Remedies Flashcards

1
Q

How is restitution different than damages & injunctive relief?

A

Restitution aims to disgorge the D’s ill-gotten gains whereas damages/injunctive relief aim to put P in her rightful position.

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2
Q

What is the substantive claim for which courts award restitution?

A

Unjust enrichment

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3
Q

What are the 13 restitutionary claims?

A

equitable lien

quantum meruit

quasi-contract

contract-implied-in-law

assumpsit

quantum valebant

constructive trust

goods sold & delivered

money had & received

accounting

land used & occupied

equitable subrogation

equitable replevin

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4
Q

of the 13 restitutionary claims, which 5 are equitable claims?

A

equitable lien

equitable subrogation

equitable replevin

accounting

constructive trust

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5
Q

What are the elements for unjust enrichment?

A

1) Did D obtain a benefit?
2) Did D obtain a benefit @ expense of P? (not considered by all courts)
3) Would retention of that benefit without compensating P be unjust?

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6
Q

What is a temporary restraining order (TRO)?

A

extraordinary 10-20 day injunction typically awarded only in emergency & only until a preliminary injunction motion can be heard

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7
Q

What is a preliminary injunction?

A

injunction issued after noticed motion to preserve matters pending final trial on the merits

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8
Q

Notice and Opportunity to be Heard Requirements

A

TRO’s?

  • some form always required UNLESS extraordinary circumstances.

Preliminary Injunctions?

  • Normal motion rules

Requirements of the notice?

  • Credible Source
  • Adequately inform the D’s of the conduct sought to be prohibited or required.
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9
Q

What are the 4 key concepts re: granting Preliminary Injunctions?

A

1) irreparable harm
2) Merits
3) Balance of hardships
4) public interest

The differences are in how jurisdictions define & combine these principles.

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10
Q

Various tests used for determining whether to grant TRO or Preliminary Injunction

A

9th Cir Test #1 (also 11th Cir):

  • likelihood of success on merits
  • substantial threat of irreparable harm
  • balance of hardships for P
  • advancement of public interest

Rocky Alliance 9th Cir Test #2 (also 2nd Cir):

  • probability of success on merits AND
  • possibility of irreparable harm
  • (post-Winter must have probability of irreparable harm)
    • OR
  • serious questions on merits AND balance of hardships sharply for P
  • advancement of public interest

Mo. Federal Court

  • Probability of success on merits AND
  • threat of irreparable harm if injunction not granted AND
  • weigh above harm to P against harm “to other parties” if injunction is granted
  • AND
  • advancement of public interest

SCOTUS (Winters)

  • likelihood of probable success AND
  • likelihood of irreparable harm AND
  • balance of harms favors P AND
  • advancement of public interest
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11
Q

What are the tests for status quo requirement?

A

Majority rule:
Is the injunction mandatory (such that it is changing the status quo) or prohibitory (such that it is maintaining the status quo)?

Trend rule:
Does the injunction change the last uncontested status immediately preceding the pending controversy? (if so, it changes the status quo)

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12
Q

What discretion does a court of equity have in crafting relief?

A

a court of equity has the power to meet the problem presented and to fashion a remedy to accomplish a just and proper result

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13
Q

Discretion in Crafting Relief: Exam Approach

A
  1. state rule
  2. brainstorm possible decrees and pick best one
  3. raise alternative decrees and explain why your alternative is the best
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14
Q

What is the basic concept of Substitionary Restitution at Law?

A

the value of the D’s gain (i.e. $ gained because of D’s wrongdoing)

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15
Q

What are the rules for measuring restitution for breach of contract?

A

General Rule?

value of D’s gain

Rule as to attorneys from Chambliss case?

value of the services rendered or the contract price, whichever is less

Rule as to non-attorneys from Algernon Blair case?

value of P’s services undiminished by any loss P would have sustained on the K and the K price does not serve as a cap on P’s recovery

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16
Q

what was the measure of restitution for property torts (Olwell case)?

A

Measure depends on tortuousness of D’s conduct:

If D consciously tortuous, D must forego profit from using P’s property.

If D merely tortuous, D must pay greater of P’s loss or D’s direct gain.

If parties equally at fault, D only pays D’s direct gain.

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17
Q

Additional Rule for Restitution

A

When D’s benefit was derived partially from what D wrongfully obtained from P and partially from assets and efforts rightfully belonging to D, courts apportion D’s gain accordingly.

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18
Q

Common Requirements for Remedies

A

1) unjust enrichment
2) inadequacy
3) tracing (to the property or debt against which the constructive trust, equitable lien, or subrogation will attach)

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19
Q

Particular Requirements for Remedies

A

Constructive trust:

The plaintiff can show plaintiff’s property was used to acquire an asset defendant is holding as his own.

