FILED
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS May 29, 2008
FOR THE TENTH CIRCUIT Elisabeth A. Shumaker
Clerk of Court
ROSALIE L. ARDESE,
Plaintiff-Appellant,
No. 07-7069
v. (D.C. No. 06-CV-12-P)
(E.D. Okla.)
DCT, INCORPORATED,
an Oklahoma corporation,
Defendant-Appellee.
ORDER AND JUDGMENT *
Before MURPHY, McKAY, and GORSUCH, Circuit Judges.
Rosalie L. Ardese appeals the district court’s judgment estopping her from
pursuing certain civil claims against her former employer, DCT, because she
failed to disclose them as assets during her bankruptcy. Because we agree with
the district court that the legal issues in Ms. Ardese’s case are materially
*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument. This order and judgment is
not binding precedent, except under the doctrines of law of the case, res judicata,
and collateral estoppel. It may be cited, however, for its persuasive value
consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
indistinguishable from those in Eastman v. Union Pacific Railroad Co., 493 F.3d
1151 (10th Cir. 2007), we affirm.
I
Ms. Ardese worked for DCT as a security guard and dispatcher. On
January 18, 2005, following her separation from employment, Ms. Ardese filed a
charge against DCT with the National Labor Relations Board (“NLRB” or
“Board”), alleging her termination violated a collective bargaining agreement
between DCT and Local 796 of the International Union, Security, Police and Fire
Professionals of America (“Union”). The NLRB deferred the matter to grievance
and arbitration procedures outlined in the collective bargaining agreement. In
July 2005, the Board determined that no further proceedings were necessary
because the Union had withdrawn Ms. Ardese’s grievance; for that reason, the
NLRB refused to issue a complaint on Ms. Ardese’s charge.
Meanwhile, on March 11, 2005, Ms. Ardese filed a charge of discrimination
against DCT with the Equal Employment Opportunity Commission (“EEOC” or
“Commission”), alleging that DCT discriminated against her by regarding her as
disabled. The EEOC dismissed the charge on September 27, 2005. The same
day, Ms. Ardese filed an amended charge with the Commission, continuing to
claim that DCT discriminated against her by regarding her as disabled, but also
adding claims of racial discrimination and retaliation. On December 24, 2005,
Ms. Ardese filed a third charge of discrimination against DCT that was identical
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to the amended charge except for the removal of her disability discrimination
claim. The EEOC dismissed this charge on January 17, 2006. Ms. Ardese was
not represented by counsel in the proceedings before the NLRB or the EEOC.
On October 11, 2005, and with the assistance of counsel, Ms. Ardese filed a
voluntary petition for discharge in bankruptcy under Chapter 7 of the Bankruptcy
Code. The bankruptcy filings required Ms. Ardese to disclose her administrative
claims against DCT. For example, Schedule B asked her to list, among other
property, “[o]ther contingent and unliquidated claims of every nature, including
tax refunds, counterclaims of the debtor, and rights to setoff claims.” Aplee.
Supp. App., Vol. I at 74. The Statement of Financial Affairs likewise required
her to “[l]ist all suits and administrative proceedings to which the debtor is or was
a party within one year immediately proceeding the filing of this bankruptcy
case.” Id. at 89. Yet nowhere in her bankruptcy court filings did Ms. Ardese
reference her administrative claims, and she identified no non-exempt assets that
could be administered for the sake of her creditors.
The bankruptcy court discharged Ms. Ardese’s debt on January 10, 2006.
That very same day Ms. Ardese filed this case in the district court, making claims
against DCT, the Union, and a number of individuals. Ms. Ardese’s pro se
complaint alleged, among other claims, sexual harassment, gender and racial
discrimination, retaliation, violation of the Americans with Disabilities Act,
breach of the collective bargaining agreement, defamation, and breach of the
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Union’s duty of fair representation. Ms. Ardese subsequently hired an attorney
and twice amended her complaint so that it finally brought claims only against
DCT, alleging racial and gender discrimination, violations of the Americans with
Disabilities Act and Labor Management Relations Act, and violations of state
law. The bankruptcy court entered its final decree on January 23, 2006, closing
Ms. Ardese’s bankruptcy case.
On July 21, 2006, DCT filed a motion to dismiss with the district court,
arguing that Ms. Ardese’s claims against DCT arose before she filed her
bankruptcy petition and therefore the court should dismiss the case because the
bankruptcy trustee was the proper party in interest and Ms. Ardese had no
standing and, even if she were the proper party in interest, Ms. Ardese should be
judicially estopped from pursuing her claims. The district court converted this
motion into one for summary judgment.
After receiving DCT’s motion, Ms. Ardese reopened her bankruptcy case
and disclosed her claims against DCT. Ms. Ardese then added the bankruptcy
trustee as a party to the district court action and responded to DCT’s motion for
summary judgment, arguing that she should be allowed to stay in the case as a
party because she had an interest in any money recovered that was beyond what
the estate owed to the creditors. The district court granted the motion for
summary judgment as to Ms. Ardese’s interest on the ground that the trustee was
the only proper party in interest.
