The insurer's attempt to reject a claim due to inconsistent positions taken by the insured in two different matters failed in Rice v. Certain Underwriters at Lloyds, 2012, U.S. Dist. LEXIS 36445 (S.D. Tex. March 19, 2012).
The insured's home was damaged in 2008 during Hurricane Ike. The insured submitted a claim to Lloyds, but no decision was made on coverage. In 2010, the insured filed for Chapter 13 bankruptcy. On Schedule B, the insured was asked to list his interests in insurance policies and other unliquidated claims. The insured failed to mention any claim against Lloyds.
On September 12, 2010, the insured sued Lloyds for breach of contract and breach of the duty to good faith and fair dealing. In March 2011, the insured filed an amended Schedule B in the Bankruptcy proceeding, adding his claim against Lloyds for damage to his home caused by Hurricane Ike.
Lloyds then filed a motion for summary judgment, arguing that the insured's previous failure to disclose his claims against Lloyds was a legal position inconsistent with his current action against Lloyds. Therefore, Lloyds argued, the insured was judicially estopped from pursuing his suit.
The court noted that judicial estoppel was applied where an intentional self-contradiction was used as a means to obtain unfair advantage. Although the insured failed to disclose his potential claims against Lloyds at the time he filed for bankruptcy, he subsequently filed an amended schedule disclosing his pending claims. Further, the insured filed his amended schedule in the Bankruptcy Court before Lloyds filed its motion for summary judgment. Accordingly, judicial estoppel did not apply and Lloyds' motion was denied.
