Equity

Question 1

When is equity relief normally awarded

Answer 1

When there is no adequate legal remedy

Question 2

Election of Remedies

Answer 2

When an injured party has 2 available but inconsistent to redress one harm, the party must choose only one remedy.

Some remedies aer complementary - where they serve different purposes & interests, can be sought in combination.

Question 3

Prerequisites for Equitable Relief

THE FIRST THING TO WRITE DOWN

Answer 3

1) Plaintiff must establish a substantive claim for liaiblity & the nature of the remedy stems from the nature of the claim
2) Plaintiff must demonstrate no adequate remedy at law or there is irreparable injury.
3) The equitable decree is enforceable.
4) the balance of the equities justifies equitable relief.

Question 4

Showing inadequate or irreparable injury

Answer 4

1) The nature of the injury can’t be remedied with money
2) the K is for unique or scarce goods
3) Where equity is necessary to prevent a multiplicity of judicial proceedings
4) money damages would be adequate, but they are so speculative that any award would be inaccurate.
5) or money would be okay, but defendant is insolvent but can still render performance OR engage in behaviour that would render defendant judgment-proof.

Question 5

Types of Injunctions

Answer 5

MRPPS
Prohibitory Injunction - court orders party from refraining from acting.

Mandatory junction - where court orders party to perform an affirmative act & the court must supervise it.

Preventive Injunction - to prevent a wrongful conduct to prevent future harm

Reparative Injunction - repair the continuing harmful consequences of a past harm & restore plaintiff to prior condition

Structural Injunction - eliminate the harmful consequences of past harmful acts and bar harmful acts on the same type.

Question 6

Balancing of Equities to justify the relief sought

Answer 6

Court balances the irreparable harm or inadequacy of relief of the plaintiff against the burden of the defendant of complying with the order. If the burden on defendant outweighs the benefit to the Plaintiff of granting the equitable relief, the court may deny it.

Question 7

Types of Equitable Remedies

Answer 7

SCARSRIPER

Subrogation, Constructive Trust, Accounting, Reformation, Specific Performance, Restitution, Injunction, partition, equitable lien, rescission.

Question 8

Four forms of Restitution

Answer 8

1) Quasi-contract - restoring defendant to their rightful position and preventing the defendant’s unjust enrichment by recovering the benefit received by the defendant as a result of their wrong doing
2) Constructive trust - where property wrongfully ACQUIRED by defendant is ordered given to P
3) Equitable Lien - security interest in property in property wrongfully acquired & held by def (or improved)
4) subrogation - standing in the shoes of the other

Question 9

Equitable Defenses

Answer 9

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Laches, Equitable Estoppel, Waiver, Unclean Hands, undue hardship, judicial estoppel

Question 10

Mandatory Injunctions

Answer 10

Issue of an order to do a paritcular act. These are subject to heightened scrutiny, requiring a showing that the facts and law clearly favor the moving party, and it can be structured to the least degree of detriment to the enjoined party.

Question 11

Preventive Injunction

Answer 11

Designed to prevent conduct to prevent future harm to the moving party. There must be

1) Danger of future harm be real (propensity for party to commit the wrongful act, the consequences are certain, the threat is imminent)
2) there is no likelihood of voluntary suspension by defendant that would render the injunction moot (sincerity, effectiveness of discontinuance, character of past violations)

Question 12

Reparative Injunction

Answer 12

repair the continuing harmful consequences of a past harm & restore plaintiff to prior condition

Question 13

Structural Injunction

Answer 13

designed to eliminate the harmful consequences of past harmful acts and bar harmful acts on the same type.

Question 14

Situations When Injunctive Relief Not Available

Answer 14

1) To prevent the breach of a K that is not specifically enforceable
2) to enforce the criminal law other than to restrain a public nuisance
3) to stay court proceedings unless necessary to prevent multiplicity of proceedings
4) to enjoin speech - 1st amendment issues

Question 15

TRO v. Preliminary Injunction

Answer 15

Both are TEMPORARY injunctive relief, Immediate but short term

TRO is for emergency situation and only lasts a few days; generally long enough for parties to seek a prelim. Prelims last until decision ont he merits.

Purpose: to maintain status quo during litigation to avoid irreperable injury.

