JUDGMENT OF THE DESOTO COUNTY CIRCUIT COURT IS REVERSED AND
REMANDED.
KING, P.J., ISHEE, GRIFFIS AND SULLIVAN, JJ., CONCUR. COLEMAN,
P.J., DISSENTS WITH SEPARATE WRITTEN OPINION JOINED BY BRANNING,
J.
COLEMAN, PRESIDING JUSTICE, DISSENTING:
¶47. While bankruptcy law is, indeed, controlled by federal law, judicial estoppel is not. The majority loses sight of the dividing line in today's case, and, as a result, incorrectly holds that the application of bankruptcy law to the doctrine of judicial estoppel by the United States Court of Appeals for the Fifth Circuit is binding authority. In so doing, the majority changes Mississippi's law on judicial estoppel in a way that weakens it, encourages attempted concealment of claims, and fails to fully protect the integrity of Mississippi's courts. The majority establishes a no-harm-no-foul standard for the application of judicial estoppel in Mississippi that has already been twice rejected by us. Accordingly, and with respect, I dissent.
I. The application of judicial estoppel is a matter of state law.
¶48. The applicability (or non-applicability) of judicial estoppel is a matter of Mississippi
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law. Clark v. Neese, 131 So. 3d 556, 560 (¶ 17) (Miss. 2013). The purpose of judicial estoppel is to require "orderliness and regularity in pleadings." City of Horn Lake v. City of Southaven (In re Mun. Boundaries of City of Southaven), 864 So. 3d 912, 919 (¶ 17) (Miss. 2003) (internal quotation mark omitted) (quoting Mauck v. Columbus Hotel Co., 741 So. 2d 259, 264-265 (Miss. 1999)). "Judicial estoppel operates to protect the integrity of the judicial system." Adams v. Graceland Care Ctr. of Oxford, LLC, 208 So. 3d 575, 580 (¶
14) (Miss. 2017) (citing Gibson v. Williams, Williams & Montgomery, P.A., 186 So. 3d 836, 847 (¶ 24) (Miss. 2016)). Without question, Mississippi courts apply the doctrine of judicial estoppel to protect the integrity of Mississippi's judicial system. Accordingly, it is a matter of state law that we should be loath to concede to our federal colleagues. ¶49. Federal courts have acknowledged that states have their own laws of judicial estoppel. In diversity cases, federal courts have acknowledged a question exists as to whether the doctrine of judicial estoppel is substantive such that state law would apply to the federal civil action or procedural such that federal law of judicial estoppel would apply. See Gibson Found., Inc. v. Norris, 159 F.4th 147, 152-154 (1st Cir. 2025); see also John Hancock Life Ins. Co. v. Abbot Lab'ys, 863 F.3d 23, 34 (1st Cir. 2017). It has long been understood that federal courts must apply the substantive law of the states in cases brought pursuant to the federal courts' diversity jurisdiction, Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938), and in acknowledging the question of whether state or federal law applies federal courts have acknowledged that states have control over their approaches to judicial estoppel.
II. Mississippi's Law of Judicial Estoppel
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¶50. Judicial estoppel applies "when one party asserts a position contrary to one taken in prior litigation." Clark, 131 So. 3d at 560 (¶ 15) (citing Thomas v. Bailey, 375 So. 2d 1049, 1052-53 (Miss. 1979), implied overruling recognized by Logan v. RedMed, LLC, 377 So. 3d 956, 962 (Miss. 2024); Wright v. Jackson Mun. Airport Auth., 300 So. 2d 805 (Miss. 1974); Sullivan v. McCallum, 231 So. 2d 801 (Miss. 1970)). "The purpose of judicial estoppel is to prevent parties from knowingly taking a position in one court that is contrary to a position that party has asserted in, and that has been accepted by, another court." Clark,
131 So. 3d at 561 (¶ 21). "Judicial estoppel is particularly appropriate where, as here, a party fails to disclose an asset to a bankruptcy court, but then pursues a claim in a separate tribunal based on that undisclosed asset." Adams, 208 So. 3d at 582 (¶ 21) (internal quotation marks omitted) (quoting Jethroe v. Omnova Sols., Inc., 412 F.3d 598, 600 (5th Cir. 2005)). ¶51. Judicial estoppel stops one from asserting one position in one court only to change positions later, in another court, when doing so has profit potential. Clark, 131 So. 3d at 560 (¶ 15); Richardson v. Cornes (In re Est. of Richardson), 903 So. 2d 51, 56 (¶ 17) (Miss. 2005); Gibson, 186 So. 3d at 846. "Allowing the debtor to back-up, re-open 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." Jones v. Alcorn State Univ., 337 So. 3d 1062, 1069 (¶ 22) (Miss. 2022) (internal quotation marks omitted) (quoting Adams, 208 So. 3d at 581). ¶52. As demonstrated above, heretofore, Mississippi has applied a robust doctrine of judicial estoppel designed to prevent parties from gaining advantage by denying in the
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bankruptcy court that a claim has value only to later file a civil action in Mississippi's courts seeking to recover. We have acknowledged that later action in the bankruptcy court that, after the fact, remediates the party's deception does not lessen the need for or appropriateness of the doctrine because doing so would encourage attempts at deception. In Jones, for example, the bankruptcy debtor only disclosed his claim to the bankruptcy court after it was discovered by the defendant in his state court action. Jones, 337 So. 3d at 1070 (¶ 29). Despite the fact that the bankruptcy court amended the debtor's schedules, thereby rendering the debtor's attempted concealment of her claim ineffective, the Mississippi Supreme Court held that the doctrine of judicial estoppel applied to bar her state court claim. Id. at 1071-72 (¶ 35).
