Amended Bankruptcy Petition Allows Oregon Worker to Keep Going on Negligence Action Against Employer

Case File

Because a bankruptcy court granted a worker's trustee's motion to reopen his bankruptcy case specifically to administer his negligence action against his employer as an asset, and the worker's disclosure of the negligence in his amended petition meant that there was no longer a risk of inconsistent judgments in the two cases, the doctrine of judicial estoppel did not bar the negligence action. Simply Research subscribers have access to the full text of the case.

Case

Eller v. ABM Industries Inc., No. A180685 (Or. Ct. App. 05/13/26)

What Happened?

A worker slipped and fell at work, suffering injuries that required several surgeries. Two years later, the worker filed for bankruptcy. Although he listed his pending workers' compensation claim on his bankruptcy petition, he did not separately list his then-unfiled third-party negligence action against his employer. The worker obtained an order discharging his debts in federal bankruptcy court.

About a year later, the employer's counsel informed the worker's attorney that the worker's omission of the negligence claim in his bankruptcy proceeding supported the application of judicial estoppel to bar his negligence action. The worker's attorney, who did not represent the worker in the bankruptcy case, contacted the court-appointed bankruptcy trustee, who immediately moved to reopen the bankruptcy case to administer an undisclosed asset.

The worker then filed an amended petition listing the negligence action in his asset schedule.

Three months later, the employer moved for summary judgment on the grounds that judicial estoppel barred the negligence action, arguing that the failure to list the claim in the bankruptcy case was "tantamount to an admission that no such claim existed." Essentially, the employer's argument was that not listing the asset that was the negligence action implied the absence of a claim and the worker inconsistently took the position in his civil case that a negligence action existed.

In response, the worker alleged that when he listed his pending workers' compensation claim, he did not realize the negligence action should have been listed separately.

On the employer's motion for summary, the trial court held that judicial estoppel barred the worker's negligence claim because it was undisputed that the worker had obtained a discharge of his debts in bankruptcy by asserting the inconsistent position that he had no third-party negligence action against the employer.

The worker appealed.

Rule of Law

"Judicial estoppel is a common law equitable principle," the purpose of which "is to protect the judiciary, as an institution, from the perversion of judicial machinery." Under Oregon caselaw, there are three elements to establish the affirmative defense of judicial estoppel:

(1) Benefit in the earlier proceeding.

(2) Different judicial proceedings.

(3) Inconsistent positions in each proceeding.

What the Oregon Court of Appeals Said

The court sided with the worker, finding that the employer did not articulate a causal relationship between the worker's omission of his negligence action in his asset schedule and the bankruptcy court's decision to discharge the worker's debts.

According to the court, although the employer established that the worker may have generally benefitted from the discharge of his debts in bankruptcy, the employer did not identify the specific causal relationship between the purported benefit and the worker's omission, and there was no evidence that the discharge was obtained because of the omission.

The court explained that Oregon caselaw has "made clear" that a causal relationship must exist between the benefit received and the asserted prior inconsistent position.

"In other words, it is not enough that the litigant received some benefit from the earlier proceeding in which they advanced the inconsistent position; rather, the litigant must have received a benefit 'as a result of their inconsistent position.'"

In the court's view, reopening the bankruptcy case undermined the risk of inconsistent outcomes, supporting the conclusion that judicial integrity was not threatened.

Thus, judicial estoppel did not bar the worker's negligence action as a matter of law.

Verdict: The Court of Appeals reversed and remanded and the trial court's decision.

Takeaway

In Oregon, the focus of the doctrine of acceptance of an earlier position and harm to the judicial system is necessary to invoke judicial estoppel. Judicial estoppel in Oregon requires proof that the party obtained a benefit specifically because of the inconsistent position, not merely that both exist.

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