law school outline- remedies[1]

Remedies OutlineI. DAMAGES.......................................................................................................................................- 3 -

A. MEASURE OF TORT DAMAGES.......................................................................................................- 3 -1. In General.................................................................................................................................- 3 -2. Conversion/Trespass to Chattel................................................................................................- 3 -3. Damage to Chattel (usually tort is negligence)........................................................................- 5 -4. Injuries to Land........................................................................................................................- 6 -5. Personal Injury.........................................................................................................................- 7 -6. Fraud........................................................................................................................................- 7 -7. Other Torts...............................................................................................................................- 8 -

B. CONTRACT DAMAGES....................................................................................................................- 8 -1. General.....................................................................................................................................- 8 -2. Buyer’s Damages......................................................................................................................- 9 -3. Seller’s Damages....................................................................................................................- 11 -4. Contractor’s Damages...........................................................................................................- 12 -5. Employer’s Damages..............................................................................................................- 12 -6. Employee’s Damages.............................................................................................................- 13 -

C. LIMITATIONS ON DAMAGES (REDUCE AMOUNT OF DAMAGES)...................................................- 13 -1. Certainty.................................................................................................................................- 13 -2. Purely economic harm from negligence.................................................................................- 13 -3. Forseeability...........................................................................................................................- 13 -4. Avoidable consequences.........................................................................................................- 14 -5. Collateral Source Rule...........................................................................................................- 15 -6. Credit for Benefit....................................................................................................................- 15 -7. Betterment...............................................................................................................................- 15 -

II. COERCIVE EQUITABLE RELIEF............................................................................................- 15 -

A. EXAM APPROACH........................................................................................................................- 15 -1. Inadequate remedy at law?.....................................................................................................- 15 -2. Equitable defenses?................................................................................................................- 15 -3. Balancing Hardships..............................................................................................................- 15 -4. Balancing Equities..................................................................................................................- 15 -5. Excessive Court Supervision..................................................................................................- 15 -6. Public Interest.........................................................................................................................- 16 -

B. EQUITY JDX.................................................................................................................................- 16 -1. Historically arose in response to flawed legal system. Religious leaders were chancellors. - 16 -2. Matter of propriety, not power to grant relief........................................................................- 16 -3. Inadequacy Requirement (Synonymous with irreparable harm in most cases).....................- 16 -

C. TRO & PRELIMINARY INJUNCTIONS (PROVISIONAL RELIEF)......................................................- 16 -1. Generally................................................................................................................................- 16 -2. Tests:.......................................................................................................................................- 17 -

D. EQUITABLE CLEAN-UP..................................................................................................................- 19 -1. Because of merger of legal and equitable courts, courts can grant “equitable damages” if equitable remedy sought fails (can’t order specific performance, for example, but that was all the plaintiff asked for.)...........................................................................................................................- 19 -2. Limited now because of civil procedure rule that legal matters are decided before equitable matters..............................................................................................................................................- 19 -

E. EQUITABLE DISCRETION (MEASURE OF INJUNCTIVE RELIEF).......................................................- 19 -1. Unfair K – court doesn’t have to order equitable relief if K is unfair...................................- 19 -2. Extra Certainty of terms in K is required...............................................................................- 19 -3. Mutuality of remedies – no longer required...........................................................................- 19 -4. Equitable defenses..................................................................................................................- 19 -

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5. Practical Enforceability.........................................................................................................- 20 -6. Balancing................................................................................................................................- 20 -7. Public Interests.......................................................................................................................- 22 -

F. EQUITABLE DECREES TO DENY RELIEF........................................................................................- 22 -1. Court has broad discretion to fashion remedy as justice requires and is not bound to either grant or deny the relief prayed for...................................................................................................- 22 -

G. CONTEMPT...................................................................................................................................- 22 -1. Generally: Ways of categorizing contempt............................................................................- 22 -2. Degree of Specificity Required...............................................................................................- 23 -3. The Law of the Decree............................................................................................................- 23 -4. Criminal v. Civil Contempt.....................................................................................................- 23 -5. Collateral Bar Rule................................................................................................................- 24 -6. Ability to Pay..........................................................................................................................- 24 -7. Who is Bound..........................................................................................................................- 24 -

