Remedies Outline



Remedies Outline

Spring 2003

I. General Principles of Law and Equity

a. 4 Major Types of Remedies

i. Coercive

1. Injunctions

a. Can be issued before trial is over, even at beginning (unlike other remedies)

b. Operate against actor/defendant – not dealing with repossession of property, but imprisonment for contempt – remedy against the person not against the property

c. 4 types:

i. Preventative – command not to do something prevents person from engaging in that particular harm; targets the harm. ex. cattle eating neighbors fruit b/c the fence is broken-a direct preventive injunction would be “don’t allow cattle to eat fruit”

ii. Restorative – order to fix problem; easier to give money damages–ex. buy new fruit plants

iii. Prophylactic – indirectly prevents harm from happening by reducing opportunity or ability for harm to occur -ex. fix the fence to keep cattle from eating fruit

iv. Structural – involves court taking over an institution/structure; it is a series of orders, not just one order, and court oversees entire institution–ex. an order by a court that regulates a school system to achieve desegregation

2. Specific Performance

a. Issued in K cases; very rare

ii. Damages

1. Goal is to compensate injured party for losses that occurred as a result of the violation of another party’s rights.

2. Focuses on P’s loss

3. -legal remedy issued by crts of law

4. they operate against your property not your person

5. types:

a. compensatory (meant to compensate P)

b. punitive (purpose to deter the D from doing it again)

iii. Restitution

1. Goal is to force wrongdoer to give back benefit received from P – prevents unjust enrichment

2. Focuses on D’s gain

3. 2 types:

a. Legal (e.g., quasi-K)

b. Equitable (e.g., equitable restitution)

iv. Declaratory Relief

1. Court determines legal relationship between parties and declares that something is the case; that declaration is binding on parties.

2. Preemptive strike, turning person who would normally be D into P (ins. cos. do it all the time).

a. Reasons for suing for Declaratory Relief are tactical:

i. Get it over with

ii. Kill other parties claim

iii. Lets you choose court

b. Drawback: You now bear burden of proof

3. RULE: Courts will not decide an issue for Decl. Relief until it is ripe – there has to be actual controversy

b. Limitations on Remedies

i. P must establish a legal basis (i.e., cause of action) for entitlement to remedy

1. Orloff v. LA Turf Club

a. RULE: Legislatures can and do provide for specific remedies, and can limit and expand remedies typically given by common law. Furthermore, statutes should not be liberally construed – limited to remedies in statute.

i. CA RULE: Statutes should be liberally construed, in light of a statute that indicates precisely that; consider whether remedy in statute would effectuate purpose of statute. Legislature can limit a CL remedy, e.g., capping med mal damages.

b. Here, statute provided cause of action for discrimination and prescribed list of remedies, one of which was actual damages + $100.

i. Possible actual damages: damage to reputation, emotional distress, but courts probably wouldn’t quantify that, would just let them slide.

ii. So damages are $100 – unsubstantial in proportion to the wrong, but under statute there is no cause of action for lost opportunity to win at racetrack.

1. Undermines P’s right if D only has to pay $100 each time they wrongly kick someone out.

iii. Want to deter such repugnant behavior – want to add “injunction” to the list

2. Cowin Equipment Co. v. General Motors

a. RULE: Unconscionability is a defense to equitable and legal claims, but does not establish a cause of action

b. FACTS--Cowin bought several pieces of equipment under a K that the order could not be cancelled (K had previously been cancelable)-econ went down and Cowin wanted to return the machines but they would not take them back.

-Cowin sought damages on the ground that the K was unconscionable

-Cowin wanted compensation for interest on loans, losses for selling the machines, insurance costs etc-crt says those costs are not recoverable under a unconscionability c/a-only remedy you can get under this c/a is specific performance-crt says that the section P relies on does not create a c/a but rather is a defense to someone else’s c/a

i. UCC §2-302 does not include a list of remedies, because it only includes a list of damages and court won’t liberally construe it

1. P could return goods/refuse to pay, wait for D to sue, and then raise DEFENSE of unconscionability.

2. P could file a declaratory action first to determine whether defense of unconscionability would work; there is actual controversy if P doesn’t pay.

3. Treister v. American Academy of Orthopaedic Surgeons

a. RULE: P has cause of action concerning organizations’ membership decisions, and court will review those decisions, only if a matter of economic necessity is involved (e.g., right to pursue livelihood, etc.)

b. P told that he will be refused membership in dental academy-P claims that membership in academy will affect his career therefore it is a matter of econ necessity

4. Pulliam v. Allen

a. RULE: judicial immunity bars suits against judges for damages but not for an injunction

i. Exception: Judicial immunity does NOT bar prospective relief – this includes coercive relief in the form of injunctions.

5. Maryland Casualty Co. v. Armco, Inc.

a. RULE: Categorization of remedy makes a big difference – legal or equitable.

i. Legal – quasi-contract

ii. Equitable – restitution

b. Insurance company says that policy covers “damages”, not restitution.

II. Injunctions and TROs

a. General Requirements:

i. No Adequate Remedy at Law

1. Factors:

a. Money damages too speculative / difficulty measuring money damages

b. Recurrent invasion of interests if money damages awarded

c. Multiplicity of lawsuits

i. Nominal damages insufficient deterrent

d. Claim involves use or enjoyment of land

ii. Great (i.e., Irreparable) Harm

iii. Balancing Requirement

1. Benefit to P vs. Harm to D

iv. Public Interest

b. Preventive Injunctions

i. Inadequacy of Remedy at Law

1. RULE: Person seeking injunction must be able to show that there is no adequate legal remedy by preponderance of the evidence (Thurston Enterprises, Inc. v. Baldi)

a. Here, legal remedy (damages) was adequate to repairing the damage to easement done by D. P wanted an injunction to prevent further damage. But to prevent further damage from happening again court would have to supervise – courts don’t want to bother, so they prefer money damages.

2. RULE: Inadequate legal remedy if leads to multiplicity of lawsuits, or if money damages are too speculative.

a. Legal remedy is often inadequate in cases of trespass (Wheelock v. Noonan)

b. Possible legal remedies for trespass / measurement of damages:

i. Fair rental value – inadequate, constantly changing, can’t sue for future conduct, so would lead to multiplicity of lawsuits.

ii. actual damages-not adequate b/c there are no actual damages for trespess

iii. money damages – inadequate, wouldn’t deter trespasser

c. In order to be made whole, P should really get past fair rental value AND injunction.

3. RULE: Requirements for injunction – great injury, no adequate remedy at law, and balancing of equities (Muehlman v. Keilman)

a. Great injury = Irreparable Harm

b. Nuisance case – no adequate legal remedy: -Keilman lived next door to people who revved their diesal engines early in the morning, disturbing Keilman’s sleep

i. Hard to calculate damages

ii. Multiplicity of lawsuits (wrongdoers might keep doing it in future)

iii. Affects use and enjoyment of land – soft spot for courts.

4. RULE: Have to balance equities – P’s rights against hardship to D (Triplett v. Beukman).

a. Bridge built by D affected P’s enjoyment of land, but injunction to remove entire causeway and make D undo and redo his work would be oppressive.

i. Harm caused to D is disproportional to benefit to P, which is comparably insubstantial to require such an injunction.

5. RULE: If injunction flunks balancing test, rethink solutions and rebalance equities for each new solution (Galella v. Onassis) Photograher constantly photographing Jackie O. Jackie sought injunction forbidding him from photographingher.

a. Great harm prong is satisfied – he is invading her privacy and making her life miserable.

b. To enjoin him from every photographing her would be oppressive – deprives him of livelihood: Flunks the balancing test.

c. Rebalancing of equities supports injunction of a “restraining order” – must be 75 ft away

i. Benefit to P – not as intrusive, gives her protection

ii. Harm to D reduced – still gets the picture.

6. RULE: Must also balance public interest against act with public interest to allow exercise of const. right (US v. Rainbow Family)

a. D wanted to have a gathering and exercise their constitutional right to assemble. Govt. wanted to protect national park from damage and public from disease. Both sides have legitimate public interests.

b. Note: if something is outright illegal (e.g., public nudity, recreational drugs, etc.), the legal remedy, arresting them, is adequate – will not get injunction.

i. Exception: Anti-gang injunctions – if you have the injunction, you can arrest them on the spot for contempt; don’t need to go through entire process.

