March 3, 2010
ERIC C. BARZDA, PLAINTIFF-APPELLANT,
NANCY CLEMENTE, DEFENDANT-RESPONDENT.
On appeal from Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-148-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued October 20, 2009
Before Judges Fuentes and Gilroy.
Plaintiff Eric C. Barzda appeals from the order of the Law Division dismissing his action against his former paramour, defendant Nancy Clemente, which sought a judicial declaration that he continues to have an interest in real property he had at one time jointly owned with defendant. The trial court concluded that plaintiff's claim against defendant was barred by the doctrine of judicial estoppel. We affirm.
Commencing in 1996, plaintiff was involved in divorce proceedings with his now former wife. On April 15, 1999, the Family Part entered a final judgment of divorce. While the matrimonial action was pending and even thereafter, plaintiff feared that his estranged spouse would assert a claim against real property in Hightstown he acquired with defendant in 1999. In an effort to shield this property from such a claim, plaintiff transferred all of his legal interest in this property to defendant by deed dated February 19, 2000. The deed indicated that defendant paid one dollar as consideration for this acquisition.
Plaintiff remained as an obligor, however, on the promissory note and mortgage that he and defendant signed to secure the financing necessary to purchase the Hightstown property. According to plaintiff, at the time of this transfer he and defendant had orally agreed that he would remain as an undisclosed partner and joint owner of the property. As evidence of the existence of this surreptitious agreement, plaintiff claims that while he and defendant resided together in this property he "performed substantial upgrades" to the property and "purchased many items of personal property... for the property."
On February 13, 2001, less than one year after the transfer of the property, plaintiff filed a petition in federal bankruptcy court seeking Chapter 7 relief. Plaintiff did not disclose his alleged interest in the Hightstown property in his bankruptcy petition, which contained a declaration, under the penalty of perjury, that the schedules of assets listed therein were true and correct. Notwithstanding this material omission, plaintiff claimed before the Law Division in this action that he disclosed his interest in the Hightstown property to both his bankruptcy attorney and the bankruptcy trustee.
According to plaintiff, his bankruptcy attorney did not list the Hightstown property in the petition because he was not "the legal owner." Similarly, plaintiff contends that he orally disclosed his interest in the property to the bankruptcy trustee during his formal meeting with him; inexplicably in light of such a declaration, plaintiff claims that the trustee ultimately decided to issue a notice of no assets. Accordingly, plaintiff obtained a full bankruptcy discharge on May 21, 2001, without the court considering his alleged interest in the Hightstown property as an asset potentially available to plaintiff's creditors.
Plaintiff and defendant ended their romantic relationship in 2002; defendant demanded that he leave the Hightstown residence. Four years later on January 17, 2006, plaintiff filed the present complaint against defendant alleging breach of fiduciary duty, fraud, and conversion for her failure to transfer his share of the proceeds from the joint venture. Defendant filed a motion to dismiss in lieu of an answer, arguing that plaintiff had failed to state a claim upon which relief could be granted.
On the return date of defendant's motion, immediately before the commencement of oral argument, plaintiff attempted to file an amended complaint and introduce a document claiming to be the unauthenticated minutes of the formal hearing held before the bankruptcy trustee. Plaintiff claimed he had only received "the minutes" the day before and proffered that these "minutes" proved that he had disclosed his interest in the Hightstown property to the bankruptcy court. Defendant objected, arguing that the document was not authenticated and did not include the certification of the trustee.
The motion judge upheld defense counsel's objection, stating: you [plaintiff's counsel] want me to accept that without any proof at all that that's what happened here. I don't know whose [handwriting] that is... You don't have anything to indicate to me. This is a piece of paper which has both typed in... and then handwritten areas, then a - I don't want to say signature, but initials written in. I don't know who wrote that. It could be your client's own handwriting.
Thereafter, the court treated defendant's motion to dismiss as the equivalent of a motion for summary judgment because the supporting documentation included matters outside the pleadings. The court then granted summary judgment in favor of defendant on the first two counts of the complaint. Accepting plaintiff's reasons for excluding his interest in the property, the trial court concluded that the parties had entered into an unenforceable contract intended to mislead and withhold material information from the Family Part. The court also held that plaintiff's claim was barred by the doctrine of judicial estoppel based on his affirmative statements, made under oath, in his petition to the bankruptcy court.
The trial court denied plaintiff's motion for reconsideration. The parties thereafter agreed by stipulation to dismiss with prejudice the remaining count in plaintiff's complaint.
Based on this record, we are satisfied that plaintiff's claim is barred by the doctrine of judicial estoppel. We will thus not address the remaining basis relied on by the trial court to support its decision to dismiss the complaint.
Judicial estoppel is predicated on a notion of integrity in the conduct of the parties before a tribunal. It "operates to 'bar a party to a legal proceeding from arguing a position inconsistent with one previously asserted.'" Cummings v. Bahr, 295 N.J. Super. 374, 385 (App. Div. 1996) (quoting N.M. v. J.G., 255 N.J. Super. 423, 429 (App. Div. 1992)). Judicial estoppel "prevents litigants from 'playing fast and loose' with, or otherwise manipulating, the judicial process." State v. Jenkins, 178 N.J. 347, 359 (2004) (quoting State, Dep't. of Law & Pub. Safety v. Gonzalez, 142 N.J. 618, 632 (1995)). "Central to that concern is the principle that a litigant should not be allowed to mislead courts by having one tribunal rely on his or her initial position while a subsequent body is led in a different direction." Ibid.
The applicability of judicial estoppel as a complete bar to a subsequent inconsistent claim only arises "when a party advocates a position contrary to a position it successfully asserted in the same or a prior proceeding." Ali v. Rutgers, 166 N.J. 280, 287 (2000) (internal citations and quotations omitted). A prior successful assertion of a contrary position is required because "[a] party is not bound to a position it unsuccessfully maintained" in a prior litigation. Id. at 288 (internal citations and quotations omitted). As with most judicially crafted remedies, judicial estoppel should be invoked only to prevent a miscarriage of justice. Ibid.
Here, plaintiff's conduct provides almost a textbook example of facts calling for the applicability of judicial estoppel. By his own words, plaintiff attempted to conceal his alleged interest in this real property to mislead his former espouse and frustrate any attempt on her part to seek legal recognition of a potential equitable interest in the property. In furtherance of this scheme, plaintiff deliberately failed to disclose his alleged interest in the petition he filed under oath before the federal bankruptcy court in order to induce that tribunal to give him relief from the legitimate claims of his creditors.
His assertions in support of this action before the Law Division are materially irreconcilable with the position he successfully adopted before the federal bankruptcy court. The evidence before the motion judge on this point is undisputed. It would be a gross miscarriage of justice if plaintiff was permitted to prosecute this action any further. The trial court's decision is amply supported by the undisputed material evidence and thus ripe for disposition as a matter of law. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 529 (1995).
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