Remedies outline

2 goals: 1) What remedy to choose 2) and once chosen how

to measure it?

What does the court do for a successful plaintiff?

Grant specific relief usually specific performance or an injunction

“in personam remedy” operates against the D’s person

Award substitutionary relief or money damages

Award= adjudicate, decide after consideration

“in rem” operate against the D’s property

Award restitution based on defendant’s gain or unjust enrichment

What court may do to the defendant?

Require D transfer title or possession of property

Order D to do something

Prohibit D from doing something

Direct the D to be confined (contempt) to coerce him to obey any of

the above except to force payment

Enter a money judgment to compensate P, to prevent D’s unjust

enrichment, or to punish D

Equitable versus Legal Remedies

Principle equitable remedies:

Injunction, specific performance, constructive trust- associated

to specific or in personam relief

For judge to grant equitable relief P must show legal

remedies inadequate, without equitable relief will suffer

irreparable injury

Major legal or common law remedy-

money damages substitutionary or in rem relief

Differences between equitable and legal remedies

1

No right to jury trial for equitable remedies

Judge will enforce an in personam equitable order by holding the

defendant in contempt; in contrast to the plaintiff’s

collection of money damages with a writ of execution,

garnishment, and judgment lien.

Tort Remedy Goals

1. Prevent a tort from occurring- injunction

2. Restore the Status Quo- can be done through specific performance,

restitution or restoration for a property tort

3. Compensate the P for Loss- compensation or indemnity principle- can

award damages for P’s physical or mental injury, pain and suffering,

lost income, and loss of property value, etc.

4. Deter Future Torts- market economic analysis stress structuring actual or

potential P damages awards should encourage D’s to take precautionary

goals to prevent future mishaps

5. Establish, Declare, Vindicate P’s Rights- declaratory judgment different

than injunction for it neither commands nor forbids anything

6. Punish wrongdoers- punitive damages for aggravated wrongful act

Remedies goals in Contract

1. Fulfill Plaintiff’s expectancy of gain- may consist of specific

performance or money damages if SP not available

2. Special Damages to restore plaintiff’s losses and reliance

expenditures P incurred

3. Restitution- court’s rescission of K or agreement followed by

restitution will restore the plaintiff and the defendant to respective

situations prior to the transaction

4. Punish or deter the D- by granting the plaintiff’s expectation and

special damages will deter D’s from breaching Ks. (market

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economist). A court will almost never award P punitive damages when

a defendant breaches a K.

5. Declare or terminate parties contractual rights or duties- may grant

declaratory judgment either before or after a parties breach

Remedy goals for Unjust Enrichment

1. Restore the benefits D unjustly holds, restitution- primordial concept.

2. Punishment and deterrence- subordinate goals when D has give up

benefits she has unjustly reaped.

Summary of Historical Crap

Common law courts

tort-property actions

1. Specific relief/ restitution of property

Ejectment- to recover possession of real property/land.

Detinue- developed from writ of debt, and to be used against an

unfaithful bailee, let the D either return the chattel or pay

plaintiff its value

Replevin- to retrieve P’s personal property from a D.

2. Compensatory Damages- money for harm

Trespass- historically to someone’s person, to chattel, or to land allowed for

damages

Trespass to the case- to compensate the P for injuries ranging from indirect

& negligent injuries to the person to nuisances and various business

torts

Trover- for D’s conversion of P’s chattels allowed for compensatory

damages

3. Punishment- historically would allow jury to award Ps punitive

damages bc of “detestation” of act itself

3

4. Prevention- Common law Courts could not award equitable remedies,

had to go to Court of Chancery (Court of Equity) thus major

deficiency- dual courts

5. Declaration of Rights, obligations and status- problem in common law

courts, but could award nominal damages.

Contract Breaches historically-

Account- originally D’s breach of fiduciary obligation- fell out of favor

cumbersome procedure for dual lit. in both court systems

Covenant- no covenant if debt is applicable- only for instruments under seal.

Debt- oldest personal action, D’s duty to pay P a certain amount either by

contract, custom (statutory required payment), or record (collect money

judgments)

Assumpsit- 2 forms-

special assumpsit- P’s action on a simple express contract supported by

consideration, whether executory or partially executed.

General assumpsit- used common counts, including work done or quantum

meruit used by contemporary courts to develop the remedy of legal

restitution and concept of quasi contract.

Chancery Court- used if common law court fell short, equitable court

Granted equitable relief- such as declaratory, uses and trusts, as well as

mortgages

Enforcing a lien still considered to be equitable matter; separate equitable

defenses such as “Laches” and “unclean hands” evolved.

Specific performance and injunctions- decisions were not necessarily

precedent thus criticized for being unpredictable and vague

All reformed by Field Code in 1848; led to

FRCP: Today “only one action a Civil Action” R.2 FRCP

Chap 2- Money Damages

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Injured P principal civil remedy is money damages; performs two

functions 1) a plaintiff is compensated for loss and 2) damages deter

particular defendant and other potential defendants from incurring

future liability, thus they take reasonable precautions.

Damage determinations require a lay jury because states and Fed Const.

require it

7th Amendment: “In Suits at common law, where the value in controversy

shall exceed twenty dollars, the right of trial by jury shall be

preserved, and no fact tried by a jury, shall be otherwise re-examined in

any Court of the United States, than according to the rules of the common

law”--- historical reasons for jury- prevent tyranny etc.

Very few cases even heard by juries bc they settle

Rules encourage settlement- FRCP pretrial conference 16(A)(5) and

FRE 408 parties settlement offers and negotiations not admissible.

FRCP 68 any litigant that rejects a settlement offer and receives a less

favorable judgment pay other sides attorney fees.

Most jury trial parties share four common characteristics-

Intransigent Party- unwilling to agree

Reputation to protect

Outcome is uncertain

Stakes are unusually high

Controversial doctrines:

Pain and suffering

Punitive damages

American Rule requiring each side to pay attorney’s fees

Gavcus v Potts (USCA 7th Cir. 1986) p.17.

Stolen silver Coins- compensatory damages and Att Fees

Gavcus brought action against stepfamily for trespass and conversion of her

silver coins from late husband. Jury awarded her special verdict of new

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locks, alarm and Att Fees from prior action concerning possessory interest

in coins and punitive damages.

DC set aside jury verdict and gave her $1.

C of A affirms DC decision- “nominal damages can be awarded when no

actual or substantial injury has been alleged or proved, since law

infers some damages from the trespass” also “consequential damages

can be awarded for actual or substantial injury to realty.” & “CD can be

recovered for a trespass, since a trespasser is liable for all injuries

which are the natural and proximate result of trespass”

Trespass can cause mental distress and illness or physical harm. No

emotional distress in Gavcus bc failure to proof to nature extent and

causation of ED

Att Fees- recoverable from prior action only if 1). prior litigation was the

natural and proximate result of the subsequent def. wrongful act and 2).

involved the P and a third party.

Punitive damages only if compensatory damages

Dura Pharmaceuticals v Broudo (SCOTUS 2005) p20

Stock fraud- FDA approval, false profits

P brought action against D for stock fraud- governed by statute- Throw

complaint out bc did not even meet Conley requirement of “short and plain

statement” as to provide the D with fair notice of what the plaintiff’s claim

is and the grounds upon which it rests.”

Did not show causation that Dura’s fraud caused an economic loss

Bc price fell after FDA not approved came out but gained back all value

within a week.

Sec Ex Act 1934 forbids use of deceptive device in connection with sale of

securities

Basic elements of stock fraud:

1. a material misrepresentation ( or omission)

2. scienter, i.e. wrongful state of mind. Or knowledge/intent

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3. a connection with the purchase of security

4. reliance or “transactional causation”

5. economic loss

6. loss causation- causal connection between misrepresentation and

loss

Dura argued P did not prove last two elements, SCOTUS agrees says “Given

the tangle of factors affecting price, the most logic alone permits us to say I

that the higher purchase price will sometimes play a role in bringing about

a future loss.” Must chow causation not simply “touch upon”

Related to Dura p.118 Randall v Loftsgaarden tax benefits incurred due to

capital losses should not be subtracted from claim

Youst v Longo (SC Cali. 1987) p25

“I could have been a contender” Horse Racing interference

“it is well settled law that interference with the chance of winning a contest,

such as the horserace at issue here, usually presents a situation too

uncertain upon which to base tort liability.”

P sought Compensatory damages between actual finish (5th) and finish

which allegedly would have occurred but for D’s interference. Punitive of

250K also sought

Did not plead physical personal injury or property damage

RST 774B actual discusses such scenario in comments “not sufficient

certainty to entitle P to recover”

To speculative to recover Compensatory Damages

Notes case point to some curious cases where some contestants allowed to

recover. I.e. Beauty contest disqualified bc not notified of earlier start time

A railroad breached agreement for delivery thus getting contestant 2nd

instead of first

Puzzle contest, answer erroneously marked wrong, given amount equal to

odds times the prize money.

7

Other speculative claims: Lost chance to survive in malpractice cases

Smith v State Dept of Health and Hospitals (Louisiana SC); x-ray

cancer MD no follow up, man died shown he had 10% chance of life if

notified on day of x-ray. So damages totaled and then only 10%. 3

recognized methods for calculating Lost chance of survival

1. focus on chance of survival lost due to negligence (used above)

2. Plaintiffs approach- if any chance than MD pays full claim

3. -Adopted by lower court in Smith- percentage more favorable

outcome – becomes percentage probability.

Can recover damages for fear of cancer as part of pain and suffering

damages if also liable for P’s physical injuries.

Medical monitoring

3 sub types- 1) D pays a lump sum to each individual P for future medical

attention

2) P’s Md’s send monitoring bills to D 3) a Court supervised

monitoring program is sought such as in

Henry v Dow Chemical Co. (Sc Mich 2005) p30

Class action for Dioxin Exposure in Tittabawssee flood plain in Mich.

Court supervised Medical monitoring sought

Court denies as plaintiffs have suffered no actual harm yet; only potential

for injury thus P’s have failed to state a valid negligence claim and grants

Sum. Judgment

“It is present injury, not fear of an injury in the future, that gives

rise to a cause of action under negligence theory.”

Importance of requirement of present physical injury 1) who actually

possesses a cause of action 2) reduces the risk of fraud by setting a minimal

threshold 3) would force Court to compromise judicial power to uncertainty,

“Our common law jurisprudence has been guided by a number of prudential

principles. Among them has been our attempt to avoid capricious

departures from bedrock legal rules as such tectonic shifts might produce

unforeseen and undesirable consequences”

8

Not emotional distress bc no physical manifestations of such distress

Court not in business of crafting policy in the dark, deference to Legislature

already created the Mich Dept of Env. Quality

Dissent p.39

Plaintiff’s physical harm secondary to defendant’s economic health

P’s claim for med. Monitoring warrants equitable relief- P exposed to dioxin

at over 80 times deemed safe

“Court has equitable jurisdiction to provide remedy where none exist at law,

even if the parties have not specifically requested an equitable remedy.”

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Proving the amount of damages p.47

Court can easily determine some of P’s damages; i.e. lost wages, medical

expenses, the value of damaged property, expectancy and reliance damages

for breach of contract

However some difficult to prove: lost business profit (mind games v western

pub.)

Future pecuniary damages hard to calculate

Some compensatory hard to calculate such as P’s pain and suffering or

mental anguish

To prove damages first must prove the fact of damages then must prove

amount of damages- however even if damages amount uncertain “the

tortfeasor, not the P, should bear the burden of some uncertainty in the

amount of damages”

Plaintiff’s lost capacity to earn (past wages)(aka economic

damages)

Washington v Am. Comm. Stores Corp (SC Neb 1976) p48

Jury verdict of 76K arising out of car crash

P , 24, was successful collegiate wrestler and working as adult parole officer

at time of crash. Had a life expectancy of 49.9 years no dispute to

permanency of P injuries or that injuries prevented P from wrestling.

“It is well settled law that loss of earning capacity is distinct from loss

of wages, salary, or earnings, is a separate element of damage.”

Loss of past earnings is an item of special damage and is specifically

pleaded and proved

Impairment of earning capacity is an item of general damage and proof

may be had under general allegations of injury and damage.

Factors include- P’s age, life expectancy, health, habits, occupation,

talents, skill, experience, training, and industry.

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Agree with jury sufficient evid. to find P pursuit of wrestling career valid.

Again general damages thus no specific evid needed to recover.

Childs v US (USDC Georgia 1996) “unborn General”

Lawsuit for wrongful death under the Fed Tort Claims Act- State subs. Law

governs

Car crash 3rd passenger, mother and unborn child “General” die

immediately when struck by postal truck. P bring action under FTCA, D

admit liability, and have stipulated to estate of Debra and General are worth

$8794 for funeral and medical ex. Plus some more for damage to the car.

Issue is to amount of damages for P wrongful death claims. Debra 33, , had

life expectancy of 47 years- also 8 months pregnant with General, life

expectancy of 73.

Debra worked as produce manager at Kroger

Lost future income 4 elements

1. base year or entry level income (projected before tax income)

2. income growth rate (inflation, progression, productivity gains)

3. worklife expectancy (how long someone would have remained

in workforce)

4. discount rate (present value of decedents future income) (PV)

personal tax offset; personal expense/consumption offset; (some don’t

use)

+lost fringe benefits (includes health insurance, pension benefits, social

security.) usually 15% of PV of decedents lost income.

Lastly +lost household service (hours spent doing housework times

minimum wage).

Battle of experts for amount of lost future income damages varied between

$890K and $195K.

Total economic loss equals all of above added together,

difference in Childs, for debra- 1.148 million versus 398K

Generals lost future income-

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No lost household services for unborn child, but lost future earnings and

lost fringe benefits- Differences astounding $1.7 million versus $433K

“Who will fail and who will succeed and who will either enjoy or suffer

through life, is a game of fools” & “the mathematical precision the experts

put on General’s death illusory”

Both experts paid to see what they saw- P overvalues, D undervalues

Difference in Debra’s economic damages explained by difference in worklife

expectancy, used P expert’s calculations for Debra fringe benefits bc talked

to Kroger, both calculations for lost household service too high. Total

economic loss 1.35 million

General more speculative , big caring family, but from single mother

so 1.08 million

Sept 11th compensation- administrative remedy set up within two weeks,

based on male tables, still victims families wanted more, 1st year ass. at law

firm.

Also subrogation (infra) reduced payments, except workers comp and

private charity

Use stat mortality tables and work-life expectancies as authorities, not

binding on court though.

Waldorf v Shuta (p.61)- consideration as future attorney, when a high school

dropout far too speculative

Good notes p.60-68

Pain and suffering (p68) (aka, nonpecuniary, general damages,

hedonic- when referring to loss of enjoyment)

Also compensatory damages. Premised on P has been through trauma

has lost more than earnings or medical bills. Pain is physical. Suffering

takes many forms: grief, bereavement, fear, and frustration.

Referred to as noneconomic, but are they? Posner thinks not, economic

but non-pecuniary.

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“Two shortcomings to awarding pain and suffering- 1) money awards do

not make them whole, 2) there is no rational scale that justifies the

award of any particular amount., in compensation for a particular amount of

pain.” Consorti v Armstrong

Are Pain and Suffering damages used to pay attorney fees? P.69

Subjectivity of pain and suffering, conversion to dollar amount is difficult

and expensive

Parts of pain and suffering-

Victims anguish and terror felt in the face of impending injury and

death

Victims tangible physiological pain at time of injury and through

recovery

V’s loss of enjoyment of life- hedonistic damages

V’s loss of consortium

Hard to prove- must discuss V’s life before accident, during, and after,

what therapies

Loth v Truck-a-way (Cali CA 1998) p71 “Active lady struck down/Whore

expert”

PI from a auto accident- P awarded general damages and

D argued not admissible, expert testimony to hedonic damages, but it is

admissible

F: P car struck by 24-wheel truck, she walked away, continued business trip

then cut short went to Dr. complained of headaches and back stiffness. Saw

army of Dr’s but none able to stop pain. D conceded liability only issue was

damages. P’s expert testified to hedonic damages.

however should have been precluded bc of double recovery -pain and

suffering and hedonic. Only one collection of pain and suffering and

hedonic included in that figure. No separate jury instructions because

one figure

Only person whose pain and suffering is relevant is the P’s.

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can ask for per diem basis for pain and suffering (the norm in Fla.)

No formula for calculation (SCOTUS); Smith’s calculation does just that.

“a life is not a stock, car, home, or other such item bought and sold in some

marketplace.”

$890K verdict not excessive although Smith’s testimony could lead to

runaway verdicts and should be inadmissible. Still remand bc curative

instruction did not properly correct prejudice of Smith testimony.

Notes: Unit of time break down not allowed in some jurisdictions, Ok in Fla.

Some states all right if come with line at end that this is just an estimate

McDougald v Garber (NY CA 1989) p80 “Comatose Caesarean”

P permanently comatose after botched Caesarean section by D and

anesthesiologists.

Jury awards $9.6M + $1M for pain and suffering + $3.5M for loss of

pleasures and pursuits of life. Trial Judge reduced to 4.9M and 2M for pain

and suffering (one award)

Can she suffer conscious pain and suffering if comatose? No! “Cannot

experience the pleasure of giving it away” award must have utility to victim

to be compensatory

Dissenting opinion – basically she is suffering even if she does not know it.

highly emotional response, majority injects an extra element into equation

by creating utility.

“to obtain the benefit of this legal fiction the law requires a

prerequisite to recovery that the V of a tort have cognitive

awareness” & “therefore the P has the threshold burden of proving

consciousness for at least some time following an accident in order to

justify an award of damages for pain and suffering”

Notes p.87 “[Above] burden can be satisfied by direct or circumstantial

evidence but mere conjecture, surmise, or speculation is not enough”

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“often when unconsciousness or death occurs shortly after a tort, it is

difficult, sometimes impossible, to determine if a decedent suffered or was

actually conscious of any pain”

Limitations on Damages Recovery

Avoidable Consequences/ Avoidance

Williams and Robbins v Bright (NY SC 1997) p90 “Jehovah’s Witness

can’t see the Dr.”

P victim in car crash driven by her father, some evidence he fell asleep.

P religious beliefs do not discharge duty to mitigate damages. She claimed

Jehovah’s not allowed blood transfusions. Then she became wheel chair

bound after necrotic development of bone structure in knee.

She got “reasonably prudent Jehovah standard” at Trial Court, in effect

discharging her of any duty to mitigate. Relied on Ballard

Appeal: “State does have a compelling interest in assuring that the

proceedings before its civil tribunals are fair. And that any litigant is not

improperly advantaged or disadvantaged by adherence to a particular set of

religious principles.”

Courts purposes must be secular, unfairly advantaged to P in instant case.

Dissent- distinguished Ballard; court gave right charge below, new

instruction impermissible 1st Amend. Violation

Collateral Source Rule

Exception to the rule barring P from recovering compensatory

damages that exceed the P’s losses. Plaintiffs can still recover full

amount from defendant tortfeasors even though they have already received

compensation for their injuries (i.e. medical or car insurance). Not always

insurance!

Such as Shriners in Moulton v Rival Co. “a plaintiff who has been

compensated in whole or in part by a source independent of the tortfeasor

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is nevertheless entitled to a full recovery against the tortfeasor, to prevent

the tortfeasor from gaining a windfall.”

Even Posner agrees not a windfall for P.

Tort Reform sought though b/c some P’s collecting from disability and court

judgments

In Fla. Reduce the amount of damages paid to the claimant from collateral

sources however if right of subrogation exists (i.e. insurance) than no

reduction in damages.

Subrogation- Conventional Subrogation gives third party (mostly

“insurer”) right to “step into P’s shoes” and recover from D the expenses

incurred by third party in putting P in the rightful position; [also equitable

subrogation related to restitution] Subrogee (payor) and Subrogor

(victim)

Lagerstrom v Mertle Werth Hospital-Mayo Health System (SC Wis

2005) p102

“I owe Medicare”

P estate sues hospital and insurers for wrongful death/med mal. Get

judgment of $55,755.00 ; D at trial presented evidence that out of pocket

expenses were only $755.

Collateral Source evidence brought in by D, but P not allowed to rebut with

evid that may need to reimburse Medicare $89K.

Opinion saturated with statutory interpretation.

Ultimately finds “… evidence of collateral sources is admissible and if

presented then P must be allowed to show any potential obligations of

subrogation or reimbursement.”

Dissent- heavy disagreement bc US not joined as a party, so would affirm

lower decision

2nd Dissent- majority against legislative intent thus full dissent, “some

litigants use the rule to get around the cap on noneconomic damages [aka

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pain and suffering]” legislative history is clear “does not require juries to

make offset bc of collateral sources but permits them to.”

Notes p118 “Benefits rule provides that if defendant’s tortious conduct

confers a benefit, as well as a harm, on the plaintiff jury may weigh the

value of benefit against the claimed harm.” i.e. negligent digging discovers

oil well

Enhancement and adjustment of compensatory

damages

Prejudgment interest

Jurisdictionally set at around 8 to 9%, and compound “calculated on

principal and interest from prior period”

Present value of money more than future value, “a dollar today is worth

more than a dollar tomorrow”

Prejudgment interest- from the time claim arose to judgment

Post-judgment or judgment interest- from the time of judgment to payment,

set by statute and often very low

Contract interest- interest a debtor agrees to pay a creditor

Jurisdictions split on awarding interest- left over medieval crap that interest

perpetuates feudalism and only awarded if D knew exactly what it owed.