7. RULE: Court will consider public interest even if raised by private party, not govt. (Boomer v. Atlantic Cement Company)

a. In a nuisance case, cement factory was causing pollution. Neighbors sought injunction. There was no adequate legal remedy and there was great harm. Old law for automatic granting of injunction is replaced by balancing test: public interest against nuisance (here, pollution) vs. damage to public (here, loss of jobs and closure of factory)

b. Court here says that it will grant injunction unless D pays $185,000 to Ps for past AND future damages.

i. Don’t usually grant monetary damages for future harm because it is hard to determine what the cost of that harm will be.

ii. Court should have just awarded damages for past conduct; threat of repeated lawsuits every few years might have given the cement industry incentive to find solution to pollution problem. This remedy gives the plant license to pollute forever.

c. Note: In order to get permanent injunction, you have to win your cause of action.

8. RULE: an equitable remedy does not give you a right to jury trial while a legal remedy

does give you a right to a legal trial (Brunecz v. Houdaille)

a. Plaintiff P sues employer for wrongful discharge, the case went to arb. And he

got low award. P decided that he wanted to go to trial. P was seeking reinstatement,back pay and attorney fees. D argued that P did not have a right to trial b/c the statute that gave P a c/a did not provide a right for a jury trial but rather just reinstatement w/ back pay

ii. Interlocutory Injunctions

1. Definition – injunction issued during pendency of complaint – before the final judgment, and after the filing of the complaint.

2. 2 categories:

a. Mandatory – order to do something

b. Prohibitory – order NOT to do something

c. NOTE: you can appeal a preliminary injunction- a mandatory injunction is automatically stayed on appeal but a prohibitory injunction is not

3. 2 types:

a. Temporary Restraining Orders

i. Short term injunction that normally is sought at the very beginning of the case, filing of complaint – generally only lasts 3 weeks (including 1 extension)

ii. Purpose: to preserve status quo until Preliminary Injunction can be granted.

iii. Requirements:

1. Must submit real evidence; need verified complaint signed by client under penalty of perjury.

2. Must have started the case already, must have actual cause of action.

iv. TRO ex parte: Must be supported by affidavit showing that immediate harm or injury will occur before opposition can be heard.

v. TRO is not appealable

vi. Courts are reluctant to issue TROs

b. Preliminary Injunction

i. Sought after TRO expires

ii. Purpose: to preserve status quo until trial on merits is over.

iii. Requirements:

1. Must bring motion, give other side notice

2. Court must enter order on record showing finding of facts

3. Must show

a. No adequate remedy at law

b. Great/Irreparable Harm

c. Balancing of Equities

d. Public Interest

e. SUBSTANTIAL LIKELIHOOD OF SUCCESS ON MERITS

f. (Alternative test: Where balancing tips in favor of P, can grant preliminary injunctive relief; need strong showing of Great Harm and Balancing, and raises serious questions on merits)

4. Bond requirement – cover losses to other party subjected to injunction if you lose.

iv. Can be appealed

c. Note: After trial, you can obtain a Permanent Injunction – part of damages.

4. RULE: Need to show substantial likelihood of success on merits, in addition to 4-part test for injunctions, to get a Preliminary (Temporary) Injunction (Metropolitan Sports Facilities Comm’n v. Minnesota Twins)

5. RULE: In case of preliminary injunction, findings must be based on facts for all 5 prongs of test, not speculative (Siegel v. Lepore)

a. Bush campaign wanted an injunction to prevent manual recount of votes in Florida

i. Analysis (requirements for general injunction)

1. no adequate legal remedy-while money damages could compensate for the monetary losses to the stadium money damages cannot replace the revitalization and morale that the team brings to the city

2. irreparable harm-yes

3. balancing the equities-harm to baseball is monetary but harm to city is greater (moral, public interest etc)

4. not adverse to public interest-it is adverse

5. substantially likely to prevail

6. RULE: If you fail on any of the first 4 prongs, don’t need to bother with “Substantial Likelihood of Success on Merits” prong (Cassim v. Bowen)

a. If preserving status quo poses threat to public safety, this fails the Balancing Test and the Public Interest Test. Surgeon was performing excessive surgeries on old people to get Medicare payments.

7. RULE: Alternate Test

a. When Balancing Test (balancing of benefit to P v. hardship to D) tips in favor of P, court can allow a weaker showing of Substantial Likelihood of Success on Merits.

i. Adequate if P has a strong showing on some elements he can have a weak showing on others- P can make a weaker showing on success on the merits if the other factors are sufficiently strong (Carribean Marine Services Co. v. Baldrige)

ii. fisherman are concerned about losing their privacy and file a complaint alleging violation of privacy-government argues that there are private room that the woman could stay in-boat owners are concerned that the crew will sexually harass the women and that they will be held liable. The statute says that the inspectors are supposed to cause minimal interference and here the woman could cause a major interference by destroying morale and harming the efficiency of the crew

b. RULE: Fed Rule Civ Pro 65

1. TRO may be granted w/o notice

2. must show that immediate or irreparable injury will occur before adverse party can be heard-must show adequate efforts to notify the other side

3. TRO are only good for 10 days-can be extended for an additional 10 days if there is a showing of good cause- to get an additional extension you must get the consent of the other party

4. TRO’s cannot be appealed; preliminary injunctions can be appealed

5. TRO’s require a bond for losses to the opposing party

8. Procedural differences b/w TRO & Injunction

1. TRO can be issued ex parte- must show that you tried to give notice to other side

2. TRO only good for 10 days and can be extended for 10 days on good cause-additional extension only upon permission by other side

3. TRO can’t be appealed

4. judge must make findings of fact on the record for preliminary injunctions

5. must post a bond for a preliminary injunction

iii. Structural Injunctions

1. Possible remedy for const. violations in institutions; provides a way for courts to run other institutions (e.g., school, prisons, etc.)

a. Judge considers remedial plan supplied by directors of institution, and then issues a series of orders on how to run institution.

i. Courts require officers or directors to come up with written remedial plan and hear argument on it; send them back to drawing board if not good enough.

b. Orders often overlap as to preventative, restorative, prophylactic, etc.

c. aspects of structural injunction

1. created to run an institution

2. comprised of a set of orders

3. continuing court jx

a. if a crt had to supervise the injunction, it was considered a reason not to grant the injunction

2. Brown v. Board of Education

a. RULE: Don’t have to go through normal balancing process – although there may be contradictory public interests at issue, can’t undermine remedy of such an important social issue that is in the general public interest.

b. “Burdensome on court” is not a reason to refuse a structural injunction -crt says that they will leave it up to the schools to come up w/ desegregation plans and the case was remanded to the crts that heard the specific cases b/c they were familiar with the facts the schools were in the best position to come up w/ a plan-the crt then had to approve the plan

3. Hutto v. Finney

a. RULE: Federal courts can grant prophylactic injunctions as part of a structural injunction. R-preventive or prophylactic injunctions can be used to remedy constitutional violations

b. Lower court can issue a structural injunction if it fits the remedial scheme of the federal court’s structural injunction, and is directed at the same violations that concern the fed ct.

i. Here, lower court limited max number of days prisoners could spend in punitive isolation to 30 days.

ii. Although it was not necessarily a constitutional violation to sentence prisoner to 30 days in isolation, given history of this institution fed court wanted to minimize other unconst. conditions, so they let it stand. crt did not immediately institute a remedy of its own but instead told the prisons to make improvements on their own and file reports on the improvements with the crt-prisons delayed in fixing the conditions-crt again gave the prisons an opportunity to come up w/ their own improvement plan but gave some guidelines- crt finally instituted its own improvement plan

iv. Permanent Injunctions – Special Issues in Equity:

1. Violation of Federal Statutes

a. RULE: Once you find a violation of a statue, you grant an injunction if the history and intent indicate that Congress has already balanced the equities (Tennessee Valley Authority v. Hill)

i. If Congress has not done balancing test, then court must do it itself.

