Can Potential South Carolina Defendants Decide When And Where a Lawsuit will be Filed?

braveheart

Plaintiffs often send notice of claim and pre-suit demands. Occasionally, it is a good idea to resolve a claim before filing suit, but more often than not, pre-suit resolution is not possible, and everyone knows that a lawsuit will eventually be filed. Typically, there will be an extended silence following the breakdown of pre-suit negotiations, and nothing else happens until the plaintiff files the lawsuit, which often happens the day before the statute of limitations runs. Meanwhile, the Plaintiff is free to collect evidence and otherwise build his or her case, choose the best venue for the case, and examine other relevant issues.  All the while, the defendant waits in the dark, at least procedurally. But what if a potential defendant could decide when and where the dispute is taken to  court?  What if the defendant could begin discovery while recollections and evidence remain fresh? Perhaps the South Carolina Uniform Declaratory Judgment Act (SCUDJA) provides the opportunity to do so.

Accordingly, we’ve been doing some brainstorming on this topic.

Declaratory judgments are typically filed to settle insurance coverage disputes, constitutional issues, and other nontraditional legal disputes. However, the SCUDJA bestows upon courts the power to declare “rights, status, and other legal relationships whether or not further relief is or could be claimed.”  SC Code Ann § 15-53-20.  A DJ can be used to ask the court to construe a contract “before or after there has been a breach thereof.”  SC Code Ann § 15-53-40. A DJ can be used to try and determine an issue of fact “in the same manner that issues of fact are determined in other civil actions” and parties to a DJ have a right to a jury trial.  SC Code Ann § 15-53-90.  The purpose of the SCUDJA is to provide “relief from uncertainty,” and the statute is to be “liberally construed.” SC Code Ann § 15-53-130; Harrington v. Blackston, 311 S.C. 459, 463, 429 S.E.2d 826, 829 (Ct. App. 1993) (“Moreover, our Supreme Court has held that declaratory judgment actions must be liberally construed to settle legal rights and remove insecurity from legal relationships without awaiting a violation of the relationships.”).

Once a potential defendant receives notice of a claim and a demand, it would appear that it is then aware of a dispute. We would submit that the potential defendant should be able to then file a DJ, asking the court to declare that the potential defendant has not violated the rights of the potential plaintiff. This would resolve the dispute, the uncertainty, and would accordingly further the purpose of the SCUDJA. Pretty crazy, right?

Obviously, the DJ plaintiff would need to determine whether a DJ makes sense from a strategic standpoint. Considerations would include: the amount in controversy, the likelihood that the claimant will actually file suit; the strength of the potential defense to the claim; whether there is an advantage to beginning discovery now instead of waiting for the claimant to file suit; and of course venue considerations. This is a novel approach, to be certain, and it woudn’t be appropriate in most cases. But there might be that one case – that unusual set of facts and legal issues – that prompts consideration of this approach.

Comments

  1. Bartleby the Scrivener says:

    This is absolutely beautiful. It allows far greater levels of risk management and assessment and can aid in the swift resolution of conflicts.

  2. I think defendants have tried the dec action route elsewhere in products actions, without success, but I don’t have anything at my fingertips.

    • Kyle White says:

      I have actually experienced the receiving end of the suggested DJ strategy in a federal court outside of South Carolina. The strategy probably would have worked had the Plaintiff and a member of one of the Defendant LLC’s not been domiciled in the same state (no complete diversity).