Courts have long held that the equitable defense of unclean hands is not a defense to an unfair trade or business practices claim based on violation of a statute. In addition, there are other defenses called equitable doctrines, which includes laches, estoppel, and unclean hands. Before moving to these defenses, here is a quick review of trademarks and trademark law. If you dont have the facts to support your defenses, they will be thrown out either before or at time of trial. 50(a)(1). Many other unforeseen circumstances could arise that may have caused you to not meet your end of the contractual agreement. When Can Foreign Judgments Be Enforced in the US? Yet this defense again depends on good faith, which, at least according to substantial evidence, may have been lacking. In some cases, an affirmative defense can be a powerful tool to stop a lawsuit in its tracks. (4) This conduct affected the balance of equities between the litigants in such a way that, in light of plaintiffs conduct, plaintiff should not be permitted any remedy against defendant in equity. "Unclean hands" is Using the Unclean Hands or Clean Hands Doctrine Quasi estoppel refers to conduct such as ratification, election, acquiescence, or acceptance of benefits. While both of these sources do indicate that a money had and received claim can result from a defendant's duress, fraud, or undue influence, they do not hold that the equitable claim can only arise in the context of reprehensible conduct by the defendant. The email address cannot be subscribed. The Court explained that the clean hands doctrine does not deny relief to a party who has committed any misconduct in the past, but only misconduct that is directly related to the issue for which he seeks relief. Waiver is defined as an intentional relinquishment of a known right or intentional conduct inconsistent with claiming such right. Defenses App.Dallas 2007, no pet.). LEXIS 2209, at *8 (Tex. In order to prove that there was a breach of contract in your Florida law agreement, there are three elements that a party must prove. c . May 26, 2022 Summary This checklist describes the affirmative defense of unclean hands for a breach of contract case. 61. A number of state and federal courts no longer restrict unclean hands to equitable remedies or preserve the substantive version of the defense.2It has also been assimilated into statutory law.3In the federal court system alone, the availability and scope of the defense is a debated topic with divided results.4Adjudication of state law shows However, in entering the injunction, the trial court declined to consider the defendants defense that there should be no injunction because defendant was forced to resign from his employment with plaintiff after he refused the plaintiffs instructions to engage in improper business practices. This is becausea business attorney is very familiar with how contracts work and the proper defenses needed to protect you and your business. The Bank of Saipan; Antonio S. Mua, Receiver, Plaintiffs-Appellants, v. CNG. The makeover included the new name Turning Leaf, the logo featuring a leaf design theme, that did not contain the name Gallo. Equitable defenses are appropriate for breach of fiduciary duty claims as fiduciary relationships originate in equity. CNG further argues that there can be no claim for money had and received without some affirmative inequitable conduct by the defendant. Parties suited for fracture of compact may defend themselves through the unclean hands teachings proving that the other party is also part liable. The doctrine of unclean hands is an affirmative defense that prevents one who has engaged in improper conduct regarding the subject matter of the cause of The Bradley decision provides a useful avenue to pursue in cases where an employer seeks to prevent a former employee from opening a competing business. Peter Mavrick is a Miami non-compete lawyer who has won non-compete litigation in Miami-Dade Circuit Court through the unclean hands affirmative defense. LEXIS 1665 (Tex. 6 is denied as to the affirmative defense of failure to mitigate. The use and application of equitable defenses are perfect examples of this gray area. (The doctrine applies against a litigant whose own conduct in connection with the same matter or transaction has been unconscientious, unjust, marked by a want of good faith, or violates the principles of equity and righteous dealing.). denied) (quoting Jenkins v. Henry C. Beck Co., 449 S.W.2d 454, 455 (Tex. This list gives you a few examples of the most commonly used defenses. Copyright 