Wal-Mart Stores, Incorporated v. Tobin Park ( 2020 )

Case: 18-30378 Document: 00515262750 Page: 1 Date Filed: 01/08/2020
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
No. 18-30378
Fifth Circuit
FILED
January 8, 2020
In the Matter of: Tobin Parker Lyle W. Cayce
Clerk
Debtor
WAL-MART STORES, INCORPORATED; WAL-MART LOUISIANA, L.L.C.;
WILLA HOBBY,
Appellants - Cross-Appellees
v.
TOBIN PARKER,
Appellee - Cross-Appellant
Appeal from the United States Bankruptcy Court
for the Western District of Louisiana
USBC No. 5:17-AP-1007
Before OWEN, Chief Judge, and WIENER and DENNIS, Circuit Judges.
PER CURIAM:*
Tobin Parker, a Chapter 13 debtor, filed a personal injury suit against
Wal-Mart, which Wal-Mart seeks to judicially estop because Parker failed to
disclose the cause of action to the bankruptcy court or amend his bankruptcy
schedules to reflect the lawsuit as an asset. The bankruptcy court concluded
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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No. 18-30378
that the elements of judicial estoppel were met but declined to apply the
doctrine for equitable reasons. The bankruptcy court then ruled that Parker
could continue with his personal injury suit but had to turn over any recovery
to the trustee to be administered as part of his bankruptcy estate for the benefit
of his creditors. We AFFIRM.
I.
Tobin Parker filed for Chapter 13 bankruptcy in February 2009, and the
bankruptcy court confirmed his bankruptcy plan in July 2009. 1 The plan
required Parker to make monthly payments for the benefit of creditors over
the next several years. In December 2010, Parker was involved in an on-the-
job accident while completing a delivery to a Wal-Mart store, causing injuries
to his hand and requiring surgeries. Parker filed a personal injury suit against
Wal-Mart in Louisiana state court in December 2011. Parker did not inform
the bankruptcy court of his personal injury claim, nor did he amend his
bankruptcy schedules to disclose the same. Parker completed the payments
under the terms of his Chapter 13 plan, signed a certificate stating that he had
completed all his payments, and, in April 2014, received a discharge, at which
point his undisclosed lawsuit against Wal-Mart was still pending.
In March 2017, the bankruptcy court granted Wal-Mart’s motion to
reopen Parker’s bankruptcy case. Wal-Mart filed an adversary proceeding in
the bankruptcy court, 2 arguing that Parker was judicially estopped from
pursuing his personal injury claim because he had failed to disclose the claim
in his bankruptcy filings. The bankruptcy court determined that the elements
1 The plan was later modified March 2010 by order after confirmation.
2 “[L]itigated matters that arise during the pendency of a bankruptcy case” are either
adversary proceedings or contested matters. 10 COLLIER ON BANKRUPTCY § 7000.01 (16th
ed. 2019). An adversary proceeding is necessary “to obtain an injunction or other equitable
relief, except when a chapter 9, 11, 12, or 13 plan provides for the relief.” FED. R. BANKR. P.
7001(7).
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of judicial estoppel were met but ultimately declined to apply the doctrine for
equitable reasons. Particularly, the bankruptcy court found that Parker’s
failure to disclose the personal injury suit did not harm any party in his
bankruptcy case. The bankruptcy court ruled:
Ultimately, this Court’s challenge is to fashion a remedy that is
equitable and does not punish innocent parties. The Court will
accomplish this by requiring any potential recovery [from Parker’s]
personal injury claim to be administer [sic] by the Chapter 13
Trustee, requiring any potential recovery to be used first to pay all
allowed unsecured claims, including [Parker’s] student loans, and
paying interest on allowed unsecured claims if the Chapter 13
estate becomes solvent.
Walmart timely appealed. 3
II.
We review a bankruptcy court ruling “as if [it] were an appeal from a
trial in the district court.” In re Coastal Plains, Inc., 179 F.3d 197, 204 (5th
Cir. 1999) (cleaned up). We review a refusal to apply the doctrine of judicial
estoppel for abuse of discretion. Id. at 205. We will only reverse where “the
district court’s factual findings are clearly erroneous or incorrect legal
standards were applied.” Latvian Shipping Co. v. Baltic Shipping Co., 99 F.3d
690, 692 (5th Cir. 1996).