Pendulum swinging to award prejudgment interest

Punitive damages (aka exemplary damages, vindictive damages, smart

money)

Awarded in addition to compensatory damages and aimed at making an

example out of D

Tuttle v Raymond, III (SC Maine 1985) p122 “Trying to pass 6 people”

D drove car excessive fast in a 25mph zone, struck P causing serious injury

Punitive damages properly awarded when D acts with “malice” does not

over compensate P but serves to deter D’s

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Other jurisdictions use different words but basically higher degree of

negligence needed for tortious conduct- aggravated tortious conduct,

willful, wanton, outrageous, etc.

Double Jeopardy not in play with civil punitive damages

Hard to measure, similar to pain and suffering, and emotional distress

Relevant is D’s wealth, Cali have to show D can pay before allowed to

ask

In this case D did not act with required malice

Also clear and convincing standard for burden of proof of such damages in

over half of jurisdictions

Notes: Louisiana, Mass, NH, Wash lack common-law punitive damages only

when statute provides. Nebraska no punies whatsoever, state constitution

forbids them.

2nd RST § 908(2) “punitive damages may only be awarded for conduct that is

outrageous, because of def’s evil motive or his indifference to the rights of

others.”

Rarely available in Contract Breaches [unless accompanied by a tort]:

contrary to concepts of Contract law for freedom of/and stable transaction.

“K transactions do not usually engender as much resentment or mental and

physical discomfort as do torts”

Examples where granted in K breach: violation of non-compete agreement

was an egregious breach of a covenant.

Constitutional challenges to punitive damages

Under 8th Am. “excessive fines”

Previous challenges survived 1/526 [TXO] ratio of compensatory to punitive,

compelled states to include post-verdict factual eval. of jury’s punitive

awards for excessiveness

Constitutional Analysis is not done under 8th Am but rather 14th Am. Due

Process

BMW v Gore (SCOTUS 1996)(from Alabama SC) p133 “BMW paint job”

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Dr Gore bought BMW, damaged in transit, repainted in America and then

sold to him told it was brand new, constituted fraud. He sued for price of

car plus punitive damages of $500K; won award of $4M; AL SC reduced to

$2M; SC said still grossly excessive

In 14th Am. Analysis look to states interest the punitive award is designed to

serve

And the degree of reprehensibility of the defendant’s conduct.

Max civil penalties in AL for deceptive trade practices was $2000, coupled

with BMW was only trying to fix its car, still a BMW so punitive damages

excessive.

Scalia Dissent, no guideposts

Ginsburg Dissent, leave AL SC decision undisturbed because only trying to

follow our decision in TXO, further every state recognizes punitive damages,

it is a state concern

On remand AL gave $50K said civil penalty not applicable bc they are weak

and AL P’s should choose courts to remedy D’s wrongs.

State Farm v Campbell (SCOTUS 2003) “Insurance Company left him”

Reaffirms Gore uses same three guideposts

UT man filing bad-faith insurance lawsuit v State Farm. He passed 6 cars on

highway and killed 1 person injuring others. After trial State Farm

abandoned him and claimed owed no liability. TC returned verdict of $2.6M

in compensatory and $145M in punitive damages.

Analyzed under three guideposts

1. Reprehensibility of D’s conduct

2. Proportional. Is the ratio outrageous “few exceeding single digits”

are not.

Presumption against 145 to 1

Suggested 1 to 1. Not followed though

3. Disparity between punitive damages and civil penalties authorized

$145M neither proportional nor reasonable.

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Did not follow 1 to 1 on remand awarded $9M to campbells

When are employers responsible for employees tort leading to

punitive damages?

A. Restatement view, adopted by California, 4 scenarios where

principal can be assessed punitive damages 1. Principal

authorized the doing 2. Agent unfit and principal was

reckless in employing him 3. Agent was in managerial

capacity and was acting in scope of employment 4. Employer

or manager ratified the act

B. Most courts willing to extend broader exposure, if employee

acting within the scope of his/her employment.

Courts not sympathetic to Defendants in mass tort and have imposed

successive punitive damages awards against them from multiple P’s.

Reasons for Remittitur, ruling by a judge to reduce amount of damages

from a jury verdict. Usually because amount awarded exceeded amount

asked for.

Subsequent remedial measures (407) should not be reason to reduce

punitive awards

Mathias v Accor Economy Lodging (USCA 7th 2003) p155 “bed bugs”

P’s got bed bugs at Red Roof Inn. D willful and wanton conduct $186K

punitive damages and only $5K in compensatory. D knew about bed bugs,

told by exterminator to close down hotel so it could be sprayed down, D’s

district manager refused thus imputing D. Total damages equaled $1000

per room in hotel (191)

“the judicial function is police a range, not a point”

Attorney fees p160

The “American Rule” both winning and losing litigants bear their own

expenses.

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Tort reform activist want loser pays or one way loser pays (only losing D’s

pay).

Primary exceptions-

1. contract,

2. statute,

3. judicially created exceptions

a. bad faith litigant (controversial)

b. “common fund” doctrine- analogous to quantum merit-

litigant who starts class action can collect from other

members of the plaintiff class awards.

Nilsen v York County (USDC Maine 2005)

Did not go over, recognizes “common fund”

Tort Reform p178

Controversial provisions – passim-

Best v Taylor Machine Works SC Ill. 1997 p180 “Worst Forklift Accident

Ever”

P was injured while working, operating a forklift, mast broke moving slabs

of hot steel, flammable hydraulic fluid caught on fire and engulfed P. P

broke both ankles jumping and suffered 40% burns on body, face. Suing

Forklift manufacturer, seller, and hydraulic fluid maker. Asking to strike

down (declaratory and injunctive relief) Tort Reform which caps

noneconomic damages at $500K.

Cap not rationally related to a legitimate government interest.

Undermines the power and obligation of the judiciary to reduce

excessive verdicts. Cap struck down.

Dissent- legislation passes rational basis test, need not approve only that

question is debatably and rational answer.

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Notes: Ill passed a new malpractice cap at $1M

Workers comp, removed most employer-employee damages claims from

the jury, no doubt that it is a legislative usurpation of courts.

Gourley ex rel. Gourley v Neb Methodist Health System, Inc. (SC Neb

2003) p191

“Cap on noneconomic damages for baby Colin”

Neb-Medical Liability Act caps medical mal actions to $1.25M. DC ruled

denied gourley’s EqP and R’t to jury trial. Negligent care during pregnancy,

Baby Colin born with cerebral palsy; awarded $5.625M.

“It is commonly held that courts will not reexamine independently the

factual basis on which a legislature justified a statute, nor will the court

independently review the wisdom of the statute. This court does not sit

as a superlegislature to review the wisdom of legislative acts”

Uphold statute, reassess damages at $1.25M, law does not violate any

provision of Neb. Constitution briefed or argued.

Concurring opinion rips act for not making cap only apply to noneconomic

damages

Therefore P cannot fully be compensated for economic damages such as

hospital bills.

Dissent special legislation and thus violates Neb Const. bc unfairly

advantages D

Notes: Neb legislature listened to concurrence and raised limits to $1.75M

Caps also struck down in Petrucelli v Wis Patients Comp. (2005)

Wis limited cap to $350K “the leg. enjoys wide latitude in economic

regulation. But when the legislature shifts the economic burden of medical

mal. from insurance companies and negligent health care providers to a

small group of vulnerable, injured patients, the leg. action does not seem

rational.” Failed even rational basis test

22

Chap 3 Equitable Remedies- the Injunction p217

1. Equity acts in personam

Most used equitable remedy the injunction; others include the

constructive trust, an equitable lien, subrogation, accounting for profits,

equitable rescission, reformation, and specific performance.

“Equity acts in personam” common function of equity remedies is the

personal response or conduct each requires form the defendant. For in

personam to work the judge will wield contempt against a recalcitrant or

disobedient def.

“A court with personal jurisdiction over the defendant is able to order the

defendant in personam to act or refrain from acting in another state.”

When is international trademark injunction proper, Lanham Act factors

include

1. Whether D’s conduct has a substantial effect on US commerce

2. Whether D is US citizen

3. Whether extraterritorial enforcement of the trademark will

encroach upon foreign trademark rights.

Tabor & Co. v McNall (Ill CA 1975) “Dueling Courts”

Tabor, Nevada Corp., doing business in Ill. Contracted with McNall Bros., a

Wis. Co, for purchase and delivery of grain in Illinois. McNall defaulted.

Tabor filed suit in Illinois, McNall contested personal jurisdiction, then D

filed suit in Wisconsin. Illinois Trial Court ordered an injunction against Wis.

Court from not litigating in Wis.

CA says improper to grant such injunction, in personam, joins the

party not a foreign court

Notes: “once a D is hooked, can always jerk him back to obedience by the

threat or fact or personal constraint.”

Some courts recognize out-of-state courts simply as matter of comity.

Full faith and credit clause applies to judgments, not necessarily injunctions

23

Statute prohibits a fed court from enjoining state court litigation, even if

lawsuit in exception to statute fed court can abstain, Younger v Harris.

Matarese v Calise (SC RI 1973) p231 “Some property in Italy” p231

TJ ordered D to convey land by deed to be recorded in Italy, and issued

injunction enjoining def from transferring property to anyone but the P.

Court had power over D and therefore had power to order

conveyance even though land was situated in Italy.

Court does not transfer legal title of property but orders it so, and enforces

such order through contempt, attachment or sequestration.

US v McNulty (USDC 1978) “Irish lottery winner” p234

D won Irish lottery roughly, $128K, IRS came to collect winnings, which D

had tried to secretly collect and deposit in foreign bank. D’s money still in

bank but D in prison for tax evasion and subject to tax penalties of $68K.

D’s only way of satisfying judgment is money in foreign bank. Court

ordered D to repatriate his assets from the bank and deposit them

with clerk of court. Again “in personam” jurisdiction thus can order D to

transfer funds and can punish him for not doing so.

2. The Plaintiff’s inadequate legal remedy, irreparable

injury

will not grant specific relief when there exists and adequate remedy at law

adequacy doctrine- in chancery courts carried over to American colonies

and still the law in almost every jurisdiction

Irreparable injury rule- still cited to

3. Equity cannot protect personal, political, or religious

rights

Certain domains outside the scope of court’s powers

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No remedy available and injunction not proper in “political thicket” Bush v

Gore

Courts lack jurisdiction to issue injunctions (TRO) in religious disputes

Decker ex rel Decker v Tshetter Hutterian Brethen (SD 1999)

Court may grant an injunction in the area of church-state relations. Court

granted injunction to prevent school prayer at public school events.

