SER Universal Underwriters & Zurich American Insurance. v. Hon. Patrick Wilson , 825 S.E.2d 95 ( 2019 )

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA
January 2019 Term
FILED
_____________ March 8, 2019
released at 3:00 p.m.
EDYTHE NASH GAISER, CLERK
No. 18-0509 SUPREME COURT OF APPEALS
_____________ OF WEST VIRGINIA
STATE OF WEST VIRGINIA ex rel. UNIVERSAL UNDERWRITERS
INSURANCE COMPANY AND ZURICH AMERICAN INSURANCE COMPANY,
Petitioners
v.
THE HONORABLE PATRICK N. WILSON, JUDGE OF THE CIRCUIT COURT OF
MARION COUNTY, WEST VIRGINIA, CHRISTINA M. VARVEL,
ADMINISTRATRIX OF THE ESTATE OF DAVID RALPH ALLEN, DECEASED,
SALVATORE CAVA, DAN’S CAR WORLD, LLC, DAN CAVA’S TOYOTA
WORLD, AND DANIEL A. CAVA,
Respondents
____________________________________________________________________
Petition for Writ of Prohibition
WRIT GRANTED
____________________________________________________________________
Submitted: February 5, 2019
Filed: March 8, 2019
Arie M. Spitz, Esq. Dino S. Colombo, Esq.
Jill C. Rice, Esq. Travis T. Mohler, Esq.
Dinsmore & Shohl, LLP Colombo Law
Charleston, West Virginia Morgantown, West Virginia
Attorneys for Petitioners Attorneys for Respondent,
Christina M. Varvel
JUSTICE HUTCHISON delivered the Opinion of the Court.
JUSTICE WORKMAN dissents and reserves the right to file a dissenting opinion.
SYLLABUS BY THE COURT
1. “With respect to insurance contracts, the doctrine of reasonable
expectations is that the objectively reasonable expectations of applicants and intended
beneficiaries regarding the terms of insurance contracts will be honored even though
painstaking study of the policy provisions would have negated those expectations.”
Syllabus point 8, Nat’l Mut. Ins. Co. v. McMahon & Sons, Inc., 177 W. Va. 734, 356 S.E.2d
488 (1987), overruled on other grounds by Parsons v. Halliburton Energy Servs., Inc., 237
W. Va. 138, 785 S.E.2d 844 (2016) and Potesta v. U.S. Fid. & Guar. Co., 202 W. Va. 308,
504 S.E.2d 135 (1998).
2. As a general rule, in order for the doctrine of reasonable expectations
to be applicable to an insurance contract, there must be an ambiguity regarding the terms
of that contract. However, an exception to this general rule occurs when reliable and
relevant evidence, extrinsic to the insurance contract, casts a reasonable doubt as to whether
coverage was provided by an otherwise unambiguous policy.
3. Pursuant to Rule 30(b)(7) of the West Virginia Rules of Civil
Procedure, an organization is required to designate a deponent(s) who must testify as to
i
matters known or reasonably available to the organization that were designated for the
deposition. Generally, if the deponent testifies that he or she has no information on a matter
that comes within the scope of the areas designated for the deposition, the organization
may not, for summary judgment purposes, proffer new or different information that could
have been provided at the time of the Rule 30(b)(7) deposition. The information may,
however, be proffered if the organization can show that the information was not known or
was inaccessible at the time of the deposition.
4. “Judicial estoppel bars a party from re-litigating an issue when: (1) the party
assumed a position on the issue that is clearly inconsistent with a position taken in a
previous case, or with a position taken earlier in the same case; (2) the positions were taken
in proceedings involving the same adverse party; (3) the party taking the inconsistent
positions received some benefit from his/her original position; and (4) the original position
misled the adverse party so that allowing the estopped party to change his/her position
would injuriously affect the adverse party and the integrity of the judicial process.”
Syllabus point 2, W. Va. Dep't of Transp., Div. of Highways v. Robertson, 217 W. Va. 497,
618 S.E.2d 506 (2005).
ii
5. For summary judgment purposes, judicial estoppel may be applied against a
litigant to prevent the litigant from using deposition testimony of a nonparty that is not
consistent with a position taken by the deponent in a previous case, or with a position taken
earlier in the same case. Application of this principle should be rare and only when the
integrity of the judicial process is clearly undermined.
iii
Hutchison, Justice:
This matter was brought under the original jurisdiction of this Court as a
petition for a writ of prohibition, by Universal Underwriters Insurance Company and
Zurich American Insurance Company (hereinafter “Petitioners”).1 The Petitioners seek to
have this Court prohibit enforcement of a ruling by the Circuit Court of Marion County
that denied their motion for summary judgment against the Respondent, Christina M.
Varvel, administratrix of the estate of David Ralph Allen. Upon careful review of the
briefs, the appendix record, the arguments of the parties, and the applicable legal authority,
we grant the writ.
I.
FACTUAL AND PROCEDURAL HISTORY
On May 30, 2014, in the town of Bridgeport, West Virginia, Salvatore Cava
pulled out of the parking lot of a McDonald’s restaurant and collided with a motorcycle
being driven by David Ralph Allen. Mr. Allen sustained injuries and was taken to a
hospital. He died several days later. The car that was driven by Salvatore Cava was owned
by an auto dealership called Dan’s Car World. Salvatore Cava’s father, Dan Cava (Mr.
Cava), owned the auto dealership.2 Petitioners provided an insurance policy for Dan’s Car
1
Universal Underwriters Insurance Company is a subsidiary of Zurich
American Insurance Company.
2
Mr. Cava allowed Salvatore to drive the car to attend classes at West
Virginia University.
1
World. Under Part 500 of the policy, entitled Garage Operations and Auto Hazard, a limit
of $300,000 in liability coverage was provided. Part 980 of the policy, entitled Commercial
Umbrella, provided up to $5,000,000 in liability coverage.
In December of 2014, Respondent brought a civil action initially against
Salvatore Cava and Dan’s Car World. The Respondent also asserted a declaratory
judgment action against Petitioners to determine the amount of insurance coverage
available. The complaint was eventually amended in January of 2016, to add Mr. Cava as
a defendant. The Petitioners offered to settle the matter for $300,000, the limit under the
garage coverage provision of the policy. The Petitioners took the position that the umbrella
coverage part of the policy did not cover the Respondent’s claims against Salvatore Cava,
because he was not a designated person under that provision. The Respondent rejected the
settlement offer and argued that the umbrella portion of the policy provided additional
liability coverage for the claims asserted against Salvatore.
In March of 2016, Mr. Cava, Salvatore Cava and Dan’s Car World filed
individual cross-claims against the Petitioners, asserting bad faith, breach of contract and
other claims. Petitioners filed a motion to dismiss the cross-claims. The circuit court
denied the motion. The Petitioners filed a writ of prohibition with this Court challenging
the denial of its motion to dismiss. This Court granted Petitioners relief in that proceeding,
after it was determined that the circuit court lacked subject matter jurisdiction over the
2
cross-claims because those claims were not ripe.3 See State ex rel. Universal Underwriters
Ins. Co. v. Wilson, 239 W. Va. 338, 801 S.E.2d 216 (2017).
After our decision in Wilson, the Petitioners filed a motion for summary
judgment in the declaratory judgment case.4 Mr. Cava and Dan’s Car World also filed a
motion for summary judgment on the tort claims. In an opinion letter dated May 29, 2018,
the circuit court denied Petitioners’ motion for summary judgment on the coverage issue.5
The circuit court denied summary judgment based upon two dispositive factors. First, it
was found that a material issue of fact was in dispute regarding the reasonable expectation
of coverage for Salvatore Cava under the umbrella provision of the policy. Second, the
court found that judicial estoppel could not be invoked by Petitioners to preclude Mr. Cava
from testifying about an alleged conversation he had with Petitioners’ agent regarding
3
The circuit court was instructed to dismiss the cross-claims without
prejudice.
