Petitioners' Brief on the Merits - Supreme Court of Texas

NO. 08-0589 

IN THE 

SUPREME COURT OF TEXAS 

JASON FERGUSON and BOBBIE FERGUSON, 

Petitioners 

v. 

BUILDING MATERIALS CORPORATION OF AMERICA, CPC LOGISTICS, 

INC., AND ROBERT JAMES MADDOX, 

Respondents 

On Petition for Review from 

The Eighth Court of Appeals at 

El Paso, Texas 

PETITIONERS’ BRIEF ON THE MERITS 

Kirk L. Pittard 

State Bar No. 24010313 

F. Leighton Durham III 


DURHAM & PITTARD, LLP 

P.O. Box 190310 

Dallas, Texas 75219 

214-946-8000 

214-946-8433 fax 

APPELLATE COUNSEL FOR 

PETITIONERS 

Kimberly Stovall 


STOVALL & ASSOCIATES, P.C. 

6750 Hillcrest Plaza Drive 

Suite 312 


(972) 774-1276 

(972) 774-1277 fax 

TRIAL COUNSEL FOR 

PETITIONERS 

Oral Argument Requested

IDENTITIES OF PARTIES AND COUNSEL 

As required by the TEXAS RULE OF APPELLATE PROCEDURE 55.2(a), 

Petitioners correctly identifies appellate counsel, trial counsel and all parties to this 

appeal: 

PETITIONERS: 

Appellate Counsel for 

Petitioners: 

Trial Counsel for 

Petitioners: 

JASON FERGUSON and BOBBIE FERGUSON 



F. Leighton Durham III 


DURHAM & PITTARD, L.L.P. 

P.O. Box 190310 


(214) 946-8000 

(214) 946-8433 Fax 





Suite 312 


(972) 774-1276 

(972) 774-1277 fax 


i

RESPONDENT: 

BUILDING MATERIALS CORPORATION OF 

AMERICA 

Appellate Counsel Greg K. Winslett 

for Respondent: State Bar No. 21781900 

Richard L. Smith, Jr. 


QUILLING, SELANDER, CUMMISKEY & LOWNDS, P.C. 

2001 Bryan Street, Suite 1800 


(214) 871-2100 

(214) 871-2111 fax 

RESPONDENTS: 

CPC LOGISTICS, INC., AND 

ROBERT JAMES MADDOX 

Trial Counsel 

John Philip Griffis 

for Respondents: State Bar No. 08476400 

BARLOW, JONES & BRUST, LLP 

17225 El Camino Real, Suite 400 

Houston, Texas 77058 

(281) 488-8440 

(281) 488-6832 fax 


ii

TABLE OF CONTENTS 

IDENTITIES OF PARTIES AND COUNSEL ........................................................ i 

TABLE OF CONTENTS........................................................................................ iii 

TABLE OF AUTHORITIES ................................................................................... v 

STATEMENT OF THE CASE................................................................................ 2 

STATEMENT OF JURISDICTION........................................................................ 2 

ISSUES PRESENTED............................................................................................. 3 

STATEMENT OF FACTS ...................................................................................... 4 

SUMMARY OF THE ARGUMENT ...................................................................... 6 

ARGUMENT & AUTHORITIES ........................................................................... 7 

A. Standard for Judicial Estoppel. ..................................................................... 8 

1. A party must have succeeded in a prior proceeding based 

on the inconsistent representation...................................................... 9 

2. A party must have acted intentionally or in bad faith, not 

inadvertently. ................................................................................... 11 

3. Disadvantage to opposing party....................................................... 12 

4. Elements........................................................................................... 13 

5. Judicial estoppel in the context of bankruptcy proceedings. ........... 13 

B. There is a subjective component to the judicial estoppel analysis. ............ 16 

C. Judicial Estoppel is not applicable to the present case because the 

Fergusons’ omission on their Schedule B was an inadvertent mistake 

and because the bankruptcy court did not judicially accept the 

inadvertent omission. .................................................................................. 17 


iii

D. The primary cases upon which the Respondents relied in the 

proceedings below are distinguishable. ...................................................... 23 

1. Brown v. Swett & Crawford of Texas, Inc....................................... 24 

2. Cleaver v. Cleaver. .......................................................................... 24 

3. Dallas Sales Co. v. Carlisle Silver Co............................................. 25 

4. Estel v. Bigelow Mgmt., Inc. ............................................................ 26 

5. In re Coastal Plains, Inc.................................................................. 28 

6. In re Superior Crewboats, Inc. ........................................................ 28 

7. Jethroe v. Omnova Solutions, Inc. ................................................... 30 

8. Lexxus Int’l, Inc. v. Loghry.............................................................. 32 

E. Conclusion. ................................................................................................. 32 

PRAYER................................................................................................................ 33 

CERTIFICATE OF SERVICE .............................................................................. 34 

APPENDIX............................................................................................................ 35 


iv

TABLE OF AUTHORITIES 

Cases 

Page 

Brown v. Swett & Crawford of Texas, Inc., 

178 S.W.3d 373 (Tex. App.—Houston [1 st Dist.] 2005, no pet.) .... 10, 13, 14, 24 

Barger v. City of Cartersville, 

348 F.3d 1289 (11th Cir. 2003).......................................................................... 29 

Burnes v. Pemco Aeroplex, Inc., 

291 F.3d 1282 (11th Cir. 2002).................................................................... 27, 31 

Cleaver v. Cleaver, 

140 S.W.3d 771 (Tex. App.—Tyler 2004, no pet.) ................................. 9, 10, 24 

Cloud v. Northrop Grumman Corp., 

67 Cal. App. 4th 995 (Cal. Ct. App. 1998) ........................................................ 16 

Dallas Sales Co. v. Carlisle Silver Co., 

134 S.W.3d 928 (Tex. App.—Waco 2004, pet. denied) ........................ 10, 25, 26 

Dawson v. J.G. Wentworth & Co., Inc., 

946 F.Supp. 394 (E.D. Pa.1996) .................................................................. 15, 21 

Estel v. Bigelow Mgmt., Inc., 

323 B.R. 918 (E.D. Tex. 2005) .............................................................. 10, 26, 27 

Eubanks v. CBSK Fin. Group, Inc., 

385 F.3d 894 (6th Cir. 2004)............................................................ 12, 16, 17, 20 

Ferguson v. Building Materials Corp. of Am., 

No. 08-07-00051-CV, 2008 WL 2390328 (Tex. App.—El Paso, 

June 12, 2008, pet. filed) ...................................................................................... 2 

In re Coastal Plains, Inc., 

179 F.3d 197 (5th Cir. 1999)....................................................................... passim 

In re Electro-Motor, Inc., 

390 B.R. 859 (E.D. Tex 2008) ..................................................................... 14, 17 

In re Griner, 

240 B.R. 432 (Bankr. S.D. Ala. 1999) ............................................. 14, 16, 17, 22 


v

In re Okan's Foods, Inc., 

217 B.R. 739 (Bankr. E.D. Penn.1998)........................................................ 11, 21 

In re Superior Crewboats, Inc., 

374 F.3d 330 (5th Cir. 2004)....................................................................... passim 

Jethroe v. Omnova Solutions, Inc., 

412 F.3d 598 (5th Cir. 2005).................................................................. 11, 30, 31 

Jogani v. Jogani, 

141 Cal. App. 4th 158 (Cal. Ct. App. 2006) ...................................................... 16 

Lexxus Int'l, Inc. v. Loghry, 

No. Civ.A. 3:04-CV-1039L, 2005 WL 3682562 (N.D. Tex. 2005) ............ 11, 32 

Mohamed v. Exxon Corp., 

796 S.W.2d 751 (Tex. App.—Houston [14 th Dist.] 1990, writ denied)............... 8 

New Hampshire v. Maine, 

532 U.S. 742 (2001) ................................................................................. 9, 10, 12 

Penrod Drilling Corp. v. Williams, 

868 S.W.2d 294 (Tex. 1993) ................................................................................ 8 

Reyes v. Texas EZPawn, L.P., 

No V-03-128, 2007 WL 2818053 (S.D. Tex. Sept. 26, 2007)............... 14, 17, 19 

