Insurers often assert the doctrine of judicial estoppel as a defense to first party claims when the insured filed bankrupcty within a few years prior to an insured loss. The most common scenario is a homeowner files bankruptcy, and utilizes the amount exempted by bankruptcy law as the value of his or her personal property when completing the bankruptcy petition (which is signed under oath). Then, when the homeowner has a total fire loss and submits a personal property claim for multiple times the amount previously sworn to in bankruptcy court, the insurer screams foul and the battle ensues. Here is an outline for analyzing the judicial estoppel doctrine as it applies to these types of cases:
First, know that judicial estoppel is not favored under Tennessee law. Layhew v. Dixon, 527 S.W.2d 739, 741 (Tenn. 1975). "Judicial estoppel only applies where a statement of fact is willfully false in the sense of knowing, deliberate perjury." See e.g. Prince v. Allstate, 2002 U.S. Dist. LEXIS 26889 (E.D. Tenn. 2002) (numerous citations to Tennessee cases omitted).
Second, be familiar with a pair of United States Supreme Court cases that discuss judicial estoppel. New Hampshire v. Maine, 532 U.S. 742 (2001); Zedner v. United States, 547 U.S. 489 (2006). These cases set forth three factors to be used in determining whether the doctrine of judicial estoppel applies to a particular case.
Third, don’t forget about the good faith exception for "mere mistakes or inadventent conduct." See e.g., Browning v. Levy, 283 F.3d 761 (6th Cir. 2001); State v. Brown, 937 S.W.2d 934 (Tenn. Ct. App. 1996); Gerber v. Segal, 2003 Tenn. App. LEXIS 120 (Tenn. Ct. App. 2003). Finally, be aware of the fact that the valuation methods are different in bankruptcy court and in the insurance realm. That alone often goes a long way in providing a very legitimate reason for discrepancies in value.