Marcia T. Dunn v. Advanced Medical Specialties, Inc.

Case: 12-11152 Date Filed: 02/10/2014 Page: 1 of 11

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT
________________________

No. 12-11152
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D.C. Docket No. 1:11-cv-21777-KMM

MARCIA T. DUNN,
Chapter 7 Bankruptcy Trustee,

Plaintiff - Appellant,

versus

ADVANCED MEDICAL SPECIALTIES, INC.,
a Florida Corporation,
LORRAINE BROWN,
an Individual,
MAGGY PONS,
an Individual,

Defendants - Appellees.

________________________

No. 12-15989
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D.C. Docket No. 1:11-cv-21777-KMM
Case: 12-11152 Date Filed: 02/10/2014 Page: 2 of 11

In Re:

FLORENCIA TRONGE-KNOEPFFLER,

Debtor.
_________________________________________________________

FLORENCIA TRONGE-KNOEPFFLER,

Plaintiff,
MARCIA T. DUNN,
as Chapter 7 Trustee of the Bankruptcy Estate of
Florencia Tronge-Knoepffler,

Plaintiff - Appellant,

versus

ADVANCED MEDICAL SPECIALTIES, INC.,
a Florida Corporation,

Defendant - Appellee,

LORRAINE BROWN,
an Individual, et al.,

Defendants.

________________________

Appeals from the United States District Court
for the Southern District of Florida
________________________

(February 10, 2014)

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Before MARCUS, and DUBINA, Circuit Judges, and HODGES, * District Judge.

PER CURIAM:

This is a consolidated appeal of two orders entered by the district court. The

first is an order granting summary judgment in favor of the defendants, and the

second is an order denying appellant Marcia T. Dunn’s (“Dunn” or “Trustee”)

amended motion to vacate.

After reviewing the record, reading the parties briefs, and having the benefit

of oral argument, we affirm both the order granting summary judgment and the

order denying Dunn’s motion to vacate.

I. BACKGROUND

Florencia Tronge-Knoepffler (“Debtor”) was employed as a Corporate

Recruiter by defendant Advanced Medical Specialties, Inc. (“AMS”) from October

16, 2006, until her employment was terminated on November 5, 2008. Debtor

suffers from Chronic Inflammatory Polyneuropathy (“CDIP”), which involves the

swelling and inflammation of nerves that results in a loss of strength or sensation,

and Monocular Diplopia, which is more commonly known as “double vision.”

Debtor alleges that on multiple occasions throughout the course of her

*
Honorable William Terrell Hodges, United States District Judge for the Middle District
of Florida, sitting by designation.
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employment, AMS discriminated against her based on her disability and sex. As a

result, Debtor filed suit alleging that AMS discriminated against her, in violation of

the Americans With Disabilities Act, 42 U.S.C. § 12101, et seq., and paid her

substantially less than her peers, in violation of Title VII of the Civil Rights Act of

1964 and the Equal Pay Act. Debtor sought compensatory damages, as well as

back pay, front pay, compensation for unpaid benefits, and recovery of loss of

pension benefits.

Approximately two months after filing her lawsuit, Debtor and her husband,

through a lawyer, filed for bankruptcy protection in the United States Bankruptcy

Court for the Southern District of Florida under Chapter 7 of the United States

Bankruptcy Code. It is undisputed that despite her filing of her lawsuit just two

months prior to the filing for bankruptcy protection, Debtor did not disclose her

lawsuit as a contingent asset under schedule B “Personal Property.”

Shortly after the Chapter 7 bankruptcy filing, Dunn was appointed as

Chapter 7 Trustee of the bankruptcy estate of Debtor. On August 2, 2011, Debtor

filed an amended complaint in her lawsuit. The next month, the Trustee indicated

that it had determined that granting Debtor’s bankruptcy petition would be an

abuse of the Bankruptcy Code. On November 7, 2011, however, the Trustee

withdrew its determination. Two days later the bankruptcy court entered an order

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granting Debtor and her husband a discharge under 11 U.S.C. § 727, which

released them from all of their debts.

