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Federal District Court in Boston Dismisses Claims Based on Plaintiff’s Non-Disclosures in Bankruptcy

In a decision issued this afternoon, a federal judge sitting in Boston held that the plaintiff in a wage case could not proceed with claims that he did not disclose in bankruptcy.  Hinckley Allen handled the defense for two of the defendants.

The plaintiff filed his action in federal court against multiple defendants seeking damages in a principal amount exceeding $200,000.   A few months later, the plaintiff filed a voluntary petition for bankruptcy.   However, the plaintiff did not make a written disclosure of the lawsuit in the bankruptcy proceedings (even though he disclosed other lawsuits) and only disclosed a “possible receivable” of $12,000 against one of the defendants.  The bankruptcy court granted a no-asset discharge.

Against this backdrop, the federal court granted a motion to dismiss, holding that the doctrine of judicial estoppel barred the plaintiff’s claims against a defendant who was not mentioned in the plaintiff’s bankruptcy disclosures.  The judge concluded that the plaintiff “took a position ‘directly inconsistent’ with the position he took in front of the bankruptcy court, asserting here that he has a claim against [the defendant] while representing to the bankruptcy court that he did not.”  Because the bankruptcy court accepted the plaintiff’s representation that he did not have a claim against the defendant, the plaintiff could not later claim that he did.  Even if the First Circuit had adopted the good faith exception to judicial estoppel, the exception would not apply in this case because the plaintiff knew about the lawsuit, which he commenced before filing for bankruptcy.