Unclear Today, Gone Tomorrow? A Bankruptcy Petitioner Who Does Not Identify Possible Employment Discrimination Claims May be Barred From Pursuing the Unidentified Claims at a Later Date

A bankruptcy petitioner who does not identify possible employment discrimination claims in his or her bankruptcy schedule may be barred from later pursuing the unidentified claims.  So held a recent federal district court opinion in Johnson v. First Technology Federal Credit Union, (S.D. Texas, Civil Action Number 4:11-cv-03812, July 18, 2013).

Joe Johnson underwent a heart procedure in June 2009.  Less than one month later, Mr. Johnson’s employers terminated his employment.  Mr. Johnson filed for bankruptcy the next day.   At no time during the bankruptcy proceeding did Mr. Johnson represent either that he did, or that he might, have employment discrimination claims against his employers.  The bankruptcy court discharged Mr. Johnson’s debt six months later.

After the bankruptcy court discharged Mr. Johnson’s debt, Mr. Johnson filed a lawsuit asserting violations of the federal Americans with Disabilities Act (“ADA”) and Age Discrimination in Employment Act (“ADEA”).  The defendants moved for summary judgment on the ground that the doctrine of judicial estoppel – a doctrine that prohibits  parties from taking inconsistent factual positions in different lawsuits in which they are involved – barred Mr. Johnson from litigating his employment discrimination claims because he had not disclosed the existence of these claims during the bankruptcy proceeding.  Mr. Johnson opposed the defendant’s motion for summary judgment on the grounds that he was not aware of all of the facts giving rise to the termination of his employment, and was unsure that he had a claim against his employers, at the time that he filed his bankruptcy petition and that his nondisclosure therefore was inadvertent.  The district court rejected Mr. Johnson’s explanation and granted the defendants’ motion for summary judgment, holding that a debtor “need not know all of the facts or even the legal basis for the [potential] cause of action” that went undisclosed.

Posternock Apell, PC is a full service law firm.  We have attorneys who can help you negotiate tricky intersections of two or more practice areas of the law, such as the intersection of bankruptcy law and employment law that arose in Johnson, and attain a reasonable outcome at an affordable price.  If you currently face such an intersection, call Posternock Apell, PC.  We will fight to protect your interests.