White v. Wyndham Vacation Ownership, Inc.

RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit Rule 206

File Name: 10a0239p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

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BETSY WHITE,

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Plaintiff-Appellant,

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No. 09-5626

v.

,

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WYNDHAM VACATION OWNERSHIP, INC.,

Defendants-Appellees. -

FAIRFIELD RESORTS, and GERALD HAYES,

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Appeal from the United States District Court

for the Eastern District of Tennessee at Knoxville.

No. 08-00405—Thomas A. Varlan, District Judge.

Decided and Filed: August 11, 2010

Before: CLAY and McKEAGUE, Circuit Judges; POLSTER, District Judge.*

_________________

COUNSEL

ON BRIEF: Michael S. Shipwash, LAW OFFICE OF MICHAEL S. SHIPWASH,

Knoxville, Tennessee, for Appellant. R. Eddie Wayland, KING & BALLOW, Nashville,

Tennessee, Catherine H. Molloy, WALLER, LANDSDEN, DORTCH & DAVIS,

Nashville, Tennessee, for Appellees. Gerald Hayes, Seviersville, Tennessee, pro se.

McKEAGUE, J., delivered the opinion of the court, in which POLSTER, D. J.,

joined. CLAY, J. (pp. 17-24), delivered a separate dissenting opinion.

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OPINION

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McKEAGUE, Circuit Judge. Plaintiff-Appellant Betsy White appeals the district

court’s grant of summary judgment to Defendants-Appellees Wyndham Vacation

*

The Honorable Dan A. Polster, United States District Judge for the Northern District of Ohio,

sitting by designation.

1

No. 09-5626 White v. Wyndham Vacation Ownership, et al. Page 2

Ownership, Fairfield Resorts, and Gerald Hayes based on a claim of judicial estoppel.

White did not disclose her sexual harassment claim against Defendants in her initial

bankruptcy filings. Because White’s limited attempts to disclose the harassment claim

before Defendants filed their motion to dismiss were inadequate, we AFFIRM the

district court’s grant of summary judgment.

I. BACKGROUND

Around June of 2001, White was hired to work in the office of Defendants

Wyndham and Fairfield. On November 15, 2006 White filed a complaint with the

Tennessee Human Rights Commission and the Equal Employment Opportunity

Commission (“EEOC”) (“harassment claim”) based on allegations that Defendant Hayes

subjected White to sexually suggestive and derogatory comments as well as to improper

sexual contact at work while she was employed by Defendants Wyndham and Fairfield.

On May 27, 2008, White requested that the EEOC issue her a Notice of Right to Sue,

which the EEOC granted on July 8, 2008.

On August 8, 2008, assisted by counsel, White filed a Chapter 13 Voluntary

Petition and Plan in the United States Bankruptcy Court for the Eastern District of

Tennessee. In her bankruptcy filings, White did not mention her harassment claim

against the Defendants. White should have listed her claims in two sections of the

Voluntary Petition and Plan. First, in the Statement of Financial Affairs, under Section

4, titled “Suits and administrative proceedings, executions, garnishments, and

attachments.” This section required White to list all claims and administrative

proceedings to which she was a party within one year immediately preceding the filing

of her bankruptcy case. Although White failed to list the harassment claim in that

section, she did list another proceeding to which she was a party within the preceding

year. White also failed to list the harassment claim as a personal asset on her bankruptcy

schedules. In particular, Question 21 of “Schedule B – Personal Property” required

White to list “other contingent and unliquidated claims of every nature . . . .” Question

21 also required her to give the estimated value of each claim. White swore, under

No. 09-5626 White v. Wyndham Vacation Ownership, et al. Page 3

penalty of perjury, that her Statement of Financial Affairs and her answer to Question

21 were both true and accurate.

On August 12, 2008, the bankruptcy court entered an order scheduling the Plan

Confirmation Hearing for October 1, 2008 and also ordered White to make payments to

the trustee and directed her to attend a meeting of creditors on September 11, 2008. On

October 1, 2008 the bankruptcy court conducted the Plan Confirmation Hearing. The

harassment claim was not mentioned in the one page official transcript for the hearing.

On October 2, 2008, White filed her lawsuit against Defendants, seeking

$250,000 in compensatory damages and $1 million in punitive damages. On October

3, 2008, White filed an “Application to Employ Counsel” with the bankruptcy court for

the harassment claim. Her application did not identify whether she was the plaintiff or

the defendant in the claim (although it did state that her attorney would be compensated

through a 20% contingency fee), when the claim would be filed, the underlying facts

giving rise to the claim, or the amount of the claim.1

On November 6, 2008, Defendants Wyndham and Fairfield filed a motion to

dismiss on the grounds of judicial estoppel.2 In response, White partially amended her

“Statement of Financial Affairs” on November 11, 2008, to reflect her harassment claim

under the category of “Suits and administrative proceedings, execution, garnishments

and attachments.” Even after amending that statement, White did not disclose the

amount of the suit.

On November 11, 2008, White filed her response to Defendants’ motion to

dismiss on judicial estoppel grounds. She attached an amendment to her bankruptcy

filings and included an affidavit from her bankruptcy attorney. The affidavit states in

the relevant portion:

1

In contrast, on October 20, 2008 White filed a complaint with the bankruptcy court noting that

a creditor had potentially violated the automatic stay provision. (R. 10, Ex. 11.) This complaint provided

the facts giving rise to the complaint, when those facts took place, and the relief that White was seeking.

2

Pro se Defendant Hayes filed a written motion joining Wyndham’s motion to dismiss on

February 24, 2009.

No. 09-5626 White v. Wyndham Vacation Ownership, et al. Page 4

5. Betsy White did inform me of her [harassment claim] when I met with

her. At no time did Ms. White attempt to conceal, or otherwise, keep that

information secret.

6. When I appeared in Court on Ms. White’s bankruptcy, this lawsuit

was discussed, as well as, any potential claims thereof.

7. I am unsure why documentation filed in her bankruptcy matter did not

list this action, however we have subsequently filed an Amendment to

cure this oversight.

(R. 12, Ex. A, pp. 1-2.)

II. ANALYSIS

The district court converted the Defendants’ motion for failure to state a claim

pursuant to FED. R. CIV. P. 12(b)(6) into a motion for summary judgment. The district

court then granted summary judgment for the Defendants based on judicial estoppel. See

Salehpour v. Univ. of Tenn., 159 F.3d 199, 203-04 (6th Cir. 1998).

