Doctrine of judicial estoppel in the context of legal malpractice actions

In Borges v Placeres, 64 Misc 3d 92, 96 [App Term 2019], the court dealt with the doctrine of judicial estoppel in the context of legal malpractice actions.

We hold that the doctrine of judicial estoppel bars plaintiff from arguing such fundamentally inconsistent positions merely because his interests have now changed (see Molina v Faust Goetz Schenker & Blee, LLP, 230 F Supp 3d 279 [SD NY 2017] [under New York law, when a legal malpractice claim is assigned to a former litigation adversary, judicial estoppel precludes the assignee from taking a position in the legal malpractice case that contradicts the assignee’s position in the underlying case]). Courts in other jurisdictions have reached similar conclusions (see Alcman Servs. Corp. v Samuel H. Bullock, P.C., 925 F Supp 252 [D NJ 1996], affd 124 F3d 185 [3d Cir 1997]; Sandman v McGrath, 78 Mass App Ct 800, 943 NE2d 945 [2011]; see also Kracht v Perrin, Gartland & Doyle, 219 Cal App 3d 1019, 1024-1025, 268 Cal Rptr 637, 641 [1990] [“(A) malpractice suit filed by the former adversary is ‘fraught with illogic’ and unseemly arguments: In the former lawsuit (the plaintiff) judicially averred and proved she was entitled to recover against (the defendant); but in the (subsequent) malpractice lawsuit (the plaintiff) must judicially aver that, but for (the) attorney’s negligence, she was not entitled to have recovered against (the defendant). Reduced to its essence, (the plaintiff’s) argument in the malpractice action is ‘To the extent I was not entitled to recover, I am now entitled to recover’ ” (citation omitted)]).

Nor was Civil Court required to defer resolution of the judicial estoppel defense until the ensuing malpractice action. The doctrine of judicial estoppel is intended to prevent abuses of the judicial system (see D & L Holdings v Goldman Co., 287 AD2d 65, 71 [2001], lv denied 97 NY2d 611 [2002]), and is based on general considerations of the orderly administration of justice and regard for the dignity of judicial proceedings (see Environmental Concern v Larchwood Constr. Corp., 101 AD2d 591, 593 [1984]). Manifestly, to prevent an abuse of the judicial system, the doctrine may be invoked at this juncture to preclude plaintiff “from framing pleadings or adopting theories at war with a position taken in prior legal proceedings” (Kimco of N.Y. v Devon, 163 AD2d 573, 575 [1990], quoting Knight v Knight, 31 AD2d 267, 271 [1969], affd 25 NY2d 957 [1969]).

R. A. Klass
Your Court Street Lawyer

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The Defense of Equitable Estoppel

There is a concept in the law that one party should not be allowed to lead another party down a road, knowing full well that it is the wrong road, only later to say “a-ha” and attempt to take advantage of the other party. Where one party claims that the other has breached a contract, there may be the availability of the defense of “equitable estoppel.” The term “estoppel” refers to “stopping” someone from taking a certain position that differs from a prior position–and “equitable” refers to that certain degree of fairness that is expected of people.

In the Matter of N.Y. State Guernsey Br. Co-op v. Noyes, 260 AD 240, modified on other grounds, 284 NY 197, the court laid out the essential elements of an equitable estoppel claim, as follows: (1) As related to the party to be charged: (a) conduct which amounts to a false representation or concealment of material facts; (b) intention, or at least expectation, that such conduct shall be acted upon by the other party; and (c) knowledge, actual or constructive, of the real facts; and (2) As related to the party claiming the estoppel: (a) lack of knowledge; (b) reliance upon the conduct of the party estopped; and (c) action based thereon of such a character as to change his position prejudicially.

In the broad context of contracts,

In Ferlazzo v. Riley, 278 NY 289 (1938), the Court of Appeals pointed out that the contract rights of a mortgagee will be enforced in the absence of waiver, estoppel, bad faith, fraud, oppressive or other unconscionable conduct on its part.

In Caspert v. Anderson Apartments, 196 Misc. 555 (Sup. N.Y. Co. 1949), the court opined: “It may be unconscionable, however, to insist upon adherence to the letter of an agreement where a mortgagee indicates by his conduct or silence that his inaction may turn to his own advantage.”

R. A. Klass
Your Court Street Lawyer

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