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Appellate Court Date: 2018.02.07
13:37:54 -06'00'
Johnson v. Fuller Family Holdings, LLC, 2017 IL App (1st) 162130
Appellate Court GREGORY JOHNSON and NATASHA JOHNSON, Plaintiffs-
Caption Appellants, v. FULLER FAMILY HOLDINGS, LLC, a Delaware
Limited Liability Company, ABM JANITORIAL SERVICES-
MIDWEST, LLC, a Delaware Limited Liability Company, 30 N.
LASALLE, L.P., a Delaware Limited Partnership, and TISHMAN
SPEYER PROPERTIES, L.P., a Delaware Limited Liability
Partnership, Defendants-Appellees.
District & No. First District, Sixth Division
Docket No. 1-16-2130
Filed December 8, 2017
Decision Under Appeal from the Circuit Court of Cook County, No. 15-L-11122; the
Review Hon. William E. Gomolinski, Judge, presiding.
Judgment Reversed and remanded.
Counsel on Peter A. Cantwell, of Cantwell & Cantwell, of Chicago, for appellants.
Appeal
Julie A. Tuescher, Matthew A. Eliaser, James A. Ahern, and Daniel J.
Basler, of Cassiday Schade LLP, and Melissa A. Murphy Petros and
John Stiglich II, of Wilson Elser Moskowitz Edelman & Dicker LLP,
both of Chicago, for appellees.
Panel JUSTICE CONNORS delivered the judgment of the court, with
opinion.
Presiding Justice Hoffman and Justice Delort concurred in the
judgment and opinion.
OPINION
¶1 Plaintiffs, Gregory Johnson and Natasha Johnson, appeal from the trial court’s order that
granted the motion to dismiss brought by defendants, ABM Janitorial Services-Midwest,
LLC (ABM), Fuller Family Holdings, LLC (Fuller), 30 N. LaSalle, L.P. (30 N. LaSalle), and
Tishman Speyer Properties, L.P. (Tishman) (hereinafter collectively referred to as
defendants). The trial court found that due to plaintiffs’ failure to disclose their personal
injury claim during their bankruptcy proceeding, judicial estoppel barred plaintiffs from
bringing the instant lawsuit. Plaintiffs assert that the trial court’s decision was in error
because their failure to disclose was inadvertent. We find that the record before us does not
evince an intent to deceive or mislead by plaintiffs. Therefore, we reverse the decision of the
trial court and remand for further proceedings.
¶2 BACKGROUND
¶3 The underlying case here stems from the personal injuries suffered by plaintiff Gregory
Johnson as a result of a slip and fall in a stairwell at work. On December 15, 2010, Gregory
was working as a security guard for Whelan Security of Illinois, Inc. (Whelan), at 30 North
LaSalle Street in Chicago, which required him to patrol the exterior of the building. While on
patrol, Gregory fell due to the allegedly negligently-maintained condition of the stairs. As a
result of his work-related injury, Gregory filed a workers’ compensation claim against
Whelan on August 25, 2011, and received benefits.
¶4 On December 14, 2012, plaintiffs filed their complaint in the circuit court of Cook
County alleging negligence against defendants, specifically that defendants negligently
owned, operated, managed, maintained, or controlled the premises. Plaintiffs’ complaint was
brought by Gregory for his personal injuries and by Gregory’s wife, Natasha, for her loss of
consortium.
¶5 Prior to setting forth the pertinent procedural facts from the circuit court, we find it
necessary to address plaintiffs’ bankruptcy proceedings. On June 14, 2012, six months prior
to filing the instant personal injury lawsuit, plaintiffs jointly filed a petition for chapter 7
bankruptcy (11 U.S.C. § 101 (2006)) in the United States District Court for the Northern
District of Illinois and were represented by Peter Francis Geraci Law, LLC, during their
bankruptcy proceeding. Plaintiffs’ petition included various “schedules” that contained their
assets and liabilities. One of the disclosures in Schedule B, which covered personal property,
required plaintiffs to describe, “[o]ther contingent and unliquidated claims of every nature,
including tax refunds, counter claims of the debtor, and rights to set off claims.” In response
to this item, plaintiffs listed: “Workers compensation case with Patricia Lannon
312.236.5412.” Plaintiffs listed the value of that case as “[u]nknown.” Both plaintiffs
electronically signed the disclosures under penalty of perjury.
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¶6 On August 8, 2012, a meeting of the creditors occurred, during which plaintiffs were
asked questions regarding their assets and liabilities by the bankruptcy trustee, Mr. Horace
Fox. In relevant part, the following exchange occurred between Mr. Fox and Gregory:
“MR. FOX [bankruptcy trustee]: In the last 2 years, has either of you suffered any
pers—physical injury that would allow you to sue the person that caused you that
damage and make them pay you money?
MR. JOHNSON [plaintiff]: Yes, I have.
MR. FOX: How long ago did that occur?
MR. JOHNSON: Worker’s [c]ompensation. It happened in, uh—
MR. FOX: Did you say [w]orkers [c]ompensation?
MR. JOHNSON: Yes.
MR. FOX: Okay.
MR. JOHNSON: December—
MR. FOX: We don’t have to have this conversation because you get to keep
100% of any [w]orkers [c]ompensation award.
MR. JOHNSON: Okay.
MR. FOX: Okay. But I appreciate your honesty.”
On October 10, 2012, approximately two months prior to the filing of plaintiffs’ personal
injury lawsuit in circuit court, plaintiffs received a discharge in bankruptcy and their
bankruptcy case was closed.
¶7 As previously stated, plaintiffs’ circuit court complaint was filed on December 14, 2012.