Effect: P gets ownership of the asset. Treated as payment in full of traced amount. P cannot sue for any deficiency.

Equitable lien: The plaintiff can show plaintiff’s property was used to improve an asset defendant is holding as his own OR the plaintiff can show plaintiff’s property was used to acquire an asset defendant is holding as his own and a constructive trust would be undesirable or unfair.

Effect: P becomes a lienholder against the asset and therefore can be paid out of the proceeds. Treated as partial payment so P can sue for any deficiency.

Subrogation: The plaintiff can show plaintiff’s property was used to discharge an obligation previously owed by the defendant.

Effect: P obtains the former creditor’s rights, whatever those rights were. Valuable only if creditor had a secured right. Why?

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20
Q

Basic Tracing Rules

A

A plaintiff may follow (trace) her property into any other form or species into which it has been transmuted.

A plaintiff can trace into a bank account into which money is deposited even if the money is deposited into an account that already contains the Δ’s money.

A bona fide purchaser takes free and clear of the plaintiff’s claim for a constructive trust or equitable lien, but a donee or a purchaser with notice takes subject to the plaintiff’s rights.

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21
Q

Pro Rata Rule

A

Where a defendant acquires an asset partially with her own money and partially with money traceable to the plaintiff, the plaintiff shares in the asset pro rata (proportionately to the extent of his involuntary “investment”).

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22
Q

Partial Withdrawals: Commingled Accounts (P’s & D’s monies)

A

Rule in Clayton’s Case: First in, first out.

Jessel’s Bag Rule: D’s money always first out.

Case: In re Oatway (and 3rd Rest of Restitution Rule): P may choose order of withdrawals.

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23
Q

Partial Withdrawals: Commingled Accounts (Restatement Rule)

A

Rule re tracing: P always can trace into the account and into any product acquired with account funds.

Rules re measure of what P gets:
If D was not a conscious wrongdoer: P is limited to an equitable lien but can apply her equitable lien against both the account and any product.

If D was a conscious wrongdoer:

P gets a choice:
P can get an equitable lien against both the account and any product OR
P can get a pro rata share of both proportionate to her share of the account before the withdrawal

