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Wholesalecars.com v. Hutcherson

United States District Court, N.D. Alabama, Southern Division

March 27, 2018

WHOLESALECARS.COM, Plaintiff,
v.
CORY HUTCHERSON, Defendant.

          MEMORANDUM OPINION AND ORDER

          KARON OWEN BOWDR, ECHIEF UNITED STATES DISTRICT JUDGE.

         Defendant Cory Hutcherson filed for Chapter 7 bankruptcy while engaged in arbitration of an employment discrimination claim against plaintiff Wholesalecars.com. Ms. Hutcherson did not disclose her bankruptcy petition to the arbitrator, and she did not disclose the pending arbitration to the Bankruptcy Court. Ms. Hutcherson received a $116, 677.22 arbitration award and did not disclose the award to the Bankruptcy Court.

         This matter comes before the court on Wholesalecars.com's “Motion to Vacate Arbitration Award and/or Preclude Enforcement Thereof” (doc. 1) and Ms. Hutcherson's response styled as a “motion to dismiss” (doc. 18). Upon filing for Chapter 7 bankruptcy protection, the petitioner's assets, including legal claims, become the property of the bankruptcy estate; thus Wholesalecars.com argues Ms. Hutcherson fraudulently procured the arbitration award by pursuing arbitration in her own name when the standing to do so belonged to the bankruptcy trustee. Accordingly, Wholesalecars.com asks the court to vacate the award under Title 9 U.S.C. § 10(a). Alternatively, Wholesalecars.com asks the court to judicially estop Ms. Hutcherson from enforcing the arbitration award because she intentionally hid the award from her creditors, the bankruptcy trustee, and the Bankruptcy Court.

         As discussed below, because Ms. Hutcherson's lack of standing did not affect the arbitrator's final decision, Ms. Hutcherson did not procure her award by fraud for purposes of Title 9 U.S.C. § 10(a). Accordingly, the court denies Wholesalecars.com's motion to the extent that it requests vacatur under Title 9 U.S.C. § 10(a). But because Ms. Hutcherson omitted her cause of action and arbitration award from her original and amended bankruptcy schedules and denied under oath that she was suing anyone, the court grants Wholesalecars.com's motion to the extent that it requests the court to judicially estop Ms. Hutcherson from enforcing the award in her name. The court does not preclude the bankruptcy trustee from enforcing the final award in the interest of the bankruptcy estate. To the extent that Ms. Hutcherson's response styled as a “motion to dismiss” is a motion to dismiss, the court denies the motion.

         I. BACKGROUND

         On July 18, 2014, Ms. Hutcherson sued Wholesalecars.com, her prior employer, in the Northern District of Alabama, alleging that the company illegally terminated her because she was pregnant. See Hutcherson v. Wholesalecars.com, 2:14-cv-01382-WMA. At Wholesalecars.com's request, the court compelled the case to arbitration. (Doc. 1 at 2). The timing of subsequent events plays a key role in resolution of this matter.

         On September 8 and 9, 2015, Ms. Hutcherson and Wholesalecars.com participated in an arbitration hearing of her employment claim. (Doc. 1-7 at 4).

         On September 25, 2015, Ms. Hutcherson filed a Chapter 7 bankruptcy petition in the United States Bankruptcy Court for the Northern District of Alabama. (Doc. 1-1). She did not disclose her suit against Wholesalecars.com in the schedules attached to her petition. (See Doc. 1-1; Doc. 1-2; Doc. 1-3; Doc. 1-5; Doc. 1-6). The petition required Ms. Hutcherson to report the suit on Schedule B, Schedule C, or the Statement of Financial Affairs. (See Doc. 1-2; Doc. 1-3; Doc. 1-5). Ms. Hutcherson reported $75, 675.00 as the total value of her assets. (Doc. 1-1 at 33). She signed her petition under penalty of perjury. (Doc. 1-1 at 4).

         On October 1 and 22, 2015, Ms. Hutcherson's attorney filed post-hearing briefs in arbitration. (Doc. 1-7 at 4). Ms. Hutcherson's attorney did not disclose the bankruptcy to the arbitrator in either brief. (See Doc. 1-8; Doc. 1-9).

         On November 6, 2015, Ms. Hutcherson attended the creditors meeting in her bankruptcy case. (Doc. 1-10). At the meeting, the bankruptcy trustee specifically asked Ms. Hutcherson, “[a]re you suing anyone for any reason?” (Id.). Under oath, Ms. Hutcherson responded, “[n]o sir.” (Id.).

         On November 24, 2015, the arbitrator awarded $116, 677.22 to Ms. Hutcherson. (Doc. 1-7 at 21).

         On January 4, 2016, Ms. Hutcherson filed amended bankruptcy schedules to disclose previously unscheduled debts. (Doc. 1-11). She did not disclose the award or adjust the value of her assets. (See Doc. 1-1; Doc. 1-11).

         On January 7, 2016, the Bankruptcy Court discharged Ms. Hutcherson's debts. (Doc. 1-12).

         On January 28, 2016, Wholesalecars.com filed its “Motion to Vacate Arbitration Award and/or Preclude Enforcement Thereof.” (Doc. 1). Wholesalecars.com argues that the court should vacate the arbitration award pursuant to Title 9 U.S.C. § 10(a) because Ms. Hutcherson procured the award by fraud. (Id. at 5-6). It alleges Ms. Hutcherson committed fraud by not disclosing her bankruptcy in arbitration and vice-versa, thus hiding an asset from her bankruptcy estate and falsely representing to the arbitrator that she had standing to pursue a claim that belonged to the bankruptcy estate. (Id. at 20-21). Additionally, Wholesalecars.com argues that judicial estoppel bars Ms. Hutcherson from enforcing the arbitration award. (Id. at 6).

         On March 3, 2017, this court permitted Rocco J. Leo, the trustee of Ms. Hutcherson's bankruptcy estate, to ...


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