Inadvertence May Be Unavailing, Says the Fifth Circuit on Judicial Estoppel

by Butler Snow LLP

The Fifth Circuit became the second United States Court of Appeals to establish a three prong test for determining whether a bankrupt debtor should be judicially estopped from pursuing a cause of action that she failed to disclose to the bankruptcy court.  Flugence v. Axis Surplus Ins. Co. (In re Flugence), 738 F.3d 126 (5th Cir. 2013).

Cheryl Flugence filed for Ch. 13 bankruptcy protection in 2004 and confirmed a plan. In March, 2007, she was injured in a car accident and hired an attorney to pursue a personal injury claim.  In July 2007 she amended and confirmed her Ch. 13 plan.  In March 2008 she sued several defendants for personal injuries sustained from the car accident.  In November 2008 she received a bankruptcy court order discharging her debts. During this period, she never disclosed to the bankruptcy court that she had been in a car accident and might prosecute a personal injury claim.

Once the personal injury defendants discovered the non-disclosure, they reopened the bankruptcy case and sought to have Ms. Flugence judicially estopped from pursuing the undisclosed claim.

The case made its way to the Fifth Circuit which confirmed that Ms. Flugence was judicially estopped from pursuing her personal injury claim.  In so doing, the Fifth Circuit established the following three prong test for judicial estoppel:

1st Prong: The plaintiff/debtor asserts inconsistent positions.  When a debtor files for bankruptcy protection, and fails to list a claim or cause of action as an asset (or even a potential claims or potential cause of action), the debtor has made a representation to the bankruptcy court that no such claim or cause of action exists.  If, prior to or during the period of the bankruptcy (including the plan period), the debtor asserts a claim in a personal injury lawsuit, the debtor has made an “intentional self-contradiction that is being used as a means of obtaining an unfair advantage in a forum provided for suitors seeking justice.”  In re Superior Crewboats, Inc. 374 F.3d 330 (5th Cir. 2004).  In other words, the plaintiff/debtor has taken a position in her lawsuit (i.e., ‘a claim exists’) that is inconsistent with the position taken in her bankruptcy case (i.e., ‘no such claim exists’).

2nd Prong: A Court accepts the prior position. The first position asserted must be accepted by a court.  Here, the bankruptcy court accepted Ms. Flugence’s “non-disclosure,” where her bankruptcy schedules reflected that she had no pending lawsuits, claims or causes of action.  Arguably, just about any action taken by a bankruptcy court constitutes an “acceptance” of the debtor’s position (i.e., granting a discharge, confirming a plan, ordering relief from the automatic stay, etc…).

3rd Prong: The non-disclosure must not have been inadvertent.  To establish inadvertence, a plaintiff/debtor must prove that she did not know of the inconsistent position or that she had no motive to conceal it from the bankruptcy court.  In order to prove that she did not know of the inconsistent position, the debtor must show that she was unaware of the facts giving rise to the inconsistent positions – a difficult argument for a debtor to make when she signs her bankruptcy petition declaring that she has reviewed the information and that it is accurate and complete, and then files a lawsuit as a named plaintiff.  Similarly, the motive to conceal is almost always present because the debtor invariably stands to gain a financial benefit by not disclosing and, according to the Fifth Circuit, ignorance of the continuing duty to disclose is irrelevant in the judicial estoppel analysis. Flugence, 738 F.3d at 130-131.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Butler Snow LLP | Attorney Advertising

Written by:

Butler Snow LLP

Butler Snow LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.