Estopped in the Name of the Law
| Año de Publicación | 2006 |
| Citado como | Vol. 47 No. 2 |
2006 Summer, 6. Estopped in the Name of the Law
Volume 47, No. 2, Pg. 6
Summer 2006
The Very Real and Very Harsh Consequences of "Prior Success" and Playing "Fast and Loose" in New Hampshire
Introduction
"Summary judgment granted." Months of work have just vanished because of something the judge referred to as judicial estoppel. You have no idea what that is and your client is looking to you for an explanation. Every lawyer dreads being in such a position, yet this is now what potentially awaits New Hampshire lawyers who carelessly, or knowingly, assert a position of fact in a current proceeding that is irreconcilable with one asserted in an earlier proceeding. The doctrine of judicial estoppel seeks to prevent a party from taking such inconsistent positions and "making a mockery of justice."1 The result is that a party is precluded from bringing the action altogether - a harsh result indeed. Adding further concern and complication is that the earlier position does not need to have been asserted by the current attorney, since application of judicial estoppel is tied to the party.2
The New Hampshire Supreme Court recently adopted the doctrine of judicial estoppel. While the Court was silent on what prompted it to do so, it has wasted no time in employing judicial estoppel, applying the doctrine to two cases in 2005.3 Thus, it is time for New Hampshire practitioners to learn about, guard against, and, in appropriate cases, invoke judicial estoppel. In Part I of this article, I will distinguish judicial estoppel from other forms of estoppel; discuss the origins of judicial estoppel; explain its various permutations; discuss the mechanics of its application; and present the conflict over applying the state or federal version in federal courts. Part II will trace the emergence and progression of judicial estoppel in New Hampshire case law. Finally, Part III will present and discuss the practical effects and consequences of adopting judicial estoppel.
Judicial estoppel is an equitable doctrine, but a relatively uncommon one.4 More so than its better known cousins, collateral estoppel (issue preclusion), res judicata (claim preclusion) and equitable estoppel, judicial estoppel is misunderstood and misapplied.5 However, practitioners should be aware of its possible application as it can just as easily prevent a party from bringing or defending a claim as its more well-known relatives. It is being used frequently in bankruptcy cases, but has also seen service "in property, tort, contract, and commercial and business law cases," and even criminal cases.6
Additionally, unlike these other related equitable doctrines, judicial estoppel does not need to be pled by an adverse party and can be invoked sua sponte by the court.7
Bankruptcy provides a good example of how judicial estoppel is employed.8 Those who declare bankruptcy must file petitions for relief and corresponding schedules.9 In doing so, the debtor asserts a position that is relied upon by creditors and the bankruptcy court.10 Frequently, however, debtors do not list pending or possible causes of action against third-parties, and seek to pursue these claims after the bankruptcy court has relied on the debtor's factual assertions to reach its decision.11 The third-parties then use the debtor's failure to include the future action on the petition for relief and schedules as the basis for invoking judicial estoppel.12 The result is that the debtor cannot pursue the claim.
I. Judicial Estoppel
The doctrine of judicial estoppel prevents a party from asserting a factual position that is directly contrary to another taken in the same or a previous judicial proceeding.13 It is intended to prevent litigants from playing "fast and loose" with the courts and to protect the integrity of the judicial process by preventing manipulation by "chameleonic litigants" who, "deliberately shift positions to suit the exigencies of the moment."14 Applying the doctrine is especially justified when withholding it would prejudice the non-contradicting party.15
While judicial estoppel is applied in narrow circumstances, its use demands a high price because it limits the justice-seeking and truth-seeking purposes of the courts.16 By not allowing a party to assert a position contrary to a previous one, neither the truth of the first or second statement is thoroughly examined.17 These sacrifices are seen as too harsh to permit a liberal application of the doctrine.18 As a result, the doctrine should be applied cautiously and only when the facts of the particular case require.19
There are limitations to the use of judicial estoppel. It should not be used when a party is now asserting an inconsistent opinion or legal position.20 Neither should it be used when a party has adjusted its position as a result of a change in the law.21 Finally, it should not be applied in cases where a party was forced to advocate its earlier position on account "of mistake, inadvertence, or fraud."22 Thus, applying the doctrine against a party who took a position it ostensibly would not have otherwise taken would be inappropriate. In order to apply judicial estoppel, the two factual positions must be "truly inconsistent" so that "the truth of one must necessarily preclude the truth of [the] other."23 The mere appearance of inconsistency is not sufficient.
