Keathley Judicial Estoppel Rule Gets First GVR: Supreme Court Vacates Fifth Circuit Roofing Designs Ruling

The Supreme Court on Tuesday, October 13, 2026, vacated the Fifth Circuit's decision in Roofing Designs by JR, L.L.C. v. Royal American Construction, Inc., No. 25-1367, and sent it back for reconsideration under Keathley v. Buddy Ayers Construction, Inc., the June 2026 ruling that replaced the Fifth Circuit's near-automatic bar on claims left off bankruptcy schedules with a totality-of-the-circumstances test. It is the first summary disposition applying Keathley judicial estoppel to another case, and it confirms that the new standard protects a corporate Chapter 11 debtor's commercial claims just as it protected the car-crash claim of the individual Chapter 13 debtor in Keathley.

For plaintiffs' lawyers, the order matters less for the roofing dispute itself than for what it signals: courts in the Fifth Circuit, which had the harshest rule in the country, will now have to re-examine estoppel dismissals that rested on the old two-factor shortcut. For defendants, the remand is a reminder that judicial estoppel survives Keathley; it simply now requires evidence rather than a presumption.

What the Supreme Court did on October 13, 2026

The October 13 order list (610 U.S.) disposed of the Roofing Designs petition in one line: certiorari granted, judgment vacated, and the case remanded to the U.S. Court of Appeals for the Fifth Circuit "for further consideration in light of" Keathley v. Buddy Ayers Construction, Inc., 608 U.S. 647 (2026). The Court wrote no opinion and heard no argument. A grant-vacate-remand order, or GVR, does not mean the lower court got the answer wrong. It means the Supreme Court believes an intervening decision creates a reasonable probability that the lower court would decide differently if it looked again.

The same order list carried two other rulings that practitioners following this site will recognize. The Court issued a parallel GVR in Monsanto Co. v. Dennis, sending a California Roundup verdict back for reconsideration under Monsanto v. Durnell, and it denied review in FCA US LLC v. Olson, leaving intact a Ninth Circuit ruling that a nonsignatory automaker could not compel arbitration of a headrest class action. Taken together, the October 13 orders show the Court cleaning up its spring docket by pushing lower courts to apply its recent merits decisions rather than taking new vehicles.

Roofing Designs filed its petition on June 4, 2026, one week before Keathley came down. The petition framed the case as presenting the identical question as Keathley and challenged the same circuit's framework. It asked, in the alternative, for exactly what it received: a GVR.

What did the Supreme Court decide in Keathley v. Buddy Ayers Construction?

Keathley, No. 25-6, was argued March 24, 2026 and decided June 11, 2026. Justice Ketanji Brown Jackson wrote for a unanimous Court. The holding is that when a court decides whether a debtor's failure to list a claim in bankruptcy was inadvertent or mistaken, and therefore not grounds for judicial estoppel, it must consider the totality of the circumstances surrounding the omission. The Fifth Circuit erred, the Court said, by artificially narrowing that inquiry to two questions: whether the debtor knew the facts underlying the claim, and whether the debtor had a potential motive to conceal it.

The problem with that two-factor test, as the opinion explained, is that it decides nearly every case before it starts. A debtor almost always knows the facts of his own car accident or contract dispute, and a debtor almost always benefits, at least hypothetically, from keeping an asset away from creditors. Under the Fifth Circuit rule, an omission counted as inadvertent only if the debtor lacked knowledge of the claim or had no motive to hide it. In practice, that made estoppel automatic.

The facts showed why the Court thought the rule produced harsh results. Thomas Keathley filed a Chapter 13 case in December 2019, and the bankruptcy court confirmed an amended plan in April 2020 that repaid 100% of creditors' claims, interest-free, over five years. In August 2021, while the plan was still running, Keathley was injured in a Mississippi crash with a vehicle driven by an employee of Buddy Ayers Construction. He hired a personal injury lawyer and told his bankruptcy counsel he planned to sue. He filed suit in the Northern District of Mississippi in December 2021. Neither he nor his bankruptcy lawyer amended the schedules, and the bankruptcy court confirmed a modified plan in July 2022 without knowing about the claim.