Riazuddin v. Schindler Elevator Corp., 

Nos. 06-011, 04-22822-NLJ, 2007 WL 441772 (10th Cir. 2007) ..................... 16 

Richardson v. Kraft-Holleb Food Service, Inc., a Div. of Philip Morris, 

774 F. Supp. 1108 (N.D. Illinois 1991).............................................................. 21 

Ryan Operations G.P. v. Santiam-Midwest Lumber Co., 

81 F.3d 355 (3rd Cir. 1996)......................................................................... passim 

Stallings v. Hussmann Corp., 

447 F.3d 1041 (8th Cir. 2006)............................................................................ 15 

Thompson v. Continental Airlines, 

18 S.W.3d 701 (Tex. App.—San Antonio 2000, no pet.) ........................... passim 


vi

Wakefield v. SWS Securities, Inc., 

293 B.R. 372 (N.D. Tex. 2003).......................................................................... 14 

Whiting v. Krassner, 

391 F.3d 540 (3rd Cir. 2004).............................................................................. 11 

Statutes 

GOVERNMENT CODE SECTION 22.001(a)(1)............................................................. 2 

GOVERNMENT CODE SECTION 22.001(a)(6)............................................................. 2 

Rules 

TEX. R. APP. P. 55.2(a) ............................................................................................. i 


vii

NO. 08-0589 

IN THE 




v. 

BUILDING MATERIALS CORPORATION OF AMERICA, CPC 

LOGISTICS, INC., AND ROBERT JAMES MADDOX, 






TO THE HONORABLE JUSTICES OF THE TEXAS SUPREME COURT: 

Petitioners, Jason Ferguson and Bobbie Ferguson file this Petitioner’s <strong>Brief</strong> 

on the Merits. 

“Fergusons.” 

In this brief, Petitioners will be referred to collectively as 

Respondents Building Materials Corporation of America, CPC 

Logistics, Inc., and Robert James Mattox will be referred to collectively as 

“Respondents.” The Clerks’ Record will be referenced as “(R at [page]).” 

PETITIONERS’ BRIEF ON THE MERITS 1

STATEMENT OF THE CASE 

Nature of the case: 

Trial Court: 

Trial Court’s Disposition: 

This is a personal injury lawsuit against 

Building Materials Corporation of America. 

The Honorable Karen Gren Johnson, 95 th 

Judicial District Court, Dallas County 

Summary judgment granted based on judicial 

estoppel. 

Parties in the Court of Appeals: Jason and Bobbie Ferguson, Appellants; 

Building Materials Corporation of America, 

CPC Logistics, Inc. and Robert James Maddox, 

Appellees. 

Court of Appeals: 

Court of Appeals’ Disposition: 

Eighth Court of Appeals; Justice McClure, 

joined by Justice Carr, Chief Justice Chew 

dissenting. Ferguson v. Building Materials 

Corp. of Am., No. 08-07-00051-CV, 2008 WL 

2390328 (Tex. App.—El Paso, June 12, 2008, 

pet. filed) (Opinion attached, Appendix, Tab 2). 

Affirmed 

STATEMENT OF JURISDICTION 

The Supreme Court has jurisdiction over this case under Government Code 

section 22.001(a)(1) because the justices in the court of appeals disagree on a 

question of law material to the decision. The Supreme Court also has jurisdiction 

over this case under Government Code section 22.001(a)(6) because the court of 

appeals committed an error of law of such importance to the State’s jurisprudence 

that it should be corrected. 


ISSUES PRESENTED 

First Issue Presented: In a judicial estoppel analysis 

in the bankruptcy context, is there a subjective 

component to a determination regarding whether a 

party acted intentionally and not inadvertently in 

taking a prior inconsistent legal position? 

Second Issue Presented: When a claimant informs 

the bankruptcy trustee, the bankruptcy court, and the 

bankruptcy creditors of a pending lawsuit through 

bankruptcy filings and creditors meetings and also files 

amended schedules in the bankruptcy court during the 

pendency of the bankruptcy to correct an inadvertent 

omission of the lawsuit in one document filed in the 

bankruptcy, is the claimant judicially estopped from 

pursuing the lawsuit as a matter of law? 

Third Issue Presented: When there has been no 

dismissal or discharge in bankruptcy, does a 

preliminary confirmation of a Chapter 13 bankruptcy 

plan constitute “judicial acceptance” of an inadvertent 

omission of an asset in a schedule filed in the 

bankruptcy court for purposes of a judicial estoppel 

analysis? 


STATEMENT OF FACTS 

This case involves numerous disclosures in a bankruptcy proceeding by a 

debtor concerning a pending lawsuit but one inadvertent omission of the lawsuit in 

the initial Schedule B filed in the bankruptcy court. The judgment below concerns 

the effect of this single inadvertent omission in the context of a judicial estoppel 

analysis. By concluding that the Fergusons’ subjective intent was irrelevant to the 

judicial estoppel analysis, the court of appeals’ ruling precludes the debtor’s 

prosecution of the lawsuit and denies the bankruptcy creditors access to what 

might otherwise be the largest asset in the bankruptcy estate. 

The opinion of the court of appeals correctly states the nature of the case. 

Due to damages sustained when a building collapsed on Jason Ferguson, on April 

12, 2005, Petitioners filed the lawsuit which is the subject of this appeal. For 

reasons unrelated to this lawsuit, on June 3, 2005, the Fergusons filed for Chapter 

13 bankruptcy. (R. at 181). At the time of their initial meeting with their 

bankruptcy attorneys, Petitioners not only disclosed this lawsuit but also discussed 

that it arose from a major accident and even provided the cause number and style 

of this case. (R. at 394). Through their bankruptcy attorneys, the Fergusons fully 

identified this case in their initial Statement of Financial Affairs filed with the 

bankruptcy court. (R. at 368). Furthermore, the Fergusons’ bankruptcy counsel 

informed the bankruptcy trustee about the lawsuit and discussed it with him at the 

initial creditors’ meeting. (R. at 375-76, 395). 


Due to a clerical error, this lawsuit was inadvertently omitted on the 

Fergusons’ Schedule B that was initially filed with the bankruptcy court. (R. at 

378-81, 394). However, upon discovering the mistake, the Fergusons’ bankruptcy 

counsel filed an amended Schedule B to reflect the information which was already 

contained in the Statement of Financial Affairs on file with the bankruptcy court 

regarding this lawsuit. (R. at 395, 448-49). Furthermore, during the pendency of 

the bankruptcy, the Fergusons requested a modification of the Chapter 13 plan 

from the bankruptcy trustee for the Fergusons to pay 100% of all the creditors in 

the Chapter 13 plan. (R. at 395, 449). The Fergusons also entered into a partial 

settlement with another party and notified the bankruptcy court of such settlement 

by seeking permission from the trustee to complete the settlement. (R. at 390). 

The bankruptcy trustee and bankruptcy court were aware of this lawsuit 

since the filing of the Statement of Financial Affairs and the initial creditors’ 

meeting. (R. at 368, 375). Moreover, the clerical error contained in the 

Ferguson’s initial Schedule B filed with the bankruptcy court was corrected before 

any discharge of the bankruptcy case. (R. at 395, 448-49). Nevertheless, 

Respondent Building Material Corporation of America filed a motion for partial 

summary judgment alleging that the Fergusons’ lawsuit was barred by the doctrine 

of judicial estoppel because the lawsuit was not reflected in the initial Schedule B. 

(R. at 227-33). Respondents, CPC Logistics, Inc. and Robert James Maddox 

joined in Building Materials’ Motion for Partial Summary Judgment. The Court 

granted the motion for partial summary judgment on August 4, 2006. (R. at 454- 


55). The Fergusons filed a motion for new trial on September 6, 2006. (R. at 460- 

78). The trial court denied the motion for new trial on October 27, 2006. (R. at 

9). On November 15, 2006, the trial court signed an order severing the Fergusons’ 

claims against the Respondents. (R. at 569). The Fergusons filed a notice of 

appeal on December 8, 2006 and an Amended Notice of Appeal on March 21, 

2007. (R. at 573). Due to the appellate docket equalization process, the case was 

transferred to the El Paso Court of Appeals for consideration. On June 12, 2008, 

the El Paso Court of Appeals affirmed the summary judgment granted by the trial 

court. Justice McClure wrote the majority opinion in which Justice Carr joined. 

