The Laches Defense in Family Court (November 2006)

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Material for Charleston County Family Court Bar CLE– November 2006

Note: After this lecture, two South Carolina Supreme Court opinions: Ables v. Gladden, 378 S.C. 558, 664 S.E.2d 442 (2008) and Strickland v. Strickland, 375 S.C. 76, 650 S.E.2d 465 (2007) abolished the defense of laches in the collection of back child support or alimony, while authorizing the continued use of a similar defense, equitable estoppel, in such collection cases.  It remains unclear whether evidentiary prejudice remains a valid laches defense. See Did the Supreme Court limit laches too much in defending back alimony and child support claims?

Laches is a powerful defense to the attempted enforcement of an order months (or even years) after one party has allegedly stopped obeying the order. This equitable defense asks the court not to enforce previous violations of an order on the basis that the party seeking enforcement rested on his or her rights to the detriment of the allegedly contemptuous party. The elements of laches are (1) delay, (2) unreasonable delay, and (3) prejudice. Emery v. Smith, 361 S.C. 207, 603 S.E.2d 598, 602 (Ct.App. 2004).

Frequently invoked in cases where one party seeks to collect years of back child support, alimony or equitable distribution payments, laches, if successful, will void the previous violations of the order (though not the future enforcement of the order). Knowing how to successfully prosecute (or defend) laches claims is a skill every family court practitioner should master.

Laches as distinguished from Equitable Estoppel

Laches is frequently confused with equitable estoppel (possibly because many equitable estoppel claims lend themselves to laches claims). However, the two defenses are conceptually dissimilar, have different elements, and result in different remedies. Laches seeks to void past non-compliance with the order due to one party’s failure to timely enforce the order to the prejudice of the other. Equitable estoppel voids all enforcement of the order because the parties have engaged in a course of conduct that would make enforcement of the order inequitable.

In South Carolina, the essential elements of estoppel are divided between the estopped party and the party claiming estoppel. As to the party being estopped, the elements are: 1) conduct which amounts to a false representation, or conduct calculated to convey the impression that the facts are otherwise; 2) the intention that such conduct shall be acted upon by the other party; and 3) knowledge of the true facts. In order to claim estoppel, the claiming party must show: 1) a lack of knowledge and the means of knowledge of truth as to facts in question; 2) justifiable reliance upon the conduct of the party estopped; and 3) prejudicial change in the position of the party claiming estoppel. Kelley v. Kelley, 368 S.C. 602, 629 S.E.2d 388, 392 (Ct. App. 2006).

Laches arises when one party has simply rested on his or her right to enforce an order. Equitable estoppel arises where the parties appear to have reached a mutual agreement (or understanding) not to obey an order because they have reached a different agreement (or understanding). It frequently arises when changed circumstances might have led the parties to formally modify a court order but instead the parties reach an informal agreement. The equitable estoppel argument is basically “I thought we had an agreement and if you had indicated otherwise earlier, I would have gone to court to get the existing order modified.”

A typical example of equitable estoppel is when a parent begins paying decreased child support (without complaint from the other parent) when one of the children becomes emancipated or goes to live with the payor parent. If the parent receiving support had complained at the time support was decreased, the payor parent could have gone to court to get support reduced. If the payee parent later tries to enforce the written order, equitable estoppel will prevent enforcement of that order. In Kelley, the Court of Appeals found equitable estoppel on the following facts: former wife was granted custody of the parties’ children in the divorce decree, both children decided to live with former husband, former husband believed that former wife agreed to waive alimony in exchange for him having custody of the children, and former husband changed his position in reliance on the parties’ agreement to waive alimony and support when he failed to have his obligation reduced or eliminated after the children began residing with him. Kelley, 629 S.E. 2d at 392.

Equitable estoppel is a stronger remedy than laches as it prevents future (as well as past) enforcement of the order. Kelley, 629 S.E.2d at 391, n. 2. Where a client has not complied with a court order for a period of years, it is worth exploring whether an equitable estoppel defense can be raised in addition to (or in lieu of) a laches defense.

Presenting a Laches Defense

Laches is neglect for an unreasonable and unexplained length of time, under circumstances affording opportunity for diligence, to do what in law should have been done. Whether laches applies in a particular situation is a highly fact-specific inquiry; therefore, the merits of each case must be closely examined. Kelley, supra, 629 S.E.2d at 391.

Although laches technically has three elements, it is unclear how one can prove the second element (unreasonable delay) without also proving the first element (delay). In developing a laches defense, one should think of the unreasonable delay that caused the defending party prejudice.

