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Introduction to Remedies:
• Purpose of Remedies
o Redress the wrong by creating the situation that would have existed had the wrong not occurred.
“restoring the П to the position he would have occupied had the wrong not occurred.”
• Different Types of Remedies:
o 1. Legal vs. Equitable
o 2. Specific vs. Substitutional
specific – gives the П exactly what she would have if the legal wrong had not been
committed.
• i.e. specific performance.
substitutional – instead of actual performance of a K, receiving a dollar value.
o 3. Damages
this is the recovery of monetary compensation for loss caused by the legal wrong of another.
o 4. Injunctions
a form of equitable relief whereby a ∆ is ordered to do something (mandatory) or refrain from
doing something (prohibitory/negative).
• Preventative – prevent a П’s legitimate legal position from being altered by the ∆/
• Reparative – restore П to the position he would have occupied but for the ∆’s
wrongful conduct
o 5. Restitution
remedy that will put the ∆ in the prosition he would have been in, had he not committed
the legal wrong.
designed to force the ∆ to disgorge a benefit when retention of that benefit would constitute
unjust enrichment.
• Can exist in law (quasi-K) or in equity (subrogation)
o 6. Declaratory Relief
provides a judicial statement of the parties’ rightful legal position with respect to a particular
matter.
• Full effect of the remedy lies in its educative value and the further remedy of a
follow up action to enforce the rights.
o 7. Punitive
to punish
o 8. Nominal
remedy for violations of legal rights which cause no measurable actual loss.
• 2 types:
o 1. traditional – no actual injury suffered.
o 2. injury cannot be measured or quanitified.
o 9. Presumed
allowance of compensatory damages without evidence of actual oss.
• Compensatory Damages:
o Purpose: to provide a substitutionary monetary remedy at law awarded by a jury for the purpose of
compensating П for the loss sustained.
o Elements:
1. Expectancy Interest (benefit of the bargain)
• puts the non-breaching party in position he would have been in if K was performed.
2. Reliance Interest (out of pocket expenses)
• seeks to undo the loss or detriment by giving the П a sum of money equal to the loss
or detriment sustained.
3. Restitutionary Interest
o Blended Rule – judgment day rule if the obligation arises entirely under
foreign law, and breach day rule if the П could recover under US law at the
time of the breach.
• Fluctuating Value
o General rule – the more egregious the ∆’s misconduct, the more likely the
court will allow the П to select a valuation date that will maximize
recovery.
o NY rule – calculate damages based on the highest value of the property
between the date of loss and a reasonable period of time after the П learned
of the loss.
o Wrinkle in NY rule – recover the highest value between the date of
discovery and the short period of time that you have to cover.
• Basically 4 approaches:
o 1. value in tort as of the date of loss.
o 2. highest value between DOL and DOT, but only for situations where ∆
acted egregiously.
o 3. NY Rule
o 3. Wrinkle in NY Rule.
Value as a Function of PLACE
• General Rule
o If П sold the property, the market in which the property was sold would be
the relevant market.
o If П is manufactuer:
1. manufacturing cost
• appropriate economic market to be used in approximating
reasonable market value is the usual market where the
property or goods had been purchased.
• The usual market for the owner of goods held for
subsequent resale, is the wholesale selling market.
2. invoice (selling) price
• if, on the other hand, the destroyed property had been
sold, the relevant market would be that in which the
replacement sale would be made, the retail market.
o Measuring Compensatory Damages
3 primary issues:
• 1. Excessiveness
o the award will be respected unless it shocks the conscience or evidences a
miscarriage of justice.
• 2. Harsh & Mild Measures
o which one the court adopts will depend on the nature or the degree of the
∆’s culpability.
• 3. Certainty
o damages must be proven to a requisite degree of certainty:
1. loss causation – did the ∆’s misconduct result in or cause the
П’s damages.
2. calculation – quality of evidence necessary to establish the
amount of damages.
o Future Damages
Definition: the unrealized losses, as of the date of trial, are future damages.
• The time that separates past from future damages is the DOT.
• Single recovery rule – П will receive one lump sum award that includes
compensation for all losses П has sustained or will sustain.
• 2. extent of profits:
o quantification – it will be enough if the evidence shows the extent of
damages as a matter of just and reasonable inference.
Important factors:
• 1. period of damages
• 2. lost revenues
o but for the legal misconduct of ∆, how much
would П have sold (X units), at what price
($Y/unit) and how much would have been
returned (Z units)?
Net Sales = (X – Z)xY.
• 3. determining costs
• 4. present value
New Business Rule:
• Without a baseline of record of profitability, a business cannot sue for lost profits in
either tort or K, but this has been abandoned.
o П must demonstrate with reasonable certainty that the start up venture
would have been profitable but for the ∆'s wrongdoing.
1. profits of another person who operated the business П would
have but for the ∆’s wrongdoing.