III. RESTITUTION (FOCUS ON DEF)........................................................................................- 25 -

A. UNJUST ENRICHMENT –................................................................................................................- 25 -1. Defined: Cause of action, remedy is Restitution....................................................................- 25 -2. Elements:................................................................................................................................- 25 -

B. RESTITUTION................................................................................................................................- 25 -1. Substitutionary........................................................................................................................- 25 -2. Specific Restitution.................................................................................................................- 28 -

IV. OTHER REMEDIES................................................................................................................- 30 -

A. RESCISSION (EXAM TIP – R.E.M. APPROACH).............................................................................- 30 -1. Requirements..........................................................................................................................- 30 -2. Election (Has party Affirmed the K?).....................................................................................- 31 -3. Mechanics of undoing the deal...............................................................................................- 31 -

B. REFORMATION.............................................................................................................................- 32 -1. Grounds:.................................................................................................................................- 32 -2. Equitable Remedy – so inadequacy requirement is easy – you can’t get reformation at law. - 33 -

V. ENHANCEMENT AND ADJUSTMENT OF MONETARY AWARDS.................................- 33 -

A. REDUCTION TO PRESENT VALUE OF FUTURE DAMAGES...............................................................- 33 -B. ATTORNEY’S FEES........................................................................................................................- 33 -C. INTEREST......................................................................................................................................- 33 -D. Costs of suit.................................................................................................................................- 33 -




I. Damages

A. Measure of Tort damages

1. In General

a) Damages are a sum of money given as compensation for a suffered wrong.

b) Damages are a substitutionary remedy.

2. Conversion/Trespass to Chattel

a) Defined:

(1) Conversion – permanent Deprivation of property

(2) Trespass to Chattel – temporary interference with use of property

b) Measure of general damages: Fair market value at the time and place of the conversion or destruction

(1) Fair Market Value

(a) Defined: Price a reasonable buyer would pay and a reasonable seller would accept in a sale of the product. Operates under the assumption that property can be replaced.

(b) Sources: Expert, Owner, Cost to recreate, Cost to generate income

(c) Sentimental Value: split in authority

(i) Bond rule: where primary value is in sentiment, consideration of the owner’s feelings is appropriate.

(ii) Some courts, only FMV.

(iii) Some courts say reasonable personal value, but can’t consider feelings of owner.

(d) Acceptance of FMV results in a Forced Sale – legal fiction that at time PLA takes substitutionary




remedy, legal title passes to DEF. Public policy against double-recovery

(e) Loss of Use

(f) Diminution in Value

(i) Subtract value it would have been minus the value in its current condition

(2) Time of Conversion/Destruction

(a) For goods whose value fluctuates: three way split

(i) “Stand-Pat” rule – FMV at time of conversion only

(ii) Highest value between conversion and trial

(iii) Highest market value within a reasonable time after the owner discovers the conversion

(3) Place of Conversion/Destruction

(a) Market sense of “place”

(i) Retail market, wholesale market, manufacturing cost – typically award price the PLA would pay. So if stolen from retailer, wholesale cost; if stolen from consumer, retail price (used). BUT - if stolen from manufacturer, wholesale price.??

(b) Geographic sense of “place”

(i) If held for use, add cost of transport

(ii) If held for sale, deduct cost of transport

c) Special Damages

(1) Consequential

(a) Cost of recovery




3. Damage to Chattel (usually tort is negligence)

a) General: Cost of Repair

(1) Rule: Use cost of repair as measure of damages unless it is not economically and physically viable.

(a) Economically viable: cost of repair exceeds diminution of value (or value before tort in some jdx),

(b) Physically viable: antique, unique piece, etc.

(2) Policy: Cost of repair actually reflects true cost as opposed to estimates of value

(3) Use Diminution in value if Cost of Repair isn’t viable.

