Appellate Victory Establishing New Law on Judicial Estoppel

Gerry Fagan and Adam Warren recently obtained a unanimous appellate victory before the Montana Supreme Court in a municipal liability case. The Supreme Court affirmed 5-0 the District Court’s dismissal of a complaint asserting damages for a substantial water leak from a City of Billings’ water line. A water leak occurred in 2011 in a City neighborhood, releasing over 700,000 gallons of water. A resident who lived in the neighborhood, Mark Kucera, eventually filed a complaint against the City for negligence, nuisance and inverse condemnation. Kucera alleged his home’s foundation was substantially damaged by the water leak. The City contended there was no actual evidence his residence received water intrusion from the pipe burst and any foundation damage was pre-existing. The City obtained summary judgment from the District Court on the grounds that judicial estoppel precluded Kucera’s claims because he had failed to report his potential claim in the bankruptcy schedules for a personal bankruptcy Kucera filed after the water leak and, alternatively, because the applicable statute of limitations had expired before Kucera filed his Complaint. The Montana Supreme Court affirmed dismissal on the judicial estoppel grounds and did not find it necessary to address the statute of limitations argument.

The Supreme Court’s ruling on judicial estoppel is the first time the Supreme Court has ruled that claims that are not listed affirmatively upon a bankruptcy schedule when the petitioner is aware of the possibility of a claim are precluded from being filed as a lawsuit under the doctrine of judicial estoppel. The decision is reported at Kucera v. City of Billings, 2020 MT 34, 2020 WL 633648.

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