2. by expert economic analysis, or
3. by profits ∆ realizes as a result of its harming or destroying П’s
business.
o П's Duty to Mitigate
A П’s failure to mitigate, when mitigation is reasonable and effective and would have
operated to reduce the П’s recovery, will result in a dollar for dollar reduction in the recovery
by the amount not mitigated.
• П must act reasonably under the circumstances.
Fragile П:
• Tort Law – take the П has be finds him.
o In mitigation, we will still apply the general standard, that it is an objective
reasonable person standard, BUT the court will allow the jury to consider
the П’s individual beliefs and risk aversion when determining whether П
acted reasonably in responding to the fact of her loss or injury.
Equal Opportunity Rule:
• П need not mitigate when the ability to lessen damages is equally available to П and
∆.
Burden of Proof:
• ∆ must demonstrate by a preponderance of the evidence that П’s bypassed mitigation
efforts would have in fact reduced the scope or severity of П’s losses.
Employee’s Duty to Mitigate:
• A wrongfully discharged or terminated employee has a duty to mitigate
o ∆ must show that there was suitable employment opportunities available
that П could have discovered and which П was qualified, and that П failed
to act reasonably in searching out and finding those replacement
employment opportunities.
Intentional Wrongs:
• Duty to mitigate is excused or relaxed when the ∆ engages in intentional misconduct.
Landlord-Tenant:
• Modern trend – landlord should mitigate.
o Offsetting Benefits
In Tort:
• When a ∆’s tortuous conduct causes legal harm to the П or her property but in so
doing also confers a special benefit to the interest that was harmed, the value of the
benefit conferred is accounted for in mitigation of damages.
o Legal interests must match.
i.e. if I am a dope attorney and fired wrongfully, I don’t have to
take a job at a 7-11, but if I do, the ∆ will get a credit.
In K:
• When a ∆’s breach of K has conferred a direct and immediate benefit on the П, the ∆
is entitled to an offset against П’s claimed damages.
o Exception – lost volume sellers.
o Collateral Source Rule
General Premise:
• П may recover damages that include amounts for which the П has already received
compensation from sources independent of and collateral to the ∆.
o i.e. П in a tort action can recover, losses for which she has received
payment under an insurance policy maintained by her.
Substantive Component:
• ∆ is barred from reducing the ∆’s compensatory award by the amount the П received
from the collateral source.
Evidentiary Component:
• Bars admission of evidence of the existence of the collateral source or the receipt of
those benefits.
Independent Source:
• CSR only applies if the benefit comes from a source wholly independent from the ∆.
o Problems in this doctrine:
1. when the US is a ∆, and
• If the payment is made from special funds to which the П
contributed, then it will deemed an independent source,
but if it is paid from general funds which are made up of
general tax revenues, then it will not be considered
independent.
2. claims against employers.
• There is a greater willingness to reject the source rule in
situations where the employee sues an employer for PI
and the employee receives benefits from a fund to which
the employer made payments.
o Majority – has not adopted this per se rule
Gratuitous Benefits
• General Rule - ∆ is not permitted to introduce evidence that the benefit was provided
gratuitously; rather П can recover the reasonable value of the services actually
provided.
Tort or K
• CSR is usually applied only to tort claims, and not to K actions.
Exception to CSR:
• П is malingering –
o i.e. if you put the П on the witness stand and you ask the П or the П
rambles in a way that now gives the ∆ the ability to use evidence of
collateral source to impeach the Пs testimony.
That the П is not suffering any significant economic consequences
as a result of the injuries and therefore has an inducement not to go
back to work.
Joint Tortfeasor:
• Award for damages should be based upon a П’s gross earnings that would have been
realized but for the wrong – pre-tax dollars.
Minority Approach:
• Applying federal law, use after-tax dollars.
Loss Causation
• Definition varies depending on Tort or K
o Tort – causation is broader than K.
What does the law do at the time of breach, since the critical concern is compensation and
deterrence?
o K – since parties came together in mutual consent and allocated their own risk, the amount of risk
assumed should be defined by the bargain.
What risks did the parties agree to assume at the time of the K formation?
• Distinction between Cause-in-Fact and Legally Responsible Cause (as a matter of public policy)
o For both Tort and K: (this is a K example)
1. actual cause
• what was the primary cause of the loss? (for K) and but-for (for tort)
o Usually the breach
• Damages must be sufficiently certain to avoid claims that they are speculative.
o П, non-breaching paryt must establish by reasonable competent evidence
both the occurrence and extent of the claimed damages resulting from the
breach.
2. legal responsibility – Hadley vs. Baxendale - general rule for recovery of breach of K
damages
• 1. was it within the reasonable contemplation of the parties at the time of K
formation, based upon the very nature of the K?
• 2. if it wasn’t, were there any special circumstances that were brought to the
attention of the contracting parties?
• 3. tacit agreement rule?
o Applies when the ∆ has been made aware, at the time of K formation, that
П will sustain extraordinary loss if the K is breached.
∆ must agree or acquiesce in being held liable for the greater
exposure.
