Petitioners' Brief on the Merits - Supreme Court of Texas

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.
PETITIONERS’ BRIEF ON THE MERITS 18