Civil Procedure — judicial estoppel — non-party preclusion

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United States Court of Appeals For the Seventh Circuit

Civil

Civil Procedure — judicial estoppel — non-party preclusion

It was not an abuse of discretion for the district court to bind a bankruptcy trustee to another party’s conduct in prior litigation, because the trustee acted at all times as a proxy for the real party in the case.

“Based on the undisputed facts, the district court did not abuse its discretion in reaching this conclusion as a matter of its equitable judgment. This is not merely a case where the creditor of an estate previously took a litigation position inconsistent with a position taken by the trustee. Rather, Spehar Capital was intimately involved in the genesis and the hoped-for end of this suit. Spehar Capital forced CMGT into bankruptcy for the purpose of allowing this suit to be brought and, after filing the bankruptcy petition, worked tirelessly to convince the trustee to bring suit. Given Spehar Capital’s significant involvement in this case, if the trustee were to prevail in this suit and Spehar Capital were to receive the lion’s share of the recovery, the courts would have been abused and misled. Preventing such a reality and perception is a core purpose of judicial estoppel. The district court’s opinion clearly showed Spehar Capital’s intimate involvement in this case and how this involvement created the impression that the courts were being misused. The consideration of Spehar Capital’s previous litigation was consistent with the aims of judicial estoppel, and the district court did not abuse its discretion by attributing Spehar Capital’s litigation conduct to the trustee.”

Affirmed.

10-2057, 11-1393 & 11-3597 Grochocinski v. Mayer Brown Rowe & Maw, LLP

Appeals from the United States District Court for the Northern District of Illinois, Kendall, J., Hamilton, J.