 30, 2009. On that same date, an entry evinces an “Order Withdrawing
Motion to Dismiss Case for Failure to Make Plan Payments.” On August 8, 2009, another
motion was filed to modify the plan. That motion was accompanied by the Seymours’ filing of
amended bankruptcy schedules. An order was entered on August 28, 2009, granting the motion
to modify.
¶6 The third motion to modify was filed on February 25, 2010. Docket entries indicate that a
response was filed on March 3, 2010, on behalf of the chapter 13 trustee, Lydia Myer, and the
motion to modify was granted on March 19, 2010. In their brief before this court, plaintiffs
state: “The March 19, 2010 plan modification entailed a reduction in the monthly payment
amount as TERRY L. SEYMOUR had sustained an unrelated work injury in May, 2009, and
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was only receiving temporary total disability benefits.” Plaintiffs’ brief cites to an affidavit
subsequently filed in this case by their bankruptcy attorney. That affidavit does not specifically
link the March 2010 modification to the alleged injury and reduction in income; however, it
does reference a May 2009 injury and a related workers’ compensation claim “subsequent to
the date of filing of [the] Chapter 13 proceeding.” Moreover, an affidavit filed in this case by
Myer references a motion to modify wherein it is stated “that the Debtor was injured at work
and unable to work and receiving only worker’s compensation benefits since May of 2009.” In
any event, the parties apparently do not dispute that the Seymours sought modification via the
February 25 motion, alleging that Terry was unable to work and was only receiving workers’
compensation payments, and the bankruptcy plan was modified on March 19, 2010.1
¶7 Apparently, it is also undisputed that Terry had not advised the bankruptcy court that he
was again working when, on June 3, 2010, he was allegedly injured, twice. The first injury was
said to have occurred while he was working for a new employer. As a result of that injury, he
was being transported by ambulance when the ambulance collided with a vehicle driven by
Collins, allegedly resulting in additional injuries to Terry and this lawsuit against the various
defendants.
¶8 Prior to the notice of completion of the payment plan filed by the bankruptcy trustee on
June 29, 2012, and the order of discharge in bankruptcy granted the Seymours on July 17,
2012, they filed two change of address forms with the bankruptcy court. However, it is
apparently undisputed that they never apprised the bankruptcy court that their circumstances
had changed subsequent to the March 19, 2010 modification. Specifically, they never informed
the bankruptcy court: (1) that Terry had returned to work for a new employer; (2) that he was
injured on June 3, 2010; (3) that Terry had, on June 8, 2010, filed another workers’
compensation claim, this one related to the June 3 injuries; (4) that Terry believed he had
viable personal injury claims against multiple defendants as a result of the June 3, 2010,
accident; and (5) that he had in fact filed suit in state court against those defendants on May 20,
2011, asserting his legal claims.
¶9 On July 18, 2013, defendants in this action moved for summary judgment, contending that
plaintiffs should be judicially estopped from proceeding with their claims because they failed
to disclose their personal injury action in the bankruptcy proceeding.
1
As we may take judicial notice of public documents which are included in the records of other
courts (May Department Stores Co. v. Teamsters Union Local No. 743, 64 Ill. 2d 153, 159
(1976))—and the defendants’ subsequently filed motion for summary judgment in this case urged the
circuit court to take judicial notice of the bankruptcy court’s records—we note that the motion in fact
alleged that Terry was injured and had “been unable to work and receiving only workmen’s
compensation benefits since May 2009.” The Seymours stated that they had fallen behind in payment
of their monthly living expenses and they sought to retain the entirety of their tax refunds for the year
2009. They suggested if that relief were granted, “they would be able to make future payments to the
Trustee and complete their Chapter 13 Plan within the time allowed by law.” An order, modifying the
plan, appears in the bankruptcy court’s records. It is dated March 19, 2010, and allows only for
retention of the 2009 income tax refunds, specifying that “all other provisions of the Debtors’ Chapter
13 Plan shall remain in full force and effect.” Based on the records we have reviewed, the discrepancy,
and the court’s and parties’ position on this matter, is perplexing.
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¶ 10 Plaintiffs responded that judicial estoppel does not apply because they did not assert, under
oath, in the bankruptcy proceeding that they did not have a personal injury case, they did not
intentionally fail to disclose the claims, and they did not obtain a benefit in the bankruptcy
proceeding by reason of the omission. In support of their response, plaintiffs submitted their
own affidavits as well as the affidavits of chapter 13 trustee, Lydia Myer, and their bankruptcy
attorney, Jeffrey Dahlberg.
¶ 11 In their affidavits, plaintiffs stated, inter alia, that Myer had told them “at the [section] 341
meeting” that they were “required to report to [their] attorney and to the Trustee, any lump sum
funds received in excess of $2,000.00 during the pendency of the Chapter 13 bankruptcy
proceeding.” Plaintiffs averred that they did not receive any lump sum funds in excess of
$2,000.00 during the pendency of the chapter 13 bankruptcy proceeding, as a result of the
personal injury action or otherwise.2
¶ 12 In her affidavit, Lydia Myer stated that she had been the chapter 13 trustee of the District
Court of the Northern District of Illinois since 1995. She served in that capacity in the
Seymours’ bankruptcy case. Myer attested that the plan for the chapter 13 bankruptcy was
confirmed on September 19, 2008, and was modified multiple times thereafter. She indicated
that Terry Seymour had filed a motion to modify on March 19, 2010,3 stating that he had been
injured at his job and was unable to work. As a consequence, he had been receiving only
workers’ compensation benefits since May of 2009. In a separately numbered paragraph,
without correlative reference, Myer stated that workers’ compensation proceeds, “pursuant to
Illinois Compiled Statutes, are specifically exempt from bankruptcy.”
¶ 13 Myer represented:
“That as the Chapter 13 Trustee *** all debtors are required by and through their
attorneys, to report to me, as trustee, any and all cash or monies received during the
Chapter 13 bankruptcy proceeding other than the income listed on the debtor’s
Schedule I.
That neither the Bankruptcy Code nor the Bankruptcy Rules require a Chapter 13
debtor to disclose the acquisition of any property interest after confirmation of his
Chapter 13 plan except if the debtor acquires or becomes entitled to acquire within 180
days after the date of the filing of the petition, property by bequest, device [sic], or
inheritance, or property received as the result of a property settlement agreement with
the debtor’s spouse or of an interlocutory or final divorce decree; or funds received as a
beneficiary of life insurance policy or of a death benefit plan. (11 U.S.C. § 541 and
Bankruptcy Rule 1007(h)).”
Myer concluded with her observation that “11 U.S.C. 1322(d)(1) provides that a Chapter 13
plan may not provide for payments over a period that is longer than 5 years.”
¶ 14 In his affidavit, the Seymours’ bankruptcy attorney, Jeffrey Dahlberg, first attested to his
experience in chapter 13 bankruptcies, and confirmed relevant filing dates in the bankruptcy
proceeding. Dahlberg recited his file notation that Terry had been injured, resulting in a
2
They did receive a tax refund in excess of $2,000, but they reported it and were granted leave to
keep it.