Ingebretsen v Jackson PS Dist. (fed 5th 1996)

Courts often issue injunctions to protect P’s personal and political

constitutional rights

4. Equity lacks jurisdiction to enjoin a criminal prosecution

Norsica v Board of Selectman (SC Mass 1975) p242 “Transient store”

P owned retail store, Board said she needed pursuant to Mass Stat. a $200

transient license and a $500 bond to operate, P also being charged

criminally for violating same statute. She filed for declaratory relief that her

store not within scope of statute and won. Selectman (D) appeal

“True rule that equity will protect personal rights by injunction upon the

same conditions upon which it will protect property rights by injunction.

These conditions are 1. That unless relief is granted a substantial right of

the P will be impaired to a material degree; 2. That the remedy at law is

inadequate and 3. That the injunction relief can be applied with practical

success and without imposing an impossible burden on the court or

bringing its processes into disrepute” from Kenyon v Chicopee

Concentrated on 2nd prong of Kenyon test

The available defenses to the criminal complaint provided an adequate

remedy at law thus injunction should not have been granted.

Shuman: 6 merchants alleged police threatened to prosecute for not having

license to conduct business. No injunction- other adequate remedies at law

Kenyon: repeated abuses by prosecution, police, and judges left Jehovah

witnesses with no other adequate remedy at law.

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“not ground for equity relief since the lawfulness or constitutionality

of the statute or ordinance on which the prosecution is based may be

determined as readily in the criminal case as in the suit for

injunction.”

Also cited Younger abstention unless “very special circumstances”

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5. Equity lacks jurisdiction to enjoin a crime

People ex. Rel. Gallo v Acuna (SC Cali 1997) p248 “Latino gang

members, injunctions”

Preliminary injunction entered against 38 individual members of an alleged

street gang in San Jose CA. 5 challenged the Order to Show Cause

Public nuisances enjoinable by injunction; “to qualify as a public

nuisance the interference must be both substantial and

unreasonable.” Backed up in RST substantiality as proof of “significant

harm” further defined as “real and appreciable invasion of the plaintiff’s

interests”, one that is “definitely offensive, seriously annoying or

intolerable” objective measure: “if normal persons in that locality would not

be substantially annoyed or disturbed by the situation then the invasion is

not a significant one.”

Highwater mark “Pullman injunction” –In Re Debs 1896- broke strike of

Pullman railroad employees by public nuisance injunction b/c strike’s effect

on national commerce.

Has been limited by state courts People v Lim Cal 1941 “ultimate legal

authority to declare a given act or condition a public nuisance rests with the

Legislature” and court cannot extend definition of public nuisance

unreasonably

[Repetition or continuance of any criminal act is a public nuisance so vests

the court of equity’s power to abate crimes with injunction.] paraphrased

from Lim; proscribing act also must further community and collective

interests to vest power of equity courts

Paragraph a and k not invalid, pass constitutional muster and behavior of

defendants can be proscribed by injunction because record is replete,

behavior is a public nuisance.

Concurrence and Dissent peaceful assembly should not be enjoined

2nd Concurrence and Dissent Blanca Gonzalez should not be enjoined, no

evidence she is gang member

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Dissent Montesquieu, Locke, and Madison would be rolling over in their

graves.

Provisions of preliminary injunction too vague , prohibitions encompass

much lawful activity that not defined as public nuisance. “Unfortunately,

there are some who think that the way to freedom in this country is to adopt

the techniques of tyranny.” CJ

Earl Warren

Compare Acuna with City of NY v Andrews (NY 2000) where NYC tried to

combat prostitution in Queens plaza with similar injunction. Court held “The

city has made it quite plain that it intends to use this injunction to bypass

the Criminal Court, which it sees as providing inadequate relief.” Equity

should not intervene bc juries reluctant to convict in criminal prosecutions.

Struck down on association and freedom of travel grounds.

Buffer-zone injunctions granted in Madsen v Women’s Health Center

(SCOUTS 1994) buffer at 36 feet. Also Schenck (1997) floating buffer at 15

feet

Original buffer-zone Jackie Onassis v paparazzo 25-feet floating

Vices and other things that injunctions have been issued against; obscenity

(porn), crack, AIDS, Love Canal waste sites US v Occidental Chem. Corp.

1997; Illegal gambling, Failed to enjoin- stop Global Warming, repackaged

products liability suits against lead paint and gun manufacturers.

6. Equity will not enjoin a libel

Prior restraint rule- an injunction is a prior restraint if it forbids a D’s

speech, think it threatens the D’s expression more than subsequent

punishment.

Tory v Cochran (SCOTUS 2005) p268 “Guy defamed Johnnie Cochran”

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Tory engaged in continuous unlawful defamatory activity against Cochran.

Court issued permanent injunction that D could not Cochran or law firm in

any public forum.

Cochran died, case is moot but

“an order issued in this area of First Am. rights must be precise and

narrowly tailored to achieve the pinpoint objective of the needs of

the case.”

B. Injunction Procedure

1. Interlocutory relief, TRO and Preliminary injunctions

given promptly to eliminate or minimize P’s irreparable loss before the

judge’s final decision. Preserves the controversy for a meaningful decision

after full trial. Must weigh P’s loss versus protecting D from possible

erroneous interlocutory injunction.

TRO- after a hearing, can be done ex parte usually called “ex parte

TRO”

Preliminary injunction- before full trial after an adversary hearing

Permanent injunction (aka injunction)- only after a full trial. FRCP

65

Roe v Crawford (USDC 2005) p272 “pregnant prison inmate”

Preliminary Injunction held by telephone call. Pregnant female in women’s

prison filed to have an offsite abortion in St. Louis. D, refused to transport

P, thus was stalling which was increasing the health risk to the P. P’s

motion is granted

4-Point Test/ 4 factors: (1) the threat of irreparable harm (2) balance

between harm to plaintiff and harm in granting injunction versus the

D (3) the probability movant will succeed on the merits (4) the

public interest.

1. relied on roe v wade to show irreparable harm

2. harm of P outweighs D’s bullshit argument

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3. P will probably ultimately succeed bc case law supports her position

4. No harm to public interest by granting

No more defiance of its orders P wins

In general Roman test for granting preliminary injunctions

1. remedy of law inadequate

2. substantive right being infringed on [he has no idea what the fuck he

is talking about]

Disfavored Preliminary Injunction (notes p275)- one that alters

status quo, is mandatory, and gives movant full relief she seeks at

trial.

Sliding Scale for evaluating these any p seeking one then must show

“modified likelihood on the merits standard”- either Injury really high or

high likelihood of success on merits

2. Jury Trial After Merger

No jury when party seeks injunction,

Feltner v Columbia Pictures Television (SCOTUS 1998) “copyright old

TV shows”

Copyright infringement case Feltner (D) owned several TV stations which

showed unauthorized TV shows under copyright by Columbia (P). P won a

$8.8M judgment from judge verdict. D argued should have been heard by

jury because damages are juries domain. Even though damages were fixed

by copyright statute and thus statutory damages, an equitable relief.

Columbia argued this did not trigger jury trial right of 7th amendment

because not a “suit at common law” because no legal rights ascertained.

Historically copyright infringement has been adjudicated in courts of equity

since 17th century. Common law rule “in cases where the amount of

damages was uncertain, there assessment was a matter so peculiarly

within the province of the jury that the court should not alter it.”

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right to jury trial includes the right to have jury determine the

amount to damages, if any awarded [to copyright owner].

Note: be careful what you wish for, Feltner got his jury and they awarded

Columbia $31.68M

C & K Enginering Contractors v Amber Steel Co. (Cal SC 1978) p285

“Subcontractor water plant”

P suit for damages stemming from a breach of contract based entirely on

equitable doctrine of promissory estoppel, neither party entitled to jury

trial.

D, subcontractor, gave in bid to P, contractor, to do some work on water

plant. P gave master bid to city, approved, D backed out claiming bid was

“honest mistake”.

Empanelled advisory jury on issue of P’s reasonable reliance on D’s

promise, jury found reliance reasonable and Judge order D to pay the cost of

detriment, another contractor.

Promissory estoppel:

1) promise

2) reliance on the promise

3) reliance was reasonable so it was foreseeable and incurred detriment (jury)

4) enforcement is necessary to avoid injustice

***damages are only the detriment incurred

Promissory Estoppel and Unjust enrichment would be equitable

“to avoid injustice” – equitable

“a jury trial must be granted where the gist of the action is legal”

No jury needed equitable doctrine.

Dissent focus not on rights but on remedies, P who seeks damages should be entitled to jury. Also the rule in Michigan.

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3. Equitable Cleanup

Ziebarth v Kalenze (ND SC 1976) p292 “Specific performance cow”

Cattle buyer contracts to buy calves from D. D sells them to someone else, P

files suit asking for specific performance. Which is impossible bc D already

sold cows to 3rd party

Overrules “law of substituted legal relief” which is espoused in UCC § 2-716

[specific performance] and in subpart 2 states: “the decree for specific

performance may include such terms and conditions as to payment of the

price, damages, or other relief as court may deem just.”

D knew no specific performance, which would trigger non-equity action, in

damages thus D should have requested jury did not, so verdict ok. Tipsy

Coachman sort of.

C. The Modern Injunction: Discretion and Flexibility

1. The Chancellors Discretion

Navajo Academy v Navajo United Methodist Mission School (NM SC

1990) p297

“Academy moves in with Mission”

Two schools Academy moves to mission campus (1981), Academy does not

charge tuition thus enrollment jumps and swallows mission. Mission enters

into year to year subleases (1981-1986) but needs an upgrade of facilities so

asks Academy to ask Bureau of Indian Affairs, because free school, for grant

which is approved. In 1987 Mission seeks to get Academy evicted. Academy

files for damages of $1.8M and ask for continued occupancy. Court grants 3

years it gets to stay and then it is forced to leave. Not outside of Courts

discretion because “the fashioning of an equitable remedy, in a suit

involving equitable powers of the court, was an abuse of discretion.”

Improvements to school, but for the Academy, can be viewed as a couple

years rent.

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Weinberger v Romero-Barcelo (SCOTUS 1982) p301 “bombing off PR”

Gov. and citizens of Puerto Rico suing the Navy, over test bombing off some

island. Some bombs did not detonate thus PR argues Navy is violating the

Fed Water Pollution Control Act (FWPCA), DC agrees but does not file an

injunction, CA orders Navy to stop bombing until they get a permit.

Test is whether statute/ Congress permits injunction, or provides other

relief.

SCOTUS says injunction not the only way of granting compliance but

FWPCA does authorize …permanent or temp injunctions and permits DC to

order the relief it considers necessary to secure prompt compliance with

act.

