Clarity of a judicial doctrine appeared paramount in yesterday’s decision from the District Court of Appeal, Fourth District, in Anfriany v. Deutsche Bank National Bank Co., Case No. 4D 16-4182 (Fla. 4th DCA, December 6, 2017).
The doctrine addressed is judicial estoppel, a defensive tool that arises not from statute or the rules of civil procedure, but common law. The doctrine of judicial estoppel generally seeks to ensure that the legitimacy of court decisions is not undermined by a party winning in a first case which then seeks to win in a second case by taking a diametrically opposite position. The rule can be said to keep the parties honest when appearing before different judges.
The setting once again was a mortgage foreclosure action that seemingly went awry.
In short background,
2008: The Bank files its foreclosure action against the Anfrianys which was voluntarily dismissed without prejudice at an unstated time.
May 2011: Anfrianys’ bankruptcy counsel moves to tax attorney’s fees and costs against the Bank.
May 2012: The trial court grants the Anfrianys’ motion for entitlement to attorney’s fees and costs, reserving the determination of the amount if the parties could not agree.
May 2013: The Anfrianys’ bankruptcy counsel, not foreclosure counsel, files a voluntary Chapter 11 petition for relief; however, neither the petition’s statements nor schedules list any contingency claim assets, either when originally filed or when amended.
2014: The Anfrianys’ reorganization plan was confirmed, the Appellate Court remarking that Anfriany’s debts were not discharged.
October 2015: The Anfrianys move to determine the amount of attorney’s fees and costs in the state court foreclosure action.
September 2016: The Bank’s moves to vacate the fee entitlement order granted in May 2012, arguing that judicial estoppel barred Anfrianys’ claim for attorney’s fees and costs because the Anfrianys’ failed to disclose in the bankruptcy proceeding the entitlement to attorney’s fees and costs as a contingent unliquidated asset and thus “misled ‘the bankruptcy court and creditors to believe that he had fewer assets from which he could pay his creditors.’”
In granting the motion to vacate the entitlement order the trial court relied upon a federal court decision, In re. Coastal Plains, Inc., 179 F.3d 197 (5th Cir. 1999).
In reversing, the appellate court remarked, without a comparison of analyzed the difference between federal and Florida approaches to judicial estoppel.
Traditionally, judicial estoppel has required a mutuality of the parties and that the movant or claimant in the second claim is taking an inconsistent position that was successfully maintained in a first claim. Citing Blumberg v. USAA Cas. Ins. Co., 790 So. 2d 1061, 1066 (Fla. 2001), the court noted that in addition to the traditional factors:
… the position assumed in the former trial must have been successfully maintained. In proceedings terminating in a judgment, the positions must be clearly inconsistent, the parties must be the same and the same questions must be involved. So, the party claiming the estoppel must have been misled and have changed his position; and an estoppel is not raised by conduct of one party to a suit, unless by reason thereof the other party has been so placed as to make it to act in reliance upon it unjust to him to allow that first party to subsequently change his position. There can be no estoppel where both parties are equally in possession of all the facts pertaining to the matter relied on as an estoppel; where the conduct relied on to create the estoppel was caused by the act of the party claiming the estoppel, or where the positions taken involved solely a question of law.
(Citations omitted, italics in decision, additional emphasis added. ) (Blumberg, 790 So. 2d at 1066)
The Court explained that the “prejudice” requirement would be that which “would drive an unfair advantage or impose an unfair detriment on the opposing party if not estopped.” Citing Grau v. Provident Life & Acc. Ins. Co., 899 So. 2d 396, 400 (Fla. 4th DCA 2005). Applied to the current case, the Court recounted two elements relying on Blumberg:
“[t]here can be no estoppel where both parties are equally in possession of all the facts pertaining to the matter relied on as an estoppel.”
As a second requirement, there must be an “unfair advantage” or an “unfair detriment” on the “opposing party.”
In overview, in this time when frequently there are knee-jerk responses to court opinions, seeking to classify text as pro-debtor or pro-creditor, or otherwise, this decision appears to be a classic effort to provide guidance to trial courts and litigators. Thus, this decision should be a handy tool for the litigator. The decision interestingly implicitly draws comparisons to the doctrine of res judicata. The decision also declined to address whether the real party in interest was not the defendant owner or the owner’s attorney who may obtain the funds.
It is noted that the same Court simultaneously issued an opinion from Judge Gross which makes for very interesting reading, not because it necessarily outlines new legal doctrines, but because the Court reinforces in a context the Court described as “the underlying mortgage was passed around like the flu, giving rise to a complexity of ownership that frustrated the appellee’s attempts to demonstrate standing at trial,” the duty of a foreclosing bank to prove that it is the holder or holds a right to foreclosing note. Supria v. Goshen Mtg., LLC, Case No. 4D16-4356 (Fla. 4th DCA, December 6, 2017).
Michael J. Gelfand
Real Property, Probate and Trust Law Section
of The Florida Bar
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Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section
© 2017 Michael J. Gelfand
Michael J. Gelfand
Florida Bar Board Certified Real Estate Attorney
Florida Supreme Court Certified Mediator:
Civil Circuit Court & Civil County Court
Fellow, American College of Real Estate Attorneys