Equity

Question 1

What is a chancellor?

Answer 1

The old Virginia term for a judge hearing equitable claims.

Question 2

What is the difference between default in Virginia courts and default in federal courts?

Answer 2

In Virginia, default is a big deal - party’s that go into default will not be rescued as they might be in federal courts

Question 3

What is unique about divorce and annulment cases in Virginia?

Answer 3

1. Common
   
   • They make up the majority of equity proceedings in Virginia
2. No default
   
   • They cannot be resolved by default - if a defendant fails to appear within 21 days of service, evidentiary submissions still have to be presented to the judge
3. No procedural waiver generally
   
   • All procedural steps must generally be followed
4. Waiver of notice
   
   • _​​_Notice of any further proceedings is not required unless the defendant filed a timely answer

Question 4

What happens in a mixed case including both legal and equitable claims?

Answer 4

Assuming there is a timely demand for a jury to hear the legal claims (e.g., by requesting on the face of the complaint),

1. The legal claims will be decided by the jury first
2. Then the equitable claims will be decided by the judge

Question 5

When is there a statutory right to a jury in equity cases?

Answer 5

There is a statutory right to a jury in two situations, and the jury verdict is binding on the chancellor:

1. Quiet title actions
2. Defendant files a Plea in Equity
   
   • Defensive pleading that sets forth a single dispositive state of facts that, if proven, would give the defendant a complete exoneration on the claim
     
     • E.g., illegality, time bar, res judiciata, etc.

Question 6

What is an advisory jury?

Answer 6

The chancellor may also seat an advisory jury to hear certain factual issues, but the verdict is not binding (advisory)

Initiated by either:

• Plaintiff’s request
• Defendant’s request
• Sua sponte (court)

Judge must make an independent decision of the case

Question 7

What are the ways that equitable action can be sought from trial court?

Answer 7

1. Motion to suspend, modify, or vacate judgment
2. Bill of Review
3. Appeal

Question 8

Motion to suspend, modify, or vacate judgment

Answer 8

From the trial court by:

1. Motion to suspend, modify, or vacate judgment
   
   • Must be decided within 21 days after entry of decree
   • Court must sign a written order either suspending, modifying, or vacating judgment
   • May be based upon:
     
     • New evidence
     • Mistake of law
     • Mistake of fact

Question 9

Bill of Review

Answer 9

Bill of review

• ​Must be filed within 6 months after entry of decree
• May be based upon:

New evidence

Mistake of law

Question 10

Appeal

Answer 10

• Appeal
• ​Must be filed within 30 days after entry of decree
• Heard by: Court of appeals
  
  • As a matter of right
  • For domestic relations appeal
• Supreme Court of Virginia
  
  • Based on its discretion
  • For all other civil appeals
  • Appellant must file petition for appeal​
    
    • Within 3 calendar months
    • Including assignments of error

Question 11

What is required in order to get a new trial based on new evidence?

Answer 11

This generally does not work

Must prove that the evidence:

1. Could not have been discovered earlier with reasonable diligence
2. Is not merely cumulative, corroborative, or collateral
3. Is material
4. Would produce an opposite result

Question 12

What are the steps to approach an equitable remedies question?

Answer 12

1. Are the general requirements for equitable relief satisfied?
   
   • Legal remedy must be inadequate
   • Equitable relief must be feasible
2. Are the particular requirements for equitable relief satisfied?
   
   • E.g., the particular requirements for an injunction, specific performance, recission, reformation, etc.
3. Are any equitable defenses available?
   
   • E.g., unclean hands, laches, unconscionability, etc.

Question 13

What court hears equitable claims?

Answer 13

The Circuit Court, unless it is a FOIA case, which is heard by the GD court

Question 14

What are the general requirements for equitable relief?

Answer 14

Equity relief is always discretionary

• The legal remedy must be inadequate
  
  1. _​_Was the subject matter unique or rare?
  2. Would setting an amount of damages have been speculative?
  3. Was the defendant insolvent?
  4. Would multiple lawsuits have been required to protect the plaintiff?
  5. Will irreparable harm occur?
• The equitable remedy must be feasible
  
  1. ​​Does the court have jurisdiction over:
     
     • The person?
     • The property subject to the lawsuit?
  2. Would enforcement of the equitable relief require protracted supervision?
  3. Does the court lack standard for measuring the party’s compliance with the equitable relief?