1. Summary Judgment Standard

This court reviews the district court’s decision to grant summary judgment de

novo. Smith v. Henderson, 376 F.3d 529, 553 (6th Cir. 2004). Summary judgment is

appropriate if the pleadings, the discovery and disclosure materials on file, and any

affidavits show that there is no genuine issue as to any material fact and that the movant

is entitled to judgment as a matter of law. FED R. CIV. P. 56(c)(2). A genuine issue of

material fact exists when, “there is sufficient evidence favoring the nonmoving party for

a jury to return a verdict for that party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

249 (1986). In deciding whether this burden has been met by the movant, this court

views the evidence in the light most favorable to the nonmoving party. Matsushita Elec.

Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). However, to survive

summary judgment, the plaintiff must present affirmative evidence sufficient to show a

genuine issue for trial. Anderson, 477 U.S. at 249. Therefore, “[i]f the evidence is

merely colorable, or is not significantly probative, summary judgment may be granted.”

Id. at 249-50 (internal citations omitted).

No. 09-5626 White v. Wyndham Vacation Ownership, et al. Page 5

2. Judicial Estoppel

This court reviews de novo the district court’s application of judicial estoppel.

See Lorillard Tobacco Co. v. Chester, Willcox & Saxbe, LLP, 546 F.3d 752, 757 (6th

Cir. 2008); Eubanks v. CBSK Financial Group, Inc., 385 F.3d 894, 897 (6th Cir. 2004).

The doctrine of judicial estoppel “generally prevents a party from prevailing in

one phase of a case on an argument and then relying on a contradictory argument to

prevail in another phase.” New Hampshire v. Maine, 532 U.S. 742, 749 (2001) (citation

omitted). This doctrine is “utilized in order to preserve ‘the integrity of the courts by

preventing a party from abusing the judicial process through cynical gamesmanship.’”

Browning v. Levy, 283 F.3d 761, 775 (6th Cir. 2002); see also Eubanks, 385 F.3d at 897

(“Judicial estoppel, however, should be applied with caution to ‘avoid impinging on the

truth-seeking function of the court, because the doctrine precludes a contradictory

position without examining the truth of either statement.’”).

In the bankruptcy context, this court has previous noted that “judicial estoppel

bars a party from (1) asserting a position that is contrary to one that the party has

asserted under oath in a prior proceeding, where (2) the prior court adopted the contrary

position ‘either as a preliminary matter or as part of a final disposition.’” Browning, 283

F.3d at 775-76 (citation omitted). Furthermore Browning noted that, “judicial estoppel

is inappropriate in cases of conduct amounting to nothing more than mistake or

inadvertence.” Id. at 776; see also New Hampshire, 532 U.S. at 753. Two circumstances

in which a debtor’s failure to disclose might be deemed inadvertent are: (1) “where the

debtor lacks knowledge of the factual basis of the undisclosed claims,” and (2) where

“the debtor has no motive for concealment.” Browning, 283 F.3d at 776 (finding that

the debtor there had, “no motive for concealment in light of its role as a

debtor-in-possession, having all the rights and duties of a trustee”).

No. 09-5626 White v. Wyndham Vacation Ownership, et al. Page 6

i. Eubanks: The absence of bad faith prevents the application of judicial

estoppel

In Eubanks, this court examined Browning and noted that the “absence of bad

faith,” was also a factor to consider in determining whether it was appropriate to grant

judicial estoppel. 385 F.3d at 895. In deciding whether the application of judicial

estoppel was appropriate, the court in Eubanks found it particularly significant that the

plaintiffs actually made “numerous attempts” through their counsel to advise the

bankruptcy court and the trustee of their claim and, therefore, that there was no evidence

of “motive or intention” to conceal the potential claim. Id. at 898-99. The court

concluded by noting that judicial estoppel was inappropriate, “[b]ecause this Court has

previously held that evidence of an inadvertent omission of a claim in a previous

bankruptcy proceeding is a reasonable and appropriate factor to consider when analyzing

judicial estoppel’s applicability.” Id. at 899. Eubanks folded the absence of bad faith

in under the inadvertence prong, made the determination of whether there was evidence

of a “motive or intention” to conceal the potential claim critical to a finding of bad faith,

and found that, in the circumstances of that case, the numerous attempts by the plaintiffs

to cure an initial omission indicated that the omission was inadvertent, not intentional.

See Lewis v. Weyerhaeuser Co., 141 F. App’x 420, 426 (6th Cir. July 6, 2005) (“Thus,

under Eubanks, even if the debtor has knowledge of a potential cause of action and a

motive to conceal it, if the plaintiff does not actually conceal it and instead takes

affirmative steps to fully inform the trustee and the bankruptcy court of the action, it is

highly unlikely that the omission in the bankruptcy petition was intentional.”).3

3

Indeed, the facts in Eubanks certainly show that the plaintiffs there made “numerous attempts”

to correct their initial omission of a lender-liability claim from their bankruptcy filings before the defendant

filed a motion to dismiss based on judicial estoppel. In particular, before they filed their lender-liability

lawsuit in state court, the plaintiffs in Eubanks: (1) orally informed the bankruptcy trustee of their claim

during a meeting of the creditors. In response, the trustee instructed (both orally and by a letter sent on

the same day) their counsel to send him all of the documents regarding the claim. The plaintiffs then:

(2) sent the trustee the requested documents concerning the claim two days later; (3) contacted the trustee

on several occasions over the next several months to determine whether he intended to pursue the claim

on behalf of the estate; (4) amended their schedules in the bankruptcy matter to include defendant as a

creditor on Schedule F (although, they failed to amend their schedule B to include the claim under potential

assets); and (5) moved the bankruptcy court for a status conference on the issue of the lender liability

claim. Ultimately, however, a “Report of No Distribution” by the trustee rendered the lender-liability

lawsuit issue moot. See Eubanks, 385 F.3d at 895-96.

Furthermore, after the plaintiffs filed the lender-liability lawsuit and after the defendant filed a

motion to dismiss on the basis of judicial estoppel, the plaintiffs in Eubanks: (1) unsuccessfully moved to

allow the trustee to be substituted for plaintiffs in the lender liability action after the trustee initially refused

No. 09-5626 White v. Wyndham Vacation Ownership, et al. Page 7

ii. Lewis: Circumstances in which the application of judicial estoppel was

appropriate

We have also recently considered a case where the plaintiff did not make

numerous attempts to correct her prior omission of a lawsuit from her bankruptcy

proceedings and where the application of juridical estoppel was found to be appropriate.

