8225379965_0b9454b303_zIn Seymour v. Collins, the Appellate Court held that where a plaintiff had failed to disclose an in-progress tort suit prior to final resolution of the plaintiff’s bankruptcy, the plaintiff’s tort suit was barred by judicial estoppel. In the closing days of September, the Illinois Supreme Court unanimously reversed in an opinion by Justice Karmeier. Our summary of the underlying facts and lower court opinions in Seymour is here. Our report on the oral argument is here.

Seymour began in 2008 when the plaintiffs filed a petition for Chapter 13 bankruptcy. A motion to modify was filed in February 2010, requesting a reduction in the monthly payment amount on the grounds that the husband had sustained an unrelated work injury and was receiving only temporary total disability benefits. The plan was modified the following month. The following year, the husband had resumed working and was injured once again. The husband then sustained further injuries when the ambulance in which he was being transported was involved in an accident.

The underlying tort suit arising from the ambulance accident was filed in May 2011. The defendants moved for summary judgment, arguing that the plaintiffs’ failure to inform the bankruptcy court of their tort claim prior to receiving their discharge gave rise to a judicial estoppel barring their suit. The Circuit Court agreed, and a divided panel of the Appellate Court affirmed.

The Supreme Court unanimously reversed. The Court explained that five prerequisites were required before a court can invoke judicial estoppel: the party must (1) take 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. A statement under oath was not, however, a requirement for applying judicial estoppel.

The Court next addressed the standard of review. The defendants argued that because applying judicial estoppel was a matter of discretion, review was for abuse of discretion. The plaintiffs argued that because the decision below was a summary judgment, review was de novo. The Court held that a trial court must begin its analysis by determining whether the five prerequisites were present. If they are, then the court must decide whether judicial estoppel is appropriate – an exercise of discretion reviewed for abuse. Whether or not there was an intent to deceive is relevant to that exercise of discretion. When the application of judicial estoppel results in summary judgment, the appellate court strictly construes the record against the movant and affirms only if there is no room for reasonable persons to differ on the weight to be given the various factors.

The Court assumed without deciding that the plaintiffs were under a continuing duty to disclose the unliquidated tort claim. However, the Court concluded that there was no evidence that the plaintiffs had intended to deceive or mislead the court. The lower courts had relied in part upon the fact that the plaintiffs had told the bankruptcy court that the husband was receiving workers compensation benefits, but the Supreme Court pointed out that the workers compensation had been referenced solely as a cause of reduced income. Nothing in the filing suggested that the plaintiffs knew they were required to disclose the unliquidated tort claim.

“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,” the purposes of judicial estoppel were not served by applying the doctrine, the Court concluded.

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