What is a “tort” and what is an “equitable claim”?

Dominic

In real estate disputes, there are usually four kinds of claims:

  1. contract claims – where two or more entities made mutual promises to each other, and the defendant didn’t make good on its promise, and thereby harmed the plaintiff monetarily;
  2. tort claims – where the defendant violated one of the plaintiff’s rights that we all have as part of a civilized society, in some way that injured the plaintiff in a manner that money can compensate for;
  3. equitable claims – where the defendant violated one of the plaintiff’s rights that we all have as part of a civilized society, in some way that injured the plaintiff in a manner that money cannot compensate for because it would still be unfair; and
  4. statutory violations – where a defendant violated one of plaintiff’s rights that the government has specifically established and protected, and prescribed certain remedies to compensate for the breach, usually to advance a public policy or to help level the playing field for innocent persons that could otherwise be taken advantage of by sophisticated bad actors.

All four of these types of claims come up in real estate disputes, and most people have a general understanding of what it means to “breach” a contract or to violate a statute. But what about torts? What even is “equity” in the old legal sense?

Torts, as stated above, are for when a plaintiff has suffered an injury as a result of the defendant violating some right that we as a society recognize, either explicitly in a law or implicitly as part of the ancient “common law” we inherited from England when we became a nation (and a state). Examples of common torts in a real estate case are: negligence, trespass, nuisance, and fraud and deceit.

An “equitable” claim, cause of action, or a lawsuit “in equity,” is very similar to a tort, except that usually the remedy involved is granting a court order for the losing defendant to actually do something. The main issue in an equitable lawsuit is usually fairness. When one person is forced to pay a debt that someone else should have rightfully paid, it is the kind of “unfair” that the law recognizes, and the out-of-pocket plaintiff can sue the unjustly enriched defendant for “equitable indemnity.” This happens frequently in construction defect lawsuits involving multiple subcontractors and multiple insurance companies.

A prime historical example of an equitable claim in the classic real estate context is “specific performance,” meaning that money cannot compensate for a defendant’s failure to sell a particular special unique property to plaintiff (the ancestral family farm perhaps), and so the Court may order the losing defendant to sell that special and unique property to the prevailing plaintiff.

A more commonly seen modern example is a “declaratory relief” action, where a plaintiff specifically asks the Court to issue an order saying that the losing defendant is wrong. This comes up often in insurance lawsuits.

Complicating things, many real estate torts may include equitable remedies. For example, if someone has trespassed on your property, you may be entitled to both monetary damages for any harm they caused, and for an order requiring them to stop. For a nuisance cause of action, you may be entitled to monetary compensation for harm caused, and an order requiring the defendant to “abate” the nuisance.

Hope that helps.