Understanding aged legal terms and their modern application is just as important as being current on the latest case law or legislative act. An example of a deep-rooted legal doctrine that can be used in the modern legal field is judicial estoppel. The doctrine of judicial estoppel prevents a party from assuming one legal position in one case from taking a contrary position in a subsequent case. This doctrine helps promote truth and protects the court system from litigants changing positions to suit the exigencies of the moment. When invoked correctly, this doctrine can also be a complete bar to litigation.
Although the doctrine of judicial estoppel is not a current hot-button legal concern, its use can be a very effective way of ending litigation before it begins. Recently the defense of judicial estoppel has been used by defendants to bar plaintiffs from pursuing personal injury actions in which the plaintiff seeks damages through a lawsuit after the plaintiff was discharged of his or her debts in bankruptcy. Cannon-Stokes v. Potter, 453 F.3d 446, 447 (7th Cir. 2006).
In Cannon-Stokes, the doctrine was invoked to prevent a plaintiff from recovering in an administrative claim after the plaintiff had her debts discharged in bankruptcy. Judicial estoppel prevented the plaintiff from prosecuting the claim in civil court after she affirmatively denied she had the claim to the bankruptcy court. In particular, the plaintiff filled out a “Personal Property” schedule in her petition in Bankruptcy, but failed to list the administrative claim under her “other contingent and unliquidated claims of every nature, including tax refunds, counterclaims of the debtor, and rights to setoff claims.”
In the civil action, the defendant moved to dismiss the entire claim based on judicial estoppel. The plaintiff argued that she did not think that her claim should have been listed in the schedule because its value was unknown and she was not certain to be successful in the claim. Furthermore, she argued that her attorneys advised her that her claim did not need to be listed or that it was a mere harmless oversight. Nevertheless, the court stated that disclosure rules required that “any valuable legal claims” must be listed and because the plaintiff failed to list the pending claim, she was barred from recovering in the civil lawsuit after the bankruptcy court had discharged her previous debts. In essence, the court held that plaintiff had represented that she and no claims against anyone and that representation had prevailed in the bankruptcy court. Now, the plaintiff could not assert the opposite to win in a civil action, as the judicial estoppel doctrine prevents the plaintiff from holding two opposite positions.
The use of judicial estoppel as a defense in Illinois litigation following a claimant’s bankruptcy is not new. In Wright v. Abbot Capital Corp., 79 Ill. App. 3d 986 (1st Dist. 1979), the plaintiff filed for bankruptcy and then tried to sue for his interest in certain assets held by a corporation. The court held that the plaintiff had been divested of any interest in his assets because of the bankruptcy.
Similarly, judicial estoppel has also barred causes of action outside of the bankruptcy setting. In Bidani M.D. v. Lewis, M.D., 285 Ill App. 3d 545 (1st Dist. 1996), the party at issue denied an interest in a business entity during his divorce proceedings. After the divorce was finalized he brought litigation to secure proceeds that he believed he was entitled to. The corporation denied that he had any claim to any assets since he previously denied the interests in the divorce proceeding. One of his arguments was that he was now willing to split 50% of the recovery with is ex-wife. The court was not persuaded and barred him from changing positions.
The key to invoking the judicial estoppel doctrine to bar litigation is knowing a potential adversary’s previous litigation history and the positions they have taken. Not every previous legal position will act as judicial estoppel, but if the previous position questions the integrity of the legal system it can be a very useful in completely barring a claim or suit.
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Nicholas Johnson, an associate in our Waukegan office, concentrates his practice in general civil litigation and construction litigation.
