[25-6] Keathley v. Buddy Ayers Construction, Inc.

Mr. Gar?

Thank you, Mr. Chief Justice, and may it please the court.

Judicial approval prevents a party from deliberately adopting inconsistent positions to gain an unfair advantage in litigation. Because the doctrine targets intentional inconsistencies, courts have resisted its application. One, a party's prior position is based on inadvertence or mistake.

“The narrow but important question in this case is how to determine when a party's position was inadvertent or intentional.”

In a specific context where a debtor fails to update a form to reflect a new cause of action outside of bankruptcy. The failure to update the form was simply a mistake, then there is no intentional inconsistencies and no basis to invoke judicial stop. The fifth circuit applies would amounts to a conclusive presumption that a debtor's failure to disclose a cause of action and updating a form is intentional.

As long as the debtor knew of the facts underlying the claim and had a potential financial motive to shield the asset,

something that exists almost by definition in the case of any bankruptcy. That rule flows to flexibility that equity or nearly demands. It grants a windfall to a much-longed yours who have no connection to the bankruptcy, and it unfairly penalizes honest debtors by denying them redress for real wrongs. This courts reject the fifth circuit's rule and hold instead that courts must undertake a holistic analysis of all facts,

bearing on a debtor's intent.

“Before concluding that a debtor's failure to update a form represents an intentional position that no cause of action exists,”

Erasing a debtor's claim, seeking redress for torsious or other illegal conduct, like Petitioner's personal injury action here, imposes an enormous cause on individuals already facing hard times. There's no basis for taking that extreme step based on a conclusive presumption that may be entirely unfounded. I welcome the court's questions.

Mr. Garwood, type of evidence should be used in your holistic approach. So we would look to all surrounding circumstances your honor objective and subjective. It would include the debtor's own testimony typically, but that would just be one factor. You would look at the sophistication of the debtor when and the manner in which the debtor updated.

The form, whether the debtor told his attorney of the cause of action. Whether creditors objected when a form was amended. The impact on creditors or other in the bank, others in the bankruptcy, the bankruptcy courts own findings. These are objective factors that courts have looked to and can be applied in determining a debtor's actual intent. One factor you haven't mentioned is of course the impact on the judiciary, the judicial reputation that surprises that have traditionally been used here.

All that you've been talking about is between the two parties to the bankruptcy and the accident. Where does that factor in? I thought that was the primary basis for the whole doctrine of judicial assault. You don't want to put the courts in the position of acting on the basis of a counterfactual. That's not true.

Absolutely your honor. That's the backbone of judicial assault, this court. And others have talked about playing fast to loosen the courts with the courts and protecting the integrity of the courts. And what that's court recognized in New Hampshire is that where the integrity is impacted is where parties intentionally advance inconsistent positions in order to gain advantage and litigation. And to put the courts in the position of potentially adopting those inconsistent positions is what undermines the integrity of the courts.

I thought it was more that they proceeded on the basis of a particular, not assumption, but what was shown. And you don't want to put them in a position of having two different versions of reality and then proceeding on the basis of one of the other.

“So I think what the courts have described it as is the cold manipulation of the process your honor.”

And that happens when an individual intentionally takes one position, secures an advantage by the adoption of that position. Turns around in a different proceeding, adopts a different position and tries to get a different advantage.

If the individual didn't intentionally adopt that first position and corrects it as happens in the scenario here where a debtor is simply unaware.

And as the emiki former bankruptcy judges indicate, bankruptcy forms are very confusing even with the aid of council. Many debtors simply just don't realize that a cause of action is an asset in forms have to be updated.

It's the existence of the cause of action.

And there, the debtor is not actually taking the position that there is no cause of action before the bankruptcy court. He simply failed because of his mistake to update a form. So there is no intentional inconsistency. There's no plain fast and loose with the courts. There's no cold manipulation of the judicial process. And there's no threat to the integrity of the court.

And conversely, I mean just shall stop is an extreme measure. And it's appropriate where there is a threat to the integrity of the court.

But it involves wiping out a cause of action.

And here you have a situation in which courts without even engaging in holistic determination as to the debtor's actual intent. Whether the debtor simply made a mistake in failing to update a form or wiping out a cause of action like Mr. Keethley's personal injury action here. Respondent's own driver admitted that his brakes failed and that his truck hit Mr. Keethley's. And that action has been wiped out based on a conclusive presumption that the fifth circuit applies. And it's simply because a debtor has a potential financial motive to mislead.

A debtor's failure to update the bankruptcy court as the existence of a cause of action is an intentional representation. Mr. Garten, I interrupt you and ask you a question.

This is an eerie question. This was a diversity suit.

So why does the federal law? Everyone's assumed that the fifth circuit's law of judicial establishment applies as the Mississippi law different.

“And if not, why doesn't the Mississippi law control in the diversity suit under eerie?”

So I think is understand this court's decision in Hampshire versus Maine. I mean, the judicial-established doctrine as embraced by this court is, you know, a federal, a common law type role inherent in the court's own authority to protect its proceedings. And so I think that that would be a federal baseline. I mean, state courts have applied it as well. I think here, no one has pointed to any difference in the proceedings.

I gather that it's a matter of some dispute in other circuits that courts have struggled with that question. And I don't want to resolve it here, and I'll think we have to resolve it here, but I certainly wouldn't want anything we said here to resolve that question. I mean, I can see arguments on either side. I think what you're saying might be kind of a bird versus blue ridge. The overriding federal interest overcomes whatever we might say about the outcome determinative prong of eerie.

It just seems to me like that might be something I just wanted to know your reaction about it because it might be something to avoid.

“So I think the court, you know, can and absolutely should reserve that question for a later day.”

I'm not aware of any inconsistency in state or federal courts in terms of recognizing that judicial-established doctrine wouldn't apply in the case that it honest mistake. You know, I think courts across the board have focused on what they call the cold manipulation of the courts and the judicial process. Okay, just one last question then speaking of just questions to avoid. Do you see your argument is really kind of confined to how judicial-established Apple plays out in the bankruptcy context in particular?

