American Cmercl Lines, L.L.C. v. D.R.D. Towing Com
753 F.3d 550
| 5th Cir. | 2014Background
- ACL chartered the tug MEL OLIVER to DRD under two agreements: a Bareboat Charter ($1/day) and a Fully Found Charter (DRD crewing and chartering services).
- In 2008 the MEL OLIVER, crewed by an unlicensed DRD steersman, collided with the M/V TINTOMARA, causing a major oil spill and multiple lawsuits, including an OPA suit by the United States and consolidated maritime limitation actions.
- In the limitations action ACL argued the charters were valid and that DRD was owner pro hac vice of the tug; the district court accepted that position and found DRD solely at fault.
- ACL separately filed a declaratory judgment action seeking to void the charters ab initio based on alleged fraud in the inducement; that action was stayed and later consolidated into the limitations proceeding.
- After the limitations judgment, the district court dismissed ACL’s declaratory action with prejudice under the equitable doctrine of judicial estoppel, reasoning ACL’s later position (charters void ab initio) contradicted its earlier position accepted by the court (charters valid).
- ACL appealed the dismissal and denial of partial summary judgment; the Fifth Circuit affirmed the dismissal for judicial estoppel.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ACL is judicially estopped from arguing charters were void ab initio after convincing court in limitations action they were valid | ACL: positions not inconsistent — in limitations it only argued charters were "intended" valid or alternatively asserted voidness; never compelled to adopt validity | United States/defendants: ACL persuaded court the charters were valid and relied on that to obtain judgment; later contrary position is inconsistent | Held: Judicial estoppel applies — ACL’s positions were clearly inconsistent and the court accepted the earlier position |
| Whether a stay of the declaratory action prevented ACL from asserting voidness such that estoppel would be unfair | ACL: the §2361 stay compelled the sequencing and prevented full presentation of the void-ab-initio argument | United States/defendants: §2361 stay only restrained proceedings; it did not force ACL to adopt a position or bar it from arguing voidness in limitations action | Held: Stay did not require ACL to adopt position; ACL in fact advanced void-ab-initio as an alternative in limitations; estoppel not inequitable |
| Whether alternative inconsistent arguments in earlier proceedings preclude later contradictory positions | ACL: alternative pleading permitted; earlier validity argument was merely one of several alternatives | Defendants: once a court accepts one alternative, party cannot later take an inconsistent position | Held: Alternatives allowed, but judicial estoppel bars later inconsistent positions if the court accepted one earlier |
| Whether elements for judicial estoppel are met (inconsistency and court acceptance) | ACL: argues nuances about what the court actually held and applicability of extra elements from bankruptcy cases | Defendants: two-element test in this circuit satisfied (clear inconsistency and court acceptance) | Held: Two-element test met; estoppel appropriate (bankruptcy nondisclosure element inapplicable) |
Key Cases Cited
- New Hampshire v. Maine, 532 U.S. 742 (2001) (judicial estoppel bars a party from asserting a position contrary to one previously successfully urged and adopted by a court)
- Hall v. GE Plastic Pac. PTE Ltd., 327 F.3d 391 (5th Cir. 2003) (elements for judicial estoppel in this circuit: clear inconsistency and court acceptance)
- Zedner v. United States, 547 U.S. 489 (2006) (judicial estoppel inapplicable where the court, not the party, instigated the prior position)
- Ergo Science, Inc. v. Martin, 73 F.3d 595 (5th Cir. 1996) (doctrine prevents parties from playing fast and loose with the courts)