IN THE SUPREME COURT OF MISSISSIPPI

Transcription

1 E-Filed Document Dec :56: CA Pages: 32 IN THE SUPREME COURT OF MISSISSIPPI SHIRLEY ADAMS, Individually and as Survivor and Heir of Dorothy Turner, Deceased APPELLANT V. NO GRACELAND CARE CENTER OF OXFORD, LLC, GRACELAND MANAGEMENT COMPANY, INC., LAFAYETTE LTC., INC., and YALOBUSHA GENERAL HOSPITAL & NURSING HOME APPELLEES APPEAL FROM THE DECISION OF THE LAFAYETTE CIRCUIT COURT BRIEF FOR APPELLEES GRACELAND CARE CENTER OF OXFORD, LLC, GRACELAND MANAGEMENT COMPANY, INC., and LAFAYETTE LTC., INC. ORAL ARGUMENT REQUESTED OF COUNSEL: Thomas L. Kirkland, Jr. (MSB #4181) Andy Lowry (MSB #100782) COPELAND, COOK, TAYLOR & BUSH, P.A. Post Office Box 6020 Ridgeland, Mississippi Telephone: Facsimile:

2 CERTIFICATE OF INTERESTED PARTIES The undersigned counsel of record certify that the following listed persons or entities have an interest in the outcome of this case. These representations are made in order that the justices of the Supreme Court and/or the judges of the Court of Appeals may evaluate possible disqualifications or recusal. 1. Shirley Adams, Plaintiff-Appellant. 2. Bobby F. Martin, Jr., Esq. of The Cochran Firm (counsel for Adams). 3. Michael C. Skouteris, Esq. of Skouteris & McGee, PLLC (counsel for Adams). 4. R. Stewart Guernsey, Esq. (counsel for Adams). 5. Graceland Care Center of Oxford, LLC and Graceland Management Company, Inc., Defendant-Appellees. 6. Lafayette LTC, Inc., Defendant-Appellee. 7. Thomas L. Kirkland, Jr. and Andy Lowry of Copeland, Cook, Taylor & Bush, P.A. (counsel for Graceland entities and for Lafayette LTC, Inc.) 8. Yalobusha General Hospital and Nursing Home, Defendant- Appellee. 9. John G. Wheeler, Esq. of Mitchell, McNutt & Sams, P.A. (counsel for Yalobusha). 10. The Honorable John A. Gregory, Circuit Judge. Respectfully submitted, s/ Andy Lowry Andy Lowry counsel of record for Graceland & Lafayette defendants -i-

3 TABLE OF CONTENTS Page Certificate of Interested Persons i Table of Contents ii Table of Authorities iv Statement Regarding Oral Argument vi Statement of the Issues Statement of the Case I. Course of Proceedings Below II. Relevant Facts Summary of the Argument Argument I. Adams s Conduct Met the Three Elements of Judicial Estoppel... 7 A. Adams s Positions Were Clearly Inconsistent B. The Bankruptcy Court Relied on Adams s Nondisclosure.. 11 C. As a Matter of Law, Adams s Nondisclosure Was Not Inadvertent Adams Did Not Lack Knowledge of Her Undisclosed Claim Adams Had a Motive to Conceal Her Claim This Court Was Right to Withdraw the Original Oliver Decision D. The Trial Court Did Not Fail to Apply Mississippi Law II. Enforcement of Judicial Estoppel Protects the Judicial System ii-

4 Page Conclusion Certificate of Service iii-

5 Cases: TABLE OF AUTHORITIES Page Almond v. Flying J Gas Co., 957 So. 2d 437 (Miss. Ct. App. 2007) Brown v. Credit Center, Inc., 444 So. 2d 358 (Miss. 1983) Browning Mfg. v. Mims (In re Coastal Plains, Inc.), 179 F.3d 197 (5th Cir. 1999) , 15, Clark v. Neese, 131 So. 3d 556 (Miss. 2013) Cont l Turpentine & Rosin Co. v. Gulf Naval Stores Co., 142 So. 2d 200 (Miss. 1962) Copiah County v. Oliver, 2010 Miss. LEXIS 514 (Miss. Sept. 30, 2010) Copiah County v. Oliver, 51 So. 3d 205 (Miss. 2011) , 7-8 Griffin v. Dollar Gen. Corp., 2006 U.S. Dist. LEXIS (N.D. Miss. July 13, 2006) Harris v. Miss. Valley State Univ., 873 So. 2d 970 (Miss. 2004) In re Flugence, 738 F.3d 126 (5th Cir. 2013) Jacox v. Circus Circus Miss., Inc., 908 So. 2d 181 (Miss. Ct. App. 2005) Jethroe v. Omnova Solutions, Inc., 412 F.3d 598 (5th Cir. 2005) , 16 Kirk v. Pope, 973 So. 2d 981 (Miss. 2007) , 12, 14-15, 21 Love v. Tyson Foods, Inc., 677 F.3d 258 (5th Cir. 2012) & n.2, 17 McKinney v. BancorpSouth Bank, No. 1:12-cv MPM-DAS, 2013 U.S. Dist. LEXIS (N.D. Miss. July 24, 2013) Miss. State Dep t of Health v. Rush Care, Inc., 882 So. 2d 205 (Miss. 2004) Pub. Employees Ret. Sys. v. Freeman, 868 So. 2d 327 (Miss. 2004) Rankin v. Am. Gen. Fin., Inc., 912 So. 2d 725 (Miss. 2005) Reed v. City of Arlington, 650 F.3d 571 (5th Cir. 2011) iv-

