Opinion
NOT TO BE PUBLISHED
Superior Court County of Ventura, Thomas Hutchins, Judge Super. Ct. No. SC049500.
Law Offices of Mark Joseph Valencia and Mark Joseph Valencia for Plaintiff and Appellant.
Seyfarth Shaw, Karen A. Rooney and Eileen Zorc, for Defendant and Respondent Countrywide Home Loans, Inc.
Lee, Hong, Degerman, Kang & Waimey, Larry R. Schmadeka and Soo A. Hong, for Defendant and Respondent, Susan Freed.
COFFEE, J.
Richard Park appeals from the judgment entered after a nonjury trial, in favor of respondents, his former employer, Countrywide Home Loans, Inc. (Countrywide), and his former supervisor, Susan Freed. In this lawsuit appellant seeks to recover damages, costs and fees for racial and national origin discrimination, retaliation, hostile work environment, constructive discharge and intentional infliction of emotional distress. The court found that the doctrine of judicial estoppel barred his claims because in his application to the state Employment Development Department (EDD) for state disability insurance (SDI) benefits, appellant declared under penalty of perjury that his disability was not caused by his job. Appellant contends that Code of Civil Procedure section 597 prohibits bifurcation of the proceedings in this action, and that no substantial evidence supports the court's factual finding that each element of judicial estoppel is present. We affirm.
All statutory references are to the Code of Civil Procedure unless otherwise stated.
Factual and Procedural Background
Appellant was employed by Countrywide between October 1999 and January 2007. On January 10, 2007, he completed an application for SDI benefits and submitted it to the EDD. Question 25 of that application asked: "Was this disability caused by your job?" Appellant answered, "No" by checking a box on the application.
Appellant resigned from Countrywide on January 24, 2007. On February 20, 2007, he filed this action seeking damages for injuries allegedly caused by his job. Countrywide asserted the affirmative defense of judicial estoppel in its answer to appellant's complaint and claimed that judicial estoppel barred his substantive claims. The court granted respondents' motion to bifurcate proceedings and try the judicial estoppel defense first, without a jury. The court conducted the trial in March 2008.
At trial, appellant acknowledged that he submitted an application for SDI benefits to the EDD stating that his disability was not caused by his job. In signing that application, appellant declared "under penalty of perjury that the foregoing statement... is to the best of my knowledge and belief true, correct and complete." Appellant further acknowledged that his civil action sought damages based on the contention that his disability was caused by his job. He testified that he was under a great deal of stress when he signed the application, and that an EDD employee told him to change his answer to question 25 from "yes" to "no." The boxes next to "yes" and "no" for question 25 are both checked or marked; appellant's initials are adjacent to the "no" box.
Question 15 of the application asked, "Why did you stop working?" Appellant answered, "My manager and the [human resource] department harasses me and stresses me from racial comments."
Appellant obtained the application for SDI benefits from the EDD online website. The EDD website explained that SDI provided short-term benefits to eligible workers who suffer a loss of wages when they are unable to work due to a non work-related illness or injury. After appellant submitted his SDI application stating that his disability was not caused by his job, he received SDI benefits from January 2007 through May 2007.
The court heard evidence in the initial phase of the proceedings in March 2008. It concluded that judicial estoppel barred appellant's substantive claims because the position he took with the EDD that his disability was not caused by his job was totally inconsistent with his position in this action that his disability or injury was caused by the discriminatory conduct of his employer and supervisor (respondents). On April 28, 2008, the court executed its statement of decision. It entered judgment in favor of respondents on April 30, 2008.
DISCUSSION
Judicial estoppel is an equitable doctrine. (MW Erectors, Inc. v. Niederhauser Ornamenal & Metal Works Co., Inc. (2005) 36 Cal.4th 412, 422; International Engine Parts, Inc. v. Feddersen & Co. (1998) 64 Cal.App.4th 345, 350.) It may be invoked to preclude a litigant from obtaining an unfair advantage by taking a position in a judicial or administrative proceeding that is inconsistent with a position successfully asserted by the litigant in an earlier proceeding. (Jackson v. County of Los Angeles (1997) 60 Cal.App.4th 171, 183.) Because it is an equitable doctrine, the decision whether to apply judicial estoppel in a given case rests in the sound discretion of the trial court. (See People ex rel. Sneddon v. Torch Energy Services, Inc. (2002) 102 Cal.App.4th 181, 189.)
On appeal, we accept the court's factual findings if supported by substantial evidence. (In re Retirement Cases (2003) 110 Cal.App.4th 426, 443; Drain v. Betz Laboratories, Inc. (1999) 69 Cal.App.4th 950, 957- 958.) We review for abuse of discretion its determination that the doctrine should be applied based upon those facts. (See, e.g., Hartford Casualty Ins. Co. v. Travelers Indemnity Co. (2003) 110 Cal.App.4th 710, 724.) There was no abuse here.