1. Defamation

a. RULE: Generally courts will not enjoin a defamation – normally the remedy at law (damages) is held to be adequate and 1st Amendment usually trumps in the balancing test (Willing v. Mazzacone).

ii. 1st Amend. is being taken more seriously; the injunction against defamation is prior restraint on speech (prohibits speech before you say it).

b. Exception:

i. Show that purpose of defamation is purely to harass:

1. First show the defamation, and then showing that there is not other way to stop them other than a prior restraint – do this by suing for damages a couple of times and showing that the D refuses to pay.

ii. Can sue for damages – must show actual malice; if person is public figure or public official, 1st Amend. comes into play (NY Times v. Sullivan)

2. Invasion of Privacy

a. RULE: Court considers it in light of whether it serves a matter of public interest – prior restraint issue will come up here too if it is a public concern/matter.

i. Exception: Harassment (same exception as Defamation)

ii. If it is a private matter, don’t worry so much about 1st amendment.

3. Enjoining Litigation

a. RULE: Courts are reluctant to enjoin litigation.

i. Exceptions (Pavilonis v. King):

1. hPurpose is to harass

2. Purpose is to reopen closed case

3. Plaintiff is vexatious litigant / litigation is baseless, repetitive, or vexatious.

b. Note: Rarely do federal judges enjoin P from bringing suit in state court.

III. Equitable Defenses

a. SOL is a defense to a legal claim. Equitable claims can be met with equitable defenses only.

i. Note: SOL can be tolled for several reasons, including if P is in military or if D is out of jdxn.

b. Laches

i. Bars P who has not acted promptly in bringing action

1. Even if SOL has not run, court can deny EQUITABLE relief if there was undue delay in filing suit (so no restitution, etc.)

2. No time limit for laches, just look at how reasonable the delay is; laches is a flexible standard.

ii. Standards (Cornetta v. US):

1. Unreasonable delay

a. Even if other side is stalling, e.g., not complying with discovery requests, etc., still not an excuse – P could have brought motion to compel.

b. Here P, an ex navy officer waited 7 years to challenge his discharge.

2. Prejudice to D

a. Defense Prejudice

i. Detrimental effect on D’s defense – losing records, fading memories, etc.

ii. In Cornetta there was no defense prejudice b/c the records were all available and the case was going to be determined solely on the records

b. Economic Prejudice

i. Each year P doesn’t sue damages (back pay, etc.) add up – no mitigation of damages.

ii. RULE: Claims for back wages can be economic prejudice if waiting increases the amount D has to pay, e.g., for replacement worker and/or accruing payment, having to demote someone to give P desired position, etc. (Gruca v. US Steel Corp).

3. RULE: When SOL for a closely related action has passed, it creates a rebuttable presumption of unreasonable delay or prejudice – burden shifts to P to prove that he did not engage in unreasonable delay or cause prejudice (Gruca v. US Steel Corp)

c. Estoppel

i. Involves prejudice to D because P staked out a particular position and D relied on that position. Therefore P is now estopped from taking a different position. (US v. Vanhorn)

ii. In Van Horn, Van Horn got scholarship to work in underserved area, the job she got didn’t have funding and couldn’t pay her so she got another job in same area but didn’t get permission from program director-Van Horn had to pay treble damages for breaching K w/ gov. Van HOrn

iii. 4 Requirements:

1. Party to be estopped (P) must know the facts (i.e., takes a particular position)

2. Party (P) must intend or reasonably infer that his conduct will be relied on by other party

3. Other party (D) must be ignorant of true facts

4. Latter (D) must rely on party’s conduct and suffer injury because of it

a. Difficult to win on defense of estoppel against plaintiff-govt. – entire statutory scheme could be nullified based on what a bureaucrat says, so reliance on the statement is not a defense.

iv. Can be used as a defense to a defense

1. John R. v. Oakland Unified School District – School argued that SOL had run, so no action could be filed.

a. RULE: Public entity is estopped from asserting SOL defense where its own agents/ee prevented or deterred the filing of a timely claim by some affirmative act, regardless of intent.

i. Threatening P estops SOL defense

ii. Misleading P also estops SOL defense, even where there was no intent to defraud or mislead.

d. Unclean Hands

i. Bars morally tainted claims, even if they are legally sound.

ii. Elements (Senter v. Furman):

1. Must be serious misconduct (illegal act, e.g., hiding assets from creditors by giving as gift to someone else; here, gave gift for $10 and other consideration)

2. Conduct has to be related to underlying action (court’s reconveyance of the property to the asset-hider)

a. Note: If you try to hide assets from creditors, they can sue for tort of Fraudulent Conveyance and would get punitives as well as their debts.

iii. Result: Court washes its hands of the matter and leaves parties where they are.

iv. Other scenarios:

1. Byron v. Clay

a. P asserts that he was fired for political reasons, even though he did nothing in his position (“ghost employment”); seeks reinstatement and damages.

b. Analysis:

i. Serious misconduct – ghost employment involving taxpayers’ $ is against law in Ind.

ii. Relates to underlying action – reinstatement would require court to facilitate lawbreaking and misconduct.

c. Note: Court also denied legal remedy of back pay (“damages”) because law and equity have merged and are practically same thing now, so can use this defense against legal claim.

2. North Pacific Lumber Co. v. Oliver

a. P sues D over K with non-compete clause after he quits and goes to work for competitor; P seeks SP of the non-compete clause, but D argues that this will force him to go back to work for P if he wants to remain in field. Remember, courts cannot compel performance of personal service. D also uses Doctrine of Unclean Hands.

b. Analysis:

i. Serious misconduct – P engaged in fraudulent misrepresentation re: settlement offers between disputing suppliers and customers; P would pocket difference

ii. Related to underlying action – P is manager and supervises the fraudulent offers – would be forced to engage in fraud.

1. If he had been a truck driver or other position where he wouldn’t be forced into actively participating in fraud, that connection would be too loose.

c. Court lets parties stay where they are and states that P can just sue D for money damages.

e. Unconscionability

i. STANDARD: Aspect of K must shock court’s conscious

ii. Analysis:

1. Must have Breach of K (either legal or equitable claim, so either asking for damages or SP)

2. Then consider whether either Type of Unconscionability is present:

a. Substantive- look at terms of K (terms are unfair/oppressive)

b. Procedural- (lack of notice/”unfair surprise” where terms are in small print, obscure lang.)

i. Look at overall circumstances (inequalities in bargaining power, education, business savvy, etc.)

ii. Strongest argument when both substantive and procedural unconscionability are present.

iii. Result: Court can strike down entire K OR can just strike the unconscionable clause and enforce the rest of the K.

iv. Examples:

1. Campbell Soup Co. v. Wentz – unconscionable term: P could refuse carrots and D would still be precluded from selling them to someone else.

2. Jones v. Star Credit Corp. – caveat emptor (“let buyer beware”) doesn’t really apply because Ps couldn’t purchase freezer anywhere else. In light of what court considers to be unequal bargaining power, $900 for a $300 freezer is overly oppressive and unfair.

a. Result:

i. Court could have refused to enforce K or stricken the unconscionable term and enforced rest of K, but then P would be out of a freezer.

ii. Instead the court limits the application of any unconscionable clause so as to avoid an unconscionable result – essentially they rewrite the K.

v. RULE: under UCC unconsionability is a defense

f. Election of Remedies

i. If 2 or more remedies are inconsistent, court may decide that you have to choose one; can’t proceed on one remedy if you choose another.

ii. Requirements:

1. Remedies must be theoretically inconsistent

a. E.g., rescission and restitution disaffirm a K, while damages affirm a K – so remedy of rescission and restitution is inconsistent with remedy of damages.

2. Election/choice of one of remedies by P

a. E.g., if P asks party to pay damages via a letter, it will also function as an election.

b. Nothing wrong with pleading inconsistent remedies in complaint

c. No clear rule on when one must elect a remedy but it must be before judgment

3. D must rely on position

a. P’s election is not binding until D has relied on that election to his detriment.

iii. Note: Some courts (BUT NOT CA!) look not to whether the remedies are inconsistent, but whether they create a double-recovery for P (Head & Seeman v. Gregg).

iv. As a Defense in Separate Recoveries Against Separate Ds: Altom v. Hawes

1. Husband breaches separation agreement by selling wife’s furniture to D. Wife seeks damages from husband for breaching the agreement (never sees the money), and replevin, a type of restitution, from D. D argues defense of Election of Remedies – she already elected damages from husband.

