Dupwe v. Wallace

• Decision Date: 08 January 2004
• Docket Number: No. 03-594.,03-594.
• Citation: 140 S.W.3d 464,355 Ark. 521
• Parties: Warren E. DUPWE v. Frank G. WALLACE, and First State Bank, et al.
• Court: Arkansas Supreme Court

140 S.W.3d 464

355 Ark. 521

Warren E. DUPWE v. Frank G. WALLACE, and First State Bank, et al.

No. 03-594.

Supreme Court of Arkansas.

January 8, 2004.

Appeal from the Crittenden Circuit Court, David Burnett, J Bond & Chamberlin, Jacksonville, by: Will Bond and Neil Chamberlin; and Rees Law Firm, by: Thomas A. Young, West Memphis, for appellants.

Wright, Lindsey & Jennings LLP, by: Gordon S. Rather, Jr. and James R. Van Dover, Little Rock, for appellees first State Bank, Parkin Bancorp, Inc., William N. Griffin, and certain others.

Rieves, Rubens & Mayton, by: Elton A. Rieves IV, West Memphis, for appellee/cross-appellant Frank G. Wallace.

JIM HANNAH, Justice.

Bankruptcy Trustee Warren E. Dupwe appeals a summary judgment finding that he is judicially estopped from pursuing the tort claims of Chapter 7 bankruptcy petitioners Barry L. and Deborah L. Nix. The trial court found that when the Nixes failed to list claims against First State Bank, and its employees ("First State") in their bankruptcy petition, any future suit on the claim was precluded by judicial estoppel. Dupwe's tort action in Crittenden County was initially filed by the Nixes after their bankruptcy case was closed; however, when First State objected to the Nixes bringing the action after their discharge in bankruptcy, the bankruptcy case was reopened, and bankruptcy trustee Dupwe was substituted in the place of the Nixes as plaintiff in the lawsuit.

A prima facie case of judicial estoppel includes four elements:

1. A party must assume a position clearly inconsistent with a position taken in an earlier case, or with a position taken in the same case;

2. A party must assume the inconsistent position with the intent to manipulate the judicial process to gain an unfair advantage;

3. A party must have successfully maintained the position in an earlier proceeding such that the court relied upon the position taken; and,

4. The integrity of the judicial process of at least one court must be impaired or injured by the inconsistent positions taken.

First State offers evidence that the petition signed under oath fails to include the cause of action now pending against First State. No evidence of intent is offered by First State. Rather, First State argues that intent may be inferred from the facts. The facts only show the cause of action was not listed, but do not show why. The elements of the prima facie case were not presented. There are questions of material fact remaining, and the trial court is reversed.

Facts

In April 2000, Barry and Deborah Nix filed a voluntary individual petition under Chapter 7 of the United States Bankruptcy Code for the Eastern District of Arkansas. The petition was filed as a consequence of the failure of Barry Nix's used car business. More specifically, the bankruptcy was required due to Barry's inability to obtain financing in his business, which Barry alleges resulted from the tortious conduct of First State.

Prior to approaching First State, Barry used financing from Auction Finance and Automotive Finance Corporation, to run his business, Nix Auto World. Auction and Automotive Finance provided what Barry characterized as floor plans to purchase vehicles for resale. In March 1999, Barry met with Frank G. Wallace, President of First State to discuss acquiring additional financing of Nix Auto World through First State. Barry was already financing his home through First State.

According to Barry, Wallace agreed to commence financing of Nix Auto World by providing financing for a specific car. Barry alleges that he instructed Auction Finance to negotiate his First State check to pay Auction Finance the amount owed on the car First State agreed to finance. According to Barry, First State did not extend the promised credit, but instead bounced Barry's check to Auction Finance. Barry alleges he made a number of attempts to get First State to pay Auction Finance on the check, and that ultimately, First State did pay Auction Finance. Barry argues, however, that his relationship with Auction Finance was so damaged by First State's misconduct that he lost his credit with Auction Finance.

Barry next alleges that he went to Wallace to complain about the loss of credit and was assured that First State would provide a line of credit to replace the one lost with Auction Finance. However, Barry alleges that Wallace never provided the credit, which forced the Nixes to file bankruptcy.

In the bankruptcy petition, the Nixes responded "no" to the question of whether they had contingent or unliquidated claims. In their statement of financial affairs in the petition, they responded "none" to a request to list all suits to which the debtor was a party within one year immediately preceding the filing of the bankruptcy case.

Dupwe was appointed bankruptcy trustee in the Nixes' bankruptcy case, and the case was brought to a close by a final decree entered August 25, 2000. On February 27, 2002, the Nixes filed a complaint against First State, Wallace, and other employees of First State, asserting fraud and other misconduct arising from the dispute with the Nixes over financing of business and personal debts.