Bifurcation
Appellant contends that because the court was "forced to assess the merits of [his] claims'" in deciding the judicial estoppel issue, section 597 barred bifurcation of the proceedings. We disagree.
Section 597 provides in relevant part: "When the answer pleads that the action is barred by the statute of limitations, or by a prior judgment, or that another action is pending upon the same cause of action, or sets up any other defense not involving the merits of the plaintiff's cause of action but constituting a bar or ground of abatement to the prosecution thereof, the court may, either upon its own motion or upon the motion of any party, proceed to the trial of the special defense or defenses before the trial of any other issue in the case...."
The court did not assess the merits of appellant's substantive claims nor was it forced to do so in order to evaluate the judicial estoppel defense. Assessing the merits of appellant's substantive claims would have involved deciding whether respondents engaged in alleged unlawful, discriminatory conduct, and thereby caused appellant's disability or injury. The court instead assessed the distinct issues relevant to the judicial estoppel doctrine, including whether appellant took inconsistent positions before the EDD and the court regarding his disability.
In making this argument, appellant relies on Unilogic v. Burroughs Corp. (1992) 10 Cal.App.4th 612. In Unilogic, the plaintiff brought a conversion action against the defendant seeking wrongful profits relating to their joint efforts to develop computer prototypes. The defendant cross-complained seeking damages for fraudulent misrepresentation and asserted an affirmative defense of unclean hands. The Unilogic court held that the trial court properly submitted the defense of unclean hands to the jury because that defense was "so intertwined with legal claims that it [could] not be separately tried to the judge." (Id. at p 623.) In contrast, the issues in this case were not so intertwined and the court acted within its discretion in bifurcating the proceedings. It reasonably concluded that trying the facts relevant to judicial estoppel first would be more efficient than proceeding on appellant's claims because the defense, if accepted, would render a complete trial of his claims unnecessary. (§ 598; Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 888.)
Judicial Estoppel
Judicial estoppel applies when: "(1) the same party has taken two positions; (2) the positions were taken in judicial or quasi-judicial administrative proceedings; (3) the party was successful in asserting the first position (i.e., the tribunal adopted the position or accepted it as true); (4) the two positions are totally inconsistent; and (5) the first position was not taken as a result of ignorance, fraud, or mistake." (Jackson v. County of Los Angeles, supra, 60 Cal.App.4th at p. 183.)
The doctrine serves to protect the integrity of the judicial process by preventing a litigant from intentionally adopting inconsistent positions to obtain an unfair advantage in successive proceedings. (Hanna v. Los Angeles County Sheriff's Dept. (2002) 102 Cal.App.4th 887, 896.) "'"Thus, the 'essential function and justification of judicial estoppel is to prevent the use of intentional self-contradiction as a means of obtaining unfair advantage in a forum provided for suitors seeking justice.' [Citation.]" [Citation.] The primary purpose of the doctrine is not to protect the litigants, but to protect the integrity of the judiciary....'" (Billmeyer v. Plaza Bank of Commerce (1995) 42 Cal.App.4th 1086, 1092; see also Thomas v. Gordon (2000) 85 Cal.App.4th 113, 118; Drain v. Betz Laboratories, Inc., supra, 69 Cal.App.4th at p. 955.)
Appellant contends that there is no substantial evidence that he took a position in a judicial or quasi-judicial administrative proceeding because he "only filed an EDD application" and never appeared before any board, tribunal, or attended any administrative proceeding, and "never formally met with an EDD officer and informed him/her that his stress was not work related." We disagree.
"The prior inconsistent assertion need not be made to a court of law. Statements to administrative agencies may also give rise to judicial estoppel." (People ex rel. Sneddon v. Torch Energy Services, Inc., supra, 102 Cal.App.4th at p. 189.) For example, the federal courts have applied the doctrine to statements made to the Social Security Administration in applications for disability benefits. (See, e.g., Mitchell v. Washington ville Cent. School Dist. (2d Cir. 1999) 190 F.3d 1, 6.) Appellant might have an arguable position had he not declared under penalty of perjury that his disability (stress) was not caused by his job. "Full, truthful disclosures in judicial or administrative proceedings are important in and of themselves. Regardless of whether the motive was pure or the effects of the falsehood inconsequential, we must expect honesty and frankness in all judicial and administrative proceedings from parties that choose to bring lawsuits in our courts." (International Engine Parts, Inc. v. Fedderson & Co., supra, 64 Cal.App.4th at p. 354.) Here, the court reasonably concluded that "the determination by the [EDD] whether to grant disability benefits to plaintiff is the equivalent of a judicial or quasi-judicial/administrative proceeding."
