Opinion
No. 2971312.
Decided November 19, 1999.
Appeal from Madison Circuit Court (CV-95-1961).
Stephen D. Heninger of Heninger, Burge Vargo, L.L.P., Birmingham, for appellants.
Stanley Rodgers and Jeffery T. Kelly of Lanier Ford Shaver Payne, P.C., Huntsville, for appellees.
On Application for Rehearing
The opinion of May 21, 1999, is withdrawn and the following is substituted therefor.
In November 1995, Larry N. Saunders sued North Alabama Neurological, P.A., and Robert L. Hash II, M.D. (collectively "Dr. Hash"), for damages based on an allegation that Dr. Hash had committed medical malpractice in treating him. Larry Saunders's wife Sandra Saunders also sued, alleging loss of consortium. Dr. Hash filed a motion for a summary judgment, which the trial court granted. The Saunderses appealed to the supreme court, which transferred the case to this court pursuant to Ala. Code 1975, § 12-2-7(6).
A motion for summary judgment is to be granted when no genuine issue of material fact exists and the moving party is entitled to a judgment as a matter of law. Rule 56(c)(3), Ala.R.Civ.P. See West v. Founders Life Assurance Co. of Florida, 547 So.2d 870 (Ala. 1989), and Bass v. SouthTrust Bank of Baldwin County, 538 So.2d 794 (Ala. 1989), for a discussion of the application of the substantial-evidence rule in the summary-judgment context.
Dr. Hash performed brain surgery on Mr. Saunders in June 1994. According to Mrs. Saunders, Mr. Saunders became paralyzed, blind, and totally disabled following the surgery. Mrs. Saunders has a general power of attorney for Mr. Saunders. The following facts are undisputed:
Mrs. Saunders consulted an attorney in October 1994 regarding her concerns about the effects of the surgery, and in November 1994 she consulted the attorney who filed this medical-malpractice action; it was filed in November 1995. In November 1994, Mrs. Saunders consulted an attorney to discuss bankruptcy, and in January 1995 the Saunderses filed a Chapter 7 bankruptcy petition. In the petition, the Saunderses did not disclose their claim against Dr. Hash. In April 1995, the bankruptcy court ordered a discharge of the Saunderses' debts.
Dr. Hash argued in the summary judgment motion that the Saunderses were judicially estopped from pursuing this malpractice claim because they did not disclose it on their bankruptcy petition. We agree.
"The doctrine of judicial estoppel applies, where a debtor in bankruptcy proceedings fails to disclose any claim that may be presented in a nonbankruptcy contest, to estop the debtor from presenting the claim." Luna v. Dominion Bank of Middle Tennessee, Inc., 631 So.2d 917, 919 (Ala. 1993) (citations omitted). See also Oneida Motor Freight, Inc. v. United Jersey Bank, 848 F.2d 414 (3d Cir. 1988), for a discussion of "the debtor's express obligation of candid disclosure." "The doctrine applies to preclude a party from assuming a position in a legal proceeding inconsistent with a position previously asserted."Luna, 631 So.2d at 918. See also Bertrand v. Handley, 646 So.2d 16 (Ala. 1994).
In this case, it is undisputed that Mrs. Saunders met with two attorneys to discuss whether Dr. Hash's surgery might have caused the disabilities Mr. Saunders subsequently experienced. When the Saunderses filed their bankruptcy petition, Mrs. Saunders knew that she and her husband had possible claims against Dr. Hash, and their failure to disclose those possible claims on their bankruptcy petition judicially estops them from suing Dr. Hash. As stated in Luna, the determinative factor for the application of the doctrine of judicial estoppel in a case involving a petition in bankruptcy is whether the debtor knew or should have known that she had a claim. In this case, we are presented with the most compelling undisputed evidence: the debtor, Mrs. Saunders, knew that she had a claim against Dr. Hash — she had consulted two attorneys before filing her bankruptcy petition. We cannot conceive of when the doctrine of judicial estoppel would not bar a lawsuit not listed on a bankruptcy petition when the debtor has actually consulted an attorney regarding the merits of a potential lawsuit.
