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Equitable Estoppel

Equitable Estoppel

Definition

A judicial doctrine by which a litigant may be prevented, or "stopped," from raising an argument or a legal defense in a lawsuit. Generally, the elements of equitable estoppel are an act or omission on the part of the party to be estopped, reliance on that act or omission by the other party, and circumstances that would make it unfair if the party to be estopped is allowed to raise the argument or legal defense. For example, equitable estoppel may be applied to an insurer that stalls the investigation of a claim, indicates to the insured that the claim will be paid, convinces the insured not to sue the insurer, and then denies the claim based on a 1-year time-to-sue limitation in the policy. Since the insurer in this example persuaded the insured not to file suit in a timely manner, and the insured relied on the insurer's overtures, it would be unfair to allow the insurer to raise the 1-year time-to-sue limitation in the policy. Out of fairness, the insurer may be equitably estopped from raising its time-to-sue limitation as a defense to the claim.

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