IN THE THIRD DISTRICT COURT OF APPEAL, STATE OF FLORIDA

IN THE THIRD DISTRICT COURT OF APPEAL, STATE OF FLORIDA CASE NO.: 3D12-2622 FERNANDO MONTES and XIOMARA FROMETA Appellants, vs. MASTEC NORTH AMERICA, INC., d/b/a ADVANCED TECHNOLOGIES, Appellee. On Appeal from a Final Summary Judgment of the Eleventh Judicial Circuit Court In and For Miami-Dade County, Florida L.T. CASE NO.: 11-10021 CA 04 REPLY BRIEF OF APPELLANTS Attorneys for Appellants DANIEL A. BUSHELL Florida Bar No. 0043442 dan@bushellappellatelaw.com BUSHELL APPELLATE LAW, P.A. 101 Northeast Third Avenue, Suite 1100 Fort Lauderdale, Florida 33301 Phone: 954-666-0220 Fax: 954-666-0225

TABLE OF CONTENTS Contents TABLE OF CONTENTS... ii TABLE OF CITATIONS... iii ARGUMENT... 1 I. THE TRIAL COURT ERRED IN APPLYING JUDICIAL ESTOPPEL FOR MASTEC S BENEFIT WITHOUT A SHOWING OF PREJUDICE AND MUTUALITY... 2 II. AS A CHAPTER 13 DEBTOR, MR. MONTES RETAINED THE AUTHORITY TO PURSUE HIS CLAIMS... 7 CONCLUSION... 9 CERTIFICATE OF SERVICE...11 CERTIFICATE OF COMPLIANCE...11 ii

TABLE OF CITATIONS Barger v. City of Cartersville, Georgia, 348 F.3d 1289 (11th Cir. 2003)... 7 Blumberg v. USAA Cas. Ins. Co., 790 So. 2d 1061, 1067 (Fla. 2001)...3, 5 Burnes v. Pemco Aeroplex, Inc., 291 F.3d 1282 (11th Cir. 2002)... 7 Cable v. Ivy Tech State College, 200 F.3d 467, 472-473 (7th Cir. 1999)... 8 Cook v. State, 921 So. 2d 631, 634-635 (Fla. 2d DCA 2005)... 6 Crosby v. Monroe Cnty., 394 F.3d 1328, 1331 n.2 (11th Cir. 2004)... 9 De Leon v. Comcar Indus., Inc., 321 F.3d 1289 (11th Cir. 2003)... 7 Grau v. Provident Life & Accident Ins. Co., 899 So. 2d 396 (Fla. 4th DCA 2005)...4, 5 Losacano v. Deaf and Hearing Connection of Tampa Bay, Inc., 988 So. 2d 66, 70 n.2 (Fla. 2d DCA 2008)...6, 7 Mar. Elec. Co. v. United Jersey Bank, 959 F.2d 1194, 1209 n.2 (3d Cir. 1992)... 9 Olick v. Parker & Parsley Petroleum Co., 145 F.3d 513, 515-16 (2d Cir. 1998)... 9 Parker v. Wendy's Int l Inc., 365 F. 3d 1268 (11th Cir. 2004)... 7 Smith v. Rockett, 522 F.3d 1080, 1082 (10th Cir. 2008)... 9 Vining v. Segal, 773 So. 2d 1243 (Fla. 3d DCA 2000)...2, 3 West v. Kawasaki Motors Mfg. Corp., 595 So. 2d 92, 94 (Fla. 3d DCA 1992)... 3 Wilson v. Dollar Gen. Corp., 717 F.3d 337, 343 (4th Cir. 2013)... 9 iii

ARGUMENT In its Answer Brief, as in the trial court, Mastec fails to come to terms with the fact that unfair prejudice and mutuality of parties remain essential elements of judicial estoppel under Florida law, as interpreted by this Court and every other Florida appellate court to have addressed the issue. Mastec s reliance on federal cases applying federal principles of judicial estoppel is misplaced, because Florida law, not federal law, is controlling on the issue of judicial estoppel. And the trial court s decision was contrary to established Florida law. Equally meritless is Mastec s tipsy coachman argument for affirmance based on the contention that Montes supposedly lost his standing to pursue claims when he filed for bankruptcy. Montes filed for bankruptcy under Chapter 13, not Chapter 7, of the Bankruptcy Code. Six federal courts of appeals have addressed whether a Chapter 13 debtor loses standing to prosecute claims in his own name and every one of them has concluded that a Chapter 13 debtor does not. 1 Mastec s contention to the contrary is erroneous. 1 Unlike the application of judicial estoppel, which is governed by Florida law, the operative effect of filing bankruptcy on a debtor s control over his property is an issue of federal law. 1