Or do you see it, okay? Yes. That's the situation and this is a risen. I mean, it's unique and the important respect is typically when a judicial-established Apple has applied in other contexts like in Hampshire versus Maine. You have a party that's affirmatively adopted two different positions. And there's no question what the party thinks this position is.

Here in the bankruptcy context where a debtor has failed to update a form, the position is implied by the failure to update the form. But the debtor hasn't actually affirmed he said I have no cause of action where judicial-estables invoke there's a presumption in the fifth circuit that the debtor in fact made that representation. So that the context is different in important ways. In New Hampshire, this court in outlining general principles that typically apply recognize that additional considerations would be appropriate in specific factual context.

“So I think the context here is important. Also in this context you have individuals who very often are not particularly sophisticated.”

You have an environment bankruptcy where forms are complex. Again, the meaty form or bankruptcy judges here and themselves have talked about the complexity of the forms. They're confusing even with the aid of counsel. And so I think that's the situation in particular this context where one would be wary about there was any position at all or whether a debtor simply made it on an honest mistake and failing to update a form. Mr. Gar, I've been having trouble trying to fit in our new Hampshire principle to the bankruptcy context.

Where the bankruptcy it has not terminated meaning in a situation like this one where the bankruptcy is still ongoing.

Because doing a way with the person withry suit deprives the creditors of a potential source of income for the bankruptcy.

“In an ongoing bankruptcy, that's a draconian effect on the creditors that the second court would be imposing.”

So I'm not sure how equitable a stopper really can play out on the principle set forth in New Hampshire.

New Hampshire said that the court first court had to be persuaded to accept that party's earlier position.

But here with the amendment, there was no permanent acceptance of a position by the bankruptcy court. It also had New Hampshire said a court has to consider whether the party seeking to assert an inconsistent position derived an unfair advantage or imposed an unfair detriment on the opposing party. But the opposing party here, there's no unfair detriment to the man who hit your client with a truck because he was involved in the bankruptcy.

And the unfair advantage was wiped away once the disclosure was made in the bankruptcy court.

So I'm a little bit, I've been perplexed when I started with this, how we deal with that context. So in this special situation where the bankruptcy has not terminated, there's been no final determination that the bankruptcy court was misled in a way that caused detriment to the bankruptcy court. The bankruptcy process to its creditors or to anyone.

So I'm not going to quarrel with anything that would lead to the conclusion that judicial stopl doesn't wipe out my clients claim your honor.

Maybe this is a question for the other side, but I've been having a hard time understanding how this eerie works in a situation in which it's different parties and not the same parties being misled.

“So in the hamster, the court did reference a possibility that either the first court or the second would be misled, and I think that's probably the theory that courts have applied here.”

I think what your honor's question underscores though, is that here the bankruptcy court, you have a proceeding on going to the bankruptcy court as well a clip to take any action it determines is appropriate to protect other creditors. Other creditors can stand up as well to sanction conduct that it believes is misled or deceitful and so there's not the need for sort of overarching judicial stopl check here. And that makes it all the more egregious, frankly, for the fifth circuit to simply disregard all that and adopt this conclusive presumption that a debtor is acting with an intent to adopt a position that no cause of action exists and to mislead the courts.

Mister, can I ask you because I'm trying to ascertain your position with respect to what suffices for establishing an inadvertent sort of stake. You've talked about intentional omissions as they relate to misleading the courts, but you can imagine a world, I think, in which the debtor might have an intent to omit perhaps to mislead someone else. So, you know, a debtor who's say contemplating a divorce, they leave off the claim because they want to have less exposure in the case if they decide to go through with a divorce.

So, it's intentional, but not with the point of misleading court. How would you say that should be taken into account or should it in regard to figuring out whether there was an inadvertent sort of stake?

“So, just to check, and I think first of all that the key is that the court has to determine that the debtor has made an intentional, adopted an intentional position that no cause of action exists.”

I think that the heart land in which judicial stopels, although the understandies that the debtor is trying to mislead the court to gain advantage. And your hypothetical, I don't think that that would invoke that the heart land of judicial stopple. Nevertheless, I think judicial stopple being an equitable doctrine, considering additional factors, that could be part of the mix.

That's exactly right. I mean, our position is that the inquiry into the debtor's intent here is to whether they intentionally adopted a position that no cause of action exists should be undertaken.

The matter that their motive is different. I mean, so in my hypothetical, they didn't intent. They intended to omit. So it's not inadvertent or mistaken. What then, I mean. So I think that, I'm sure. I think that's a good example where, you know, really the bankruptcy judge is in charge of his or her proceedings and can take appropriate action. The situation without the judge would think it's improper and perhaps weren't sanctioned that the debtor is attempting to hide his assets from his spouse or others. And so sanctions might be warranted.

I don't think that that's the typical fact pattern which judicial stopples warranted. But I think what distinguishes this case is there's just no determination that the debtor here actually intended to hide anything from the courts.

“Mr. Gar on that, just to follow up on it. Why is intent to mislead the court essential?”

You know, I struggle to find that new hamster. There are gestures in that direction, but couldn't sometimes annoying, knowingly misleading the court, plus other factors and equity, be enough.

Yes. And if that's true, if that's true, then intent isn't essential. It's just one factor in your view.

So I agree it's one factor, but the intent that matters your honor is the intent to adopt inconsistent position. No, I get that, but not necessarily an intent to mislead the court. Right. I mean, there's a lot of language in the cases about coal manipulation of the courts plain fast and less. But really what I think that the court is driving at is intentionally adopting inconsistent positions. And what's different about this case is there's no there's been no actual determination that did that are here intentionally.

I got the position that there's no cause. Thank you, council. Just as Thomas. Justice Alito. I won't excuse me a little confused by those answers. So what is required is knowledge of the fact that inconsistent positions are being taken.

“So I think Justice Alito, it's the fact that the debtor has taken intentionally inconsistent positions.”

