Late Disclosure in Chapter 13 Bankruptcy Doesn't Prevent Pursuit of a Claim
By Dan Bushell
Florida’s Third District Court of Appeal (in Miami) recently reaffirmed that making a mistake in one’s bankruptcy filings is not necessarily fatal. The decision reversing summary judgment in Montes v. Mastec North America, Inc., No. 3D12-2622, was released on February 12, 2014. Bushell Appellate Law, P.A. represented the appellant.
Mr. Montes was injured in an accident that occurred at his workplace. He hired a law firm to investigate whether he might be able to bring a personal injury lawsuit to recover for his injuries, and if so, to file suit.
Several months later, while the PI law firm was still investigating a potential lawsuit, Mr. Montes hired a different law firm to file a petition for Chapter 13 bankruptcy relief. The bankruptcy petition filed by the bankruptcy law firm on Mr. Montes’ behalf did not disclose that he had potential claims arising from his accident. The bankruptcy court approved a Chapter 13 plan for Mr. Montes, with which he was required to comply in order to obtain a bankruptcy discharge.
About a year later, Mr. Montes, represented by the PI law firm, sued Mastec (a contractor for DirecTV) for allegedly causing his injuries. Mastec moved for summary judgment based on judicial estoppel, a doctrine that prohibits a litigant from taking a position that directly contradicts a position he/she/it took in a prior case, if the litigant was successful in the first case and certain other conditions are satisfied.
Mastec asserted that because Mr. Montes did not disclose his potential injury claim in his bankruptcy case, the doctrine of judicial estoppel prevented him from pursuing the claim. Mr. Montes, whose bankruptcy case remained open, then amended his bankruptcy schedules to disclose the claim against Mastec.
The trial court nonetheless granted summary judgment against Mr. Montes. It agreed with Mastec that allowing Mr. Montes to pursue his claim would make a mockery of the court system because it pursuing the claim would be inconsistent with his bankruptcy filing, which did not acknowledge that he had such a claim.
In an opinion authored by Judge Salter (joined by Judge Lagoa and Judge Fernandez), the 3rd DCA reversed. While Mastec argued that the Florida Supreme Court’s holding in Blumberg v. USAA Casualty Insurance Co., 790 So. 2d 1061 (Fla. 2001), had relaxed the requirements for judicial estoppel and precluded the lawsuit, the court found Blumberg distinguishable. The court also rejected Mastec’s argument that certain federal decisions supported the application of