Chief Justice Chew filed a dissenting opinion. 

SUMMARY OF THE ARGUMENT 

In the context of a judicial estoppel analysis, determinations regarding an 

actor’s intent, inadvertence, and motivation necessarily entail an analysis of the 

actor’s state of mind. Consequently, in determining whether a party’s omission of 

a pending lawsuit on a schedule of assets filed in a bankruptcy proceeding was 

intentional, inadvertent, or with motivation to conceal assets, a court should 

review facts concerning the debtor’s state of mind. 

In the present case, the Fergusons disclosed the existence of this case to 

their bankruptcy attorney, the bankruptcy trustee, and the bankruptcy court. They 

raised these claims in meetings with their bankruptcy attorney and the trustee and 

in creditors meetings. Moreover, these claims were accurately represented in the 

initial Statement of Financial Affairs filed with the bankruptcy court. Once the 


Fergusons discovered that the pending lawsuit had been inadvertently omitted 

from their initial Schedule B, the Fergusons filed an amended Schedule B and 

requested to have their bankruptcy plan amended to pay 100% of their creditors 

based on the existence of this lawsuit. If the appropriate standard for judicial 

estoppel is applied, it is apparent that these facts are inconsistent with an intent to 

mislead the Respondents or the court and inconsistent with a motivation to conceal 

assets. These facts instead demonstrate an inadvertent mistake by the Fergusons’ 

bankruptcy counsel illustrating that the Fergusons actually had no motive to 

conceal their assets from the bankruptcy court. 

Additionally, the summary judgment evidence demonstrated that the 

bankruptcy court had not judicially accepted the inadvertent omission that was 

contained in the original Schedule B filed with the court as the court approved an 

amendment to the bankruptcy plan before any discharge or dismissal of the 

bankruptcy. 

Therefore, the court of appeals erred in concluding that the 

Ferguson’s lawsuit was barred by judicial estoppel. 

ARGUMENT & AUTHORITIES 

This case presents an issue of first impression for this Court concerning the 

circumstances under which bankruptcy debtors and creditors will be adversely 

affected by an inadvertent omission of a bankruptcy asset in an initial Schedule B 

filed in a bankruptcy court. Despite numerous disclosures of the pending lawsuit 

in the bankruptcy proceedings, the trial court and court of appeals determined as a 

matter of law that a single inadvertent omission of the lawsuit from an initial 


Schedule B precluded the debtor from pursuing that claim. 

Such a ruling 

ultimately prevents the bankruptcy creditors from accessing a significant 

bankruptcy asset due to a hyper-technical application of the otherwise equitable 

doctrine of judicial estoppel. 

A. Standard for Judicial Estoppel. 

In analyzing the application of judicial estoppel in the bankruptcy context, 

while this Court may certainly “draw upon the precedents of the Fifth Circuit, or 

any other federal or state court, in determining the appropriate federal rule of 

decision, [Texas courts] are obligated to follow only higher Texas courts and the 

United States Supreme Court.” Penrod Drilling Corp. v. Williams, 868 S.W.2d 

294, 296 (Tex. 1993); see also Mohamed v. Exxon Corp., 796 S.W.2d 751, 753-54 

(Tex. App.—Houston [14 th Dist.] 1990, writ denied) (acknowledging that the court 

of appeals is not bound by Fifth Circuit precedent on matters of federal law and 

that the court of appeals reading of federal law could diverge from that of the Fifth 

Circuit in a given case). In Penrod, this Court noted that the court of appeals’ 

reliance on Fifth Circuit precedent overlooked the weight of intervening federal 

court decisions from other jurisdictions. Penrod, 868 S.W.2d at 296. Therefore, 

in addition to Fifth Circuit cases, this Court may consider other federal cases 

outside the Fifth Circuit for a thorough analysis of the application of judicial 

estoppel in the present case. 

When a party assumes a certain position in a legal proceeding, and succeeds 

in maintaining that position, the party may not thereafter assume a contrary 


position simply because his interests have changed, especially if it would be to the 

prejudice of the party who has acquiesced in the position formerly taken by him. 

New Hampshire v. Maine, 532 U.S. 742, 749 (2001). In such instances, the 

doctrine of 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. New Hampshire, 532 U.S. at 749; Cleaver v. Cleaver, 

140 S.W.3d 771, 774 (Tex. App.—Tyler 2004, no pet.). 

The purpose of judicial estoppel is to protect the integrity of the judicial 

process by prohibiting parties from deliberately changing positions according to 

the exigencies of the moment. 

New Hampshire, 532 U.S. at 749-50; In re 

Superior Crewboats, Inc., 374 F.3d 330, 334 (5 th Cir. 2004); In re Coastal Plains, 

Inc., 179 F.3d 197, 205 (5 th Cir. 1999). It is not intended to eliminate all 

inconsistencies, however slight or inadvertent; rather, it is designed to prevent 

litigants from “playing ‘fast and loose with the courts.’” Ryan Operations G.P. v. 

Santiam-Midwest Lumber Co., 81 F.3d 355, 358 (3 rd Cir. 1996). Because the rule 

is intended to prevent the improper use of the judicial process, the doctrine is an 

equitable one invoked by a court at its discretion. New Hampshire, 532 U.S. at 

750. 

1. A party must have succeeded in a prior proceeding based on the 

inconsistent representation. 

“Absent success in the prior proceeding, a party’s later inconsistent position 

introduces no ‘risk of inconsistent court determinations’ and, thus, poses little 


threat to judicial integrity.” New Hampshire, 532 U.S. at 750-51 (citing United 

States v. C.I.T. Constr., Inc., 944 F.2d 253, 259 (5 th Cir. 1991)); see also In re 

Coastal Plains, Inc., 179 F.3d at 206 n.4, 213 (discussing the requirement that a 

party must have succeeded with regard to the prior position to invoke judicial 

estoppel); Brown v. Swett & Crawford of Texas, Inc., 178 S.W.3d 373, 381 (Tex. 

App.—Houston [1 st Dist.] 2005, no pet.). While the “success” requirement, also 

discussed as the “judicial acceptance” requirement, may not necessarily require 

that the party must have prevailed on the merits, judicial acceptance at least 

requires that the first court adopted the position urged by the party, either as a 

preliminary matter or as part of a final disposition. In re Coastal Plains, 179 F.3d 

at 206. 

The following examples demonstrate how the “judicial acceptance” 

element has been satisfied in other cases: 

● Brown v. Swett & Crawford of Texas, Inc., 178 S.W.3d 373, 381 (Tex. 

App.—Houston [1 st Dist.] 2005, no pet.) (dismissal of bankruptcy based on 

conclusion by the trustee that there were no assets to administer for the 

benefit of the creditors). 

● Cleaver v. Cleaver, 140 S.W.3d 771, 773-75 (Tex. App.—Tyler 2004, no 

pet.) (plaintiff was discharged in bankruptcy based on a finding that there 

were no assets for the bankrupt estate). 

● Dallas Sales Co. v. Carlisle Silver Co., 134 S.W.3d 928, 932 (Tex. 

App.—Waco 2004, pet. denied) (trustee abandoned debtor’s assets based 

on conclusion that the debtor’s assets had no value). 

● Estel v. Bigelow Mgmt., Inc., 323 B.R. 918, 922 (E.D. Tex. 2005) (no 

asset discharge in bankruptcy based on debtor’s position that there was no 

claim or suit). 


● In re Coastal Plains, Inc., 179 F.3d 197, 210 (5 th Cir. 1999) (bankruptcy 

stay lifted based in part on a stipulation representing that the debtor’s assets 

were inadequate to satisfy its debts). 

● In re Superior Crewboats, Inc., 374 F.3d 330, 335 (5 th Cir. 2004) (no 

asset discharge in bankruptcy based on misrepresentations regarding 

lawsuit being time barred). 

