Hughes v. Canadian National Railway Company

Background

Ricky Hughes worked for Wisconsin Central Ltd. maintaining railroad tracks in 2016 and 2017. He alleged that he was injured in two workplace accidents: one involving track jacks on October 24, 2016, and another involving a hydraulic spike puller on August 8, 2017. Racine Railroad Products manufactured the spike puller, and Portaco distributed it to the railroad. Hughes brought a claim under the Federal Employers Liability Act against Wisconsin Central 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 filed a Chapter 13 bankruptcy case. He listed no contingent or unliquidated claims on his bankruptcy schedules and did not tell the bankruptcy court or trustee about the personal-injury claims. His debts were discharged on February 9, 2018, and the bankruptcy case closed on March 15, 2018. Hughes later filed this lawsuit in October 2019. In August 2021, he reopened the bankruptcy case and amended the schedules to identify the potential injury and Federal Employers Liability Act claims. The bankruptcy court later denied his motion to approve a stipulation that would have allowed him to schedule this action as a contingent, unliquidated claim.

Court’s analysis

The court first rejected Hughes’s argument that the renewed motions were improper requests for reconsideration. The court explained that its earlier denial of the motions had been without prejudice to the defendants’ right to bring them again later.

On standing, the court applied bankruptcy-law provisions making property acquired before a Chapter 13 case closes part of the bankruptcy estate. It concluded that Hughes’s injury claims became estate property because they arose after the bankruptcy case began but before it closed. A Chapter 13 debtor in possession may prosecute an action for the bankruptcy estate, but the court found that Hughes could no longer do so because the bankruptcy court had denied his attempt to modify the bankruptcy plan. Because Hughes was pursuing the claims for himself rather than on behalf of the estate, the court held that he lacked standing.

The court also applied judicial estoppel, an equitable rule that prevents a party from taking a position in one legal proceeding that conflicts with a position taken in an earlier proceeding. The court found that Hughes’s current assertion that the injury claims existed conflicted with his failure to disclose them in bankruptcy. It further found that the bankruptcy court had relied on the bankruptcy filings when it discharged Hughes’s debts and that allowing Hughes to keep any recovery would give him an unfair advantage over creditors. The court stated that a finding of malice or intent was not required.

Disposition

The court granted the summary-judgment motions filed by Racine Railroad Products, Portaco, and Wisconsin Central. It dismissed the action with prejudice and directed that judgment be entered. Judge Donovan W. Frank signed the order on February 2, 2023.