Both plaintiffs gave deposition testimony on November 11, 2013. Natasha testified first, with
her deposition beginning at 1 p.m. Gregory testified after Natasha, with his deposition
beginning at 2:50 p.m., and ending after 8 p.m. During his deposition, Gregory testified that
he had filed two lawsuits prior to the instant personal injury case: a personal injury claim
related to a 2000 motorcycle accident and a property damage claim related to a 2002 car
accident. Gregory also testified that he and his wife had filed for personal bankruptcy. When
asked if the instant lawsuit had been disclosed as an asset in the bankruptcy, Gregory
responded, “No. It wasn’t, no.”
¶8 Most relevant to the issues raised in this appeal, is the following exchange from
Gregory’s deposition:
“Q. While you may not have been asked it by the bankruptcy trustee, did you
disclose the fact that you had been involved in an accident that could potentially
result in a third-party action against other entities during the bankruptcy proceedings?
MR. CANTWELL [plaintiffs’ attorney]: Objection. If he disclosed the workmen’s
comp claim, that certainly is about—There’s no other workmen’s comp claim he ever
made, I don’t think. Not that I know of.
Q. [Defendant ABM’s attorney:] Do you understand my question?
A. You’re asking me if I filed a lawsuit for workers’ compensation—
Q. No. What I’m asking is, you testified that you disclosed that you had a
workers’ comp action—
A. That’s right.
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Q. —proceeding with respect to this incident. Did you disclose that you might
potentially file a lawsuit with respect to something non-workers’ compensation
resulting from the December 15, 2010, accident regardless of whether you were asked
it by the bankruptcy trustee or not?
A. I told him I had no idea. I didn’t know if I would do anything because at that
time I didn’t even have my surgery.1
Q. Okay.
A. When I first talked to a—the bankruptcy lawyers, I had no idea that I would
even file a lawsuit, period.
Q. But you had been injured as of at least that time, correct?
A. Yes.
Q. And at that point in time that you consulted the—Do you recall when exactly
you first retained the law firm of Peter Francis Geraci to represent you in the
bankruptcy proceeding?
A. Not offhand because they give you a consultation and they give you—they set
up another meeting where you confirm everything and then you go through another
process of them showing you all the records of whatever you owe, funds that you
want to claim on you bankruptcy and so forth and so on.”
¶9 On November 13, 2013, two days after plaintiffs’ depositions, two of defendants, ABM
and Fuller, filed an emergency motion to dismiss pursuant to the doctrines of standing and
judicial estoppel.
¶ 10 On December 13, 2013, plaintiffs filed a motion to reopen their bankruptcy case in
federal court. The motion asked that their case be reopened so as to allow plaintiffs to amend
their bankruptcy schedules to include their personal injury claim that was then pending in
circuit court. The motion stated that plaintiffs “believed that they had disclosed the
unliquidated contingent claims by listing the [w]orker’s [c]ompensation claim on their
[s]chedules,” and explained that “[n]o claim against any third parties had been filed or was
pending in any [c]ourt at the time of [plaintiffs’] filing of their [bankruptcy petition] or
during the pendency of the [b]ankruptcy case, and any failure by [plaintiffs] to disclose the
potential third party claims was inadvertent and an honest mistake.” On December 20, 2013,
the bankruptcy court granted2 plaintiffs’ motion to reopen their case and allow the trustee
and the court to address the disposition of plaintiffs’ circuit court personal injury lawsuit.
1
Earlier in the deposition, Gregory testified that he had surgery on his shoulder in August 2011.
2
We note that the copy of the bankruptcy court’s December 20, 2013, order that is contained in the
record states: “The Debtors Motion to Re-Open Bankruptcy Case is granted/denied.” Neither “granted”
nor “denied” is scratched-out. However, the order subsequently states, inter alia, that the debtors are
granted leave to amend their schedules to include the contingent claims currently pending before the
circuit court and that the matter was set for status on January 7, 2014. The same copy of the order
appears in the bankruptcy court’s online records but the “docket text” contained in the online record
references the order as “granting motion to reopen Chapter 7 [c]ase.” It is well settled that “we may take
judicial notice of public documents which are included in the records of other courts.” Seymour v.
Collins, 2015 IL 118432, ¶ 6 n.1. Based on the context of the order and the online docket text, it is clear
that plaintiffs’ motion to reopen was granted.
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¶ 11 On March 17, 2014, the circuit court placed plaintiffs’ case on the bankruptcy stay
calendar.
¶ 12 On July 29, 2014, the parties in the bankruptcy case, including the trustee and plaintiffs’
attorney for their personal injury case, appeared before the bankruptcy court. The trustee
informed the court that he had filed a no-asset report and that the case was ready to be
reclosed. It was then brought to the court’s attention that plaintiffs had a pending state court
case. The trustee stated that they had not sought to administer that asset other than
discussions with defendants’ counsel regarding a possible settlement of plaintiffs’ personal
injury claim, however, “[t]hey were unwilling to offer any kind of settlement that would
yield a dividend for the estate after payment of liens, attorney fees and exemptions to the
debtors.” Additionally, the trustee acknowledged that there was a controversy regarding
whether plaintiffs properly disclosed their personal injury claim, and plaintiffs’ counsel
informed the court that defendants filed a motion to dismiss based on judicial estoppel in the
personal injury action. The court responded that judicial estoppel would not apply against the
trustee but asked if the trustee intended to nonetheless abandon the claim. The trustee
confirmed his intent to abandon, explaining that:
“Effectively, we are because we anticipate that, first of all, there are certain
defenses that the defendants have raised that they would assert. Assuming that the
debtors or the trustee as plaintiff could get past there, there’s going to be adjudication
on the topic that you’re discussing with the counsel over whether the trustee
abandoned it when the case was first closed.”
