Summary:
The bankruptcy court in this opinion begins by distinguishing between the judicial notice that a court may take of pleadings and proceedings in other courts and judicial estoppel. The bankruptcy court held that while a court cannot take judicial notice of the truth of facts alleged in those pleadings, it can nonetheless take judicial notice that such allegations were made. From the fact that such allegations had been made, the bankruptcy court then turned to determine whether such allegations judicially estopped a party in later proceedings. The requirements for judicial estoppel are:
1. The party sought to be estopped must be seeking to adopt a factual (opposed to legal) position that is inconsistent with a stance taken in prior litigation;
2. The prior inconsistent position must have been accepted by the court; and
3. As the determinative factor, the party against whom judicial estoppel is to be applied must have intentionally misled the court to gain unfair advantage.
Zinkand v. Brown, 478 F.3d 634, 638 (4th Cir. 2007).
Further, because judicial estoppel “exists to protect the integrity of the courts, rather than any interest of the litigants”, Lowery v. Stoval, 92 F.3d 219, 223, n.3 (4th Cir. 1996), it would not “not impose the harsh systemic remedy of judicial estoppel as a tactical litigation windfall....”
The opinion also addresses questions of breach of contract, breach of fiduciary duty, negligence, constructive and actual fraud, aiding and abetting conversion, and unjust enrichment under Ohio law (which as such are outside the immediate interests of this summary) and also for unfair and deceptive trade practices under North Carolina law, which the bankruptcy court disposed as Broussard v. Meineke Discount Muffler Shops, Inc., 155 F.3d 331, 334-35 (4th Cir. 1998), “admonished trial courts against allowing breach of contract claims to masquerade as Chapter 75 claims.”
For a copy of the opinion, please see:
NC & VA Warranty v. Fidelity Bank- Judicial Notice and Judicial Estoppel
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