Flugence v. Axis Surplus Ins. Co., No. 13-30073 (5th Cir. 2013)
Annotate this CaseFlugence filed for Chapter 13 bankruptcy protection in 2004 and a plan was confirmed. In 2007, she was injured in a car accident and hired an attorney. Weeks later an amended Chapter 13 plan was confirmed. In 2008 Flugence sued for personal injury. Months later, Flugence was discharged. She never disclosed to the bankruptcy court that she might prosecute a personal-injury claim. The personal-injury defendants discovered the non-disclosure and had the bankruptcy case reopened. The bankruptcy court declared that although Flugence was estopped from pursuing the claim on her own behalf, her bankruptcy trustee was not estopped and could pursue the claim for the benefit of creditors. The district court reversed with respect to estopping Flugence, stating that Flugence did not have a potential cause of action prior to her initial application for bankruptcy protection, and relied on her attorney’s advice concerning disclosure. The Fifth Circuit reinstated the bankruptcy court holding. There is a continuing duty to disclose in a Chapter 13 proceeding and Flugence met all elements of estoppel. Nothing requires that recovery be limited strictly to the amount owed creditors; after a claim is prosecuted and creditors and fees have been paid, any remaining recovery must be returned to the personal-injury defendants.
The court issued a subsequent related opinion or order on November 22, 2013.
The court issued a subsequent related opinion or order on January 20, 2014.
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