6 Page Richardson v. Cornes, 903 So. 2d 51 (Miss. 2005) Superior Crewboats Inc. v. Primary P & I Underwriters (In re Superior Crewboats), 374 F.3d 330 (5th Cir. 2004) , 13, 22 Tate v. Wayne Farms, LLC, No. 2:07cv1009-KS-MTP, 2008 U.S. Dist. LEXIS (S.D. Miss. Dec. 16, 2008) Walters v. Inexco Oil Co., 440 So. 2d 268 (Miss. 1983) Woodard v. Taco Bueno Restaurants, Inc., 2006 U.S. Dist. LEXIS (N.D. Tex. Dec. 8, 2006) Statutes & Rule: 11 U.S.C U.S.C M.R.C.P v-

7 STATEMENT REGARDING ORAL ARGUMENT This appeal presents a straightforward application of this Court s decisions to a simple set of facts. However, given that Appellant is asking for those decisions to be overruled or disregarded, Appellees request oral argument to discuss the principles and precedents (many of them federal cases) underlying the Mississippi case law in question. -vi-

8 STATEMENT OF THE ISSUES I. Shirley Adams failed to disclose her contingent asset (a potential tort judgment) in bankruptcy court, but then filed her tort suit in circuit court, thus contradicting her representation to the bankruptcy court. After the bankruptcy court held that Adams did indeed have a duty to disclose her tort cause of action to it, was it reversible error for the circuit court to hold that Adams was judicially estopped from pursuing her tort suit? II. Judicial estoppel exists to protect the judicial system, not the interests of litigants. Did the circuit court err in granting summary judgment on the basis of judicial estoppel? -1-

9 STATEMENT OF THE CASE Shirley Adams told a bankruptcy court that she had no potential lawsuit, and was granted discharge on that basis. Then she told the circuit court the opposite, filing suit in a medical-malpractice case. Judicial estoppel prevents such doubledealing, as the circuit court correctly held. I. COURSE OF PROCEEDINGS BELOW Adams filed suit against Graceland Care Center of Oxford, LLC in Lafayette Circuit Court on May 14, 2008, later amending to add defendants related to Graceland as well as an unrelated defendant, Yalobusha General Hospital & Nursing Home. R. 1, 114 (1st Amended Complaint), 142 (2d Amended Complaint). 1 Defendants moved for summary judgment on the basis of Adams s failure to disclose her tort cause of action in her Chapter 13 bankruptcy. R. 268, 334. The Lafayette Circuit Court (Lackey, J.), by letter, in September 2010 announced it would grant the motion, R. 437, but Adams moved to reconsider based upon the September 30, 2010 ruling by this Court in Copiah County v. Oliver, 51 So. 3d 205, 207 (Miss. 2011). R The circuit court entered a stay (Dec. 19, 2011) in the instant proceedings until, per the revised Oliver decision of January 13, 2011, the bankruptcy court decided whether Adams had a duty to disclose the cause of action. R The clerk s papers are cited as R.. Plaintiff s record excerpts were lettered A, B, and C and are cited as R.E. ; additional record excerpts submitted by Appellees are numbered beginning with 4 and are cited R.E.. The brief for Appellant is cited as Adams at. -2-

10 Adams moved for the bankruptcy court to rule on the issue, and after the motion was briefed and orally argued to the bankruptcy court, that court issued its decision on October 12, R. 564 (R.E. 4). The bankruptcy court (Houston, J.) considered the relevant authorities and concluded that Adams had a continuing duty throughout the pendency of her bankruptcy case to disclose the state law cause of action. R.E. 4 at 7. In so holding, the court relied in part upon its findings of fact that (1) Adams had believed she had a cause of action regarding Dorothy Turner no later than March 2006, when she engaged a personal-injury attorney, and (2) Adams was the sole beneficiary of the personal-injury and wrongful-death causes of action. R.E. 4 at 5. With the ruling of the bankruptcy court in hand, Defendants renewed their motion for summary judgment, which was granted by the circuit court (Gregory, J.). R.E. B (order). The circuit court held that based on Plaintiff s own affidavit and deposition testimony, she had knowledge of the facts supporting her cause of action prior to the discharge of her chapter 13 proceeding. R.E. B at 1. Feeling aggrieved, Adams appealed to this Court. II. RELEVANT FACTS. Adams was involved in a Chapter 13 bankruptcy proceeding, which she filed on August 9, R.297. Sometime in 2004 or 2005, she consulted with an attorney regarding a possible medical-malpractice suit against Appellees, arising out of alleged deficiencies in the care of her mother, Dorothy Turner, at the Lafayette LTC nursing- -3-

