My Remedies Outline_Kelly

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Remedies Outline Fall 2009 - Kelly

I) EQUITY and EQUITABLE RELIEFA) Rule of remedies: To place victim in the position he would have been in had the

wrong not occurredB) Origins of Equity

i) Emphasis on conscienceii) Most states have unified law and equity courts except for DE and NJiii) Entitled to jury in law cases but not in equity cases largely depends on whether

right existed in 1792C) STANDARDS FOR AVAILABILITY OF EQUITABLE RELIEF

i) Conscience and equity demand reliefii) Equity acts in personamiii) Irreparable harm/ Inadequacy of legal remedy

(1) Legal remedy adequate if it is as complete, efficientandpracticalas equitableremedy(a) When money damages are as good as injunction(b) If money damages and equitable remedy are equal, then choose legal remedy(c) Incomplete: damages might not suffice(d) Impractical: injunction is much simpler and surer

(e) Inefficient: injunction avoids damage testimony(2) Inadequate remedy = insufficient to put plaintiff in position before the wrong was

committed(3) Specific Performance: equitable remedy will not be granted unless the good is

unique or that something about it would prevent money damages from giving fullrelief; shortage of item insufficient (Fortner v. Wilson)(a) UCC 2-716 Specific performance may be decreed if the goods are unique

orin other proper circumstances(i) Uniqueitem

1. Jewelry may be considered unique where it involves an engagementring (Schiller v. Miller)

a. But realize argument that ring can be replaced where purpose of it isinvestment and not sentiment no irreparable injury

(ii) Other proper circumstancesunder UCC1. Extreme shortage of item

a. Substitute may not be available or equalb. Price will increase given shortagec. Incidental costs to finding substitute difficult to predict

2. Inadequate remedy at law insufficient to put plaintiff in position beforewrong committed

3. Uncertainty as to damagesa. Estimates inaccurate

b. Incomplete if damages might be less than venture pursuedc. Impracticalif it is easier to allow venture to proceedd. Inefficientif requires testimony on damages

4. Risk of repeated litigationa. Incomplete if nuisance causes health riskb. Impracticalwhere wrong is too small to justify repeated actionsc. Inefficientsince multiple suits costly for everyone

(b) Note: Land is presumed to be unique(c) Issues with denying specific performance

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(i) If cover is impossible, how are damages measured?1. Market Price (cover price) K price

a. But if the items price is regulated, then market price and K pricewould be equal and damages would be zero

(ii) Jury may wrongly determine market price(iii) Cover transaction must be reasonable not comparable price but

comparable item

(4) Efficient breach(a) Liability rules allow this where benefit to defendant greater than harm to plaintiff

defendant breaches and pays(b) Property rules prohibit this which prohibit violation of rights even if defendant

willing to pay injunctions arise as a result of this as an absolute prohibition ofthe wrong

D) EQUITABLE DEFENSESi) Equitable relief is discretionary

(1) Court may deny equitable relief even when plaintiffs legal remedy inadequate(a) Court denied injunction to build animal shelter even where legal remedy

inadequate since damages cant compensate for continued nuisance of dogs

barking; public policy argument that dogs have to go somewhere (George v.Animal Defense League)

(b) Courts reluctant to grant specific performance where it would require judicialsupervision over a long period of time

(2) Impracticality and court over supervision is a defense to an equitable remedy(3) Courts deny injunctive relief where it is problematic and say that the legal remedy

is sufficientii) Unclean Hands

(1) Rule: He who comes to equity must come with clean hands; Party seekingequitable relief must not himself have been guilty of any inequitable or wrongfulconduct with respect to the transaction of the subject matter of the present suit

(a) Result will always be that one wrongdoer is unjustly enriched(b) Its not a comparative rule like in pari delicto: simply a question of if plaintiffs

hands are clean and not if theyre cleaner than the defendants(c) Defense recognizes that equitable decrees have effect on third parties and

should not be entered without consideration of those third party effects(d) Unclean hands will not be invoked where its application will produce

inequitable results, especially where the rights of innocent parties are involved(2) Sheridan v. Sheridan

(a) Court denies distribution of ill-gotten marital property (husband embezzled fromcompany) to wife seeking it in dissolution proceedings

(b) Courts will sometimes leave property in hands of main wrongdoer so wronged

third parties can seek it from wrongdoer(3) Highwaymens Case

(a) Two bandits agreed to rob travelers and split profits and when one refused tosplit, the other sued for an accounting and court dismissed the case invokingunclean hands

(4) American University v. Wood(a) Plaintiff wanted to enjoin defendant from sending misleading advertising

communications to plaintiffs students but court denied equity where plaintiffscommunications were just as misleading

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(b) Court of conscience refuses to protect plaintiff in the commission of fraud uponthe public though not unclean hands with respect to the defendant

(5) Relief granted despite unclean hands(a) Seagirt Realty v. Chazanof

(i) Original fraudfeasor who transferred property to hide it from creditors suedto have it returned to him and court returned property to him regarding hisunclean hands as washed during lapse of 20 years

(ii) While plaintiff had unclean hands, the unclean hands do not relate to thetransaction with the defendant so it doesnt count

iii) Unconscionability(1) K defense where court may refuse to enforce a K or a specific unconscionable

term or limit the effect of unconscionable term(2) Definitions

(a) Unfair surprise + unreasonably favorable terms(b) Unfair surprise + Oppression(c) Lack of meaningful choice + Harsh terms(d) Unduly harsh terms, regardless of surprise

(3) Cambpell Soup v. Wentz

(a) Where plaintiffs were buyers of red cored carrots and sued for specificperformance from sellers, court denied equitable relief even though carrotswere unique because K was too hard a bargain and too one-sided anagreement

(b) Court still awarded plaintiffs damages but simply denied equitable relief so Kwas still held enforceable despite unconscionable terms

iv) Laches(1) Rule: Equity aids the vigilant; any unreasonable delay by the plaintiff instituting

action where delay causes prejudice to the defendant.(a) Unreasonable delay = unjustified delay

(i) Justified ignorance of facts constituting cause of action, personal disability

or ongoing settlement negotiations make delay reasonable(b) Causing prejudice can include things like large amount spent by defendant,

loss of witnesses, circumstances of relationships between parties havechanged, or diminished memories(i) Be prepared to argue that little prejudice caused to D who actually benefited

from holding a benefit longer than entitled to(c) But watch out for the fact that an issue may not be ripe yet prior to the harm

(2) Contrast with statute of limitations(a) SOL applies at law while laches applies only to equitable relief(b) No equitable relief if laches applies but damages still available up until the SOL

(i) Laches neverextends the SOL; it can only shorten the period that you can

sue for equitable relief(c) SOL starts running from date of injury or date of discovery of injury for latent

injuries(3) City of Eustis v. Firster

(a) Court used laches defense to deny injunction to remove certain piers andboathouses where plaintiff waited 10 years after purchasing land

(b) Delay was unreasonable where plaintiff failed to investigate whether there wasobstruction to his property

(c) Prejudice to defendant is large of requiring them to remove structures whichthey built, maintained and repaired

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(i) Delay in removal is actually a benefit to defendant since they keep theunjust benefit longer

(ii) Lease revenue might have covered cost of maintenance so not so muchprejudice

(4) Stone v. Williams(a) Court applied laches to deny relief to plaintiff who delayed 5 years in filing for

proceeds from her fathers songs because the 5 year delay was unreasonable

and it prejudiced the defendant due to death of witnesses and defendant hadentered into transactions with third parties

(5) Nahn v. Soffer(a) Court applied laches to defendants claim for specific performance for sale of

property where delay was 21 months between exercise of option contract tothe date scheduled for closing

(b) Repudiation by plaintiffs excused further performance but did not excuse thedelay in asserting a claim for specific performance

(c) Prejudice to plaintiffs because property value increased from $200K to $350Kand defendants failed to pay property taxes but this doesnt seem likeprejudice because plaintiffs got to keep property longer than they deserved

v) Promissory Estoppel(1) Requirements- Rest Contracts 90

(a) Promise(b) Reliance(c) Reasonably expected to induce reliance(d) Detriment

(2) Generally used as an exception to requirement of consideration certain actionsmake it seem like bargain was made(a) A substantive cause of action which permits foreseeable reliance substitute for

consideration and supplies basis for breach of K action(3) Equitable defense in the sense that it enjoins the defendant from raising a

particular defense injunction against certain defenses(4) Feinberg v. Pfeiffer

(a) Court relied on promissory estoppel to refute defendants argument that therewas no consideration by plaintiff for K where plaintiff made promise to payplaintiff $200 per month for life for retirement and plaintiff retired in reliance ofthat promise

(b) Without defense of lack of consideration, plaintiff proves case for enforceablecontract and wins

vi) Equitable Estoppel(1) This merely precludes equitable relief and relegates plaintiff to legal remedies(2) Requirements