The court expressed its belief that “[i]t would seem to me they would have no incentive to
give an attractive offer to the trustee.” The trustee also acknowledged defendants’ position
that plaintiffs do not have a meritorious case. Plaintiffs’ counsel asked that plaintiffs be
allowed to file a motion to amend their assets and liabilities schedules nunc pro tunc to the
date of their original disclosures. The court did not allow plaintiffs’ oral motion, stating,
“Counsel, I’m really—I’m not incentivized to help—a party who did not reveal a cause of
action.”
¶ 13 Plaintiffs’ circuit court case remained inactive until November 2, 2015, when it was
removed from the stay calendar.
¶ 14 On February 16, 2016, defendants filed a renewed joint motion to dismiss based on the
doctrines of standing and judicial estoppel. Their motion was brought pursuant to section
2-619(a)(9) of the Code of Civil Procedure (Code), which allows a defendant to move for
dismissal of an action when “the claim asserted against defendant is barred by other
affirmative matter avoiding the legal effect of or defeating the claim.” 735 ILCS
5/2-619(a)(9) (West 2014). Their renewed motion was similar to their previously filed
motion to dismiss with a few notable exceptions: (1) defendants’ renewed motion was not
brought as an emergency, (2) defendants’ renewed motion cited additional portions of the
record that came to light through the reopened bankruptcy proceedings, and (3) defendants’
renewed motion addressed the recently decided case of Seymour v. Collins, 2015 IL 118432.
As to the issue of standing, defendants’ motion argued that plaintiffs lacked standing
because, although the trustee abandoned plaintiffs’ personal injury claim, the claim remained
the exclusive property of the trustee. Additionally, defendants contended that the doctrine of
judicial estoppel barred plaintiffs’ personal injury claim because plaintiffs failed to list it on
their bankruptcy disclosures as an unfiled contingent claim.
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¶ 15 Plaintiffs filed their response to defendants’ motion on March 30, 2016, asserting, in
relevant part, that defendants failed to present clear and convincing evidence that plaintiffs
should be judicially estopped from proceeding with their claims. Attached to plaintiffs’
response were affidavits from both Gregory and Natasha that were substantially similar. Both
affidavits contained the attestation that at the time plaintiffs filed their bankruptcy petition,
“they had not consulted with any attorneys about filing any third party lawsuit against the
[d]efendants in the case at bar, and had no idea if they were going to or could file a lawsuit
other than the workers’ compensation case in connection with the December 15, 2010
incident.” Additionally, plaintiffs’ affidavits stated that they “believed that [they] had
disclosed all personal injury claims and ‘unliquidated contingent claims’ on the [b]ankruptcy
[s]chedules by disclosing the workers’ compensation case.”
¶ 16 Defendants filed a reply in support of their motion to dismiss on April 12, 2016.
¶ 17 The circuit court conducted oral argument on defendants’ motion to dismiss on May 4,
2016, and issued its memorandum order and opinion on June 30, 2016. The court’s order
recognized that the law requires a debtor to disclose any conceivable interests, including
speculative future interests, and thus determined that plaintiffs did not satisfy their duty under
federal law to disclose all claims. On the issue of standing, the court noted that “[p]laintiffs
do not identify a single Illinois case standing for the proposition that the abandoned claim
reverted back to [p]laintiffs retroactively, as if the bankruptcy had never been filed[,
therefore] *** [p]laintiffs did not have standing to file their present claims.” The court’s
order further stated that although it found that plaintiffs lacked standing, it would also
address defendants’ arguments regarding judicial estoppel.
¶ 18 On the issue of judicial estoppel, the court’s order determined that the doctrine applied to
bar plaintiffs’ action. In determining whether the requirements for judicial estoppel were
present, the court noted that even if plaintiffs’ error in failing to disclose their personal injury
claim was corrected through the reopening of the bankruptcy case, such a correction does not
erase plaintiffs’ initial position that they did not possess that asset. Significantly, the court
stated that “[t]he bankruptcy judge also did not grant [p]laintiffs’ motion to amend the
bankruptcy schedule nunc pro tunc, and there is not support for [p]laintiffs’ contention that
the trustee’s abandonment of the claims retroactively cures [p]laintiffs’ initial failure to
disclose.” The court found that “there is sufficient evidence to convince this court that it is
not punishing [p]laintiffs for an innocent mistake.” Also, the court distinguished this case
from Seymour, finding that “[i]n the present case, [p]laintiffs, through their bankruptcy
counsel, knew to include Gregory’s workers’ compensation claim on the bankruptcy
schedule. Gregory Johnson also testified that he knew of the claim but did not think he would
file it when he was making his bankruptcy disclosures.”
¶ 19 The court’s order ultimately stated, “Defendants ABM Janitorial Services-Midwest LLC
and Fuller Family Holdings, LLC’s Joint Motion to Dismiss Pursuant to Doctrines of
Standing and Judicial Estoppel is GRANTED, and Plaintiffs’ Complaint is DISMISSED
WITH PREJUDICE.” The order also contained language pursuant to Illinois Supreme Court
Rule 304(a) (eff. Mar. 8, 2016).
¶ 20 Defendants filed their timely notice of appeal on August 1, 2016.
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¶ 21 ANALYSIS
¶ 22 Jurisdiction
¶ 23 Prior to addressing the merits of this appeal, we must first address an issue regarding the
proper parties to this appeal and our jurisdiction. We have an independent duty to consider
the issue of jurisdiction and dismiss the appeal where our jurisdiction is lacking. Palmolive
Tower Condominiums, LLC v. Simon, 409 Ill. App. 3d 539, 542 (2011).
