This was an assignment for my Introduction to Judicial Clerkships class. Our assignment was to draft a bench memo for a judge in an ongoing (at the time of writing) lawsuit. All of the case material can be found here or by scrolling to the bottom of the page.
To: Judge Robert J. Conrad, Jr.
From: Jackson Lanier
|Case Number: 3:21cv387|
Date Filed: 07/29/2021
Assigned To: District Judge Robert J. Conrad, Jr
Referred To: Magistrate Judge David Keesler
Nature of Suit: Other Contract (190)
Cause: Diversity – Legal Malpractice
Lead Docket: None
Other Docket: None
|Class Code: Open |
Jury Demand: Plaintiff
Demand Amount: $0
NOS Description: Other Contract
3:21cv387, Heider V. Carr Et Al
United States District Court, North Carolina Western
|Angela Lowe Heider Plaintiff||Derek Paul Adler ATTORNEY TO BE NOTICED DeVore, Acton & Stafford, PA 438 Queens Road Charlotte, NC 28207 USA 704-377-5242 Fax: 704-332-2825 Email:[email protected]|
|Eugene M. Carr, III Defendant||Edward B. Davis LEAD ATTORNEY; ATTORNEY TO BE NOTICED Bell, Davis & Pitt PA 227 W. Trade St., Suite 2160 Charlotte, NC 28202 USA 704-227-0400 Fax: 704-227-0178 Email:[email protected]|
|Carr Blackwell & Associates, P.C. Defendant||Edward B. Davis LEAD ATTORNEY;ATTORNEY TO BE NOTICED Bell, Davis & Pitt PA 227 W. Trade St., Suite 2160 Charlotte, NC 28202 USA 704-227-0400 Fax: 704-227-0178 Email:[email protected]|
NATURE OF THE ACTIONS
Plaintiff alleges that Defendant committed Legal Malpractice and Fraud by not adequately representing her interests during divorce proceedings, Plaintiff is seeking compensatory and punitive damages in excess of $75,000. Defendant seeks to dismiss the claims under a theory that Plaintiff’s claims are precluded by the doctrine of judicial estoppel and because the complaint lacks particularity.
PROCEDURAL STATEMENT AND HISTORY
|1||07/29/2021||COMPLAINT against Eugene M. Carr, III, Carr Blackwell & Associates with Jury Demand, filed by Angela L Heider.(Adler, Derek)|
|07/30/2021||Case assigned to District Judge Robert J. Conrad, Jr. and Magistrate Judge David Keesler.|
|2||07/30/2021||Summons Issued Electronically as to Eugene M. Carr, III, Carr Blackwell & Associates, P.C..|
|3||08/04/2021||WAIVER OF SERVICE Returned Executed by Angela Lowe Heider. Carr Blackwell & Associates, P.C. waiver sent on 7/30/2021, answer due 9/28/2021. (Adler, Derek) Modified waiver sent and answer date on 8/5/2021.|
|4||08/04/2021||WAIVER OF SERVICE Returned Executed by Angela Lowe Heider. Eugene M. Carr, III waiver sent on 7/30/2021, answer due 9/28/2021. (Adler, Derek) Modified waiver sent and answer date on 8/5/2021.|
|08/05/2021||Set/Reset Deadlines: Eugene M. Carr, III answer due 9/28/2021; Carr Blackwell & Associates, P.C. answer due 9/28/2021.|
|5||09/28/2021||MOTION to Dismiss for Failure to State a Claim by Eugene M. Carr, III, Carr Blackwell & Associates, P.C.. Responses due by 10/12/2021 (Davis, Edward). Motions referred to David Keesler.|
|6||09/28/2021||MEMORANDUM in Support re 5 MOTION to Dismiss for Failure to State a Claim by Eugene M. Carr, III, Carr Blackwell & Associates, P.C.. (Attachments: # 1 Exhibit, # 2 Exhibit, # 3 Exhibit, # 4 Exhibit, # 5 Exhibit, # 6 Exhibit, # 7 Exhibit, # 8 Exhibit, # 9 Exhibit, # 10 Exhibit, # 11Exhibit) (Davis, Edward)|
|7||10/12/2021||MEMORANDUM in Opposition re 5 MOTION to Dismiss for Failure to State a Claim by Angela Lowe Heider. Replies due by 10/19/2021 (Adler, Derek)|
|8||10/19/2021||REPLY to Response to Motion re 5 MOTION to Dismiss for Failure to State a Claim by Eugene M. Carr, III, Carr Blackwell & Associates, P.C.. (Attachments: # 1 Exhibit)(Davis, Edward)|
Plaintiff, Angela Lowe Heider, was previously married to Timothy Ryan Heider, Sr. (“Mr. Heider”). On October 16, 2017, Plaintiff and Mr. Heider separated and began divorce proceedings. On or about June 26, 2018, Plaintiff retained Defendant Carr to represent her.