III. The Fifth Circuit's Oparaji Decision
¶53. In the Fifth Circuit's Wells Fargo Bank, N.A. v. Oparaji (In re Oparaji), 698 F.3d 231 (5th Cir. 2012), a debtor failed to make payments on a balloon note and deed of trust in favor of Wells Fargo Home Mortgage. Id. at 233. Seeking Chapter 13 bankruptcy relief, the debtor entered a plan whereby the debtor would make payments on the prebankruptcy debt to the bankruptcy trustee while continuing to make regular postbankruptcy payments to Wells Fargo. Id. Less than year later, the debtor again fell behind on his payments to Wells Fargo, and Wells Fargo sought a lifting of the bankruptcy stay to be able to foreclose. Id. The bankruptcy court approved a modified Chapter 13 plan. Id. at 234. Two years later, the debtor filed another motion to modify the plan. Id. The new plan only provided for the ongoing mortgage payments to Wells Fargo, and it failed to address prior postpetition
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payments as to which the debtor had defaulted. Id. Afterwards, a third modified plan was approved by the bankruptcy court after Wells Fargo amended its proof of claim to include delinquent taxes. Finally, the bankruptcy trustee moved to dismiss the bankruptcy, and the bankruptcy court did so without discharging the debtor. Id.
¶54. Three months after the dismissal, the debtor instituted a new bankruptcy proceeding.
Id. In the second bankruptcy, Wells Fargo submitted evidence of numerous defaults and arrearages on the part of the debor. Id. In response, the debtor initiated the lawsuit that was the subject of the Oparaji Court's opinion, in which the debtor contested the amount of Wells Fargo's claim and sought to prevent Wells Fargo from asserting part of its claim pursuant to the doctrine of judicial estoppel. Id. at 234-35. The bankruptcy court entered summary judgment in favor of the debtor, finding that Wells Fargo was judicially estopped from filing a claim that included amounts that could have been but were not included in the first bankruptcy. Id.
¶55. In reversing the grant of summary judgment, the Fifth Circuit held that Wells Fargo had not taken inconsistent positions. Id. at 237. It did not base its holding on the element of judicial acceptance, and its discussion of the judicial acceptance element is clearly dicta.
"Since we hold that Wells Fargo did not assert legally inconsistent positions in the proceedings below, we need not even reach this issue. However, we will briefly address the reasons why the Bankruptcy Court's acceptance of Wells Fargo's claims was revoked when Debtor's bankruptcy was dismissed without a discharge." Id. at 238. ¶56. Even were it not dicta, Oparaji concerns the applicability of the doctrine of judicial
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estoppel in a setting far different from the one in the case sub judice. Oparaji addresses whether judicial estoppel should apply between the bankruptcy debtor and one of his creditors over whether or not part of the debt could be made part of the bankruptcy estate in a subsequent bankruptcy. It is nothing like the case today, in which a bankruptcy debtor misrepresented to the bankruptcy court the value of a claim and obtained relief from the bankruptcy court (albeit temporary). It is true that as between Wells Fargo and Oparaji, the dismissal of the bankruptcy without discharge put the two parties back to square one, but the application of the doctrine by Mississippi courts in the context of today's case has never been about the relationship between the bankruptcy debtor and creditor. The application of the doctrine by Mississippi courts in the current context is about protecting the integrity of Mississippi's judicial process by not allowing a party to try to benefit themselves by misleading the bankruptcy court only to proceed on an undisclosed claim in Mississippi courts. Accordingly, Oparaji fails to control or even persuade as to the issue before us today.
