contract-law jurisdiction equitable-relief
What is the legal procedure for suing to void a contract for non-performance?
<p>Sometimes a person might have a contract that they wish to void because the other party is not performing on their end of the contract. Generally it is the person who is paying money who wants to void the contract and the one providing services would be the plaintiff. For example, recently <a href="https://arstechnica.com/information-technology/2019/02/frontier-demands-4300-cancellation-fee-despite-horribly-slow-internet/" rel="nofollow noreferrer">a small business owner got hit with a $4000+ contractual demand when she tried to end her internet service contract because the internet service was bad</a>.</p>

<p>So, for example, in Massachusetts I know that district courts are supposed to handle certain "equitable injunctions", but superior court handles "equitable relief". I am not sure of the exact distinction there. So which court would it be?</p>

<p>Assuming we have figured out the right court, is it then just a matter of making a normal suit for equitable relief stating cause and asking for an order voiding the contract as the remedy?</p>

<p>There are at least three options available to litigate this dispute. </p>

<p>The first doesn't actually require going to court unless the other side tries to sue you. The second would probably be cheaper if the suit could be brought in a limited jurisdiction district court rather than a general jurisdiction superior court. The third would have to be brought in a superior court which would usually be slower and more expensive than bringing suit in district court.</p>

<p>Also, @IñakiViggers is correct that the contract might require mediation prior to commencing litigation, or might require an arbitration forum. That would need to be confirmed before someone files suit. Both kinds of terms would be common in contracts like the one described.</p>

<p><strong>Self Help</strong></p>

<p>The usual one is to stop paying and advise the non-performing party why you are doing so (which takes little or no legal fees). Then, the non-performing party has to sue you to get paid, and you have a credible defense against that suit. But, you can't be sure in advance that the court will rule in your favor.</p>

<p><strong>A Suit For A Refund</strong></p>

<p>A second option would be to sue the service provider for a refund of the amounts already paid which were not earned as a result of non-performance. This breach of contract suit would be proper in any court with jurisdiction over breach of contract suits with the appropriate amount in controversy in the lawsuit. The service provider would then probably counterclaim against you for the amount owed for which you have not yet paid (if any).</p>

<p>A declaration of the rights of the parties would have to be made by the court incident to resolving the claim for money judgment relief in the case.</p>

<p><strong>A Declaratory Judgment Action</strong></p>

<p>A third option is to bring a suit for "declaratory judgment". This is a lawsuit brought when there is a bona fide dispute between the parties concerning the interpretation of a legal issues such as contract interpretation or statutory interpretation as applied to a particular situation. The court would then rule on the question of whether you had a right to withhold payment before you risked being sued, without providing any other relief.</p>

<p>If the court determined that the breach of contract eliminated your obligation to pay, you could then cease to pay and request a refund of what you have already paid without risking being sued for non-payment which could hurt your credit rating, or put you at risk of violating some loan covenant that considers being sued for non-payment of a debt to be an event of default unless a bond is posted for the payment of that debt (which is not uncommon in business loan agreements).</p>

<p>It is not entirely settled whether a declaratory judgment action is equitable or not. In some circumstances in some jurisdictions, these kinds of lawsuits are aways treated as equitable because they don't seek either a money judgment or possession of specific real property or personal property, which are the primary kinds of remedies allowed in non-equitable cases called "actions arising at law". Other jurisdictions, for example, for the purpose of determining a right to a jury trial, look to whether the underlying dispute in which relief is sought arises at law or in equity to determine the character of the action.</p>

<p>Usually, case law interpreting or the express language of, the statute setting out the jurisdiction of particular courts, or the statute or constitutional provision authorizing declaratory judgment actions in a jurisdiction, will address the question of whether a particular kind of court has jurisdiction to entertain declaratory judgment actions. As explained below, in MA, a statute expressly states which courts do and do not have jurisdiction to enter declaratory judgments.</p>

<p>A suit for an injunction is always one seeking equitable relief, but an injunction is a court order directing someone to refrain from taking a particular action, or ordering someone to take a particular action, rather than simply declaring what the law says about the rights of the parties in a particular situation without actually requiring either party to do, or refrain from doing anything, as a declaratory judgment does. In the situation that you describe in the question, the proper court in which to bring a declaratory judgment action regarding this dispute would be the superior court.</p>

<p>In MA, the statute describing jurisdiction to enter a declaratory judgment is M.G.L.A. 231A, § 1. It states (emphasis added and paragraph break added for ease of reading in this digital format):</p>

<blockquote>
  <p>§ 1. Power to make declaratory determination; jury questions</p>
  