¶ 24 The circuit court’s June 30, 2016, order contained an introduction that stated:
“This matter comes for ruling on Defendants ABM Janitorial Services-Midwest
LLC and Fuller Family Holdings, LLC’s Motion to Dismiss Plaintiffs’ Complaint
pursuant to 735 ILCS 5/2-619(a)(9) and the doctrines of standing and judicial
estoppel.”
Similarly, the judgment line of the court’s June 30, 2016, order stated:
“Therefore, based upon the pleadings, briefs, and case law cited above,
Defendants ABM Janitorial Services-Midwest LLC and Fuller Family Holdings,
LLC’s Joint Motion to Dismiss Pursuant to the Doctrines of Standing and Judicial
Estoppel is GRANTED, and Plaintiffs’ Complaint is DISMISSED WITH
PREJUDICE. The court further finds that there is no just reason for delaying either
enforcement or appeal of this order pursuant to Rule 304(a).”
Notwithstanding the fact that 30 N. LaSalle and Tishman are not listed as movants in either
the introduction or the judgment line of the circuit court’s order from which this appeal
stems, the response brief in this appeal was filed on behalf of all four defendants. We find
this perplexing because the record does not contain any evidence that any defendant ever
filed a motion to modify or correct the circuit court’s June 30, 2016, order to include all four
defendants rather than ABM and Fuller only.
¶ 25 In their statement of jurisdiction, plaintiffs acknowledge that the June 30, 2016, order
contains Rule 304(a) language. Later in their brief, plaintiffs also stated that although all four
defendants jointly filed the motion to dismiss and all four defendants filed appearances in this
appeal, none sought to modify the court’s order to reflect that the motion to dismiss was
granted as to all defendants. Nonetheless, plaintiffs curiously assert that our jurisdiction
exists pursuant to Rules 301 and 303. Ill S. Ct. R. 301 (eff. Feb. 1, 1994); R. 303 (eff. Jan. 1,
2015). Plaintiffs’ brief also points out that “[a] judgment for two of four defendants, with a
Rule 304(a) finding entered in the same [o]rder ***, has recognized jurisdictional meaning,
which should not be totally disregarded.” However, plaintiffs fail to explain this proposition
and provide no legal authority to support it.
¶ 26 In defendants’ statement of jurisdiction, defendants posit that “[t]he trial court’s June 30,
2016 [o]rder inadvertently omitted reference to the movants and, thus, to the dismissed
parties, 30 N. LaSalle, L.P. and Tishman Speyer Properties, L.P.” Defendants cite two pages
of the record as support for this proposition; however, neither page evinces any inadvertence
by the court. In fact, the two pages that defendants cite are the first and last pages of the
court’s June 30, 2016, order, both of which list only ABM and Fuller as movants. Defendants
then suggest that the court’s Rule 304(a) language was unnecessary “because all [d]efendants
moved for dismissal jointly and thus all [d]efendants were dismissed per the trial court’s June
30, 2016 [o]rder.”
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¶ 27 After a thorough review of the record, we find no evidence that any party ever attempted
to bring to the circuit court’s attention its purported inadvertence in omitting two defendants
from its order. “Failure to raise an issue in the trial court generally results in forfeiture of that
issue on appeal.” Huang v. Brenson, 2014 IL App (1st) 123231, ¶ 22. It is clear from the
record that both the motion to dismiss and the reply were brought on behalf of all four
defendants. Equally clear is the fact that the circuit court, for reasons unknown, believed only
ABM and Fuller were the movants. There are two separate occasions in the court’s June 30,
2016, order in which the court refers to only ABM and Fuller as the movants. Additionally,
as defendants correctly noted in a somewhat ironic manner, there would be no need for Rule
304(a) language if the court’s order had disposed of the entire litigation. We find that the
court’s two references to ABM and Fuller as the only movants, coupled with the court’s
inclusion of Rule 304(a) language, indicates that the court only intended to enter judgment in
favor of two out of four defendants. Because defendants never sought to correct what they
deemed an inadvertent mistake by the circuit court, they have forfeited such an argument on
appeal. See id. As a result, we only have jurisdiction over ABM and Fuller pursuant to Rule
304(a). The case as to 30 N. LaSalle and Tishman remains pending in the circuit court. Thus,
any subsequent reference to “defendants” in this order only refers to ABM and Fuller, who
are the only defendants over which we have jurisdiction, and thus the only two defendants to
which this order applies.
¶ 28 Standing
¶ 29 Plaintiffs made two arguments for reversal in their opening appellate brief—the first of
which was based on the court’s erroneous determination that plaintiffs lacked standing.
Defendants’ response brief does not disagree with plaintiffs’ assertion that they did, in fact,
have standing to file their lawsuit and goes so far as to acknowledge that there is “no issue
presented for review regarding standing.” The circuit court granted defendants’ motion to
dismiss on the doctrines of both standing and judicial estoppel. The court specifically noted
that there was no Illinois authority holding that upon abandonment, a claim reverted back to a
bankruptcy debtor, such as plaintiffs, retroactively to the claim’s date of filing. However, this
court has since issued its decision in Board of Managers of the 1120 Club Condominium
Ass’n v. 1120 Club, LLC, 2016 IL App (1st) 143849, ¶ 42, wherein it held that “once a claim
is assigned back to the debtor by the bankruptcy trustee, standing revests in the debtor, as if
the debtor had never lost standing in the first place.” Due to the clear holding of Board of
Managers and defendants’ concession that they “do not argue or rely upon lack of standing
as a ground for affirmance,” we find the trial court erred in determining that plaintiffs lack
standing to bring their claim. Once the bankruptcy trustee abandoned their personal injury
claim, standing revested in plaintiffs as if they had never lost it in the first place. As a result,
we reverse the court’s decision granting defendants’ motion to dismiss for lack of standing.