11 home facility in Oxford, Mississippi. R.E. 5 at 93. In July 2007, she moved her mother to a nursing home in Yalobusha County. R Her mother passed away in December 2007, R. 145, and Adams filed suit in May R.1. Adams received a full discharge of her bankruptcy debts on March 31, 2009, having never disclosed her state-court suit to the bankruptcy court or amended her bankruptcy schedules to include it. R At Adams s deposition in August 2009, Appellees learned that she had filed for Chapter 13 prior to filing her tort suit. R.E. 6 at 527. After inspection of the bankruptcy docket, Appellees moved for summary judgment because judicial estoppel precluded Adams from pursuing her tort suit. Only after the judicial estoppel defense was raised by Appellees did Adams file a motion to re-open her bankruptcy proceedings and belatedly attempt to amend her bankruptcy schedules to include the tort cause of action. R.E. 4 at 3. However, in amending her schedules, Adams attempted to list this cause of action as exempt personal property. R.E. 4 at 3. The trustee filed an objection to this attempted exemption, and the bankruptcy court sustained the trustee s objection. R.E. 4 at 3. At the hearing in bankruptcy court, the trustee s representative stated that, because creditors after a discharge typically write off whatever sums they did not collect during the bankruptcy, past experience suggested it would be difficult at this late date for the trustee to pursue the tort cause of action belatedly declared by Adams, and in fact, the trustee did later inform the bankruptcy court that it would not pursue the claim, thus leaving Adams in full possession and her creditors -4-

12 shortchanged. R.E. 4 at 5-6 ( The trustee s lack of knowledge of Adams state court cause of action does not provide Adams a safe harbor. ). The bankruptcy court went on to hold that Adams did have a continuing duty throughout the pendency of her bankruptcy case to disclose the state law cause of action, because Adams was the sole beneficiary of her mother, and the cause of action was clearly a contingent asset that belonged to her and to her bankruptcy estate. R.E. 4 at 7. While noting that the question of judicial estoppel itself was not properly before it, the bankruptcy court went on to cite federal authorities making it clear that it would have ruled that judicial estoppel did apply. R.E. 4 at

13 SUMMARY OF THE ARGUMENT For part or all of the time that her Chapter 13 bankruptcy was pending, Adams knew that she had a potential cause of action for tort on the basis of her allegations regarding the nursing-home care of her mother. Yet she never disclosed this contingent asset to the bankruptcy court not until after being served with a motion for summary judgment on the basis of judicial estoppel. The law of judicial estoppel bars a party from benefiting from contrary positions in judicial proceedings. This Court applies a test of three elements: were contrary positions taken, did the prior court rely on the position being contradicted in the later proceeding, and was the original position taken inadvertently? There is no genuine issue of material fact as to any of these three elements: Adams omitted her contingent asset from her Chapter 13 estate, despite having an affirmative duty to disclose it to the bankruptcy court; based on her representations, the bankruptcy court granted her a discharge; and as inadvertence has been legally defined in this context, Adams s omission was not inadvertent: she knew of the facts underlying her tort claim, and she had an undeniable motive for shielding this potential asset from her creditors. Because the rule of judicial estoppel is essential to protect the judicial system, the circuit court did not err as a matter of law in holding Adams estopped from pursuing her tort suit and in granting summary judgment. This Court should affirm. -6-

14 ARGUMENT Adams has taken her appeal from the circuit court s entry of summary judgment. This Court is well acquainted with the standard for summary judgment. Where no genuine issue of material fact is disputed, summary judgment as a matter of law is proper. M.R.C.P. 56(c). Plaintiffs must present record evidence going beyond mere allegations that supports their claims, and where they cannot do so, summary judgment against the plaintiffs is proper. Plaintiffs may draw legitimate inferences from the facts, but may not rely on conclusory allegations, improbable inferences, and unsupported allegations. Jacox v. Circus Circus Miss., Inc., 908 So. 2d 181, 184 (Miss. Ct. App. 2005) (citing Krim v. BancTexas Group, Inc., 989 F.2d 1435, 1449 (5th Cir. 1993)). Put another way, inferences that rest merely on speculation and conjecture cannot oppose a motion for summary judgment. Harris v. Miss. Valley State Univ., 873 So. 2d 970, 981 (Miss. 2004). Nor can a plaintiff stack inference upon inference to defeat summary judgment. Almond v. Flying J Gas Co., 957 So. 2d 437, 440 (Miss. Ct. App. 2007). I. ADAMS S CONDUCT MET THE THREE ELEMENTS OF JUDICIAL ESTOPPEL. Adams told the bankruptcy court she didn t have a potential lawsuit, and told the circuit court that she did. Such double-dealing is precisely what judicial estoppel prevents. This Court has summarized the law of judicial estoppel: Judicial estoppel is designed to protect the judicial system and applies where intentional self-contradiction is being used as a means of obtaining unfair advantage in a forum provided for suitors seeking justice. In order to protect the integrity of the judiciary, -7-

15 judicial estoppel must be invoked in the Court in which the apparent self-serving contradiction occurred and in which the defense is first asserted. [There are] three requirements for judicial estoppel: (1) the party is judicially estopped only if its position is clearly inconsistent with the previous one; (2) the court must have accepted the previous position; and (3) the non-disclosure must not have been inadvertent. Copiah County v. Oliver, 51 So. 3d 205, 207 (Miss. 2011) (quoting Kirk v. Pope, 973 So. 2d 981, 991 (Miss. 2007)). The Kirk Court relied upon Fifth Circuit case law for these three elements. Kirk, 973 So. 2d at 991 (quoting Superior Crewboats Inc. v. Primary P & I Underwriters (In re Superior Crewboats), 374 F.3d 330, 335 (5th Cir. 2004)). The Fifth Circuit has held that [j]udicial estoppel is particularly appropriate where... 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. Love v. Tyson Foods, Inc., 677 F.3d 258, (5th Cir. 2012) (quoting Jethroe v. Omnova Solutions, Inc., 412 F.3d 598, 600 (5th Cir. 2005)) (emphasis added). Judicial estoppel is thus particularly appropriate in this case, where each of the three elements was met. 2 A. Adams s Positions Were Clearly Inconsistent. Adams plainly acted inconsistently in the circuit court and in bankruptcy court, omitting to name the tort cause of action in the federal court while actually pursuing it in the state court. This is now the law of the case, because the bankruptcy 2 Some cases have spoken of detrimental reliance as an element of judicial estoppel, but it appears this was a mistaken borrowing from the law of equitable estoppel. Because the doctrine [of judicial estoppel] is intended to protect the judicial system, rather than the litigants, detrimental reliance by the opponent of the party against whom the doctrine is applied is not necessary. Love, 677 F.3d at 261 (citation omitted; emphasis in Love). -8-

