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Court allows bankruptcy trustee to join as party plaintiff in car accident case

Connie Sielicki was alleged hurt in a car accident in May of 2009.  In December, an attorney made a claim against the at-fault's insurer by letter.  In February, she and her husband filed for bankruptcy, but did not list an injury recovery as a potential asset.  That same month, her injury attorney apparently rejected a verbal offer of $30,000.00 to settle her claim.  In May, her debts were discharged by the bankruptcy trustee, who found that she had no assets to pay them.  One year later, her PI attorney filed an injury lawsuit. 

As discovery developed, the insurer argued that Sielicki should be barred or "estopped" from making an injury claim because she had not listed the claim as a bankruptcy asset.  The Plaintiff filed an amended bankruptcy form disclosing the claim, and asked that the Trustee be joined as an additional plaintiff in the injury suit.  The Trustee joined in this motion, an action which the insurer opposed, pointing to the expiration of the three-year statute of limitations.

The trial judge granted the motion and joined the Trustee, leading to an appeal by the insurer.  The Court of Appeals noted prior decisions holding that the "judicial estoppel" doctrine "is to be applied with caution."  It pointed out that applying the doctrine in this case might result in denial of justice to Sielicki's creditors.  Further, by seeking amendment of the bankruptcy petition, the debtor is not avoiding payment of her debts with the disputed personal injury recovery, as alleged by the insurer.

Nevertheless, since the joinder of a new party does not "relate back" to the original pleading date, and since the addition of the Trustee occurred one day after the three-year statute of limitations had run, the lower court committed error by allowing the Trustee to become a party to the lawsuit.  That amendment should have been denied and the Trustee left to his bankruptcy remedies against the Plaintiff.  The court reached this conclusion based on a 2007 Michigan Supreme Court holding in a similar case, which denied amendment despite prior cases suggesting that the Trustee was "the real party in interest" from the outset of the personal injury case.

Thompson O’Neil, P.C.
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