We also reject the contention that there is no substantial evidence to support the court's factual finding that appellant took two totally inconsistent positions concerning his stress disability. In his application for disability insurance benefits, appellant declared that his disability was not caused by his job. In this litigation, he alleges that the same disability, or injury, was caused by his job.
In arguing that his positions with EDD and the court are not totally inconsistent, appellant stresses that he also informed the EDD on the application that he left his job because his employer "harass[ed him] and stress[ed him] from racial comments." This argument is based on the false premise that the EDD would assume that whenever a person leaves a job because of stress from an employer's unlawful discriminatory conduct, the person is necessarily disabled. The court correctly concluded that as to the material question on the application regarding the cause of his disability, appellant took a position with the EDD that was totally inconsistent with his position in this action.
Appellant further argues that there is no substantial evidence to support the finding that the EDD relied on his answer to question 25 on the EDD application--that his disability was not caused by his job. He asserts that "EDD would rely on [his] statement to question 15 since he had [written] it out and since there was already ambiguity in question 25, since it was changed." These arguments are not persuasive. The EDD's website explained that SDI provided short-term benefits to eligible workers who suffer a loss of wages when they are unable to work due to a non work-related illness or injury. Appellant submitted his SDI application stating that his disability was not work-related. After he did so, EDD authorized the payment of benefits that appellant received from January 2007 through May 2007.
Appellant also challenges the sufficiency of the evidence to support the court's finding that neither ignorance nor mistake caused him to state to the EDD that his disability was not caused by his job. We disagree. Appellant's testimony and his written statements support the court's finding. He never claimed that he was mistaken about or misunderstood what caused his disability. He testified that he knew that his disability was caused by his job, as he initially indicated on the application by answering "yes" to question 25. He claimed, however, that he changed that answer to "no" when an EDD employee told him to do so. He also testified that he was under considerable stress when he prepared and submitted the application.
Appellant complains that the statement of decision lacks "facts to support[] [the conclusion] that [he] did not take the first position because of ignorance." He also stresses that the court struck the only language in the statement of decision that summarized the facts concerning his lack of ignorance. However, in addition to concluding that "[appellant] did not take the first position under oath to the State of California as a result of ignorance, fraud or mistake," the statement of decision summarizes appellant's testimony about his reasons for taking inconsistent positions, and changing his answer after "an EDD employee (who did not testify) told him to fill out the EDD application this way." The court rejected appellant's explanation and found that he had "engaged in an intentional, purposeful act when he changed his answer." Appellant was not ignorant, and did not claim to be ignorant, about the cause of his injury. The record demonstrates his lack of ignorance about the SDI procedure. He researched the availability of SDI benefits and obtained an application by using the EDD online website. Substantial evidence supports the court's findings concerning the absence of mistake or fraud or ignorance underlying appellant's taking the position with the EDD that his disability was not caused by his job.
We also reject appellant's argument that the Jackson test for judicial estoppel has been superseded by Gottlieb v. Kest (2006) 141 Cal.App.4th 110, 132, and that Gottlieb added a "sixth element" to the Jackson test -- that the plaintiff's conduct must have been "egregious." In making that argument, appellant points to the following language: "Further, given that 'judicial estoppel is an equitable doctrine,... its application, even where all necessary elements are present is discretionary.' [Citation.] Because of its harsh consequences, the doctrine should be applied with caution and limited to egregious circumstances." (Gottlieb, at p. 132.)
In Gottlieb, the court simply acknowledged that the application of the doctrine is discretionary "even where all necessary elements are present." Gottlieb v. Kest, supra, 141 Cal.App.4th at p. 132.) It did not add another necessary element. It also made other statements that have no application to this case: ''[J]udicial estoppel is an extraordinary remedy that should rarely apply to positions taken in Chapter 11 cases absent evidence that the bankruptcy court adopted or accepted the truth of the debtor's position. " (Id. at p. 145, italics added.) The plaintiff's conduct "pose[d] little threat to judicial integrity.'' (Id. at p. 146.) In contrast, the court below expressed its clear concern that appellant's conduct threatened the integrity of the judicial system: "The Court finds that, by taking inconsistent positions, plaintiff was playing 'fast and loose' with the judicial system." The court acted within its discretion in applying the doctrine of judicial estoppel in this case. (Billmeyer v. Plaza Bank of Commerce, supra, 42 Cal.App.4th at p. 1092.)
The judgment is affirmed. Costs are awarded to respondents.
We concur: GILBERT, P.J., PERREN, J.