Remedies

Question 1

Tip for Remedies

not rule

Answer 1

Split discussion by cause of action

1. Contract
2. Tort
3. Property
4. Quasi-contract/unjust enrichment/restitution

Then by Type of Remedy
1. Legal
2. Equitable

Question 2

Contract Legal Remedies – Damages

not rule

Answer 2

Types of compensatory Damages – Contract compensatory damages include several types of damages:
1. Expectancy (Benefit of the Bargain)
2. Consequential Damages
3. Reliance Damages
4. Incidental Damages
5. Liquidated Damages

Question 3

Contract Damages - Strategies

not rule

Answer 3

If damages are expectancy, just calculate difference between contract price and market price or cover.

If damages are lost future profits, consequential damages, or reliance damages, apply four factor analysis.

If K was never performed or expectancy damages are too speculative, discuss reliance damages.

Liquidated damages – extremely difficult to ascertain / reasonable forecast / proportional

When dealing with contracts remedies, must discuss choice of law (including defining whether the object is a good and merchants).

Question 4

Legal Damages

contract damages

Answer 4

The purpose of contract damages is to put the nonbreaching party in the economic position he would have been in had the promise been performed. That is usually calculated as expectation damages, plus consequential damages, less any loss or cost saved by not performing.

barbri

Question 5

Expectancy (Benefit of Bargain) Damages

Answer 5

Expectancy damage is the benefit of the bargain measure. Market price less contract price.
—
(Normal benefit of the bargain damages are the market price less the contract price.)

barbri

Question 6

Expectancy damage

UCC - buyer and sellers

Answer 6

A party to a contract for the sale of goods may sue the breaching party and seek compensatory damages for non-delivery.

If the seller breaches, the buyer’s damages are the additional market price above contract price.

If the buyer breaches, seller will get its profit margin - the difference between the contract price and its cost of sale or production.

Question 7

Expectancy Damages UCC subrules

Answer 7

For contaract controlled by UCCC:
- for the buyer’s breach, the seller can recover by contract price minus the market price plus incidental damages. The seller can resell the item and get damages - the contract price minus resale price - as long the resale is done in good faith in a commercially reasonable manner, and reasonably soon after breach.

• For seller’s breach, the buyer can recover by the market price minus the contract price plus cover price. The buyer can recover the cover price if the buyer covers by buying replacement goods without unreasonable delay, in good faith, and at a reasonable price. Cover is the cost of the replacement goods.

Question 8

Lost Volume Seller Damage

Expectancy Damages

Answer 8

If the seller is someone who can sell as many of an item as she can find buyers, seller’s damage is the lost profit on the item.
–

If buyer repudiates purchase and the seller can sell as many items as the seller can find buyers, seller’s damage is the lost profit on the item. Even if that particular item is resold to another buyer, the seller still lost the profit on the sale of the particular computer.

Question 9

Contract compensatory damages
Four-Part Analysis for Damages

Use for consequential and reliance damage

Answer 9

Contract compensatory damages must be causal (“but for”), foreseeable (as of the time of formation), certain, and unavoidable. Certainty with regard to established businesses can be determined using a profit history.

Question 10

Certainty

Four-Part Analysis for Damages

Answer 10

Certainty with regard to established businesses can be determined using a profit history , but it is an issue with new businesses, since future profits are often speculative. Relevant factors in determining certainty are availability of the evidence, certainty of actual loss, and culpability of the defendant.

Question 11

Unavoidability

Four-Part Analysis for Damages

Answer 11

A plaintiff must take reasonable steps to mitigate his or her loss once it occurs.

Question 12

Consequential Damages

Answer 12

Consequential damages are the damages that logically flow from a breach of the contract other than the cost of sale, profit and purchase price. These include future profits beyond those from the immediate transaction itself, costs incurred due to the breach that were not part of the original deal, and similar damages.

Four-part analysis regarding damages must be undertaken whenever plaintiff seeks lost future profits (other than a seller’s immediate profit from the deal), consequential damages and reliance damages.

Question 13

Reliance Damages

Rule

Answer 13

Reliance damages seek to put the party in the position they would have been in had the contract not been formed in the first place. These are usually out of pocket costs incurred by a party before the contract is actually performed. Reliance damages are not recoverable where compensatory damages are measurable.

Bolded is the short rule
Only available if the expectancy damages are too speculative or no enforceable K (such as with promissory estoppel, with the contract that is never performed at all).