In Lewis, the court considered whether the plaintiff’s actions were the result of

inadvertence or a good-faith mistake. 141 F. App’x at 425. The court in Lewis

considered Eubanks but noted that, “Lewis’s actions in the present case pale in

comparison to the actions taken by the plaintiffs in Eubanks.” Id. at 427. The court

found: (1) that none of Lewis’s evidence suggested that her claim was “revealed to the

bankruptcy court or to the trustee before approval of the bankruptcy plan”; (2) that she

“never sought to amend her bankruptcy schedules, nor did she file a motion or make any

other sort of attempt to inform the bankruptcy court of her discrimination action”; and

(3) that “her only relevant contact with the [bankruptcy] trustee was a conversation with

a woman named ‘Phyllis’ whom Lewis alleges worked for the Trustee” but that “Lewis’s

description of that conversation . . . does not indicate that the conversation took place

before Weyerhaeuser raised the issue of judicial estoppel” and that it does not “establish

that Phyllis was aware that the cause of action had been omitted from the bankruptcy

petition.” Id. The Court in Lewis found that these “minimal alleged effort[s]” did not

serve “to establish that her omissions were inadvertent under Eubanks.” Id.

In finding that “Lewis acted intentionally and in bad faith,” the court also noted

that: (1) “Lewis began the process of filing her discrimination claim with the EEOC only

one month after the bankruptcy plan was approved, which tends to show that she waited

until the plan was approved before pursuing her discrimination action” and (2) while “a

non-attorney may not know the exact nature of ‘[o]ther contingent and unliquidated

claims of every nature’” it was hard to believe that Lewis did not understand the

language requiring her to disclose “the gross amount of income the debtor has received

to abandon the claim in the bankruptcy proceeding (evidentially, the trustee initially took actions to pursue

the claim and then abandoned it); and (2) filed an amendment to their original bankruptcy petition to add

the lender-liability claim to their bankruptcy schedule B. See id. at 896-97.

No. 09-5626 White v. Wyndham Vacation Ownership, et al. Page 8

from employment” and, consequently, hard to believe that she had unintentionally

omitted altogether her prior employment with Weyerhaeuser. 141 F. App’x at 427.

3. Application of Judicial Estoppel to White’s Harassment Claim

In short, to support a finding of judicial estoppel, we must find that: (1) White

assumed a position that was contrary to the one that she asserted under oath in the

bankruptcy proceedings; (2) the bankruptcy court adopted the contrary position either

as a preliminary matter or as part of a final disposition; and (3) White’s omission did not

result from mistake or inadvertence. In determining whether White’s conduct resulted

from mistake or inadvertence, this court considers whether: (1) she lacked knowledge

of the factual basis of the undisclosed claims; (2) she had a motive for concealment; and

(3) the evidence indicates an absence of bad faith. In determining whether there was an

absence of bad faith, we will look, in particular, at White’s “attempts” to advise the

bankruptcy court of her omitted claim.4 The contrasting facts in Eubanks and Lewis

illuminate this inquiry.

i. Initial inquiries under the test for judicial estoppel

The Defendants have come forward with evidence that shows that: (1) White

assumed a position that was contrary to one that she asserted under oath in the

bankruptcy proceeding and (2) the bankruptcy court adopted the contrary position as a

preliminary matter. When White filed her harassment claim, she asserted a position

before the district court that was contrary (and continued to be contrary) to the position

that she asserted before the bankruptcy court. White omitted from her initial filings

(which she signed and swore were accurate under penalty of perjury) before the

4

White omitted the initial bankruptcy claim from the filings and, as discussed below, as a debtor,

she had a motive to not disclose the harassment claim. While Defendants are seeking summary judgment,

they have provided evidence showing White’s omission, that it resulted in the bankruptcy court adopting

her position (that there was no harassment claim, which was contrary to her later assertion of her

harassment claim), her knowledge of the harassment claim, and her motive for concealment. Since

Defendant’s have come forward with this evidence, White must now point out evidence that shows an

absence of bad faith (in particular, through her attempts to correct her initial omission) and that her

omission resulted from inadvertence or mistake and was not intentional. Indeed, “[t]o survive summary

judgment, the plaintiff must present affirmative evidence sufficient to show a genuine issue for trial.”

Anderson, 477 U.S. at 249 (“If the evidence is merely colorable, or is not significantly probative, summary

judgment may be granted.”).

No. 09-5626 White v. Wyndham Vacation Ownership, et al. Page 9

bankruptcy court on August 8, 2008 any mention of her harassment claim, despite the

fact that those requirements specifically required her to list the harassment claim. See

11 U.S.C. §§ 521(a)(1), 541(a)(7) (describing the debtor’s affirmative duty to disclose

all of her assets to the bankruptcy court). This omission, which essentially stated that

the harassment claim did not exist, was contrary to White’s later assertion of the

harassment claim before the district court. It also conflicted with the fact that White had

requested and received a Notice of Right to Sue from the EEOC (and hired an attorney),

and with her earlier filing of complaints with the EEOC and the Tennessee Human

Rights Commission.5

Furthermore, on August 12, 2008, the bankruptcy court entered an order

requiring White to make payments to the trustee and directing her to attend a meeting

of the creditors. At this point, the bankruptcy court adopted her position: “[W]hen a

bankruptcy court – which must protect the interests of all creditors – approves a payment

from the bankruptcy estate on the basis of a party’s assertion of a given position, that,

in our view, is sufficient ‘judicial acceptance’ to estop the party from later advancing an

inconsistent position.” Lewis, 141 F. App’x at 425 (quoting Reynolds v. Comm’r, 861

F.2d 469, 473 (6th Cir. 1988)).6

The Defendants have also provided evidence that shows that (1) White had

knowledge of the factual basis of the undisclosed harassment claim, since she had

5

“It goes without saying that the Bankruptcy Code and Rules impose upon bankruptcy debtors

an express, affirmative duty to disclose all assets, including contingent and unliquidated claims.” In re

Costal Plains, Inc., 179 F.3d 197, 207-08 (5th Cir. 1999) (“The duty of disclosure in a bankruptcy

proceeding is a continuing one, and a debtor is required to disclose all potential causes of action.”). White

did not even (partially) amend her initial bankruptcy filings, which she made on August 8, 2009, until

November 11, 2008. She filed her harassment claim on October 3, 2008. Therefore, the filing of her

harassment claim was contrary to the position she had asserted on August 8, 2008 in her bankruptcy

filings. Furthermore, White had filed a complaint related to her harassment claim nearly two years before

she filed for bankruptcy. The EEOC terminated its processing of her harassment claim and issued a Notice

of Right to Sue (at White’s request) on July 8, 2009, a month before White filed her bankruptcy petition.

(See R. 10, Exs. 1-3.)

6

White’s attorney filed an affidavit that stated that: “When I appeared in Court on Ms. White’s

bankruptcy, this lawsuit was discussed, as well as, any potential claims thereof.” (R. 12, Ex. A, pp. 1-2.)

It does not appear, and White has not presented any evidence that, there was any contact between the

attorney and the bankruptcy court (or other communication of White’s harassment claim) until after the

bankruptcy court entered its order on August 12, 2008. Therefore, White’s initial position, which did not

disclose the harassment claim, was accepted by the bankruptcy court.

