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May 21, 2019 Practice Points

Be Careful with Admissions

Evidentiary admissions can diminish credibility if they need to be changed; judicial admissions may lock in the litigant to a position that may later prove to be undesirable

by Michael R. Lied

A couple of recent Illinois cases point out potential evidence traps involving admissions.

Derrick Roberts, while driving National Freight’s semi-truck, struck Clifton Armstead’s semi-truck in Illinois. Armstead sued Roberts, alleging that Roberts negligently operated the vehicle at excessive speed. Armstead also signed a “Compromise and Release Agreement by Stipulation” to settle a Pennsylvania workers’ compensation claim. In this agreement, under “state the precise nature of the injury,” Armstead indicated only “right knee strain.”

In the Illinois litigation, Roberts moved for partial summary judgment on Armstead’s claim, arguing that it was barred under the doctrines of (1) collateral estoppel, (2) res judicata, and (3) judicial admission. Regarding the judicial admission argument, Roberts maintained Armstead could not present evidence of injuries other than to his knee, based on the agreement. The court granted summary judgment to the defendants and Armstead appealed, arguing that the circuit court erred because his response in the agreement was not a judicial admission.

The appeals court explained that there are two types of admissions, judicial and evidentiary. Judicial admissions are formal admissions in the pleadings that have the effect of withdrawing a fact from issue and dispensing with the need for proof of the fact. Evidentiary admissions, though, may be explained by the party.  Evidentiary admissions may be made in, among other things, pleadings in a case other than the one being tried. Whether Armstead’s signed response in the agreement was a judicial admission is a question of law.

The appeals court agreed that Armistead’s statement in the agreement was not a judicial admission. A judicial admission is clear, unequivocal, and uniquely within the party’s personal knowledge. A statement cannot be considered a judicial admission when it is made in the course of another proceeding.

Because Armstead made a contradictory statement about his injuries in a separate proceeding, the statement was properly characterized as an evidentiary admission. Armstead v. National Freight, Inc. and Derrick Roberts, 2019 IL App (3d) 170777.

The second case teaches that judicial admissions are a greater risk. Axion RMS, Ltd. engages in the business of insurance brokerage and employee benefits consulting. Axion filed a verified (sworn) complaint against Michael Booth, its former president. Counts I and II were breach of contract claims, count III was a tortious interference claim, and count IV was an accounting claim. Counts I, II, and IV were based on alleged violations of a noncompete clause in a five-year employment agreement between Axion and Booth. The case turned on the contract element of consideration.

The verified complaint alleged the employment agreement was adequately supported by virtue of Booth’s continued employment and the compensation paid by Axion. Illinois law is somewhat unsettled as to when employment or continued employment constitutes adequate consideration for a noncompete agreement.

The circuit court concluded that due to the lack of adequate consideration, the noncompete clause between Axion and Booth was unenforceable. It found that Axion could not sufficiently plead counts I, II, and IV, and the court dismissed those counts with prejudice.

Axion filed a combined motion to reconsider the court’s order dismissing counts I, II, and IV and for leave to file a second amended complaint. The combined motion attached a proposed second amended complaint, which sought to plead additional consideration in order to render the noncompete clause enforceable. The trial court denied Axion’s combined motion, focusing on the fact that Axion originally filed a verified complaint.

On appeal, the court of appeals observed that the employment agreement cited Booth’s continued employment as the only consideration. A promotion or salary increase was not mentioned anywhere in the employment agreement. Notably, the employment agreement also included an integration clause, which stated that “[t]his instrument contains the entire agreement of the parties pertaining to the subject matter hereof.”

A sworn statement of fact in a verified pleading remains binding on a party even after an amendment, and the party cannot subsequently contradict the factual allegation. Once Axion filed a verified complaint, the statements alleged were binding judicial admissions that it could not later contradict.

The relevant portions of the proposed amended complaint were inconsistent with the previously made judicial admissions in the original verified complaint. A verified complaint cannot be casually changed as may be expedient to circumvent a motion to dismiss. Thus, the trial court did not abuse its discretion in denying Axion leave to file its proposed amended complaint. Axion RMS, Ltd. v. Booth, 2019 IL App (1st) 180724.

Admissions can be powerful things. Evidentiary admissions can diminish credibility if they need to be changed. Judicial admissions may lock in the litigant to a position that may later prove to be undesirable.

 Michael R. Lied is with Howard & Howard Attorneys PLLC, Peoria, IL.

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