2. RULE: Election is not enough; D must also rely on your choice.

a. Here there is no evidence that D relied on P’s election to seek damages from husband.

i. Reliance would be shown if he had tried to resell furniture, paid the husband for the furniture (not clear whether or not he ever did), or reupholstered it and spent $ on it.

b. here the remedies are inconsistent b/c if she goes after husband she is saying that the K b/w

husband and Hawes was valid but if she goes after Hawes she is saying that the K was always invalid and fraudulent

i. crt dismantled the theory of election of remedies in this case and basically said that

election of remedies is not a defense but rather just a limitation on damages

IV. Contempt

a. Terminology:

i. Contemnor – person who engages in contempt

ii. Contumacious conduct/Contemptuous conduct – the conduct of contemnor

1. Contumacious – disobedient

2. Contemptuous – disrespectful

b. 3 Ways to Challenge/Overturn Court Order:

i. Order is frivolous or invalid

ii. Language of injunction is vague or broad (and state court that issued it refused to clarify)

iii. Challenge to validity of order was met with frustration and delay

c. 2 Classes:

i. Criminal

1. Purpose: To punish party, for things like disobedience of an order and obstructing justice.

2. 2 Types:

a. Direct

i. Where contempt happens in the presence of the court (e.g., screaming in courtroom in opposition to judge’s order for silence)

ii. Requirements:

1. Conduct must occur in the presence of the court (in sensory presence of judge – sees or hears it) and disrupt proceedings and integrity of the court.

2. RULE FOR EXAM: If judge didn’t see it and needs additional witnesses, then must have DP.

3. RULE FOR EXAM: If judge holds someone in summary contempt, judge must certify and sign written order; then no DP requirement.

b. Indirect

i. Where contempt happens outside the court (disobedience of injunction, etc.)

3. RULE: An injunction must be obeyed, regardless of whether it is erroneous, unconstitutional, etc. Civil disobedience is not a defense. (Walker v. City of Birmingham).

a. Protestors were bound by injunction because they had notice – were served with copy.

i. Could have just applied for inj. and taken witnesses to observe them being rebuffed

ii. Could appeal injunction (but would take forever – could try to get court to expedite calendar and then argue that court was purposefully dragging its feet)

iii. Could attack injunction on propriety of service – if only 5 were served then those 5 could stay out and everyone else could go ahead with action; argue that others had no notice.

1. If not served but had notice, then this wouldn’t work.

iv. Could find out whether court had no jdxn over matter

v. Could argue that order is “transparently invalid” – extremely rare that this works

b. Can disobey order:

1. that is transparently invalid

2. where crt lacks jx

3. if it is not served

4. if it was challenged but met with delay or frustration

4. RULE: Criminal contempt order predicated on invalid inj. will stand until punishment is reversed; will still stand even if injunction is reversed (US v. United Mine Workers of America)

a. Note: Norris-LaGuardia act only applies to and protects striking ees of a business, not striking members of a union.

b. RULE: you can’t be held in civil contempt for a violation of an injunction where the injunction is later found invalid

5. RULE: Indirect criminal contempt requires Due Process, proof of violation of statute beyond reasonable doubt, right to counsel, etc. – all rules of criminal cases apply (In re Stewart).

6. RULE: Direct criminal contempt requires no Due Process – judge has first hand knowledge about what happened in the court. We trust the judge and thus allow her to punish direct criminal contempt summarily (Ex parte Daniels).

a. Note: the easiest way to lose your job as a judge is to abuse your contempt power.

7. RULE: Court can hold someone in direct contempt ONLY IF judge enters a written order certifying that he saw and heard the action and signs it (Matter of Contempt of Greenberg).

a. “Certify” – more than an oral order, but slightly less than swearing under oath. By certifying, judge becomes a witness.

b. Strict version of “in the presence of the court” – requires judge to see or hear it happen.

8. For Criminal Contempt to apply under Rule 42(a) one must:

1. threaten the judge

2. disrupt a hearing

3. obstruct court proceedings

ii. Civil

1. 2 Prongs/Purposes:

a. Damages – To compensate (damages to party in litigation that suffered loss)

i. RULE: Must show losses with reasonable certainty (Time-Share Systems, Inc. v. Schmidt).

b. Coercive Civil Contempt – To force party to do court’s order (discovery, etc.; e.g., produce docs by certain date)

i. Note: For coercive injunctions (coercing you to act/comply), the amount of fine per day will depend on what it takes to move you.

ii. punishment in civil cases is indeterminate since it is up to the party whether or not the punishment will be imposed

2. RULE: Civil contempt order predicated on invalid inj. will fall if underlying injunction is later reversed or held unconstitutional (US v. United Mine Workers of America).

3. RULE: 2 defenses to Coercive Civil Contempt (hard to win on):

a. Substantial Compliance

b. Good Faith

V. Contract Damages

a. Purpose: To restore party to position they would have been in if the K had been performed.

b. Principle:

i. Don’t want to punish D

ii. Don’t want P to reap a windfall

c. 2 Remedies:

i. Substitutional

1. 3 Types of Damages:

a. Expectation/K Damages

i. Your expected profit; the benefit of the bargain (better than tort damages).

ii. Exp. Dam. = (loss of value of other party’s perf. + any other losses) – (cost avoided by not having to perform)

iii. RULE: If const. is incomplete or not to specification, then measure loss in value through Reduction in Value of Property, OR Cost to Complete (Eastlake Const. Co. v. Hess)

1. Give Cost to Complete unless it is clearly disproportionate to Reduction in Value; then just give Reduction in Value.

iv. RULE: Try to get Exp. Damages; if damages are not reasonably certain and you can’t, then try to get Reliance Damages or Restitution (Gruber v. S-M News Co.)

b. Reliance Damages

i. Tort damages – puts you back in prior position

ii. Includes:

1. Money you gave to 3rd parties in reliance on other K-party’s promise

2. Out of pocket damages

iii. Implied Ks – 2 Types:

1. Implied in Fact

a. Actually is a K, based not on party’s words, but their actions

b. “Real K”

2. Implied in Law (Campbell v. Tennessee Valley Authority)

a. Court imposes K in interest of justice – can get Restitution measured by quantum meruit (“what it was worth”)

i. Look to benefit to D; if that isn’t feasible THEN…

ii. Look to FMV

b. “Quasi-K”

c. Requirements:

i. Benefit conferred

ii. Unjust enrichment

c. Restitution

i. Tort damages – puts you back in prior position

ii. Repayment of any benefit you directly conferred to the other party

ii. Specific Performance

1. Arises in breach of K cases.

2. Requirements:

a. P has no adequate legal remedy

i. Re: Ks for sale of goods: Look at uniqueness of property at issue, i.e., P can’t get it somewhere else, can’t replace, can’t be made whole without replacement of item (UCC provision)

1. Hard to value something that is unique – difficulty in measuring dollar amount goes to inadequacy of legal remedy. Generally the uniqueness rule applies to the sale of real property

b. K is valid

c. K is supported by adequate consideration

i. Look at consideration at time of agreement

ii. Higher standard than that of K formation (peppercorn, etc.)

d. Terms of K are sufficiently definite

e. P substantially performed obligations under K

f. D is able to perform K obligations

g. Mutuality of remedies

i. One party cannot get SP if other party would not have also been entitled to SP.

ii. R-consider mutuality of remedies at the time specific performance is ordered

3. RULE: Breach of sale of land/real estate creates a presumption that the legal remedy is inadequate – difficult to assess value of property (Van Wagner Advertising Corp. v. S&M Enterprises).

a. side of building was leased for advertising (good location)-building was leased for 3 years w/ a 7

year option-lessee sub-leased the space to someone else for 3 years-building owner sold the building and cancelled the lease-this was a breach-issue: was lessee entitled to specific performance crt said that the property was unique-crt said that the fact that the property was unique was not enough to warrant specific performance- there must be uncertainty in valuing the property-crt said that the value was not uncertain here and so they did not order specific performance

b. Here, lease was at issue, so did not create presumption of inadequate legal remedy – look at rental value.