Question 15

What are the two types of injunctions?

Answer 15

1. Prohibitory
   
   • Prevents a threatened wrong or injury
2. Mandatory
   
   • Redresses an already inflicted wrong or injury

Question 16

How do you obtain injunctive relief?

Answer 16

• Equity will balance the hardships on the parties
  
  • Injunctive relief is normally available for:
    
    • Continuous or repeated trespass
    • Conversion of a unique chattel
    • Stopping unfair competition
  • Injunctive relief is sometimes available for:
    
    • Eliminating a nuisance:
      
      • Provided it is a private nuisance
      • But not a public nuisance
    • Preventing waste (i.e., damage to real property)
      
      • But not if it is ameliorative (i.e., changes the character but increases the value)
        
        • E.g., buldozing an old house but adding a nicer one
  • Injunctive relief is never available for:
    
    • Defamation
    • Commercial defamation (i.e., trade libel)
    • Invasion of privacy
      
      • Unless it involves name or likeness
    • Enjoining pending criminal proceedings
    • Enjoining threatened criminal proceedings (unless extraordinary circumstances)

Question 17

What is temporary injunctive relief, and what term is used in Virginia?

Answer 17

Injunctive relief that is necessary to preserve the status quo

In Virginia, it is called a preliminary injunction

Question 18

How do you obtain preliminary injunctive relief?

Answer 18

You must show:

1. Substantial likelihood the moving party will win
2. Irreparable harm to the movant unless the status quo is preserved
3. Harm to the moving party outweighs hardship caused to the restrained party
4. Public interest will not be adversely affected

Question 19

What is the exception to the general rule that equity courts “balance the hardships”?

Answer 19

Real covenants exception

• If P sues D for violating a real property covenant:
  
  • P does not have to show any harm
  • D cannot escape the injunction unless he shows exceptional harm from injunction

Question 20

What is specific performance?

Answer 20

An equitable remedy by which:

• A party to a contract
• Is ordered to perform according to its terms

Question 21

When is specific performance available?

Answer 21

In addition to the general requirements, there are three key requirements:

1. A valid contract exists, including:
   
   • Offer
   • Acceptance
2. All contract conditions have been met, and
3. Mutuality of remedy exists

Question 22

How do you extablish the existence of a valid contract?

Answer 22

You must establish:

1. Certainty of terms
   
   • The contract must be reasonably certain as to:
     
     • Offer and acceptance
     • Consideration (i.e., presume that any consideration is enough)
     • Terms for performance
2. Existence of consideration
   
   • _​​_The amount of consideration is not considered unless its inadequacy is so extreme that the contract is unconscionable (which is very tough to show in Virginia)

Question 23

How do you determine whether all conditions have been fulfilled in a contract?

Answer 23

Two main issues involving this:

1. “Time is of the essence” provision
   
   • Insists upon full performance by a specified date
   • Failure to comply will prevent specific performance unless the court uses discretion based on:
     
     • Delay was only slight (few hours or days)
     • Delay did not cause injury to other party
     • Invalidating contract would cause extreme hardship
     • Requirement was been waived (e.g., agreement to rescheduling)
2. Marketable title
   
   • Failure to comply will prevent specific performance unless the court uses discretion based on:
     
     • Deficiency in title is minor
       
       • Specific performance will be granted, but with a reduction in price
     • Requirement has been waived
       
       • _​_Specific performance will be granted, but with a reduction in price

Question 24

What is mutuality of remedy?

Answer 24

It means that one party cannot get specific performance if the other party would not have been able to get it

Remedies are mutual if:

1. Both parties are able to perform, and
2. Both parties can be bound
   
   • E.g., neither party is:
     
     • A minor
     • Incompetent
     • Out of state

Question 25

What does the tort of unfair competition cover?

Answer 25

• Passing off your product as that of another
• Inferfering with existing business relationships
• Using confidential information (i.e., trade secrets) appropriated from a former employer to competitively injure that person

Question 26

What is a trade secret?