● Jethroe v. Omnova Solutions, Inc., 412 F.3d 598, 599-600 (5 th Cir. 2005) 

(bankruptcy case was closed and the court had confirmed the debtor’s 

bankruptcy plan based on the debtor’s failure to disclose pending claims in 

violation of the ongoing duty to amend the bankruptcy petition to reflect the 

claim while the bankruptcy petition was pending). 

● Lexxus Int’l, Inc. v. Loghry, No. Civ.A. 3:04-CV-1039L, 2005 WL 

3682562, *4 (N.D. Tex. 2005) (discharge in bankruptcy based on debtor’s 

failure to disclose pending claims). 

2. A party must have acted intentionally or in bad faith, not 

inadvertently. 

Bad faith is an essential requirement for the application of judicial estoppel. 

Whiting v. Krassner, 391 F.3d 540, 544 (3 rd Cir. 2004). The doctrine of judicial 

estoppel does not apply when the prior position was taken because of a good faith 

mistake rather than as part of a scheme to mislead the court. Ryan Operations, 81 

F.3d at 362. As for the “bad faith” element, it has been said that it is satisfied by 

“[s]tatements or conduct of the debtor evincing a reckless disregard for the truth.” 

In re Coastal Plains, 179 F.3d at 211-12 (citing Okan's Foods, Inc. v. Windsor 

Associates Ltd. Partnership (In re Okan's Foods, Inc.), 217 B.R. 739 (Bankr. E.D. 

Pa.1998)). 

Many courts have imposed the additional requirement that the party to be 

estopped must have acted intentionally, not inadvertently in order to impose the 


doctrine of judicial estoppel. In re Coastal Plains, Inc., 179 F.3d 197, 206 (5 th Cir. 

1999). Furthermore, many courts have concluded that judicial estoppel is 

inappropriate when such omissions are the result of mere mistake or inadvertent 

conduct. Eubanks v. CBSK Fin. Group, Inc., 385 F.3d 894, 898 (6 th Cir. 2004) 

(citing United States v. Hussein, 178 F.3d 125, 130 (2 nd Cir.1999); King v. Herbert 

J. Thomas Mem'l Hosp., 159 F.3d 192, 196-97 (4 th Cir.1998); Helfand v. Gerson, 

105 F.3d 530, 536 (9 th Cir.1997)); Ryan Operations v. Santiam-Midwest, 81 F.3d 

355, 362 (3 rd Cir.1996). 

The doctrine is generally invoked where “intentional self-contradiction is 

being used as a means of obtaining unfair advantage in a forum provided for 

suitors seeking justice.” In re Coastal Plains, 179 F.3d at 206 (quoting Scarano v. 

Central R. Co., 203 F.2d 510, 513 (3 rd Cir.1953)); see also Ryan Operations, 81 

F.3d at 362-63 (citing Chaveriat v. Williams Pipe Line Co., 11 F.3d 1420, 1428 

(7 th Cir.1993) and Total Petroleum, Inc. v. Davis, 822 F.2d 734 (8 th Cir. 1987)). 

Nevertheless, “it may be appropriate to resist application of judicial estoppel when 

a party’s prior position was based on inadvertence or mistake.” New Hampshire, 

532 U.S. at 753 (quotations omitted). 

3. Disadvantage to opposing party. 

An additional consideration concerns whether the party seeking to assert an 

inconsistent position would derive an unfair advantage or impose an unfair 

detriment on the opposing party if not estopped. New Hampshire, 532 U.S. at 751; 

see also Ryan Operations, 81 F.3d at 362. 


4. Elements. 

Stated concisely as elements, it has been stated that judicial estoppel may 

only apply where: (1) the position of the party to be estopped is clearly 

inconsistent with its previous one; (2) that party must have convinced the court to 

accept that previous position, and (3) the party to be estopped has acted 

intentionally, not inadvertently. In re Coastal Plains, 179 F.3d at 206; Brown v. 

Swett & Crawford of Texas, Inc., 178 S.W.3d 373, 381 (Tex. App.—Houston [1 st 

Dist.] 2005, no pet.) (citing In re Coastal Plains, Inc., 179 F.3d at 206-07). 

5. Judicial estoppel in the context of bankruptcy proceedings. 

In the bankruptcy context, courts will not permit a debtor to obtain relief 

from the bankruptcy court by representing that no claims exist and then 

subsequently assert those claims for his own benefit in a separate proceeding. In 

re Coastal Plains, Inc., 179 F.3d at 208. Rejecting the argument that intent may 

be inferred for purposes of judicial estoppel solely from nondisclosure in the 

bankruptcy context, the Third Circuit has noted that the law requires a showing of 

intent in other contexts involving judicial estoppel such that there is “no reason 

why the process of discerning the intent should be unworkable in the bankruptcy 

context when it is workable elsewhere.” 

Ryan Operations G.P. v. Santiam- 

Midwest Lumber Co., 81 F.3d 355, 364-65 (3 rd Cir. 1996). Furthermore, policy 

considerations militate against adopting a rule that the requisite intent for judicial 

estoppel can be inferred from the mere fact of nondisclosure in a bankruptcy 

proceeding. Ryan Operations., 81 F.3d at 364 (“Such a rule would unduly expand 


the reach of judicial estoppel in post-bankruptcy proceedings and would inevitably 

result in the preclusion of viable claims on the basis of inadvertent or good-faith 

inconsistencies.”). 

The debtor’s failure to satisfy its statutory disclosure duty is “inadvertent” 

only when, in general, the debtor either lacks knowledge of the undisclosed claims 

or has no motive for their concealment. 1 In re Coastal Plains, 179 F.3d at 210; 

Brown, 178 S.W.3d at 381. 

The test relating to motive contains subjective 

components. Wakefield v. SWS Securities, Inc., 293 B.R. 372, 380-81 (N.D. Tex. 

2003) (discussing In re Coastal Plains, Inc., 179 F.3d 197 (5 th Cir. 1999)); see 

also Superior Crewboats, 374 F.3d at 335-36 (discussing numerous subjective 

facts in determining whether the debtor’s non-disclosure was inadvertent); In re 

Electro-Motor, Inc., 390 B.R. 859 (E.D. Tex 2008) (same; relevant discussion 

under headnotes 13 and 14) 2 ; Reyes v. Texas EZPawn, L.P., No V-03-128, 2007 

WL 2818053, *2 (S.D. Tex. Sept. 26, 2007) (same); In re Griner, 240 B.R. 432, 

438-39 (Bankr. S.D. Ala. 1999) (same); Thompson v. Continental Airlines, 18 

S.W.3d 701, 704-05 (Tex. App.—San Antonio 2000, no pet.) (recognizing the 

existence of a fact issue concerning the debtor’s motive or intent in failing to 

disclose claims in bankruptcy filings). While it could be said that every debtor 

could be motivated by a desire to hide assets, because the Superior Crewboats 

1 In the bankruptcy context, the Third Circuit has stated that the doctrine of judicial estoppel entails a twopart 

inquiry: (1) is the party’s present position inconsistent with a position it asserted in its bankruptcy 

proceedings; and (2) if so, did the party assert either or both of the inconsistent positions in bad faith with 

intent to play fast and loose with the court. Ryan Operations, 81 F.3d at 361. 

2 For some reason, the Westlaw version of this case does not contain page numbers, hence the reference to 

the relevant headnotes under which the discussion takes place. 


court and other courts have conducted a detailed analysis of the subjective facts 

concerning the element of “inadvertence,” see, e.g., Superior Crewboats, 374 

F.3d. at 335-36, it is apparent that the real question is whether a debtor is actually 

motivated by a desire to hide assets. 

In the summary judgment briefing in the present case, the Respondents 

argued that that a debtor in bankruptcy, as a matter of law, has a motivation to 

conceal assets. (R. at 156-57). However, such a suggestion negates the 

“motivation” and thus “inadvertence” elements of the judicial estoppel analysis in 

the bankruptcy setting making those elements superfluous. 

