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.”).
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.