I. THE TRIAL COURT ERRED IN APPLYING JUDICIAL ESTOPPEL FOR MASTEC S BENEFIT WITHOUT A SHOWING OF PREJUDICE AND MUTUALITY Mastec makes no attempt to show that it is a party to Montes bankruptcy case or that Mr. Montes gained an unfair advantage over Mastec by failing to initially disclose his potential claims against Mastec in his bankruptcy schedules. It chooses to simply ignore that these requirements still exist, instead using inflammatory language like fraud, and manipulating, in an apparent attempt to convince this Court to ignore the trial court s having overlooked the fact that Mastec did not, and could not, satisfy them. Indeed, in Vining v. Segal, 773 So. 2d 1243 (Fla. 3d DCA 2000), this Court expressly rejected Mastec s argument that judicial estoppel can be invoked against a party who fails to disclose a lawsuit in his bankruptcy filing without satisfying the other requirements. Mastec erroneously contends that Vining should be ignored because this Court s opinion supposedly does not recite any facts Appellee s Brief at 39. But this Court s opinion fully explains the dispositive facts, namely that the party seeking to invoke judicial estoppel had not been impacted by the opposing party s failure to disclose a judgment he had obtained: [T]he trial court erred in relying on the doctrine of judicial estoppel Howard I. Segal did not detrimentally rely on Edward C. Vining's failure, in Vining's bankruptcy action, to disclose an asset, namely a judgment against Segal. The failure to disclose an asset in a bankruptcy action does not justify the application of 2

judicial estoppel in a subsequent action absent a showing of detrimental reliance. Id. Thus, the Court made clear that even though Vining s bankruptcy disclosures were incomplete indeed, unlike Mr. Montes, Vining did not merely have potential claims, but had already obtained a judgment judicial estoppel could not be applied absent a showing of the other requirements for judicial estoppel, including detrimental reliance. Mastec also contends that Vining is of little value because it does not discuss the Blumberg exception of special policy considerations. Appellee s Brief at 39. But what Mastec ignores is that the special fairness and policy considerations exception is an exception to the requirement of mutuality, not to the requirements of detrimental reliance and gaining an unfair advantage. See Blumberg v. USAA Cas. Ins. Co., 790 So. 2d 1061, 1067 (Fla. 2001). Moreover, Blumberg derived the exception from this Court s own precedent, so surely this Court was aware of the exception. See Blumberg, 790 So. 2d at 1067 (relying on West v. Kawasaki Motors Mfg. Corp., 595 So. 2d 92, 94 (Fla. 3d DCA 1992)). And even if Mastec could somehow show detrimental reliance and that Mr. Montes gained an unfair advantage over Mastec (and it cannot), Mastec cannot point to any special fairness or policy reasons for the application of the exception to mutuality here. Mastec simply argues that the exception should apply because Mr. Montes silence about the existence of potential injury claims was supposedly 3

diametrically opposed to his later filing of a lawsuit. But if that were true, the exception would swallow the rule of mutuality. Showing that a contradictory statement was made (and successful) is a separate and necessary requirement for judicial estoppel to ever apply. But there remains a requirement to show mutuality. The Fourth District s holding in Grau v. Provident Life & Accident Ins. Co., 899 So. 2d 396 (Fla. 4th DCA 2005), also belies Mastec s attempt to evade the requirement of mutuality. And Mastec s attempt to distinguish Grau fails. Grau s statement in his bankruptcy schedules that his disability benefits were worthless was more contradictory to his assertion in litigation that he should be paid such benefits than was Mr. Montes initial silence about the existence of a personal injury claim to his later prosecution of a claim. Yet the Fourth District still found that judicial estoppel did not apply because Grau neither obtained relief nor received any benefit in bankruptcy court that was based on a finding that he was not disabled within the meaning of the policies. None of Grau s pleadings raised that issue and there was no ruling or factual finding by the bankruptcy court regarding his disability. Grau, 899 So. 2d at 401. The same is true here. Moreover, the Fourth District found that the fact that the defendants were not parties to the bankruptcy, such that mutuality was lacking, independently precluded application of judicial estoppel. Id. And the court specifically rejected the application of the special fairness and policy considerations exception: 4

