Woman gets $4M award by summary judgment

A Smithfield woman seeking protection from financial exposure after being sued over a traffic accident torpedoed her own personal injury defense with her bankruptcy filings, a judge has ruled. The woman – and the insurance companies covering her – now faces a $4 million judgment in favor of the injured plaintiff.

Richmond Circuit Judge Margaret P. Spencer invoked the legal doctrine that bars a party from both “approbating and reprobating,” or taking inconsistent factual positions in litigation. The judge found the defendant’s signed bankruptcy forms, listing the personal injury claim as an undisputed debt, barred any further challenge to the claim in Womack v. Yeoman (VLW 011-8-207).

The Womack case also produced an award of sanctions based on an accusation of criminal conduct against an attorney who searched online for personal information about the plaintiff.

The lawsuit arose from a 2008 accident in Richmond. Sheila Womack, a 29-year-old office assistant, claimed she suffered a head injury when Jerrene Yeoman made an improper left turn and their cars collided, according to Mark M. Esposito of Richmond, one of Womack’s attorneys.

After Womack filed suit demanding $5 million, Yeoman admitted liability, but contested the alleged head injury. Yeoman had $300,000 in liability insurance coverage with GEICO, and Womack’s policy, with Transportation Insurance Co., provided $1 million in underinsured motorist coverage, according to GEICO attorney Jayne B. Randall.

Yeoman filed for bankruptcy on Jan. 20, forcing postponement of the trial that had been scheduled to start four days later. On her petition in the bankruptcy court, she included the $5 million claim in three separate listings. In each case, the form indicated the claim was undisputed.

Esposito argued there could be no mistake about Yeoman’s position. “[W]hen you file a petition in bankruptcy, it is filed under oath,” he told Spencer at a Sept. 15 hearing. He said Yeoman identified the claim three times as a liquidated, undisputed debt – in her initial petition, in an amended petition and at a creditors meeting.

The rule against approbating and reprobating is alive and well, he argued. “This is not some ancient doctrine that’s fallen in disfavor. It’s been reaffirmed,” he said at the hearing.

Esposito reasoned that Yeoman had received the benefit of a bankruptcy discharge based on her acknowledgment of a debt to Womack. “And in so doing, she now cannot be heard to come into this Court before you and … take the position that she, in fact, does not owe it. That is the nature of the rule against approbating and reprobating,” he said.

Esposito also based his argument on the rule of judicial estoppel, but Spencer ruled she did not have to reach that argument to resolve the summary judgment issue.

Yeoman’s defense attorney, Julie S. Palmer of Richmond, said the bankruptcy listings were no more than an inadvertent mistake. She submitted an affidavit from Yeoman’s bankruptcy lawyer, Ronald J. Berg of Norfolk, stating he did not anticipate this issue when he prepared the schedule of debts. “She signed it on advice of counsel. You know she’s a lay person, she doesn’t understand the potential impact of that on this case,” Palmer told the judge.

Spencer noted, however, that the bankruptcy listings were never corrected. “I can’t believe that as of today’s date, if it was a mistake, it hasn’t been corrected,” the judge said, granting Womack’s motion for summary judgment.

The UIM carrier, Transportation, urged Spencer to reconsider. The effect of the ruling, the company argued, was to deny the UIM carrier its right under Virginia law to defend its interests. Spencer, however, held Transportation was a victim of its reliance on the defendant’s position.

The decision means a $1million recovery for Womack. Yeoman filed a notice of appeal.

Esposito said it appeared Yeoman’s bankruptcy filing stemmed from apprehension that she would be subject to liability for a judgment in excess of the insurance limits. He suggested at the hearing that the bankruptcy lawyer may have been trying to maximize Yeoman’s indebtedness in order to qualify for bankruptcy relief.

Spencer’s ruling affirms the validity of the rule on approbation and reprobation, said Thomas J. Schilling, Esposito’s partner, who researched the issue. “It’s a great legal doctrine – it’s been around for 150 years,” he said. “We took a novel and out-of-the-ordinary approach to a case that people never would have thought of.”

The practice pointer for consumer bankruptcy lawyers, Esposito said, is “you better be careful how you categorize your client’s debt.”

Steven B. Ramsdell of Alexandria, a bankruptcy lawyer, noted it’s easy to overlook the “disputed” label when listing debts on a bankruptcy schedule. It’s “just a tiny little box,” he said.

Nevertheless, Ramsdell and fellow bankruptcy lawyer H. David Cox of Lynchburg agreed the characterization of the debt had little significance for Yeoman’s Chapter 7 bankruptcy. “She was eligible for bankruptcy no matter what,” Ramsdell said.

“There was nothing to indicate this claim was not dischargeable,” Cox said.

The group with the most at risk based on Spencer’s opinion are insurance companies, Cox said. Here, the carriers lost out because of actions by a defendant/debtor out of their control. “It’s really tough on them,” Cox said.

Calls for comment to Palmer, Berg, and Transportation lawyer Kenneth C. Hirtz of Henrico were not returned.