Equity

Question 1

What is a chancellor?

Answer 1

The old Virginia term for a judge hearing equitable claims.

Question 2

What is a cross-bill?

Answer 2

The old Virginia term for cross-claims and third-party complaints

Question 3

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

Answer 3

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 4

What is unique about divorce and annulment cases in Virginia?

Answer 4

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 5

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

Answer 5

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 6

Can there ever be a jury in equity cases?

Answer 6

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

• Initiated by either:
  
  • Plaintiff’s request
  • Defendant’s request
  • Sua sponte
• Just must make an independent decision of the case

Question 7

How can review of an equitable judgement or order be sought?

Answer 7

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
2. Bill of review
   
   • _​_Must be filed within 6 months after entry of decree
   • May be based upon:
     
     • New evidence
     • Mistake of law
3. 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 8

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

Answer 8

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 9

What are the steps to approach an equitable remedies question?

Answer 9

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 10

What court hears equitable claims?

Answer 10

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

Question 11

What are the general requirements for equitable relief?

Answer 11

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 12

What are the two types of injunctions?

Answer 12

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

Question 13

How do you obtain injunctive relief?

Answer 13

• 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 14

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

Answer 14

Injunctive relief that is necessary to preserve the status quo

In Virginia, it is called a preliminary injunction

Question 15

How do you obtain preliminary injunctive relief?

Answer 15

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 16

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

Answer 16

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 17

What is specific performance?

Answer 17

An equitable remedy by which:

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

Question 18

When is specific performance available?

Answer 18

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 19

How do you extablish the existence of a valid contract?

Answer 19

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 20

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

Answer 20

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 21

What is mutuality of remedy?

Answer 21

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 22

What does the tort of unfair competition cover?

Answer 22

• 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 23

What is a trade secret?

Answer 23

Information that is both:

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

Question 24

Is equitable relief available for unlawful competition? Why?

Answer 24

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

Question 25

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

Answer 25

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 26

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

Answer 26

• 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 27

What is blue penciling?

Answer 27

• 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 28

What is rescission?

Answer 28

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 29

What is reformation?

Answer 29

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 30

How do you obtain rescission?

Answer 30

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

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

Question 31

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

Answer 31

Yes, these are mutually exclusive alternative remedies

Question 32

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

Answer 32

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

Question 33

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

Answer 33

• 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 34

How do you obtain reformation?

Answer 34

A contract will be reformed if:

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

Question 35

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

Answer 35

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

Question 36

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

Answer 36

No.

Question 37

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

Answer 37

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

Question 38

What is restitution?

How is it obtained?

Answer 38

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 recompense

Question 39

What is unique about restitution in the courts of equity?

Answer 39

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

Question 40

Who cannot be sued for equitable causes of action?

Answer 40

The Commonwealth

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

Question 41

What are the remedies to achieve restitution?

Answer 41

• 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 42

What are other forms of equitable relief?

Answer 42

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

Question 43

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

Answer 43

The “best interests” of the owners

The preferred outcome is partition in kind

Question 44

What is subrogation?

Answer 44

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 45

How is recovery handled in contribution claims?

Answer 45

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

This is available except in intentional torts

Question 46

When is equitable indemnification available?

Answer 46

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 47

What are creditors’ suits?

Answer 47

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

Question 48

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

Answer 48

• 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
  • The debtor was either insolvent at the time or the transfer or became insolvent afterwards
• Fraudulent conveyance (i.e., evil motive necessary) will be set aside if:
  
  • Transferor intended to defraud the creditor
  • The transfer was made with the effect of hindering or defrauding the creditor
  • Note: solvency is irrelevant

Question 49

What are the equitable defenses?

Answer 49

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

Question 50

What is the doctrine of unclean hands?

Answer 50

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 51

What is the defense of laches?

Answer 51

This is available where plaintiff delayed bringing suit if both:

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

Question 52

How does a defendant make out the fraud defense?

Answer 52

He must allege

• Knowingly misrepresentation
• Of a present fact
• Seeking reliance by the other party

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

Question 53

What is equitable estoppel?

Answer 53

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