16 court held that Adams had a duty to disclose her cause of action in her Chapter 13 bankruptcy, and it is indisputable that she did not do so. R.E. 4 at 7. The doctrine of law of the case is a rule of practice adopted by the courts and rests upon principles of res judicata. Cont l Turpentine & Rosin Co. v. Gulf Naval Stores Co., 142 So. 2d 200, 206 (Miss. 1962). The doctrine of the law of the case is similar to that of former adjudication, relates entirely to questions of law, and is confined in its operation to subsequent proceedings in the case. Whatever is once established as the controlling legal rule of decision, between the same parties in the same case, continues to be the law of the case, so long as there is a similarity of facts. Pub. Employees Ret. Sys. v. Freeman, 868 So. 2d 327, 330 (Miss. 2004) (quoting Moeller v. Am. Guar. & Liab. Ins. Co., 812 So. 2d 953, 960 (Miss. 2002)) (emphasis added). Adams did not appeal from the bankruptcy court s decision, which is therefore binding on her. In any event, there is no genuine issue of material fact here. In her brief, Adams attempts to argue that the test is whether she knowingly took positions that were inconsistent. This confuses the first and third elements as stated in Kirk. Whether the positions are inconsistent is a different issue than whether the person inadvertently took inconsistent positions. Knowledge or lack of knowledge, as this Court will see, is addressed by the legal authorities on the third element. Adams points to this Court s recent decision in Clark v. Neese, 131 So. 3d (Miss. 2013), but that case does not support her. In Neese, a widow sued in federal 3 Adams s short citations use Neese, not Clark, and we will do the same in hope of avoiding confusion. -9-

17 court for the death of her husband in a traffic accident, alleging that her husband was not at fault; then, having settled that suit, she sued her husband s estate in state court, alleging he was partly at fault for her injuries in the accident. Neese, 131 So. 3d at 558. The issue in that case was the old requirement that the parties be adverse, which is not at issue here. Id. at It is relevant, however, that this Court in Neese expressly relied upon and reaffirmed the three elements of judicial estoppel as enunciated in Kirk v. Pope. Neese, 131 So. 3d at 562: the trial judge applied the correct elements of judicial estoppel by citing our Kirk opinion. What Adams tries to seize upon is this Court s summation of judicial estoppel: 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. Id. Adams appears to think that knowingly takes a position replaces element one as stated in Kirk. But this Court was not addressing any particular element stated in Kirk, but rather summing up its position on the adverse-parties issue. A quotation in full of paragraph 21 of Neese makes the context and the meaning clear: Accordingly, we take this opportunity to clarify that our opinion in Kirk eliminated the adverse-party requirement and overruled our prior judicial-estoppel opinions insofar as they included such a requirement. 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. This purpose is served regardless of whether the inconsistent positions were taken in opposition to the same party. Here, the trial judge applied the correct elements of judicial estoppel by citing our Kirk opinion. -10-

18 Id. at (emphasis added). The second boldfaced sentence is summing up judicial estoppel as a whole, not rewriting any of the elements as stated in Kirk. Adams s further arguments as to her alleged inadvertence will therefore be considered below in our discussion of the third element (I.C.). B. The Bankruptcy Court Relied on Adams s Nondisclosure. Somewhat desperately, Adams tries to cast doubt on the second element s having been satisfied. The bankruptcy court accepted her Chapter 13 plan and granted her a discharge based on her representation that she had no chose in action. R.E. 4 at 3. This again is the law of the case (as discussed at I.A. above), because the bankruptcy court s findings were not appealed by Adams. Alternatively, there is no genuine issue of material fact as to this question. Adams claims that, by reopening the case, the bankruptcy court essentially jettisoned whatever previous acceptance it may have harbored. Adams at 10. That assertion rests on no authority. The law is clear that Adams cannot escape judicial estoppel by the simple expedient of reopening her bankruptcy and belatedly declaring her cause of action therein. The Fifth Circuit wisely has rejected such a dodge: a debtor cannot be permitted, at this late date, to re-open the bankruptcy proceeding and amend [her] petition. Judicial estoppel was designed to prevent such abuses. Superior Crewboats, 374 F.3d at 336 (citing Burnes v. Pemco Aeroplex, Inc., 291 F.3d 1282, 1288 (11th Cir. 2002) ( 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 -11-