We conclude that the trial court properly entered the summary judgment, because the Saunderses are judicially estopped from pursuing the claims presented in this action.
OPINION OF MAY 21, 1999, IS WITHDRAWN; OPINION SUBSTITUTED; APPLICATION OVERRULED; RULE 39(k) MOTION DENIED; AFFIRMED.
Thompson, J., concurs.
Robertson, P.J., concurs specially.
Yates and Monroe, JJ., dissent.
I agree that the summary judgment is due to be affirmed. I write specially to emphasize that the doctrine of judicial estoppel arising from failure to disclose potential causes of action in bankruptcy proceedings is limited.
"It is essential, in order to invoke the operation of the legal doctrine of estoppel, that the inconsistent position first asserted must have been successfully maintained." Edwards v. McCord, 461 So.2d 1319, 1320 (Ala. 1984) (emphasis in original). Consistent with that fundamental principle, both Luna v. Dominion Bank of Middle Tennessee, Inc., 631 So.2d 917 (Ala. 1993), and Bertrand v. Handley, 646 So.2d 16 (Ala. 1994), applied the doctrine of judicial estoppel to claims that should have been listed as assets in bankruptcy proceedings so as to bar their assertion after the debtor/plaintiffs had been discharged, i.e., after the bankruptcy court had granted relief to the debtor/plaintiffs based, in part, upon their asset disclosures. In contrast, the Alabama Supreme Court has held that the doctrine of judicial estoppel does not bar the assertion of claims that are later listed as assets in an amended disclosure statement filed in the bankruptcy court, i.e., before the bankruptcy court has discharged the debtor/plaintiff. Selma Foundry Supply Co. v. Peoples Bank Trust Co., 598 So.2d 844 (Ala. 1992).
Because I do not believe that the trial court's entry of a summary judgment was proper in this case, I must respectfully dissent.
The Saunderses filed their bankruptcy petition in January 1995, and the bankruptcy court entered an order discharging them from their debts in April 1995. At the time they filed the petition, the Saunderses were investigating the possibility that perhaps Mr. Saunders had become disabled because of his doctor's negligence, however, they did not yet know whether they had a valid claim against the doctor. They did not file a suit against Dr. Hash until November 1995, more than six months after the bankruptcy court entered its order.
In Underwood v. First Franklin Financial Corp., 710 So.2d 424 (Ala.Civ.App. 1997), this court held that whether the bankruptcy petitioner was judicially estopped from suing certain defendants because she had failed to list her claims against them on a bankruptcy petition was an issue of fact precluding a summary judgment. The question at issue here is not whether judicial estoppel applies in this case. We agree that if the Saunderses knew they had a claim at the time their bankruptcy petition was filed, then the doctrine would apply. The question is whether the Saunderses knew or should have known that they had a valid cause of action against Dr. Hash at the time they filed their bankruptcy petition. As this court held in Underwood, that is a genuine issue of a material fact that must be determined by the finder of fact.
This situation is analogous to determining whether a fraud claim is barred by the statute of limitations. There is no dispute that if a party knew he had a claim but failed to file that claim in a timely manner, then his claim is barred by the statute of limitations. Whether the statute of limitations is applicable in any given case is a question of law. However, the question of when a party knew or should have known of the fraud which would toll the statute of limitations is for the jury.McGowan v. Chrysler Corp., 631 So.2d 842 (Ala. 1993).
Consulting an attorney to find out if one has a valid medical malpractice claim is just the first step in a lengthy process. Until the client's medical records can be obtained, and an expert can review those records to determine if there is a question of whether the standard of care was breached in the particular instance, an attorney cannot tell the client with any confidence whether she has a valid cause of action. In this case, the Saunderses presented evidence tending to show that they filed their bankruptcy petition before their attorneys could properly evaluate the merits of their case to determine whether they in fact had a valid claim.
The question of when the Saunderses knew they had a claim against Dr. Hash is a genuine issue of a material fact. Therefore, summary judgment is not proper in this case, and I would reverse the judgment of the trial court. Therefore I respectfully dissent.