November 18, 2011

Plaintiff's bankruptcy filing may create defenses in civil litigation A search should be conducted early in every case to determine if the plaintiff has filed for bankrtupcy. There are a number of good reasons to do so. DRI published a recent article on its website concerning the defense of judicial estoppel arising from the plaintiff's failure to disclose his or her claim as an asset in the bankruptcy proceedings. There is quite a bit of case law on judicial estoppel arising from bankruptcy. Another way in which bankruptcy proceedings can negatively impact a plaintiff's suit was recently illustrated by the case of Kocher v. Campbell, a decision of the Virginia Supreme Court that came out last June. In Kocher, the Court considered the issue whether the plaintiff in an action to recover damages for personal injuries had standing to maintain his action after filing a petition for bankruptcy, causing his claim to become an asset of his bankruptcy estate. The Court held that the plaintiff lacked standing, and dismissed the case. The plaintiff was involved in a motor vehicle accident, and before filing a lawsuit the plaintiff filed a voluntary Chapter 7 petition in bankruptcy. His petition failed to disclose his personal injury claim as an asset in Schedule B, and failed to list it on Schedule C as an exempt property. About three months later, plaintiff received a standard discharge in bankruptcy. The plaintiff then filed his civil action based on the motor vehicle accident. This was nonsuited then refiled and served. The defense filed a motion for...

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