4
The Petitioners also sought dismissal of the tort claims against Mr. Cava and
Dan’s Car World.
5
In a separate opinion letter dated May 30, 2018, the circuit court granted the
summary judgment motion of Mr. Cava and Dan’s Car World on the tort claims
brought by Respondent. The opinion letter specifically stated that “for the reasons
argued in the pleadings and on the record by the Cava Defendants’ counsel and
counsel for Zurich, Dan’s Car World and Dan Cava’s Motion for Summary
Judgment should be, and are hereby, GRANTED.” The opinion letter directed an
attorney to draft a proposed order reflecting the findings contained in the opinion
letter. The record in this proceeding does not contain an actual summary judgment
order.
3
umbrella coverage for Salvatore Cava. Petitioners filed the instant matter after the circuit
court denied their motion for summary judgment in the opinion letter. 6
II.
STANDARD OF REVIEW
This case comes to this Court as a petition for a writ of prohibition. We have
long held that “[t]he writ of prohibition will issue only in clear cases, where the inferior
tribunal is proceeding without, or in excess of, jurisdiction.” Syllabus, State ex rel.
Vineyard v. O'Brien, 100 W. Va. 163, 130 S.E. 111 (1925). See Syl. pt. 2, State ex rel.
Peacher v. Sencindiver, 160 W. Va. 314, 233 S.E.2d 425 (1977) (“A writ of prohibition
6
The record does not contain an actual order denying summary judgment.
The opinion letter authorized one of the trial attorneys to draft an order that reflected
the findings contained in the opinion letter. This does not appear to have been done
before the writ was filed with this Court. Counsel for Petitioners noted during oral
argument that in original jurisdiction proceedings before this Court, Rule 16(e)(1)
of our Rules of Appellate Procedure provides that if a written order “has not been
issued, a copy of the portion of the transcript where the decision is set forth is
sufficient.” The Petitioners have provided a transcript of the summary judgment
proceeding. However, the trial court did not make a decision on the summary
judgment motion during the hearing, as is required to invoke the transcript exception
to an order under Rule 16(e)(1). Insofar as the opinion letter adequately informs
this Court of the basis for the trial court’s denial of Petitioners’ summary judgment
motion, we will exercise our discretion and treat the opinion letter as an order. See
Stone v. Stone, 200 W. Va. 15, 19 n.9, 488 S.E.2d 15, 19 n.9 (1997) (“While we do
not encourage the abbreviated type of letter opinion offered in this case, we are able
to discern the basis of the circuit court’s decision on this narrow issue.”); State ex
rel. Spaulding v. Watt, 188 W. Va. 96, 98, 422 S.E.2d 818, 820 (1992) (writ of
prohibition filed after “the trial judge issued a letter opinion which held that the
respondent was entitled to a new trial on the basis of newly discovered evidence.”).
4
will not issue to prevent a simple abuse of discretion by a trial court. It will only issue
where the trial court has no jurisdiction or having such jurisdiction exceeds its legitimate
powers. W. Va. Code 53–1–1.”). In Syllabus point 4 of State ex rel. Hoover v. Berger,
199 W. Va. 12, 483 S.E.2d 12 (1996), we set forth the following standard for issuance of a
writ of prohibition when it is alleged a lower court is exceeding its authority:
In determining whether to entertain and issue the writ of
prohibition for cases not involving an absence of
jurisdiction but only where it is claimed that the lower
tribunal exceeded its legitimate powers, this Court will
examine five factors: (1) whether the party seeking the
writ has no other adequate means, such as direct appeal,
to obtain the desired relief; (2) whether the petitioner
will be damaged or prejudiced in a way that is not
correctable on appeal; (3) whether the lower tribunal's
order is clearly erroneous as a matter of law; (4) whether
the lower tribunal's order is an oft repeated error or
manifests persistent disregard for either procedural or
substantive law; and (5) whether the lower tribunal's
order raises new and important problems or issues of
law of first impression. These factors are general
guidelines that serve as a useful starting point for
determining whether a discretionary writ of prohibition
should issue. Although all five factors need not be
satisfied, it is clear that the third factor, the existence of
clear error as a matter of law, should be given
substantial weight.
With the foregoing in mind, we turn to the parties’ arguments.
5
III.
DISCUSSION
The Petitioners argue that the circuit court erred as a matter of law in denying
their motion for summary judgment on the grounds that (1) the umbrella coverage
provision of the policy was ambiguous therefore the doctrine of reasonable expectations
applied, and (2) the doctrine of judicial estoppel did not apply. The Respondent takes the
position, as it did below, that summary judgment was properly denied because the doctrine
of reasonable expectations applied for two reasons: (1) ambiguity existed as to whether
Endorsement No. 043 applied to the umbrella coverage provision; and (2) because of the
conflicting evidence as to whether Petitioners’ agent informed Mr. Cava that Salvatore was
covered under the umbrella provision of the policy. The Respondent also argues that
Petitioners failed to satisfy the elements of the doctrine of judicial estoppel.
We begin by setting out the legal principles that guide our resolution of the
issue of the application of the doctrine of reasonable expectations to this case. This Court
has defined the doctrine of reasonable expectations as follows:
With respect to insurance contracts, the doctrine of
reasonable expectations is that the objectively
reasonable expectations of applicants and intended
beneficiaries regarding the terms of insurance contracts
will be honored even though painstaking study of the
policy provisions would have negated those
expectations.
6
Syl. pt. 8, Nat’l Mut. Ins. Co. v. McMahon & Sons, Inc., 177 W. Va. 734, 356 S.E.2d
488 (1987), overruled on other grounds by Parsons v. Halliburton Energy Servs.,
Inc., 237 W. Va. 138, 785 S.E.2d 844 (2016) and Potesta v. U.S. Fid. & Guar. Co.,
202 W. Va. 308, 504 S.E.2d 135 (1998). We have also made clear that “[b]efore
the doctrine of reasonable expectations is applicable to an insurance contract, there
must be an ambiguity regarding the terms of that contract.” Syl. pt. 2, Robertson v.
Fowler, 197 W. Va. 116, 475 S.E.2d 116 (1996). “When reasonable people can
differ about the meaning of an insurance contract, the contract is ambiguous, and all
ambiguities will be construed in favor of the insured.” Syl. pt. 1, D’Annunzio v.
Security–Connecticut Life Insurance Co., 186 W.Va. 39, 410 S.E.2d 275 (1991).
See Syl. pt. 1, Prete v. Merchants Prop. Ins. Co. of Indiana, 159 W. Va. 508, 223
S.E.2d 441 (1976) (“Whenever the language of an insurance policy provision is
reasonably susceptible of two different meanings or is of such doubtful meaning
that reasonable minds might be uncertain or disagree as to its meaning, it is
ambiguous.”). In construing the terms of a policy we have held that “[l]anguage in
an insurance policy should be given its plain, ordinary meaning.” Cherrington v.
Erie Ins. Prop. & Cas. Co., 231 W. Va. 470, 486, 745 S.E.2d 508, 524 (2013)
(internal quotation marks and citation omitted). Thus, “[w]here the provisions of
an insurance policy contract are clear and unambiguous they are not subject to
judicial construction or interpretation, but full effect will be given to the plain
7
meaning intended.” Syllabus, Keffer v. Prudential Ins. Co. of America, 153 W. Va.
