Laches: The Doctrine and the Reality

Introduction:

The concept of “courts of equity” is an ancient one in Anglo-American law, deriving from the effort of the Kings of England to reserve an area of total discretion within the common law supported by an often-hostile Parliament. That concept survives today in American law even though the courts, once divided into courts of equity and courts of law, are now merged into a single system of courts.

The way equity now works in American law differs from state to state, but generally applies in all cases in which the relief sought by the plaintiff is not for monetary compensation. If one seeks to quiet title to land, to impose an injunction, to invalidate a land transfer, to determine border of a parcel, to compel a party to do or not do something, that is a claim in equity. If one seeks monetary compensation instead, that is a claim in law. Often a single action filed will ask for both in which case the claims in equity and law are tried separately.

There are also areas of law which have been placed into equity for historical reasons. Most matters involving Wills, Trusts and probate are considered equitable matters to be tried in courts of equity.

Usually, a jury is not allowed for trials in equity: the judge hears the case without a jury. And the principles applied to the case often differ from those applied in a court of law. In general, the trier of fact is to utilize general notions of fairness and justice rather than follow strict statutory or common law applications of the law.

One such difference between law and equity is the Doctrine of Laches which is the topic of this article.

Basic Law:

In courts of law, one cannot bring an action after the Statute of Limitations has passed. For example, in California one has four years from date of breach to file an action predicated on breach of contract. While there are circumstances that can prolong the time before the statute bars an action, in general a court will dismiss a case that is brought after the statute has run.

As the name implies, the Statute of Limitations is normally set by statute with the time to bring action encased in law passed by the legislature. The statute can be a long time (ten years or more for hidden construction defects) or a short time (one year for certain types of libel or slander) but the key is that the time limit of the statute of limitations is clearly set out.

In equity, no such statute of limitations exists. Instead, the party defending against the claim can assert “Laches,” which essentially argues unreasonable delay by a plaintiff in bringing their claim. Central to this defense is that laches requires a lack of diligence and activity in making a legal claim, or moving forward with legal enforcement of a right, particularly in regard to equity. This means that it is an unreasonable delay that can be viewed as prejudicing the opposing party. When asserted in litigation, it is an equity defense, that is, a defense to a claim for an equitable remedy.

Laches is a defense to a proceeding in which a plaintiff seeks equitable relief. Types of equitable relief include Injunction, where the court orders a party to do or not to do something; declaratory relief, in which the court declares the rights of the two parties to a controversy; and accounting, where the Court orders a detailed written statement of money owed, paid, and held.

The rules of equity are built on a series of legal maxims, which serve as broad statements of principle, the truth and reasonableness of which are evident. The basis of equity is contained in the Maxim "Equity will not suffer an injustice." Other maxims present reasons for not granting equitable relief.

Laches is one such equitable defense. Laches is based on the legal maxim "Equity aids the vigilant, not those who slumber on their rights." Laches recognizes that a party to an action can lose evidence, witnesses, and a fair chance to defend himself or herself after the passage of time from the date the wrong was committed. If the defendant can demonstrate a disadvantage because of the length of time he or she relied on no suit being filed. If the defendant can demonstrate major disadvantages due to the long time between the issue arising and the lawsuit being filed, laches may apply, and the case may be dismissed. 

Perhaps an example will demonstrate the concept best.

Assume you are building an extension on your house next to what you consider the boundary line. You let your neighbor know so he will understand what the noise is all about and while he is not happy, he does not object. You hire contractors, get permits, break ground and are putting in the new foundation and three months after breaking ground, in the middle of the project, he sues to quiet title, claiming that your proposed addition is built four inches onto his land and must be removed. 

You claim laches, saying he waited too long, knew you were breaking ground, that he did not file suit while you proceeded, that the four inches matters little compared to the cost of removing the structure and that you would pay him ten thousand dollars to allow this infringement assuming it is truly over the boundary.

There is a good chance that the Court will bar the action even though only a few months had passed since you broke ground, comparing the equities and the relative loss to the parties. 

Another example: you seek an injunction stopping a person from slandering you on the internet saying it is hurting your business and causes you emotional distress and give evidence that when he first started doing it two years ago your business made twice the profit it does now. He claims laches.

First, the fact that you waited two years before seeking an injunction will bother the court. What happened this far along to suddenly make the claim filed? Second, it sounds as if monetary damages might be the appropriate remedy since you could quantify the damages, so the court may ask why you are seeking an injunction. You will have to show the court that money will not solve the problem and explain why you let so long pass before bringing the action.

Note that in both cases there was no set time limit. No statute that tells one if one can still file suit. Instead, there are arguments about fairness, relative benefits and losses and the “gut” feeling of the judge as to what is fair. 

However, delay alone is usually not enough to prevent a claimant obtaining relief. The consequence of the delay must be that it would be unfair for the court to give relief, usually because the defendant has changed its position because of the delay.

Note that the party asserting laches has the burden of proving that it is applicable. Laches is distinguishable from the statute of limitation, which prevents a party from asserting claims after the designated limitations period has expired. Claims may be asserted regardless of the time that has passed if fairness demands it in the mind of the judge.

Practical Approaches:

Using some common sense and experience, one can determine if an equitable claim should be brought and the danger that laches will bar your claim.

1. Remember, equitable orders are normally not the relief that the court provides. Most courts prefer to award monetary damages since it is easy to enforce. As one court told the writer, “How am I supposed to make him obey me? Send out the sheriff to arrest him?” The answer was yes that is precisely what he should do, but courts would rather simply provide monetary relief and not have the time and trouble inherent in enforcing an equitable mode of relief. In choosing to go into equity, you are already making the court work harder. 
2. Fairness is the key. If the defendant reasonably believed no action would be brought, either by your words or deeds, or lack of action, the court will possibly find a way to bar you. That means if you are going to bring an action in equity, move fast. If you must delay, make sure you have good cause and perhaps give notice to the defendant that you will be bringing an action later. Reliance of the defendant on your lack of action is vital to their defense.
3. Be ready to prove that monetary damages will not give you relief that is required. Do not assume that the court will opt for equitable relief simply because you sought same in your pleadings.
4. Make sure the equities are on your side. As the examples illustrate, to force a party to spend hundreds of thousands due to a four-inch mistake that makes no economic difference to you is going to require you to have good arguments as to why it is justified and if you delayed in bringing the action to the defendant’s harm, you are facing an uphill battle.
5. If you are alleging laches, note that the key is fairness. Courts do not like to eliminate relief for a party merely due to timing. If the delay caused you no harm, if the evidence is such that it did not “disappear,” and if you did not rely on lack of action to your detriment, you will face an uphill battle.
6. Note some forums are inherently equitable. Arbitration, agreed upon by the parties, is an equitable forum and the arbitrators are given broad powers to make decisions based on their notion of fairness. Indeed, one court refused to overturn an arbitration decision that was wrong on the law, indicating that in an equitable forum the arbitrator need not strictly follow the law.
7. One old attorney had a good method for assessing the equities of a situation: he would find a layperson stranger and put the case to him or her and ask for their gut reaction as to what is right and fair. He commented to the writer, “We get too close to the case. We are advocates. We lose objectivity as to what is right and fair. Ask someone else.”

Conclusion:

The moment you bring an equitable action you move to an arena in which the overall emotive reaction of the judge is the determining factor. You move from a statutory realm in which the laws are in black and white, to a world in which elements of fairness trump all. That can be to your benefit and if you want more than monetary damages, you have little choice.

But why you may feel the equities are on your side and laches will not make a difference, make sure you objectify your analysis.