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Webb v. Webb

Supreme Court of Louisiana

December 5, 2018

ELIZABETH WEBB
v.
DANIEL ANDREW WEBB

          ON WRIT OF CERTIORARI TO THE COURT OF APPEAL, FIFTH CIRCUIT, PARISH OF JEFFERSON

          WEIMER, Justice.

         This case concerns a post-divorce community property partition. The former husband, Daniel Webb, filed a claim for reimbursement and for the classification of a promissory note of $250, 000 as a community obligation. The promissory note corresponds to a loan secured by a mortgage on the family home. Mr. Webb contended that Mrs. Webb owed reimbursement for loan payments and that the loan should be considered a community obligation because he borrowed the money to pay community debts.

         This loan has a pernicious history. Mr. Webb, who is an attorney licensed to practice law in Louisiana, admitted that he caused a forged signature for Mrs. Webb to be placed on the loan documents and that he concealed the existence of the loan and the mortgage on the family home from Mrs. Webb.

         Mr. Webb's forgery was eventually discovered, and formal attorney disciplinary charges were brought against him. In the ensuing disciplinary proceedings, Mr. Webb admitted his misconduct, but represented to this court that he was taking "sole financial responsibility" and"full responsibility"for the loan and was otherwise committed to "making right" what he had done. Mr. Webb consented to being professionally disciplined by this court, but he prayed for leniency, citing his "[t]imely good faith effort to rectify consequences of misconduct." This court responded to Mr. Webb's petition for consent discipline by imposing a fully-deferred six-month suspension.

         Shortly after this court's disciplinary order was issued, Mr. Webb returned to the district court where the community property partition was pending. There, Mr. Webb claimed that, although he personally incurred the $250, 000 debt, responsibility for the loan should be an obligation shared by both Mr. and Mrs. Webb, rather than solely by Mr. Webb.

         The district court rejected Mr. Webb's claim, finding that Mr. Webb's representations to this court in his attorney discipline case amounted to a judicial confession that he alone was responsible for the debt. Mr. Webb appealed, and the appellate court ruled in his favor by classifying the loan as a community obligation and ordering Mrs. Webb to personally reimburse Mr. Webb for loan payments he made after the community property regime was terminated.

         Mrs. Webb sought this court's review of the appellate court's ruling. We granted certiorari to determine whether Mr. Webb's representations to this court in his attorney disciplinary case precluded him from shifting any financial responsibility for the loan to Mrs. Webb or to the Webbs' former community property. Finding that Mr. Webb represented to this court in his disciplinary case that Mrs. Webb would suffer no financial harm from his fraudulent loan for which he took "full responsibility," we further find the doctrine of judicial estoppel is appropriate for analyzing these unique circumstances. Applying the doctrine of judicial estoppel, which serves to prevent a party from manipulating the court system, we hold that, in the community property litigation, Mr. Webb cannot shift to the position of a creditor as to Mrs. Webb or to the Webbs' former community property for his fraudulent loan-a position which is contrary to the position of "sole financial responsibility" for the loan that he previously expressed to this court.

         FACTUAL AND PROCEDURAL BACKGROUND

         The facts of this matter and a prior disciplinary proceeding are intertwined. Accordingly, we begin our review of the record there.

         On December 12, 2011, while an attorney licensed to practice law in this state, Mr. Webb executed a loan for $250, 000. It is presently undisputed that the proceeds of the loan were used for purposes that would be considered community debts, such as tax liabilities and a payment on their daughter's wedding reception.

         To secure the loan, Mr. Webb executed a home equity mortgage on the family home. He obtained the loan and mortgaged the family home without Mrs. Webb's knowledge. More to the point, Mr. Webb actively concealed all of this from Mrs. Webb, going so far as to arrange for Mrs. Webb's signature to be forged on the mortgage documents and causing that forgery to be notarized. Mr. Webb also indicated on the loan documents that correspondences regarding the loan should be sent to his law office. However, the lending bank apparently overlooked Mr. Webb's efforts to change the correspondence address and, about a month after Mr. Webb obtained the loan, the bank mailed copies of the documents to the Webb family home. Mrs. Webb opened the mail from the bank and discovered the existence of the $250, 000 loan, the mortgage on the family home, and observed that her signature had been forged on the mortgage documents.

         Mrs. Webb confronted Mr. Webb about the mortgage documents. Mr. Webb admitted to forging Mrs. Webb's signature and also informed her of the existence of an unsecured loan of $120, 000 and lines of credit of $50, 000 and $75, 000 of which Mrs. Webb was previously unaware. In the wake of these revelations, Mrs. Webb filed for divorce and a community property partition, and also filed an attorney misconduct complaint with the Office of Disciplinary Counsel (ODC).

         The ODC opened an investigation into the allegations that Mr. Webb had forged the mortgage documents. Through counsel, Mr. Webb admitted Mrs. Webb's allegations were "essentially correct." In this written response dated July 12, 2012, Mr. Webb explained that he asked his secretary to sign Mrs. Webb's name on the mortgage and presented the forged document to his law partner for notarization. Mr. Webb agreed with Mrs. Webb's characterization that he forged the mortgage because Mrs. Webb would not have agreed to the loan. Mr. Webb characterized his actions as a one time "lapse in judgment" which he "deeply and sincerely regrets." Mr. Webb committed to "make it right." He elaborated: "As to 'making it right,' Mr. Webb has been actively working with the lender to renegotiate the loan, cancel the home equity mortgage, and to remove his wife from any possible personal exposure associated with the underlying loan." Mr. Webb further indicated that he "has been making the payments on the note" and reiterated that: "once again he accepts full responsibility for it." Mr. Webb also acknowledged that "he faces some level of discipline as a result of his actions," and he expressed a desire to explore consent discipline.