813, 172 S.E.2d 714 (1970).
As previously stated, the Respondent argues that the policy is ambiguous
because it is not clear as to whether Endorsement No. 043 applies to the umbrella provision.
The relevant language of the umbrella provision reads as follows:
Who Is An Insured
***
C. With respect to:
1. any AUTO or watercraft used in YOUR business; or
2. personal use of any AUTO owned or hired by YOU;
any person or organization shown in the declarations for this
coverage part as a
Designated Person.
***
Commercial Umbrella
***
Endorsements Applicable:
0089 Umbrella Limits Inclusive
0809 Personal Property in Customer’s Auto Excluded
Designated Persons:
Dan Cava
The quoted language from the umbrella provision of the policy is not ambiguous. It clearly
only designates “Dan Cava” as an insured under the umbrella provision. The Respondent
8
contends that the language which makes the policy ambiguous is contained in Endorsement
No. 043. The language in Endorsement No. 043 provides that an insured under the
umbrella provision is “any of YOUR partners, paid employees, directors, executive
officers, or stockholders, and members of their households.” According to the Respondent
Endorsement No. 043 provides umbrella coverage for Salvatore Cava because he was a
member of Mr. Cava’s household.
The Respondent asserts that it is unclear as to whether Endorsement No. 043
applies to the policy, therefore the policy is ambiguous. We disagree. The Petitioners point
out that the type of policy issued to Dan’s Car World is called a Unicover Policy. This
type of policy is typically issued to auto dealerships. A Unicover Policy comprises about
200 pages that set out numerous coverage options and endorsements. According to
Petitioners “[w]hen a policy is sold to a customer, a Declarations Page(s) is issued to that
customer that identifies which of the coverage options and endorsements contained in the
booklet the customer has purchased.” The Petitioners point out that the policy purchased
by Dan’s Car World clearly and unambiguously sets out the Endorsements that are
applicable to the umbrella provision: Endorsement No. 0089 and Endorsement No. 0809.
It is clear to this Court that the Respondent has simply located an Endorsement that was
not purchased by Dan’s Car World and attempted to use it to argue that the policy is
ambiguous. We have made clear that “[a]n insurance policy should never be interpreted
9
so as to create an absurd result, but instead should receive a reasonable interpretation,
consistent with the intent of the parties.” Syl. pt. 2, D’Annunzio.
The decision in Universal Underwriters Ins. Co. v. Paradis, 50 Conn. Supp.
486, 940 A.2d 918 (Super. Ct. 2006), aff'd, 285 Conn. 342, 940 A.2d 730 (2008)
demonstrates the simplicity of reviewing an umbrella provision of a Unicover Policy to
determine who is a named insured. In that case, an auto dealership’s employee, Eric
Paradis, was sued for causing the death of a person while driving his employer’s car. The
employer had a Unicover Policy that provided umbrella coverage in the amount of $10
million. The insurer filed a declaratory judgment action seeking a determination that the
umbrella coverage did not apply to the employee. The trial court granted summary
judgment for the insurer, which was affirmed on appeal, based upon the following
reasoning:
Crowley’s unicover policy explicitly names the
individual insureds for each coverage part
separately. . . . Page 1–0 of the policy declarations
provides in relevant part: “Umbrella (Part 980) . . .
Designated Persons: Kenneth Crowley, Steven Miller,
Thomas Moden, Kimberley Marie Crowley, Mark
Crowley, James Brooks, Gary Stebbins, Peter Kelly,
Thomas Strano, Tom Jasperson [and] Debbie Fregeau.”
Paradis is not listed. Our Supreme Court in Cantonbury
Heights Condominium Assn., Inc. v. Local Land
Development, LLC, 273 Conn. 724, 735, 873 A.2d 898
(2005), explained that “[a] contract is unambiguous
when its language is clear and conveys a definite and
precise intent. . . . The court will not torture words to
impart ambiguity where ordinary meaning leaves no
room for ambiguity. . . . [T]he mere fact that the parties
10
advance different interpretations of the language in
question does not necessitate a conclusion that the
language is ambiguous. . . . If the language of the
contract is susceptible to more than one reasonable
interpretation, the contract is ambiguous.” (Internal
quotation marks omitted.) Unambiguous contract
language is given effect according to its terms. Poole v.
Waterbury, 266 Conn. 68, 88, 831 A.2d 211 (2003).
The declarations, by their terms, designate by name the
business entities and individuals insured under the
optional umbrella coverage. The definition of an
insured for such coverage has a definite and precise
meaning concerning which there is no reasonable basis
for a difference of opinion. As a consequence, efforts by
Lamont and the estate to assert that Paradis had
umbrella coverage must fail.
Paradis, 50 Conn. Supp. at 493–95, 940 A.2d at 923–24.
The decision in Paradis is consistent with our conclusion that umbrella
coverage under Petitioners’ Unicover Policy is determined by a review of who has been
named in the Designated Persons section of the provision. In the instant proceeding, Mr.
Cava is the only person named in the Designated Persons section of the umbrella provision.
There is nothing ambiguous about that designation.
Although we have determined that no ambiguity exists in the relevant
language of the umbrella provision of the policy, the Respondent contends that the doctrine
of reasonable expectations may still apply because of an alleged conversation between
Petitioners’ agent and Mr. Cava before the auto accident occurred. “[T]his Court has
applied the doctrine of reasonable expectations in select cases not involving ambiguous
11
policy provisions[.]” Cherrington, 231 W. Va. at 493 n.43, 745 S.E.2d at 531 n.43 (2013).
We have done so when reliable and relevant evidence, extrinsic to a policy, casts doubt on
whether a claim was not covered by an otherwise unambiguous policy. See New
Hampshire Ins. Co. v. RRK, Inc., 230 W. Va. 52, 736 S.E.2d 52 (2012) (holding that a jury
question was presented as to whether it was reasonable for insured to rely solely on a 17–
page fax as containing all of the terms of its insurance contract and in failing to review the
actual policy mailed to it on two occasions); Costello v. Costello, 195 W. Va. 349, 465
S.E.2d 620 (1995) (holding that conduct during the application process may have created
a reasonable expectation of insurance); Keller v. First Nat'l Bank, 184 W.Va. 681, 403
S.E.2d 424 (1991) (finding that even though offer to insure was extended by mistake it
created an expectation of coverage therefore coverage could not be denied); Romano v.
New England Mutual Life Insurance Co., 178 W.Va. 523, 362 S.E.2d 334 (1987) (finding
unambiguous policy exclusion not applicable because promotional materials provided to
the insured led him to a reasonable belief that he was covered under the policy). During
oral argument counsel for Petitioners suggested that in Erie Ins. Prop. & Cas. Co. v.
Chaber, 239 W. Va. 329, 801 S.E.2d 207 (2017) this Court implicitly disapproved of the
line of cases invoking the doctrine of reasonable expectations when a policy was not
ambiguous. The decision in Erie did not implicitly reject the principle of law recognized
in those line of cases.
12
In Erie this Court merely refused to consider the exception to the ambiguity
requirement under the specific facts of that case. Had the opinion intended to disapprove
of the line of cases recognizing the exception to the ambiguity requirement, we would have
done so expressly. In order to bring clarity to the bench and bar, we now expressly hold
that as a general rule, in order for the doctrine of reasonable expectations to be applicable
to an insurance contract, there must be an ambiguity regarding the terms of that contract.
