Opinion
No. 7-02-18308 MA.
February 16, 2006
Donald Provencio, Attorney for Debtor, Albuquerque, NM.
Richard M. Leverick, Attorney for Deutsche Bank National Trust Company Albuquerque, NM.
Michael J. Caplan, Chapter 7 Trustee, Grants, NM, Office of the United States Trustee, Albuquerque, NM.
ORDER DENYING DEBTOR'S MOTION TO REOPEN CASE
THIS MATTER is before the Court on the Debtor's Motion to Reopen Case ("Motion"). The Debtor seeks to reopen the case pursuant to 11 U.S.C. § 350(b) for the purpose of amending her statements and schedules to include certain counter claims and third party claims against Deutsche Bank National Trust Company, N.A. ("Deutsche Bank"); Ann Drago, individually, and as employee of Elite Mortgage; First State Bank of Taos, d/b/a First State Mortgage; and Impac Funding Corporation for unfair trade practices under the New Mexico Unfair Trade Practices Act, fraud and misrepresentation, and breach of fiduciary duty on a mortgage. Deutsche Bank filed an objection to the Motion. The Court held a final hearing on the Motion on February 8, 2006 and took the matter under advisement. For the reasons stated below, the Court finds that the Motion should be denied.
Debtor filed a voluntary petition under Chapter 7 of the bankruptcy code on November 22, 2002, and received a discharge on March 10, 2003. The case was then closed. Some time in 2004, Deutsche Bank initiated foreclosure proceedings against the Debtor in state court. Debtor asserted counterclaims against Deutsche Bank, and added claims against Ann Drago, as a third-party defendant, and others, in the state court foreclosure action. As part of the state court foreclosure action, third-party defendant Ann Drago asserted that Debtor should be judicially estopped from asserting claims against her because the Debtor had not listed her claims, which arose prior to the filing of her bankruptcy proceeding, in the statements and schedules filed in her Chapter 7 proceeding. Despite having notice of the defense of judicial estoppel asserted in the state court foreclosure action, Debtor did not seek to reopen her bankruptcy case for the purpose of adding her claims against Deutsche Bank, Ann Drago, and others to her statements and schedules until just prior to the state court hearing on the motion to dismiss. The state court ruled that judicial estoppel barred Debtor's claims and granted Ann Drago's motion to dismiss, with prejudice.
Motions to reopen are governed by 11 U.S.C. § 350(b), which provides:
A case may be reopened in the court in which such case was closed to administer assets, to accord relief to the debtor, or for other cause.11 U.S.C. § 350(b).
Whether to grant a request to reopen a bankruptcy case is left to the sound discretion of the bankruptcy court, provided the Court is guided by the parameters of 11 U.S.C. § 350(b). In re Alpex Computer Corp., 71 F.3d 353, 356 (10th Cir. 1995). Under the circumstances present here, no cause exists for reopening the case.
The state court has determined that the Debtor is barred from pursuing her claims under the doctrine of judicial estoppel. The Debtor, not the Chapter 7 Trustee, seeks to reopen the bankruptcy proceeding. Thus, while the state court's ruling regarding judicial estoppel is not binding on the Chapter 7 Trustee, it does have res judicata effect as against the Debtor, who is the party seeking to reopen the bankruptcy proceeding. Cf. Parker v. Wendy's Int'l, Inc., 365 F.3d 1268, 1273 (11th Cir. 2004) (holding that judicial estoppel did not apply because the claim belonged to chapter 7 trustee who was pursuing the cause of action on behalf of the bankruptcy estate, not the debtor). Reopening the case, therefore, serves no purpose. There can be no relief afforded to the Debtor because the state court's ruling bars the Debtor from pursuing her causes of action, nor is the Trustee seeking to reopen the case for the purpose of administering an asset of the estate.
The doctrine of judicial estoppel precludes a party "from `asserting a claim in a legal proceeding that is inconsistent with a claim taken by that party in a previous proceeding. Judicial estoppel is an equitable concept intended to prevent the perversion of the judicial process.'" Burnes v. Pemco Aeroplex, 291 F.3d 1282, 1285 (11th Cir. 2002) (quoting 18 James Wm. Moore et al., Moore's Federal Practice § 134.30, p. 134-62 (3d ed. 2000)).
WHEREFORE, IT IS HEREBY ORDERED that the Debtor's Motion to Reopen Case is DENIED.