Seafood restaurant group Red Lobster LLC could not net a reversal from the Court of Appeals of Indiana on a ruling denying its motion for summary judgment in a negligence case.
In May 2017, Abigail Fricke filed a Chapter 13 petition for bankruptcy with the U.S. Bankruptcy Court for the Southern District of Indiana.
That September, the bankruptcy court entered an order for Fricke to pay $1,350 a month to the bankruptcy trustee for five years. The plan provided, “If additional property comes into the estate pursuant to 11 U.S.C. § 1306(a)(1) or if the Trustee discovers undisclosed property of the estate, then the Trustee may obtain such property or its proceeds to increase the total amount to be paid under the plan.”
Two years later in December 2019, Fricke visited a Red Lobster restaurant in Indianapolis and tripped on an unmarked elevated portion of the floor. The following August, she sued for negligence.
In response to an interrogatory, Fricke answered “no” when she was asked if she had ever been party to a civil, criminal or bankruptcy action.
Red Lobster filed a motion for summary judgment in May 2021, asserting Fricke was judicially estopped and lacked standing due to her bankruptcy action.
A month later, Fricke amended her assets with the bankruptcy court, adding the personal injury action against Red Lobster. The bankruptcy court later granted the trustee’s motion to dismiss Fricke’s bankruptcy case due to her missing payments.
In response to Red Lobster’s motion for summary judgment, Fricke explained that she didn’t intend to mislead by not disclosing her bankruptcy case. She included an affidavit, which Red Lobster attempted to strike for being contradictory to her previous sworn interrogatory answers.
After a hearing, the Marion Superior Court denied both Red Lobster’s motion to strike and its motion for summary judgment.
Red Lobster appealed, arguing first that the trial court abused its discretion when it denied the motion to strike Fricke’s affidavit.
“However, Red Lobster’s argument misses the boat,” Judge Melissa May wrote. “Fricke is not using her affidavit to contradict her prior sworn testimony. She is using the affidavit to explain her own mindset and intentions.
“Both of Fricke’s explanations for incorrectly answering the interrogatory — that she overlooked the word bankruptcy and that she did not think of her bankruptcy as a lawsuit because she was not suing anyone or being sued by anyone — explain why she believed she did not need to disclose the bankruptcy,” May continued. “They convey that Fricke was acting in good faith rather than trying to hide her bankruptcy.”
Red Lobster also argued the trial court erred when it denied the restaurant’s motion for summary judgment.
“… Fricke averred that she did not intend to conceal her personal injury suit from the bankruptcy court. Consequently, a factual dispute exists regarding whether Fricke intentionally concealed the personal injury suit from the bankruptcy court,” May wrote, rejecting the judicial estoppel argument. “Moreover, the bankruptcy trustee moved to dismiss Fricke’s bankruptcy petition after Fricke disclosed the personal injury suit to the trustee, and we fail to see how any of Fricke’s creditors were harmed by her failure to disclose the suit earlier.”
Finally, on the issue of standing, the COA ruled Fricke had standing because she sustained a direct injury.
“Fricke was also under an obligation to advise the trustee upon the resolution of her claim and to not dispose of any funds without first obtaining the consent of the trustee,” May wrote. “Thus, had Fricke’s bankruptcy petition not been dismissed, any recovery would have been available to satisfy her creditors. The trial court properly rejected Red Lobster’s argument that Fricke lacked standing.”
Judges Paul Mathias and Elizabeth Tavitas concurred.
This article was first published in The Indiana Lawyer.
