(PS) Balthrope v. Garcia- Mitchell et al, No. 2:2009cv01013 - Document 28 (E.D. Cal. 2010)
Court Description: ORDER signed by Judge Frank C. Damrell, Jr. on 2/1/2010 DENYING plaintiff's 21 Motion for Reconsideration of 18 Order Adopting Findings and Recommendations and 19 Judgment. (Marciel, M)
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(PS) Balthrope v. Garcia- Mitchell et al Doc. 28 1 2 3 4 5 6 7 8 IN THE UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 ROBERT BENNING BALTHROPE, II, 12 Plaintiff, No. 2:09-cv-1013 FCD JFM PS 13 vs. 14 15 GARCIELA GARCIA-MITCHELL, et al., 16 17 Defendants. __________________________/ ----oo0oo---- 18 19 MEMORANDUM & ORDER On August 31, 2009, plaintiff Robert Benning Balthrope II 20 (“plaintiff”) filed a motion for reconsideration of the court’s 21 order dismissing his complaint. 22 court erred in concluding that his claim was precluded by the 23 failure to include it as an asset in his Chapter 13 bankruptcy 24 proceeding. 25 MFR”), 2:5-8.) Plaintiff contends that the (Plaintiff’s Motion for Reconsideration (“Pl.’s For the reasons set forth below,1 the court holds 26 27 28 1 Because oral argument will not be of material assistance, the court orders this matter submitted on the briefs. E.D. Cal. L.R. 230(g). 1 Dockets.Justia.com 1 that plaintiff’s claim is the property of the bankruptcy estate 2 and, therefore, plaintiff is estopped from bringing this action 3 because he failed to list the claim as an asset. BACKGROUND 4 5 The court adopts the factual and procedural background set 6 forth by the magistrate judge in his findings and 7 recommendations. 8 28, 2009.) (See Findings and Recommendations, filed July 9 10 STANDARD Absent “highly unusual circumstances,” reconsideration of a 11 final judgment is appropriate only where (1) the court is 12 presented with newly-discovered evidence, (2) the court committed 13 “clear error or the initial decision was manifestly unjust,” or 14 (3) there is an intervening change in the controlling law. 15 School Dist. No. 1J, Multnomah County v. ACandS, Inc., 5 F.3d 16 1255, 1263 (9th Cir. 1993). 17 the court with any new evidence or claimed that there has been an 18 intervening change in the controlling law, plaintiff’s motion can 19 only be granted if the court committed clear error or the initial 20 decision was manifestly unjust. See Because plaintiff has not presented 21 ANALYSIS 22 Judicial estoppel is an equitable doctrine, invoked by a 23 court at its discretion, that precludes a party from gaining an 24 advantage by asserting one position and then later seeking an 25 advantage by taking a clearly inconsistent position. 26 State Farm Fire & Casualty Co., 270 F.3d 778, 782 (9th Cir. 2001) 27 (citations omitted); Russel v. Rolfs, 893 F.2d 1033, 1037 (9th 28 Cir. 1990). Hamilton v. The Supreme Court has listed three factors that 2 1 courts may consider in determining whether to apply the doctrine 2 of judicial estoppel: 1) whether a party’s position is “clearly 3 inconsistent” with its earlier position, 2) whether the first 4 court accepted the party’s earlier position, and 3) whether the 5 party seeking to assert an inconsistent position would derive an 6 unfair advantage if not estopped. 7 U.S. 742 (2001). New Hampshire v. Maine, 532 8 “In the bankruptcy context, a party is judicially estopped 9 from asserting a cause of action not raised in a reorganization 10 plan or otherwise mentioned in the debtor’s schedules or 11 disclosure statements.” 12 First Interstate Bank of Kalispell, N.A., 978 F.2d 555, 557 (9th 13 Cir. 1992)). 14 District Court’s determination that the plaintiff’s claim against 15 his insurance company was barred by judicial estoppel because the 16 plaintiff had failed to list the claim as an asset in his Chapter 17 7 bankruptcy schedule. 18 failure “deceived the bankruptcy court,” and therefore, the court 19 “must invoke judicial estoppel to protect the integrity of the 20 bankruptcy process.” 21 197 (5th Cir. 1999) (discussing the continuing duty to disclose 22 in Chapter 11 bankruptcy proceedings). 23 Hamilton, 270 F.3d at 783 (citing Hay v. In Hamilton, the Ninth Circuit affirmed the Id. at 785. The court noted that this Id. (quoting In re Coastal Plains, 179 F.3d Section 541(a)(1) of the Bankruptcy Code provides that at 24 the time of commencement of the bankruptcy proceeding, the 25 bankruptcy estate includes “all legal or equitable interests of 26 the debtor.” 27 action belonging to the debtor at the commencement of the 28 bankruptcy case.” 11 U.S.C. 541(a)(1). This “includ[es] causes of Kane v. Nat’l Union Fire. Ins. Co., 535 F.3d 3 1 380, 385 (5th Cir. 2008) (per curiam). In Chapter 13, the 2 bankruptcy estate also includes claims which are acquired “after 3 the commencement of the case but before the case is closed, 4 dismissed, or converted.” 