Joining three other circuits, the Second Circuit held that a lawyer’s mistake in a pleading doesn’t amount to a judicial admission making the client liable when the client would have been free from liability had the lawyer quoted the correct document.
The opinion is a hornbook explication of what is or is not a judicial admission. Among other things, a judicial admission must be “deliberate.” Evidently, a lawyer’s mistake is not “deliberate,” thus extricating the lawyer from the specter of malpractice.
The appeal arose in the wake of the reorganization of General Motors Corp. The plaintiff’s deceased wife had an accident several years before GM’s bankruptcy in 2009. The accident was the result of a faulty ignition switch. The wife was severely injured, but she did not die from her injuries until three years after the GM bankruptcy.
In state court, the plaintiff brought a wrongful death suit against “New GM,” the successor entity that had purchased “Old GM’s” assets in a bankruptcy sale. “New GM” removed the suit to federal court and filed an answer to the complaint.
Here was the mistake by New GM’s counsel: In the body of both the notice of removal and answer, “New GM” quoted from a prior version of the asset purchase agreement that was not approved by the bankruptcy court. The quoted language would have made New GM liable, not the creditors’ trust created to deal with accidents occurring before the sale.
As exhibits to both the notice of removal and answer, New GM attached copies of the asset purchase agreement that the bankruptcy court actually approved. In the court-approved version, New GM was to have no liability for accidents that occurred before the closing date of the sale.
The plaintiff resorted to GM’s bankruptcy court for a ruling on whether the suit was barred. The bankruptcy judge ruled that the reference to the prior draft of the sale agreement was a judicial admission binding New GM. Although saying that the quotation from the prior version was “plainly” a mistake, the bankruptcy judge ruled that the suit was not barred by the sale order.
Had New GM quoted from the final version of the sale agreement, the bankruptcy judge observed that he would have followed a prior decision of his where he ended a lawsuit against New GM.
The district court reversed, concluding that the documents were not judicial admission.
In a per curiam opinion on May 6, the Second Circuit upheld the district court’s reversal.
First citing Second Circuit precedent, the appeals court said that a judicial admission must be a statement “of fact — a legal conclusion does not suffice.”
Analyzing the facts, the appeals court observed that the misquotation in both the answer and notice of removal “bore sufficient indicia of formality and conclusiveness to constitute such an admission.” On the other hand, the circuit went on to say that its conclusion would be “informed” by two facts: (1) New GM had attached the correct agreement to the pleadings; and (2) the bankruptcy court recognized that the quoted language was “plainly” a mistake.
The appeals court then proceeded to join three other circuits by holding that a judicial admission must also be “deliberate, clear, and unambiguous.” For “a statement to constitute a judicial admission it must not only be a formal statement of fact but must also be intentional, clear, and unambiguous,” the circuit court said.
The appeals court declined to decide whether the misquotation was a statement of fact rather than a legal conclusion, which cannot be the basis for a judicial admission. The court nonetheless said it had “serious misgivings” about whether the quotation was a statement of fact.
The circuit said it was not appropriate to elevate a statement of fact to the status of a judicial admission “where that statement could not be true.”
The court therefore held that the erroneous quotation from a non-operative agreement “did not constitute a judicial admission” because it “was not an intentional, clear, and unambiguous statement of fact.”
Joining three other circuits, the Second Circuit held that a lawyer’s mistake in a pleading doesn’t amount to a judicial admission making the client liable when the client would have been free from liability had the lawyer quoted the correct document.
The opinion is a hornbook explication of what is or is not a judicial admission. Among other things, a judicial admission must be “deliberate.” Evidently, a lawyer’s mistake is not “deliberate,” thus extricating the lawyer from the specter of malpractice.
The appeal arose in the wake of the reorganization of General Motors Corp. The plaintiff’s deceased wife had an accident several years before GM’s bankruptcy in 2009. The accident was the result of a faulty ignition switch. The wife was severely injured, but she did not die from her injuries until three years after the GM bankruptcy.
In state court, the plaintiff brought a wrongful death suit against “New GM,” the successor entity that had purchased “Old GM’s” assets in a bankruptcy sale. “New GM” removed the suit to federal court and filed an answer to the complaint.
Here was the mistake by New GM’s counsel: In the body of both the notice of removal and answer, “New GM” quoted from a prior version of the asset purchase agreement that was not approved by the bankruptcy court. The quoted language would have made New GM liable, not the creditors’ trust created to deal with accidents occurring before the sale.