The Virginia Business Litigation Blog
Declaratory judgments are court decisions that clarify the legal relationship between parties and their rights in a situation. Unlike traditional judgments, which might involve the awarding of damages or the enforcement of rights, declaratory judgments simply declare the rights, duties, or obligations of each party. (See Virginia Code § 8.01-184, giving the courts the power to make “binding adjudications of right” in “cases of actual controversy”). This type of judgment is often sought when a party seeks an official determination of the legal status or interpretation of a law or contractual obligation. As the Fairfax Circuit Court recently held, however, declaratory judgments are not appropriate in all circumstances. They are designed to help parties understand legal rights and obligations without engaging in full-blown litigation. The key aspect of declaratory judgments is that they are preventive and aim to resolve legal uncertainty rather than to provide a remedy for a wrong already done.
Prior to the Declaratory Judgment Act (Virginia Code §§ 8.01-184 to -191), the common law usually precluded judicial resolution of contractual disputes unless they encompassed a fully formed, prima facie claim (consisting of an enforceable contract, an unexcused breach, and resulting damages). The Declaratory Judgment Act introduced a nuanced judicial approach, creating an intermediary tier between fully matured claims and those deemed insufficient under traditional common law. (See Ames Ctr., L.C. v. Soho Arlington, LLC, 301 Va. 246, 253 (2022)). Declaratory judgments cannot be used as a means of issuing advisory opinions or deciding moot or speculative matters, but they can be used to adjudicate actual conflicting assertions of rights, even absent immediate consequential harm. The Act’s purpose “is to afford relief from the uncertainty and insecurity attendant upon controversies over legal rights, without requiring one of the parties interested so to invade the rights asserted by the other as to entitle him to maintain an ordinary action therefor.” (See Va. Code 8.01-191).
The Fairfax case referenced above, Zurich American Insurance Company v. Hilton Worldwide Holdings Inc., involved a dispute between Hilton and its insurance carrier. Although the opinion does not contain a detailed recitation of the facts of the dispute, it notes that the insurance carrier (Zurich American) was seeking a declaratory judgment to avoid damages for past activities. The court found this to be an inappropriate use of the declaratory judgment remedy. The court emphasized that declaratory judgments are intended to guide future 
conduct rather than to resolve past disputes. Where rights and wrongs have already matured, such as in this case, declaratory relief is unavailable.
By providing clarity and direction for future conduct and relations between parties, declaratory judgments mitigate the risks associated with undirected actions pertaining to rights, thereby preserving the interests of all involved parties. Declaratory judgments should not be sought for retrospective disputes or where other adequate legal processes exist.