19 consider disclosing personal assets only if he is caught concealing them. )). Likewise, in Kirk, this Court affirmed the trial court s finding that Kirk notified the bankruptcy trustee only because the defendants forced his hand ; such a belated effort did not avoid judicial estoppel. Kirk, 973 So. 2d at 992. The fact of the case is that, prior to Defendants motion for summary judgment, Adams had misrepresented her position to the bankruptcy court, been granted a discharge on that basis, and filed suit in circuit court. There can be no greater acceptance of one s position in bankruptcy court than that court s accepting one s plan and then granting discharge of debts. The second element of judicial estoppel is satisfied. C. As a Matter of Law, Adams s Nondisclosure Was Not Inadvertent. The third element is whether Adams s nondisclosure was inadvertent. Inadvertence here has a specific legal meaning, not just oops : A debtor s non-disclosure is inadvertent only when, in general, the debtor either lacks knowledge of the undisclosed claims or has no motive for their concealment. Kirk, 973 So. 2d at 991 (quoting Superior Crewboats, 374 F.3d at 335) (emphasis added). We will consider these two sub-elements of inadvertence in turn. 1. Adams Did Not Lack Knowledge of Her Undisclosed Claim. Adams did not lack knowledge of her claims. Adams decided to seek legal advice about suing Graceland as early as 2004 or R.E. 5 at 93, 138. She filed for Chapter 13 in August 2004, and had her plan confirmed in Adams at 1. She retained a personal-injury attorney in R.E. 4 at 5. Adams moved her mother -12-

20 from Graceland to Yalobusha in June 2007, allegedly because she was dissatisfied with the care provided at Graceland. R.E. 5 at 83; R. 144 (2d Am. Complaint) at 9. Adams s mother passed away in December Adams filed suit in May 2008, and was not discharged from bankruptcy until March R Thus for at least four years, and possibly even before she filed for bankruptcy, Adams was aware of facts which, in her view, could potentially give rise to a tort suit, but she never declared them to the bankruptcy court. There is no genuine issue of material fact here. Adams cannot evade estoppel by claiming that she was unsophisticated and didn t know she was supposed to confess the tort claim in her bankruptcy: to claim that her failure to disclose was inadvertent [Adams] must show not that she was unaware that she had a duty to disclose her claims but that, at the time she filed her bankruptcy petition, she was unaware of the facts giving rise to them. Jethroe, 412 F.3d at 601 (emphasis added). That [the debtor] did not know that bankruptcy law required disclosure even if true is, according to our precedents, irrelevant. In re Flugence, 738 F.3d 126, 130 (5th Cir. 2013). Although the Jethroe court referred to the time of filing the petition, a debtor s duty of disclosure does not cease with filing, but is a continuous one, as the bankruptcy court held with regard to Adams. Superior Crewboats, 374 F.3d at 335; see R.E. 4 at 6-7. It s immaterial that one has not yet filed suit at the time of confirmation: It goes without saying that the Bankruptcy Code and Rules impose upon bankruptcy debtors an express, affirmative duty to disclose all assets, including contingent and unliquidated claims. 11 U.S.C. 521(1) ( The debtor shall (1) file a list of creditors, and unless the court orders otherwise, a schedule of assets and liabilities, a schedule of current income and current expenditures, and a statement of the -13-

21 debtor s financial affairs ). The duty of disclosure in a bankruptcy proceeding is a continuing one, and a debtor is required to disclose all potential causes of action. The debtor need not know all the facts or even the legal basis for the cause of action; rather, if the debtor has enough information prior to confirmation to suggest that it may have a possible cause of action, then that is a known cause of action such that it must be disclosed. Any claim with potential must be disclosed, even if it is contingent, dependent, or conditional. Browning Mfg. v. Mims (In re Coastal Plains, Inc.), 179 F.3d 197, (5th Cir. 1999) (boldfacing added & citations omitted). This duty of continuing disclosure is especially applicable in Chapter 13 bankruptcy proceedings because a Chapter 13 bankruptcy estate includes legal claims and causes of action that are acquired after the commencement of the [bankruptcy] case but before the case is closed, dismissed, or converted. 11 U.S.C. 1306(a)(1) & 541(a)(7); R.E. 4 at 6. Nor can a debtor rely on her supposed ignorance as to what assets were required to be disclosed: Duke s claimed lack of awareness of Coastal s statutory disclosure duty for its claims against Browning is not relevant. See Chandler v. Samford University, 35 F. Supp. 2d 861, 865 (N.D. Ala. 1999) ( Research reveals no case in which a court accepted such an excuse for a party's failure to comply with the requirement of full disclosure ). In any event, no one testified that Coastal s bankruptcy attorney advised Coastal not to disclose the claims. Browning Mfg., 179 F.3d at 212 (emphasis added). Adams would have this Court believe that Mississippi has not interpreted inadvertence so strictly. This assertion requires Adams to cite her way around Kirk, which expressly applied the Fifth Circuit s reasoning: A debtor s non-disclosure is inadvertent only when, in general, the debtor either lacks knowledge of the undisclosed claims or has no motive for their concealment. Kirk, -14-