On December 20, 2011, AMS filed a motion for summary judgment, arguing

it was entitled to judgment as a matter of law, because Debtor was judicially

estopped from bringing the claims asserted in the amended complaint.

Specifically, AMS contended that judicial estoppel applied because of Debtor’s

motive to conceal the claim and her intentional failure to disclose her ADA

complaint in her bankruptcy schedules. Subsequently, the district court entered

judgment in favor of AMS on all of Debtor’s claims, finding that Debtor had both

knowledge of her lawsuit and a significant motive to conceal the action from the

bankruptcy court.

After Debtor filed an appeal of the summary judgment order, the Trustee

filed her amended motion to vacate under Federal Rule of Civil Procedure

60(b)(4). The Trustee argued that once Debtor filed her Chapter 7 bankruptcy

petition, the Trustee became the real party in interest in the lawsuit and the only

entity with standing to pursue the cause of action. Because the Debtor allegedly

lacked standing to continue to prosecute the case, the Trustee claims that the

judgment is void, and the Trustee should be allowed to continue to pursue the

claims against AMS. The district court denied the Trustee’s amended motion to

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vacate under Rule 60(b)(4), which provides for relief from judgment based on

voidness.

II. ISSUES

(1) Whether the district court correctly granted summary judgment in

favor of AMS on the ground of judicial estoppel.

(2) Whether the district court correctly denied the Trustee’s motion to

vacate under Rule 60(b)(4).

III. STANDARDS OF REVIEW

While an order granting summary judgment typically is subject to de novo

review by this court, see Moorman v. UnumProvident Corp., 464 F.3d 1260, 1264

(11th Cir. 2006), it is equally well-settled that the district court’s application of the

doctrine of judicial estoppel is reviewed for abuse of discretion, see Robinson v.

Tyson Foods, Inc., 595 F.3d 1269, 1273 (11th Cir. 2010). Because this case was

decided upon the theory of judicial estoppel, the applicable standard of review is

abuse of discretion, with a review of the findings of fact for clear error. Id.

On the other hand, the district court’s order denying the Trustee’s Rule

60(b)(4) motion is reviewed de novo. Burke v. Smith, 252 F.3d 1260, 1263 (11th

Cir. 2001).

IV. DISCUSSION

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A. Summary Judgment and Judicial Estoppel

“Judicial estoppel is an equitable doctrine invoked at a court’s discretion.”

Burnes v. Pemco Aeroplex, Inc., 291 F.3d 1282, 1285 (11th Cir. 2002). In

particular, this doctrine is intended to protect the integrity of the judicial system.

Id. (citing New Hampshire v. Maine, 582 U.S. 742, 749-50, 121 S.Ct. 1808, 1814

(2001)). “Under this doctrine, a party is precluded from asserting a claim in a legal

proceeding that is inconsistent with a claim taken by that party in a previous

proceeding.” Id. (internal quotation marks omitted).

We conclude from the record that the district court correctly granted

summary judgment in favor of AMS. This circuit repeatedly has recognized that

when a debtor fails to disclose a pending lawsuit to the bankruptcy court, while

having knowledge of the lawsuit and a motive to conceal it, the doctrine of judicial

estoppel bars the undisclosed action from proceeding. See Robinson, 595 F.3d at

1272; Barger v. City of Cartersville, 348 F.3d 1289, 1296-97 (11th Cir. 2003); De

Leon v. Comcar Industries, Inc., 321 F.3d 1289, 1291 (11th Cir. 2003); Burnes,

291 F.3d at 1285-88.

There can be no genuine dispute that the doctrine of judicial estoppel was

properly applied to Debtor and her filings with the bankruptcy court. In seeking to

obtain a complete discharge of all of her debts, she represented under oath that she

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did not have any contingent or unliquidated claims and denied that she had brought

any lawsuits within the past year. Debtor made these representations on July 18,

2011, even though she had filed her lawsuit two months earlier. In addition, prior

to filing these sworn statements with the bankruptcy court, the court repeatedly

admonished Debtor and reminded her that her disclosures must be complete and

truthful. She signed several statements acknowledging her obligation to be truthful

in her filings, and she acknowledged, under oath, that she had read her petition and

other papers before filing them. As a result of her bankruptcy filings, Debtor

obtained a complete discharge of her debts. Yet, while concealing this matter from

the bankruptcy court and obtaining a discharge of her liabilities, she proceeded to

litigate the employment action before the district court by, among other things,

quantifying her damages as more than $1.8 million.

