ANSWER: YES, DEPENDING ON THE FACTS OF THE CLAIM AND THE STATE WHERE THE CLAIM IS PENDING.
ANSWER: YES, DEPENDING ON THE FACTS OF THE CLAIM AND THE STATE WHERE THE CLAIM IS PENDING.
The applicable doctrine to this set of facts is the doctrine of judicial estoppel that prevents a party from asserting a claim in a legal proceeding that is inconsistent with a claim taken by that party in a previous proceeding. Based on the factors set forth by the United States Supreme Court, the insurer can defend denying a claim based on judicial estoppel if the insurer can show that (1) the insured did not list the property involved in the insurance claim on his bankruptcy petition, (2) the insured obtained a discharge of his debts based on the representations made in the petition, and (3) allowing the insured to now seek payment for damages to property that was not identified for his creditors is an inconsistent position from which the insured would derive an unfair advantage. See e.g., New Hampshire v. Maine, 532 U.S. 742, 750-751 (2001). As set forth below, the courts in the Southeastern states all recognize the doctrine of judicial estoppel, but Tennessee courts only allows it to be invoked in a limited circumstance.
Tennessee recognizes the doctrine of judicial estoppel but it is not favored by the Tennessee courts. Guzman v. Alvares, 205 S.W.3d 375 (Tenn. 2006). In fact, because the doctrine is not favored, the Tennessee courts only allow judicial estoppel to be invoked where the prior sworn statement was a willful falsehood, as opposed to the result of inadvertence, inconsideration, or mistake. State ex rel. Ammons v. City of Knoxville, 232 S.W.2d 564 (Tenn. Ct. App. 1950); Rogersville, 2007 Tenn. App. LEXIS 568 at *18-*19. This standard is strictly adhered to, and anything short of “conscious and deliberate perjury” is insufficient to give rise to the application of judicial estoppel in Tennessee. State ex rel. Scott v. Brown, 937 S.W.2d 934, 936 (Tenn. Ct. App. 1996). See also, Frazier v. Pomeroy, 2006 Tenn. App. LEXIS 775 (Tenn. Ct. App. 2006) (judicial estoppel not applicable where party failed to disclose interest in property in prior bankruptcy filing, where court found exclusion not willfully false but only mistake).
In North Carolina, the courts have held that judicial estoppel is an equitable, gap-filling doctrine that “provides courts with a means to protect the integrity of judicial proceedings” from “individuals who would play fast and loose with the judicial system.’” Whitacre Partnership v. Biosignia, Inc., 591 S.E.2d 870, 887 (S.Ct. 2004). The North Carolina Supreme Court specifically held judicial estoppel is applicable to preclude a party from making a true factual assertion in a later proceeding because it contradicts a false factual assertion made in an earlier one may be seen as interfering with the truth-seeking function of courts. Unlike the courts in Tennessee, the subsequent position does not have to be intended to deceive in order for the doctrine to apply in South Carolina. Id.
South Carolina also applies judicial estoppel to prevent a party from adopting a position in conflict with one previously taken. “The purpose of the doctrine is not to protect litigants from allegedly improper or deceitful conduct by their adversaries, but to protect the integrity of the judicial process and the courts.” Hayne Federal Credit Union v. Bailey 489 S.E.2d 472 (1997). The Alabama courts also recognize judicial estoppel to prevent a party from assuming a position in a legal proceeding inconsistent with a position previously asserted in order to protect the integrity of judicial proceedings. Luna v. Dominion Bank of Middle Tennessee, Inc., 631 So.2d 917, 918 (Ala. 1993); Consolidated Stores, Inc. v. Gargis, 686 So.2d 268, 274 (Ala. Civ. App. 1996).
In Georgia, the doctrine of judicial estoppel has been applied specially to uphold the denial of an insured’s claim for property that was not listed on the insurer’s bankruptcy petition. Battle v. Liberty Mutual Fire Insurance Co., 276 Ga.App. 434 (2005). Finally, Florida applies the doctrine in cases to where a party has taken an inconsistent position in a prior litigation versus the position taken by that party in a current suit. Blumberg v. USAA Cas. Ins. Co., 790 So. 2d 1061 (2001).
Therefore, in the Southern states, except Tennessee, an insurer need only show that the insured took a position with regard to the property in a bankruptcy court or another previous litigation that is inconsistent with the current claim regarding that property filed with the insurer. The prior inconsistent position can be a bankruptcy petition, and if the insured obtained a discharge of his debts, an insurer can argue that judicialestoppel should apply because allowing the insured to now seek payment for damages to property that was not identified for his creditors is an inconsistent position from which the insured would derive an unfair advantage. Battle, supra.