Opinion ID: 201116
Heading Depth: 2
Heading Rank: 3

Heading: Judicial Estoppel and Laches

Text: 20 Fleet argues that the doctrine of judicial estoppel bars appellant from arguing that Fleet is divested of its claim to the avoided gap payments. 7 Fleet argues that appellant has taken a position here that contradicts its position in a prior adversary proceeding against ARK, in which Gray argued that ARK did not have an interest in the avoided gap payments. Fleet contends that appellant now takes the position that Fleet is divested of its claim to these proceeds because it transferred the claim to ARK. Even assuming that appellant's current position contradicts its position in the ARK adversary proceeding, Fleet's argument fails. 8 21 The doctrine of judicial estoppel takes effect when the proponent has shown that the party to be estopped succeeded previously with a position directly inconsistent with the one [it] currently espouses. Lydon v. Boston Sand & Gravel Co., 175 F.3d 6, 13 (1st Cir.1999); see also New Hampshire v. Maine, 532 U.S. 742, 749, 121 S.Ct. 1808, 149 L.Ed.2d 968 (2001) (stating, [t]his rule, known as judicial estoppel, `generally 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.') (quoting Pegram v. Herdrich, 530 U.S. 211, 227 n. 8, 120 S.Ct. 2143, 147 L.Ed.2d 164 (2000)). In determining whether the party succeeded in a prior proceeding, we look to whether the prior forum accepted the legal or factual assertion alleged to be at odds with the position advanced in the current forum.... Gens v. Resolution Trust Corp. (In re Gens), 112 F.3d 569, 572-73 (1st Cir.1997). 22 Gray and the Committee did not succeed in the adversary proceeding against ARK. On June 3, 2002, Gray filed a complaint containing the factual allegations that Fleet believes contradict appellant's position here. On July 3, 2002, ARK answered, denying those allegations. On October 10, 2002, before any substantive proceedings were scheduled to begin, the action was settled. On November 13, 2002, the bankruptcy court approved the settlement. At no time did the bankruptcy court accept the legal or factual assertions of the complaint. See also Bates v. Long Island R.R. Co., 997 F.2d 1028, 1038 (2d Cir.1993) (stating, `settlement neither requires nor implies any judicial endorsement of either party's claims or theories, and thus a settlement does not provide the prior success necessary for judicial estoppel.') (quotations omitted); Water Technologies Corp. v. Calco Ltd., 850 F.2d 660, 665-66 (Fed.Cir.1988); Edwards v. Aetna Life Ins. Co., 690 F.2d 595, 599 (6th Cir.1982) (stating, [i]f the initial proceeding results in settlement, the position cannot be viewed as having been successfully asserted.) (citations omitted). Accordingly, the doctrine of judicial estoppel does not bar appellant from arguing that Fleet is divested of its claim to the gap payments. 23 Further, Fleet argues that because Bankvest did not seek avoidance of the gap period payments before Fleet's sale to ARK, the avoidance action came too late. This laches-type argument fails. Rejecting a similar contention below, the bankruptcy court said, Fleet's argument that it was lulled into believing that no adversary proceeding would be commenced and therefore it was somehow duped into withdrawing its objection to confirmation is simply wrong. The court did not abuse its discretion. See Ansin v. River Oaks Furniture, Inc., 105 F.3d 745, 757 (1st Cir. 1997) (stating, [w]e review the district court's determination as to laches for abuse of discretion.). 24 In determining whether laches applies, we ask whether the plaintiff's delay in bringing suit was unreasonable and whether the defendant was prejudiced by the delay. Puerto Rican-American Ins. Co. v. Benjamin Shipping Co., Ltd., 829 F.2d 281, 283 (1st Cir.1987). The analogous statute of limitations determines where the burden of proof falls; if a plaintiff files a complaint within the analogous statutory period, the burden of proving unreasonable delay and prejudice falls on the defendant. Id. Here, Gray brought the avoidance action well within the two-year statute of limitations. 11 U.S.C. § 549(d) (stating, [a]n action or proceeding under this section may not be commenced after the earlier of — (1) two years after the date of the transfer sought to be avoided; or (2) the time the case is closed or dismissed.). Accordingly, the burden is on Fleet to prove unreasonable delay and prejudice. Puerto Rican-American Ins. Co., 829 F.2d at 283. It has not met this burden. 25 Gray was not appointed until months after the sale to ARK. Thereafter, Gray brought this action only ten months after Fleet's disclosure of the gap payments and little more than five months after he was appointed. Any delay was not unreasonable. 26 Lastly, Fleet argues that the Committee's silence in the face of its consensual offer to reverse the transaction bars the avoidance action. Fleet relies, however, entirely on cases that are distinguishable and largely immaterial here. See Patriot Cinemas, Inc. v. General Cinema Corp., 834 F.2d 208, 212 (1st Cir.1987) (party represented that it would not pursue an antitrust count and subsequently repudiated this intention); Lydon, 175 F.3d at 13 (defendant argued to First Circuit that federal law was plaintiff's exclusive remedy where, at underlying arbitration proceeding, defendant had succeeded with precisely the opposite argument); Hurd v. DiMento & Sullivan, 440 F.2d 1322, 1323 (1st Cir.1971) (plaintiff who wrote to district court in a motion for continuance that defendant was unable to represent plaintiff was estopped from claiming in front of First Circuit that defendant had agreed to represent her). We therefore reject this argument.