Because the 

“motivation” sub element used to determine inadvertence is unique to bankruptcy 

cases, In re Coastal Plains, Inc., 179 F.3d 197, 210 (5 th Cir. 1999), it would be an 

odd rule indeed if such elements were satisfied as a matter of law simply because 

the party was in bankruptcy. 

Fact issues regarding a debtor’s good or bad faith in not disclosing claims 

in original bankruptcy schedules preclude summary judgment based on judicial 

estoppel. 

In re Coastal Plains, 179 F.3d at 210 n.9 (citing Dawson v. J.G. 

Wentworth & Co., Inc., 946 F. Supp. 394 (E.D. Pa.1996)); Thompson, 18 S.W.3d 

at 704-05. Moreover, the Eighth Circuit has concluded that, when a bankruptcy 

court does not discharge a debtor’s bankruptcy based on inaccurate information 

provided in the bankruptcy schedules, there is no judicial acceptance of the 

inaccurate position. Stallings v. Hussmann Corp., 447 F.3d 1041, 1049 (8 th Cir. 

2006). Judicial estoppel is particularly inapplicable when a plaintiff amends a 


ankruptcy schedule to place the defendant on the schedule as a creditor and 

potential asset and where the plaintiff put the trustee and bankruptcy court on 

notice of such claims. Eubanks v. CBSK Fin. Group, Inc., 385 F.3d 894, 898-99 

(6 th Cir. 2004). Finally, public policy dictates that, to promote the satisfaction of 

debts held by bankruptcy creditors, the doctrine of judicial estoppel should not be 

applied in a way that would inequitably deprive the creditors of potentially 

valuable assets. See, e.g., Riazuddin v. Schindler Elevator Corp., Nos. 06-011, 04- 

22822-NLJ, 2007 WL 441772, *6 (10 th Cir. 2007); In re Griner, 240 B.R. 432, 

439 (Bankr. S.D. Ala. 1999); Jogani v. Jogani, 141 Cal. App. 4 th 158, 182-84 (Cal. 

Ct. App. 2006); Cloud v. Northrop Grumman Corp., 67 Cal. App. 4 th 995, 1013 

n.11, 1014, 1020 (Cal. Ct. App. 1998). 

B. There is a subjective component to the judicial estoppel analysis. 

The preliminary issue to be determined by this Court is whether there is a 

subjective component in determining if a party intentionally or inadvertently took 

an inconsistent position in a prior proceeding. The companion issue concerns 

whether a party’s intent is merely determined under an objective analysis with no 

consideration for what the party actually intended. The trial court and court of 

appeals effectively determined that there is no subjective component to 

determining a party’s intent. 

Therefore, irrespective of any evidence 

demonstrating that the omission of a pending lawsuit in a Schedule B filed in a 

bankruptcy proceeding was merely an inadvertent accident or mistake, under the 

determinations by the trial and appellate court, the omission itself proves the 


element of intent as a matter of law. However, given the common definitions of 

intent, motive, and inadvertence, which include varying references to a state of 

mind, it is contrary to such definitions for an analysis of these terms to fail to take 

into account the subjective intent of the actor. 3 

Furthermore, as is discussed in 

more detail below, after a careful review of the subjective facts weighing on the 

motive and intent of the debtors, numerous courts have held that judicial estoppel 

was inapplicable. See, e.g., Eubanks v. CBSK Fin. Group, Inc., 385 F.3d 894, 898 

(6 th Cir. 2004); In re Electro-Motor, Inc., 390 B.R. 859 (E.D. Tex. 2008); Reyes v. 

Texas EZPawn, L.P., No V-03-128, 2007 WL 2818053, *2 (S.D. Tex. Sept. 26, 

2007); In re Griner, 240 B.R. 432, 438-39 (Bankr. S.D. Ala. 1999); Thompson v. 

Continental Airlines, 18 S.W.3d 701, 704-05 (Tex. App.—San Antonio 2000, no 

pet.). 

C. Judicial Estoppel is not applicable to the present case because the 

Fergusons’ omission on their Schedule B was an inadvertent mistake 

and because the bankruptcy court did not judicially accept the 

inadvertent omission. 

As noted above, the Fergusons informed their bankruptcy counsel and the 

bankruptcy trustee regarding this lawsuit. (R. at 375-76, 394, 395). The 

3 “Intent” – 1. Something that is intended; an aim or purpose; 2. Law The state of one’s mind at the time 

one carries out an action. The American Heritage® Dictionary of the English Language, Fourth Edition. 

Retrieved July 24, 2008, from Dictionary.com website: http://dictionary.reference.com/browse/intent . 

“Intend” – To have in mind; plan. The American Heritage® Dictionary of the English Language, Fourth 

Edition. Retrieved July 24, 2008, from Dictionary.com website: 

http://dictionary.reference.com/browse/intend. 

“Motive” – An emotion, desire, physiological need, or similar impulse that acts as an incitement to action. 

The American Heritage® Dictionary of the English Language, Fourth Edition. Retrieved July 24, 2008, 

from Dictionary.com website: http://dictionary.reference.com/browse/Motive. 

“Inadvertent” – 1. Not duly attentive; 2. Marked by unintentional lack of care. The American Heritage® 

Dictionary of the English Language, Fourth Edition. Retrieved July 24, 2008, from Dictionary.com 

website: http://dictionary.reference.com/browse/inadvertent 


Fergusons also informed the bankruptcy court about this case in the Statement of 

Financial Affairs which was filed with the bankruptcy court. (R. at 368). 

Furthermore, upon discovering the inadvertent omission of this case from the 

Schedule B filed in the bankruptcy court, the Fergusons filed an amended 

Schedule B to reflect this case as an asset of the estate. (R. at 395, 448-49). The 

bankruptcy court never dismissed or discharged the bankruptcy or abandoned the 

Fergusons’ assets based on the inadvertent omission from the Fergusons’ original 

Schedule B. 

Therefore, the bankruptcy court did not judicially accept the 

inadvertent omission. 4 

To the contrary, the Fergusons filed an amended Schedule 

B reflecting the lawsuit and requested a modification of their bankruptcy plan to 

pay 100% of the creditors. (R. at 395, 449). Additionally, the summary judgment 

evidence demonstrates that the Fergusons’ failure to disclose this case on their 

original Schedule B was not intentional or in bad faith but was merely an 

inadvertent clerical error. (R. at 378-81, 394). Furthermore, the evidence 

demonstrates that the Fergusons had no motive to conceal the existence of this 

case, or the evidence at least raises a fact issue on the elements of motive and 

inadvertence. Therefore, judicial estoppel is not appropriate in this case to bar the 

Fergusons’ claims. Moreover, application of judicial estoppel in this case would 

frustrate the primary objective of bankruptcy law and instead penalize both the 

debtor and the creditors while bestowing a windfall to the noncreditor defendant 

whose wrongful acts may have caused or contributed to the debtor’s dire financial 

4 Compare examples of “judicial acceptance” noted under Section A.1 supra. 


situation which led to bankruptcy. The following cases further demonstrate why 

judicial estoppel is inapplicable in this case. 

In Reyes v. Texas EZ Pawn, L.P., No. V-03-128, 2007 WL 2818053 (S.D. 

Tex. 2007), the court considered a motion to dismiss based on facts very similar to 

the ones presented in this case. In Reyes, the plaintiff filed for Chapter 13 

bankruptcy and noted a pending lawsuit on his Schedule B, but inadvertently 

failed to include it on the Statement of Financial Affairs he filed with the 

bankruptcy court. Id. at *1. Upon discovering the mistake, the plaintiff amended 

his Statement of Financial Affairs to reflect the pending lawsuit. Id. 

In 

responding to the defendant’s motion to dismiss based on judicial estoppel, the 

plaintiff demonstrated that the initial failure to note the pending lawsuit on his 

Statement of Financial Affairs was an inadvertent clerical mistake made on behalf 

of his attorney. Id. at *2 n.4. 

