230 F. Supp. 3d 279
S.D.N.Y.2017Background
- Molina performed renovation work on a Manhattan building; the Oyens and Allstate sued for water damage and obtained default judgments against Molina after his counsel ceased appearing.
- Molina executed a First Assignment granting Gregory Oyen exclusive rights to prosecute any malpractice claims arising from the underlying litigation (Oyen became assignee and gained control).
- Later, Molina and Oyen executed a Second Assignment that purported to return prosecution to Molina but required proceeds to be deposited in Oyen’s counsel’s escrow and allocated 94% to Oyen, with Hansen (Oyen’s lawyer) retained to control settlement and disbursement.
- Hansen (Oyen’s counsel) filed two federal malpractice suits: one dismissed; Hansen then (despite conflicts) represented or retained control over litigation steps while also negotiating proceeds sharing with Oyen.
- Defendants moved for summary judgment arguing judicial estoppel bars Molina’s malpractice claims because Molina (as Oyen’s assignee) now seeks to contradict positions Oyen successfully asserted in the state court actions.
- The Court concluded that, as a matter of New York law and on the undisputed facts, Molina stands in Oyen’s shoes for equitable purposes and judicial estoppel applies; summary judgment for defendants granted in full.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Molina is effectively Oyen’s assignee/real party in interest | Molina says he retained the right to sue and is the plaintiff in his own right | Defendants say the First Assignment divested Molina and the Second Assignment left Oyen with control and entitlement to proceeds, making Molina Oyen’s assignee | Court: Molina stands in Oyen’s shoes for equitable purposes; Oyen is a real party in interest |
| Whether judicial estoppel bars the malpractice suit | Molina contends assignment of malpractice claims is permitted and estoppel should not apply | Defendants assert Molina (as Oyen’s assignee) now must contradict Oyen’s prior sworn positions that supported the judgments, satisfying estoppel elements | Court: Judicial estoppel applies because Molina’s present positions are clearly inconsistent, the state court accepted Oyen’s prior positions, and allowing the suit would unfairly advantage Oyen |
| Whether assignment of malpractice claims to a former adversary precludes invoking judicial estoppel | Molina argues permissibility of assignments forecloses estoppel here | Defendants reply assignment permissibility does not immunize claims from equitable defenses | Court: New York permits assignments but does not bar judicial estoppel; estoppel applies on these facts |
| Whether summary judgment is appropriate | Molina did not rebut estoppel elements or distinguish controlling facts | Defendants sought judgment as matter of law based on estoppel | Court: Granted summary judgment for defendants; dismissed amended complaint |
Key Cases Cited
- Zedner v. United States, 547 U.S. 489 (U.S. 2006) (articulating judicial estoppel principles and policy of preserving judicial integrity)
- New Hampshire v. Maine, 532 U.S. 742 (U.S. 2001) (formulated multi-factor test for judicial estoppel)
- Int’l Ribbon Mills, Ltd. v. Arjan Ribbons, Inc., 36 N.Y.2d 121 (N.Y. 1975) (assignor/assignee rule: assignee takes subject to assignor’s equities and burdens)
- Maharaj v. Bankamerica Corp., 128 F.3d 94 (2d Cir. 1997) (noting federal and New York principles of judicial estoppel lead to same result)
- Sandman v. McGrath, 943 N.E.2d 945 (Mass. App. Ct. 2011) (affirming estoppel where assignee/substitution appeared designed to evade prior positions supporting a judgment)