Where’s the Beef: Ma ...

Where’s the Beef: Make sure there’s still a controversy when your declaratory judgment is entered – if you’ve lost the beef, you’ve lost jurisdiction.

August 23, 2023 | by Butler Snow

Declaratory judgments under the Uniform Declaratory Judgment Act (UDJA) can be a powerful tool, resolving current (or future) disputes while opening an avenue to claim attorneys’ fees. Once a UDJA claim is filed and the stampede of litigation commences, it would be easy to overlook the underlying controversy and focus on the requested declaration; after all, if the parties agreed, they wouldn’t need a declaration!

That would be a mistake. A controversy is at the heart of any UDJA claim; without one, the court has no jurisdiction to enter a declaratory judgment. The need for a controversy at the beginning of a case is readily apparent and accepted; whether a controversy exists should be the first question a party asks when a UDJA claim is filed against it.

But even if there is a controversy when suit is filed, that does not mean the controversy automatically extends—and the court’s jurisdiction thus follows it—throughout the pendency of the suit. The controversy can die, and jurisdiction can be lost, at any time.

Texas’s Fifth Court of Appeals in Dallas recently highlighted the relevant distinction and the pitfalls for unwary prevailing litigants.[1] In Banigan, a husband filed a UDJA claim back in 2015 to establish the validity and enforceability of an agreement he made with his wife. At a hearing, the wife confirmed the facts of the husband’s claims and agreed to entry of an order on the issue. The husband got the declaratory judgment he asked for.

Except he couldn’t use it. Six years later, in 2021, the husband filed for divorce. The wife then sought to challenge the 2015 agreement underlying the declaratory judgment, arguing she did not voluntarily sign it. She also filed a bill of review challenging the declaratory judgment itself, asserting there was no existing justiciable controversy at the time the court issued the judgment. The Fifth Court of Appeals agreed and vacated the judgment.

The Court’s decision focused on the facts established at the time the judgment was signed and entered to determine whether a controversy existed. When the husband first filed the action, there could have been a controversy over the 2015 agreement. And six years later, there certainly was. But at the time of entry, after a hearing wherein the wife testified and agreed with the husband on the relevant facts, that crucial element was lacking. Because it was lacking, the Court found that the trial court lacked the necessary jurisdiction to enter the judgment and voided it. The Court did not express whether the trial court ever had jurisdiction to enter the judgment, just that, at the time of entry, jurisdiction was lacking.

The Bottom Line:

Parties often disagree. Those disagreements can lead to a dispute or outright litigation. The UDJA was built as an avenue to resolve those disagreements and added the additional incentive of attorneys’ fees to encourage and sweeten the pot for a prevailing party.

But the UDJA is not a blank check. Things change in litigation; parties must be aware that what was once a controversy—whether because the parties staked out different negotiating positions pre-litigation, because they asserted competing claims at the beginning of litigation, or merely because they disagreed on interpretation—can easily cease to be one. The adversarial process is a pressure cooker meant to challenge positions and reveal truths; in that pressure cooker, facts are discovered, items are stipulated to, and positions change to reflect new realities. 

Generally, this is a good thing, and exactly what the adversarial process is meant to do: resolve disputes and narrow the issues. But that also means that in the course of litigation, controversies can be resolved without court intervention, removing the need (and the jurisdiction) for a court declaration. In those situations, when a controversy ceases to be one, it would be prudent to replead or nonsuit a UDJA claim rather than pursue it and obtain a declaratory judgment (and subsequent order for attorneys’ fee) that is void on its face.

[1] In re Banigan, 660 S.W.3d 307 (Tex. App.—Dallas 2023, no pet.) (https://cases.justia.com/texas/fifth-court-of-appeals/2023-05-22-01084-cv.pdf?ts=1673754782)