Make sure you are disclosing ALL property, including any personal injury or other claims you might have against any other party. That includes disclosing it after your Bankruptcy case is filed in a Chapter 13 case. I expect the debtor might prevail on remand because he apparently promptly notified his Bankruptcy lawyer after the accident.
Keathley v. Buddy Ayers Construction, Incorporated, — S.Ct. —- , 2026 WL 1686028 (June 11, 2026) (click here for .pdf) (click here for oral argument). The Debtor filed a Chapter 13 case in December 2019. In August 2021, while the case was still pending, Debtor was in a car accident and had a personal injury claim. He hired a personal injury lawyer and notified his Bankruptcy lawyer of the accident and claim, but no one disclosed the claim in the Bankruptcy case. After the Debtor filed suit on the personal injury claim in District Court, the defendant moved for summary judgment based on judicial estoppel and the failure of the Debtor to disclose the claim in the Bankruptcy case. Although the Debtor promptly amended his schedules, the District Court “found that [Debtor] knew of the facts underlying his claims and hypothetically had a motive to conceal, and therefore held the omission was not inadvertent or a mistake, entering summary judgment for [the defendant].” The Fifth Circuit affirmed.
The Supreme Court reversed, finding that the lower courts should have considered the “totality of circumstances” rather than just knowledge of the facts and claim and a potential motive to conceal.
Judicial estoppel is an “equitable doctrine” intended “to protect the integrity of the judicial process” by “prohibiting parties from deliberately changing positions according to the exigencies of the moment” and preventing the “risk of inconsistent court determinations.”… The rigidity comes from the Fifth Circuit’s failure to fully recognize that “judicial estoppel is an equitable doctrine.” … The Fifth Circuit’s rule allows courts to consider only two circumstances—whether the debtor knew of the underlying facts and whether there was a potential motive to conceal—and does not permit courts to look at any other evidence tending to show the omission was inadvertent. That rigidity is out of step with equity. The Fifth Circuit’s rule is also overly broad because it holds that an omission falls outside the exception any time a debtor knows certain facts or could potentially benefit from nondisclosure, circumstances that will almost always be true, as the Fifth Circuit recognized. A near-dispositive criterion is a poor fit for a fair inquiry into whether an omission is actually the result of inadvertence or mistake.
Scott Riddle’s practice focuses on bankruptcy and reorganization. Scott has represented businesses and other parties in Bankruptcy cases for over 20 years. You can contact Scott at 404-815-0164 or scott@scottriddlelaw.com. For more information, click here.