Elizabeth Webb v. Daniel Andrew Webb , 263 So. 3d 321 ( 2018 )

Supreme Court of Louisiana
FOR IMMEDIATE NEWS RELEASE NEWS RELEASE #053
FROM: CLERK OF SUPREME COURT OF LOUISIANA
The Opinions handed down on the 5th day of December, 2018, are as follows:
BY WEIMER, J.:
2018-C-0320 ELIZABETH WEBB v. DANIEL ANDREW WEBB (Parish of Jefferson)
The appellate court’s ruling that Mr. Webb’s fraudulent loan is a
community obligation and that Mrs. Webb owes reimbursement for
prior payments is hereby reversed. The trial court’s ruling,
which denied Mr. Webb’s reimbursement claims for the fraudulent
loan and found that loan to be Mr. Webb’s separate obligation, is
hereby reinstated. Other aspects of the lower courts’ rulings
are not presently before this court and we express no view on
them.
REVERSED IN PART; TRIAL COURT RULING REINSTATED.
GUIDRY, J., concurs in the result.
HUGHES, J., dissents and would affirm the court of appeal.
CRICHTON, J., concurs in the result and assigns reasons.
GENOVESE,J., concurs in part, dissents in part, and assigns
reasons.
12/05/18
SUPREME COURT OF LOUISIANA
No. 2018-C-0320
ELIZABETH WEBB
VERSUS
DANIEL ANDREW WEBB
ON WRIT OF CERTIORARI TO THE COURT OF APPEAL,
FIFTH CIRCUIT, PARISH OF JEFFERSON
WEIMER, Justice
This case concerns a post-divorce community property partition. The former
husband, Daniel Webb, filed a claim for reimbursement and for the classification of
a promissory note of $250,000 as a community obligation. The promissory note
corresponds to a loan secured by a mortgage on the family home. Mr. Webb
contended that Mrs. Webb owed reimbursement for loan payments and that the loan
should be considered a community obligation because he borrowed the money to pay
community debts.
This loan has a pernicious history. Mr. Webb, who is an attorney licensed to
practice law in Louisiana, admitted that he caused a forged signature for Mrs. Webb
to be placed on the loan documents and that he concealed the existence of the loan
and the mortgage on the family home from Mrs. Webb.
Mr. Webb’s forgery was eventually discovered, and formal attorney
disciplinary charges were brought against him. In the ensuing disciplinary
proceedings, Mr. Webb admitted his misconduct, but represented to this court that he
was taking “sole financial responsibility” and“full responsibility”for the loan and
was otherwise committed to “making right” what he had done. Mr. Webb consented
to being professionally disciplined by this court, but he prayed for leniency, citing his
“[t]imely good faith effort to rectify consequences of misconduct.” This court
responded to Mr. Webb’s petition for consent discipline by imposing a fully-deferred
six-month suspension.
Shortly after this court’s disciplinary order was issued, Mr. Webb returned to
the district court where the community property partition was pending. There, Mr.
Webb claimed that, although he personally incurred the $250,000 debt, responsibility
for the loan should be an obligation shared by both Mr. and Mrs. Webb, rather than
solely by Mr. Webb.
The district court rejected Mr. Webb’s claim, finding that Mr. Webb’s
representations to this court in his attorney discipline case amounted to a judicial
confession that he alone was responsible for the debt. Mr. Webb appealed, and the
appellate court ruled in his favor by classifying the loan as a community obligation
and ordering Mrs. Webb to personally reimburse Mr. Webb for loan payments he
made after the community property regime was terminated.
Mrs. Webb sought this court’s review of the appellate court’s ruling. We
granted certiorari to determine whether Mr. Webb’s representations to this court in
his attorney disciplinary case precluded him from shifting any financial responsibility
for the loan to Mrs. Webb or to the Webbs’ former community property. Finding that
Mr. Webb represented to this court in his disciplinary case that Mrs. Webb would
suffer no financial harm from his fraudulent loan for which he took “full
responsibility,” we further find the doctrine of judicial estoppel is appropriate for
analyzing these unique circumstances. Applying the doctrine of judicial estoppel,
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which serves to prevent a party from manipulating the court system, we hold that, in
the community property litigation, Mr. Webb cannot shift to the position of a creditor
as to Mrs. Webb or to the Webbs’ former community property for his fraudulent
loan–a position which is contrary to the position of “sole financial responsibility” for
the loan that he previously expressed to this court.
FACTUAL AND PROCEDURAL BACKGROUND
The facts of this matter and a prior disciplinary proceeding are intertwined.
Accordingly, we begin our review of the record there.
On December 12, 2011, while an attorney licensed to practice law in this state,
Mr. Webb executed a loan for $250,000. It is presently undisputed that the proceeds
of the loan were used for purposes that would be considered community debts, such
as tax liabilities and a payment on their daughter’s wedding reception.
To secure the loan, Mr. Webb executed a home equity mortgage on the family
home. He obtained the loan and mortgaged the family home without Mrs. Webb’s
knowledge. More to the point, Mr. Webb actively concealed all of this from Mrs.
Webb, going so far as to arrange for Mrs. Webb’s signature to be forged on the
mortgage documents and causing that forgery to be notarized. Mr. Webb also
indicated on the loan documents that correspondences regarding the loan should be
sent to his law office. However, the lending bank apparently overlooked Mr. Webb’s
efforts to change the correspondence address and, about a month after Mr. Webb
obtained the loan, the bank mailed copies of the documents to the Webb family home.
Mrs. Webb opened the mail from the bank and discovered the existence of the
$250,000 loan, the mortgage on the family home, and observed that her signature had
been forged on the mortgage documents.