Question 14

Incidental Damages

Answer 14

These are expenses reasonably incurred in shipping, care and custody of the goods and, for the seller, in re-selling the goods after a breach.

rarely tested

Question 15

Liquidated Damages

Answer 15

Liquidated Damages are agreed-upon damages where actual damages are hard to calculate. Liquidated damages must be proportional or otherwise void as penalty.

Analysis:
Real Estate purchase contracts – no more than 6-10%
Service contracts – approximation of lost profit

Upheld if damages will be extremely difficult to ascertain and the stipulated amount is a reasonable forecast of the damages

Question 16

Contract – Equitable Remedies List

not rule

Answer 16

1. Specific Performance
2. Rescission
3. Reformation
4. Injunctive relief in aid of contract remedies
5. Declaratory judgment

Question 17

Specific Performance

Answer 17

A party is entitled to specific performance when —whether the contract is under the common law or under the UCC:
(1) there is a valid and enforceable contract, definite and certain;
(2) the party has met all the conditions required, or the condition have been excused;
(3) the legal remedy is inadequate (the subject of the contract is unique);
(4) the remedy is feasible for the court to supervise; and,
(5) Defendant must not have any defense.

barbri+ST

Question 18

Valid and Enforceable Contract

no rule
Specific Performance

Answer 18

1. valid and enforceable contract,
2. with definite and certain terms,

Question 19

Conditions Met or Excused

Specific Performance

Answer 19

A party seeking specific performance must show that he or she performed all conditions required of him under the contract, unless excused.

Question 20

Legal Remedy Inadequate

Specific Performance

Answer 20

A legal remedy may be inadequate for a variety of reasons.
(choose one of following)
* For the purposes of specific performance, one of those is that the subject matter of the contract is unique.
* Land is always unique.
* Dealing with rare and unique good

Question 21

Feasible remedy

Specific Performance

Answer 21

Plaintiff must show that the remedy is feasible for the court to enforce without great difficulty or complication to the court. Enforcement is feasible when the court has personal jurisdiction over the defendant because if the defendant refuses to obey the court’s command, she can be held in contempt in court.

barbri+ST

Question 22

Defense of hardship

Answer 22

The defendant must show that there was inadequate consideration, marked inequity between the parties; and plaintiff exercised unfair advantage; this defense does not apply when the subject matter of the contract is found to be worth more than the agreed price at the time set for performance.

barbri

Question 23

Contract – Provisional Remedies

Answer 23

Where the object of a contract is unique (such as either land or a unique and rare good), a provisional remedy such as a TRO or Preliminary Injunction is available—not to prevent the breach of the contract, but to preserve the Specific Performance and Replevin remedies where there is an imminent likelihood of irreparable harm from the permanent loss of the object of the contract

TRO and preliminary injunction are provisional injunction, not permanent injunction

Question 24

TRO and Preliminary Injunction

Contract, Tort, Property

Answer 24

In the case of a TRO or Preliminary Injunction, plaintiff must show:
(1) a reasonable likelihood of success on the merits,
(2) irreparable harm if the injunction is not granted, and
(3) a balancing of the hardships in plaintiff’s favor.

In addition, (1) there is a special showing on a TRO of immediate irreparable harm if the TRO is not granted right away and (2) must give nonmoving party notice unless moving party can make a strong showing why notice should not be required.

—
for tort and property - only trespass/nuisance
for contract - unique good or land (property)

barbri

Question 25

Reasonable Likelihood of Success

TRO and Preliminary Injunction

Answer 25

Plaintiff must show a reasonable likelihood that they would prevail on the merits of the underlying action—in this case, a [cause of action]

–
e.g., breach of contract.

Question 26

Irreparable Harm

TRO and Preliminary Injunction

Answer 26

Plaintiff must show they would suffer irreparable harm if the injunctive relief is not granted. Irreparable harm is harm that cannot be satisfied by legal damages.

—

This involves the uniqueness of the harm or the object of the contract involved, and the threat that it will be permanently lost if the TRO or preliminary injunction are not granted.

If plaintiff seeks a TRO, also discuss why this threat of irreparable harm is so immediate that emergency relief is required.