(a) Assertion of fact(b) False or the fact that other party claims is false(c) Reliance(d) Detriment if fact contradicted now

(3) Similar to fraud(a) Intent to induce reliance(b) Knowledge of falsity(c) Justifiable reliance

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(d) Ex.) defendants fraudulent conduct; plaintiff knowingly permits defendant tomake expenditures or improvements to property when plaintiff knows it to beplaintiffs property

(4) Comparison to Promissory Estoppel(a) Both require proof of reliance and detriment(b) Promise is different from assertion of fact so no need to prove falsity for

promissory estoppel

(c) No need to promise a reasonable expectation of inducing reliance in equitableestoppel because of built-in assumption of reliance on assertions of fact

(5) United States v. Georgia- Pacific(a) Court applied equitable estoppel against plaintiff government where defendant

Georgia-Pacific agreed to donate certain lands if boundaries were extended toinclude lands but subsequent public land order retracted boundary of forestand thereafter, government allowed owners successor to manage remainingtimberlands at considerable expense and add a great deal of value to them

(b) Government was equitably estopped from bringing suit for specificperformance

E) Summary of Equitable Defenses

i) Courts try to find something that borders on some type of misconduct(1) On part of plaintiff (unclean hands)(2) On part of defendant (promissory estoppel)(3) In litigation (laches, fraud in equitable estoppel)(4) Negotiation tactics (unconscionability)

F) RIGHT TO JURY TRIALi) Rule: Where a complaint contains mixed legal and equitable claims, the legal claims

must be determined by a jury prior to any final court determination of equitable claims(Dairy Queen v. Wood)(1) Common issues to both legal and equitable claims is decided by jury and judge

must defer to jurys determination in deciding whether to grant equitable relief

(2) The right to jury trial extends to derivative actions by stockholders of a corporationfor those issues, if the corporation had been suing in its own right, would havebeen entitled to a jury (Ross v. Bernhard)

II) INJUNCTIVE RELIEFA) STRUCTURAL TYPES

i) Preventative order not to do somethingii) Reparative ordered to do something to right the wrongiii) Structural- reorganize institution in a way to reduce harm (i.e. school desegregation,

prison reform)B) PERMANENT INJUNCTION

i) Background(1) Issued after trial on the merits and determination of fault; not permanent and can

be subject to modificationii) Four factor test

(1) Inadequate remedy at law (folds into irreparable harm analysis sometimes)(2) Irreparable harm(3) Balance of hardship to plaintiff if denied against that to defendant if granted

(straight inequality)(4) Public interest

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iii) Ebay v. MercExchange(1) Court declined to issue a permanent injunction even though it found that defendant

Ebay had infringed on MercExchanges patent(a) May have been a pragmatic decision not so shut down the website over the

patent(2) Court applied 4 factor preliminary injunction test from Hughes to this patent case(3) No way of setting damages here because no market to determine FMV for

damages(4) But injunction gives plaintiff power to extort large percentage of profits undue

hardship defense should be used by defendant(5) S. Ct. held that injunction for patent infringement must still satisfy 4 factor test and

cannot issue as a matter of rule as appellate court didC) PRELIMINARY INJUNCTIONS (before trial)

i) Background(1) Preventing of irreparable harm until trial and lasts until final judgment entered(2) Issued to maintain status quo pending trial

(a) But this analysis is difficult to apply; hard to characterize what status quo is(b) Not some independent requirement in 4 factor test but may be a useful

argument(3) Requires evidentiary hearing with witnesses which takes time since some

discovery need be taken(a) Cannot be issued ex parte under Rule 65(a)(1)

ii) Four factor test (Hughes v. Cristofane)(1) Irreparable injury / inadequate remedy at law

(a) Must be immediate: substantial likelihood that it will occur or become inevitablebefore next chance to act

(b) Comparative inadequacy: After trial, any inadequacy may suffice but beforejudgment, the its only money argument may be sufficient to defeatirreparable injury argument

(c) Situations alleging harm of reputation resulting as a consequence of thewrong often suffice for irreparable injury

(d) Irreparable injury can result from situations where a student is suspended money compensation inadequate

(2) Probability of success on the merits(a) Most courts require this(b) CfAmerican Hospital Supplywhich does not require certainty or even 50%+

but only need to show that there is some serious issue which deservesresolution more hardship to plaintiff requires less likelihood of success(sliding scale)

(c) J. Posners formula

(i) Grant preliminary injunction if: P x Hp > (1 P) x Hd2

(ii) Probability of harm is multiplied by magnitude of harm(3) Balance of hardships

(a) Straight inequality unlike undue hardship defense(4) Public Interest

(a) Often plays little role public has no special interest either way(b) Often part of the balance of hardship consideration

iii) Note: Courts generally do not enjoin socially useful projects (dog shelter, incinerator)if there is even a small probability that it will not be a nuisance

D) TEMPORARY RESTRAINING ORDER (TRO)

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i) Background(1) Attempts to prevent irreparable harm until preliminary injunction(2) Issued after hearing on motion with some supporting affidavits; can be issued ex

parte in some instancesii) In many jurx, TROs can only be prohibitory (D is prohibited from doing something)

but substance may be mandatory(1) D is prohibited from permitting a wall to remain on Ps property = D is required to

remove wallE) EXPERIMENTAL AND CONDITIONAL INJUNCTIONS

i) Delay of Injunction(1) Boomer v. Atlantic Cement

(a) Facts: Court found defendant who owned a large cement plant near Albanyliable for nuisance for injury to property from dirt, smoke and vibration fromplant.

(b) Court rejected ordinary rule in NY that an injunction would issue if a nuisancewas found not unsubstantial(i) Ordinary rule didnt weigh disparity in economic consequence between

effect of injunction and effect of nuisance

(c) Court conditions issuance of injunction only if defendant does not pay forpermanent damages to plaintiffs economic loss on property

ii) Cost of Issuance of Injunction(1) Spur Industries v. Webb

(a) Court finds a nuisance but finds that plaintiff was essentially the cause of thedamage because plaintiff developer brought residents close to nuisance conditions issuance of injunction on plaintiff paying for defendants cost ofmoving or shutting down

(b) Plaintiff has committed no legal wrong for having to incur cost but court issaying that the undue hardship of having defendant bear all costs of injunctionmay weigh against issuance of injunction

iii) Undue Hardship Defense Against Injunctions(1) Hardship to defendant if injunction granted is disproportionate to harm to plaintiff if

injunction denied(a) Hardship must not just be greater than but disproportionate

(2) May not be applicable to defendants who are intentional wrongdoers(3) Contrast with 4 factor test for injunctions which applies the weighing of hardship

with straight inequality(4) Public interest can be weighed in this defense; c.f. 4 factor test where public

interest is explicit factorF) CHALLENGING INJNCTIONS

i) Appeal

(1) Can appeal permanent injunction by appealing liability from underlying case(2) Appealing preliminary injunction is an interlocutory appeal and must be authorized(3) TROs are not appealabe in federal courts(4) Safe and traditional method

ii) Collateral Bar Rule(1) Rule: Collateral attack on injunction by violating injunction first and then appealing

contempt judgment on grounds of invalidity of injunction will not work not aproper defense to criminal contempt and conviction will be upheld(a) Only applies to orders that court hadjurisdiction to issue

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(i) If federal judge issue injunction in a case where there is no federaljurisdiction or diversity of citizenship, then order invalid and collateral barrule inapplicable (United Mine Workers)

(ii) But a court has jurisdiction to determine its jurisdiction has power toenjoin conduct until it has completed jurisdiction determination so criminalcontempt can still apply if that order is violated

(b) Direct appeal is the only safe way to challenge validity of injunction

(c) Walker v. Birmingham(i) Even though injunction against protest as held to be unconstitutional,

violators still guilty of criminal contempt for violating order againstprotesting.