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DCT filed another motion for summary judgment on June 15, 2007, again
arguing that the district court should deny recovery on the ground of judicial
estoppel. The trustee responded that judicial estoppel was improper because
Ms. Ardese had settled with the trustee, paying all her creditors’ claims in full
and purchasing all right, title, and interest in the lawsuit from the estate.
The district court granted motions subsequently filed by both Ms. Ardese
and the trustee, asking the court to replace the trustee, who had abandoned the
estate’s interest in the lawsuit pursuant to the settlement, with Ms. Ardese as the
sole plaintiff. The district court then granted DCT’s second motion for summary
judgment, concluding that Ms. Ardese was judicially estopped from pursuing her
claims because of her failure to apprise the bankruptcy court initially of her
claims against DCT, despite her later attempt to cure the omission. Ms. Ardese
now appeals this decision.
II
We review the district court’s decision holding Ms. Ardese judicially
estopped from pursuing her claims for abuse of discretion. See Eastman, 493
F.3d at 1156. A court abuses its discretion only when it exceeds the bound of
permissible choice given the facts and applicable law. United States v. McComb,
519 F.3d 1049, 1053 (10th Cir. 2007). Because this case comes to us on summary
judgment, we review for abuse of discretion while viewing the facts and all
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reasonable inferences that can be drawn from those facts in the light most
favorable to Ms. Ardese. See Eastman, 493 F.3d at 1155-56.
A
Judicial estoppel is an equitable doctrine intended “‘to protect the integrity
of the judicial process by prohibiting parties from deliberately changing positions
according to the exigencies of the moment.’” Id. at 1156 (quoting New
Hampshire v. Maine, 532 U.S. 742, 749-50 (2001)). We have held that three
factors typically inform the decision whether to apply the doctrine in a particular
case:
First, a party’s subsequent position must be clearly inconsistent with
its former position. Next, a court should inquire whether the suspect
party succeeded in persuading a court to accept that party’s former
position, so that judicial acceptance of an inconsistent position in a
later proceeding would create the perception that either the first or
the second court was misled. Finally, the court should inquire
whether the party seeking to assert an inconsistent position would
gain an unfair advantage in the litigation if not estopped.
Id. (citations, emphasis, and quotations omitted). In Eastman itself, we found
these conditions were met because the plaintiff had failed to disclose a pending
lawsuit as a potential asset of the estate in his bankruptcy filings, received a
discharge of his debts in bankruptcy, and then sought to prosecute his undisclosed
damages suit. See id. at 1156-60.
There is little obvious daylight between Eastman and Ms. Ardese’s case.
First, Ms. Ardese’s position in the bankruptcy court – representing that she did
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not have any administrative proceedings, lawsuits, or other claims for damages
against DCT – is clearly inconsistent with her position in the district court as she
pursued her pre-existing claims against DCT. Second, because the bankruptcy
court proceeded as if no legal claims existed and granted a discharge of
Ms. Ardese’s debts on that basis, “[t]he obvious perception” is that the
bankruptcy court was misled. Id. at 1159 (quotation omitted). Finally, to permit
her to proceed now on her undisclosed claims against DCT would grant Ms.
Ardese the “ultimate benefit,” inconsistent with her discharge in bankruptcy, of
gaining financially from an asset undisclosed to her creditors. Id. at 1159-60. In
this respect, Ms. Ardese’s case appears “indistinguishable from the overwhelming
majority of cases where debtors, who have failed to disclose legal claims to the
bankruptcy court without credible evidence of why they did so, have been
judicially estopped from pursuing such claims subsequent to discharge.” Id. at
1159.
B
1. Despite the apparent congruity between Eastman and her own case,
Ms. Ardese argues that she should be excused for failing to disclose her potential
claims against DCT because she is unskilled in the law. As it happens, however,
Ms. Ardese was aided by counsel in her bankruptcy proceedings and we rejected
very much this same line of argument in Eastman. There, the plaintiff stressed
that he was “unsophisticated” and “unschooled” in bankruptcy matters. Id. We
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responded by recognizing that “[a] large portion of debtors who file for chapter 7
bankruptcy are [equally] ‘unsophisticated’ and ‘unschooled,’ . . . yet have little
difficulty fully disclosing their financial condition to the bankruptcy court.” Id.
We then categorically held that the argument that a debtor “simply did not know
better and [her bankruptcy attorney] attorney ‘blew it’ is insufficient to withstand
application of the doctrine.” Id. Bound by Eastman, we are not free to reach a
different result here.
