Opinion
No. 09-06-258 CV.
Delivered: December 21, 2006.
On Appeal from the 284th Judicial District Court, Montgomery County, Texas, Trial Cause No. 04-02-01508 CV.
BEFORE MCKEITHEN, C.J., GAULTNEY AND HORTON, J.J.
MEMORANDUM OPINION
Appellants Jerry Johnson and Diana Johnson filed suit seeking a judgment declaring they are the owners of two lots that James W. Haugen sold them under a contract for deed. Haugen filed a motion for summary judgment asserting the affirmative defense of judicial estoppel. The trial court granted the summary judgment, and the Johnsons appealed. We affirm.
Haugen signed the contract as "Seller/Agent" for Windwood Estates. The Johnsons sued Haugen individually and doing business as Windwood Estates.
A movant for summary judgment has the burden of showing that there is no genuine issue of material fact and that he is entitled to judgment as a matter of law. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985). Here, the defendant-movant sought summary judgment on an affirmative defense and was required to conclusively prove each element of his affirmative defense. Walker v. Harris, 924 S.W.2d 375, 377 (Tex. 1996). The burden then shifted to the nonmovant to present evidence raising a genuine issue of material fact on at least one element of the affirmative defense. Dallas Sales Co., Inc. v. Carlisle Silver Co., 134 S.W.3d 928, 932 (Tex.App.-Waco 2004, pet. denied).
In 1993, the Johnsons signed a "Contract of Sale and Purchase" that provided for monthly payments on the land purchase. The contract included a cancellation provision. The provision stated in part that after a cancellation of the contract, the "purchaser in possession" would be "only a tenant" and liable for rent while in possession of the property. In 1997, Haugen sent the Johnsons a written "Notice of Cancellation" stating they were "late in making [their] payments under the Contract . . . and unless [they] make the payments by Sept[.] 10, 1997, the seller has the right to take possession of [their] property and keep all payments made to date." The Johnsons assert they paid for the property or, if not, are "ready, willing and able to do so." Haugen maintains they did not pay.
The Johnsons filed a bankruptcy petition in 1999. On the bankruptcy schedule listing real property in which they had any legal, equitable, or future interest, the Johnsons stated "None." On the schedule for "Executory Contracts and Unexpired Leases," they set out "Lot lease for [Mobile] home" and named Haugen as the other party to the lease. On the schedule of the debtors' current expenditures, the Johnsons listed as an expense the "Lot Lease for [Mobile] Home." On subsequent amended schedules, the Johnsons continued to characterize the property transaction as a lease.
In his summary judgment motion, Haugen asserts the Johnsons are judicially estopped from claiming ownership of the lots because they earlier stated by sworn declaration in the bankruptcy proceeding that the lots were leased. In issue one, the Johnsons challenge the trial court's summary judgment on judicial estoppel grounds. A common-law principle, judicial estoppel precludes a party from asserting a position in a legal proceeding inconsistent with a position taken by that party in prior litigation. Andrews v. Diamond, Rash, Leslie Smith, 959 S.W.2d 646, 649 (Tex.App.-El Paso 1997, writ denied). The purpose of judicial estoppel is to prevent fraud and uphold the integrity of the judicial process. In re Estate of Huff, 15 S.W.3d 301, 308-09 (Tex.App. — Texarkana 2000, no pet.). Generally, the elements of judicial estoppel applied by Texas courts are as follows: (1) a party made a sworn, inconsistent statement in a previous judicial proceeding; (2) the party successfully maintained the previous position; (3) the previous statement was not made inadvertently or by mistake, fraud, or duress; and (4) the statement was deliberate, clear, and unequivocal. See Long v. Knox, 155 Tex. 581, 291 S.W.2d 292, 295 (Tex. 1956); In re Estate of Huff, 15 S.W.3d at 309; see generally New Hampshire v. Maine, 532 U.S. 742, 750-53, 121 S.Ct. 1808, 149 L.Ed.2d 968 (2001).
The United States Supreme Court has explained judicial estoppel is not reducible to any general formula. New Hampshire v. Maine, 532 U.S. 742, 750, 121 S.Ct. 1808, 149 L.Ed.2d 968 (2001). Nevertheless, the Court held that several factors typically inform the decision of whether to apply the doctrine in a particular case: (1) a party's later position must be "clearly inconsistent" with its earlier position; (2) the party succeeded in persuading a court to accept that party's earlier position; (3) the party seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped. Id. at 750-51.
Haugen relied on the Johnsons' bankruptcy petition as his summary judgment evidence. Haugen was listed as a creditor in the bankruptcy and was given notice of the filing. There is no evidence he filed a proof of claim or challenged the characterization of the property transaction. As part of their bankruptcy petition, the Johnsons filed a sworn statement stating the lots were leased. This statement contradicts their pleadings in this suit that they own the lots. The fact that the Johnsons continued to maintain that position in their amended filings in the bankruptcy suit evidences a clear, unequivocal, deliberate statement that contradicts their present claim of ownership. If the Johnsons had listed the property as owned by them or characterized it as being under executory contract, presumably Haugen could have challenged that characterization in the bankruptcy proceeding. The trial court's confirmation of the bankruptcy, in effect, accepted the Johnsons' listing of the property as a "[l]ot lease."
In response to the motion for summary judgment, the Johnsons filed affidavits asserting they made all payments under the contract, paid all taxes, and made improvements on the land. Alternatively, the Johnsons stated they stood "ready, willing and able to make any payments not previously made." Because of the affidavits' alternative assertions, the trial court may have reasonably concluded that not all payments were actually made, and that the Johnsons were only "willing and able" to pay. There is no other evidence in the record indicating the Johnsons made all payments. Haugen states in his affidavit the Johnsons did not complete the payments.
The Johnsons also state they informed their bankruptcy attorney the "lease" statement was a mistake, but were advised to "simply sign the papers" because the description of the status of the contract was not significant. The Johnsons signed the bankruptcy petition and schedules under oath. Whether they believed their sworn statements to be true or false, the statements regarding "lot lease" were clear, deliberate, and unequivocal. The Johnsons have not claimed fraud or duress. Haugen established his affirmative defense of judicial estoppel as a matter of law. The Johnsons have not raised a genuine material fact issue to negate an element of that defense. Issue one is overruled.
In issue two and three, the Johnsons assert that circumstances changed after the 1999 bankruptcy filing, and fact issues now exist precluding summary judgment. In issue three, they claim a fact issue exists as to whether Haugen reinstated the purchase contract, and whether appellants relied on the reinstatement in making additional payments. The Johnsons rely on their own affidavits and on letters from Haugen indicating the parties were discussing past-due payments and the possibility of reinstatement of the contract if the Johnsons could establish they paid the arrearages. The February 14, 2003, letter from Haugen to the Johnsons states that the Johnsons defaulted in September 1997, they were sent a "Notice of Cancellation," and the parties agreed to a rental plan. The February 17, 2003, letter references the Johnsons' default and describes their payments as "rent." Neither the letters nor the Johnsons' affidavits show payment of the arrearages or contract reinstatement, and the evidence does not serve to raise a fact issue on the applicability of judicial estoppel. Issues two and three are overruled.
In issue four, the Johnsons argue Haugen failed to follow requirements of the Texas Property Code. We need not reach this issue as the Johnsons unequivocally stated in their bankruptcy petition schedules and amendments that they were leasing the property. The Johnsons are judicially estopped from claiming otherwise in this proceeding. Issue four is overruled.
The Johnsons do not address the applicability of the judicial estoppel doctrine in this context.
The judgment is affirmed.
AFFIRMED.