Final Review Flashcards
BMW v. Gore Rule Statement (Limitation on Damages/Punitive Damages)
If a punitive damages award is grossly excessive in relation to a state’s interests in punishment and deterrence, the award violates the defendant’s due-process rights.
Courts consider three factors to determine whether a punitive-damages damages award is grossly excessive: (1) the reprehensibility of the defendant’s conduct (2) the ratio of punitive damages to actual damages, and (3) the amount of criminal or civil sanctions imposed for similar misconduct.
eBay Inc. v. Marcexchange Rule Statement (Injunctions)
Under the Patent Act, in order to issue a permanent injunction, a plaintiff must satisfy the traditional four-factor test, which requires that the plaintiff demonstrate (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.
Courts consider three factors to determine whether a punitive-damages award is grossly excessive:
(1) the reprehensibility of the defendant’s conduct, (2) the ratio of punitive damages to actual damages, and (3) the amount of criminal or civil sanctions imposed for similar misconduct.
Rhodes v. E.I. DuPont De Nemours and Company, 657 F. Supp. 2d 751 (S.D. W. Va. 2009)
Rule Statement (Medical Monitoring)
Under medical monitoring P must prove that he has been significantly exposed relative to the general population, by a proven substance which is hazardous, through the tortious conduct of the defendant, and as a proximate result of the exposure, P has suffered an increased risk of contracting a latent disease, that increase risk makes it reasonable to under periodic testing, and procedures exist to make detection of the disease possible.
Norcisa v. Board of Selectmen Rule Statement (Subject Matter of Equitable Relief)
Courts may not enjoin or issue declaratory judgements against criminal prosecutions unless there is a lack of adequate remedy at law.
However, there is an exception for special circumstances, which requires the following three-prong test: (1) a substantial right of the plaintiff’s will be impaired to a material degree unless relief is granted, (2) the remedy at law is inadequate, and (3) injunctive relief can be applied with practical success and without imposing an impossible burden on the court or bringing court processes into disrepute.
Wisconsin Auto v. Jones Rule of Law ( Unconscionability)
A contract may be unconscionable if one party does not have meaningful choice, and the contract terms are unreasonably favorable to the other party.
People Ex. Rel. Gallo v. Acuna (Public Nuisance/Subject Matter of Equitable Relief)
A court may issue an injunction enjoining a public nuisance if the nuisance is substantial and unreasonable.
Key Points: Additionally, the court concludes that the injunction is not overbroad and is not unconstitutionally vague. Finally, the injunction does not violate the defendants’ right to association under the First Amendment. The First Amendment does not protect the illegal activities of the gang members.
Maglica v. Maglica Rule of Law Statement (Unjust Enrichment)
Quantum meruit allows recovery for the value of beneficial services, not the value by which someone benefits from those services.
Green v. Higgins Rule of Law Statement (Unclean Hands)
A person may not seek equitable relief of a transaction in which he has been guilty of fraudulent, illegal, or unconscionable conduct.
Key Points: A person may not seek equitable relief of a transaction in which he has been guilty of fraudulent, illegal, or unconscionable conduct. This doctrine is called the doctrine of clean hands. A defendant may raise unclean hands as a defense to a plaintiff’s claim for equitable relief. The clean-hands doctrine applies even if the plaintiff’s misconduct harmed a third party, rather than the defendant. The purpose of denying relief based on the plaintiff’s unclean hands is not to protect the defendant, but to protect the court’s integrity.
Odorizzi v. Bloomfield School District Rule Statement ( Undue Influence)
If a dominant party to a transaction uses excessive pressure to persuade a party whose weakened mental state makes him especially susceptible to persuasion, the weaker party may rescind the agreement as obtained by undue influence.
Main Points: The first condition of undue influence is met if a party’s judgment is so impaired that his mental state prevents him from freely contracting. The second condition requires excessive pressure or overpersuasion, indicated by several of the following characteristics: the people representing the dominant party outnumber the weaker party; the time or location of the discussion is unusual or inappropriate; the dominant party claims that the agreement must be reached immediately, that there is no time to consult an attorney or third party, or that delay will have serious negative consequences; or the weaker party does in fact fail to seek the advice of counsel or a third party.