On April 19, 2002, both First State and Wallace filed a pleading called a motion for summary dismissal, asserting a lack of standing and judicial estoppel. Neither First State nor Wallace provided any cite to authority for a motion for summary dismissal. First State and Wallace challenged the Nixes' right to sue on a claim that predated the bankruptcy. In response, the Nixes reopened their bankruptcy case, and on January 31, 2003, an order was entered granting the Nixes' motion to substitute Dupwe as the plaintiff in the case. The Nixes are no longer parties to the present case. The motions for summary dismissal were treated as motions for summary judgment and granted without prejudice on March 5, 2003. Dupwe appeals.

First State and Wallace asserted in their motions for summary dismissal that they were entitled to summary dismissal based on both judicial estoppel and standing. The trial court decided the issue on judicial estoppel, and there was no ruling on the issue of standing. Therefore, the only issue before this court is whether the trial court erred in its application of judicial estoppel.

This court has jurisdiction pursuant to Ark. Sup.Ct. R. 1-2(b)(1)(5) (2003). Although this case was filed in the court of appeals, Dupwe moved to transfer this case to the supreme court because the issue of when judicial estoppel applies needed further development and posed issues of first impression. The motion was granted.

Standard of Review

The motions for summary dismissal had affidavits attached. It is well settled that where the parties present affidavits and other matters outside the pleadings to the circuit court on a motion to dismiss, we can and will treat the motion as one for summary judgment. Coats v. Gardner, 333 Ark. 581, 970 S.W.2d 802 (1998); see also Ark. R. Civ. P. 12(b) and (c) (2003). In Nielsen v. Berger-Nielsen, 347 Ark. 996, 69 S.W.3d 414 (2002), this court recently stated the standard of review on review of summary judgment:

Summary judgment is appropriate when there are no genuine issues of material fact, and the moving party is entitled to judgment as a matter of law. Ford v. Arkansas Game and Fish Comm'n, 335 Ark. 245, 979 S.W.2d 897 (1998); Nelson v. River Valley Bank & Trust, 334 Ark. 172, 971 S.W.2d 777 (1998). Once the moving party has established a prima facie entitlement to summary judgment, the opposing party must meet proof with proof and demonstrate the existence of a material issue of fact. Id. On appellate review, this court determines if summary judgment was appropriate based on whether the evidentiary items presented by the moving party in support of the motion leave a material fact unanswered. Id. This court views the evidence in a light most favorable to the party against whom the motion was filed, resolving all doubts and inferences against the moving party. Id. Our review focuses not only on the pleadings, but also on the affidavits and other documents filed by the parties. Id.

Nielsen, 347 Ark. at 1003-1004, 69 S.W.3d 414.

Judicial Estoppel

In its motion for summary dismissal, First State argued that the Nixes were judicially estopped from prosecuting their lawsuit because they failed to list the cause of action as an asset in their bankruptcy petition in the federal court. The term "judicial estoppel" is found in six of this court's opinions. McLane v. Davis, 353 Ark. 539, 110 S.W.3d 251 (2003); Francis v. Francis, 343 Ark. 104, 31 S.W.3d 841 (2000); Employers Surplus Ins. v. Murphy Oil USA, 338 Ark. 299, 993 S.W.2d 481 (1999); First Commercial Bank, N.A. v. Walker, 333 Ark. 100, 969 S.W.2d 146 (1998); Edwards v. State, 328 Ark. 394, 943 S.W.2d 600 (1997); Muncrief v. Green, 251 Ark. 580, 473 S.W.2d 907 (1971); Rinke v. Weedman, 232 Ark. 900, 341 S.W.2d 44 (1960). The court of appeals has mentioned judicial estoppel twice. Daley v. City of Little Rock, 36 Ark.App. 80, 818 S.W.2d 259 (1991); Womack v. First State Bank of Calico Rock, 21 Ark.App. 33, 728 S.W.2d 194 (1987). None of these cases includes a detailed discussion of judicial estoppel.

The best beginning point in our analysis is Muncrief, supra, where this court stated that the appellee in that case was asserting judicial estoppel, "by which a party may be prevented from taking inconsistent positions in successive cases with the same adversary." Muncrief, 251 Ark. at 583-84, 473 S.W.2d 907. This same language was stated in a similar conclusory fashion in Murphy Oil, supra. Muncrief was cited in Murphy Oil, but judicial estoppel was not applied. In Daley, supra, the court of appeals cited Muncrief, stating that "judicial estoppel is a doctrine whereby a party may be prevented from taking inconsistent positions in successive cases with the same adversary." Daley, 36 Ark.App. at 84, 818 S.W.2d 259. In Daley the court of...