Thursday, July 25, 2013

New Ninth Circuit Bankruptcy Law Opinion! - Quin v County of Kauai

Quin v County of Kauai (9th Cir. July 24, 2013)

Kathleen Quin filed an employment discrimination lawsuit in 2008, and later filed bankruptcy in 2009. Her bankruptcy schedule of assets failed to list the lawsuit.

Despite reopening her bankruptcy and adding the claim, the district court dismissed her lawsuit under judicial estoppel grounds.

The Ninth Circuit Court of Appeals vacated and remanded the dismissal because the district court erroneously applied a narrow interpretation of "inadvertence."

The Court cited New Hampshire v. Maine, 532 U.S. 742, 753 (2001) for the proposition that "it may be appropriate to resist application of judicial estoppel when a party’s prior position was based on inadvertence or mistake."

The Court reasoned that no presumption of deceit exists, at least when a debtor claims inadvertence and has reopened her bankruptcy and filed amended schedules.

Various equitable policy arguments favoring Mrs. Quin's position were also discussed.

Read the full opinion for complete analysis: http://cdn.ca9.uscourts.gov/datastore/opinions/2013/07/24/10-16000.pdf

Commentary: This opinion creates a circuit split as to the presumption of deceit factor. Judge Bybee dissented. Judicial estoppel is an equitable doctrine and the opinion's reasoning avoided a harsh result under the somewhat vanilla facts of this case.