3
The bankruptcy docket entry indicates that the order granting the motion was entered on that date.
The order filed in the bankruptcy court also bears that date.
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workers’ compensation claim around May of 2009, a date subsequent to the date of filing his
chapter 13 proceeding. His personal injury claim, arising from an automobile accident, was
also subsequent to the commencement of the bankruptcy proceeding. Dahlberg noted that
Meyer advises debtors at the section 341 meeting that they are required to report any lump sum
funds received in excess of $2,000.00 during the pendency of the bankruptcy proceeding.
Dahlberg stated that nothing in the Bankruptcy Code would prohibit this case from going
forward as the personal injury and workers’ compensation claims were unliquidated. Dahlberg
concluded “because Mr. Seymour’s claims *** arose subsequent to the filing of his Chapter 13
and because he did not receive any lump sum funds as a result of the claims during the
pendency of the Chapter 13, the Chapter 13 Trustee will make no claim on future funds which
may be generated by resolution of those claims as the case has closed with discharge.”
¶ 15 On November 15, 2013, the circuit court entertained oral argument on defendants’ motion
for summary judgment. In the course of that hearing, counsel for Rockford asserted the
following:
“[O]n March 19, 2010, the Chapter 13 bankruptcy was modified. It was to advise the
bankruptcy court that the plaintiff had a workers’ comp. injury and possible assets from
the May 2009 injury.
***
So what happened was this discharge was pending during the time that this
litigation was pending and the plaintiff knew he had to advise the bankruptcy court of a
workers’ comp. claim because he had previously modified his plan to advise them, and
yet after this injury, there’s no similar notification to the bankruptcy court that there’s
now yet another injury and potential lawsuit, another asset that has become a part of the
bankruptcy estate.
And that’s where the judicial estoppel is coming in. We’re telling the Court that the
plaintiff knew. This wasn’t a mistake or mere inadvertence. The plaintiff knew that he
had a duty to disclose, which is why he filed to modify the plan after the first workers’
comp. injury.”
¶ 16 After hearing argument on the motion for summary judgment, the court took the matter
under advisement and ultimately issued a written order granting defendants summary
judgment. In that order, the circuit court observed, inter alia, that: (1) plaintiffs filed for
modifications of the plan after its confirmation, and before discharge, but never disclosed the
“work injury and/or the motor vehicle accident that occurred on June 3, 2010”; (2)
“[p]laintiffs’ counsel sent a letter to all parties in the instant case seeking to mediate and settle
the case [during the pendency of the bankruptcy proceeding]”; and (3) during the pendency of
the bankruptcy case, plaintiffs never made any amendments to their schedules or statement of
financial affairs disclosing the existence of this action.
¶ 17 The court then spoke to applicable legal standards. The court noted that summary judgment
is properly entered only where there is no genuine issue of material fact and the moving party
is entitled to judgment as a matter of law. The court acknowledged that summary judgment is
not appropriate where “reasonable persons might draw different inferences from the
undisputed facts.” The court observed that “[s]ummary judgment is appropriate when judicial
estoppel applies,” and judicial estoppel “is an equitable doctrine invoked by the court at its
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discretion.” The court recited the prerequisites generally required for the invocation of judicial
estoppel, and concluded with this seemingly inflexible rule:
“ ‘In [the] bankruptcy context, a party is judicially estopped from asserting a cause of
action not raised in a reorganization plan or otherwise mentioned in the debtor’s
schedules or disclosure statements.’ Hamilton, 270 F.3d at 783; see alsoDailey, 684 N.E.2d at 995-96
.”
¶ 18 The court then stated, unequivocally, in the first sentence of its “Analysis and Decision,”
“the Court finds that Plaintiffs’ failure to disclose this case as a potential asset in their
Bankruptcy case judicially estops them from seeking a monetary judgment against the
Defendants.” The court cited federal case law requiring disclosure of this type of action in a
bankruptcy proceeding, noted that plaintiffs became aware of their “potential cause of action”
while their bankruptcy was pending, and observed that they had filed amendments to their
bankruptcy schedules, but “never alerted the bankruptcy court to the instant action.” Based
upon those undisputed facts, the court stated: “The Court can only conclude that Plaintiffs were
attempting to hide this asset from their bankruptcy creditors.”
¶ 19 Addressing the affidavit of the bankruptcy trustee, Lydia Myer, the court stated: “With due
respect to Ms. Myer, the Court completely disagrees with the argument posited by Plaintiffs
that because they believed their personal injury cause of action was an exempt asset, they had
no duty to disclose it in their bankruptcy case. [D]ebtors have an absolute duty to report
whatever interests they hold in property, even if they believe their assets are worthless or are
unavailable to the bankruptcy estate.” The court inferred that the 2010 modifications sought by
plaintiffs in the bankruptcy proceeding “establish[ed] that the Plaintiffs were aware that the
Bankruptcy Court had to be advised that the Plaintiff, Terry Seymour, had suffered personal
injuries in May, 2009, and therefore the estate had an interest in property relating to that
occurrence.” The court continued: “This awareness is evidenced [sic] by the March 19, 2010,
motion to modify the plan already put in place, which would allow Plaintiffs to claim an
exemption, would give the bankruptcy trustee time to review the claim for exemptions, and
would allow creditors time to object to the modification and the ensuing possible exemptions
of any monies received pursuant to that occurrence.” According to the court, plaintiffs “knew
they needed to include all of the estate’s assets in their plan, including the after-acquired
property interest, which is why they filed a motion to modify the plan on March 19, 2010.” The
court concluded its order with this statement: “Because [plaintiffs] failed to disclose their
personal injury claims in their bankruptcy case, as they were legally required to do, the Court
finds that they are judicially estopped from proceeding on their claims against defendants.”
¶ 20 A divided panel of the appellate court affirmed the judgment of the circuit court. 2014 IL
App (2d) 140100, ¶ 50. The court, initially, recited the five elements generally required for
application of judicial estoppel, as we enumerated them in People v. Runge, 234 Ill. 2d 68, 132
(2009) (2014 IL App (2d) 140100, ¶ 25), and noted that plaintiffs contended defendants failed
to establish three of them: that plaintiffs took factually inconsistent positions in the two
proceedings, that they intended for the bankruptcy court to accept the truth of the facts alleged,
and that they obtained a benefit in the bankruptcy proceeding. Id. ¶ 26.
¶ 21 The court first found, summarily, that the plaintiffs took inconsistent positions insofar as
they “failed to disclose, in the bankruptcy proceeding, the existence of their personal injury
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claims,” while, contemporaneously, “relying on the existence of those claims, they prosecuted
their personal injury action in the trial court.” Id. ¶ 27.
