In 1997, the decedent’s claims for asbestos exposure against shipowners represented by Thompson Hine LLP were administratively dismissed, with the option of pursuing at a later date. In 1999, the decedent brought claims against various defendants, including the shipowners represented by Thompson Hine LLP. In 2001, the decedent received a separate cancer diagnosis that he claimed was asbestos related; he died in 2002. In 2003, his widow, the plaintiff, filed for bankruptcy, which was closed four months later. In 2011, the MDL reinstated the action which had been dismissed in 1997. While this case began in the Northern District of Ohio, it was transferred to the Eastern District of Pennsylvania, where it became part of the asbestos MDL 875 and assigned to the maritime docket.
The defendants moved for summary judgment, arguing that (1) the plaintiff’s claims are barred by judicial estoppel because this action was not disclosed as an asset in the bankruptcy filing, and (2) the asbestos action is now owned by the bankruptcy estate. The court denied both issues in the summary judgment.
The court applied federal law in the Third Circuit in deciding these issues, and followed the Third Circuit’s test for judicial estoppel: “First, the party to be estopped must have taken two positions that are irreconcilably inconsistent. Second, judicial estoppel is unwarranted unless the party changed his or her position “in bad faith – i.e., with intent to play fast and loose with the court.” Finally, a district court may not employ judicial estoppel unless it is ‘tailored to address the harm identified’ and no lesser sanction would adequately remedy the damage done by the litigant’s misconduct.” The parties did not dispute that the asbestos claim was not listed in the bankruptcy case. However, this failure to disclose was not in bad faith, because the plaintiff could not have known that eight years after her bankruptcy claim a new MDL judge would reopen her late husband’s case. However, regarding the second issue, the claims were part of the bankruptcy estate because they were realized claims held in abeyance by the court.
The court then stayed this action for thirty days so that the bankruptcy estate could be reopened and the trustee could be substituted as the party, since the trustee, not the plaintiff, was the real party in interest for the asbestos claims.