One month after plaintiff, Shirley Berge, filed for bankruptcy, she was involved in an auto accident with a car owned by defendant DMG America, Inc. and driven by DMG’s employee. Berge sued DMG and its employee to recover the damages she suffered which arose out of the accident.
Berge, however, never disclosed to the Bankruptcy Court that she had claims against DMG and its employee even though she had several opportunities to do so prior to the closure of her bankruptcy case as a "no asset" case. Accordingly, DMG moved for summary judgment to bar her from proceeding with her personal injury claims based upon the application of the doctrine of judicial estoppel. It was only after she was faced with DMG’s motion that Berge returned to the Bankruptcy Court to reopen her case and make the disclosure of her personal injury claims in her bankruptcy case.
The trial court and the Illinois Appellate Court reasoned:
The Illinois courts have determined that judicial estoppel has five separate elements, 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." All five elements are present in this case. First, plaintiff presented two conflicting positions. Her position in Bankruptcy Court was that she had no pending lawsuits. Her pursuit of this state court action was to the contrary. Secondly, plaintiff made these conflicting positions in separate judicial proceedings. Plaintiff never disclosed her lawsuit in Bankruptcy Court, but she then turned around and actively pursued her pending personal injury case against defendants in state court. Third, plaintiff’s complaint in this case and her many representations in her bankruptcy case were filings made under oath. Fourth, plaintiff benefitted by having her debts discharged in bankruptcy without giving her creditors any knowledge of her potential to recover a money judgment. In other words, plaintiff's failure to disclose left her with the ability to permanently avoid her debts after recovering a money judgment. Lastly, the final element is present and could not be clearer. Plaintiff never disclosed she had a lawsuit to the bankruptcy court while actively maintaining a lawsuit Illinois state court.
The courts further reasoned "... the purpose behind judicial estoppel is to prevent the perversion of the judicial process. It is intended to protect the courts from a party who plays fast and loose in a forum designed for parties seeking justice. ... Condoning a litigant’s action in reopening a discharged bankruptcy case to amend his or her asset disclosure after being faced with a judicial estoppel motion in his or her pending lawsuit would only serve to promote less-than-truthful asset disclosures with a hope of not getting caught."
The Illinois Appellate Court, therefore, affirmed the decision of the trial court entering summary judgment in favor of DMG and its employee.
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