A Pair of Cases about "Judicial Estoppel" Failure to list lawsuit as asset does not result in denial of right to sue Eubanks v. CBSK Financial Group, Inc., 6th Cir. 2004 Judicial estoppel bars a party from asserting a position that is contrary to one the party has asserted under oath in a prior proceeding where the prior Court adopted the contrary position “either as a preliminary matter or as part of a final disposition.” Dismissal of Plaintiffs' lender-liability claim on ground that Plaintiffs were judicially estopped because they failed to disclose that claim in a Bankruptcy proceeding is reversed where the District Court did not consider Plaintiffs' reasons of mistake and inadvertence, as well as an absence of bad faith. Plaintiffs failed to schedule claims sounding in breach of contract, contractual bad faith, tortious interference with contract, negligent misrepresentation, constructive fraud, negligent supervision, breach of fiduciary duty and intentional infliction of emotional distress. The District Court held that Plaintiffs were judicially estopped from pursuing the claim thereafter. Plaintiffs asserted that their Bankruptcy Counsel inadvertently failed to amend their schedules. Held: Because the Appellate Court previously held that evidence of inadvertent omission is a reasonable and appropriate factor to consider when analyzing judicial estoppel, it reversed the District Court decision barring Plaintiffs’ civil claim. Failure to list lawsuit in Schedules leads to dismissal Howell v. Town of Leyden, Mass. 2004 Stephanie and William Howell brought an action against the Town of Leyden and its Chief of Police alleging civil rights violations and intentional torts. A month before filing suit the Howells filed a Petition in the Middle District of Florida. In that Petition the Howells did not list the suit among their assets; ultimately the Howells received their discharge without disclosing the claim. Based on that omission the Defendants moved for Summary Judgment on the grounds that judicial estoppel precluded the suit. The Court agreed. The Howells retained an Attorney to pursue Bankruptcy. That Florida Attorney sent a questionnaire. The Howells never met with their Attorney to review their answers. Nevertheless, the Attorney used their questionnaire answers to prepare the Petition and Schedules. The Howells received the completed forms by mail along with a letter requesting that they review the paperwork. Again, the Florida Attorney never provided the Howells with an explanation of the forms. The Petition was filed on July 19, 2002. The Statement of Financial Affairs asked the Petitioners to list any "suits and administrative proceedings to which the debtor is or was a party within one year immediately preceding the filing of this bankruptcy case." The Howells answered "none." Schedule B asked the petitioner to identify "contingent and unliquidated claims of every nature, including . . . counterclaims of the debtor, and rights to setoff claims." Again, the Howells answered "none." The Howells submitted an affidavit to the effect that they did not understand these questions and believed that they referred to tax and other debt matters. Held: The prerequisites of judicial estoppel are clearly met on these facts: first, the Howells represented to the Florida Bankruptcy Court that they had no claims among their assets — a position contrary to their assertion before the Appellate Court that they had multiple claims against the Defendants. Second, the Bankruptcy Court accepted the Howells' representation in resolving their Petition and depriving their creditors of access to this potential asset. Were the Court to allow the Howells to proceed with this lawsuit, the integrity of the judicial process would be endangered. Right to convert to Chapter 13 is not absolute In re Copper, 6th Cir. BAP 2004 The right to convert from Chapter 7 to Chapter 13 is not absolute and in extreme circumstances conversion can be denied. In the Debtor's 6th Chapter 7 filing, the Bankruptcy Court did not err in denying a motion to convert on the grounds that the conversion would be futile since it was clear that the Debtor lacked the requisite good faith necessary to confirm a Plan.