Mike Kirk v. Randy Pope

IN THE SUPREME COURT OF MISSISSIPPI
NO. 2005-CA-02164-SCT
MIKE KIRK
v.
RANDY POPE AND DIXIELAND FOREST
PRODUCTS, INC.
DATE OF JUDGMENT: 11/04/2005
TRIAL JUDGE: HON. BOBBY BURT DELAUGHTER
COURT FROM WHICH APPEALED: HINDS COUNTY CIRCUIT COURT
ATTORNEYS FOR APPELLANT: W. ERIC STRACENER
W. ANDREW NEELY
ATTORNEYS FOR APPELLEES: CYNTHIA A. STEWART
EDWARD J. PETERS
EILEEN N. SHAFFER
NATURE OF THE CASE: CIVIL - CONTRACT
DISPOSITION: REVERSED AND REMANDED - 12/06/2007
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
EN BANC.
WALLER, PRESIDING JUSTICE, FOR THE COURT:
¶1. This appeal is taken from the Circuit Court of the First Judicial District of Hinds
County’s entry of a final judgment dismissing Plaintiff Mike Kirk’s claims against
Defendants Randy Pope and Dixieland Forest Products, Inc. Because we find that the circuit
court erred in vacating the final judgment and dismissing Kirk’s claims, and because the
remittitur was not accepted by both parties as required under our recent opinion in Dedeaux
v. Pellerin Laundry, Inc., 947 So. 2d 900, 908 (Miss. 2007), we reverse the judgment of
dismissal and remand the case to allow Pope the opportunity either to accept the remittitur
or to have a new trial on the issue of damages only. On remand, all judgment proceeds are
to be distributed to Kirk’s bankruptcy estate, and judicial estoppel is to apply to Kirk,
individually.
FACTS
¶2. On February 5, 1996, Mike Kirk filed a breach-of-contract action against Randy Pope
and Dixieland Forest Products, Inc., (Dixieland) in the Circuit Court of the First Judicial
District of Hinds County. Kirk was represented by attorney David Baria, and Pope was
represented by attorney Leonard Melvin. On August 27, 1998, Kirk filed a Chapter 7
bankruptcy petition in United States Bankruptcy Court. Derek A. Henderson was appointed
the Chapter 7 trustee. Kirk did not disclose the existence of his lawsuit against Pope and
Dixieland in the bankruptcy proceedings.1 On December 30, 1998, the bankruptcy case was
closed, and Kirk was discharged.
1
The record contains an affidavit from Barney Eaton, who served as Kirk’s
bankruptcy counsel. Eaton said that Kirk informed him “that he had filed a lawsuit in 1996,
but after some initial discovery the lawsuit had been dormant since 1997.” Eaton further
stated that he did not include the lawsuit on the bankruptcy schedules because he presumed
it had been dismissed for dormancy under Rule 41(b) of the Mississippi Rules of Civil
Procedure. Eaton said Kirk later contacted him in October of 2002 to inform him that a
judgment had been obtained on the case and asked whether anything needed to be done with
the bankruptcy. Eaton said he advised Kirk that the bankruptcy would need to be reopened
and that the judgment would become an asset of the estate. Eaton said Kirk authorized him
to reopen the case.
2
¶3. Approximately four years after his discharge from bankruptcy, Kirk’s breach of
contract case was tried. The jury returned a verdict of $700,000 in favor of Kirk on October
18, 2002.2 The final judgment was entered on October 28, 2002.
¶4. On October 25, 2002, the Bankruptcy Court entered an Order Reopening the
Bankruptcy Case. Pope later discharged Leonard Melvin and obtained new counsel, Edward
J. Peters and Cynthia Stewart. On November 25, 2002, Pope filed a notice of removal to the
United States District Court for the Southern District of Mississippi on the basis that the
action related to the bankruptcy estate. On January 23, 2003, the bankruptcy court entered
an order approving a motion to employ David Baria as the trustee’s special counsel and
approving a contingency fee agreement. On June 24, 2003, the federal court remanded the
case to Hinds County because the case already had been tried on the merits, and Kirk’s
counsel had been appointed as the trustee’s representative to pursue the cause of action.
¶5. On November 19, 2003, the trial court granted a remittitur and reduced the judgment
to $400,000, which Kirk accepted. On November 25, 2003, Pope filed a Motion for
Reconsideration and for Stay of Judgment, which was set for hearing on December 12, 2003,
apparently by ex parte order3 of the trial court, which also stayed all matters. On December
1, 2003, the trial court entered another order granting Kirk additional time to respond to the
motion, enjoining Kirk from executing on the judgment, and enjoining Pope from divesting
any assets until the motion was heard. On December 9, 2003, the trial court entered an
2
The judgment included $350,000 in compensatory damages and $350,000 in
punitive damages.
3
The order stated that the judge was contacted at home by counsel for Pope and that
the order was necessary, in part, to prevent Kirk from executing on the judgment.
3
agreed order continuing the hearing on the motion for reconsideration and motion for stay
of judgment until February 6, 2004, and continuing the injunctions on both parties. Prior to
the hearing on February 6, 2004, Pope advised the trial court that there would be no hearing,
as both parties were negotiating a settlement of the judgment.4 During this time, neither
party submitted an order or requested that the trial court reschedule a hearing regarding
Pope’s Motion for Reconsideration.
¶6. Pope filed a legal-malpractice action against Melvin arising from previous
representation in the instant case and executed a contingency-fee agreement with his new
counsel, Peters and Stewart. Pope and Melvin settled the malpractice action for $275,000
on April 20, 2005. On May 5, 2005, Kirk filed a motion for contempt and for an injunction
to freeze Pope’s assets. That same day, Pope filed a motion asking the court to clarify the
December 9, 2003, order,5 and admitting that Pope had disbursed the proceeds from the
malpractice settlement6 and sold at least one asset.
¶7. On May 17, 2005, the trial court entered an order declaring that neither party had
requested a continuance of the injunction beyond February 6, 2004, and that it assumed the
4
The trial court said by order that the attorneys for all parties advised that the parties
were involved in settlement negotiations and asked that the hearing be cancelled. However,
both parties dispute the trial court’s characterization.
5
Pope’s Motion for Clarity asked the court to clarify “its Order dated December 8 and
filed herein on December 11, 2003, . . . .” The order was attached as an exhibit to the motion
and was, in fact, dated December 8 and stamped as a certified, true copy on December 11,
2003. However, the record indicates that the order was dated December 8 but filed on
December 9, 2003.
6
Pope acknowledged in his deposition that the majority of the settlement proceeds
was paid to his new attorneys.
4
parties had reached a settlement, but reserved ruling on the issue of whether the December
11, 2003, order extended the injunction beyond February 6, 2004, until a hearing on the
record scheduled for June 17, 2005. In the interim, the trial court enjoined the parties from
executing on the judgment and from disposing of any assets. On May 24, 2005, the trial
court entered an order denying Pope’s Motion for Reconsideration and for Stay of Judgment
and lifting the injunctions.
¶8. On September 14, 2005, Pope filed, in accordance with Rule 60(b) of the Mississippi
Rules of Civil Procedure, a Motion for Relief from Judgment, asserting that Kirk was
judicially estopped from pursuing his claims against Pope. Thereafter, the trial court vacated
the final judgment by memorandum opinion and order on October 17, 2005, finding that
Kirk’s failure to disclose this case to the bankruptcy court effectively stripped Kirk of
standing to pursue his claims against Pope. The trial court further found that it lacked
jurisdiction over the case and dismissed the final judgment. The final judgment of dismissal
was entered on November 4, 2005. Kirk’s post-trial motions were denied and he filed this
appeal.
STANDARD OF REVIEW
¶9. Issue I concerns a trial court’s decision on a Rule 60(b) motion, which is subject to
review under an abuse of discretion standard. Hartford Underwriters Ins. Co. v. Williams,
936 So. 2d 888, 892 (Miss. 2006) (citing M.A.S. v. Mississippi Dep’t of Human Services,
842 So. 2d 527, 530 (Miss. 2003)). While deference is given to the trial judge, consideration
of a Rule 60(b) motion also requires that a balance be struck between granting a party a
hearing on the merits and the need to achieve finality. Id. (citing Lose v. Illinois Cent. Gulf
5
R.R., 584 So. 2d 1284, 1286 (Miss. 1991)). Furthermore, “[a]n abuse of discretion standard
does not mean a mistake of law is beyond appellate correction,” because a court abuses its
discretion when it makes an error of law. Browning Mfg. v. Mims, 179 F.3d 197, 205 (5th
Cir. 1999) (quoting Koon v. United States, 518 U.S. 81, 100, 135 L. Ed. 2d 392, 116 S. Ct.