• Awareness + manifestation of assent at the time of K
formation.
o This satisfies #2 of the Hadley test and is also the minority rule.
o Tort Causation:
Requirements:
• 1. cause-in-fact
o 1. but-for analysis – but for the ∆’s acts, the injury would not have
occurred.
o 2. Substantial factor – so long as the ∆’s acts were a significant or
substantial factor in the loss, then it was sufficient to make the ∆ factually
responsible.
• 2. legally responsible cause
o 1. direct consequences – domino effect
o 2. foreseeability test –
o 3. blended – broader public policy approach
1. whether the injury is too remote from the negligence
2. whether the injury is wholly out of proportion to the culpability
of the negligent tortfeasor
On the other hand, when the damage to the product results from
deterioration, internal breakage, or other non-accidental causes, it
is treated as economic loss.
o Integrated Product Rule – when various components are provided by the
same supplier as part of a complete and integrated package, even if a defect
in one component damages another component, there is no damage to other
property of the П.
• Exceptions to Economic Loss Rule
o Pollution Cases:
Bodily Injury
• Non-Economic Damages
o Negligent Infliction of Emotional Distress
Courts do not recognize it as a free-standing tort
Courts recognize only if:
• 1. it is derivative of some other actual harm.
• 2. when it is closely associated with a tort
o i.e. assault.
Generally not available for breach of K:
• Exception:
o When the subject matter of the K is unique.
4 tests:
• 1. Physical Impact Rule
o limiting recoveries to cases where the distress is tied to a physical impact on
the П.
• 2. Zone of Danger Test
o permits ED recoveries without physical impact when a П, in the zone of
danger, reasonably fears for her own safety.
Some variance as to who the fear must be for.
• 3. Reasonable Foreseeability Test – dominant test
o permits a П to recover for her emotional distress caused by injury to
another.
1. basic approach – pure foreseeability
• was it foreseeable to the ∆, based upon his or her
conduct, that the П would suffer emotional distress?
2. gloss – Thing
• must be some sort of legally recognizable relationship,
that would allow that person to make a legitimate claim
for distress damages.
• 4. Physical Harm or Manifestation Requirement
o requires a showing of physical injury related to the emotional distress.
Must reflect some objectively ascertainable discomfort that
evidence the genuineness of the claim.
Awards will be upheld so long as it does not shock the conscience.
• Measuring Non-Economic Loss
o Excessiveness:
An award is not excessive if it is within reasonable limits and there is any evidence in the
record to sustain it.
o Pre-Impact Fear of Death:
Split in Jdxs:
• 1. permit award without requiring prior physical injury.
Equitable Remedies
• Equity:
o Equity involves the exercise of judicial value judgments based upon relevant factual data
Judicial discretion is always involved when equitable relief is sought; ethical considerations
pertaining to the conduct of the parties and their moral culpability are a part of the decision-
making process when a party seeks equitable relief.
• Different Types of Equitable Remedies:
o 1. injunctions
o 2. specific performance
o 3. rescission
o 4. reformation
o 5. restitution
• Equitable Relief:
o Requirements:
1. core jdx of equity
2. irreparable injury requirement
3. look to a statute
• statute may sometimes entitle a П to equitable relief.
o Irreparable Injury Requirement
If the legal remedy is not complete, practical, efficient, etc., then the П satisfies the IIR.
Frustration of Relief Sought/Loss of Chance
• IIR is satisfied when delay in obtaining legal redress would effectively deprive the П
of the beneficial use of the right he seeks to establish.
o i.e. Ali and his boxing license.
Economic Harm
• Is NOT enough to satisfy IIR, unless the harm is so great that it has measurable
collateral consequences.
Problems in Measuring the Legal Remedy
• IIR found when the proof needed to establish the amount of legal damages would be
difficult to establish, measure or quantify.
Nature of the Injury
• Breach of statutory duty
• When ∆’s conduct infringes or deprives one of a constitutional right or guarantee.
Insolvency
• IIR found when ∆ is unable to respond to a monetary award.
Multiplicity of Lawsuits
Uniqueness
• i.e. K
• Actions in Equity
o Equity Acts in Personam
Although the legal system may declare rights, the equitable system can act on the conscience
of the person
• Basically – court is acting on the person and ordering him to do something.
o Discretion in Equity
Equity is based upon ideas of fairness/justice and the idea that a case must be analyzed on its
individual merits
o Statutory Equity Remedies
Whenever a legislative body seeks to restrict the Court’s equitable jdx, at the very least, you
have a find on your hands, and in many cases, if not all, those statutes are going to get a very
close scrutiny by the court, and they will fail regularly.
o Ripeness/Mootness
Key Question:
• Ripeness – is there a reasonable likelihood that the event that you fear will harm
you will in fact occur without the injunction?
• Burden on the Court – Supervision
o Even though П may have an inadequate remedy at law, if an equitable decree in the form of an
injunction will require too much court supervision, the court won’t grant the injunction.
П is entitled only to that amount of injunctive relief needed to restore her to her rightful
position.
