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Buttermark v. A.J.D. Construction Co.


July 21, 2008


On appeal from the Superior Court of New Jersey, Law Division, Ocean County, Docket No. L-230-05.

Per curiam.


Argued March 10, 2008

Before Judges Graves and Alvarez.

This is an appeal from summary judgment dismissing the complaint filed by plaintiffs, Jeffrey Buttermark (Buttermark) and Nadxelly Buttermark, against defendants A.J.D. Construction Co., Inc., Power Electric Co., Inc., and F&G Mechanical Corp., on the grounds of judicial estoppel. For the reasons that follow, we reverse and remand.

On January 16, 2003, Buttermark fell in a stairwell at a construction site where he was working as a plumber for defendant, F&G Mechanical. As a result, Buttermark suffered permanent injuries, and he initiated a claim for workers' compensation against F&G Mechanical Corporation.

Buttermark filed a Chapter 13 bankruptcy petition on September 26, 2003. On an unspecified date in October 2003, he appeared at a hearing conducted at the bankruptcy trustee's office, together with his bankruptcy attorney. The bankruptcy attorney's notes state that Buttermark "Testified Seeking Legal Advice for Work Injuries - 'Fell Down Stairs.'" Despite the testimony, the bankruptcy petition was not amended to include the within cause of action. Buttermark entered into a bankruptcy plan, and continues making payments to creditors pursuant to that plan.

Approximately two years after the fall, plaintiffs filed the within complaint. Buttermark was deposed by defendants on January 16, 2006, and June 8, 2006, and disclosed his bankruptcy status. The matter proceeded to non-binding arbitration on November 14, 2006, and an award of arbitration was made to plaintiffs in the net amount of $225,000, which they rejected.

On February 13, 2007, defendants filed motions for summary judgment, pursuant to the doctrine of judicial estoppel. On February 27, 2007, Buttermark's bankruptcy attorney amended the bankruptcy petition to include this cause of action as an asset. Summary judgment was granted on March 16, 2007, and the Law Division judge's oral conclusions were supplemented by a decision written that same day. Thereafter, plaintiffs filed an application for reconsideration, which was denied on May 11, 2007.

The judge's issuance of summary judgment for defendants is reviewed under the familiar standard as stated in Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). See also R. 4:46-2(c). The court is obliged "to consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill, supra, 142 N.J. at 540. On appeal, we apply the same standard as the trial court under Rule 4:46-2(c). Liberty Surplus Ins. Corp. v. Nowell Amoroso, P.A., 189 N.J. 436, 445-46 (2007).

We conclude, contrary to the motion judge, that when the evidence is viewed in the light most favorable to plaintiffs, the doctrine of judicial estoppel is inapplicable as a matter of law. In this case plaintiffs allege both that there was a material conflict of fact, and error as to the judge's conclusion of law. We review the legal ruling de novo, according no special deference to the trial court. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).

The judge relied principally on Superior Crewboats, Inc., v. Primary P&I Underwriters (In re Superior Crewboats, Inc.), 374 F.3d 330 (5th Cir. 2004). As set forth in that opinion, the purpose of the judicial estoppel doctrine "'is to protect the integrity of the judicial process by preventing parties from playing fast and loose with the courts to suit the exigencies of self interest.'" Id. at 334 (quoting Browning Mfg. v. Mims (In re Coastal Plains, Inc.), 179 F.3d 197, 205 (5th Cir. 1999) cert. denied, 528 U.S. 1117, 120 S.Ct. 936, 145 L.Ed. 2d 814 (2000)). Because "judicial estoppel is designed to protect" the integrity of the system, no "detrimental reliance by the party opponent" need be shown in order for the doctrine to apply. Ibid. (citing Coastal Plains, supra, 179 F.3d at 205). Essentially, three elements must be established: (1) that the party's position is clearly inconsistent with one previously taken; (2) that "the court must have accepted the previous position; and (3) [that] the non-disclosure must not have been inadvertent." Id. at 335.

The judge concluded the first Crewboats requirement was met when Buttermark did not disclose the existence of a personal injury lawsuit as an asset on his bankruptcy petition. Crewboats involved a superficially similar, but actually quite different, factual scenario. In that case, prior to the bankruptcy court learning of the viability of plaintiffs' personal injury lawsuit, plaintiffs were granted a complete discharge of their indebtedness. Id. at 333. In this case, Buttermark's bankruptcy status continues. In Crewboats, plaintiffs "inaccurately informed" their creditors, during a bankruptcy hearing, that their personal injury claim was barred by Louisiana's analog to a statute of limitations. Ibid. They also failed to advise the creditors that, despite this alleged statute of limitations bar, they had gone to the trouble and expense of serving the complaint on the personal injury defendants a month prior. Ibid. Here, Buttermark appears to have disclosed his potential personal injury claim at the initial bankruptcy trustee hearing, and disclosed the bankruptcy to the personal injury attorneys during depositions.

Significantly, in this case, the judge made no factual findings as to why he concluded that the non-disclosure was not inadvertent, the third element required under Crewboats. Despite the unrefuted certification of the bankruptcy attorney that Buttermark had disclosed the existence of a possible lawsuit to the bankruptcy trustee at the very first meeting, the court said "I'm not concerned about [the disclosure] because no matter what happened at that 341 hearing, no one ever did anything about it." The fact "no one ever did anything" about Buttermark's information, however, does not prove intentional conduct on his part. Buttermark maintains he did not hide the possibility of lawsuit from his bankruptcy attorney or trustee, and cannot be held accountable for the fact the petition should have been amended at that stage, but was not.

The judge said in his written decision, "a rebuttable inference of bad faith arises when the pleadings demonstrate both knowledge of a claim and a motive to conceal that claim in the face of an affirmative duty to disclose." He did not explain, however, why he did not consider Buttermark's statement to the trustee at the first meeting to be fulfillment of that affirmative duty.

It is our view that this issue raised a material conflict of fact when the evidence is viewed in the light most favorable to plaintiffs, namely, that Buttermark did make full disclosure despite defendant's assertions to the contrary. Furthermore, as a matter of law, if Buttermark disclosed the possibility of a lawsuit during the first trustee meeting, the third prong of the Crewboats test has not been met. The doctrine should not bar him from pursuing his personal injury claims as the failure of bankruptcy counsel and the trustee to amend the petition, was not due to any omission on his part.

Accordingly, as we find there was a conflict of material fact, and that the third element of the doctrine of judicial estoppel was not established, summary judgment should not have been granted. We reverse and remand, and do not retain jurisdiction.

Reversed and remanded.


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