Pleading in the Alternative or Painting Yourself into a Corner?

In late October, federal inmate number 14170-041 explained to Judge Richard Kyle that he was, in fact, guilty of engaging in a massive Ponzi scheme and apologized for his prior false claims of innocence. Tom Petters finally saw the light and was trying to reduce his sentence. Similarly, Lance Armstrong confessed and asked the public to forgive him when the doping charges he had vehemently denied for years could no longer be avoided.

Those are two extreme examples of pleading in the alternative – a practice that is expressly allowed in civil proceedings.

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A party may “set forth two or more statements of a claim or defense alternatively or hypothetically … A party may also state as many separate claims or defenses as the party has regardless of consistency and whether based on legal or equitable grounds or both.” Minn. R. Civ. P. 8.05(b) (emphasis added). However, when pleading in the alternative, “[a]ll statements shall be made subject to the obligations set forth in Rule 11.” Rule 8.05 has a second, implicit limitation that the practitioner should bear in mind – pleading in the alternative should be limited by the very real need for credibility.

A recent case in Hennepin County’s district court provides an illustration of pleading in the alternative that may have satisfied Rule 8.05 but bore credibility on par with Tom Petters and Lance Armstrong. The plaintiff brought a claim for declaratory judgment, asking the court to find that a contract with an express term of 10 years “ending October 31, 2013” would, as a matter of law, expire on Oct. 31, 2013. The defendant answered and brought a counterclaim for declaratory judgment asking the court to find that the contract would continue beyond October 31.

With both parties asking the court to interpret the contract, the plaintiff scheduled a motion for summary judgment. The defendant’s response was a motion to amend its counterclaim to add an alternative claim for reformation. In its proposed amended counterclaim, the defendant alleged that the contract may have included an October 31 expiration date and no right to an extension because of a “mutual mistake.” The defendant asked the court to correct this “mistake” and rewrite the contract, so it would not terminate on October 31 as stated, but rather continue on indefinitely at the option of the defendant.

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On the hearing date, the defendant was before the court with three alternative positions: (1) the contract is unambiguous and enforceable, and embodies the parties’ intent, but the words mean something other than what they say; (2) if the court does not agree with the defendant’s interpretation, then the contract must be ambiguous and the court should consider extrinsic evidence of the parties’ intent; and (3) if the court still doesn’t agree with the defendant’s interpretation, then the defendant should be allowed to add a claim for reformation of the contract so it can be rewritten to say what the defendant would like it to say.

After the hearing, the case settled before the court could issue a ruling. If the case had proceeded, it is at least possible that the defendant’s strategy of pleading in the alternative may have let the defendant survive to fight another day. But what then?

The defendant would have been required to muster evidentiary support for its alternative positions. The enormity of that task was previewed in affidavits the defendant gathered in opposition to the plaintiff ’s motion for summary judgment. Because the defendant was pleading alternate theories, affiants were providing explanations that were internally inconsistent and laden with unsupported conclusions and assertions. What would happen when the affiants became witnesses subject to cross examination?

Imagine a deposition where a witness first testifies that the contract unambiguously and accurately reflects the parties’ agreement, then testifies “in the alternative” that the contract may be ambiguous because it does not mean what it says, then testifies “in the alternative” that the parties agreed to something entirely different from what the contract says and the parties made a “mistake” in drafting the contract. Now imagine multiple witnesses giving similar deposition testimony. Now imagine trying to sell that case to a judge or jury at trial.

In short, be cautious about pleading in the alternative – just because it is allowed by Rule 8 doesn’t mean it is a good idea. Alternatively pleading may require “alternative” evidence, i.e., inconsistent evidence. If so, pleading in the alternative may leave a party with no credibility. At that point, you will be left playing to delay an inevitable loss rather than playing to win. Norman J. Baer