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24
Q

Replenishment Rules

A
If P can prove that D actually intends to restore P’s money, P’s money will be treated as restored to the extent of D’s replenishment.
 If P cannot prove D actually intended to restore P’s money, there is a split of authority:
 Minority rule: Presumption that any replenishment of the account is a restoration of the P’s money.
 Majority rule (“lowest intermediate balance rule”): Presumption that any replenishment of the account is NOT a restoration of the P’s money.
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25
Partial Withdrawals: Commingled Accounts (Two P's monies)
When the defendant withdraws some but not all of the money from an account in which the defendant has commingled monies belonging to two or more plaintiffs, there is a two-way split of authority as to how to determine whose money was withdrawn. Minority rule: First in, first out. Majority Rule: Each victim bears depletions pro rata (proportionately to her fraction of the account at the time of the withdrawal).
26
Permanent Injunctions
1) not necessarily lasting forever 2) issued after trial on the merits (i.e. not provisional relief like TRO or preliminary injunction 3) Elements: * Inadequate Remedy at Law (as always- though Thomas talks uses phrase irreparable harm) * Feasibility (Court will consider supervisory function; undue judicial involvement in parties relationship ); * Balance Hardship (to plaintiff if injunction doesn’t issue; to defendant if it does) * Public Interest
27
Specific Performance: This is a form of Permanent Injunction
* inadequate legal remedy * definite and certain terms (relates to supervision-contract must be clear SO court knows what it is enforcing) * feasibility (concern with involuntary servitude - forcing hostile parties to interact/also ongoing nature of court involvement) * mutuality/assuring security of performance
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Goals of Damanges
``` Expectation damages (Four P’s) Put the Plaintiff in the Performance Position Reliance damages (Three B’s) Bring the Plaintiff Back to the Beginning ```
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Summary of Possible Items of Damages
Benefit of bargain damages Reliance damages $ spent in performing or in preparing to perform $ spent based on getting other party’s perf. $ spent dealing with breach fallout (Incidental Damages) Consequential damages Property damage Personal injury Lost resale profits Lost use profits
30
What are the 2 types of breach?
1) breach by non-performance 2) breach by defective performance
31
What are examples of incidental damages (ensuing/indirect reactions to the wrong)?
Seller is stuck storing/maintaining/transporting goods that would have been delivered to buyer absent buyer breach. Buyer has to rent car due to seller’s failure to deliver car per contractual agreement
32
What are examples of consequential damages?
Losses that result from plaintiff not being able to use the property as intended Classic examples- lost use/lost profits (i.e. Seller failed to deliver machinery to Buyer; Buyer’s factory can’t produce widgets. Buyer suffers lost widget sales (you can see how these damages could get big fast- which is why we have Hadley foreseeability rule) )
33
2 Formula's for Contractor's Damages for Owner's Mid-Performance Breach
Formula 1: Profit + amt spent $25 + $50 = $75 Formula 2: K price – amt saved $100 – $25 = $75 But, don’t forget to subtract 40,000 that contractor has already received.
34
Types of Reliance Damages Recoverable
**Essential reliance damages** Money spent preparing to perform (e.g., gearing up a factory) Money spent performing (e.g., construction costs) **Incidental reliance damages** Money spent in anticipation of getting the other party’s performance (e.g., renting a slip for a purchased boat) Money spent because of the breach (e.g., cost of cover or resale)
35
When can a P be limited to Reliance Damages?
**Four Situations from Contracts?** * Promissory estoppel * Plaintiff has no benefit of the bargain loss (contract is break-even or losing K) * Public policy (e.g., Sullivan v. O’Connor) * Benefit of bargain damages are too uncertain (e.g., royalties un unpublished book in Freund)
36
Major (and minor) Probabilities Implicated by Loss of Chance/Increased Risk Claims
Most Important- The change in the plaintiff’s prognosis because of Defendant’s Fault. We call this CHANGE IN PROGNOSIS PROBABILITY ## Footnote But, Remember- as in all civil legal claims, Pl. must establish all elements (including def’s negligence or breach and causation) by a preponderance of the evidence- which means by 51% of the evidence)
37
Split of Authority re: Value of Chance/Increased Risk of Harm
Traditional approach: P must prove that, as a result of D’s negligence, D deprived her of at least a 51% chance of an outcome more favorable than the one she actually had. If so, P gets all her damages. Increased risk allowed/all or nothing recovery: P recovers if P proves the D increased her harm to some degree (some courts say any degree and some require the increase to be substantial) Modern trend: P recovers if P proves D caused a lost opportunity of a better outcome but may recover only the value of that lost opportunity.
38
Specific Rules for Two Certainty Requirements
As to the existence of damages More likely than not Π suffered the claimed harm As to the amount of damages Reasonable certainty—sufficient data from which a reasonable estimate can be made
39
Pure Economic Harm for Negligence Cases
No recovery in negligence if plaintiff’s only injury is economic (e.g., no negligent interference with business advantage;) Exception (Negligent Misrepresentation)
40
Contract Foreseeability Rule
No recovery for damages that the Δ did not have reason to foresee, at the time the contract was made, as a probable result of the breach, What is recoverable? -- Damages naturally arising PLUS -- Other damages Δ had reason to anticipate: -- How might Δ gain such reason to know? Knowledge of Π’s business Disclosure by Π
41
Tort Foreseeability: Three Issues
Π must be foreseeable: in zone of danger Harm suffered by the Π must be foreseeable (within scope of risk created by Δ’s breach of duty) Intervening event; is it foreseeable; is resulting harm foreseeable
42
Basic Rule re Mitigation
Π’s recovery may be reduced to the extent the Δ has engaged in conduct that reduces the harm suffered by Π, e.g., returning converted chattel printing a retraction of a defamation or an invasion of privacy
43
Basic Rule re Avoidability