5 Bankruptcy Code subjects debtors to a “continuing duty to 6 disclose all pending and potential claims.” 7 384-85; Hamilton, 270 F.3d at 785 (“The debtor’s duty to disclose 8 potential claims as assets does not end when the debtor files 9 schedules, but instead continues for the duration of the 11 U.S.C. 1306(a)(1). Therefore, the Kane, 535 F.3d at 10 bankruptcy proceeding.”); see In re Coastal Plains, 179 F.3d at 11 207-08. 12 full and honest disclosure by debtors of all their assets.” 13 Hamilton, 270 F.3d at 785 (quoting In re Coastal Plains, 179 F.3d 14 at 208) (emphasis in original). 15 debtor to obtain relief from the bankruptcy court by representing 16 that no claims exist and then subsequently to assert those claims 17 for his own benefit in a separate proceeding.” 18 “[T]he integrity of the bankruptcy system depends on “The courts will not permit a Id. The facts and events upon which plaintiff’s claim are based 19 occurred on or around August 8, 2005. 20 Complaint (“Compl.”) ¶ 1.) 21 petition for Chapter 13 bankruptcy on July 20, 2007, and did not 22 list this claim as an asset. 23 Court, E.D. Cal., [Docket No. 1] (“Chapter 13 Voluntary 24 Petition”)). 25 amended bankruptcy plan on May 7, 2008; this claim was not listed 26 as a potential asset in any of these documents. 27 07-25631, Bankruptcy Court, E.D. Cal., [Docket Nos. 38, 40] 28 (“Amended Plan” and “Amended Schedules”). (Pl.’s First Amended Plaintiff initially filed a voluntary (See Case No. 07-25631, Bankruptcy Plaintiff filed amended bankruptcy schedules and an 4 (See Case No. Like Hamilton, plaintiff has clearly asserted inconsistent 1 2 positions by failing to include a cause of action in his 3 bankruptcy filings and subsequently attempting to sue on that 4 claim outside of the bankruptcy proceeding. 5 F.3d at 784. 6 that he did not have any causes of action when it granted an 7 order modifying plaintiff’s Chapter 13 plan on August 15, 2008. 8 (See Case No. 07-25631, Bankruptcy Court, E.D. Cal., [Docket No. 9 54] (“Order Modifying/Amending Chapter 13 Plan”)). See Hamilton, 270 The bankruptcy court accepted plaintiff’s assertion Even if 10 plaintiff did not learn of the facts leading to the cause of 11 action until August 8, 2008, as asserted in his complaint, he had 12 a duty to disclose the cause of action as an asset in his 13 bankruptcy proceeding once he became aware of the claim. 14 ¶ 1.) 15 (Compl. He has failed to do so.2 The court notes that plaintiff has not filed an amended 16 schedule or converted his bankruptcy since allegedly becoming 17 aware of the cause of action. 18 Coastal Plains, Inc., 179 F.3d 197; Burnes v. Pemco Aeroplex, 19 Inc., 291 F.3d 1282 (11th Cir. 2002); Caviness v. England, 2007 20 WL 1302522 (E.D. Cal. May 3, 2007); Young v. Town of Greenwood, 21 2009 WL 1924192 (W.D. La. June 26, 2009). 22 whether plaintiff amended the petition without including the 23 cause of action or whether he simply failed to amend once aware 24 of the claim, the continuing duty to disclose, which is necessary Cf. Hamilton, 270 F.3d 778; In re However, regardless of 25 26 27 28 2 At present, plaintiff’s bankruptcy proceeding has not been closed, dismissed, or converted and the property of the bankruptcy estate has not been revested in plaintiff. (See Case No. 07-25631, Bankruptcy Court, E.D. Cal., [Docket No. 54] (Order Modifying/Amending Chapter 13 Plan). 5 1 to the integrity of the bankruptcy system, prevents him from 2 proceeding on a cause of action which is the property of the 3 bankruptcy estate. 4 estoppel will be imposed when the debtor has knowledge of enough 5 facts to know that a potential cause of action exists during the 6 pendency of the bankruptcy, but fails to amend his schedules or 7 disclosure statements to identify the cause of action as a 8 contingent asset.” (citation omitted)). 9 bankruptcy court to adopt plaintiff’s amended schedule that See Hamilton, 270 F.3d at 784 (“Judicial By allowing the 10 failed to include all known claims and then attempting to pursue 11 the present cause of action, plaintiff has “deceived the 12 bankruptcy court.” 13 plaintiff must be barred from prosecuting his present claim 14 through the doctrine of judicial estoppel. Hamilton, 270 F.3d at 785. As such, 15 Therefore, plaintiff’s motion for reconsideration is DENIED. 16 IT IS SO ORDERED. 17 DATED: February 1, 2010 18 19 20 FRANK C. DAMRELL, JR. UNITED STATES DISTRICT JUDGE 21 22 23 24 25 26 27 28 6
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