January 29, 2014
MARK ROBINSON Plaintiff,
DISTRICT OF COLUMBIA, Defendant.
ELLEN SEGAL HUVELLE, United States District Judge
Plaintiff Mark Robinson, an African-American, has sued the District of Columbia, alleging unlawful race discrimination and retaliation under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., and unlawful retaliation under the District of Columbia Whistleblower Protection Act. Before the Court is defendant’s motion to dismiss plaintiff’s complaint as judicially estopped because plaintiff failed to disclose these causes of action during his now-closed bankruptcy proceeding. For the reasons stated below, defendant’s motion will be granted and the case will be dismissed.
The alleged discriminatory and retaliatory actions underlying plaintiff’s complaint occurred between November 29, 2010 and July 30, 2013. (See generally First Amd. Compl., Oct. 18, 2013 [Dkt. No. 11] ¶¶ 7-27.) Plaintiff filed complaints with the Equal Employment Opportunity Commission (“EEOC”) in August and December of 2011 claiming discrimination and retaliation, respectively. (Id. ¶ 28.) He received right-to-sue letters for his complaints on May 30 and June 25, 2013. (Notices of Right to Sue [Dkt. No. 14-3] at 1, 4.) He filed this action on August 27, 2013, seeking $750, 000 in damages. (Compl., Aug. 27, 2013 [Dkt. No. 1] at 7.)
According to his complaint, “[a]s a result of Defendant’s actions against Plaintiff, [plaintiff] . . . suffered significant monetary losses, which led to his [and his wife’s] filing of bankruptcy.” (First Amd. Compl. at ¶ 29.) Plaintiff and his wife filed for bankruptcy on July 9, 2012, while both of plaintiff’s complaints before the EEOC remained pending. In re: Mark E. Robinson & Kimberly A. Robinson, No. 12-22685, Dkt. 1 (Bankr. D. Md. July 9, 2012). In their joint and voluntary bankruptcy petition, plaintiff did not list the pending EEOC complaints as a personal asset under Item 21 on Schedule B, which required him to list and estimate the value of “[o]ther contingent and unliquidated claims of every nature . . . .” (Id. at 13.) Nor did he list the EEOC complaints on the Statement of Financial Affairs, which required him to “[l]ist all suits and administrative proceedings to which the debtor is or was a party within one year immediately preceding the filing of this bankruptcy case.” (Id. at 29.) Plaintiff declared under penalty of perjury that he had read the bankruptcy petition and that its contents were true and accurate. (Id. at 35.) The Robinsons were represented by counsel (though not the counsel in this action) during these proceedings, and plaintiff states that “had [he] known that an EEOC filing would be relevant, [he] would have immediately disclosed that information.” (Aff. of Mark Robinson, Jan. 20, 2014 [Dkt. No. 19-2] ¶ 7.)
Although plaintiff and his wife initially filed for bankruptcy under Chapter 13, they voluntarily converted the petition to one under Chapter 7 on February 11, 2013. In re: Mark E. Robinson & Kimberly A. Robinson, No. 12-22685, Dkt. 32 (Bankr. D. Md. Feb. 11, 2013). The U.S. Bankruptcy Court for the District of Maryland entered an order granting plaintiff and his wife a discharge on May 21, 2013, less than a week before the EEOC issued plaintiff his first right-to-sue letter. In re: Mark E. Robinson & Kimberly A. Robinson, No. 12-22685, Dkt. 52 (Bankr. D. Md. May 21, 2013). After the discharge, plaintiff disclosed this lawsuit to his bankruptcy attorney, who informed him that the suit “did not matter as a bankruptcy discharge had already been issued.” (Robinson Aff. ¶ 8.)
In September of 2013, plaintiff received a correspondence from the bankruptcy trustee regarding “additional potential assets” and assumed that the trustee was referring to this action. (Id. ¶ 9.) Plaintiff attempted to contact the trustee multiple times to confirm his assumption, but was referred to his bankruptcy attorney. (Id.) On October 22, 2013, the bankruptcy trustee submitted a “No Distribution Report, ” indicating that there was no property available for distribution to creditors and stating that the total claims scheduled to be discharged without payment amounted to $967, 633.69. In re: Mark E. Robinson & Kimberly A. Robinson, No. 12-22685, Dkt. 61 (Bankr. D. Md. Oct. 22, 2013). Two days later, the bankruptcy court issued a final decree that the estate had been “fully administered, ” discharging the trustee and closing the case. In re: Mark E. Robinson & Kimberly A. Robinson, No. 12-22685, Dkt. 62 (Bankr. D. Md. Oct. 24, 2013).