2. Two maxims of Equity: Clean hands and Laches

a. Clean Hands doctrine

Green v Higgins (SC Kan 1975) p310 “Schisters trying to do business”

Both P and D committed fraud in selling/buying house. Committed fraud

against real estate agent, third party with right of first refusal, and each

other.

Clean hands doctrine; “in substance provides that no person can obtain

affirmative relief in equity with respect to transaction in which he has,

himself, been guilty of inequitable conduct.” To be applied at discretion of

court, conduct that amounts to unclean hands must be willful

conduct that is fraudulent, illegal, unconscionable and it must relate

to the subject matter of the suit. Additionally the purpose of clean hands

doctrine is to protect the courts, and not a matter of defense of the party

asserting it as an affirmative defense.

Not effected by merger, only available in suits of equity.

b. Laches

Stone v Williams (Stone I) (USCA 1989) p315 “Hank Williams baby”

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Hank Williams Sr., country music star, died at age 29 in 1953 had baby, P,

who is suing for her share of copyright renewal rights for all his hits. His

estate was litigated in 1967 for his son Hank Williams Jr.

She did not know who her rumored dad was till she was 21, also told

“everything has been decided against you”. She had numerous chances to

investigate further but finally choose look at documents until 1984 with her

attorney. DC ruled doctrine of laches barred her claim. “equity aids the

vigilant, not those who sleep on their rights.”

She should not be penalized for not participating in 1967 proceedings, or

for the period between 1974 to 1980 because she did not want to upset

adoptive parents. But no excuse for waiting five more years to file until

1985.

Doctrine of laches not a bar because P’s conduct unexcused it must

also be determined whether the D was prejudiced in the delay.

If no excuse than any prejudice sufficient, however if mediocre

excuse then slight prejudice. Prejudice can be shown through 1.

Decreased ability of the defendants to vindicate themselves or 2.

Inequity in light of some change in D’s position to permit plaintiff’s

claim to be enforced.

D prejudiced in both ways

Stone v Williams (Stone II) (1989) p320

D’s lawyers intentionally and fraudulently covered up plaintiff’s identity. D

had unclean hands thus decision reversed.

“The evidence of fraud which the AL SC found persuasive, makes SJ on the

grounds of laches inappropriate.”

Notes: She eventually won in Stone III

“Some courts have held the running of an analogous SoL creates a

rebuttable presumption of unreasonable delay and prejudice flowing

therefrom.” Goodman p322

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D. Contempt

Still must obey the injunction if not then held in contempt

Direct contempt- from behavior in the courtroom

Indirect contempt – disobedience from outside the courtroom, Entitled to

notice and a hearing

1. What Orders Support Contempt?

FRCP 65 (d) Contents and Scope of Every Injunction and

Restraining Order.

(1) Contents.

Every order granting an injunction and every restraining order

must:

(A) state the reasons why it issued;

(B) state its terms specifically; and

(C) describe in reasonable detail — and not by referring to the

complaint or other document — the act or acts

restrained or required.

H.K. Porter Co. v National Friction Products (USCA 2nd 1977) p325

Settlement agreement between the parties. P wanted clause enforced had

contempt proceedings

To have contempt must have been disobedience of “an operative

command capable of enforcement.” And that command, if it is in

substance an injunction, must comply with rule 65(d)[above] of

FRCP.

DC judgment did not use language which a contractual duty into an

operative command. Even if it was an operative command, which it was not,

did not conform to mandatory precedents in FRCP 65(d)(1)(C) because it

merely referred to the settlement agreement and did not issue an operative

command.

35

“Equitable decrees…trace their origin to the royal command… to obey the

chancellors direction. B/c of the risks of contempt proceedings, civil or

criminal, paramount interests of liberty and DP make it indispensible for the

chancellor to speak clearly, explicitly, and specifically if violation of his

direction is to subject a litigant” to penalty including damages.

Even statute not enough, as a reference.

2. What is a violation?

Playboy Enterprises v Chuckleberry Publishing (USDC 1996) p328

“Playboy v Playmen”

Def. Tattilo, Italian man, publishing “Playmen” magazine in Italy since 1967,

D wanted to bring Playmen to US in 1979. Playboy got Judgment in 1981

which enjoined D from publishing, printing, distributing or selling in the

United States an English Language Magazine titled “Playmen”. D in 1996

has violated judgment now by operating “playmen” website from Italy.

A Court has the power to hold a party in civil contempt when (1) there is a

“clear and unambiguous” court order; (2) there is clear and convincing

proof of noncompliance; and (3) the party has not attempted to comply in a

reasonably diligent manner.

**** failure to comply need not be willful****

Cyberspace not a safe haven, Tattilo has violated the Court’s Injunction,

Contempt granted

3. The Puzzle of Criminal Contempt-Coercive Contempt

International Union, United Mine Workers of America v Bagwell

(SCOTUS 1994) p334 “Mine workers causing ruckus getting fined”

Unions told not to violate injunction, every violation brings penalty of $100K

for violent and $20K non-violent. 7 separate contempt hearings for over 400

offenses racks up $64M in fines for Union. Companies and union settle and

vacate $12M in fines but $52M still owed to Virginia and two counties.

36

Union argues fines are criminal contempt and not civil contempt thus

needed a jury and higher standard of proof.

Civil Contempt- “carry the key of prison door in your own pocket.”

1. coerces the D into compliance with the court’s order, or

2. compensates the complainant for losses sustained

Criminal contempt- a fixed sentence of imprisonment and is imposed

retrospectively for a “completed act of disobedience.” Gompers (had

been put in jail for 12 months was criminal contempt) “thus a flat,

unconditional fine totaling even as little as $50 announced after a finding of

contempt is criminal if the contemptor has no subsequent opportunity to

reduce or avoid the fine through compliance.”

What protections are afforded and When?

“Courts independently must be vested with “power to impose silence,

respect, and decorum, in their presence” Anderson “inherent Contempt

authority” Gompers

Thus direct contempt’s can still be handled summarily

Indirect contempt’s of complex injunctions demands reliable fact finding

and triggers the criminal procedural protections [presumed innocent,

advised of charges against them, have an opportunity to respond to

charges, right to counsel, right to call witnesses, have a public trial,

unbiased judge, right not to testify against oneself, and proof BaRD; and

afforded a jury for serious criminal contempt] to prevent arbitrary exercise

of judicial power.

Fines levied on Union were not compensatory and were punitive thus should

have triggered criminal procedural protections such as criminal jury trial.

Scalia Dissent $52M criminal, too extreme a case to try and clarify civil

versus criminal contempt. Would satisfy all the previous tests.

4. Confinement, Contempt, and Cash money: Ability to comply.

Statutes authorize a judgment creditor to institute collection proceedings or

discovery proceedings to find the judgment debtor’s assets.

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Judge may enforce an order to pay with contempt even though requires him

to pay money bc defendants failure to comply considered contumacious

conduct.

“Yet cannot get any blood out of a turnip” contemptor can assert the

defense of inability to comply” Deadbeat dad cannot be forced into civil

contempt if he is unable to pay Hughes v Georgia Dept of Human Resources

p 344 Contemptor has both burden of persuasion and burden of production

on defense of inability to pay.

Moss v Superior Court, Ortiz (SC Cal 1998) p345 “Deadbeat dad has to

pay”

There is no constitutional impediment to imposition of contempt sanctions

on a parent for failure to pay child support when the parent has the ability

to seek and accept available employment.

A court order requiring parent to pay child support and thus seek and

accept gainful employment is not a violation of the thirteenth Am.

Prohibiting involuntary servitude. Neither it is a violation of Cal Const. “A

person may not be imprisoned for a debt” bc provision has long been held

not to apply to imprisonment for crimes or contempt’s.

5. The Collateral Bar

Ex Parte Purvis (Sc AL 1980) p352 “protestor imprisoned for 3 criminal

contempts”

Purvis violated of TRO by striking against his employer, Water Works Board

of Birmingham. Sentenced to criminal contempt of 15 days for 3 separate

incidents of contempt. Uphold TRO despite Purvis contention that

Injunction violated his constitutional rights to freedom of assembly, etc.

“order issued by court with jurisdiction… must be obeyed until it is reversed

by orderly and proper proceedings even though it may be constitutionally

defective” unless rare case [If transparently invalid- ridic high standard]

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where compliance would cause the irreparable injury and appeal would not

totally repair the error.

5. Who may obey

Because courts cannot make general rules that apply to the masses, such as

statutes as made by legislatures, then injunctions only apply to certain

people.

Can be geographically specific Acuna or Milk Wagon Drivers p359 or 36

feet Madsen

People v Conrad (Cal CA 1997) p360 “Two groups one abortion clinic”

Two groups picket abortion clinic, one group, “Solano Citizens for Life” has

injunction enjoined against it. “Operation Rescue of California, another anti-

abortion group, claims they are unrelated. ORCal was at clinic to “test the

injunction”. Parties did not know each other and thus could ORCal members

could not be enjoined by previous injunction. Did not act “in concert” as

required by injunction.

Ex Parte Davis (Tex 470 SW 2d 647) [Roman asked up to look up] “It don’t

apply to me”

Beaumont preacher building church against injunction

states that an injunction is binding only upon the parties to the

action, their officers, agents, servants, employees, and attorneys,

and upon those persons in active concert or participation with them

Neither Bible Baptist Church nor Davis were parties to the 1962 temporary

injunction. The question here is whether a non-party to the original

injunction proceeding, was in active concert or participation with the Brites.

This court in Ex Parte Foster said that while a person not named as a party

is not ordinarily bound by the terms of the injunction decree and therefore

cannot be punished for violating its terms, he is ‘in active concert or

participation’ with the named party if he participated in the original

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proceeding and was a real party in interest when the decree was

rendered

E. The Enforcement of Constitutional and Public Law

Through Structural Injunctions

Granted to protect P’s constitutional rights usually infringed by schools,

prisons, jails, and now mental hospitals and even police departments.

Future based hard to draft and strain the judiciary, also Separation of

powers concerns because may usurp executive and legislative power. But

sometimes needed because other branches too slow to react, i.e. Brown II

“all deliberate speed.”

Courts can hold city council members or other government officials in

contempt for not following structural injunctions; Courts can subject

injunctions over entire systems as in Dixon v Berry where courts supervised

the DC mental health system for over 25 years.

A judge may also grant relief from an injunction when the prospective

application in “no longer equitable” FRCP 60(b)(5).