¶ 22 The court next addressed the question of whether plaintiffs intended that the bankruptcy
court accept the fact that they did not have such claims. The appellate majority agreed with
plaintiffs that the documents submitted to the bankruptcy court did not require them, therein, to
disclose their postconfirmation cause of action, and that “[p]laintiffs’ failure to include such
information on those forms thus did not evince that they intended to deceive the bankruptcy
court regarding the existence of their personal injury claims.” (Emphasis added.) Id. ¶ 28.
However, the court concluded: “That does not mean *** that defendants did not establish that
element of judicial estoppel.” Id.
¶ 23 The majority went on to cite federal authority imposing a continuing duty of disclosure, in
a bankruptcy proceeding, of all property acquired postpetition, including legal claims. Id. ¶ 29.
The appellate court noted that plaintiffs did not disclose the existence of their personal injury
claims, despite a clear duty to do so. The court stated:
“Moreover, when it inured to their benefit, they promptly notified the bankruptcy court
of their changed financial condition due to Terry’s May 2009 work-related injury and
loss of income and sought a lower payment schedule via a modification of the plan.
Those facts show that plaintiffs knew that they had a continuing duty to disclose any
changed financial conditions that might affect the plan. Yet, when Terry went back to
work and was injured again, only a few months after receiving the plan modification,
they never notified the bankruptcy trustee or the court. Plaintiffs cannot now claim that
they were oblivious to their continuing duty to disclose all assets acquired during the
pendency of the bankruptcy proceeding.” Id. ¶ 30.
“Absent some affirmative statement by the trustee that they did not need to disclose
such an asset, their reliance on the [trustee’s] information regarding any cash assets
exceeding $2,000 did not justify their failure to disclose their personal injury claims.”
Id. ¶ 31.
The court concluded, in light of plaintiffs’ “clear duty to disclose their personal injury claims,
their failure to do so evinced their intent that the bankruptcy court accept the fact that no such
claims existed. Therefore, defendants established that element of judicial estoppel.” Id. ¶ 32.
¶ 24 The appellate majority next considered the question of whether defendants established the
element that plaintiffs received some benefit in the bankruptcy proceeding from their failure to
disclose their personal injury claims. Citing an unreported federal district court decision, the
majority stated that ongoing disclosure is required in a chapter 13 proceeding so that creditors
can object to, or seek modification of, a confirmed plan. Id. ¶ 34 (citing Woodard v. Taco
Bueno Restaurants, Inc., No. 4:05-CV-804-Y, 2006 WL 3542693, at *10 (N.D. Tex. Dec. 8,
2006)). The court cited an Illinois appellate panel’s decision in Shoup v. Gore, 2014 IL App
(4th) 130911, for the proposition that the “benefit-received requirement of judicial estoppel” is
satisfied where a plaintiff fails to disclose a postconfirmation personal injury suit insofar as
such a plaintiff has “ ‘his repayment plan established and performed without giving his
creditors any knowledge of his potential to recover damages in his personal-injury action’ ”
(2014 IL App (2d) 140100, ¶ 34 (quoting Shoup,2014 IL App (4th) 130911
, ¶ 17)), thus
denying creditors the opportunity to “object to, or seek modification of, the plan.” Id.
Moreover, the court observed, as in Shoup, the failure to disclose left plaintiffs with the ability
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to permanently avoid their debts (via discharge) and yet receive a judgment against the
defendants in the personal injury case. Id. ¶ 35.
¶ 25 The majority rejected plaintiffs’ contention that the trial court abused its discretion—or
failed to exercise it at all—insofar as the circuit court did not demonstrate any analysis of the
elements of judicial estoppel and in effect made a “blanket finding” that, because they failed to
disclose their personal injury action in the bankruptcy court, they were judicially estopped
from maintaining that action. The majority found it sufficient that the circuit court had allowed
argument at a hearing of the matter and stated, in its written order, that it had reviewed the
“ ‘[m]otion, briefs, affidavits, exhibits, relevant case law, and *** arguments.’ ” Id. ¶¶ 37-39.
The appellate majority also found it significant that the circuit court, citing Runge, identified
the five elements of judicial estoppel. Id. ¶ 40.
¶ 26 The majority then directly addressed the primary points made by the dissent. The court,
first, rejected the dissent’s contention that a false statement under oath was required for
judicial estoppel to apply, noting that this court in Runge did not expressly require that the
factual position be taken under oath; rather, this court “phrased the element more broadly to
include any factual assertion that a party intends for the court to accept as true.” Id. ¶ 42.
Second, the appellate court found “ample evidence” for the trial court to have found “that
plaintiffs intended to deceive the bankruptcy court by not disclosing the lawsuit.” Id. ¶ 43.The
appellate court emphasized “the critical fact that plaintiffs promptly disclosed the existence of
Terry’s first workers’ compensation case when it advantaged them but failed to disclose the
second such case when it appeared likely that it would disadvantage them.” Id. The appellate
court considered that a “key piece of evidence,” with respect to what the appellate majority
saw as an intent to deceive the bankruptcy court. Id. Finally, the majority found no injustice in
applying judicial estoppel here. Observing, in “virtually all cases in which judicial estoppel is
applied, the result will seem harsh to the party against whom the doctrine is invoked,” the
appellate majority reiterated that the purpose of judicial estoppel, i.e., to protect the integrity of
the court in question, and prevent manipulation of the judicial system, and found the doctrine’s
“laudable purpose is served” in this case. Id. ¶ 45.
¶ 27 The majority concluded that plaintiffs knowingly took inconsistent positions in the
bankruptcy court and the circuit court regarding the existence of their personal injury claims,
and they did so in a way that benefited them. Thus, the appellate majority found no abuse of
discretion insofar as it determined the trial court’s decision “was anything but arbitrary,
fanciful, or unreasonable” (id. ¶¶ 46-47)—the applicable standard for abuse of discretion
where a circuit court has exercised discretion in the first instance.
¶ 28 The dissenting justice, for her part, first noted the equitable nature of judicial estoppel,
observing that it is meant to be “ ‘flexible and not reducible to a pat formula,’ ” that it should
be invoked only to prevent an injustice (id. ¶ 52 (Schostok, J., dissenting) (quoting Ceres
Terminals, Inc. v. Chicago City Bank & Trust Co., 259 Ill. App. 3d 836, 850-51 (1994))), and
that it is intended to prevent a litigant from “playing ‘fast and loose’ ” with the court by
“intentionally taking contrary positions in order to obtain an unfair advantage.” (Internal
quotation marks omitted.) Id. ¶ 52 (citing Holland v. Schwan’s Home Service, Inc., 2013 IL
App (5th) 110560, ¶ 113). Though the majority had determined that the Fifth District’s opinion
in Holland was distinguishable, the dissent found it instructive.