2035 (1996), superseded by statute, Pub. L. No. 108-21, 117 Stat. 670).
¶10. Issue II regards standing, which is a question of law reviewed under a de novo
standard. See City of Picayune v. Southern Reg’l Corp., 916 So. 2d 510, 519 (Miss. 2005)
(citing Brown v. Mississippi Dep't of Human Services, 806 So. 2d 1004, 1005-06 (Miss.
2000)).
¶11. Issue III concerns a trial court’s imposition of judicial estoppel, which is subject to
review under an abuse of discretion standard. Superior Crewboats, Inc. v. Primary P & I
Underwriters, 374 F.3d 330, 334 (5th Cir. 2004) (citing Hall v. GE Plastic Pacific PTE Ltd.,
327 F.3d 391, 396 (5th Cir. 2003).
¶12. Issue IV concerns the remittur granted by the trial court. While the subject case was
pending appeal, this Court decided Dedeaux v. Pellerin Laundry, Inc., 947 So. 2d 900(Miss. 2007). In Dedeaux, we overruled prior case law and held that a remittitur takes effect
only if it is accepted by all parties. Dedeaux, 947 So. 2d at 908. Under Dedeaux, if all
parties do not agree to the remittitur “then each party shall have the right to either demand
a new trial on damages, or appeal the order asserting an abuse of discretion on the part of the
trial judge.” 7 Id.
7
The prior rule as set forth in Odom v. Roberts stated the following:
6
¶13. Under Rule 28(a)(3) of the Mississippi Rules of Appellate Procedure, “the Court may,
at its option, notice a plain error not identified or distinctly specified.” M.R.A.P. 28(a)(3).
Plain-error review is appropriate where there has been an intervening change in the law while
a case is on appeal. United States v. Williamson, 183 F.3d 458, 464 (5th Cir. 1999) (quoting
Johnson v. United States, 520 U.S. 461, 117 S. Ct. 1544, 1548-49, 137 L. Ed. 2d 718(1997)). Plain-error review may be invoked where (1) a party has failed to preserve an error
for appellate review and (2) a substantial right is affected. State Highway Comm'n of Miss.
v. Hyman, 592 So. 2d 952, 957 (Miss. 1991). This Court has stated that a monetary interest
is a substantial right. Id.; Miss. Mun. Liab. Plan v. Jordan, 863 So. 2d 934, 941 (Miss.
2003). Because the remittitur in this case affects a substantial right—specifically, a $400,000
judgment—plain-error review is appropriate.
DISCUSSION
I. Whether Pope’s 60(b) Motion for Relief from Judgment was timely.
¶14. Kirk asserts that Pope’s 60(b) motion was not filed “within a reasonable time” from
October 28, 2002, or from November 19, 2003—the dates on which the final judgment and
remittitur were entered, respectively. Kirk contends that the trial court erred in calculating
[W]here the trial court has granted a remittitur, or, in the alternative, a new
trial on the issue of damages only, the plaintiff only may elect (1) to reject the
remittitur and have the case retried on the issue of damages only, (2) to appeal
to this court on grounds the circuit court should not have granted the remittitur
at all, or, alternatively, the remittitur granted was legally excessive, or, (3) to
accept the remittitur. In such a case the defendant's only procedural avenue is
that it may (cross) appeal to this court arguing that the trial court abused its
discretion and that the remittitur was legally inadequate.
Odom, 606 So. 2d 114, 121 (Miss. 1992) (emphasis added).
7
the time from the May 24, 2005, order denying reconsideration, because Pope did not seek
relief from that specific order and relief from that order would not have relieved Pope from
the judgment.
¶15. Pope filed a Motion for Relief from Judgment on September 14, 2005, and asked the
trial court to vacate the October 28, 2002, judgment pursuant to Mississippi Rule of Civil
Procedure 60(b)(1), (4) and (6).8 Under Rule 60(b), a court may relieve a party from a “final
judgment, order, or proceeding” when “(4) the judgment is void” or for “(6) any other reason
justifying relief from the judgment.” Miss. R. Civ. P. 60(b)(4), (6). A motion pursuant to
Rule 60(b)(4) or (6) must be made “within a reasonable time.” Miss. R. Civ. P. 60(b).
¶16. Rule 60(b) is an extraordinary remedy and “is not an escape hatch for lawyers and
litigants who had procedural opportunities afforded under other rules and who without cause
failed to pursue those procedural remedies.” Bruce v. Bruce, 587 So. 2d 898, 904 (Miss.
1991). Accordingly, a litigant should pursue other available remedies before requesting
relief under Rule 60(b).
¶17. On November 5, 2002—eight days after the entry of final judgment—Pope filed a
Motion for Judgment Notwithstanding the Verdict, or in the Alternative, for a New Trial.
Pope’s motion alleged errors in the denial of jury instructions, ineffective assistance of
counsel, and error in allowing perjured testimony regarding Kirk’s bankruptcy. The motion
also incorporated by reference every objection made during trial and pre-trial motions.9 On
8
The trial court properly found that Pope had waived any argument pursuant to Rule
60(b)(1) of the Mississippi Rules of Civil Procedure.
9
While not raised specifically as an objection, Pope challenged Kirk’s right to pursue
the claim during pre-trial motions in limine. Pope argued that Kirk “forfeited [his right to
8
November 19, 2003, the trial court overruled Pope’s Motion for Judgment Notwithstanding
the Verdict and for New Trial. Subsequently, on November 25, 2003, Pope filed a Motion
for Reconsideration and requested a stay of judgment. It was not until May 24, 2005, that
the trial court entered an order denying Pope’s Motion for Reconsideration and lifting all
injunctions. Pope then filed his Motion for Relief from Judgment pursuant to Rule 60(b) on
September 14, 2005.
¶18. Pope properly pursued all other remedies prior to requesting the exceptional relief
afforded under Rule 60(b). While both parties had chosen not to proceed any further on all
motions pending at the time of the May 24, 2005, order, a Rule 60(b) motion “proceed[s] on
the assumption that the trial court has entered a valid and enforceable judgment which has
become final.” Id. Pope resorted to filing his Rule 60(b) Motion for Relief from Judgment
only after the trial court’s May 24, 2005, order in which his post-trial motions were denied
and the final judgment became fully enforceable. Accordingly, the trial court correctly
calculated the “reasonable time” period from the May 24, 2005, order.
¶19. The trial court ultimately granted Pope’s Motion for Relief from Judgment pursuant
to Rule 60(b)(4), holding the final judgment “null and void.” While a Rule 60(b)(4) motion
must be made “within a reasonable time,” federal authority has interpreted this to mean that
there is no effective time limit. Overbey v. Murray, 569 So. 2d 303, 306 (Miss. 1990) (citing
7 J. Moore & J. Lucas, Moore's Federal Practice, ¶ 60.25[4] 2d ed. 1987). The rationale for
having no effective time limit for a Rule 60(b)(4) motion is that “no amount of time or delay
pursue the suit] when he didn’t list it in his assets when he filed individual bankruptcy.”
9
may cure a void judgment.” Id. Even so, Pope filed his 60(b) motion approximately four
months after the court’s May 24, 2005, order—well within the six-month time frame
applicable to other provisions under Rule 60(b). See Miss. R. Civ. P. 60(b). Accordingly,
we find that the trial judge did not abuse his discretion in finding that the 60(b) motion was
timely.
II. Whether the circuit court erred in finding that because Kirk was no longer the
real party in interest when he filed his bankruptcy petition, he lacked standing
to pursue the claim.
¶20. Kirk asserts that the trial court failed to recognize the distinction between standing and
real party in interest. Kirk argues that the simple fact that a party no longer is the real party
in interest does not necessarily cause that party to lose standing in the traditional,
jurisdictional sense.
