J.H. Group, LLC v. Royal Rolling Chairs, LLC , 523 F. App'x 922 ( 2013 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 12-3476
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J.H. GROUP, LLC, d/b/a OCEAN ROLLING CHAIRS;
JOHN TAIMANGLO; STEPHANIE TAIMANGLO,
Appellants
v.
ROYAL ROLLING CHAIRS, LLC; WILLIAM BOLAND; GARY HILL;
JOHN SCHULTZ; CITY OF ATLANTIC CITY; JOHN DOES(S) A-K;
JANE DOE(S) A-K, being present and former counsel persons known or unknown on
behalf of ATLANTIC CITY with regard to any and all control, supervisor, monitoring
the rolling chair business on behalf of ATLANTIC CITY; THEODORE GARRY
____________________________________
On Appeal from the United States District Court
for the District of New Jersey
(D.N.J. Civil Action No. 11-cv-01595)
District Judge: Honorable Joseph H. Rodriguez
____________________________________
Submitted Pursuant to Third Circuit LAR 34.1(a)
May 15, 2013
Before: RENDELL, FISHER and GARTH, Circuit Judges
(Opinion filed: May 17, 2013)
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OPINION
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PER CURIAM
John and Stephanie Taimanglo, proceeding pro se, appeal an order of the United
States District Court for the District of New Jersey dismissing their complaint under the
doctrine of judicial estoppel. For the reasons that follow, we will affirm the judgment of
the District Court.
The Taimanglos filed a complaint through counsel in District Court pursuant to 42
U.S.C. § 1983 claiming that the City of Atlantic City, Royal Rolling Chairs, LLC, and
other defendants conspired to destroy their business, Ocean Rolling Chairs, through
unnecessary inspections and other unfair treatment. The Taimanglos averred that Ocean
Rolling Chairs d/b/a J.H. Group, LLC is a legal organization that operates the business of
providing rolling chairs on the Atlantic City boardwalk. The business leases rolling chair
equipment to independent contractors. The Taimanglos averred that they are the sole
stockholders and sole members of Ocean Rolling Chairs and J.H. Group and the sole
owners of all interest in J.H. Group.1
Royal Rolling Chairs and the City of Atlantic City moved to dismiss the complaint
under the doctrine of judicial estoppel, asserting that the Taimanglos made inconsistent
statements in a bankruptcy petition filed in the United States Bankruptcy Court for the
District of New Jersey five months after filing their complaint. The Taimanglos attested
in their bankruptcy filings that they had no income from the operation of business, that
1
J.H. Group, LLC d/b/a Ocean Rolling Chairs was a party to the complaint but is
not participating in this appeal.
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their income was wage income, that they did not own more than five percent of the
voting or equity securities of a business, and that they were not self-employed full or
part-time. The Taimanglos attested they did not own any stock and interest in
incorporated and unincorporated businesses or interest in partnerships or joint ventures.
They also declared that they had no contingent and unliquidated claims and that they
owned no office equipment, furnishings, or supplies used in business.
After a hearing, the District Court ruled that the Taimanglos were judicially
estopped from bringing their present action. Applying the factors in Krystal Cadillac-
Oldsmobile GMC Truck Inc. v. General Motors Corp., 337 F.3d 314, 319 (3d Cir. 2003),
the District Court found that the Taimanglos had taken inconsistent positions by failing to
disclose their business and the present lawsuit in their bankruptcy petition while at the
same time bringing this suit based on their ownership of Ocean Rolling Chairs. The
District Court found that the nature and frequency of the inconsistencies established bad
faith, noting that the financial problems in the rolling chair business were the impetus to
filing for bankruptcy. Although the bankruptcy petition was ultimately dismissed, the
District Court found that dismissal of the Taimanglos’ § 1983 action was appropriate
because a lesser sanction would send a message that a debtor should disclose assets only
if he is caught hiding them. This appeal followed.
We have jurisdiction pursuant to 28 U.S.C. § 1291. We review the District
Court’s decision for abuse of discretion. Montrose Med. Grp. Participating Sav. Plan v.
Bulger, 243 F.3d 773, 780 (3d Cir. 2001).
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As recognized by the District Court, the “basic principle of judicial estoppel . . . is
that absent any good explanation, a party should not be allowed to gain an advantage by
litigation on one theory, and then seek an inconsistent advantage by pursuing an
incompatible theory.” Krystal, 337 F.3d at 319 (quoting Ryan Operations G.P. v.
Santiam-Midwest Lumber Co., 81 F.3d 355, 358 (3d Cir. 1996)). The Taimanglos do not
dispute the District Court’s finding that they took inconsistent positions in their
bankruptcy filings and in this case. Their sole argument on appeal is that they gave their
bankruptcy attorney all information about their income, assets, and pending lawsuits and
that their attorney neglected to include this information in their bankruptcy filings.2
The District Court rejected this argument, stating that the fact that the Taimanglos
gave documents to their attorney did not relieve them of their obligation for candor to the
bankruptcy court. We agree. Other courts of appeals have upheld the application of the
judicial estoppel doctrine where a party, who had knowledge of an undisclosed claim and
had motive to conceal it, argued that his or her attorney was responsible for the non-
disclosure. See, e.g., Barger v. City of Cartersville, GA, 348 F.3d 1289, 1295 (11th Cir.
2003); In re Coastal Plains, 179 F.3d 197, 212 (5th Cir. 1999). The Taimanglos do not
challenge the District Court’s findings that they had knowledge of their present claim
when they filed for bankruptcy and that they had a motive to shield their assets.
2
We do not consider the correspondence attached to the Taimanglos’ brief, which
is not part of the District Court record. See In re Capital Cities/ABC Inc.’s Application
for Access to Sealed Transcripts, 913 F.2d 89, 96 (3d Cir. 1990) (noting court cannot
consider material on appeal that is outside the district court record).
4
Accordingly, we will affirm the judgment of the District Court.
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