Bankrupt plaintiffs must declare tort claim, or court will bar suit
(Continued - Page 2)

The Court of Appeals noted that judicial estoppel precludes a party from gaining an advantage by asserting one position in court and then later taking a clearly inconsistent position in court. In limited circumstances, the court will not invoke the doctrine, such as where the party can reasonably explain the differing positions. In the bankruptcy context, the debtor has an express, affirmative duty to disclose all assets, which includes contingent and unliquidated claims.

Because the doctrine of judicial estoppel is intended to protect the integrity of the judiciary, it applies in the court where the self-contradiction first appears, even if the debtor later takes steps, such as reopening the bankruptcy, in an effort to avoid its effect. Garrett argued that since Dr. Morgan was not a creditor or otherwise involved in the bankruptcy case, he therefore could not argue judicial estoppel. The Court of Appeals rejected that argument.

Because “judicial estoppel seeks to protect courts and not parties, the doctrine may be applied even if the inconsistent actions involve different parties or, in the absence of reliance, damage or final judgment in the first action.”

Garrett also argued that when the Davises reopened their bankruptcy and added the malpractice claim to their schedule of assets, any inconsistency was eliminated. The Court of Appeals disagreed. The consequence of closing a bankruptcy as a “no asset” case is that the debtors tell the creditors that no such claim exists, and the creditors are prevented from pursuing it.