So in the bankruptcy context, by failing to update the form, a determination would be made that the debtor in fact adopted, intended to adopt the position that no cause of action exists as opposed to simply making mistake in failing to update a form. And when the debtor then goes to a separate court and advances this cause of action, he's taking the separate position that the cause of action exists. And that would be intentionally inconsistent. But that intentional inconsistency doesn't arise where a debtor simply makes a mistake in failing to update a form.

And in that situation the debtor isn't adopting any position that he has no cause of action, he's simply making an honest mistake. And that's not trying to understand that the distinction in this context. But I'll leave it at that. Does the record show why the bankruptcy attorney did not list this has a massive? It doesn't your honor. The bankruptcy attorney did in a sworn declaration in the record here say that my client informed him of it.

But he doesn't explain why he didn't advise the court. I mean that's something that potential could come out in a holistic inquiry.

“But I think here what matters is the debtors intent in terms of whether or not the debtor was attempting to help.”

Do you think that the client in a judicial stopple situation has? Is to any degree responsible for the actions of the attorney? I don't not certainly not in the normal sense that the court ordinarily would apply the client responsibility or honor, because the key here is that the debtor own intent in terms of whether the debtor was trying to hide anything. Because it's the debtor who's going to a different court and asserting his cause of action.

And so I think that that's a factor and I think frankly the fact that the debtor here told his attorney promptly after the accident is a factor that cuts it. His favor that he wasn't trying to hide anything from the bankruptcy court. And there are many other factors that go to that.

But what we really want is an opportunity for a holistic analysis that under the fifth circuits rule we never, we never got.

Would you disagree with the proposition that where there is a duty to disclose and a potential financial interest?

Not in this context your honor. Because here and again the brief by the Mickey former bankruptcy judges themselves piggybacking on the American bankruptcy institutes on finance emphasized that these forms are confusing hard to follow,

“even with the aid of attorneys. So I think in this context we're dealing with you know by and large relatively unsophisticated people who lack legal training of the like.”

All of that factors into the judicial stopl analysis here. There are factors here that seem perhaps confined to the bankruptcy situation and to the way in which proceedings are often conducted in bankruptcy court,

which I think are not always.

It's not always a forum in which. Scrupulous compliant have very meticulous compliance with all the rules apply, but I don't quite understand why the bankruptcy attorney did disclose. I don't quite understand why the creditors here. Had no interest apparently in having this as an asset of the estate. Well the creditors can explain what's going on is just because this is chapter 13 and it's not just handled in a rather informal way.

So you're on a, I mean that that's part of it. I mean here the creditors were paid 100% on on the plan and ultimately were paid off.

And if any creditor had any concern about the payments on the plan or how this asset would have affected the estate,

they could have taken action in the nearly one year between the time when Mr. Keith Lee advised the court of the cause of action and before his, his bankruptcy was completed. And all of that would be part of the mix here of the fact that no creditors even complained. There's a debate in the laws to whether or not there was any interest available here. I mean again, as they make a former bankruptcy judges explain, we don't think interest was available here. So the creditors were getting and did get everything they were entitled to.

Thank you, bankruptcy. Just to so many of you. I don't know how much this loss, personal injury, the lawsuit with Garner, but the choice for the creditors was an unknown sum of recovery.

“Some of which would have been paid to medical injuries and to supplement loss income versus the security of having full payment, correct?”

That's correct, you're on it. And having the bankruptcy last forever without full payment. That's correct. And your creditors are uniquely situated to protect their own interest if they thought anything wrong had happened or there was a stake in the cause of action. They would have acted here. No creditor objected. Thank you.

Just to guard your brief speaks often of the bad faith of whether the debtor had bad faith in making these inconsistent representations. Are you equating that? You haven't spoken of it very much today.

“Are you equating it with the kind of intent that you have been talking about?”

Yes. I mean, the courts refer to bad faith here in cases from here and there. I mean, we're not suggesting that this is an inquiry into whether there was an intent to defraud the court or anything like that. I think what the doctrine looks to is the intentional inconsistency and where a litigant makes an intentional inconsistency to gain an unfair advantage through the courts. This court recognized in a hamster that that undermines the integrity of the court and that that is sort of consistent with an intent to mislead the court often.

But we're not suggesting that a finding of actual bad faith is necessary or part of it part of the analysis. But are you suggesting that this finding of intentional misrepresentation is necessary? Just to score such a question again and also to the chief justice is when he opened with he said, you know, in the end judicial stopple is about the integrity of the courts. And aren't there circumstances in which even though you couldn't find that kind of intentionality on the part of the debtor or the part of somebody else making the representations.

Still the integrity of the courts is on the line. So I don't think the court has to rule that out. I think the courts, you know, just as frequently talk about how judicial stopple doesn't apply in the case of inadvertence or mistake. And we think in that situation where a party because of a mistake hasn't intentionally adopted a particular position that there is not the same kind of threat to the judiciary.

But this court doesn't need to say here that judicial stopple is never appropriate in any situation in which a party makes a mistake.

Thank you. This is Gorsuch.

Good briefly Mr. Gar. I take your point that you don't need to have an intention to mislead the court. You say though an intention to pursue inconsistent positions is required.

“I don't see that in New Hampshire either. I see you have to take inconsistent positions.”

But I'm not sure I see that you have to intentionally do so. My missing something there. So I think in New Hampshire on page 750 it talked about prohibiting parties from deliberately changing positions, according to the actions and sees. I mean, the court cited lower court cases like Toronto which talked about does cite lower court cases, but when it actually lists the factors, it just says inconsistent positions. And driving an unfair advantage from them and page 750. But then I think that I'm sorry.

No go ahead, please. But then I think in the court later in applying the factors says that courts have resisted application in the instance of mistake. Yes, and inverts and mistake. That we know to be true. That New Hampshire definitely does say. Right.

