PBCBA BAR BULLETINS pbcba_bulletin_sept2018 | Page 9

JASON S . RIGOLI

Dismissal of your bankruptcy case is not going to save a debtor if the debtor is trying to mislead the bankruptcy court by not disclosing a cause of action on the debtor ’ s schedules . Weakley v . Eagle Logistics Celadon Trucking , 894 F . 3d 1244 ( 11th Cir . 2018 ).

Relevant here is the Eleventh Circuit ’ s opinion in Slater v . U . S . Steel Corp ., 871 F . 3d 1174 , 1180 n . 4 ( 11th Cir . 2017 ) ( en banc ), with the newly articulated “ two-part test to guide district courts in applying judicial estoppel : ( 1 ) Whether the plaintiff “ took a position under oath in the bankruptcy proceeding that was inconsistent with the plaintiff ’ s pursuit of the civil lawsuit [ s ],” and ( 2 ) whether the inconsistent positions “ were calculated to make a mockery of the judicial system .” Id . at 1244 ( citing Slater at 1180 – 81 ( quotation marks omitted )).

In Weakley , the debtor did not disclose two lawsuits worth approximately $ 14 million in the original schedules or six-subsequent amendments , but did disclose two other lawsuits worth substantially less in value . Id . at 1244 . After the defendants in the two undisclosed lawsuits moved to dismiss the lawsuits for failing to disclose , the debtor then filed a seventh amendment to the schedules and disclosed the lawsuits . Id . In a last-ditch effort to save the lawsuits , the debtor voluntarily dismissed his bankruptcy case , arguing that the voluntary dismissal mooted the judicial estoppel argument . The district court disagreed , applying judicial estoppel , and the Eleventh Circuit affirmed the dismissal .

case could undo this attempted perversion of the judicial process it would “ guarantee [ debtors in this ] situation that , if caught , they could always undo the application of the judicial estoppel doctrine … [ rendering ] it toothless .” Id .

This article is submitted by Jason S . Rigoli , Esq ., Furr Cohen , 2255 Glades Road , Suite 301E , Boca Raton , FL 33431 , jrigoli @ furrcohen . com

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The Eleventh Circuit found the District Court did not abuse its discretion in finding that the debtor in Weakley intentionally misled the Bankruptcy Court by failing to disclose the lawsuits in the original schedules and first six amendments . This failure to disclose was a direct attempt to “ pervert the judicial process ” and that , if the voluntary dismissal of the bankruptcy

PBCBA BAR BULLETIN 9

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