Quinn v. Sharon Corp.

• Decision Date: 27 November 2000
• Docket Number: No. 3262.,3262.
• Citation: 343 S.C. 411,540 S.E.2d 474
• Court: South Carolina Court of Appeals
• Parties: Joseph Lee QUINN, Appellant, v. The SHARON CORPORATION, Sharon Quinn, Dennis Baker, Respondent.

343 S.C. 411
540 S.E.2d 474

Joseph Lee QUINN, Appellant,
v.
The SHARON CORPORATION, Sharon Quinn, Dennis Baker, Respondent

No. 3262.

Court of Appeals of South Carolina.

Submitted October 9, 2000.

Decided November 27, 2000.

Rehearing Denied January 29, 2001.

343 S.C. 412

J. Falkner Wilkes, of Meglic & Wilkes, of Greenville, for appellant

D. Denby Davenport, of Greenville, for respondent.

HUFF, Judge:

Joseph Lee Quinn brought an action against the Sharon Corporation, his daughter, Sharon Quinn, and Sharon's husband, Dennis Baker, seeking affirmation of his ownership of all of the issued and outstanding stock of the Corporation, damages, attorney's fees and court costs against Sharon and Baker, and judgment of $272,330.82 on a promissory note.

343 S.C. 413

From an order granting the Corporation, Sharon, and Baker summary judgment, Joseph appeals.¹ We affirm

STANDARD OF REVIEW

Summary judgment is appropriate when it is clear there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Wilson v. Moseley, 327 S.C. 144, 488 S.E.2d 862 (1997). In ruling on a motion for summary judgment, the evidence and all inferences which can be reasonably drawn therefrom must be viewed in the light most favorable to the non-moving party. Id.

FACTUAL/PROCEDURAL BACKGROUND

Viewing the record in the light most favorable to Joseph, the record reveals the following facts. In August, 1976, Joseph organized the Corporation, to which he conveyed most or all of his land and wealth. All of the 10,000 issued and outstanding shares of the Corporation were issued to Joseph. In accordance with his estate plan, Joseph transferred his shares of the Corporation to Sharon. Sharon was elected to all offices of the corporation at one time or another. Joseph stated in an affidavit that he explained to Sharon that he would remain the sole owner of the Corporation and she would have no interest in the Corporation until his death.

Until 1986, Joseph kept all the certificates of shares in his bank safety deposit box, to which Sharon had access. In 1986, Sharon removed the certificates from the safety deposit box. Joseph filed a lis pendens to prevent Sharon from conveying any of the corporation's property. As a result of the dispute with her father, Sharon endorsed the shares in blank. Joseph stated he then returned the shares to his safety deposit box. In either 1990 or 1991, Joseph delivered the certificates to the Corporation's accountant in order to keep them with the corporate records. After a medical scare in 1996, Joseph informed Sharon of the location of the certificates and Sharon retrieved them from the accountant. Joseph instructed Sharon to put the certificates back in his safety deposit box, but

343 S.C. 414

she failed to do so. In October of 1996, Joseph attempted to terminate the employment of Sharon's husband, Dennis Baker. Thereafter, Sharon assumed control over the Corporation. Joseph filed the present action on November 19, 1996

LAW/ANALYSIS

Joseph argues the trial court erred in granting the Respondents summary judgment on his claims. We disagree.

The supreme court expressly adopted the doctrine of judicial estoppel, as it relates to matters of fact, in the case of Hayne Federal Credit Union v. Bailey, 327 S.C. 242, 489 S.E.2d 472 (1997). The doctrine precludes a party from adopting a position in conflict with one previously taken in the same or related litigation. Id. 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. Id. The supreme court explained,

In order for the judicial process to function properly, litigants must approach it in a truthful manner. Although parties may vigorously assert their version of the facts, they may not misrepresent those facts in order to gain advantage in the process. The doctrine thus punishes those who take the truth-seeking function of the system lightly. When a party has formally asserted a certain version of the facts in litigation, he cannot later change those facts when the initial version no longer suits him.

Id. at 251-52, 489 S.E.2d at 477.

In Hayne, the appellant contended he owned certain property by virtue of a resulting trust. The appellant had, in a previous divorce action, claimed he had no legal interest in the property and that the property was owned by his son. The court held, because the father had previously claimed his son owned the property, he was judicially estopped from later claiming ownership of the property.