After declining to apply judicial estoppel and thus allowing Parker to
proceed with his personal injury suit against Wal-Mart, the bankruptcy court
ordered Parker to turn over any recovery to the Chapter 13 trustee to be
administered for the benefit of creditors. In cases similar to Wal-Mart’s—when
a potential defendant argues that a debtor is estopped from bringing a lawsuit
for failure to disclose it to the bankruptcy court—we have held that, while a
3The bankruptcy court certified its judgment for direct appeal to this court, and this
court authorized the direct appeal. See 28 U.S.C. §158(d)(2)(A).
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debtor may be estopped from pursuing the claim on his own behalf, his
bankruptcy trustee is not similarly estopped and may pursue the claim for the
benefit of the creditors. See Reed v. City of Arlington, 650 F.3d 571, 579 (5th
Cir. 2011) (en banc); In re Flugence, 738 F.3d 126, 128 (5th Cir. 2013). This
approach “protect[s] the integrity of the bankruptcy system by deterring
debtors from concealing assets” while also being “consistent with the core
bankruptcy goal of obtaining a maximum and equitable distribution for
creditors.” Reed, 650 F.3d at 577.
Here, the bankruptcy court took an alternate route to the same final
outcome. Instead of following the path sanctioned by this court in Reed—
applying judicial estoppel to prevent the debtor from pursuing the undisclosed
claim but allowing the trustee to pursue the claim for the benefit of creditors—
the bankruptcy court declined to apply judicial estoppel to the debtor, allowing
him to pursue his undisclosed claim himself, but ordered him to turn over any
recovery to the trustee. The ultimate outcome is the same in both situations—
any personal injury recovery winds up in the hands of the trustee.
Significantly, we have said that “there is no per se rule estopping any
party who fails to disclose potential claims to a bankruptcy court.” U.S. ex rel.
Long v. GSDMIdea City, L.L.C., 798 F.3d 265, 271 (5th Cir. 2015). The doctrine
of judicial estoppel “is equitable in nature,” and “should be applied flexibly,
with an intent to achieve substantial justice.” Reed, 650 F.3d at 574. Because
of the equitable nature of the doctrine, “trial courts are not required to apply it
in every instance that they determine its elements have been met.” Long, 798
F.3d at 271; see Flugence, 738 F.3d at 132 (Dennis, J., concurring) (“The
bankruptcy court, which is closest to the facts, operates in a zone of discretion
in crafting an appropriate remedy.”).
Considering the bankruptcy court’s ultimate remedy, we conclude that it
did not abuse its discretion in declining to apply judicial estoppel to Parker’s
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personal injury claim but requiring him to turn over any recovery to the
trustee. See Flugence, 738 F.3d at 132 (Dennis, J., concurring) (explaining that
“our opinion does not require the same remedy in all cases”). If we concluded
that the bankruptcy court abused its discretion here, the final outcome would
likely be the same—we would reverse and remand for the bankruptcy court to
apply judicial estoppel to Parker’s claim, and in so doing, the bankruptcy court
would allow the trustee to pursue the personal injury claim and administer the
proceeds for creditors. See Reed, 650 F.3d at 573; Flugence, 738 F.3d at 128.
The bankruptcy court did not abuse its discretion in reaching the same end
through different, reasonable means. See Flugence, 738 F.3d at 132 (Dennis,
J., concurring) (“That we affirmed the bankruptcy court’s remedy here—
estopping [the debtor] from pursuing her personal-injury claim while allowing
the bankruptcy trustee to do so and requiring that any recovery by the trustee
exceeding [the debtor’s] remaining debt be refunded to the tortfeasors—does
not imply that the same must be done in all cases in which a debtor fails to
disclose a claim to the bankruptcy court.”).
Though the bankruptcy court’s decision is certainly odd and not the route
we would have chosen, we cannot say that it contained clearly erroneous
factual findings or the application of incorrect legal standards that amount to
an abuse of discretion. See Latvian Shipping Co., 99 F.3d at 692; Gen. Elec.
Co. v. Joiner, 522 U.S. 136, 143 (1997) (“[D]eference . . . is the hallmark of
abuse-of-discretion review.”). The judgment of the bankruptcy court is
AFFIRMED.
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