While we are all familiar with court orders that settle a dispute after a plaintiff has sued for damages, sometimes a court can issue judgment before the plaintiff has actually incurred any damages. This is known as a declaratory judgment or declaratory relief. However, the dispute must be real and present rather than hypothetical for a court to grant a declaratory judgment. Much like binding arbitration, once a judge has issued a declaratory judgment, the decision is legally binding regarding the present and future rights of all of the parties involved. Unlike arbitration, a declaratory judgment cannot award any damages or regulate the parties in any way.
Plaintiffs often seek declaratory judgments to settle issues dealing with contracts, deeds, leases, and wills. An insurance company, for example, might seek a declaratory judgment as to whether a policy applies to a particular person or event. In that case, although the insurance company has not yet lost any money as a result of adding a person or event to the policy, they might lose money in the future as a result of the addition. When disputing a will, a beneficiary may seek a declaratory judgment to determine what portion of the estate she is to receive before the estate has been divided.
In contrast, if someone filed a claim with their insurance company for a person or event that was not covered, then it would be too late for the insurance company to seek a declaratory judgment. Similarly, a beneficiary looking to claim a different or larger portion of an estate after it has already been divided should not seek declaratory judgment. Because these situations involve plaintiffs that have already been harmed financially, they would be better suited to litigation.
Declaratory judgments are a form of preventive justice because, by informing parties of their rights, the court can help them to avoid breaking certain laws or terms of a contract. Because it is preventive, a declaratory judgment has no way of managing the parties involved once the judgment has been issued. Instead, it merely states the court's opinion regarding the legal nature of the issue, without requiring either party to do anything. Also, because of their preventive nature, courts are usually unwilling to issue declaratory judgments. Instead, most judges would prefer to wait until actual damages have been incurred. However, by stepping in early, the court can prevent one or both parties from breaching their contract or breaking the law. By extension, the court prevents a long and costly legal battle between the parties, which would be a drain on the court's resources as much as it would be a burden for the litigants involved.
Declaratory judgments can be made at both the federal and the state level. At the federal level is the Declaratory Judgment Act which was enacted by Congress in 1934. In 1922, the National Conference of Commissioners on Uniform State Laws passed the Uniform Declaratory Judgments Act. Within one year, forty-one states, the U.S. Virgin Islands, and the Commonwealth of Puerto Rico had all adopted the act. Most of the remaining nine states have their own laws governing declaratory judgments.
Our declaratory judgmentattorneys bring decades of courtroom experience in consumer litigation. DiTommaso Lubin Austermuehle has offices in Oakbrook Terrace and Chicago, Illinois and represents clients in the greater Chicagoland area and throughout Illinois, Indiana, and Wisconsin. To schedule a consultation with a member of our team, contact us via email, at (877) 990-4990, or locally at (630) 333-0000.