Can a personal injury claim be barred by judicial estoppel if you fail to disclose the unliquidated claim in your personal bankruptcy proceeding? That’s the question the Illinois Supreme Court agreed to decide late in its January term in Seymour v. Collins, a case from the Second District.

In April 2008, plaintiffs filed a petition for bankruptcy. The following year, husband was injured at work. Plaintiffs moved to modify their Chapter 13 bankruptcy plan because husband was unable to work and was receiving workers compensation payments. The following year, husband was injured at work once again, and then injured a second time while being transported in an ambulance. He then filed a tort suit for the injuries arising out of the ambulance accident.

In July 2012, plaintiffs were granted a discharge in bankruptcy. Defendants then moved for summary judgment in the tort suit arising out of the ambulance accident, arguing that plaintiffs were judicially estopped from proceeding with their claim, since they had never disclosed their claim in the bankruptcy proceeding. The trial court granted the motion.

The Appellate Court affirmed. The five elements of judicial estoppel, the court found, were that a party (1) took two positions; (2) which were factually inconsistent; (3) in separate judicial proceedings; (4) intending for the trier of fact to accept the truth of the facts alleged; and (5) the plaintiff succeeded in the first proceeding, receiving some benefit from the position taken.

The court held that plaintiff satisfied the first element by failing to disclose their unliquidated personal injury claim. Although the bankruptcy forms didn’t affirmatively require the disclosure of such claims, the bankruptcy estate encompassed all property, including legal claims, acquired after the petition is filed but before the case is closed. Debtors have a continuing duty to disclose all assets acquired while the case remained open.

Further, plaintiffs received some benefit by failing to disclose their claim, since they avoided the possibility of creditors objecting to or seeking modification of their plan. They also received a discharge of their debts without disclosing the existence of their personal injury claims.

The majority acknowledged that some courts have held that a statement under oath is necessary for the doctrine to apply, but the court disagreed. The element was more properly expressed as an intent for the court to accept the truth of the facts asserted in support of the petition, the court found. That element was satisfied on the evidence, noting that the plaintiffs had disclosed the husband’s first workers’ compensation case in the course of seeking a reduction in their payments.

Justice Schostok dissented, arguing that a statement under oath was needed for judicial estoppel to apply, and that the evidence showed that the non-disclosure in the case was unintentional.

We expect Seymour to be decided in eight to twelve months.

Image courtesy of Flickr by Steve Lyon (no changes).