Title: Green v. Goodman-Gable-Gould Co.
Citation: N/A
Docket Number: 032106
State: Virginia
Issuer: Virginia Supreme Court
Date: June 10, 2004

Present:  All the Justices 
 
JOYCE GREEN, ET AL. 
 
v.  Record No. 032106  OPINION BY JUSTICE CYNTHIA D. KINSER 
 
 
 
 
 
 
 
 
June 10, 2004 
GOODMAN-GABLE-GOULD COMPANY, 
INC., ET AL. 
 
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY 
Leslie M. Alden, Judge 
 
 
 
In this appeal, we address the appropriate use of 
declaratory judgments.  Because we conclude that the 
declaratory relief requested in this action was a 
determination of a disputed issue rather than an 
adjudication of the parties’ rights, we will reverse the 
judgment of the circuit court granting declaratory relief. 
MATERIAL FACTS AND PROCEEDINGS 
 
A residence owned by Joyce E. Green and John W. Gural 
(collectively, the “Homeowners”) was destroyed by fire.  A 
few days after the fire, the Homeowners decided to engage 
the services of Goodman-Gable-Gould Company, Inc. (“GGG”), 
a public insurance adjusting company, to assist them in 
processing their fire loss claim with Allstate Insurance 
Company (“Allstate”), the company that had issued the 
policy insuring the Homeowners’ residence and personal 
property.  The Homeowners contacted James Goodman, a 
representative of GGG who had approached them at the fire 
 
2
about the services offered by GGG.1  Goodman met with the 
Homeowners at the hotel where they were temporarily 
staying.  After Goodman explained a proposed contract to 
the Homeowners, Gural executed the one-page contract.2 
In pertinent part, the contract provided that the 
Homeowners were employing “Goodman-Gable-Gould/Adjusters 
International” to assist them in adjusting the fire loss 
claim with Allstate.  GGG was “authorized to prepare all 
necessary inventories and other applicable and/or required 
instruments to comply with the provisions” of the Allstate 
policy.  In return for GGG’s services, the Homeowners 
agreed to pay GGG a fee of ten percent of “the gross amount 
adjusted or otherwise recovered.”  The Homeowners also 
assigned to GGG “all moneys due or to become due from” 
Allstate to the extent of GGG’s fee.  Gural also executed 
an addendum to the contract that required GGG to waive that 
portion of its fee relating to rebuilding the Homeowners’ 
                     
1 According to Goodman, GGG learns about fires, floods, 
and tornadoes via several paging systems.  Upon receiving a 
page about a particular disaster, GGG decides whether it is 
of sufficient magnitude to warrant further investigation. 
 
2 The parties stipulated at trial that Green was a 
party to the contract with GGG and had ratified that 
contract even though she did not sign it. 
 
 
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residence if they elected to retain Rolyn Construction for 
that purpose. 
The Homeowners eventually became dissatisfied with the 
manner in which GGG was performing its contractual 
obligations.  Consequently, they authorized their attorney 
to request that GGG withdraw from the adjustment of the 
fire loss claim with Allstate.  A letter to GGG for that 
purpose stated: 
On behalf of Joyce Green and John Gural, we 
request that you and your firm withdraw from this 
matter and allow us to deal directly with 
Allstate.  We appreciate your assistance, and 
will call you if your assistance is needed again.  
When our clients’ claim is paid, we will notify 
you and discuss your fee. 
 
Following receipt of the letter, GGG advised the 
Homeowners’ counsel that GGG did not agree with the request 
to “withdraw.”  In a letter to Allstate, GGG demanded that 
Allstate include GGG as an additional payee on any check 
issued on the Homeowners’ claim.  GGG also asserted that it 
had a lien interest in the insurance proceeds and Allstate 
had an obligation to honor the Homeowners’ assignment of 
funds.  This litigation then ensued. 
In a motion for judgment naming the Homeowners and 
Allstate as defendants, GGG sought a declaratory judgment 
that, inter alia, GGG had an interest in the insurance 
 
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proceeds and that it was owed a fee of ten percent of those 
proceeds.  GGG also sought monetary damages in claims for 
breach of contract and quantum meruit against the 
Homeowners, and in a conversion claim against Allstate. 
Trial of the case was set to commence on Monday, April 
28, 2003.  On the Wednesday before the scheduled trial, GGG 
served a motion to nonsuit all the claims except those 
seeking declaratory relief and to waive a jury trial on the 
remaining issues.  GGG’s stated reason for filing this 
motion was the fact that Allstate had not yet resolved the 
Homeowners’ fire loss claim.  In GGG’s view, the proper 
course of action was to seek only declaratory relief. 
 