4. RULE: Can cancel or terminate K if:

a. there is a termination clause

b. the other party breaches (then cancel and sue for damages)

c. K is “at will”

5. RULE: Replevin (claiming items wrongfully held by D), if court has jdxn over items, can be an adequate legal remedy, even if difficult to compute other costs like delay (Niagara Mohawk Power Company v. Graver Tan & Manufacturing Co.).

a. In event of replevin, P states before trial that D wrongfully possesses something P owns (here, parts for P’s power plant). P posts bond to cover D’s costs if D ends up winning; D can argue for increase in bond, and P can demand that D post counter-bond. Sheriff holds item until dispute is resolved.

6. RULE (Henderson v. Fisher): In determining whether to grant SP, court must also consider

a. whether K was supported by adequate consideration at time K was made;

i. Adequate consideration – here, it was taking care of old guy for rest of his life in exchange for house-guy died before deeding over house and P sued heirs; although he only lived for 18 days after formation of K, at the time K was formed the consideration was adequate.

b. whether the terms of K sufficiently definite;

i. Is K vague – can judge write order that reflects terms of K? Never says when old man was supposed to execute deed, but judge figures that transfer within a reasonable amount of time will do.

c. whether there was mutuality of remedies

i. Had old guy lived, he wouldn’t have been able to sue the couple for SP – can’t compel people to perform personal services.

7. RULE: Specific Performance is discretionary – even if all required elements are satisfied, court can still deny SP on grounds of inability to supervise/too much supervision required (Dover v. Cushman’s Sons)

a. So on appeal, P must argue abuse of discretion.

b. In Dover, D ran and bakery and wanted to stop running it and just pay rent-P was supposed to get a portion of the sales. D argued that court would have to do a lot of supervising if it forced D to stay in business.

8. SP and UCC Provisions – Ks for the Sale of Goods

a. UCC RULE: Court may decree SP as buyer’s remedy for breach of K to sell goods where the goods are unique or other proper circumstances (Sedmak v. Charlie’s Chevrolet)

b. “Other proper circumstances” can be liberally construed – replacing item would cause great expense, time, delay, even if item is not unique. Here P contracts to buy a special corvette from D. P gives D a deposit-car comes in and D tells P that they can’t have the care for 15K but can bid on the car b/c the demand and value of car went up. P sues for specific performance. Crt is not reluctant to order specific performance under the UCC. Crt ordered specific performance b/c the car was unique and it held that there was no adequate remedy at law

***-uniqueness is a way of determining whether the legal remedy is adequate

-here the crt held that the car was unique b/c it would be very difficult to find a car just like it since there were only 6K and P got certain special options-an argument could be made that the car wasn’t totally unique

i. ** under the UCC the crt looked beyond the fact that it was possible that other similar cars existed, they looked at the amount of time it would take to find another car

ii. Note: As mentioned earlier, when dealing with purchase or sale of land, it is always unique.

iii. RULE-under UCC if an item is unique the legal remedy will not be adequate

iv. RULE-under UCC if item is not unique but is too difficult expensive to replace, specific performance will be ordered

a. Sale of Goods Ks

i. UCC applies

ii. Buyer

1. Remedies, in general (Wilson v. Hays):

a. Cancellation and Restitution for price that was already paid (UCC §2-711)

b. Difference between cover price and K price (UCC §2-712)

i. Right to cover – buy goods elsewhere at reasonable price

c. Difference between K price and market price at time buyer learned of breach (UCC §2-713)

d. Specific Performance or Replevin

i. RULE: Can get SP if the goods are unique (Gerwin v. Southeastern Cal. Ass’n of 7th Day Adventists)

1. Used goods are unique.

2. Ordinary and Consequential Damages:

a. Ordinary Damages

i. Must be foreseeable, i.e., known/anticipated by seller at time K was made

1. Often relates to potential profits that would have been received from 3rd parties

b. Consequential Damages

i. Additional damages that occur as indirect result of breach (loss of business, etc.) they do not naturally flow from the breach but are foreseeable

ii. Requirements:

1. At time K was made, seller had reason to know of buyer’s requirements and needs (UCC §2-715)

a. RULE: Indirect damages must be reasonably foreseeable (Hadley v. Baxendale)

2. Damages couldn’t be prevented by cover

a. P has a duty to make a GF effort to cover/mitigate ONLY IF doing so would reduce damages D has to pay (Aries v. Palmer Johnson, Inc.)

-Where yacht builder failed to deliver yacht in time for race, damages not preventable-not reasonable to buy another yacht-could have rented another yacht (not reasonable)

-if yacht were being used for commercial purposes it may have been reasonable for him to rent a yacht to prevent loss profits.

b. Measure value of cover through Fair Rental Value of item.

i. Can still get damages for actual use – money for days item could not be used

iii. If Seller breaches warranty, buyer can get consequential damages that are caused by the breach of warranty (UCC §2-715)

1. Damages for non-conformity of goods = value of goods accepted – value of goods had they been as warranted

a. Cannon v. Yankee Products Co. – Injury (loss of business) was not caused by breach of warranty, but by customer’s overreaction.

iv. Rule consequential damages are measured by lost use

1. R-lost use is measured by reasonable rental value

2. 2-715 UCC-can collect loss use if

a. the seller knew or had reason to know of the buyer’s needs

b. the buyer could not have avoided the losses by cover

3. R- only recover for the time you would have actually used the item

iii. Seller

1. Remedies, in general (Sprague v. Sumitomo Forestry)UCC 2-703

a. Withhold delivery of goods

b. Stop delivery byway of any baillee (UCC §2-706)

c. Resell and recover damages (UCC §2-706)

i. Must be at public or private sale

1. If resell at private sale, must give buyer reas. notice of intention to resell

a. If mkt price has changed so much, it would be better to have buyer bid again

b. Ensure sale isn’t private deal (extra high price that buyer will have to pay diff for)

c. Note: filing of suit is inadequate notice

ii. Must be commercially reasonable

iii. Damages = K price – Resale Price

iv. Note: If resale is in GF and commercially reas., seller may recover diff. between resale and K price.

v. R-sellers cannot have consequential damages under UCC-only buyers can have consequential damages

d. Recover damages for non-acceptance (UCC §2-708) or price (UCC §2-709)

i. Damages = Market price at time and place of tender – unpaid K price

1. Note: tack on incidental damages and deduct expenses saved in consequence of buyer’s breach

ii. Market Price difference is inadequate if:

1. There is no market

2. Seller has no legal obligation to enter the marketh

a. Unreasonable expense or difficulty

b. Humiliation

3. Neumiller Farms v. Cornett – no obligation to enter market – it is already a saturated market; if they enter to sell their potatoes, they will compete against themselves = more potatoes for sale will make market drop further.

a. And the potatoes will end up rotting in the field.

e. If those Resale damages and Market Price damages are inadequate, the seller can argue that he is a “Lost Volume Seller” and get Lost Profits (Nat. Controls v. Commodore Bus Machines)

i. RULE: Must prove that even though the K goods were resold, the sale to that 3rd party would have been made anyway – would have realized profits from 2 sales if the buyer had not breached.

ii. Requirement: Must show that seller had capacity to make 2 sales (factual question – space, workers, ability for bulk/mass production)

f. Cancel K

g. NOTE: Seller CANNOT get consequential damages – can only get INCIDENTAL damages (e.g., extra transportation costs for sales, refinancing, extra rent, etc.)

h. ways seller can get profits

1. prove you are a loss volume seller

2. prove there is no market or an extremely weak market

2. Legal Consequences of Buyer’s Acceptance of Goods

a. RULE: When buyer accepts delivery, buyer becomes liable for price (Daniels v. Yazoo)

i. Acceptance of goods = buyer waives right to rescind K, waives right to rescission and restitution (UCC §2-709).

c. Buyer is now stuck with K, but can still sue for breach if goods are nonconforming IF he gives notice of breach (e.g., goods were defective – breach of warranty, etc.)

i. Sending back one item is NOT sufficient notice.

ii. R-under UCC the buyer must give notice of the breach after acceptance of the goods w/in a reasonable amount of time

b. Land Sale/Real Estate Ks

i. Earnest Money (Deposit) and Liquidated Damages

1. Earnest Money is paid by buyer before closing, at time of making of offer – what it actually is depends on intention of parties; could be:

a. Partial payment of damages

i. Result: Earnest Money goes back to buyer if actual damages is less than Earnest Money amount.

b. Partial payment of purchase price

i. Scenario: Suit by seller for SP in enforcement of K (remember, land is unique)

ii. If seller can’t get SP, then actual damages is appropriate

c. Partial payment of liquidated damages

i. Use of term “Liquidated Damages” = you agree to accept certain amount of damages in case of breach.

