United States District Court, E.D. Tennessee
WENDY TOLEDO, MANUEL TOLEDO, and KAYLEE GREEN (a minor), Plaintiffs,
CSX TRANSPORTATION, INC., and UNION TANK CAR COMPANY, Defendants.
MEMORANDUM OPINION AND ORDER
A. VARLAN, CHIEF UNITED STATES DISTRICT JUDGE.
the Court are defendant Union Tank Car Company
(“UTC”)'s motions for partial summary
judgment [Doc. 44] and to amend its answer [Doc. 53].
Defendant CSX Transportation, Inc. (“CSX”), has
filed notice that it joins in UTC's summary judgment
motion [Doc. 46]. Plaintiff Wendy Toledo has responded in
opposition to both motions [Docs. 51, 55], and defendants
have replied [Docs. 52, 54, 56]. For the reasons explained
below, the Court will grant both of defendants' motions.
facts at issue in the instant motions are not in dispute.
This case is one of many pending before this Court that arose
out of a train derailment and resulting chemical fire on July
1, 2015, in Maryville, Tennessee, which prompted the
evacuation of thousands of local residents [Doc. 1 pp.
13-16]. Plaintiffs here were Maryville residents
at the time of the derailment [Id. at 11]. They have
brought this lawsuit against the operator of the train,
defendant CSX, and the owner of the tank car that derailed
and caught fire, defendant UTC, asserting claims of
negligence, battery, nuisance, negligent infliction of
emotional distress, and gross negligence under Tennessee law
[Id. at 16-30].
February 8, 2016, plaintiff filed a voluntary Chapter 13
bankruptcy petition in the United States Bankruptcy Court for
the Eastern District of Tennessee [No. 3:16-bk-30300, Doc.
One part of the petition form-specifically, Question 33 in
Schedule A/B: Property-asked plaintiff whether she had any
“[c]laims against third parties, whether or not [she
had] filed a lawsuit or made a demand for payment, ”
including “[a]ccidents, employment disputes, insurance
claims, or rights to sue” [Id. at 21].
Plaintiff checked the box marked “no”
[Id.] Thus, the parties do not dispute that she
omitted from her petition the claims she has raised against
CSX and UTC in this case [See Doc. 45 p. 2; Doc. 51
pp. 2-3]. In an affidavit attached to her response brief,
however, plaintiff submits that this omission was “an
honest mistake not intended or used to gain any unfair
advantage” [Doc. 51-2 ¶ 8]. Plaintiff further
provides that she completed the petition after one
consultation meeting with a bankruptcy lawyer and one
follow-up meeting when she returned certain documents for
review [Id. ¶ 5]. In addition, plaintiff notes
that she has only a high school education, with no formal
legal training [Id. ¶ 3].
originally filed a complaint against CSX and UTC in the
Circuit Court for Blount County, Tennessee, on June 24, 2016
[Doc. 1 p. 1]. CSX then removed the case to this Court under
28 U.S.C. §§ 1441 and 1446 [Id.]. On July
12, the Bankruptcy Court entered an order discharging
plaintiff's debts, and her case was closed on August 22
[No. 3:16-bk-30300, Docs. 19, 22]. Up to this point,
plaintiff had not sought to amend her bankruptcy petition or
notify the Bankruptcy Court of her claims against CSX and
UTC. Meanwhile, UTC answered plaintiff's complaint in
this case on August 10, but did not assert as a defense
plaintiff's failure to schedule her claims against UTC in
her bankruptcy petition [Doc. 16]. CSX, on the other hand,
filed its answer on August 17 and expressly raised equitable
estoppel as an affirmative defense [Doc. 19 ¶ 100].
later disclosed her pending bankruptcy petition in response
to CSX's first set of interrogatories [Doc. 51-3 p. 2].
On March 14, 2017, UTC moved for summary judgment solely as
to Wendy Toledo, arguing that her claims against UTC were
barred by judicial estoppel because she had failed to
schedule them in her bankruptcy petition [Docs. 44-45]. On
March 23, CSX filed notice that it was joining in UTC's
motion [Doc. 46]. Then, on April 5, the United States Trustee
moved to reopen plaintiff's bankruptcy case, noting that
it had been “notified about the existence of additional
assets that are likely property of the bankruptcy
estate” [No. 3:16-bk-30300, Doc. 23 p. 1]. The
Bankruptcy Court reopened the case that same day [No.
3:16-bk-30300, Doc. 24]. In addition, the bankruptcy
trustee has since hired plaintiff's counsel to
represent the bankruptcy estate's interests in this
litigation [No. 3:16-bk-30300, Doc. 32].
then responded in opposition to defendants' summary
judgment motion, arguing that: (1) UTC had failed to assert
judicial estoppel in its answer as an affirmative defense;
(2) judicial estoppel is not warranted on the facts of this
case; and (3) such a remedy is now moot, given the reopening
of her bankruptcy case [Doc. 51]. CSX and UTC replied [Docs.
52, 54], and in response to plaintiff's first argument,
UTC simultaneously filed a motion to amend its answer to
include an affirmative defense of judicial estoppel [Doc.
53]. Plaintiff has now responded to that motion [Doc. 55],
and UTC has replied [Doc. 56]. Therefore, UTC's motion to
amend and defendants' joint motion for summary judgment
are both fully briefed and ready for disposition. E.D. Tenn.