The next day, the Homeowners filed a written objection 
to GGG’s request to proceed only with the declaratory 
judgment claim.3  The Homeowners stated that they did not 
object to GGG’s nonsuit of the breach of contract and 
quantum meruit claims but argued that, without those 
claims, declaratory relief was not appropriate.  On the day 
of the scheduled trial, the Homeowners also filed a motion 
for summary judgment on the declaratory judgment claim.  
                     
3 The Homeowners first raised the issue regarding the 
appropriateness of declaratory relief in a demurrer to 
GGG’s motion for judgment.  They asserted that GGG was 
seeking a judgment regarding a disputed issue of fact 
rather than an interpretation of a defined right. 
 
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They again asserted that the “declaratory judgment action 
was appropriate only because it was pursued in conjunction 
with the substantive counts against the [Homeowners].”  
Since those claims had been nonsuited, the Homeowners 
argued that declaratory relief did not lie because GGG was 
using that procedure to avoid its burden of proof on the 
nonsuited claims.  Thus, the Homeowners asked the circuit 
court to dismiss the declaratory judgment claim, or 
alternatively, grant summary judgment in their favor. 
 
After hearing argument on the Homeowners’ motion, the 
circuit court took the matter under advisement and 
proceeded with a jury trial on the declaratory judgment 
claim.  The court eventually denied the motion for summary 
judgment during the trial. 
At the close of the evidence, the circuit court 
submitted one factual issue to the jury in an 
interrogatory: “Do you find that Goodman, Gable, [&] Gould 
Company rendered substantial performance to the Defendants 
Joyce Green and John Gural under their November 5, 2001 
contract with them prior to the March 22, 2002 letter 
requesting Goodman, Gable[,] & Gould Company to withdraw 
from the claim?”  The jury answered “Yes” to this 
interrogatory.  The circuit court subsequently entered a 
 
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final order granting declaratory relief to GGG and ruling 
that GGG has an “irrevocable interest” in the insurance 
proceeds attributable to the Homeowners’ claim for the fire 
loss, that the amount of its interest is ten percent of 
“the gross amount paid or to be paid by Allstate . . . 
under the . . . policy of insurance,” that the assignment 
in favor of GGG was valid and enforceable, and that 
Allstate shall pay directly to GGG all sums that are due or 
may become due to GGG from the Homeowners’ claim.  We 
awarded the Homeowners this appeal. 
ISSUES AND ANALYSIS 
 
 
The sole issue is whether the circuit court abused its 
discretion in allowing this case to proceed as a 
declaratory judgment action after GGG nonsuited its other 
claims.  Resolution of this issue requires an analysis of 
the proper function of a declaratory judgment. 
The purpose of declaratory judgments, which are 
“creatures of statutes,” see Code §§ 8.01-184 through –191, 
is to “supplement rather than to supersede ordinary causes 
of action and to relieve litigants of the common law rule 
that no declaration of rights may be judicially adjudged 
until a right has been violated.”  Williams v. Southern 
Bank of Norfolk, 203 Va. 657, 661-62, 125 S.E.2d 803, 806-
 