(d) In CA: collateral bar does not prevent a defendant from avoiding both criminaland civil contempt if order found invalid

(e) Injustice of the rule when injunction is invalid because what violator did waslegal but he is jailed for disobeying injunction

(2) Exceptions(a) During contempt hearing, if injunction is shown to be invalid, can avoid civil

sanctions but not criminal punishment

(b) Author if injunction not judge(c) Issuing judge from another country(d) Issuing judge from another state

(3) Rationale(a) Preference for invalid injunction to be obeyed than risk the irreparable harm

that would result from violation of injunction high rate of obedience with rule(b) Usually injunctions are correct

(i) Privileged communications : Must refuse to answer and defend thecontempt by claiming privilege must risk sanction to appeal

G) HEARING REQUIREMENTi) TRO

(1) Little more than a few hours notice orex parte(2) Requires complaint and some supporting affidavits(3) Two part test- Rule 65(b)

(a) It clearly appears from specific facts shown by affidavit or by verified complaintthat immediate and irreparable injury, loss, or damages will result to applicantbefore adverse party or his attorney can be heard in opposition, and(i) Must show a substantial likelihood that harm sought to be prevented will

occur(b) The applicants attorney certifies to court in writing the efforts, if any, which

have been made to give notice and the reasons supporting his claims thatnotice should not be required

(i) While court prefers notice, there are situations where notice would beinappropriate because harm would continue with notice

H) PERSONS BOUNDi) Rule 65(d): TRO or preliminary injunction is binding only upon the parties to the

action, their officers, agents, servants, employees and attorneys, and upon thosepersons in active concert or participation with them who receive actual notice of theorder by personal service or otherwise.(1) If defendant is not involved in the contempt, the employee cannot be (Alemite

Mfg. Co. v. Staff)

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(2) Idea that equity acts in personam and orders someone to not do something andnot that the thing cannot be done

(3) Includes bona fide successors or assignees(a) A bona fide purchaser, acquiring, with knowledge that the wrong remains

unremedied, the employing enterprise which was the locus of the unfair laborpractice, may be considered in privity with its precedessor for Rule 65(d)(Golden State Bottling v. NLRB)

(i) Bona fide purchaser essentially continues the business as it was sameoperations so court treats as if the same company for purposes of injunction

ii) SUNY v. Denton(1) Where injunction issued against student protestors and faculty protesters then

protested, court reversed finding that faculty was in contempt for violating order.(2) Bad drafting of injunction: prohibited all other persons receiving notice of this

preliminary injunction, whether acting individually or in concert from acting...insuch unlawful manner as to disrupt or interfere with plaintiffs lawfuland normaloperations orunlawfully interfere with ingress or egress from such properties... oremploying unlawful force or violence(a) Order does not prohibit anything lawful interference

(b) Unlawful interference with unlawful operations(c) Lawful violence

(3) Persons not parties can be bound only if parties were acting either as agents orservants of the defendants, or in combination or collusion with them or in assertionof their rights or claims.

iii) Civil Rights Cases(1) United States v. Hall

(a) Rule: Courts of equity have inherent jurisdiction to preserve their ability torender judgment in a case such as this; can issue an ex parte order against anundefinable class of persons(i) A district court has power to punish a person for criminal contempt who is

neither a party nor bears any legal relationship to a party in a schooldesegregation case because orders like this excite community passionsand are particularly vulnerable to disruption by undefinable class of personswho are neither parties nor acting in concert

(2) This is a very narrow exception to Rule 65(d) that injunctions act in personamI) NOTICE REQUIREMENT

i) Requirements(1) Clear and plain terms of scope of injunction(2) Must be from reliable source

ii) Willful ignorance is not an excuse at least where youve received actual notice(Midland Steel Products)

(1) No need for actual knowledge of the order as long as notice of it is received(2) Its actual notice and not actual knowledge which is relevant

iii) Notice of order must be delivered in some appropriate way as to give parties boundactual notice(1) Publication of an injunctive order in newspapers and the posting thereof on the

employer's vehicles have been held not of themselves sufficient to charge withnotice

J) BOND REQUIREMENTi) Rule 65(c): One who obtains a preliminary injunction or TRO must usually post

security to protect the defendant against loss.

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(1) To guard against loss defendant may incur from refraining from acting in a way hehad a right to act

(2) D must prove that he suffered from erroneous issuance of order and recoversdamages on the bond and bond company recovers from plaintiff

(3) Exception for the U.S. and its officers or agenciesii) Rationale

(1) Assign risk to plaintiff who led court to error

(2) Unjust enrichment of plaintiff(3) Deter frivolous litigation by plaintiffs

iii) Bond limits risk to plaintiff only 4 states allow recovery above the posted bondamount(1) Smith v. Coronodo Foothills

(a) Where TRO issuing court set bond at $10 in an ex parte motion withoutdefendant present, the court found the Association liable for more than cashbond set

(b) If defendant has opportunity to be heard, then standard for amount of bond isreviewed using an abuse of discretion standard.

iv) Increase to bond amount

(1) Continuum v. Incepts(a) Where original bond was $200,000 and court order bond to be increased to

$2MM, appellate court held that the increase would impose a substantialhardship on plaintiff who had annual profits of $2.5MM but that the amountcould satisfy any judgment for damages as a result of wrongful issuance, andinstead kept the bond at $200,000 on the condition that plaintiff waive bondamount as cap

v) Practical tips(1) Plaintiffs should have injunction bond ready before motion and be prepared to

argue about amount of bond(2) Defendants should be prepared to demand a large bond

K) STAYSi) Rule 65(b): On 2 days notice to the party who obtained the TRO without notice or on

such shorter notice as the court may prescribe, the adverse party may appear andmove for its dissolution or modification and in that even, the court shall proceed tohear and determine such motion as expeditiously as the ends of just require(1) If trial court refuses relief, party against whom relief was granted can seek stay

from appellate court.ii) Rule 8: Stay of Injunction Pending Appeal. Motion shall show that application to

the district court for the relief sought is not practicable, or that the district court hasdenied application, or has failed to afford the relief which applicant requested... shallalso show the reasons for the relief requested and the facts relied upon... reasonable

notice of the motion shall be given to all parties.iii) Four factor test (Washington MTA v. Holiday Tours)

(1) Likelihood of success on merits of appeal(2) Irreparable injury if enforcement proceeds pending appeal(3) Harms to other parties(4) Harms to public interest

L) FRAMING THE INJUNCTIONi) Rule: Injunction should put plaintiff in the position he would have occupied if the

wrong had not been committed but only to prevent wrong from being committed andnot to enjoin any other legal conduct

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(1) Identify the wrong(a) Do NOT determine what right would be and then achieve that

(2) Determine how absence of wrong would have affected the situationii) Rule 65(d): shall set forth the reasons for its issuance, shall be specific in terms, shall

describe in reasonable detail, and not by reference to the complaint or otherdocument, the act or acts sought to be restrained.

iii) Jurisdiction

(1) Court of equity has no inherent jurisdiction to resolve a family dispute betweenparents as to the school their child should attend when there is no questionconcerning custody of child incident to separation or divorce of parents (Kilgrowv. Kilgrow)

iv) Specificity Requirement(1) The words within the immediate vicinity were too vague for an injunction

prohibiting picketing near a home (Murray v. Lawson)(a) Alternative wording: in front of; within X feet of; within sight distance of; on

plaintiffs street(2) Without specificity, hard for plaintiff to know when order is violated to seek

contempt; difficult for defendant to know when violating; difficult for police to know

when to interfere(a) Courts rarely conclude that an injunction is so vague as to be invalid and

unenforceable most courts hold injunction was sufficiently precise so thatdefendants knew their conduct was prohibited.

(3) The rights of a wife in her husbands affection are not property rights which can begoverned by injunction

(4) But the more specific an injunction it, the easier it is for defendant to find aloophole to violate

(5) Where court permanently enjoyed defendants from making, baking and sellingchocolate chip cooks which use or utilize plaintiffs formula and defendants addedvanilla to their cookies which plaintiff did not do, court found injunction only

commanded defendants not to produce cookies containing the exact sameingredients in exact same proportions as plaintiff (Peggy Lawton Kitchens v.Hogan)

(6) In injunction implicating the First Amendment, the injunctive relief should be nomore burdensome to the defendants than necessary to provide complete relief tothe plaintiffs whether certain provisions burden no more speech thannecessary to serve a significant government interest (Madsen v. WomensHealth Center)(a) Court upheld provision for 36 ban on public property and noise restrictions but

overturned provisions of which included private property and ban on imagesobservable

M) MODIFICATION OF DECREESi) Permanent Injunctions

(1) Rule 60(b)(5): A permanent injunction may be modified or dissolved upon ashowing of changed circumstances(a) Factual Change- injunction no longer needed to prevent harm(b) Law Change- conduct no longer illegal; continued injunction grants plaintiffs

more relief than legally entitled to receive(i) Agostini v. Felton -Change in establishment law from time of issuance of

injunction entitle petitioner to relief from permanent injunctionii) Consent Decrees

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(4) Stigma suffered by person enjoined label of habitual offenderiii) Repeated violations

(1) If repeated violation of city ordinance constitutes a nuisance, then equity can grantrelief not because it is a crime but because the violations are repeated to theextent that their repetition effects such public rights as to constitute a nuisance(State v. H. Samuels)(a) This is an exception more than the rule; most judges will not say that any crime

is a nuisance which can be enjoinedP) INJUNCTIONS AGAINST LITIGATION

i) State Court Injunctions Against Foreign State Litigation(1) A state court may have the power to enjoin litigation in other states but it is a

discretionary exercise of power(2) Enjoining a party effectively deprives court of ability to decide case, even within its

jurisdictionii) State Court Injunctions Against Federal Litigation

(1) Rule: State courts cannot enjoin federal litigation; if there is federal jurisdiction, thecourt can exercise it though federal court may decline to exercise it (Donovan v.Dallas)

