In this week's Freedom Friday blog and email newsletter, I want to talk about a topic related to lawsuits, especially in the construction industry. In the past several months, I have had a lot of inquiries from small business owners in the construction industry. In fact, for new inquiries into my law firm, the construction industry is the #2 industry contacting my law firm. The #1 industry is cannabis, the #2 industry is construction, and the #3 industry is real estate, and if you're in the real estate industry, this topic can affect you and your business, as well. When most people hear the idea of a breach of contract lawsuit, most people usually think that one of the parties owes the other party money. Many breach of contract lawsuits involve what's called a “money judgment,” which is when the court awards the plaintiff a sum of money based on a breach of contract, open account, or related issue. However, there is a second type of breach of contract case, which may or may not involve money damages, and that's a declaratory judgment case. In today's Freedom Friday blog and email newsletter, I'm answering the question, “What is a declaratory judgment?”
A declaratory judgment is when the court makes an order that is something other than a money judgment, especially in a breach of contract or real estate related case. Let me give you some examples of how a declaratory judgment can come up. One example of a declaratory judgment case is to ask the court to determine who owns a piece of property, or to ask the court to enforce an easement. This is especially common in what is called a “quiet title” action. A “quiet title” action is when there is a dispute or possible dispute as to who owns a piece of property. Over time, the title to real property has been clouded by liens, or other “encumbrances,” and the person or entity that thinks they own the property does not have what is called “clear” title to the property. In such case, that person or entity can file a “quiet title” action and ask the court to determine who owns the property, which “quiets” the issue of ownership. In this kind of case, there is no request for money damages or anything like that; instead, the request is for a declaratory judgment, i.e., the court determines who owns the property.
Another major example of a declaratory judgment case involves enforcement of contracts. In Oklahoma, not only can you sue for breach of contract and have a claim for money damages, but you can also have a claim for what is called “specific performance." In this instance, the other party has failed to do something that the contract allegedly requires him to do. Instead of seeking a money judgment because that person or entity failed to take a specific action, the lawsuit is filed to ask the court to require that person or entity to take a specific action in fulfillment of the contract. This is very common in construction contracts. In many construction cases, there is a request in the lawsuit for the court to interpret the contract, and possibly determine whether a contractual relationship exists between the parties, identify their obligations, and possibly order specific performance. A related example is also regarding arbitration provisions within a contract, and in Oklahoma, a party can ask the court to require arbitration between the parties in the lawsuit as a matter of specific performance. These are just a few examples of a declaratory judgment case in Oklahoma.
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