(a) Defined: Value before injury minus the value after the injury

(b) Rule: (see above rule for Cost of Repair)

b) Special:

(1) Loss of Use

(a) Reasonable Replacement Rental value OR

(i) Measure if no rental market available: Proportionate cost of keeping and maintaining alternative.

(2) Lost income while the item couldn’t be used

(3) Rule: Loss of use damages are recoverable even though no substitute was actually rented or profits were lost based on loss of opportunity, which has value. “Spare boat doctrine.”

(4) Clean up

(a) Emotional




4. Injuries to Land

a) Trespass

(1) General

(a) Reasonable rental value and

(i) Pro-rated for amount of land trespassed upon

(b) Cost of Repair

(2) Special

(a) Emotional Distress

b) Nuisance (intentional interference with use and enjoyment of property)

(1) General:

(a) Diminution in Value

(i) Usually available when nuisance can’t be abated

(b) Reasonable Rental Value

(i) if the nuisance is continuing

(2) Special:

(a) Discomfort and Annoyance

(b) Cost of Repair/Clean-up/

(c) Medical

(d) Lost Profits

c) Trees and Crops Injuries

(1) General:

(a) Diminution in Value to the land caused by absence

(b) Cost of Replacement




(c) Lost profits (usually when the tree/crop is productive)

(d) Value of right to prospect (grow crops if seeds are lost, mine, etc.)

5. Personal Injury

a) General:

(1) Pain and Suffering

(a) Encompasses both physical sensation and emotional reaction to injury (general damages)

(2) Loss of Earning Capacity

(a) Impairment of ability to earn in the future

b) Special:

(1) Medical

(2) Lost Wages

6. Fraud

a) Type of misrepresentation:

(1) Intentional – rescission, damages, punitive damages

(2) Negligent – rescission, damages

(3) Innocent – (all but one jdx) rescission only

b) General Damage:

(1) Out-of-Pocket - Value parted with minus value received (minority)

(a) Example where FMV = $155, K price is $150, and actual value = $145. OOP damages: $150-145=$5.

(2) Benefit of Bargain - Value as Promised minus value received (plurality rule)




(a) Example where FMV = $155, K price is $150, and actual value = $145. OOP damages: $155-145=$10

(3) Cost to Make Representation True (preferred choice)

(4) Flexibility Rule – court can adopt any of the above as seems most fair.

7. Other Torts

a) Misappropriation of funds –

(1) General: the measure is the amount misappropriated

b) Trade Secret Publication –

(1) Generals:

(a) Cost to develop trade secret

(b) Maybe - injured party’s profit margin times number of sales of competitor who benefited

B. Contract Damages

1. General

a) Policy: Put the plaintiff in the position he would have been in if the contract had been fully performed (forward looking)

b) General Measures –

(1) General Damages:

(a) Benefit of Bargain – FMV minus K price

(2) Special Damages:

(a) Reliance

(i) PLA is limited to only reliance when:

(a) Promissory Estoppel is basis of claim




(b) Expectancy is too speculative

(c) When party has no expectancy damages

(d) Public policy reasons (Dr. Malpractice)

(b) Consequential

c) Types of breaches

(1) Non-performance

(2) Defective Performance (substantial performance)

(a) Minor

(b) Major

2. Buyer’s Damages

a) Major defect

(1) Flureau Jdx: if breach was in good faith, no benefit of the bargain, only reliance

(a) Incidental Reliance Damages (Cost of improvements, cost of investigating title)

(b) Essential Reliance Damages (Purchase Price, interest

(2) Majority jdx: Benefit of the Bargain in addition to all of reliance damages

(a) Measure: FMV minus K price

b) Non-Performance

(1) Essential Reliance Damages - So much of price as has been paid AND

(2) Incidental Reliance - Market price at time and place set for delivery minus contract price




c) Minor Defective

(1) Value as promised minus value as received

d) Resale Contract – split of authority

(1) Fair market value minus contract or

(2) Resell value minus contract

e) Defective Performance

(1) Majority Rule:

(a) Cost of repair unless it would create economic waste

(i) Economic Waste Rule – repair would mean destruction of perfectly good item

(b) If cost of repair would create economic waste, diminution in value at time of breach.