A. Real party in interest.
¶21. A real-party-in-interest defense must be timely and may be waived if tardily asserted.
Gogolin & Stelter v. Karn’s Auto Imports, Inc., 886 F.2d 100, 102 (5th Cir. 1989); see also
Rogers v. Samedan Oil Corp., 308 F.3d 477, 483-84 (5th Cir. 2002) (failure to raise the
assertion that plaintiff was not the real party in interest until day before trial constituted
waiver); United HealthCare Corp. v. American Trade Ins. Co., 88 F.3d 563, 569 (8th Cir.
1996) (assertion at pretrial conference constituted waiver); Hefley v. Jones, 687 F.2d 1383,
1388 (10th Cir. 1982) (assertion sixteen days before trial is untimely). Because the earliest
Pope alluded to a possible real-party-in-interest defense was after jury selection and just prior
to the start of the trial, we find that Pope waived any real-party-in-interest defense.
B. Standing.
10
¶22. While Pope waived any real-party-in-interest defense, standing is a “jurisdictional
issue which may be raised by any party or the Court at any time.” City of Madison v. Bryan,
763 So. 2d 162, 166 (Miss. 2000) (citing Williams v. Stevens, 390 So. 2d 1012, 1014 (Miss.
1980)).
¶23. To have standing, this Court has stated, “there must be a present, existent actionable
title or interest which must be completed at the time the cause of action is filed.” Id. at 165
(quoting Crawford Commercial Constructors, Inc. v. Marine Indus. Residential Insulation,
Inc., 437 So. 2d 15, 16 (Miss. 1983)). Kirk had a valid cause of action for breach of contract
when he first filed suit and therefore initially had standing to pursue the claim. However,
once Kirk filed his bankruptcy petition, he could have standing only if there was a proper
ratification by the bankruptcy trustee.
¶24. A debtor’s cause of action that existed at the time of the filing of the bankruptcy
petition is property of the bankruptcy estate. Pruitt v. Hancock Med. Ctr., 942 So. 2d 797,
801 (Miss. 2006) (quoting Lawrence v. Jackson Mack Sales, Inc., 837 F. Supp. 771, 779
(S.D. Miss. 1992)). Property of the bankruptcy estate that is not abandoned and that is not
administered in the bankruptcy proceeding remains property of the bankruptcy estate. 11
U.S.C. § 554(d). More specifically, the “[f]ailure to list an interest on a bankruptcy schedule
leaves that interest in the bankruptcy estate.” Pruitt, 942 So. 2d at 802 (quoting Parker v.
Wendy's Int'l, Inc., 365 F.3d 1268, 1272 (11th Cir. 2004)).
¶25. When Kirk filed his bankruptcy petition on August 27, 1998, Kirk’s suit against Pope
and Dixieland became property of the bankruptcy estate. See Pruitt, 942 So. 2d at 801.
Because Kirk’s claim is property of the bankruptcy estate, “the Trustee is the real party in
11
interest with exclusive standing to assert” the claim. Wieburg v. GTE Southwest Inc., 272
F.3d 302, 306 (5th Cir. 2001) (emphasis added); accord Pruitt, 942 So. 2d at 802 (an
unscheduled cause of action remains property of the bankruptcy estate with the bankruptcy
trustee having “exclusive standing to assert the claim.”).
¶26. While Kirk lacked standing, in his own right, to pursue the claim, a trustee may confer
standing by proper ratification. Wieburg, 272 F.3d at 307. A valid ratification requires the
“ratifying party to authorize continuation of [the] action and agree to be bound by the result.”
Jenkins v. Wright & Ferguson Funeral Home, 215 F.R.D. 518, 522 (S.D. Miss. 2003)
(quoting Wieburg, 272 F.3d at 307). A ratification also must satisfy the purpose of Rule
17(a),10 which is to assure that the judgment will be final and that res judicata will protect the
defendant from having to defend a separate action.11 Id.10
Jenkins was a case before the U.S. District Court for the Southern District of
Mississippi and cites Rule 17(a) of the Federal Rules of Civil Procedure. However, with the
exception of slight changes or deletions, Rule 17(a) of the Mississippi Rules of Civil
Procedure tracks the language from Rule 17(a) of the federal rules.
11
The Advisory Committee Notes to Rule 17(a) states that the ratification provision
“is intended to prevent forfeiture when determination of the proper party to sue is difficult
or when an understandable mistake has been made.” Fed. R. Civ. P. 17(a) Advisory
Committee Notes, 1966 Amendment. Many courts have limited ratification to such
circumstances. See Wieburg, 272 F.3d at 308. Other courts have been reluctant to rely on
the Advisory Committee Notes to Rule 17(a). Eposito v. U.S., 368 F.3d 1271, 1275-77 (10th
Cir. 2004); Jenkins, 215 F.R.D. at 522. The federal court for the Southern District of
Mississippi found the Advisory Committee Note to be in conflict with the Rule itself because
Rule 17(a) “does not state or even imply that the real party in interest must have been
difficult to determine or that an understandable mistake had been made.” Jenkins, 215
F.R.D. at 522 n.4. Because of the ambiguity and because this particular language from the
Advisory Committee Note was not incorporated into the Comment to Rule 17(a) of the
Mississippi Rules of Civil Procedure, we do not limit ratification to such circumstances.
12
¶27. The Motion to Employ Special Counsel and Approve Contingency Agreement
approved by the bankruptcy court stated that “[i]n order for the Trustee to effectively pursue
the claim against [defendants], it is necessary of the Debtor to retain special counsel to
pursue the claim on behalf of the bankruptcy estate.” This language authorizes continuation
of the action on behalf of the bankruptcy estate and therefore meets the first requirement for
a valid ratification. However, the agreement does not expressly state that the trustee will be
bound by the result or that Pope and Dixieland will be protected from having to defend a later
lawsuit. Typically, this would invalidate the ratification. Wieburg, 272 F.3d at 307(ratification invalid because it did not give any assurance to the defendant that res judicata
would protect the defendant from having to defend against later claims by the trustee).
¶28. Despite its deficiencies, the trustee’s Motion to Employ Special Counsel constitutes
a valid ratification due to the status of the case at the time the bankruptcy court approved the
motion. When the bankruptcy court approved the motion to employ special counsel on
January 23, 2003, Kirk already had obtained a judgment on the suit. The trustee’s motion
noted that a judgment already had been entered and, thus, implicitly agreed to be bound by
the result. The trustee’s acceptance of the judgment also protected Pope and Dixieland from
having to defend a later, separate lawsuit.
¶29. While ratification did not occur until after the judgment had been entered, the trial
court retained jurisdiction to enter a valid judgment in the subject case. Standing is an aspect
of subject matter jurisdiction. Breeden v. Kirkpatrick & Lockhart LLP (In re The Bennett
Funding Group, Inc.), 336 F.3d 94, 102 (2d Cir. 2003) (citing Lujan v. Defenders of
Wildlife, 504 U.S. 555, 561, 119 L. Ed. 2d 351, 112 S. Ct. 2130 (1992)). The Fifth Circuit
13
has stated that if subject matter jurisdiction exists among the original parties, it remains intact
after substitution. Ransom v. Brennan, 437 F.2d 513, 516 (5th Cir.), cert. denied, 403 U.S.
904, 29 L. Ed. 2d 680, 91 S. Ct. 2205 (1971). The rationale is that “[a] substituted party
steps into the same position of the original party.” Id. Under Rule 17(a), ratification is given
the same treatment as substitution—each has “the same effect as if the action had been
commenced in the name of the real party in interest.” Miss. R. Civ. P. 17(a). Accordingly,
the ratifying party “steps into the shoes” of the original party so that subject matter
jurisdiction remains intact. Moreover, post-judgment ratifications have been deemed valid
by other courts. See Knight v. New Farmers Nat’l Bank, No. 90-6071, 1991 U.S. App.
LEXIS 24819, slip op. (6th Cir. Oct. 15, 1991); Arabian American Oil Co., v. Scarfone, 939
F.2d 1472, 1477 (11th Cir. 1991); Sun Refining & Marketing Co. v. Goldstein Oil Co., 801
F.2d 343, 345 (8th Cir. 1986).
¶30. Given that the ratification was valid, we must consider whether judicial estoppel
applies.
