Commercial Division Blog

Posted: October 27, 2016 / Categories Commercial, Res Judicata/Collateral Estoppel/Entire Controversy Doctrine

Argument Barred by Judicial Estoppel

On October 11, 2016, Justice Scarpulla of the New York County Commercial Division issued a decision in Hamilton 65th Partners, LLC v. Smallbone Inc., 2016 NY Slip Op. 31935(U), holding an argument barred by judicial estoppel, explaining:

The doctrine of judicial estoppel prevents a party who assumed a certain position in a prior proceeding and secured a ruling in his or her favor from advancing a contrary position in another action, simply because his or her interests have changed.

In the proceeding before Judge Lebovits, Hamilton asserted in the petition that its rental agreement with Smallbone expired by its own terms, and that Smallbone remained in possession thereafter as a month to month tenant. Throughout the proceeding, Hamilton consistently maintained that Smallbone was a month-to-month tenant and it never sought to collect holdover rent under the lease. In fact, Hamilton alleged instead that it had received no monies for rent and/or use and occupancy since March 31, 2014 and sought to recover the fair value of use and occupancy. Based on Hamilton's position that Smallbone was a month-to-month tenant throughout the prior proceeding, I find that Hamilton is judicially estopped from denying Smallbone's status as a month-to-month tenant and from collecting holdover rent. To allow Hamilton to change its position now and seek holdover rent would be highly prejudicial to Smallbone.

(Internal quotations and citations omitted).