Chapter 31 EQUITABLE ESTOPPEL, LACHES
Jurisdiction | New York |
Chapter Thirty-One
Equitable Estoppel, Laches
I. Equitable Estoppel
The availability of the doctrine arises when a party, while knowing the true facts all along, makes a false representation or conceals a material fact with the intention that the other party will act thereon.5486 The purpose of invoking the doctrine is to prevent the infliction of unconscionable injury and loss upon one who has relied on the promise of another.5487 Generally, an estoppel rests upon the word or deed of one party upon which another rightfully relies, and, so relying, changes his position to his injury5488—when this occurs it would be inequitable to permit the first to enforce what would have been his rights under other circumstances.5489 An equitable estoppel argument rests largely on the facts and circumstances of the particular case; consequently any attempted definition usually amounts to no more than a declaration of an estoppel under those facts and circumstances.5490 "Where, under the law, there is an entire lack of power to do the act in question, it cannot be made good by estoppel."5491
Equitable estoppel requires three elements on the part of the party being estopped: (1) conduct calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to assert; (2) intent that such conduct (representation) will be acted upon; and (3) knowledge, actual or constructive, of the true facts.5492 "Fraudulent representations may play a dual role. They may be the basis for an independent action for fraud. They may also, in equity, be a basis for an equitable estoppel barring the defendants from invoking the statute of limitations as against a cause of action for breach of fiduciary relations."5493 Equitable estoppel does not apply where the misrepresentation or act of concealment underlying the estoppel claim is the same act which forms the basis of plaintiff's underlying substantive cause of action.5494
In Airco Alloys Division, Airco Inc. v. Niagara Mohawk Power Corp.,5495 the Fourth Department laid out the elements needed to be proved by the party to be estopped and by the party asserting estoppel:
Equitable estoppel prevents one from denying his own expressed or implied admission which has in good faith been accepted and acted upon by another.
The elements of estoppel are with respect to the party estopped: (1) conduct which amounts to a false representation or concealment of material facts; (2) intention that such conduct will be acted upon by the other party; and (3) knowledge of the real facts. The party asserting estoppel must show with respect to himself: (1) lack of knowledge of the true facts; (2) reliance upon the conduct of the party estopped; and (3) a prejudicial change in his position.
The doctrine of equitable estoppel, an extraordinary remedy, provides that a defendant may be estopped from pleading the statute of limitations where the plaintiff was induced by fraud, misrepresentation, or deception to refrain from filing a timely action, or, stated another way, that the plaintiff was "lulled" into inaction by the defendants so that the statute of limitations would expire. The fraud upon which the application of the doctrine is based must be separate and distinct from the acts underlying the action itself.5496 The doctrine requires proof that the defendant made an actual misrepresentation or, if a fiduciary, concealed facts it was required to disclose and that the plaintiff's reliance resulted in an untimely action and mere silence or failure to disclose the wrongdoing is insufficient.5497
Anthony v. Cole5498 framed it this way:
The doctrine [of equitable estoppel] precludes a party at law and in equity from denying or asserting the contrary of any material fact which he has induced another to believe and to act on in a particular manner. It "rests upon the word or deed of one party upon which another rightfully relies and so relying changes his position to his injury" (Triple Cities Constr. Co. v. Maryland Cas. Co., 4 N.Y.2d 443, 448, quoting Metropolitan Life Ins. Co. v. Childs Co., 230 N.Y. 285, 292.) Parties are estopped to deny the reality of the state of things which they have made to appear to exist and upon which others have been made to rely. It does not operate to create rights otherwise nonexistent; it operates merely to preclude the denial of a right claimed otherwise to have arisen (21 N.Y. Jur, Estoppel, Ratification, and Waiver, §§ 17-18). New York's rather restrictive view of estoppel requires three elements on the part of the party estopped: (1) conduct which is calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to assert; (2) intent that such conduct (representation) will be acted upon; and (3) knowledge, actual or constructive, of the true facts (21 N.Y. Jur, Estoppel, Ratification, and Waiver, § 21). The elements pertaining to the party asserting estoppel are (1) lack of knowledge of the true facts; (2) good faith reliance; 5499 and (3) a change of position (21 N.Y. Jur. Estoppel, Ratification, and Waiver, § 60). These are commonly termed the elements of detrimental reliance. 5500
II. Burden of Proof Is on the Plaintiff to Show Due Diligence
Due diligence on the part of the plaintiff in bringing his action is an essential element for the applicability of the doctrine of equitable estoppel, to be demonstrated by the plaintiff when he seeks the shelter of the doctrine. The burden is on the plaintiff to establish that the action was brought within a reasonable time after the facts giving rise to the estoppel have ceased to be operational, which must necessarily depend on all the relevant circumstances:5501
The length of the legislatively prescribed period of limitations is sometimes said to be relevant, and courts have held that in no event will the plaintiff be found to have exercised the required diligence if his action is deferred beyond the date which would be marked by the reapplication of the statutory period, i.e., that the length of the statutory period itself sets an outside limit on what will be regarded as due diligence.