1. You can have Liq. Damages and get Specific Performance as long as it doesn’t result in double recovery OR is precluded by K (i.e., K says that Liq. Damages is exclusive remedy)

a. Liq. Damages will cover incidentals

b. R- cannot get ordinary damages if you agree to liquidated damages

ii. Requirement for enforceable Liq. Damages clause:

1. At time of K-ing, damages were uncertain

2. Parties intended to fix their compensation for breach (i.e., to be bound), not to establish penalty

a. RULE: Parties must agree that Liq. Damages is min. and max. that injured party will receive; must set amount in advance and agree to be bound by it. (SE Land Fund v. Real Estate World)

3. Estimate bore a reasonable relationship to amount anticipated at the time (i.e., GF estimate of damage)

a. CA RULE: Earnest Money equaling 2%-5% of est. damages is considered reasonable – deposit acts as Liq. Damages.

i. Note: it is possible to have Liq. Damages without having a deposit.

iii. RULE: Only injured party is entitled to remedy

1. Exception: Breaching party may sometimes be entitled to restitution, if they can show that injured party will be unjustly enriched (value of property went up, etc.)

a. FOR EXAM: Breaching party will be entitled to restitution if you can show that seller suffered no damages at all. Vine v. Orchard Hills

b. R-have to take a second look at time of breach-if the actual damages are 0 at the time of breach then no liquidated damages are accessed against breaching party

iv. Arguments against Liq. Damages:

1. Party suffered no net loss from breach

a. RULE: NO INJURY = NO ENFORCEMENT

2. K was unenforceable

a. Fraud

b. Undue influence

c. Lack of consideration

3. Raise Defense of Unconscionability

4. Liq. Damages Provision doesn’t meet Requirements

a. Damages not uncertain when K was made with party

b. Parties did not intend to set and be bound compensation for breach OR intended amount to be penalty

c. Amount is unreasonable to party’s anticipated damages

5. RULE: “Partial Liquidated Damages” don’t exist – term invalidates clause

d. If seller in GF can’t convey proper title to real estate (Donovan v. Bachstadt)

i. English Rule: Buyer could get restitution and reliance; NO expectation (K) damages

ii. AMERICAN RULE: Can recover expectancy damages too.

e. If closing is delayed in K to buy or sell real estate

i. RULE: Court may adjust equities so that buyer can collect for lost use of house and seller can claim purchase price (Stratton v. Tejani).

1. If buyer is injured party = can recover for increased financing costs & rental value during delayed period

a. Determine interest on purchase price (purchase price * interest rate) and multiply by number of years average person stays in house and pays mortgage (need this number)

2. If seller is injured party = can recover for difference in market value/interest on the purchase money during the delayed period

a. Determine lost interest to figure out how much the seller lost by not putting money in bank right away (purchase price * interest rate)

b. this is calculated by looking at the extra amount of interest paid in 1 year and multiplying it by the number of years the party is expected to remain in the house

3. Breaching party can get restitution if there is unjust enrichment

1. Tort Damages

a. Purpose: To restore party to position they would have been in if tort had never happened; to restore status quo.

i. 2 types of tort damages

1. reliance damages

-try to compensate person for losses he suffered as a result of relying on the K

-typically this involves money paid to third parties

-ex. A agrees to buy B car for 5K, A wants special upholstery and B agrees and spends 500 getting car reupholstered. A then breaches and doesn’t buy car-B has reliance damages of 500

-typically reliance damages are less than expectation damages which is why people usually try to get expectation damages first

2. restitution

-to give back a benefit that was conferred

ex. guy asks girl to prom. Girl spends $100 on dress and guy stands her up.

Girl sues.

*** go through remedies in following order in analysis

a) K remedies

b) Reliance

c) Resititution

b. Damages to Personal Property (Hewlett v. Barge Bertie)

i. RULE: If personal property is completely destroyed, you get FMV of property at time of accident.

1. Court may also give damages for lost use during time it reasonably takes to find subst. good (note: does not apply to clothes or other personal effects/household items)

2. R- w/ total destruction you get FMV of property right before it was destroyed

-old rule=FMV right before destruction

-new rule=also get loss use along w/ FMV before destruction

ii. RULE: If personal property is not a complete loss:

1. If feasible, economically and physically, to repair

a. damages = cost to repair AND reasonable lost use.

2. If not feasible

a. damages = loss of value (difference between FMV of object before and now)

3. RULE: If FMV of object at time of casualty is LESS THAN cost to repair, then FMV is CAP on damages (no cap on lost use)

iii. Damage to vehicles

R-when a vehicle is totally destroyed you get lost use damages for a reasonable amount of time to obtain a replacement

R- when a vehicle can be repaired you get loss use damages during the time the vehicle is being repaired

c. Conversion (Roxas v. Marcos)

i. RULE: Damages = fair and reasonable value of property at time of conversion

ii. SPECIAL RULE for items in flux (gold, silver, etc.) = P gets highest FMV of item between time of conversion and reasonable time of learning of conversion.

a. Loss of Non-Commercial Goods – Household Items and Personal Effects (Lane v. Oil Delivery, Inc.)

i. RULE: -normal standard for measuring damages for total destruction is FMV

ii. R-FMV is likely to undercompensate people (ie buy used clothes)-apply actual value to owner-it is determined by looking at what the owner paid originally, what the replacement cost it, FMV, depreciation, wear and tear

iii. Use Factors for measurement:

1. FMV (value of used goods)

2. Actual value to owner (i.e., what owner paid for it, antique value, etc. – must give actual basis for value)

3. Original cost

4. Replacement cost to buy new

5. NOTE: Include appropriate deductions/factorization for wear and tear depreciation

iv. RULE: Most courts still hold that you cannot factor in sentiment (Landers v. Municipality of Anchorage).

v. Note: Burden of Proof on P to produce evidence to prove amount of award – give evidence that provide factual underpinning for award

1. Cost of damages must be based on evidence, not argument (Taliferro v. Augle).

2. Remittitur-reversing the damage amount and allowing part to stand to avoid a new trial

b. Injury to Real Property

i. Permanent Injury to Land

1. Permanent injury – never will abate, property will never recover.

2. SOL for Nuisance and Trespass = 2 years

a. So can’t recover for damage suffered more than 2 years prior.

b. SOL starts to run when the cause of action accrues – you first have a right to sue when the injury becomes permanent: the case is ripe and all the elements are there for a complete cause of action.

3. Measure of damages: difference in FMV before and after injury

a. Damages are for injuries incurred before suit

i. No damages for lost use – only reduction in value.

b. CANNOT be compensated for Permanent Damages twice – damages are for entire injury (past, present, and possible additional future injury).

c. Note: No longer true that land always has some value and therefore can never be destroyed.

d. R-most you can get for lost use is the FMV of land before injury

i. *lost use comes on top of the cap for the destruction of property b/c it is a separate type of injury

ii. Temporary Injury to Land

1. Temporary injury – injury will abate if activity ceases; harm will go away.

2. Can recover for every instance of temporary damage for 2 years.

a. Temporary damage is considered separate little instances of temporary damage.

i. New cause of action accrues every time you have another injury occurring.

b. SOL ends when you file complaint.

i. So you can go as far back as 2 years before filing of complaint and up to time of judgment; at that time when the case is awarded, the damages are past damages.

ii. If you want to recover for damage after the date of judgment, then sue within another 2 years.

