Shoup v. Gore ( 2014 )

FILED
2014 IL App (4th) 130911 June 26, 2014
Carla Bender
NO. 4-13-0911 4th District Appellate
Court, IL
IN THE APPELLATE COURT
OF ILLINOIS
FOURTH DISTRICT
JOHN D. SHOUP, ) Appeal from
Plaintiff-Appellant, ) Circuit Court of
v. ) McLean County
DANIEL W. GORE; DEBRA GORE, a/k/a DEBBIE ) No. 12L82
S. GORE; AMEREN ILLINOIS COMPANY, a/k/a )
AMEREN CIPS, a/k/a AMEREN ILLINOIS; and )
)
CENTRAL ILLINOIS LIGHT COMPANY, a/k/a
) Honorable
AMEREN CILCO, a/k/a CILCO, ) Paul G. Lawrence,
Defendants-Appellees. ) Judge Presiding.
PRESIDING JUSTICE APPLETON delivered the judgment of the court, with
opinion.
Justices Turner and Steigmann concurred in the judgment and opinion.
OPINION
¶1 Plaintiff, John D. Shoup, appeals from the trial court's judgment granting
summary judgment in favor of defendants on the basis of judicial estoppel. Plaintiff claims
judicial estoppel does not apply to the facts of this case. We disagree and affirm.
¶2 I. BACKGROUND
¶3 In February 2010, plaintiff filed a chapter 13 bankruptcy petition. See 11 U.S.C.
§§ 1301 to 1330 (2006). In October 2010, plaintiff's underlying claim accrued against the
defendants, Daniel W. Gore, Debra Gore, a/k/a Debbie S. Gore (hereinafter, the Gores), Ameren
Illinois Company, a/k/a Ameren CIPS, a/k/a Ameren Illinois (hereinafter, Ameren), and Central
Illinois Light Company, a/k/a Ameren CILCO, a/k/a CILCO (hereinafter, CILCO). Plaintiff
began making payments pursuant to his bankruptcy repayment plan on April 15, 2010. Plaintiff
concedes he did not amend his bankruptcy filing or otherwise advise the bankruptcy court or the
trustee of his claim against defendants prior to receiving a discharge, which he received on June
25, 2012. (On July 2, 2013, he did advise the bankruptcy trustee of his complaint against
defendants. However, the trustee stated in a July 3, 2013, letter to plaintiff's bankruptcy attorney
that, because the plan had been completed, "the debtor would have [no] further liability to the
estate for any claims.")
¶4 Plaintiff filed a personal-injury lawsuit against defendants on June 8, 2012 (prior
to receiving a discharge by the bankruptcy court), in the McLean County circuit court. The basis
for plaintiff's claim was that, on October 12, 2010, he was surveying property owned by the
Gores on behalf of Ameren and CILCO when he tripped and fell over a drainage hole. Any
further factual information obtained by either party during discovery in this case is not relevant
to the disposition, and therefore, is not addressed or summarized in this court's order.
¶5 After conducting discovery, defendants filed separate motions for summary
judgment, claiming the doctrine of judicial estoppel barred plaintiff's claim because he never
advised the bankruptcy court of the claim against defendants. On October 1, 2013, the trial court
entered a written order granting defendants' motions for summary judgment. This appeal
followed.
¶6 II. ANALYSIS
¶7 Plaintiff contends the elements of judicial estoppel are not present in this case
primarily because he did not take inconsistent positions in different proceedings under oath as
required for application of the doctrine. We disagree.
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¶8 An appellate court reviews the trial court's application of the doctrine of judicial
estoppel for an abuse of discretion regardless of the procedural manner in which the issue was
raised. Berge v. Mader, 2011 IL App (1st) 103778, ¶ 9. An abuse of discretion occurs only
when the trial court's decision is arbitrary, fanciful, or unreasonable or where no reasonable
person would take the view adopted by the trial court. People v. Donoho, 204 Ill. 2d 159, 182
(2003). Contrary to plaintiff's position, our review is deferential, rather than de novo.
¶9 The doctrine of judicial estoppel bars a party from making a representation in a
case after he has successfully taken a contrary position in another case. Berge, 2011 IL App
(1st) 103778, ¶ 12. The goal of the application of judicial estoppel is to protect the integrity of
our system of justice and prevent a party from manipulating and making a mockery of our
system of dispensing justice in all its forms. Berge, 2011 IL App (1st) 103778, ¶ 12. "At its
heart, this doctrine prevents chameleonic litigants from 'shifting positions to suit the exigencies
of the moment' [citations], engaging in 'cynical gamesmanship' [citation] or '[h]oodwinking' a
court. [Citation.]" Ceres Terminals, Inc. v. Chicago City Bank & Trust Co., 259 Ill. App. 3d 836,
850 (1994).