And I guess that leads me to this. Judicialist stopper was kind of an off branch of equitable stopper and is a relatively new invention dating to the well-do dates to the mid-19th century. For law, I guess that's new sometimes. And we have exactly one opinion on the subject, New Hampshire. That's it. We haven't developed a long very much yet.

And I wonder whether you would be content with the following ruling and if not why not. We've said inadvertence and mistake is not a basis for judicial establishment. The fifth circuit glossed that rule with one of its own.

A bright line rule that it's never inadvertence and mistake when there's a knowing, omission, and there's a motive.

Would it be enough to simply say, we don't need it for the gloss on inadvertence and mistake. And equitable doctrine go back and do it again looking to what we've said. So that would be an improvement your honor.

“But I think that what the court need, what the, the fifth circuit needs guidance on is that you really have to take this holistic analysis in terms of whether or not there was a mistake.”

Yes, no, I know, I'm giving you that. Right. I'm just simply saying their bright line rule on what does and does not qualify as inadvertence and mistake is not what we've said in New Hampshire. I can try again, maybe maybe applying state law, maybe taking cognizance of the bankruptcy context, all these kinds of additional concerns. But, but a very short and succinct opinion saying, look at New Hampshire.

So I think that that would be fine, obviously the devil's and the details are honored. But I think what's critical there is it would be many details. That the upshot would be, is that in this instance, if the courts conclude that a debtor's failure to update a form is simply an honest mistake. That it generally would be inappropriate to apply judicial stop on this. It's an expert on this.

Yes. Okay. Let's just take a look. Thank you. Discaven off?

There are any difference between a knowing inconsistency and an intentional inconsistency. I'm not sure about your answer to that. I don't think so, Your Honor.

The point that's critical here is that the court has to determine that when the debtor failed to update his form, he was knowingly or intentionally adopting the position that no cause of action.

Exists. No daylight. Just making sure. Well, I mean, I look in the law. They're probably is different.

Well, in this intentional. In this context, is there any daylight between a knowing inconsistency and an intentional inconsistency as you see it? As a practical matter, I don't think there is. I will say that the courts have talked about intentional inconsistency. I mean, that's the language, this court piggybacked on.

Well, I think that creates this use and is just the course of which was talking about. So, I mean, I think the intent language is well taken. I mean, if this court believes that the knowing language is more suited to the doctrine. I mean, I think there would lead to the same conclusion here.

“And that's what we're up here fighting for.”

Thank you. Thank you very much. Justice Jackson. So, I'm noting that New Hampshire wasn't a bankruptcy case. And I'm thinking that maybe judicialistopal is sort of a poor fit for this context,

because even if there is an intentional omission, however, we define that. The bankruptcy court has many, many tools, I think. This is sort of what Justice Sotomayor was alluding to. To solve that problem when it comes to its attention. And to prevent the estate from getting this additional asset seems to harm the creditors in ways that I don't think are consistent with the way we understand bankruptcy.

So, again, I'm not going to quarrel with anything that results in conclusion of judicial stopl. It doesn't apply.

“What I think is important here is what the bankruptcy court has control of these proceedings,”

and its actions or inactions should be an important factor in determining whether or not judicial stopl is. Do you know if there's ever a world in which, is it after the bankruptcy closes if this information comes to the bankruptcy court's attention? Is there nothing that could be done at that point? So, it can be reopened. It can be a reality.

It's always an opportunity to take advantage of it.

And I'm not going to make my friends argument what I would say though is I think that the courts of assume judicial stopl is applied here, because on the theory that the second court is being duped, so to speak, in the sense that there's inconsistent positions, and so it's a threat to the second court. But I think your honors point is exactly right that the bankruptcy context is unique, and that there's an important role for the bankruptcy court.

And the second court's proceeding are sort of completely independent, right? And they're arising out of facts that if nothing to do with the bankruptcy. Exactly.

“And that underscores the windfall that the defendant is getting,”

that the defendant and the second proceeding has no connection to the bankruptcy, and yet the defendant walks away, Scott, free. Thank you.

That's not equitable in any sense.

Thank you, Council. Thank you, Madam. Sirlu. Thank you, Mr. Chief Justice. Please, the court.

Oops, I still do water. That's a first. Judicial stopl should apply only if the balance of equities supports it. And you have your versus main. This court described factors relevant to that balance.

Those factors include whether a party derived an unfair advantage from the prior position, whether that position was the product of inadvertence, and whether a judicial stopl is consistent with broader public interests. Here, the fifth circuit made two errors. One is the error, petitioner has focused on this morning.

The fifth circuit reduced inadvertence to just two considerations. They're by failing to consider the totality of the relevant evidence, including evidence that petitioner reasonably believed that he had no duty to disclose his tort claim, while the damages award was still a long ways off. But the other error is, in our view, even more fundamental.

The fifth circuit effectively reduced the entire balance of equities to a single factor in adherence, thereby ignoring the interests of innocent creditors, and the bankruptcy courts ability to undo any unfair advantage. Therefore, the decision below should be vacated in the case remanded. I welcome the court's questions.

Mr. Liu, I'd like you to take a step back to our new Hampshire. The Hampshire was quite a different case from this. New Hampshire involved litigation between Maine and New Hampshire over the boundaries. In two earlier cases, New Hampshire had accepted that the middle of the river was a boundary. And in the subsequent litigation, it changed and argued that the boundary was to the Maine shore.

And what the court said in Justice Ginsburg's opinion was that you could not to your advantage change positions like that. And hence, judicial stock will. How does that fact pattern allow us to decide this case based on New Hampshire? Well, you're right that the specific context of New Hampshire is far different from a bankruptcy case

whereas some justices have already mentioned that the two proceedings, the bankruptcy case. Well, I'm not as interested in the bankruptcy case. I'm interested in the fact that the litigation was between the same parties between New Hampshire and Maine here that you do not have that mutuality. That's right. And I think what this points up is that four judicial stubble to apply

the balance of equities has to support it.