(i) Value had the contract been performed completely minus value as performed.

(2) Minority Rule (2nd Restatement):

(a) Cost of repair unless it is grossly disproportionate to diminution in value.

f) Partial Performance

(1) Difference between the amount unpaid on the K and the amount required to get someone else to finish.

g) Consequential (Special) Damages

(1) Lost Profits

(a) Lost Primary Profits: difference between what the buyer would have earned from reselling had their been no breach and what was earned after breach

(b) Lost Secondary Profits: Lost profits from secondary products also sold (e.g., if breach was over




tires, buyer who sold hubcaps as well as tires could recover for resulting loss of hubcap sales)

(c) Loss of Goodwill: profits lost on future sales rather than on sale of defective goods.

(i) Requires PLA to prove such lost future profits were causally linked to breach of warranty and provide trier of fact with reasonable basis from which to calculate damages.

h) Reliance Damages

(1) Types:

(a) Incidental Reliance – Money spent as a consequence of dealing with the breach

(b) Essential Reliance - Money spent connected with performing (Performing or preparing to perform)

(2) Exception: Reliance damages are limited if it can be shown that the full performance would have resulted in a net loss to the plaintiff. (Can’t escape bad bargain). But – DEF has the burden of proving the project was a loser.

3. Seller’s Damages

a) Sale of Land

(1) Benefit of the Bargain: K price minus FMV. (Take what they expected to get (K price) and subtract what they expected to give (FMV of land).

(a) Because damages are paid as cash now, measure market value & K price on all-cash basis.

(b) Economic Obsolescence Theory: Seller is allowed to rely on a depressed FMV of the property that results from dissemination of information about the broken contract. So when the land is devalued because the buyer breached, the seller is allowed to use the new lower FMV.

(c) Resale price is relevant evidence of FMV, but not determinative.




(2) NOT interest on benefit of bargain: because of concept of equitable conversion. At the time the contract was signed, the seller’s interest in land was equitably converted to an interest in money.

b) Sale of goods: UCC makes resale value one determinative way of measuring FMV.

4. Contractor’s Damages

a) Benefit of Bargain:

(1) If no performance: K price less contractors cost to perform

(2) If partial performance: Either:

(a) Whatever is still owed on K minus what he saved by not having to perform; or

(b) Compensation for what he’s done so far plus profit expected.

5. Employer’s Damages

a) Cost of obtaining other service equivalent to that promised and not performed minus K price. FMV not performed – K price for period not performed

(1) The salary the breaching employee gets at his new employer is strong evidence of the FMV of the services.




6. Employee’s Damages

a) Present cash value of the K to the employee if it had not been breached, less actual earning or what he reasonably could have earned from other employment

b) Small minority of Jdx: Special consequential damages for harm to reputation as a result of breach

C. Limitations on Damages (reduce amount of damages)

1. Certainty

a) As to Existence of damages (was the plaintiff really harmed?)

(1) Reasonable Probability

b) As to Amount of damages (calculation)

(1)

2. Purely economic harm from negligence

3. Forseeability

a) Contract

(1) Hadley v. Baxendale - Reason to know at time of K formation. Either

(a) Reasonably considered as following naturally or

(b) Within reasonable contemplation as the probable result

(2) When damages are disproportionate to the K price, not foreseeable

b) Tort

(1) Reasonably foreseeable at time of tort

(2) Focus on whether plaintiff was foreseeable




(3) “Eggshell skull plaintiff” – no real issue as to extent of damages

4. Avoidable consequences

a) General idea: PLA must take reasonable steps to minimize harm from the tort/contract

(1) Restatement: Damages are not recoverable that could have been avoided without undue burden, risk, or humiliation

(2) Special beliefs – can be considered as a factor when determining reasonableness, but aren’t determinative. (Jehovah’s Witness)

(3) If the defendant is equally capable of avoiding the loss, the plaintiff does not have to take on the burden.

(4) Employment – employee must take reasonable steps to secure other employment.

