MIAMI BUSINESS LITIGATION: THE DEFENSE OF JUDICIAL ESTOPPEL

Under Florida law, the rule of judicial estoppel prohibits a litigant from taking a position in a former action or judicial proceeding and then taking an inconsistent position in a subsequent action or judicial proceeding that prejudices the adverse party. Blumberg v. USAA Casualty Insurance Co., 790 So. 2d 1061 (Fla. 2001). The rule is designed to prevent litigants from making a mockery of the justice system. Scarano v. Cen. R. Co. of N.J., 203 F. 2d 510 (3rd Cir. 1953) (A situation justifying application of judicial estoppel “is more than affront to judicial dignity [because] intentional self-contradiction is being used as a means of obtaining unfair advantage in a forum provided for suitors seeking justice.”). The Miami business litigation attorneys of the Mavrick Law Firm represent businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.

The judicial estoppel rule has three considerations. The first is party mutuality because application of the judicial estoppel doctrine only applies when the parties of the earlier proceeding and subsequent proceeding are the same. Blumberg, 790 So. 2d 1061. However, party mutuality is not required when “special fairness and policy considerations” compel application of the doctrine. The rationale for creating an exception to party mutuality is that the same exception applies in similar contexts such as res judicata and collateral estoppel. See West v. Kawasaki Motors Mfg. Corp., 595 So. 2d 92 (Fla. 3d DCA 1992) (“Florida courts have on occasion recognized exceptions to the identity of parties requirement under the res judicata or collateral estoppel doctrines where special fairness or policy considerations appear to compel it.”). Therefore, court have reasoned that the party mutuality exception should be extended to apply in the judicial estoppel context too. See Keyes Co. v. Bankers Real Estate Partners, Inc., 881 So. 2d 605 (Fla. 3d DCA 2004) (applying judicial estoppel even through party mutuality did not exist).

The second consideration is whether the party asserting the judicial estoppel argument was misled and changed positions based on the opposing party’s initial position in the first judicial proceeding. The judicial estoppel rule used to require a party to demonstrate it had been misled by the opposing party and changed positions as a result. See Chase & Co. v. Little, 156 So. 609 (Fla. 1934) (“The party claiming the estoppel must have been misled and have changed his position.”). However, Florida law appears to have dispensed with these requirements because Florida’s Supreme Court allowed a litigant to prevail on a judicial estoppel argument without demonstrating he was misled or changed positions. Blumberg, 790 So. 2d 1061.

The third consideration is whether the party against whom the judicial estoppel is to apply successfully maintained an action in the first proceeding. See Blumberg, 790 So. 2d 1061. Judicial estoppel will apply if a verdict is entered in favor of the party against whom the judicial estoppel is advanced against, the court makes relevant findings of fact in favor of the party against whom the judicial estoppel is advanced against, or the party asserting juridical estoppel admits facts that operate as a confession. See Palm Beach Co. v. Palm Beach Estates, 110 Fla. 77, 148 So. 544 (Fla. 1933); Edwards v. Aetna Life Ins. Co., 690 F. 2d 595 (6th Cir.1982) (To find that the party to be estopped successfully maintained a prior claim or position requires that the first court adopt the claim or position, “either as a preliminary matter or as part of a final disposition”). But without prior success, judicial estoppel will not apply because “a party’s subsequent inconsistent position introduces no risk of inconsistent court determinations, and thus poses little threat to judicial integrity.” New Hampshire v. Maine, 532 U.S. 742 (2001).

The Miami business litigation lawyers of the Mavrick Law Firm also represent clients in Fort Lauderdale, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.