A bankrupt plaintiff did not try to do an end-run around the bankruptcy court by hiding a personal injury lawsuit from his list of pending claims, an Illinois appeals panel said, reversing a lower court decision that dismissed the lawsuit against the Blain’s Farm & Fleet retail chain.
The Feb. 17 ruling was authored by Justice Robert McLaren of the Illinois Second District Appellate Court, with concurrence from Justices Ann Jorgensen and Michael Burke. The court sits in Elgin. The decision favored Terence Knott in his suit against Blain’s Farm & Fleet. Blain's is based in Janesville, Wis., with stores in Illinois, Iowa and Wisconsin.
Knott said he was a customer at a Blain’s store in suburban Woodstock in McHenry County in April 2013, when another customer drove a motorized cart into a display of pizza ovens, knocking ovens into Knott and injuring his knee. Knott said he had knee surgery three months later.
In July 2013, Knott and his wife filed for Chapter 7 bankruptcy, stating he had no “contingent and unliquidated claims.” The following October, Knott amended his bankruptcy filing, saying he had a possible pending claim of $15,000.
In November 2013, the Chicago firm of Geraci Law - which was handling the bankruptcy case - notified Blain’s they were representing Knott in connection with an injury claim against Blain’s. In January 2014, Knott’s debts were discharged in the bankruptcy case, and the following June, Knott brought suit against Blain’s, alleging the company was liable for his injury.
Blain’s responded with a motion for summary judgment, arguing Knott had a duty to fully disclose his injury claim in his bankruptcy filing, but allegedly did not do so, which constituted an attempt to deceive the bankruptcy court.
Knott countered he did not know at the time he filed bankruptcy he was going to sue Blain’s, because he was worried about the cost and stress of litigation, as well as the uncertainty of winning. Further, Knott said he had not realized a potential injury claim was considered an asset for bankruptcy purposes.
McHenry County Associate Judge Thomas Meyer granted Blain’s motion in January 2016, finding Knott violated the judicial doctrine of estoppel by taking inconsistent positions in regard to his injury claim - referring to a “possible” claim in bankruptcy papers and then actually filing the claim in circuit court. In Meyer’s view, this inconsistency suggested deception.
Knott appealed.
Appellate Justice McLaren noted that for estoppel to be invoked, it was “critical” whether Knott tried to fool the bankruptcy court. McLaren found Knott “informed the bankruptcy court that he had a possible claim and also informed the court of the nature of the claim,” which showed Knott was not engaging in chicanery.
McLaren acknowledged Knott should have provided more information about the potential suit, but that shortcoming could have been the result of an innocent mistake, and was not sufficient to prove Knott tried to manipulate bankruptcy proceedings.
Blain’s also contended Knott did not have standing to press his lawsuit against the store chain, because the claim belonged to the bankruptcy estate and could only be pursued by the bankruptcy trustee. McLaren dismissed this argument with a little math that indicated if Knott won his suit, enough money would remain exempt from the estate for Knott to retain an interest in the suit.
Knott was represented by the Chicago firm of Breen Goril Law. Blain’s was defended by Lindsay, Rappaport & Postel, which has offices in Chicago and Waukegan.