East Cambridge Sav. Bank v. Wheeler
| Citation | 422 Mass. 621,664 N.E.2d 446 |
| Parties | EAST CAMBRIDGE SAVINGS BANK v. Joseph N. WHEELER & another. 1 |
| Decision Date | 08 May 1996 |
| Court | United States State Supreme Judicial Court of Massachusetts |
CIVIL ACTION commenced in the Superior Court Department on February 24, 1992; Judith A. Cowin, J.
Camille F. Sarrouf (Donald J. Savery, with him), Boston, for defendants.
Joseph W. McDermott, Cambridge, for plaintiff.
Before LIACOS, C.J., and WILKINS, ABRAMS, LYNCH and GREANEY, JJ.
We consider again the largely uncharted realm of judicial estoppel, a concept that precludes a party in certain circumstances from asserting a position in one proceeding that is contrary to a position that the party previously asserted successfully in another proceeding. See Fay v. Federal Nat'l Mortgage Ass'n, 419 Mass. 782, 787-788, 647 N.E.2d 422 (1995). In the Fay case, we said that "we would apply the doctrine of judicial estoppel at least where a party had successfully asserted his or her inconsistent position in a previous proceeding" (emphasis in original). Id. at 788, 647 N.E.2d 422. There, the plaintiff was not affected by the principle because she had not been successful in asserting her inconsistent position in the earlier action. Id. Here, we conclude that the plaintiff bank is not judicially estopped from asserting that the defendant Fredella is liable on a partnership debt. We, therefore, affirm the judgment entered against Fredella, having transferred his appeal here on our own motion.
In 1990 and 1991, Joseph N. Wheeler, a partner in the two-lawyer partnership of Fredella & Wheeler, obtained loans from the plaintiff bank ostensibly in the name of the partnership. Neither the partnership nor Fredella, however, received any funds from these loans. Wheeler used only his own funds to make such payments on those loans as were made. The loans went into default, and the bank brought this action to collect the amount owed on the defaulted notes. In entering judgment for the bank against Fredella in the amount of approximately $86,000 plus interest, the trial judge ruled that Wheeler had actual and apparent authority to borrow from the bank on behalf of the partnership, and that the loans were obligations of the partnership. Fredella does not now challenge the findings on which that ruling was based nor does he now challenge the ruling except as it may be affected by the application of judicial estoppel. 2
While the complaint in this action to collect on the notes was pending, Wheeler filed a bankruptcy proceeding in the United States Bankruptcy Court for the Eastern District of Massachusetts, listing the outstanding debts on the loans from the bank as personal debts. The bank then filed a complaint to determine the dischargeability in bankruptcy of Wheeler's debt to it. In that complaint, the bank alleged that, although Wheeler had represented to the bank that he had authority to act on behalf of the partnership in borrowing money, Wheeler's lawyer had represented at a preliminary hearing in this debt-collection action that Wheeler's obligations to the bank were only personal, and not partnership, obligations. Fredella also had filed an answer in the bank's action against him denying his liability for the outstanding debt. The bank asserted in its Bankruptcy Court complaint that Wheeler's debt to it should not be discharged because Wheeler knowingly deceived the bank by representing that the debt was a partnership debt. In his answer to the bank's Bankruptcy Court complaint, Wheeler in effect disavowed his counsel's representation and admitted that the loans were partnership debts, for which he was personally liable.
Wheeler and the bank settled the bankruptcy dispute, agreeing that the bank's complaint should be dismissed with prejudice on Wheeler's payment of $1,000 to the bank. Shortly thereafter, Wheeler was released on all dischargeable debts including the bank's loans to the partnership.
We have not traditionally referred to a principle of judicial estoppel. We first used the words in Fay v. Federal Nat'l Mortgage Ass'n, supra at 787-788, 647 N.E.2d 422. T...
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