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Kraetsch v. United Service Automobile Association

United States District Court, E.D. Missouri, Eastern Division

March 30, 2015



CAROL E. JACKSON, District Judge.

This matter is before the Court on defendant's motion to strike plaintiffs' class claims. The plaintiffs have responded and the issues are fully briefed.

I. Background

Plaintiffs Robert Kraetsch and Mary Kraetsch purchased a homeowners insurance policy issued by defendant United Service Automobile Association (USAA). In the second amended complaint, plaintiffs allege that their home sustained extensive damage when rainwater penetrated the defective artificial stucco that was installed on the house. Plaintiffs filed a claim with USAA which denied coverage.

In the second amended complaint plaintiffs assert three causes of action: Count I is a breach of contract claim premised on USAA's failure to perform under the policy. In Count II, plaintiffs seek a declaration that the policy covers the water damage. Count III is for vexatious refusal to pay the insurance claim. The complaint also contains allegations of fraudulently concealment and a claim of equitable tolling of the statute of limitations.

The plaintiffs also seek certification of a class, pursuant to Fed.R.Civ.P. 23. The putative class would consist of (1) USAA policyholders; (2) in Missouri; (3) who installed artificial stucco on their homes; (4) and whose stucco was negligently designed, installed, or maintained, which caused the policyholders to suffer water damage intrusion to their insured premises; (5) whose policies with USAA contain coverage provisions that are the same as or substantially similar to those in plaintiffs' policy; (6) regardless of whether those policyholders ever filed claims with USAA. Plaintiffs seek to proceed on behalf of the class under each theory of recovery presented in the complaint. The gravamen of plaintiffs' class claim is that USAA failed to compensate the putative class members for covered "ensuing losses" ( i.e., the water damage), which the policies define to include "faulty, negligent, inadequate or defective design, specifications and workmanship in construction." 2d Am. Compl. at 2.

In its motion to strike, USAA argues that the proposed class should not be certified because, as defined, the class does not satisfy Fed.R.Civ.P. 23(b)(3)'s predominance requirement.

II. Discussion

A. Judicial estoppel

In its removal notice USAA states that based on plaintiffs' class allegations ( i.e., more than 100 members and an amount in controversy exceeding $5 million), the requirements of 28 U.S.C. ยง 1332(d) have been met. Plaintiffs interpret this statement as USAA's concession that an actual class is ascertainable, which is contrary to the position it takes in the motion to strike the class claims. Plaintiffs argue that judicial estoppel prevents USAA from taking contradictory positions in this litigation such that it is precluded from moving to strike the class claims.

Judicial estoppel "protects the integrity of the judicial process." Total Petroleum, Inc. v. Davis, 822 F.2d 734, 738 n.6 (8th Cir. 1987). It "prevents a person who states facts under oath during the course of a trial from denying those facts in a second suit, even though the parties in the second suit may not be the same as those in the first." Monterey Dev. Corp. v. Lawyer's Title Ins. Corp., 4 F.3d 605, 609 (8th Cir. 1993). Accordingly, "a party that takes a certain position in a legal proceeding, and succeeds in maintaining that position, ' is prohibited from thereafter assuming a contrary position simply because his interests have changed, ' especially if doing so prejudices the party who acquiesced in the position formerly taken by him.'" Stallings v. Hussmann Corp., 447 F.3d 1041, 1047 (8th Cir. 2006) (quoting New Hampshire v. Maine, 532 U.S. 742, 748 (2001)).

"The circumstances under which judicial estoppel may appropriately be invoked are probably not reducible to any general formulation of principle." New Hampshire, 532 U.S. at 750. "Three factors, while not an exhaustive formula for determining the applicability of judicial estoppel, ' aid a court in determining whether to apply the doctrine." Stallings, 447 F.3d at 1047 (quoting New Hampshire, 532 U.S. at 751). Those three factors are: (1) the party's "later position must be clearly inconsistent with its earlier position;" (2) the party must have "succeeded in persuading a court to accept [its] earlier position, so that 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) the party must be in such a position that it would "derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped." Id. (quoting New Hampshire, 532 U.S. at 750-51).

USAA's argument that an actual class is not ascertainable is not "clearly inconsistent" with its earlier assertion that the putative class defined by plaintiffs meets CAFA's numerosity and amount in controversy requirements. USAA has not conceded that a class exists, hence its use of the word "putative." In seeking removal, USAA merely asserted that this Court has jurisdiction under CAFA to determine whether or not a class exists. There is no inconsistency between that assertion and USAA's current position that the Court, in exercising its jurisdiction over the issue, should find that the putative class does not meet the requirements of Rule 23.

Further, the Court has not been misled. The Supreme Court's concern about the "perception that either the first or the second court was misled" is instructive. New Hampshire, 532 U.S. at 750. This case is before one court. USAA has not advanced contradictory positions in two different cases. Plaintiffs cite no authority for the proposition that judicial estoppel applies within a case, at different stages in litigation before a single court. Moreover, that argument is wholly undercut by the Supreme Court's proclamation that "[a]bsent success in a prior proceeding, a party's later inconsistent position introduces no risk of inconsistent ...

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