Sometimes a legal disagreement results in litigation. Often, one party is seeking money to cover damages that another party caused. But there are other types of court action related to legal disputes. Specifically, we’re talking about declaratory judgment actions. Business owners in particular may find that this is the best course of action to protect their rights and potentially force another party to fulfill their obligations.
The actual declaratory judgment is a court order defining a party’s rights and the legal relationship between two or more parties. Typically, this type of court case does not involve granting monetary damages to the winning party. Instead, declaratory relief is obtained through the court’s ‘declaration’ in the form of an order.
Chapter 86 of the 2021 Florida Statutes covers this type of legal action. Here are some key points from Florida’s Declaratory Judgment Act (the “Act”):
The Act also specifies who can file for declaratory relief.
Generally, anyone concerned about their rights under certain legal documents, like:
“deed, will, contract, or other article, memorandum, or instrument in writing.”
Also, some people might seek declaratory relief because their “rights, status, or other equitable or legal relations” could be affected by statutes, regulations, ordinances, and so on.
For example, two parties to a contract might disagree on its terms. One might file a declaratory judgment action in the appropriate court, asking the court to resolve the issue. The judge renders a decision on the issue. The decision is legally binding.
Another common reason to seek declaratory relief involves insurance coverage. An insured party might file a claim, but the insurer denies coverage. The insured party could ask a court to decide whether their insurance should cover the incident in question.
During COVID-19 lockdowns, business owners filed filed declaratory judgment actions to clarify policy provisions that could cover losses due to business interruption. The phrase often cited by plaintiffs is “direct physical damage or loss.” Plaintiffs claimed this included government lockdowns. Some insurers disagreed.
The decision in one case – Studio 417, Inc. v. Cincinnati Insurance Company – seems to support policyholder’s positions. In this case and similar ones, some judges are granting relief while others deny plaintiffs’ claims.
Winning parties could exercise their rights. Typically, they would expect the losing party to comply with the court’s order. However, losing parties could appeal the decision.
Also, further lawsuits could be filed. If more clarification is needed, further legal action could include another declaratory judgment action.
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with business and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.
