Helfand v. Gerson

Decision Date28 January 1997
Docket Number95-15672,Nos. 94-16772,s. 94-16772
Citation105 F.3d 530
Parties97 Cal. Daily Op. Serv. 633, 97 Daily Journal D.A.R. 1015 Ruth C. HELFAND; Mark Seidenberg, as Attorney-in-fact for Ruth C. Helfand, real party in interest, Plaintiffs-Appellants, v. Mervyn GERSON; an individual; Gerson, Grekin and Wynhoff, a professional law corporation, Defendants-Appellees.
CourtU.S. Court of Appeals — Ninth Circuit

James V. Lacy, Laguna Niguel, California, for plaintiffs-appellants.

John S. Nishimoto, Ayabe, Chong, Nishimoto, Sia & Nakamura, Honolulu, Hawai'i, for defendants-appellees.

Appeals from the United States District Court for the District of Hawaii, Alan C. Kay, District Judge, Presiding. D.C. No. CV-93-00759-ACK.

Before BEEZER and THOMPSON, Circuit Judges; and GONZALEZ, District Judge. *

DAVID R. THOMPSON, Circuit Judge:

I. OVERVIEW

The widow and nephew of the late William Helfand brought a diversity action alleging legal malpractice against the attorney and law firm responsible for preparing Mr. Helfand's testamentary documents. The district court held the plaintiffs were judicially estopped from asserting their interpretation of Mr. Helfand's testamentary documents because they had successfully advocated an inconsistent position in state court. The district court granted summary judgment for the defendants. On appeal, the plaintiffs contend the district court erred by applying judicial estoppel. They also contend the district court erred by awarding attorney fees under Hawaii Revised Statutes § 607-14 because the complaint was not "in the nature of assumpsit." We have jurisdiction pursuant to 28 U.S.C. § 1291 and we affirm.

II. FACTS

Defendant Mervyn S. Gerson, a partner in the defendant law firm Gerson, Grekin and Wynhoff (collectively, the "defendants"), prepared a will for William T. Helfand, which Mr. Helfand executed on October 9, 1991. The will contained the following paragraph 2(b) regarding Mr. Helfand's residence in Hawaii:

I give, devise and bequeath all my right, title and interest in and to Apartment # 1302, the Waikiki Shores, 2161 Kalia Road, Honolulu, Hawaii, together with all furniture and furnishings customarily situated therein, to my wife, RUTH C. HELFAND, if she survives me.

Thus, under the will, Ruth Helfand was to take Mr. Helfand's interest in the residence if she survived him.

Mr. Gerson also prepared a revocable living trust, which Mr. Helfand executed the same day he executed his will. The trust contained the following paragraph 3.13 regarding Mr. Helfand's principal residence:

In the event that after the Settlor's death the Trustee holds an interest in property constituting the Settlor's principal residence at the Settlor's death, the Trustee shall not dispose of such interest so long as the Settlor's spouse desires to continue to live in said property as a principal residence, and the Trustee shall pay its proportionate share of the costs of maintaining said property and shall allow Settlor's Paragraph 2.2(B) of the trust provided:

surviving spouse to continue to reside therein free of all charges.

If the Settlor's will specifically bequeaths or devises any property which at the time of the Settlor's death is held in or receivable by the trust (and is not in the Settlor's probate estate), the Trustee shall make distribution of such property as provided therein.

On November 1, 1991, the Hawaii residence was conveyed to the trust. That same day, Mr. Helfand executed an amendment to the trust which provided:

If the Settlor's wife, RUTH C. HELFAND, becomes permanently institutionalized, then upon such institutionalization the Trustee shall distribute absolutely and free of the trust the Settlor's principal residence as defined in Paragraph 3.13, presently at 2161 Kalia Road, Apartment 1302, Honolulu, Hawaii, to the Settlor's nephew, MARK J. SEIDENBERG, if he is then living.

Mr. Helfand died on December 8, 1991. A few months later, First Hawaiian Bank, the trustee, filed a Petition for Instructions in Hawaii state court. The Bank explained that paragraph 2(b) of the will and paragraph 2.2(B) of the trust seemed to require the residence to be distributed directly to Mrs. Helfand. On the other hand, paragraph 3.13 of the trust and the amendment to the trust seemed to require that the residence remain in the trust as long as Mrs. Helfand desired to live in it and as long as she was not institutionalized; upon her permanent institutionalization, however, the residence should be distributed to Mark Seidenberg. 1 Although the Bank believed the residence should be distributed outright to Mrs. Helfand, it sought instructions from the court to avoid potential litigation.