III. Whether the circuit court erred in finding that judicial estoppel applied to Kirk.
¶31. Judicial estoppel is designed to protect the judicial system and applies where
“intentional self-contradiction is being used as a means of obtaining unfair advantage in a
forum provided for suitors seeking justice.” Browning Mfg. v. Mims, 179 F.3d 197, 205 (5th
Cir. 1999) (quoting Scarano v. Central RR. Co., 203 F.2d 510, 513 (3d Cir. 1953)). In order
to protect the integrity of the judiciary, judicial estoppel “must be invoked in the Court in
which the apparent self-serving contradiction occurred and in which the defense is first
asserted.” In re Dewberry, 266 B.R. 916, 920 (Bankr. D. Ga. 2001) (bankruptcy court
14
determined that the district court had “exclusive jurisdiction” to impose judicial estoppel
where the debtor had not listed the claim in his bankruptcy schedules).
¶32. The Fifth Circuit has stated three requirements for judicial estoppel: “(1) the party is
judicially estopped only if its position is clearly inconsistent with the previous one; (2) the
court must have accepted the previous position; and (3) the non-disclosure must not have
been inadvertent.” Superior Crewboats, Inc., 374 F.3d at 335.
¶33. Under the first requirement, the trial court determined that Kirk took inconsistent
positions by initially failing to list the lawsuit on his bankruptcy schedules and then pursuing
the lawsuit after his discharge from bankruptcy. In Superior Crewboats, Inc., the Fifth
Circuit found that the mere omission of a claim in bankruptcy filings is “tantamount to a
representation that no such claim existed.” Superior Crewboats, Inc., 374 F.3d at 335 (citing
Browning Mfg., 179 F.3d at 210). Accordingly, Kirk’s failure to list the lawsuit represented
that no such suit existed and is inconsistent with his subsequent pursuit of the claim.
¶34. The trial court also found the second prong satisfied because the bankruptcy trustee
and court relied upon Kirk’s schedules in granting his discharge from bankruptcy. Because
the bankruptcy court could only have granted Kirk’s discharge based on the information
before it, the court necessarily relied on the contents of Kirk’s schedules. Thus, the second
prong also is satisfied.
¶35. Finally, the trial court found that Kirk’s non-disclosure of the lawsuit was not
inadvertent. A debtor’s non-disclosure is “‘inadvertent’ only when, in general, the debtor
either lacks knowledge of the undisclosed claims or has no motive for their concealment.”
Id. (quoting Browning Mfg., 179 F.3d at 210); see also Mississippi Power & Light Co. v.
15
Cook, 832 So. 2d 474, 482 (Miss. 2002) (the representation “must be willfully false, or must
have the effect of misleading the other party to his injury . . . .”).
¶36. Kirk had knowledge of the undisclosed claim. Around August of 1998, he told his
bankruptcy attorney that he had filed a lawsuit in 1996, but that after some initial discovery,
the lawsuit had been dormant since 1997. Based on Kirk’s information, his bankruptcy
counsel assumed that the lawsuit had been dismissed under Mississippi Rule of Civil
Procedure 41(b) based on dormancy and did not list the lawsuit on Kirk’s bankruptcy
schedules.
¶37. The trial court determined that Kirk was less than candid with his bankruptcy attorney
regarding the status of the lawsuit. From the time Kirk filed his lawsuit in February 1996
until May 1997, activity on the suit included four notices of deposition and a Motion to
Compel Production of Documents, which was denied by the trial court. Regardless, once
Kirk resumed pursuit of the claim, he had an affirmative duty to disclose the suit to the
bankruptcy court. Id. (citing Browning Mfg., 179 F.3d at 207-08) (the Bankruptcy Code and
Rules impose an affirmative duty to disclose contingent and unliquidated claims, and the
duty to disclose is continuous). Yet Kirk’s failure to list the lawsuit in his bankruptcy
schedules was brought out during pre-trial motions in limine and on cross-examination not
at Kirk’s initiative, but by the defendants. Even then, Kirk did not disclose the suit to the
bankruptcy court until October of 2002, after he had obtained a final judgment.
¶38. While we cannot be certain of Kirk’s motivation, we find there was sufficient
evidence for the circuit court to conclude that Kirk’s non-disclosure was not inadvertent and
that Kirk notified the bankruptcy trustee only because the defendants forced his hand. We
16
cannot say that the circuit court abused its discretion in finding that Kirk intended to conceal
his claim from the bankruptcy court in order to reap a windfall by preventing his creditors
from recovering any proceeds of a potential judgment. See id. at 336. Therefore, we find
that the circuit court did not err in finding that judicial estoppel applied to Kirk.
¶39. Even though judicial estoppel is appropriate, we must consider the impact that
vacating the judgment would have on Kirk’s creditors. See Jenkins, 215 F.R.D. at 522. In
Parker v. Wendy's Int'l, Inc., the Eleventh Circuit found that the bankruptcy trustee should
not be judicially estopped in pursuing an undisclosed claim. Parker, 365 F.3d 1268, 1272-73
(11th Cir. 2004). The Eleventh Circuit reasoned that the trustee had never taken an
inconsistent position and was “not tainted or burdened by the debtor’s misconduct.” Id. at
1273. Nevertheless, Parker noted that, should the trustee recover more than the amount to
satisfy all creditors, “judicial estoppel could be invoked by the defendant to limit recovery
to only that amount and prevent an undeserved windfall from devolving on the non-
disclosing debtor.” Id. at 1273 n.4.
¶40. We adopt the rationale in Parker and hold that Kirk’s bankruptcy trustee should not
be judicially estopped from pursuing the claim. On remand, should the trustee recover more
than the amount necessary to fully compensate Kirk’s bankruptcy estate, we invoke judicial
estoppel against Kirk individually to prevent him from recovering any proceeds of the
judgment.
IV. The trial court’s grant of a remittitur.
¶41. On August 21, 2003, the trial court entered an order granting a new trial on the issue
of damages. Kirk then filed a Motion for Reconsideration of the trial court’s order granting
17
a new trial on the issue of damages and asked the court to leave the jury verdict intact. On
November 19, 2003, the trial court issued an order granting Kirk’s Motion for
Reconsideration “contingent upon [Kirk’s] acceptance of a remittitur of the trial verdict of
$700,000 to $400,000 . . . .” Kirk accepted the remittitur, and the trial court entered a final
judgment in the amount of $400,000 on November 19, 2003.
¶42. The trial court acted in accordance with this Court’s precedent at the time in granting
the remittitur. In Odom v. Roberts, we held that only the plaintiff could elect to (1) reject the
remittitur and have a new trial on the issue of damages only, (2) appeal to this Court on the
grounds that the trial court should not have granted the remittitur or that the remittitur granted
was legally excessive, or (3) accept the remittitur. Odom, 606 So. 2d 114, 121 (Miss. 1992).
The only procedural remedy afforded to the defendant under the prior rule was to “(cross)
appeal to this court arguing that the trial court abused its discretion and that the remittitur
was legally inadequate.” Id.
¶43. While the subject case was pending appeal, this Court adopted a standard which
requires that a remittitur take effect only if it is accepted by all parties. Dedeaux v. Pellerin
Laundry, Inc., 947 So. 2d 900, 908 (Miss. 2007) (emphasis added). Furthermore, “[i]f all
the parties do not agree to . . . the remittitur, then each party shall have the right to either
demand a new trial on damages, or appeal the order asserting an abuse of discretion on the
part of the trial judge.” Id. Because this Court retroactively applies newly-enunciated rules
of law to cases that are pending trial or that are on appeal, we are compelled to apply the
standard set forth in Dedeaux to the subject case. Thompson v. City of Vicksburg, 813 So.
2d 717, 721 (Miss. 2002).
18
¶44. Under the rule announced in Dedeaux, Pope could have chosen to: (1) accept the
remittitur; (2) demand a new trial on damages; or (3) appeal the order asserting an abuse of
discretion on the part of the trial judge. See Dedeaux, 947 So. 2d at 908. Pope did not agree
to accept the remittitur, as evidenced by his Motion for Reconsideration and for Stay of
Judgment filed shortly thereafter on November 25, 2003. Pope’s Motion for Reconsideration
and for Stay of Judgment stated that by granting the remittitur, the trial judge had recognized
Pope’s lack of sufficient legal representation and that “all compensatory and punitive
damages should be set aside and a new trial should be granted based on the ineffective
counsel issue.” Kirk himself notes that Pope was “apparently aggrieved” by the trial court’s
ruling on the remittitur.