However, an exception to this general rule occurs when reliable and relevant evidence,
extrinsic to the insurance contract, casts a reasonable doubt as to whether coverage was
provided by an otherwise unambiguous policy. We must now determine whether the facts
of this case fall within the narrow exception to the requirement of ambiguity to trigger the
doctrine of reasonable expectations.
To start, before Mr. Cava was brought into the case as a named defendant,
the Petitioners sought to depose Dan’s Car World under Rule 30(b)(7) of the West Virginia
Rules of Civil Procedure.7 Dan’s Car World designated its controller, Tiffany Moine, as
7
Under Rule 30(b)(7) the following is set out:
A party may in a notice and in a subpoena name as the
deponent a public or private corporation or a partnership
or association or governmental agency and describe
with reasonable particularity the matters on which
examination is requested. In that event, the
organization so named shall designate one or more
officers, directors, or managing agents, or other persons
who consent to testify on its behalf, and may set forth,
13
the Rule 30(b)(7) deponent for the company. 8 During the deposition, which occurred on
June 29, 2015, Ms. Moine testified about a conversation she had with Mr. Cava regarding
policy coverage for Salvatore Cava. The relevant part of the deposition testimony was as
follows:
Q. All right. Well, are you aware of any
communications between Dan’s Car World and Zurich
or Universal that would be considered a request for
coverage in addition to or separate from the coverages
that are shown on this dec page?
A. Yes, I am aware of a conversation.
for each person designated, the matters on which the
person will testify. A subpoena shall advise a non-party
organization of its duty to make such a designation. The
persons so designated shall testify as to matters known
or reasonably available to the organization. This
subdivision does not preclude taking a deposition by
any other procedure authorized in these rules.
8
The commentators on our rules of civil procedure have summarized the role
of a Rule 30(b)(7) deponent as follows:
At a Rule 30(b)(7) deposition, the testimony elicited
represents the knowledge of the organization, not that
of the individual deponent. The designated witness is
speaking for the organization so that his/her testimony
must be distinguished from that of a mere organization
employee. Rule 30(b)(7) does not require the
organization’s designee have personal knowledge of, or
have been personally involved in, the examination
topics. The rule merely requires that the designee be
sufficiently prepared to give knowledgeable, complete
and binding answers on behalf of the organization.
Louis J. Palmer, Jr., et al., Litigation Handbook on West Virginia Rules of Civil
Procedure, § 30(b), at 874 (5th Ed. 2017).
14
Q. All right. Tell me about that, please.
A. After the incident, Danny had a conversation with
me that he was under the--the assumption that after he
spoke with a representative with Zurich at some point in
time after Salvatore was needing to be put on our policy,
that Danny was under the assumption that he had been
added to the policy. He had this conversation with the
representative to add him.
***
Q. And when was Salvatore supposed to be added to the
policy.
A. That I’m not sure. I don’t know.
***
Q. All right. And what communication did, I take it, Dan
Cava have with Universal or Zurich in which he
expressed a desire for Salvatore to be added to the
policy which--which occurred prior to May of 2014?
A. He had a conversation with our representative--
Q. And who’s your representative?
A. --of Zurich. At the time it would have been Scott
Beresford.
***
Q. Do you know if any written correspondence was
exchanged between Mr. Beresford and Dan Cava
concerning adding Salvatore to the policy?
A. I do not know.
***
Q. Do you know what Mr. Beresford communicated to
Dan Cava during that conversation?
A. I do not know.
***
15
Q. And what I want to know is: Did Dan Cava tell you
what Scott Beresford said to him during that
conversation?
A. No.
Q. Did Dan Cava tell you what he said to Scott
Beresford during that conversation?
A. Yes, and I’ve already said that. That he was--told him
that he needed to have Salvatore added to the policy
because he would be driving one of our vehicles.
***
Q. And if we want to know what Scott Beresford said to
Dan Cava, we would have to ask Dan; is that correct?
A. Yes.
***
Q. Do you know if that premium ever changed during
the course of the policy?
A. No, it did not change.
***
Q. Did Dan Cava—tell me as specifically as you can
what Dan Cava told you he asked Scott Beresford to
provide in terms of coverage for Salvatore.
A. He didn’t tell me specifically what coverage. He told
me that he told Scott Beresford—he was under the
assumption that Salvatore was on the policy because he
told Scott Beresford to add him, and that was when
Salvatore started driving his car. Salvatore was no
longer driving a—a vehicle, and he was driving one of
our vehicles, and at that time he told Scott Beresford to
add him.
***
Q. And I take from your earlier testimony, though, that
it’s your understanding that prior to Salvatore beginning
16
to use a car that was owned by Dan’s Car World, Dan
Cava had a conversation with Scott Beresford in which
he asked for Salvatore to be, quote/unquote, added to
the policy because he was going to be driving a car
owned by Dan’s Car World?
A. That is my understanding.
Reduced to its essence, Ms. Moine testified that Mr. Cava told her that he
asked Petitioners’ agent to add Salvatore Cava to the policy. After Ms. Moine’s deposition
the Petitioners filed a motion to compel Dan’s Car World to produce a Rule 30(b)(7)
witness who could testify about what its agent said to Mr. Cava regarding adding Salvatore
Cava to the policy.9 Dan’s Car World opposed the motion. In doing so, it argued, “to the
extent [Dan’s Car World’s] representative was unaware of information sought by Zurich,
that information is not available and [Dan’s Car World] is bound by that response.” The
circuit court entered an order dated September 21, 2015, which denied the motion to
compel.10 On March 13, 2018, several years after Ms. Moine’s deposition, the Respondent
9
The motion also sought a witness who could testify to other matters that are
not relevant here.
10
The circuit court found that because Mr. Cava was not a party to the action,
Dan’s Car World could not be compelled to produce him at a deposition. We fail to
understand the circuit court’s reasoning. Mr. Cava owned Dan’s Car World. See
Palmer, et al., Litigation Handbook, § 30(b), at 873 (“The organization may
designate one or more officers, directors, or managing agents, or other persons who
consent to testify on its behalf.”); Michelman v. Hanil Bank, Ltd., 104 B.R. 289, 294
(Bankr.C.D.Cal.1989) (“If an entity’s designated witness lacks sufficient
knowledge or fails to adequately respond to the deposition requirements, the
responding entity must designate additional witnesses capable of providing
sufficient answers. This process was intended ‘to curb the bandying by which
17
deposed Mr. Cava. During that deposition, Mr. Cava testified that Petitioners’ agent told
him that he did not have to add Salvatore to the policy because he was already covered
under the garage provision and umbrella provision.11
The Respondent primarily relies upon the deposition testimony of Mr. Cava
to argue that there was a reasonable expectation of coverage, even if the policy was not
ambiguous.12 However, the deposition testimony of Mr. Cava is not consistent with prior
representations of Dan’s Car World.13 When the Petitioners sought to determine what its
agent was supposed to have said to Mr. Cava, Ms. Moine testified that Mr. Cava did not
officers or managing agents of a corporation are deposed in turn but each disclaims
knowledge of the facts that are clearly known to the organization.’ (quoting 1970
Advisory Committee Notes to Rule 30).”).
11
Petitioners’ agent testified at a deposition that he did not recall having a
conversation with Mr. Cava regarding adding Salvatore to the policy. The agent
testified further that a specific screening procedure had to be followed before
anyone was added to a policy, and that he did not have any documentation showing
that process was triggered to add Salvatore.
12
The Respondent also cites for support the testimony of Ms. Moine and
Endorsement No. 043.