Question 27

Balancing the Hardships

TRO and Preliminary Injunction

Answer 27

The court will balance the hardship to plaintiff of denying an injunction against the hardship to defendant of granting one.

discussed harm/lack of harm done to plaintiff if injunction not granted
discuss harm/lack of harm done to defendant if injunction is granted
then compare whose harship is worse in one sentence

Tip: someone who breach K is looked down upon

Hardships are always balanced at the TRO and preliminary injunction stage. Generally, for a court to even consider a hardship to the defendant, the defendant’s conduct should be inadvertent (negligence and ultrahazard), and **not intentional. **

Question 28

Recission

Answer 28

Recission is the undoing of a contract. It is restitutionary remedy, which cancels the contract by plaintiff’s prompt notice of the recission and tender back of the consideration, or by plaintiff seeking recission in the lawsuit and offers to tender back the consideration. The grounds for recission must have existed at the time of formation, making the contract voidable. Grounds for recission are mutual or unilateral mistakes, or fraudulent or innocent misrepresentation.

Question 29

Grounds for Recission

Answer 29

1. Mistake
2. misrepresentation

Question 30

Mutual Mistake

Answer 30

A mutual mistake occurs when both parties are incorrect as to a basic assumption (of the material fact and) of the contract prior to or during the formation of the contract. The mistake must be as the nature or identity of the subject matter of the contract. If the rescinding party does not bear the risk of the mistake, then the contract is voidable.

—
Mutual mistake requires a mutual mistake (among all parties to the contract) as to a material fact—one that goes to the basis of the bargain.

Question 31

Unilateral Mistake

Majority and Modern rule

Answer 31

Unilateral mistake occurs where one party is mistaken as to a basic assumption of the contract prior to or during the formation.

The established rule grants recission only if that nonmistaken party knows or should know of the mistake.

The modern trend grants recission when the mistake is basic and the mistaken party’s hardships outweighs the detriment to the nonmistaken party’s expectations under the contract.
–
Majority – non-mistaken party knows of mistake

• Rule: a unilateral mistake (as to a material fact) will only be grounds for rescission if the non-mistaken party knows or should know of the mistake

Modern – balance harms to each party
* Rule: court grants rescission if the mistake is basic and the mistaken party’s hardship outweighs the detriment to the non-mistaken party’s expectations under the contract.

Question 32

Misrepresentation

Answer 32

Misrepresentation requires:
(1) a false representation of a material fact or omission of a material fact;
(2) that the defendant knew was false (intentional misrepresentation), or should have known was false (negligent misrepresentation), or made innocently (innocent misrepresentation);
(3) reasonably relied upon by the plaintiff to his or her detriment.

Question 33

Reformation

Answer 33

Reformation is the remedy by which the court alters or modifies a written instrument, such as a contract or deed, to make it conform to the parties’ previous mutual understanding. Reformation requires a valid prior agreement in the first place. The grounds include a mutual mistake of fact regarding whether the instrument conformed to the parties’ intentions, including scrivener’s errors, unilateral mistake where one party knows the instrument contains an error but the other party does not, mistake of law as to the legal meaning of terms, and fraud.

Question 34

Declaratory Relief

For Contract

Answer 34

In a contract situation, it may issue where there is a dispute in the interpretation of the contract. The court will issue a declaratory judgment as to the parties’ rights and obligations under the contract.

In constitution, declaratory relief will be granted where the government conduct is unconstitutional and where plaintiff can show they have a substantial controversy with the government - standing.

—
In a contract situation, it may issue where there is a dispute as to interpretation of a contract—such as where in an insurance policy the insured and insurer dispute whether there is policy coverage. The court will issue a declaratory judgment as to the rights and obligations of the parties under the contract, including whether the insurance company has coverage or an obligation to defend the insured.

Question 35

Tort - Damages

not rule

Answer 35

Three kinds of tort damages
1. General damage
2. Special damages
3. Punitive damage

Special damages and punitive damages must be specially pleaded in the Complaint.

Question 36

General Damage

Answer 36

General damages are foreseeable from the injury such as pain and suffering

Question 37

Special Damages

Answer 37

Special Damages that could not have been foreseen from the mere occurrence of the wrong (medical expenses; lost wages)

Question 38

Punitive damages

Answer 38

Punitive damages may be awarded for willful and wanton conduct amounting to fraud, oppression, or malice.Punitive damages are subject to due process issues.