Prior to filing a response to the Bank's petition, Seidenberg and Mrs. Helfand attempted to obtain the defendants' records and documents pertaining to Mr. Helfand's will and trust. On June 3, 1992, they served a subpoena duces tecum on the defendants requiring them to produce those documents. By letter, the defendants gave notice that they would not appear or produce the requested documents. They asserted that the documents were protected by the attorney-client privilege. Seidenberg and Mrs. Helfand did not challenge the defendants' claim of privilege.

Seidenberg filed a response to the Bank's petition on behalf of himself and as attorney-in-fact for Mrs. Helfand. The response stated:

Seidenberg takes no position on Petitioner's request for instructions. Seidenberg only requests that, if the Court determines that the property should be delivered to Mrs. Helfand, ... the Court also determine whether the estate or trust of William T. Helfand remains financially responsible for the upkeep and maintenance of the property.

At the July 10th, 1992, hearing on the Bank's petition, attorney Michael Lilly represented Seidenberg. The parties dispute whether Lilly also represented Seidenberg as attorney-in-fact for Mrs. Helfand.

At the hearing, Lilly argued that because Mrs. Helfand had expressed a desire to live in the residence, the Bank should retain it in the trust until Mrs. Helfand's permanent institutionalization, at which point it should be distributed to Seidenberg. On March 23, 1993, the Hawaii state court adopted this position and instructed the Bank to retain the residence in the trust subject to possible distribution to Seidenberg upon Mrs. Helfand's permanent institutionalization.

Several months later, on September 30, 1993, Mrs. Helfand and Seidenberg as her attorney-in-fact (the "plaintiffs"), sued the defendants in federal district court claiming they had been injured by the Bank's retention of the residence in the trust. They argued that the residence should have been distributed directly to Mrs. Helfand and that Mrs. Helfand failed to obtain ownership of the residence due to the flawed preparation of the estate planning documents. The complaint contained four claims: negligence On June 15, 1994, the plaintiffs filed a motion for summary adjudication of some of the elements of their claims. The same day, the defendants filed a motion for summary judgment contending, in relevant part, that the plaintiffs' claims were barred by the doctrine of judicial estoppel because they asserted a position with regard to Mr. Helfand's testamentary intent that was inconsistent with the position they successfully asserted before the Hawaii state court.

breach of contract, breach of warranty, and legal malpractice arising from the defendants' preparation of allegedly ambiguous testamentary documents.

The district court denied the plaintiffs' motion for summary adjudication and granted the defendants' motion for summary judgment, holding that the plaintiffs were judicially estopped from asserting the position alleged in their complaint.

The defendants filed a motion for attorney fees and costs on September 15, 1994. The district court granted this motion pursuant to Hawaii Revised Statutes § 607-14 and awarded the defendants $32,706.50 in attorney fees and $8,541.63 in costs.

On appeal, the plaintiffs challenge both the grant of summary judgment and the award of attorney fees.

III. DISCUSSION

A. Judicial Estoppel

"Judicial estoppel, sometimes also known as the doctrine of preclusion of inconsistent positions, precludes a party from gaining an advantage by taking one position, and then seeking a second advantage by taking an incompatible position." Rissetto v. Plumbers and Steamfitters Local 343, 94 F.3d 597, 600 (9th Cir.1996). It is an equitable doctrine intended to protect the integrity of the judicial process by preventing a litigant from "playing fast and loose with the courts." Russell v. Rolfs, 893 F.2d 1033, 1037 (9th Cir.1990), (quoting Rockwell Int'l Corp. v. Hanford Atomic Metal Trades Council, 851 F.2d 1208, 1210 (9th Cir.1988)), cert. denied, 501 U.S. 1260, 111 S.Ct. 2915, 115 L.Ed.2d 1078 (1991) (internal quotation marks omitted). "[F]ederal law governs the application of judicial estoppel in federal court." Rissetto, 94 F.3d at 603.

The plaintiffs contend that the district court should not have applied judicial estoppel because the position they asserted before the district court was not inconsistent with Lilly's prior assertions in the state court proceeding. We disagree.

Although the plaintiffs' written response to the Bank's petition for instructions on how to interpret Mr. Helfand's testamentary documents explicitly took no position on the petition, Lilly eschewed this "no position" position at the hearing itself. At the hearing, Lilly urged the Hawaii state court to interpret the trust documents as providing that the trust retain the residence if Mrs. Helfand desired to continue to live in it, subject to possible distribution to Seidenberg upon Mrs. Helfand's permanent institutionalization. Lilly stated that Mrs. Helfand had in fact expressed her desire to live in the residence, and argued that consequently the residence should be retained in the...

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