         Indeed, by letter dated July 27, 2012, Mr. Webb submitted to the ODC an extensive proposal for consent discipline. Just as before, when describing the fraudulent loan, Mr. Webb "accepts responsibility for it." When urging that mitigating factors justified a public reprimand, Mr. Webb added: "Further, neither his wife nor any financial institution has suffered any financial loss as a result of his conduct. … While he cannot undo what he did, he can and does acknowledge his conduct, accept responsibility for it, and express his deep remorse." When proposing probation as an alternative, Mr. Webb referenced his first admissions to the ODC and stated: "As noted in our letter dated July 12, 2012, Mr. Webb has taken measures to cancel the home equity mortgage in question and to accept sole financial responsibility for the loan amount."

         During the course of the ODC's investigation, the ODC obtained a request for extension to file federal income taxes submitted on behalf of Mr. and Mrs. Webb, but Mrs. Webb's signature was also forged on that document. Mr. Webb admitted to the ODC that he was responsible for that forgery as well. Mr. Webb contended that, just as he was afraid to tell his wife about the need for the $250, 000 loan, he "feared his wife's reaction when he learned in October, 2011, that their tax bill for the year 2010 would be higher than expected." The fraudulent loan, Mr. Webb explained, was in part used to pay the 2010 tax liability, and "there have been no issues raised regarding the tax return itself." To ODC's inquiry whether Mr. Webb had forged any other documents, Mr. Webb "advise[d] he [was] not aware of any other documents containing a signature purporting to be that of Mrs. Webb which he knows to be false."

         The ODC apparently determined it had ascertained the full scope of Mr. Webb's misconduct, and reached an agreement with Mr. Webb to submit a joint petition for consent discipline to this court. All of the foregoing representations by Mr. Webb were among the exhibits to the "Joint Petition for Consent Discipline Pursuant to Rule XIX, § 20" submitted by ODC and personally signed by Mr. Webb. Moreover, the Joint Petition described that "[a]ll relevant facts … are set forth in the Joint Stipulation of Facts accompanying this petition, and more fully reflected in the exhibits submitted herewith." (Emphasis added.)

         This court accepted the petition for consent discipline on December 6, 2013, and issued to Mr. Webb a six-month suspension, but that suspension was fully deferred. In re Webb, 13-2583 (La. 12/06/13), 129 So.3d 526.

         Several weeks later, on December 30, 2013, Mr. Webb filed a motion for summary judgment in the community property case, seeking to characterize the fraudulent loan, not as his sole obligation to repay, but an obligation for which the community was responsible. Alternatively, Mr. Webb claimed that if the obligation to repay the loan was solely his, he was owed reimbursement for using the loan proceeds for community debts. The trial court deferred ruling on these issues until a trial on the merits. However, on February 14, 2014, the trial court issued a partial summary judgment in favor of Mrs. Webb, finding that she was not bound by the mortgage on the ground that she did not consent to the loan, but the trial court made no ruling as to whether Mrs. Webb had any liability on the underlying debt.

         After a trial, the trial court issued a community property partition judgment, which denied Mr. Webb's reimbursement claims for the fraudulent loan and found that loan to be Mr. Webb's separate obligation. The trial court's ruling stated "that First NBC Account … debt … in the amount of $244, 356.92 is the separate debt of Daniel Webb. Accordingly, Daniel Webb shall assume full responsibility for the above described debt and remove the liability that it may have to Elizabeth Webb personally."

         In written reasons for judgment, the trial court explained:

La. C.C. art. 1853 provides that "[a] judicial confession is a declaration made by a party in a judicial proceeding. That confession constitutes full proof against the party who made it. A judicial confession is indivisible and it may be revoked only on the ground of error of fact." In the Louisiana Supreme Court disciplinary proceedings against him, Mr. Webb through his counsel made declarations which establish that he assumed the First NBC loan as his separate obligation.
The Joint Stipulation filed in the Louisiana Supreme Court disciplinary proceedings against Mr. Webb states that he has taken appropriate steps to try and have the mortgage transferred into his name alone. The Louisiana Supreme Court found as a mitigating factor Mr. Webb's "good faith effort to rectify the consequences of his conduct." The Court finds that the First NBC loan is a separate obligation of Daniel Webb in the amount of $244, 356.92.

         Mr. Webb filed a motion for new trial on this issue. The trial court denied Mr. Webb's motion. Mr. Webb then appealed.[1]

         The appellate court reversed the trial court's judgment allocating the fraudulent loan as Mr. Webb's separate obligation. The appellate court ruled that "although obtained through fraudulent means," the $250, 000 loan "is a community obligation." Webb v. Webb, 16-567, p. 19 (La.App. 5 Cir. 1/24/18), 238 So.3d 566, 580. Having found the fraudulent loan was a community obligation, the appellate court also ruled Mrs. Webb must reimburse Mr. Webb one half of the $21, 216.64 that Mr. Webb paid toward the loan after the Webbs' community property regime was terminated.

         This court granted Mrs. Webb's request for review of the correctness of the appellate court's ruling, which characterized the fraudulent loan as a community property obligation and ordered Mrs. Webb to reimburse half of Mr. Webb's post-termination payments toward the loan. Webb v. Webb, 18-0320 (La. 4/27/18), 247 So.3d 113.

         LAW AND ANALYSIS

         When, as here, former spouses do not reach a voluntary partition, an action to partition property following the termination of the community property regime is governed by La. R.S. 9:2801. In pertinent part, the ...


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