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Is a Debtor Judicially Estopped from Prosecuting Undisclosed Prepetition Causes of Action where Debtor’s Bankruptcy Case has been Dismissed?

As reported by Robin Miller of CBAR:

Although the debtor had failed to schedule her prepetition claims against her mortgage creditors in her prior Chapter 13 bankruptcy case, and her failure to list the causes of action among her assets was tantamount to a representation that she had no such claims, the debtor was not judicially estopped from prosecuting the claims following the dismissal of her bankruptcy case, as the court had made no ruling relating to that representation. The court did not confirm the debtor’s proposed plan, address its merits, or mention her assets. It simply dismissed her petition, stating principally that she “ha[d] created unreasonable delay … prejudicial to creditors … [,] ha[d] failed to appear at the confirmation hearing,” and “ha [d] failed to remain current in proposed plan payments to the trustee.” As there was no ruling relating to the debtor’s claims or to her assets generally, there was no risk of inconsistent adjudications, and therefore there was no ground for judicial estoppel.

Crawford v. Franklin Credit Management Corp., — F.3d —-, 2014 WL 3377175 (2nd Cir., July 11, 2014)

(case no. 13-2514)