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Mrs. Webb confronted Mr. Webb about the mortgage documents. Mr. Webb
admitted to forging Mrs. Webb’s signature and also informed her of the existence of
an unsecured loan of $120,000 and lines of credit of $50,000 and $75,000 of which
Mrs. Webb was previously unaware. In the wake of these revelations, Mrs. Webb
filed for divorce and a community property partition, and also filed an attorney
misconduct complaint with the Office of Disciplinary Counsel (ODC).
The ODC opened an investigation into the allegations that Mr. Webb had
forged the mortgage documents. Through counsel, Mr. Webb admitted Mrs. Webb’s
allegations were “essentially correct.” In this written response dated July 12, 2012,
Mr. Webb explained that he asked his secretary to sign Mrs. Webb’s name on the
mortgage and presented the forged document to his law partner for notarization. Mr.
Webb agreed with Mrs. Webb’s characterization that he forged the mortgage because
Mrs. Webb would not have agreed to the loan. Mr. Webb characterized his actions
as a one time “lapse in judgment” which he “deeply and sincerely regrets.” Mr. Webb
committed to “make it right.” He elaborated: “As to ‘making it right,’ Mr. Webb has
been actively working with the lender to renegotiate the loan, cancel the home equity
mortgage, and to remove his wife from any possible personal exposure associated
with the underlying loan.” Mr. Webb further indicated that he “has been making the
payments on the note” and reiterated that: “once again he accepts full responsibility
for it.” Mr. Webb also acknowledged that “he faces some level of discipline as a
result of his actions,” and he expressed a desire to explore consent discipline.
Indeed, by letter dated July 27, 2012, Mr. Webb submitted to the ODC an
extensive proposal for consent discipline. Just as before, when describing the
fraudulent loan, Mr. Webb “accepts responsibility for it.” When urging that
mitigating factors justified a public reprimand, Mr. Webb added: “Further, neither his
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wife nor any financial institution has suffered any financial loss as a result of his
conduct. … While he cannot undo what he did, he can and does acknowledge his
conduct, accept responsibility for it, and express his deep remorse.” When proposing
probation as an alternative, Mr. Webb referenced his first admissions to the ODC and
stated: “As noted in our letter dated July 12, 2012, Mr. Webb has taken measures to
cancel the home equity mortgage in question and to accept sole financial
responsibility for the loan amount.”
During the course of the ODC’s investigation, the ODC obtained a request for
extension to file federal income taxes submitted on behalf of Mr. and Mrs. Webb, but
Mrs. Webb’s signature was also forged on that document. Mr. Webb admitted to the
ODC that he was responsible for that forgery as well. Mr. Webb contended that, just
as he was afraid to tell his wife about the need for the $250,000 loan, he “feared his
wife’s reaction when he learned in October, 2011, that their tax bill for the year 2010
would be higher than expected.” The fraudulent loan, Mr. Webb explained, was in
part used to pay the 2010 tax liability, and “there have been no issues raised regarding
the tax return itself.” To ODC’s inquiry whether Mr. Webb had forged any other
documents, Mr. Webb “advise[d] he [was] not aware of any other documents
containing a signature purporting to be that of Mrs. Webb which he knows to be
false.”
The ODC apparently determined it had ascertained the full scope of Mr.
Webb’s misconduct, and reached an agreement with Mr. Webb to submit a joint
petition for consent discipline to this court. All of the foregoing representations by
Mr. Webb were among the exhibits to the “Joint Petition for Consent Discipline
Pursuant to Rule XIX, § 20” submitted by ODC and personally signed by Mr. Webb.
Moreover, the Joint Petition described that “[a]ll relevant facts … are set forth in the
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Joint Stipulation of Facts accompanying this petition, and more fully reflected in the
exhibits submitted herewith.” (Emphasis added.)
This court accepted the petition for consent discipline on December 6, 2013,
and issued to Mr. Webb a six-month suspension, but that suspension was fully
deferred. In re Webb, 13-2583 (La. 12/06/13), 129 So.3d 526.
Several weeks later, on December 30, 2013, Mr. Webb filed a motion for
summary judgment in the community property case, seeking to characterize the
fraudulent loan, not as his sole obligation to repay, but an obligation for which the
community was responsible. Alternatively, Mr. Webb claimed that if the obligation
to repay the loan was solely his, he was owed reimbursement for using the loan
proceeds for community debts. The trial court deferred ruling on these issues until
a trial on the merits. However, on February 14, 2014, the trial court issued a partial
summary judgment in favor of Mrs. Webb, finding that she was not bound by the
mortgage on the ground that she did not consent to the loan, but the trial court made
no ruling as to whether Mrs. Webb had any liability on the underlying debt.
After a trial, the trial court issued a community property partition judgment,
which denied Mr. Webb’s reimbursement claims for the fraudulent loan and found
that loan to be Mr. Webb’s separate obligation. The trial court’s ruling stated “that
First NBC Account … debt … in the amount of $244,356.92 is the separate debt of
Daniel Webb. Accordingly, Daniel Webb shall assume full responsibility for the
above described debt and remove the liability that it may have to Elizabeth Webb
personally.”
In written reasons for judgment, the trial court explained:
La. C.C. art. 1853 provides that “[a] judicial confession is a
declaration made by a party in a judicial proceeding. That confession
constitutes full proof against the party who made it. A judicial
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confession is indivisible and it may be revoked only on the ground of
error of fact.” In the Louisiana Supreme Court disciplinary proceedings
against him, Mr. Webb through his counsel made declarations which
establish that he assumed the First NBC loan as his separate obligation.
The Joint Stipulation filed in the Louisiana Supreme Court
disciplinary proceedings against Mr. Webb states that he has taken
appropriate steps to try and have the mortgage transferred into his name
alone. The Louisiana Supreme Court found as a mitigating factor Mr.
Webb’s “good faith effort to rectify the consequences of his conduct.”
The Court finds that the First NBC loan is a separate obligation of
Daniel Webb in the amount of $244,356.92.