If they are “grossly excessive,” they may be invalid under the 14th Amendment Due Process Clause. The issue is whether the defendant had fair notice of the possible magnitude of the punitive damages. The factors in assessing notice include:
(a) the reprehensibility of the defendant’s conduct;
(b) the disparity between the actual or potential harm suffered and the punitive award; and
(c) the difference between the punitive award and the criminal or civil penalties authorized for comparable misconduct.

Question 39

Tort Compensatory Damages
for Conversion

Answer 39

Damages for conversion are the fair market value of the property at the time of conversion.

Question 40

Tort Compensatory Damage
four part analysis

To get Tort Damage

Answer 40

Tort compensatory damages must be causal (“but for”), foreseeable (compliant with proximate cause rules), certain, and unavoidable. But the foreseeability requirement is relaxed for intentional torts.

Question 41

Fraud

Punitive Damage

Answer 41

Fraud means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant to deprive a person of property or legal rights or otherwise causing injury.

Question 42

Oppression

Puntitive Damage

Answer 42

Oppression means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.

Question 43

Malice

Answer 43

Malice means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.

Question 44

Torts – Equitable Remedies

not rule

Answer 44

Equitable relief - Injunctive remedy
* Temporary restraining order (TRO)
* Preliminary injunction
* Permanent injunction

Provisional Remedies
* TRO and Preliminary injunction are provisional remedies
* Permanent injunction is not provisional remedy and only issued after trial

with trespass or nuisance, there is usually not an adequate legal remedy because they involve harms to real property, which is always unique.

Question 45

Permanent Injunction

Answer 45

To obtain a permanent injunction—which is granted only after trial on the merits, the plaintiff must show:
(1) an inadequate legal remedy,
(2) feasibility of enforcing the injunction, and
(3) a balancing of the hardships in plaintiff’s favor.

if you are simply asked about the plaintiff’s right to an injunction, assume it is a permanent injunction, and do not discuss the provisional remedies at all.

Question 46

Inadequate legal remedy
not rule

Permanent Injunction

Answer 46

Different reasons for inadequate legal remedy
* Irreparable harm
* Money damages inadequate
* Damages are too speculative.
* The potential of multiplicity of suits e.g., continuous trespass or nuisance cases
* Threat of a prospective tort.

Question 47

Feasibility of enforcing the decree

Permanent Injunction

Answer 47

Generally, it is more feasible to enforce a negative or prohibitory injunction than a mandatory injunction because courts need to be able to supervise their decrees. Mandatory decrees requires the court to sometimes continue to fashion remedies, or have continual involvement, unless the act was easy to supervise.

—

E.g., feasible - an order to execute a deed or complete a transfer of goods for money, for example.

E.g., infeasible - However, seeking a mandatory injunction to operate a business in a certain way is almost certainly infeasible due to the complexity in running a business.

Question 48

Balancing Hardship

Permanent Injunction / not a rule

Tort related only

Answer 48

For Tort, only balance the hardships in cases of encroachment and private nuisance.

Question 49

Property Remedies - Damages

Answer 49

Usually, the damages for property involve the difference between the property value before and after the harm.

Question 50

Property Remedies for Damages by Enroachment

Answer 50

When the harm is due to a permanent encroachment, the damages will be the diminution in value to the encroachment, or the fair rental value of the area encroached upon.

Question 51

Injunction - Property

not rule

purpose of injunction

Answer 51

Use it for trespass and nuisance

Question 52

Waste

Answer 52

Waste is an act by someone in rightful possession of property that does permanent injury to the land, harming the interest of someone entitled to future possession. There are three types of waste:
* voluntary;
* permissive; and
* ameliorative.

Question 53

Voluntary waste

Answer 53

Voluntary waste are deliberate destructive acts, such as cutting timber from the land without permission.

—
* Remedies
* Injunction
* Damages
* the lesser of the diminution in value of the property both before and after the injury or
* cost of repairs
* Treble damages if permitted by statutes

Question 54

Permissive Waste

Answer 54

Permissive waste are acts of omission or neglect, such as failing to repair conditions that have fallen into disrepair, or undertaking repairs or other acts required by a lease.

—

Remedies:

• Damages
  
  • the lesser of the diminution in value of the property both before and after the injury or
  • cost of repairs
  • Note: not injunction (b/c it would require affirmative acts)

Question 55

Ameliorative Waste

Answer 55

These are acts that alter the property but result in an increase in value

—

Remedies:
* if anything, cost of restoration to their original condition in certain circumstances
* injunction depends on the facts of a case

e.g, yes - short-term tenant might be enjoined from making substantial changes

e.g., no - long-term tenant might not be enjoined from making substantial changes

Note: Not recoverable by damages

Question 56

Unjust Enrichment / Restitutionary Remedies

Answer 56

Restitutionary remedies are available under an unjust enrichment (quasi-contract) theory.