If one intends to raise laches (or equitable estoppel) as a defense to enforcement of a court order, one should file a return to the rule to show cause (or complaint) that raises the defense. It is unclear whether these defenses can be raised unless pled. See Rule 8(c), SCRCP (“In pleading to a preceding pleading, a party shall set forth the affirmatively the defenses: … laches… and any other matter constituting an avoidance or affirmative defense.”). If no pleading raises laches as a defense, the prosecuting party must object to any evidence on laches being introduced or laches will be considered tried by implied consent. See Rule 15(b), SCRCP (“When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings”).

Proving or disproving unreasonable delay

The prosecuting party [which this article will refer to as the Plaintiff] will typically try to show that the delay in enforcing the order was due to lack of notice, lack of funds, health problems or inability to locate the defending party. See e.g., Emery, supra,  603 S.E.2d at 600-01 (husband’s failure to provide notice of retirement from military to bring wife’s entitlement to portion of his retirement benefit into effect precluding husband from claiming laches; wife’s medical conditions, including Anasara, fibromyalgia, a large hiatal hernia, and depression may have made delay in pursuing claim reasonable); South Carolina Dept. of Social Services on Behalf of State of Tex. v. Holden, 319 S.C. 72, 459 S.E.2d 846, 848 (1995) (nine year delay in seeking child support was not barred by laches, in part because the mother lacked the financial wherewithal to pursue the claim); Anderson v. Anderson, 284 S.C. 487, 327 S.E.2d 355, 356 (Ct.App. 1985), (husband’s claim that he was incapacitated by drinking problem and emotional instability could be a defense to a claim of laches); Kelley, supra (wife alleged that her delay in enforcing alimony order was due to her inability to locate husband).

The party claiming laches [which this article will refer to as the Defendant] has the burden of proof. Circle Square Co. v. Atlantis Development Co., 267 S.C. 618, 230 S.E.2d 704, 708 (1976). Defendant’s counsel should anticipate these potential defenses to a claim that the delay was unreasonable and must be prepared to show that the delay in enforcing the order was not caused by lack of funds or notice, the Plaintiff’s poor health or an inability to locate the Defendant.

The Defendant should be prepared to show that his or her whereabouts were always known by the Plaintiff (or that the Plaintiff could have easily ascertained the Defendant’s whereabouts). Factors such as frequency of contact (and whether done in writing, by phone or in person) and listings in phone directories can show that the Defendant was not hiding.

In contrast, the Plaintiff should be prepared to show efforts made to locate the Defendant (if failure to locate the Defendant is the explanation for delay). A lack of contact from the Defendant where contact would be expected (such as where the parties have children living with the Plaintiff) can explain the delay. Returned mail showing the Defendant did not provide a current address can show the delay in enforcement was due to the Defendant’s hiding. Previous unsuccessful attempts by the Plaintiff to enforce the order (especially where those attempts failed because the Defendant could not be located or served) are especially relevant.

Where a Defendant was pro se or failed to appear at the hearing where the order being enforced was created, the Plaintiff should be prepared to show that the Defendant had notice of the order. Often such notice can be shown by providing the correspondence enclosing the order. However notice can also be proven by showing the Defendant acted in accordance with other provisions of the order in question (such as exercising visitation or dividing assets or debts in conformance with the order). Where either party was required to take some action to have a provision of the order go into effect (such as the notice of retirement in Emery), that party should be prepared to show that notice was provided and how it was provided.

A Plaintiff claiming the delay in pursuing enforcement was due to lack of funds should be prepared to show how he or she was able to finally procure the funds to enforce the order and how previous attempts to procure enforcement were unsuccessful due to lack of funds. The Defendant should be prepared to show that funds were available to pursue the claim. Often enforcement is sought only when the Defendant stops making any payments; in such circumstances the timing of the enforcement action would appear to belie a claim that the Plaintiff delayed enforcement due to a lack of funds. The Defendant should be prepared to show discretionary expenditures made by the Plaintiff during a time the Plaintiff could have been pursuing enforcement: new vehicles or boats, vacations, major home renovations or purchase of a new home; funding retirement or saving accounts. The Plaintiff should be prepared to show that attempts to pursue enforcement were thwarted due to the lack of funds. Evidence of unsuccessful attempts to retain counsel due to a lack of funds is especially useful.