In her brief, the Trustee argues there is an issue of fact as to whether Debtor

intentionally failed to disclose this action to the bankruptcy court. In support of

this argument, the Trustee asserts that Debtor submitted an affidavit in opposition

to summary judgment where she alleged that she informed her lawyer of the

lawsuit and believed that the lawsuit had been included in her bankruptcy filings.

The district court disregarded this affidavit by finding it was a sham. We agree

with that finding. See, e.g., Van T. Junkins & Assocs., Inc. v. U.S. Indus., Inc., 736

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F.2d 656, 657 (11th Cir. 1984) (agreeing with district court that under the facts

presented, the affidavit was a sham).

Even if we assume, arguendo, that Debtor notified her bankruptcy lawyer of

her lawsuit and he failed to include it in the bankruptcy filings, that fact would not

forestall the application of the doctrine of judicial estoppel. See Barger, 348 F.3d

at 1294-95. Thus, in this case, we conclude Debtor’s attempt to blame her

concealment on her bankruptcy lawyer is of no consequence.

Accordingly, we affirm the district court’s grant of summary judgment in

favor of defendants.

B. Rule 60(b)(4).

We also conclude from this record that the district court properly denied the

Trustee’s motion to vacate under Rule 60(b)(4). Here, the Trustee failed to show

that the district court acted without jurisdiction or due process. The record is

undisputed that the Trustee received notice of the lawsuit on December 22, 2011.

In the notice, Debtor informed the Trustee of the case number, the status of the

case, and the nature of her case, which was a claim for employment discrimination.

The circumstances of this disclosure provided the Trustee with adequate notice of

the employment discrimination claims. At a minimum, the Trustee could have

made an appearance in the action, sought a stay to investigate the claim, or filed an

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objection to Debtor’s continued prosecution of the action. Instead, the Trustee sat

on her hands and elected to stay silent. The Trustee’s choice to sleep on her rights

further supports the district court’s denial of the Rule 60(b)(4) motion.

The Trustee also suggests that AMS, who is not a party to the bankruptcy

proceeding, had an obligation or duty to notify the Trustee of the action and

pending motion for summary judgment. However, the Trustee does not cite any

legal authority in support of this suggestion and we can find none.

Additionally, the Trustee has failed to show that the district court lacked

subject matter jurisdiction when it entered its order. In support of her position, the

Trustee contends that she had exclusive standing to prosecute this claim, and thus,

the district court lacked subject matter jurisdiction to enter its orders. The Trustee

confuses the principle of jurisdictional standing under Article III of the United

States Constitution, which would impact the court’s subject matter jurisdiction,

with the principle of real party in interest, which does not impact the court’s

subject matter jurisdiction. See Barger, 348 F.3d at 1292.

The present case mirrors Barger. In Barger, the Debtor there similarly filed

discrimination claims prior to filing a bankruptcy petition. See Barger, 348 F.3d at

1292. After filing for bankruptcy, the Debtor continued to pursue her

discrimination claims in the district court, ultimately filing an appeal after the

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district court entered summary judgment against her on the basis of judicial

estoppel. Id. We stated that “[i]t is undisputed that [the Debtor’s] employment

discrimination claims satisfy all of [the standing] requirements” and “[t]he issue is

really about who can litigate the claim,” Debtor or the Trustee. Id. We determined

in Barger that the Trustee, as the real party in interest, “simply takes (the Debtor’s)

place from hereon.” Id at 1293. After substituting the Trustee for the Debtor on

appeal, we affirmed the district court’s order granting summary judgment based on

the principle of judicial estoppel. Id. at 1297.

In conclusion, because there is no merit to any of the arguments the Trustee

makes in this consolidated appeal, we affirm the district court’s grant of summary

judgment and its order denying the Trustee’s motion to vacate under Rule 60(b)(4).

AFFIRMED.