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Cloud v. Northrop Grumman Corp.11/12/1998
ort to be timely appointed or to comply with the pertinent requirements of the Probate Code. Under these circumstances, we hold that the court below did not abuse its discretion when it did not apply the `relation back' doctrine." (Id. at p. 968.)
Coats did not consider Klopstock, and insofar as the record on appeal reflects, Klopstock was not cited to the trial court in the instant action. To the extent the trial court in this case interpreted Coats to hold that amendments substituting in a real party in interest do not "relate back," such an interpretation would conflict with Klopstock and its progeny. Klopstock is a Supreme Court opinion while Coats is a Court of Appeal opinion. Hence Klopstock and the cases following its liberal rule of amendment control. (Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455 [Supreme Court decision must be followed by all California state courts, including courts of appeal]; see also Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 1997) § 14:192.) Coats has apparently never been cited in any other reported opinion. Klopstock has, however, been cited and followed many times in many other reported opinions. Moreover, to the extent that Coats, due to its unique facts and procedural background, might not be considered wholly inconsistent with the Klopstock line of decisions, it is nevertheless not controlling here. Whether due to its probate setting, the plaintiff's history of knowing misrepresentations to the defendant and to the court, the opinion's lack of substantive "relation back" analysis, the lack of a motion by plaintiff to amend in Coats, etc., Coats provides no basis for a refusal to allow amendment in the instant case.
c. Plaintiff should have been given leave to amend.
The trial court was correct that leave to amend need not be granted if any possible amendment would inevitably be barred by the statute of limitations. "The law neither does nor requires idle acts." (Civ. Code, § 3532.) However, even disregarding the apparent fact that the statute of limitations had not yet expired at the time of the trial court's rulings (see (supra) at fn. 6), the Klopstock line of cases makes clear that an amendment to substitute in the real party in interest is entitled to relation-back effect. The effect of plaintiff's lack of standing, therefore, was simply that plaintiff needed to amend. "If a pleading is defective but amendable, judgment on the pleadings should be granted but with leave to amend. [Citations.]" (Olsen, supra, 237 Cal.App.2d at p. 742. Cf. Cain v. Hyatt, supra, 101 B.R. 440, 443 [action stayed pending substitution of bankruptcy trustee or other action allowing trial to proceed].)
II. JUDICIAL ESTOPPEL.
a. The origin of the judicial estoppel theory in the bankruptcy context: lender liability cases.
The seminal case concerning judicial estoppel in the bankruptcy context is the two-to-one decision in Oneida Motor Freight, Inc. v. United Jersey Bank (3rd Cir. 1988) 848 F.2d 414. The debtor in Oneida filed a Chapter 11 (reorganization) bankruptcy proceeding. In that proceeding, the major creditor was the debtor's bank. The bank sought and obtained in the bankruptcy action "an order establishing the validity and extent of the bank's lien" on the debtor's assets. The debtor "acknowledged its debt to the bank . . . without any mention of a setoff." (Id. at p. 417.) Later, the bankruptcy court approved a settlement "among the bank, Oneida [the debtor], and the official unsecured creditor's committee" and approved an "unconditional payment" of millions of dollars by the debtor to the bank. (Id. at p. 415.) During these proceedings, the debtor neither m
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