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¶ 29 The dissent observed that the facts of Holland were similar to those in this case. In
Holland, the plaintiff, Holland, had filed a chapter 13 bankruptcy petition in August 2008 and
the repayment plan was confirmed in November 2008. Six months later, in May 2009, Holland
was terminated from his employment and a claim arose against the defendant-employer,
Schwan’s, for retaliatory discharge. Holland never declared his claim against Schwan’s as an
asset of his bankruptcy estate and Schwan’s argued that Holland should be estopped from
asserting his claim. Holland, 2013 IL App (5th) 110560, ¶ 115.
¶ 30 The Holland court disagreed, noting that judicial estoppel did not apply because Holland’s
failure to declare his claim against Schwan’s as an asset of his bankruptcy estate did not
constitute an inconsistent position under oath. Id. ¶ 118. Although the Holland court held that
an inconsistent statement “under oath” was still a requirement for application of judicial
estoppel (id. ¶ 119), the court noted that the absence of the oath requirement would not change
its determination, because there was no evidence that Holland intended to omit his claim
against Schwan’s from the bankruptcy estate. Id. ¶ 120. In short, there was no intent to deceive.
¶ 31 Though the dissenting justice in this case argued for the preservation of an “under oath”
requirement in this context, noting, inter alia, that Runge itself cites People v. Caballero, 206
Ill. 2d 65, 80 (2002), wherein “the sanctity of the oath” (internal quotation marks omitted) is
mentioned, the dissenter would have found, “regardless of the oath requirement judicial
estoppel should not have been applied here, because there was no evidence that the plaintiffs
intended to omit this cause of action from the bankruptcy estate. Rather, the evidence in this
case indicates that the failure to disclose was unintentional.” 2014 IL App (2d) 140100, ¶ 59
(Schostok, J., dissenting).
¶ 32 The dissent observed that the majority, in its analysis, limited the inferential impact upon
the plaintiffs of Myer’s admonition regarding the need to disclose lump sum amounts received
over $2,000 during the pendency of the bankruptcy proceeding, when “it could equally have
been inferred by the plaintiffs [under the principle we refer to as expressio unius est exclusion
alterius (the expression of one thing is the exclusion of another)] that it was not necessary to
disclose any unliquidated assets.” Id. The dissent also pointed out that there were no
bankruptcy pleadings required to be filed after the cause of action arose. Id.
¶ 33 Moreover, the dissent took issue with the majority’s determination that the fact the
plaintiffs disclosed their first workers’ compensation case evinced knowledge of the need to
disclose the pendency of the present suit. The dissenter observed that reduced income in the
former instance necessitated a return to bankruptcy court; whereas, plaintiffs had received
nothing—they might as laymen consider reportable—as a result of the personal injury action
during the pendency of the bankruptcy proceeding. Id. ¶ 60. The dissent also made the
following observations:
“[T]he trustee *** did not believe that disclosure of this suit would have changed the
outcome of the bankruptcy proceeding since no funds were received during the five
years when payments were required. *** Attached to the defendants’ motion for
summary judgment were letters from plaintiffs’ counsel seeking to settle this cause of
action prior to the discharge of the bankruptcy proceeding. If the plaintiffs were trying
to avoid creditors, they would have waited until after the discharge in bankruptcy to
attempt to settle this suit.” Id. ¶ 61.
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¶ 34 The dissent concluded that the majority—by automatically finding that plaintiffs’ failure to
disclose the suit evinced the intent to deceive—had applied “a rigid formula [that] fails to
consider the specific circumstances of each case.” Id. ¶ 62. The dissent found the decisions in
Dailey, Berge, and Shoup distinguishable from the present case because, inter alia, they all
involved subsequent bankruptcy filings made where disclosure was specifically required and
the plaintiff failed to make the required disclosure. Id. (citing Shoup v. Gore, 2014 IL App
(4th) 130911, ¶ 10, Berge v. Mader, 2011 IL App (1st) 103778, ¶ 17, and Dailey v. Smith,292 Ill. App. 3d 22
, 28 (1997)).
¶ 35 ANALYSIS
¶ 36 Judicial estoppel is an equitable doctrine invoked by the court at its discretion. New
Hampshire v. Maine, 532 U.S. 742, 750 (2001); People v. Runge,234 Ill. 2d 68
, 132 (2009);
People v. Jones, 223 Ill. 2d 569, 598 (2006); People v. Caballero,206 Ill. 2d 65
, 80 (2002). As
the Supreme Court has observed, the uniformly recognized 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, 532 U.S. at 749-50. Judicial estoppel applies in a judicial proceeding when
litigants take a position, benefit from that position, and then seek to take a contrary position in
a later proceeding. Barack Ferrazzano Kirshbaum Perlman & Nagelberg v. Loffredi, 342 Ill.
App. 3d 453, 460 (2003).
¶ 37 This court has identified five prerequisites as “generally required” before a court may
invoke the doctrine of judicial estoppel. The party to be estopped must have (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) have succeeded in the first proceeding and received some benefit from it.
Runge, 234 Ill. 2d at 132;Jones, 223 Ill. 2d at 598
;Caballero, 206 Ill. 2d at 80
.
¶ 38 Notably, a statement “under oath” has not been listed among those requirements. Indeed,
although this court in Caballero mentioned “ ‘the sanctity of the oath’ ” in its discussion of
judicial estoppel (Caballero, 206 Ill. 2d at 80 (quoting Bidani v. Lewis,285 Ill. App. 3d 545
,
549 (1996))), the court did not subsequently list an oath requirement among the requisites for
application of the doctrine (see Barack Ferrazzano Kirshbaum Perlman & Nagelberg v.
Loffredi, 342 Ill. App. 3d 453, 464 (2003) (noting the absence of an oath requirement among
the elements listed in Caballero)), and this court has not mentioned it since. See Runge, 234 Ill.
2d at 132;Jones, 223 Ill. 2d at 598
. The core concern is, and it seems should be, that a party
takes factually inconsistent positions, in separate proceedings, intending that the trier of fact
accept the truth of the facts alleged. As the appellate majority in this case aptly observed,
“there might well be situations in which a party could intend a court to accept the truth of its
factual position even without a statement under oath.” 2014 IL App (2d) 140100, ¶ 42; see also
Department of Transportation v. Coe, 112 Ill. App. 3d 506, 510 (1983) (relaxing the oath
requirement but holding that the record must “clearly reflect that the party intended the trier to
accept the truth of the party’s position”). We now expressly hold that a statement under oath is
not required for the doctrine of judicial estoppel to apply. Application of the five factors
enumerated in Cabellero, Runge, and Jones addresses, without undue restriction, the problem
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of a party acting in bad faith, playing “ ‘fast and loose’ ” with the court. Runge, 234 Ill. 2d at
133.
¶ 39 We also agree with the appellate majority’s statement that, “[j]udicial estoppel, like all
estoppels, must be proved by clear and convincing evidence.” 2014 IL App (2d) 140100, ¶ 25
(citing Smeilis v. Lipkis, 2012 IL App (1st) 103385, ¶ 20 (judicial estoppel), and Boelkes v.
Harlem Consolidated School District No. 122, 363 Ill. App. 3d 551, 554 (2006) (collateral,
equitable and judicial estoppel) (citing Geddes v. Mill Creek Country Club, Inc., 196 Ill. 2d
302, 314 (2001) (equitable estoppel))). We believe that evidentiary standard properly accounts
for a degree of caution with which this doctrine should be considered and applied. See
Construction Systems, Inc. v. FagelHaber, LLC, 2015 IL App (1st) 141700, ¶ 38 (noting that
courts have warned the doctrine is “an extraordinary one which should be applied with caution
(internal quotation marks omitted)”).
¶ 40 We turn now to the appropriate standard of review. The parties dispute the applicable
standard of review: the defendants arguing for abuse of discretion; the plaintiffs urging us to
apply de novo review.
¶ 41 Since we have said that judicial estoppel is an equitable doctrine invoked by the court at its
discretion (Runge, 234 Ill. 2d at 132;Jones, 223 Ill. 2d at 598
;Caballero, 206 Ill. 2d at 80
), it
would seem to follow that we review a court’s invocation of the doctrine under the
abuse-of-discretion standard (see Highmark Inc. v. Allcare Health Management System, Inc.,
572 U.S. ___, ___, 134 S. Ct. 1744, 1748 (2014) (noting that, “[t]raditionally,” decisions on
matters of discretion are reviewable for abuse of discretion)), irrespective of the procedural
mechanism that culminated in the court’s ruling. An abuse of discretion occurs only when the
trial court’s decision is arbitrary, fanciful, or unreasonable or where no reasonable person
would take the view adopted by the trial court. Holland, 2013 IL App (5th) 110560, ¶ 114.
¶ 42 On the other hand, defendants raised this issue via a motion for summary judgment,
seeking dismissal pursuant to the doctrine. 4 An appeal following a grant of summary
judgment, like an appeal from a section 2-619 dismissal, is subject to de novo review. Raintree
Homes, Inc. v. Village of Long Grove, 209 Ill. 2d 248, 254 (2004). 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. Nationwide Financial, LP v. Pobuda, 2014 IL 116717, ¶ 25.
Summary judgment is a drastic measure and should only be granted if the movant’s right to
judgment is clear and free from doubt. Bagent v. Blessing Care Corp., 224 Ill. 2d 154, 163
(2007). Where a reasonable person could draw divergent inferences from undisputed facts,
summary judgment should be denied. Pielet v. Pielet, 2012 IL 112064, ¶ 53. On a motion for
summary judgment, the trial court has a duty to construe the record strictly against the movant
4
We note that one appellate panel addressing judicial estoppel in this context, and the appropriate
standard of review, has observed that, though raised in a motion for summary judgment, a motion
seeking dismissal essentially raises an affirmative matter that seeks to defeat the claim, and is more
appropriate for a motion to dismiss under section 2-619(a)(9) of the Code of Civil Procedure (735 ILCS
5/2-619(a)(9) (West 2008)). Berge v. Mader, 2011 IL App (1st) 103778, ¶ 9. Some federal courts take a
similar view. See Barley v. Fox Chase Cancer Center, 54 F. Supp. 3d 396, 404 (E.D. Pa. 2014)
(“Judicial estoppel is properly classified as an affirmative defense, see Fed.R.Civ.P. 8(c)(1); see also
18B Charles Alan Wright and Arthur R. Miller, Federal Practice and Procedure § 4477 (2d ed.2014),
and, like all affirmative defenses, it is the defendant’s burden to properly plead and prove.”).
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and liberally in favor of the nonmoving party. Williams v. Manchester, 228 Ill. 2d 404, 417
(2008). As a result, summary judgment is not appropriate: (1) if “there is a dispute as to a
material fact” (Jackson v. TLC Associates, Inc., 185 Ill. 2d 418, 424 (1998)); (2) if “reasonable
persons could draw divergent inferences from the undisputed material facts” (id.); or (3) if
“reasonable persons could differ on the weight to be given the relevant factors” of a legal
standard (Calles v. Scripto-Tokai Corp., 224 Ill. 2d 247, 269 (2007)).
¶ 43 Where the prospect of judicial estoppel is raised via a motion for summary judgment,
Illinois appellate decisions are in conflict over the applicable standard of review. As the
appellate court noted in this case, some courts have applied an abuse-of-discretion standard
(Berge, 2011 IL App (1st) 103778, ¶ 9;Bidani, 285 Ill. App. 3d at 550
), while others have
ultimately applied a de novo standard to dismissal, reasoning that the underlying motion, for
summary judgment or under section 2-619 of the Code of Civil Procedure (735 ILCS 5/2-619
(West 2012)), is “inseparable” from the decision to apply judicial estoppel (Smeilis, 2012 IL
App (1st) 103385, ¶¶ 22-23 (citing Barack, 342 Ill. App. 3d at 459 (stating that the court
applied an abuse-of-discretion standard to application of judicial estoppel, but applied de novo
review to the grant of summary judgment)). 2014 IL App (2d) 140100, ¶ 19. Divergent
opinions as to the appropriate standard of review are not limited to Illinois jurisprudence.
¶ 44 We note that federal courts are split as to whether dismissal on grounds of judicial estoppel
should be reviewed de novo or for abuse of discretion when a ruling was rendered on a motion
for summary judgment—which is normally subject to de novo review—though the clear
majority favor the abuse-of-discretion standard. See Uzdavines v. Weeks Marine, Inc., 418
F.3d 138, 142 (2d Cir. 2005) (applying de novo standard of review); Solomon v. Vilsack,628 F.3d 555
, 561 (D.C. Cir. 2010) (same); Mirando v. United States Department of Treasury,766 F.3d 540
, 545 (6th Cir. 2014) (same); Queen v. TA Operating, LLC,734 F.3d 1081
, 1086-87
(10th Cir. 2013) (reviewing for abuse of discretion); Ah Quin v. County of Kauai Department
of Transportation, 733 F.3d 267, 270-71 (9th Cir. 2013) (same); Grochocinski v. Mayer Brown
Rowe & Maw, LLP, 719 F.3d 785, 795 (7th Cir. 2013) (same); Rockwood v. SKF USA Inc.,687 F.3d 1
, 10 (1st Cir. 2012) (same); In re Oparaji,698 F.3d 231
, 235 (5th Cir. 2012) (same);
Capella University, Inc. v. Executive Risk Specialty Insurance Co., 617 F.3d 1040, 1051 (8th
Cir. 2010) (same); In re Kane, 628 F.3d 631, 636 (3d Cir. 2010) (same); Stephens v. Tolbert,
471 F.3d 1173, 1175 (11th Cir. 2006) (same).
¶ 45 Although we have not conducted comprehensive research on the subject, we note that
some other jurisdictions have opted for de novo review. See Tarver v. City of Sheridan Board
of Adjustments, 2014 WY 71, ¶ 10,327 P.3d 76
(Wyo. 2014) (application of the principles of
judicial estoppel, collateral estoppel and/or the law of the case are matters of law;
consequently, review is de novo); NOLM, LLC v. County of Clark, 100 P.3d 658, 663 (Nev.