In March 2023, Buddy Ayers Construction moved for summary judgment on judicial estoppel grounds. Keathley then amended his schedules to list the claim and filed affidavits explaining that he believed he had done what was required and gained nothing from the omission. The district court granted summary judgment anyway on August 9, 2023, finding that he knew the facts and had a motive to conceal. The Fifth Circuit affirmed, with Judge Catharina Haynes concurring only because circuit precedent required it and expressing doubt that estoppel served its purposes on those facts.

The Supreme Court vacated and remanded. It did not decide whether Keathley's omission was in fact inadvertent; that is for the lower courts under the corrected standard.

Can you lose a personal injury claim for not listing it in bankruptcy?

Yes, but after Keathley it is no longer automatic. A debtor in bankruptcy must disclose assets, and a pending or potential lawsuit is an asset. When a debtor fails to list a claim, then later pursues it in another court, the defendant can argue judicial estoppel: the debtor took one position (no claim exists) to win relief from the bankruptcy court and is now taking the opposite position (the claim is worth money) in the tort case. The doctrine, as the Supreme Court described it in New Hampshire v. Maine, 532 U.S. 742 (2001), protects the integrity of the courts by preventing parties from playing fast and loose with them, and it has long recognized that a position taken through inadvertence or mistake may not justify estoppel.

Keathley holds that courts must decide the inadvertence question on the whole record. A personal injury plaintiff who left a claim off the schedules can still lose it if the defendant shows the omission was a deliberate effort to keep the recovery away from creditors. But the defendant can no longer win simply by pointing out that the plaintiff knew about the accident and would have benefited from hiding it.

The Roofing Designs case: a corporate debtor and a $0.00 schedule

Roofing Designs is a very different case from Keathley, and that is what makes the GVR instructive.

In 2020, Roofing Designs by JR, L.L.C. signed two subcontracts with Royal American Construction, Inc., the general contractor building an apartment community in Houston. Roofing Designs did not finish the work, and the parties dispute who was at fault. Roofing Designs recorded affidavits claiming a mechanic's lien and a retainage lien and asserted a right to payment under two bonds issued by Hartford. Royal American sued in the Southern District of Texas in 2021 (No. 4:21-cv-02440), and Roofing Designs pursued its own claims against Royal American and Hartford.

The damages figure grew as the case progressed. Roofing Designs' initial disclosures sought $227,756.48. On June 16, 2022, its corporate representative testified that the company was seeking more than $600,000, including attorneys' fees.

On October 4, 2023, Roofing Designs filed a voluntary Chapter 11 petition in the Northern District of Texas. Its schedules listed its claims against Royal American and Hartford with values of "Unknown" and "$0.00." Royal American and Hartford then moved for summary judgment, arguing that the company could not tell the bankruptcy court its claims were worthless while telling the district court they were worth more than $600,000.

The district court agreed and, on January 7, 2025, dismissed Roofing Designs' claims against both defendants with prejudice. The Fifth Circuit affirmed in an unpublished per curiam opinion on January 13, 2026. Summaries of that opinion differ on whether the panel rested on judicial estoppel or a related equitable estoppel analysis, but the petition treated the decision as an application of the same judicial estoppel framework that Keathley rejected, and the Supreme Court's GVR accepted that framing.