7
07 (1962).  Declaratory judgments provide relief from the 
uncertainties stemming from controversies over legal 
rights, USAA Cas. Ins. Co. v. Randolph, 255 Va. 342, 346, 
497 S.E.2d 744, 746 (1998), but they are not to be utilized 
“as instruments of procedural fencing, either to secure 
delay or to choose a forum.” Williams, 203 Va. at 662, 125 
S.E.2d at 807.  “ ‘Where a declaratory judgment as to a 
disputed fact would be determinative of issues, rather than 
a construction of definite stated rights, status, and other 
relations, commonly expressed in written instruments, the 
case is not one for declaratory judgment.’ ”  Id. at 663, 
125 S.E.2d at 807 (quoting 16 Am. Jur., Declaratory 
Judgments, § 20 at 294-95); accord Hoffman Family, L.L.C. 
v. Mill Two Associates P’ship, 259 Va. 685, 693, 529 S.E.2d 
318, 323 (2000); Randolph, 255 Va. at 346, 497 S.E.2d at 
746. 
 
This Court addressed the propriety of using a 
declaratory judgment action to decide disputed issues in 
Randolph.  There, an employee filed a declaratory judgment 
proceeding to determine whether his injury arose out of and 
in the course of his employment.  255 Va. at 344, 497 
S.E.2d at 745.  We held that declaratory judgment was 
inappropriate “because the case [did] not involve a 
 
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determination of rights, but only involve[d] a disputed 
issue to be determined in future litigation between the 
parties, namely, whether [the employee’s] injuries arose 
out of and in the course of his employment.”  Id. at 347, 
497 S.E.2d at 747. 
 
Similarly, in Williams, a bank filed a petition for 
declaratory judgment seeking a determination whether it 
could be held liable for damages in a civil action for 
malicious prosecution.  203 Va. at 658-59, 125 S.E.2d at 
804.  A former customer of the bank had been the subject of 
11 indictments for larceny in regard to the financing of 
motor vehicles by the bank.  Id. at 658, 125 S.E.2d at 804.  
After the customer was acquitted of two of the charges, the 
Commonwealth’s Attorney “nol pros[sed]” the remaining nine 
indictments.  Id.  The customer then threatened 11 
malicious prosecution actions against the bank.  Id.  The 
sole issue presented in the declaratory judgment proceeding 
was one of disputed fact, whether the bank had made a full 
and honest disclosure of all material facts within its 
knowledge to its attorney and the Commonwealth’s Attorney.  
Id. at 663, 125 S.E.2d at 807.  We concluded that 
declaratory judgment was not appropriate because “[t]he 
determination of that issue rather than an adjudication of 
 
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the rights of the parties was the real object of the 
proceeding.”  Id.  The bank’s use of a declaratory judgment 
proceeding allowed it to pick the forum and its position at 
the trial of the cause of action.  Id., 125 S.E.2d at 808. 
 
In the declaratory judgment proceeding here, GGG 
sought to determine whether it had substantially performed 
its obligations under the contract with the Homeowners, as 
evidenced by the interrogatory submitted to the jury.  Like 
the employee in Randolph and the bank in Williams, GGG’s 
actual objective in the declaratory judgment proceeding was 
a determination of that disputed issue rather than an 
adjudication of the parties’ rights.  See Williams, 203 Va. 
at 663, 125 S.E.2d at 807.  However, that issue should have 
been litigated in the context of a breach of contract 
claim.  By nonsuiting that claim and seeking only 
declaratory relief, GGG did not have to prove, by the 
greater weight of the evidence, a valid contract, a breach 
of that contract by the Homeowners, and damages resulting 
from the breach.  See Shenandoah Milling Co. v. Phosphate 
Products Corp., 161 Va. 642, 650, 171 S.E. 681, 684 (1933). 
The jury instructions themselves illustrate this 
point.  The jury was not instructed with regard to the 
elements that a plaintiff must prove to establish a breach 
 
10
of contract.  Instead, the jury was instructed that the 
issue in the case was whether GGG had substantially 
performed its contract with the Homeowners prior to the 
letter requesting GGG to withdraw from the claim and that 
GGG had the burden of proof on that issue by the greater 
weight of the evidence.  Nevertheless, the jury was 
instructed that “[a] party to a contract who prevents the 
other party from performing his obligations under a 
contract has breached the contract.”  Similarly, the 
circuit court instructed the jury with regard to what 
constitutes a material breach of a contract and that “[a] 
breach of a contract cannot be material if the breaching 
party has rendered substantial performance.”  In other 
words, the jury was instructed about various aspects of a 
breach of contract claim but were never told that GGG had 
to prove, by the greater weight of the evidence, that the 
Homeowners breached the contract. 
 