No. 09-5626 White v. Wyndham Vacation Ownership, et al. Page 10

already filed a complaint before the EEOC. Indeed, she provided an affidavit from her

bankruptcy attorney stating that “Betsy White did inform me of her [harassment claim]

when I met with her.” (R. 11, Ex. A.) Furthermore, Defendants have provided evidence

showing that (2) White had a motive for concealment: if the harassment claim became

a part of her bankruptcy estate, then the proceeds from it could go towards paying

White’s creditors, rather than simply to paying White. See Lewis, 141 F. App’x at 426

(“It is always in a Chapter 13 petitioner’s interest to minimize income and assets.”).

ii. The absence of bad faith and White’s attempts to correct her initial

omission

After considering the evidence presented by the Defendants, the more difficult

question is whether White can point to evidence showing an absence of bad faith. Based

on Eubanks, she can do this by showing her attempts to correct her initial omission.

Since the bankruptcy system depends on accurate and timely disclosures, the extent of

these efforts, together with their effectiveness, is important.7 Furthermore, since judicial

estoppel seeks to prevent parties from abusing the judicial process through cynical

gamesmanship, the timing of White’s effort is also significant. Consequently, efforts to

correct an omission that came before the Defendants filed their motion to dismiss are

more important than efforts that came after the Defendants filed their motion to dismiss.

White has provided evidence that she made several attempts to correct the

omission of the harassment claim before the bankruptcy court. Viewing the evidence

in the light most favorable to White, two of these efforts – (1) Crawford’s affidavit and

(2) the Application to Employ Counsel – came before the Defendants filed their motion

7

White’s omission of the harassment claim from her initial bankruptcy filings is significant and

must be viewed against the backdrop of bankruptcy law:

“[T]he disclosure obligations of consumer debtors are at the very core of the bankruptcy

process and meeting these obligations is part of the price debtors pay for receiving the

bankruptcy discharge.” In re Colvin, 288 B.R. 477, 481 (Bankr. D. Mich. 2003); In re

Coastal Plains, Inc., 179 F.3d at 208 (citing Oneida Motor Freight, Inc. v. United Jersey

Bank, 848 F.2d 414 (3d Cir. 1988)) (“Viewed against the backdrop of the bankruptcy

system and the ends it seeks to achieve, the importance of this disclosure duty cannot

be overemphasized.”).

Lewis, 141 F. App’x at 424. Only adequate disclosure would give the bankruptcy court, the bankruptcy

trustee, and White’s creditors adequate time and information to respond to her harassment claim.

No. 09-5626 White v. Wyndham Vacation Ownership, et al. Page 11

to dismiss. A third effort – (3) the amendment to White’s “Statement of Financial

Affairs” – came after the motion to dismiss. These limited and ineffective attempts to

correct her initial misfiling distinguish this case from Eubanks and make the application

of judicial estoppel appropriate.

a. Crawford’s affidavit

First, her bankruptcy attorney, Steven Crawford, filed an affidavit stating that:

“When I appeared in Court on Ms. White’s bankruptcy, this lawsuit was discussed, as

well as, any potential claims thereof.” (R. 12, Ex. A, pp. 1-2.)8 The affidavit is signed

on November 17, 2008 and it does not state when the appearance took place. However,

the docket sheet filed by Defendants states that the only “appearance” took place on

October 1, 2008 and that Seven Crawford (White’s attorney) and the bankruptcy trustee

appeared. (R. 12, Ex. 1, p.3; see also Appellee’s Br. pp. 37-38 (Appellees also seem to

concede this).) Viewing the evidence in the light most favorable to White, her attorney

discussed (to some degree) the harassment claim when he appeared in court on October

1, 2008, which represents an attempt to correct the initial omission.

However, in the affidavit, White has provided no evidence as to what, exactly,

was discussed, whom it was discussed with, or whether the omission from the initial

filings was discussed or emphasized. Indeed, there is no evidence that the timing of the

harassment claim (whether it arose before or after White’s bankruptcy filings) was

discussed. Moreover, the Defendants provided what they claim is the only official

transcript of this appearance before the bankruptcy court (on October 1, 2008), and this

transcript does not show any discussion of the harassment claim. There is no evidence

that either the bankruptcy court or the trustee asked for any additional information, and

White did not update her filings until after Defendants filed their motion to dismiss.

Furthermore, there is no evidence that White’s creditors were made aware of the

harassment claim. Taken together, this evidence does not show that White effectively

or adequately disclosed the harassment claim, which was allegedly worth $1.25 million.

8

White did not provide any affidavit or explanation for her actions.

No. 09-5626 White v. Wyndham Vacation Ownership, et al. Page 12

This evidence does not show an absence of bad faith or that White’s omission resulted

from mistake or inadvertence.

b. Application to Employ Counsel

Second, on October 3, 2008, White filed an “Application to Employ Counsel”

with the bankruptcy court for the harassment claim. This filing did provide some notice

to the bankruptcy court that White had a harassment claim. However, her application

did not identify whether she was the plaintiff or the defendant in the lawsuit (although

the fact that her lawyer was representing her on a contingency fee suggests that she was

the plaintiff), the amount of the lawsuit, the facts giving rise to the lawsuit, or even when

the actions giving rise to the lawsuit took place. It also did not indicate that the

harassment claim had been omitted from her initial filings and it did not appear to trigger

any request for additional information from the bankruptcy court or the trustee.

Furthermore, it did not cause White to update her inaccurate filing statements.9

Consequently, the application did not adequately inform the court, the trustee, or White’s

creditors of the initial omission and it does not show an absence of bad faith or that

White’s omission resulted from mistake or inadvertence.

c. Amendment to White’s “Statement of Financial Affairs”

Third, after the Defendants filed their motion to dismiss, White partially

amended her “Statement of Financial Affairs” to reflect her harassment claim under the

category of “Suits and administrative proceedings, execution, garnishments and

attachments.” (R. 11, Ex. B (not disclosing the amount of the suit or whether White was

the plaintiff or the defendant).)

We will not consider favorably the fact that White updated her initial filings after

the motion to dismiss was filed. To do so would encourage gamesmanship, since White

only fixed her filings after the opposing party pointed out that those filings were

9

In contrast, when White filed a compliant on October 20, 2008 with the bankruptcy court, noting

that a creditor had potentially violated the automatic stay provisions, she provided specific information to

the bankruptcy court concerning the facts giving rise to the complaint, when those facts took place, and

the relief that she was seeking. (R. 10, Ex. 11 (not mentioning the harassment claim).)