1. Attempts to remodel an existing social or political institution to bring it into conformity with constitutional demands

2. Typically complex and invasive 3. Likely to involve judge in tasks traditionally considered to be non-judicial, that is,

less about rights and duties and more about management4. Used only as public law remedies for serious and pervasive rights violations5. Ex. restructure school system to facilitate equality of educational opportunity

F. Injunction Reform2 big areas: Limits on strike injunctions and injunctions which effect

unconstitutional prison conditions

Frew ex Rel. Frew v Hawkins (SCOTUS 2004) p374

Texas parents filed a class action lawsuit on behalf of their children against

state healthcare officials, claiming deficiencies in the state's Medicaid

program. The case was settled through a consent decree, a written

40

agreement similar to a contract that the court approves and has the power

to enforce. Two and a half years later, parents were unsatisfied with the

state's progress and filed a motion to enforce the consent decree. The

district court found that the consent decree was enforceable, but the court

of appeals reversed, holding that the state was immune from enforcement

under the Eleventh Amendment, which provides that a state cannot be sued

by individuals from other states, countries, or its own residents unless it

explicitly waives immunity. The court of appeals held that a consent

decree is not enforceable against a state or its officials except to

vindicate a federal right under 42 U.S.C. § 1983. The court found no

violation of a federal right and no waiver of sovereign immunity;

therefore, the consent decree was unenforceable.

Chapter 4 – Unjust Enrichment- Restitution

A. Doctrine of Unjust Enrichment is an Equitable one, providing

one party should not be able to benefit at the expense of another because of

an innocent mistake or unintentional error. UE opposite of Officious

intermeddler- window washer.

Kistler v Stoddard (Ark CA 1985) p384 “Hey I planted those crops”

Stoddard tenant farmer for 20 yrs. planted crop in Nov. 1980. Farm owner

died, estate sold land which Stoddard planted on. New owner unjustly

enriched. Stoddard had no equitable or legal claim to the crop, but that

does not mean D (Kistler) is entitled to be unjustly enriched.

Kossian v American Nat. Ins. Co. (Cal CA 1967) p393 “Cleanup of Fire in

hotel”

The plaintiff was hired by the owner of a hotel to clean up debris after a

fire. He performed the work but was never paid. Later, the hotel owner filed

a bankruptcy petition. The trustee in bankruptcy abandoned the hotel to the

defendant company, which held a mortgage on the property. The defendant

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took possession of the debris-- free premises, and also collected on an

insurance policy the hotel owner had maintained for the defendant's benefit

pursuant to the mortgage. The insurance contract indemnified the

defendant for fire loss, including the cost of removing debris; but, like most

insurance contracts, it did not require that the work be done.

The plaintiff asserted a restitution claim against the defendant, seeking a

money remedy in the amount of the insurance proceeds corresponding to

debris removal. Although the defendant never requested the plaintiff's

services, and the insurance payment was based on an independent contract

between the hotel owner and the insurer, the court allowed the claim. It

interpreted the "equitable doctrine of unjust enrichment" to mean

that the defendant should not "be indemnified twice for the same

loss, once in labor and materials and again in money, to the

detriment (forfeiture) of the party who furnished the labor and

materials."

Patureau-Miran c.(v) Boudier (France 1892)

Boudier, manure salesman, supplies Patureau-Miran’s tenant; tenant

evicted and court finds unjust enrichment; action in de rem verso [action

for restitution based on the defendant’s UE] derives from the

principle of equity which forbids one to enrich oneself at the expense

of another.

Knaus v Dennler (Ill. CA 1988) p396 “neighborhood lake and dam”

P purchase lake front lot, had ½ earthen dam protecting the neighborhood

from flooding. Dam broke now P want D’s to help pay for dam. Some

neighbors contributed to fix dam. Smedleys, one D, neighbors objected to

their portion of the dam being repaired. Ill courts recognize quantum meruit

but not applicable. “B/c P’s instructed the repairs to be commenced

notwithstanding defendant’s opposition and lack of willingness to

42

enter the agreement proposed by P’s, we are unable to find the Ds

voluntarily accepted a benefit, as required to establish unjust

enrichment.”

D’s are freeriders, and get trespass damages of $130.

Notes: does common fund fit into UE?

B. Legal Restitution: Quasi-Contracts

Legal Restitution two branches (A) money or value restitution, occurs when

a successful plaintiff recovers a money judgment measured by the

defendant’s unjust enrichment. (B) specific or specie restitution includes

replevin and ejectment; where the D returns the P’s exact chattel or real

property respectively.

3 “common counts” or Quasi-Contract:

Complaint for money had and received

Quantum Valebant- for goods sold and delivered

Quantum Meruit- for service rendered under UE principle

Not equity in chancery sense- thus need a jury trial and P prevails

then get a money judgment.

Many cases, even ones below, confuse equitable and legal restitution;

mistakenly use terms interchangeable. Be on the look out for improper

vocab.

1. Measuring the defendant’s benefit-services

Occurs because no contract or tort but P has conferred a benefit on the D

Campbell v TVA (USCA 1969) p406 “trade journals for TVA library”

P made microfilm trade journals for TVA, but no K because was ordered by

an employee at TVA with no authority to enter into such a contract.

Action in Quantum Meruit.

Two ways to measure benefit D received: 1. Fair market value or 2.

How much the benefit has been worth to the person upon it was

conferred?

43

Bc it was TVA library, real benefit to patrons, almost immeasurable.

Correct in using fair market value, Only fair market value is to TVA

library.

Also did not need to follow experts assertion that microfilm could have been

done for $10K. Campbell recovery was for $30K.

Dissent J. Rives (only one year of college) judgment in exact amount of

original invalid contract, thus decision did not even follow their own rule.

Maglica v Maglica (Cal CA 1998) p415 “maglight unmarried seperation”

Unmarried couple who lived together for 20+ yrs, Husband started

maglight, wife’s ideas helped grow company. She got $84M in quantum

meruit from Jury.

No contract, no marriage bc no “common law” marriage “the fact they

remained unmarried is dispositive”

“The measure of recovery in quantum meruit is the reasonable value of the

services rendered provided they were of direct benefit to the defendant.”

“the idea that one must be benefitted by the goods and services bestowed is

thus integral to recovery in quantum meruit.”

Improper jury instructions misled the jury, Quantum meruit is not an

implied contract

New trial, new jury instructions, more facts about business relationship

coupled with facts about living together, holding themselves out as husband

and wife, could help wife prevail.

C. Equitable Restitution

1. Constructive Trust

more beneficial in three situations, and major equitable restitution

1. D is bankrupt, and P can trace his or her property to identifiable asset

2. D has purchased an identifiable asset with P’s property, and that asset

has appreciated in value

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3. D has transformed P’s property to a 3rd person, and P wants the 3rd

person to return the item; operating like replevin or specific

restitution

P must TRACE so chancellor can find the constructive trust “res”

Simonds v Simonds (NY CA 1978) p422 “1st Wife wants her life insurance

money”

Decedents 1st wife seeks to apply a constructive trust on proceeds of life

insurance policy. Separation agreement required husband to keep life

insurance policy, of $7000 to be paid to her. Insurance policy lapsed.

“The separation agreement vested in the first wife an equitable right in the

existing policies. Decedents substitution of policies could not deprive the

first wife of her equitable interests, which was then transferred to the new

policy.”

Cardozo: “a constructive trust is the formula through which the conscience

of equity finds expression. When property has been acquired in such

circumstances that the holder of legal title may not in good conscience

retain the beneficial interest, equity converts him into a trustee”

45

2. Tracing

Restatement of Restitution § 202 comment c

Explains the stealing money lotto conundrum explained in E &E p282

Limits on tracing:

creditors: fraud victims of a ponzi scheme should each get a pro rata

share US v Durham

Life Ins.: embezzled money then buy Life Insurance only entitled to

amount of embezzled money, interests, and any costs

Homesteads: yes can get homestead if take your money and buy a

house, However Fla one of the most protectionist

states for homestead

C. Defenses to Restitution

Non-affirmative defenses: attack either the unjustness or enrichment tag

the P with intermeddler or volunteer status

Affirmative Def:

a. Time bar- varies if legal then jurisdictions contract statute of limitations

or equitable restitution under equitable doctrine of laches

b. Change of position-estoppel- if making restitution would be “inequitable”

or estoppel if bank overtransferred, D asked if it was his money and bank

assured him “money is yours” then creates estoppel- must show relied on P

representation p432

c. Bona Fide purchaser- second hand purchaser no idea, what you

purchased was without good title- must show lack of knowledge under UCC

d. Discharge for value- when creditor discharges debt owed to them bc

thought money was clean or property had good title.

Chapter 5- Restitution in Transactions

A. disqualifying the P for Rescission-Restitution

1. Election of another Remedy

46

FRCP 15 allows P’s to amend complaint adding or retracting remedies

FRCP 54(c) tells a judge to grant the relief to which the successful plaintiff

id entitled even if the party has not demanded such relief in the party’s

pleading.

UCC remedies cumulative

Gannett Co. v Register Pub. Co. (USDC 1977) p436 “Hart-fraud Times”

Sale of Hartford Times, D overvalued assets and fraudulently inflated

circulation stats.

P learned of this only after purchase, did not rescind right away.

TC held waited two months, to long, to rescind thus affirmed the contract.

“the reasonable time period within which rescission must be

demanded starts the moment the injured party is on notice of the

fraud.”

To force shares of Hartford back upon Gannett at his stage would be

unequitable.

2. Lack of Injury

Earl v Saks & Co. (Cal SC 1951) “How much is that Fur Coat?”

Lady gets Saks to sell fur coat to BF only because she promises to pay

difference. She then returns to get coat monogrammed and pays the

difference, he tells Saks he is rescinding. He then sues Saks for conversion.

But no injury Saks has coat, he has paid nothing, only signed sales slip and

Mrs. Earl has paid $916.30 which can be returned.

So Contract Rescinded, [in modern day we call this a return]

Monetary Injury is a requirement- classic view- Prof. Pomeroy

Harper v Adametz (SC of Errors Conn.) 1955 “Lying Realtor”

Realtor defrauds buyer out of 63 acres by lying to buyer and seller. Ends up

purchasing the 63 acres for his son (D). “Equity will not permit these D to

keep a benefit which came to them by reason of Jere’s fraudulent conduct.”

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“If one acquires property by means of fraudulent misrepresentation of a

material fact, equity will assist the defrauded person by fastening a

constructive trust on the property”

P gave addition $1000 he had offered and court ordered D to convey 63

acres to P.

B. From Defective Negotiations to plain Overreaching

1. Seller’s right to disclose

Reed v King (Cal CA 1983) p455 “For Sale: mother and her four children

murdered”

Murder of five people, 10 years ago, does Seller have to disclose?

In general seller of house has a duty to disclose: “where the seller knows

of facts materially affecting the value or desirability of the property

which are known or accessible only to him & also knows that such

facts are not known to, or within the reach of diligent attention and

observation of the buyer.”

2. Undue Influence

Odorizzi v Bloomfield School Dist. (Cal CA 1966) p460 “homo school

teacher resigns”

School teacher forced into resigning after arrested for homosexual activity.