¶45. Had the rule in Dedeaux been in effect at the time, Pope would have had the right to
demand a new trial on damages. See Dedeaux, 947 So. 2d at 908-10 (if all parties do not
agree to an additur or remittitur, a new trial on damages is a matter of right that should be
available to any party who requests such new trial). Because Pope was procedurally barred
from demanding a new trial on damages, we find that he should be afforded such opportunity
on remand.12 See id. at 909-10.
¶46. We remand this case for compliance with our recent decision in Dedeaux v. Pellerin
Laundry, Inc., 947 So. 2d 900 (Miss. 2007).
12
Even under then-existing case law, Pope could have chosen to appeal the order
granting the remittitur by asserting an abuse of discretion by the trial judge. See Odom, 606
So. 2d at 121. However, Pope elected not to file such an appeal. Accordingly, on remand,
Pope is barred from appealing the order granting the remittitur dated November 19, 2003.
See Tandy Electronics, Inc. v. Fletcher, 554 So. 2d 308, 311 (Miss. 1989) (“[T]hirty-day
rule for perfecting an appeal is in the nature of a statute of limitations.”).
19
CONCLUSION
¶47. Because we find that the circuit court erred in vacating the final judgment and
dismissing Kirk’s claims, and because the remittitur was not accepted by both parties as
required under our recent opinion in Dedeaux v. Pellerin Laundry, Inc., we reverse the
judgment of dismissal and remand the case to allow Pope either to accept the remittitur or
to have a new trial on the issue of damages only. On remand, all judgment proceeds should
be distributed to Kirk’s bankruptcy estate, and the circuit court’s final judgment should state
that judicial estoppel applies to Kirk, individually, so that he is prohibited from collecting
any proceeds of any judgment ultimately awarded.
¶48. REVERSED AND REMANDED.
SMITH, C.J., EASLEY, CARLSON, DICKINSON, RANDOLPH AND LAMAR,
JJ., CONCUR. GRAVES, J., CONCURS IN PART AND DISSENTS IN PART WITH
SEPARATE WRITTEN OPINION JOINED BY DIAZ, P.J.
GRAVES, JUSTICE, CONCURRING IN PART AND DISSENTING IN PART:
¶49. Because the majority ignores both relevant portions of the record and the applicable
law, I must dissent in part.13 I concur that Pope waived a real-party-in-interest defense and
that proper ratification occurred. I further concur that the trial court erred in vacating the
final judgment and dismissing Kirk’s claims. However, I disagree with the majority’s
13
I note that the majority follows its recent and inexplicable trend and finds that this
matter should be reversed and remanded for a new trial as to damages. See Beverly
Enterprises, Inc. v. Reed, 961 So. 2d 40 (Miss. 2007). See also Community Hosp. v.
Goodlett, 2007 Miss. LEXIS 528 (Miss. 2007); Smith v. Captain D's, LLC, 963 So. 2d
1116, 1117 (Miss. 2007) and Century 21 Maselle & Assocs. v. Smith, 965 So. 2d 1031(Miss. 2007).
20
finding that the trial court correctly found that the motion pursuant to Rule 60(b) of the
Mississippi Rules of Civil Procedure was timely. I further disagree with the majority that the
trial court did not err in finding that judicial estoppel applied to Kirk. Moreover, I disagree
with the majority’s finding that both parties did not agree with the remittitur. Because I
would reverse and render, reinstating the prior judgment, I respectfully concur in part and
dissent in part.
Timeliness of Rule 60(b) Motion
¶50. Pope filed a Motion for Relief from Judgment on September 14, 2005, and asked the
trial court to vacate the October 28, 2002, judgment. A motion pursuant to Rule 60(b)(4) or
(6) must be made within a reasonable time. M.R.C.P. 60(b). Kirk asserts that September 14,
2005, is not within a reasonable time from October 28, 2002, or from November 19, 2003.
Kirk further asserts that the trial court erred in calculating the time from the May 24, 2005,
order denying reconsideration because Pope did not seek relief from that order and relief
from that order would not have relieved Pope from the judgment. I agree.
¶51. In Bruce v. Bruce, 587 So. 2d 898, 904 (Miss. 1991), this Court, quoting Stringfellow
v. Stringfellow, 451 So. 2d 219, 221 (Miss. 1984), said:
Rule 60(b) provides for extraordinary relief which may be granted only upon
an adequate showing of exceptional circumstances, and that neither ignorance
nor carelessness on the part of an attorney will provide grounds for relief. . .
. Additionally, it has been said that a party is not entitled to relief merely
because he is unhappy with the judgment, but he must make some showing
that he was justified in failing to avoid mistake or inadvertence; gross
negligence, ignorance of the rules, or ignorance of the law is not enough.
Bruce, 587 So. 2d at 904. Further, this Court said:
21
No doubt there is overlap between the rules – we know of no grounds for relief
within Rule 60 that are not also grounds for relief under Rule 59(e), if only
they be timely sought – but, fundamentally, Rule 60(b) is not an escape hatch
for lawyers and litigants who had procedural opportunities afforded under
other rules and who without cause failed to pursue those procedural remedies.
Rule 60(b) is designed for the extraordinary, not the commonplace.
A loose but apt analogy may be found in our criminal practice. A Rule
59(e) motion is the functional equivalent of a motion for a new trial or, on
appeal, of a petition for rehearing. A Rule 60(b) motion is the functional
equivalent of an application for post-conviction relief.
Id.
¶52. Pope asked for relief from the October 28, 2002, final judgment. However, the trial
court later granted a remittitur and entered a subsequent final judgment on November 19,
2003. The motion for relief from judgment was not filed until September 14, 2005. Rule
60(b) requires the motion to be made within a reasonable time. M.R.C.P. 60(b). The
September 14, 2005, motion was not filed until nearly two years after the final judgment, on
November 19, 2003. This Court has found that a Rule 60(b) motion filed two years after
judgment was not filed within a reasonable time. See Hinds Co. Bd. of Supervisors v.
Common Cause of Mississippi, 551 So. 2d 107, 119 (Miss. 1989). Therefore, Pope’s Rule
60(b) motion was not timely filed.
¶53. The majority opinion states that Pope filed a motion for JNOV eight days after the
entry of the judgment. Pope’s motion for JNOV failed to raise any judicial estoppel
argument. The majority says that Pope’s motion for JNOV incorporated by reference Pope’s
“challenge” during the hearing on the motion in limine. However, the crux of Pope’s
challenge was to establish “Kirk’s general inability to operate a business successfully.” Pope
22
did mention Kirk’s failure to list the asset on his bankruptcy schedule and then agreed that
it was a legal question for the trial court to decide as opposed to a question for the jury.
¶54. Further, the majority clearly disregards the facts in this case. The majority finds that
Pope properly pursued all other remedies. However, prior to the hearing on the motion for
reconsideration, “Pope advised the trial court that there would be no hearing and that
the defendants had abandoned their effort to have the court reconsider its judgment.”
(Emphasis added). Moreover, the May 24, 2005, order of the trial court summarily denied
all pending motions, finding that the parties “do not wish to proceed any further with
respect to all motions” set to be heard.
¶55. The record indicates that Pope failed to pursue procedural remedies under other rules
and that Pope was unable to show any justification for his failure to do so. In Bruce, this
Court also said: “Rule 60(b) motions, on the other hand, proceed on the assumption that the
trial court has entered a valid and enforceable judgment which has become final.” Bruce,
587 So. 2d at 904. However, Pope asserts the opposite – that there was never a valid and
enforceable judgment. Ironically, the majority quotes this very language from Bruce
regarding the assumption of a valid and enforceable judgment to overcome the fact that Pope
failed to pursue all other remedies and abandoned his claims. Then, in the very next
paragraph, the majority contradictiously maintains that the judgment is void to overcome the
untimeliness of the Rule 60(b) motion. The majority cites Overbey v. Murray, 569 So. 2d
303 (Miss. 1990), for the proposition that federal courts have found no effective time limit
for a Rule 60(b)(4) motion to a void judgment. However, in Overbey, this Court also said:
“In defining a void judgment, this Court has repeated the federal rule, which states that ‘a
23
judgment is void only if the court that rendered it lacked jurisdiction of the subject matter,
or of the parties, or if it acted in a manner inconsistent with due process of law.’” Id. at 306.