Mr. Webb filed a motion for new trial on this issue. The trial court denied Mr.
Webb’s motion. Mr. Webb then appealed.1
The appellate court reversed the trial court’s judgment allocating the fraudulent
loan as Mr. Webb’s separate obligation. The appellate court ruled that “although
obtained through fraudulent means,” the $250,000 loan “is a community obligation.”
Webb v. Webb, 16-567, p. 19 (La.App. 5 Cir. 1/24/18), 238 So.3d 566, 580. Having
found the fraudulent loan was a community obligation, the appellate court also ruled
Mrs. Webb must reimburse Mr. Webb one half of the $21,216.64 that Mr. Webb paid
toward the loan after the Webbs’ community property regime was terminated.
This court granted Mrs. Webb’s request for review of the correctness of the
appellate court’s ruling, which characterized the fraudulent loan as a community
property obligation and ordered Mrs. Webb to reimburse half of Mr. Webb’s
post-termination payments toward the loan. Webb v. Webb, 18-0320 (La. 4/27/18),
247 So.3d 113.
LAW AND ANALYSIS
When, as here, former spouses do not reach a voluntary partition, an action to
partition property following the termination of the community property regime is
1
Mrs. Webb answered the appeal. The issues raised in her answer are not presently before this
court.
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governed by La. R.S. 9:2801. In pertinent part, the partitioning court is governed by
the following statutory procedure:
The court shall allocate or assign to the respective spouses all of
the community assets and liabilities. In allocating assets and liabilities,
the court may divide a particular asset or liability equally or unequally
or may allocate it in its entirety to one of the spouses. The court shall
consider the nature and source of the asset or liability, the economic
condition of each spouse, and any other circumstances that the court
deems relevant. As between the spouses, the allocation of a liability to
a spouse obligates that spouse to extinguish that liability. The allocation
in no way affects the rights of creditors.
La. R.S. 9:2801(A)(4)(c).
It is well-established that the partitioning court is granted much discretion
under La. R.S. 9:2801 in allocating assets and liabilities. See, e.g., Hoover v.
Hoover, 10-1245, p. 3 (La.App. 1 Cir. 3/17/11), 62 So.3d 765, 767; McDaniel v.
McDaniel, 35,833, p. 5 (La.App. 2 Cir. 4/3/02), 813 So.2d 1232, 1235; Keenan v.
Keenan, 15-828, p. 5 (La.App. 3 Cir. 2/3/16), 186 So.3d 289, 295; Robeaux v.
Robeaux, 13-0404, p. 4 (La.App. 4 Cir. 11/6/13), 129 So.3d 659, 664; Goines v.
Goines, 09-994, p. 4 (La.App. 5 Cir. 3/9/11), 62 So.3d 193, 198. However,
“[q]uestions of law are reviewed de novo, without deference to the legal conclusions
of the tribunals below.” Snider v. Louisiana Med. Mut. Ins. Co., 13-0579, p. 6 (La.
12/10/13), 130 So.3d 922, 928.
Here, relying on Kaufmann v. Corp. Realty, Inc., 99-1104 (La.App. 5 Cir.
4/12/00), 759 So.2d 969, 974, the appellate court reasoned that because Mr. Webb’s
statements in his disciplinary case were made in a separate proceeding, they are
“extrajudicial confessions or admissions.” The appellate court further drew from
Kaufman, explaining that statements in a separate proceeding:
are evidence, but they do not create conclusive presumptions or operate
as an estoppel against the party making them. The only instance where
an extrajudicial confession will operate as an estoppel against the party
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making it is if the party claiming the benefit of the estoppel was
deceived by the admission or relied on it to his prejudice.
Webb, 16-567 at 16, 238 So.3d at 578 (quoting Kaufman, 759 So.2d at 974).
The appellate court then disagreed with the trial court, which found Mr.
Webb’s statements in his disciplinary case about taking “full responsibility” for the
fraudulent loan to be judicial confessions under La. C.C. art. 1853. Turning to the
principles it drew from Kaufman, the appellate court acknowledged Mr. Webb’s
statements in the disciplinary case “can be considered as probative evidence in any
subsequent proceeding. Nevertheless, while the statements can be considered, they
cannot change the classification of the underlying debt unless, essentially, Mrs. Webb
can prove that she relied on those statements.” Webb, 16-567 at 16-17, 238 So.3d
at 578.
The appellate court’s reliance on Kaufman as a framework for resolving this
case is misplaced for two reasons. First, the appellate court overlooked that the larger
question in Kaufman was not simply whether “judicial confessions” had been
proven, but whether “the principle of judicial estoppel is … applicable.” Kaufman,
99-1104 at 10, 759 So.2d at 975 (emphasis added). Second, the appellate court
overlooked more recent and more authoritative pronouncements on judicial estoppel.
Specifically, this court has unanimously observed that “judicial estoppel [is]
an equitable doctrine designed to protect the integrity of the judicial process by
prohibiting parties from deliberately changing positions according to the exigencies
of the moment.” Miller v. Conagra, Inc., 08-0021, p. 9 (La. 9/8/08), 991 So.2d 445,
452 (citing New Hampshire v. Maine, 532 U.S. 742, 749-50 (2001)). In Miller, a
livestock producer omitted potential lawsuit claims as an asset from the livestock
producer’s earlier bankruptcy case. After gaining a bankruptcy discharge, the
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livestock producer litigated claims stemming from a breach of contract that occurred
before the livestock producer had filed for bankruptcy protection. The livestock
producer obtained a trial court judgment of over two million dollars. This court
granted the defendant’s writ application to review whether the livestock producer’s
claims should have been barred by the doctrine of judicial estoppel because the
livestock producer shifted his litigation positions by asserting in his bankruptcy case
that he had no potential lawsuit assets, but later urging the defendant was liable for
a pre-bankruptcy breach of contract. In that context, this court observed there are
three elements for establishing judicial estoppel: “(1) the party’s position must be
clearly inconsistent with a previous one, (2) the court must have accepted the
previous position, and (3) the non-disclosure of an asset must not have been
inadvertent.” Id. at 453.