¶ 10 Judicial estoppel applies if the following five separate elements are present.
Those are as follows:
"(1) the two positions must be taken by the same party; (2) the
positions must be taken in judicial proceedings; (3) the positions
must be given under oath; (4) the party must have successfully
maintained the first position, and received some benefit thereby;
and (5) the two positions must be 'totally inconsistent.' (Internal
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quotations marks omitted.)" Berge, 2011 IL App (1st) 103778,
¶ 13 (quoting Ceres Terminals, 259 Ill. App. 3d at 851).
¶ 11 "When a chapter 13 bankruptcy petition is filed, a new bankruptcy 'estate' is
created, and the estate is made up of all of the debtor's property at the time the case commences.
[Citation.] The assets of the bankruptcy estate include all legal or equitable interests of the
debtor in property as of the commencement of the case. [Citation.] The assets of the bankruptcy
estate include the debtor's unliquidated lawsuits. [Citation.]" Holland v. Schwan's Home
Service, Inc., 2013 IL App (5th) 110560, ¶ 116. "The filing of a bankruptcy petition is an
assertion of the jurisdiction of the bankruptcy court over all the assets and property of the alleged
bankrupt." Dailey v. Smith, 292 Ill. App. 3d 22, 24 (1997). The bankruptcy estate "has been
found to encompass 'every conceivable interest of the debtor, future, non-possessory, contingent,
speculative, and derivative.' " Dailey, 292 Ill. App. 3d at 24 (quoting In re Yonikus, 996 F.2d
866, 869 (7th Cir. 1993)).
¶ 12 Before us are two seemingly conflicting authorities addressing the issue of
whether judicial estoppel applies under circumstances similar to those presented here. First, in
Berge, the First District found the trial court had not abused its discretion in applying the
doctrine when the plaintiff, who had filed a chapter 13 bankruptcy petition, never disclosed her
personal-injury claim. Berge, 2011 IL App (1st) 103778, ¶ 21. After the plaintiff filed her
bankruptcy petition, she was involved in an auto accident and sued the tortfeasors. After she
filed the lawsuit, she converted her chapter 13 to a chapter 7 petition, but did not include the
pending lawsuit. She received a discharge in October 2009 without the bankruptcy court
knowing about her personal-injury claim. Berge, 2011 IL App (1st) 103778, ¶ 3. The tortfeasors
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filed a motion for summary judgment, raising the judicial-estoppel argument and the trial court
granted the same. Berge, 2011 IL App (1st) 103778, ¶ 3.
¶ 13 Noting that "bad faith" was not one of the elements required for the application of
judicial estoppel as the plaintiff argued, the court nevertheless held all of the elements had been
satisfied and the plaintiff was precluded from proceeding with her lawsuit. Berge, 2011 IL App
(1st) 103778, ¶¶ 6, 14. As to the first element, the court noted that in bankruptcy court, the
plaintiff held the position she had no pending lawsuits yet she pursued her personal-injury action.
Berge, 2011 IL App (1st) 103778, ¶ 14. Second, the conflicting positions were made in separate
judicial proceedings. Berge, 2011 IL App (1st) 103778, ¶ 14. Third, she took these two separate
positions under oath by filing a complaint and various bankruptcy filings in the respective
proceedings. Berge, 2011 IL App (1st) 103778, ¶ 14. Fourth, the plaintiff received a benefit by
having her debts discharged without the creditors knowing of her potential recovery in state
court. Berge, 2011 IL App (1st) 103778, ¶ 14. Finally, the plaintiff never disclosed the
existence of her lawsuit in bankruptcy court, yet actively pursued it in state court. Berge, 2011
IL App (1st) 103778, ¶ 14.
¶ 14 Relying on Dailey and Cannon-Stokes v. Potter, 453 F.3d 446 (7th Cir. 2006), the
Berge court agreed that "a debtor who does not disclose an asset cannot later realize a benefit
from that concealed asset after having his or her debts discharged in bankruptcy." Berge, 2011
IL App (1st) 103778, ¶ 16. The plaintiff's arguments that (1) it was her bankruptcy attorney who
had failed to include the lawsuit in her bankruptcy filings, and (2) she tried to reopen her
bankruptcy case after it was closed in order to add the lawsuit were unavailing. The court
viewed the plaintiff's attempted remedial actions as doing a disservice to the doctrine of judicial
estoppel, in that by accepting these after-the-fact actions, the court would seemingly be
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condoning a litigant's "less-than-truthful asset disclosures with a hope of not getting caught."
