It’s Never Over Till It’s Over in Baseball and Civil Trials
How do you win a case after your client has already paid damages and attorney
fees to the defendant? You make novel use of judicial estoppel. There was no
clear precedent for our approach, and there is every reason now that another
plaintiff—or a defendant—can also use it.
By Alexander A. Salinas | March 01, 2024
How do you win a case after your client has already paid damages and
attorney fees to the defendant? You make novel use of judicial estoppel.
There was no clear precedent for our approach, and there is every
reason now that another plaintiff—or a defendant—can also use it.
Our firm represented a client seeking to enforce a promissory note of
more than $1 million that ballooned to $1.7 million with interest because
the borrower failed to repay it. We sued in the Eleventh Judicial Circuit
Court of Florida. Before litigation went forward, though, our client
decided to withdraw the lawsuit.
When the case was dismissed, the borrower asked the court to grant
attorney fees as the prevailing party under the terms of the note. The
judge agreed.
While disappointed with that ruling, we saw an opportunity to refile the
case and, based on several conditions peculiar to the case, to pursue a
“reversal of fortune” of sorts. The borrower had taken the position that
the note was unenforceable because it was the result of gambling debt.
My colleagues and I decided that the borrower’s position was not
relevant to the question at hand and chose instead to focus on arguing
the doctrine of judicial estoppel. As every first-year law student learns,
judicial estoppel prevents a party from successfully asserting one
position and then subsequently taking the opposite position. The
doctrine opened the door to a new legal strategy that rendered the case’s
material facts largely irrelevant.
In Whittingham v. HSBC Bank USA, (5th DCA 2019), the court wrote that
the doctrine consists of four elements: A claim or position successfully
maintained in a former action or judicial proceeding bars a party from
making a completely inconsistent claim or taking a clearly conflicting
position to the prejudice of the adverse party, where the parties are the
same in both actions.
When we refiled the lawsuit, we noted that the borrower had enforced
the note in the first action, specifically the attorney fees provision,
against our client, thereby conceding, at least implicitly, the note’s
enforceability. Second, the court had ruled in the first action that the
borrower was “entitled to reasonable attorney fees and costs under the
promissory note.” Third, a final judgment was entered awarding the
borrower attorney fees. Fourth, the borrower had accepted payment of
those attorney fees under the note and in compliance with the final
judgment.
Before moving for summary judgment on the issue of estoppel, we asked
ourselves whether the doctrine of judicial estoppel had been successfully
applied before in a similar situation. The answer was “not exactly.”
Here’s what we found in our research. It can be used in similar
circumstances.
• Gabarick v. Laurin Maritime (America), (5th Circuit 2014). It held
that judicial estoppel precluded the claim seeking a declaratory
judgment that agreements were void based on fraud in the
inducement because, in a prior action, the plaintiff successfully
argued that the defendant owned the tugboats and, thus, implied
that the agreements were valid.
• Haddad v. Randall S. Miller Associates, (6th Circuit 2014). It held
that judicial estoppel precluded claims that a mortgage was void
because the mortgagor had previously represented in a separate
proceeding indicating that the mortgage was valid.
• Visual Interactive Phone Concepts, v. Virgin Mobile USA, a case in
New Jersey granting summary judgment based on judicial estoppel
against a party that argued that the contract was invalid as a matter
of law but had sought to enforce the same contract in another
lawsuit.
• AFN v. Schlott, a second New Jersey court ruling that judicial
estoppel barred the defendant from contending that the contract
was illegal where the defendant had previously argued in another
forum that the contract was valid.
• Additionally, we found two relevant cases in New York: Avila Group
v. Norma J of California and VNB N.Y. v. Maidi, 74 and one in
Hawaii, Ueoka v. Szymanski.
Another relevant precedent was a 1995 opinion from the Third District
Court of Appeal in Carnival Leisure Industries v. Arviv, which held that a
trial court cannot award contractual prevailing-party attorney fees if the
underlying contract is an unenforceable gambling debt. Through
deductive reasoning we persuaded the court that, since the borrower in
our case had sought and been awarded contractual prevailing party
attorney fees, the underlying contract could not be an unenforceable
gambling debt.
In an 11-page ruling, the judge granted our client summary judgment
and ordered the borrower to pay the $1.7 million debt. And, on the last
line of the order, the court said it would entertain attorney fees and costs
for our client.
Alexander A. Salinas is a partner at TA PLLC, a business law firm. Salinas
leads the firm’s litigation practice and may be reached
at asalinas@tapllc.com.
Reprinted with permission from the March 1, 2024 edition of the Daily Business Review© 2023 ALM
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