BANKRUPTCY CORNER
PALM BEACH COUNTY
BAR ASSOCIATION
BANKRUPTCY CORNER
The Supreme Court Weighs in on Judicial Estoppel in Bankruptcy( and Beyond?)
JASON S. RIGOLI
In its most simple form“ judicial estoppel is‘ equitable doctrine’ intended‘ to protect the integrity of the judicial process,’ both by‘ prohibiting parties from deliberately changing positions according to the exigencies of the moment,’ and by preventing the‘ risk of inconsistent court determinations.’” Keathley v. Buddy Ayers Constr., Inc., Case No. 25-6, 2026 U. S. LEXIS 2465 at * 10( June 11, 2026)( quoting New Hampshire v. Maine, 532 U. S. 742, 749-751, 121 S. Ct. 1808, 149 L. Ed. 2d 968( internal quotation marks omitted)).
Defendants have been raising judicial estoppel as a means of escaping litigation when a debtor fails to disclose the lawsuit as an asset in the debtor’ s bankruptcy and subsequently pursues the litigation for the debtor’ s own benefit, generally speaking. Appellate courts have split on the“ approach” the courts should take when applying judicial estoppel in this context. Buddy Ayers Constr., Inc., 2026 U. S. LEXIS 2465 at * 10. The Fifth and Tenth Circuits took a rigid approach and said the omission of a claim from the schedules is“ inadvertence or mistake only if( 1) the debtor did not know the facts underlying the claim, or( 2) there was no potential motive to conceal the claim.” Id. at * 9-10( internal citations omitted). Five other Courts of Appeals took a more holistic approach. Id. at * 10( citations omitted). Ultimately, the Supreme Court reversed the Fifth Circuit, holding that as an equitable doctrine, judicial estoppel requires a holistic approach and must be analyzed“‘ on a case-by-case basis’ considering all relevant facts and circumstances.” Id. at * 12( citation omitted).
The Supreme Court’ s opinion on this point was unanimous. The justices, however, rendered this opinion only assuming without deciding whether judicial estoppel can apply in the bankruptcy context. Id. at * 12. The concurring opinions went further. Justice Thomas, joined by Justice Gorsuch, questioned the very foundation of judicial estoppel and whether the doctrine could ever be applied. Justice Sotomayor, while not questioning the foundation of the doctrine, questioned whether the doctrine could ever be applied in a bankruptcy context.
For now, the argument for applying judicial estoppel requires a court to consider the totality of the circumstances on a caseby-case basis. It will be interesting to see how much longer judicial estoppel exists or, if it continues to exist, whether it can apply in a bankruptcy context.
This article was submitted by Jason S. Rigoli, Esq., Furr and Cohen, P. A., 2255 Glades Road, Suite 419A, Boca Raton, FL 33431, jrigoli @ furrcohen. com
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