Before turning to the application of those elements in this case, some
procedural points bear mention. In Miller, we remarked that “the defense of judicial
estoppel should be raised in a timely filed answer.” Miller, 08-0021 at 9, 991 So.2d
at 452. However, the remark just quoted about pleading judicial estoppel in an
answer is inapposite to the procedural posture of this action for partitioning
community property, which was incidental to the main action of a divorce. See La.
C.C. art. 105. As permitted by Article 105, Mrs. Webb prayed for a partition in her
petition for divorce. [Rec. p. 8] Mr. Webb’s response included filing a motion for
summary judgment, seeking to have the fraudulent loan characterized as a community
debt when the court would later partition the community property.
In her opposition to Mr. Webb’s motion, Mrs. Webb urged that summary
judgment should be denied because Mr. Webb had taken inconsistent litigation
positions regarding the responsibility for the loan. Specifically, Mrs. Webb
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contended, “before the Supreme Court Dan Webb represented that the underlying
debt was his separate debt, but before this Court Dan Webb now represents that the
underlying debt should be a community debt.” The trial court denied Mr. Webb’s
motion, explaining that “based on Mr. Webb’s representations to the Louisiana
Supreme Court regarding his intent to accept full responsibility for the FNBC loan,
the Court finds that genuine issues of material fact exists as to whether this loan is a
community obligation or Mr. Webb’s separate obligation.”
With the denial of Mr. Webb’s motion to characterize the fraudulent loan as a
community debt, that issue was submitted as part of a community property partition
trial. A major portion of Mrs. Webb’s trial strategy was geared toward showing Mr.
Webb had taken shifting, and inconsistent, litigation positions. The record from this
court’s attorney disciplinary proceedings for Mr. Webb was admitted into evidence
at the community partition trial, during which the parties greatly debated the
significance of Mr. Webb’s representations to this court. As Mrs. Webb summarized
in her post-trial memorandum:
Regardless of the legal semantics engaged at trial by Mr. Webb,
an attorney, no interpretation can be inferred by “full responsibility” and
“sole responsibility” other than that to the Supreme Court Mr. Webb
assumed the obligation as his separate debt. Any attempts now to
classify the underlying debt to the fraudulent mortgage as a community
obligation is inconsistent with “full responsibility” and “sole
responsibility” as it would have a negative monetary effect on Mrs.
Webb resulting in a reduction in her share of the community, contrary
to what was represented to the Supreme Court by or on behalf of Mr.
Webb in order to mitigate his discipline.
Accordingly, we find the record reflects that ample information was adduced
at trial for us to determine whether the doctrine of judicial estoppel should apply.
Parenthetically, we also note that this court could apply judicial estoppel as the legal
predicate for the peremptory exception of no right of action, an exception which this
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court is permitted to raise sua sponte, with or without a full trial. See La. C.C.P. art.
927(B) (“the failure to disclose a cause of action or a right or interest in the plaintiff
to institute the suit, or discharge in bankruptcy, may be noticed by either the trial or
appellate court on its own motion.”).
Having established that the procedural groundwork has been laid for the
doctrine of judicial estoppel in this case, but has not been fully considered by the
lower courts, we turn to the applicability of each element of judicial estoppel de novo.
See Evans v. Lungrin, 97-0541, p. 7 (La. 2/6/98), 708 So.2d 731, 735.
Whether Litigation Positions are Inconsistent
The first element for applying judicial estoppel, as noted above, is that “the
party’s position must be clearly inconsistent with a previous one.” Miller, 08-0021
at 9, 991 So.2d at 452. In the instant case, Mr. Webb has taken the position that he
is entitled to claim from Mrs. Webb reimbursement for half the amount of loan
payments after the community property regime was terminated and that the liability
for the loan itself is a community obligation–all to the detriment of Mrs. Webb’s
interest in the community’s assets. The question thus becomes whether Mr. Webb,
in his attorney disciplinary case, represented otherwise, i.e., that Mrs. Webb would
not suffer detrimental financial consequences from Mr. Webb’s fraudulent loan.
Earlier, we observed in the record of the disciplinary case several instances
where Mr. Webb told this court he took “full responsibility” for the loan. At the risk
of stating the obvious, Mr. Webb did not represent to this court that he was only
willing to take “half responsibility,” which is essentially his position toward his
fraudulent loan in the present case.
However, in his brief in the instant case, Mr. Webb points to a stipulation
submitted to this court and claims that it is tantamount to putting this court on notice
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that he might later seek half of the loan balance from Mrs. Webb and/or from the
community property in which Mrs. Webb held an interest. The stipulation stated:
The Respondent [Mr. Webb] has since verified that the home
equity mortgage was obtained solely for the purpose of paying
community debts incurred prior to the filing of the divorce petition and
this was a private transaction that did not involve the submission of any
documents to a court of law. The Respondent has further verified that
he has taken appropriate steps to try and have the mortgage transferred
into his name, alone; even though he maintains that the underlying debts
were incurred for the benefit of the community. The final determination
of these property issues remains pending in the 24th Judicial District
Court at the present time. The Respondent maintains no harm to Mrs.
Webb resulted from his actions. [Emphasis added.]
Mr. Webb points to the underlined language in support of his argument that he
reserved the right to later seek to have the loan declared a community obligation.
However, and setting aside for a moment the context of other stipulations, the
sentence immediately preceding the underlined sentence defeats Mr. Webb’s present
argument. In the preceding sentence, Mr. Webb describes his efforts to transfer a
loan that was fraudulently made in the name of both Mr. and Mrs. Webb, “into his
name alone,” and avers that he took these efforts “even though he maintains the
underlying debts were incurred for the benefit of the community.”