(a) Probably cant enjoin removal of a state action to federal court since that wouldbe enjoining a federal action

iii) Federal Court Injunctions Against State Litigation(1) Federal courts have the power to enjoin state litigation but federalism forbids

federal courts to enjoin absent special circumstances(a) Judicially created exception to enjoin where a person about to be prosecuted in

a state court can show that he will suffer irreparable injury if proceeding in statecourt not enjoined pending potential prosecution but must be a real threat ofprosecution(i) Federal court should not enjoin if the state court prosecution is already

proceeding

(b) The possible unconstitutionality of a statute on its face does not itself justify aninjunction against good-faith attempts to enforce it by prosecutor in state court;injury faced was solely that incidental to every criminal proceeding broughtlawfully and in good faith (Younger v. Harris)(i) Strong arguments for irreparable injury here

1. No real damage action allowed against prosecutor or state because ofimmunity

2. Risk of criminal prosecution and conviction3. Cost of defending both prosecution and contempt proceeding4. Certain constitutional harms which do not result in prosecution

(2) 28 U.S.C. 2283. Anti-Injunction Act

(a) Prohibits writ to stay proceedings in state court unless:(i) Expressly authorized by Act of Congress

1. Where 42 U.S.C. 1983 expressly authorizes a suit in equity to redressthe deprivation under color of state law of Constitutional rights, this wasexpressly authorized because it created a specific and uniquely federalright or remedy, enforceable in a federal court of equity, that could befrustrated if the federal court were not empowered to enjoin a state courtproceeding (Mitchum v. Foster)

(ii) Where necessary in aid of its jurisdiction(iii) To protect or effectuate its judgment

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(3) Enjoining government agencies?(a) Where court issued injunctive order to significantly revise the internal

procedures of the PA police department, court exceeded its discretion andstructural injunction was reversed (Rizzo v. Goode)

(b) Where court set 30 days as the maximum length for isolation in a prison, Courtfound this to be enforceable in light of the fact that prison had not fully compliedwith courts numerous orders (Hutto v. Finney)

(c) Where district court ordered that the State fund salary increases for teachers ofa magnet school, it was beyond remedial authority of court because it was aninterdistrict remedy siphoning money away from other school districts to payfor this school is giving the plaintiffs far beyond what they would have had ifthere had been no segregation (Missouri v. Jenkins)

III) ENFORCEMENT OF EQUITABLE DECREESA) CONTEMPT

i) Forms of Contempt(1) Violation of court order(2) Hindrance of court operations

ii) Problems with Contempt(1) Contempt is powerful three different types of sanctions which may be severe

with limited procedural protections(2) Contempt poorly defined(3) Power urges restraint reserved for cases where it appears necessary

(a) Not every insult will be contempt; must give some latitude where criminaldefendant required to argue his own case (In re Little)

iii) Two Types(1) Must look into purpose to determine type can be monetary or jail(2) Civil

(a) Compensatory remedial to victim for damage from contempt

(i) Measured by position party would be in if court order was obeyed(ii) Parties generally receive injunction + damages

1. Injunction prevents future harm2. Damages cover harm preceding injunction + compensatory contempt for

harm after injunction(iii) Attorney fees incurred in prosecution of contempt recoverable as

long as it is reasonable and based on proof that harm was suffered (TimeShare Systems)1. Exception toAmerican Rule which generally does not award attorneys

fees absent statutory authority or contractual obligation(b) Coercive- designed to encourage obedience; finite termination once contempt

ceases; Key to jail in contemnors pocket(i) Most useful for passive contempt doing nothing is contempt of court and

conduct ceases contempt(ii) Ends once proceeding is over(iii) VT Womens Health Center

1. Court imposed prospective fines of $10,000 per day for first violationand $20,000 per day for future violations was coercive because it wascapable of being avoided by defendants by adhering the courts order

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2. This case was before Bagwelland can be contrasted because it was aprospective fines but if court attempts to assess the fines later, it wouldprobably be criminal contempt.

(iv)Could become criminal in nature if it becomes apparent contempt will notcoerce because then it becomes punitive

(3) Criminal(a) This is to punish past violations through jail or monetary sanction

(b) Requires criminal procedural protections indictment, right to attorney, proofbeyond reasonable doubt, jury trial, mens rea

(c) Yates v. United States(i) If witness is jailed for civil contempt, it is inappropriate to hold witness in jail

for refusal to testify once grand jurys term ends because civil coerciveeffect no longer applicable

(ii) Court may hold witness in criminal contempt and impose a punishment for acontinued refusal to testify past violation

(d) United States v. PATCO(i) $5000 fine imposed for person violating court order against striking was

criminal because it was imposition for past violation subject to criminal

procedure protections(e) United Mine Workers v. Bagwell

(i) Where court levied contempt fines of $64mm against a union for violationsof a labor injunction, S.Ct. found these to be criminal fines

(ii) Not civil coercive contempt because by the time the contempt fine istotaled, key is no longer in violators pocket since acts have alreadyoccurred

iv) Defenses to Contempt(1) Defendants not bound by decree(2) Did not receive notice of its requirements(3) Impossible to comply with decree

B) Procedural Requirements Different Types of Contempti) Direct Contempt

(1) No need for witnesses since it occurs in presence of court sanction must beimposed immediately and not deferred to separate sentencing hearing

(2) Examples(a) Disruptive acts in court

(i) If contempt charged involves disrespect to or criticism of a judge, that judgeis disqualified from presiding at the contempt hearing except with consent ofthe person charged with contempt

(b) Threatening letter from attorney to court clerk(c) Assault on the incorrectly thought to be witness

(d) Letter from father of husband in divorce proceeding to wife and threats to herattorney

(e) Sending an abusive letter to judge(3) Summary contempt(4) Unexcused absence of an attorney is a hybrid of direct and indirect contempt

because offense is committed by not appearing in court but non-excuse occurswhen attorney appears in court to offer explanation that does ( In re Yengo)(a) If explanation is inadequate or frivolous, court can treat as direct contempt(b) If explanation is adequate, court should treat as indirect contempt and refer to

another judge for order to show cause

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ii) Requirement for Jury(1) Rule: The right to a jury applies to criminal contempt proceedings where: (Bloom

v. Illinois)(a) The maximum punishment allowed by statutes is 6 months or more

(i) But where there is no maximum punishment, court uses actual sentenceimposed but then there is the dilemma that a jury trial cannot be demandeduntil you know the sanction

(b) Where the fine is imposed for past acts and for punitive purposes no floorfor fine amount to qualify as criminal contempt

iii) Removal from Courtroom(1) Rule: Confrontation clause not violated where defendant was removed from

courtroom for extremely disruptive behavior; essential to proper administration ofcriminal justice that dignity, order, decorum be observed (Allen v. Illinois)(a) Other options:

(i) Bind and gag but keep present(ii) Cite for contempt(iii) Remove from courtroom until he promises to conduct himself properly

IV) DECLARATORY JUDGMENTSA) Background

i) Definition: To determine rights, obligations or status a decree delineating partiesrights(1) Different from injunction because no need to show irreparable injury

ii) Primary utility is to eliminate uncertaintyiii) Allows a potential defendant to bring suit first

(1) Can think of it as laches defense in reverse because it gives the potentialdefendant a way to avoid potential prejudice from laches

iv) After declaratory judgment, party can get relief based on the judgment under 28U.S.C. 2202 (Damages or injunction)

v) Examples(1) Lot line is here(2) Lien is valid or invalid(3) Patent valid or invalid(4) Insurance policy does or does not cover claim(5) Divorce(6) Quiet title actions

vi) Advantages(1) Forum shopping(2) Better action when you seek to continue relationship with other party

declaration of who is right is less harsh than judgment or injunction

(3) Clarification prior to violation(4) Potential for speedier action less discovery and less fact-specific

B) Case or Controversy Requirementi) Rule: A controversy must be definite and concrete, touching the legal relationship of

parties having adverse legal interests; must be a real and substantial controversy(1) Where plaintiff insurance company asked for declaratory judgment that 4 policies

be declared null and void for lapse of nonpayment and that obligation uponremaining policy consisted of paying the sum of $45 upon death of insured, courtfound a controversy (Aetna v. Haworth)

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(2) Basic question is whether the facts alleged show that there is a substantialcontroversy, between parties having adverse legal interest, of sufficient immediacyand reality to warrant the issuance of declaratory judgment

(3) Certain employees who sued to prevent the Commission from enforcing the HatchAct by declaring it unconstitutional, who had not yet violated the Act, did notpresent a case or controversy (United Public Workers v. Mitchell)(a) Power of courts to determine constitutionality of Acts arises only when the

interests of litigants require use of judicial authority to protect against actualinterference.

(b) Only person who presented a case or controversy was one who had violatedthe Act and was fired as a result

(4) Where threatened action by government is concerned, courts do not require aplaintiff to expose himself to liability before bringing suit to challenge the basis forthe threat--for example, the constitutionality of a law threatened to be enforced.