Answer 26

Information that is both:

• Nonpublic
  
  • It is confidential and not otherwise available
• Beneficial
  
  • It gives the owner a competitive advantage

Question 27

Is equitable relief available for unlawful competition? Why?

Answer 27

Yes, because damages for profits lost from business wrongfully appropriated would necessarily be speculative

Question 28

What sort of equitable relief will the court grant for unlawful competition?

Answer 28

Is there a covenant not to compete?

• No
  
  • Equity will enjoin the conduct
• Yes
  
  • Equity will grant specific performance if the restrictions are reasonable as to:
    
    • The employer’s legitimate interest in protecting its business
      
      • E.g., hair replacement in Va. Beach
    • The employee’s fair opportunity to accept other jobs in the industry
      
      • E.g., disc jockey in Shenandoah
    • The public interest
      
      • E.g., urologist in Fairfax

Question 29

What are the aspects of a covenant not to compete that a court will consider?

Answer 29

• The specific job duties prohibited
  
  • Is it too broad on what functions the person is restricted from performing?
• Geographic limitations
  
  • Is it too broad on where the person can perform?
• Duration of restriction
  
  • 1 and 2 years is okay
  • 5 years is too long
  • Always consider how much time the employer invested in the employee

Question 30

What is blue penciling?

Answer 30

• Virginia courts WILL NOT do this
• Courts in Virginia will not edit the terms of a covenant not to compete to strike out the offensive provisions
• Instead, the agreement stands or falls as a whole

Question 31

What is rescission?

Answer 31

This is often called “cancellation”

It is a remedy by which a voidable contract is put to an end and the parties are treated as though it was never made

Question 32

What is reformation?

Answer 32

This is a remedy that treats the contract as valid, and changes a writing setting forth or implementing the agreement to conform to the originally intended agreement

Question 33

How do you obtain rescission?

Answer 33

Equity will cancel a contract if, at the time it was entered into, there was either:

• Mutual mistake; OR
• Unilateral mistake coupled with:
  
  • Any form of misrepresentation (even innocent); or
  • Some other form of inequitable conduct
• Others grounds such as:
  
  • Duress
  • Undue influence
  • Lack of capacity
  • Failure of consideration

Question 34

Can a plaintiff recover for fraud in addition to rescission based on that same fraud?

Answer 34

Yes, these are mutually exclusive alternative remedies

Question 35

If an agreement is rescinded, can the plaintiff get anything other than the remedy of rescission?

Answer 35

Yes, they may get restitutionary relief to recover the value exchange prior to the recscission

Question 36

What is tender? Is it a prerequisite to bringing a rescission claim?

Answer 36

• Tender means offering back all consideration to the other party
• In Virginia, it is not a prerequisite to bringing a rescission claim
• Instead, restoring the parties to their pre-contract position can be done as party of the ultimate decree

Question 37

How do you obtain reformation?

Answer 37

A contract will be reformed if:

• It was valid, and there was either:
  
  • Any mutual mistake (not necessarily material); OR
  • Any unilateral mistkae coupled with:
    
    • Knowing misrepresentation (i.e., fraud)

Question 38

What standard is required to establish the grounds for reformation or rescission?

Answer 38

Clear and convincing evidence, which is more than a mere preponderance

Question 39

Will the statute of frauds block reformation is the grounds for reforming the agreement are shown?

Answer 39

No.

Question 40

If two parties disagree as to the quantity included in the contract, can they obtain reformation?

Answer 40

No. They didn’t have a meeting of the minds, so there was not a valid contract

Question 41

What is restitution?

How is it obtained?

Answer 41

A set of rules to deal with unjust enrichment

The plaintiff must show that the defendant both:

• Obtained a benefit from the plaintiff
• Upon request of the defendant, or in circumstances showing that the defendant should have known that the plaintiff expected compensation

Question 42

What is unique about restitution in the courts of equity?

Answer 42

It can also be sued based on the legal theory of quasi-contract, in which case a jury can hear the case

Question 43

Who cannot be sued for equitable causes of action?