III. Judicial Estoppel
Jones Lang Wootton USA v. LeBoeuf, Lamb, Greene & MacRae simplifies the principle of judicial estoppel:5502
The doctrine of judicial estoppel or the doctrine of inconsistent positions "precludes a party who assumed a certain position in a prior legal proceeding and who secured a judgment in his or her favor from assuming a contrary position in another action simply because his or her interests have changed." 5503 As stated by the United States Supreme Court, "where a party assumes a certain position in a legal proceeding, and succeeds in maintaining that position, he may not thereafter, simply because his interests have changed, assume a contrary position" (citations omitted). "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.' "
In Martin v. C.A. Productions Co.,5504 the Court of Appeals explained judicial estoppel:
"By reason of the successful position 5505 thus taken by him in the prior action, the defendant 'comes within the rule that a claim made or position taken in a former action or judicial proceeding will estop the party from making any inconsistent claim or taking a conflicting position in a subsequent action or judicial proceeding to the prejudice of the adverse party.' "
The doctrine of judicial estoppel has been applied in matrimonial actions.5506 The separation agreement, in Crespo v. Crespo,5507 executed in 1986, required the parties to live separate and apart. Plaintiff was to pay maintenance to the defendant until the death of either party or the defendant's remarriage, there was no expiration date. In March 1988, the defendant executed a "statement of disclosure" to "certify that the last alimony payment will be in October, 2001, the expiration date of the separation agreement." The judgment of divorce, in December 1988, did not reference the "statement of disclosure." Plaintiff was granted a divorce based the parties' having lived separate and apart pursuant to the separation agreement.
The plaintiff moved to modify the judgment to terminate his maintenance obligation based upon the "statement of disclosure." The Appellate Division affirmed the denial of his motion on the grounds of the doctrine of judicial estoppel, that the prohibition against inconsistent positions prohibits a party from obtaining a favorable judgment and subsequently taking an inconsistent position simply because his or her interests have changed. The plaintiff obtained a favorable judgment of divorce based, at least, in part upon the representation that the parties had been living separate and apart pursuant to the terms of the separation agreement, one of which was that he would pay lifetime maintenance to the defendant, except as specified. His new argument would retroactively modify that agreement and add a fourth self-serving and self-limiting circumstance.
A party is precluded from framing his pleadings in a manner inconsistent with a position taken in a prior proceeding.5508 The policies underlying preclusion of inconsistent positions are general considerations of the orderly administration of justice and regard for the dignity of judicial proceedings.5509 The doctrine is invoked to estop parties from adopting such contrary positions because "the judicial system cannot tolerate this playing fast and loose with the courts"5510 and to avoid a mockery of the truth-seeking function.5511 It has a res judicata effect. A person who invokes the jurisdiction of a court will not be heard to repudiate the judgment which that court entered upon his seeking and in his favor. The rule applies in cases where property...
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