To parse the meaning of these two sentences, we note that the first sentence
describes actions Mr. Webb is undertaking to rectify his fraud. The second sentence,
which is the underlined sentence above, does not describe any action or even any
intent on Mr. Webb’s part. In an attorney disciplinary case, in which the attorney’s
actions usually speak louder than words, it is a relatively straightforward matter for
us to interpret the sentence containing Mr. Webb’s actions as the focal point of his
stipulated position, and to construe the sentence that follows (which we have
underlined) as merely containing context and providing information. To restate these
representations, we find Mr. Webb undertook responsibility for the fraudulent loan
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(the action sentence), even though the trial court had yet to impose any separate
responsibility upon him (the underlined sentence).
Although we read Mr. Webb’s stipulation quoted above as taking sole
responsibility for the loan, when that stipulation is read in the context of Mr. Webb’s
other stipulations, that conclusion is all the more compelling. Each instance where
Mr. Webb indicated to the ODC he was undertaking “full responsibility” and “sole
financial responsibility” for the fraudulent loan and demonstrating a commitment to
“make it right,” was submitted as a stipulation of fact to this court: “All relevant facts
pertaining to this matter are set forth in the Joint Stipulation of Facts accompanying
this petition, and more fully reflected in the exhibits submitted herewith.” (Joint
Petition for Consent Discipline Pursuant to Rule XIX, § 20). Mr. Webb personally
signed this representation.
One of Mr. Webb’s stipulations is especially noteworthy. When urging that
mitigating factors justified leniency toward him, Mr. Webb stipulated: “Further,
neither his wife nor any financial institution has suffered any financial loss as a result
of his conduct. … While he cannot undo what he did, he can and does acknowledge
his conduct, accept responsibility for it, and express his deep remorse.”
The importance of the stipulation just quoted stems from Mr. Webb
indicating–there and elsewhere–the bank will suffer no loss from his fraud because
he has committed to paying the loan. However, it is significant that in this stipulation
Mr. Webb is placing his wife on par with the bank as not suffering any financial loss
from the loan. That representation can only be true if Mr. Webb is representing to
this court that she truly will bear no responsibility. While Mr. Webb indicates in his
brief that the community already owed money which was paid from the fraudulent
loan and, hence, he tacitly suggests his fraud was a financial benefit for the
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community, Mr. Webb’s present position is inconsistent with his prior representation
to this court in his disciplinary case that he “express[es] his deep remorse” for the
fraud.
In sum, we find inconsistent positions have been taken regarding the fraudulent
loan. In the attorney disciplinary case, it was represented to this court that Mr. Webb
took “sole financial responsibility” and “full responsibility” for the loan and, like the
bank, Mrs. Webb would suffer no financial detriment from the loan. However, in the
community property partition, it was represented he was taking only half
responsibility for the loan.
Whether This Court Accepted the Previous Position
Mrs. Webb contends that a fully deferred suspension was a lenient sanction for
Mr. Webb’s misconduct, which involved a forgery of loan and tax documents. Mrs.
Webb points to harsher sanctions in other attorney misconduct cases to demonstrate
that this court accepted Mr. Webb’s “full responsibility” and “sole financial
responsibility” for the loan as a reason for fully deferring suspension, which allowed
Mr. Webb to continue to practice law during his suspension.
We find it neither necessary nor helpful to compare Mr. Webb’s sanction to
other cases at this juncture. Every case is unique, and such a comparison is more
appropriate when imposing discipline in consent cases. See La. Sup. Ct. Rule XIX,
§ 20(B) (requiring petitions for consent discipline to be accompanied by a
memorandum that inter alia addresses “prior jurisprudence which establishes a
similar range of sanctions for similar misconduct.”). Suffice it to say that when we
indicated in our order of discipline for Mr. Webb that we both “reviewed” and
“accepted” Mr. Webb’s petition, we meant what we said. As required by Sup. Ct.
Rule XIX, § 20(A), Mr. Webb’s stipulations of fact were included with his petition,
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which was filed jointly with the ODC. As described in the petition, the stipulations
of fact extended to Mr. Webb’s correspondences with the ODC, which were
submitted as exhibits to the petition. By operation of Rule XIX, § 20(E), once we
accepted Mr. Webb’s joint petition, “the entire record,” including Mr. Webb’s
stipulations, which were confidential until that point, “bec[a]me public.” In contrast,
if we had rejected Mr. Webb’s joint petition, his petition along with his stipulations
would have remained confidential pursuant to La. Sup. Ct. Rule XIX, § 20(F) (“The
joint motion shall remain sealed and shall not be disclosed or made available for use
in any other proceeding except upon order of the Court.”). Thus, our acceptance of
Mr. Webb’s stipulations allowed the present and very public debate as to their
significance, a debate which would never have occurred if we had rejected Mr.
Webb’s stipulations.
To recap our review of the second element of judicial estoppel, as part of his
petition for consent discipline, Mr. Webb made numerous stipulations regarding his
“full responsibility” and “sole financial responsibility” for the fraudulent loan. As
indicated in our ruling, we “reviewed” and “accepted” those stipulations and thereby
intended for Mr. Webb to honor them.
Whether the Prior Position was Inadvertent
In Miller, we addressed the significance of non-disclosure of potential
litigation as an asset in a bankruptcy case. Miller, 08-0021 at 9, 991 So.2d at 452.
Reviewing other bankruptcy cases dealing with non-disclosure of potential litigation
assets, we identified as a third element of judicial estoppel that the litigant’s
non-disclosure was not inadvertent. Id. Even though the instant case does not deal
with bankruptcy, for thoroughness of analysis, we address the inadvertence element.
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Given that the instant case concerns affirmative representations (rather than
omissions examined in the bankruptcy jurisprudence), and that Mr. Webb’s
representations were numerous, were made with advice of counsel and Mr. Webb
himself is also an attorney, we find there is no question that Mr. Webb’s
representations in the disciplinary case were not inadvertent, but intentional.
Application of Judicial Estoppel
Although we have found all elements met, that does not end our inquiry. In
Miller, we observed: “We are reminded of the Supreme Court’s caution against
reducing judicial estoppel to a general formulation or principle, as well as the Court’s
recognition that specific factual contexts may give rise to additional considerations.”
Miller, 08-0021 at 11, 991 So.2d at 453 (citing New Hampshire, 532 U.S. at
750-51). “In fact, the New Hampshire Court ultimately looked to equity to resolve
its judicial estoppel question.” Id.In Miller, all three elements for applying judicial estoppel were met, but we
found “the equities in this case weigh against applying judicial estoppel.” Id.Specifically, the equities dissuading us from applying judicial estoppel were harms
to third-parties: “[I]t is clear that Miller’s creditors will be harmed if we bar Miller’s
claim.” Id., 08-0021 at 12, 991 So.2d at 454.
In the instant case, the equities weigh in favor of estopping Mr. Webb’s claims
for reimbursement and characterization of his fraudulent loan as a community
property obligation. Unlike Miller, there are no third parties impacted by estopping
Mr. Webb’s claim. Significantly, because the instant case involves a judicial partition
of community property under La. R.S. 9:2801(A)(4)(c), that statute itself invites
equitable considerations: “The court shall consider the nature and source of the asset
or liability, the economic condition of each spouse, and any other circumstances that
17
the court deems relevant.” (Emphasis added.) See also Hare v. Hodgins, 586 So.2d
118, 127 (La. 1991) (“In fact, La. R.S. 9:2801, which was enacted subsequent to Sims
[v. Sims, 358 So.2d 919 (La. 1978)] affords the partitioning tribunal a great deal of
flexibility and clearly implies that the goals of equality and equity require that no one
method should be used to the exclusion of other apportionment techniques.”).
In this case, the following equitable concerns loom large. The doctrine of
judicial estoppel “is designed to protect the integrity of the judicial process by
prohibiting parties from deliberately changing positions according to the exigencies
of the moment.” Miller, 08-0021 at 9, 991 So.2d at 452 (citing New Hampshire, 532
U.S. at 749-50). Recalling that Mr. Webb’s misconduct consisted of forging a
mortgage document that would be inscribed in the public records, we find it all the
more important to hold him to his prior representations of making amends by
accepting “sole financial responsibility” and “full responsibility”for his misconduct.
Mr. Webb is trained in the law, and a significant purpose of any attorney discipline
case is to reinforce the expectation that the attorney will conform to “high standards
of conduct.” See Louisiana State Bar Ass’n v. Reis, 513 So.2d 1173, 1177 (La.
1987). To allow Mr. Webb to now retreat from his representations in a case in which
he petitioned for lenient discipline and to shift positions in the community property
case, would amount to a “perversion of the judicial process” and “playing fast and
loose with the courts.” Ghassemi v. Ghassemi, 11-1771, pp. 6-7 (La.App. 1 Cir.
6/8/12), 103 So.3d 401, 405 (citing Lowman v. Merrick, 06-0921 (La.App. 1 Cir.
3/23/07), 960 So.2d 84, 92). The doctrine of judicial estoppel exists to prevent such
injustices.
CONCLUSION
18
Faced with the unusual facts of this case, the lower courts did not identify the
legal construct best suited for the proper analysis. The trial court focused on whether
Mr. Webb’s statements in his attorney disciplinary case amounted to judicial
confessions under La. C.C. art. 1853, which primarily deals with the evidentiary value
of a litigant’s prior positions, inasmuch as Article 1853 indicates that a judicial
confession “constitutes full proof against the party who made it.” The appellate court
also examined this case through the lens of La. C.C. art. 1853, but relied on an earlier
appellate decision, Kaufman, which alluded to the larger question of whether judicial
estoppel applied, but which predated the current views of this court and of the United
States Supreme Court on judicial estoppel.
With its emphasis on protecting the courts from manipulation, the doctrine of
judicial estoppel is appropriate for resolving this case. Mr. Webb represented to this
court in his disciplinary proceeding that he took “sole financial responsibility” and
“full responsibility” for his fraudulent loan, but in the present community property
case, he essentially changed his position to accept only “half responsibility.”
Applying the doctrine of judicial estoppel, we hold Mr. Webb to the “sole financial
responsibility” and “full responsibility” position he expressed to this court, and rule
that he is estopped from having his fraudulent loan characterized as a community
property obligation or otherwise being a creditor relative to Mrs. Webb, or to the
community for the loan proceeds and/or for any loan payments he has made.
Although this is the first instance in which this court has applied judicial
estoppel based on an attorney disciplinary case, nothing in this opinion should be
construed as an expansion of that doctrine. This case required an examination of
what this court intended when accepting a petition for consent discipline and,
although we ultimately agree with the district court that Mr. Webb is accountable for
19
his representations to this court, this court is uniquely positioned to interpret its own
intent when imposing attorney discipline. We are mindful that unscrupulous litigants
may attempt to use the attorney disciplinary system to gain a litigation advantage.
Rule 8.4(g) of the Rules of Professional Conduct prohibit attorneys from bringing
ethical complaints solely to gain a litigation advantage, and thereby serves as one
protection against using the attorney disciplinary system as a litigation tactic. We
affirm that principle here, while at the same time noting that it was not breached here.
Rather, this case turns on Mr. Webb’s statements, which he must own and which
could foreseeably have been made in another litigation context outside the attorney
disciplinary system, such as a civil fraud action. Setting aside all the nuances of the
three-factor legal test, our application of judicial estoppel simply enforces Mr.
Webb’s ownership of his prior statements to this court even after those statements no
longer suit an outcome he desires.
DECREE
The appellate court’s ruling that Mr. Webb’s fraudulent loan is a community
obligation and that Mrs. Webb owes reimbursement for prior payments is hereby
reversed. The trial court’s ruling, which denied Mr. Webb’s reimbursement claims
for the fraudulent loan and found that loan to be Mr. Webb’s separate obligation, is
hereby reinstated. Other aspects of the lower courts’ rulings are not presently before
this court and we express no view on them.
REVERSED IN PART; TRIAL COURT RULING REINSTATED.
20
12/05/18
SUPREME COURT OF LOUISIANA
No. 2018-C-0320
ELIZABETH WEBB
VERSUS
DANIEL ANDREW WEBB
ON WRIT OF CERTIORARI TO THE COURT OF APPEAL,
FIFTH CIRCUIT, PARISH OF JEFFERSON
GUIDRY, J., concurs in the result.
1
12/05/18
SUPREME COURT OF LOUISIANA
No. 2018-C-0320
ELIZABETH WEBB
VERSUS
DANIEL ANDREW WEBB
ON WRIT OF CERTIORARI TO THE COURT OF APPEAL,
FIFTH CIRCUIT, PARISH OF JEFFERSON
Hughes, J., dissents and would affirm the court of appeal.
1
12/05/18
SUPREME COURT OF LOUISIANA
No. 2018-C-0320
ELIZABETH WEBB
VERSUS
DANIEL ANDREW WEBB
ON WRIT OF CERTIORARI TO THE COURT OF APPEAL,
FIFTH CIRCUIT, PARISH OF JEFFERSON
CRICHTON, J., concurs in the result and assigns reasons:
I agree with the plurality’s reversal of the court of appeal and reinstatement of
the trial court’s ruling. I also concur with its analysis of Mr. Webb’s statements
made during his disciplinary proceeding and ultimate conclusion that Mr. Webb
represented in that proceeding that Mrs. Webb would not suffer any personal liability
or financial responsibility for Mr. Webb’s fraudulent loan. However, I disagree with
the remainder of the opinion’s reasoning and its expansion, in my view, of the
common law doctrine of judicial estoppel in Louisiana.
Despite claiming that “nothing in this opinion should be construed as an
expansion of [judicial estoppel doctrine]”, the test proposed by the plurality would
expand the narrow version of that doctrine that had been previously accepted in
Louisiana law. While perhaps seemingly innocuous in the application to the current
facts, the plurality’s interpretation of judicial estoppel would be a significant
departure from this Court’s historical position that “the common law doctrine of
judicial estoppel does not apply in Louisiana.” Doyle v. State Farm (Mut.) Ins.
Co., 414 So. 2d 763, 765 (La. 1982) (citing Domak v. Lafayette General Hospital,
1
399 So. 2d 168 (La. 1981); Ugulano v. Allstate Insurance Company, 367 So. 2d
6 (La. 1978)).
The plurality relies on one case where this Court nevertheless recognized and
applied a special version of common law judicial estoppel in matters involving
bankruptcy proceedings. Miller v. Conagra, Inc., 08-0021 (La. 9/8/08), 991 So. 2d
445 (citing In re: Superior Crewboats, Inc., 374 F.3d 330, 335 (5th Cir. 2004)).
To appreciate the significance of the plurality’s application of Miller to the case at
hand, it is important to understand that Miller itself was an adaptation of the general
principals of federal judicial estoppel to be applied specifically to matters involving
representations made in prior bankruptcy proceedings.
In a “typical” scenario, the judicial estoppel factors set forth by the Supreme
Court of the United States in New Hampshire v. Maine, cited by Miller, include:
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,” Absent success in a prior proceeding, a
party's later inconsistent position introduces no “risk of inconsistent
court determinations,” and thus poses little threat to judicial integrity.
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, 750-51, 121 S.Ct. 1808, 1815, 149
L.Ed.2d 968 (2001) (citations omitted) (emphasis added). This Court in Miller,
following guidance of the U.S. Fifth Circuit Court of Appeal, adopted the first two
elements of judicial estoppel set forth in New Hampshire v. Maine but changed the
third factor to require that “the non-disclosure of an asset must not have been
inadvertent”. Miller, 991 So. 2d at 452.
Since the case at hand does not involve statements made by Mr. Webb in prior
bankruptcy proceedings, by relying on Miller the plurality is forced to again adapt
the third element of the test to require that the estopped litigant have made
2
representations that “were not inadvertent, but intentional.” This new test proposed
by the plurality would not only adopt the common law doctrine of judicial estoppel
outside of the context of bankruptcy, which is in and of itself an expansion of that
doctrine’s application in Louisiana, but also would apply to a much larger cast of
cases in which the litigant makes prior statements “intentionally.”
If this Court desires to recognize the common law doctrine of judicial
estoppel to the extent the plurality suggests, adaptation of Miller would be a
particularly curious means of doing so. Assuming adoption of judicial estoppel
doctrine is prudent, it might be more prudent to adopt the U.S. Supreme Court’s test
set forth therefore in New Hampshire v. Maine and not to create a new test that is
in essence an adaptation of the U.S. Fifth Circuit’s adaptation of common law
judicial estoppel doctrine. The plurality does not explain its reasons for doing
otherwise, and I am unable to conceive of any.
This Court has previously recognized that, while not accepted generally, the
common law concept of judicial estoppel is most closely mirrored in Louisiana by
the estoppel afforded judicial confessions pursuant to La. C.C. art. 1853. Mitchell
v. Bertolla, 340 So. 2d 287, 289 (La. 1976). Even in the context of extra-judicial
confessions, estoppel has been used by Louisiana courts where another party to a
suit has detrimentally relied on an extra-judicial confessions of the estopped litigant.