(5) In a patent declaratory judgment for validity of the patent, a licensee presented alive case or controversy even though he had not breached the contract andrefused to pay royalties, provided that you indicate intention to breach and thatthere is some threat extended to you that leads you to believe you will face

negative consequences for doing so (MedImmune v. Genentech)C) Jurisdiction

i) Rule: Actions for declaratory judgments must satisfy the same requirements fordiversity or federal question jurisdiction; a federal question must be on the face of awell-pleaded complaint and cannot merely be anticipated as a defense(1) Simply because someone may raise a federal law as a defense somewhere down

the line is not sufficient for federal jurisdiction where there is no diversityD) Adequacy of Remedy

i) Rule: No explicit requirement that legal remedy be inadequate in 28 U.S.C. 2202but courts exercise discretion in denying relief if convinced it would be less effectivethan another method or is unnecessary

ii) Exercise of Discretion(1) Creative Non-Violence v. Hess

(a) Plaintiffs sought a declaratory judgment that the judges requirement thatpeople rise when a judge enters or exits a courtroom was unconstitutional

(b) While there was still a case or controversy because there was past conduct ofjudges imposing sanctions for not rising, court declines to proceed on theaction where judges indicated that as long as they were informed in advancethat the person was not rising for religious reasons, court declined to hear theaction because the likelihood of recurrent confrontations is to small to warrant adecision

(c) Three factor test used:

(i) Bona fide intent to discontinue actions(ii) Effectiveness of discontinuance- structural changes making it less likely to

repeat actions(iii) Character of past violations intentional v. innocent mistake

(2) Provident Bank v. Patterson(a) Federal court should not have denied relief in diversity action brought for

declaratory judgment that insured's automobile was being operated by driverwithin scope of permission granted to him by insured on ground thatcontemporaneous state tort actions raised mooted question as to coverage ofpolicy where the state and federal actions did not involve identical parties and

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same issues in that, inter alia, state suits raised agency question while federalsuit dealt with whether driver had permission thus bringing his own liabilitywithin coverage of policy.

(3) Katzenbach v. McClung(a) In cases where the state criminal prosecution was begun prior to the federal

suit, the same equitable principles relevant to the propriety of an injunctionmust be taken in deciding whether to issue declaratory judgments

(b) Since Civil Rights Act provides statutory proceeding for determination of rightsand duties arising thereunder, courts should ordinarily refrain from exercising

jurisdiction to grant declaratory relief in cases involving rights and dutiesthereunder.

(4) Wilton v. Seven Falls(a) In declaratory judgment context, normal principle that federal courts should

adjudicate claims within their jurisdiction yields to considerations of practicalityand wise judicial administration(i) Federal action may abstain to state action even if federal action was filed

first(5) National Wildlife Federation v. United States

(a) Sometimes the great public importance of an issue militates in favor of itsprompt resolution by means of mandamus or declaratory relief, but at othertimes public interest dictates that courts exercise restraint in passing uponcrucial issues.

(b) Judicial restraint precluded issuance of mandamus and declaratory reliefagainst alleged failure of the President of the United States and the Director ofthe Office of Management and Budget to comply with the requirements of theForest and Rangeland Renewable Resources Planning Act of 1974 inpreparing the proposed fiscal budget for 1979 because (1) as such remedieswould require intervention in the wrangling of the federal budget and budgetprocedures, matters which were the archetype of those best resolved through

bargaining and accommodation between the legislative and executivebranches, and (2) discretionary relief would intrude on the responsibilities,including the shared responsibilities, of the coordinate branches. Forest andRangeland Renewable Resources Planning Act of 1974, 8(b) as amended

E) Intellectual Property Contexti) Significant remedy for owners or potential infringers without it, patent holders may

exercise undue market leverageii) A case or controversy exists even if alleged infringers did not receive direct noticeiii) Importance of declaratory judgments to prevent coercive use of patents

V) RESTITUTION

A) Rule: A person who has been unjustly enriched at the expense of another is required tomake restitution to the otheri) No need to prove inadequate legal remedy unlike equitable actions for injunction

can seek this or damagesB) Contract setting

i) Restitution as remedy for breachii) Restitution following recissioniii) Seeks to put defendant in the position defendant would have occupied if promise had

not been made

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(1) Applies even if defendant is justified in refusing to performC) Elements of Unjust Enrichment

i) Benefit to defendant from plaintiffii) Unjust for defendant to keep benefit without compensating plaintiff

(1) No need for actual contract between the parties(a) Where through a reasonable mistake, one builds house on anothers land,

landowner electing to keep the house must pay for it even though on contract

between landowner and builder (Beacon Homes v. Holt)(2) Injustice does not lie in how benefit was acquired(3) Simply the absence of a just reason to keep benefit without paying for it(4) Just to keep:

(a) Gifts(i) Donative intent(ii) Delivery(iii)Acceptance

(b) Benefits bestowed by volunteers(i) Officious intermeddlers

1. Voluntary interference (ex. person who plants crops on land while

bankruptcy eviction proceedings pending)2. Note: If you have a duty to do something, then you are not a volunteer

(ii) Bypasses opportunity to negotiates providing benefit without askingwhether wanted

(c) Fruits of a valid contractD) Types

i) Preservation of anothers things(1) Rest Restitution 117. Entitled to restitution a person preserves things from

damage or destruction if services were necessary before person could reasonablycommunicate with owner; had no reason to believe owner did not want him to act;preserver had no donative intent; owner accepts things.

ii) K sale of diamond at flea market(1) Unjustness depends on whether K is valid if invalid, unjust to retain diamond

iii) Benefits resulting from fraud(1) Stewart v. Wright

(a) Where victim of fraud sued for restitution, even though he was a participant inthe fraud, court granted restitution to victim because victim was part of anunsuccessful scheme to defraud while defendants were part of a successfulone

(b) In pari delicto defense did not apply because plaintiff was not equally wrong asdefendant

iv) Repairs to property

(1) Western Coach v. Roscoe(a) Where creditor repaired a trailer home and then sought restitution from original

borrower for cost of repair and paid back taxes, borrower was unjustly enrichedbecause creditor was not a donor or volunteer because creditor had interest inrepairing to protect its own interests

E) MEASURE OF ENRICHMENTi) Rule: Put defendant (person receiving benefit) in the position she would have

occupied had benefit not been bestowed(1) Note: Plaintiff should sue for damages and not restitution when the Plaintiffs loss

is greater than benefit to defendant

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ii) Two Methods(1) FMV of services provided(2) Amount of increase in defendants wealth

(a) Comparing costs is NOT a proper measure(b) Where plaintiff made repairs to a stolen car, owner of stolen car who received

car back with repairs was ordered to pay restitution in the amount of thedifference between the value before and after the plaintiff worked on the car,

regardless of the value when stolen (Iacomini v. Liberty Mutual)iii) Conduct of plaintiff considered

(1) Bron v. Weintrab(a) Where plaintiffs here acquired title to property in an unethical manner, court

inclined to give smallest compensation required and does not give the benefitof the full value of the land but simply the cost of what it would cost thedefendants to get the right from someone else

F) SPECIAL TYPES OF RESTITUTIONARY REMEDIESi) Constructive Trust

(1) Definition:(a) Created by law as a remedy to unjust enrichment trustee (defendant) holds

property for benefit of plaintiff(i) Different from a resulting trust which is a trust created with intent even

though procedural defect prevented proper formation(ii) Action in equity by holder of equitable title which means the court first

declares you the beneficiary and then you receive the body of the trust Wrongdoer may hold legal title but doesnt own property because he isholding title for beneficiarys benefit1. Different from replevin and ejectmentbecause both those actions must

be instituted by the holder of legal title(2) Requirements

(a) Defendant engages in unconscionable conduct, duress, abuse of trust

(i) Where defendant did not engage in any unconscionable conduct in theplaintiff quitting his job and moving closer to defendant and defendantrefused to convey property which had been orally promised, there was nogrounds for a constructive trust (Fletcher v. Nemitz)

(b) Obtains property or benefit holds legal title(c) Remedy at law is inadequate

(3) Advantages of remedy(a) Subjective value > legal remedy unique items(b) Property value may exceed damages claim(c) Better remedy when defendant is insolvent

(i) Constructive trust removes property from defendants estate so creditors

cant take it(d) When property has been transformed trust allows tracing

(i) Plaintiff can receive proceeds of sale or items bought with proceeds(ii) Allows recovery of property from buyer if buyer is not a bona fide purchaser

for value(4) Disadvantages of remedy

(a) May produce overcompensation(b) May harm creditors

(5) Limited remedy:(a) Requires conscious wrongdoing

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(i) Fraud or theft(b) Identifiable property

(i) Not just any of defendants property but rather plaintiffs equitable propertyii) Equitable Lien