In December of 2018, the parties entered into a settlement. The Heiders’ divorce consisted of division of assets, which included approximately $5.3 Million of equity, much of which was contained in cash accounts, retirement accounts, and real property located in Mecklenburg County.
The crux of the present case arose around the time the December 2018 revised settlement agreement was signed. According to Plaintiff, Defendant Carr was aware that Plaintiff had little access to her family’s financial resources. Defendant Carr did not seek an interim distribution of marital assets which would have provided capital to engage the legal and accounting resources necessary to appropriately represent Plaintiff’s interests. In the days leading up to the execution of the Revised Settlement, Defendant Carr urged Plaintiff to accept what he indicated was a very fair settlement. When Mr. Heider was noncompliant with the terms of the revised settlement and Plaintiff questioned the fairness of it, Defendant Carr assured Plaintiff that the Revised Settlement was more than fair and at all times advised her to seek specific performance of it to force compliance by Mr. Heider. On January 9, 2019, Mr. Heider filed a Complaint for Absolute Divorce; Defendant Carr did not answer the Complaint on behalf of Plaintiff. Defendant Carr withdrew as counsel in April of 2019.
After Defendant Carr withdrew, Plaintiff retained Attorney Ryan Bradley to represent her. Mr. Bradley represented Plaintiff in s child custody case which also addressed certain aspects of the Revised Separation Agreement. Mr. Bradley did not challenge the Revised Separation Agreement. Plaintiff affirmed her satisfaction with Mr. Bradley’s representation and that she received “competent advice” in relation to the August 2019 Consent Custody Order.
After the August 2019 Consent Custody Order, Plaintiff retained another attorney, James Epperson, and filed a lawsuit for contractual enforcement and specific performance of the Revised Separation Agreement in February 2020. Plaintiff’s February 2020 Verified Complaint states: she voluntarily executed the Revised Separation Agreement; she affirmed that she “entered into the Agreement and Amendment after mature consideration and judgement; and, Plaintiff affirmed that the terms of the Revised Separation Agreement were not unconscionable nor against public policy. The Court accepted Plaintiff’s verified statements, and a Consent Order for Specific Performance was entered on November 23, 2020.
The issues before the Court are whether the Plaintiff is judicial estopped from pleading her claims and whether Plaintiff the provides sufficient factual allegations to survive the Rule 12(b)(6) motion considering the estoppel.
- Judicial Estoppel
In his Motion to dismiss, Defendant asserts that Plaintiff is judicially estopped from arguing that the revised separation agreement is unconscionable and that it was legal malpractice for him to recommend Plaintiff sign the agreement. Defendant argues this because since hiring Defendant Carr, Plaintiff, through subsequent counsel, has enforced provisions of the separation agreement and made inconsistent statements to the Court in other proceedings that the agreement was fair.
Although the previous legal proceedings surrounding this case occurred in state court, this action is being brought before a federal court sitting in diversity jurisdiction so federal judicial estoppel doctrine will apply, even to the potentially inconsistent statements made in state court. Allen v. Zurich Ins. Co., 667 F.2d 1162, 1167, (4th Cir. 1982). In the Fourth Circuit, the elements of judicial estoppel are: (1) there must be a prior, inconsistent position of fact as opposed to an inconsistent legal theory; (2) the prior inconsistent fact must have been accepted by the court; and (3) “the party sought to be estopped must have “intentionally misled the court to gain unfair advantage.” Lowery v. Stovall, 92 F.3d 219, 223- 24 (4th Cir. 1996).
Judicial estoppel prevents the use of “intentional self-contradiction” to obtain an unfair advantage in a judicial forum. Allen, at 1166-67. Although not a requirement, it is important that the “intentional self-contradiction” be of legal significance when invoking judicial estoppel. Allen, 667 F.2d at 1167. Although it cannot be reduced to a formula,
“several factors typically inform the decision whether to apply the doctrine in a particular case: First, a party’s later position must be ‘clearly inconsistent’ with its earlier position. Second, courts regularly inquire whether the party has succeeded in persuading a court to accept that party’s earlier position, so that judicial acceptance of an inconsistent position in a later proceeding would create the perception that either the first or the second court was misled. . . . A third consideration is whether 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.”
New Hampshire v. Maine, 532 U.S. 742, 751 (2001).
A. Defendants’ Argument
Defendants argue that Plaintiff is judicially estopped from pleading her claims because presently she pleads that the Revised Separation Agreement is unfair whereas in previous litigation, she maintained it was fair. Defendants cite and analogize the case to Guinness PLC v. Ward, where the Fourth Circuit ruled the defendant was estopped from asserting the validity of a settlement agreement due to an omission. 955 F.2d 875 (1992). The defendant in Guinness was estopped because, in a previous case, the defendant sought a continuance of an appeal without informing the appellate court of the settlement agreement. Id. at 899.
