(Posted December 7, 2017) The Supreme Court hands down two published decisions today – one opinion and one order. Both of these decisions come in cases argued in the September session.



The Supreme Court fills in a noticeable gap in pleadings jurisprudence in Eilber v. Floor Care Specialists, Inc. Eilber filed a Chapter 13 bankruptcy petition and received confirmation of a 36-month payment plan. During that three-year period, he was fired from his job and sued a subcontractor for defamation, asserting that two of the subcontractor’s employees had made statements that damaged him in his profession, thus constituting defamation per se.

The defendants filed some fairly vanilla demurrers, which the court denied. They then moved for summary judgment “on the ground that Eilber lacked standing to prosecute his defamation action because he failed to disclose the claim to the bankruptcy court.” Eilber duly responded, and in a reply brief, the defendants asserted for the first time that judicial estoppel barred the claim.

The trial court took this bait, dismissing the case on the judicial-estoppel argument. Eilber appealed, asserting that the defendants hadn’t pleaded judicial estoppel, so it was inappropriate as the basis for a dismissal.

The Supreme Court today notes that in general, a defendant must plead an affirmative defense, or it may be held waived. There are some specific exceptions to that, but prior caselaw from the SCV has never addressed whether judicial estoppel is one of those exceptions or not.

The court resolves this issue today by joining five federal circuits that have held that a defendant need not plead judicial estoppel in order to prevail in that basis. A court may even raise the issue sua sponte. The reason is that the doctrine of judicial estoppel is designed to protect the integrity of the judicial process and to guard it from improper use.” After all, a litigant who asserts one thing in a given court and the opposite fact in another court is likely gaming the system.

Eilber’s failure to disclose the defamation claim during the pendency of his bankruptcy case is tantamount to a statement that he had no such claim. On that basis, the justices unanimously affirm the dismissal.

The surface-level lesson of this case from a plaintiff’s perspective is that you have to ask your incoming client if he or she has a pending bankruptcy claim, and you have to disclose any tort claim to the trustee, even one that arises after the filing date. The lesson to litigants more broadly is that judicial estoppel is a card that can be held in reserve and played at a strategically advantageous time for the defense.


Trusts and estates

There’s a fairly simple resolution to Kim v. Kim, involving a revocable trust, a pour-over will, and a claim of undue influence. It also shows you that lawyers who do favors – even innocent ones – for family members eventually end up getting punished.

There are actually three Kims in this story. Kim #1 is the settlor of the trust and the testator of the will. Kim #2 is his brother, a licensed attorney. Kim #3 is the testator’s wife.

The testator saw that the end was near; he was undergoing treatment for end-stage lymphoma at Johns Hopkins Hospital. He called his brother to his side and asked him to draw up the will and trust. The brother did so, naming himself as executor in the will and as successor trustee in the trust. Even the medical heroes at Hopkins could not postpone the inevitable; eight days after executing the documents, the testator passed away.

His widow speedily qualified as personal representative and sued her brother-in-law, claiming undue influence. She asserted that suspicious circumstances existed, in that her late husband was enfeebled when he signed; was entirely dependent on others; and relied on his brother, who stood in a fiduciary relationship with the testator. These circumstances have in the past given rise to a presumption of undue influence. (I hardly need point out that the terms of the trust were noticeably less beneficial for the widow than intestate succession would have proved to be.)

The brother who prepared the documents had a ready reply: Even assuming all that to be true, he hadn’t named himself as a beneficiary, and he stood to gain nothing from his late brother’s will except the normal fees that any other fiduciary would charge for estate administration. Indeed, the trust stated that the brother could not distribute any of the proceeds of the estate to himself. The trial court agreed with the brother and granted judgment in his favor.

On appeal, the justices consider and reject the widow’s claim that the brother stood to benefit from the will and trust: “Neither [the brother’s] entitlement to compensation as executor and trustee, nor his power as trustee to choose beneficiaries of certain Trust property make him a beneficiary of the Will or Trust.” Since the brother wasn’t a beneficiary, directly or indirectly, he can’t be held to have unduly influenced the testator to benefit himself. The court thus affirms the judgment.