Heinze v. Bauer

• Decision Date: 25 January 2008
• Docket Number: No. 33579.,33579.
• Citation: 178 P.3d 597,145 Idaho 232
• Parties: Timothy S. HEINZE, Plaintiff-Appellant, v. Charles B. BAUER, Defendant-Respondent.
• Court: Idaho Supreme Court

178 P.3d 597

145 Idaho 232

Timothy S. HEINZE, Plaintiff-Appellant, v. Charles B. BAUER, Defendant-Respondent.

No. 33579.

Supreme Court of Idaho, Boise, December 2007 Term.

January 25, 2008.

Rehearing Denied March 14, 2008.

Ellis, Brown, & Sheils, Boise, for appellant. Allen Ellis argued.

Moffatt, Thomas, Barrett, Rock & Fields, Boise, for respondent. Mark Prusynski argued.

HORTON, Justice.

This is a legal malpractice action. Appellant Timothy Heinze appeals from the district court's grant of summary judgment in favor of Respondent Charles Bauer dismissing Heinze's complaint. This Court is asked to decide whether Heinze is judicially estopped from pursuing a claim that Bauer negligently recommended Heinze accept the terms of a divorce settlement after Heinze stipulated to the settlement, under oath, in court. We affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

Heinze retained Bauer, an attorney, to represent him in his divorce. The divorce action presented two main issues: the division of the community estate and the custody arrangement pertaining to the couple's child. The divorce trial started; opening statements were given, and the first witness, a child custody evaluator, was called to testify. Before direct examination of the child custody evaluator was finished, the magistrate brought counsel for the parties into chambers for an off-the-record meeting regarding the parties' claims. Shortly after this meeting, Bauer and Heinze's ex-wife's attorney began discussions concerning a possible settlement, whereby the parties would stipulate to joint custody of the child and a Property and Debt Settlement (PDS) that divided the community estate.

Heinze and Bauer discussed the PDS submitted by Heinze's ex-wife. Bauer recommended Heinze accept the settlement despite Heinze's expressed concern that "the [PDS], prepared by opposing counsel, may not be correct with respect to both debts and assets." The settlement was presented to the court, and the magistrate discussed some, but not all, of the terms of the settlement, including who would retain the family home and the custody agreement. The judge then placed the parties under oath. Heinze acknowledged that he agreed with the terms of the settlement and would abide by them.

Two days after the settlement, Heinze sent Bauer an email, expressing misgivings about the terms of the property settlement. In that email, he stated: "I guess I'm just really uncomfortable with the process, and how quickly I was asked to decide something that I obviously didn't understand at the time. It is very different than anything I have previously reviewed." In accordance with Heinze's wishes, Bauer thereafter filed a motion to set aside the settlement. The magistrate denied this motion.

Subsequently, Heinze brought this action, alleging Bauer negligently represented him in the divorce proceedings with resultant damages in excess of $100,000. Bauer moved for summary judgment, arguing inter alia that Heinze's claim was barred by the doctrine of judicial estoppel. The district court granted Bauer's motion for summary judgment, concluding the case was controlled by this Court's decision in McKay v. Owens, 130 Idaho 148, 937 P.2d 1222 (1997). Soon thereafter, the district court entered judgment dismissing Heinze's claim against Bauer, with prejudice. Heinze moved for reconsideration, arguing the case was distinguishable from McKay. The district court denied the motion to reconsider. Heinze has timely appealed from the judgment and the order denying his motion for reconsideration.

II. STANDARD OF REVIEW

In reviewing a ruling on a summary judgment motion, this Court employs the same standard used by the district court. Sprinkler Irrigation Co. v. John Deere Ins. Co., Inc., 139 Idaho 691, 695, 85 P.3d 667, 671 (2004). Summary judgment is appropriate "if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law." I.R.C.P. 56(c). This Court liberally construes all disputed facts in favor of the non-moving party and will draw all reasonable inferences and conclusions supported by the record in favor of the party opposing the motion. Lockheed Martin Corp. v. Idaho State Tax Comm'n, 142 Idaho 790, 793, 134 P.3d 641, 644 (2006).

III. ANALYSIS

A. Heinze is chargeable with full knowledge of the attendant facts surrounding the settlement prior to adopting the settlement.