Defendant argues that plaintiff should be judicially estopped from bringing this complaint pursuant to Moses v. Howard University Hospital, 606 F.3d 789 (D.C. Cir. 2010), because he did not list the underlying causes of action on his bankruptcy petition or otherwise disclose the causes of action during the bankruptcy proceedings. (Mot. at 2.) Plaintiff declares that “[a]t no time was [he] trying to hide any information or mislead anyone with regard to this law suit” (Robinson Aff. ¶ 10), and that he “will gladly reopen the bankruptcy case to include this case if necessary and ha[s] been made aware that any debtors from the bankruptcy case could come after any judgment or recovery in this case.” (Id. ¶ 11.)
I. MOTION TO DISMISS
Defendants concede that the factual allegations in plaintiff’s amended complaint “allege viable causes of action under Title VII . . . and the District of Columbia Whistleblower Protection Act” (Mot. at 1), but argue that the allegations also establish that judicial estoppel bars those claims. (Id. at 1-2.) When ruling on a motion to dismiss pursuant to Rule 12(b)(6), courts must assume the veracity of all “well-pleaded factual allegations” contained in the complaint and draw all reasonable inferences in plaintiff’s favor. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009); see also Atherton v. D.C. Office of Mayor, 567 F.3d 672, 681 (D.C. Cir. 2009). In so doing, a court is not limited to the facts alleged in the complaint, but also may consider documents attached to or incorporated by reference in the complaint, matters about which the court may take judicial notice, and any documents appended to a motion to dismiss whose authenticity is not disputed, if they are referred to in the complaint and are integral to a claim. U.S. ex rel. Folliard v. CDW Tech. Servs., Inc., 722 F.Supp.2d 20, 24 (D.D.C.2010); see also Fed. R. Civ. P. 10(c). For the purposes of this case, the Court also will consider – and presume the veracity of – the contents of plaintiff’s January 20, 2014 affidavit, which the Court requested by its January 6, 2014 Order.
II. BANKRUPTCY CODE’S DUTY TO DISCLOSE
Section 521 of the Bankruptcy Code requires a debtor to file “a schedule of assets and liabilities; a schedule of current income and current expenditures; [and] a statement of the debtor's financial affairs.” 11 U.S.C. § 521(a)(1)(B). Pending and potential causes of action are assets that must be scheduled under section 521. See Eubanks v. CBSK Financial Grp., Inc., 385 F.3d 894, 897 (6th Cir. 2004); In re Coastal Plains, Inc., 179 F.3d 197, 208 (5th Cir.1999). Thus, “a debtor is under a duty both to disclose the existence of pending lawsuits when he files a petition in bankruptcy and to amend his petition if circumstances change during the course of the bankruptcy.” Moses, 606 F.3d at 793. “Viewed against the backdrop of the bankruptcy system and the ends it seeks to achieve, the importance of this disclosure duty cannot be overemphasized.” In re Coastal Plains, 179 F.3d at 208.
III. JUDICIAL ESTOPPEL
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) (internal quotation marks omitted). As defined by the D.C. Circuit, “[t]here are at least three questions that a court should answer in deciding whether to apply judicial estoppel: (1) Is a party’s later position clearly inconsistent with its earlier position? (2) Has the party succeeded in persuading a court to accept that party’s earlier position, so that judicial acceptance of an inconsistent position in a later proceeding would create the perception that either the first or the second court was misled? (3) Will the party seeking to assert an inconsistent position derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped?” Moses, 606 F.3d at 798. “[A] court may not invoke judicial estoppel against a party (1) who has engaged in misconduct in a separate judicial proceeding, (2) but there is no meaningful connection between that proceeding and the judicial proceeding in which judicial estoppel is sought. There must be a discernible connection between the two proceedings.” Id. at 799. Moreover, the doctrine is inappropriate in cases where “ommissions [by plaintiff] are the result of mere mistakes or inadvertent conduct.” Eubanks, 385 F.3d at 898 (collecting cases); see also New Hampshire, 532 U.S. at 753.
