United States District Court, D. Utah, Central Division
MEMORANDUM DECISION AND ORDER OVERRULING REPORT &
RECOMMENDATION AND GRANTING SUMMARY JUDGMENT
A. KIMBALL UNITED STATES DISTRICT JUDGE
case was referred to Magistrate Judge Evelyn Furse under 28
U.S.C. § 636(b)(1)(B). On September 8, 2017, Magistrate
Judge Furse issued a Report and Recommendation, recommending
that the court deny Defendant's Motion for Summary
Judgment because the equities of the matter disfavor a
finding that judicial estoppel bars Ordonez's claims.
Magistrate Judge Furse did not address Air Serv's
remaining claims for summary judgment. On September 22, 2017,
Air Serv objected to the Report and Recommendation. Plaintiff
did not file a reply. However, the time for doing so has
passed and the court considers the matter fully briefed.
Magistrate Judge's Report and Recommendation is subject
to de novo review by this court. See 28
U.S.C. § 636(b)(1)(B); see also Fed. R. Civ. P.
72(b). The court has reviewed the record de novo
with respect to the present motion.
parties do not dispute that Ordonez failed to disclose her
claims against Air Serv in a personal bankruptcy she filed in
2010 while her administrative charge against Air Serv was
pending with the EEOC. Ordonez's debts were fully
discharged on October 14, 2011, and the Bankruptcy Court
closed Ordonez's bankruptcy case in 2014. In re:
Sonia Ordonez, case 10-37596.
months after Air Serv filed its motion for summary judgment
on judicial estoppel grounds, Ordonez petitioned to reopen
her bankruptcy case. On July 27, 2017, the Bankruptcy Court
reopened the case. Since that time, Ordonez had not amended
any of her bankruptcy filings and has filed a motion to
convert her bankruptcy from Chapter 7 to Chapter 13. This
conversion will prevent the Chapter 7 bankruptcy trustee from
realizing value through the claims in this case and from
paying the proceeds to creditors.
Magistrate Judge Furse recognized, judicial estoppel
“‘protect[s] the integrity of the judicial
process' by ‘prohibiting parties from deliberately
changing positions according to the exigencies of the
moment' . . . . [and] ‘prevent[s] improper use of
judicial machinery.'” New Hampshire v.
Maine, 532 U.S. 742, 749-50 (2001). The Tenth Circuit
has identified three factors for courts to consider when
deciding whether to apply judicial estoppel:
First, a party's subsequent position must be
“clearly inconsistent” with its former position.
Next a court should inquire whether the suspect party
succeeded in persuading a court to accept that party's
former position, “so that judicial acceptance of an
inconsistent position in a later proceeding would create the
perception that either the first or the second court was
misled.” Finally the court should inquire whether the
party seeking to assert an inconsistent position would gain
an unfair advantage in the litigation if not estopped.
Eastman v. Union Pac. R. Co., 493 F.3d 1151, 1156
(10th Cir. 2007) (citation omitted). A court may
find inadvertence or mistake when “the debtor either
lacks knowledge of the undisclosed claims or has no motive
for their concealment.” Id. at 1157. However,
“[w]here a debtor has both knowledge of the claims and
a motive to conceal them, courts routinely, albeit at time
sub silentio, infer deliberate manipulation.”
court agrees with Magistrate Judge Furse's findings that
Ordonez adopted an inconsistent position before the
bankruptcy court when she represented that she did not have
any administrative claims and that Ordonez succeeded in
persuading the bankruptcy Court to adopt her position when it
proceeded to discharge her debts without knowledge of her
administrative claim against Air Serv.
the court disagrees with the finding that Ordonez would not
gain an unfair advantage if not estopped from pursuing her
action against Air Serv because she has reopened her
bankruptcy. Ordonez filed her EEOC claims and knew of their
existence at the time of her bankruptcy. Even if she did not
understand the full import of their legal significance, she
knew of their existence. It is generally recognized that
bankruptcy filers, like Ordonez, have a motive to sweep
pending or potential claims under the rug in order to
“obtain a discharge free and clear.” Id.
at 1157. “[I]t was to their benefit to conceal the
claim so that they could receive a full discharge in
bankruptcy before proceeding with the lawsuit, because this
would allow them to pursue an award for damages without the
risk that any of the award would go to their
creditors.” Queen v. TA Operating, LLC, 734
F.3d 1081 (10th Cir. 2013).
Circuit precedent holds that a party should not be allowed to
“back up and benefit from the reopening of [her]
bankruptcy only after [her] omission had been exposed.”
Eastman, 493 F.3d at 1160. If a party could do so,
it “would suggest  that a debtor should consider
disclosing potential assets only if he is caught concealing
them. This so-called remedy would only diminish the necessary
incentive to provide the bankruptcy court with a truthful
disclosure of the debtor's assets.” Id.
The purpose of judicial estoppel in these circumstances is to
prevent “a perception that the bankruptcy court was
misled.” Queen, 734 F.3d at 1091.
Report and Recommendation cites to Hanley v. Trizetto
Corp., No. 13-CV-01667-KLM, 2014 WL 4212719, at *1 (D.
Colo. Aug. 26, 2014) in support of its conclusion that
Ordonez did not have a motive to conceal her EEOC claim, did
not have knowledge of her obligation to disclose her claim to
the Bankruptcy Court, and that the equities in the case weigh
against judicial estoppel. However, there are striking
difference between this case and Hanley. In
Hanley, the plaintiff sought to reopen her
bankruptcy before the defendant raised the issue and the
plaintiff entered into an agreement with the bankruptcy
trustee to pay $25, 000 into the estate at the time of the
agreement and to forfeit ten percent of her net recovery to
the estate in exchange for the right to pursue the lawsuit.
case, Ordonez did not attempt to reopen her bankruptcy until
after Air Serv exposed her misrepresentations, she did not
amend her bankruptcy filings, and she moved to convert her
Chapter 7 case to a Chapter 13 case, which will harm rather
than help her creditors. Plaintiff has not done anything like
the plaintiff in Hanley to work out an agreement
with the bankruptcy trustee. Rather, Ordonez continues to
take actions to receive the maximum potential benefit. These
actions demonstrate her knowledge and understanding of the
system as well as her motives for taking such actions
throughout the proceedings. The court cannot excuse such
conduct merely because Ordonez is a pro se litigant.
The court concludes that Tenth Circuit precedent directs the
application of judicial estoppel in this type of case.
on the above reasoning, the court refuses to adopt the Report
and Recommendation and grants Defendant Air Serv's motion
for summary judgment on judicial estoppel grounds. Plaintiffs
claims against Air Serv are dismissed in their entirety.
After Magistrate Judge Furse rules on the pending Motion for