In the instant case, the record shows Joseph had previously filed an answer and counterclaim dated March 16, 1992 in the case of Charles H. Smith v. Joe L. Quinn and The Sharon Corporation, Case No. 92-CP-23-304. There, Joseph

343 S.C. 415

admitted that Sharon owned and operated the Corporation and stated he had no authority to bind the Corporation. Similarly, in a hearing held June 16, 1992 in the case of State of South Carolina v. Joe Quinn, Case No. 91-GS-23-7358, 7359, Joseph testified Sharon owned the Corporation. He denied owning any real estate, stocks, bonds, notes, or other valuable property.

Joseph's claim in the present action that he is the sole owner of the Corporation is in direct contravention to his assertions in the prior litigations. Were we to allow Joseph to change his position as to the facts and now claim ownership of the Corporation, "the truth-seeking function of the judicial process [would be] undermined." Hayne, 327 S.C. at 252, 489 S.E.2d at 477. We therefore hold Joseph's claim for ownership of the Corporation is barred by the doctrine of judicial estoppel.²

For the foregoing reasons, the order granting respondents summary judgment is

AFFIRMED.

GOOLSBY, J., concurs.

ANDERSON, J., concurring in result only in a separate opinion.

ANDERSON, Judge (concurring):

I concur in result. Judicial estoppel bars Joseph Lee Quinn's claim to sole ownership of the Sharon Corporation.

343 S.C. 416

I. Definition and Purpose of Judicial Estoppel

A court must be able to rely on the statements made by the parties because truth is the bedrock of justice. Therefore, a litigant cannot "blow both hot and cold." McDaniels v. Gen. Ins. Co. of Am., 1 Cal.App.2d 454, 36 P.2d 829, 832 (1934). Under the doctrine of judicial estoppel, a party that has assumed a particular position in a judicial proceeding, via its pleadings, statements, or contentions made under oath, is prohibited from adopting an inconsistent posture in subsequent proceedings. Black's Law Dictionary 848 (6th ed.1990) (citation omitted); 28 Am.Jur.2d Estoppel and Waiver § 74 ("The fundamental concept of judicial estoppel is that a party in a judicial proceeding is barred from denying or contradicting sworn statements made therein." (footnote omitted)); see also City of New York v. Black Garter, 179 Misc.2d 597, 685 N.Y.S.2d 606, 607-08 (N.Y.1999) ("Judicial estoppel, or the doctrine of inconsistent positions, precludes a party who assumed a certain position in a prior legal proceeding... from assuming a contrary position in another action simply because his or her interests have changed.... The doctrine rests upon the principle that a litigant `should not be permitted... to lead a court to find a fact one way and then contend in another judicial proceeding that the same fact should be found otherwise.'" (citations omitted)).

The purpose of judicial estoppel is to prevent the manipulation of the judicial system by the litigants. Case of Canavan, 432 Mass. 304, 733 N.E.2d 1042 (2000); see also 31 C.J.S. Estoppel and Waiver § 139 (1996) ("The... function of judicial estoppel is to protect the integrity of the judicial process... rather than to protect litigants from allegedly improper conduct by their adversaries." (footnote omitted)). A court invokes judicial estoppel to prevent a party from changing its position over the course of judicial proceedings. 31 C.J.S. Estoppel and Waiver § 139 (1996) (footnote omitted). The doctrine estops a party from playing "fast-and-loose" with the courts or to trifle with the proceedings. Id. (footnotes omitted).

A quintessential case illustrating the efficacy and application of judicial estoppel is Allen v. Zurich Insurance Company, 667 F.2d 1162 (4th Cir.1982). Allen was assisting Zurich's

343 S.C. 417

insured, Scruggs, in installing a mobile home when the home, which Scruggs had placed on blocks, shifted, fell, and crushed Allen's hand. Allen sued Scruggs in South Carolina state court on a negligence theory to recover for his injuries "while in the employment of the Defendant, Carl H. Scruggs...." Zurich defended Scruggs. The jury returned a verdict for Allen of $37,000, which Scruggs did not pay.

Allen then brought suit in federal court against Zurich to collect on Scruggs' automobile liability policy and alleged in the complaint he and Scruggs were joint...