District Court Split: When Must A Plaintiff Elect Its Remedy?
By: Doron Weiss
Assume a commercial dispute in which a plaintiff brings a count for breach of contract (with a request for compensatory damages) along with a fraud-related count (which seeks rescission of the subject contract). In such a situation, the plaintiff is attempting to affirm the contract by seeking damages for breach while simultaneously attempting to disavow the contract by seeking rescission. Because these two remedies are inconsistent and mutually exclusive, it is well established that the plaintiff is required to elect the remedy it wishes to pursue. However, there is a circuit split in Florida on whether such an election must be made prior to the entry of judgment or prior to trial.
The doctrine of election of remedies is an application of the doctrine of estoppel, and operates on the idea that a party electing one course of action should not be permitted to avail itself of an incompatible course. For the doctrine of election of remedies to apply, the remedies at issue must be coexistent and inconsistent. If two remedies are inconsistent or mutually exclusive such that one implies negation of the underlying facts necessary for the other, then the choice of one remedy operates as an election. In particular, it is well established that the remedies for breach of contract and rescission are inconsistent. The reason these remedies are inconsistent is because the remedy of damages for breach of contract is based on an affirmance of a contract, while the remedy of rescission is premised on the disavowal of a contract.
As noted by the Florida Supreme Court, and premised on the distinction between cases heard in equity and at law, so long as the elected remedy is appropriate and effectual,
They [plaintiffs] cannot, of course, pursue to a final conclusion both the remedy in equity and that at law, there being a patent inconsistency between a suit in equity to rescind and cancel a contract for fraud or other cause and an action at law to recover damages for breach thereof. Thus, when a party takes legal steps to enforce a contract, he relies upon its provisions as a basis for recovery and it is generally held that he thereby makes a conclusive election not to rescind. By the same token, it is the general rule that the choice of the equity remedy by way of rescission and cancellation operates as an election of remedies and bars a subsequent action at law for damages.
As such, benefit of the bargain damages are not available to a party who repudiates (rather than affirms) a contract due to the doctrine of election of remedies.
In the Third District, a plaintiff may be required to elect its remedy prior to trial. In all other Florida Districts, however, a plaintiff is only required to elect its remedy prior to the entry of judgment. Accordingly, there is an inter-circuit split amongst Florida courts as to whether a plaintiff is required to elect its remedy prior to trial or merely prior to the entry of judgment.
The Third District should eschew the rule which may require a plaintiff to elect its remedy prior to trial and instead should follow the lead of other Florida districts such that election of remedies is only required prior to the entry of judgment. In addition to providing a more uniform standard throughout the state, a change in the Third District’s rule requiring election prior to trial will allow for resolution of the entirety of a dispute and will eliminate the risk that a plaintiff, having elected a remedy prior to trial, be forced to try the majority of the case again in search of an alternative remedy in the event that the first trial is unsuccessful. The concepts of fairness to litigants and judicial economy demand no less.
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Article Concepts: Election of remedies, breach of contract, recession of contract.
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