Hughes v. Canadian National Railway Company

Background

Ricky Hughes alleged that he was injured in two workplace accidents while maintaining railroad tracks for Wisconsin Central Ltd. The first accident occurred on October 24, 2016, while a crew was raising track with track jacks. The second occurred on August 8, 2017, and involved a hydraulic spike puller. Racine Railroad Products, Inc. manufactured the tool, and Portaco, Inc. distributed it to the railroad.

Hughes brought a claim against Wisconsin Central under the Federal Employers Liability Act and state-law strict-liability and negligence claims against Racine Railroad Products and Portaco based on the alleged defective condition of the spike puller.

Before the accidents, Hughes had filed a Chapter 13 bankruptcy case. He did not list the potential injury claims in his bankruptcy schedules, including on a schedule requiring disclosure of contingent and unliquidated claims. His debts were discharged, and the bankruptcy case was closed in March 2018. After filing this lawsuit, Hughes reopened the bankruptcy case in August 2021 and amended the bankruptcy schedules to identify the potential personal-injury and Federal Employers Liability Act claims as assets of the bankruptcy estate.

Defendants’ arguments

The defendants moved for summary judgment based on lack of standing and judicial estoppel. They argued that Hughes lacked standing because he was pursuing the lawsuit for himself rather than on behalf of the bankruptcy estate. They also argued that Hughes should be barred by judicial estoppel—a doctrine that can prevent a party from taking inconsistent positions in related proceedings—because he had failed to disclose the claims in bankruptcy. The defendants further argued that reopening the bankruptcy case and amending the schedules came too late.

Standing

The court explained that legal claims belonging to a debtor when a bankruptcy case begins generally become property of the bankruptcy estate. In a Chapter 13 case, the estate also includes certain property acquired before the case closes. The court noted that a Chapter 13 debtor in possession may prosecute an action on behalf of the bankruptcy estate.

The court concluded that standing remained unclear because the bankruptcy case had been reopened. Whether Hughes had standing depended on whether the bankruptcy estate would benefit from any recovery in this lawsuit. The court therefore denied the motion based on lack of standing without prejudice and stayed the case while the Bankruptcy Court determined whether reopening the bankruptcy case would permit a benefit to the estate.

Judicial estoppel

The court recognized that failing to disclose an asset in bankruptcy can support judicial estoppel. It nevertheless declined to apply the doctrine at this stage. The court relied on evidence that the bankruptcy case had been reopened, the absence of evidence that Hughes intended to defraud creditors or intentionally mislead or manipulate the judicial system, and uncertainty about whether creditors’ interests remained implicated in the reopened proceeding.

Disposition

The court denied all three defendants’ summary-judgment motions—Wisconsin Central’s motion, Portaco’s motion concerning the bankruptcy nondisclosures, and Racine Railroad Products’ amended estoppel motion—without prejudice. It stayed the case so the parties could obtain clarification in the bankruptcy case about whether the bankruptcy estate could benefit if Hughes pursued and recovered on his claims. The parties were ordered to update the court, and the scheduled motion hearing was canceled. The court stated that the motions could be refiled if necessary.