2004) (“Whether judicial estoppel applies is a question of law subject to de novo review.”);
State v. Petty, 548 N.W.2d 817, 820 (Wis. 1996) (“Determining the elements and
considerations involved before invoking the doctrine of judicial estoppel are questions of law
which we decide independently [of the circuit court or court of appeals].”); Spohn v. Van Dyke
Public Schools, 822 N.W.2d 239, 246 (Mich. Ct. App. 2012) (Michigan court of appeals noted
that judicial estoppel is an equitable doctrine and, when reviewing equitable actions, that court
reviews the trial court’s decision de novo); Atkins v. 4940 Wisconsin, LLC, 93 A.3d 1286, 1289
(D.C. 2014) (de novo review); compare Regents of the University of California v. Superior
Court, 166 Cal. Rptr. 3d 166, 186 (Cal. Ct. App. 2014) (“The determination of whether judicial
- 12 -
estoppel can apply to the facts is a question of law reviewed de novo, i.e., independently
[citations], but the findings of fact upon which the application of judicial estoppel is based are
reviewed under the substantial evidence standard of review. [Citations.] Even if the necessary
elements of judicial estoppel are found, because judicial estoppel is an equitable doctrine
[citations], whether it should be applied is a matter within the discretion of the trial court.
[Citations.] The exercise of discretion for an equitable determination is reviewed under an
abuse of discretion standard.” (Internal quotation marks omitted.)).
¶ 46 The appellate court in this case stated the standard of review thusly:
“In the context of this appeal, both standards apply. In applying the
summary-judgment standard, we must decide first whether there were any issues of
material fact related to the applicability of judicial estoppel. If there were, then
summary judgment would be improper. If not, then we must decide whether defendants
were entitled to judgment as a matter of law. To answer that latter question, we
necessarily must decide whether the court abused its discretion in applying judicial
estoppel under the undisputed facts. If it did, then defendants would not be entitled to
judgment as a matter of law. If it did not, then they would be.” 2014 IL App (2d)
140100, ¶ 22.
¶ 47 We believe the procedural and analytical sequence should proceed as follows.5 First, the
trial court must determine whether the prerequisites for application of judicial estoppel are
met. In this respect, the party to be estopped must have (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) have succeeded in
the first proceeding and received some benefit from it. Runge, 234 Ill. 2d at 132; Jones,223 Ill. 2d
at 598;Caballero, 206 Ill. 2d at 80
. We note, even if all factors are found, intent to deceive
or mislead is not necessarily present, as inadvertence or mistake may account for positions
taken and facts asserted. Second, if all prerequisites have been established, the trial court must
determine whether to apply judicial estoppel—an action requiring the exercise of discretion.
Multiple factors may inform the court’s decision, among them the significance or impact of the
party’s action in the first proceeding and, as noted, whether there was an intent to deceive or
mislead, as opposed to the prior position having been the result of inadvertence or mistake.
New Hampshire, 532 U.S. at 753 (acknowledging that it may be appropriate to resist
application of judicial estoppel when a party’s prior position was based on inadvertence or
mistake); accord Holland, 2013 IL App (5th) 110560, ¶ 120 (“ ‘The Courts have been reluctant
5
As will appear hereafter, in this case we would not need to engage in the full analysis we outline,
i.e., review of the ruling on summary judgment, and could perhaps decline to settle the matter of
standards of review in that respect (see The Venture—Newberg-Perini, Stone & Webster v. Illinois
Workers’ Compensation Comm’n, 2013 IL 115728, ¶ 14 (refraining from deciding the applicable
standard of review as the result would be the same under either standard); People v. Edwards, 2012 IL
111711, ¶ 30 (same); see also Hoffler v. Bezio,726 F.3d 144
, 151-52 (2d Cir. 2013) (stating that a court
need not determine standard of review when the result would be the same under either standard)), we
nonetheless address the issue in order to provide guidance in future cases; however, we provide the
discussion here to guide future courts confronted with this question. See Lebron v. Gottlieb Memorial
Hospital, 237 Ill. 2d 217, 236 (2010) (“judicial dictum is entitled to much weight, and should be
followed unless found to be erroneous” (internal quotation marks omitted)).
- 13 -
to apply the doctrine of judicial estoppel in the bankruptcy context where the nondisclosure of
a claim was inadvertent.’ ” (quoting Jaeger v. Clear Wing Productions, Inc., 465 F. Supp. 2d
879, 882 (S.D. Ill. 2006)); see alsoJaeger, 465 F. Supp. 2d at 882
(suggesting—in what may,
perhaps, be a minority view in federal bankruptcy jurisprudence—that judicial estoppel should
apply only where there is “deliberate,” “cold manipulation,” or a “scheme to mislead the
court,” not where there is “inadvertent oversight,” a “confused blunder,” or a “good-faith
mistake”).
¶ 48 With respect to the applicable standard of review, we believe it logically follows that we
review a trial court’s exercise of discretion for abuse of discretion. That standard also appears
to be consistent with the approach commonly taken by other courts where an exercise of
discretion is concerned. Highmark Inc., 572 U.S. at ___, 134 S. Ct. at 1748 (“[t]raditionally,”
decisions on matters of discretion are reviewable for abuse of discretion). Therefore, where a
trial court has exercised its discretion in the application of judicial estoppel, we review for
abuse of discretion.
¶ 49 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. As the authorities previously
cited indicate, the necessary representations in a successful motion for summary judgment are
that: there are no genuine issues of material fact and the moving party is entitled to judgment as
a matter of law (Nationwide Financial, LP, 2014 IL 116717, ¶ 25), as reasonable persons could
not draw divergent inferences from the undisputed facts (Pielet, 2012 IL 112064, ¶ 53), and the
movant’s right to judgment is clear and free from doubt (Bagent, 224 Ill. 2d at 163). The record
must be strictly construed against the movant and liberally in favor of the nonmoving party.
Williams, 228 Ill. 2d at 417. There can be no room for reasonable persons to “differ on the
weight to be given the relevant factors” of a legal standard. Calles, 224 Ill. 2d at 269.