• Modification of Injunctions:
o An injunction is subject to modification when it would no longer be fair or just to require
continued obedience to the existing terms of the injunction.
o TIR
Modification of a Preliminary Injunction is proper only when there has been a change in
circumstances between the time the injunction was issued and the time modification is sought.
o PIR
3 Part Test for the modification of a PIR:
• 1. a clear showing of substantial change in circumstances since the injunction was
issued.
o Change in law
Any change in law is an adequate basis.
o Change in facts
Party must show:
• 1. changed factual conditions make compliance
substantially more onerous
• 2. compliance with the injunction proves unworkable due
to onforeseen obstacles, or
• 3. enforcement of the injunction in its present form
would be detrimental to the public interest.
• 2. extreme and unexpected hardships in compliance with the injunctions existing
terms, and
• 3. good reason why the court should modify the injunction.
• Consent Decrees and Structural Injunctions
o Consent Decrees
Like permanent injunctions, they seek to remedy a particular harm by ordering the enjoined
party’s future conduct.
• Product of assent
• Product of compulsion
o Structural Injunctions
Particularized form of PIR
• Specificity
o Injunction must be:
1. specific and
2. definite to be enforceable
o 2 approaches to how specific and definite:
1. strict approach
• injunction must be clear and unambiguous and ambiguity will be resolved in favor of
persons charged with violating the order.
2. less strict approach
• close questions of interpretation are resolved in the ∆’s favor in order to prevent
unfair surprise.
o Will look objectively beyond the 4 corners of the injunction.
• Persons Bound by Injunctive Relief
o General Rule
A person who knowingly assists a ∆ in violating an injunction subjects himself to civil as well
as criminal proceedings for contempt/
• An injunction not only binds the parties ∆’s but also those identified with them
o 1. in interest
o 2. in privity
o 3. represented by them
o 4. subject to their control.
o Successors in Interest:
2 views:
• 1. bind the successor when the successor acquires the assets and property of the
enjoined party.
• 2. 3 part test: Bates
o 1. continuity in operations and work force of the successor and predecessor
employers
o 2. notice to the successor employer of its predecessor’s legal obligation,
and
o 3. ability of the predecessor to provide adequate relief directly.
Restitutionary Relief
• Goal
o Avoid unjust enrichment
Recovery of the benefit realized by the ∆, and not the harm or injury sustained by the ∆.
o Critical Inquiry
Whether retention of the benefit by the ∆ would be unconscionable.
• П is usually deemed entitled to reestitution if he establishes that the ∆ was injustly
enriched, either through a wrongful act or by passively accepting a benefit that
owuld be unconscionable for the ∆ to keep.
• Judicial Review
o Trial court’s finding on issues of unjust enrichment are reviewed for abuse of discretion consistent
with the general approach to equitable determinations.
• Unjust Enrichment
o Volunteer principle:
This is a justification for denying a claim for unjust enrichment.
• A person who , without request, at his own insistence, and without a valid
reason confers a benefit upon another, is not entitled to restitution.
i.e. person acting to protect his own legal interest, even though it is ultimately determined
that he had no legal liability, is not a volunteer.
• i.e. paying the debt of another in reponse to the threat of civil proceedings by 3rd
person.
i.e. person acting under a legal obligation is not a volunteer
i.e. if benefit is conferred out of a moral duty, rather than a legal duty, conferrer is a
volunteer.
• A mistaken belief of a moral obligation to act and then the action does not constitute
a volunteer.
o П must always act in good faith in providing the benefit.
П cannot expect payment for the benefit when he confers the benefit over the objection of the
∆.
o Choice principle:
Restitution will be denied when the benefactor denied or frustrated the recipient’s ability to
reject the benefit.
o Mistaken payment:
1. when a person receives something with knowledge of the circumstances evidencing that
the transfer is mistaken, that person may be held to have been unjustly enriched.
2. when a party enters or concludes a bargain consciously aware that it is uncertain as to the
true facts, that party may not seek restitution on the ground of mistake.
o Expectation of Payment/Compensation
1. where goods are services have been provided, the benefit must be conferred on the ∆ under
circumstances that raises an expectation, on the П’s part, of payment or compensation.
• If proided altruistically, restitution is inappropriate.
• Prima Facie Case of Unjust Enrichment
o COA =
1. a benefit conferred upon the ∆ by the П with expectation of payment
2. awareness, appreciation or knowledge by the ∆ of the benefit; and
3. acceptance or retention of the benefit by the ∆ under such circumstances as to make it
inequitable for the ∆ to retain the benefit without payment to the П.
o In Emergency Situations:
Restitution will be allowed even though the goods or services were provided w/o knowledge
or consent of the ∆ if the П acted with the expectation of payment an under circumstances
where he acted immediately to satisfy requirements of public decency; health or safety.
• ∆ must be under a duty to ac, and that the expenses for which the П seeks
reimbursement be incurred in connection with the discharge of ∆’s duty by the
П, which benefits ∆.