Keathley and Roofing Designs side by side

	Keathley v. Buddy Ayers Construction	Roofing Designs v. Royal American Construction
Supreme Court docket	No. 25-6	No. 25-1367
Debtor	Individual	Limited liability company (roofing subcontractor)
Bankruptcy chapter	Chapter 13 (filed December 2019)	Chapter 11 (filed October 4, 2023, N.D. Tex.)
Undisclosed claim	Negligence claim from August 2021 Mississippi crash	Contract, lien and bond claims from 2020 Houston subcontracts
How it was handled in bankruptcy	Not scheduled at all until after the March 2023 estoppel motion	Scheduled, but valued as "Unknown" and "$0.00"
Value asserted in the civil case	Personal injury damages (amount not stated in the opinion summaries)	$227,756.48 in initial disclosures; more than $600,000 per June 2022 testimony
Trial court	N.D. Miss.; summary judgment for defendant, August 9, 2023	S.D. Tex.; claims dismissed with prejudice, January 7, 2025
Fifth Circuit	Affirmed under two-factor test (Haynes, J., concurring with doubt)	Affirmed, unpublished per curiam, January 13, 2026 (No. 25-20048)
Supreme Court	Vacated and remanded, 9-0, June 11, 2026	Certiorari granted, vacated and remanded (GVR), October 13, 2026

What happens next in the Roofing Designs case?

The Fifth Circuit will reconsider the summary judgment under the totality standard. It can decide the question itself on the existing record or send the case back to the Southern District of Texas to weigh the evidence of inadvertence in the first instance.

Royal American has already previewed its argument. Its brief in opposition, filed September 8, 2026, contended that a GVR was unwarranted because Keathley did three narrow things: it rejected only the Fifth Circuit's rigid two-factor approach, it declined to adopt the bad-faith requirement Roofing Designs had urged, and it left judicial estoppel available in bankruptcy cases. On Royal American's account, every circumstance in the record (a represented business debtor, a sworn valuation of more than $600,000 a little over a year before the petition, and a schedule entry of zero) supports the original result even under the broader test.

Roofing Designs will argue the opposite: that the Fifth Circuit never looked past knowledge and motive, so it never weighed the evidence of mistake, and that listing the claims at all, even with an "Unknown" value, is inconsistent with concealment. The Supreme Court's order does not decide who is right. It decides only that the question has to be asked properly.

The remand will be the first appellate test of how much Keathley changes outcomes in the circuit that generated most of the hard cases. A Fifth Circuit ruling that the same dismissal stands under the totality test would tell defendants the doctrine still has teeth for sophisticated, represented debtors. A ruling that the summary judgment cannot stand would tell plaintiffs that undervaluation, as opposed to complete omission, is difficult to punish on summary judgment.

What is the totality of the circumstances test for judicial estoppel after Keathley?

The Supreme Court did not supply a checklist, and it deliberately left the weighing to lower courts. But the opinion, the concurrences, and the pre-Keathley circuit case law that already used a broader test point to the circumstances courts are likely to examine. The most developed model is the Eleventh Circuit's en banc decision in Slater v. U.S. Steel Corp., 871 F.3d 1174 (11th Cir. 2017), which overruled that circuit's earlier presumption of intent and directed courts to consider all the facts in deciding whether a plaintiff who omitted a lawsuit intended to make a mockery of the judicial system.

The factors that recur in that body of law include:

• The debtor's sophistication. An individual consumer relying on counsel is differently placed from a business with in-house finance staff and a litigation team.
• The explanation for the omission. Keathley told his bankruptcy lawyer about the claim. Evidence that the debtor disclosed the claim to counsel, who failed to act, cuts against intent.
• Whether and when the debtor corrected the schedules. Amendment after an estoppel motion is weaker evidence than voluntary correction, but the Court did not treat late amendment as irrelevant.
• Whether the debtor actually gained anything. Keathley's confirmed plan already paid creditors 100%. A debtor whose creditors would have been paid in full regardless has a weaker practical motive than one whose plan paid cents on the dollar.
• What the bankruptcy court did with the information. Whether the bankruptcy court relied on the omission, for example by confirming a plan or granting a discharge, and whether it later reopened the case or let the trustee pursue the claim.
• Who bears the loss. Estoppel extinguishes the claim. If creditors or a trustee could otherwise recover from it, dismissal harms the very parties the disclosure rules protect.