13
The Respondent cites to the decision in New Hampshire, supra, and
Romano, supra, as support for its reasonable expectation argument. However, both
cases are distinguishable. The decision in New Hampshire involved a 17–page fax
document that contained terms of an insurance contract that were different from the
actual policy. In Romano it was determined that a policy exclusion was not
applicable, because the insured was given promotional materials that led him to a
reasonable belief that he was covered under the policy. In the instant case, there is
no evidence of any documentation extrinsic to the policy that was provided to Mr.
Cava that was inconsistent with the policy itself.
18
tell her what the agent said. The Respondent’s attempt to rely on the deposition testimony
of Mr. Cava, for information that Dan’s Car World’s Rule 30(b)(7) deponent could not
supply, is problematic and presents two entangled issues of first impression for this Court:
(1) could Mr. Cava’s deposition have been used by Dan’s Car World, and (2) if not, may
the Respondent use it.
To begin, federal courts have addressed the issue of a corporation attempting
to use evidence at the summary judgment stage that differed from the responses of its Rule
30(b)(6) witness.14 In this context federal courts hold that at the summary judgment stage
14
Rule 30(b)(6) of the federal Rules of Civil Procedure is the equivalent of
our Rule 30(b)(7). See W. Virginia Dep’t of Transp., Div. of Highways v. Newton,
235 W. Va. 267, 281 n.20, 773 S.E.2d 371, 385 n.20 (2015) (“We often look to
federal decisions for guidance when our rules are similar in wording.”). Under
federal Rule 30(b)(6) the following is set out:
In its notice or subpoena, a party may name as the
deponent a public or private corporation, a partnership,
an association, a governmental agency, or other entity
and must describe with reasonable particularity the
matters for examination. The named organization must
then designate one or more officers, directors, or
managing agents, or designate other persons who
consent to testify on its behalf; and it may set out the
matters on which each person designated will testify. A
subpoena must advise a nonparty organization of its
duty to make this designation. The persons designated
must testify about information known or reasonably
available to the organization. This paragraph (6) does
not preclude a deposition by any other procedure
allowed by these rules.
19
a corporation “‘is not allowed to defeat a motion for summary judgment based on an
affidavit that conflicts with its Rule 30(b)(6) deposition or contains information that the
Rule 30(b)(6) deponent professed not to know.’” Vehicle Mkt. Research, Inc. v. Mitchell
Int'l, Inc., 839 F.3d 1251, 1260 (10th Cir. 2016), quoting 7 James William Moore et al.,
Moore's Federal Practice—Civil § 30.25.15 See Keepers, Inc. v. City of Milford, 807 F.3d
24, 35 (2d Cir. 2015) (“Some deponents will, of course, try to abuse Rule 30(b)(6) by
intentionally offering misleading or incomplete responses, then seeking to ‘correct’ them
by offering new evidence after discovery. Appropriate remedies are available for such
situations.”); Daubert v. NRA Grp., LLC, 189 F. Supp. 3d 442, 458 (M.D. Pa. 2016) (“A
party may not retract prior 30(b)(6) testimony with a later affidavit, and then use that
affidavit to preclude summary judgment.”); Weinstein v. D.C. Hous. Auth., 931 F. Supp. 2d
178, 186 (D.D.C. 2013) (“In other words, if a deponent initially pleads ignorance when
asked about a subject, but a declaration filed by another employee later raises ‘new or
different allegations that could have been made at the time of the 30(b)(6) deposition,’ the
later filing will not be considered.”); Hyde v. Stanley Tools, 107 F. Supp. 2d 992, 993 (E.D.
La. 2000) (“Stanley should not be allowed to defeat Hyde’s motion for summary judgment
based upon its self-serving abuse of a Rule 30(b)(6) deposition.”).
15
See also Wilson v. Lakner, 228 F.R.D. 524, 530 (D. Md. 2005)
(“Additionally, depending on the nature and extent of the obfuscation, the testimony
given by the non-responsive deponent (e.g. ‘I don't know’) may be deemed ‘binding
on the corporation’ so as to prohibit it from offering contrary evidence at trial.”).
20
The decision in Rainey v. Am. Forest & Paper Ass’n, Inc., 26 F. Supp. 2d 82
(D.D.C. 1998) illustrates the federal position regarding an organization using testimony by
a non-Rule 30(b)(6) deponent to provide testimony that its Rule 30(b)(6) witness failed to
provide. In Rainey, a former employee brought an action for declaratory judgment, seeking
a determination as to whether the defendant improperly classified her so to as exempt her
from receiving overtime pay. During discovery the defendant designated two Rule
30(b)(6) deponents. One of the deponents had no knowledge of the plaintiff’s work, and
the second deponent did not have knowledge of many issues related to plaintiff’s
employment. After the plaintiff moved for partial summary judgment, the defendant
submitted an affidavit from plaintiff’s former supervisor which disclosed information that
was not provided by the Rule 30(b)(6) deponents. The district court rejected the affidavit
as follows:
[P]laintiff reads Rule 30(b)(6) as precluding defendant
from adducing from Ms. Kurtz a theory of the facts that
differs from that articulated by the designated
representatives. Plaintiff's theory is consistent with both
the letter and spirit of Rule 30(b)(6). First, the Rule
states plainly that persons designated as corporate
representatives “shall testify as to matters known or
reasonably available to the organization.” Fed.R.Civ.P.
30(b)(6). This makes clear that a designee is not simply
testifying about matters within his or her own personal
knowledge, but rather is “speaking for the corporation”
about matters to which the corporation has reasonable
access. By commissioning the designee as the voice of
the corporation, the Rule obligates a corporate party “to
prepare its designee to be able to give binding answers”
in its behalf. Unless it can prove that the information
was not known or was inaccessible, a corporation
cannot later proffer new or different allegations that
21
could have been made at the time of the 30(b)(6)
deposition.
Rainey, 26 F. Supp. 2d at 94 (citations omitted). See United States v. Taylor, 166 F.R.D.
356, 362 (M.D.N.C. 1996) (“Therefore, if a party states it has no knowledge or position as
to a set of alleged facts or area of inquiry at a Rule 30(b)(6) deposition, it cannot argue for
a contrary position . . . without introducing evidence explaining the reasons for the
change.”).
In light of the above federal authorities, we now hold that pursuant to Rule
30(b)(7) of the West Virginia Rules of Civil Procedure, an organization is required to
designate a deponent(s) who must testify as to matters known or reasonably available to
the organization that were designated for the deposition. Generally, if the deponent testifies
that he or she has no information on a matter that comes within the scope of the areas
designated for the deposition, the organization may not, for summary judgment purposes,
proffer new or different information that could have been provided at the time of the Rule
30(b)(7) deposition. The information may, however, be proffered if the organization can
show that the information was not known or was inaccessible at the time of the deposition.16
16
The principle of law contained in our holding is similar to the “sham
affidavit” rule adopted by this Court in syllabus point 4 of Kiser v. Caudill, 215 W.
Va. 403, 405, 599 S.E.2d 826, 828 (2004) as follows:
To defeat summary judgment, an affidavit that directly
contradicts prior deposition testimony is generally
insufficient to create a genuine issue of fact for trial,
unless the contradiction is adequately explained. To
22
Insofar as our holding involves a Rule 30(b)(7) deponent, we apply it to the
deposition testimony of Ms. Moine. As we previously indicated in this opinion, Dan’s Car
World designated Ms. Moine as its Rule 30(b)(7) deponent. Ms. Moine testified that Mr.