A Plaintiff claiming medical problems as a reason for delaying enforcement should, at a minimum, provide some corroborating information on the medical condition(s) that delayed enforcement. Rule 7(c), SCRFC, authorizes the admission of a physician’s statement showing dates of treatment and the type of ailment. The Plaintiff should also be prepared to explain how the medical condition(s) delayed enforcement and explain the timing of the enforcement action (i.e., why the Plaintiff is now able to pursue enforcement if the medical condition still exists).

The Defendant should be prepared to show that any medical condition of the Plaintiff is not the true explanation of the delay. One method is to show that the Plaintiff was able to engage in other strenuous or stressful activities during a time he or she could have pursued enforcement. Another method would be to show that nothing in the Plaintiff’s medical condition has changed which would explain the sudden ability to enforce the order.

By anticipating these common explanations for delay in pursuing enforcement of a court order, the Plaintiff can develop his or her strongest case for showing the delay was not unreasonable and the Defendant can develop its strongest case for showing the delay was unreasonable.

Prejudice

It is not enough that the Defendant prove an unreasonable delay in pursuing enforcement: the Defendant must also show prejudice.

While delay is a required element of laches, prejudice triggers the application of laches, for so long as parties are in the same condition, it matters little whether one presses a right promptly or slowly, within the limits allowed by law. When a party, however, takes no steps to enforce known rights until the condition of the other party has, in good faith, becomes so changed that he or she cannot be restored to his or her former state, the party’s rights will not then be enforced, the delay having become inequitable.

27A Am. Jur. 2d. Equity §176 (2006).

Prejudice to the Defendant usually falls within one of two categories: it may be inequitable to allow Plaintiff’s claim to proceed because of a change in Defendant’s financial position or because the Plaintiff’s delay has made it difficult for the Defendant to garner evidence to vindicate his rights. The first of these two prejudice claims is commonly referred to as “financial prejudice;” the other is commonly referred to as “evidentiary or defense prejudice.” In developing a laches claim, it is vital to determine whether the prejudice element involves defense prejudice, financial prejudice or both.

Reported South Carolina cases discussing the prejudice element more commonly focus on financial prejudice. See e.g. Kelley, supra, 629 S.E.2d at 391-92 (finding laches where ex-wife had delayed twenty-four years in seeking alimony, ex-husband’s health was poor, his finances had been erratic and he was approaching retirement). Defense prejudice tends to be common and can lead to a successful claim of prejudice. Yet there is little South Carolina case law discussing this type of prejudice. One reported case, Lynch v. Jordan, 145 S.C. 525, 143 S.E. 264 (1928) notes one party claimed laches due to it being “extremely difficult to obtain direct evidence upon the point” but did not address the laches claim in detail or make a finding of laches.

It is not enough for the Defendant to claim financial prejudice by noting the difficulty of paying significant sums: the court is likely to simply set the arrears and put the Defendant on a payment plan. If the Plaintiff does not seek back interest on the past due sums, the Defendant has basically obtained a lengthy interest-free loan from the Plaintiff and will not be able to show financial prejudice. Instead, the Defendant should be prepared to show how the Plaintiff’s delay in enforcing the order caused the Defendant to believe that the order would not be enforced and the financial decisions the Defendant made based on that belief that would now render compliance with the order prejudicial. Often the economic prejudice will be the Defendant’s failure to seek modification of the court order when a change of circumstances might have merited modification. Situations in which a Defendant paid support directly to the Plaintiff where the order required payment through the court is economic prejudice if the Plaintiff then attempts to obtain the court’s listed arrearage amount as past-due support.

In contrast, the Plaintiff should either be prepared to show that the Defendant’s assumption that the Plaintiff was not interested in enforcing the order was unreasonable or that the financial situation of the Defendant would not be fundamentally different if the Defendant had been complying with the order all along.

While a claim of financial prejudice acknowledges non-compliance with the order but attempts to excuse it, a claim of defense prejudice alleges compliance with the order which the Defendant is no longer able to prove. In claiming defense prejudice, the Defendant needs to show what evidence has been lost due to the Plaintiff’s delay and how this lost evidence is material to the defense of the claim.

Classic elements of undue evidentiary prejudice, for purposes of determining the applicability of the doctrine of laches, include the loss of pertinent records and the unavailability of witnesses. For example, documents may have been misplaced or destroyed; or it may be difficult or impossible for the party to defend a claim if witnesses are deceased or too ill to testify. A party also may be prejudiced if witnesses cannot be identified due to the lapse of time, or if witnesses cannot be identified or found due to change of a party’s personnel, or if witnesses are hostile to the party defending the claim due to events occurring during the delay.

