In this video, you get answers to these questions:
- What is an example of estoppel?
- When does this come up?
- What is an example of estoppel coming up in litigation?
- How do you avoid claims of estoppel against you?
Table of Contents
Estoppel is a legal doctrine that prevents someone from asserting a claim or a right that contradicts what they have said or done before or what has been legally established as true. There are four main areas of estoppel, including promissory estoppel, equitable estoppel, judicial estoppel, and collateral estoppel.
Promissory estoppel implies a contract in law where no contract actually exists. Del Hayes & Sons, Inc. v. Mitchell, 230 N.W.2d 588, 593 (Minn. 1975). A typical situation in which promissory estoppel may be raised begins with some sort of promise. For example, if one person makes a promise (promisor) to a second person (promisee) that if the promisee were to get accepted to and went to law school, the promisor would pay for his tuition prices at that school. Ideally, some sort of contract should be drawn up, but when there is not, promissory estoppel is in place to protect the person who relied on that promise. When the promisee relies on a promise in a way that makes the promisee incur costs and spend time and effort in reliance on the promise, a court will most likely require the promisor to perform even without an enforceable contract in place. In every claim for promissory estoppel four elements must be met:
- There must be a clear and definite promise made by the promisor;
- The promisor expected, or reasonably should have expected, the promise to induce definite and substantial action by the promisee;
- The promise did in fact induce such action; and
- The promise must be enforced to avoid an injustice to the promisee.
See Cohen v. Cowles Media Co., 479 N.W.2d 387, 391 (Minn. 1992).
The two most important elements to a promissory estoppel claim are that the promisee’s reliance on the promise was justified and that it would be unjust not to enforce the promise. Landro v. Glendenning Motorways, Inc., 625 F.2d 1344 (8th. Cir. 1980). The promisor is most likely going to deny the existence of one or more of these elements, claiming that the promisee did not rely upon the promise or that the reliance on the promise was unreasonable or not justified under the circumstances. When an individual is entitled to damages from a claim of promissory estoppel, a court will most likely award damages equal to the amount of money lost because of the promisee’s reliance on the promise. Deli v. University of Minnesota, 578 N.W.2d 779 (Minn. Ct. App. 1998); Grouse v. Group Health Plan, Inc., 306 N.W.2d 114, 116 (Minn. 1981).
Equitable estoppel is a legal doctrine that is used to prevent a party from enforcing a particular term of a contract or agreement because the party has previously waived the right to enforce that term. For example, a tenant speaks to a landlord about a situation which the tenant does not know is in violation of the lease. Presumably, the landlord should know that the situation is in violation of the lease, and does not inform the tenant of the violation. The tenant then proceeds believing that his actions are appropriate because the landlord did not tell him that there was any violation. The landlord may be estopped from later trying to sue the tenant for that specific violation that he failed to address previously. In a case of equitable estoppel, a plaintiff must show that a defendant’s language or conduct induced the plaintiff to rely, in good faith, on that language or conduct to the plaintiff’s own detriment. Ridgewood Dev. Co. v. State, 294 N.W.2d 288 (Minn. 1980). There must be some loss to the plaintiff as a result of reliance on the language or conduct of the defendant. Id. The language and conduct of the defendant must not always be explicit. In Minnesota,
- The conduct does not need to be affirmative words or conduct, rather it can be silence or a negative omission to act when there is a duty to speak on the matter;
- The facts do not have to be known to the defendant party, it is enough if the situation is such that a knowledge of the truth is necessarily imputed to him;
- Conduct does not have to be done with a fraudulent intent to deceive the plaintiff, rather it is enough if the conduct is done under such circumstances that the defendant should have known that it was probable that his conduct would be acted upon. Dimond v. Manheim, 63 N.W. 495, 497 (Minn. 1895); Pollard v. Southdale Gardens of Edina Condo. Ass’n, Inc., 698 N.W.2d 449 (Minn. Ct. App. 2005).
Equitable estoppel is in place to prevent one party from using its own misleading comments or conduct to create an equitable right against another. Firstar Eagan Bank v. Marquette Bank Minneapolis, 466 N.W.2d 8 (Minn. Ct. App. 1991). The party that failed to enforce the stipulation originally is estopped from enforcing that term of the agreement or contract later on.
The doctrine of judicial estoppel applies to prevent a party from contradicting previous declarations made during the same or an earlier proceeding if the change in the position would adversely affect the proceeding or constitute a fraud in the courtroom. State v. Pendelton, 706 N.W.2d 500, 506 (Minn. 2005). In order to have a successful claim for judicial estoppel, the party must have previously succeeded at trial on a factual theory that is inconsistent with the one in question at the subsequent trial. Id. at 507. There is no determined formula to determine judicial estoppel, but there are a number of factors that must be taken into consideration.
- The position taken by the party later on must be “clearly inconsistent” with the previous position;
- The court will look to see if the party was successful in persuading the court to accept the party’s earlier position;
- Whether the party trying to use the inconsistent position would get an unfair advantage or would impose unfair detriment on the other party if not prevented from doing so. Zedner v. United States, 547 U.S. 489, 504 (2006); New Hampshire v. Maine, 532 U.S. 742, 750-51 (2001).
