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Explanation & Examples. Under Chapter 37 of the Texas Civil Practice and Remedies Code, a party is entitled to seek a declaratory judgment from a Texas state court to “settle and afford relief from uncertainty and insecurity with respect to rights, status, and other legal relations.” Tex. Civ. Prac. & Rem. Code § 37.002. Cases seeking a declaratory judgment are often filed when a party wants a court to construe its rights and duties under a contract, or to declare that he or she is or is not a party with an interest in a will or trust. The court then declares, i.e. clarifies, if a contract is valid, a non-compete clause enforceable, or a will properly established, to name only a few examples.
Strategic Use. Savvy lawyers often use declaratory judgments for other purposes as well. For example, when someone has threatened to sue a client for breach of a contract or violation of the Texas Deceptive Trade Practices Act, the attorney may recommend filing an action for a declaratory judgment that the contract was not breached, or a tort was not committed, in order to have first choice of venue for the case. The statutory scheme also provides for attorney’s fees in an appropriate case, so adding a cause of action for a declaratory judgment may open up the possibility of a fee award at the end of the case.
Limitations. However, there are limits to declaratory judgments of which many attorneys are unaware. For example, a person who does not have standing to bring an affirmative cause of action for violation of a law may not seek a declaratory judgment that the opposing party has broken that law. See Davis v. Hendrick Autoguard, Inc., 294 S.W.3d 835, 840 (Tex. App.—Dallas 2009, no pet.) (plaintiff had no standing to seek declaratory judgment for violation of statute having no private right of action). Thus, for example, a competitor may not seek a declaration that you have violated the federal or state anti-kickback laws, because they could not bring a private cause of action for violation of those laws. See, e.g., Reliable Ambulance Serv. v. Mercy Hosp. of Laredo, No. 04-02-00188-CV, 2003 Tex. App. LEXIS 10934, at *5 (Tex. App.—San Antonio Aug. 20, 2003, pet. denied) (dismissing claim for unfair competition based on alleged violation of anti-kickback provision of Social Security Act); Tex. Occ. Code §§ 102.009, 102.010 (West 2013) (explaining that action for violation of Texas anti-kickback statute may be instituted by attorney general, county attorney, or district attorney).
Conclusion. A declaratory judgment can be a good tactical move in litigation to secure a preferred venue, create the possibility of attorney’s fees, or simply to position yourself as a plaintiff rather than a defendant. But it is important to be aware of the loopholes and restrictions on such causes of actions so that you are not fined or otherwise sanctioned for bringing a frivolous cause of action and abusing the judicial system.
If you are seeking or defending against a declaratory judgment, you should contact the experienced attorneys at Oberheiden & McMurrey, LLP. Get a free and confidential consultation and benefit from talking to former federal and state prosecutors and experienced litigators.
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This information has been prepared for informational purposes only and does not constitute legal advice. This information may constitute attorney advertising in some jurisdictions. Reading of this information does not create an attorney-client relationship. Prior results do not guarantee similar future outcomes. Oberheiden & McMurrey, LLP is a Texas LLP with headquarters in Dallas. Mr. Oberheiden limits his practice to federal law.