Stone v. Williams (I) Rule of Law Statement (Laches)
The doctrine of laches bars unreasonably delayed complaints where the delay has prejudiced the defendant.
Two Prong Test: Determining whether a complaint is barred by laches requires analyzing (1) the reasonableness of the delay and (2) the prejudice to the defendants.
Stone v. Williams (II) Rule of Law Statement (Laches)
A court of equity may bar an otherwise successful laches defense as a result of fraud.
Key Points: If the defendant obtains the availability of the defense by withholding information from the plaintiff, the prejudice is of the defendant’s own doing, and courts of equity will not permit the defendant to use the defense.
US v. McNulty Rule of Law Statement (Legal Effects of Equitable Relief)
A court’s personal jurisdiction over an individual grants the court the authority to order the individual to transfer property, regardless of the property’s location.
Simonds v. Simonds Rule of Law (The Constructive Trust)
The replacement of insurance policies does not defeat an equitable interest in an insurance policy.
Main Points: Equitable Interest in Insurance Policies:
Replacement of insurance policies does not eliminate an equitable interest.
Equity ensures justice where legal remedies fail, treating as done what should have been done.
Persistence of Equitable Interest:
Survives policy lapse and replacement, even if tracing replacement policies is impossible.
Obligation remains to maintain policies with the original beneficiary.
Case Decision:
Frederick failed to maintain policies naming Mary as the beneficiary.
Mary lacks a contractual remedy due to Frederick’s insolvent estate.
Second wife unjustly benefits from the insurance policies.
Constructive trust imposed on proceeds for Mary.
Judgment affirmed.
Wisconsin Auto v. Jones Rule of Law (Unconscionability)
A contract may be unconscionable if one party does not have meaningful choice, and the contract terms are unreasonably favorable to the other party.
Main Points:
United Mine Workers v. Bagwell (Contempt)
Contempt proceedings based on out-of-court disobedience to complex injunctions seeking to impose noncompensatory fines must utilize criminal procedural protections such as the right to a jury trial.
Main Points:
Contempt Proceedings:
Out-of-court disobedience to complex injunctions imposing noncompensatory fines requires criminal procedural protections (e.g., jury trial).
Courts hold independent authority to ensure compliance with mandates, but this power risks abuse since judges oversee identification, prosecution, adjudication, and sanctioning.
Types of Contempt:
Civil Contempt: Requires civil procedural protections. Sanctions are coercive (e.g., imprisonment until compliance, purgeable daily fines).
Criminal Contempt: Requires criminal procedural protections (e.g., jury trial, right to counsel). Sanctions are punitive and not purgeable.
Summary Proceedings:
Appropriate for in-court conduct threatening proceedings.
Out-of-court disobedience demands enhanced procedural safeguards.
Case Decision:
Out-of-court disobedience to a complex injunction occurred.
Fines imposed were punitive, not coercive (no chance to purge).
Trial court erred by not providing criminal protections (jury trial required).
Judgment reversed.
Renner v. Kehl Rule of Law (Mutual Mistake)
A contract may be rescinded where there is mutual mistake with regard to a material fact which is an essential component and condition of the contract.
Main Points: Rescission for Mutual Mistake:
Grounds for Rescission:
A contract can be rescinded when there is a mutual mistake about a material fact that is an essential component of the contract.
A failure to discover the unknown condition before the contract does not bar rescission if:
The risk of the mistake was not allocated to one party.
The mistake relates to a basic assumption of the contract.
Case Details:
Both parties mistakenly assumed there was an adequate and economically feasible water supply for commercial jojoba cultivation.
This assumption was a material component, making rescission appropriate.
Damages in Rescission:
Consequential damages are not available in rescission cases.
Restitution damages may be awarded to avoid unjust enrichment, considering benefits conferred on the other party.