(a) If the other employment opportunity is different and inferior, PLA doesn’t have to take it. Factors:

(i) Title, type of work, location,

5. Collateral Source Rule

a) Majority General Rule: If injured party receives some compensation for injury from a source wholly independent from the DEF, such payment may not be deducted from the damages otherwise available. Policy – keep benefit of thrift.

b) CAL: same as above, but to be a collateral source, it has to be something for which the PLA has actually or constructively paid or is subject to subrogation (insurance).

c) Minority of Jdx. have repealed the collateral source rule

6. Credit for Benefit




a) Rule: When the defendant’s violation of PLA’s rights leaves PLA in better position than before, DEF is entitled to a credit for the benefit.

7. Betterment

a) Defined: After DEF commits tort, repair occurs that extends useful life beyond what it would have been. Multiply percentage increase by money paid.

b) DEF can’t force use on PLA.

II. Coercive Equitable Relief

A. Exam Approach

1. Inadequate remedy at law?

2. Equitable defenses?

3. Balancing Hardships

4. Balancing Equities

5. Excessive Court Supervision

6. Public Interest

B. Equity Jdx

1. Historically arose in response to flawed legal system. Religious leaders were chancellors.

2. Matter of propriety, not power to grant relief

3. Inadequacy Requirement (Synonymous with irreparable harm in most cases)

a) Common arguments used to show remedy at law is inadequate:

(1) DEF is insolvent

(2) Irreplaceability –

(a) No market for replacement (closely held stock)




(b) Not available in market (heirloom)

(c) With land, there is a presumption land is irreplaceable

(3) Difficulty of measuring – (e.g. value of growing old trees; careful trade secret)

(4) Secure remedy (equitable lien/constructive trust)

(5) Multiplicity of suits/Continuing Harm – legal remedy would require PLA to sue over and over again each time the damage occurs.

b) Synthesized: Remedy at law is inadequate if it is not as full, complete, and efficacious.

C. TRO & Preliminary Injunctions (Provisional relief)

1. Generally

a) Difference: (standards are stricter for provisional)

(1) TRO – Provisional, fast, may be ex parte, usually brief, irreparable harm

(2) Prelim – Provisional, notice, hearing, adversarial, irreparable harm

(3) Perm – trial on merits, inadequacy

b) Notice & Hearing – almost always required, except in extreme cases

c) Bonds – help guard against risk of error. Wrongfully enjoined party can recover from bond fund. Bond is usually a cap.

d) 4 Basic Elements:

(1) Likelihood of success

(2) Irreparable harm (Immediacy)

(3) Balance equities




(4) Public interest

e) Status Quo – generally we strive to avoid changing the status quo, less risk of error

(1) (Minority rule) look to form of injunction.

(a) Mandatory Injunctions – requires action (harder to get, changes status quo)

(b) Prohibitory injunctions – stops action

(2) Majority rule – last uncontested status before the controversy

2. Tests:

a) 9th #1 & 11th Cir:

(1) Likelihood of success on merits

(2) Irreparable harm

(3) Balance of hardships

(a) Exam – identify harms and make comparative discussion

(4) Advancement of public interest

b) 9th #2

(1) Probable success on the merits and possibility of irreparable harm; OR

(2) Existence of serious questions on the merits and the balance of hardships tipping decidedly in favor of PLA

(a) “Serious questions” means some chance of success on a reasonable claim

(3) Public interest

c) D.C. Cir. (Sanders)

(1) Likelihood of success on merits




(2) Irreparable harm

(3) Balance Harm to interested parties

(4) Public interest

d) Leubsdorf forumla

(1) P x Hp > (1-P) x Hd = Only if the harm to the plaintiff if the injunction is denied multiplied by the probability of success is greater than the defendant’s probability of success on the merits multiplied by harm to defendant if the injunction is granted.

D. Equitable clean-up

1. Because of merger of legal and equitable courts, courts can grant “equitable damages” if equitable remedy sought fails (can’t order specific performance, for example, but that was all the plaintiff asked for.)