• Quasi-K Actions
o Definition
It is a form of restitution, that implies a K and then gives the reasonable value of services to
prevent unjust enrichment.
• A fictional promise.
• There will be no quasi-K remedy if there is a K in existence.
o Remedy:
П recovers in quantum meruit (reasonable value of services rendered)
• Award is measured by:
o 1. gains accruing to the wrongdoer, or
o 2. losses sustained by the injured party
• Valuation of the Benefit
o Critical Issue:
Disgorgement of the benefit unjustly held by the ∆.
o 3 approaches to measuring benefit:
1. cost of producing – subjective
2. market value of the thing produced – objective
3. value to the ∆ of the thing produced – subjective
Court has dissection in the measure of value of the benefit
o Apportioning Benefits
fairness is key:
• the more culpable the ∆, the more direct the connection between profits and
wrongdoing, the more likely that the П can recover all ∆’s profits.
2 important factors:
• 1. feasibility of the apportionment
o ∆ has the burden of proving what portion of the total benefit resulted from
lawful activities.
• 2. culpability of the ∆
• Other Restitutionary Remedies
o 1. disgorgement orders
taking the ill-gotten gains away from the wrongdoer
restore the ∆ to the status quo by stripping him of his gains he unjustly obtained by his
misconduct.
o 2. subrogation
principle = where A has paid the obligation of B, who is primarily liable, it is fair and just that
A receive reimbursement from B, otherwise B would be unjustly enriched.
• Subrogee = (A) person who pays the obligation
• Subrogor = (B) person whose obligation is paid
Legal vs. conventional
• Legal = equitable principles
o Requires showing of unjust enrichment and if person acts a volunteer, there
is no unjust enrichment.
• Conventional = based on K
Subrogee steps into the shows of the subrogor and can assert all the subrogor’s rights
o 3. indemnity
Principle = provides for reimbursement when one person pays or discharges a debt or liability
which another person should have paid or discharged.
• One party (indemnitee) has paid more than its fair share and therefore another
person (indemnitor) has been unjustly enriched to that extent.
2 forms:
• 1. contractual – consensual risk sharing agreement between parties
o i.e. insurance
• 2. equitable – arises by operation of law
o i.e. joint tortfeasors when one tortfeasor was passively liable and the other
was actively liable.
o i.e. where parties had a relationship but failed to expressly address risk of
loss issues within the relationship.
• 3. implied – indemnity will be implied when public policy and justice dictate that
responsibility for payment of damages should be shifted entirely from one party to
another.
Rules:
• 1. claim for equitable or implied contractual indemnification does not accrue until
the person seeking indemnification has paid the debt or discharged the obligation
which is more justly owed by another.
• 2. indemnification is not available unless the indemnitor could be held directly liable
to the person injured.
o 4. constructive trusts
Principle = provides specific relief that can be used to reach the product of assets wrongfully
appropriated through fraud, mistake, duress, or fiduciary relationship.
• Basically = ∆ is holding the property involuntarily as a trustee for the benefit of the
person with a superior equitable claim to the property.
Elements of constructive trust:
• 1. wrongful act
o fraud, mistake, duress, etc.
o need not be done by the person currently having possession of the property
• 2. specific property acquired by ∆ which is traceable to the wrongful behavior
o tracing allows П to follow what is his through subsequent transactions in
which the property is sold, exchanged or chages form
o strict tracing in BK
• 3. equitable reason why the person now holding the property should not be allowed
to keep or retain possession of the property.
When appropriate:
• 1. when a money judgment would be largely uncollectible.
• 2. when a money judgment could be compromised by the claims of others creditors.
• 3. when the П must trace her property into new, evolved forms of property.
o 5. equitable liens
Principle = specific relief which allows the claimant to trace property into the product of ∆
and to establish a lien or charge (monetary claim) against identified property up to the amount
of the lien.
• Property will collateralize the money judgment that the П-lienholder obtains against
the ∆.
• The most you can get is the amount you are owed
Different with CT:
• People want CT if the property has appreciated because CT allows for the capture of
the appreciation inherent in the property.
Good Faith Improve of Property:
• GFIP owned by another – a court of equity may give restitution to a П and prevent
unjust enrichment of a ∆ by imposing a CT or by imposing an EL upon the property
in favor of the П.
o BUT – when the П makes improvements upon the land of another under
circumstances which entitle him to restitution, he is entitled only to an EL
upon the land and he cannot charge the owner of the land as C trustee and
compel the owner to transfer the land to him.
Tracing Principles:
• Rightful owner of property is entitled to follow what is his through subsequent
transactions in which the property is sold, exchanged, or transferred.
o As long as the owner can ID his property, he can trace it through an
unlimited number of transactions.
• Limitations on Following Property
o Strict tracing in BK
Party seeking to trace property out of commingled funds has the
burden of tracing the alleged trust property specifically and
directly back to the illegal transfer giving rise to the trust.
o Lowest Intermediate Balance Rule and Tracing Fictions
When trustee commingles trust funds with other funds in a single
account.