Cava told her that he asked Petitioners’ agent to add Salvatore Cava to the policy. However,
when asked how the agent responded to Mr. Cava’s request, Ms. Moine testified several
times that she did not know. In response to Petitioners’ motion to compel Dan’s Car World
to produce a Rule 30(b)(7) witness who could answer the question, Dan’s Car World stated
that the information was not available. Several years later Mr. Cava testified at a deposition,
called by the Respondent, that Petitioners’ agent informed him that Salvatore Cava was
already covered under the garage provision and umbrella provision of the policy. Nowhere
determine whether the witness’s explanation for the
contradictory affidavit is adequate, the circuit court
should examine: (1) Whether the deposition afforded
the opportunity for direct and cross-examination of the
witness; (2) whether the witness had access to pertinent
evidence or information prior to or at the time of his or
her deposition, or whether the affidavit was based upon
newly discovered evidence not known or available at
the time of the deposition; and (3) whether the earlier
deposition testimony reflects confusion, lack of
recollection or other legitimate lack of clarity that the
affidavit justifiably attempts to explain.
Unlike the rule we have adopted when an organization seeks to qualify the
testimony of a Rule 30(b)(7) deponent, the sham affidavit rule requires new
information “contradict” a deponent’s prior testimony. The principle of law adopted
for Rule 30(b)(7) does not require the new information be contradictory.
23
in the record does it show that at the time of Ms. Moine’s deposition, this information was
not known or was inaccessible to Mr. Cava as owner of Dan’s Car World. Under these set
of facts, if Dan’s Car World were still a party to this proceeding, it would not be able to
offer the new information provided by Mr. Cava’s deposition to defeat summary
judgment.17 The issue we must now resolve is whether the Respondent should be allowed
to use Mr. Cava’s deposition testimony to show a reasonable expectation of coverage, when
Dan’s Car World would be prohibited from using that same testimony to defeat Petitioners’
summary judgment motion. Resolution of this issue is found in the doctrine of judicial
estoppel.
The Petitioners argue that Mr. Cava’s testimony should be precluded under
the doctrine of judicial estoppel.18 The Respondent contends that the Petitioners cannot
17
The Respondent contends that Mr. Cava’s deposition was taken in his
individual capacity, not as the owner of Dan’s Car World, therefore he should not
be bound by any representations made by the Rule 30(b)(7) deponent. We reject
this argument. The testimony that is critical here occurred during an alleged
conversation Mr. Cava had as owner of Dan’s Car World with Petitioners’ agent.
The fact that the Respondent seeks to portray Mr. Cava as acting in his individual
capacity during the deposition is of no moment, because Mr. Cava was conveying
information he allegedly obtained in his capacity as owner of Dan’s Car World.
Moreover, that information only has relevancy because it was obtained while he was
acting as the owner of Dan’s Car World.
18
The Petitioners’ brief actually invokes the judicial estoppel doctrine against
Dan’s Car World, not the Respondent. However, as previously mentioned, Dan’s
Car World was granted summary judgment and is not part of this proceeding.
Petitioners’ brief states clearly that “[t]he case is currently set for trial, on both the
coverage dispute against [Petitioners] and the tort claims against Salvatore Cava[.]”
24
satisfy the elements of judicial estoppel adopted by this Court in W. Va. Dep’t of Transp.,
Div. of Highways v. Robertson, 217 W. Va. 497, 618 S.E.2d 506 (2005).
We begin by observing that the doctrine of judicial estoppel has been
explained as follows:
The judicial estoppel doctrine generally prevents a party
from asserting a claim in a legal proceeding that is
inconsistent with a claim taken by that party in a
previous proceeding or the same proceeding. The
purpose of the doctrine is to protect the integrity of the
judicial process, by prohibiting a party from
deliberately changing positions according to the
exigencies of the moment.
In the final analysis, we are not concerned with the erroneous application of the
doctrine by the Petitioners in their brief, because the doctrine may be raised sua
sponte by this Court. See Larry V. Faircloth Realty, Inc. v. Pub. Serv. Comm'n of
W. Virginia, 230 W. Va. 482, 740 S.E.2d 77, 82 (2013) (“We have invoked judicial
estoppel, sua sponte[.]”); Grigson v. Creative Artists Agency L.L.C., 210 F.3d 524,
530 (5th Cir. 2000) (“[B]ecause [judicial estoppel] protects the judicial system ...
we can apply it sua sponte in certain instances.”); Bethesda Lutheran Homes &
Servs. v. Born, 238 F.3d 853, 858 (7th Cir. 2001) (the doctrine of judicial estoppel
“is for our protection as well as that of litigants, and so we are not bound to accept
a waiver of it”); Rissetto v. Plumbers & Steamfitters Local 343, 94 F.3d 597, 601
(9th Cir. 1996) (“Because [judicial estoppel] is intended to protect the dignity of the
judicial process, it is an equitable doctrine invoked by a court at its discretion.”);
Eilber v. Floor Care Specialists, Inc., 294 Va. 438, 444, 807 S.E.2d 219, 222 (2017)
(“In fact, one court has even said that it not only has the right, but also an
independent duty, to raise judicial estoppel sua sponte to protect the integrity of the
judicial system independent of the interests of the parties.”) (internal quotations and
citations omitted).
25
Palmer, et al., Litigation Handbook, § 8(c), at 235. See Monterey Dev. Corp. v. Lawyer's
Title Ins. Corp., 4 F.3d 605, 609 (8th Cir. 1993) (“Unlike its related counterparts—
collateral estoppel, which prevents repetitive litigation, and equitable estoppel, which
prevents contracting parties from asserting contradictory positions to ensure fairness
between them—judicial estoppel is designed to preserve the dignity of the courts and insure
order in judicial proceedings.”); Edwards v. Aetna Life Ins. Co., 690 F.2d 595, 598 (6th
Cir. 1982) (“Unlike equitable estoppel, judicial estoppel may be applied even if detrimental
reliance or privity does not exist. This distinction reflects the difference in the policies
served by the two rules. Equitable estoppel protects litigants from less than scrupulous
opponents. Judicial estoppel, however, is intended to protect the integrity of the judicial
process.”). In syllabus point 2 of Robertson we set out the following test for establishing
judicial estoppel:
Judicial estoppel bars a party from re-litigating an issue
when: (1) the party assumed a position on the issue that
is clearly inconsistent with a position taken in a previous
case, or with a position taken earlier in the same case;
(2) the positions were taken in proceedings involving
the same adverse party; (3) the party taking the
inconsistent positions received some benefit from
his/her original position; and (4) the original position
misled the adverse party so that allowing the estopped
party to change his/her position would injuriously affect
the adverse party and the integrity of the judicial
process.
26
See Grove v. State ex rel. Black, No. 17-0083, 2018 WL 2174128, at *4–5 (W. Va. May
11, 2018) (Memorandum Decision) (“We conclude that the doctrine of judicial estoppel is
not applicable here because all of the required elements are not satisfied.”).
The general test for establishing judicial estoppel that we outlined in
Robertson does not fit the situation that we face under the facts of this case. 19 This,
however, does not preclude further consideration of the doctrine. It has been correctly
noted by the United States Supreme Court that “the circumstances under which judicial
estoppel may appropriately be invoked are not reducible to any general formulation.” New
Hampshire v. Maine, 532 U.S. 742, 743, 121 S. Ct. 1808, 1810, 149 L. Ed. 2d 968, 973
(2001). In the context of the instant case, we are called upon to determine the application
of judicial estoppel against the Respondent for conduct engaged in by Mr. Cava and his
company, Dan’s Car World. Federal courts have addressed the issue of a litigant being
bound by the conduct of another litigant, in the context of judicial estoppel. The federal
approach has been summarized as follows:
Judicial estoppel looks to the connection between the litigant
and the judicial system, not the relationship between the parties
to the prior litigation. Because the doctrine of judicial estoppel
is intended to protect the courts, we are particularly mindful
that the [i]dentity of parties is not a mere matter of form, but of
substance. Parties nominally the same may be, in legal effect,
different; and parties nominally different may be, in legal
19
The judicial estoppel principle of law recognized in Robertson may only
estop the party who actually benefited from a prior inconsistent position, not a
nonparty.