None of these factors is dispositive, and the Court assumed rather than decided several underlying premises, discussed below.

Which circuits used the rigid judicial estoppel rule before Keathley?

Before June 2026, the Fifth and Tenth Circuits were the only courts of appeals that treated knowledge plus a potential motive as enough to infer that an omission was not inadvertent. The Fourth, Sixth, Seventh, Ninth and Eleventh Circuits had required courts to look further, either at the full circumstances or at evidence of an actual intent to mislead the bankruptcy court. Keathley resolved that split in favor of the broader inquiry, but it did not go as far as the bad-faith rule the petitioner proposed.

The practical effect is concentrated in Texas, Louisiana and Mississippi (the Fifth Circuit) and in Colorado, Kansas, New Mexico, Oklahoma, Utah and Wyoming (the Tenth Circuit), where trial courts had routinely granted early summary judgment on estoppel grounds. Roofing Designs is the first of those cases to come back down with instructions from the Supreme Court. Others pending on appeal in those circuits are likely to receive similar treatment from the panels themselves.

Does Keathley apply to Chapter 11 business debtors as well as Chapter 13 debtors?

The Roofing Designs GVR is the clearest signal yet that it does. Keathley involved an individual Chapter 13 debtor, and much of the commentary in June focused on consumers and injury victims. Roofing Designs is a limited liability company in Chapter 11 whose dispute involves construction liens and surety bonds. By remanding it in light of Keathley, the Court indicated that the totality test governs judicial estoppel in bankruptcy nondisclosure cases generally, regardless of chapter or debtor type.

The disclosure mechanics differ by chapter, and those differences will feed into the totality analysis. Every debtor must file schedules of assets under 11 U.S.C. § 521(a)(1). In Chapter 7, claims that arose before the petition belong to the estate, and the trustee, not the debtor, controls them. In Chapter 13, 11 U.S.C. § 1306(a) adds to the estate property the debtor acquires after filing while the case is open, which is how Keathley's post-petition car crash became an estate asset. In Chapter 11, a debtor in possession manages its own claims and owes fiduciary duties to creditors, which defendants will argue makes an undervaluation by a business debtor harder to excuse as a mistake.

Keathley expressly declined to decide whether a debtor has a continuing duty to amend schedules to disclose assets acquired after filing. That question remains open and will matter most in Chapter 13 cases like Keathley's, where injuries routinely occur during a three-to-five-year plan.

Does amending bankruptcy schedules after the defendant raises judicial estoppel cure the problem?

Not by itself. Keathley amended his schedules only after the estoppel motion, and the Supreme Court did not say that late amendment wipes out the issue. What the Court rejected was a test that made the amendment, the explanation and the absence of any real benefit legally irrelevant. Under the totality standard, a prompt correction, particularly one made before the defendant raised the defense, is evidence of inadvertence. A correction made only after the defense surfaced still counts but is weaker. Plaintiffs' counsel should expect defendants to argue that post-motion amendments are tactical, and should be ready with evidence of when the client first told anyone about the claim.

The concurrences and what the Court left open

Justice Clarence Thomas, joined by Justice Neil Gorsuch, concurred to question judicial estoppel itself. He wrote that the doctrine "appears to have no basis in any statute, any Federal Rule of Civil Procedure, or any traditional inherent power of federal courts," and suggested that in a future case the Court should reconsider whether federal courts may invoke it at all. Two votes do not make a majority, but defendants relying on estoppel now know the doctrine's foundation is under challenge.

Justice Sonia Sotomayor concurred separately to emphasize creditors. Her opinion observed that applying judicial estoppel to debtors still in open bankruptcy cases tends to hurt creditors, because extinguishing the claim produces a windfall for a potentially liable defendant at the expense of creditors who might otherwise share in a recovery. She also questioned whether a nonbankruptcy court should impose estoppel while a bankruptcy court is still supervising the case and could address the omission itself.