“And in New Hampshire versus Maine, I think it was important to the balance of equities”

that you had two co-equal sovereigns that had been involved in the same litigation many years prior. That's part of the balance of equities. Our submission here is a court shouldn't blind itself to the balance of equities in this context either.

I think what New Hampshire versus Maine teaches is there are two kind of essential elements of judicial

stop. Those are the first two factors. You got to have inconsistent statements and you got to have the first statement relied upon by the court. But beyond that, and this is on page 750 to 756 of the court's opinion,

You look to see if one party derived an unfair advantage. You look to see if the prior position was the product of an adverse, you look to at the broader public interest, including the fact that these were two co-equal sovereigns that were involved in the same case earlier, and you ask after considering the entire balance of equities, whether judicial stop is appropriate.

“I think what's really wrong about the fifth circus decision in this case is if you look at Pet App 9A,”

to reduce that entire balance to just one factor, which is in advance. And then beyond that, a compounding that error, it turned in advance into just two considerations, knowledge of the facts and potential motive, which is not a totality analysis of even the one factor the fifth circuit thought it should consider. Mr. Lou, I guess I'm not sure I understand how what you're saying right now.

If it's with this footnote that you wrote, this is page 24 in your brief, but note 2,

where you say we shouldn't talk about whether in advance always precludes judicial stop-up.

And I hear you saying now, we should talk about that, we should say in advance is just one factor. It doesn't always preclude judicial stop-up. Am I wrong about that there's a shift here? I wouldn't say it's a shift in this sense. I think there are two analytical things that issue.

One question is what goes on the balance? And we think that is an important question. The court should address what goes on the balance is not just in advance, but also unfair advantage, other interests, et cetera. That's all what goes on the balance.

“I think there is a separate analytical question about how those various factors relate to each other.”

And what we mean by footnote 2 is this court doesn't need to decide whether one factor if it exists is necessarily going to trump the other factors.

We think it's enough for this court to basically reiterate what it said in New Hampshire versus Maine,

which is the balance of equities isn't just one factor. It's all these factors. The court said it was not exhaustive. Do you agree with this that even if you add all the intent in the world, it doesn't necessarily get you judicial stop-up and conversely.

Even if there was complete inadvertence, it doesn't necessarily preclude judicial stop-up. That is the government's position. I think that's that second bucket of analysis. The court doesn't need to go that far.

“I think the court can just say, look, if you're a lower court, you should be looking at all the factors.”

It may well be that one factor turns out to be dispositive. After you've seen a bunch of cases, maybe you can reach that conclusion. But at this part of the analysis, you should at least have in full view all the relevant factors. And it's the idea behind this that everything needs to be filtered through the principle purpose of judicial stop-up, which is protecting the integrity of the courts and that this question of intentionality,

may coincide with that principle purpose, but in certain cases may not. Correct. We think certainly when a party has deliberately taken a prior position as opposed to having taken it by an inadvertence, it certainly heightens the impression that I think judicial stop-ups are trying to avoid. And that impression is the impression that courts are just arbitrarily giving a party whatever it says it wants.

But conversely, there may be cases where the first party gets a tremendous advantage,

even though it took that position inadvertently. And it doesn't make sense. It just wouldn't be fair to allow that party to obtain a further advantage in the second proceeding. Mr. Lewat, I think your point that inadvertence and the stake may not automatically defeat judicial stop-up. But I'm also not sure we need to get into what all the factors are or even talk about holistic analysis,

given as just as Thomas pointed out, the Hampshire was really could have been an equitable stop-up case, forget about judicial stop-up. And the bankruptcy context is different. And we have an eerie problem. And all these, why not just simply say the factor of inadvertence and the stake, whatever it means,

doesn't mean what the fish circuit set it meant. That is a sufficient ground for vacating and remaining. And you have no problem with that. We have no problem with that. We just wanted the court to be aware when it's considering the scope of an advertence,

but it may not be the be all end-all of the analysis. But you might not necessarily hang everything in the case on whether it's inadvertent or not. We don't even need to take a view on that.

Maybe some future case that there'll be a reason to make it a bright line.

Maybe not, as you say. We don't have to take a position in this case on that. Do we? That's right. And really our submission is you don't need to move the lines you drew in New Hampshire versus main and inch.

New Hampshire versus main said inadvertence. It may be appropriate to resist the application judicial installable if the party's prior position was the product of an adherence. We're happy with what that statement of what the law is. Thank you. We dispute the way an adherence was defined here.

“Well, I mean, New Hampshire against main, it's featured prominently because it's the only thing.”

I wonder if saying anything about it. I mean, it's two sovereign states against each other and the boundaries. I'm not sure that we should try to bring it into play any more than it's necessary. I don't really quibble with that at all. I read New Hampshire versus main as setting forth pretty high level principles.

I mean, the principles I understand that decision to set forth are the balance of equities matters. And the list of equities is kind of non-exhaustive. And it inadvertence may be one of those factors. I think at that level, there's nothing wrong with taking those principles and articulating them here. I agree once you get into how those principles cash out, you may not be in a situation where New Hampshire versus main really speaks to that.

Thank you, Council. Justice Thomas. Justice Alina. I know I would have a chance to speak to Justice Gorsuch later. But you answered him forward.

I don't know what you think simply saying they were wrong about inadvertence would get us. Because you came up here and said there were two fundamental errors. And I thought in describing the errors, both times you said the court failed to take into account totality of the certain senses. So it wasn't just merely their failure to address inadvertence properly. They failed to do the holistic evaluation of what was the prejudice to the parties from that inadvertence even if it was deliberate.

It could still, you've said all these other things. I'm not sure. Well, we would certainly be more satisfied with an opinion that went further and said inadvertence is not the only factor.

“I think that just follows pretty directly from New Hampshire versus main to give one stark example.”

I mean, New Hampshire versus--

No, but why did you say yes to an opinion that basically brings us back here?

Because I can see the fifth circuit saying exactly what it said below. If you know you didn't say it, it's intentional. It's not inadvertence. So they've already answered that question. Yeah, and so I'm not sure.

