The District of Columbia Court of Appeals (“D.C. Appellate Court”) held in its opinion dated September 16, 2021: “the invocation of the doctrine of judicial estoppel arose from appellants’ failure to disclose their malpractice claim as a potential asset in their bankruptcy petition in the United States Bankruptcy Court of Maryland. The bankruptcy Trustee and the creditors whose debts where discharged were unaware of this potential asset when the case was closed with the order of discharge. Ordinarily, a failure to divulge a potential lawsuit as an asset in bankruptcy bars litigation of the civil action in question. Based upon our analysis of the record and pertinent case law, we conclude that appellants have failed to establish any abuse of discretion in the trial court’s application of judicial estoppel. We further conclude that appellants did not satisfy their burden to establish their chosen defense, i.e. that the failure to disclose was the product of inadvertence or mistake. We also hold that it was not error for the trial court to decline to submit the substance of this defense to a jury, because the process of determining whether to apply judicial estoppel is an equitable analysis to be performed by a judge and because the remedy sought is equitable in nature.”
The doctrine of judicial estoppel recognizes that where a party successfully assumes a certain position in a legal proceeding, that party may not subsequently assume a contrary position in a different proceeding, simply because that party’s interests have changed, particularly where the change in position results in an unfair advantage to that party or where the change works an unfair detriment upon another party.
In the present case, the trial court found evidence of inequities: (1) harm to the bankruptcy creditors because of the nondisclosure; (2) creation of an advantage for the appellants in the bankruptcy case because the nondisclosure left them free to sue for damages that would have been subject to potential distribution to the creditors; and (3) harm to the appellees by eliminating their opportunity to settle the potential claims against them while the bankruptcy case was still open.
The D.C. Appellate Court held: “we are satisfied that the trial court’s findings and conclusions on judicial estoppel are supported by the evidence and applicable law. We find no error of law or abuse of discretion in any aspect of the trial court’s rulings. The judgment stands.”
Source Dennis v. Jackson, No. 19-CV-156.
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