GGG and Allstate, however, assert that declaratory 
relief was appropriate because it provided all the parties 
with a determination as to whom the insurance proceeds 
should be paid once that amount was ascertained.4  Relying 
                     
4 We note that Allstate, in a demurrer to the motion 
for judgment, took the position that declaratory relief was 
not appropriate in this case. 
 
11
on our decision in Reisen v. Aetna Life & Cas. Co., 225 Va. 
327, 302 S.E.2d 529 (1983), GGG and Allstate contend that, 
without declaratory relief, neither of them could protect 
their rights in the face of the competing claims to the 
Homeowners’ unliquidated insurance claim.  We do not agree. 
 
In Reisen, the appellant, Philip O. Reisen, filed a 
tort action against Jack W. Goins, who had driven his truck 
into Reisen while he was on a sidewalk.  225 Va. at 329, 
302 S.E.2d at 530.  The insurance company providing 
coverage on Goin’s truck advised Reisen and Goins that the 
loss was not covered under the policy because Goins’ act 
was intentional.  Id. at 330, 302 S.E.2d at 530.  The 
insurance company then filed a declaratory judgment 
proceeding seeking a determination that it was not 
obligated to pay any judgment that might be rendered 
against Goins.  Id.  The issue on appeal was “whether 
declaratory judgment [lay] to decide a coverage question 
when the ultimate issue of fact determining coverage[, 
whether Goins’ act was intentional, was] set for 
adjudication in a related, pending tort action.”  Id. at 
329, 302 S.E.2d at 530. 
 
Because of a firm offer from Reisen to settle his 
claim within the policy limits, the insurance company had a 
 
12
duty to exercise good faith in dealing with that offer.  
Id. at 335, 302 S.E.2d at 533.  That duty was independent 
of the insurance company’s duty to defend Goins.  Id.  
Thus, we concluded that declaratory relief was appropriate 
because the parties needed guidance in their future conduct 
in relation to each other so as to avoid the risk of action 
that would jeopardize their respective interests.  Id.; see 
also Liberty Mut. Ins. Co. v. Bishop, 211 Va. 414, 421, 177 
S.E.2d 519, 524 (1970).  Unlike the situation in Williams, 
declaratory relief regarding the disputed fact in issue in 
Reisen “resulted . . . in delineation and interpretation of 
definite rights expressed in the insurance contract.”  
Reisen, 225 Va. at 337, 302 S.E.2d at 534; see also 
Randolph, 255 Va. at 348, 497 S.E.2d at 747 (unlike Reisen, 
employee did not seek adjudication of rights). 
 
The same distinction exists between Reisen and the 
present case.  Although GGG asserts that it was seeking a 
determination of its rights vis-à-vis the Homeowners with 
regard to the insurance proceeds, GGG was actually asking 
the circuit court to decide whether the Homeowners had 
breached the contract between them and GGG.  That was an 
inappropriate use of declaratory judgment. 
CONCLUSION 
 
 
13
 
A trial court’s authority to enter declaratory relief 
is discretionary.  Randolph, 255 Va. at 346, 497 S.E.2d at 
746 (citing Bishop, 211 Va. at 421, 177 S.E.2d at 524).  
That discretion must, however, be exercised ”with great 
care and caution.”  Id.  For the reasons stated, we 
conclude that the circuit court abused its discretion by 
allowing GGG to seek declaratory relief after it nonsuited 
the other claims.  GGG was using declaratory judgment as an 
instrument of “procedural fencing.”  Williams, 203 Va. at 
662, 125 S.E.2d at 807; accord Hoffman, 259 Va. at 692, 529 
S.E.2d at 323.  Thus, we will reverse the judgment of the 
circuit court and dismiss the declaratory judgment action.5 
Reversed and dismissed. 
                     
5 We also find no merit in GGG’s motion to dismiss this 
appeal and will deny that motion.