Argued: May 8, 2019
from the United States District Court for the District of
South Carolina, at Columbia. Margaret B. Seymour, Senior
District Judge. (3:16-cv-02650-MBS)
Matthew James Greer, WILLIAMS & CONNOLLY, LLP,
Washington, D.C., for Appellant.
J. DuRant, SOWELL & DURANT, LLC, Columbia, South
Carolina, for Appellees.
Thornwell F. Sowell, SOWELL & DURANT, LLC, Columbia,
South Carolina, for Appellees.
NIEMEYER and HARRIS, Circuit Judges, and Ellen L. HOLLANDER,
United States District Judge for the District of Maryland,
sitting by designation.
HARRIS, CIRCUIT JUDGE
after entering into a settlement that released certain tort
claims, Paige Martineau filed for Chapter 7 bankruptcy. After
her debts were discharged and the bankruptcy proceedings
closed, Martineau brought this case in federal district
court, seeking to rescind her settlement agreement as
fraudulently induced and to pursue a tort action.
district court rejected that effort and entered judgment in
favor of the defendants. First, the district court held,
Martineau lacked standing because her tort claims were the
property of her bankruptcy estate when she filed this action.
And in any event, the court found, judicial estoppel
precluded Martineau's suit: Because Martineau had not
disclosed her future legal claims when she filed for
bankruptcy, the court reasoned, she had effectively disavowed
them, and could not now take a contrary position.
to a different conclusion. The district court's
"standing" determination conflates Article III
requirements with the distinct real-party-in-interest
analysis; when the two are untangled, it becomes clear that
Martineau has both Article III standing and the legal
entitlement to pursue these tort claims on her own behalf.
With respect to judicial estoppel, the district court relied
on an improper presumption of bad faith, short-circuiting the
necessary inquiry. Accordingly, we remand so that the
district court may evaluate the appropriateness of judicial
estoppel in light of all facts and circumstances without
recourse to a presumption of bad faith.
underlying tort claims stem from a grisly attack on her by
defendant Richard Guest on October 13, 2009. Martineau
encountered Guest outside of Guest's apartment, while
visiting her boyfriend in the same building. According to the
police report, Guest stabbed Martineau repeatedly with an
eight-to-ten-inch kitchen knife in an unprovoked assault. The
police arrested Guest, who was charged with assault and
battery with intent to kill and kidnapping. Guest was found
incompetent to stand trial, however, and civilly committed to
a mental health facility.
years that followed, Martineau retained counsel to
investigate potential claims against Guest and co-defendants
Diane and Joel Wier, Guest's sister and brother-in-law
and the owners of the apartment building in question.
According to Martineau, the Wiers assured her that the only
relationship they had with Guest was as landlords, and that
they had no reason to know of his severe mental illness or
potential dangerousness. Relying on those representations,
Martineau alleges, she concluded that the Wiers could not be
held liable for negligence in connection with Guest's
attack on her. As a result, Martineau, still represented by
counsel, agreed in October of 2012 to release all claims
against the Wiers and Guest in exchange for $20, 000 - a sum
that she contends represents only a fraction of her damages.
a year later, in December of 2013, prosecutors in Guest's
criminal case gave Martineau access to Guest's criminal
file for the first time. It was at that point, Martineau
alleges, that she learned that the Wiers in fact had ample
knowledge of Guest's long history of mental illness and
propensity for violence. According to Martineau, Diane had
attempted to have Guest involuntarily committed years
earlier; she was the trustee of a long-standing mental health
trust established because Guest was incompetent to manage
funds; and the Wiers had discovered poems by Guest describing
bloody stabbings. Despite these revelations, Martineau took
no legal action, believing that her settlement agreement
barred her from proceeding against the Wiers or Guest.
of 2015, eighteen months after reviewing Guest's criminal
file, Martineau, now proceeding without counsel, filed for
Chapter 7 bankruptcy. When a debtor files for Chapter 7
bankruptcy, her assets immediately are transferred to the
bankruptcy estate. See 11 U.S.C. § 541(a). A
Chapter 7 bankruptcy trustee liquidates that property and
distributes the proceeds to the debtor's creditors.
Id. §§ 704(a)(1), 726. The estate does not
include, however, wages earned or assets acquired after the
debtor files for bankruptcy. See id. §
541(a)(1). A Chapter 7 debtor thus gains a "clean
break" from her financial struggles, "but at a
steep price: prompt liquidation of the debtor's
assets." Harris v. Viegelahn, 135 S.Ct. 1829,
facilitate this process, a Chapter 7 debtor must disclose to
the bankruptcy court those assets which now belong to the
estate, 11 U.S.C. § 521(a), including "all legal
[and] equitable interests of the debtor," id.
§ 541(a). Courts "uniformly" interpret this
statutory language to include causes of action. In re
Bogdan, 414 F.3d 507, 512 (4th Cir. 2005) (internal
quotation marks omitted). And indeed, Martineau's
disclosures listed a pending suit she had against her
then-landlord. Those disclosures did not, however, mention
any potential future claims against Guest and the Wiers.
bankruptcy court appointed a trustee to oversee the
distribution of assets within Martineau's estate. In
carrying out that responsibility, a trustee need not pursue
all claims, and instead may "abandon any property of the
estate that is burdensome to the estate or that is of
inconsequential value and benefit to the estate." 11
U.S.C. § 554(a). That includes legal claims deemed to be
"worthless or low value." Biesek v. Soo Line R.
Co., 440 F.3d 410, 413 (7th Cir. 2006). Here, the
trustee abandoned any interest in Martineau's assets,