(1) Definition(a) Useful when there is no claim of ownership(b) Proper remedy where part of the property or part of the fund belong in good

conscience to the defendant or to someone other than plaintiff(c) Security interest in the sense that plaintiff benefited the property so plaintiff can

foreclose on property to collect debt(d) Never exceeds compensation amount of lien fixed by amount owed to

plaintiff(i) In a rising property market, person would prefer constructive trust than

equitable lien since dollar amount fixed in lien(e) Limited priority secured claim so equal in priority to other secured creditors

(constructive trust always has first priority)(2) Applicable to:

(a) Good against all persons who acquired an interest with knowledgeor notice of

plaintiffs equitable lien, but not against anyone who acquired an interestwithout such knowledge or notice (Leyden v. Citicorp)(i) Can be actual or constructive notice (facts which would lead a reasonably

intelligent person to inquire)(b) Where one party has paid another partys liabilities or debts upon certain

identifiable property (Rolfe v. Varley)(3) Neither equitable lien or constructive trust available against a bona fide purchaser

for valueiii) Tracing

(1) Allowed in both the constructive trust and equitable lien(2) A constructive trust may be imposed on proceeds of life insurance policies where

a portion of the premiums were paid with wrongfully obtained funds in a pro ratashare- (percentage of wrongfully obtained funds + legally obtained funds) / totalamounts paid (G&M Motor Co. v. Thompson)

(3) Methods of tracing commingled amounts:(a) Presumption that wrongdoer spends his own money first and whatever money

is left is the plaintiffs(b) Apply the lowest intermediate balance rule- amount limited to lowest

intermediate balance, even if there were later additions

VI) DAMAGE REMEDIESA) Rule: Seek to put party in the position she would have occupied if wrong had not been

committedi) Contract: Put plaintiff in position she would be in if promise had been performedii) Property: Damages for inability to convey good title for costs incurred by buyer as a

result of the dealB) Basic Measure of Damages

i) Rule: How much money would be needed to repair or replace the thing injuredii) American Rule(Basiliko v. Pargo Corp.)

(1) Benefit of the bargain= FMV of property at time it should have been conveyed contract price

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(a) Some jurisdictions reject damages of lost profit of anticipated resale of propertythough the general rule is incidental and consequential damages can berecovered(i) UCC 2-713 for goods- damages is the difference between the market

price at the time when buyer learned of breach and the contract pricetogether with any incidentaland consequentialdamages, but less expensessaved as a result of sellers breach

(b) Must subtract contract price because buyer no longer need pay contract price;sellers breach excuses buyers performance

(2) Can also think of this as the expectation interest = position if promise performed(a) The wrong here is the breach of contract

(3) Almost always used for real estate instead of difference between cover price andK price because of uniqueness of real estate

(4) Fair market value(a) The price that an owner willing but not compelled to sell ought to receive from

one willing but not compelled to buy.(b) A resale contract can provide evidence of FMV on which to base an award of

damages for breach of initial sales contract

(c) Court sometimes uses cover price in determining FMViii) British Rule

(1) Return of the deposit plus interest and expenses incurred after contract is made very narrow rule for property

(2) Can think of this as reliance interest = position if promise had never been made(a) The wrong here is the making of the contract

iv) Cost of Repair v. Diminution in Value(1) Both of these fall under expectation interest both seek to put plaintiff in position

she would have occupied but for the wrong(2) Cost of Repair

(a) Cost to remedy the wrong

(b) Generally used when damage is considered temporary(i) Repairs < Value Before Injury(ii) Repairs < Value after repair(iii)Repairs < Value added by repair

(c) If repairs are unreasonable, defendant is generally not liable for cost of repair exception: when theres a environmental statute mandating the repair

(d) Preference for awarding cost of repairs but courts will not award it if repairs aredisproportionate to value of property or diminution of value in property(i) Note: But remember, value is the value to the plaintiff so watch out for

items with large subjective values(3) Diminution in value

(a) Difference in FMV of the property before and after the injury(b) Applies when damage to property is considered permanent

(i) Permanent damage = generally is when the cost to remedy is greater thanthe value after repairs

(c) Courts may impose this on top of cost of repair if repairs dont properly restoreproperty to value to plaintiff before injury

v) Measures of Value (OBrien Bros v. Helen B Moran) pg 469(1) Market value

(a) Timing affects price used

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(i) Normal rule is to use date of injury- Indiana approach; avoids manipulationby plaintiff

(ii) Where typical practice of farmer was to harvest crop first and delay inselling crops until spring, court allowed spring price for calculation ofdamages where evidence showed it was common practice and not done toenhance damages (Semenza v. Brown) pg 473

(b) Must subtract savings as a result of breach

(c) Type of Market(i) Wholesale v. retail

1. Where company had a truck stolen and company paid wholesale pricefor truck, court nonetheless awarded retail market price as damagesbecause there was no evidence that company could purchasewholesale unless buying in bulk and not just one truck (United Truck v.Kleenco.) pg 476

(ii) Rental v. purchase(iii)Geographic: local v. regional

(2) Replacement cost less depreciation = cost to cover(3) Capitalization of earnings- based on how much income will be earned over time

(a) This is similar to ensuing loss similar to lost profits which are consequentialbut using them to calculate value of property makes them direct damages

(b) Formula(i) Income x Discount (1/1+ expected rate of return^year)= 1 years present

value(ii) Then add up all the years of expected useful life to arrive at value(iii) Ex.) $15,000 expected income, expected rate of return of 6%; 10 years

useful life1. Year 1: $15,000 x (1/1.06) = Prevent Value of Year 1 of earnings2. Year 2: $15,000 x (1/1.062) = Prevent value of Year 2 of earnings

vi) Losses beyond Value

(1) Consequential damages(a) Rule: allows recovery for not just the thing you would have had had injury not

occurred but also the way you would have used it to create value(b) Lost profits

(i) Measured by the amount of profit that a plaintiff could prove would havebeen generated had the plaintiff not been deprived of use of the property,less the amount of profit actually generated during deprivation (UnitedTruck v. Kleenco) pg 476

(ii) Requirements1. Seller had reason to know at time of contracting that if K was breached,

buyer would be deprived of profits foreseeability

2. Lost profits are reasonably ascertainable3. Lost profits could not have been reasonably prevented

(c) Loss of Use (tort terminology)(i) Fukida v. Hawaii Servicepg 482

1. Loss of use damages are available fordamagedproperty and is NOTlimited to the amount of the property value, even where plaintiff did notactually rent a replacement vehiclea. Plaintiff still lost convenience and time for not having his car, even if

he didnt rent replacement

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b. According to United Truck v. Kleenco, these are available fordestroyedproperty also.

2. Limited to period of time reasonably necessary to obtain replacement, toeffect repairs or to recover possession of the property replacementmust be reasonable

(ii) Three measurements1. Rental value or the amount that could have been realized by renting out

the property- must be gross profits so saved overheard must bededucted (storage, insurance)

2. Reasonable cost of renting a substitute (normally should only be usedwhere a substitute is actually rented)

3. Ordinary profits that could have been made from use of the property normally only used when rental substitute unavailable or type of propertydamaged not the type normally rented

(d) Incidental losses(i) Cost of making substitute arrangements

1. Where fertilizer maker was forced to dip into his ammonia stockpile tomake up for reduced ammonia output as a result of a malfunctioning

machine, plaintiff could recover for amount in diminished stockpile whichis measured either by cost to replenish stockpile or if not replenished,market price (Mississippi Chemical v. Dresser-Rand) pg 491

(ii) UCC 2-710. Incidental damages to an aggrieved seller include anycommercially reasonable charges, expenses or commissions incurred instopping delivery, in the transportation, care and custody of goods after thebuyer's breach, in connection with return or resale of the goods orotherwise resulting from the breach.

(iii) UCC 2-715. Incidental damages resulting from the seller's breachinclude expenses reasonably incurred in inspection, receipt, transportationand care and custody of goods rightfully rejected, any commercially

reasonable charges, expenses or commissions in connection with effectingcover and any other reasonable expense incident to the delay or otherbreach.

(2) Prejudgment Interest(a) This constitutes damages for loss of use of money plaintiffs deprived of

money they should have received needed to borrow some aond interest is therental fee on money

(b) Available even if the plaintiff did not borrow money similar to loss of use fordeprived property

(c) Semenza v. Brown(i) Montana interest statute (discretionary award) states that interest accrues

30 days from demand letter1. Penalty for failure to settle or litigation delay2. Penalty for misconduct lets jury augment damage with interest, at

their discretion3. Consequential damages for nonpayment

a. Direct loss: pay the money of money owedb. Ensuing loss: plaintiff could have used the money but this creates

a proof problemi. Hindsight permits selection of great investmentii. Credibility issue

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iii. Certainty issue of whether plaintiff would really have invested in acertain way

(d) Limitations of prejudgment interest(i) Applies only to liquidated amounts- an ascertainable amount of money(ii) Simple interest rather than compound interest(iii) Some courts treat as general damages rather than consequential damages

and court performs calculation rather than jury

C) LIMITS OF MARKET MEASURESi) Market measures are less valuable in some settings:

(1) Subjective value for personal items(2) Fantastic claims(3) Pain, Suffering and Indignity which are non-market items

ii) Subjective Value(1) Strict Hierarchy of different measurements - WA law (Mieske v. Bartell Drug Co.)