Question 16

Preliminary Injunction/TRO Criteria

Answer 16

1) The Plaintiff is likely to succeed on merits of underlying claim
2) The P will suffer irreparble injury if temporary relief is not granted
3) The balance of hardhips lies with the Plaintiff - balance benefit of injunction against cost of compliance, court favors party that suffers greater loss
4) Public interest will be served by ordering the temprorary relief

BALANCE ALL THESE FACTORS INSTEAD OF INDEPENDENT CRITERIA

Question 17

Notice Requirements of Injunctions

Answer 17

TRO can be granted ex-parte, without notice if irreparable injury will result before a hearing w/notice. May need to show why notice need not be given.

Prelims granted only if notice and opportunity to be heard.

Question 18

Bond Requirement

Answer 18

To be awarded a temporary injunction (prelim or TRO), must post bond.

Bonds provide source of funds if wronguflly enjoined so Def can collect damages. It also caps amount of damages collectable from Plaintiff.

Determined by

1) potential loss of D
2) potential loss of P
3) potential importance of rights involved

Question 19

Appellate review

Answer 19

Decisions, if granted or denied, are immediately appealable.

Prohibitory injunctions - generally not stayed pending full review

Mandatory injunctions - stayed pending review when so requested by Defendant

Question 20

Permanent Injunction

Answer 20

Plaintiff has prevailed on substantive claim and demonstrates ongoing need for protection. Continues in force until expiration or dissolved.

Question 21

How Courts Enforce Injunctions

Answer 21

Enforces through contempt power - imposing sanctions against a party to punish or induce compliance.

Civil Contempt or Criminal Contempt

Question 22

Civil Contempt

Answer 22

Should be tailored to achieve desired aim & not be punitive or disproportionate to the harm trying to avoid.

Compensatory contempt - to compensate the plaintiff for any losses caused by defendant’s disobedience of the court order, sanction is monetary and will be based on Plaintiff’s loss.

Punitive Contempt - desiged to coerce compliance and is conditional innature. Once compliance achieved the sanction is lifted.

Question 23

Criminal Contempt

Answer 23

Is a crime against the dignity and authority of the court, independent of the underlying case the produced the order. Punished by fixed sentance, fines to court.

Immediately appealable. Survives regardless of success of underlying actions.

Question 24

Specific Enforcement of a K Requirements

Answer 24

1) K is enforceable
2) that all conditions precedent to performance have been satisfied
3) the contractural terms at issue are sufficiently certain
4) the defendant is able to perform or it can be abated
5) it would be fair or equitable to specifically enforce.

Need not mutuality of performance, just that the other party substantially performed or it can be secured to court’s satisfaction.

Question 25

Land Sale Contracts

Answer 25

Unique character of land. Specific even if liquidated damages.

Equitable Conversion - risk of loss on buyer.

If buyer dies, estate can enforce K. Equitable interest is regarded as reality.

if seller dies, estate can enforce K.

Question 26

Sale of Goods or Chattels

Answer 26

Personal property must be sufficiently rare or invaluable to be specifically enforceable.

OR in UCC 2 - specially ordered, scarce on open market, goods from competitor are deemed inferior.

Sales for Closley held stock - if no readily ascertainable market OR stock repressents voting control

Question 27

Non-Compete Agreements

Answer 27

Courts are reluctant unless trade secrets or confidential business information to be protected. But must be reasonable. Guideline:

1) scope of activities restricted - tied to nature of the work
2) Geographic limits of restricted activities - not beyond employer’s market
3) duration of restriction - length of time not excessive

Question 28

When Specific Enforcement Not Available

Answer 28

Personal services or if ongoing relationship to continue, or court supervision would be onerous.

1) employment contract / personal service - but can enjoin from working elsewhere
2) partnership agreements or marriage agreements
3) franchise/business ventures
4) construction K

Question 29

Reformation - Fraud in the inducment or Mistake in inducement

Answer 29

Fraud - If One party to a K induces other party to execute the K by fraudulent misrepresenting its contents, reformation may be granted.

Unilateral Mistake - if either party claims mistake, reformation is not proper because no meeting of minds; seek rescission.

Mutual Mistake = rescission

Question 30

Reformation - Mistake in Execution

Answer 30

If either party knows or has reason to know that written instrument does not embody the true agreement, reformation may be granted to reflect the understanding of the unknowing party.

Question 31

Defenses to Reformation

Answer 31

Statute of Frauds - part performance allows reformation

Parol Evidence Rule - not a valid defense to reformation because court must attempt to learn original agreement of the parties.

Protection of Rights of 3rd Parties - reformation not available unless it can be done without prejudice to a BFP

Question 32

Rescission generally

Answer 32

Court will also order resitution to restore parties to position they were in before K was formed.