Wants declaratory relief reinstating him after charges were dropped

Undue influence involves an application of excessive strength by a

dominant subject against a servient object

Undue Influence certain characteristics of excessive strength:

1. Timing of discussion of transaction

2. Consummation of transaction at unusual place

3. insistent demand that be done immediately

4. extreme emphasis unexpected consequences of delay

5. use of multiple persuaders of dominant party

6. absence of third party advisors

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7. statements that there is no time to consult financial advisors or attorneys

Remanded to TC for factfinding determination

****Roman- also possible duress and threat of character concerns in

Odorizzi

3. Duress-Business Compulsion

Selmer Co. v Blakeslee-Midwest Co. (USCA 1983) p466 “I had to take

the offer”

Selmer, P, subcontractor entered into agreement with D, general

contractor, D was to supply something to P then P to build and deliver to

site. D was late in delivery and P incurred cost of $150K, offered to settle

for $120K, D refused to budge from counteroffer of $67K. P accepted

because of economic difficulties and now is suing for rest of costs incurred

claiming “economic duress”

“The mere stress of business conditions will not constitute duress where the

defendant was not responsible for the conditions.”

4. Unconscionability “Doctrinally difficult”

Discover Bank v Superior Court (Cal SC 2005) p472 “Fucked up

cardholder agreements”

Arbitration agreement between Discover and Card holders, arbitration

came about because aggregate late payments from class action [payment

was late after 1pm]

“When a party has superior bargaining power and has carried out schemes to deliberately cheat

consumers out of individually small sums, the waiver becomes applicable and is

unconscionable.” Gave discover card unequal bargaining power

C. No Enforceable Contract

49

Contract may fail bc of SoF, failure of consideration, lack of capacity,

party’s mistake or illegality.

1. SoF Required Writing Rule

Marriage

Year

Land

Executor

Guarantor

Sale of goods over $500 and UCC 2-201 revised $500 to $5000 [revised still

not adopted as of 2010]

Schweiter v Halsey (Wash SC 1961) p 481 “SoF land case”

Tried to convey land with an inadequate description of the property.

Violated Statute of frauds thus voided whole agreement

Abrams v Unity Mutual Life Ins. (USCA 2001) p485 “preneed funeral

insurance”

P, funeral director brought on by Insurance company to start selling

“preneed” insurance for beneficiaries to cover funeral costs. No written

contract despite 7 drafts of a contract and relationship lasts 6 years.

Contract claim is barred bc violates SoF and unjust enrichment claims is

barred for two reasons. One it based on the same promise and seeks the

same relief of the barred contract claim, thus enforcing it would circumvent

the statute of frauds. Second he cannot prove what benefit he conferred on

Unity without the draft contract, the fatal flaw resurfaces.

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2. Lack of Capacity

Halbman v Lemke (Wis Sc 1980) p488 “minor buys car, car breaks down”

P a minor buys car from D. Car breaks P take sit to garage repair bill

$637.00 does not pay bill. Garage removes engine and tows to minor’s

house.

Infancy Doctrine- Absolute right of minor to disaffirm a contract

Absent misrepresentation or tortious damage to the property, a

minor who disaffirms a K for the purchase of an item which is not a

necessity may recover his purchase price without liability for use,

depreciation, damage, or other diminution in value.

Draft of Rst. Of Restitution § 16 Illustration 13 allows Seller to offset

depreciation with

minor buyers refunded purchase price/consideration

D. Ground for restitution

1. Deficient Consideration

Johnson v GM Corp, Chevy motors division (Kan SC 1983) “UCC

revocation” setoff

P, bought a new truck, traded in old received a limited warranty. Problems

with new truck almost immediately. Continued to drive truck bc seller

refused to take back after numerous chances to cure defects. Seller wants

setoff for depreciation of truck while litigation on going

“A B that properly rejects or revokes acceptance is first made whole from

the injuries resulting from the seller’s failure to perform his part of the

agreement, escapes the bargain, and forces any loss resulting from

depreciation of the goods back on the seller.” B had vested security interest

pursuant to 2-711 UCC thus should have kept truck after S refused to

retake possession.

Get out from under being wrongful to the Seller [2-608(2)(a)] bc

transportation is necessity not a luxury thus had to use truck

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However S gets there setoff 2 ways to calculate:

1. Lease vehicle monthly depreciation

2. Alternative method highway safety method

Chose second method D gets their setoff but also owes P’s interest at 10%

from time of attempted revocation till judgment, ouch!

2. Mistake

Renner v Kehl (Ariz SC 1986) p499 “jojoba farming”

Equitable rescission from a mutual mistake. Buyers of land wanted to start

a jojoba farm S thought land was sufficient for jojoba farming. Turns out not

enough water a P’s wanted out of agreement. TC awarded and CA upheld

P’s getting back their down payment and all damages incurred with drilling

test wells etc.

Ariz SC struck down award and said “P’s are entitled to their down payment

plus the amount by which their efforts increased the value of the petitioners

prop. Not the $229K in damages awarded because that would shift the

risk of mistake onto the D’s which is incompatible with equitable

rescission.”

Terra Nova Ins. v Ass. Commercial Corp. (USDC 1988) p504 “stolen

truck insurance fraud”

Scharbarth commits insurance fraud but insurers pay out anyways, despite

investigating realizing Scharbarth probably commits fraud Ins. pays out

claim scared of retaliatory claim for bad faith insurer. Scharbarth goes to

jail after FBI gets involved.

“Under Wis. Law plaintiff’s cannot recover from Associates what turns out

to be a mistake of fact.”

Scharbarth however owes the full amount plus interest

52

Lenawee County Board of Health v Messerly (Mich SC 1982) p 508

“leaky septic tank”

Pickles’ purchased investment property only to discover the septic tank was

leaking out onto the ground. The Board moved in and condemned the

property, and seeking a permanent injunction until the property was

brought into compliance. Injunction granted. Messerly’s former buyers filed

foreclosure and Pickle’s countered with rescission. TC found no cause of

action, CA found a mutual mistake that went to a basic element of the

contract, an income producing property.

SC Mich reverses “In cases of mistake by two equally innocent parties,

we are required, in the exercise of our equitable powers, to determine

which blameless party should assume the loss resulting from the

misapprehension they shared. Equity suggests the risk should be

allocated to the purchasers.” –no rescission

53

Mutual of Omaha v Russell (USCA 1968) p 512 “travel insurance”

Woman tries to buy travel insurance from machine, no change buys it from

booth, but buys different insurance, she dies on flight back and is not

covered under 2nd insurance because trip lasted one day longer, would have

been under 1st insurance. “The printed contract controls” family gets

nothing

3. Illegality- Violation of Public Policy

Judge can raise illegality concerns sua sponte

Bovard v American Horse Enterprises, Inc. (Cal CA 1988) p517 “roach

clips and bongs”

P, sued to recover promissory notes executed by D’s in connection with

Ralph (other Defendant) purchase of Corp. from P. At trial judge discovered

Corp made jewelry but really bongs and roach clips, and sua sponte

stopped proceedings and threw out compliant.

Discussion of Moran which list several factors

1. nature of the conduct

2. extent of public harm which may be involved

3. moral quality of the conduct of the parties in light of the prevailing

standards of the community

No enforcement of the K

R.R. v M.H. & husband (Mass SC 1998) “Surrogacy agreement”

Enforceability of surrogacy parenting agreement. Lady backed out after 6

months pregers despite complex agreement which provided for

compensation and custody rights.

Minority of states outlaw, a few have made them legal, including Fla which

requires intended mother to be infertile. Others place restrictions but Mass

Legislature silent

Examine adoption statutes that require waiting period before mother can

give away baby. Thus because of public policy surrogacy agreements are

void in Mass.

54

Leaves open door if unpaid and mother waits to give up, then would be

legit, but again still unenforceable because then not really an agreement.

What about intended father having to pay child support to adoptive mother

despite not being real father? Yes he does have to pay in Cal. In Re

Marriage of Buzzanca p527

Chapter 6 - Contort

EVRA Corp. v Swiss Bank Corp (USCA 1982)

Hybrid tort, contract Roman hates this shit

Scrap metal dealer lost a valuable contract b/c D failed to effect a telex

deposit

Awarded $2.1M by Trial Judge most of which was for lost profit

****Posner decision****

cites Cardozo “The sender can protect himself by insurance in one form or

another if the risk of non-delivery or error appear to be too great.*** The

Company, if it takes out insurance for itself, can do more than guess at the

loss to be avoided.”

P is not entitled to recover consequential damages from D

C.Economic Loss Rule

Local Joint Exec. Board v Stern (Nev SC 1982) p539

“Can’t work suing over fire at MGM grand”

“Forseeability of economic loss even when modified by other factors

is a standard that sweeps too broadly in a professional or

commercial context.”

“the law does not spread its protections so far” Robins Dry Dock

a. The economic loss doctrine

ii. A judicially created doctrine providing that a commercial

purchaser of a product cannot recover from a manufacturer,

55

under the tort theories of negligence or strict products

liability, damages that are solely “economic” in nature

iii. Three policies upon which application of the economic loss

doctrine to tort actions between commercial parties is

generally based:

1. To maintain the fundamental distinction between tort

law and contract law

2. To protect commercial parties’ freedom to allocate

economic risk by contract

3. To encourage the party best situated to assess the risk

economic loss, the commercial purchaser, to assume,

allocate, or insure against that risk

****Exxon-Valdez Oil Spill p 540****

Trans-AK Pipeline Liability Fund, set up to pay for damages, and the Courts

agree owner’s losses not proximately caused by the oil spill. Either

geography too remote, or impact was on customers who stopped

patronizing. Adkins v Trans-Alaska Pipeline

Chapter 7 Breached Sales Agreements

UCC article 2 governs sale of goods

First must show UCC applies sale of fungible goods over $500

§2-703 covers Sellers remedies in general and comment 1 tells us that

Seller’s remedies are cumulative, unless facts bar a specific remedy. In

addition comment 4 guides us to section §1-106, an umbrella to the entire

remedies provisions stating “remedies are to be liberally administered to

the end that the aggrieved party may be put in as good a position as if the

other party had fully performed”.

§2-711 covers Buyers Remedies and §1-106 also applies

McCarthy v Tobin (Mass SC 1999) p557

No UCC b/c about land not goods

56

Preprinted real estate form –OTP- gave extension passed extension by five

days and Same day P signed agreement sent by D’s lawyer D accepted 3rd

parties offer to purchase. P gave agreement to D’s lawyer the next day. P

then filed for specific performance and damages.

Was the OTP a firm offer? Controlling fact is intention of parties and OTP

was binding and contains familiar contractual language Aug 16 deadline is

merely a condition subsequent and was waived bc negotiations continued.

Specific Performance appropriate “because property is unique and

money damages will often be inadequate to redress a deprivation of

an interest in land.”

