In Schaefer v. First Source Advantage, LLC, 2013 WL 509001 (E.D.Mo. 2013), Judge Shaw found that a TCPA Plaintiff who re-opened his bankruptcy to list the asset gained standing to pursue it, but was estopped from bringing it.
If a debtor fails to list an asset in his bankruptcy schedules, that asset is not automatically abandoned back to the debtor when the case is closed but instead remains part of the estate. 11 U.S.C. § 554(c),(d). Here, plaintiff reopened his bankruptcy case, amended his schedules to list the FDCPA and TCPA claims against FSA, and obtained the trustee’s formal abandonment of the claims. “The Bankruptcy Code allows a trustee to abandon any property of the estate that ‘is burdensome to the estate or that is of inconsequential value or benefit to the estate.’ 11 U.S.C. § 554(a). Title to abandoned property reverts to the debtor as it was held previous to the filing of bankruptcy.” In re Bentley, 916 F.2d 431, 432 (8th Cir.1990) (cited case omitted). Where the bankruptcy trustee formally abandons property, as occurred with the FDCPA and TCPA claims here, the debtor regains his interest in the property. As a result, plaintiff became the real party in interest and has prudential standing to pursue this action. FSA’s motion for summary judgment based on lack of standing should therefore be denied.
Despite finding standing, Judge Shaw found Plaintiff collaterally estopped from pursuing the claim.
FSA also moves for summary judgment on judicial estoppel grounds. FSA argues that plaintiff is judicially estopped from bringing this action based on his failure to include the FDCPA and TCPA claims in his sworn bankruptcy schedules, until this fact was disclosed by FSA in its motion for summary judgment. ¶ Judicial estoppel is an equitable doctrine that “prevents a party from asserting a claim in a legal proceeding that is inconsistent with a claim taken by that party in a previous proceeding[.]” New Hampshire v. Maine, 532 U.S. 742, 749 (2001). The purpose of judicial estoppel is to protect the integrity of the judicial process by preventing parties from playing “fast and loose with the courts to suit the exigencies of self interest.” In re Coastal Plains, Inc., 179 F.3d 197, 205 (5th Cir.1999). “A court invokes judicial estoppel when a party abuses the judicial forum or process by making a knowing misrepresentation to the court or perpetrating a fraud on the court.” Stallings v. Hussmann Corp., 447 F.3d 1041, 1047 (8th Cir.2006). ¶ This Court has rejected the argument that a debtor who omits a claim can negate a judicial estoppel defense by reopening the bankruptcy case and amending the schedules. Copeland v. Hussmann Corp., 462 F.Supp.2d 1012, 1020 (E.D.Mo.2006). The Court will therefore not treat plaintiff’s amended schedules and the trustee’s abandonment of the claims as negating FSA’s judicial estoppel argument. ¶ The Supreme Court has outlined three factors to consider when applying the doctrine: (1) whether the party’s later position was “clearly inconsistent” with the party’s earlier position; (2) whether the party “has succeeded in persuading a court to accept that party’s earlier 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”; and (3) “whether the party seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped.” New Hampshire, 532 U.S. at 750–51. The Supreme Court noted that these three factors are not “inflexible prerequisites or an exhaustive formula for determining the applicability of judicial estoppel.” Id. at 751. . . .¶ . . .In this case, plaintiff has not offered any affirmative evidence of good-faith error or inadvertence. This Court has found it significant when a party does not attempt to explain why he did not list a claim as property in his bankruptcy proceeding. See, e.g., Martin, 2005 WL 3107722, at *4 (“Significantly, in none of Plaintiff’s pleadings before this Court following Defendant’s motion for summary judgment has she attempted to explain why she did not list her claim against Defendant as property in the bankruptcy proceeding.”). Here, some evidence tends to suggest a lack of good faith. Plaintiff clearly had knowledge of his undisclosed claims, as evidenced by his filing of this lawsuit during the pendency of his bankruptcy proceedings, and had a motive to conceal them from the bankruptcy court. See Stallings, 447 F.3d at 1048. Plaintiff’s failure to disclose his potential claims to the bankruptcy court impaired both the interests of his creditors and the bankruptcy court. Id. Plaintiff was represented by counsel in his bankruptcy case, as well as separate counsel in this case. Nonetheless, plaintiff did not amend his bankruptcy schedules after filing this action, and ultimately did so only after the existence of his bankruptcy proceeding was brought to the Court’s attention by FSA’s motion for summary judgment. ¶ Finally, in seeking to have the claims abandoned, plaintiff represented to the bankruptcy court under oath that his FDCPA and TCPA claims were worth only $1,000 in total even though, months earlier, he rejected FSA’s Rule 68 offer of judgment of $1,001 plus fees and costs to settle the claims. Plaintiff now avers to this Court that his actual damages are worth “no less than $2,000” in addition to $1,000 in statutory damages, costs and attorneys’ fees. Affidavit of Michael Schaefer at 4, ¶ 16. Plaintiff also argues in opposing FSA’s motion for summary judgment that his case is not mooted by FSA’s Rule 68 offer of judgment of $1,001 plus fees and costs, because his FDCPA claims alone are worth $3,000 in statutory and actual damages, in addition to the actual and statutory damages on his TCPA claims. Plaintiff’s taking of these contrary positions before the bankruptcy court and this Court as to the value of his claims is evidence of a scheme to mislead the courts and obtain an unfair advantage or windfall. Compare Barger v. City of Cartersville, 348 F.3d 1289, 1296–97 (11th Cir.2003) (plaintiff was judicially estopped from asserting monetary damages on a discrimination claim where she represented to the bankruptcy trustee at the creditor’s meeting that her suit did not have monetary value because she only sought reinstatement to her position, even though she later reopened the bankruptcy estate seeking to include her damages). ¶ For these reasons, the Court finds that all three of the New Hampshire factors have been satisfied and plaintiff’s nondisclosure of his FDCPA and TCPA claims was not inadvertent. As a result, the Court concludes that plaintiff is bound by his previous representations and is judicially estopped from pursing his claims in this lawsuit. FSA’s motion for summary judgment should therefore be granted.