In the bankruptcy context, “every circuit that has addressed the issue has found that judicial estoppel is justified to bar a debtor from pursuing a cause of action in district court where that debtor deliberately fails to disclose the pending suit in a bankruptcy case.” Moses, 606 F.3d at 798 (collecting cases); see Ah Quin v. Cnty. of Kauai Dep’t of Transp., 733 F.3d 267, 271 (9th Cir. 2013) (“[T]he federal courts have developed a basic default rule: If a plaintiff-debtor omits a pending (or soon-to-be-filed) lawsuit from the bankruptcy schedules and obtains a discharge (or plan confirmation), judicial estoppel bars the action.”). The doctrine protects the integrity of the bankruptcy system, see In re Coastal Plains, 179 F.3d at 208, and is meant to prevent parties from hiding causes of actions during bankruptcy proceedings, thereby obtaining a “valuable benefit in the discharge of . . . debts, ” and then “asserting [the causes of action] in order to win a second time.” See Cannon-Stokes v. Potter, 453 F.3d 446, 447 (7th Cir. 2006).
This initially seems a classic case for judicial estoppel, as all three of the Moses elements are met. First, plaintiff’s current position is “clearly inconsistent” with his prior position before the bankruptcy court. See Moses, 606 F.3d at 799. Plaintiff had two complaints pending before the EEOC when he (and his wife) filed for bankruptcy on July 9, 2012. Yet, he did not disclose the EEOC complaints (or the underlying causes of action) as current or potential causes of action under Schedule B, or as suits or administrative proceedings to which he was a party in the Statement of Financial Affairs. And now, after having his debts discharged on May 21, 2013, he seeks to assert those undisclosed causes of action before this Court. Second, the bankruptcy court’s decision to discharge plaintiff from Chapter 7 without consideration of the pending EEOC complaints and underlying discrimination claims “leaves little doubt that [plaintiff] succeeded in hiding the inconsistency from the” bankruptcy court and creates the perception that the bankruptcy court was misled. See Id . And, finally, allowing plaintiff’s claims to proceed would provide an unfair advantage for plaintiff over both creditors of his now-discharged debt, as well as defendant, with whom plaintiff’s trustee could have settled the matter or dismissed it had the cause of action been properly disclosed. See id.
Nonetheless, plaintiff argues that the equitable nature of judicial estoppel, see New Hampshire, 532 U.S. at 750, should foreclose its application under the specific facts of this case. Plaintiff offers two reasons. First, plaintiff argues that there is “no meaningful connection” between plaintiff’s bankruptcy case and this action. (Opp’n at 5.) While it is true that judicial estoppel may apply only if there exists some “meaningful connection between [the earlier] proceeding and the judicial proceeding in which judicial estoppel is sought, ” Moses, 606 F.3d at 799, the connection demanded does not erect a high bar. As evidenced by the cases cited in Moses, all that is required is that a plaintiff “failed to list his claims against [a party] as assets on his bankruptcy schedules, and then later sued [that party] on the same claims.” Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778, 784 (9th Cir. 2001); see also Cannon-Stokes, 453 F.3d at 447; U.S. ex rel. Gebert v. Transp. Admin. Servs., 260 F.3d 909, 918 (8th Cir. 2001); Payless Wholesale Distrib., Inc. v. Alberto Culver (P.R.) Inc., 989 F.2d 570, 571 (1st Cir. 1993).
Because it is undisputed that those criteria are met in this case, the requisite “meaningful connection” between the relevant actions exists here. See Moses, 606 F.3d at 800.