Question 57

Quasi-Contract

Answer 57

Quasi-contract imposes a legal obligation on the defendant to provide restitution for receiving a benefit and property by an illegal or unenforceable contract or a wrongful retention or obtaining of property.

—
Quasi-contract [is the name given to the legal theory] impos[ing] a legal obligation on the defendant who receives a benefit pursuant to an unenforceable contract or a wrongful act.
Tip:
* The nature and amount of the restitution is dependent on the type of agreement and the type of benefit conferred on the defendant.
* if a contract is unenforceable because of the Statute of Frauds, incapacity, fraud, duress, or illegality, a defendant who has received the benefit under the unenforceable contract may be forced to make some form of restitution to avoid defendant’s unjust enrichment.

Element:
* Legal theory to support restitution in cases of wrongful retention of benefits and property due to:
* Illegal or unenforceable contract; OR
* Wrongful retention or obtaining of property (conversion/fraud)

Question 58

Acts to remedies to remedy unjust enrichment

Answer 58

• In the case of a wrongful act, such as conversion, for example, if the defendant unjustly retains the converted personal property, specific restitution of the personal property is the appropriate remedy.
• If the defendant wrongfully obtains goods and services without paying for them, the value of those goods and services is the restitutionary remedy.
• If the defendant wrongfully obtains and keeps money, and uses it to make purchases or commingles it, we look to equitable remedies such as a constructive trust, resulting trust, or equitable lien.

• For bar exam purposes, where unjust enrichment is an issue, always consider all possible remedies as options.

Question 59

Legal Remedies for Unjust Enrichment

not rule

Answer 59

1. Replevin
2. Ejectment

Question 60

Replevin

General Law

Answer 60

Replevin is a legal restitutionary remedy, where its purpose is to recover personal property that is wrongfully taken or detained.

—
Replevin is a legal restitutionary remedy, not an equitable one. Its purpose is to recover personal property that is wrongfully taken or detained. With replevin, it is possible to recover prejudgment possession of the personal property, in a proceeding for a provisional remedy called “claim and delivery.”

Tip: state the general rule of replevin but then only state the relevant replevin

Question 61

Common Law Replevin

Property Wrongfully Taken or Detained:

Answer 61

Common law replevin requires that the defendant has possession of wrongfully taken or detained property, and that plaintiff must have a showing of the immediate right to reclaim the possession or title.

—
e.g., which occurs if defendant fails to make payments.

Tip:
* at common law, replevin requires a showing of the immediate right to possession or title. If so, then unless the plaintiff can show an immediate right to recover, replevin is unavailable.
* replevin issue also occur where there has been conversion of personal property. Yet, if the property has then been sold to a BFP, replevin is unavailable against the transferor, but is available against the BFP holder of the personal property.

Question 62

UCC Replevin

Whole Rule

don’t write it

Answer 62

To obtain an order of replevin in connection with the sale of goods under UCC, plaintiff must show either:

(1) that the goods are specifically identified in the contract, and the plaintiff is unable to cover (obtain equivalent goods) despite reasonable attempts to do so (in which case, replevin will be granted conditioned on payment for the goods); or
(2) if the buyer has made part payment and seller has not delivered the goods, and seller becomes insolvent within 10 days after receiving buyer’s payment or the goods were purchased for personal, family, or household purposes.

only need to state one type

Question 63

Replevin Type I

Answer 63

To obtain an order of replevin under the UCC, the plaintiff must show that the goods are specifically identified in the contract, and the plaintiff is unable to cover despite reasonable attempts to do so.

Question 64

Replevin Type II

Answer 64

To obtain an order of replevin under the UCC, the plaintiff-buyer has made part payment and seller has not delivered the goods, and either the seller becomes insolvent within 10 days after receiving buyer’s payment or the goods were purchased for personal, family, or household purposes.

Question 65

Ejectment

Answer 65

Ejectment is a legal restitutionary remedy to have possession restored to a plaintiff against a defendant wrongfully in possession of real property, [such as a tenant who holds over.] If an ejectment action is not brought timely (within the statute of limitations period), the possessor can prevail in an adverse possession action.