2. Ms. Ardese stresses that she eventually reopened her bankruptcy case to
disclose her lawsuit to the bankruptcy court, if admittedly only in response to
DCT’s motion for summary judgment. Eastman indicates, however, that this will
not suffice to preclude application of judicial estoppel:
Allowing [a debtor/plaintiff] to ‘back up’ and benefit from the
reopening of his [or her] bankruptcy only after his [or her] omission
had been exposed would suggest that a debtor should consider
disclosing potential assets only if he [or she] is caught concealing
them. This so-called remedy would only diminish the necessary
incentive to provide the bankruptcy court with a truthful disclosure
of the debtor’s assets.
Id. at 1160 (quotation and brackets omitted). Simply put, the initial favorable
Chapter 7 discharge Ms. Ardese received was “sufficient to establish a basis for
judicial estoppel, even if the discharge [was] later vacated.” Id. (quotation
omitted).
3. Ms. Ardese contends that she could not have disclosed her claims
against DCT because she did not know of them at the time she filed for
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bankruptcy. We agree with the district court, however, that, based on the
undisputed facts, no reasonable jury could accept this assertion. Before her
October 11, 2005, bankruptcy petition, Ms. Ardese filed a Union grievance on
March 13, 2005, expressly requesting reinstatement and lost wages and benefits.
Aplee. Supp. App., Vol. II at 477. In the General Intake Questionnaire she
submitted to the EEOC on April 12, 2005, Ms. Ardese was asked what her
expectations were from filing the charge, and she expressly stated that she sought
“Back Pay” and “Compensatory damages.” Id. at 427. Each time the EEOC
dismissed one of Ms. Ardese’s charges, it sent her a document titled “Dismissal
and Notice of Rights”; the notices and the accompanying cover letters informed
Ms. Ardese of her right to sue and the time limit for filing such a lawsuit.
Plainly, Ms. Ardese knew before she filed for bankruptcy that she had a claim
against DCT.
Her knowledge was further confirmed during the course of the bankruptcy
proceedings themselves, a time during which she bore a continuing duty to
disclose claims known to her. For example, on December 14, 2005, she wrote the
EEOC expressly seeking a “notice of right to sue.” Aplt. App. at 221. When she
received the notice – three days after she filed for bankruptcy – she saw that it
only reflected her ADA claim, and she called the EEOC asking for an amendment
of the notice to include her other claims. In another note dated December 18,
2005, Ms. Ardese similarly wrote, “I’m pleading to let me have my day in court
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with these people (co. and others involved[)].” Id. at 228. On these facts, a
reasonable jury considering the above evidence could not find that Ms. Ardese
was unaware that she had a claim against DCT prior to the termination of her
bankruptcy case. 1
4. Finally, Ms. Ardese argues that the district court’s ruling in Archuleta v.
Wagner, No. 06-CV-02061-LTB, 2007 WL 3119615 (D. Colo. Oct. 22, 2007),
indicates that the district court in this case abused its discretion in applying
judicial estoppel. In Archuleta, two months after the debtor filed for bankruptcy
she was arrested pursuant to a domestic violence charge. The arrest was later
determined to have been improper and the debtor filed a 42 U.S.C. § 1983 action.
She initially failed to update her bankruptcy filings to show her new claim, but
eventually updated her Chapter 13 plan to reflect the lawsuit after the omission
was brought to her attention by the defendants in the federal action.
Obviously we are not bound by the district court’s decision in Archuleta,
and we express no opinion on its correctness. Further, the fact that another judge
in another case might have made a different decision about applying an equitable
doctrine does not suggest that the district court in this case abused its discretion.
Nevertheless, we see at least a couple material distinctions between Archuleta, on
the one hand, and this case and Eastman, on the other. In the first place, the
1
Speaking of her mens rea, it is also of some significant interest, if not
necessary to our analysis, that Ms. Ardese filed her claims against DCT the very
same day she received her bankruptcy discharge.
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bankruptcy proceedings in Archuleta were still in progress when the debtor
corrected her omission. The debtor therefore had not obtained the advantage of
having her debts discharged at the time she corrected her error, unlike
Ms. Ardese. In fact, the district court in Archuleta specifically noted that
“[c]ourts will generally not allow a plaintiff to” avoid judicial estoppel by
“retroactively reopen[ing] a closed bankruptcy case to allow disclosure of a
pending civil claim.” Id. at *4.
Additionally, unlike the omission in this case, the omission in Archuleta
was not corrected only in response to prodding from an opposing party in the
form of a motion for summary judgment. Voluntary amendment presents quite a
different equitable scenario than that presented here, where Ms. Ardese was
“forced to [amend her bankruptcy petition] by the actions of her civil opponent.”
Id. at *5. The district court in Archuleta expressly acknowledged that “courts
will generally not allow a plaintiff to” avoid judicial estoppel by “amend[ing] her
bankruptcy filings in response to a motion for summary judgment – based on
judicial estoppel – in an ongoing civil case.” Id. at *4. For at least these reasons,
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we consider Eastman, rather than Archuleta, a more appropriate analogy in this
case.
* * *
The judgment of the district court is affirmed.
Entered for the Court
Neil M. Gorsuch
Circuit Judge
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