• Once the single account is reduced, the amount expended
is dissipated and cannot be deemed to reappear in
subsequent deposits.
o Therefore – when traced proceeds are
withdrawn, they are lost.
o Modern Approach
Beneficiary’s interest in a commingled account are preserved to
the greatest extent possible as the account is depleted.
• Withdrawals come first from the wrongdoer’s interest in
the funds.
Remedies Defenses:
• Laches
o Concern = delay in bringing the action.
o Principle = equity will determine whether in the particular case, delay and its consequences warrant
denial of equitable relief in the interests of justice and fairness.
Requirements:
• Essence = unreasonable delay by the П, causing material prejudice to the ∆.
• 1. П delayed in bringing the action
• 2. delay must be unreasonable
o when there is no good explanation for the delay
o ∆ has the burden of showing unreasonable delay
Conversion not available when the claim is that “money” was taken.
o Replevin Damages
Seeking the return of the specific (unique) property – if ∆ destroys the PP, then he will be
subject to a judgment that represents the value of the property as of the time of trial
• П is entitled to loss of use
• П can get consequential damages
• П's claim can be negated by a superior title by a BFP
o Thief cannot convey title, even to a BFP
o But if ascession (converter adds new material), this can cut off orig. title
California Rule –
• 1. if improver enhances the property by adding materials,
the whole belongs to the owner of the principal part.
• 2. if improver enhances the property through services,
but the enhancement does not constitute the principle part,
the owner must compensate enhancer for value of
services.
• 3. if enhancement by services is to principal part, then
improver may claim the property but pay owner the FMV
of the property prior to enhancement
• Right can be lost through SOL or laches
o Demand Rule – SOL begins at the time ∆ takes possession OR at the time
П demands return and is refused.
o Discovery Rule – Tolls Sol until the true owner knows or should know the
ID of the possessor
Requires due diligence.
o Specific Restitution
Leads to the imposition of a constructive trust or an equitable lien in cases of fraud or breach
of fiduciary relationship, if the remedy at law is inadequate.
o Restitution
Focusing on the ∆’s benefit and addressing the wrongful interference through unjust
enrichment.
•1. damages = value of the mineral extraction – costs incurred by the trespasser in
producing the mineral
• 2. royalty rate = exploitation value of the mineral before it is disturbed.
• П's election will depend on whether th П had the ability to develop the resource.
o Encroachment (Continuing Trespass)
A physical occupation that effectively transfers the use and benefit of the property occupied
from the owner to the encroacher.
• Since this is permanent, the court will issue an injunction if on balance, the right
of the party to the exclusive use and enjoyment outweighs the cost of such
compliance.
• Nuisance
o Definition: an unreasonable interference w/ use and enjoyment of land (no intent required)
o Remedy:
An injunction may be granted if the injury is of a continuing nature
• Balance:
o 1. hardships and the public interest
o 2. nature and scope of damage to П and the cost of enjoining ∆’s activity
• П can still get damages until the injunciton issues
General Damages are measured by (permanent) DIV or temporary (cost of repair)
standards
• Annoyance damages are available for both.
o Permanent Nuisance
Definition – a nuisance that won’t be abated and can only be redressed through damages.
• Must bring all claims (past, present, and future) in one claim
• SOL could cause ∆ to lose the claim.
o Temporary Nuisance
Definition – a nuisance that is abatable, redressed through injunction
• Damages before SOL period are barred
• Damages after trial require a separate action.
o Public Nuisance
П may bring an action for public nuisance if he suffers an injury that is different from the
public at large.
• Good Faith Improver of Property – Doctrine of Accession and Confusion
o General Rule:
Improve property at your own peril
o Exception:
Accession and confusion allows improvers of real or personal property to receive a credit for
the value they impart to the true owner’s property.
• Limitation:
o Improver must act innocently and in good faith.
o Some court will require that the improver’s entry onto the property be under
a colorable claim of title to claim betterment
Physical ID Test
• Courts will apply the doctrine only if the physical identity of the property has
changes so that it is no longer considered the same property
Relative Value Test
• Courts will apply the doctrine and vest title in the party who produces the greatest
contribution to the finished product.
o You can also recover in quasi-K
• Background
o The context in which the fraud claim is asserted and the remedial purpose of the action are highly
significant in defining what fraud is and conversely, whether, and what, fraud remedies are available in
the particular case.
• Common Law Fraud
o Damages Action: П must plead and prove:
1. a false representation by the ∆ of a past or present fact
2. ∆’s knowledge of the falsity of the representation (Scienter)
• if negligent misrepresentation or innocent misrepresentation, П can only get out of
pocket damages.
3. the representation was material to the transaction or bargain
• would induce a reasonably prudent person to rely on the representation
4. П did in fact rely on the representation, and
5. П suffered actual damages from reliance on the misrepresentation.
• If only “damage” has been sustained, then rescission and nominal damages should be
recognized.