—
* Basis for unlawful detainer (eviction of tenant wrongfully holding over), or
* If not brought within the limitations period, gives rise to adverse possession

**Remedy to restore possession of real property **

use in tenant holdover or adverse possession analysis

Question 66

Equitable Remedies

Answer 66

Generally, equitable remedies are issued at the court’s discretion to avoid injustice when there is inadequate legal remedy.

Question 67

Constructive Trust

The Rule!!

Answer 67

To impose a constructive trust on the property, the court must find that the defendant-wrongdoer is unjustly enriched from retaining the title of the property by either wrongfully obtaining plaintiff’s title to the property or using the plaintiff’s proceeds to purchase full title to the property. The constructive trustee’s sole trust obligation is to convey the title of the property to the plaintiff, along with the benefit of any increase in value.

—
A constructive trust may only be imposed on property to which defendant obtains title. It thus applies to a defendant who either wrongfully obtains title to plaintiff’s property or uses proceeds of the plaintiff’s with which the defendant has been unjustly enriched to purchase full title to property.

To impose a constructive trust, the court must find that retention of title to property by the defendant-wrongdoer would constitute an unjust enrichment. The sole trust obligation of the constructive trustee is to convey title to the property to the plaintiff, who also then gets the benefit of any increase in value.

Question 68

Constructive Trust

definition

Answer 68

A constructive trust provides for specific restitution of specific property that has been wrongfully acquired by a defendant. Thus, a constructive trust may only usually be imposed on property to which defendant obtains title. It thus applies to a defendant who either wrongfully obtains title to plaintiff’s property or uses proceeds of the plaintiff’s with which the defendant has been unjustly enriched, or which defendant has converted, to purchase full title to property.

Question 69

Imposing a Constructive Trust

Answer 69

To impose a constructive trust, the court must find that retention of title to property by the defendant-wrongdoer would constitute an unjust enrichment. The sole trust obligation of the constructive trustee is to convey title to the property to the plaintiff, who also then gets the benefit of any increase in the value of the property. So if defendant does not have full title to property, the property usually cannot be made subject to a constructive trust.

Question 70

No constructive trust against commingle unless conscious Wrongdoer

The Rule!!

Answer 70

Constructive trust usually does not apply where the wrongdoer uses the victim’s money to commingle with his or other’s money or improve his own property; or the wrongdoer conveys title. Instead, an equitable lien in the plaintiff’s favor will be applied, to the extent of the converted funds or the value of the improvement. However, if the defendant is a conscious wrongdoer who obtains the money through theft or embezzlement and commingles that victim’s money with others’ money to purchase an asset, the defendant cannot block a constructive trust, and the plaintiff can elect constructive trust or equitable lien, whichever gives the plaintiff more.

Question 71

Wrongdoer who Commingles Fund

bad rule

Constructive Trust not applicable but equitable lien is

Answer 71

Usually does NOT apply where wrongdoer commingles money or improves own property or transfers title UNLESS conscious wrongdoer obtains through theft or embezzlement, in which case plaintiff can elect constructive trust or equitable lien, whichever gives plaintiff more

^^marker^^

Otherwise, (1) where defendant commingles plaintiff’s money with their own or others’ funds, or improves their own property (as opposed to purchasing title to property) with plaintiff’s money or property or the proceeds thereof, or (2) where defendant conveys title, then:

• a constructive trust against defendant is unavailable and
• an equitable lien in favor of plaintiff to the extent of the converted funds or the value of the improvement will be imposed.

—

At that point, the property can be sold to pay the lien. Thus, unlike a constructive trust, plaintiff does not get the benefit of an increase in value of the property subject to the equitable lien.

Elements
1. Commingled funds, improved property, funds from sale of title
2. Plaintiff not entitled to appreciation

• If commingled funds, plaintiff gets lowest intermediate balance (lowest balance in the account after recalculating that balance after each deposit and withdrawal)
• BUT IF wrongful act (theft / embezzlement) and funds are used to acquire title, again a constructive trust is appropriate if value of title increased

—-

^^marker^^
In some circumstances, involving a conscious wrongdoer who commits embezzlement or outright theft, a defendant who commingles money with others’ money to purchase an asset cannot block a constructive trust.

bad rule

Question 72

Equitable Lien

Answer 72

An equitable lien is the appropriate remedy where the wrongdoer commingles her own funds with the funds she misappropriated from the victim and either:
1. maintains commingled funds in an account;
1. uses the funds to purchase property; or
2. sells title acquired with misappropriated funds and commingle those proceeds.

