Congratulations to Partner Juan C. Gonzalez and his team on securing dismissal of a contentious action against his client. Plaintiff allegedly suffered serious personal injuries in a fall inside the client’s property. Following discovery, Juan moved for summary judgment or alternatively, to stay the action and estop plaintiff from recovering more than $25,000, the “maximum value” of the case claimed in his Chapter 7 petition. Juan argued that plaintiff’s bankruptcy petition claiming a valuation of no greater than $25,000 was a misrepresentation on which the bankruptcy Trustee detrimentally relied, harming creditors and causing the Bankruptcy Court to discharge the estate. Juan argued that plaintiff’s pursuit of millions of dollars in damages in this action was a position in direct conflict and inconsistent with his position taken in bankruptcy: that the case had a “maximum value” of $25,000. Juan argued that the value of this civil action – claimed to be worth only $25,000 – did not revert back to plaintiff in bankruptcy, and thus this “asset” was not abandoned by the Trustee due directly to plaintiff’s misrepresentation ($25,000 vs. $5,000,000 valuation) in bankruptcy. As a result, Juan argued, plaintiff lacked standing to prosecute the action, thus warranting a stay and plaintiff’s estoppel from recovery in excess of the claimed “maximum value” amount. Juan argued that this result was necessary to prevent plaintiff from potentially defrauding creditors while taking a position in one legal proceeding (Supreme Court) contrary to a position taken in a prior proceeding (Bankruptcy Court), thereby preserving the integrity of judicial proceedings.
While the Court denied summary judgment on questions of fact, the Court agreed with Juan’s remaining arguments, stayed the action until the Trustee was substituted, and estopped plaintiff from any recovery in excess of $25,000!
Over 18 months later, plaintiff sought to substitute the bankruptcy Trustee as the real party in interest, an acknowledgment of the fact that plaintiff’s valuation was materially incorrect (the basis for estoppel and stay order). Juan opposed and cross moved to disqualify plaintiff’s counsel or for outright dismissal of the action in its entirety on a variety of grounds, including laches and vexatious and harassing litigation history that included at least three prior amendments, violation of court orders and wasteful and vexatious motion practice to the tune of no less than 10 frivolous motions that unnecessarily prolonged an action commenced in 2018.
On March 31, 2022, the Court denied plaintiff’s motion for substitution and granted Juan’s cross motion dismissing the complaint in its entirety!!
Congratulations again to Juan and his team on a hard-fought victory for his clients!