This Court adopted the doctrine of judicial estoppel in Loomis v. Church, 76 Idaho 87, 277 P.2d 561 (1954). In Loomis, this Court held that a litigant who obtains a judgment, advantage, or consideration from one party through means of sworn statements is judicially estopped from adopting inconsistent and contrary allegations or testimony, to obtain a recovery or a right against another party, arising out of the same transaction or subject matter. Id. at 93-94, 277 P.2d at 565. Judicial estoppel "precludes a party from gaining an advantage by taking one position, and then seeking a second advantage by taking an incompatible position." McKay, 130 Idaho at 152, 937 P.2d at 1226 (quoting Rissetto v. Plumbers & Steamfitters Local 343, 94 F.3d 597, 600 (9th Cir.1996)). The policies underlying judicial estoppel are general considerations of the orderly administration of justice and regard for the dignity of judicial proceedings. Id. (citing Rissetto, 94 F.3d at 601). Judicial estoppel is intended to prevent a litigant from playing fast and loose with the courts. Id.

This Court considered judicial estoppel in the context of legal malpractice in McKay. The district court granted summary judgment based on the factual similarities between the instant action and McKay. In McKay, the plaintiff brought a medical malpractice claim on behalf of herself and her child, who was severely disabled at birth, against St. Luke's Regional Medical Center and her obstetrician. 130 Idaho at 150, 937 P.2d at 1224. During the course of litigation, the plaintiff's attorney negotiated a proposed settlement with which the plaintiff disagreed. However, at a minor's compromise hearing, the plaintiff represented to the court that she accepted the settlement. Id. The plaintiff later filed a malpractice action against her attorney alleging that he negligently settled her malpractice claim. Id. at 151, 937 P.2d at 1225. The trial court granted the defendant's motion for summary judgment, finding the plaintiff was judicially estopped from asserting the malpractice claim. Id. This Court affirmed the trial court on appeal. Id. at 159, 937 P.2d at 1233.

Judicial estoppel is intended to prevent abuse of the judicial process by deliberate shifting of positions to suit the exigencies of a particular action. Id. at 153, 937 P.2d at 1227. Consequently, judicial estoppel does not apply to a litigant who wishes to repudiate a position inadvertently taken due to mistake, fraud, or duress. Id. Heinze argues the doctrine of judicial estoppel is inapplicable to the instant action because he did not learn of the facts giving rise to the malpractice claim until after the settlement.

In McKay this Court addressed the situation where a represented litigant settles a case on the record, but later learns of facts giving rise to a legal malpractice claim against the attorney. Id. at 155, 937 P.2d at 1229. Under these circumstances, the Court noted the policies behind judicial estoppel will not be furthered and the doctrine should not be applied. Id. The Court stated:

For guidance purposes and to avoid misapplication of judicial estoppel, it should be made clear that the concept should only be applied when the party maintaining the inconsistent position either did have, or was chargeable with, full knowledge of the attendant facts prior to adopting the initial position. Stated another way, the concept of judicial estoppel takes into account not only what a party states under oath in open court, but also what that party knew, or should have known, at the time the original position was adopted. Thus, the knowledge that the party possesses, or should have possessed, at the time the statement is made is determinative as to whether that person is "playing fast and loose" with the court.

Id. (emphasis added).

Heinze asserts the errors within the PDS did not come to light until after the stipulation was entered on the record and therefore the doctrine of judicial estoppel should not apply. Thus, as a threshold matter, this Court must consider the evidence relating to what Heinze knew, or should have known, at the time of the settlement.

1. The district court incorrectly determined Heinze understood the terms of the PDS.

In its first memorandum decision, the district court found that Heinze understood the terms of the settlement, stating Heinze "acknowledged that he understood the terms of the settlement," and "Heinze stated in open court, under oath, that he understood the terms of the settlement offer and that he agreed. . . ." This finding was apparently based upon the following dialogue between Heinze and the magistrate:

THE COURT: That having been said, and without a great repetition of everything that we have talked about, because we have talked for a long time — and I have probably done more than my share — Mr. Heinze, you brought this matter. Are you in agreement today?

MR. HEINZE: I am.

THE COURT: And do you agree to abide by the terms and conditions?

MR. HEINZE: I do.

This testimony demonstrates that Heinze represented that he was entering into an agreement and that he agreed to be bound by the terms of that agreement. Significantly, however, this testimony did not address Heinze's understanding of the terms of that agreement.

Heinze did not file his own affidavit in connection with the summary judgment proceedings. Accordingly, there is no direct testimony in the record that he was unaware of errors in the PDS at the time...