Then, the equitable lien attaches to the funds remaining in the account and any property purchased with funds taken from the account.

—
Equitable Lien is the appropriate remedy where the wrongdoer commingles her own funds with the funds she misappropriated from the victim and maintains commingled funds in an account, or uses the funds to purchase property, or sells title acquired with misappropriated funds and commingles those proceeds. An equitable lien then lies on both the funds remaining in the account and any property purchased with funds taken from the account.

—-

An equitable lien does not provide specific restitution of specific property, but instead creates a security interest for the equitable debt.

Question 73

Constructive Trust vs. Equitable Lien: When to use for stock value

Answer 73

If the value of the stock goes up, plaintiff will seek to impose a **constructive trust to get the increased value of the shares. **

If the value of the stock goes down, plaintiff will seek an equitable lien against the stock and will then seek a lien in any other property needed to recover the full amount that was embezzle

—-

This illustrates the principle that if the wrongdoer is a conscious wrongdoer (as opposed to a mistaken person) and through embezzlement or theft acquires assets purchased with the victim’s funds, the victim may choose a constructive trust remedy, allowing him to share in the value of his pro rata portion in the purchased assets, if the value of the converted assets increases, or an equitable lien if the value decreases.

Question 74

Resulting Trust

two types

Answer 74

1. Failure of Express Trust (lack of beneficiary or beneficiary is dead), equity creates a resulting trust in Settlor or Settlor’s estate, OR
2. A resulting trust is found in case of a purchase money resulting trust - Person who supplied some or all of consideration does not hold title.

for both, Resulting trustee’s sole trust obligation is to convey the property to the plaintiff

Question 75

Resulting Trust from Failure of Express Trust

Answer 75

When an express trust fails because the beneficiary is dead, equity creates a resulting trust in the settlor or, if the settlor is dead, the settlor’s estate.

Question 76

Purchase Money Resulting Trust

definition

Answer 76

A resulting trust is found in case of a purchase money resulting trust - Person who supplied some or all of consideration does not hold title.

Supply of consideration but lack of title –> creates presumption of resulting trust

Presumption rebutted by evidence of:
* Gift from the resulting beneficiary to the resulting trustee
* Loan from the resulting beneficiary to the resulting trustee
* Payment of Debt - the consideration was payment of a debt owing from the resulting beneficiary to the resulting trustee.

Question 77

Purchase Money Resulting Trust

Answer 77

A purchase money resulting trust is found where a person who takes title did not supply all or part of the consideration, but still holds title. Such a person is presumed to hold title or partial title in trust for the person who did supply the consideration—the resulting beneficiary. The resulting trustee’s sole trust obligation is to convey the property to the plaintiff. No writing is required to enforce the purchase money resulting trust.

Question 78

Rebutting Presumption of REsulting Trust

Answer 78

The presumption of a resulting trust arising from the supply of consideration can be rebutted by proof of gift, proof of a loan, or proof of consideration from paying back debt owe from the resulting beneficiary to the resulting trustee.
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The presumption of a resulting trust arising from the supply of consideration can be rebutted by proof of a gift from the resulting beneficiary to the resulting trustee, proof of a loan from the resulting beneficiary to the resulting trustee, or proof that the consideration was payment of a debt owing from the resulting beneficiary to the resulting trustee.

Question 79

Misappropriation of Money

analysis

Answer 79

Misappropriation of money is often the tort of conversion.

Remedies:

1. Damages for Tort Conversion?
   
   • show that specific, identifiable money was taken.
   • Damages include actual damages (the amount of money taken), and punitive damages.
2. Restitution under Quasi-contract?

