Page 33 - John Hundley 2013

Sharp Thinking

No. 97 Perspectives on Developments in the Law from The Sharp Law Firm, P.C. August 2013

But State Decision Raises Questions . . .
Judicial Estoppel Doctrine Is

Flexible, 7th Circuit Emphasizes

By John T. Hundley, jhundley@lotsharp.com, 618-242-0246

Because judicial estoppel is concerned with protecting the integrity of the courts from the appearance
and reality of manipulative litigation conduct, courts considering that doctrine have the “freedom to
consider the equities of an entire case” and can even impose the estoppel where the party estopped and
the party which committed the underlying conduct are not perfectly identical, the U.S. Court of Appeals for
the Seventh Circuit has held.

At issue in Grochocinski v. Mayer Brown Rowe & Maw, LLP, 719 F.3d 785 (7th Cir. 2013), was the
situation where a creditor of the bankrupt company had obtained a default judgment against it, forced it
into bankruptcy, and then convinced the bankruptcy trustee to sue the bankrupt's former counsel on the
1
theory that allowing the default to be entered was malpractice.

In Grochocinski, the creditor involved:

● had obtained the default judgment,
● had then forced the company into bankruptcy with an involuntary petition,
● had approached the bankruptcy trustee about suing Mayer, Brown on the theory
that allowing the judgment to be taken was malpractice,
● had advanced funds to finance the investigation and filing of the malpractice
case when the estate had none,
● recommended the attorney to bring the suit,
● frequently communicated with that attorney, and
● was poised to receive “the lion's share of any recovery” on the malpractice claim
because it was the principal creditor in the estate. Hundley

Noting those facts, the appeals court affirmed a trial court decision that judicial estoppel was appropriate.

The court rejected an argument that judicial estoppel should be applied only in circumstances
analogous to those required for the doctrines of claim preclusion and issue preclusion. “It is true
that both the preclusion doctrines and judicial estoppel attempt to ensure consistent results across
proceedings,” the court stated, but estoppel is “more flexible” than those doctrines.

“Judicial estoppel is a flexible equitable doctrine designed to prevent 'the perversion of the judicial
process',” the court said. It “protects the courts from being '“manipulated by chameleonic litigants who
seek to prevail, twice, on opposite theories”'” (citations omitted).

1
The author formerly was a partner with the malpractice defendants in Grochocinski.

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