The Massachusetts Appeals Court issued an important decision last week on what is needed for a declaratory judgment. The decision comes from a foreclosure law case, but just as easily applies to other areas of law. The decision, Wells Fargo v. Mulvey, is included below.
What is a Declaratory Judgment?
A declaratory judgment, simply put, is a court order that resolves a legal uncertainty. Pursuant to G.L. c 231A, § 1:
The supreme judicial court, the superior court, the land court and the probate courts, within their respective jurisdictions, may on appropriate proceedings make binding declarations of right, duty, status and other legal relations sought thereby, either before or after a breach or violation thereof has occurred in any case in which an actual controversy has arisen and is specifically set forth in the pleadings and whether any consequential judgment or relief is or could be claimed at law or in equity or not . . .
Declaratory judgments are often requested when the desired remedy for a case is more than simply money. For example, in the context of foreclosure defense, money alone will not help someone who wrongfully lost their home to foreclosure . . . that party wants the home back, not money. In such a case, the party can request a declaratory judgment stating that the foreclosure was wrongful, which has the full force of law.
For real estate cases, declaratory judgments are often recorded in the land records, which becomes part of the property’s title.
Overview of Case
In this case, Wells Fargo requested a declaratory judgment as to whether it could perform a non-judicial foreclosure against a homeowner. The bank was concerned that its mortgage did not include the necessary language permitting such a foreclosure.
Importantly, the home owner in this case never filed an answer or response to the bank’s motion. The bank sought a default judgment and requested what it asked for: a declaratory judgment allowing it to foreclose.
What is Needed for a Declaratory Judgment?
Not so fast, said the Court! Although the homeowner never responded to the lawsuit, the court, on its own, declined to give the bank a declaratory judgment. The reason for doing so answers this important question: what is needed for a declaratory judgment?
A declaratory judgment requires there to be an actual controversy for a court to resolve. Here, because the bank presented no evidence to conclude that its right to foreclose against the homeowner was in question, this was not a matter appropriate for a declaratory judgment.
As someone who often requests declaratory judgments in my cases, this decision is an important reminder of the need to properly prepare such lawsuits. Failure to do so can result in dismissal of the case. This decision is clear that a court can do this entirely on their own, even if the opposing party never raises this concern.
If you find yourself involved in a legal dispute concerning a declaratory judgment, contact me for a consultation.Wells Fargo v. Mulvey