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A Potential Sword and/or Shield Worth Considering: The First Circuit's Recent Guide to the Application of Judicial Estoppel in Bankruptcy

Once asserted, may a party alter it? Once claimed, may a party contradict it? A party’s ability to abandon a previously taken position and champion its converse in a later case or proceeding often depends on one of the law’s more esoteric prohibitions: that kaleidoscopic smorgasbord of precepts collectively known as “judicial estoppel.”

What Is “Judicial Estoppel,” Precisely?

As generally understood, judicial estoppel “prevent[s] a litigant from pressing a claim that is inconsistent with a position taken by that litigant either in a prior legal proceeding or in an earlier phase of the same legal proceeding.” This rule emerged long ago, and persists to this day, as a means of protecting the integrity of the courts, not the parties, in the same manner as certain types of contempt orders. Beneath this broad agreement over its purpose and boundaries, however, simmer longstanding divides over many of its finer details, from what types of positions it covers to what elements can justify its application. Judicial estoppel’s surprising obscurity likely bears some responsibility for this uncertainty; indeed, while the Supreme Court referenced the doctrine no later than its 1895 decision in Davis v. Wakelee, it did not officially acknowledge its viability until 2001’s New Hampshire v. Maine.

First Circuit’s General Instructions 

Perhaps recognizing that bankruptcy tends to worsen the complications associated with this hazily defined estoppel doctrine, the First Circuit provided a ready primer on its bankruptcy-specific application in its February 22, 2023, opinion in Buscone v. Botelho (In re Buscone), Case No. 22-9001.

In particular, Buscone distilled at least five guiding principles for courts and counsel from a mishmash of federal appellate opinions:

  • This doctrine is both discretionary and equitable through and through;
  • Bankruptcy courts should apply judicial estoppel with careful regard to its “paramount purpose”: “‘to protect the integrity of the judicial process,’ by ‘prohibiting parties from deliberately changing positions according to the exigencies of the moment’”;
  • Before a bankruptcy court may consider its imposition, two “baseline factors” must be demonstrated: (1) the old and new positions must be “‘clearly inconsistent with their earlier position,’” and (2) “the party must have ‘succeeded in persuading the court to adopt [their] prior position’”;
  • Assuming such a two-part showing, other “‘[a]dditional considerations” may nonetheless inform judicial estoppel’s utilization “‘in specific factual contexts,’” such as (3) “‘whether the party seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped’”; and
  • Once (and only after) a bankruptcy court has “weigh[ed] the relevant factors,” it may then apply this estoppel doctrine if it “believe[s] that ‘a litigant is playing fast and loose with the courts’ or that ‘intentional self-contradiction is being used as a means of obtaining unfair advantage,’” as when a debtor who “‘obtained judicial relief on the representation that no claims existed’” attempts to “‘resurrect them and obtain relief on the opposite basis.’”

With these principles in mind, the First Circuit proceeded to deal with “the distinct problem” before it: “whether a court is bound to reason so, and apply judicial estoppel at summary judgment, regardless of the factual circumstances at issue and in the face of allegations that a prior omission was inadvertent and may be remedied.”

Click the link below for the full opinion and learn about this case, including its overflowing factual brew—curdled dreams of yogurt spawned the underlying cases, and the appeal came at the tail-end of two bankruptcies, two default judgments, and far more than two discovery disagreements—and the First Circuit’s granular analysis and particular holdings.

"When filing for bankruptcy, debtors are obligated to fully disclose the extent of their assets and debts, including their contingent claims against others and those held against them, in such schedules." "[C]ountless courts have confronted the question of how best to deal with cases where the debtor has failed to make the full requisite disclosure in her initial bankruptcy petition. One adverse repercussion has been, in many instances, to bar the debtor from subsequently making claims that conflict with her prior disclosures. This bar is known as judicial estoppel ...." "[A]n individual who has received a discharge based on schedules that failed to list an asset, such as a claim they had for credit from another, may not go ahead and pursue the claim in a subsequent proceeding."


bankruptcy, estoppel, judicial estoppel, equity, judicial discretion, federal procedure, restructuring & insolvency