In order for rescission

1) the party must be prepared to tender back what he has received under the provisions of the K and restore the parties as if no K had ever existed
2) Also can be granted if consideration can’t be returned, but merits of the case or likelihood of irreparable injury justify the remedy.

Question 33

Grounds for Rescission

Answer 33

Innocent Misrepresentation - mis rep must be material and P must have reasonabily relied

Fraudulent Misrepersentation - Def knowingly makes material false rep, P relies to detriment. Rescission is an appropriate alternative.

Mutual Mistake - both parties mistaken on a fact, the fact goes to the essence of the K, the mistake had material effect on bargain, the party seeking did not assume the risk. (in K, or relied on inadequate knowledge)

Unilateral mistake - mistake involves basic assumption of underlying K, P will suffer extreme hardship if K enforced & defendant not prejudiced OR def knew of P’s mistake and proceeded anyway.

Substantial breach, illegality of K, failure of conisderation, lack of capacity, impossbility, duress, undue influence

Question 34

Restitution

Answer 34

Restore parties to their rightful position and prevent unjust enrichment. Must prove it necessary.

Quasi-Contract - allows P to recover a defendant’s unjust gains. Implies fictional K. Requirements:

1) Plaintiff conferred a benefit upon defendant, who realized the benefit, and retention by defendant under the circumstances is unjust. Benefit = any form of advantage.

Question 35

Disgorgment

Answer 35

Stripping the defendant of ill-gotten games especially if derived from violation of statute. Usually some public interest, more punitive purpose.

Question 36

Constructive Trust - Generally

Answer 36

Created by operation of law to prevent unjust enrichment of defendant by effectuating the transfer of property. Fraud rectifying. Seeks to:

retake from a wrongdoer the title to property he obtained as a result of misappropriation through conduct such as fraud, duress, undue influence, breach of fiduciary duty or other inequitable means.

Question 37

Requirements for Constructive Trust

Answer 37

1) a confidential or fiduciary duty between the P and the D
2) As a result of fiduciary duty breach, the defendant holds legal title to property that rightfully belongs to claimant.
3) retention of the property by the defendant would result in unjust enrichment

As a result, Def holds property in trust for P. Enforced by mandatory injunctions. It’s cut off by a BFP.

Question 38

Equitable Liens

Answer 38

A charge or encumbrance that makes property stand as security for debts or obligations owed by D to P.

1) appropriate if improved on property.
2) equitable lien limited to a sum certain, but if property declines in value, P may seek deficiency money judgment.

Question 39

Subrogation

Answer 39

When one party discharges an obligation for which another is primary liable and which the obligor ought to pay. Unless the obligor reimburses the payor, the obligor may have been unjustly enriched.

1) derative claim where subrogee derives claim from subrogor.

Question 40

Laches

Answer 40

Equitable equivalent of SOL. 1) P has waited an unreasonable length of time in asserting its claim and 2) the defendant has suffered prejudice as a result of the moving party’s unreasonable delay.

evaluate reasons & consequences of delay.

Question 41

Equitable Estoppel

Answer 41

1) P through words or conduct, or silence if under duty to speak, caused Defendant to believe a certain state of affairs existed
2) the Defendant relied on facts or state of affairs exsting as flowed from the words, conduct or silence
3) the D was prejudiced as a result of his reliance on the plaintiff.

May be estopped from assert SOL as defense due to conduct induced the delay.

Question 42

Waiver

Answer 42

Voluntary and intentional relinquishment of a known right. No reliance required to establish a waiver.

Focus on P’s conduct rather than D’s induced conduct.

Question 43

Unclean Hands

Answer 43

MAXIMS:

1) He who comes into equity must come with clean hands 2) no one can take advantage of his own wrong 3) and between those who are equally in the wrong, the law will not interpose.

Prevents equitable relief if P engaged in improper or unfair conduct, with a close connection to the matter in controversy, for which the P sees equitable relief.

Majority of courts refuse to apply this doctrine to actions at law.

Question 44

Undue Hardship

Answer 44

Equity court considers the hardship to each party that would result if the relief were granted or denied.

Question 45

Judicial Estoppel

Answer 45

Prohibits a party from adopting a contrary factual position in a lawsuit in direct conflict with a position taken in the same or related case.

1) two totally inconsistent positions taken
2) in the same / related proceedings involving same party
3) must have been succesful in maintaing that position and received some benefit
4) inconsistency must be part of intentional effort to mislead court.

Question 46

Modifying an Injunction

Answer 46

MAY be made in court which granted it when

1) court believes ends of justice would be served
2) law has changed
3) change in controlling facts on which injunction rested

parties can’t do it themselves