L.R. 7.1(a). The Court will resolve both motions in this
UTC's Motion to Amend
Court will first address defendant UTC's motion for leave
to amend its answer to assert an affirmative defense of
judicial estoppel [Doc. 53]. For the reasons explained below,
the Court will grant UTC's motion.
Standard of Review
Federal Rule of Civil Procedure 15, after the twenty-one-day
window for amendment as of right has expired, “a party
may amend its pleading only with the opposing party's
written consent or the court's leave.” Fed.R.Civ.P.
15(a)(2). “The court should freely give leave when
justice so requires.” Id. The decision whether
to grant leave rests within the district court's sound
discretion. Zenith Radio Corp. v. Hazeltine Research,
Inc., 401 U.S. 321, 330 (1971). Leave is generally
appropriate “[i]n the absence of . . . undue delay, bad
faith or dilatory motive on the part of the movant, repeated
failure to cure deficiencies by amendments previously
allowed, undue prejudice to the opposing party by virtue of
allowance of the amendment, [or] futility of the
amendment.” Leary v. Daeschner, 349 F.3d 888,
905 (6th Cir. 2003) (quoting Foman v. Davis, 371
U.S. 178, 182 (1962)); accord Crawford v. Roane, 53
F.3d 750, 753 (6th Cir. 1995).
of a complaint is futile when the proposed amendment would
not permit the complaint to survive a motion to
dismiss.” Miller v. Calhoun Cty., 408 F.3d
803, 807 (6th Cir. 2005) (citing Neighborhood Dev. Corp.
v. Advisory Council on Historic Pres., 632 F.2d 21, 23
(6th Cir. 1980)). In making this determination, the court
must construe the complaint in the light most favorable to
the plaintiff, accept all factual allegations as true, draw
all reasonable inferences in the plaintiff's favor, and
determine whether the complaint contains “enough facts
to state a claim to relief that is plausible on its
face.” Twombly, 550 U.S. at 570; accord
Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir.
2007). “A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009).
noted above, an additional basis for denying leave to amend
is a “likelihood of prejudice to the opponent, ”
after weighing “the competing interests of the
parties.” Moore v. City of Paducah, 790 F.2d
557, 559 (6th Cir. 1986). The Sixth Circuit has, however,
required “at least some significant showing of
prejudice to the opponent” to deny leave on this basis.
Id. at 562. On the other hand, “[w]hen
amendment is sought at a late stage in the litigation, there
is an increased burden to show justification for failing to
move earlier.” Wade v. Knoxville Utils. Bd.,
259 F.3d 452, 459 (6th Cir. 2001); accord Szoke v. United
Parcel Serv. of Am., Inc., 398 Fed.Appx. 145, 153 (6th
Cir. 2010); Owens Corning v. Nat'l Union Fire Ins.
Co., 257 F.3d 484, 496-97 (6th Cir. 2001).
delay is another, often related ground for denying leave.
Foman, 371 U.S. at 182. But “[d]elay that is
neither intended to harass nor causes any ascertainable
prejudice is not a permissible reason, in and of itself[, ]
to disallow an amendment.” Tefft v. Seward,
689 F.2d 637, 639 n.2 (6th Cir. 1982); see also Ziegler
v. Aukerman, 512 F.3d 777, 786 (6th Cir. 2008) (noting
that “delay alone, regardless of its length is not
enough to bar it if the other party is not prejudiced”
(quoting Moore, 790 F.2d at 560)). The court should
consider whether amendment would “ require the
opponent to expend significant additional resources to
conduct discovery and prepare for trial;  significantly
delay the resolution of the dispute; or  prevent the
plaintiff from bringing a timely action in another
jurisdiction.” Phelps v. McClellan, 30 F.3d
658, 662-63 (6th Cir. 1994).
UTC argues that “[t]he thrust of Rule 15 is to
reinforce the principle that cases should be tried on their
merits rather than the technicalities of pleadings.”
Tefft, 689 F.2d at 639. UTC further asserts that
none of the “limited circumstances” warranting
denial of leave to amend are present here [Doc. 53 ¶ 4].
First, UTC argues that plaintiff received adequate notice of
its judicial estoppel defense, both through CSX's answer
and UTC's summary judgment motion and briefs. Second, UTC
argues that plaintiff will suffer no prejudice from amendment
because this case is still in the discovery stage, with the
trial not set to begin until November 5, 2018 [Doc. 57].
Third, UTC argues that amendment would not be futile because
its affirmative defense of judicial estoppel has merit.
Fourth, UTC argues that it has not unduly delayed in seeking
amendment, as it moved for summary judgment promptly after
learning of plaintiff's bankruptcy petition and then
sought leave to amend seven days after plaintiff first
asserted that UTC had not pleaded this affirmative defense.
Finally, UTC argues that it has not exhibited any bad faith,
nor has it repeatedly failed to cure deficiencies in past
responds that the Court should deny leave to amend on several
grounds. First, plaintiff asserts it would be inconsistent to
“hold the omission of an unsophisticated Plaintiff
against her [via the judicial estoppel defense], but not hold
the nearly nine month omission of an extremely sophisticated
[d]efendant against it” [Doc. 55 p. 2]. Relatedly,
plaintiff argues that if her attempts to correct the omission
in her bankruptcy petition came too late, then that same
logic would apply to UTC's belated attempt to correct its
deficient answer. Second, plaintiff argues that “a
failure to plead an affirmative defense as required by
Federal Rule 8(c) results in the waiver of that defense and
its exclusion from the case.” 5 Charles Alan Wright et