22 973 So. 2d at 991 (quoting Superior Crewboats, 374 F.3d at 335). Adams attempts to distinguish that case because Kirk knowingly deceived the court and even his own attorneys. Adams at 6. But this Court strictly applied the Superior Crewboats test: it found that Kirk had knowledge of the claim just as Adams did and found sufficient evidence for the circuit court to conclude that Kirk s non-disclosure was not inadvertent and that Kirk notified the bankruptcy trustee only because the defendants forced his hand. Kirk, 973 So. 2d at 992. Adams appears to think that some showing of special depravity on her part is required before she can be judicially estopped from asserting a claim whose existence she denied in bankruptcy court. But that is not the law. Nonetheless, in her brief, Adams s defense is that she does not recall ever being questioned in bankruptcy court about any pending lawsuits. Adams at 7. As the foregoing case law indicates, that is not the test. She had an express, affirmative duty to disclose all assets, including contingent and unliquidated claims. Browning Mfg., 179 F.3d at (emphasis in original) (quoted in R.E. 4 at 6). An affirmative duty puts the burden on the debtor to disclose her asset, not on the court to ask the magic question. Adams also takes pride in not being evasive or misleading when deposed in the present case and asked about her bankruptcy status. Adams at 7. But the point is that she misled the bankruptcy court, not the circuit court. The test isn t whether she tried to hide, obscure, or trivialize the Chapter 13 filing in circuit court, Adams at 8. Nor is the test whether she made the conscious, calculated choice to withhold -15-

23 her mother s lawsuit from her creditors. Adams at 8. The test as stated above is, did she know of facts that could give rise to her having a contingent asset? And the fact is that she did. She may have known back in 2004, even though she claims in her brief (at 8) that it s undisputed that she did not: she testified having sought advice about a tort suit in 2004 or 2005, and she filed for Chapter 13 in Regardless, the issue isn t only what she knew when she filed, but what she knew while her plan remained in effect. And years before her discharge, she was aware of those facts, and kept silent. 4 Finally, Adams tries to argue that knowledge of the law was required for her to have acted other than inadvertently. Adams at 9. That is not the law, or else no one other than a lawyer (the undersigned would say, no one other than a bankruptcy lawyer) would have any duty to disclose, because who else has mastered the bankruptcy code? The Fifth Circuit has rejected any such test: the controlling inquiry, with respect to inadvertence, is the knowing of facts giving rise to inconsistent positions. Moreover, Browning states that [a claimant s] lack of awareness of [a] statutory disclosure duty for its [legal claims] is not relevant. Jethroe, 412 F.3d at 601 n.4 (emphasis added) (quoting Browning, 179 F.3d at 212). Adams knew she had a potential lawsuit, or at least that her mother, of whom she was the sole beneficiary, had a potential lawsuit. That was a contingent asset that, the bankruptcy court has held, she had a duty to disclose. She did not do so, preferring to take her chances. 4 Thus the interesting hypothetical of her acquiring these facts the day before her bankruptcy discharge, Adams at 9, need not be decided by this Court today. It is unsurprising that Adams is uncomfortable with her facts and would prefer to imagine new, more sympathetic ones. -16-

24 2. Adams Had a Motive to Conceal Her Claim. As for the question of having a motive to conceal her claims, Adams s motive is all too evident: she obtained a Chapter 13 discharge while keeping any potential tort recovery free and clear of her creditors. (Note that Jethroe speaks of having a motive, not of consciously intending such a motive; one has a motive whether or not it motivates one s act or omission.) The Fifth Circuit has stated: the motivation sub-element is almost always met if a debtor fails to disclose a claim or possible claim to the bankruptcy court. Motivation in this context is self-evident because of potential financial benefit resulting from the nondisclosure. Love, 677 F.3dat 262 (quoting Thompson v. Sanderson Farms, Inc., 3:04-CV-837-WHB-JCS, 2006 U.S. Dist. LEXIS 48409, at *12-13 (S.D. Miss. May 21, 2006)). Accord, McKinney v. BancorpSouth Bank, No. 1:12-cv MPM-DAS, 2013 U.S. Dist. LEXIS , at *7-9 (N.D. Miss. July 24, 2013) (applying Love). A debtor always has a motive for concealing potential causes of action in order to minimize income and assets. Tate v. Wayne Farms, LLC, No. 2:07cv1009-KS-MTP, 2008 U.S. Dist. LEXIS , at *7 (S.D. Miss. Dec. 16, 2008) (quoting Gaskins v. Thousand Trails, 521 F. Supp. 2d 693, 697 (S.D. Ohio 2007)). Thus, there is no question of material fact as to whether Adams had a motive: she did. Because Adams knew she had a potential lawsuit and also had a motive for concealing it from the bankruptcy court, the circuit court was correct in holding that her nondisclosure of that lawsuit was not inadvertent as a matter of law. The circuit court s holding that her lawsuit was judicially estopped was therefore correct, and this Court should affirm. -17-

25 3. This Court Was Right to Withdraw the Original Oliver Decision. In her briefing below, Adams sought to invoke this Court s withdrawn opinion in Copiah County v. Oliver, which was vacated upon rehearing. In the event that her reply brief returns to this topic, we take the liberty of explaining why that decision is not persuasive as to the relevant law. The withdrawn opinion had stated that the case of a bankruptcy debtor who omitted to disclose her contingent asset in federal court was distinguishable from Kirk because a debtor s continuing duty to disclose supposedly was not so clear in a Chapter 13 proceeding. On rehearing, however, this Court accepted the reasoning of Justice Randolph s dissent from the first opinion, in which he suggested that the better course was to specifically direct the circuit court to stay the proceedings until the Bankruptcy Court performs its function. Copiah County v. Oliver, 2010 Miss. LEXIS 514 at 22 (Miss. Sept. 30, 2010) (Randolph, J., dissenting), withdrawn on reh g, 51 So. 3d 205 (Miss. 2011). The withdrawn opinion distinguished Oliver from Kirk on two grounds: The situation in this case is clearly distinguishable from that in Kirk v. Pope. First, this case involves Chapter 13 of the bankruptcy code, whereas Kirk v. Pope involved Chapter 7. As will be discussed below, the two bankruptcy mechanisms each have unique provisions regarding the status of the estate's property and the duty to report. But most significantly, it is undisputed that Oliver s personalinjury claim, unlike Kirk s breach-of-contract action, accrued and arose after she had filed her bankruptcy petition and after her Chapter 13 repayment plan was approved by the bankruptcy court, and she had begun making payments on the plan. At any rate, to decide if judicial estoppel applies to Oliver s suit against Copiah County, we must decide whether she had a duty to disclose to the bankruptcy court this post-petition, post-confirmation claim. -18-