Additionally, there may be a dulling of witnesses’ or parties’ memories from the passage of time, such that the testimony contains inconsistencies, gaps, and in some cases, speculation rather than memory.

In an extreme case justifying application of laches, it may be impossible, due to the delay, for a party to marshal evidence in its defense. Thus, although a complainant may feel he can prove his case without great difficulty, despite a delay, this does not mean that that adverse and/or third parties have not been harmed.

27A Am. Jur. 2d. Equity §182 (2006).

Courts look beyond conclusory claims of evidentiary prejudice and assess the particular facts of the case. Evidentiary prejudice is not established without a statement of the particular prejudice suffered due to the absence of witnesses and documents. Where witness memories are claimed to have faded, courts assess whether the particular witnesses’ testimony is critical or insignificant. Memory losses of insignificant witnesses obviously are less relevant. Courts also assess whether the party asserting memory loss has made reasonable effort to revive witness memories by showing the witnesses relevant documents. Failure to do so may cast doubt on the merits of a loss-of-memory claim. Additionally, courts assess whether witness testimony, when given, evidences memory losses.

Where witness unavailability is claimed, courts assess whether in fact the witness is gone, missing, or unavailable. Where a witness is out-of-state, beyond state court subpoena power, a court considers whether the party asserting prejudice has shown that the witness would not appear, is unable or unwilling to testify, or would not be available to testify by deposition. Additionally, courts consider whether the unavailable or deceased’s witness’s testimony is cumulative of other witnesses’ testimony or of other evidence available, and consider the loss of cumulative testimony less important. Where the decedent’s knowledge is crucial to a party’s defense, however, the loss of testimony is prejudicial and laches may apply.

27A Am. Jur. 2d. Equity §185 (2006).

In developing a claim of defense prejudice, the Defendant should determine what evidence of compliance has been lost to the passage of time and be prepared to show why that evidence is material and cannot be duplicated. For a case in which my client successfully claimed defense prejudice we showed that recent banking records indicated the Plaintiff’s recollection of the child support payment history was inaccurate and that older banking records were no longer available. The court found that the inability to obtain the older banking records prejudiced my client’s defense and dismissed all arrears claims predating the time period in which my client was able to obtain the banking records.

Defense prejudice is also common where a Defendant typically paid support in cash. Seeking to recollect the past year’s payment history where payment has been in cash is often difficult; seeking to recollect a decade (or longer) payment history where payment has been in cash is impossible and leads to an argument that laches should apply.

In claiming defense prejudice it is not enough to allege the loss of evidence: one must be prepared to show the loss of evidence. In the example above of cash support payments, it will not be enough to allege that support was paid in cash if the Plaintiff denies it. Instead the Defendant should seek corroborating evidence. If the Defendant ever had someone accompany him or her when making payments that witness should be produced to corroborate the defense prejudice. If the Defendant made periodic withdrawals from an account to pay the support banking records showing the withdrawals should be produced. The more evidence that can be provided the court showing defense prejudice, the more likely the court is to find laches.

If the Plaintiff needs to defend a laches claim by showing lack of prejudice (because there has been an unreasonable delay), the Plaintiff needs to show how the Defendant’s financial situation and ability to defend the claim has not been prejudiced by the delay.

CONCLUSION

Where laches is a viable defense, the Plaintiff needs to be prepared to rebut that claim: either by showing the delay was reasonable or that there was no prejudice to the Defendant. If the Plaintiff’s complaint raises disputed evidentiary issues where the evidence has been lost due to the passage of time, the Defendant needs to be prepared to show that the evidentiary issues are legitimately disputed and that critical evidence is truly unobtainable. Meanwhile, the Plaintiff should be prepared to prove the evidence is either cumulative or not material. If the Defendant claims unreasonable delay, the Plaintiff needs to be prepared to provide reasons for the delay. Meanwhile, the Defendant should be thinking about ways to prove the Plaintiff’s explanations for the delay are either unjustified or mere post-hoc justification.

In many collection cases, tens of thousands of dollars may be at issue. Simply alleging laches without thoroughly investigating the facts, circumstances, and proof that might show laches does the Defendant a disservice. With so much at stake and with laches being so fact specific, a request for discovery before the hearing, in certain circumstances, may be appropriate. Merely waiting for trial to prepare these issues is not viable: one should thoroughly analyze the other party’s position well before trial.