No. 09-5626 White v. Wyndham Vacation Ownership, et al. Page 13

inaccurate. See Barger, 348 F.3d at 1297 (“Allowing [a debtor] to back-up, re-open the

bankruptcy case, and amend his bankruptcy filings, only after his omission has been

challenged by an adversary, suggests that a debtor should consider disclosing potential

assets only if he is caught concealing them.”) (citation omitted).10 Furthermore, she did

not adequately fix those filings but, instead, only updated a part of them (so that they still

did not reflect the estimated value of the lawsuit).

d. Other factors

Several other factors further undermine the sufficiency of White’s attempts to

advise the bankruptcy court of her harassment claim and undermine any evidence

indicating the absence of “motive or intention” to conceal the harassment claim. In

particular, her initial bankruptcy filings, which listed a claim in one of the sections,

should have included the harassment claim in that same section. The inclusion of the

other suit indicates that White (who signed the bankruptcy filings) was aware of this

section of the bankruptcy filings, and of the requirement that she list her claims,

including her harassment claim, in it. (R. 10, Ex. 5, p. 8 (listing a Civil Summons for “Ft

10

The dissent argues that we should – effectively – put White in the position she would have been

in had she properly disclosed her harassment claim in her initial bankruptcy filings. Thus, the harassment

claim should proceed and any proceeds from the harassment claim would go into the bankruptcy estate:

they would go first to White’s creditors and then, if any amount was left over, to White. This would,

effectively, allow White to avoid the consequences of failing to disclose her harassment claim. We do not

believe that this is the proper course of action in this case and that this “so-called remedy would only

diminish the necessary incentive to provide the bankruptcy court with a truthful disclosure of the debtor’s

assets.” Barger, 348 F.3d at 1297 (citation omitted). Furthermore, we note that this court has previously

applied judicial estoppel in similar circumstances, even though the result prevented recovery by bankruptcy

creditors. See generally Lewis, 141 F. App’x at 420-27 (noting that Lewis filed an affidavit (on February

13, 2004) with the district court, stating that she discussed with an employee of the Chapter 13 bankruptcy

trustee, whose office received her ongoing payments, “what [she] should do with any proceeds of this

[discrimination] lawsuit,” and that this employee informed her that, if her discrimination claim was

successful, “some of the proceeds of the [discrimination] lawsuit would have to be paid into the bankruptcy

plan” to which Lewis observed that “[t]hat is exactly what I intend to do”). Similarly, the fact that the final

plan confirmation order appears to have contained an amended modification stating that “[a]ny and all

proceeds from debtor’s pending sexual harassment lawsuit,” does not change our determination. This

language, like White’s amendment to her “Statement of Financial Affairs,” only came after Defendants

filed their motion to dismiss based on judicial estoppel. Furthermore, this language still did not disclose

the amount of White’s harassment claim.

We also disagree with the dissent’s characterization of our opinion. See generally Dissenting Op.

at 17, 19-20, 23 (“The majority’s approach . . . fails to appreciate the absurdity of the result of its erroneous

application of judicial estoppel . . . the majority instead applies it recklessly . . . the majority engages in

speculation and conjecture . . . [t]he majority’s approach constitutes a perversion of justice . . . .”). Instead,

in the circumstances of this case, we analyzed our earlier opinions applying judicial estoppel, White’s

actions, and whether she presented affirmative, significantly probative evidence sufficient to show a

genuine issue for trial. After careful consideration, we found that she did not and, therefore, we affirmed

the district court’s decision.

No. 09-5626 White v. Wyndham Vacation Ownership, et al. Page 14

Sanders Sevier Med Ctr v. Betsy White”)). In addition, White waited until just after the

plan confirmation hearing to file her harassment claim with the district court.11

In short, the limited and ineffective nature of White’s “attempts” to correct her

initial omission clearly distinguish this case from Eubanks, where the defendant made

numerous, effective attempts to correct the initial omission before (and after) the

defendant in that case filed a motion to dismiss based on a claim of judicial estoppel.

Furthermore, White’s attempts to correct the initial omission do not show an absence of

bad faith or that White’s omission resulted from mistake or inadvertence. Instead, the

limited evidence that White provides, the limited nature of her attempts to correct the

initial omission, the strong financial motivation she had to conceal the claim, and her

inadequate response even after the motion to dismiss was filed, all show that she had

motive and intention to conceal the claim.

4. White’s attorney’s affidavit does not excuse her initial omission

We also find that White’s argument, based on her bankruptcy attorney’s affidavit,

implying that she discussed her harassment claim with her attorney, but that her attorney

failed to include it in the filings, and that her attorney’s mistake should excuse her

omission of her harassment claim, is unpersuasive.12 Lewis examined a similar issue and

found that Lewis’s “assertion that she relied in good faith on the advice of her attorney’s

paralegal” was also “unpersuasive.” 141 F. App’x at 427. Lewis claimed that she had

11

The district court also questioned, “the timing of events in this case,” noting that:

Though Mr. Shipwash represented Plaintiff White [in the harassment claim] as early as

May 27, 2008, when he requested the Notice of Right to Sue on her behalf, the

Bankruptcy Court application to employ him was filed only after the meeting with

creditors and objections to confirmation hearing [on October 1, 2008]. The timing of

events in this matter raises questions as to why Plaintiff White’s discrimination claims

were not included on her original bankruptcy petition or at least timely amended after

the filing of the present lawsuit, all of which further weaken her contention of

inadvertence or mistake in this matter.

(R. 20 p. 14.) It appears that the EEOC’s Notice of a Right to Sue, which was issued on July 8, 2008, gave

White 90 days to file a lawsuit against Defendants (however, the box specifically giving 90 days is not

checked). (R. 10, Ex. 4.) White filed her harassment claim on October 2, 2008, just a few days before the

90 day period for filing that claim expired and just one day after her plan confirmation hearing.

12

Since White hired her attorney as her freely selected agent, the burden of showing, with

significantly probative evidence, that her attorney’s conduct should excuse her mistaken filing is hers.

Anderson, 477 U.S. at 249.

No. 09-5626 White v. Wyndham Vacation Ownership, et al. Page 15

told a paralegal with her attorney’s law firm that she had a potential discrimination

claim, but that the paralegal or Lewis’s attorney made a “conscious decision” to not

present that information to the bankruptcy court “in contravention of the clear terms of

the bankruptcy petition.” Id. In rejecting Lewis’s arguments, the court in Lewis cited

to a case from the Eleventh Circuit, which noted that even though the “[debtor’s]

attorney failed to list [the debtor’s] discrimination suit on the schedule of assets despite

the fact that [the debtor] specifically told him about the suit,” that this “attorney’s

omission [was] no panacea.” Id. (quoting Barger v. City of Cartersville, Georgia, 348

F.3d 1289, 1295 (11th Cir. 2003) and citing to Link v. Wabash R.R. Co., 370 U.S. 626

(1962)).13 The court found no reason to deviate “from the general rule set forth in Link

that litigants are bound by the actions of their attorneys,” and, therefore, that Lewis’s

attorney’s omission did not excuse her omission. Id.

