What does “Paid In Full” mean? Can you take it back and say I didn’t really mean it was paid in full? That’s what happened in this case.
CHD owed Taggart $16,000 for work that Taggart had performed. CHD signed a promissory note and gave Taggart a deed of trust on a piece of property. CHD made two failed attempts at filing for bankruptcy and filed documents with the bankruptcy court stating that it owed Taggart $41,000 (several years had passed and interest had accrued).
CHD then refinanced the property and the closing agent contacted the trustee of the deed of trust to obtain a payoff amount. The trustee sent a payoff statement reflecting that the total payoff amount was $28,847.79. The closing agent submitted a check in that amount, the check was cashed, and a copy of the promissory note, marked “PAID IN FULL” was sent to the closing agent.
STOP EVERYTHING! A month later, the trustee stated it was invalidating the payoff statement and returning the $28,847.79. It seems that when the trustee presented the check to Taggart he informed them that CHD owed him more than that. Lesson to trustee: Check with the beneficiary before you accept a payoff amount!
So CHD simply filed an action to quiet title. The trial court eventually granted summary judgment to Taggart stating that CHD was judicially estopped from claiming any amount different than the amount it claimed in the bankruptcy proceedings.
There are three factors to consider when applying judicial estoppel:
"(1) whether a party’s later position is clearly inconsistent with its earlier position; (2) whether judicial acceptance of an inconsistent position in a later proceeding would create the perception that either the first or the second court was misled; and (3) whether the party seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped." Miller v. Campbell, 164 Wn.2d 529, 539, 192 P.3d 352 (2008).
(1) CHD had in fact stated in ONE filing that the amount owed to Taggart was $41,000. However, in other filings the true amount owed was contested. (2) In addition, both of the bankruptcy filings failed and were dismissed. Therefore the factual position was not consistent and there was no judicial acceptance of the position. (3) Division III found that there was no windfall to CHD as Taggart could still pursue the additional amount, they just weren’t secured by the deed. Remember this was an action to quiet title.
Judicial estoppel did not apply and thus the case was remanded back to the trial court for further proceedings.