I don't think they--so this is getting to the error, I think, this court should really needs the correct, because it is court of the dispute between the parties, which is-- This is what--this is the real deficit. This is the correct definition in our view of inadvertence versus non-inadverance. We think, in all cases, the relevant question is, did the party deliberately take the prior position?

In other words, did the party deliberately choose position? Come down to the fifth circuit now coming back to us and saying, he told us it's turning, but the attorney didn't sell the court and you're responsible for your attorney's errors. So we-- Which is what we usually say.

We do think the attorney is responsible. The attorney's kind of does bind the client.

“And so that's what the fifth circuit basically said here that the attorney knew the attorney didn't say it.”

So you-- Well, here's--here are two errors, I think, the fifth circuit made just as to inadvertence. One is, it deemed irrelevant, and this is on Pet App 13A. Any evidence regarding the attorney's knowledge of whether the duty to disclose applied in this case. That is a bucket of relevant evidence that a relevant and mainly objective evidence in our view that the fifth circuit

didn't consider. And the second error is even though it's an analysis of the potential motive that just as the veto brought up,

the fifth circuit's analysis was incomplete. I mean, the record suggests many reasons why there was no modification of the plan when this--

The fact is, no matter when you disclosed it, it would have been years before this claim would have become an award of damages.

“In one word, I do a simple opinion that says you have to look at the totality of the circumstances and you can't reduce it to the three factors that you mentioned alone.”

That would be my opinion. That's right. And the fifth circuit ignored evidence relevant to the knowledge of the duty and ignored evidence pertaining to the potential motive to the wrong that the fifth circuit considered. Just to the game, just to the scores of-- Just to the count, no, just to the ground. Just to the Jackson.

Thank you, Council. Mr. J.

Mr. Chief Justice and may it please the court.

The question, the court agreed to decide in this case is not about whether there was a clear inconsistency between the representations, but about whether proof of bed faith is required before judicial install will can apply. And the answer should be no. Where the same litigant seeks to win a second victory on grounds that are clearly inconsistent with the grounds of which he won the first victory, that undermines the integrity of the judicial process.

And it is not necessary to also prove that, as Mr. Lugia said, that litigant intended to switch positions all along. Like to make basically three basic points, one about precedent, one about practicalities, and one about bankruptcy. The first is that there are multiple cases, not just New Hampshire, but also the 19th century cases that New Hampshire addressed. I don't think Petitioner's rule can explain any of them.

One key thing that New Hampshire says is that mistake or inadvertence looks at time one, not time two.

“And I think there's been a lot of inconsistency with the other side's presentation this morning about whether they look at time one or time two.”

Second, I, in practice, as the district court noted, basically every litigant facing judicial stop-up claims his original position was a mistake. Under the other side's rule, we just, just a declaration claiming a lack of legal understanding or that the attorney gave bad advice would be enough for a trial. And third, although we are not urging a special rule for bankruptcy cases, as the other side is, we think that our rule better fits the bankruptcy context anyway. Petitioner's rule would undermine the full disclosure of assets on which the bankruptcy bargain depends.

A doctrine, as Judge Easterbrook puts it, that encourages debtors to be truthful in their bankruptcy filings, will assist creditors in the long run. That is why our rule does not deprive creditors of recoveries that they would otherwise be able to get. District courts might well exercise their discretion at the margin and favor of less culpable litigants, but there's no reason to make bad faith, a prerequisite. I welcome the court's questions.

“Is there any difference between your rule and the fifth circuit's rule?”

Not in practice, certainly not in this case. If I were writing the rule for all circumstances, I would say that the question of benefit, which the fifth circuit describes as part of the inadvertence or mistake inquiry, I think New Hampshire would put that earlier in the analysis, and the core three factors are clear inconsistency, accepted by the tribunal, and getting some benefit that would be inequitable for you to keep. And I think that we would put the sort of the financial aspect of the benefit that the litigant gains from the bankruptcy in that bucket instead.

I don't think that's an analytical point. I don't think it makes any difference in this case. So we certainly agree with the fifth circuit that the question is not whether the litigant himself got bad legal advice or was subjectively aware of the legal duty as opposed to the facts. New Hampshire also considered the detriment to the party before the court in the subsequent litigation. What is the detriment to your client? So in New Hampshire, the court said, or in other words, that it's either benefit to the party that took the position or detriment to the adversary.

And I think New Hampshire is unusual, and your question to my friend earlier about mutuality gets to this. It is actually unusual for judicial unstoppable to come up in second piece of litigation before the same involving the same parties, precisely because the second, if it's the same party, they're well positioned to call the person out for switching positions. In the Philadelphia Wilmington Railroad case that New Hampshire discussed, you know, it's been settled since the 1850s that this is primarily a doctrine about defending the court's integrity.

And for that reason, mutuality is not required. How would you respond to petitioners argument that this is a windfall for your client? I think it's just the same point that the way in which courts integrity is preserved through the use of this doctrine is that the litigant against whom the inconsistent representation is being made points it out to the court.

So I understand the windfall point, but I think that's just, you might say the same thing about race due to collateral stopple, that the system cares more about locking down the first determination and preventing it from being re-litigated rather than saying, well, the correct answer would be to decide against the second litigant rather than the first.

“But it's not really just re-litigation. It's a new person jumping onto the scene. It just seems in terms of the courts integrity. It does seem a little much that the one person who's getting off is the one who's truck hit the other guy.”

I mean, it's a lot easier to explain why that's a bad result than simply the idea that there was something else that went on that the court didn't know about and now you're going to change the natural sense of the propriety of the result by saying the one person who we know inflicted harm according to the allegations, of course, gets off Scott free. I think that's a consequence, your honor, of the fact that if this comes up, it comes up at a time when it's too late to reopen the first proceeding, and this goes to a question that just a set of my or asks that one of the elements of judicial stopple is that the first proceeding has already resulted in some benefit to the, to the common litigant.

