Counsel for National Fire misreads the precedential value of that case. The
dispute in McShane appears very similar to the present one to the extent
that a plaintiff filed suit against the surety on a performance bond. The
surety maintained it had no obligation to pay a claim on the bond because
the plaintiff did not give it an opportunity to remedy a default. Id.
at 479-80. The court did not find, as National Fire maintains, that failure
to give notice is fatal to a claim. Instead, the court denied the
defendant's motion for summary judgment because the plaintiff had raised
a disputed issue of material fact regarding the notice given. Id. at
481. In addition, the performance bond at issue in McShane provided that
the surety's obligations arose only "after reasonable notice" given by
the obligee. Id. at 480. The Bond now at issue contains no such express
language, suggesting that a denial of summary judgment based on the
defendant's arguments regarding notice is even more appropriate in
National Fire's case. If the McShane decision reached the merits of
surety law instead of limiting itself to a procedural discussion of
Fed.R.Civ.P. 56, it would provide strong support against National Fire's
4. Answer by Wise Acknowledging Substantial Completion
When, without satisfactory explanation, a nonmovant's affidavit
contradicts earlier deposition testimony, the district court may
disregard the affidavit in determining whether a genuine issue of
material fact exists. Hackman v. Valley Fair, 932 F.2d 239, 241 (3d Cir.
1991). "The objectives of summary judgment would be seriously impaired if
the district court were not free to disregard the conflicting affidavit."
Martin v. Merrell Dow Pharm., Inc., 851 F.2d 703, 706 (3d Cir. 1988).
This view is a contemporary application of the equitable doctrine of
judicial estoppel, sometimes called "preclusion by inconsistent
positions." AFN, Inc. v. Schlott, Inc., 798 F. Supp. 219, 223 (D.N.J
1992). The doctrine derives from the Supreme Court's statement in Davis
v. Wakelee that "[w]here a party assumes a certain position in a legal
proceeding, and succeeds in maintaining that position, he may not
thereafter, simply because his interests have changed, assume a contrary
position." 156 U.S. 680, 689, 15 S.Ct. 555, 39 L.Ed. 578 (1895). The Third
Circuit utilized the doctrine in Scarano v. Central Railroad Co. as a
measure to protect the integrity of the judicial process by preventing
litigants from "playing fast and loose with the courts." 203 F.2d 510,
513 (3d Cir. 1953). The doctrine applies in a situation where
"intentional self-contradiction is being used as a means of obtaining
unfair advantage." Id.
Recently, the Third Circuit has applied judicial estoppel in several
situations involving inconsistent sworn testimony, but has also limited
the boundaries of the doctrine's application. In Martin v. Merrell Dow
Pharmaceuticals, Inc., a plaintiff offered testimony regarding the date
she ingested the drug Benedictin that plainly contradicted no fewer than
eight of her prior sworn statements. 851 F.2d at 705. When she offered no
explanation for the inconsistency, the circuit court held that the
district court properly disregarded the later affidavit for summary
judgment purposes. We note that Martin involved a simple factual question
of when a drug was ingested, not an abstract question of interpretation.
The next case concerned the precise date a plaintiff had received
notice from his union that it would not pursue his Labor Management
Relations Act claim. Claims brought six months after such notice were
barred by the applicable statute of limitations. Hackman v. Valley Fair,
932 F.2d 239, 240 (3d Cir. 1991). In his deposition, the plaintiff
admitted that he had received notice by June 1, 1989 for a claim he filed
on December 4, 1989. In an effort to avoid summary judgment, the
plaintiff filed a subsequent affidavit alleging he was confused during the
deposition and that notice did not occur until June 7, 1989. Id. at
240-41. The district court ignored the attempt to contradict previous
testimony, granted summary judgment, and the circuit court affirmed. Id.
at 241. Hackman therefore concerned the issue of notice, which, like
Martin, involved a relatively straightforward factual question.
In Videon Chevrolet, Inc. v. General Motors Corp., the plaintiff,
Videon, jeopardized its cause of action by characterizing a mandatory
General Motors surcharge on vehicles as a price increase instead of a
prohibited advertising fee. 992 F.2d 482, 484 (3d Cir. 1993). The Third
Circuit held that a later affidavit submitted by an expert on Videon's
behalf was properly introduced, even though it flatly contradicted the
earlier deposition and characterized the surcharge as an advertising
fee. Id. at 488. The court distinguished the outcomes in Martin and
Hackman on the basis of the "clear and extreme" facts of those earlier
cases. The court continued, "[h]ere, Mr. Videon's deposition testimony
was ambiguous and it does not appear that he intended it to go to the
ultimate legal issue. It thus cannot fairly be said that Mr. Ten Eyck's
affidavit improperly impeached Mr. Videon's earlier deposition
testimony." Id. In light of Videon Chevrolet, Inc., it appears that
judicial estoppel should not apply where a party most likely was confused
or did not intend to address an ultimate legal issue such as the
characterization of a surcharge.
We find that the present dispute between Wise and Bracy more closely
resembles Videon Chevrolet, Inc. rather than Martin and Hackman. Although
Wise has not alleged confusion at the time it provided its answers to
Bracy's interrogatories, it has attempted to explain the inconsistency by
pointing to a later deposition of its President Barbara O'Connell. She
explained that as of September 12, 2000, despite the acknowledgment of
substantial completion, Wise had also noted in its answers that a
significant amount of work remained on the construction project. We find
further that judicial estoppel is not warranted here because Wise has not
previously relied on the disputed interrogatory answer to its advantage in
any judicial proceeding past or present. In fact the answer was prepared
in the context of the present litigation and well after both Wise and
Bracy had recognized the existence of their dispute involving the
concrete retaining wall. It is hard to see how Wise would have meant to
characterize the ultimate legal issue of performance in a manner fatal to
its claim when answering an interrogatory. We are therefore not concerned
that consideration of Barbara O'Connell's later deposition will undermine
the integrity of the judicial process.
Denial of National Fire's Motion for Summary Judgment, at least in
part, is also supported by the terms of the Construction Contract, as
incorporated by the Bond. The agreements between the parties define
substantial completion in detail. We reproduce several of the more
significant conditions below.
"Substantial completion" shall be defined as:
1. The premises being complete including the building
being completely finished (excluding minor punch list
5. The final or temporary `Certificate of Occupancy'
having been issued by South Whitehall Township.
7. Acceptance of the entire premises by the VA such
that the entire rent shall be payable and all lump sum
payments due shall be payable by the VA with no hold
backs for unfinished items, punch lists or non working
equipment. . . .
(Pl.'s Compl., Ex. A, Supplemental Conditions to Article 3, ¶ 3.2).
From the record we cannot find that no genuine issue of material fact
exists with respect to the fulfillment of these conditions as of
September 12, 2000. But regardless of whether Bracy had achieved
substantial completion as of that date, the Construction Contract
provides that Bracy's performance obligations do not cease on the day of
substantial completion. Article 23 of the Construction Contract, entitled
"Correction of Work," states as follows: