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Keathley v. Buddy Ayers Construction, Inc.
Opinion: https://www.supremecourt.gov/opinions/25pdf/25-6_d1o2.pdf
Case background
Thomas Keathley and his wife filed a Chapter 13 bankruptcy petition in
December 2019. The Bankruptcy Code requires debtors to file schedules listing
their property, including claims against third parties, and to swear under
penalty of perjury that the information is true and correct. Based on the
Keathleys’ disclosures, the Bankruptcy Court confirmed an amended plan in
April 2020 providing for interest-free repayment of 100% of creditors’ claims
over five years. In August 2021, while the bankruptcy case remained open,
Keathley was involved in a car accident in Mississippi with a driver employed
by Buddy Ayers Construction, Inc. He retained a personal-injury attorney and
told his bankruptcy counsel that he intended to sue, but neither disclosed the
potential claim to the Bankruptcy Court, and in December 2021 Keathley filed a
negligence action in federal district court without notifying that court. After
Buddy Ayers Construction moved for summary judgment on grounds of judicial
estoppel, Keathley amended his schedules and submitted affidavits explaining
that the omission had been inadvertent. The District Court, relying on Fifth
Circuit precedent, found that Keathley knew the facts underlying his claims and
hypothetically had a motive to conceal them, held that the omission was
therefore not inadvertent or a mistake, and entered summary judgment for the
company. The Fifth Circuit affirmed, with one judge concurring but expressing
doubt that judicial estoppel’s goals were served by applying it given evidence
the omission was an “honest mistake.”
Questions Presented
Holding
To determine whether an omission of a claim in the bankruptcy context was
inadvertent or mistaken for purposes of judicial estoppel, courts should look
to the totality of the circumstances surrounding the omission. The Fifth
Circuit erred by artificially narrowing its inquiry to whether the debtor had
knowledge of the underlying facts or a potential motive to conceal the claim —
a rule that is at once too rigid, because judicial estoppel is an equitable
doctrine that “eschews mechanical rules” and depends on a case-by-case
weighing of all relevant facts and circumstances, and too broad, because a
debtor will almost always know the underlying facts and stand to benefit from
nondisclosure. Vacated and remanded.
The Court
Justice Jackson delivered the opinion for a unanimous Court. Justice Thomas
filed a concurring opinion, in which Justice Gorsuch joined. Justice Sotomayor
filed a concurring opinion.
What this episode contains
This episode is an AI-narrated reading of the majority opinion in
Keathley v. Buddy Ayers Construction, Inc., written by Justice Jackson.
AI disclosure: The voice in this episode is AI-generated, using a machine
learning model styled to loosely resemble the authoring justice. Tone,
inflection, pacing, and emphasis are artifacts of the model and should not be
attributed to Justice Jackson. The text being read is the Court’s published
majority opinion, lightly adapted to improve readability for the spoken format.
View all episodes
By So OrderedOpinion: https://www.supremecourt.gov/opinions/25pdf/25-6_d1o2.pdf
Case background
Thomas Keathley and his wife filed a Chapter 13 bankruptcy petition in
December 2019. The Bankruptcy Code requires debtors to file schedules listing
their property, including claims against third parties, and to swear under
penalty of perjury that the information is true and correct. Based on the
Keathleys’ disclosures, the Bankruptcy Court confirmed an amended plan in
April 2020 providing for interest-free repayment of 100% of creditors’ claims
over five years. In August 2021, while the bankruptcy case remained open,
Keathley was involved in a car accident in Mississippi with a driver employed
by Buddy Ayers Construction, Inc. He retained a personal-injury attorney and
told his bankruptcy counsel that he intended to sue, but neither disclosed the
potential claim to the Bankruptcy Court, and in December 2021 Keathley filed a
negligence action in federal district court without notifying that court. After
Buddy Ayers Construction moved for summary judgment on grounds of judicial
estoppel, Keathley amended his schedules and submitted affidavits explaining
that the omission had been inadvertent. The District Court, relying on Fifth
Circuit precedent, found that Keathley knew the facts underlying his claims and
hypothetically had a motive to conceal them, held that the omission was
therefore not inadvertent or a mistake, and entered summary judgment for the
company. The Fifth Circuit affirmed, with one judge concurring but expressing
doubt that judicial estoppel’s goals were served by applying it given evidence
the omission was an “honest mistake.”
Questions Presented
Holding
To determine whether an omission of a claim in the bankruptcy context was
inadvertent or mistaken for purposes of judicial estoppel, courts should look
to the totality of the circumstances surrounding the omission. The Fifth
Circuit erred by artificially narrowing its inquiry to whether the debtor had
knowledge of the underlying facts or a potential motive to conceal the claim —
a rule that is at once too rigid, because judicial estoppel is an equitable
doctrine that “eschews mechanical rules” and depends on a case-by-case
weighing of all relevant facts and circumstances, and too broad, because a
debtor will almost always know the underlying facts and stand to benefit from
nondisclosure. Vacated and remanded.
The Court
Justice Jackson delivered the opinion for a unanimous Court. Justice Thomas
filed a concurring opinion, in which Justice Gorsuch joined. Justice Sotomayor
filed a concurring opinion.
What this episode contains
This episode is an AI-narrated reading of the majority opinion in
Keathley v. Buddy Ayers Construction, Inc., written by Justice Jackson.
AI disclosure: The voice in this episode is AI-generated, using a machine
learning model styled to loosely resemble the authoring justice. Tone,
inflection, pacing, and emphasis are artifacts of the model and should not be
attributed to Justice Jackson. The text being read is the Court’s published
majority opinion, lightly adapted to improve readability for the spoken format.