So every court of appeals that has applied New Hampshire to the bankruptcy context has agreed with the basic proposition in this case, although I think it's one that Mr. Garcia has to be disagreeing with, that a representation to the bankruptcy court that there is no cause of action is inconsistent with asserting in a subsequent action, that there is a cause of action, just like asserting ownership of a piece of property or a different legal interest asserting that you don't own that property.

That property in one action is inconsistent with a start with trying to invoke the ownership right in a second.

“>> Yes, it can consistent, but what is the advantage that is gained from that in this situation?”

>> So the advantage in a bankruptcy in which the debtor has an incentive to minimize assets is the ability to convince the bankruptcy court that, so this is a chapter 13 case that I,

to taking this as an example, that a chapter 13 would be just as much in the creditors interest as a chapter 7, which is always the.

>> I understand, but the bankruptcy court could convert the proceeding if that information is brought to their attention, the creditors apparently in this case for whatever reason to said, we don't care. I don't understand what the advantage is that is being apparently at the heart of your concern that judicial integrity is threatened or something in this situation. The advantage that a litigant gets is getting is convincing the bankruptcy court to confirm the chapter 13. >> Not a litigant, this litigant. In other words, in these circumstances because, as others have pointed out, we're talking about a totality of the circumstances, you know, equitable assessment of whether judicial establishment should be applied.

>> Right, I mean, if you want me to talk about the facts of this case, so in this case, at the time that the debtor had the cause of action, so fell behind on payments and had to submit additional amendments to the modifications to the chapter 13 plan.

And the trustee initially objected to the first of those amendments and said, this amended plan doesn't leave unsecured creditors as well off as the chapter 7.

>> Once the information was brought to their attention, no one sought interest, no one thought the plan should change in any way. So, respectively, that's a distinct point, and I'm happy to address that, because this was brought to the bankruptcy court's attention, such as it was. And if you look at page 203, you'll see that the debtors didn't actually disclose any valuation for this claim, they didn't change the sum total of their assets at all. They just listed, they mentioned the claim and said unknown. This, of course, was well into the payment plan. It's after the new confirmation had been granted.

“And at that point, I think it's not surprising that creditors who were receiving the stream of payments and weren't really told anything about this cause of action,”

I didn't affirmatively speak reopening of the, I guess my question is, is it fair to just assume or presume that by not having this information and advantage has been obtained such that it makes sense and is equitable to preclude the debtor from accessing or having this asset, which could in some situations actually go into the estate.

So, I'm happy to answer the question, and I just let me note by a way, a preface that the weather there has been an advantage gained, I think, as this is much of my colleague with Justice Thomas earlier, I think that that's a different question than the one on which the court granted served. Well, we certainly didn't grant served on the bad faith. You said that at your original statement, and I took issue with it. The question the court granted served on you said was whether proof of bad faith is required.

If you look at the actual question presented, it's whether the fifth circuit's formulation, which is requiring potential motive for disclosure was correct.

But if you look at the last sentence of the question presented, it says that the reason that the fifth circuit is wrong is that it doesn't require proof of bad faith. And that is the fundamental submission that we're making to the court that inadvertence or mistake, as an exception to the judicialist opal doctrine, does not connote proof of bad faith.

“Mr. J, if we're talking about protecting integrity of the courts, I just want to clarify a factual point. Am I correct that the bankruptcy court declined to sanction?”

No party asked for sanctions, you're on or so.

The bankruptcy court knew because this was brought, you know, the, let's see, it's my understanding of the bankruptcy court knew about this because he ultimately did go back to the bankruptcy court and make the court aware. My right about that. There's an amended schedule that, as I was saying to Justice Jackson, doesn't disclose the amounts, but states that there is a claim for the first time that there is a claim under in the answer to question 33 on the schedule. That's after the confirmation.

“And maybe this goes to Justice Sotomayor's point in Justice Jackson's point to your friend on the other side. Why isn't the bankruptcy in this context? Why wouldn't we expect the bankruptcy court to be the one to police this?”

I think that no one asked the bankruptcy court to take any action, and it may well be that, as I was saying to Justice Jackson, that the creditors concluded that this lead in the payment plan, it wasn't worth the candle to do so.

And the bankruptcy court, and this, to the point that Justice Jackson asked my friend about,

the bankruptcy court may have tools that it can use in bankruptcy in the sense of denying a discharge or denying access to Chapter 13 and force in the case to be converted to Chapter 7, or even referring to criminal prosecution. But all of those things go to the bankruptcy itself, rather than the consistency of the representations between the bankruptcy and the NS subsequent proceeding.

“If we might zoom out this for a second, a judicial stopple is an off branch of equitable stopple. Equitable stopple requires mutuality.”

Our judicial stopple, one case, had mutuality where a benefit gained by one party did cause a detriment to the other, could have been an equitable stopple case. This is where we don't have mutuality. And if a judicial stopples about protecting the integrity of the courts, I get the concern on the one side that there's perhaps a misrepresentation of the bankruptcy court subject to all the caveats we've discussed. But the courts also have a duty and they're open to claim some personal injury and to give your client a windfall would also seem to have some impact again zooming out on the integrity of the judicial process and its accessibility.

I don't think so, you're on or any more than issue preclusion does, which is the courts. I understand we have non-mutual issue preclusion and you alluded to those, but those doctrines are again new and riddled with exceptions when it comes to non-mutual collateral stopple and the like. And it does seem to me like what often we don't do it when it's just not fair. And here, how about again if we're concerned about the integrity of the judicial process, why is a one consideration that your client would just get a plan of windfall.

So the non-mutuality goes, at least back to the Philadelphia Wilmington Railroad case in the 1850s, which discussed in your answer, right? So I resist the premise that it is as new as for example non-mutual issue preclusion. Okay, take the point. And the significance that we take from the fact that, as you said, the judicial stopple grows out of equitable stopple is that equitable stopple likewise doesn't have this type of state of mind requirement. That's not relevant to my question. But I think that the reason that there is no state of mind requirement for equitable stopple or judicial stopple is that both doctrines focused on the effect, equitable stopple focused on the effect to one lit again judicial stopple focuses on the effects on the judicial system.