The majority assumed, without deciding, two things: that judicial estoppel applies in bankruptcy nondisclosure cases, and that inadvertence or mistake is an exception to it. Both assumptions are now live targets. A future petition could ask the Court to hold that estoppel never applies while a bankruptcy case is open, or that the bankruptcy court is the exclusive forum to police schedule omissions.

What it means for personal injury firms, defendants and funders

Personal injury firms. Intake should ask every new client whether they are in an open bankruptcy case or have been in one since the injury, and the answer should be documented. For a client in an active Chapter 13 plan, the PI firm should coordinate with bankruptcy counsel to amend the schedules promptly and, where required, seek bankruptcy court approval to employ special counsel on a contingency fee and to settle the claim. A written record showing that the client disclosed the injury to bankruptcy counsel, as Keathley did, is now the most valuable evidence in any later estoppel fight. Firms should also expect that settlement proceeds may need bankruptcy court approval and that any medical lien or other payee will need to be addressed within that process.

Defendants and insurers. Searching the PACER bankruptcy index for every plaintiff remains routine and worthwhile. What changes is the motion practice. A summary judgment motion built only on knowledge and motive will not survive in any circuit now. Defendants should develop evidence of actual concealment, such as sworn valuations inconsistent with the schedules (the core of Royal American's position), repeated omissions across amended filings, or a discharge obtained on the strength of the omission. Defendants should also anticipate the bankruptcy trustee intervening to pursue the claim for creditors, which several courts have treated as a reason not to apply estoppel against the estate's creditors.

Commercial litigants and Chapter 11 counsel. Roofing Designs shows that the risk is not limited to consumers. A business debtor that schedules a pending lawsuit at "$0.00" or "Unknown" while asserting a six-figure value in the litigation invites an estoppel motion. Valuing disputed claims at a good-faith estimate, with a note on the uncertainty, is the safer course.

Litigation funders. Third-Party Litigation Funding agreements for plaintiffs who are or recently were in bankruptcy carry an added diligence step. A funded claim that was never scheduled is exposed to estoppel and to competing trustee claims. Keathley lowers that risk in the Fifth and Tenth Circuits but does not eliminate it.

Frequently asked questions

What did the Supreme Court do in Roofing Designs v. Royal American Construction?

On October 13, 2026, it granted certiorari in No. 25-1367, vacated the Fifth Circuit's January 13, 2026 judgment, and remanded the case for reconsideration in light of Keathley v. Buddy Ayers Construction. It did not decide whether Roofing Designs' claims survive.

What is Keathley judicial estoppel in one sentence?

Under Keathley, a court deciding whether to bar a claim that a debtor left off (or undervalued in) bankruptcy schedules must weigh the totality of the circumstances to decide whether the omission was inadvertent, rather than relying only on the debtor's knowledge of the claim and a hypothetical motive to conceal it.

Was Keathley a unanimous decision?

Yes. The Court ruled 9-0 on June 11, 2026, in an opinion by Justice Jackson. Justice Thomas, joined by Justice Gorsuch, and Justice Sotomayor each wrote concurring opinions.

Does Keathley mean a debtor can never lose an undisclosed claim?

No. The Court assumed that judicial estoppel remains available in bankruptcy and declined to require proof of bad faith. A defendant that shows, on the full record, that a debtor deliberately concealed or undervalued a claim can still obtain dismissal.

Does the Roofing Designs order mean the contractor wins?

No. A GVR only requires the Fifth Circuit to apply the correct standard. Royal American argues the result should be the same under the totality test because the company valued its claims at more than $600,000 in testimony and at $0.00 in its Chapter 11 schedules.

Which courts are most affected?

Courts in the Fifth Circuit (Texas, Louisiana, Mississippi) and Tenth Circuit, which had applied the rigid knowledge-plus-motive rule. Circuits that already used a broader inquiry, such as the Eleventh Circuit after Slater v. U.S. Steel, see less change.