• Equitable Fraud
o When fraud is the basis for rescission of the transaction, the fraud may be based on intentional,
negligent, or innocent misrepresentation.
• Fraud Economic Damages
o Out of Pocket vs. Benefit of the Bargain
Out of pocket measure = difference between the value parted with (usually KSN) and the
value received.
Benefit of the Bargain = difference between what that party would have received had the
representations been true and the value of what was actually received.
• This is different from bargain expectancy
o Consequential Damages – “special damages”
They are recoverable when they are foreseeable and directly traceable to and result from the
fraud.
• i.e. costs incurred in preparing for, performing, or passing up other business
opportunities, as well as costs incurred in making reasonable efforts to mitigate
damages.
o Distress Damages
Generally unavailable because they’re difficult to measure and K damages are limited to
pecuniary losses, but they can be recovered if it’s the kind of fraud that would normally cause
distress.
o Attorney’s Fees and Punitive Damages
Attorneys Fees are limited to cases where the recovery of fees is allowed statute, contract, or
limited exceptions.
Punitive Damages can be recovered in cases of CL fraud, and attorneys fees can be a
component of that punitive damages award.
• Negligent Misrepresentation
o If it is recognized, the defrauded party can recover pecuniary losses to the same extent as if the
misrepresentation was deliberate.
Comparative fault may reduce damages.
o Restatement Approach:
Out of Pocket measure.
o Tests to Determine Whether a Duty of Candor was Owed to the Recipient of the
Misrepresentation:
1. privity or near privity requirement
Agents, who for their own benefit, act deceptively toward 3rd parties, ostensibly on behalf of
their principals, may be required to disgorge to the 3rd parties any benefits they obtained from
the 3rd party.
• Fraud and Public Policy
o You can be defrauded but not able to recover damages
i.e. when a subcontractor is not licensed and sues for fraud and the court gives no recovery
because not licensed.
Rescission
• Background
o It is a restitutionary K remedy intended to undo the K and return the parties to the position they were in
before the K was formed (status quo)
The less likely it wil be that restoration will be rendered may call for denying rescission:
• Factors:
o 1. when П has been instrumental in preventing the restoration of the status
quo – deny rescission
o 2. when restoration cannot be achieved because of ∆’s misconduct – allow
rescission.
o It is usually granted in cases of fraud, deceit, misrepresentation, failure of KNS, material breach
of K, duress, undue influence, and illegality
Rescission is Sole Remedy:
• 1. mistake, duress and illegality
Rescission in not Sole Remedy:
• 1. fraud, deceit, misrep, failure of KSN, undue influence.
o In order to establish an equitable right to rescind a bargain, the rescinding party must establish
that timely notice of rescission was provided to the other party, return or offer to return the KSN
the rescinding party received, and restore any benefit derived from possession of the KSN when
retention of that benefit would constitute unjust enrichment.
• Types of Rescission
o Rescission at Law
Must tender KSN received to the ∆, and then can sue ∆ in quasi-K
o Rescission in Equity
Tender not required
• To Rescind a K, the Rescinding Party Must:
o 1. give ∆ timely notice of rescission
given within a reasonable time after the rescinding party learns, or should have learned that it
possessed a right to rescind.
o 2. return or offer to return KSN the rescinding party received, and
o 3. restore any benefit derived from possession of the KSN when retention would constitute unjust
enrichment.
• Election of Remedies
o This doctrine may be applied to require the П to choose between statutory or CL rights
Purpose of Election Doctrine:
• 1. operates as a preemption rule,
• 2. prevents duplicative remedies for a single injury
o i.e. can’t ask for rescission and expectancy
• 3. prevents parties from seeking inconsistent theories of relief
o Seeking Interim Relief:
Majority View: Seeking interim relief (TRO or preliminary injunction) to preserve the status
quo, as opposed to obtaining a pre-trial advantage, should not be deemed an election.
o Judicial Estoppel:
Judicial Estoppel is related to the doctrine of election.
• Judicial estoppel bars a party from obtaining an advantage by taking one position
before a court and then seeking a 2nd advantage by taking an inconsistent and
incompatible position
• Scope of Rescission Remedy
o You can get rescission damages, punitive damages, and disgorgement of benefit
1. rescission damages = out of pocket losses caused by the conduct justifying rescission
2. disgorgement = when rescission action is based on culpable wrongdoing.
Breach of K Remedies
• Background
o Important to understand that remedies for Breach of K will depend on the situation.
Approach:
• 1. What kind of K are we dealing with?
o Employment or construction
• 2. Who is the breaching party?
• 3. What relief am I seeking?
o Damages, injunction (specific performance), and restitution
• 4. What are the breaching party’s rights?
o Traditional rule – no assistance to breaching party
Exception – substantial compliance rule
• 3. rescission
Majority Rule:
• Allowing the disappointed buyer his expectancy = K price – Market Price (At time
of breach)
o + reliance damages
o + consequential damages
o Seller’s Remedies:
3 remedies:
• 1. rescission
• 2. compliance with the K followed by an action for specific performance
• 3. retention of the land coupled with a damage action for loss of the bargain.
o K price – FMV of the property (at date of buyer’s performance was due)
+ prejudgment interest
+ consequential damages – putting property back on market
o determining market value
if property has gone down in value, FMB will depend on the date
of the breach.