¶ 30 Judicial Estoppel
¶ 31 Plaintiffs contend that the trial court’s dismissal of their complaint on the basis of judicial
estoppel was also in error because the requirements for judicial estoppel were not met where
the court relied on defendants’ distortion of Gregory’s testimony and other mischaracterized
evidence.
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¶ 32 A motion to dismiss brought pursuant to section 2-619 of the Code admits all well-pled
allegations in the complaint and reasonable inferences to be drawn from the facts. In re
Chicago Flood Litigation, 176 Ill. 2d 179, 184 (1997). All pleadings and supporting
documents must be interpreted in the light most favorable to the nonmoving party. Id. at 189.
¶ 33 Judicial estoppel is an equitable doctrine invoked by the court at its discretion. Seymour,
2015 IL 118432, ¶ 36. “[T]he uniformly recognized purpose of the doctrine is to protect the
integrity of the judicial process by prohibiting parties from ‘deliberately changing positions’
according to the exigencies of the moment.” Id. (quoting New Hampshire v. Maine, 532 U.S.
742, 749-50 (2001)). The doctrine of judicial estoppel applies when a party takes a position,
benefits therefrom, and then attempts to take a contrary position in a subsequent proceeding.
Id. “Courts have warned that the doctrine of judicial estoppel is an extraordinary doctrine that
should be applied with caution because it precludes a contradictory position without
examining the truth of either statement.” (Internal quotation marks omitted.) Pepper
Construction Co. v. Palmolive Tower Condominiums, LLC, 2016 IL App (1st) 142754, ¶ 64.
¶ 34 The framework for ascertaining whether judicial estoppel should bar a claim is a two-step
process. Seymour, 2015 IL 118432, ¶ 47. First, the trial court must determine whether the
party to be estopped has (1) taken two positions, (2) that are factually inconsistent, (3) in
separate judicial or quasi-judicial administrative proceedings, (4) intending for the trier of
fact to accept the truth of the facts alleged, and (5) succeeded in the first proceedings and
received some benefit. Id. Judicial estoppel must be proved by clear and convincing
evidence. Id. ¶ 39.
¶ 35 Second, if all five factors are found present, the trial court must then exercise its
discretion in deciding whether to apply judicial estoppel. Id. ¶ 47. Numerous factors may
inform a court’s decision, such as “the significance or impact of the party’s action in the first
proceeding, and *** whether there was an intent to deceive or mislead, as opposed to the
prior position having been the result of inadvertence or mistake.” Id. Our supreme court has
recognized that whether a party intended to deceive or mislead the court is “a critical factor
in the application of judicial estoppel” and has also noted that even if all five prerequisites
are present, intent to deceive or mislead is not necessarily present because inadvertence or
mistake may account for positions taken and facts asserted. Id. ¶¶ 47, 54.
¶ 36 The parties disagree as to the applicable standard of review. Plaintiffs argue that our
review should be de novo, and defendants assert that we should review for an abuse of
discretion. Prior to the Seymour decision, “it [was] well settled that the standard of review
when a trial court rules on the application of judicial estoppel [was] an ‘abuse of discretion’
standard regardless of the procedural manner in which it was raised.” Berge v. Mader, 2011
IL App (1st) 103778, ¶ 9. However, in Seymour, the court created a distinction, specifically
holding that “where the exercise of [a court’s] discretion results in termination of the
litigation, and that result is brought about via the procedural mechanism of a motion for
summary judgment, it follows, as well, that we review that ruling de novo.” Seymour, 2015
IL 118432, ¶ 49; see also Barnes v. Lolling, 2017 IL App (3d) 150157, ¶ 21; Knott v.
Woodstock Farm & Fleet, Inc., 2017 IL App (2d) 160329, ¶ 24. In the case before us,
defendants brought a section 2-619 motion to dismiss, arguing judicial estoppel barred
plaintiffs’ personal injury lawsuit. Defendants’ motion was granted, resulting in the dismissal
with prejudice of plaintiffs’ complaint. Although the appeal in Seymour stemmed from the
trial court’s grant of a motion for summary judgment, we believe de novo review should also
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apply in the context of a section 2-619 motion to dismiss. Like review of a dismissal based
on summary judgment, review of a section 2-619 dismissal is de novo. Van Meter v. Darien
Park District, 207 Ill. 2d 359, 368 (2003). Additionally, our supreme court has recognized
that “[a section 2-619 dismissal] resembles the grant of summary judgment.” Epstein v.
Chicago Board of Education, 178 Ill. 2d 370, 383 (1997). Thus, our review is de novo.
¶ 37 Plaintiffs argue that the trial court erred in granting defendants’ motion to dismiss
because the requirements for judicial estoppel were not met. Plaintiffs point to the authority
relied on by the trial court, i.e., Berge, 2011 IL App (1st) 103778, and Dailey v. Smith, 292
Ill. App. 3d 22 (1997), as outdated in light of the Seymour decision. Conversely, defendants
assert that all of the requirements were met.3 Because our review is de novo, we perform the
same analysis a trial court would perform and we owe no deference to the trial court.
Twyman v. Department of Employment Security, 2017 IL App (1st) 162367, ¶ 20.
¶ 38 We must first determine whether the five prerequisites of judicial estoppel have been
established through clear and convincing evidence: (1) the party to be estopped has taken two
positions, (2) that are factually inconsistent, (3) in separate judicial or quasi-judicial
administrative proceedings, (4) intending for the trier of fact to accept the truth of the facts
alleged, and (5) succeeded in the first proceedings and received some benefit. Seymour, 2015
IL 118432, ¶¶ 39, 47.
