Robertson Supply, Inc. v. Nicholls

• Decision Date: 22 January 1998
• Docket Number: No. 23653,23653
• Parties: ROBERTSON SUPPLY, INC., an Idaho Corporation, Plaintiff-Respondent, v. G. David NICHOLLS, Defendant-Appellant.
• Court: Idaho Court of Appeals

Page 914

952 P.2d 914

131 Idaho 99

ROBERTSON SUPPLY, INC., an Idaho Corporation, Plaintiff-Respondent, v. G. David NICHOLLS, Defendant-Appellant.

No. 23653.

Court of Appeals of Idaho.

Jan. 22, 1998.

Benjamin C. Rice, Boise, for defendant-appellant.

Mark L. Clark, Nampa, for plaintiff-respondent.

PERRY, Judge.

G. David Nicholls appeals from the district court's order, in its appellate capacity, reversing the magistrate's judgment in favor of Nicholls. We affirm the decision of the district court, concluding that Robertson Supply, Inc.'s cause of action is not barred by either judicial estoppel or collateral estoppel, and remand to the magistrate division for further proceedings.

I. FACTS AND PROCEDURE

Robertson Supply is attempting to collect a debt. Originally, Robertson Supply extended credit to Nicholls' proprietorship, which he called American Pump. Nicholls executed a "guaranty" to be personally liable for any debt resulting from the extension of credit to American Pump. ¹ Prior to October 27, 1994, Robertson Supply delivered goods charged to the American Pump account in the amount of $7,153.60. American Pump never paid this debt.

In September 1994, Nicholls incorporated his business and named the new entity American Well Drilling and Pump, Inc. (American Well). Although Robertson Supply was informed of the incorporation in September, no change was made with respect to the account until October 27, 1994. On that date Robertson Supply received an application from Nicholls' wife for a name change on the account to American Well. Robertson Supply approved the application and the name change became effective October 31, 1994. Nicholls did not execute a new guaranty of the corporation's obligation. The corporation received goods from Robertson Supply in the amount of $4,846.49 after October 31, 1994. The purchase price for these goods was charged to the account under the corporate name. American Well never paid this debt.

In a prior action in a different county, Robertson Supply brought suit against American Well attempting to recover the entire debt accumulated on the accounts of both American Pump and American Well. Nicholls was not a named party to that suit. Robertson Supply received a default judgment against American Well for $12,120.09 Subsequently, Robertson Supply filed this suit against Nicholls, individually, for the $7,153.60 of goods charged to American Pump. At the conclusion of the evidence presented at the court trial, the magistrate entered findings of fact and conclusions of law. The magistrate found that Robertson Supply, in its previous suit, had sought sums for goods and services provided to American Well from October 6, 1994, until December 15, 1994. The magistrate concluded that because Robertson Supply had already obtained a judgment on the total amount due for goods and services against American Well, Robertson Supply could not subsequently bring suit against Nicholls, individually, to recover on the amount of the debt which had arisen from a portion of the same goods and services. It appears from its decision that the magistrate based this conclusion on the doctrines of judicial estoppel and collateral estoppel.

and was awarded $2,500 for attorney fees and $105 for costs. Robertson Supply executed on the judgment, but only received $374.52.

Robertson Supply appealed to the district court. The district court reversed the magistrate's judgment, determining that collateral estoppel did not preclude Robertson Supply from bringing this cause of action against Nicholls. Nicholls now appeals to this Court.

II. ANALYSIS

Preliminarily it is important to note that we are reviewing a district court's decision reversing the judgment of a magistrate. This Court reviews the decision of a magistrate independently of a district court sitting in an appellate capacity, but with due regard for the district court's ruling. Hentges v. Hentges, 115 Idaho 192, 194, 765 P.2d 1094, 1096 (Ct.App.1988). This Court will uphold a magistrate's findings of fact if supported by substantial and competent evidence. Id. On issues of law, however, this Court exercises free review. Id.

Although Nicholls raises a number of issues in his appellate brief, we will only address those necessary for this opinion. We must first determine whether Robertson Supply's cause of action is barred by either judicial estoppel or collateral estoppel.

A. Judicial Estoppel

Nicholls contends that Robertson Supply's claim is barred by judicial estoppel. The Idaho Supreme Court considered and adopted the doctrine of judicial estoppel in Loomis v. Church, 76 Idaho 87, 277 P.2d 561 (1954). In Loomis, the Court stated:

It is quite generally held that where a litigant, by means of such sworn statements, obtains a judgment, advantage or consideration from one party, he will not thereafter, by repudiating such allegations and by means of inconsistent and contrary allegations or testimony, be permitted to obtain a recovery or a right against another party, arising out of the same transaction or subject matter.

Id., 76 Idaho at 93-94, 277 P.2d at 565. Essentially, this doctrine prevents a party from assuming a position in one proceeding and then taking an inconsistent position in a subsequent proceeding. 31 C.J.S. Estoppel and Waiver § 139, § 144 (1996). There are very important policies underlying the judicial estoppel doctrine. One purpose of the doctrine is to protect the integrity of the judicial system, by protecting the orderly administration of justice and having regard for the dignity of judicial proceedings. McKay v. Owens, 130 Idaho 148, 152, 937 P.2d 1222, 1226 (1997). The doctrine is also intended to prevent parties from playing fast and loose with the courts. Id.

In its judgment, the magistrate cited Loomis and then explained the judicial estoppel doctrine. Unfortunately, the magistrate did not go on to analyze Robertson Supply's cause of action by applying the law of judicial estoppel to the facts of this case. Rather, the magistrate simply concluded, at the end of its memorandum, that Robertson Supply's claim was barred by "the continuing authority of Loomis v. Church." Furthermore, the district court did not address the issue of judicial estoppel in its appellate decision. The district court reversed the decision of the magistrate, but based the reversal on the The magistrate found Robertson Supply did not extend credit to American Well until the account was changed to the corporate name. Nonetheless, Robertson Supply, in the prior suit against American Well, received a default judgment for all goods provided from October 6, 1994, to December 15, 1994. Nicholls contends that it is inconsistent for Robertson Supply to now claim that Nicholls also received some of the goods and should be liable for a portion of the debt and, thus, Robertson Supply's claim should be barred by judicial estoppel.

collateral estoppel doctrine. Therefore, we have no rationale on the application of the judicial estoppel doctrine from either the magistrate or the district court to the facts of this case. Thus, we will conduct a review without the benefit of the views of either of the lower courts, but will apply the facts found by the magistrate when supported by substantial and competent evidence.

We disagree with Nicholls' premise that Robertson Supply's pursuit of a judgment against American Well is inherently inconsistent with its current claim against Nicholls. As the proprietor of American Pump, Nicholls was the principal obligor on debts charged to the account. Nicholls was only relieved of his duty as obligor when the corporation was substituted as the account holder on October 31, 1994. In the prior lawsuit, had American Well contested the action, for example, Robertson Supply might have taken the position that the corporation agreed to be responsible for the debts of American Pump and thereby became an additional obligor for the pre-October 31 charges, or Robertson Supply might have asserted that the corporation received the benefit of the goods and services sold prior to October 31 and thereby became liable for payment on a theory of implied...