Keathley v. Buddy Ayers Construction, Inc.

Keathley v. Buddy Ayers Construction, Inc. | 03/24/26 | Docket #: 25-6 25-6 KEATHLEY V. BUDDY AYERS CONSTRUCTION, INC. DECISION BELOW: 2025 WL 673434 CERT. GRANTED 10/20/2025 QUESTION PRESENTED: Judicial estoppel is an equitable doctrine designed '"to protect the integrity of the judicial process' by 'prohibiting parties from deliberately changing positions"' to gain an unfair advantage. New Hampshire v. Maine , 532 U.S. 742, 749-50 (2001). The doctrine targets those who "'deliberately"' mislead courts, not those whose inconsistent positions stem from "inadvertence or mistake." Id . at 750, 753. Courts regularly apply judicial estoppel when a debtor-plaintiff pursues a claim he failed to disclose to the bankruptcy court. The Eleventh, Ninth, Seventh, Sixth, and Fourth Circuits require courts to look at the totality of the circumstances and find that a debtor subjectively intended to mislead the bankruptcy court before applying judicial estoppel to bar a claim outside of the bankruptcy. In stark contrast, the Fifth and Tenth Circuits have embraced a "rigid" and "unforgiving" judicial estoppel rule in the bankruptcy context that bars claims regardless of whether there is evidence that a plaintiff actually intended to mislead. App. 55a. In those circuits, a debtor's failure to disclose a lawsuit to a bankruptcy court triggers judicial estoppel whenever the debtor knew the facts relevant to the undisclosed claim and had a potential motive for concealment-which is virtually always present in the bankruptcy context. The question presented is: Whether the doctrine of judicial estoppel can be invoked to bar a plaintiff who fails to disclose a civil claim in bankruptcy filings from pursuing that claim simply because there is a potential motive for nondisclosure, regardless of whether there is evidence that the plaintiff in fact acted in bad faith. LOWER COURT CASE NUMBER: 24-60025