Defendants draw similarity to their case because, like in Guinness PLC v. Ward, they claim Plaintiff made numerous representations that the Revised Separation Agreement is fair and equitable, valid, and legally binding. Defendants point to Plaintiff’s numerous lawsuits against her ex-husband, with whom the Revised Separation Agreement was made, where, Defendants allege by omission, Plaintiff confirmed the validity and fairness of the Revised Separation Agreement.
Presently, Plaintiff appears before the Court and argues that the Revised Separation agreement was unfair. Defendants reason that if the Revised Separation Agreement was not a fair and valid contract, then Plaintiff’s previous lawsuit for specific performance against her ex-husband would not have been successful. Because Plaintiff has received numerous court orders in her favor enforcing the Revised Separation Agreement, Defendants argue that, via omission, Plaintiff has affirmed its fairness and these inconsistent statements are “of legal significance.” See Allen, 667 F.2d at 1167.
Further, Defendants argue that Plaintiff’s mistake defense to judicial estoppel does not apply because Ms. Heider’s prior, inconsistent factual statements were knowingly made in the course of litigation. Defendants analogize Plaintiff’s mistake defense to that in National Union. Nat’l Union Fire Ins. Co. of Pittsburgh, Inc. v. Mfrs. and Traders Trust Co., 137 Fed. Appx. 529 (2005). In the case, the Fourth Circuit rejected the estopped party’s mistake defense because the supposedly mistaken conclusion was not “the inadvertent result of [the estopped party’s] hasty assumptions formed only days after discovering the fraud. They came as a result of a deliberate and lengthy course of conduct in litigation.” Id. at 531. Citing this case, Defendants argue that Plaintiff cannot claim mistake because she went through multiple lawsuits to enforce an agreement she, then at least, believed to be fair
B. Plaintiff’s Arguments
Plaintiff provides two arguments: the first being that Defendants’ Judicial Estoppel defense is inapplicable and the second being that if judicial estoppel applies, it is excusable.
For her first argument, Plaintiff fails to cite any cases from federal courts to support their argument. Instead, Plaintiff only provides North Carolina appellate cases which, since federal judicial estoppel doctrine applies, carry no weight.
For her second argument, Plaintiff argues that even if judicial estoppel applies, it is excusable because of her mistake as to the fairness of the Revised Settlement Agreement. Plaintiff cites to New Hampshire v. Maine where the Supreme Court wrote “It may be appropriate to resist application of judicial estoppel when a party’s prior position was based on inadvertence or mistake.” New Hampshire, 532 U.S. at 745. As stated in the Complaint, and accepted as true, Plaintiff says the reason she made previous inconsistent statements was because Plaintiff was justifiably mistaken as to the alleged fairness of her equitable distribution settlement, as she relied entirely on Defendant Carr’s representations and statements in forming her opinion.
Because she was mistaken about the fairness of the Revised Separation Agreement, Plaintiff argues that judicial estoppel is inapplicable considering New Hampshire v. Maine.
The Defendants have met all of the elements of judicial estoppel. There was prior inconsistent position of fact as evidenced by Plaintiff seeking to enforce the Revised Separation Agreement by claiming it was fair to all parties and now Plaintiff, in this action, claiming it is not. The prior inconsistent fact was accepted by the court as evidenced by Plaintiff receiving court orders in her favor enforcing the agreement. The Plaintiff did intentionally mislead the court to gain unfair advantage as evidenced by Plaintiff not investigating the terms of the Revised Separation Agreement and instead, after deliberate and lengthy litigation with subsequent counsel, represented to the courts the fairness, enforceability, and validity of the Revised Separation Agreement.
However, Plaintiff’s defense of mistake is strong, but not compelling. When accepted as true, it is conceivable that Plaintiff, relying on Defendant Carr’s representations and statements, would have been mistaken to the fairness of the agreement. Alone, this fact supports resisting the application of judicial estoppel as outlined in New Hampshire v. Maine. However, the rule from New Hampshire says it “may” be appropriate to resist applying judicial estoppel if there was a mistake, not that a court “must” resist applying it. See New Hampshire, 532 U.S. at 745. Following the agreement, Plaintiff subsequently hired two separate counsels for litigation regarding the Revised Separation Agreement. Neither attorney questioned the fairness of the agreement and Plaintiff continued to contend that the agreement was fair.
Because Plaintiff’s previous contentions that the Revised Separation Agreement was fair “came as a result of a deliberate and lengthy course of conduct in litigation,” Plaintiff’s defense of mistake is inapplicable, and Plaintiff is judicially estopped from claiming that the Revised Separation Agreement is unfair. See National Union, 137 Fed. Appx. at 529. As such, Plaintiff’s claims of malpractice, negligence, and fraud are moot.
It is recommended that Plaintiff’s claims be dismissed without prejudice. Taken as true, Plaintiff’s claims call into question Defendants’ competence as a member of the North Carolina Bar and raises potential Rules of Professional Conduct violations. Plaintiff should have the opportunity to refile her action without the estopped issue.