IV. Judicial Acceptance
¶57. The instant case, contrary to the majority's assertion, does not present a pure question of first impression. In Jones v. Alcorn State Univ., 337 So. 3d 1062 (Miss. 2022), mentioned above, we held that judicial acceptance of a bankruptcy debtor's failure to disclose a claim is not revoked when, in the end, the debtor's attempt at concealment fails to affect the outcome of the debtor's bankruptcy. In Jones, the plaintiff, Ernest T. Jones, sued the Board of Trustees of the State Institutions of Higher Learning for breach of contract.
Id. at 1065 (¶ 2). Years later, Jones filed for bankruptcy in Florida, swearing "under penalty
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of perjury" that he had no unliquidated or contingent claims. Id. at 1065 (¶ 3). However, Jones did not disclose his lawsuit against Alcorn State. Id. The same day that Jones won a $500,000 verdict on his claim in state court, he moved to dismiss his Florida-based bankruptcy proceeding. Id. at 1065 (¶ 4).
¶58. After the $500,000 verdict, the Board of Trustees successfully moved for a judgment notwithstanding the verdict in the trial court, and Jones then appealed the trial court's grant of that motion. Id. at 1065 (¶ 5). While the appeal was pending, Jones filed a second, Chapter 13, bankruptcy. Id. at 1066 (¶ 6). Again, he failed to disclose his lawsuit against the Board of Trustees. Id. The Mississippi Court of Appeals reversed the trial court's grant of the Board's motion for a judgment notwithstanding the verdict. Id. at 1066 (¶ 7). Jones modified his bankruptcy plan, and the bankruptcy court accepted his modified plan. Id. Jones had yet to disclose his lawsuit to the bankruptcy court. Id.
¶59. After remand of the case to the trial court, the Board of Trustees again moved for summary judgment, claiming that Jones was judicially estopped by his failure to disclose his claim against the Board to the Florida bankruptcy court. Id. at 1066 (¶ 8). Within ten days of the filing of the Board's motion for summary judgment, Jones finally amended his bankruptcy plan to disclose the lawsuit. Id. The trial court found that judicial estoppel applied and granted the Board's motion for summary judgment. Id. at 1066 (¶ 9). ¶60. In Jones, like today's case, in the end the debtor received no benefit from his attempt to conceal his claim from the bankruptcy court because the claim was eventually disclosed, and the bankruptcy court ordered him to pay any proceeds to the bankruptcy trustee. Id. at
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1068 (¶ 17). In other words, Jones ended up right where he would have been had he disclosed the claim originally. Nevertheless, unlike today, the Jones majority held that the element of judicial acceptance was met, and the doctrine of judicial estoppel barred Jones's claim. Id. at 1070 (¶ 22).
¶61. Adams v. Graceland Care Ctr., 208 So. 3d 575 (Miss. 2017), discussed favorably by the Jones Court, Jones, 337 So. 3d at 1070-71 (¶¶ 27-33), provides another example. There, the plaintiff, Shirley Adams, sued her mother's nursing home, Graceland Care Center, for injuries allegedly sustained by her mother while in the care of Graceland. Adams, 208 So. 3d at 577 (¶ 1). Graceland moved for summary judgment on the grounds of judicial estoppel, and the trial judge granted Graceland's motion. Id.
¶62. In Adams, Graceland's attorney discovered during the deposition of Adams that she had filed for Chapter 13 bankruptcy five years earlier. Id. at 577-78 (¶ 3). However, despite filing her lawsuit against Graceland a year before her bankruptcy discharge, Adams never reported the lawsuit to the bankruptcy court. Id. at 578 (¶ 3). Graceland filed its motion for summary judgment based on the doctrine of judicial estoppel, and Adams filed to reopen her bankruptcy. Id. at 578 (¶ 4). The bankruptcy was reopened, and Adams amended her schedules. Id. Like Jones and like today's case, Adams ended up where she would have been had she initially disclosed the claim.