¶ 39 As to the first and second prerequisites, it is clear that plaintiffs took two factually
inconsistent positions by not disclosing the possibility of their personal injury claim as an
asset in their federal bankruptcy proceedings, which essentially amounted to ignoring the
claim’s existence, and then subsequently bringing this personal injury action in circuit court.
The third prerequisite is also clearly satisfied where the first proceeding, which was in
federal bankruptcy court, is separate from the instant personal injury lawsuit that was filed in
the circuit court of Cook County, a state court. We also find that the fourth prerequisite is
satisfied where plaintiffs intended the court to accept their alleged facts as true. Plaintiffs’
disclosures in federal court were signed under oath. Additionally, plaintiffs both gave
deposition testimony under oath and submitted affidavits in support of their response to
defendants’ motion to dismiss in their circuit court case. Testimony under oath certainly
evinces an intent for the court to accept their assertions as true.
¶ 40 The fifth prerequisite, requiring that plaintiffs succeeded in the first proceeding and
received some benefit from it, is also satisfied. Plaintiffs argue that defendants cannot satisfy
this requirement because they did not receive any benefit in their bankruptcy case where the
trustee ultimately abandoned their personal injury case. Defendants respond that,
notwithstanding the trustee’s abandonment of the claim, plaintiffs were still able to receive a
discharge of their debts without disclosing their possible personal injury claim.
3
We briefly note that defendants contend that plaintiffs “made no argument in their [a]ppellant
[b]rief that the trial court erred in finding that the five elements were satisfied, and thus [p]laintiffs have
waived this issue.” We find such a contention perplexing because plaintiffs’ opening brief contains a
section titled “THE REQUIREMENTS FOR JUDICIAL ESTOPPEL WERE NOT MET,” that consists
of over 20 pages of argument related to this issue. Further, plaintiffs specifically argue that certain
prerequisites were not met. It is clear from a cursory reading of the arguments in that section that
plaintiffs, in fact, asserted that the requirements of judicial estoppel were not met and, therefore,
properly asserted this issue on appeal. Thus, we need not address defendants’ baseless argument
regarding waiver.
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¶ 41 We find the recent Barnes decision instructive. In Barnes, the plaintiff filed a bankruptcy
petition and was subsequently involved in an automobile accident. Barnes, 2017 IL App (3d)
150157, ¶ 1. The plaintiff did not disclose her accident or possible personal injury claim. Id.
Her debts were discharged in bankruptcy, and five months later, she filed a personal injury
lawsuit based on the injuries suffered in the accident that occurred during the pendency of
her bankruptcy case. Id. The trial court granted summary judgment on the basis of judicial
estoppels and was affirmed on appeal. Id. ¶ 2. The court found that the plaintiff “received a
benefit from the bankruptcy proceeding by having more than $92,000 of her unsecured debt
discharged in bankruptcy without having to increase her payments to her creditors in light of
the claim.” Id. ¶ 22.
¶ 42 Here, plaintiffs succeeded in their bankruptcy proceeding when they received a discharge
of their debts. They also received some benefit from that victory, namely avoiding the
addition of their personal injury claim to their assets prior to discharge of their debts. We do
not find that the trustee’s eventual abandonment of their claim negates the benefit plaintiffs
received through the initial discharge of their debts without their creditors having access to
this claim. Although we appreciate plaintiffs’ argument that a debtor-plaintiff’s discharge in
bankruptcy cannot per se satisfy the benefit prerequisite, we have not determined that the
benefit here is the discharge alone, but rather the discharge of their original bankruptcy
petition having been granted with the trustee, the creditors, and the court being unaware of
plaintiffs’ personal injury claim. Therefore, we find that even where the trustee eventually
abandoned plaintiffs’ personal injury claim, the fact that plaintiffs received a discharge of
their debts without disclosure of an asset is enough evidence to clearly and convincingly
establish a benefit.
¶ 43 Having determined that all five prerequisites are met, we must next exercise our
discretion in determining whether to apply the doctrine of judicial estoppel. Seymour, 2015
IL 118432, ¶ 47. In exercising our discretion, we consider factors such as “the significance or
impact of the party’s action in the first proceeding, and *** whether there was an intent to
deceive or mislead, as opposed to the prior position having been the result of inadvertence or
mistake.” Id. Primarily, we look to whether plaintiffs had an intent to deceive or mislead,
which our supreme court has deemed “a critical factor in the application of judicial estoppel.”
Id. ¶ 54.
¶ 44 Plaintiffs argue that their failure to divulge their possible personal injury claim at the time
they filed their bankruptcy disclosures was inadvertent. Plaintiffs supported this contention
by attaching affidavits to their response to defendants’ motion to dismiss, in which plaintiffs
both attested that they did not “purposefully or intentionally omit[ ] any personal injury
claims or ‘unliquidated contingent claims’ from their [b]ankruptcy [s]chedules.” Defendants
respond that Gregory’s deposition testimony establishes that he was aware of his potential
personal injury claim at the time the disclosures were filed. Specifically, defendants point to
Gregory’s deposition when he was asked if he told the trustee that he might potentially file a
lawsuit with respect to something not related to workers’ compensation, and he answered, “I
told him I had no idea. I didn’t know if I would do anything because at that time I didn’t even
have my surgery.”
