Old Republic National Title Insurance Co. v. Hartford Fire Insurance Co.

797 S.E.2d 264, 369 N.C. 500, 2017 WL 1034503, 2017 N.C. LEXIS 133
CourtSupreme Court of North Carolina
DecidedMarch 17, 2017
Docket155A16
StatusPublished
Cited by14 cases

This text of 797 S.E.2d 264 (Old Republic National Title Insurance Co. v. Hartford Fire Insurance Co.) is published on Counsel Stack Legal Research, covering Supreme Court of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Old Republic National Title Insurance Co. v. Hartford Fire Insurance Co., 797 S.E.2d 264, 369 N.C. 500, 2017 WL 1034503, 2017 N.C. LEXIS 133 (N.C. 2017).

Opinions

NEWBY, Justice.

[501]*501The doctrine of judicial estoppel preserves the integrity of judicial proceedings by preventing a party from taking inconsistent positions before the court, thus safeguarding the rule of law and seeming public confidence in the court system. Here the trial court found that, in a prior related case, defense counsel assured a federal court that defendant Hartford Fire Insurance Company (defendant or Hartford) would not collaterally attack the federal judgment post hoc by relitigating its related claims arising from the same facts. Defendant declined to join that federal litigation, but nonetheless raises substantially similar tort claims here. As such, the trial court found that defendant essentially takes the action which defense counsel stated it would not take, thereby adopting an inconsistent position. Affording the appropriate deference to the trial court, we conclude that the trial court did not abuse its discretion by invoking the doctrine of judicial estoppel to bar defendant from proceeding with its tort counterclaims. Accordingly, we reverse the decision of the Court of Appeals.

This case arises from a bonding dispute, which stems from a failed hotel development project. Four suits involving various parties, including the property owner, general contractor, lender, and bonding company, ensued, the last of which is before this Court. The third suit arose in federal court, which Hartford, the bonding company, declined to join, and during which the bonding company’s counsel made declarations to the federal court, which may reasonably be interpreted as contravening the bonding company’s actions sub judice.

On 14 November 2007, Shrijee LLC (owner and developer) contracted with Helm Builders, LLC (general contractor) for the construction of a Durham hotel project, known as Hotel Indigo. Under the contract Helm agreed to furnish labor and materials for a total cost of $13,050,000, and Helm was required to obtain a payment and performance bond.

On 20 December 2007, United Bank & Trust Company (lender) issued a construction loan to Shrijee in the amount of $13,600,000 for use on the project,1 and Shrijee executed a “deed of trust, assignment and security agreement” on the underlying hotel real property for the benefit of the Bank, which was recorded on 21 December 2007 with the Durham County Register of Deeds. At Helm’s request, on 22 February 2008, United Bank sent a letter (the 2008 Letter) to Helm “confirm[ing] that the financing is available for the Hotel Indigo,” that “[t]he minimum [502]*502of $13,050,000 has been allocated for the contract amount to Helm Builders, LLC for the construction of the project,” and that “payment authorizations will be determined and conducted by a third-party architect.” The Bank further stated: “We understand this letter is to be used to release the Payment and Performance bonds for the construction of this project.”

On 8 July 2008, Hartford issued a labor and material payment bond and a performance bond “to guarantee HELM’s faithful performance of HELM’s obligations under the Contract.” Helm had executed various general indemnity agreements beforehand, dating back to 15 August 2005, which assigned to Hartford all of its rights under the construction contract, including tort claims, and which also gave Hartford the discretion to “assert and pursue all of the assigned . . . rights, actions, causes of action, claims, and/or demands.”

Over the next two years, Helm substantially completed the Hotel Indigo project, which received a conditional certificate of occupancy in August of 2009, but Shrijee withheld payment for certain work. Hartford subsequently made payments under the bonds to various subcontractors whom Helm had failed to pay. On 28 January 2010, Helm sued Shrijee in Superior Court, Durham County (Helm I), and ultimately obtained a judgment for the unpaid work in the amount of $1,074,163.20, plus interest of $352,796.40 and $278,287.05 in attorneys’ fees, on 20 October 2011 (the Shrijee Judgment).

During the pendency of the Helm I suit, on 31 January 2011, Helm sued United Bank in the United States District Court for the Middle District of North Carolina (the federal action), alleging that the 2008 Letter, which “confirmed in writing . . . that financing was being made available,” contained fraudulent “misrepresentations made by the Bank,” namely, that the monies were not actually allocated to pay Helm. Helm asserted claims of, inter alia, fraud, fraud in the inducement, negligent misrepresentation, and unfair and deceptive trade practices, all of which relied upon the alleged misrepresentations in the 2008 Letter.

On 14 November 2012, counsel for Hartford contacted United Bank to “reaffirm” that “Hartford was the lawful owner of the Shrijee Judgment” under its previous general indemnity agreements. On 20 November 2012, Helm re-memorialized the agreement by executing an “Assignment of Judgment,” filed with the Durham County Clerk of Superior Court, which stated that “HELM Builders, LLC does hereby further assign, transfer and grant to Hartford all of its rights to sue ... and all other legal processes necessary to the enforcement of the [Shrijee] [503]*503Judgment and all proceeds recovered,” and that “the [previous indemnity agreements] shall remain in full force and effect.”

Nonetheless, on 4 June 2013, Helm filed a complaint in Superior Court, New Hanover County, against Hartford (Helm II) seeking, inter alia, a declaratory judgment that Helm’s “Assignment is null and void,” that Hartford “has no rights or interest in the [federal action],” and that “Helm’s claims asserted in the [federal action] are not subject to the assignment provisions of the Hartford Indemnity Agreements.”

In light of Helm’s apparent assignment to Hartford of the Shrijee Judgment and tort claims, United Bank became “concem[ed] over the possibility of inconsistent verdicts should United Bank be forced to litigate the same issues against Helm and Hartford in separate actions.” Furthermore, faced with “Hartford’s alleged ownership of all claims arising from or related to the [Hotel Indigo] Project,” the Bank became concerned about not only the claims arising in Helm’s name, but those arising in the name of Hartford. Ultimately, on 7 June 2013, the Bank moved the federal court to substitute Hartford as the plaintiff or, in the alternative, to join Hartford as a necessary party, noting that “it is undisputed that Hartford claims an interest in the subject of this [federal] action,” and thus any related claims arising therefrom.

On 21 June 2013, in the action sub judice United Bank filed its complaint in Superior Court, Durham County, against Hartford seeking, inter alia, a declaratory judgment that the Bank’s deed of trust securing the construction loan has priority over Helm’s lien against Shrijee for “labor performed or materials furnished.”2

On3 July 2013, counsel for Helm, United Bank, and Hartford appeared before the federal court regarding the Bank’s motion to include Hartford as a plaintiff or necessary party in the federal action. Noting the recently filed state court litigation, the Helm II suit and the suit sub judice, the court inquired about the “purported dispute between the plaintiff here [Helm] and Hartford with regard to what rights Hartford may or may not have in this litigation.” The court expressed concerned about

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Cite This Page — Counsel Stack

Bluebook (online)
797 S.E.2d 264, 369 N.C. 500, 2017 WL 1034503, 2017 N.C. LEXIS 133, Counsel Stack Legal Research, https://law.counselstack.com/opinion/old-republic-national-title-insurance-co-v-hartford-fire-insurance-co-nc-2017.