Court Bars Party From Changing its Arguments Based on Doctrine of Judicial Estoppel

On September 15, 2020, Justice Ostrager of the New York County Commercial Division issued a decision in Pacific Alliance Asia Opportunity Fund L.P. v. Kwok Ho Wan, 2020 NY Slip Op. 33030(U), barring a party from changing its factual arguments on summary judgment based on the doctrine of judicial estoppel, explaining:

At the outset of this case, Kwok moved to dismiss this action on forum non conveniens grounds. The Court granted Kwok’s motion, which decision was subsequently reversed and remitted by the First Department. In making his motion to dismiss, Kwok argued that the contracts at issue were governed by Hong Kong law. Specifically, Kwok attached to his motion true and correct copies of several agreements among the parties including the 2011 Personal Guarantee and the 2013 Deed of Settlement, which he now contests.

Kwok now argues that because the thrust of his argument on the motion to dismiss and the Court’s decision related to forum non conveniens, (1) he is not actually changing his position on the authenticity of the documents, and (2) the Court did not actually determine the authenticity of the documents. This argument is incorrect. Kwok’s assertion that the case should have been dismissed in favor of a resolution in Hong Kong because the agreements on their face are governed by Hong Kong law necessarily required an argument by Kwok, and an acceptance by the Court, that the agreements were authentic and not forgeries, as Kwok now claims. Kwok further argues that in any event judicial estoppel cannot apply because there was no final determination on the merits on the issue of whether the contracts were authentic, because the First Department reversed this Court’s decision on the motion to dismiss. This argument is not supported by the case law in the First Department. Judicial estoppel is an equitable doctrine used to prevent a party from changing its position during the same litigation. Indeed, because judicial estoppel is used to prevent parties from changing their position in the same litigation – a final determination cannot be a prerequisite for judicial estoppel.

Additionally, the Court notes that Kwok never pleaded that the documents were forgeries in either of his Answers, which is an affirmative defense.

Kwok’s recent, uncorroborated assertion that the agreements are forgeries is inconsistent with his prior position in this litigation – and therefore provides an appropriate basis for judicial estoppel. Accordingly, Kwok’s cross-motion for reargument is denied, and the agreements previously sponsored by Kwok are accepted as authentic for the purpose of evaluating plaintiff’s motion for partial summary judgment.

(Internal quotations and citations omitted).

The results in a complex commercial litigation often turn on the facts more than the law (which is why it is complex). The rule of judicial estoppel, discussed above, is one tool the courts use to force people to keep their stories straight. If you or a client have questions regarding a party changing its factual arguments in the midst of a litigation, contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com.