Barnes v. Lolling

2017 IL App (3d) 150157

80 N.E.3d 727

Jerry L. BARNES, Plaintiff-Appellant,

v.Daniel R. LOLLING and United Contractors Midwest, Inc., Defendants-Appellees.

Appeal No. 3-15-0157

Appellate Court of Illinois, Third District.

Opinion filed June 27, 2017

Patrick E. Halliday and Ronald E. Halliday, of Doc Halliday Law, of Peoria, for appellant.

Matthew S. Hefflefinger and Craig L. Unrath, of Heyl, Royster, Voelker & Allen, of Peoria, for appellees.

OPINION

PRESIDING JUSTICE HOLDRIDGE delivered the judgment of the court, with opinion.

¶ 1 Plaintiff Jerry L. Barnes, a former bankruptcy debtor, sued defendants Daniel R. Lolling (Lolling) and his employer, United Contractors Midwest, Inc. (United Contractors), for personal injuries Barnes allegedly sustained during an automobile accident. The accident took place on October 7, 2011, after Barnes had filed her Chapter 13 bankruptcy petition and while the bankruptcy proceeding was pending. Barnes did not disclose her potential cause of action against the defendants to the bankruptcy trustee or schedule the cause of action as an asset of the bankruptcy estate. Barnes filed the instant personal injury claim on October 7, 2013, two years after the accident and approximately five months after the bankruptcy court had discharged Barnes's debts and closed the bankruptcy case.

¶ 2 The defendants moved for summary judgment, arguing that: (1) Barnes's personal injury claim was barred under the doctrine of judicial estoppel because Barnes failed to disclose the claim during the bankruptcy proceedings; and (2) Barnes lacked standing to sue because the personal injury action accrued while the bankruptcy case was pending and was therefore the property of the bankruptcy estate. The trial court ruled that the elements of judicial estoppel had been met and granted summary judgment for the defendants on that basis. This appeal followed.

¶ 3 FACTS

¶ 4 On February 8, 2008, Barnes and her husband filed for Chapter 13 bankruptcy protection to resolve their personal and business debt. Barnes completed an individual debtor petition in her name and provided all the required information. She appeared in bankruptcy court on only one occasion at the beginning of the case. Sometime in 2008, the bankruptcy court placed Barnes and her husband on a five-year debt repayment plan. Barnes and her husband made payments of $500 per month under the plan until they received a discharge from bankruptcy on April 11, 2013. During that five-year period, Barnes did not file any bankruptcy pleadings, seek any modifications to the repayment plan, or inform the bankruptcy court of any new assets, liabilities, or diminished earnings.

¶ 5 The bankruptcy court discharged Barnes's debt and closed the bankruptcy case in April 2013. The Trustee's Final Report and Account showed that, over a period of approximately five years, Barnes paid a total of $30,000 to her creditors. Barnes had $92,164.70 in unsecured debt discharged in bankruptcy.

¶ 6 On October 7, 2011, approximately 18 months prior to the discharge of her bankruptcy, Barnes was involved in a motor vehicle accident with the defendant, Daniel Lolling. At the time of the accident, Lolling was purportedly working within the scope of his employment with the defendant, United Contractors. Barnes retained counsel to prosecute her personal injury claims of negligence against Lolling and United Contractors. Eighteen days after the accident, Barnes's counsel wrote to the defendants' insurer stating that: (1) he would be representing Barnes in her claim for personal injuries against Lolling and United Contractors; and (2) he anticipated that Barnes's damages from the accident "could easily exceed $50,000" in medical bills "plus lost wages." The defendants disagreed with Barnes' allegations, disputed her claim that Lolling was negligent, and denied liability.

¶ 7 On October 7, 2013, six months after the bankruptcy discharge and two years after the accident, Barnes filed the instant personal injury action against Lolling and United Contractors.¹ In her complaint, Barnes alleged that, as a result of the accident, she had suffered severe injuries, incurred medical expenses, and had lost the capacity to earn sums of money in the future that she would have been able to earn had it not been for the accident. She claimed damages in excess of $50,000. On November 22, 2013, the defendants filed an answer to Barnes's complaint in which they denied liability for the accident and asserted an affirmative defense of contributory negligence against Barnes. Barnes filed a timely answer to the affirmative defense in which she denied contributory negligence.

¶ 8 At the conclusion of discovery, the defendants moved for summary judgment on two grounds. First, the defendants argued that Barnes lacked standing to bring the suit because the personal injury claim had accrued before the bankruptcy proceedings were closed and was therefore the property of the bankruptcy estate. Second, the defendants argued that Barnes's claim was barred under the doctrine of judicial estoppel because Barnes had failed to disclose the claim as a potential asset during the bankruptcy proceedings.