2. Limited now because of civil procedure rule that legal matters are decided before equitable matters.

E. Equitable discretion (measure of injunctive relief)

1. Unfair K – court doesn’t have to order equitable relief if K is unfair.

2. Extra Certainty of terms in K is required

a) Policy: court needs to know what to order the parties to do

3. Mutuality of remedies – no longer required.

4. Equitable defenses

a) Unclean Hands – Defined: no person can obtain affirmative relief in equity with respect to a transaction in which he has himself been guilty of inequitable conduct.

(1) Inequitable conduct




(2) Must be willful and

(3) Fraudulent, illegal, or unconscionable

(a) Broader concept than just “illegality” because it also includes unconscionable conduct.

(4) Misconduct must bear immediate relationship to the transaction at issue

b) Laches – law doesn’t aid those who sleep on their rights.

(1) Unreasonable delay

(a) Look to the excuse – a delay that is not excused is unreasonable

(b) Applicability of SOL? 3-way split

(i) SoL creates rebuttable presumption

(ii) Completely disregard

(iii) Use SoL as one factor to consider

(2) Delay prejudiced other party

(a) Worry about losing evidence (death, failed memory, lost documents) OR

(b) Change in position in reliance on inaction

5. Practical Enforceability

a) Can the court issue an enforceable order

(1) Impossibility of performance

(2) Illegality of enforcement (involuntary servitude, exercise of religion, etc.)

b) Excessive Supervision

(1) Often framed as argument that ordering relief will create inherently unstable relations




6. Balancing

a) Balance of Hardships

(1) Reasoning Process:

(a) Identify harm to PLA if injunction is denied,

(b) Identify harm to DEF is injunction is granted

(c) Compare the two

(2) Do we balance when there is a statute? Yes with some exceptions.

(3) Options available regarding crafting injunctive relief when balancing the hardships

(a) Find nuisance and enjoin

(b) Find nuisance and damages

(c) No nuisance

(d) Find nuisance and PLA pays DEF’s costs/losses and enjoin

(e) Find nuisance and enjoin results

(f) Find nuisance and limit

(g) Require regular reports or technical developments

(h) Timetables

(4) Balancing hardships in contracts case is much harder than in tort.

b) Balance of Equities

(1) Instead of weighing relative hardships, look to equitable conduct (good faith, etc.)




7. Public Interests

a) Consider harm or benefit to the general public if the relief is granted or denied.

b) Exam tip: If the action is a tort, there is always a public interest in favor of granting the injunction to discuss.

F. Equitable decrees to deny relief

1. Court has broad discretion to fashion remedy as justice requires and is not bound to either grant or deny the relief prayed for.

G. Contempt

1. Generally: Ways of categorizing contempt

a) Direct v. Indirect

(1) Direct contempt: recalcitrant or unseemly conduct

(2) Indirect – disobedience of court order

b) Criminal v. Civil

(1) Criminal – public purpose, punish and deter, beyond reasonable doubt

(2) Civil – No jury, burden is clear and convincing evidence

(a) Purpose: secure private plaintiff the benefits of an injunction – compensatory purpose

(b) Form: opportunity to purge

c) Retrospective v. Prospective

(1) Retro – defendant breached and judge can no longer secure the conduct, so judge has to order something else as compensation (money, criminal contempt)




(2) Prospective – coercive contempt to threaten defendant to perform

2. Degree of Specificity Required

a) Due process requirement to make sure person knows what conduct is forbidden before being punished for it.

3. The Law of the Decree

a) The order will spell out what constitutes a violation, so must look at the order

4. Criminal v. Civil Contempt

a) Look to the Purpose and Form to determine which one – these are all factors

(1) Purpose:

(a) Secure compliance for PLA - civil

(b) Vindicate court – criminal

(2) Form:

(a) Structure:

(i) Set sentence/fine with code of conduct – criminal

(ii) Daily fine - civil

(b) Indeterminate sentence/fine (contemnor holds key to own jail cell – civil

(c) Opportunity to purge – civil

(d) Complexity of order




5. Collateral Bar Rule

a) Order of the court must be obeyed until set aside

b) Disregard of court order bars ability to challenge validity

c) Exceptions:

(1) Order is transparently invalid

(2) Challenge is based on lack of subject matter jurisdiction

(3) Irreparable harm if forced to comply (loss of privilege)

6. Ability to Pay

a) General rule – we don’t imprison for inability to pay. Exceptions:

(1) Family support

(a) Court can impose contempt sanctions for violation of family support order even where the contemnor has no ability to pay if the lack of work is willful and person had ability to work.

