Powell v. City of Newton - 364 N.C. 562, 703 S.E.2d 723 (2010)

Rule:

Broadly speaking, judicial estoppel prevents a party from acting in a way that is inconsistent with its earlier position before the court. This equitable doctrine, which may be invoked in a court's discretion, inherently flexible and requires weighing of relevant factors. It is limited to assertions of fact in civil proceedings and does not require an intent to deceive the court, though such intent may nevertheless be a consideration supporting invocation of the doctrine. While many factors can affect a court's decision whether to invoke the doctrine, three frequently considered aspects of a case are whether: 1) the party's subsequent position is clearly inconsistent with its earlier position; 2) judicial acceptance of a party's position might threaten judicial integrity because a court has previously accepted that party's earlier inconsistent position; and 3) the party seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair detriment on the opposing party as a result.

Facts:

Shortly before January 2005, defendant City of Newton began the process of constructing a park on land abutting plaintiff James W. Powell's property. Defendant City hired third-party defendants, Shaver Wood Products Inc., to clear and harvest timber on the park property and W.K. Dickson Engineering, Inc., to carry out the design, development, and management of the project. In December 2005, plaintiff filed a complaint alleging that the defendant’s agents had trespassed on his property and wrongfully cut and removed hardwood trees. Defendant subsequently filed a third-party complaint against third-party defendants seeking indemnification should it be held liable to plaintiff. In November 2007, after the jury had begun hearing evidence, defendant’s attorney informed the court that the parties had reached a settlement under which plaintiff agreed to quitclaim his interest in the disputed land in exchange for $30,000 from the defendant and $5,000 each from third-party defendants. The court directly addressed the participants and terminated the trial after knowing that all the parties consented to the agreement. The attorneys sent an e-mail to exchange a draft written document memorializing their agreement. At the same time, defendant delivered $40,000 to plaintiff's attorney, who deposited the funds into his firm's trust account. The exchanged document, titled "Settlement Agreement and Release," stipulated that it constituted the entire agreement between the parties. Plaintiff subsequently refused to execute the agreement and to consummate the settlement. In a motion filed in January 2008, defendant moved for a court order to require plaintiff to meet his obligations under their settlement agreement. Plaintiff, now represented by new counsel, filed a reply, asserting that he was not bound. Plaintiff subsequently amended his reply to add the affirmative defense that the settlement agreement, as a contract for the sale of land, was void under the statute of frauds. The trial court concluded as a matter of law that plaintiff entered into a valid and binding settlement of all issues and defendant was entitled to specific performance. Accordingly, the trial court ordered plaintiff to execute the written agreement, along with a quitclaim deed, and to deliver those documents to counsel for the defendant. Plaintiff appealed. A divided panel of the court of appeals affirmed the decision of the trial court, holding that the settlement agreement was not void under the statute of frauds. The dissenting judge disagreed, arguing that the agreement did not satisfy the North Carolina statute of frauds.  Plaintiff appealed on the basis of the dissenting opinion.

Issue:

Was the settlement agreement entered into by plaintiff and defendant city enforceable?

Answer:

Yes.

Conclusion:

On appeal, the court held that the parties' settlement agreement was not in compliance with the statute of frauds, N.C. Gen. Stat. § 22-2 (2009) because the plaintiff’s statements in open court and the subsequent email correspondence did not constitute the signature required by the statute, and because the e-mails showed that the parties intended for the plaintiff’s physical signature to appear on the settlement agreement and release. However, the court held that the settlement agreement was enforceable under the doctrine of judicial estoppel because plaintiff made a statement to the trial judge affirming that the arrangement described by counsel was his agreement and then later refused to execute the written agreement, second, the failure to estop the plaintiff from asserting a contradictory position would indicate either that he misled the first court into believing he had agreed to the settlement or that he misled the second court into believing that he had not agreed to the settlement, lastly, failure to estop the plaintiff would give him unfair power to extract additional concessions from the defendant city and other defendants in any further settlement negotiations. Thus, as modified, the judgment was affirmed.