¶ 9 Barnes responded to the defendants' summary judgment motion, attaching a supporting affidavit. In her sworn affidavit, Barnes asserted (inter alia ) that: (1) she did not inform the attorney representing her in the personal injury action that she had previously filed a Chapter 13 bankruptcy petition and was making monthly payments as required by the bankruptcy plan; (2) she did not know that she had a duty to report the automobile accident to the bankruptcy court; (3) as a result, she did not report the automobile accident to the bankruptcy court or inform her bankruptcy attorney of the accident; (4) she did not file any documents in the bankruptcy court after the accident; and (5) she did not intend to deceive the bankruptcy court.

¶ 10 The trial court granted summary judgment in favor of the defendants on the basis of judicial estoppel. The court's written order states:

"Cause coming on for hearing defendants' motion for summary judgment, parties appearing by counsel and [Barnes] appearing in person, in the court hearing argument, it is ordered that the elements of judicial estoppel are met, and defendants' motion for summary judgment is granted."

The record on appeal does not include the report of proceedings or a transcript of the trial court's hearing on the motion for summary judgment. Accordingly, any statements that trial court may have made from the bench in issuing its summary judgment order have not been made available to this Court for review.

¶ 11 This appeal followed.

¶ 12 ANALYSIS

¶ 13 1. Standing

¶ 14 As noted above, the trial court granted summary judgment for the defendants in this case on the basis of judicial estoppel. It did not address the defendants' alternative argument that Barnes lacked standing to bring the instant personal injury action. However, this court is not bound by the trial court's reasoning and may affirm on any basis supported by the record, regardless of whether the trial court based its decision on that basis. Mutual Management Services, Inc. v. Swalve , 2011 IL App (2d) 100778, ¶ 11, 353 Ill.Dec. 732, 956 N.E.2d 594 ; See also Kubiche c k v. Traina , 2013 IL App (3d) 110157, ¶ 28, n.3, 374 Ill.Dec. 860, 996 N.E.2d 307 ("we review the trial court's judgment, not its rationale, and we may affirm on any basis that the record supports"); People v. Reed , 361 Ill. App. 3d 995, 1000, 297 Ill.Dec. 841, 838 N.E.2d 328 (2005). We hold that Barnes lacked standing to bring the instant claim for her own benefit after the bankruptcy proceeding was closed.

¶ 15 A Chapter 13 bankruptcy estate encompasses all property, including any legal claims acquired by the debtor after the petition is filed and before the case is closed. See 11 U.S.C. §§ 541(a)(1), 1306(a)(1) ; In re Jones , 657 F.3d 921, 927 (9th Cir.2011) ; In re Willett , 544 F.3d 787, 791 n. 3 (7th Cir.2008) ; In re Waldron , 536 F.3d 1239, 1241 (11th Cir.2008) ; Cable v. Ivy Tech State College , 200 F.3d 467, 472–74 (7th Cir.1999), overruled on other grounds , Hill v. Tangherlini , 724 F.3d 965 (7th Cir. 2013).² Debtors have a continuing duty to schedule newly acquired assets while the bankruptcy case is open. Waldron , 536 F.3d at 1244. Unless the bankruptcy court orders otherwise, property of the estate that is not expressly abandoned by the bankruptcy trustee or administered in the bankruptcy case "remains property of the estate." 11 U.S.C. § 554(d).³ Undisclosed assets, including undisclosed legal claims accruing while the bankruptcy is ongoing, remain property of the estate even after the bankruptcy case is closed. In re Easley-Brooks , 487 B.R. 400, 409 (S.D.N.Y. 2013) ; see In re An-Tze Cheng , 308 B.R. 448, 461 (9th Cir. 2004) (ruling that, under section 554(d), property of a Chapter 11 estate that is not scheduled or otherwise administered by the time the case is closed "remains property of the estate forever"). A closed bankruptcy proceeding may be reopened for the purpose of scheduling and administering previously undisclosed legal claims or other assets of the estate. 11 U.S.C. § 350(b) ; In re James , 487 B.R. 587, 594-95 (N.D. Ga. 2013) ; Easley-Brooks , 487 B.R. at 409 ; Cheng , 308 B.R. at 461.

¶ 16 Although there is a trustee in a Chapter 13 bankruptcy, the trustee acts as an advisor and administrator while the debtor remains in possession of the estate. 11 U.S.C. §§ 1302(a), 1303, 1306(b) ; Cable , 200 F.3d at 472. Accordingly, a Chapter 13 debtor can pursue legal claims for the benefit of the estate and its creditors. Fed. R. Bankr. P. 6009 ; Cable , 200 F.3d at 472–73 ("Under the reorganization chapters [including Chapter 13], the debtor-in-possession steps into the role of trustee and exercises concurrent authority to sue and be sued on behalf of the estate"); Smith v. Rockett , 522 F.3d 1080, 1081 (10th Cir. 2008) (collecting cases)...