¶63. Also like the Jones Court, the Adams Court held that the doctrine of judicial estoppel applied to bar Adams's claims. Adams, 208 So. 3d at 582 (¶ 21). Regarding the judicial acceptance element, the Adams Court wrote:
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[T]he bankruptcy court accepting the original bankruptcy schedules and then discharging Adams under the original schedules without the lawsuit listed satisfies the second element of judicial estoppel that a court accepted Adams's previous position. Additionally, Adams's attempt to amend her bankruptcy schedules after Graceland filed the motion for summary judgment does not cure the fact that the bankruptcy court relied on her position. "Allowing the debtor to back-up, re-open 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." Love v. Tyson Foods Inc., 677 F.3d 258, 262 (5th Cir. 2012) (citation omitted).
Adams, 208 So. 3d at 580-81 (¶ 16). ¶64. In the instant case, the bankruptcy court approved Strong's Amended Chapter 13 plan on May 14, 2019. Strong hired an attorney to represent him in his personal injury claim no later than April 25, 2019, and he testified at the Chapter 13 creditors meeting on February 26, 2019, that he had no pending claims other than his workers' compensation claim. Based on his representations, both in testimony and in his written bankruptcy schedules, on May 18, 2019, the bankruptcy court approved the favorable-to-Strong 0 percent plan. Here is found the benefit to Strong, even if temporary, and judicial reliance. That the bankruptcy court's reliance was later canceled out due to the dismissal of the bankruptcy—that resulted from Strong's failure to make his payments under the plan—should have no more effect on the application of judicial estoppel than the efforts of Jones and Adams to amend their bankruptcy paperwork after they were caught. In today's holding, the majority rewards Strong for two wrongs, failing to disclose his claim to the bankruptcy court and failing to abide by his Chapter 13 plan.
V. Majority's Determination that Trial Court Erred as a Matter of Law
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¶65. To justify applying a de novo standard of review, the majority writes that the trial court erred as matter of law by not applying Fifth Circuit precedent to its treatment of the doctrine of judicial estoppel. As a preliminary matter, as shown above the application of the doctrine of judicial estoppel in Mississippi courts is a question of Mississippi law—not federal law. Federal courts, of course, have the final say as to bankruptcy law, but once they have their final say, Mississippi courts are not bound in how they apply federal bankruptcy law to the state-law question of judicial estoppel. To write that the trial judge erred by not applying Fifth Circuit precedent to the doctrine of judicial estoppel is a jurisprudential nonsequitur.
¶66. In any event, the majority writes that the trial judge erred as a matter of law by not acknowledging the Oparaji dicta that the element of judicial acceptance is not met when what had been judicial acceptance is canceled out by the later dismissal without discharge of the bankruptcy. The Oparaji result, to the extent that it holds that the dismissal of a bankruptcy without discharge operates as a revocation of the earlier judicial acceptance, is a pronouncement of a judicial-estoppel principle, not a rule of bankruptcy law. As such, it is not binding on Mississippi's state courts applying Mississippi law. It contradicts standing Mississippi precedent as found in Jones and Adams to the effect that judicial estoppel will still apply even when the plaintiff's concealment of a claim does not affect the outcome of a bankruptcy, and, therefore, is not persuasive either.
¶67. For the foregoing reasons, the trial judge did not err as a matter of law (or otherwise).
CONCLUSION
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¶68. In its Oparaji dicta, the Fifth Circuit adopted, or would have adopted had it not been dicta, a no-harm-no-foul approach to the judicial acceptance element, albeit in a wholly different context than today's case. As can be seen from both Jones and Adams, Mississippi courts have repeatedly rejected a no-harm-no-foul approach in Mississippi's law on the doctrine of judicial estoppel. It is our job, not the Fifth Circuit's, to ensure that the purpose of judicial estoppel in protecting the integrity of the judicial process in Mississippi is fulfilled.
¶69. With today's holding, the majority fails to protect that integrity by opening the door for litigants in Mississippi's courts to try to conceal claims from their bankruptcy estates in hopes that they do not get discovered, then escape any consequences for their attempt as long as that attempt does not, in the end, affect their bankruptcy proceedings. Contrary to the claim that today's case presents an issue of first impression, we have held, repeatedly, that litigants may not call our judicial processes into question by doing so. ¶70. The trial court committed no error of law or of fact, and I would reverse the decision of the Court of Appeals and would reinstate and affirm the trial court's grant of summary judgment.
BRANNING, J., JOINS THIS OPINION.
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