Remedies Flashcards
Tip for Remedies
not rule
Split discussion by cause of action
- Contract
- Tort
- Property
- Quasi-contract/unjust enrichment/restitution
Then by Type of Remedy
1. Legal
2. Equitable
Contract Legal Remedies – Damages
not rule
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
Contract Damages - Strategies
not rule
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).
Legal Damages
contract damages
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
Expectancy (Benefit of Bargain) Damages
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
Expectancy damage
UCC - buyer and sellers
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.
Expectancy Damages UCC subrules
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.
Lost Volume Seller Damage
Expectancy Damages
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.
Contract compensatory damages
Four-Part Analysis for Damages
Use for consequential and reliance damage
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.
Certainty
Four-Part Analysis for Damages
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.
Unavoidability
Four-Part Analysis for Damages
A plaintiff must take reasonable steps to mitigate his or her loss once it occurs.
Consequential Damages
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.
Reliance Damages
Rule
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).
Incidental Damages
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
Liquidated Damages
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
Contract – Equitable Remedies List
not rule
- Specific Performance
- Rescission
- Reformation
- Injunctive relief in aid of contract remedies
- Declaratory judgment
Specific Performance
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
Valid and Enforceable Contract
no rule
Specific Performance
- valid and enforceable contract,
- with definite and certain terms,
Conditions Met or Excused
Specific Performance
A party seeking specific performance must show that he or she performed all conditions required of him under the contract, unless excused.
Legal Remedy Inadequate
Specific Performance
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
Feasible remedy
Specific Performance
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
Defense of hardship
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
Contract – Provisional Remedies
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
TRO and Preliminary Injunction
Contract, Tort, Property
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
Reasonable Likelihood of Success
TRO and Preliminary Injunction
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.
Irreparable Harm
TRO and Preliminary Injunction
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.
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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.
Balancing the Hardships
TRO and Preliminary Injunction
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. **
Recission
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.
Grounds for Recission
- Mistake
- misrepresentation
Mutual Mistake
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.
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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.
Unilateral Mistake
Majority and Modern rule
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.
Misrepresentation
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.
Reformation
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.
Declaratory Relief
For Contract
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.
Tort - Damages
not rule
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.
General Damage
General damages are foreseeable from the injury such as pain and suffering
Special Damages
Special Damages that could not have been foreseen from the mere occurrence of the wrong (medical expenses; lost wages)
Punitive damages
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.
Tort Compensatory Damages
for Conversion
Damages for conversion are the fair market value of the property at the time of conversion.
Tort Compensatory Damage
four part analysis
To get Tort Damage
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.
Fraud
Punitive Damage
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.
Oppression
Puntitive Damage
Oppression means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.
Malice
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.
Torts – Equitable Remedies
not rule
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.
Permanent Injunction
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.
Inadequate legal remedy
not rule
Permanent Injunction
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.
Feasibility of enforcing the decree
Permanent Injunction
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.
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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.
Balancing Hardship
Permanent Injunction / not a rule
Tort related only
For Tort, only balance the hardships in cases of encroachment and private nuisance.
Property Remedies - Damages
Usually, the damages for property involve the difference between the property value before and after the harm.
Property Remedies for Damages by Enroachment
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.
Injunction - Property
not rule
purpose of injunction
Use it for trespass and nuisance
Waste
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.
Voluntary waste
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
Permissive Waste
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)
Ameliorative Waste
These are acts that alter the property but result in an increase in value
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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
Unjust Enrichment / Restitutionary Remedies
Restitutionary remedies are available under an unjust enrichment (quasi-contract) theory.
Quasi-Contract
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.
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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)
Acts to remedies to remedy unjust enrichment
- 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.
Legal Remedies for Unjust Enrichment
not rule
- Replevin
- Ejectment
Replevin
General Law
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
Common Law Replevin
Property Wrongfully Taken or Detained:
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.
UCC Replevin
Whole Rule
don’t write it
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
Replevin Type I
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.
Replevin Type II
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.
Ejectment
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
Equitable Remedies
Generally, equitable remedies are issued at the court’s discretion to avoid injustice when there is inadequate legal remedy.
Constructive Trust
The Rule!!
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.
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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.
Constructive Trust
definition
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.
Imposing a Constructive Trust
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.
No constructive trust against commingle unless conscious Wrongdoer
The Rule!!
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.
Wrongdoer who Commingles Fund
bad rule
Constructive Trust not applicable but equitable lien is
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
Equitable Lien
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.
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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.
Constructive Trust vs. Equitable Lien: When to use for stock value
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
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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.
Resulting Trust
two types
- Failure of Express Trust (lack of beneficiary or beneficiary is dead), equity creates a resulting trust in Settlor or Settlor’s estate, OR
- 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
Resulting Trust from Failure of Express Trust
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.
Purchase Money Resulting Trust
definition
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.
Purchase Money Resulting Trust
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.
Rebutting Presumption of REsulting Trust
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.
Misappropriation of Money
analysis
Misappropriation of money is often the tort of conversion.
Remedies:
- Damages for Tort Conversion?
- show that specific, identifiable money was taken.
- Damages include actual damages (the amount of money taken), and punitive damages.
- 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
Misappropriation of Personal Property
- 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
- Actual damage - Value of property at time of conversion
- 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
- Damages for conversion or trespass to chattels
- 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)
- Constructive trust,
Misappropriation of Personal Property
- 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
- Actual damage - Value of property at time of conversion
- 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
- Damages for conversion or trespass to chattels
- 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)
- Constructive trust,
Equitable Defenses
list
not rule
- Laches
- unclean hands
- sales to BFP
- injunction not available
After discussing equitable remedies, discuss equitable defenses
Laches
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.
Unclean Hands
with respect to subject matter of suit
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.
Sale to Bona Fide Purchaser
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.
Conversion of Personal Property
Sale to Bona Fide Purchaser
A BFP is liable for actual, but not punitive, damages to the true owner in an action for conversion of personal property.
Injunctions Not Available b/c Breach of Contract
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.
Injunctions Not Available b/c Criminal Prosecution
No injunction against a criminal prosecution by the District Attorney can be granted without a strong showing of irreparable injury.
Injunctions Not Available b/c Criminal Misconduct
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.
Defense for Legal Remedy:
Statutes of Fraud
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
Unjust enrichment when both parties are guilty of wrongdoing
Where both parties are guilty of wrongdoing, a court will weigh the equities
no need for heading.
mostly to counter defendant’s defense
