Wooten v. Bank of Am., N.A.
290 Va. 306
| Va. | 2015Background
- Gary Wooten purchased real property in 2002 and alone executed a deed of trust to secure a loan in November 2007; Iracy Wooten did not sign the loan or deed of trust.
- A week after the deed of trust, Gary conveyed the property to himself and Iracy as tenants by the entirety; both the conveyance and the earlier deed of trust were recorded.
- Five years later the lender sued Gary and Iracy seeking, inter alia, reformation or declaration that Iracy’s interest was encumbered by Gary’s deed of trust (the lender advanced equitable reformation, quiet title, equitable lien, unjust enrichment theories).
- Iracy denied knowledge of the loan and asserted she received none of the loan proceeds.
- During the litigation the parties’ divorce was finalized; the divorce decree addressed the property (noting foreclosure) and divided any net proceeds or deficiencies equally, and ordered cooperation in transfer/sale; Iracy’s counsel endorsed the decree “Seen” and no appeal was taken.
- The lender moved for summary judgment, arguing the divorce decree estopped Iracy from denying her interest was subject to the deed of trust; the trial court granted summary judgment declaring the deed of trust a valid first lien on the entire fee simple interest of both spouses.
Issues
| Issue | Plaintiff's Argument (Wooten) | Defendant's Argument (Bank/Lender) | Held |
|---|---|---|---|
| Whether judicial estoppel barred Iracy from denying that her interest was encumbered by Gary’s deed of trust based on the divorce decree | Iracy: she never affirmatively represented to the divorce court that her interest was subject to the deed; she knew nothing of the loan and did not benefit | Lender: the divorce decree’s terms and Iracy’s failure to object or appeal amounted to an affirmative, inconsistent position estopping her from denying encumbrance | Reversed: judicial estoppel does not apply where there was no prior affirmative, inconsistent representation by Iracy to the court; silence or acceptance of a decree endorsed “Seen” is not an affirmative assertion creating estoppel |
| Whether silence or failure to appeal the divorce decree can constitute an affirmative representation for judicial estoppel | Iracy: silence absent duty to speak is not an affirmative representation | Lender: failure to object or appeal endorses the decree’s implications | Held for Iracy: silence alone does not satisfy the required affirmative representation for judicial estoppel |
| Whether the divorce decree put Iracy in direct debtor-creditor relation with the lender or adjudicated the deed’s efficacy | Iracy: decree only apportioned marital assets/liabilities inter se and did not adjudicate lender’s lien or create direct liability | Lender: decree’s allocation and cooperation language supports estoppel | Held: decree adjudicated inter se obligations; it did not make Iracy’s statements affirmatively inconsistent nor determine the deed’s legal efficacy against her to invoke judicial estoppel |
| Whether the court below properly entered summary judgment declaring a first deed of trust lien against the entire fee simple interest | Iracy: summary judgment based on judicial estoppel was improper as a matter of law | Lender: entitled to summary judgment based on estoppel arising from divorce decree | Held: reversed and remanded for further proceedings; summary judgment based solely on judicial estoppel was erroneous |
Key Cases Cited
- Lofton Ridge, LLC v. Norfolk S. Ry., 268 Va. 377 (Va. 2004) (discusses limits of judicial estoppel and its relation to historic approbation-reprobation rule)
- Virginia Elec. & Power Co. v. Norfolk S. Ry., 278 Va. 444 (Va. 2009) (judicial estoppel does not require a showing of prejudice and may be invoked without a prior final judgment; prior position must be an affirmative inconsistent representation relied upon by a court)
- Cangiano v. LSH Bldg. Co., 271 Va. 171 (Va. 2006) (judicial estoppel requires prior affirmative, inconsistent representation)
- Maxey v. Doe, 217 Va. 22 (Va. 1976) (silence generally does not constitute an affirmative representation)
- Cashion v. Smith, 286 Va. 327 (Va. 2013) (endorsement of “Seen” does not necessarily waive objections or constitute affirmative waiver of appeal)