Dec. 21, 2018
Reversed and remanded.
- Whether the trial court erred in dismissing the case on the premise that the trustee was judicially estopped from pursuing the medical malpractice claim against the defendants.
In July 2013, the plaintiff began experiencing pain in her back and numbness in her right leg. Despite having two back surgeries, the plaintiff’s pain not only continued but more severe symptoms occurred post-surgery, resulting in the plaintiff being unable to work. After meeting with two attorneys regarding a potential medical malpractice claim, the plaintiff did not believe she had a viable claim of medical malpractice. In April 2015, the plaintiff met with a bankruptcy attorney who drafted the plaintiff’s petition for chapter 7 bankruptcy, but did not list the potential medical malpractice claim on the schedule of assets. The plaintiff also failed to disclose the potential medical malpractice claim to the bankruptcy trustee. The plaintiff filed for bankruptcy and the court granted the plaintiff a discharge under 11 U.S.C. § 727 (2012).
In February 2016, the plaintiff met with new counsel who agreed to represent her in a medical malpractice claim. On June 27, 2016 the plaintiff filed the medical malpractice action; however, the plaintiff did not advise the bankruptcy court or trustee of the change of status of this potential claim. On July 14, the bankruptcy court closed the case and discharged the trustee. On October 28, the defendants filed a motion to dismiss the medical malpractice case on the grounds of judicial estoppel because the plaintiff failed to disclose the medical malpractice claim on her list of assets.
As a result, the plaintiff — through new counsel — was granted a motion to reopen the plaintiff’s bankruptcy case and was appointed a trustee. Subsequently, the plaintiff filed an objection to the defendant’s motion to dismiss claiming inadvertence or mistake and therefore judicial estoppel should not apply. The plaintiff also claimed that the judicial estoppel was “moot” as her bankruptcy case had been reopened. The plaintiff attached documentation to her objection in support of her argument. The trial court, however, granted the defendants’ motion to dismiss finding that the plaintiff was judicially estopped from pursuing her medical malpractice claim. The trial court then denied the plaintiff’s motion for reconsideration and the plaintiff filed an appeal
First, the Court held that the trial court did not apply the appropriate standard in reviewing the motion to dismiss as the trial court required the plaintiff to submit evidence supporting her position and overlooked the fact that the plaintiff attached supporting documentation to her objection to the motion to dismiss.
The second issue on appeal — an issue of first impression — pertained to judicial estoppel and bankruptcy. Specifically, the Court reviewed the “application of judicial estoppel to a trustee pursuing a claim on behalf of a bankruptcy estate.” In its analysis, the Court confirmed that the trustee is the real party in interest. Next, the Court disagreed with the defendant’s argument that the trustee was under an obligation to file a substitution or intervention, otherwise judicial estoppel would be applicable. The Court then noted that other jurisdictions have not applied the principle of judicial estoppel to a bankruptcy trustee who is pursuing a claim that was not disclosed by the debtor. The Court rejected the defendant’s argument of protecting the integrity of the courts and noted that the bankruptcy courts have protections of their own. The Court concluded that “imposing the doctrine of judicial estoppel on an innocent bankruptcy trustee, which, in turn, punishes innocent creditors for the mistakes of a debtor does not further the purpose of protecting the integrity of the judicial process.”
The Court then rejected the defendants’ remaining propositions in that a trustee should be bound by the plaintiff’s conduct and reliance on a trustee-plaintiff agreement, stating that it has no effect on the Court’s ultimate decision and reasoning that the bankruptcy court is the responsible court for deciding issues on agreements to split potential proceeds.
For all of these reasons, the Court found that the trial court erred in dismissing the medical malpractice suit and held that judicial estoppel was not applicable to the trustee in the medical malpractice claim.
David P. Angueira of Swartz & Swartz, P.C. of Boston, MA for the plaintiff. Todd J. Hathaway of Wadleigh Starr & Peters P.L.L.C of Manchester for defendants Emery Johnston, M.D. and Elliot Hospital. Peter A. Meyer and Jay Surdukowski of Sulloway & Hollis of Concord for defendant Gary D. Fleischer, M.D. Stephen M. Fiore of Foster & Eldridge LLP, of Cambridge, MA for defendants Tung Thuy Nguyen, M.D. and Southern New Hampshire Medical Center.