Answer 43

The Commonwealth

But, counties, cities, and towns may be sued on equitable claims

Question 44

What are the remedies to achieve restitution?

Answer 44

• Dollar damages awards
  
  • Clean up doctrine
    
    • Once property is in equity, the plaintiff can get dollar damages to tie up loose ends
• Constructive trusts
  
  • If the property defendant wrongfully obtained can be traced to a particular asset the defendant has,
  • This in effect declares the plaintiff is the beneficial owner of the asset and that defendant must disgorge it in a specified form
• Equitable liens
  
  • If the plaintiff’s money has gone into property of the defendant,
  • The court can declare that the victim has a lien on the property in a specified amount
  • Note: equitable liens on realty in Virginia require the existence of a writing indicating the intention to subject the property to a lien
• Specific restitution
  
  • The court may order that specific items of property be returned to the plaintiff

Question 45

What are other forms of equitable relief?

Answer 45

• Equitable accounting
• Receiver
• Partition of real property
• Subrogation
• Contribution
• Equitable indemnification
• Creditors’ suits

Question 46

If an equity court considers a partition of real property, what controls whether partition is ordered?

Answer 46

The “best interests” of the owners

The preferred outcome is partition in kind

Question 47

What is subrogation?

Answer 47

If you have paid the obligation of another, you may be permitted to pursue the rights of the person whose obligation was paid in actions against others concerning the obligation

(i.e., stand in their shoes)

Question 48

How is recovery handled in contribution claims?

Answer 48

Pro rata, not proportional to fault (i.e., not comparative fault)

This is available except in intentional torts

Question 49

When is equitable indemnification available?

Answer 49

In rare situations where a party who is without personal fault is legally liable for damages caused by the negligence of another

E.g., agency situations where a blameless principal is obliged to pay for wrongs committed by an agent

Question 50

What are creditors’ suits?

Answer 50

Often situations that arise when a debtor transferred property to a third party disabling a creditor from reaching it

Question 51

What are the different ways to justify a remedy in creditors’ suits?

Answer 51

• Voluntary transfer (i.e., no evil motive necessary) will be voided if:
  
  • There was not adequate consideration
  • The creditor became a creditor before the transfer; AND
  • The debtor was either insolvent at the time or the transfer or became insolvent afterwards
  • * no evil motive required
• Fraudulent conveyance (i.e., evil motive necessary) will be set aside if:
  
  • Transferor intended to defraud the creditor; AND
  • The transfer was made with the effect of hindering or defrauding the creditor
  • Note: solvency is irrelevant

Question 52

What are the equitable defenses?

Answer 52

1. Unclean hands
2. Laches
3. Unconscionability
4. Impossibility and hardship
5. Fraud
6. Equitable estoppel

Question 53

What is the doctrine of unclean hands?

Answer 53

Note: address this in every equity question, but even if it applies go on to address the elements of the equitable claim

This defense is available if the plaintiff is guilty of improper conduct proxmiately related to the same transaction for which she seeks relief

Question 54

What is the defense of laches?

Answer 54

This is available where plaintiff delayed bringing suit if both:

• He was an adult plaintiff who waited an unreasonable time before suing
• The delay was prejudicial to the defendant (e.g., D lost evidence)

Question 55

Unconscionability

Answer 55

Any arrangement which is fundamentally unfair may be unenforceable as unconscionable (consideration for K is grossly out of proportion to true value of deal)

Question 56

How does a defendant make out the fraud defense?

Answer 56

He must allege

• Knowingly misrepresentation
• Of a present fact (not opinion)
• Seeking reliance by the other party

It must be proven by clear and convincing evidence (i.e., not a preponderance)

Question 57

What is equitable estoppel?

Answer 57

A party is estopped from seeking equity relief is he makes a representation that foreseeably induced the other party to act to his detriment

Question 58

Can equitable claims be made against state of VA?

Can equitable defenses be raised against ANY gov body in VA?

Answer 58

NO (both)

Question 59

Difference of temporary or preliminary injuntion and ex parte or preliminary injunction?

Answer 59

Temporary

• only after hearing both sides
• injunction bond normally required

Ex Parte

• can be obtained wihout hearing both sides
• effective only for short time period