2023, Thomson Reuters. Thus, to find waiver through a partys conduct, intent must be clearly demonstrated by the surrounding facts and circumstances. v. Varsity Brands, Inc. A doctrine in equity lawsuits that bars a plaintiff from obtaining judicial relief in a matter in which he is not free of guilt, or does not have clean hands., Failing to perform ones duties under the contract, Obtaining a favorable offer, or acceptance of an offer, by use of, Dishonestly or fraudulently representing the contents of the contract, Committing a crime in connection with some aspect of the contract. Wilson had feigned wealth on a claim to 48,000 outstanding credit card accounts. Star Athletica, L.L.C. Fraud in the Inducement Defenses of Breach of Contract. Improvement Assn., 23 S.W.3d 398, 403 (Tex. The court further ordered that the sister take nothing on all her claims and ordered her to pay attorneys fees for the trustee. There are quite a few more affirmative defenses that apply depending on the type of case you have. Id. Unclean hands is a common affirmative defense pleaded by defendants and must be proved by the defendant. 6. 05-07-00079-CV, 2008 Tex. But they can be useful from time to time and they are waived if not pleaded in the response/answer, which is why you see them in nearly every response/answer. App. 823 S.W.2d at 765. . To explore this concept, consider the following clean hands definition. Entering a contractual agreement with another party is a serious business relationship that either party should not take lightly. 5. App.Amarillo 1991, no writ). The ball returns to the plaintiffs court if you deny the breach of contract claims made. It aims at the abstract justice of the case, and looks solely at the inquiry, whether the defendant holds money, which belongs to the plaintiff. It is not uncommon for beneficiaries to sue a trustee for actions that the beneficiaries had knowledge of but where they failed to object to that conduct for a period of time. H.A. For example, your business attorney can raise an unclean hands defense that argues the person bringing the lawsuit acted in a way that should preclude anything youve done. Meanwhile, in Texas, Michael Wilson, another sophisticated con-man with a previous felony conviction, presented himself to CNG as an important and wealthy businessman, and expressed his intent to purchase two of CNG's failing subsidiaries, Finity and Fi-Scrip. In this circumstance, the trustee may want to raise certain equitable defenses to those claims, such as laches, ratification, waiver, and estoppel. To establish the affirmative defense of accord and satisfaction, the defendant must show that in the new contract: (1) the parties agree to discharge the existing obligation; (2) the parties agree that one party will perform and the other will accept something different from what each expected from the existing obligation; (3) the parties unmistakably communicate that the different performance will discharge the existing obligation; (4) the agreement to discharge the existing obligation is plain, definite, certain, clear, full, explicit, and not susceptible of any other interpretation; and (5) the parties agreement must be accompanied by acts and declarations that the creditor is bound to understand. Honeycutt v. Billingsley, 992 S.W.2d 570, 576-77 (Tex. To establish the affirmative defense of accord and satisfaction, the defendant must show that in the new contract: (1) the parties agree to discharge the existing obligation; (2) the parties agree that one party will perform and the other will accept something different from what each expected from the existing obligation; (3) the parties If you fail to do so in that timeframe, then you cannot prevail on your suit no matter how great your evidence is. Under Florida law, if a former employer engaged in wrongdoing that caused the entrepreneurs separation from employment, then the employer will be precluded from enforcing a covenant not to compete against the former employee. Shaver v. Schuster, 815 S.W.2d 818 (Tex. WebUnclean hands is an equitable defense much like fraud. It claims they were saddled with RICO, constructive trust, and UCC-1 claims against substantially all of their assets. There can be no waiver unless so intended by one party and so understood by the other. Id. Unfortunately, there are several cases where one party does not meet their end of the deal, breaching the agreed-upon terms. (D.I. All rights reserved. Peter Mavrick is a Miami non-compete lawyer who has won non-compete litigation in Miami-Dade Circuit Court through the unclean hands