Tennessee Supreme Court Overturns Application of Judicial Estoppel

Where a plaintiff had previously signed a marital dissolution agreement that stated that the divorce settlement was “fair and equitable,” but also sought to bring a legal malpractice claim against an attorney who had represented her during a portion of her divorce proceedings, the Supreme Court ruled that the signed statement did not invoke the doctrine of judicial estoppel and the plaintiff’s claim could move forward.

In Kershaw v. Levy, No. M2017-01129-SC-R11-CV (Tenn. Sept. 18, 2019), plaintiff had previously been involved in a contentious divorce proceeding. She had already faced several issues when she retained defendant attorney to begin representing her in the divorce. At the time attorney began his representation of her, the divorce court had imposed discovery sanctions against plaintiff, including granting the husband a default judgment, striking her pleadings, and “barring [plaintiff] from asserting any defenses to the husband’s claims.” The Court extended plaintiff’s discovery deadline when she hired defendant attorney, however, and “apparently agreed to lift the sanctions, provided [plaintiff] timely file her discovery responses.”

When counsel for husband asserted that the discovery responses were late, defendant attorney represented that he mailed them on the day they were due, but that turned out to be untrue, as he did not mail them until two days after the extended deadline. The divorce court accordingly reinstated all the sanctions against plaintiff and awarded her husband attorneys’ fees.

Plaintiff retained a different attorney for her divorce case, and she eventually signed a marital dissolution agreement. That agreement contained language stating that it was “fair and equitable and that it [was] being entered into voluntarily[.]”

Before plaintiff’s divorce case was finalized, she filed this legal malpractice claim against defendant attorney. She alleged that defendant’s “actions caused her to lose possession of her home, lose primary custody of her children, owe various judgments and fees to the husband, and face the prospect of a divorce trial with no prayer for relief.” Plaintiff alleged that defendant’s “actions so compromised her position that she had no negotiating leverage; as a result, she was left with little choice but to agree to an unfavorable divorce settlement.”

Defendant attorney moved for summary judgment, arguing that “the trial court should apply the doctrine of judicial estoppel to [plaintiff’s] claim that his negligence forced her to agree to unfavorable divorce terms because the …MDA acknowledgement attested to the fairness and equity of the settlement.” The trial court granted summary judgment, and the Court of Appeals affirmed, but the Supreme Court reversed.

“[T]he doctrine of judicial estoppel prohibits litigants from contradicting by oath a sworn statement previously made.” (internal citation and quotation omitted). In order for the doctrine of judicial estoppel to apply, “the statements being compared must be ‘clearly inconsistent,” as judicial estoppel does not apply “when there is an innocent inconsistency or apparent inconsistency that is actually reconcilable.” (internal citations and quotations omitted). Further, judicial estoppel “is usually warranted only if there are directly contradictory statements of fact.” (internal citation omitted).

Looking at the facts of this case, the Supreme Court determined that this was not an appropriate application of judicial estoppel:

The statements by [plaintiff] are not the type of sworn statements that are proscribed under the doctrine of judicial estoppel. …[Plaintiff’s] acknowledgment that the MDA is fair and equitable differs from a purely factual statement in that it implies a context-related legal conclusion. In the MDA, [plaintiff] acknowledged that the agreement was ‘fair and equitable’ given the circumstances in which she found herself. Those circumstances, however, she lays at [defendant’s] feet; she contends that [defendant’s] actions severely compromised her divorce negotiating position. Moreover, the acknowledgment in the MDA and [plaintiff’s] assertions in her legal malpractice claim are not totally inconsistent. The truth of the acknowledgment in the MDA does not necessarily preclude the truth of [plaintiff’s] statements in her legal malpractice action. [Plaintiff] in fact gives a reasonable explanation of the discrepancy. Thus, the MDA acknowledgment and the legal malpractice claim can comfortably exist side by side.

(internal citations and quotations omitted). The Supreme Court accordingly reversed summary judgment.

We don’t see many Supreme Court cases dealing solely with judicial estoppel, so if you have a case with judicial estoppel issues, this is an important read.

            NOTE: To aid lawyers in giving clients guidance about how long it takes to receive an opinion after oral argument in the appellate courts, we are going to start sharing that information with readers.   Please understand that the length of time that elapses between oral argument and the date the opinion is released is dependent on a multitude of factors, not the least of which is the complexity of the issues presented.  In this case, the opinion was released over seven months after oral argument.