26 Copiah County v. Oliver, 2010 Miss. LEXIS 514 at 10 (Miss. Sept. 30, 2010), withdrawn on reh g, 51 So. 3d 205 (Miss. 2011)(emphasis added). Because the issue involved Chapter 13, and because the claim allegedly accrued post-confirmation, Kirk appeared distinguishable. Both of those grounds now have been disposed of by the bankruptcy court, leaving this Court to consider the boldfaced statement above, that whether judicial estoppel applies hinges upon whether [Adams] had a duty to disclose to the bankruptcy court this post-petition, post-confirmation claim. And the answer, according to the bankruptcy court, is yes, she did. The withdrawn opinion relied heavily upon a Texas district court s holding that equity somehow militated against judicial estoppel where the tort cause of action arose post-confirmation. Id. at 14-17; see Woodard v. Taco Bueno Restaurants, Inc., 2006 U.S. Dist. LEXIS 89135, 2006 WL (N.D. Tex. Dec. 8, 2006). The flowery language of the Texas court conceals the weakness of its holding. It was simply incorrect for the Texas district court to have concluded that the debtor s supposed uncertainty as to the law made judicial estoppel improper. The main problem with this holding is that it flies in the face of Jethroe, which requires a showing that the debtor was unaware of the facts giving rise to her claims, not merely that she was unaware of her legal duty. Both Jethroe and Superior Crewboats place the emphasis on knowing the facts as to the tort claim, not on knowing the bankruptcy-law duty to disclose. Thus, when the Taco Bueno court rested its holding on the assertion that [t]he bankruptcy code in its entirety is not like other legislation; it is highly technical and its comprehension requires a specific expertise not possessed by most -19-

27 lay persons and often, not possessed by competent lawyers, Taco Bueno, 2006 U.S. Dist. LEXIS at *32, it misapprehended the test for inadvertence. Indeed, it simply ignored the language from Browning, quoted above, that bluntly said the debtor s claimed lack of awareness of [its] statutory disclosure duty for its claims against Browning is not relevant. In fact, the district court relied on no Fifth Circuit decisions in reaching that conclusion, preferring instead some Supreme Court decisions in criminal cases where the maxim ignorance of the law is no excuse was relaxed. Id. at *33. With all due respect to the district court, judicial estoppel from pursuing a tort suit is not comparable with criminal penalties. The lone judge in Woodard ruled contrary to the precedents binding him, which are of a piece with those applied by this Court in Kirk. This Court was right to look to the law as applied by the bankruptcy courts, rather than the peculiar holding in Taco Bueno. D. The Trial Court Did Not Fail to Apply Mississippi Law. Adams tries to assert, based on the undersigned s oral argument at the Rule 56 motion hearing, that Appellees commingled the federal elements [of judicial estoppel] with the Mississippi elements and called it good law. Adams at 11. The trial court s order granting summary judgment expressly followed Kirk v. Pope. R.E. B at 1. The elements as set forth in Kirk were briefed to the circuit court. R.545. Adams fails to make any showing as to how the circuit court supposedly failed to follow Mississippi law; rather, she claims that Appellees simply made the conclusory declaration based on federal law that Adams s misrepresentation to the -20-

28 bankruptcy court estopped her tort suit. Adams at 12. As this Court can see from the foregoing argument, that is a misleading characterization. This Court itself has looked to relevant federal precedents in Kirk, a proceeding recently reaffirmed in Neese, which noted several citations from Kirk based on federal law. Evidently, Adams thinks this Court erred in so doing. Appellees respectfully disagree with her. Leaving aside the persuasive quality of the federal decisions cited above and in Kirk, there is also a strong judicial interest in discouraging forum-shopping and in protect[ing] the judicial system. Kirk, 973 So. 2d at 991; see Brown v. Credit Center, Inc., 444 So. 2d 358, 364 n.1 (Miss. 1983) (condemning forum-shopping) and Walters v. Inexco Oil Co., 440 So. 2d 268, 273 (Miss. 1983) (same). This Court has not hesitated to bar claims on the basis of judicial estoppel where the initial misrepresentations were made in some court other than the courts of this State. See, e.g., Rankin v. Am. Gen. Fin., Inc., 912 So. 2d 725, (Miss. 2005) (statements in federal court estopped contrary statements in state court). This assignment of error is without merit. Thus, for all the reasons shown above, the circuit court did not err in holding that judicial estoppel applied to Adams. This Court should affirm. II. ENFORCEMENT OF JUDICIAL ESTOPPEL PROTECTS THE JUDICIAL SYSTEM. Bankruptcy courts cannot send United States Marshals to audit each debtor. They must rely on debtors to tell the truth. Because the importance of this -21-