affirmative defense. In a civil lawsuit, an equitable remedy is a remedy, or resolution, that does not involve the payment of monetary damages. App.Eastland 1963, no writ). The doctrine applies when it would be unconscionable to allow a party to maintain a position inconsistent with one in which she acquired or by which that party accepted a benefit. The court therefore concluded the husband was not entitled to summary judgment on his affirmative defense of estoppel, whether couched in terms of judicial or quasi-estoppel. Wilson paid the $4.5 million from the Bank to CNG and CNG financed the remaining amount to satisfy its $19.7 million asking price in the form of promissory notes taken from Wilson. The clean-hands doctrine is [t]he principle that a party cannot seek equitable relief or assert an equitable defense if that party had violated an equitable principle, such as good faith. A false representation may be accomplished by conduct, or when one has a duty to speak, by mere silence. Without an underlying fraud, CNG could not be derivatively liable for the knowing acceptance of fraudulent benefits. For example, in Bank of Am., N.A. What is required to prove that a party had unclean hands varies by jurisdiction, making it important to consult with an attorney experienced in contract law. You definitely should include as many affirmative defenses as possible, but no every one known to man. Use Of Equitable Defenses In Breach Of Fiduciary Duty Litigation, defense to breach of fiduciary duty claim, equity application to fiduciary relationships, equity to defeat breach of fiduciary duty claims, Trustee Quandary: Criminal Activity By A Beneficiary With Or On Trust Property, Suing Attorneys In Texas For Participating in Fiduciary Breaches, Texas Passes A New Law To Punish Elder Financial Abuse. In most cases, however, an affirmative defense could prove useful, but you wont know for sure until more evidence is uncovered. Knowing your defenses to breach of contract can protect you in these types of instances. We affirm the dismissal of the fraud claim. Laches may bar an action where the plaintiff acquiesces in the way and manner a trust is handled for many years. We now turn to the judgment as a matter of law with respect to the fraud claim. App.Austin 1995, no writ) (estoppel); Pickett v. Heygood, Orr & Reyes, L.L.P., No. App.Waco 1957, writ refd n.r.e.). App.San Antonio 1991, writ denied). List of Possible Affirmative Defenses (If you don't raise, you might have waived). Sun Exploration & Prod. In the summer of 2001 two sophisticated con-artists-now serving time in federal prison on various fraud convictions-arrived in Saipan, an American territory in the Western Pacific. Co. v. Conoco, Inc., 52 S.W.3d 671, 677 (Tex. Critically, the evidence must establish the parties assent to the new agreement, and [t]here must be an unmistakable communication to the creditor that tender of the lesser sum is upon the condition that acceptance will constitute satisfaction of the underlying obligation. Ind. MOTION TO STRIKE REPLY BRIEF DENIED AS MOOT; AFFIRMED in part; REVERSED in part; REMANDED. App.Texarkana 1992, writ denied). Kendall-Jackson asserted a defense that Gallos complaint should be barred by the doctrine of unclean hands. This is always one of the first Restitution & Constructive Trusts 6 (3d ed.2003). Furthermore, the acceptance of benefits of an agreement or contract cannot, as a matter of law, preclude a party from challenging the agreement if the party was led into the agreement by virtue of fraud or similar misconduct. The doctrine of unclean hands is an affirmative defense that prevents one who has engaged in improper conduct regarding the subject matter of the cause of action, to pursue the claim at issue. Sender v. Mann, 423 F. Supp. An affirmative App.Dallas 1984, no writ). Specifically, the court found [i]n this case, by agreeing to be bound by the lease, [plaintiffs] did not ratify the tortious conduct that cause them to have to accept the lease or else lose the property. Cartel Asset Mgmt. See, e.g., Gulf Oil, 322 F.2d at 31-32. For example, estoppel simply means that a party should not be allowed to win because it would be unfair for some reason. ANSWER to Complaint with Affirmative Defenses by all This article is part of Vail Laws open-source litigation and legal risk management checklist. App.Dallas 2002, pet. If the employee proves that his or her former employer engaged in improper conduct leading to the employees separation of employment, then the former employer will likely be precluded from enforcing a non-compete agreement.