Sunday, April 13, 2014

Bankruptcy Schedules Must Completely Disclose Assets - The Doctrine of Judicial Estoppel

The recent case of Javier Milian vs. Wells Fargo & Company, et al,, Case 13-CV-22201-KMM (February 18, 2014) illustrates the importance of a person completing his bankruptcy schedules fully and accurately - including as to unfixed and contingent claim. In this case, the doctrine of "judicial estoppel" was applied to bar the debtor from pursuing a claim against his mortgage lender as he failed to list the claim in his bankruptcy schedules.  In this case, the Bankruptcy Court's decision to abstain and also apply the doctrine of judicial estoppel was upheld.

Judicial Estoppel

The District Court upheld the Bankruptcy Court's application of the doctrine of "judicial estoppel" barring the debtor's adversary proceeding.  The District Court explained that the judicial estoppel is an equitable doctrine that "prevents a claim in a legal proceeding that is inconsistent with a claim taken by that party in a previous proceeding." Barger v. City of Cartersville, GA, 348 F.3d 1289, 1293 (11th Cir. 2003),  Burnes v. Pemco Aeroplex, Inc., 291 F.3d 1282, 1284 (11th Cir. 2002).  The District Court noted that bankruptcy petitions are required "under penalty of perjury to disclose in their bankruptcy petitions all fixed and contingent assets, including all causes of action that the debtor knows about or that exist at the time the bankruptcy action being, as well as those that the debtors learn about before the bankruptcy case is closed." 11 U.S.C. § 521.  The two factors in the application of judicial estoppel in a particular case are whether the inconsistent positions were made under oath in the prior proceeding and whether the inconsistencies have been calculated to make a mockery of the judicial system.

Pro Se Litigants

The District Court's ruling is also instructive to pro se litigant - that is, persons who represent themselves in court with the assistance of an attorney.  The District Court noted that  "judges cannot and will not give litigants legal advice" and that a litigant does not have the constitutional right to receive personal instruction from the trial court judge on courtroom procedure. The District Court also stated that the constitution does not require a trial court judge to take over the chores for a pro se litigant that would normally be taken care of by a trained attorney.  McKaske v. Wiggins, 465 U.S. 168, 183-84 (1984).