Grau, 899 So. 2d at 401. Unlike Blumberg, this is not a case where a plaintiff litigated to a jury verdict on one legal theory, only to abandon that theory for a contradictory one when the verdict was not as favorable as the plaintiff desired. Grau has not used intentional self-contradiction to obtain an unfair advantage in litigation Without similar special fairness and policy considerations in this case, we decline the insurers invitation to apply judicial estoppel punitively against Grau, bestowing a windfall upon them. The reasoning of Grau is equally applicable here, and belies Mastec s arguments for application of judicial estoppel here. Like the insurers in Grau, what Mastec seeks is a windfall based on a late disclosure that in no way prejudiced or even affected Mastec, at the expense of the only persons who could possibly have been affected by the non-disclosure Mr. Montes creditors. To the extent that Mr. Montes late disclosure warrants a penalty, it is for the bankruptcy court to police the conduct of litigants who appear before it, not for the trial court. In short, under Florida law, as interpreted by this Court, the Supreme Court of Florida, and other District Courts of Appeal, judicial estoppel can only apply when there is successful maintenance of the first statement, mutuality of the parties, an unfair advantage gained by the party against whom the doctrine is invoked and detrimental reliance by the party invoking the doctrine. Mastec has not shown, and cannot show, any unfair advantage gained by Mr. Montes or that 5

Mastec detrimentally relied on Mr. Montes initial bankruptcy schedules. The special fairness and policy considerations exception is an exception only to mutuality, and applies only in limited circumstances, as in Blumberg where the party successfully obtained a jury verdict, only to reverse course because he was not awarded as much in damages as he had hoped for. Mastec is not a party to Mr. Montes bankruptcy, and the special fairness and policy considerations exception is inapplicable. The federal cases Mastec purports to rely on do not support the trial court s application of judicial estoppel here. As Florida appellate courts have noted, the requirements of judicial estoppel under federal law are different from the requirements of judicial estoppel under Florida law, which requires mutuality of parties (with rare exceptions) as well as detrimental reliance and the opposing party having gained an unfair advantage over the party seeking to invoke judicial estoppel. Losacano v. Deaf and Hearing Connection of Tampa Bay, Inc., 988 So. 2d 66, 70 n.2 (Fla. 2d DCA 2008); see also Cook v. State, 921 So. 2d 631, 634-635 (Fla. 2d DCA 2005) (noting differences between Florida and federal requirements for application of collateral estoppel, including Florida s requirement of mutuality of parties). Moreover, the trilogy of 2002-2003 Eleventh Circuit decisions on which Mastec purports to rely, Burnes v. Pemco Aeroplex, Inc., 291 F.3d 1282 (11th Cir. 6

2002), Barger v. City of Cartersville, Georgia, 348 F.3d 1289 (11th Cir. 2003) (relying on Burnes), and De Leon v. Comcar Indus., Inc., 321 F.3d 1289 (11th Cir. 2003) (relying on Burnes), have themselves been called into doubt even as to their validity as interpretations even of federal principles of judicial estoppel. See, e.g., Losacano, 988 So. 2d at 70 (listing cases criticizing and limiting the application of the Burnes/Barger line of cases); Parker v. Wendy's Int l Inc., 365 F. 3d 1268 (11th Cir. 2004) (casting doubt on that line of cases). But whether or not they are accurate statements of federal law, they are not statements of Florida law, which requires mutuality of parties, an unfair advantage and detrimental reliance. As such, they do not support the trial court s decision or Mastec s attempt to defend it. II. AS A CHAPTER 13 DEBTOR, MR. MONTES RETAINED THE AUTHORITY TO PURSUE HIS CLAIMS Perhaps recognizing the indefensibility of the trial court s dismissal based on judicial estoppel, Mastec asks this Court to affirm based on an issue not addressed by the trial court Montes standing to pursue his claims after filing for bankruptcy. But Mastec s standing argument fails to take into account that Mr. Montes filed for bankruptcy under Chapter 13 of the Bankruptcy Code, not under Chapter 7. Mastec s contention is erroneous because it relies on cases addressing the effect of filing for bankruptcy under Chapter 7 of the Bankruptcy Code. But the lack of standing found in such cases resulted from an aspect of Chapter 7 7