B. Buyers Damages for Seller’s Breach

1. Tort v Contract

Selman v Shirley (Oregon SC 1939) p566 “This house aint got no Logs”

The general rule of damages in fraud is that a plaintiff is entitled to "such

damages as naturally and proximately resulted from the fraud."

2. Expectancy Damages v Rescission-Restitution

Horton v O’Rouke (Fla DCA 1975) “4 families and Federal tax Lien”

Ps, rental agreements to live in houses under construction, moved in then

told Federal Tax Lien encumbering at $94K. Assured Lien would be

removed, renters continued to rent for 22 months. Finally told lien not

going to be removed. Then ousted by other Co. who took control of title.

They filed for damages against D construction Co. and original landlord.

“No suggestion of bad faith on D’s part” so no damages

Standard measure of K damages for benefit of the bargain:

Difference between value of the land when it should have been

conveyed less the contract price as yet unpaid.

Classic expectancy

3. Measuring the Buyer’s Expectancy

57

Wilson v Hayes (TX CA 1976) p580 “Selling and buying bricks”

Sell 600,000 bricks for $6K, Seller, Defendant-Wilson delivered only

400,000 bricks. Market value $.05/ brick

UCC 2-712 Cover or 2-713 MP:

o 2-712: cover

buyer doesn’t have the goods K’d for (for a number of reasons)

formula: return of buyer’s purchase price + cost of cover

(cost to obtain substitute goods) – K price + incidental

damages + consequential damages – expenses saved

requirements:

good faith—no unreasonable delay—reasonable

purchase or reasonable K to purchase—failure to cover

leaves all other remedies intact but may impact

consequential damages (cmt. 3)

o you don’t have to cover but if you have

consequential damages (i.e., forward sale) and

you don’t cover—you will be sued for breach and

cannot get damages

o some cases you can’t cover, then you have

consequential damages

o §2-713: when buyer doesn’t coverreturn of buyer’s

purchase price + MP – KP + ID + CD – ES

timing: mkt. price at time buyer learns of breach

location: market price at place of tender

Under 2-711 he gets his $2000 back for price paid then under 2-713 he gets

the $8000 for non-delivery or repudiation.

Texpar Energy v Murphy Oil USA (USCA 1995) p580 “asphalt sale”

Basically get more than out of pocket expenses and 2-713 proper

application

58

§1-106 “remedies are to be liberally administered to the end that the

aggrieved party may be put in as good a position as if the other party

had fully performed”.

Wolf v Cohen (USCA 1967) p 587 “No damages in real estate”

Suit for damages out of series of real estate transactions; B, going to resell

but never did, supposed 2nd buyer backed out. Then filed damages against

Seller

“measure of damages for breach of a contract of sale is the difference

between the K price and the fair market value of the property.”

Hourihan v Grossman Holdings (FLA SC 1982) p590 “mirror image

house”

House built mirror image DCA applied Edgar v Hosea

SC Fla applies 346(1)(a) of RST of K Diminution of value theory

Basically get reasonable costs and in fixing problem or difference in

value of the product contracted for and value had performance been

received by the plaintiff; if this is possible without economic waste

Oloffson v Coomer (Ill. CA 1973) covers Buyers remedies for UCC 2-711

and 2-713 as well as repudiation 2-610

When Seller repudiated B should have secured new corn that day thus only

get market price at time and place of tender. 2-713(2).

No 2-712 because not cover had unreasonable delay!

4. Buyer’s Special Damages: Lost business Profits

59

AM/PM franchise Ass. V Atlantic Richfield Co. (Penn SC 1990) p604

“Sold Bad Gas”

Agreement required franchises to sells ARCO gas, blended with oxinol and

caused consumers to have car problems. Precipitous fall off in gas sales

during period in which they started selling this bad gas.

Rely on 2-714 and 2-715

2-714: value of conforming goods – value of non-conforming goods (general damages)

2-715: incidental and consequential damages

a. 1. loss due to general or particular need 2. known at time of K-ing by S 3. couldn’t be avoided through cover or otherwise (only economic

damages) b. injury to person or property—only economic damages

Lost profits a form on consequential damages: 3 types of lost profits

1. lost primary profits (difference what B would have earned and what

they did earn bc of breach)

below only available in breach of warranty cases

2. lost secondary profit (loss of secondary goods)

3. loss of prospective profits (aka good will damages) (AM/PM first

case in Penn to allow)

2 and 3 become more speculative

for Good will damages [p given opportunity to set forth but must show (a)

such profits were related to the breach of warranty and (b) there is a

reasonable basis on which to calculate]

5. New Business Rule

Mindgames v Western Pub (USCA 2000) “Cleaver Endeavor: the most

fucking ironic game name ever”

Wanted $40M in expected profits that it never earned bc of D’s lack of

marketing

Abrogates “new business rule” for Ark [even though fed court]

60

Real question is to undue speculation; P had no track record when he

created cleaver endeavor could point to no other games he had made. Plus

$40M a bit steep had to have sold 10M copies of game to earn that.

6. Emotional distress stemming breach of contract

Erlich v Menezes (Cal SC 1999) p619 “leaky dream home”

Wanted dream house, but contractor built house that leaked everywhere.

Claimed emotional distress had physical illness, heart condition, brought on

by shoddy construction. “damages those likely to result therefrom”

Need separate tort to collect emotional distress damages, not recoverable

in breach of contract

7. Economic loss rule revisited (p539 originally) p630

***Tort or product liability avenues of recovery possess special advantages:

it avoids wavier (on labels or packaging), it liberates P from Hadley v

Baxendale contemplation limit on special damages, unlocks the plaintiff’s

access to recovery for mental suffering and to possible punitive damages.

Line between product liability and contract-warranty doctrines:

1. D has no tort-products liability duty when a defective product causes

a P purely monetary harm Seely v White motor Co. only contract

damages, when product injures only itself.

Second test minority nonexistent

8. Reliance Damages

Wartman v Hightower (MD CA 1983) p635 “Flagpole sitter venture”

Met with attorney to incorporate venture, Att. Ok’ed selling stocks then

realized problem contacted Hightower and offered them to meet with

incorporation specialists They refused bc would have cost $10K, Jury gave

them reliance damages

Appeal over reliance damages

61

“ordinarily profits lost due to a breach of K are recoverable. Where

anticipated profits are too speculative to be determined, monies

spent in part performance, in preparation for or in reliance on the

contract are recoverable.”

II. Sellers Remedies

A. Specific Performance

Centex Homes Corp v Boag (NJ AC 1974) p641

“Seller trying to force Condo on Couple”

Guy buys house then transferred to Chicago, stops payment on check, down

payment.

Seller, Vendor, asks for specific performance, that agreement be performed

in full.

“Specific performance…should be confined to those special instances

where a vendor will otherwise suffer an economic injury for which

his damage remedy at law will not be adequate, or where other

equitable considerations require that the relief be granted.”

B. Sellers Damages

1. Sellers expectancy and other damages

basic expectancy K price minus market price [at time and place for

tender]

or KP-MP

2-706 KP- Resale price

2-709 recover price

2-708(2) sellers “lost profit”

2-718 liquidated damages

Jagger Brothers v Technical Textile (Penn AC 1964) p646 “Yarn

repudiation”

62

Agreement to buy 20,000 pounds of yarn at $2.15/lb. buyer repudiate after

only taking delivery of 3,723, noticed seller would refuse future deliveries.

S awarded $4069.25 in a bench trial, MP $1.90 award represent 16,277

times the $.25 difference between KP and MP. [(KP-MP) x 16,2777]

Pursuant to 2-708 judgment affirmed

McMillian v Meuser Material and Eq. (Ark SC 1976) p 648 “Bulldozer

resale”

K to sell bulldozer, Buyer breached supposedly over wrong delivery date.

S resold 14 months later, sought damages under 2-706, which provides

for difference in KP- lower resale price; resale was commercially

unreasonably delayed.

Remittitur (reduction) of damages award, incidental damages ok’ed bc

reasonable to upkeep

Sprague v Sumitomo Forestry Co. (Wash SC 1985) p651 “No notice of

resale Logs”

Logger, P, entered into K to sell logs to D, who cancelled K bc of difficulties

at its sawmill. In answer B said mitigate, S then did but failed to notice B as

required by 2-706(3). Not an affirmative defense for B, rather element of S’s

claim under recovery under 2-706 thus S must prove at trial. So no recovery

under 2-706

But 2-703 allows for elections of remedy coupled with 1-106 they must be

administrated liberally so can recover under 2-708(1)(classic expectation

damages): MP-KP+ID-ExS affirm most of award some discussion of what is

difference between ID and CD which are not recoverable under 7-708(1)

[but are allowed under 2-708(2) subject to undue speculation dealt with

infra]

“incidental damages are normally incurred when a buyer repudiates and

include expenses incurred in transporting, storing, or reselling the

goods. …

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Consequential damages do not arise within the scope of the immediate

buyer-seller transaction but rather stem from the losses incurred by the

non-breaching party in its dealings, often with third parties, which were

the proximate result of the breach and which were reasonably

foreseeable by the breaching party at the time of contract.”

2. Seller’s profits

R.E. Davis Chemical v Diasonics Inc “lost volume seller” p655

Medical equipment B breached, S sued claimed entitled to offset of 2-708(2)

as a lost volume seller; 2-708(2) provides “if the measure of damages

provided in subsection (1) are inadequate to put the seller in as good a

position as performance would have done then the measure of damages is

the profit (including reasonable overhead) which the seller would have

made from full performance by the buyer together with any ID provided in

this article (2-710).”

Lost volume seller not solely focused on capacity to sell but rather

would it have been profitable for the seller to produce both units.

D. Seller’s restitution

Wellston Coal v Franklin Paper Co. (Ohio SC 1897) p673

Suit in Quantum Meruit for coal K breached by D in down months when MP

was below KP. Executed K during winter when KP was below MP.

“justice and fair dealing require that the D, having repudiated the K,

should pay the market price for the coal at the time it was

delivered.”

Dietz v Dietz (Minn SC 1955) p 676 “mom and son joint tenants” p676

Mom conveys half of house to son as joint tenants, in consideration for his

promise to take care of her for the rest of her life. He gets married and

feuds begin, ending with him ousting her through. She files a claim in unjust

enrichment thus imposing of constructive trust is proper

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Constructive trust may be imposed where the plaintiff shows the existence

of relationship of justifiable reliance or confidence (or fiduciary duty) and

the abuse by defendant of confidence and trust bestowed under it to

plaintiff’s harm.

Calculating Damages

1. General damages: Diminished value v Cost to repair

Hewlett v Barge Bertie (USCA 1969) p782

“If reclamation and repair costs exceed the ship’s just value at the

time of casualty, then it is a constructive total loss and the limit of

compensation is the value plus interests”

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