Vanzandt v. Peaks

UNPUBLISHED

Wayne Circuit Court LC No. 2019-006143-NI

Before: Borrello, P.J., and Jansen and Boonstra, JJ.

Per Curiam.

Plaintiff appeals as of right the order granting summary disposition in favor of defendants, Brandon Tyrell Peaks and Rock-Way, LLC, and dismissing plaintiff's automobile negligence claim on the basis of judicial estoppel. For the reasons set forth in this opinion, we affirm.

I. BACKGROUND

Plaintiff filed a petition for Chapter 13 bankruptcy protection on March 28, 2016. In plaintiff's bankruptcy petition, she averred that she did not have any claims against third parties. The bankruptcy court approved her bankruptcy payment plan on July 25, 2016. On September 28, 2016, plaintiff notified the bankruptcy court of a slight decrease in her income.

Germane to this case, on August 25, 2017, plaintiff was rear-ended while driving by defendant Peaks, in his capacity as an employee of defendant Rock-Way. Following the accident, plaintiff did not amend her bankruptcy filing to reflect a potential claim against defendants. On September 25, 2017, the bankruptcy trustee moved to dismiss the bankruptcy petition for failing to make plan payments for the previous four months. Plaintiff hired an attorney to represent her against defendants on October 12, 2017. Again, plaintiff did not amend her bankruptcy payment plan, nor did she inform the bankruptcy trustee or the bankruptcy court of this development. The bankruptcy court granted the motion to dismiss the bankruptcy petition on October 24, 2017.

2

Plaintiff filed a complaint against defendants on April 25, 2019, alleging that defendant Peaks-and, through vicarious liability, defendant Rock-Way-had been negligent and that their negligence caused plaintiff to experience serious injuries. On April 8, 2020, defendants moved the trial court for summary disposition under MCR 2.116(C)(7). Defendants argued, because plaintiff "fail[ed] to disclose her claims to the bankruptcy court[, she] is judicially estopped from pursuing this lawsuit." The trial court granted defendants' motion for summary disposition on the basis of judicial estoppel. The trial court reasoned:

I think Defendant has clearly demonstrated that Plaintiff assumed a position in this law suit that was contrary contrary to the one she asserted[] under oath[] in her Bankruptcy proceedings, by asserting her-or failing to show that she had a . . . substantial asset[] that she was not claiming. And you [are] required to update those papers[] in Bankruptcy Court[] as your situation changes. And clearly, as pointed out b[y] Defense, she knew, or her attorney knew . . . how to make those changes . . . . [A]nd also, the Bankruptcy Court adopted that contrary position . . . . [A]nd that Plaintiff's omission did not result from mistake, or inadvertence. I'm making those findings. And granting Defense counsel's Motion for Summary Disposition . . . .

This appeal followed.

II. ANALYSIS

Defendants sought, and the trial court granted, summary disposition under MCR 2.116(C)(7). "MCR 2.116(C)(7) provides that a motion for summary disposition may be raised on the ground that a claim is barred because of immunity granted by law." Dextrom v Wexford Co, 287 Mich.App. 406, 428; 789 N.W.2d 211 (2010). We review de novo a trial court's decision to grant or deny summary disposition under MCR 2.116(C)(7). Meemic Ins Co v Fortson, 506 Mich. 287, 296; 954 N.W.2d 115 (2020); Roby v City of Mount Clemens, 274 Mich.App. 26, 28; 731 N.W.2d 494 (2006). The de novo standard of review requires us to review the legal issues at hand without deferring to the trial court. Washington v Washington, 283 Mich.App. 667, 671; 770 N.W.2d 908 (2009), citing In re Contempt of Auto Club Ins Ass'n, 243 Mich.App. 697, 714 n 33; 624 N.W.2d 443 (2000). "When reviewing a motion under MCR 2.116(C)(7), a reviewing court must consider all affidavits, pleadings, and other documentary evidence submitted by the parties and construe the pleadings and evidence in favor of the nonmoving party." Anzaldua v Neogen Corp, 292 Mich.App. 626, 629; 808 N.W.2d 804 (2011). The court must consider that evidence in the light most favorable to the nonmoving party. Skinner v Square D Co, 445 Mich. 153, 162; 516 N.W.2d 475 (1994).

The de novo standard of review applies to our interpretation of both Michigan statutes and the Michigan Rules of Court. State Farm Fire & Casualty Co v Corby Energy Servs, Inc, 271 Mich.App. 480, 483; 722 N.W.2d 906 (2006); Webb v Holzheuer, 259 Mich.App. 389, 391; 674 N.W.2d 395 (2003). Legal questions are likewise reviewed de novo. In re Estate of Moukalled, 269 Mich.App. 708, 713; 714 N.W.2d 400 (2006), citing Roan v Murray, 219 Mich.App. 562, 565; 556 N.W.2d 893 (1996). The application of judicial estoppel is an equitable doctrine that we also review de novo. Spohn v Van Dyke Pub Sch, 296 Mich.App. 470, 479; 822 N.W.2d 239 (2012).