Judicial estoppel is rare and is most often invoked to prevent a party from trying to prevail on a claim more than once by asserting contradicting theories. Pendelton, 706 N.W.2d at 507. In determining whether or not contradictory positions are put forth, one has to look at whether or not the change was in good faith. Id. If new evidence has come to light that was previously unavailable, this may be considered a justified change in position. Judicial estoppel is a difficult claim to raise and has not been widely successful in Minnesota courts.
Collateral estoppel, or more commonly known as issue preclusion, is a legal doctrine that bars the re-litigation of issues that were litigated in a previous action. The second action can have a completely different cause of action than the previous, but the question is whether the issue raised in the second action is the same as an issue litigated in the previous litigation. It is important to note that collateral estoppel can only prevent the re-litigation of issues that were actually raised in the prior action. Collateral estoppel is in place to prevent duplicative litigation and to promote finality in decisions. When an issue is first litigated, the issue is thereafter considered conclusive and binding. For example, Joe sues Bob on a breach of contract claim. Bob argues that the contract is not valid and says that there was no breach of contract. The court finds that the contract was valid but Bob only breached the contract by failing to make the required payment to Joe. In a later litigation regarding a different breach of the same contract between Joe and Bob, Bob cannot re-litigate the validity of the contract. It was conclusively determined previously that the contract was valid.
In general, there are four requirements in order for collateral estoppel to apply:
- The parties involved must be identical to, or in privity with, those involved in the prior action;
- The issues in both proceedings must be identical;
- The issue in the prior proceeding was actually litigated and determined in a prior action; and
- The resolution of the issue was necessary to the judgment in the earlier case. Kaiser v. N. States Power Co., 353 N.W.2d 899, 902 (Minn. 1984).
In addition, the application of collateral estoppel must also be fair. Parklane Hosiery Co., Inc. v. Shore, 439 U.S. 322, 331 (1979). Collateral estoppel may be used both defensively and offensively. When used defensively, collateral estoppel is used to prevent a plaintiff from asserting a claim against a defendant that had previously been litigated. Barth v. Stenwick, 761 N.W.2d 502, 508 (Minn. Ct. App. 2009). When used offensively, a plaintiff can use collateral estoppel to foreclose the defendant from re-litigating an issue that it had previously lost in a prior action. Id. See also Parklane Hosiery. Although the general rule is that the parties must be identical to the parties involved in the prior action, it is possible for a different plaintiff to use collateral estoppel. This is called offensive nonmutual collateral estoppel. Under these circumstances, a different plaintiff can seek to preclude a defendant from re-litigating an issue that the defendant had already litigated and lost in a previous action. Barth, 761 N.W.2d at 508. An example of offensive nonmutual collateral estoppel is if John were to sue a car company for injuries resulting from a product defect in his car, and John wins on that claim, with the court holding that the company is liable for that product defect. In a later action, Jean could also sue the car company for injuries suffered from the same product defect and invoke collateral estoppel. The invocation of collateral estoppel here would prevent the car company from denying that there was a product defect. Using this type of collateral estoppel is subject to scrutiny by the court, and may not always succeed. Generally, collateral estoppel is a technical area of law that includes several conditions and requirements that must be met in order for a party to be able to invoke this legal doctrine.
What is estoppel? That’s the question I’m answering today. I’m Aaron Hall, an attorney in Minneapolis, Minnesota. Quite simply, estoppel is a legal term where you try to say one thing for one purpose and another thing for another purpose, and estoppel kicks in and says, “No, you can’t have it both ways.”
Estoppel basically means once you said it was one way, you are stopped. You can’t now say you can have it another way. Whatever you said first applies here. This comes up a lot in litigation because a party might say one thing at one time before one court hearing and then in another court hearing, maybe with other parties, they’re trying to argue something else. They’re saying, “Oh, you know, I spent business money on a business trip.” They say in one case and then, later on, they’re arguing that trip wasn’t for business. They were enjoying time with their family.
We can’t have it both ways. Estoppel kicks in. So, estoppel is a legal doctrine that basically says you can’t have it one way for one purpose and another way for another purpose. This comes up in tax law. This comes up in all sorts of legal issues. So, the bottom line is to avoid claims of estoppel against you, you should be consistent. If you say it’s one way, stick with it. Don’t try to bring in another version of events or a different angle or different story or a different perspective because you may be estopped from bringing that up and in fact, it might undermine your credibility.
So, that answers the question, “What is estoppel?” A legal term used in the United States and a legal doctrine with a lot of cases around it. To learn more about this and other topics, feel free to see the descriptions below in the link to aaronhall.com. If you’d like other videos like this, you’re welcome to subscribe to this channel. And please see the disclaimer below. This is general education information. It’s not a substitute for talking with your attorney. I’m Aaron Hall, a business attorney in Minnesota. I look forward to seeing you at the next video.