Is laches an applicable defense for a debt that was never contractually agreed upon in writing?

Question

A tenant has a parking spot in their building for a period of 8 years and was never billed for it by the management. Management discovered their book keeping error and has turned around to retroactively bill them for the entire time. Is laches applicable in this situation?

It should be noted that no written agreement was ever signed by the tenant. The monthly price for the parking also was raised during that period and no written notice was ever provided to the Tenant. Tenant was being charged a minimal fee for the 'rental' of a remote to access the garage but no other charges ever appeared on their monthly statements. Now they are being asked to pay $10K+ in back fees.

Answer 1

The equitable defense of laches is not applied the same way in every jurisdiction. Some jurisdictions apply it only to equitable claims. Others also apply it to claims arising in law or by statute.

A claim for breach of an oral contract arises in law, so in some jurisdictions only the statutes of limitations and not laches applies, while in others, laches as well as the statute of limitations might apply.

If laches does apply in this jurisdiction, one must typically show (1) a delay in asserting a right or a claim; (2) the delay was not reasonable or excusable; and (3) either acquiescence in the act about which plaintiff complains OR prejudice to the defendant resulting from the delay.

The second and third elements are typically the issues in dispute in a laches claim.

A prejudice argument might be that the person using the parking space wouldn't have continued to use it if he had believed that the person leasing it was going to impose a charge beyond the one actually imposed.

Ultimately, this would be a fairly close call if the defense of laches is available for this kind of claim in this jurisdiction.

There is also an argument that the right to collect the charges has been waived, although not a very strong one.

With respect to the statute of limitations, there are different ways to characterize the violation. If each month of parking without paying is viewed a separate breach of contract and the statute of limitations is three years, only 3/8th of the amount claimed would be timely. But, if it is viewed as a single continuing violation, the entire claim might be timely.

To the extent that the parking agreement is viewed as a lease for a time in excess of one year, the statute of frauds might require it to be in writing for it to be enforceable, in which case it is not a breach of contract case, but is instead a trespass case. Viewed as a trespass case the statute of limitations would typically be different and shorter, and the tort might only arise (and compensation might only start to be due) once a demand is made upon the person using the parking space to pay a higher amount (resulting in a much, much lower amount owed).

Answer 2

Laches

Laches is an equitable defense. It therefore depends on there having been an unreasonable delay, which harmed the party asserting the defense. What is reasonable is determined by the court in each case,there is no set time period, but a delay significantly longer than would occur in the normal course of business, without a good reason, may well be found unreasonable. "I made a mistake" is not generally considered a good reason.

However, the party asserting laches must have been harmed or prejudiced by the delay. Common sources of such prejudice are witnesses or evidence being lost or hard to locate because of the delay, and the party affected by the delay having made significant choices whch s/he would have made otherwise had that party known of the legal claim.

The party asserting laches has the burden of showing the delay, showing that it is unreasonable, and showing that s/he was prejudiced by the delay. That party must indicate why it would be unfair to allow the claim after the delay.

Equity

Laches is an equitable defense. Therefore it is normally asserted when the plaintiff seeks an equitable remedy, such as an injunction. It is often not available as a defense to an action for money damages, although this may vary by jurisdiction. In a money damages case, a statute of limitations will often apply, instead.

Also, as an equitable defense, laches will generally be available only in common-law legal systems that include the English equity courts in their ancestry.

Alternate Defenses

If the parking space rental was not included in the lease or other written agreement which the tenant signed or accepted, it is hard to see on what ground the tenant can be claimed to owe such a fee at all.

If the tenant did agree to the fee, bu twas never notified of any increase, it is hard to see a legal basis to charge the larger fee.

In many jurisdictions, if the landlord accepts rent payment without complaint, or does not complain within one rental period (often a month) it may waive any claim that the rent paid was too little.

The statute of limitations may bar claims more than a certain number of year ago, the number dependent on the jurisdiction.

A tenant in such a situation might be wise to consult a lawyer with expertise in landlord/tenant law in that jurisdiction before going to court.

Sources

The LII page "Laches" reads:

laches [is] [a] doctrine in equity that those who delay too long in asserting an equitable right will not be entitled to bring an action.

The Wikipedia article "Laches (equity)" reads:

Invoking laches is a reference to a lack of diligence and activity in making a legal claim, or moving forward with legal enforcement of a right, in particular with regard to equity, and so is an "unreasonable delay pursuing a right or claim, in a way that prejudices the [opposing] party".^[1] When asserted in litigation, it is an equitable defense, that is, a defense to a claim for an equitable remedy.^[2] The essential element of laches is an unreasonable delay by the plaintiff in bringing the claim; because laches is an equitable defense, it is ordinarily applied only to claims for equitable relief (such as injunctions), and not to claims for legal relief (such as damages).^[2] The person invoking laches is asserting that an opposing party has "slept on its rights", and that, as a result of this delay, witnesses and/or evidence may have been lost or no longer available, and circumstances have changed such that it is no longer just to grant the plaintiff's original claim...

...

... Even if the court denies equitable relief to a plaintiff because of laches, the plaintiff may still have a claim for legal relief if the statute of limitations has not run out.

Under the United States Federal Rules of Civil Procedure, laches is an affirmative defense, which means that the burden of asserting laches is on the party responding to the claim to which it applies.

The Thomson Reuters Practical law page "Laches" reads:

Laches is an equitable defense, or doctrine. A defendant who invokes the doctrine is asserting that the claimant has delayed in asserting its rights, and, because of this delay, is no longer entitled to bring an equitable claim. Failure to assert one's rights in a timely manner can result in claims being barred by laches: it is a maxim of equity that, "Equity aids the vigilant, not the negligent."

However, delay alone is not enough to prevent a claimant obtaining relief. The consequence of the delay must be that it would be unfair for the court to give relief, usually because the defendant has changed its position because of the delay.

The party asserting laches has the burden of proving that it is applicable. Laches is distinguishable from the statute of limitation, which prevents a party from asserting claims after the designated limitations period has expired.

Notes

[1] Garner, Bryan A., ed. (2009). "Laches [Definition of 'laches' by Black's]". Black's Law Dictionary (9th ed.)

[2] Bray, Samuel (2014). "A Little Bit of Laches Goes a Long Way: Notes on Petrella v. Metro-Goldwyn-Mayer, Inc" (PDF). Vanderbilt Law Review en Banc. 67: 1–18.