In this case, the affidavit from White’s bankruptcy attorney does indicate that

White informed her lawyer of her harassment claim when he met her and that she did not

attempt to conceal the information. However, her lawyer was “unsure” why the

information was not included, and there are a number of explanations (e.g., his mistake,

her mistake, a conscious decision). Furthermore, White has not provided any affidavit

(or other information) clarifying her understanding of the situation or explaining what

she discussed with her lawyer, or why the lawsuit was not included in her initial

bankruptcy filings. Therefore, based on the limited evidence that White has provided

13

Lewis discussed Link in the context of judicial estoppel. In approving the district court’s sua

sponte dismissal of a case after plaintiff’s counsel missed a pretrial conference, Link stated that:

Petitioner voluntarily chose this attorney as his representative in the action, and he

cannot now avoid the consequences of the acts or omissions of this freely selected agent.

Any other notion would be wholly inconsistent with our system of representative

litigation, in which each party is deemed bound by the acts of his lawyer-agent and is

considered to have notice of all facts, notice of which can be charged upon the attorney.

370 U.S. at 633-36. However, we have been reluctant to “uphold the dismissal of a case merely to

discipline an attorney.” Coleman v. American Red Cross, 23 F.3d 1091, 1094-95 (6th Cir. 1994)

(numerous citations omitted) (noting, in the context of dismissal for violation of a protective order, that

“dismissal of an action for an attorney’s failure to comply is a harsh sanction which the court should order

only in extreme situations showing ‘a clear record of delay or contumacious conduct by the plaintiff’ . . .

‘[d]ismissal is usually inappropriate where the neglect is solely the fault of the attorney’” (citation omitted;

emphasis in original).).

No. 09-5626 White v. Wyndham Vacation Ownership, et al. Page 16

and pointed to, it is unclear whether White or her attorney is responsible for the

omission.

In any event, the mistake does not lie solely with White’s attorney. In addition

to choosing her attorney, White signed the bankruptcy petition that omitted the filing.

By signing, she swore, under penalty of perjury, that the filing was accurate. The initial

bankruptcy petition contained one proceeding in it already, which was listed in the

section where the harassment claim should have been listed. (R. 10, Ex. 5, p. 8.) The

fact that one proceeding was listed should have further informed White that other claims

(like the harassment claim) needed to be listed, especially given the apparent importance

(both financially and personally) of the harassment claim. Consequently, we will not

deviate “from the general rule set forth in Link that litigants are bound by the actions of

their attorneys,” and, therefore, find that the ambiguous statements in the affidavit from

White’s bankruptcy attorney (which is the only evidence on this matter that she points

to) do not excuse her omission. Id.

III. CONCLUSION

White asserted a position before the bankruptcy court that was contrary to the

position that she asserted before the district court and the bankruptcy court accepted her

position. She had a motive to conceal and knowledge of the factual basis of her

harassment claim. Furthermore, the evidence White has presented of her attempts to

advise the bankruptcy court and the trustee of her harassment claim does not excuse her

initial omission. Therefore, we AFFIRM the decision of the district court.

No. 09-5626 White v. Wyndham Vacation Ownership, et al. Page 17

_________________

DISSENT

_________________

CLAY, Circuit Judge, dissenting. The majority’s approach to this case fails to

appreciate the absurdity of the result of its erroneous application of judicial estoppel.

Plaintiff has brought suit based on serious sexual harassment charges, including

improper sexual contact at work. In a normal situation, if Plaintiff could prove the

allegations, she would personally be entitled to damages. The fact that Plaintiff was in

bankruptcy proceedings changes the normal course of events. But because the claim

arose before she filed for bankruptcy, her creditors should be entitled to any proceeds

that could be used to repay Plaintiff’s debts. Therefore, our law permits damages to be

awarded to the bankruptcy estate in order to insure Plaintiff’s creditors receive their fair

share.

It is undisputed that Plaintiff failed to disclose her claim against Wyndham

Vacation Ownership (“Wyndham”) in her initial bankruptcy filings. However, she has

come forward with sufficient evidence to allow a reasonable factfinder to find that she

notified the trustee and the bankruptcy court of her claim before it was filed. The

majority believes that because of Plaintiff’s failure to make the appropriate disclosure

in connection with the initial bankruptcy filing, neither she nor her creditors should be

entitled to any recovery. Instead, the majority finds that Wyndham, the employer who

allegedly employed someone who repeatedly sexually harassed Plaintiff, should be

excused from paying any damages to any party whatsoever.

“Judicial estoppel is an equitable doctrine to be invoked by this court at its

discretion.” Pennycuff v. Fentress County Bd. of Educ., 404 F.3d 447, 453 (6th Cir.

2005) (citing New Hampshire v. Maine, 532 U.S. 742, 750 (2001)). In applying an

equitable doctrine, we need to weigh the benefits involved and the degree of fault of the

parties. The only fault attributed to Plaintiff in the instant case is the contested issue of

whether she concealed her sexual harassment claim from the bankruptcy court.

Plaintiff’s creditors, who would have had a right to recover from any judgment in favor

No. 09-5626 White v. Wyndham Vacation Ownership, et al. Page 18

of Plaintiff, are blameless in this dispute. See Cannon-Stokes v. Potter, 453 F.3d 446,

448 (7th Cir. 2006) (acknowledging that judicial estoppel “is an equitable doctrine, and

it is not equitable to employ it to injure creditors who are themselves victims of the

debtor’s deceit”). Meanwhile, Defendant stands accused of allowing sexual harassment

in the workplace and would suffer no “unfair detriment” from Plaintiff’s alleged

inconsistent positions, since it had no stake in the bankruptcy proceedings. See New

Hampshire, 532 U.S. at 751.

The majority ignores the fact that Defendant suffered no prejudice from

Plaintiff’s initial failure to disclose her claim and improperly applies in a formulaic

manner the two-part test for judicial estoppel articulated in Browning v. Levy, 283 F.3d

761, 776 (6th Cir. 2002). That test ignores a third consideration that the Supreme Court

has found relevant, namely “whether the party seeking to assert an inconsistent position

would derive an unfair advantage or impose an unfair detriment on the opposing party

if not estopped.” New Hampshire, 532 U.S. at 751.1 Additionally, the Supreme Court

has emphasized that it did not “establish inflexible prerequisites or an exhaustive

formula for determining the applicability of judicial estoppel. Additional considerations

may inform the doctrine’s application in specific factual contexts.” Id.