• As long as the resale occurred within a reasonable amount
of time and the conditions at the time of resale are
approximate to the conditions at the time the ∆’s
performance was due, the resale price is evidence of the
value of the property as of the date the ∆’s performance
was required.
• UCC Cover Rule –
o When the seller covers within a reasonable
amount of time, the cover price establishes the
damages.
• Installment Land Sale Ks – seller financed real property transactions
o 2 views:
1. if buyer defaults, the seller may foreclose on the security and keep both the property and
prior payments
2. modern trend – condition the seller’s ability to take a forfeiture by providing the buyer
with a statutory cure period.
• i.e. tendering the delinquent installment.
o Buyer must show that it is equitably just to be allowed to cure her default:
Punitive Damages
• Background
o 2 levels of analysis:
1. Common Law Test, and
• jury instructions giving jury discretion in awarding punitive awards
2. BMW v. Gore – Constitutional Factors to Determined Whether Punitive Damages Award
is Appropriate
• considered by the judge, trial or appellate, in determining whether the exercise of
jury discretion was appropriate.
o Cooper
Trial judge must review the jury’s PD award De Novo and look at all three factors in the CL
Test
In appeal, the trial judge’s opinion must be reviewed De Novo on the BMW Factors and not
on the CL test.
o Purpose and Scope
To punish and deter –
o 1. allows the П to submit both claims to the trier of fact and claim the
greater
o 2. treat the augmented damages claim as penal and bars PD claim
Some courts – augmented damages are completely compensatory
3. lost profits
• Attorneys Fees
o Many jdxs permit recovery of attorney’s fees for prosecuting a civil contempt action.
Some jdxs - require that contemnor willfully violate the order.
• Collateral Bar Rule/Defenses to Contempt
o Defenses:
Order was issued without or in excess of, the court’s subject matter jdxs.
No violation.
o Collateral Bar Rule
Prohibits many non-jdx challenges to the validity of the order by one who is charged with
violating the order.
• Usually limited to criminal contempts.
Requires that a party comply with the order if the party wishes to challenge the validity
of the order.
• Walker – because ∆s violated the TRO, they could not challenge its constitutional
validity.
Exceptions:
• 1. CBR will not be applied when the order, which was disobeyed, was transparently
invalid or had only a frivolous pretence to validity.
• 2. Where there is no effective procedure available to obtain judicial review of the
order before it is violated.
• 3. Claims that compliance would cause irreparable injury.
• 4. Court lacks subject matter jdx.
Jdxs to Determine Jdx Rule
• Court has jdx to determine whether it has jdx – and an interim order is valid, while
the court has jdx to determine jdx.
• Attempted Contempts
o 2 categories:
Anticipatory Contempt
• General Rule – a coercive sanction requires that the contemnor be in violation of the
order at the time of the contempt proceeding.
Pre-Order Evasive Conduct as Contempt
• Contempt sanctions may be sought to address efforts undertaken by a party before an
order is issued to frustrate the implementation of the order that is ultimately entered.
• Whether the buyer has lost the substantial value of the bargain (deviation between
product promised and product delivered)
o Other Ks
Relies directly on notions of unconscionability.
• As Is Clauses
o In order to be enforceable:
The “As Is” clause must have been bargained for.
• If this is met, the general effect of the clause is to exclude all implied warranties and
to constitute a representation by the seller that the property may or may not be
defective, but that if the buyer nonetheless buyers, he does so solely at his own risk.
You still can affirmatively and intentionally misrepresent.
• It will not relieve a party of a duty imposed by law to disclose certain facts.
• Negligent misrepresentation coupled with a right to inspect could be sufficient to
shift the risk of loss to the buyer.
• In fee awards against the US based on the Equal Access to Justice Act, a prevailing
party may recover attorney’s fees against the US unless the US shows that its
litigation position was substantially justified.
Actual Damages Award as Limit on Fees Award
• Split in jdxs:
o Dominant view – no limit.
o Retainer As Limit on Fees Award
Assumed that an attorney’s ordinary billing rate reflects the market rate.
• Split in jdxs: as to whether to award the actual billing or the community rate
(locality of where case is tried).
o Bound by fee arrangement, OR
o Calculating reasonable fees.
General Rule: dominant rule
• The retainer is not an upper limit on an attorney’s fees award – it does not cap the fee
award.
o Pro Se Attorney Litigants
Dominant Modern Rule = deny a fees recovery in this context.
• Standing to Collect Fees Award
o General Rule = right to collect belongs to the party and can be waived by the party without incurring a
breach of duty to the attorney.
However, once a party collects an attorney’s fees recovery, the attorney’s rights to the fees
arises.