3. Measure of damages: reasonable cost of repairing property or diminution of rental value in property (represents lost use of land)

a. RULE: Cost to repair can’t be more than FMV of real property right before injury.

i. Exception: Personal reason to restore property to original condition, so can exceed value of property – e.g., maintaining govt. K, etc. (Roman Catholic Church of Archdiocese of New Orleans v. La. Gas Serv. Co.)

b. Note: If you can’t get cost to repair, this suggests an INADEQUATE LEGAL REMEDY – thus, argue for an injunction, to avoid multiplicity of lawsuits.

c. crts are reluctant to give cost to repair where it exceed the FMV b/c it could result in a windfall if person just decides to keep the money

iii. Removal/Destruction of Trees

1. Ornamental

a. Part of Real Estate

b. Claim: Permanent Injury to Real Property

c. Measure by reduction in value of property without tree.

2. Commercial

a. Lumber, generally

b. Claim: Conversion

c. Measure by looking at reasonable commercial value (FMV) of trees at time of taking

3. Note: If tree can be replaced, damages are measured by reasonable cost of replacement.

iv. Gravel, Minerals, and Oils

1. Non-willful trespass:

a. Value In Place (in ground)

i. Value of gravel – find out how much someone would pay for it

ii. Value of oil – look in the newspaper

iii. 2 ways to measure value of minerals:

1. Royalties (lesser measure)

a. P gets this if he actually receives royalties

2. Surface Value – Extraction Cost (higher measure)

a. P gets this if he can convince court that he will extract the minerals himself.

2. Willful Trespass:

a. Value At Surface (removed from ground)

i. Always higher than value in ground – have to spend money to remove them, maybe process them, etc.

c. Sovereign Land

i. Here state is suing to vindicate environmental interest.

ii. Damages:

1. Calculate lost use of land from rental value (percentage of FMV) (Chenega Corp. v. Exxon Corp.)

2. If loss is not monetary (rented out land, etc.), then the preservation value is measured by having experts measure it as a percentage of FMV of land.

iii. RULE: Where you have a sovereign entity (state or native corp) that can’t buy and replace land, FMV is not a cap, but P can’t reap windfall (Commonwealth of Puerto Rico v. The SS Zoe Colocotroni)

1. Can’t give disproportionately high damages – state won’t go and buy all the vegetation and animals that were lost.

a. Look at reasonable amount the state will spend to rehab area, taking into account the technical feasibility of doing so and the natural regeneration.

2. Personal Injury Damages

a. Where Injury Doesn’t Involve Death (Frankel v. United States)

i. Past Medical Expenses

1. Just need evidence – show medical bills

ii. Future Medical Expenses

1. Calculate life expectancy to determine how long to provide medical expenses

a. Can consider that injury has shortened P’s life span

b. Some courts factor in inflation to avoid under-compensating

2. If money is for lump sum, don’t reduce to present value

3. If money is for definite future use, reduce to present value

4. Trust Fund Approach

a. Some jdxns allow/require court to put damages in trust for proper use (for P’s care)

b. Also prevents caretakers from squandering money or getting windfall if P dies early.

c. Often used in settlements where P agrees to installment payments instead of lump sum.

i. Trust funds are one of the limits on malpractice claims.

d. CA RULE: Trust funds can be used at judge’s discretion.

e. RULE: Anti-assignment clauses – prevent Ps from assigning settlement payments to someone else, who gives a lump sum in return.

iii. Future Earning Capacity

1. ONLY if injury is permanent

2. Damages = (Earnings P would have made per year) * (# of years P would be expected to work)

a. Reduce amount to present value.

3. Entitled to gross wages

4. RULE: Make no gender-based distinctions, and assume that most people work until age 65

a. Only deduct time to raise kids if you can show that P would have certainly left labor market.

iv. Lost Future Earnings (Wilburn v. Maritrans GP, Inc.)

1. ONLY if injury is temporary

2. Relevant if P can go back to work, but loses ability to promote, or is limited in amount/time of work.

3. Lost future Earnings = Earnings * # of years P is expected to work

a. Earnings

i. Figure out what P would make in a year, calculate for inflation, then reduce to present value.

ii. Increase in pay should be factored in, then reduced to present value.

1. Promotions, etc. – can only give difference between current salary and potential salary.

b. Time

i. Must support time value with evidence (doctor’s testimony, etc.)

4. Entitled to gross wages

5. R-deduct any costs that are avoided by the accident ie cost of going to college and law school

v. Past Earnings

1. ONLY if injury is temporary

2. P must show with reasonable certainty that he lost the earnings for a specific amount of time.

3. Entitled to gross wages

vi. Pain and Suffering

1. Presence of Pain, AND

2. Loss Enjoyment of Future Life (“hedonic damages”)

3. STANDARD: “Fair and Reasonable”

4. Jury may consider any evidence

a. NO economist testimony – Courts do not allow anyone to testify as to $$ amount of pain/suff.

5. EXAM RULE: Atty can make per diem argument (“by the day” – $$/day * # of days)

vii. Damages for unknown, but likely, future ailments (e.g., asbestos – future likelihood of cancer)

1. Some courts will either make an exception or simply eliminate the single action rule

2. Some courts will allow a suit for the fear of getting cancer

3. Some courts/legislature will modify the SOL.

b. Injury to Minors (Healy v. White)

i. 2 lawsuits:

1. Minor

a. Lost future earnings

b. Future medical costs (after he becomes an adult)

2. Parents

a. Past and future medical costs (while he is still a minor)

c. Loss of Consortium (White Construction Co. v. Dupont)

i. Intangible Consortium

1. Love, companionship, sexual relations

2. Value through evidence of quality of relationship, age, time left for couple to be together, etc.

ii. Tangible Consortium

1. Economic support and household services (what you would have to pay someone else to do)

2. RULE: If husband recovers for lost wages, wife can’t recover for support – that would be double recov.

d. Wrongful Death

i. Survival Action

1. Brought be deceased’s estate (executive/personal representative) to assert deceased’s claims; provides that claims survive the death.

2. Injuries:

a. Pain and suffering before death

i. CA: Not allowed to get damages for pain, suffering, or disfigurement.

b. Medical expenses for which estate is liable

c. Funeral costs for which estate is liable

d. Lost earnings (those that would have been earned between time of injury and time of death)

e. Punitives

ii. Wrongful Death Action (Moragne v. States Marine Lines, Inc.)

1. Brought by deceased’s parents, spouses, kids, etc., on their own behalf

2. Injuries:

a. Support/Services (tangible consortium)

i. P must build record through evidence that shows support.

b. Loss of consortium (intangible consortium)

i. P must introduce evidence of relationship with deceased

ii. In some jdxns parents can sue for death of kids and vice versa.

c. Medical or funeral expenses if they don’t come out of estate

3. Can’t recover for pain, suffering, mental distress

a. CA: Separate tort action (infliction of emotional distress)

iii. NOTE: Businesses can take out insurance on important ees – “key man” insurance

3. Limitations on Compensatory Damages

a. RULE: Fact of causation has to be reasonably certain; amount doesn’t have to be so certain (at least in torts)

i. Predatory Pricing damages formula (Story Parchment Co. v. Paterson Parchment Paper Co.):

1. Damages = Actual Market Price – What Price Would Have Been w/out Predatory Pricing

a. Actual price is reasonably certain; what price would have been is not so certain – could look at market price before predatory pricing began.

ii. Competition Damages (Youst v. Longo)

1. British RULE: Value of chance – if person was one of 10 competitors when eliminated, then you had a 1/12 chance; so damages = 1/10 total purse.

2. American RULE: damages are too uncertain, because chances of winning are too uncertain.

b. Duty to Mitigate (aka, Doctrine of Avoidable Consequence)

i. Mitigation is an affirmative defense, so Burden of Proof on D to show that P did not meet duty to mitigate.

ii. General RULE: If you don’t mitigate, then avoidable amount of loss will be deducted from award.

iii. In Context of K

1. RULE: If repudiation of K was clear, then other party must stop performance and can’t recover for full performance (Rockingham County v. Luten Bridge Co.)

a. If P doesn’t stop performance – only entitled to loss profit (NOT labor and materials)

b. Exception: UCC – If it makes economic sense to complete the K.