That is not the case here.
¶56. Further, because Pope failed to comply with the requirements of Rule 60(b), he is now
estopped from asserting that the final judgment should be vacated. Moreover, because the
judgment was valid for other reasons stated herein, the trial court abused its discretion in
vacating it. Notwithstanding the untimeliness of the Rule 60(b) motion, I address the issues
alternatively herein.
Standing versus Real Party in Interest
¶57. In its Memorandum Opinion and Order Vacating Final Judgment, the trial court
found:
Kirk’s claim against these defendants became an asset of his bankruptcy estate
when he filed his petition on August 27, 1998. Kirk’s failure to list this
pending lawsuit on the bankruptcy schedules left that interest in the
bankruptcy estate. Derek Henderson, as trustee, became and still remains the
real party in interest and possessed sole standing to pursue the claim from and
after August 27, 1998. Conversely, Mike Kirk forever lost standing to do so
from and after that date.
As a result, the trial court found that it lacked jurisdiction to enter a judgment and rendered
the judgment void.
¶58. Kirk correctly asserts that the trial court failed to recognize the distinction between
standing and real party in interest.14 The trial court held that the judgment was void because
14
Pursuant to Rule 17(a) of the Federal Rules of Civil Procedure, which says:
Every action shall be prosecuted in the name of the real party in interest. An
executor, administrator, guardian, bailee, trustee of an express trust, a party
with whom or in whose name a contract has been made for the benefit of
24
the court lacked jurisdiction, finding: “Unfortunately for Kirk, the Mississippi Supreme Court
has specifically held: ‘Standing is a jurisdictional issue which may be raised by any party or
the court at any time,’ even by the appellate courts for the first time on appeal.” (Citing City
of Madison v. Bryan, 763 So. 2d 162, 166 (Miss. 2000)).
¶59. To have standing, this Court has said, “there must be a present, existent actionable title
or interest which must be completed at the time the cause of action is filed.” City of
Madison, 763 So. 2d at 165 (citing Crawford Commercial Constructors, Inc. v. Marine
Indus. Residential Insulation, Inc., 437 So. 2d 15, 16 (Miss. 1983) and American Book Co.
v. Vandiver, 181 Miss. 518, 178 So. 598 (1938)). In City of Madison, Bryan’s appeal
stemmed from the City of Madison’s failure to approve a building permit for Bryan to build
on certain property when Bryan had no actual title, interest in, or option to purchase said
property. This Court found that Bryan lacked standing because he was unable to demonstrate
that the City’s action had an adverse effect on property in which he had an interest. Id.another, or a party authorized by statute may sue in that person's own name
without joining the party for whose benefit the action is brought; and when a
statute of the United States so provides, an action for the use or benefit of
another shall be brought in the name of the United States. No action shall be
dismissed on the ground that it is not prosecuted in the name of the real party
in interest until a reasonable time has been allowed after objection for
ratification of commencement of the action by, or joinder or substitution of,
the real party in interest; and such ratification, joinder, or substitution shall
have the same effect as if the action had been commenced in the name of the
real party in interest.
Fed. R. Civ. P. 17(a). (Emphasis added). Further, with the exception of slight changes or
deletions in the italicized portions, Rule 17(a) of the Mississippi Rules of Civil Procedure
tracks this language.
25
¶60. Although courts have used the term standing in analyzing real-party-in-interest cases,
courts have also clearly distinguished standing and real party in interest by their analysis
solely under real party in interest or by specific language, such as the following:
The [real party in interest] rule is similar to, though distinct from, the
requirement that the plaintiff have standing to sue, in that both standing and
real party in interest ‘are used to designate a plaintiff who possesses a
sufficient interest in the action to entitle him to be heard on the merits.’ 6A
Charles Alan Miller et al., Federal Practice and Procedure § 1542 (2d ed.
1990).
Weissman v. Weener, 12 F.3d 84, 86 (7 th Cir. 1993).
¶61. In distinguishing standing and real party in interest, the United States Bankruptcy
Court for the Eastern District of Texas said:
Frequently, attorneys and courts confuse the concepts of standing with that of
capacity to sue and with the real party in interest principle. 6A Charles A.
Wright, Arthur R. Miller & Mary K. Kane, Federal Practice and Procedure §
1542 (1990). . . . The standing doctrine, unlike Rule 17, relates only to the
public law context. Rule 17 is implicated in suits between private parties. See
Malamud v. Sinclair Oil Corp., 521 F.2d 1142, 1147 (6th Cir. 1975). ["The
fundamental aspect of standing is that it focuses on the party seeking to get his
complaint before a federal court and not on the issues he wishes to have
adjudicated." Flast v. Cohen, 392 U.S. 83, 99, 88 S. Ct. 1942, 1952, 20 L. Ed.
2d 947 (1968). Since standing refers to identifying the proper litigant in a suit,
it is related but not identical to the concept of the real party in interest. The
former doctrine usually applies to "public" suits and the latter to "private"
ones.] Lucas v. Lucas, 946 F.2d 1318, 1322 n 6 (8th Cir.1991) ("'Standing' is
a constitutional doctrine regarding one's right to challenge a governmental
action"). . . . The Court is of the opinion that standing is not an appropriate
objection in this particular action given no governmental action. Therefore, the
objection to standing must be denied.
Reynolds v. Feldman (In re Unger & Assocs.), 292 B.R. 545, 550-551 (Bankr. D. Tex.
2003).
26
¶62. The fact that a party is no longer the real party in interest does not necessarily cause
that party to lose standing in the traditional, jurisdictional sense. Kirk had a valid action
against Pope for breach of contract. Kirk did not file his bankruptcy petition until some two
and a half years after he filed this cause of action. Kirk clearly had standing to file this cause
of action.
¶63. The question then becomes whether Kirk ever lost his status as the real party in
interest to pursue the action. Upon filing bankruptcy, Chapter 7 debtors are no longer the
real party in interest for purposes of pursuing pre-petition claims. See Wieburg v. GTE
Southwest, Inc., 272 F.3d 302, 306 (5 th Cir. 2001) (“Because the claims are property of the
bankruptcy estate, the Trustee is the real party in interest with exclusive standing to assert
them.”).
¶64. Courts have consistently found that this issue is governed by Rule 17(a), as stated
herein, which requires that “every action shall be prosecuted in the name of the real party in
interest.” See Wieburg, 272 F.3d at 306. Wieburg filed for bankruptcy after the events
giving rise to her cause of action occurred. The Fifth Circuit Court of Appeals found
Wieburg’s claims to be the property of the bankruptcy estate and found that they should have
been disclosed in Wieburg’s bankruptcy schedules. “Because the claims are the property of
the bankruptcy estate, the Trustee is the real party in interest with exclusive standing to assert
them.” Id. However, the court further found the district court’s dismissal of the action to be
improper pursuant to the following:
The last sentence of Rule 17(a) provides that “no action shall be
dismissed on the ground that it is not prosecuted in the name of the real party
in interest until a reasonable time has been allowed after objection for
27
ratification of commencement of the action by, or joinder or substitution of,
the real party in interest.” FED. R. CIV. P. 17(a).
Id. at 308. The court further found:
In accordance with the Advisory Committee’s note, most courts have
interpreted the last sentence of Rule 17(a) as being applicable only when the
plaintiff brought the action in her own name as the result of an understandable
mistake, because the determination of the correct party to bring the action is
difficult. . . . Feist [v. Consolidated Freightways Corp.], 100 F. Supp. 2d
[273] at 276 (“Rule 17(a) should not be applied blindly to permit substitution
of the real party in interest in every case. In order to substitute the trustee as
the real party in interest, Plaintiff must first establish that when he brought this
action in his own name, he did so as the result of an honest and understandable
mistake.”). . .
Id.