¶ 45 The trial court determined that there was “sufficient evidence to convince this court that it
is not punishing [p]laintiffs for an innocent mistake.” The court specifically found that
“[p]laintiffs, through their bankruptcy counsel, knew to include Gregory’s workers’
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compensation claim on the bankruptcy schedule.” Most significantly, the court observed that,
“Gregory *** also testified that he knew of the claim but did not think he would file it when
he was making the bankruptcy disclosures.” The court further determined that the
circumstances under which plaintiffs brought their motion to reopen their bankruptcy case
“do not afford [plaintiffs] the benefit of the doubt regarding intent.” Plaintiffs argue that the
trial court’s order misstated Gregory’s testimony and was likely due to defendants’ distortion
of his actual testimony.
¶ 46 Contrary to the trial court, our exercise of discretion results in our finding that the record
before us does not contain sufficient evidence to convince this court that plaintiffs intended
to deceive or mislead the bankruptcy court when they failed to disclose their unliquidated
personal injury claim. Defendants rely on Berge, which was decided prior to Seymour. We
find this problematic for a few reasons. In Berge, the court listed the elements of judicial
estoppel as: “(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.” (Internal quotation marks omitted.) Berge,
2011 IL App (1st) 103778, ¶ 13. The Seymour court expressly rejected the five elements set
forth in Berge, holding that “a statement under oath is not required for the doctrine of judicial
estoppel to apply.” Seymour, 2015 IL 118432, ¶ 38. Additionally, Seymour created the new
requirement that a court must exercise its discretion in determining whether to apply judicial
estoppel by examining factors, such as whether there was an intent to deceive. Id. ¶ 47. In
Berge, the court noted that the plaintiff in that case “certainly knew of the undisclosed claim
and had motive to conceal it.” Berge, 2011 IL App (1st) 103778, ¶ 19. However, the court
did not state that such a determination was the result of its exercise of discretion, as is now
required by Seymour. We further find Berge lacking in guidance because the court there
relied on federal authority wherein the courts did not show much forgiveness when a party
failed to disclose assets in a bankruptcy case. Id. ¶ 20. In fact, the Berge decision went so far
as to state “we see no reason to deviate from either Dailey v. Smith, 292 Ill. App. 3d at 25, or
this long line of federal cases.” Id. Conversely, in Seymour, the court stated, “[w]e are not
willing, as appears to be the case in prevailing federal authority given these circumstances
[citations], to presume that the debtors’ failure to disclose was deliberate manipulation.”
(Emphasis in original.) Seymour, 2015 IL 118432, ¶ 62. The Seymour court felt so strongly
about its deviation from the majority of federal opinion on this issue that it later in its opinion
stated, “[w]e are not so ready, as the federal courts appear to be, to penalize, via presumption,
the truly inadvertent omissions of good-faith debtors in order to protect the dubious, practical
interests of bankruptcy creditors.” Id. ¶ 63.
¶ 47 We find it pertinent to highlight these distinctions between Seymour and Berge because
we believe these distinctions are great enough such that a court’s reliance on Berge
subsequent to Seymour seems erroneous. Defendants argue that Seymour did not criticize,
limit, question, or overturn Berge. We disagree based on the aforementioned discrepancies
between the analyses undertaken by the courts. Thus, we decline to consider Berge as
instructive and decline to rely on any authority prior to Seymour that conflicts with the
supreme court’s holding in that case. Instead, we follow the explicit framework set forth in
Seymour and subsequently decided cases, such as Barnes, in reaching our determination that
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the record evidence, when viewed in a light most favorable to the nonmovants, does not
establish plaintiffs’ intent to mislead or deceive the court below.
¶ 48 Defendants rely on Barnes to support their appellate arguments, but we find that case
more helpful to plaintiffs. In Barnes,4 the plaintiff filed a bankruptcy petition and was
subsequently involved in an automobile accident, which she did not disclose in her
bankruptcy case. Barnes, 2017 IL App (3d) 150157, ¶ 1. Her debts were discharged in
bankruptcy, and five months later, she filed a personal injury lawsuit based on the injuries
suffered in the accident that occurred during the pendency of her bankruptcy case. Id. On
appeal, the court affirmed the trial court’s grant of summary judgment on the basis of judicial
estoppel. Id. ¶ 28. The court found significant the fact that plaintiff waited to attempt to settle
her personal injury claim until after receiving her discharge in bankruptcy. Id. ¶ 25. The court
found her failure to disclose to be intentional because her conduct in waiting to settle until
after discharge was the exact behavior that the Seymour court recognized as an indication that
the plaintiff was trying to avoid creditors. Id. In fact, the court found “ample evidence” to
suggest that the plaintiff’s failure was a deliberate attempt to mislead, including the following
pieces of evidence: the plaintiff retained a personal injury attorney 18 days after the accident;
the plaintiff’s attorney wrote a letter to the defendants’ attorney stating that the plaintiff’s
personal injury claim was worth over $50,000, including lost wages; the plaintiff did not file
her personal injury lawsuit or attempt to settle it until after her bankruptcy was discharged;
and the plaintiff never informed her bankruptcy attorney about her personal injury claim and
vice versa. Id. ¶¶ 24-25.
¶ 49 We find Barnes to be helpful because the type of conduct that warranted the application
of judicial estoppel there is not present here. In this case, the primary evidence that
defendants rely on to show that plaintiffs intended to deceive or mislead the court is
Gregory’s deposition testimony wherein he stated that he “didn’t know if [he] would do
anything” when asked if he disclosed he might potentially file a personal injury lawsuit. We
find that Gregory’s statement, when read in context, does not evince an intent to deceive. The
trial court stated that Gregory “testified that he knew of the claim but did not think he would
file it when he was making his bankruptcy disclosures.” This is simply not accurate. When
viewed critically, Gregory’s testimony raises more questions than it answers. The following
is the critical exchange from Gregory’s deposition:
“Q. While you may not have been asked it by the bankruptcy trustee, did you
disclose the fact that you had been involved in an accident that could potentially
result in a third-party action against other entities during the bankruptcy proceedings?