7. Who is Bound

a) Only Parties, agents, and servants, attorneys & those in concert or participation with them

(1) Not those who are not in privity




b) Notice

III.Restitution (focus on DEF)

A. Unjust enrichment –

1. Defined: Cause of action, remedy is Restitution

2. Elements:

a) Unjust

b) Enrichment

B. Restitution

1. Substitutionary

a) At Law

(1) Tort Measured: Value of the defendant’s gain

(a) There may be different methods of measuring

b) In Equity

(1) Tracing Doctrine –

(a) Basic Tracing Rule: PLA Can trace her property into any form or specie into which it has been transmuted.

(i) PLA can trace money into a commingled account

(ii) BFP take free and clear of PLA’s claim for constructive trust or equitable lien, but donee or purchaser with notice takes subject to PLA’s rights.

(b) Pro Rata Rule: PLA can trace her property into asset acquired with her money and with DEF’s money proportionately

(c) Withdrawal from Commingled Accounts: 4-way split of authority [Exam tip – when you see money being withdrawn from a commingled account – finish




the hypothetical for each rule before moving on to the next rule.]

(i) Rule in Clayton’s case: First in, first out.

(ii) Jessel’s Bag rule: DEF’s money is always presumed to have been withdrawn first.

(iii) Rule from In re Oatway: PLA may choose the order of withdrawals.

(iv)Restatement: Tracing: PLA always can trace into the account and into any product acquired with account funds. Measure: depends on how bad DEF was in acquiring money.

(a) If DEF was NOT a conscious wrongdoer: PLA is limited to an equitable lien but can apply her equitable lien against both the account and any product.

(b) b. If DEF WAS a conscious wrongdoer – P gets a choice:

(i) PLA can, at a minimum get an equitable lien against the account and any product or:

(ii) PLA can get a pro rate share of both the account and any product in the proportion of what she had in the account over the total amount in the account.

(d) Replenishment into account after some part of money dissipated: Four rules:

(i) ALL JDX: If P can prove DEF had intent to replenish, P’s money treated as restored.

(ii) If P can’t prove intent to replenish MAJORITY Lowest Intermediate Balance rule – Presumed that any replenishment is




not PLA’s money. Each depletion further reduces PLA’s money to the lowest point.

(iii) If P can’t provie intent to replenish MINORITY rule: Presumption that any replenishment is restoration

(e) DEF withdraws money from account where DEF has commingled money of two or more PLAs:

(i) MINORITY: First in, first out

(ii) MAJORITY: Each victim bears depletions pro rata

(2) Constructive Trust

(a) Requirements:

(i) Unjust Enrichment & Inadequacy

(ii) Tracing to new property

(b) Right conferred: P gets equitable ownership of the asset

(3) Equitable Lien

(a) Requirements:

(i) Unjust enrichment & inadequacy

(ii) Trace PLA’s property to improvement of an asset of DEF

(b) Right conferred: P becomes lienholder and can force sale to pay the lien

(4) Subrogation

(a) Requirement:

(i) Unjust enrichment & inadequacy

(ii) Trace use of PLA’s property to discharge of an obligation previously owed by DEF.




(b) Right Conferred: P obtains former creditor’s rights (only meaningful of creditor had secured interest, otherwise, damages are adeauate.)

2. Specific Restitution

a) At Law (Replevin for personal property, Ejectment for land)

(1) Requirements:

(a) Conversion, or trespass with ouster, or contractual right to the property

(b) Can Replevy from anyone in whose possession it is found

(c) Constitutional requirements of notice and opportunity to be heard before replevin, but TRO type setting might be enough.