We only, the premise of your question you're on or that it is a good claim is, let's assume I know you resist that, but let's just assume. I'm not resisting it for the usual, I don't you know lawyers don't can see anything in every reasons. I'm resisting it because it's the very premise of judicial stopple that we don't look past once the first case is over, we don't look past the accuracy of the representation in the first case.

“That's the point, the whole point of the representation in the first case whether it's New Hampshire or this bankruptcy case or any of the other judicial stopple cases is the representation that in this case I don't have an asset of this nature.”

That Mr. Garb in his presentation brought this back to the sort of the mantra of a failure to update a form. I do want to resist that characterization because, I mean again, first the court didn't grant certain on the clear inconsistency point. There's no no disagreement in the courts of appeals that where there's a representation that a cause of action doesn't exist that's inconsistent with asserting it. And in this case there's no fact no assertion of a factual lack of knowledge in fact the facts show that all the facts were known.

There's also no dispute about the obligation to disclose and this gets to a question I think that Justice Alito asked my friend earlier that where there is a duty to disclose that failing to make a disclosure is a representation to the courts that there's nothing to disclose. So because those aren't the questions before the court all I think that the other side is left with is saying that they resist the idea that either the attorney knew of the legal obligation which in that bankruptcy court is well established has been established for at least a decade or that the attorney failed to give advice on that to the debtor.

And trying to gather all the questions about what you might say in an opinion we would urge you to say in an opinion that the bank that attorneys representations matter that a litigant can't escape judicialistopal by saying although my attorney made this representation to the court in the first action that's a mistake because I didn't understand the consequences of the choice that my attorney was making.

That's fundamentally inconsistent with the notion of mistake as this court has used it for well over a century.

“I think this is well fleshed out in the German versus Carl Allen at nearly a decision that we cite in our papers but that site's precedent going well back to just a story.”

Construing a statute involving mistake or error legal mistakes aren't that kind of mistake and that type of error is not with the judicial stopple doctrine or the inadvertent or mistake exception to it or getting it. And I think just as Jackson I had the hypothetical and the top half of the argument about the asset being concealed from the divorce and I think that the point that I wanted to make from that is that how is that example going to come to light and how are these causes of action that are not disclosed in bankruptcy.

And that if disclosed the bankruptcy court could make its determination about whether they should have been disclosed sooner and what the consequences should be. How are they going to come to light if there is no incentive to litigate the fact that they didn't come to light sooner. So as the lower courts have recognized, that apply our rule not just the fifth circuit but also others. But why does the incentive have to come from the threat of not allowing you to pursue the claim. I mean this is the point that many have pointed to or made with respect to all the tools the bankruptcy court has to sanction an intentional omission of that nature.

“But the tools to sanction all presuppose that someone's going to find out about the concealed claim and the tools are not useful if the assets don't come to light.”

But you need to find out about the concealed claim in order for the claim to be extinguished. I mean that's a necessary condition for anything to happen. The question is why once we find out about it the remedy is to say you cannot pursue that claim as opposed to some other solution. I think the reason is the clear inconsistency. This doesn't just come up in the context of the good claim that we're talking about. I mean this comes up in all types of bankruptcy actions in which party makes a solemn representation to the bankruptcy court about the amount of property that they have.

And they subsequently turn around and make representations to another court that are flatly inconsistent with that.

Right? The answer is they adjust the bankruptcy proceeding to sanction them appropriate.

But that's just that's just it, Justice Jackson. I think that once the plan is confirmed and the debtor gets the discharge, I don't think that the that my friend on the other side is correct to say that the bankruptcy court always has the option to say, "Oh, I'm going to take some further action." In chapter 13 plan if the creditors have been paid off and the creditors have been paid off.

“And chapter 13 plan is time limited that bankruptcy court, I think doesn't have the free hand that your question is positive.”

And should that factor in then to whether or not judicial a stop-up is appropriate? Why couldn't in the totality of the circumstances maybe in that situation would have judicial a stop-up? So I think our, I resist giving a bankruptcy specific answer, but I'm happy to give an answer for that question.

In every judicial a stop-up case, rather, the question is what is the benefit that the common litigant in between the two actions has gotten from the first action.

And if it's raised early enough that the litigant can surrender the benefit, then there isn't going to be judicial a stop-up, I think that's just baked right into the doctrine.

“You don't need a bankruptcy specific rule to say that because I think that's part of judicial a stop-up, just like the clarity, like the clearness.”

How clear the inconsistency between the representations is, also baked into the judicial a stop-up doctrine.

And when there's doubt about whether a pro say litigant or something like that has made such a representation, then the existing judicial a stop-up doctrine can deal with that.

Thank you. Mr. Court has any further questions? Just a comment. Thank you, Council. Thank you, Ars.

A bottle Mr. Gar? Thank you, Mr. Chief Justice.

“We would welcome any ruling setting aside the district rule in this case, but we do think it's important for the court to say that a holistic analysis should be undertaken.”

The undertaken into intent because I do think that it's likely this case will end up right back before this court is just a son of my or indicated. And then we would urge the court to let the lower courts sort out the particular facts and circumstances, in this case under the holistic analysis. As to the question presented, the question presented and the whole petition is directed right at that this circuit's rule here, there's absolutely nothing that prevents this court from considering that question resolving the circuit split.

And the court should do so. The petitioner disclosed his claim with more than a year left on the bankruptcy plan, in this case the bankruptcy court could have objected if it thought anything was a rye and any creditor could have come forward and objected if it thought it was entitled to anything more. But no one did, and last I would just say on the windfall point no doctrine of equity would allow the tort fees are in this case to walk away Scott free if the debtor here simply made an honest mistake in failing to update the form.

The fifth circuit's decision should be reversed in the case remanded. Thank you counsel. The case is submitted.