499 subjective views of worth.(a) Market value if available;(b) If destroyed property has no market value, then replacement value(c) If destroyed property has no market value and cannot be replaced or

reproduced, then value to the owner(i) Note: Damages are not recoverable for sentimental value placed on

property by owner1. But realize that there is a strong argument that value to owner is all

sentimental value(ii) Subjective value may overlap distress because price must overcome the

loss of property but no recovery for emotional distress unless it wasintentional infliction

(2) In some cases, may want to start further down the list even if there is a marketvalue or replacement value(a) Certain personal items have more intrinsic value to owner than market value or

replacement cost may be able to compensate for(3) FMV of personal items such as home movies impossible to determine because no

overlap between what a buyer would pay and what a seller would sell at = nomarket transaction from which to determine FMV(a) Buyers willing to buy tapes at very low price(b) Sellers only willing to sell at high price

(4) Value to Owner ?(a) Utility value(b) Cost of replacement, original cost, cost to reproduce (Comment e to Rest 2d

Tort 911 value of item to owner) but not including sentimental or fancifulvalue

(c) Owners reserve price = lowest amount owner would accept for goods(d) Hypothetical transaction: Market price IF someone valued goods more than

Plaintiff(e) Note: The only real evidence comes from plaintiffs testimony

(i) Credibility issues(ii) Potential exaggeration worth since no market limit

(5) State of Ohio v. United States DOI pg 507(a) A regulation limiting damages recoverable to the lesser of either the cost of

restoring or replacing the equivalent of an injured resource OR the lost usevalue was directly against Congress intent

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(i) Loss of use value does not give injured party value of lost things(ii) A rule such as the one above would give no preference for restoration since

it could cost more than loss of use(6) Non-existent goods

(a) Chatlos v. National Cash Registerpg 516(i) For a non-existent good, plaintiffs were entitled to the value warranted

minus the value delivered because the machine was kept

(ii) Case stands for potentially high damage award if only plaintiffs put in experton damage calculation and defendants dont put in any evidence ofpotential damages

(7) Benefit of the bargain(a) Similar to expectation interest in that it seeks to put person in position they

would be in if wrong had not been committed(b) Used commonly in situations of fraud and misrepresentations (Liberty

National v. Sanders) pg 520(i) Measure of damages is the benefit of the bargain which is what the K

promises if warranties or representations had been true(c) This rule treats torts and contracts the same fraud and innocent breach of K

are treated equally(d) Makes it irrelevant whether words spoke were a promise or misrepresentation

iii) Pain, Suffering, Distress(1) Pain Damages Essential:

(a) Tort damages act as incentive to take precautions against commission(b) Forces harms to be internalized by defendant(c) Omit pain damages and too little incentive to prevent injuries

(i) But exaggerating pain is too much incentive to prevent injuries1. Leads to higher transaction costs and higher costs to consumers in

potential increased harm(d) Allowed where distress accompanies a physical injury or an insult to individual

dignity but not recoverable when distress accompanies lost property(i) Note: Some courts may make an exception for willful or intentional torts

(2) Limitations(a) Cannot be so high that it shocks the conscience or monstrously excessive

that it necessarily implies that the verdict must have been result of passion andprejudice(i) Appellate review is limited and deferential to trial judge or jury(ii) Trial judge has more latitude to overturn verdict if it is against the great

weight of the evidence(b) Must be some rational connection between evidence on damages and verdict(c) Defendant not required to pay foridealrequirements but ratherreasonable

requirements of care (Sharman v. Evans) pg 528(d) Generally courts do not grant loss of joy as a separate award but include it

into the pain & suffering calculus no double counting(e) Some cognitive awareness is necessary for loss of enjoyment of life

(McDougald v. Garber) pg 540(3) Contract setting

(a) Generally not allowed unless there is some kind of physical injury or seriousdistress particularly like to result from this kind of breach of K(i) Coffins falling apart(ii) Vacations ruined by agents breach

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(iii) When breach of K is willful and wanton provided distress wasreasonably foreseeable at time

(b) Existence of a contract claim does not affect available of distress for tort arisingfrom transaction

(c) Minority view(i) Allows emotional distress in K cases involving transaction between vendees

and builder-vendors but only in the sale of a completed house (Kishmarton

v. William Bailey)iv) Indignity and Intangible Losses

(1) Golden Rule argument generally not allowed argument to jury to imagine itself inplaintiffs position impermissible because it encourages jury to depart from itsneutral role

(2) Joan W. v. City of Chicago(a) Court awarded compensatory damages where plaintiff was strip searched for a

traffic violation(b) Court uses other verdicts in similar actions to determine whether this plaintiffs

award was monstrously excessive and finds it was significantly higher thanother cases

(3) Memphis Community v. Stachura(a) A deprivation of a right may cause distress but generally speaking, that

deprivation has no separate and independent value = plaintiff cannot receiveadditional compensatory damages for constitutional violation

(b) No independent recovery for the loss of a right aside from the right to vote(c) Implication: may be okay to value rights as long as it is not abstractly; must be

a particular injury to the particular plaintiffv) Wrongful Death

(1) Plaintiff shift: Plaintiff is the family members = claim by heirs(2) Rule: Put plaintiff in position she would be in if wrong not committed

compensate for familys losses caused by death

(3) Includes:(a) Burial expenses(b) Loss of financial support (generous computation)

(i) Income Purely personal savings1. Federal courts use net pay after taxes2. State courts tend to vary between net and gross pay3. Jury Miscalculation Issue

a. Juries may adjust damages upwards to adjust for taxes but awardsare not taxable so risk of overcompensation

b. Federal courts instruct juries while state courts vary(ii) Maybe subtract savings as well since family still inherits those

(iii) Not pro rata: entire rent, all utilities, all food(c) Loss of services

(i) Deceased helped with family duties which now family must go out intomarket and replace those services

(ii) Provides compensation for death of person without wages(d) Loss of companionship (Minority view)

(i) Most states dont include this(ii) Applies only to children and elderly rationale is to recognize that there is

value to family contributionvi) Survival Action

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(1) Rule: Allows tort actions to continue despite death of the plaintiff(a) Estate continues to prosecute claims(b) Proceeds paid to estate which is different from wrongful death actions where

the proceeds are paid to the family(2) Useful for torts unrelated to death

(a) Defamation: losses are real despite death of plaintiff(b) Incapacitating injury: loss of support caused by tortfeasor and not by

subsequent death(3) Increase recovery

(a) Grants property damage: i.e. person killed in car crash and car is alsodamaged

(b) Interim losses income(c) Pain & suffering if plaintiff survived long enough to experience this, then

increases recoveryvii)Loss of Consortium

(1) Rule: Put plaintiff in position she would have occupied absent wrong; spouseslosses caused by injury

(2) Claim by a spouse for 3 Ss: services, support (emotional), sexual relations

(a) Does not include financial support because victim can receive damages by lostearnings suit or increased medical costs income still available to supportspouse

(3) Only applies to married couples although domestic partner statutes may changethis

(4) Childs claim for loss of parents consortium quite rare(5) Parents claim for loss of childs consortium nearly nonexistent(6) Usually limited to most severe injuries because of incentives to exaggerate

D) LIMITATIONS ON RECOVERYi) Causation

(1) Rule: Any loss that would have resulted had defendant not committed the wrongcannot be recovered(2) McKennon v. Nashville Banner

(a) Where an employee is discharged in violation of the ADEA and the employerlater discovers some wrongful conduct that would have led to discharge if it hadbeen discovered earlier, some recovery is appropriate starting from a calculationof backpay from the date of the unlawful discharge to the date the new informationwas discovered(b) Key question is not what caused discharge but what caused the harm harmwas caused by violation of ADEA

ii) Certainty

(1) Rule: Damages are not recoverable for loss beyond an amount that evidencepermits to be established with reasonable certainty (Schonfeld v. Hillard)

(a) Maximum cap on damages but not rejection of damages(b) Even if damages not reasonably certain, can still make an argument forreliance interest where the person would be if the promise had not been made(c) Applies to each element of damages calculation: i.e.) lost profits and lostassets separately(d) Where a business is a new business, lost profits must be established withreasonable certainty for recovery

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(i) But note that lost assets of the business may be able to be established withreasonable certainty how much someone would have paid for the right topurchase this asset from you

(2) Wrongdoer Exception(a) When the existence of damage is certain, and the only uncertainty is as to theamount which was caused by the defendants breach, the burden of uncertainty asto amount of damage is shifted to the defendant

(3) Two ways to state doctrine(a) Requires both existence and amount of damages

(i) If wrongdoers breach causes amount to be uncertain, then wrongdoerexception allows jury room to estimate amount