Second, plaintiff argues that his failure to disclose his EEOC claims (and underlying causes of action) should be excused as “purely inadvertent.” (Opp’n at 4-6; Robinson Aff. ¶ 10.) The Supreme Court has instructed that “it may be appropriate to resist application of judicial estoppel when a party’s prior position was based on inadvertence or mistake.” New Hampshire, 532 U.S. at 753 (internal quotation marks omitted). However, the Courts of Appeals “generally have interpreted [inadvertence] narrowly, ” Ah Quin, 733 F.3d at 271, such that “[t]he failure to comply with the Bankruptcy Code’s disclosure duty is ‘inadvertent’ only when a party either lacks knowledge of the undisclosed claim or has no motive for their concealment.” Barger v. City of Cartersville, 348 F.3d 1289, 1295 (11th Cir. 2003); see also In re Coastal Plains, 179 F.3d at 210 (“[T]he debtor’s failure to satisfy its statutory disclosure duty is ‘inadvertent’ only when, in general, the debtor either lacks knowledge of the undisclosed claims or has no motive for their concealment.”). But see Dzakula v. McHugh, __F.3d__, 2014 WL 128605, *2 (9th Cir. Jan. 15, 2014) (interpreting “inadvertence, ” after Ah Quin, based on the “ordinary understanding” of the term). “Where a debtor has both knowledge of the claims and a motive to conceal them, courts routinely, albeit at times sub silentio, infer deliberate manipulation.” Eastman v. Union Pac. R.R. Co., 493 F.3d 1151, 1157 (10th Cir. 2007). This prevailing “interpretation of ‘inadvertence’ is narrow in part because the motive to conceal claims from the bankruptcy court is . . . nearly always present.” Ah Quin, 733 F.3d at 271.
Plaintiff clearly had knowledge of the undisclosed claims he now brings before this Court when he filed for bankruptcy. Although he asserts in his opposition that he did not have “actual knowledge that he possessed a potential cause of action against the Defendant prior to or during the pendency of his bankruptcy proceeding” (Opp’n at 3), his argument fails as a matter of law and is belied by undisputed facts of the case. Contrary to plaintiff’s argument regarding his actual knowledge, “[t]he debtor need not know all the facts or even the legal basis for the cause of action; rather, if the debtor has enough information . . . to suggest that it may have a possible cause of action, then that is a ‘known’ cause of action such that it must be disclosed.” In re Coastal Plains, 179 F.3d at 208 (emphasis added) (internal quotation marks omitted). Plaintiff’s filing of two EEOC claims less than a year before filing for bankruptcy shows that he clearly had “knowledge of enough facts to know that [the] potential cause[s] of action” that he now seeks to bring “exist[ed] during the pendency of the bankruptcy.” See Hamilton, 270 F.3d at 784.
Moreover, plaintiff’s two charges before the EEOC – because they were pending when he and his wife filed for bankruptcy – independently triggered his duty of disclosure, regardless of when he received his right-to-sue letters. See Jethroe v. Omnova Solutions, Inc., 412 F.3d 598, 600 (5th Cir. 2005) (“[Plaintiff] was under a duty both to disclose the existence of her pending EEOC complaint when she filed her petition and to disclose her potential legal claims throughout the pendency of that petition”); see also Casanova v. Pre Solutions, Inc., 228 F. App’x 837, 841 (11th Cir. 2007) (“Even though Plaintiff did not file a lawsuit before or during the pendency of his bankruptcy petition, the pending EEOC charges constitute ‘administrative proceedings’ and ‘[o]ther contingent and unliquidated claims’ that Plaintiff was required to disclose on his [Statement of Financial Affairs].”); Kamont v. West, 83 F. App’x 1, 3 (5th Cir. 2003) (“[Plaintiff’s] first three complaints filed with the EEOC were pending when she filed for bankruptcy, and they are estopped.”).
While plaintiff may not have understood that his EEOC claims were required to be disclosed in the bankruptcy filings,  he clearly had actual knowledge that he had filed the charges with the EEOC. Indeed, plaintiff claims that defendant’s allegedly discriminatory conduct underlying his EEOC claims (and the instant case) also contributed to his and his wife’s bankruptcy. (First Amd. Compl. ¶ 29.) When a plaintiff admits that the factual basis for an undisclosed claim also contributed to his bankruptcy, courts have had little problem finding that the debtor-turned-plaintiff had knowledge of the undisclosed claim during the bankruptcy proceedings, see, e.g., Okan’s Foods, Inc. v. Windsor Assocs. Ltd. P’ship, 217 B.R. 739, 756 (Bankr. E.D. Pa.1998), and that therefore judicial estoppel applied. See Barger, 348 F.3d at 1291 (applying judicial estoppel where defendant’s alleged wrong caused bankruptcy); Payless Wholesale Distrib., 989 F.2d at 571 (same); Oneida Motor Freight, Inc. v. United Jersey Bank, 848 F.2d 414, 420 (3d Cir. 1988) (same). Accordingly, the Court concludes that the only reasonable inference to be drawn from the undisputed facts in this case is that plaintiff knew of the factual bases for his causes of action against defendant throughout his bankruptcy proceedings.