The court concluded that because the plaintiff had disclosed the pending 

lawsuit in his schedule of assets and because the debtors knew of the cause of 

action, the plaintiff did not take inconsistent positions in his bankruptcy filings and 

his mistake was inadvertent. Id. at *2. Therefore, the court concluded that the 

doctrine of judicial estoppel did not bar the plaintiff’s claims. Id. 

The fact that the plaintiff in Reyes inadvertently left the pending lawsuit off 

his Statement of Financial Affairs instead of his Schedule B is not a distinction 

that warrants a different result in the present case. This is particularly true in light 

of the fact that, in the present case, Ferguson disclosed his pending lawsuit in his 


Statement of Financial Affairs, to the bankruptcy court, to the bankruptcy trustee, 

and to the creditors and thereafter amended his Schedule B to reflect the his 

pending claims. 

The present case is also analogous to Eubanks v. CBSK Fin. Group, Inc., 

385 F.3d 894, 898 (6 th Cir. 2004). In Eubanks, the record established that the 

plaintiffs amended the bankruptcy schedules once, and attempted to amend them a 

second time, to finally place the defendant on the schedule as a creditor and 

potential asset. Id. at 898-99. The defendant offered no additional evidence that 

the plaintiffs demonstrated fraudulent intentions towards the court. Id. at 899. 

Additionally, the record established that the plaintiffs put the court and the trustee 

on notice through correspondence, motions, and status conference requests. Id. 

Having adopted the Fifth Circuit’s analysis in In re Coastal Plains, Inc., 179 F.3d 

197 (5 th Cir. 1999) regarding when a debtor’s failure to disclose a claim in 

bankruptcy might be inadvertent, the Eubanks court concluded that application of 

judicial estoppel to bar the plaintiff’s claims would be inappropriate in this 

situation. Eubanks, 385 F.3d at 898. 

Similarly, in Thompson v. Continental Airlines, 18 S.W.3d 701, 704-05 

(Tex. App.—San Antonio 2000, no pet.), the San Antonio Court of Appeals 

reversed a summary judgment concluding that the application of judicial estoppel 

was improper. In Thompson, the plaintiff suffered an injury while deplaning from 

a Continental Airlines flight. Id. at 702. For unrelated reasons, on April 26, 1995, 

the plaintiffs filed for Chapter 13 bankruptcy. Id. In their bankruptcy filings, the 


plaintiffs failed to list the potential cause of action they had against Continental. 

Id. The following year, the plaintiffs filed a lawsuit against Continental. Id. 

Continental moved for summary judgment asserting that the plaintiffs’ claims 

were precluded by judicial estoppel. Id. at 703. The trial court granted 

Continental’s motion for summary judgment. Id. 

In response to Continental’ motion for summary judgment, the plaintiffs 

raised a fact issue as to whether the omission of their possible cause of action in 

their bankruptcy petition was intentional or simply a mistake. Id. at 704. The 

court of appeals concluded that, in light of the summary judgment standard 

viewing evidence favorable to the non-movant as true and resolving every 

reasonable inference or doubt in the non-movant’s favor, the plaintiffs met their 

burden by raising a fact issue concerning whether their failure to disclose the 

cause of action was intentional and in bad faith. Id. at 704 (citing Dawson v. J.G. 

Wentworth & Co., Inc., 946 F.Supp. 394, 397 (E.D. Pa. 1996) (finding that 

although the debtor disclosed his claim in his amended bankruptcy schedules, the 

fact issue regarding his good or bad faith in not disclosing his claims in the 

original bankruptcy schedules precluded summary judgment based on judicial 

estoppel); In re Okan's Foods, Inc., 217 B.R. 739, 755 (Bankr. E.D. Penn. 1998) 

(stating that a person’s motivation or intent is generally considered to be a 

question of fact which is not subject to resolution on summary judgment); 

Richardson v. Kraft-Holleb Food Service, Inc., a Div. of Philip Morris, 774 F. 

Supp. 1108, 1111 (N.D. Illinois 1991), aff'd, 998 F.2d 1016 (7th Cir.1993) (stating 


that resolution by summary judgment is inappropriate when questions of motive 

and intent are in dispute)). Therefore, the court reversed the summary judgment 

concluding that the evidence demonstrated that the plaintiffs were not attempting 

to play “fast and loose” with the courts. Id. at 705 

Likewise, in In re Griner, 240 B.R. 432, 438-39 (Bankr. S.D. Ala. 1999), a 

federal bankruptcy court held that judicial estoppel did not bar a plaintiff from 

pursuing a lawsuit that was inadvertently left off the asset schedules filed in a 

Chapter 13 bankruptcy proceeding. In the Griner case, the debtor had listed its 

lawsuit in the statement of financial affairs filed with the bankruptcy court but did 

not list the lawsuit in the bankruptcy schedules. Id. at 434. The plaintiff’s Chapter 

13 bankruptcy plan was confirmed. Id. at 434. After receiving a verdict in their 

favor, the plaintiffs filed amended schedules and sought an amendment to their 

Chapter 13 bankruptcy plan. Id. at 434. The court rejected the defendant’s 

contention that the plaintiff’s claim was barred by judicial estoppel because the 

plaintiffs’ bankruptcy had not yet been discharged and the plaintiffs amended their 

bankruptcy schedules to reflect the lawsuit. Id. at 438. The court concluded that 

the plaintiffs complied with their obligations to submit amended schedules at any 

time before the bankruptcy is closed and that there was no evidence that the 

plaintiffs attempted to conceal their lawsuit as they had initially listed it on their 

statement of financial affairs filed in the bankruptcy court. Id. at 439. In light of 

the plaintiff’s initial listing of the lawsuit in their statement of financial affairs, the 

court concluded that the evidence demonstrated that the plaintiffs mistakenly 


omitted the suit from their bankruptcy schedules and they did not intentionally 

conceal the lawsuit from their creditors. Id. at 439. Finally, the court noted that 

the defendant’s position would actually adversely affect the bankruptcy creditors 

which the court noted would be “overly harsh and inequitable.” Id. at 439. 

D. The primary cases upon which the Respondents relied in the 

proceedings below are distinguishable. 

In the proceedings below, the Respondents did not cite any cases to support 

the application of the doctrine of judicial estoppel when all of the following are 

true: (1) the bankruptcy counsel was informed of the claims, (2) the bankruptcy 

trustee was informed of the claims, (3) the bankruptcy court was informed of the 

claims as reflected in the initial Statement of Financial Affairs filed with the 

bankruptcy court, (4) the claims were reflected in an amended Schedule B filed 

with the bankruptcy court during the pendency of the bankruptcy, (5) no discharge 

in bankruptcy or other action taken by the bankruptcy court reflected a judicial 

acceptance of the debtor’s prior inadvertent omission, and (6) there was never an 

effort by the debtor to reopen a closed bankruptcy case in an effort to avoid the 

effects of the doctrine of judicial estoppel. Instead, Respondents only relied upon 

cases in which one or two of the above facts were even relevant to the court’s 

analysis. 

In fact, as discussed below, the primary cases upon which the 

Respondents relied in the proceedings below actually support the Fergusons’ 

position demonstrating why judicial estoppel is not applicable in the present case. 


1. Brown v. Swett & Crawford of Texas, Inc. 

In the Brown case, the application of judicial estoppel largely turned on 

whether the plaintiff’s prior inconsistent position had been “accepted” by the 

bankruptcy court. The court of appeals ultimately concluded that dismissal of the 

bankruptcy based on the trustee’s conclusion that there were no assets that existed 

for the benefit of the creditors constituted “acceptance” by the court of the party’s 

inconsistent position. Brown v. Swett & Crawford of Texas, Inc., 178 S.W.3d 373, 

381 (Tex. App.—Houston [1 st Dist.] 2005, no pet.). 

However, in the present case, not only has there been no dismissal, but the 

bankruptcy is still pending and amended schedules have been filed reflecting this 

case as an asset. (R. at 395, 448-49). 

2. Cleaver v. Cleaver. 

In the Cleaver case, the plaintiff successfully maintained his position before 

a bankruptcy court that his lawsuit offered no potential assets for the bankrupt 

estate. Cleaver v. Cleaver, 140 S.W.3d 771, 775 (Tex. App.—Tyler 2004, no pet.) 