¶65. The court expressed concern that the dismissal of the action would prevent Wieburg’s
creditors from having any possibility of recovery. In vacating the district court, the court
held:
More importantly, it is unclear whether the district court considered the impact
of the dismissal on Wieburg’s creditors. . . .Under these circumstances, and in
light of Rule 17(a)’s purpose of preventing forfeitures, we believe that it was
an abuse of discretion for the district court to dismiss the action without
explaining why the less drastic alternatives of either allowing an opportunity
for ratification by the Trustee, or joinder of the Trustee, were inappropriate.
Id. at 309.
¶66. The United States District Court for the Southern District of Mississippi also
addressed this issue in Battle v. Pre-Paid Legal Services, Inc., 2006 U.S. Dist. LEXIS 15690(S.D. Miss. Feb. 9, 2006) (“The Fifth Circuit has consistently held that with respect to
Chapter 7 proceedings, where ‘the claims are property of the bankruptcy estate, the Trustee
is the real party in interest with exclusive standing to assert them.’”) The court found that,
28
as Beverly Thompson, the plaintiff and Chapter 7 debtor, lacked standing to pursue the
claims, the case could be dismissed, but the court went on to cite 11 U.S.C. §554 of the
bankruptcy code and ordered the trustee to respond, saying: “However, in the court’s
opinion, the better course is to provide the bankruptcy trustee an opportunity to respond and
advise the court what action, if any, he desires to take with respect to the case.” Id. at 2.
¶67. The Fifth Circuit Court of Appeals has also found that the defense of real party in
interest must be timely asserted. Specifically, that court found:
. . . It is thus contemplated that if a defendant objects to being sued by a party
who does not have the right to pursue the claim in issue, the real party in
interest will be able to step forward and assume the plaintiff’s role. . . . The
earlier the defense is raised, the more likely that the high cost of trial
preparation for both parties can be avoided if a real party in interest question
is determined adversely to a plaintiff.
Surely it is inconsistent with the rule to raise a real party in interest
defense for the first time on motion for directed verdict. A number of cases
have held that the defense is waived when tardily asserted. See, e.g., Hefley
v. Jones, 687 F.2d 1383, 1388 (10 th Cir. 1982) (assertion 16 days before trial
is untimely). . . .
Gogolin & Stelter v. Karn’s Auto Imports, Inc., 886 F.2d 100, 102 (5 th Cir. 1989). See also
Rogers v. Samedan Oil Corp., 308 F.3d 477, 483-84 (5 th Cir. 2002) (failure to raise the
assertion that plaintiff was not the real party in interest until day before trial constituted
waiver); and United HealthCare Corp. v. American Trade Ins. Co., 88 F.3d 563 (8 th Cir.
1996) (assertion at pretrial conference constituted waiver).
¶68. As discussed more fully herein, in the instant case, the earliest Pope even alluded to
a possible real-party-in-interest defense was after jury selection and just prior to the start of
the trial. Based on Gogolin, Pope waived a real-party-in-interest defense. Notwithstanding
29
the waiver, the trial court erred in vacating the judgment and dismissing the case for other
reasons as well.
¶69. The trial court found in its memorandum opinion on October 17, 2005, as follows: “At
no time, however, has any motion been filed with this court asking that Henderson, as trustee,
be substituted as the real party in interest or permitting him, as such, to intervene in this
action.” However, as set out in the aforementioned case law, Rule 17(a) plainly allows for
“ratification, joinder or substitution” and the trustee acknowledged his ratification some two
and a half years prior to dismissal. (Emphasis added). In his Motion to Employ Special
Counsel and Approve Contingency Fee Agreement, which was approved by order on January
23, 2003, the trustee asserted:
The [bankruptcy] case was reopened because the Trustee discovered a possible
asset that is property of the estate and had not been administered. The Debtor,
George Michael Kirk had a claim against Dixieland Forest Products and
others. In order for the Trustee to effectively pursue the claim against
Dixieland Forest Products and others, it is necessary of the Debtor to retain
special counsel to pursue the claim on behalf of the bankruptcy estate.
This language clearly indicates the real party in interest’s ratification of the action.
¶70. Rule 17(a) provides, in relevant part: “No action shall be dismissed on the ground that
it is not prosecuted in the name of the real party in interest until a reasonable time has been
allowed after objection for ratification of commencement of the action by, or joinder or
substitution of, the real party in interest. . . .” Pope first alluded to a possible real-party-in-
interest argument only after jury selection and just prior to the start of the trial on October
14, 2002, during a hearing on a motion in limine by Kirk. However, Pope raised Kirk’s
failure to list the lawsuit in an objection to Kirk’s motion in limine as discussed previously
30
herein, rather than as a specific objection dealing with real party in interest.15 Nevertheless,
the bankruptcy case was reopened on October 25, 2002, and the trustee acknowledged his
ratification in his motion for special counsel on December 23, 2002.
¶71. The trustee clearly acknowledged his ratification long before any actual objection and
within a reasonable time of the mention of the bankruptcy at trial. Additionally, just five
days after the trial court entered the Final Judgment of Dismissal, the trustee filed a Notice
of Substitution of Real Party in Interest and Ratification and a Motion to Alter and Amend
Judgment, reiterating his prior ratification of the lawsuit. Specifically, the trustee asserted:
Therefore, pursuant to the procedures of the United States Bankruptcy Court,
the Trustee did ratify the furtherance of the lawsuit and the collection of the
judgment by obtaining the court order of the Bankruptcy Court assuming the
contingency fee agreement for the prosecution of the causes of action against
Randy Pope and Dixieland Forest Products, Inc. Further, David W. Baria was
approved as the Trustee’s special legal counsel. There is no requirement that
ratification by the Bankruptcy Court Orders be filed in the state court
proceeding.
¶72. The trustee’s assertion that it is not necessary for a Chapter 7 trustee to intervene or
be substituted as a real party in interest in a pending state court action, as the trustee’s
ratification of the lawsuit is sufficient, is supported by Jenkins v. Wright & Ferguson
Funeral Home, 215 F.R.D. 518 (S.D. Miss. 2003), and Wieburg, 272 F.3d at 307. In
Jenkins, the district court found:
This provision of Rule 17(a) “provides that formal joinder or substitution of
the real party in interest will not be necessary when [the real party in interest]
ratifies commencement of the action.” Big John, B.V. v. Indian Head Grain,
15
Then, in his September 14, 2005, Rule 60(b) motion for relief from judgment, Pope
asserted that Kirk was judicially estopped from pursuing the lawsuit for failure to initially
disclose it to the bankruptcy court.
31
Co., 718 F.2d 143, 147 *522 (5 th Cir. 1983) (citations omitted). “Proper
ratification requires [the] ratifying party to authorize continuation of [the]
action and agree to be bound by the result.” Wieburg, 272 F.3d at 307 (citing
Naghiu v. Inter-Continental Hotels Group, Inc., 165 F.R.D. 413, 421 (D.Del.
1996).”
Jenkins, 215 F.R.D. at 521. The district court further held:
However, this Court must also consider the impact of dismissal of this case on
Jenkins’ creditors. [Citation omitted]. Under the wording of the subject
Ratification Agreement, it is apparent to the Court that even though the case
will be prosecuted in Jenkins’ name, her bankruptcy estate will be the first
beneficiary from the proceeds of the case, if any. For this additional reason,
the Court finds that the Ratification Agreement should be enforced, and that
Jenkins should be allowed to prosecute this case in her name.
Id. at 522.
¶73. Therefore, I would find that it was an abuse of discretion for the trial court to vacate
the judgment.
Judicial Estoppel
¶74. Pope argues that judicial estoppel is not an issue before this Court because the trial
court did not vacate the judgment on the basis of judicial estoppel. Although the trial court
held the judgment void on the basis of standing, the trial court did make a finding of judicial
estoppel, which it identified as the threshold question. However, as I would find that the
motion raising judicial estoppel was untimely and that this matter should be reversed and
rendered, and as Pope concedes the trial court made no finding of judicial estoppel, this issue
is moot. Notwithstanding that the issue is moot, I would find that judicial estoppel is not
applicable to Kirk. Furthermore, I would avoid any attempt to interfere with matters properly
32
within the jurisdiction of the United States Bankruptcy Court.16 In the Order of Remand, the
U.S. District Court stated that the fact that plaintiff’s counsel was appointed as the trustee’s
representative to pursue this matter “quiets the court’s apprehensions whether the debtor
would be in any position to squander the proceeds of any received judgment instead of
reporting same to the bankruptcy court for the benefit of creditors.” I agree.