Berge, 2011 IL App (1st) 103778, ¶ 18. The court also noted the doctrine applies equally to a
chapter 7 and a chapter 13 bankruptcy, "as both chapters require full disclosure of assets."
Berge, 2011 IL App (1st) 103778, ¶ 20.
¶ 15 The second case is Holland, in which the Fifth District determined the trial court
did not abuse its discretion when it declined to apply the doctrine. The plaintiff had filed for
chapter 13 bankruptcy protection yet failed to amend his filing to include his lawsuit against
Schwan's, his former employer, for retaliatory discharge. Holland, 2013 IL App (5th) 110560,
¶ 110. The plaintiff filed his bankruptcy petition in August 2008 and his repayment plan was
confirmed in November 2008. The plaintiff's claim against Schwan's did not arise until May
2009 when he was terminated. The court described the plaintiff's cause of action against
Schwan's as "not a prepetition cause of action," meaning the plaintiff "could not have disclosed a
claim for an injury that had not yet occurred." Holland, 2013 IL App (5th) 110560, ¶ 117.
Although the court noted a debtor's continuing duty to disclose any potential lawsuits, it
determined a subsequently filed lawsuit could not be said to be an "inconsistent position" from
one taken earlier in a bankruptcy petition filed before the cause of action arose. Holland, 2013
IL App (5th) 110560, ¶ 118. That is, the court noted that assets of the bankruptcy estate include
the debtor's unliquidated lawsuits (citing Dailey, 292 Ill. App. 3d at 24-25), but, at the same time,
found that nondisclosure of a postpetition lawsuit failed to satisfy at least one element of the
judicial-estoppel doctrine. The court stated: "Therefore, although he did not properly disclose
the retaliatory discharge claim, he did not take two inconsistent positions under oath." Holland,
2013 IL App (5th) 110560, ¶ 118.
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¶ 16 The court held that it could not conclude that the trial court had abused its
discretion in declining to apply the judicial-estoppel doctrine to the plaintiff's lawsuit against
Schwan's when the plaintiff had not taken "two contrary positions under oath and the record [did]
not establish that he intended to omit his claim against Schwan's from his bankruptcy estate."
Holland, 2013 IL App (5th) 110560, ¶ 120. The court distinguished Berge by finding that the
plaintiff in Berge, unlike the plaintiff in Holland, (1) knew of the undisclosed claim and had a
motive to conceal it, and (2) received a benefit from the nondisclosure by receiving a discharge
of his debt without his creditors knowing of the lawsuit. Holland, 2013 IL App (5th) 110560,
¶ 122. Further, the plaintiff in Holland did not benefit from the nondisclosure because the
bankruptcy court dismissed his chapter 13 case for failing to make the required payments.
Holland, 2013 IL App (5th) 110560, ¶ 122.
¶ 17 Contrary to plaintiff's position, we find the reasoning in Berge more applicable
than that in Holland primarily due to the fact that the plaintiff in Holland did not receive a
benefit from the bankruptcy court. Here, plaintiff, like the plaintiff in Berge, benefitted by
having his repayment plan established and performed without giving his creditors any knowledge
of his potential to recover damages in his personal-injury action. Plaintiff's failure to disclose
left him with the ability to permanently avoid his debts after recovering a judgment against
defendants. See Berge, 2011 IL App (1st) 103778, ¶ 14.
¶ 18 Based upon the authority presented, we find the trial court did not abuse its
discretion in applying the doctrine of judicial estoppel when the plaintiff (1) took two different
positions (by impliedly representing to the bankruptcy court he had no pending lawsuit while, at
the same time, pursuing damages in a lawsuit in state court), (2) in two separate judicial
proceedings, (3) under oath, (4) and received a discharge from the bankruptcy court without its
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knowledge of the potential recovery of damages from plaintiff's pending personal-injury lawsuit
against defendants, and (5) received the benefit from representing two "totally inconsistent"
positions. See Berge, 2011 IL App (1st) 103778, ¶ 13 (quoting Ceres Terminals, 259 Ill. App.
3d at 851). All five elements are present in this case to justify the applicability of the doctrine.
¶ 19 III. CONCLUSION
¶ 20 For the reasons stated, we affirm the trial court's judgment.
¶ 21 Affirmed.
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