27
effect, the same. While it is true that a new party should
generally not be punished for another party’s unseemly
conduct, there are circumstances in which it is fair to bind a
nonparty to another party’s actions. To protect the integrity of
the judicial process, a court needs freedom to consider the
equities of an entire case.
Toyo Tire & Rubber Co. v. Hong Kong Tri-Ace Tire Co., 281 F. Supp. 3d 967, 983 (C.D.
Cal. 2017) (internal quotation marks and citations omitted). See Monterey Dev. Corp. v.
Lawyer’s Title Ins. Corp., 4 F.3d 605, 609 (8th Cir.1993) (“Judicial estoppel prevents a
person who states facts under oath during the course of a trial from denying those facts in
a second suit, even though the parties in the second suit may not be the same as those in
the first.”); Schuring v. Cottrell, Inc., 2015 WL 9850317 (N.D. Illinois. September 29,
2015) (“Only in ‘unusual circumstances’ is it equitable to attribute the actions of a non-
party to a party for the purposes of judicial estoppel.”); Rand G. Boyers, Precluding
Inconsistent Statements: The Doctrine of Judicial Estoppel, 80 Nw. U. L. Rev. 1244, 1262
(1986) (“The courts should reserve the doctrine of judicial estoppel for parties’ attempts to
contradict positions they asserted either as parties or nonparty witnesses in previous
proceedings.”).
The decision in Grochocinski v. Mayer Brown Rowe & Maw, LLP, 719 F.3d
785 (7th Cir. 2013) illustrates a situation in which judicial estoppel was applied against a
litigant because of prior judicial conduct by a nonparty. In Grochocinski a bankruptcy
trustee filed an action in federal court against a law firm for malpractice. The trustee argued
that the law firm was negligent in causing the bankrupt debtor, CMGT, Inc., to have a
28
default judgment rendered against it in an action brought by Spehar Capital. 20 The law
firm filed a motion for summary judgment. The district court granted the motion on the
grounds that the doctrine of judicial estoppel barred the inconsistencies in the suit, and the
prior action by Spehar Capital against CMGT. The Seventh Circuit affirmed. In doing so,
the opinion set out the following relevant facts and law:
Shortly after Grochocinski was appointed trustee of
CMGT’s estate, Spehar Capital approached him about
bringing a malpractice action against CMGT’s
attorneys, Given and the Mayer Brown firm. The
bankrupt CMGT had essentially no assets, so Spehar
Capital’s only hope for recovering on the default
judgment in the California suit was to convince the
trustee to sue CMGT’s lawyers for malpractice.
***
Acknowledging that the parties to this suit are different
from the California suit, the district court found this was
not a per se bar because judicial estoppel is concerned
solely with protecting the integrity of the courts, not the
relationship between the parties to the prior litigation.
The court found it appropriate to bind the trustee to
Spehar Capital’s prior conduct because the trustee acted
at all times as a proxy for the real party in this case,
[Spehar Capital]. The court then found that Spehar
Capital’s judgment in the California suit was
inconsistent with the trustee’s need to prove in the
malpractice suit that Spehar Capital was never entitled
to the judgment in the first place and that without this
argument, the malpractice action failed as a matter of
law.
***
The trustee bases his appeal on a question of first
impression: What showing is required to apply judicial
20
CMGT had hired Spehar Capital to help it find financing.
29
estoppel to a litigant based on the litigation positions of
someone else? The trustee argues that the district court
erred in applying judicial estoppel by attributing to the
estate Spehar Capital’s previous litigation positions.
***
Judicial estoppel is a flexible equitable doctrine that is
not reducible to any general formulation of principle
and accordingly does not lend itself to rigid rules. To
protect the integrity of the judicial process, a court needs
freedom to consider the equities of an entire case.
Therefore it is appropriate for a court considering
judicial estoppel effects of a non-party’s conduct to
engage in an equitable inquiry that turns on the specific
circumstances of an individual case. With this in mind,
we turn to the equities of this case.
The district court concluded that the unusual
circumstances of this case made it equitable to treat the
trustee and Spehar Capital as the same entity so that
positions taken by Spehar Capital in the California suit
would be attributed to the trustee for purposes of
judicial estoppel.
***
Based on the undisputed facts, the district court did not
abuse its discretion in reaching this conclusion as a
matter of its equitable judgment.
***
The trustee also argues that judicial estoppel is
inequitable here because it will unfairly prevent the
innocent unsecured creditors from receiving any
recovery. In other circumstances, this could be a serious
concern, but it does not sway the equities in this case.
Grochocinski, 719 F.3d at 792-797 (internal quotation marks and citations omitted).
30
The decision in Amari Co. v. Burgess, 955 F. Supp. 2d 868 (N.D. Ill. 2013)
applied judicial estoppel to deny a motion for summary judgment filed by the defendants.
The plaintiffs in Burgess were sixteen businesses that sued three defendants, owners of
several consulting companies referred to as IPA. The plaintiffs alleged that the defendants
engaged in racketeering activity that swindled them into buying expensive, but worthless
business management and tax consulting services. Shortly after the plaintiffs filed their
action in federal court, IPA filed numerous actions in an Illinois state court against
numerous businesses, including some of the plaintiffs in the Burgess action. The plaintiffs
in the Burgess action filed a motion to stay the state court proceeding, pending the outcome
of their federal case. The Burgess plaintiffs contended that IPA and the defendants in their
action were the same, because IPA was owned by the Burgess defendants. IPA argued that
it was not the same Burgess defendants and that the Burgess defendants were not named
as parties in IPA’s state court case. The state court agreed and denied the motion to stay.
Ultimately IPA was able to obtain a judgment against many of the businesses in the state
court action. Subsequent to the resolution of the state court cases, the defendants in Burgess
moved for summary judgment. In doing so the defendants argued that they and IPA were
one and the same, therefore res judicata prevented the federal action from proceeding
further. The district court rejected the res judicata argument and held that judicial estoppel
precluded the defendants from arguing that they and IPA were the same:
In state court, where IPA and its affiliates were angling
for speedy judgments on their collection claims
(perhaps for the very purpose of trying to use them here
to preclude the RICO claim), and deploring the state-
31
court defendants’ motions to stay as mere delay tactics,
the companies argued that they were distinct from the
[three Burgess defendants]…. IPA won that argument,
and as a result, its state-court suits proceeded to
judgment…. Now, however, the defendants insist that
they are legally the equivalent of the IPA entities, and
cannot be subject to redundant litigation in this Court….
This confusing argument—without the support of any
affidavit or other evidence—does not justify the about-
face the [defendants] have made on this issue.
***
Nor does it matter that the party advancing the argument
in state court was IPA and here it is the [defendants].
The [defendants] received the benefit of the argument
in state court; whether they were listed in the caption or
not, their legal and financial interests were the same as
IPA’s (as they now admit). And given their current
position that they are in total privity with the IPA
entities, they cannot be heard to argue that judicial
estoppel does not apply because a nominally different
party (their corporate counterparts) succeeded on the
argument in state court.