Thus, the only remaining question in this case is whether plaintiff had a motive to conceal the claims he had pending before the EEOC and now brings before this Court. “[T]he motivation sub-element is almost always met if a debtor fails to disclose a claim or possible claim to the bankruptcy court.” Love v. Tyson Foods, Inc., 677 F.3d 258, 262 (5th Cir. 2012) (internal quotation marks omitted). For “[m]otivation in this context is self-evident because of potential financial benefit resulting from the nondisclosure.” Id. (internal quotation marks omitted). Nonetheless, courts have been reticent to hold that the obvious (and general) benefits of a debtor’s non-disclosure in a bankruptcy proceeding produce an irrebuttable presumption that the debtor-turned-plaintiff harbored a motive to conceal during that proceeding. Instead, a court must weigh the generally reasonable assumption that non-disclosing debtor gains an advantage (and thus has a motive) against “the specific facts of a case.” See Stallings v. Hussmann Corp., 447 F.3d 1041, 1049 (8th Cir. 2006). To hold otherwise “would unduly expand the reach of judicial estoppel in post-bankruptcy proceedings and would inevitably result in the preclusion of viable claims on the basis of inadvertent or good-faith inconsistencies.” Ryan Operations G.P. v. Santiam-Midwest Lumber Co., 81 F.3d 355, 364 (3d Cir. 1996). As a result, courts have refused to apply judicial estoppel in instances where the benefits of any recovery on the non-disclosed claims would not have accrued to the non-disclosing party, see Browning v. Levy, 283 F.3d 761, 776-77 (6th Cir. 2002); where faultless trustees attempt to pursue a non-disclosed claim on behalf of the bankruptcy estate’s creditors, see, e.g., Kane v. Nat’l Union Fire Ins. Co., 535 F.3d 380, 387 (5th Cir. 2008); or where “[t]here is no evidence that the nondisclosure played any role in the confirmation of the [reorganization] plan or that disclosure of the potential claims would have led to a different result.” See Ryan Operations, 81 F.3d at 355.
But none of those situations apply here. In this case, plaintiff had over $900, 000 in debts discharged through Chapter 7 and seeks a $750, 000 judgment in this action. Had plaintiff disclosed his claims, his creditors may have objected to discharge of debts, see In re Coastal Plains, 179 F.3d at 212-13, and it would have been the trustee, not the plaintiff, who would have determined whether to pursue the claims through the EEOC, withdraw them and file suit in federal court, or seek settlement. See Moses, 606 F.3d at 793, 799. And plaintiff’s creditors likely would have been the beneficiaries of any resolution of the claims in plaintiff’s favor; indeed, even assuming judgment in the full amount requested, plaintiff may not have received any portion of the judgment. Considering the benefits of non-disclosure under the facts of this case, there can be no doubt that plaintiff had a motive to conceal this action from the bankruptcy court, see, e.g., Cannon-Stokes, 453 F.3d at 448; Jethroe, 412 F.3d at 601; Barger, 348 F.3d at 1296; In re Coastal Plains, 179 F.3d at 213, and thus, plaintiff’s failure to disclose his claims against defendant does not constitute inadvertence. Accordingly, plaintiff, “having obtained judicial relief on the representation that no claims existed, cannot now resurrect them and obtain relief on the opposite basis.” Payless Wholesale Distrib., 989 F.2d at 571.
For these reasons, the Court will GRANT defendant’s motion to dismiss this case as judicially estopped [Dkt. No. 14]. An Order consistent with this Memorandum Opinion will be filed on this day.