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Defendants' Motion for Summary Judgment on Judicial Estoppel Grounds Denied Because Plaintiff Did Not Act in Bad Faith When He Failed to Disclose His Asbestos Lawsuit in Subsequent Bankruptcy Filing U.S. District Court for the Eastern District of Pennsylvania, September 4, 2015

The plaintiff claims he developed an asbestos-related illness as a result of exposure to asbestos while working aboard various ships. The plaintiff originally brought his asbestos-related claims against several defendants in 1997. His claims were administratively dismissed in a manner allowing for those claims to be brought at a later time; the claims were reinstated in 2001, but there was no evidence that the plaintiff had been informed that his lawsuit had been reinstated.  Following the reinstatement, the plaintiff filed for bankruptcy under Chapter 7 and failed to list his asbestos-related action as an asset.
 
The bankruptcy case was eventually resolved and the trustee discharged. The defendants learned of the plaintiff’s bankruptcy filing and filed a motion for summary judgment, arguing that the plaintiff’s failure to list the asbestos lawsuit as an asset constituted judicial estoppel, barring recovery in the personal injury action. The defendants also argued that the plaintiff did not have standing to pursue the asbestos claims. During the pendency of the defendants’ motion, the bankruptcy action was re-opened and the bankruptcy trustee was reinstated, who in turn retained the same plaintiffs’ firm that represented the plaintiff to pursue the personal injury action. The defendants argued that notwithstanding these actions by the bankruptcy trustee, the doctrine of judicial estoppel barred the current action because the plaintiff took irreconcilably inconsistent positions in the personal injury and bankruptcy actions. The court agreed with the defendants’ argument; however, it denied the motion because there was no evidence that the plaintiff had acted in bad faith with intent to “play fast and loose with the court.” In reaching this decision, the court cited the fact that there was no evidence the plaintiff had been informed by his counsel that the personal injury action had been reinstated by the court before his bankruptcy filing, and there was no evidence that his personal injury counsel was aware of the bankruptcy filing.

The defendants also argued that the plaintiff did not have standing to pursue the personal injury action. The court agreed that the personal injury action was an asset of the bankruptcy estate and that the bankruptcy trustee was the only person with standing to pursue the asbestos claims.  Citing the recent re-opening of the bankruptcy matter and the trustee’s retention of plaintiffs’ counsel, the court fashioned a remedy to allow for the substitution of the trustee as the plaintiff and denied the defendants’ motion  for summary judgment on the standing grounds without prejudice.

Read the full decision here

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