A. Other Forms of Estoppel and Preclusion
Judicial estoppel is appropriate in circumstances where other forms of estoppel do not apply.24 However, because it is relatively unknown, the purposes it serves and its proper application are often misunderstood. Some of this can be attributed to confusion between judicial estoppel and its more well-known cousins.25 Regardless, judicial estoppel has the same debilitating effect on a party's ability to pursue litigation as do collateral estoppel, res judicata, and equitable estoppel.
1. Collateral Estoppel (Issue Preclusion)
The differences between collateral estoppel and judicial estoppel are fairly clear. Collateral estoppel bars a party from relitigating an issue of ultimate fact.26 Because these issues have already been fully litigated, collateral estoppel's bar on repetitive litigation serves to conserve judicial resources.27
Hoult v. Hoult28 illustrates the application of collateral estoppel. In Hoult, the defendant was successful in an earlier action in which she claimed the plaintiff, her father, had committed assault and battery.29 The defendant gave descriptions of the abuse and rapes she had suffered.30 After the verdict, the defendant made several claims that her father raped her, which prompted the father to sue for defamation.31 The daughter maintained that the verdict in her earlier assault action required the jury to determine that her father had raped her, and the defamation claim was now barred by collateral estoppel.32 Despite the fact that the jury made no explicit finding of rape, the Court stated that "an issue may be 'actually' decided [for collateral estoppel purposes] even if it is not explicitly decided, for it may have constituted, logically or practically, a necessary component of the decision reached."33 The court found that "the rape charges were the centerpiece of" the earlier assault action and upheld the application of collateral estoppel.34 According to the Hoult court, "[w]hether the jury was right or wrong" was not open to relitigation.35
In contrast, judicial estoppel prevents a party from asserting inconsistent positions, whether or not they have been fully considered in either proceeding.36 The difference between the two is that collateral estoppel precludes a party from taking the same position on an issue that has been fully adjudicated, while judicial estoppel only limits a party from taking clearly inconsistent positions on a particular issue.37 Thus, judicial estoppel does not necessarily bar re-litigation of an issue.38
2. Res Judicata (Claim Preclusion)
The differences between res judicata and judicial estoppel are more pronounced. Res judicata prevents a party from relitigating a claim that has been fully adjudicated.39 Because all litigants, in theory, had an opportunity to bring claims arising out of the same transaction or occurrence in the first proceeding, subsequent claims based on that same transaction or occurrence are barred.40 Similar to collateral estoppel, the bar on subsequent litigation serves to conserve judicial resources, but also to protect the finality of judgments.41 Res judicata requires privity between the parties and a final adjudication on the merits of the case.42 In contrast, judicial estoppel does not require privity and the prior and subsequent actions can stem from wholly different transactions or occurrences.43
3. Equitable Estoppel
The distinction between equitable estoppel and judicial estoppel is less clear. In fact, courts frequently confuse the two doctrines.44 This is because they are both directed toward sanctioning parties who take inconsistent positions.45 However, they differ in their elements and ultimate goals. Equitable estoppel focuses on ensuring fairness between parties in litigation and preventing prejudice that may result from a change in position.46 Judicial estoppel, on the other hand, seeks to protect the integrity of the judicial system by preventing the "intentional assertion of an inconsistent position that perverts the judicial machinery,"47 irrespective of prejudice.
In New Hampshire, "[e]quitable estoppel serves to forbid one to speak against his own act, representation or commitments communicated to another who reasonably relies upon them to his injury."48 A party seeking to prove equitable estoppel must show: "(1) a knowingly false representation or concealment of material facts; (2) a recipient who was intentionally, or...
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