See Alexis v. Metropolitan Life Ins. Co., 604 So. 2d 581 (La. 1992) (“The party
who has made such an admission in a previous suit is not barred from denying the
facts contained in that admission in a subsequent suit, unless the adverse party has
been prejudiced by his reliance upon that admission.”) (emphasis added).
I agree with the Court of Appeal’s analysis finding that Mr. Webb’s
statements in his disciplinary proceeding are not judicial confessions but instead
extra-judicial confessions upon which Mrs. Webb did not rely. Like the plurality, I
believe that it is important to “enforce[] Mr. Webb’s ownership of his prior
3
statements to this court even after those statements no longer suit an outcome he
desires” despite the fact that the current law regarding extra-judicial confessions
does not so provide. Webb v. Webb, 18-0320, p. 20 (La. 12/__/18), __ So. 3d __.
Although this Court has previously permitted only one exception to a litigant’s
allowance under Louisiana law to change his stance from prior extra-judicial
confessions, I would adopt an additional exception: that attorney-litigants be barred
from denying the facts contained in an admission made in attorney disciplinary
matters before this Court in a subsequent suit.
It is well-established in our jurisprudence that the purposes of disciplinary
proceedings are to maintain high standards of conduct, protect the public, preserve
the integrity of the profession, and deter future misconduct. Louisiana State Bar
Ass’n v. Reis, 513 So. 2d 1173 (La. 1987). The discipline we ultimately impose
depends upon the facts of each case and the seriousness of the offenses involved
considered in light of any aggravating and mitigating circumstances. Louisiana
State Bar Ass’n v. Whittington, 49 So. 2d 520 (La. 1984). The testimony of the
attorney subject to disciplinary proceedings is often critical to making these
determinations, and the ability of this Court to “preserve the integrity of the
profession” relies on the truthfulness and candor of the attorney. As such, even
though extra-judicial confessions ordinarily do not bar litigants from denying
admissions made in prior suits where reliance is absent, in my view an exception is
warranted to protect the integrity of disciplinary proceedings. Mr. Webb’s attempt
to manipulate the disciplinary process to his advantage certainly illustrates this
heightened need.
It is incumbent on this Court not only to consider the impact of our decisions
on the facts before us but also to make every reasonable effort to ensure that the legal
principles we espouse are not overbroad such that they have unforeseen and
undesired effects. The distinction between the adaptation of common law judicial
4
estoppel proposed by the plurality and the limited exception to the preclusive effect
of extra-judicial confessions I propose herein admittedly have equal application to
the facts at hand. Nevertheless, I cannot embrace the plurality’s reasoning, as it
would unnecessarily and significantly expand an area of the law that this Court has
historically hesitated to recognize.
5
12/05/18
SUPREME COURT OF LOUISIANA
No. 2018-C-0320
ELIZABETH WEBB
VERSUS
DANIEL ANDREW WEBB
ON WRIT OF CERTIORARI TO THE COURT OF APPEAL,
FIFTH CIRCUIT, PARISH OF JEFFERSON
GENOVESE, J., concurs in part, dissents in part, and assigns reasons.
In this matter, we are called upon to determine whether certain statements
made by a party in connection with a lawyer disciplinary proceeding are binding on
that party in parallel community property litigation. I find the district court failed to
consider the evidence presented in this case under the proper standard and that this
error interdicted the lowers courts’ judgments.
My first disagreement with the majority opinion is its application of the
common law doctrine of judicial estoppel under the facts in this case.
Notwithstanding the case of Miller v. Conagra, Inc., 08-0021 (La. 9/8/08), 991 So.2d
445, (citing In re: Superior Crewboats, Inc. 374 F.3d 330, 335 (5th Cir. 2004)), a
bankruptcy proceeding (which is not the case herein), our jurisprudence has
historically found that “the common law doctrine of judicial estoppel does not apply
in Louisiana.” Doyle v. State Farm (Mut.) Ins. Co., 414 So.2d 763, 765 (La. 1982).
Thus, I find this Court’s opinion relying on the common law doctrine of judicial
estoppel misplaced.
Next, the district court characterized the relevant statements made by the
husband during the disciplinary proceedings as a “judicial confession.” I find the
1
district court to be in error in this regard. “A judicial confession is a declaration made
by a party in a judicial proceeding….” La. Civ. Code art. 1853. The jurisprudence
has strictly and narrowly construed La. Civ. Code art. 1853. Disciplinary
proceedings are “neither civil nor criminal but are sui generis.” Louisiana Supreme
Court Rule XIX, § 18(A); In re Raspanti, 08-0954, p. 8 (La. 3/17/09), 8 So.3d 526,
532, cert. denied, 558 U.S 991, 130 S.Ct. 495 (2009). Thus, a disciplinary
proceeding cannot be deemed a judicial proceeding, and the husband’s statements in
said disciplinary proceeding cannot be deemed a judicial confession, thereby making
La. Civ. Code art. 1853 inapplicable to the facts in this case. Consequently, the
district court erred in relying on La. Civ. Code art. 1853 and in finding the husband’s
statements in the disciplinary proceeding to be a judicial confession.
Finally, because the district court erroneously relied on the judicial confession
provisions of La. Civ. Code art. 1853, it did not give proper consideration to the
evidence herein under the standard applicable to extra-judicial confessions, nor were
the parties able to make a full record on this issue. I find this error interdicted the
district court’s factual findings with regard to the legal characterization of the FNBC
loan. Thus, I concur in the majority opinion’s reversal of the court of appeal, but
dissent to its doing so on the grounds of judicial estoppel. Accordingly, I find it
necessary to vacate the judgments of the lower courts and remand the case to the
district court for a new hearing on the characterization of the FNBC loan with the
application of the correct legal standard.
2