MR. CANTWELL [plaintiffs’ attorney]: Objection. If he disclosed the workmen’s
comp claim, that certainly is about—There’s no other workmen’s comp claim he ever
made, I don’t think. Not that I know of.
Q. [Defendant ABM’s attorney]: Do you understand my question?
A. You’re asking me if I filed a lawsuit for workers’ compensation—
Q. No. What I’m asking is, you testified that you disclosed that you had a
workers’ comp action—
4
Although we have already set forth the facts of Barnes in this decision, we resummarize some of
those pertinent facts for purposes of clarity. Supra ¶ 41.
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A. That’s right.
Q. —proceeding with respect to this incident. Did you disclose that you might
potentially file a lawsuit with respect to something non-workers’ compensation
resulting from the December 15, 2010, accident regardless of whether you were asked
it by the bankruptcy trustee or not?
A. I told him I had no idea. I didn’t know if I would do anything because at that
time I didn’t even have my surgery.5
Q. Okay.
A. When I first talked to a—the bankruptcy lawyers, I had no idea that I would
even file a lawsuit, period.
Q. But you had been injured as of at least that time, correct?
A. Yes.”
¶ 50 Gregory’s testimony does not indicate an intent to deceive. In fact, the meaning behind
Gregory’s testimony is unclear. Perhaps this is because at the time Gregory made the
statement at issue he was already five hours into his deposition. In part, Gregory stated that,
“I told him I had no idea.” Although somewhat unclear whom “him” refers to, the context of
the preceding questions seems to point to the trustee. However, in reviewing the transcript of
the sole conversation between Gregory and the trustee,6 which occurred at the August 8,
2012, meeting of the creditors, at no point does Gregory say he “had no idea” whether he
would file a personal injury claim. In fact, Gregory’s potential personal injury case is never
addressed because, after Gregory mentions his workers’ compensation claim, the trustee does
not ask any further questions, and actually tells Gregory that: “We don’t have to have this
conversation because you get to keep 100% of any [w]orkers [c]ompensation award.” We
find this statement by the trustee to be somewhat similar to the factual scenario of Seymour.
In Seymour, the uncontroverted affidavits of the plaintiffs and their bankruptcy attorney
established that the trustee advised the plaintiffs that they had to disclose any lump sum of
funds received in excess of $2000; thus, the court observed that it would be understandable
that the plaintiffs, who were laymen, might have inferred that smaller sums, and perhaps
even unliquidated claims for money, did not have to be disclosed. Seymour, 2015 IL 118432,
¶ 61. Here, the trustee informed Gregory, who is also a layman like the Seymour plaintiffs,
that they need not have a conversation regarding his workers’ compensation case, which
could have led Gregory to infer that he need not disclose any more information about his
injury or any potential claim arising therefrom. Defendants attempt to make plaintiffs out to
be sophisticated, serial litigants. However, both of Gregory’s prior lawsuits stemmed from
motor vehicle accidents. Neither prior lawsuit involved workers’ compensation, and there is
no record evidence that plaintiffs ever filed for bankruptcy on another occasion. Additionally,
unlike plaintiffs’ workers’ compensation case, which was filed on August 25, 2011,
plaintiffs’ personal injury claim was not filed at the time Gregory spoke to the trustee. Thus,
5
Earlier in the deposition, Gregory testified that he had surgery on his shoulder in August 2011.
6
Defendants repeatedly assert that plaintiffs were represented by counsel throughout their
bankruptcy proceedings. While we do not doubt that they were, we believe it best to clarify that the
transcript of the question and answer session between the trustee and Gregory does not indicate that
plaintiffs’ counsel was present.
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the record before us does not establish that plaintiffs are the savvy litigants that defendants
make them out to be.
¶ 51 Gregory’s deposition testimony, that “at that time I didn’t even have my surgery,” raises
another issue. This statement evinces confusion because the plaintiffs’ bankruptcy petition
was filed in June 2012 and Gregory had his shoulder surgery in August 2011; thus, Gregory
had already had his shoulder surgery at the time he was examined by the trustee. Thus, his
statement of “I didn’t know if I would do anything because at that time I didn’t even have my
surgery” is nonsensical. In light of the Seymour decision and its emphasis on the importance
on a party’s intent to deceive, we refuse to presume that Gregory’s testimony, which was
unclear at best, evinced an intent to deceive or mislead.
¶ 52 Viewing all of the evidence before us in a light most favorable to plaintiffs, we find that
the evidence presented fails to show that plaintiffs intended to deceive or mislead the
bankruptcy court when filing their disclosures. Perhaps prior to the Seymour decision the
result here may have been different. However, our supreme court has made it clear that they
believe it best to deviate from the federal court’s strict application of judicial estoppel
regardless of intent. Because we have not found that plaintiffs were “deliberately changing
positions,” dismissal of their complaint would not satisfy the purpose of the doctrine of
judicial estoppel. Id. ¶ 36. Therefore, where, as here, the record is void of sufficient evidence
to establish that the party to be estopped intentionally failed to disclose a potential personal
injury claim in order to deceive or mislead the court, dismissal on the basis of judicial
estoppel is unwarranted.
¶ 53 CONCLUSION
¶ 54 Based on the foregoing, we reverse the decision of the trial court that granted defendants’
section 2-619 motion to dismiss, vacate any judgments entered thereto, and remand for
further proceedings.
¶ 55 Reversed and remanded.
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