3

In her appeal, plaintiff argues the trial court erred in granting defendants' motion for summary disposition on the basis of the doctrine of judicial estoppel. Judicial estoppel "is widely viewed as a tool to be used by the courts in impeding those litigants who would otherwise play 'fast and loose' with the legal system." Paschke v Retool Indus, 445 Mich. 502, 509; 519 N.W.2d 441 (1994), quoting Bigelow, Estoppel (6th ed), p 783. It is considered an "extraordinary remed[y] to be invoked when a party's inconsistent behavior will otherwise result in a miscarriage of justice." Opland v Kiesgan, 234 Mich.App. 352, 364; 594 N.W.2d 505 (1999) (quotation marks and citations omitted). Judicial estoppel "generally prevents a party from prevailing in one phase of a case on an argument and then relying on a contradictory argument to prevail in another phase." Chelsea Investment Group LLC v City of Chelsea, 288 Mich.App. 239, 251; 792 N.W.2d 781 (2010). The contradictory positions must be within "the same or related litigation." Wolverine Power Supply Coop v DEQ, 285 Mich.App. 548, 567; 777 N.W.2d 1 (2009). "Of utmost importance in determining whether to apply the doctrine of judicial estoppel is whether the party seeking to assert an inconsistent position would derive an unfair advantage if not estopped." Spohn, 296 Mich.App. at 489.

Chapter 13 bankruptcy involves what is essentially an agreement between the debtor and the bankruptcy court and creditors. The debtor agrees to be bound by certain obligations- including a duty to disclose all of his or her assets to the bankruptcy court-in return for a discharge of debts. Spohn, 296 Mich.App. at 481. This duty to disclose continues throughout the pendency of the bankruptcy action. Id. at 482 (internal citations omitted) (noting that "the duty of disclosure in a bankruptcy proceeding is a continuing one, and a debtor is required to disclose all potential causes of action.").

This Court in Spohn, 296 Mich.App. 480-481, set forth the procedure for a trial court to employ when deciding whether the doctrine of judicial estoppel should to apply to bankruptcy proceedings. According to the Spohn Court, a trial court must find:

(1) [the plaintiff] assumed a position that was contrary to the one that she asserted under oath in the bankruptcy proceedings; (2) the bankruptcy court adopted the contrary position either as a preliminary matter or as part of a final disposition; and (3) [the plaintiff's] omission did not result from mistake or inadvertence. In determining whether [the plaintiff's] conduct resulted from mistake or inadvertence, [the reviewing] court considers whether: (1) [the plaintiff] lacked knowledge of the factual basis of the undisclosed claims; (2) [the plaintiff] had a motive for concealment; and (3) the evidence indicates an absence of bad faith. In determining whether there was an absence of bad faith, [the reviewing court] will look, in particular, at [the plaintiff's] "attempts" to advise the bankruptcy court of [the plaintiff's] omitted claim. [Id. at 480-481, citing White v Wyndham Vacation Ownership, Inc, 617 F.3d 472, 478 (CA 6, 2010).]

If these three elements are met, then judicial estoppel may be invoked by the reviewing court "at its discretion." Opland, 234 Mich.App. at 365.

The first element of judicial estoppel requires the reviewing court to find that plaintiff "assumed a position that was contrary to the one that she asserted under oath at the bankruptcy proceedings." Spohn, 296 Mich.App. at 480. When plaintiff filed her petition for bankruptcy, she

4

assumed a duty to disclose information to her creditors and the court that continued throughout the pendency of the bankruptcy action. Id. at 482. Plaintiff stated in her bankruptcy filing that she did not have any claims against third parties. The trial court correctly recognized that plaintiff was "required to update those . . . papers[] in Bankruptcy Court[] as [her] situation changes." Acting in accordance with this duty to disclose, plaintiff subsequently notified the bankruptcy court of a slight decrease in her income. However, after the automobile accident occurred on August 25, 2017, plaintiff did not notify the bankruptcy court of her change in asset status because of her potential claim against defendants. Plaintiff directly admitted this in her answer to defendants' motion for summary disposition. On October 17, 2017, before the bankruptcy petition was dismissed by the bankruptcy court, plaintiff hired an attorney to represent her against defendants. Again, plaintiff failed to notify the bankruptcy court of her known potential claim against defendants.

Plaintiff then filed her negligence suit on April 25, 2019, against defendants. In doing so, she "assumed a...