Based on this representation, the plaintiff was discharged in bankruptcy. Id. at 

773. The court noted that a debtor has a continuing duty to disclose to the 

bankruptcy court causes of action belonging to the debtor. Id. at 774. 

In the present case, the Fergusons’ bankruptcy has not been discharged and 

is still pending. Moreover, the Fergusons complied with their continuing duty to 

make disclosures to the bankruptcy court by filing their amended schedules to 


match the Statement of Financial Affairs that was already on file with the 

bankruptcy court. (R. at 395, 448-49). 

3. Dallas Sales Co. v. Carlisle Silver Co. 

Likewise in Dallas Sales Co. v. Carlisle Silver Co., 134 S.W.3d 928 (Tex. 

App.—Waco 2004, pet. denied), it was undisputed that the bankruptcy court had 

accepted the plaintiff’s non-disclosures regarding causes of action belonging to the 

debtor in that the trustee ultimately abandoned the debtor’s assets based on the 

trustee’s conclusion that the assets were of little or no value. Id. at 932. Relying 

upon an affidavit of its bankruptcy counsel who stated that the claims were 

“inadvertently omitted” because “the principal concern [at the time of the 

bankruptcy filing] was to obtain post-petition financing,” the debtor argued that its 

failure to disclose such claims in its bankruptcy schedules was inadvertent. Id. 

However, the court concluded that, instead of demonstrating an inadvertency on 

the part of the debtor or its bankruptcy counsel, the explanation was instead a 

“tactical explanation.” Id. The court further noted that the debtor could have 

amended its bankruptcy schedules to include the claims, however, the debtor 

“never amended its schedules.” Id. 

The Dallas Sales case stands in stark contrast to the present case further 

demonstrating why judicial estoppel is not applicable. In the present case, there 

has been no abandonment of the Fergusons’ assets by the trustee. In fact, the 

Fergusons have requested an amended plan to pay 100% of the creditors based on 

the inclusion of their personal injury case in the assets of the bankruptcy estate. 


(R. at 395, 449). Additionally, the Fergusons’ bankruptcy counsel’s explanation 

for the inadvertent omission of this case from the initial Schedule B was not a 

“tactical explanation” but instead reflects that the omission was merely due to a 

clerical error. (R. at 378-81, 394). Finally, unlike the Dallas Sales plaintiff, the 

Fergusons have filed amended schedules to reflect their personal injury case as 

well as informed the trustee and the bankruptcy court of the existence of such 

claims. (R. at 368, 375-76, 395, 448-49). 

4. Estel v. Bigelow Mgmt., Inc. 

In Estel, the debtor allegedly mistakenly left out a potential asset in his 

representations to the bankruptcy court. Estel v. Bigelow Mgmt., Inc., 323 B.R. 

918, 921 (E.D. Tex. 2005). Based on these representations, the bankruptcy court 

issued a no asset discharge adopting the debtor’s position that there was no claim 

or suit. Id. at 922. The court concluded that by issuing a no asset discharge, the 

bankruptcy court adopted the debtor’s position that there were no assets. 

Moreover, in Estel, in an attempt to avoid the consequences of having failed to 

disclose certain claims to the bankruptcy court, the debtor moved to reopen the 

bankruptcy proceedings in order to amend its bankruptcy schedule. Id. at 921. 

Citing In re Superior Crewboats, Inc., 374 F.3d 330 (5 th Cir. 2004), the court 

noted that a debtor should not be able to reopen the bankruptcy proceeding to 

amend his petition, noting that “[t]his is the very abuse that judicial estoppel was 

designed to prevent.” Estel, 323 B.R. at 923. The court stated that “‘[a]llowing 

[the debtor] to back-up, reopen the bankruptcy case, and amend his bankruptcy 


filings, only after his omission has been challenged by an adversary, suggests that 

a debtor should consider disclosing personal assets only if he is caught concealing 

them.’” Id. (quoting Burnes v. Pemco Aeroplex, Inc., 291 F.3d 1282, 1288 (11 th 

Cir. 2002)). Additionally, the court noted that the debtor had completely failed to 

demonstrate that he had ever disclosed the actual filing of the lawsuit to anyone, 

including his own bankruptcy attorney. Estel, 323 B.R. at 923. 

Once again, this case stands in stark contrast to the facts in the present case. 

In the present case, the bankruptcy court has never discharged the Fergusons’ 

bankruptcy. Moreover, the Fergusons have never attempted to “reopen” their 

bankruptcy. 

Instead, they have filed amended schedules in their pending 

bankruptcy consistent with their continuing obligation to provide the bankruptcy 

court updated and accurate information. (R. at 395, 448-49). The actions taken by 

the Fergusons to provide the bankruptcy court updated and accurate information 

during the pendency of their bankruptcy is not the kind of “abuse” that judicial 

estoppel is designed to prevent. Instead, the Fergusons’ actions are encouraged by 

the continuing duty to provide the bankruptcy court updated and accurate 

information. Finally, unlike the plaintiff in Estel who did not disclose his lawsuit 

to anyone, including his own bankruptcy counsel, the Fergusons informed their 

bankruptcy counsel and the bankruptcy trustee and notified the bankruptcy court 

of the existence of the lawsuit in their initial Statement of Financial Affairs and 

their amended Schedule B. (R. at 368, 375-76, 394, 395). 


5. In re Coastal Plains, Inc. 

In In re Coastal Plains, Inc., there was virtually no dispute over whether 

the second prong for judicial estoppel (that is to say “acceptance” of Coastal’s first 

position by the bankruptcy court) was satisfied because the bankruptcy stay was 

lifted based in part on a stipulation representing that Coastal’s intangible assets 

were worth less than $20,000 and that its assets were inadequate to satisfy its debt 

to Westinghouse. In re Coastal Plains, Inc., 179 F.3d 197, 210 (5 th Cir. 1999). 

Additionally, there was no evidence that the debtor listed his other lawsuit in his 

statement of financial affairs filed with the bankruptcy court. 

In the present case, the bankruptcy court has not accepted the initial 

inadvertent omission. Instead the court has accepted the information disclosed to 

the bankruptcy trustee, the Fergusons’ Statement of Financial Affairs, and their 

amended Schedule B concerning the existence of this case. 

6. In re Superior Crewboats, Inc. 

In In re Superior Crewboats, Inc., 374 F.3d 330 (5 th Cir. 2004), the debtors 

filed their lawsuit after the bankruptcy case was commenced. Id. at 333. 

Nevertheless, the debtors failed to formally amend their bankruptcy filings before 

discharge of the bankruptcy to reflect their lawsuit as an asset of the bankrupt 

estate. Id. at 333. As further evidence of the debtor’s deliberate intent to 

manipulate the process, although the debtors disclosed the lawsuit during their 

creditors meeting, the debtors misrepresented the viability of the lawsuit by 

representing to the creditors that the case was time barred. Id. Based on these 


misrepresentations, the bankruptcy court granted the debtor a “no asset” discharge. 

Id. 

The Fifth Circuit concluded that the bankruptcy court had adopted the 

debtor’s representation that the personal injury claims were time barred. Id. at 

335. While the court noted that “adoption” of a debtor’s misrepresentation does 

not require a formal judgment, the bankruptcy court did in fact adopt the debtor’s 

misrepresentation inasmuch as the trustee formally abandoned the claim and the 

bankruptcy court issued a “no asset” discharge, thereby, adopting the debtor’s 

position. Id. The court further drew an analogy from Barger v. City of 

Cartersville, 348 F.3d 1289 (11 th 

Cir. 2003) in which a debtor incorrectly 

informed the bankruptcy trustee that her discrimination lawsuit had no monetary 

value. In re Superior Crewboats, 374 F.3d at 335 n.4. Stating that the Barger 

case is no different than the Superior Crewboats case, it is apparent that an 

incomplete or misleading representation to the bankruptcy trustee does not save 

the case from consequences of judicial estoppel. Id. at 335 n.4. The Superior 

Crewboats case also involved a situation in which the bankruptcy had already 

been closed and the debtors sought to reopen the case after being confronted with 

the possibility of being judicially estopped from asserting their claims. Id. at 336. 

