The 9th Circuit Court of Appeals has barred claims due to the borrower’s failure to amend include the claims in their bankruptcy schedules.
On Aug. 29, the 9th Circuit provided foreclosing parties some well-needed protection from borrower lawsuits in Meyer v. Northwest Trustee Services. While the Meyer decision is unpublished and involved a foreclosure trustee, the rationale behind the ruling should apply to future litigation against trustees, servicers and investors in the 9th Circuit of the Federal Courts, which includes Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington.
In its decision, the Ninth Circuit declined to review the borrower’s claims but instead determined that the borrowers were barred from bringing the claims against Northwest Trustee Services Inc. under the doctrine of judicial estoppel. The ruling sends the message to borrowers that, as soon as they learn of a potential claim during their bankruptcy, they must amend their schedules or disclosure statements to include the claim as an asset. If they don’t, their subsequent claims could be barred by the doctrine of judicial estoppel.
Source: Mortgage Daily