Constructive trust or Resulting trust
* If specifically identify money, or
* If property purchased with specifically identify money

Equitable Lien
* if money commingled, or
* money used to improve property or buy property with another person or with defendant’s (wrongdoer’s) own funds

where the wrongdoer dissipates funds from the account after commingling them, and later adds more funds, the victim seeking a remedy against the account can then only impose an equitable lien on the lowest intermediate balance—the lowest balance in the account after recalculating that balance after each deposit and withdrawal

Question 80

Misappropriation of Personal Property

Answer 80

1. Legal Remedies
   
   • Damages for conversion or trespass to chattels
     
     • Actual damage - Value of property at time of conversion
       
       • Note: actual damages are also recoverable by the true owner against the BFP.
     • Cost of recovery (if trespass to chattels)
     • Punitive damages
   • Replevin –
     * if the property has not been destroyed, plaintiff can seek the legal restitutionary remedy of replevin
     * if not cut off by sale, replevin is available by true owner against BFP
2. Equitable Remedies – if not cut off by sale to BFP
   
   • Constructive trust,
     
     • (if the converter obtains title to the property, sells the property for money, or takes that money and acquires title to some other item of personal property)
   • Equitable lien, or
   • Mandatory injunction
     * (only if replevin is inadequate)

Question 81

Misappropriation of Personal Property

Answer 81

1. Legal Remedies
   
   • Damages for conversion or trespass to chattels
     
     • Actual damage - Value of property at time of conversion
       
       • Note: actual damages are also recoverable by the true owner against the BFP.
     • Cost of recovery (if trespass to chattels)
     • Punitive damages
   • Replevin –
     * if the property has not been destroyed, plaintiff can seek the legal restitutionary remedy of replevin
     * if not cut off by sale, replevin is available by true owner against BFP
2. Equitable Remedies – if not cut off by sale to BFP
   
   • Constructive trust,
     
     • (if the converter obtains title to the property, sells the property for money, or takes that money and acquires title to some other item of personal property)
   • Equitable lien, or
   • Mandatory injunction
     * (only if replevin is inadequate)

Question 82

Equitable Defenses

list

not rule

Answer 82

1. Laches
2. unclean hands
3. sales to BFP
4. injunction not available

After discussing equitable remedies, discuss equitable defenses

Question 83

Laches

Answer 83

Laches is the equitable equivalent to a statute of limitations. It requires an unreasonable delay has resulted in harm to the other party - such as the loss of the ability to mount a defense due to loss or destruction of evidence.

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Laches is the equitable equivalent to a statute of limitations. It requires:

(1) an unreasonable delay; and
(2) the delay has resulted in harm to the other party—such as the loss of the ability to mount a defense due to loss or destruction of evidence.

The period of laches may be shorter than the legal statute of limitations, but it cannot be longer. Laches runs from when a plaintiff has knowledge that a right has been infringed.

Question 84

Unclean Hands

with respect to subject matter of suit

Answer 84

The party seeking equitable relief must not be guilty of inequitable or wrongful conduct with respect to the subject matter of the present suit. The essence is unfair dealing or conduct related to the subject matter, not whether plaintiff has committed an actual tort. However, this only applies if the party guilty of unclean hands has harmed the other party to the transaction. Where both parties are guilty of wrongdoing, a court will weigh the equities to determine the just result.

Question 85

Sale to Bona Fide Purchaser

Answer 85

The wrongdoer’s sale of property to a bona fide purchaser (BFP)** cuts off the remedies of constructive trust and equitable lien as to that BFP,** but not replevin if plaintiff is the true owner of personal property.

Question 86

Conversion of Personal Property

Sale to Bona Fide Purchaser

Answer 86

A BFP is liable for actual, but not punitive, damages to the true owner in an action for conversion of personal property.

Question 87

Injunctions Not Available b/c Breach of Contract

Answer 87

Equity will not enjoin a breach of contract, because with a breach of contract, damages are generally adequate. But, where the contract involves a unique subject matter, so that the legal remedy might be inadequate and specific performance is available, it is possible that an injunction would be available to aid in obtaining specific performance.

Question 88

Injunctions Not Available b/c Criminal Prosecution

Answer 88

No injunction against a criminal prosecution by the District Attorney can be granted without a strong showing of irreparable injury.

Question 89

Injunctions Not Available b/c Criminal Misconduct

Answer 89

Injunctions against crimes do not fall within equity jurisdiction, unless the crime is also a public nuisance.

Note: A public nuisance is one that endangers the public health and welfare.

Question 90

Defense for Legal Remedy:
Statutes of Fraud

Answer 90

Under the Statute of Frauds, certain kinds of contracts are unenforceable if they are not in writing.

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Look at SOF in Contracts to do the analysis

Question 91

Unjust enrichment when both parties are guilty of wrongdoing

Answer 91

Where both parties are guilty of wrongdoing, a court will weigh the equities

no need for heading.

mostly to counter defendant’s defense