Moreover, in Superior Crewboats, there was ample evidence that the debtors were 

actually motivated by a desire to conceal their claims. It is evident that the 

Superior Crewboats court did not hold that, as a matter of law, all debtors in 


ankruptcy in partial disclosure situations should be judicially estopped simply by 

virtue of being in bankruptcy. 

Superior Crewboats does not speak at all to a situation, like in the present 

case, where the disclosures to the bankruptcy trustee are accurate. Moreover, in 

the present case, the trustee has not abandoned the case nor has the bankruptcy 

court entered any discharge of the Fergusons’ bankruptcy. Additionally, there 

were egregious misrepresentations in the In re Superior Crewboats case 

demonstrating an actual motivation to manipulate the system by concealing the 

viability of the pending claims. However, in the present case, there is ample 

evidence demonstrating that the Fergusons were not motivated to conceal the 

existence of their personal injury claims, or at least there is sufficient evidence to 

raise a fact issue on the elements of motive and inadvertence. 

7. Jethroe v. Omnova Solutions, Inc. 

In Jethroe v. Omnova Solutions, Inc., 412 F.3d 598 (5 th Cir. 2005), the 

plaintiff not only failed to disclose an EEOC charge filed while the bankruptcy 

was pending, but the plaintiff also failed to comply with her duty to disclose her 

potential claims throughout the pendency of that petition. Id. at 600. The court 

recognized that the “obligation to disclose pending and unliquidated claims in 

bankruptcy proceedings is an ongoing one.” Id. Moreover, the debtor’s 

bankruptcy was closed and the bankruptcy court confirmed the debtor’s plan at 


least in part based on its assessment of her assets and liabilities. 5 Id. at 599-600. 

In determining whether the debtor’s failure to disclose was inadvertent, the court 

noted that the reasoning in Burnes v. Pemco Aeroplex, Inc. 291 F.3d 1282 (11 th 

Cir. 2002) was sound when the Burnes court concluded that intent could be 

inferred where the debtor filed and pursued employment discrimination claims 

during the pendency of his chapter 13 bankruptcy, “but never amended his 

financial statement to include the lawsuit.” Jethroe, 412 F.3d at 601. 

Based on the Jethroe court’s analysis, it follows that when a debtor actually 

does amend their bankruptcy financial statements during the pendency of a 

bankruptcy to include another lawsuit, like the Fergusons did in the present case, 

(R. at 395, 448-49), such acts do not support an inference of intent to conceal 

pending claims from the bankruptcy court. Moreover, the Fergusons complied 

with their ongoing duty to provide the bankruptcy court with updated and accurate 

information, (R. at 395, 448-49), and requested a modification to their bankruptcy 

plan to pay 100% of the creditors based on the existence of the personal injury 

case. (R. at 395, 449). Therefore, the Jethroe case does not support the 

application of judicial estoppel in this case. 

5 In Jethroe, the court stated that the second element of judicial estoppel concerning the judicial acceptance 

of the prior inconsistent position was satisfied because the bankruptcy court confirmed the debtor’s 

bankruptcy plan at least in part based on its assessment of the debtor’s assets and liabilities. Jethroe v. 

Omnova Solutions, Inc., 412 F.3d 598, 600 (5 th Cir. 2005) (citing In re Coastal Plains, Inc., 179 F.3d 197, 

210 (5 th Cir. 1999) (also known as the Browning case)). Citing In re Coastal Plains, the Jethroe court 

incorrectly concluded that the Browning court treated the bankruptcy parties’ stipulation as sufficient to 

demonstrate that the bankruptcy court had accepted the party’s statement of assets to the court. Jethroe, 

412 F.3d at 600 (citing In re Coastal Plains, 179 F.3d at 210). Instead, the In re Coastal Plains court 

actually concluded that it was a bankruptcy stay that was lifted based on the stipulation of the parties (not 

the stipulation itself) that constituted the “judicial acceptance” of the prior inconsistent representation. In 

re Coastal Plains, 179 F.3d at 210. 


8. Lexxus Int’l, Inc. v. Loghry. 

In Lexxus Int’l, Inc. v. Loghry, No. Civ.A. 3:04-CV-1039L, 2005 WL 

3682562 (N.D. Tex. 2005), there was no dispute that the bankruptcy court had 

accepted the debtor’s representation of no potential litigation claims. The debtor 

did not disclose such claims in his bankruptcy schedule, and the court relying on 

the debtor’s bankruptcy petition and schedules granted the debtor a discharge. 

Lexxus, 2005 WL 3682562 at *4. The Lexxus case also involved a situation in 

which a debtor attempted to reopen a bankruptcy to include the claims at issue. 

Lexxus, 2005 WL 3682562 at *4 n.4. 

The present case is distinguishable from the Lexxus case in that the 

Fergusons’ bankruptcy has not been discharged, this lawsuit was disclosed in the 

initial Statement of Financial Affairs and amended Schedule B, (R. at 368, 395, 

448-49), and this case does not involve an effort by the Fergusons to reopen their 

bankruptcy. 

Consequently, the Lexxus case provides no support for the 

application of judicial estoppel in this case. 

E. Conclusion. 

Considered as a whole, the facts in this case do not support the application 

of judicial estoppel. 

The Fergusons provided their bankruptcy attorney, the 

bankruptcy trustee, and the bankruptcy court with sufficient notice of the claims 

made in this lawsuit. In light of all the facts in this case, it is apparent, objectively 

and subjectively, that the Fergusons were not acting in bad faith in an attempt to 

play fast and loose with the bankruptcy court. Furthermore, the bankruptcy court 


has not judicially accepted the single inadvertent omission from the Fergusons’ 

initial Schedule B, but has instead accepted and approved an amendment to the 

Fergusons’ Chapter 13 bankruptcy plan to include this lawsuit as a bankruptcy 

asset. As such, the circumstances in this case do not impugn the integrity of the 

judicial process. Finally, applying judicial estoppel in this case would ultimately 

harm the Fergusons’ creditors by removing from the bankruptcy estate potentially 

the largest asset. For these reasons, judicial estoppel is not applicable in this case. 

PRAYER 

For the foregoing reasons, the Fergusons ask the Court to grant their 

Petition for Review and reverse the judgments of the court of appeals and the trial 

court and remand this case for a trial on the merits. 

Respectfully submitted, 

/s/ Kirk L. Pittard 



F. Leighton Durham 


DURHAM & PITTARD, LLP 

P.O. Box 224626 


214-946-8000 

214-946-8433 fax 

APPELLATE COUNSEL FOR 

PETITIONERS JASON 

FERGUSON AND BOBBIE 

FERGUSON 

AND 






Suite 312 


(972) 774-1276 

(972) 774-1277 fax 

TRIAL COUNSEL FOR 

PETITIONERS JASON 

FERGUSON AND BOBBIE 

FERGUSON 

CERTIFICATE OF SERVICE 

I hereby certify that a true and correct copy of Petitioners’ <strong>Brief</strong> on the 

Merits has been forwarded to counsel listed below via certified mail, return receipt 

requested on this 10th day of March, 2009. 

Greg K. Winslett 

Richard L. Smith, Jr. 

Quilling, Selander, Cummiskey & Lownds, P.C. 

2001 Bryan Street, Suite 1800 


John Philip Griffis 

Barlow, Jones & Brust, LLP 

17225 El Camino Real, Suite 400 

Houston, TX 77058 

/s/ Kirk L. Pittard 



NO. 08-0589 

IN THE 




v. 

BUILDING MATERIALS CORPORATION OF AMERICA, CPC 

LOGISTICS, INC., AND ROBERT JAMES MADDOX, 





APPENDIX 

1. Summary Judgment...................................................................................... Tab 1 

2. Opinion of the El Paso Court of Appeals..................................................... Tab 2 

3. Judgment of the El Paso Court of Appeals ................................................. Tab 3

Petitioners' Brief on the Merits - Supreme Court of Texas

Create successful ePaper yourself

Delete template?

Save as template?