  <p><strong>The supreme judicial court, the superior court, the land court and the probate courts,</strong> 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; and such proceeding shall not
  be open to objection on the ground that a merely declaratory judgment
  or decree is sought thereby and such declaration, when made, shall
  have the force and effect of a final judgment or decree and be
  reviewable as such; provided, that nothing contained herein shall be
  construed to authorize the change, extension or alteration of the law
  regulating the method of obtaining service on, or jurisdiction over,
  parties or affect their right to trial by jury. </p>
  
  <p>When a declaration of right, or the granting of further relief based
  thereon, shall involve the determination of issues of fact triable by
  a jury as of right and as to which a jury trial is duly claimed by the
  party entitled thereto, or issues which the court, in accordance with
  the practice of courts of equity, considers should be tried by a jury,
  such issues may be submitted to a jury in the form of questions, with
  proper instructions by the court, whether a general verdict be
  required or not.</p>
</blockquote>

<p>As the language above indicates, for purposes of a right to a jury trial, MA is a state in which a declaratory judgment action is not automatically either at law or in equity, but instead the court looks through to the nature of the underlying dispute to determine if there is a right to a jury trial (which hinges on the distinction between law and equity).</p>

<p><strong>FOOTNOTE RE STATUTORY DRAFTING STYLE</strong></p>

<p>The MA declaratory judgment statute demonstrates a common feature of (bad) American statutory drafting, which is the use of very long compound, multi-clause sentences. This is disfavored in modern legal writing because it often gives rise to ambiguities in meaning and is hard to read.</p>

<p>This style became common because American statutory drafters were worried that if the entire concept of a statute was not contained in one sentence that a sentence from the statute could be truthfully quoted out of context in a way that would mislead a reader regarding the meaning of the statute as a whole. This was particularly a problem in the days when few people had easy access to the full statutory language of a law. Thus, many readers of a misleading out of context quote from a statute would not be able to review the full context of the quoted language to determine its true meaning.</p>

<blockquote>
  <p>I know that district courts are supposed to handle certain "equitable
  injunctions", but superior court handles "equitable relief". I am not
  sure of the exact distinction there. So which court would it be?</p>
</blockquote>

<p>Could you specify where you read that? Broadly speaking, [state] district courts handle claims of up to some limit of monetary relief (claims beyond that limit would have to be filed in [state] circuit court), but I had never heard about a division of remedies as you describe it. In federal jurisdictions, this would be litigated in <em>district court</em>, since <em>circuit court</em> denotes the appellate court therein.</p>

<p>There are different types of relief, and injunctive is one of them. Two other types are monetary and declaratory. In the context of contract law, a party might be awarded injunctive relief in the form of <em>compelled performance</em> of that contract. If non-performance of a contract caused losses, the harmed party could be awarded monetary relief that compensates him for those losses.</p>

<p>A party pursues <em>equitable</em> relief in situations where he is harmed and neither his contract nor the law provides remedies for that harm, yet it contravenes notions of fairness if the issue were left unaddressed.</p>

<p>A party's duties under a contract may be discharged by what the <a href="https://www.nylitigationfirm.com/files/restat.pdf" rel="nofollow noreferrer"><em>Restatement (Second) of Contracts</em></a> calls <em>supervening frustration</em>, where that "supervening frustration" might be the counterparty's non-performance. See <em>Restatement at § 265</em>:</p>

<blockquote>
  <p>Where, after a contract is made, a party's principal purpose is
  substantially frustrated without his fault by the occurrence of an
  event the non-occurrence of which was a basic assumption on which the
  contract was made, his remaining duties to render performance are
  discharged, unless the language or the circumstances indicate the
  contrary.</p>
</blockquote>

<p>Here, the non-occurrence is the counterparty's failure to comply with the contract, where that failure is without the plaintiff's fault.</p>

<p>That said, the plaintiff will need to persuade the court that voiding the contract is the only <em>reasonable</em> solution under the circumstances. In some contracts,it <em>might</em> suffice to show that the defendant's non-compliance has irreparably stricken the covenant of <em>good faith and fair dealing</em> that is required in contracts. Other scenarios could would warrant a finding of "frustration of contract" if the plaintiff clearly needed the job to be done soon and further withstanding the defendant's delay was unreasonable or impermissibly risky.</p>

<blockquote>
  <p>is it then just a matter of making a normal suit for equitable relief
  stating cause and asking for an order voiding the contract as the
  remedy?</p>
</blockquote>

<p>Yes, unless the contract establishes that disputes shall be addressed first through other methods (such as mediation, arbitration, "administrative remedies", and so forth).</p>

<p>There is no need to classify your <em>Prayer for Relief</em> as <em>equitable</em>, <em>injunctive</em>, or otherwise. What matters is whether the facts as pleaded entitle the plaintiff to the remedy(-ies) sought (and of course, provided that the evidence favors his position).</p>