¶ 50 In this case, our review is necessarily truncated by circumstances. When a court is required
by law to exercise its discretion, the failure to do so may itself constitute an abuse of discretion,
precluding deferential consideration on appeal. People v. Newborn, 379 Ill. App. 3d 240, 248
(2008); People v. Whirl, 351 Ill. App. 3d 464, 467 (2004); see also Arizona v. Washington,434 U.S. 497
, 510 n.28 (1978) (“If the record reveals that the trial judge has failed to exercise the
‘sound discretion’ entrusted to him, the reason for such deference by an appellate court
disappears.”). We find that principle applicable in this case. Although the circuit court, at the
outset in its written order, recited the proposition that judicial estoppel “is an equitable doctrine
invoked by the court at its discretion,” it does not otherwise appear from this record—as we
will elaborate hereafter—that the court exercised discretion in its application of the doctrine,
finding, rather, that the presence of certain facts, i.e., the mere failure to disclose the personal
injury cause of action in the bankruptcy proceeding, mandated dismissal. 6 Because no
6
The circuit court’s inaccurate references to the content of the Seymours’ February 2010 motion to
modify the bankruptcy plan, as indicative of their knowledge of the need to disclose, and their intent,
does not convince us otherwise. In any event, the Supreme Court’s recent statement in Highmark Inc.
would seem applicable here: “The abuse-of-discretion standard does not preclude an appellate court’s
correction of a district court’s legal or factual error: ‘A district court would necessarily abuse its
discretion if it based its ruling on an erroneous view of the law or on a clearly erroneous assessment of
- 14 -
discretion was exercised—or if arguably exercised, clearly abused by reason of erroneous
assessment of the evidence—no deferential review would be warranted in any event. We find
hereafter, pursuant to independent consideration, judicial estoppel was inequitably applied.
¶ 51 We note, at the outset, there are some relevant bankruptcy questions upon which the
federal courts are not in agreement. Because we find the dispositive issue in this case to be
whether the plaintiffs “deliberately” changed positions according to the exigencies of the
moment, whether they used “intentional self-contradiction *** as a means of obtaining unfair
advantage” (internal quotation marks omitted) (New Hampshire, 532 U.S. at 750-51), we deem
it unnecessary to weigh in on those federal questions.
¶ 52 Though trustee Myer’s affidavit suggests otherwise, and the statute and rule she cited (11
U.S.C. § 541 (2006) and Bankruptcy Rule 1007(h) (Fed. R. Bankr. P. 1007(h))) may well
support her position,7 we will assume, for purposes of our analysis, that the Seymours were
under a continuing duty to disclose their personal injury cause of action during the pendency of
their chapter 13 bankruptcy proceeding. There appears to be general agreement with the
position taken by the Eleventh Circuit Court of Appeals in Robinson v. Tyson Foods, Inc., 595
F.3d 1269, 1274 (11th Cir. 2010):
“A debtor seeking shelter under the bankruptcy laws has a statutory duty to disclose all
assets, or potential assets to the bankruptcy court. 11 U.S.C. §§ 521(1), 541(a)(7). ‘The
duty to disclose is a continuing one that does not end once the forms are submitted to
the bankruptcy court; rather the debtor must amend [her] financial statements if
circumstances change.’ Burnes, 291 F.3d at 1286. This duty applies to proceedings
under Chapter 13 and Chapter 7 alike because ‘any distinction between the types of
bankruptcies available is not sufficient enough to affect the applicability of judicial
estoppel because the need for complete and honest disclosure exists in all types of
bankruptcies.’ De Leon v. Comcar Industries, Inc., 321 F.3d 1289, 1291 (11th
Cir.2003).”
Accord In re Flugence, 738 F.3d 126, 128-31 (5th Cir. 2013).8 Specifically, it has been said
that federal courts have uniformly held that chapter 13 debtors are obligated to disclose
the evidence.’ Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405 (1990).” Highmark Inc., 572 U.S.
at ___ n.2, 134 S. Ct. at 1748 n.2.
7
See In re Padula, No. 11-12985-BFK, 2015 WL 1931977, at *4 n.6 (E.D. Va. Apr. 28, 2015):
“Fed. R. Bankr. P. 1007(h). The Rule is limited by its terms to the kinds of property described in
Bankruptcy Code Section 541(a)(5). It does not apply to post-petition property covered by Section
1306, that is, to the kind of property at issue in Carroll v. Logan and in this case. In re Kemp, Adversary
No. 11–5002, 2011 WL 3664497, at *3 (W.D.La. Aug. 19, 2011) (Rule 1007(h) ‘does not, however,
cover the property brought into the estate under section 1306, including post-petition causes of action.
Nevertheless, courts have uniformly held that a Chapter 13 debtor is obligated to disclose post-petition
causes of action.’).”
8
We note, for purposes of applying judicial estoppel, federal authority holds that a debtor’s failure
to disclose an asset is generally deemed inadvertent only when the debtor either lacks knowledge of the
undisclosed claims or has no motive for their concealment (Eastman v. Union Pacific R.R. Co., 493
F.3d 1151, 1157 (10th Cir. 2007) (“courts routinely, albeit at times sub silentio, infer deliberate
manipulation”)), neither of which—lack of knowledge or motive—is often the case. See also Flugence,
738 F.3d at 130-31 (the controlling inquiry with respect to inadvertence is whether the debtor knew of
- 15 -
postpetition causes of action. In re Padula, No. 11-12985-BFK, 2015 WL 1931977 (E.D. Va.
Apr. 28, 2015).9
¶ 53 So we begin with the assumption that the Seymours were under a legal duty to disclose
their personal injury cause of action as an asset in the bankruptcy proceeding and the
undisputed fact that they failed to do so. We assume further, for purposes of this analysis, that
the prerequisites generally required for the application of judicial estoppel are established, i.e.,
that the parties to be estopped have (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) have succeeded in the first proceeding
and received some benefit from it. Runge, 234 Ill. 2d at 132;Jones, 223 Ill. 2d at 598
;
Caballero, 206 Ill. 2d at 80.
¶ 54 We may well say that the Seymours intended for the bankruptcy court to accept the truth of
the fact, or their position, that they had no “assets”—as they understood the term—other than
those disclosed; however, there is no evidence that they intended to deceive or mislead the
court—a critical factor in the application of judicial estoppel. The one factor cited by the
circuit court as evincing the Seymours’ knowledge of the need to disclose their personal injury
claim, i.e., that they had recognized the need to disclose Terry’s workers’ compensation claim
as an asset in their 2010 motion to modify the bankruptcy plan, simply does not exist.
¶ 55 The inference that plaintiffs knew they had to disclose the June 3, 2010, injuries and
derivative claims because they had disclosed similar “assets” or sought “exemptions”
previously in their motion to modify the bankruptcy plan, finds no basis in the bankruptcy
court’s records or the affidavits before the circuit court. We quote here the pertinent allegations
and representations of the motion to modify the chapter 13 plan filed in the bankruptcy court
on February 25, 2010:
“That the Debtor, TERRY L. SEYMOUR, was injured at work and has been unable
to work and receiving only workmen’s compensation benefits since May, 2009. He
anticipates being released to work within the next few weeks.
That the Debtors’ combined gross income during 2009 was approximately
$8800.00 less than their gross income at the time of the filing of their petition. Because
of reduced income, the Debtors have fallen behind in payment of their monthly living
expenses.
the facts giving rise to her claim and had a motive to conceal; “[A] lack of awareness of a statutory
disclosure duty for [ ] legal claims is not relevant.” (Internal quotation marks omitted.)).