(2) Accession

(a) Exception to replevin rule that you can recover from anyone in whose possession the property is found

(b) Rule:

(i) Party must be BFP

(ii) BFP must add labor and materials such that the FMV of the chattel is greatly enhanced.

(iii) Usually, BFP would be required to pay damages for conversion to PLA measured as FMV of the item before its value was greatly enhanced. (BFP would then sue DEF for breach of warranty of title to get the money back)

(3) Measure when PLA sues for conversion seeking replevin:

(a) Return and detention damages (loss of use or depreciation)

(b) FMV of property at time of taking + interest or




(c) FMV of property at time of trial + detention damages

(i) In order to know detention damages, we have to know why the chattel was held. If held for use, detention damages are Fair Rental Value. If held for sale, depreciation.

(4) Result: Actual repossession effectuated by the sheriff or marshal

b) Equitable Replevin (“Give it back” injunction”)

(1) Rule: Inadequacy of legal remedy and equitable considerations (because replevin is such an adequate remedy, usually requires unique goods.)

(2) Result: Order of injunction with power of contempt, but no detention damages.

c) Real Property Restitution

(1) Forcible Entry & Detainer (squatter)

(a) Accelerated process to get someone off land

(2) Ejectment

(a) Settle ownership disputes

(b) Get DEF out

(c) Mesne profits (rental value)

(d) Set-off if good faith improvement

(3) Damages and Injunction

(4) Injunction

(5) Quiet Title/Suit to Remove Cloud on Title




IV. Other remedies

A. Rescission (Exam tip – R.E.M. approach)

1. Requirements

a) Grounds –

(1) Material Breach/Failure of Consideration

(2) Deception

(a) Intentional Misrepresentation

(b) Negligent misrepresentation

(c) Innocent misrepresentation

(d) Non-disclosure

(e) Concealment

(3) Undue Influence

(4) Duress

(a) Traditional

(b) Economic

(5) Mutual/Unilateral Mistake as to basic assumption

(6) Incapacity

(a) Age

(b) Mental

(c) Intoxication

(7) Illegality

b) Tender or Actual Restoration

(1) Party seeking rescission must tender or actually return what that party received under the K.




(2) Property must be in substantially the same condition

(3) In California, Tender is effectuated by serving suit.

c) Notice

(1) Must give notice within Reasonable amount of time of discovering the grounds for rescinding (or free from undue influence of duress). Factors to consider:

(a) Existence of settlement negotiations – especially if wrongdoer assured PLA that settlement is forthcoming.

(b) How Speculative the waiting period is

(c) Prejudice to wrong-doer from waiting

(2) California – serving suit satisfies notice

2. Election (Has party Affirmed the K?)

a) Express – manifest intent to affirm

b) Implied – Exercise dominion

(1) Acted like an owner (affirm) or gratuitous bailee (rescind)

3. Mechanics of undoing the deal

a) Restitution of K consideration

b) Restitution of gains from having K consideration

(1) Reasonable Rental Value (property)

(2) Interest (money)

(3) Profit (business)

(4) Reasonable value of Improvements




c) Other restitution

d) Consequential Damages

(1) Usually not available – only available when grounds for rescission are

(a) Intentional or negligent misrepresentation, non-disclosure, concealment or

(b) Failure of consideration, material breach

e)

B. Reformation

1. Grounds:

a) Mutual Mistake in Integration

(1) Writing doesn’t accurately reflect the parties’ agreement

(2) Not available when a third party’s right will be unfairly affected. (Like BFP)

(3) Doesn’t apply when the mistake is as to a basic assumption

b) Fraud in Integration

(1) Reliance must not be wholly irrational, preposterous, or absurd

(2) No third parties (BFP)’s rights are unfairly affected

(3) Generally, can’t get reformation from non-disclosure




2. Equitable Remedy – so inadequacy requirement is easy – you can’t get reformation at law.

V. Enhancement and adjustment of monetary awards

A. Reduction to present value of future damages

B. Attorney’s fees

C. Interest

D. Costs of suit




law school outline- remedies[1]

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