The majority’s position is to absolve of all liability a defendant who has not been

injured in any way by Plaintiff’s actions – even though it is factually disputed whether

Plaintiff failed to notify the bankruptcy court of her sexual harassment suit and even

though her creditors are accused of no wrongdoing. The equitable nature of judicial

estoppel means that there is no bar to Plaintiff’s claim unless the Court determines that

barring the suit is the most equitable outcome. The proper outcome is not foretold by

applying some sort of litmus test but is determined in the sound discretion of the Court.

We have often remarked that judicial estoppel “should be applied with caution to ‘avoid

impinging on the truth-seeking function of the court.’” Eubanks v. CBSK Financial

Group, Inc., 385 F.3d 894, 897 (6th Cir. 2004) (quoting Teledyne Indus., Inc. v. NLRB,

1

Browning did not create some sort of separate test to be applied in the bankruptcy setting. For

support of its two-part test, it cites to Teledyne Indus., Inc. v. NLRB, 911 F.2d 1214, 1218 (6th Cir. 1990),

a review of a National Labor Relations Board order that had nothing to do with bankruptcy.

No. 09-5626 White v. Wyndham Vacation Ownership, et al. Page 19

911 F.2d 1214, 1218 (6th Cir. 1990)). The majority in this case recklessly applies

judicial estoppel, barring a suit to the detriment of Plaintiff and her creditors even though

Plaintiff has come forward with evidence that she informed the bankruptcy court of her

sexual harassment claim. The evidence presented by Plaintiff creates clear factual

disputes which make this case inappropriate for the application of judicial estoppel at the

summary judgment stage.

Judicial estoppel reasonably precludes suits in cases where a plaintiff has failed

to disclose a potential suit to the bankruptcy court because otherwise, potential plaintiffs

would be able to reap a windfall by retaining monetary awards that properly should be

made available to their creditors. Judicial estoppel may be appropriate in a case where

a plaintiff has made no legitimate attempt to inform the bankruptcy court or the

bankruptcy estate of his or her potential claims. See Lewis v. Weyerhaeuser Co., 141 F.

App’x 420, 427 (6th Cir. July 6, 2005) (finding that apart from a phone call to the

trustee’s office on an undisclosed date, the plaintiff did not “make any other sort of

attempt to inform the bankruptcy court of her discrimination action”).2 However, if a

plaintiff has attempted to inform both the bankruptcy court and the trustee in a

meaningful way of a potential suit even before it is filed, then it is hardly equitable to

absolve the defendant of liability. Courts should endeavor to insure that a plaintiff’s

creditors, if possible, have a real chance to recover any damages owed by a defendant.

See Eubanks, 385 F.3d at 898 n.1 (acknowledging that “various courts in other

jurisdictions have held that a trustee’s knowledge of the claim precludes the application

of judicial estoppel since the plaintiff was obviously not trying to defraud the court if

they placed the trustee on notice”).

2

The majority’s characterization of Lewis as representing “similar circumstances” to those

presented in this case is belied by a look at the factual record of each case. In Lewis, we cited with

approval the district court’s opinion that noted that none of Lewis’ evidence suggested that her claims

“were revealed to the bankruptcy court or to the trustee before approval of the bankruptcy plan.” 141 F.

App’x at 427. We emphasized the plaintiff’s “failure to notify the bankruptcy court” and specifically noted

that the plaintiff never established that her contact with an alleged employee of the trustee took place

before the issue of judicial estoppel was raised. In this case, meanwhile, we have a signed affidavit from

Plaintiff’s lawyer swearing that he informed both the bankruptcy court and the trustee of Plaintiff’s sexual

harassment suit. Furthermore, the lawyer filed documents available to any party in the bankruptcy

proceedings requesting an attorney on a contingency fee basis for a sexual harassment suit. Both of these

actions took place before Plaintiff had even filed her sexual harassment suit and before Defendant raised

a defense of judicial estoppel.

No. 09-5626 White v. Wyndham Vacation Ownership, et al. Page 20

The majority ignores the lesson of Eubanks by focusing on whether the omission

in Plaintiff’s initial bankruptcy filing is attributable “to nothing more than mistake or

inadvertence.” Browning, 283 F.3d at 776. In Lewis, we found that in light of Eubanks,

an “argument that judicial estoppel must apply where a debtor cannot establish ‘mistake

or inadvertence’ under Browning is unpersuasive.” 141 F. App’x at 427. In Lewis, we

acknowledged that Eubanks teaches that “even if the debtor has knowledge of a potential

cause of action and a motive to conceal it, if the plaintiff does not actually conceal it and

instead takes affirmative steps to fully inform the trustee and the bankruptcy court of the

action, it is highly unlikely that the omission in the bankruptcy petition was intentional.”

Id. at 426.

The majority imports a “bad faith” requirement from Eubanks, but it still applies

judicial estoppel in too rigid a fashion. Furthermore, in rushing to foreclose a judicial

remedy to Plaintiff and her creditors, the majority engages in speculation and conjecture

about Plaintiff’s motivations in order to find that she was acting in bad faith rather than

find that the exclusion of her sexual harassment suit was negligent or inadvertent. Even

though this matter is before the Court on summary judgment, under which standard

Plaintiff should be afforded the benefit of the doubt, the majority inexplicably resolves

all disputed issues of material fact in favor of Defendant. The majority places the entire

burden on Plaintiff to show an absence of bad faith and places little or no burden on

Defendant to show the existence of bad faith. In skewing the appropriate standard to the

detriment of Plaintiff, the majority also loses sight of the crucial fact in Eubanks that

“[t]here is record evidence . . . that Plaintiffs made the court, and the Trustee, aware of

the potential civil claim against Defendant before the bankruptcy action closed, although

the claim was omitted from Plaintiffs’ bankruptcy schedule form.” 385 F.3d at 898.

Similar evidence is assuredly present in this case, particularly if, unlike the majority, we

apply the proper summary judgment standard.

Plaintiff presents two facts to support her contention that she notified the

bankruptcy court and the trustee of her sexual harassment claim. First, she provides her

bankruptcy attorney’s signed, sworn statement to the effect that “When I appeared in

No. 09-5626 White v. Wyndham Vacation Ownership, et al. Page 21

Court on Ms. White’s bankruptcy, this lawsuit was discussed, as well as, any potential

claims thereof.” Notwithstanding the majority’s contention that Plaintiff’s attorney’s

affidavit lacked sufficient specificity, the affidavit clearly states that the lawsuit and

potential claims were discussed in the bankruptcy court. Second, Plaintiff notes that on

October 3, 2008, she filed an “Application to Employ Counsel” with the bankruptcy

court. Viewing the evidence in the light most favorable to the Plaintiff, as we must at

this stage of the proceedings, her counsel informed the bankruptcy court and the trustee

of the sexual harassment suit directly in court and indirectly through the Application to

Employ Counsel. Those facts strongly suggest that she did not attempt to conceal the

sexual harassment claim.