bankruptcies that is not present in Chapter 13 cases. And Mr. Montes filed for Chapter 13 relief. See R.I: 114-146 & R.I: 155-157. There is a fundamental difference between Chapter 7 and Chapter 13. Chapter 7 establishes a much more radical solution to indebtedness, requiring the liquidation of the debtor s property, to which end Congress granted the trustee broad powers without interference from the debtor. Cable v. Ivy Tech State College, 200 F.3d 467, 472-473 (7th Cir. 1999). Due to the nature of Chapter 7 bankruptcies, [t]he trustee has sole authority to dispose of property, including managing litigation related to the estate. Id. But the same is not true in Chapter 13 bankruptcies: Chapter 13, on the other hand, encourages the debtor to pay his debts over time by establishing a court-approved payment plan but leaving the debtor in possession of the estate. See 11 U.S.C. sec. 1303 (debtor-in-possession has substantially same powers as the trustee in other chapters); sec. 1306(b) (debtor retains possession of estate except as limited by plan). The trustee acts as an adviser and administrator to facilitate the repayment of debts according to the plan. Id. Correspondingly, in Chapter 13 cases, unlike in Chapter 7 cases, the debtor has express authority to sue and be sued. Id. And bankruptcy court approval is not required for the debtor to sue. Id. Thus, as the United States Court of Appeals for the Fourth Circuit recently explained, [a]ll of the five circuit courts to have considered the question have 8

concluded that Chapter 13 debtors have standing to bring causes of action in their own name on behalf of the estate. Wilson v. Dollar Gen. Corp., 717 F.3d 337, 343 (4th Cir. 2013) (citing Smith v. Rockett, 522 F.3d 1080, 1082 (10th Cir. 2008); Crosby v. Monroe Cnty., 394 F.3d 1328, 1331 n.2 (11th Cir. 2004); Cable v. Ivy Tech State College, 200 F.3d 467, 472-74 (7th Cir. 1999); Olick v. Parker & Parsley Petroleum Co., 145 F.3d 513, 515-16 (2d Cir. 1998) & Mar. Elec. Co. v. United Jersey Bank, 959 F.2d 1194, 1209 n.2 (3d Cir. 1992)). The Fourth Circuit reached the same conclusion, becoming the sixth federal court of appeals to join this unanimity. Wilson, 717 F.3d at 343. The Eleventh Circuit is also in agreement. See Crosby, 394 F.3d at 1331 ( [B]ecause Crosby filed under Chapter 13 of the Bankruptcy Code, he retains standing to pursue legal claims on behalf of the estate. ). Given this unanimity among the federal courts of appeals, which are the final arbiters of federal law absent a ruling by the Supreme Court of the United States, there can be no doubt that Chapter 13 debtors do not lose their standing to sue in their own name when they file for bankruptcy. As such, Mastec s contention that Mr. Montes lacks standing is meritless. CONCLUSION For all of the reasons set forth above as well as in Appellant s initial brief, the trial court erred in granting summary judgment for Mastec based on judicial 9

estoppel. This Court should reverse the trial court s final summary judgment and remand for further proceedings. Respectfully submitted, BUSHELL APPELLATE LAW, P.A. Counsel for Appellants 101 Northeast Third Avenue, Suite 1100 Fort Lauderdale, Florida 33301 Phone: 954-666-0220 Fax: 954-666-0225 By: s/ Daniel A. Bushell. DANIEL A. BUSHELL Florida Bar No. 0043442 dan@bushellappellatelaw.com 10

CERTIFICATE OF SERVICE I hereby certify that on December 4, 2013, a true and correct copy of the foregoing was furnished by email to: Richard A. Sherman, Sr., Esq., Law Offices of Richard A. Sherman, P.A., rsherman@appealsherman.com. s/ Daniel A. Bushell. DANIEL A. BUSHELL CERTIFICATE OF COMPLIANCE I HEREBY CERTIFY that the foregoing brief complies with the requirements set forth in Florida Rule of Appellate Procedure 9.210(a)(2). It was typed in Times New Roman 14-point font. s/ Daniel A. Bushell. DANIEL A. BUSHELL 11