Court’s Determination:
Kehls must refund Renner’s down payment and compensate only for increased property value from his efforts.
Renner must transfer leasehold interests back to the Kehls and pay fair rental value for land use.
Outcome:
Trial court’s decision is affirmed in part, reversed in part.
Court of Appeals’ decision is approved in part, vacated in part.
Case remanded for further proceedings consistent with this determination.
Terra Nova v. Associates Rule of Law (Mutual Mistake)
A plaintiff is not entitled to restitution if it makes a payment due to a mistake of fact in a factual but not legal sense.
Main Points: No Restitution for Mistake of Fact in Factual Sense Only:
A plaintiff cannot claim restitution if payment is made due to a factual mistake, but not a legal mistake.
Knowing there’s a possibility of not being obligated to pay negates a legal mistake of fact.
Business Decision vs. Mistake:
If a plaintiff knowingly makes a payment despite suspicion of fraud to avoid potential litigation risks, this is a business decision, not a legal mistake.
In this case, Terra Nova strongly suspected fraud by Scharbarth but chose to pay the insurance claim to avoid potential bad faith lawsuits.
Case Outcome:
Terra Nova not entitled to restitution of payment to Associates due to lack of a legal mistake.
However, Terra Nova granted summary judgment against Scharbarth for fraud.
Mutual of Omaha v. Russell Rule of Law (Mutual Mistake)
Reformation is an ancient equitable remedy that reframes written contracts to reflect accurately the real agreement between the parties if the writing does not embody the real agreement due to a unilateral mistake combined with actual or equitable fraud by the other party or a mutual mistake.
Main Points:
This index card summarizes a legal principle and case outcome regarding reformation of contracts:
Reformation of Contracts:
Reformation is an equitable remedy used to modify written contracts so they reflect the actual agreement between the parties. It applies when:
There is a unilateral mistake combined with actual or equitable fraud by the other party, or
There is a mutual mistake by both parties.
In this case:
No evidence of mutual mistake or actual fraud.
No duty for Mutual of Omaha to provide further explanation beyond presenting the written agreement.
Without such a duty, there is no basis for equitable or constructive fraud.
Key Ruling:
Requiring additional disclosures could lead to ambiguity about the extent and format of such obligations. Therefore, the terms of the printed contract control, and the trial court’s judgment is reversed.
Beatty v. Guggenheim Rule of Law (Constructive Trust)
Rule of Law Statement: An agent who engages in a business venture related to their principal’s interests without consent breaches their fiduciary duty and may be held liable as a constructive trustee for profits derived from the venture. However, an employer’s oral consent can waive the agent’s breach, even if a written modification is required under the contract.
Explanation of Constructive Trust in Beatty v. Guggenheim:
A constructive trust is an equitable remedy imposed to prevent unjust enrichment when one party wrongfully holds property or profits that, in fairness, belong to another. In Beatty v. Guggenheim, the court used the concept of a constructive trust to address the plaintiff’s breach of fiduciary duty. The court considered:
Fiduciary Duty Breach:
The plaintiff, as an agent, entered into the Perry-Treadgold contract, benefiting personally from the profits, without obtaining his employer’s consent. This act conflicted with his fiduciary obligations to act solely in the employer’s best interest.
Imposition of Constructive Trust:
Because the plaintiff violated his duty, the court treated him as a trustee for the profits derived from the Perry-Treadgold contract. This meant that any financial gains he obtained from this agreement would be held in trust for the employer unless a valid waiver existed.
Oral Consent Waiver:
Despite the fiduciary breach, the court recognized that the employer’s oral consent to the plaintiff’s involvement in the Perry-Treadgold contract effectively waived the written consent requirement. This exception allowed the plaintiff to retain his share of the profits under equitable principles.
Purpose:
The constructive trust ensures fairness by restoring to the employer profits that would otherwise have been wrongfully retained. In this case, the remedy balanced enforcing fiduciary duties with recognizing the employer’s informal consent.