¶75. Judicial estoppel is a common-law doctrine by which a party is estopped from
assuming a position contrary to a position previously assumed. Browning Mfg., 179 F.3d
at 205. “The purpose of the doctrine is ‘to protect the integrity of the judicial process,’ by
‘preventing parties from playing fast and loose with the courts to suit the exigencies of self
interest.’” Id. (quoting Brandon v. Interfirst Corp., 858 F.2d 266, 268 (5 th Cir. 1988). “The
doctrine is generally applied where ‘intentional self-contradiction is being used as a means
of obtaining unfair advantage in a forum provided for suitors seeking justice.’” Browning
Mfg., 179 F.3d at 206 (quoting Scarano v. Central R. Co., 203 F.2d 510, 513 (3d Cir.
1953)). There are typically three limitations on the doctrine of judicial estoppel: 1) it may
be applied only where the party’s position is clearly inconsistent with its previous one; 2) the
party must have convinced the court to accept its previous position; and 3) the party must
have acted intentionally. Id.
¶76. In Browning, the court found judicial estoppel based on the repeated failure to
disclose some millions of dollars of claims. There is no assertion in the case sub judice that
Kirk repeatedly failed to disclose the lawsuit against Pope. The record indicates that Kirk
16
In re Dewberry, 266 B.R. 916, 920 (Bankr. S.D. Ga. 2001), as cited by the majority,
is distinguishable because it did not address the issue of an action in state court.
33
disclosed the lawsuit to his bankruptcy lawyer, and that Pope and the trial court were fully
aware of the bankruptcy at all times herein relevant. As stated previously herein, Kirk’s
bankruptcy attorney indicates that Kirk contacted him inquiring as to whether anything
needed to be done with regard to the bankruptcy and then proceeded to attempt to correct the
situation. There is no evidence of any intentional attempt by Kirk to “play fast and loose
with the courts.”
¶77. This Court has said that, to find judicial estoppel, the representation “must be willfully
false, or must have the effect of misleading the other party to his injury. . . .” Mississippi
Power & Light Co. v. Cook, 832 So. 2d 474, 482 (Miss. 2002). In Mississippi Power &
Light (MP&L), Kenneth Cook failed to disclose the existence of a lawsuit filed some two
years earlier in a petition for Chapter 7 bankruptcy. Cook said he did not disclose the lawsuit
because he believed it would not amount to anything and because his attorney advised him
that it was not necessary to disclose it. When MP&L tried to have the bankruptcy reopened,
Cook amended his schedule to reflect the claim. MP&L raised an issue on appeal regarding
the trial court’s handling of the bankruptcy file. This Court held:
Cook explained his actions in the bankruptcy proceeding, and it was correctly
left to the jury to determine his credibility. Cook did not make a willfully false
statement that led MP&L to injury. On the advice of counsel, Cook did not
disclose the present lawsuit because he thought it was dead. Additionally,
MP&L was not a debtor to whom Cook owed money in the bankruptcy
proceeding. This issue is without merit.
Id. at 482.
¶78. In the instant case, Kirk explained his actions. However, the Rule 60(b) motion was
not filed until almost two years after the final judgment, so there was no opportunity for a
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jury to determine his credibility. Kirk did not make a willfully false statement that led to
Pope’s injury. Kirk fully disclosed the lawsuit to counsel, but counsel determined it was not
worth listing in the schedule. Pope was not a debtor to whom Kirk owed money in the
bankruptcy proceeding. Based on MP&L, this issue is without merit.
¶79. The trial court and the majority rely on Superior Crewboats, Inc. v. Primary P & I
Underwriters, 374 F.3d 330 (5 th Cir. 2004), in the analysis of this issue. However, Superior
Crewboats was decided several years after this case began and can be distinguished. In
Superior Crewboats, Arthur Hudspeath filed a personal-injury lawsuit and then a year later
filed a petition for Chapter 13 bankruptcy, which was subsequently converted to a Chapter
7. Hudspeath disclosed the lawsuit at the creditors’ meeting, but made inaccurate
representations that the claim was barred by the statute of limitations. As a result of
Hudspeath’s misrepresentation, the trustee filed a petition of disclaimer and abandonment
with regard to the lawsuit. Superior later informed the trustee that Hudspeath was still
pursuing the lawsuit and moved to dismiss on the basis that the claim was barred by judicial
estoppel. The district court rejected the judicial-estoppel argument, and the Fifth Circuit
Court of Appeals reversed. There is absolutely no suggestion in the instant case that Kirk
made any misrepresentation to the trustee or the bankruptcy court regarding the lawsuit in
an attempt to garner abandonment.
¶80. The trial court and the majority also cite Parker v. Wendy’s International, 365 F.3d
1268 (11 th Cir. 2004). However, Parker supports Kirk’s position. In Parker, Parker filed
a complaint against Wendy’s. Some two years later, Parker filed a petition for Chapter 7
bankruptcy. Just before trial against Wendy’s, Parker moved for a continuance, indicating
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that she had failed to disclose the lawsuit to the bankruptcy trustee. At some point thereafter,
the trustee moved to intervene or to be substituted as the real party in interest. The court
found that the doctrine of judicial estoppel was improperly invoked, and held: “The claim
against Wendy’s belongs to the bankruptcy estate and its representative, the trustee. The
trustee made no false or inconsistent statement under oath in a prior proceeding and is not
tainted or burdened by the debtor’s misconduct.” Id. at 1273.
¶81. The trial court in the instant case, relying on Parker, found that the trustee never
moved to intervene or to be substituted. However, as discussed previously herein, the trustee
did acknowledge his ratification of the lawsuit in his motion on December 23, 2002, which
was sufficient pursuant to Rule 17(a), long before the final judgment, which according to the
trial court in his calculations for the Rule 60(b) motion, was entered May 24, 2005.
Therefore, pursuant to Parker, the trustee, as the real party in interest, clearly has made no
inconsistent statement in a prior proceeding.
¶82. Further, the only evidence of a party playing “fast and loose with the courts” is the
conduct exhibited by Pope, who relied on the very judgment in question herein to pursue a
malpractice action against his prior attorney. While owing a judgment in this matter and long
before making any claim that Kirk was judicially estopped from pursuing this matter, Pope
procured a $275,000 settlement in the legal malpractice case as a result of this judgment, sold
assets and paid substantial sums in legal fees to his new attorneys. Pope now asks this Court
to affirm relief from this judgment, which is now part of the bankruptcy estate. Such a move
would further compound Pope’s inappropriate behavior and would harm only Kirk’s
creditors. I would decline to take such a route.
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Remittitur
¶83. The majority relies on plain error in addressing the issue of remittitur, which was not
raised on appeal. However, while there are many cases in which this Court should apply
plain error, this is not a case in which plain error should apply. The majority is correct that
the trial court entered an order on August 21, 2003, granting a new trial on damages.
However, this order was, in part, granting “the plaintiff’s request for a new trial on the issue
of damages. . . .” The plaintiff, Kirk, then filed a motion for reconsideration, asserting that
any new trial language in his previous motion was inadvertent and that he did not want a new
trial on the issue of damages. The trial court granted Kirk’s motion for reconsideration,
contingent on Kirk accepting the remittitur. Kirk accepted the remittitur, and the final
judgment of $400,000 was entered on November 19, 2003. As acknowledged by the
majority, under the then-existing law, Pope had the procedural remedy of appealing to this
Court, “arguing that the trial court abused its discretion and that the remittitur was legally
inadequate.” Pope failed to appeal to this Court. Moreover, while Pope did subsequently file
a Motion for Reconsideration and Stay of Judgment, such motion was solely on the basis of
ineffective assistance of counsel. Further, shortly thereafter, Pope abandoned his effort to
have the court reconsider its judgment, thereby indicating his agreement to accept the
remittitur.
CONCLUSION
¶84. For the reasons stated herein, I would reverse trial court’s judgment of dismissal and
reinstate the prior judgment in this matter.
DIAZ, P.J., JOINS THIS OPINION.
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