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Mitchell v. Davis

United States District Court, S.D. Mississippi, Northern Division

January 2, 2019

KENNYADA MITCHELL PLAINTIFF
v.
LISA DAVIS, IN HER INDIVIDUAL AND OFFICIAL CAPACITIES, AND HAZLEHURST CITY SCHOOL DISTRICT DEFENDANTS

          ORDER

          Daniel P. Jordan III CHIEF UNITED STATES DISTRICT JUDGE.

         Defendants Lisa Davis and the Hazlehurst City School District seek summary judgment on Plaintiff Kennyada Mitchell's claims against them on the basis of judicial estoppel. Mot. Summ. J. [31]. For the reasons that follow, Defendants' motion is granted, but the Trustee will be given an opportunity to pursue Mitchell's claims on behalf of the bankruptcy estate.

         I. Facts and Procedural History

         Mitchell filed this lawsuit in July 2017, alleging that Defendants caused her to lose her job with the Mississippi Department of Education in May 2017. See Am. Compl. [12]. On August 1, 2018, Mitchell filed a Voluntary Petition for Chapter 13 Bankruptcy in the United States Bankruptcy Court for the Southern District of Mississippi. Yet when she completed her bankruptcy schedules, Mitchell failed to disclose this still-pending lawsuit. Instead, she checked the “no” box in response to questions whether she “own[s] or ha[]s any legal or equitable interest in”: any “[c]laims against third parties, whether or not you have filed a lawsuit or made a demand for payment” or any “[o]ther contingent and unliquidated claims of every nature.” Bankruptcy Schedules [31-3] at 5, 7; see also Id. at 37 (responding “no” to the question, “[w]ithin 1 year before you filed for bankruptcy, were you a party in any lawsuit, court action, or administrative proceeding?”).

         An even more troubling deception occurred on September 4, 2018, when Mitchell attended a creditors' meeting and was examined under oath. See 11 U.S.C. § 343. At that meeting, Mitchell testified that she believed the information in her schedules was accurate, that she had identified all her assets in her schedules, and that she had no “pending litigation or lawsuits or claims against anyone.” Tr. [31-7] at 3. On October 16, 2018, the bankruptcy court confirmed Mitchell's chapter 13 plan. Under the confirmed plan, which calls for 60 monthly payments of $371.00, “[a]ll property shall remain property of the estate and shall vest in the debtor only upon entry of discharge.” Chapter 13 Plan [31-8] at 1.

         Defendants filed their motion for summary judgment on November 7, 2018, asserting that Mitchell is judicially estopped from pursuing her claims given her failure to disclose them as an asset in her bankruptcy schedules. In response, Mitchell filed amended schedules in her bankruptcy case on November 20, 2018. Defendants' motion has been fully briefed, and the Court has personal and subject-matter jurisdiction.

         II. Standard

         Summary judgment is warranted under Federal Rule of Civil Procedure 56(a) when evidence reveals no genuine dispute regarding any material fact and that the moving party is entitled to judgment as a matter of law. The rule “mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

         The party moving for summary judgment “bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.” Id. at 323. The nonmoving party must then “go beyond the pleadings” and “designate ‘specific facts showing that there is a genuine issue for trial.'” Id. at 324 (citation omitted). In reviewing the evidence, factual controversies are to be resolved in favor of the nonmovant, “but only when . . . both parties have submitted evidence of contradictory facts.” Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc). When such contradictory facts exist, the court may “not make credibility determinations or weigh the evidence.” Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000). Conclusory allegations, speculation, unsubstantiated assertions, and legalistic arguments have never constituted an adequate substitute for specific facts showing a genuine issue for trial. TIG Ins. Co. v. Sedgwick James of Wash., 276 F.3d 754, 759 (5th Cir. 2002); Little, 37 F.3d at 1075; SEC v. Recile, 10 F.3d 1093, 1097 (5th Cir. 1993).

         III. Analysis

         “Judicial estoppel ‘is an equitable doctrine invoked by a court at its discretion' for the purpose of ‘protect[ing] the integrity of the judicial process.'” United States ex rel. Long v. GSDMIdea City, L.L.C., 798 F.3d 265, 271 (5th Cir. 2015) (quoting New Hampshire v. Maine, 532 U.S. 742, 749-50 (2001)). In assessing whether to apply judicial estoppel, the Court “look[s] to whether: ‘(1) the party against whom judicial estoppel is sought has asserted a legal position which is plainly inconsistent with a prior position; (2) a court accepted the prior position; and (3) the party did not act inadvertently.'” Id. at 271-72 (quoting Reed v. City of Arlington, 650 F.3d 571, 574 (5th Cir. 2011) (en banc)). In the context of a legal position taken in a bankruptcy case, “judicial estoppel must be applied in such a way as to deter dishonest debtors, whose failure to fully and honestly disclose all their assets undermines the integrity of the bankruptcy system.” Reed, 650 F.3d at 574.

         In response to Defendants' motion, Mitchell concedes the first two elements of the judicial-estoppel test, arguing only that her failure to disclose this lawsuit in her bankruptcy schedules was inadvertent. In this context, “inadvertence exists ‘only when, in general, the debtor either lacks knowledge of the undisclosed claims or has no motive for their concealment.'” Long, 798 F.3d at 272 (quoting In re Coastal Plains, Inc., 179 F.3d 197, 210 (5th Cir. 1999)).

         Mitchell was obviously aware of this civil action during her bankruptcy proceedings. And as to the second available argument, the Fifth Circuit has “held that a motive to conceal is ‘self-evident' when a debtor fails to disclose an asset to the bankruptcy court due to the ‘potential financial benefit resulting from nondisclosure.'” Fornesa v. Fifth Third Mortg. Co., 897 F.3d 624, 628 (5th Cir. 2018) (quoting Allen v. C & H Distribs., L.L.C., 813 F.3d 566, 574 (5th Cir. 2015)).

         Mitchell never directly addresses these points, arguing instead that she relied on the advice of counsel and remedied the defect through an amended schedule disclosing this lawsuit. Starting with the ...


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