9
While our primary focus here is on the knowledge and intent of the debtors, we consider the value
of the personal injury claim to the creditors a relevant consideration under the circumstances of this
case. One might well ask what a postpetition, postconfirmation, unliquidated cause of action is worth to
debtors’ creditors in a chapter 13 bankruptcy, which is, as trustee Myer attested, to be completed within
a five-year period. See 11 U.S.C. § 1322(d)(1) (2006). Surprisingly, though many decisions speak to
the need for disclosure, far fewer address valuation of the claim, which is the only issue that should be
of practical interest to the debtors’ creditors. Those that do—usually in the context of claimed
exemptions—concede that a cause of action is an asset that is not easily valued, insofar as, prior to
judgment, a cause of action’s value is unliquidated and contingent. Wissman v. Pittsburgh National
Bank, 942 F.2d 867, 871 (4th Cir. 1991) (adding that “claiming a specific dollar exemption” for a cause
of action “is, at best, speculation”); accord In re Ball, 201 B.R. 210, 214 (Bankr. N.D. Ill. 1996).
- 16 -
The Debtors received tax refunds for the year 2009 in the amount of approximately
$7805.00. They need said refunds to supplement their living expenses.
That if their Chapter 13 Plan were modified as hereinafter provided, the Debtors
believe they would be able to make future payments to the Trustee and complete their
Chapter 13 Plan within the time allowed by law.”
The Debtors thereafter prayed only that they be allowed to retain the entirety of their 2009
income tax refunds—an amount in excess of $2000—“to supplement their living expenses”
and that “all other provisions of their Chapter 13 Plan remain in full force and effect.”
¶ 56 The order that was entered on March 19, 2010, modifying the plan, provided only:
“That the Chapter 13 Plan of the Debtors is hereby modified to provide that the
Debtors are hereby allowed to retain all of their 2009 income tax refunds to supplement
their living expenses.
That all other provisions of the Debtors’ Chapter 13 Plan shall remain in full force
and effect.”
¶ 57 The workers’ compensation benefit was not asserted as an asset; it was, as the dissenting
appellate justice observed in this case (2014 IL App (2d) 140100, ¶ 60 (Schostok, J.,
dissenting)), referenced only as a cause of reduced income. Obviously, there was no claim of
an exemption.
¶ 58 Moreover, the circuit court was not justified in extrapolating its inference from Myer’s
affidavit. As we have noted, Myer indicated that Terry Seymour had filed a motion to modify,
stating that he had been injured at his job and was unable to work. As a consequence, he had
been receiving only workers’ compensation benefits since May of 2009. In a separately
numbered paragraph, without correlative reference, Myer stated that workers’ compensation
proceeds, “pursuant to Illinois Compiled Statutes, are specifically exempt from bankruptcy.”
She never said that the Seymours claimed the workers’ compensation proceeds as an
exemption, nor did any other affidavits filed on behalf of the plaintiffs. The filing of the motion
to modify does not evince knowledge, on the part of the plaintiffs, of the need to disclose their
personal injury claim in the bankruptcy proceeding. As the dissenting appellate court justice in
this case aptly observed, the 2009 injury and workers’ compensation claim were relevant, and
submitted, in the motion to modify only because they explained the Seymours’ decrease in
income. Id.
¶ 59 Moreover, as the dissenter noted, citing letters the Seymours’ personal injury counsel sent
to defendants seeking to settle the case during the pendency of the bankruptcy case, “If the
plaintiffs were trying to avoid creditors, they would have waited until after the discharge in
bankruptcy to attempt to settle this suit.” Id. ¶ 61.
¶ 60 It is also clear from Myer’s affidavit that, had she been apprised of the personal injury
claim, she, at least, would not have taken action with respect thereto. It is, as we have
suggested, and federal case law indicates (see Wissman, 942 F.2d at 871), difficult to discern
how this asset might have been valued so as to benefit the Seymours’ creditors within the
applicable period of chapter 13 bankruptcy.
¶ 61 Further, the uncontroverted affidavits of the Seymours and their bankruptcy attorney
confirm that Myer advised them that they had to report any lump sum funds received in excess
of $2,000 during the pendency of the bankruptcy. It is understandable that laymen might infer,
in the absence of advice to the contrary from their bankruptcy attorney—which appears not to
- 17 -
have been forthcoming in this case—that smaller sums—and certainly unliquidated claims for
money—did not have to be disclosed.
¶ 62 We are not willing, as appears to be the case in prevailing federal authority given these
circumstances (see Eastman, 493 F.3d at 1157;Flugence, 738 F.3d at 130-31
), to presume that
the debtors’ failure to disclose was deliberate manipulation. We do not find that inference or
presumption controlling in Illinois, much less given the facts of this case.
¶ 63 Where there is affirmative, uncontroverted evidence, that debtors did not deliberately
change positions according to the exigencies of the moment, that they did not employ
“intentional self-contradiction *** as a means of obtaining unfair advantage,” we believe the
purpose of the doctrine of judicial estoppel is not furthered by application of the doctrine in this
case. We are not so ready, as the federal courts appear to be, to penalize, via presumption, the
truly inadvertent omissions of good-faith debtors in order to protect the dubious, practical
interests of bankruptcy creditors. Compare Flugence, 738 F.3d at 130-31 (“the controlling
inquiry, with respect to inadvertence, is the knowing of facts giving rise to inconsistent
positions”; a “lack of awareness of a statutory disclosure duty for [ ] legal claims is not
relevant”; expressing concern that a different rule would “land another blow on the victims of
bankruptcy fraud” (internal quotation marks omitted)); Payne v. Wyeth Pharmaceuticals, Inc.,
606 F. Supp. 2d 613, 616 (E.D. Va. 2008) (federal authority holds that a debtor’s failure to
disclose an asset is deemed inadvertent only when the debtor either lacks knowledge of the
undisclosed claims or has no motive for their concealment). In this case, given these
uncontested facts, we find the failure to disclose the personal injury action insufficient, in
itself, to warrant the application of judicial estoppel.
¶ 64 In sum, we agree with the dissent’s summary in this matter. The fact that the plaintiffs had
a legal duty to disclose 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. “[T]his reasoning
diminishes the application of judicial estoppel to a rigid formula and fails to consider the
specific circumstances of each case.” 2014 IL App (2d) 140100, ¶ 62 (Schostok, J.,
dissenting). Moreover, the filing of the Seymours’ 2010 motion to modify the bankruptcy plan
does not evince their awareness of the need to disclose this personal injury cause of action.
Any inference otherwise is based on a wholesale misconstruction of the motion to modify and
the pertinent affidavits submitted in this case. We find that the application of judicial estoppel
was not warranted here. We, therefore, reverse the judgments of the circuit and appellate
courts, and remand for further proceedings.
¶ 65 Reversed and remanded.
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