Keathley v. Buddy Ayers Construction, Incorporated

The Supreme Court said bankruptcy-related claim omissions must be evaluated using all the circumstances, not just a debtor's knowledge of the facts or possible motive to hide a claim. It vacated the Fifth Circuit's decision and sent the case back for further proceedings.

Justice Jackson wrote the 9–0 opinion, joined by Chief Justice Roberts and Justices Alito, Kagan, Gorsuch, Kavanaugh, and Barrett; Justices Thomas and Sotomayor concurred.

The Court ruled 9-0. Justice Ketanji Brown Jackson wrote the opinion, joined by Chief Justice John Roberts and Justices Samuel Alito, Elena Kagan, Neil Gorsuch, Brett Kavanaugh, and Amy Coney Barrett; Justices Clarence Thomas and Sonia Sotomayor each wrote a concurrence.

Majority

Jackson

Roberts

Thomas

Alito

Sotomayor

Kagan

Gorsuch

Kavanaugh

Barrett

“Courts should look to the totality of the circumstances surrounding the omission.”

People who failed to list a civil claim in bankruptcy may get a fuller review of whether the omission was a mistake. Courts cannot automatically block such claims based only on knowledge and a possible financial motive.

The Fifth Circuit must reconsider Keathley's case using the broader, all-circumstances approach required by the Supreme Court. Other courts deciding similar bankruptcy-omission disputes must apply that approach as well.

The Court said judges must consider all circumstances before barring a bankruptcy debtor's civil claim for failing to disclose it.

Bankruptcy debtors with omitted civil claims and the people or businesses they sue may face a fuller inquiry into whether an omission was mistaken.

The Fifth Circuit will reconsider the case under the Supreme Court's totality-of-the-circumstances test.