Moreover, judicial estoppel does not come into play
only when a party attempts to retreat in a second case
from an argument on which it prevailed in a separate
earlier case; it also prevents a party from prevailing in
one phase of a case on an argument and then relying on
a contradictory argument to prevail in another phase.
The defendants are not only changing their story from
the prior litigation, they are changing their approach to
this lawsuit to date. In their answers to the amended
complaint, the defendants would do no more than admit
to being employed by the IPA entities. Moreover,
throughout the tortured discovery in this litigation, they
have taken great pains to emphasize IPA’s “non-party”
status, and to downplay any control over that nonparty
when the plaintiffs sought written and oral discovery
from the IPA entities and their employees…. In short,
the [defendants] have been conducting discovery as
though they do not control the IPA entities. The Court
32
will not accept a contrary representation for purposes of
this motion. The defendants are estopped from arguing
that this case and the Lake County cases are between the
same parties or their privies. Therefore, the defendants
cannot establish the “identity of the parties” element of
the res judicata inquiry.
Burgess, 955 F. Supp. 2d at 880-881 (internal quotation marks and citation omitted). See
Milton H. Greene Archives, Inc. v. CMG Worldwide, Inc., 568 F. Supp. 2d 1152, 1190-1191
(C.D. Cal. 2008) (“the court concludes it is appropriate, on the facts of this case, to hold
that plaintiffs are judicially estopped to take a position contrary to that which their
predecessors’ representative took in the inheritance tax proceedings.”).
The decision in American Transp. Grp. LLC v. California Cartage Co., LLC,
168 F. Supp. 3d 1074 (N.D. Ill. 2016) applied the doctrine of judicial estoppel to prevent a
litigant from asserting inconsistent liability theories in different lawsuits. The plaintiff in
American initially sued a transport carrier, ACH Express, for losing two shipments of
copper cathodes. ACH Express failed to answer the complaint. The plaintiff moved for
default judgment and submitted an affidavit from one of its management employees. The
affidavit stated that the two shipments of copper cathodes were tendered to ACH Express
and that ACH Express acknowledged receipt of the shipments, but failed to deliver them.
The federal district court entered default judgment against ACH Express. A few months
after the plaintiff in American filed the action in federal court against ACH Express, it filed
another action in the same court against two warehouse companies. In the second suit the
plaintiff in American alleged that the two defendants failed to deliver the two shipments of
33
copper cathodes to ACH Express. After the two defendants learned that the plaintiff
obtained a judgment against ACH Express for the same two shipments of copper cathodes,
they moved for summary judgment. The defendants argued that the doctrine of judicial
estoppel precluded any claim by the plaintiff that was inconsistent with its prior
representations about what happened to the shipments of copper cathodes. The district
court granted summary judgment based upon the following:
Unlike res judicata or other preclusion doctrines ..., judicial
estoppel relates to the federal courts’ ability to protect
themselves from manipulation.... The purpose is to protect the
integrity of the judicial process.
Simply stated, under the doctrine of judicial estoppel, a party
who prevails on one ground in a prior proceeding cannot turn
around and deny that ground in a later proceeding. The
principle is that if you prevail in Suit # 1 by representing that
A is true, you are stuck with A in all later litigation growing
out of the same events.
***
[Plaintiff] is also off-base in suggesting that judicial estoppel
should not apply because these defendants were not parties to
the prior case and the judgment “had no affect [sic] or impact
upon” them. Judicial estoppel is about protecting the courts
from manipulation, not protecting the interests of particular
parties. Identity of the parties is not required. Judicial estoppel
may be raised by any party, regardless of whether the party was
prejudiced by the inconsistency, or by the court on its own
motion. [Plaintiff] can rest assured that this Court would have
raised the issue sua sponte had the defendants not done so.
[Plaintiff] is right about one thing: Judicial estoppel is an
equitable doctrine designed to prevent unfairness and
inequitable conduct. And that is what it does here in barring
[plaintiff’s] attempt to secure a second judgment, relating to
the same loss, based on irreconcilable positions. That
[plaintiff] might be out $283,000 is a direct result of its
34
deliberate litigation strategy—simultaneously pursuing
factually inconsistent claims in two lawsuits and failing to act
upon learning the “real” version of events—and not any action
by the Court or the defendants. [Plaintiff’s] effort to have it
both ways, by obtaining one judgment based on [ACH
Express’] failure to deliver shipments and then pursuing
another judgment for the same loss under a theory that [ACH
Express] never received the shipments, is the reason that
judicial estoppel is even available as a defense in this case.
Application of the doctrine is completely appropriate here, and
the Court has no sympathy for [plaintiff’s] cries of unfairness.
American, 168 F. Supp. 3d at 1078-1082 (internal quotation marks and citations omitted).
See Cardiac Pacemakers, Inc. v. St. Jude Med., Inc., 149 F. Supp. 2d 610, 613 (S.D. Ind.
2001) (“The doctrine of judicial estoppel instructs that having obtained a judgment in a
case on some ground a litigant cannot turn around and in another case seek a judgment on
an inconsistent ground.”) (internal quotations and citation omitted).
Applying the foregoing analysis to the facts of the instant case, we now hold
that for summary judgment purposes, judicial estoppel may be applied against a litigant to
prevent the litigant from using deposition testimony of a nonparty that is not consistent
with a position taken by the deponent in a previous case, or with a position taken earlier in
the same case. Application of this principle should be rare and only when the integrity of
the judicial process is clearly undermined.
In light of our holding, we believe that the doctrine of judicial estoppel should
be applied to prevent the Respondent from using the deposition testimony of Mr. Cava. It
35
is true the Respondent was not the party seeking the information the Rule 30(b)(7) witness
could not provide, nor was it the party resisting Petitioners’ motion to compel.21 However,
the integrity of the judicial process would be undermined if we allowed Respondent to use
Mr. Cava’s deposition testimony in view of the unseemly conduct of Mr. Cava and his
company earlier in the litigation. Dan’s Car World resisted the motion to compel to obtain
additional information, but later, when it was convenient, Mr. Cava decided to provide the
information that his company said was not available and also had agreed to be bound by
that assertion. The Respondent has failed to show that the information provided in Mr.
Cava’s deposition was not available when the motion to compel was resisted. The judicial
process is designed for seeking the truth, not rewarding gamesmanship. The Respondent
has articulated no legal or factual reason we should allow the Respondent to reap the
benefits of the outrageous conduct of Mr. Cava and his company. Consequently, the record
in this case compels us to conclude that the doctrine of judicial estoppel precludes
Respondent from using Mr. Cava’s deposition testimony to support the application of the
doctrine of reasonable expectations. See Wilson v. Stanbury, 118 Md. App. 209, 217, 702
A.2d 436, 440 (1997) (“If we were to hold that the doctrine [of judicial estoppel] did not
apply under these circumstances, it would be hard to imagine when it would be
applicable.”).
21
It will be noted that during the hearing on the motion to compel, counsel
for Respondent did in fact state that it agreed with the position of Dan’s Car World
in resisting the motion.
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In sum, the Respondent failed to show that the relevant language of the
insurance policy was ambiguous or that information extrinsic to the policy language made
the policy ambiguous. Therefore, the doctrine of reasonable expectations could not be used
to defeat the Petitioners’ motion for summary judgment on the umbrella coverage issue.
IV.
CONCLUSION
In view of the foregoing we find that the circuit court erred as a matter of law
in denying the Petitioners’ motion for summary judgment on the umbrella coverage issue.
We therefore grant the writ and order the circuit court to enter summary judgment for the
Petitioners on that issue.
Writ granted.
37