The time-line on this case is crucial. Plaintiff filed her bankruptcy petition on

August 8, 2008, and the court ordered White to make payments to the trustee on August

12, 2008. The plan confirmation hearing was scheduled for October 1, 2008. At that

hearing, the first in-court hearing in the bankruptcy proceedings, Plaintiff’s bankruptcy

attorney notified the court about the sexual harassment claim. Plaintiff filed her sexual

harassment lawsuit after this hearing – where her attorney notified the trustee and the

bankruptcy court of her claim.3

The majority refuses to admit it, but it is apparent that it does not believe

Plaintiff’s bankruptcy attorney. However, when an officer of the court swears that the

lawsuit was discussed in front of the bankruptcy judge and the trustee, a reasonable

factfinder could certainly believe that such a conversation occurred. See, e.g., United

States v. Hernandez, 31 F.3d 354, 361 (6th Cir. 1994) (holding that when an attorney,

who is an officer of the court, testifies, “absent some indication of misconduct, the court

3

The district court and the majority infer bad motive from the filing of the sexual harassment

complaint after the plan confirmation hearing. Plaintiff had received her right-to-sue letter in July 2008,

but did not file suit until after the plan confirmation hearing on October 1, 2008. Construing the facts most

favorably for Plaintiff, however, the attorney told the bankruptcy court and the trustee about the case at

the plan confirmation hearing. See Martin v. Cincinnati Gas and Elec. Co., 561 F.3d 439, 443 (6th Cir.

2009) (noting that at the summary judgment stage, “the district court must construe the evidence and draw

all reasonable inferences in favor of the nonmoving party”). The proper inference to make on Plaintiff’s

behalf is that the filing of the claim was the result of the fact that the statute of limitations was about to run.

The right-to-sue letter was received on July 8, 2008, meaning the 90-day period would run less than a week

after the sexual harassment suit was filed. Plaintiff would hardly be the first litigant to wait until the statute

of limitations was about to run to file her lawsuit.

No. 09-5626 White v. Wyndham Vacation Ownership, et al. Page 22

is entitled to accept his representations on the issue”). The majority ignores a core tenet

of summary judgment jurisprudence by failing to make all inferences in favor of Plaintiff

as the non-moving party. The majority inexplicably attributes the lack of record

evidence that the trustee responded with requests for additional information as proof that

the Plaintiff’s bankruptcy attorney failed to inform the court of Plaintiff’s suit. Not only

is it troubling that an absence of evidence could, in the mind of the majority, trump the

sworn statement of an officer of the court, but the majority also ignores the possibility

that the trustee was not overly concerned about the suit because the potential proceeds

were too speculative to worry about in what was a relatively small bankruptcy

proceeding. The bankruptcy estate had allowed claims of less than $17,000, and no

individual creditor had a claim of more than $4,000.

If Plaintiff’s bankruptcy attorney’s sworn statement was insufficient to show that

Plaintiff was not attempting to conceal her suit, two days later, Plaintiff filed an

application to employ counsel on a contingency basis. The majority contends that

Plaintiff failed to state in the application whether she was plaintiff or defendant in the

lawsuit, but that motion was accompanied by an affidavit from her sexual harassment

attorney which stated: “I do not hold nor represent an interest adverse to the Debtor

Betsy Ann White’s sexual harassment lawsuit; I am eligible to serve as counsel to the

Debtor, Betsy Ann White in her sexual harassment lawsuit.” If Plaintiff were attempting

to hide her sexual harassment lawsuit from her creditors, then it was assuredly a bizarre

decision to notify them of her wish to employ counsel seeking to represent her in that

lawsuit.

Plaintiff’s position that a proper resolution of the case would allow Plaintiff an

opportunity to prove her case is bolstered by the fact that Plaintiff’s actual plan

confirmation order, issued on January 14, 2009, called for “Any and all net proceeds

from debtor(s) pending sexual harassment lawsuit claim to be paid into the plan as

additional plan payments, except for Court approved legal fees and expenses.” Thus, the

bankruptcy court reached the appropriate result. If Plaintiff could prove she was

sexually harassed, Defendant should pay damages, and Plaintiff’s creditors should

No. 09-5626 White v. Wyndham Vacation Ownership, et al. Page 23

receive the money owed to them. Obviously, notification to creditors made after a

defendant’s motion to dismiss may require a different result to avoid providing

incentives for debtors to hide potential claims until those claims are discovered by an

opposing party. However, the record in this case amply supports a determination that

a reasonable jury could find that Plaintiff made the trustee and the bankruptcy court

aware of the sexual harassment claim before it was even filed, and certainly before

Defendant’s motion to dismiss in this action.

The majority therefore attempts to punish Plaintiff for failing to properly disclose

her sexual harassment suit, even though a factfinder could easily determine that she

informed both the trustee and the bankruptcy court of the suit before the possibility of

judicial estoppel was ever raised. Furthermore, the majority simply never comes to

terms with the fact that the real victim of such unorthodox and aggressive use of judicial

estoppel is not the debtor but the bankruptcy estate, and by extension the debtor’s

creditors. Quite simply, if the debtor was not intentionally hiding her suit and in fact

disclosed it to both the bankruptcy judge and the trustee, it is hardly equitable to deprive

the bankruptcy estate of the right to its share of any recovery. On the other hand, the

outcome proposed by Plaintiff is amply supported by our precedents and rulings in other

cases that decline to apply judicial estoppel when subsequent conduct indicates that the

initial omission was inadvertent or not done in bad faith. See, e.g., Eubanks, 385 F.3d

at 899; Browning, 283 F.3d at 776 (holding that “judicial estoppel is inappropriate in

cases of conduct amounting to nothing more than mistake or inadvertence”); Matthews

v. Potter, 316 F. App’x 518, 522 (7th Cir. 2009) (finding judicial estoppel inapplicable

where plaintiff “did not conceal her administrative complaints during the bankruptcy

proceedings”).

The majority’s approach constitutes a perversion of justice because, under its

approach, even if Plaintiff could prevail in her sexual harassment lawsuit, neither she nor

her creditors could receive any damages. Contrary to both our case law and basic

notions of justice, the majority has decided that Defendant, who allegedly employed

someone who repeatedly sexually harassed Plaintiff, should pay no damages and suffer

No. 09-5626 White v. Wyndham Vacation Ownership, et al. Page 24

no consequence for its egregious behavior under any circumstances – even if Plaintiff

could demonstrate to a trier of fact that she did not deliberately conceal her sexual

harassment claim.

I therefore respectfully dissent.