2. RULE: If K is breached, P has affirmative duty to take reasonable steps to reduce damages (Parker v. 20th Century Fox).

a. Amount P receives will be reduced by any amount that could have been avoided if P had taken reasonable steps to find COMPARABLE employment (not different or inferior to P’s employment under K).

b. D must bear burden of proof by showing that there was comparable employment.

iv. In Context of Tort (Lobermeier v. General Telephone Company of Wisconsin)

1. Current RULE: If D asserts failure to mitigate on part of injured party, then D must prove that a person of ordinary intelligence and prudence under the same/similar circumstances would have elected to undergo the recommended medical procedure.

a. Old Rule: P doesn’t have to mitigate damages by undergoing medical procedures.

2. COLLATERAL SOURCE RULE: Compensation and other benefits which injured party receives from source unaffiliated with/independent from D-tortfeasor (e.g., insurance) are not deducted from D’s liability (Helfend v. So. Cal.Rapid Transit Dist.).

a. Problematic when tortfeasor is govt. and when collateral source money comes from special fund

b. R-if tortfeasor is the government or public entity, crt looks at the source of the funding to see if collateral source rule applies

-if it comes from a general fund-CSR does not apply and you make deduction

-if it comes from a separate fund –CSR applies and you don’t deduct

-social security is a separate fund

i -this rule gives people an incentive to purchase insurance-tortfeasor should not be allowed to benefit from victim having bought insurance

4. Punitive Damages

a. Purpose: to deter and punish

b. STANDARD:

i. Malice

1. Conduct intended by D to cause injury to P, OR

2. Despicable conduct that is carried on by D with a willful and conscious disregard of rights/safety of others.

OR

ii. Oppression

1. Despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of person’s rights.

OR

iii. Fraud

1. Intentional misrepresentation, deceit, or concealment of a material fact known to D with the intention on part of D of thereby depriving person or property of legal rights, or otherwise causing injury.

c. Burden of Proof on P.

d. STANDARD: Clear and Convincing Evidence

e. RULE: Punitives are not imposed based on vicarious liability

i. Exceptions:

1. If er engaged in conduct that satisfies the standard for punitives (malice, fraud, or oppression)

2. If er participated in the action, encouraged it, consented to it, ratified it, etc.

3. If er recklessly hired unfit ee, and then ee engaged in outrageous conduct

4. If er hired someone in a managerial capacity, and that managerial ee engaged in bad conduct in the capacity of his position.

f. RULE: Punitive damages can be granted on top of nominal damages awarded for ordinary damages.

g. ISSUE: In cases of mass tort/product liability in strict liability cases, company’s assets may not be enough to go around to all Ps; could bankrupt company (Wangen v. Ford Motor Co.)

i. Possible solutions:

1. “First Comer” Rule

2. Trials can be bifurcated at D’s request

a. First, decide compensatory damages and whether to grant punitives;

b. If yes to punitives, then jury hears evidence on D’s wealth, prior payments of punitives by D

3. Avoid windfall to P – P’s attys take quite a chunk; also, some states take portion of punitives and put it in a fund/treasury.

h. RULE for K Cases: Can only get punitives if breach of K if an independent tort.

i. Exceptions:

1. Conduct is a breach of fiduciary duty;

2. Common carrier/public service provider who fails to perform service cold-hearted or despicable way (e.g., skipping train stop);

3. Can sue insurance companies for “tortious breach of covenant of good faith and fair dealing (i.e., dismissing claims in bad faith).

a. Damages would be breach of K damages (what insurance company owed P in the first place.

ii. Note: SOL is longer for breach of K than for tort

i. Constitutional Challenges

i. 8th Amend.

1. But punitives are not a fine, even if govt. is prosecuting – unless money goes to govt.

ii. DP Clause of 14th Amend.

1. Procedural DP

a. Jury must find in clear and convincing fashion that evidence support verdict for punitives

b. Judge must give jury detailed jury instructions

c. Must be some sort of meaningful review of damage award by judge for reasonableness of amount and evidentiary support.

i. When appellate court reviews constitutionality of punitive award, it does so de novo.

2. Substantive DP

a. Basic STANDARD: Punitive damages amount cannot be grossly excessive.

i. TEST:

1. Reprehensibility of conduct

2. Proportionality – ratio of punitive damages to compensatory damages (try to keep ratio to single digits)

3. Comparable fines (civil/crim sanctions applicable in similar circumstances)

a. Shouldn’t be higher than fines established by legislature, but can be IF you take legislatures number into consideration

b. Can’t use punitives to punish actions that are legal in other jdxns – limits mass torts (BMW v. Gore)

i. Probably can’t punish for action that are illegal in other jdxns.

j. arguments against punitive damages

1. the costs of punitive damages will get passed on to the consumer via higher prices

2. costs will get passed on to the shareholders

3. multiple plaintiffs-pay too many punitive damages claims and the will be no money left in co. to pay compensatory damages

4. creates a windfall to the plaintiff

k. judicial review

Honda v.Oberg- R-judge must review the amount of the puni’s w/ the authority to grant a new trial or reduce the amount

5. Restitution

a. Substantive right to restitution in certain causes of action, e.g., Breach of K.

i. Innocent party to a breach of K has several options:

1. Rescission and restitution

2. Injured party can go ahead with K and ignore breach

3. Suit for damages

b. If no actual K, then argue for Restitution under quasi-K

i. General Requirements:

1. D received a benefit

2. By keeping this benefit, D is unjustly enriched

a. Focus on D’s gain, not P’s loss

3. Under the circumstances, D should make compensation

ii. Alternate way to get rescission:

1. Show existence of K, and breach of K, then argue that instead of suing for breach you would rather rescind and get restitution.

a. D can’t rescind – P has to (Alder v. Drudis)

c. Restitution in Context of Atty’s Contingency Fee

i. RULE: Fired atty is not entitled to full contingency fee, just restitution

1. Measurement of restitution:

a. Value of goods/services that lawyer conferred

b. Lawyer’s ordinary hourly rate

ii. CA/EXAM RULE: Lawyer doesn’t recover unless P was successful with 2nd atty.

iii. Old rule: Expectation damages, full amount – but had chilling effect on clients getting rid of lawyers.

d. Note: If you want just rent money, you must sue for restitution (Monarch Accounting Supplies, Inc. v. Prezioso)

e. General rule for restitution-damages measured by D’s gain

f. R-w/ restitution the total amount recovered cannot exceed the K amount

g. Torts of Conversion

i. Can sue D for restitution in 2 causes of action:

1. Conversion

2. Assumpsit/Common Counts

a. Money had and received

i. Use this to recover on debt

b. Goods sold and delivered

i. Use this when someone buys something from you and doesn’t pay.

ii. Could be fictitious sale that court decides to treat act as sale.

ii. Why choose between the two?

1. Assumpsit has longer SOL than tort of conversion (4 years).

a. Waiver of Tort (of Conversion) and Suit in Assumpsit – get longer SOL.

2. Certain types of Assumpsit allows P to get increased value of item (unlike conversion)

6. Constructive Trusts and Equitable Liens

a. Constructive Trusts

i. Equitable remedy

ii. Traditional remedy for some causes of action (fraud, etc.), so just prove that cause of action.

iii. If not traditional remedy, then must satisfy requirements:

1. Confidential/fiduciary relationship

2. Person abused trust and took advantage of other party

iv. Equitable Tracing:

1. If D uses ill-gotten gains to purchase property or make investments, trace the money to the purchase (“Equitable Tracing”)

2. Then place constructive trust on property – good if property goes up in value, bad if it decreases in value.

a. Must show that ALL the ill-gotten goods, and ONLY those goods went into the purchase.

b. If not, then get an Equitable Lien

3. Note: If property is sold to bona fide purchaser, then you are not entitled to property any more – but can get money in D’s bank account from sale if you can use Equitable Tracing to track it there.

b. Equitable Liens

i. Can generally get an equitable lien in circumstances where you can get a constructive trust.

ii. Foreclose on property, get what property is worth, and be entitled to deficiency judgment on rest of money (good if property decreases in value)

1. Must get Equitable Lien if property is bought with both embezzled funds (P’s property) and someone else’s funds – only option is to get a judgment for your money and slap an equitable lien on the house.

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