29 disclosure duty cannot be overemphasized, Browning Mfg., 179 F.3d at 208, the harsh sanction of judicial estoppel must be applied: The rationale for decisions [invoking judicial estoppel to prevent a party who failed to disclose a claim in bankruptcy proceedings from asserting that claim after emerging from bankruptcy] is that the integrity of the bankruptcy system depends on full and honest disclosure by debtors of all of their assets. The courts will not permit a debtor to obtain relief from the bankruptcy court by representing that no claims exist and then subsequently to assert those claims for his own benefit in a separate proceeding. The interests of both the creditors, who plan their actions in the bankruptcy proceeding on the basis of information supplied in the disclosure statements, and the bankruptcy court, which must decide whether to approve the plan of reorganization on the same basis, are impaired when the disclosure provided by the debtor is incomplete. Id. (quoting Rosenshein v. Kleban, 918 F. Supp. 98, 104 (S.D.N.Y. 1996) (emphasis altered)). These policy considerations make it necessary to enforce estoppel strictly: judicial estoppel is designed to protect the judicial system, not the litigants. Superior Crewboats, 374 F.3d at 334. In a similar case, a debtor filed under Chapter 13 in February 2001, was fired from her job in June 2004, filed an EEOC charge in August 2004, and filed a discrimination lawsuit in January 2005, without ever apprising the bankruptcy court of her suit before her discharge in July Griffin v. Dollar Gen. Corp., No. 4:05CV11, at *1 (N.D. Miss. Apr. 11, 2006) (magistrate s report) (R ). The district court accepted the magistrate s recommendation that the suit against Dollar General be dismissed with prejudice. Griffin v. Dollar Gen. Corp., 2006 U.S. Dist. LEXIS (N.D. Miss. July 13, 2006). There is no valid reason why that plaintiff should have enjoyed a different outcome in state court. Nor is there any valid reason -22-

30 why Adams s gamesmanship with the bankruptcy court should not estop her tort suit. Judicial estoppel is an equitable doctrine, and the Fifth Circuit holds that judicial estoppel must be applied [in a bankruptcy situation] in such a way as to deter dishonest debtors, whose failure to fully and honestly disclose all their assets undermines the integrity of the bankruptcy system, while protecting the rights of creditors to an equitable distribution of the assets of the debtor s estate. Reed v. City of Arlington, 650 F.3d 571, 574 (5th Cir. 2011) (en banc). Adams may complain that it is somehow inequitable for her tort suit to be estopped, but this Court has held that [t]he doctrine of unclean hands provides that he who comes into equity must come with clean hands. Richardson v. Cornes, 903 So. 2d 51, 55 (Miss. 2005) (quoting Thigpen v. Kennedy, 238 So. 2d 744, 746 (Miss.1970)). As this Court pointed out, had the plaintiffs in Richardson taken a different procedural route, i.e., shown candor and honesty with the chancellor, a different result may have been 5 obtained. Instead, they chose not to do so. Equity cannot rescue Adams from the consequences of her own decision. This Court should affirm the grant of summary judgment below. 5 Quoting Judge Griffis s separate opinion (at 84) from the Court of Appeals decision which this Court was reviewing on writ of certiorari. -23-

31 CONCLUSION Adams s factual assertions to the circuit court were contradicted by the pleadings in her bankruptcy suit. She failed to show the necessary inadvertence, as that term has been defined by the courts, to avoid a finding that her duty was to disclose her potential tort suit. Judicial estoppel applies and should be imposed to protect the integrity of the judicial system. The dismissal of Adams s suit should be affirmed. Respectfully submitted, this the 23d day of December, GRACELAND CARE CENTER OF OXFORD, LLC, GRACELAND MANAGEMENT COMPANY, INC., and LAFAYETTE LTC., INC. By: s/ Andy Lowry Andy Lowry Counsel for Graceland Care Ctr. of Oxford, LLC, Graceland Mgmt. Co., Inc., & Lafayette LTC, Inc. OF COUNSEL: Thomas L. Kirkland, Jr. (MSB #4181) Andy Lowry (MSB #100782) COPELAND, COOK, TAYLOR & BUSH, P.A. Post Office Box 6020 Ridgeland, Mississippi Telephone: Facsimile: alowry@cctb.com Counsel for Graceland Care Ctr. of Oxford, LLC, Graceland Mgmt. Co., Inc., & Lafayette LTC, Inc. -24-

32 CERTIFICATE OF SERVICE The undersigned attorney for Appellees Lafayette LTC, Inc., Graceland Care Center of Oxford, LLC, and Graceland Management Co., Inc., hereby certifies that on this day he electronically filed the foregoing pleading with the Clerk of the Court using the MEC system, which sent notification of such filing to the following: Bobby F. Martin, Jr., Esq. The Cochran Firm - Memphis One Commerce Square, 26th Floor Memphis, Tennessee R. Stewart Guernsey, Esq. Attorney at Law Post Office Box 167 Water Valley, Mississippi John G. Wheeler, Esq. Mitchell, McNutt & Sams, P.A. Post Office Box 7120 Tupelo, Mississippi Further, I hereby certify that I have mailed by the United States Postal Service the document to the following non-mec participants: The Honorable John A. Gregory Post Office Box 466 Okolona, Mississippi Michael Skouteris, Esq. Skouteris & McGee, PLLC 50 North Front Street, Suite 590 Memphis, Tennessee So certified, this the 23d day of December, s/ Andy Lowry Andy Lowry -25-