(b) Requires existence of loss to be reasonably certain(i) If existence reasonably certain, jury can estimate amount of loss

iii) Foreseeability(1) Rule: Losses as a result of the breach are only recoverable for those that thedefendant had reason to foresee at the time of formation

(a) Arise in the natural course of events(b) Party gave notice of their likelihood before K was formed

(c) Involves the magnitude of the loss and not just the type of loss(2) The more uncertain something is (i.e. lost profits), the harder it is to foresee(3) Some courts couch foreseeability in terms of what must be foreseeable is theactual lost profit damages from liability although the general rule is that only sometype of loss must be foreseeable

iv) Economic Loss Doctrine(1) Rule: Damages for purely economic losses are not recoverable in tort actions inthe absence of physical injury (personal injury or property damage)(2) Courts apply a foreseeability test in limiting consequential damages

(a) Louisiana ex rel Guste- this case actually allows for fishermen to recover froma chemical spill to a river even though they suffered no physical injury and other

cases make similar exceptions to the rule(b) Common Exceptions: (more of recharacterization of duty owed rather thanactual exceptions to rule)

(i) Consortium and wrongful death(ii) Fraud(iii) Libel(iv)Attorney Malpractice(v) Intentional Infliction of Emotional Distress(vi)Interference with contract(vii) Bad faith breach of insurance contract

(3) Rationale:

(a) Limit on effectiveness of deterrence of damages because defendants cant beexpected to take precautions against every injury

(i) Also, if cost of taking precautions > benefit, defendant may stop engaging inthe business (public policy argument)

(b) First party insurance is cheaper liability insurance available.(4) Functions of Rule:

(a) Limits recovery by remote victims(b) Differentiates contract from tort claims

(i) Contract terms govern when the only damage is to the property itself

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(ii) Tort rules govern for other claims when there is more injury other than theproperty itself and this rule limits the amount of damages recoverable on tortclaim

(5) Rule is almost redundant because you can reach the same results applyingforeseeability and certainty(6) Used to limit damages recovery so that not every person injured by some actioncan recover

(a) Reduces the amount of loss the defendant must internalize even thoughdefendant caused loss and the loss was certain and foreseeable

v) Benefits Rule(1) Rule (Rest Torts): Where defendants tortious conduct has caused harm toplaintiff or his property and in doing so has conferred upon the plaintiff a specialbenefit to the interest which was harmed, the value of the benefit mitigates amount ofdamages, where equitable

(a) Only the net harm will be awarded as damages limit is to prevent plaintifffrom being in a better position than would have occupied but for the wrong(b) This is a tort rule although the same rule applies in contracts but it is built intothe damage calculation for contracts

(i) You only recover anything in excess of the contract price - resale price.1. Ex.) If buyer of car breaches before performance commences, sellercould recover K price of car minus the value of the car

a. Keeping or reselling car is a benefit of breach and you dont get torecover damages for that benefit amount

(2) Requirements(a) Special benefit= must be identifiable(b) Must be caused by the defendant(c) Must be to the interest injured(d) If equitable

(3) Troppi v. Scarf

(a) Benefits of unplanned child may be weighed against all elements of damageclaimed by plaintiffs who had unwanted child as result of pharmacist's negligentlysupplying tranquilizer rather than birth control pill called for by prescription, butapplication of benefit rule did not prevent recovery for expenses of rearingunwanted child.

(i) Case by case analysis for amount of benefits conferred depending onunique factual circumstances of couples

1. Family size2. Family income3. Age of parents4. Marital status

(b) Majority of jurisdictions deny recovery for the cost of raising a healthy childalthough that does not prevent recovery of other costs of pregnancy such asmedical costs and pain during pregnancy

vi) Collateral Source Rule(1) Rule: Benefits received from third parties other than the defendant cannot be usedto offset the damages the defendant owes

(a) Somewhat of a limitation on the benefits rule(b) Defendants not entitled to mitigation of damages for those benefits thatplaintiffs would have received even without defendants wrong

(2) Rationale

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(a) Encourage parties to buy insurance(b) Wrongdoer should be made to pay to deter wrongful conduct, regardless ofwhether plaintiff has other source of compensation

(3) No offset of damages where plaintiff receives benefits from insurance, pension,continued wages, or disability payments, which are all benefits for which the plaintiffhas actually or constructively paid for benefits(4) Issue of double recovery?

(a) No double recovery because insurance policies generally provide forsubrogation or refund of benefits on a tort recovery

vii)Avoidable Consequences Doctrine(1) Rule: When a plaintiff, by reasonable conduct, could have reduced the size of theloss, court refuses to compel defendants to pay for those additional losses.

(a) Example: When a company kept building a bridge even after the countyrepudiated the contract, the additional expenses incurredthose that could havebeen avoided by halting construction)were subtracted from the contract price incalculating damages(b) Similar to incidental damages rule where plaintiff can only recover forreasonable costs incurred to minimize the loss

(c) Rest 2d Torts 918 - limits avoidable consequences to reasonable effort orexpenditure afterthe commission of the tort

(i) Courts are reluctant to apply this doctrine to situations where failure to weara seat belt increases amount of damages

(2) S.J. Groves v. Warner(a) No duty to mitigate damages by contracting for supplemental supply ofconcrete when it was clear that concrete supplier would not perform satisfactorilywhere both plaintiff and defendant have had an equal opportunity to reduce breachof contract damages by the same act(b) Equally reasonable to expect defendant to minimize damages and sodefendant cannot assert duty to mitigate damages as a way to reduce damages

(i) In a way, applicable in every situation so the better rule is that because theplaintiff acted reasonably in its choice to continue with existing arrangements,court prevented defendant from asserting plaintiffs duty to mitigate by sameactions available to defendant

(3) Parker v. Twentieth Century Fox(a) Substitute employment must be comparable, or substantially similar to thatwhich the employee has been deprived. Employees rejection or failure to seekother available employment of a different or inferior kind cannot be used tomitigate damages

(i) No need to look for job in neighboring town can stick to current locationand reasonable commuting distance

(ii) No need to look for a job in a different field(iii) No need to take an offer from same breaching employer

viii)Public Policy

(1) Method of Analysis(a) Identify the public policy(b) Establish policy as that of the state

(i) Recognizable authority: 1) statutory; 2) judicial precedent (note that newlyestablished policies tend to be weaker)

(c) Establish policys implication

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(2) Method of use(a) Policy arguments help interpret and apply doctrines(b) Policy arguments pose objections to doctrines and favor limitations on doctrinalresult

(3) Troppi v. Scarf(a) Public policy of state supporting contraception favors a tort scheme whichencourages pharmacists to exercise great care in filling prescriptions

(b) Implication of not allow negligence claim for wrongful birth would mean thatdamages for negligent contraception would equal $0- seems like an undesirableresult(c) Note: Other courts may reject claims because public policy may not favortreating a healthy child as a loss.

(i) Taylor v. Kurapati- difficult to say what the public policy here was exceptthat maybe it was against public policy to award damages for birth of child

(4) Brunswick v. Pueblo-Bowl(a) Court refused to allow plaintiff to recover damages where plaintiffs damagesstemmed from too much competition and anti-trust statute was designed fostercompetition

E) AGREED REMEDIESi) Liquidated Damages

(1) Permits parties to agree on the amount of damages or the method of computingdamages(2) UCC 2-718. Damages for breach by either party may be liquidated in theagreement but only at an amount which is reasonable in the light of the anticipated oractual harm caused by the breach, the difficulties of proof of loss, and theinconvenience or nonfeasibility of otherwise obtaining an adequate remedy. A termfixing unreasonably large liquidated damages is void as a penalty.

(a) No need to prove actual damages are greater than liquidated amount(i) Red Sage v. Despa

1. A lease provision providing for a 50% abatement of rent for breach of anexclusive use covenant, negotiated by sophisticated parties, was not anunreasonable estimate of the damages likely to result from breach of thecovenant. Damages could have been much larger or smaller so amountabatement was reasonable.

(b) The requirement of adequate remedy is not mentioned in the Rest. Contractsand only in the UCC

(3) Rationale:(a) May increase recovery

(i) Overcomes difficulties with certainty and foreseeability(ii) May add certain damages: attorney fees, emotional loss, subjective value,

maybe even avoidable loss(b) Simplifies litigation

(i) Reduce cost of proving loss(ii) Increase likelihood of settlement since only issue may be liability and notamount of damages(iii) Improve decisions about breach since cost of breach known beforehand

(4) Reasonableness of provision(a) Unreasonbly large amount = penalty = unenforceable(b) Role of parties intent

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(i) If unreasonable in light of anticipated damages, then court presumesparties intended provision to be penalty but if reasonable, court presumesparties intended liquidated damages(ii) But note that even if the anticipated losses were small and liquidateddamages provision provided for a large amount, and damage actually

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