Π must make a reasonable effort to minimize her harm from the defendant’s wrongdoing Restatement of Contracts 2d: “Damages are not recoverable for loss the injured party could have avoided without undue risk, burden or humiliation”
44
Credit for Benefit General Rule
Where Δ’s wrongdoing (breach of contract or tort) bestows a benefit on the Π in addition to causing a harm, the value of the benefit conferred may be offset against Π’s damages
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Collateral Source Rule
If an injured party receives payment for an injury from a source wholly independent of the tortfeasor (and therefore collateral) such payment will NOT be deducted from the plaintiff’s recovery
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Establishing Equity Jurisdiction
By showing that the plaintiff is asserting a claim that is a “traditional inclusion” or by showing the remedy at law is inadequate Traditional Equity Includsions: Guardianships Trusts Probate Enforcement of Liens Quiet Title Inadequacy Arguments: Insolvency No substantially similar property/unique Special meaning of property to the П No market for the property Continuing harm necessitating multiplicity of suits Superiority (of the equitable remedy) Inability to calculate damages Damages ineffective to vindicate (e.g., civil rights)
47
When is remedy at law inadequate? (synthesis of theories)
One possible synthesis: The remedy at law is inadequate when it is not as full, complete or efficacious as the remedy in equity
48
Elements to Establishing Permanent Injunction
Inadequate Remedy at Law ## Footnote Harm to Pl. if Court fails to grant Injunction Exceeds Harm to Def. if Court Grants Injunction Public Interest Supports Injunction
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Discretion to Deny Relief
Introduction Unfairness of the contract Mutuality Certainty of terms Burden on the Δ/Balance of hardships/equities Undue burden on the court Public interest Equitable defenses: Unclean Hands and Laches
50
On what basis did the Campbell Soup ourt deny relief?
Unfairness of the bargain. Court may deny relief when K is particularly unfair (i.e. substantively unconscionable
51
Given that interest in land are presumed unique, why did court conclude remedy at law was inadeqaute?
Balance of hardshiops rule from Van Wagner case? Weigh the gain to the P if injunction were granted against harm to the D if it were granted. Extra rule: burden on D must be greater than burder for which D originally bargained.
52
What is the rule for mutuality?
Historical Rule: P should only be able to get specific performance if D could have obtained it had P breached. Today: No such requirement anymore (in some states: so long as court is convinced P will perform)
53
Two forms:
1) order would require excessive court supervision 2) inability to craft an enforceable order (e.g. specific performance would require delivery of a destroyed good)
54
What are the discretionary conditions?
unfair contract insufficient certainty of terms mutuality (mostly over) undue burden on the court public interest
55
What is the balance of equities rule?
Weigh the parties’ relative equitable conduct (i.e., consider delay short of laches and bad conduct short of unclean hands)
56
What is the law for enforcing negative covenants?
Three ways this issue can arise: A Π wants but cannot get specific performance of an employment contract vs. a current employee Breach of a covenant not to compete by a seller of a business Breach by a former employee of a post-employment covenant not to compete Rules: Evaluate normal issues for equitable relief Can enforce covenants against sellers of businesses so long as reasonable Post-employment covenants disfavored: must be necessary to protect legitimate employer interest and reasonable as to burden on former employee Split of Authority re Overbroad Post-Employment Covenants not to Compete Refuse to enforce covenant at all Blue pencil rule: If court can cross out unreasonable parts of covenant and the covenant still makes sense, court can enforce it Revise to reasonableness rule: Court can reform the covenant any way necessary to make the covenant reasonable
57
Two elements of damages?
1. General damages (sometimes referred to as direct loss) 2. Special damages (sometimes referred to as ensuing loss)
58
2 key aspects of damages are?
* Damages are compensatory * Damages are substitutionary
59
What are the 3 aspects of an award for general damages for conversion (per Barum)?
Fair Market Value ## Footnote Time of Conversion Place of Conversion
60
**Place as in type of market If plaintiff is a retailer Wholesale value If plaintiff is a manufacturer Market where manufacturer sells (usually wholesale) If plaintiff is a consumer Retail value Place as in location (i.e., if there’s no local market) If the property is held for sale: The cost of transport is deducted If the property is held for use: The cost of transport is added **
61
How do you calculate damages for damage to chattel?
Damages rules General damages? Step 1: GR: COR Step 2: But only use COR if repair is physically (can be done) possible and economically feasible (the COR doesn’t exceed the FMV before the tort [OR the DIV caused by the tort OR is not grossly disproportionate to the DIV]) Step 3: If repair is not physically or economically feasible, use the FMV before the tort or the DIV caused by the tort (the one you used as the limit) Special damages? Loss of use Lost profits or reasonable rental value
62
Contract prices often aren’t the same as the FMV of the thing being sold (land or goods)... How does it ever happen that FMV and K prices are different? Imperfect information about the market Unequal negotiating skills Different perspectives **_Three-way Split of Authority_** **Benefit of bargain rule defined:** Value as represented less value as received **Out of pocket rule defined:** K price minus FMV (i.e., what P has overpaid for the consideration at issue) **A third alternative: Cost to make good** Cost to bring property to the represented value (if less than BOB)
63
Damages in General
** Overarching goal of damages?** The “rightful position” **Two elements of damages?** General damages (sometimes referred to as direct loss) Special damages (sometimes referred to as ensuing loss)
64
What is fair market value (FMV)?
What is it? Theoretical value that a willing buyer would pay and a willing seller would accept for the item in question Do we ever eschew fair market value in favor of subjective value (Bond v. Belo)? Use reasonable personal value for property with primary value in sentiment
65
how do the courts deal with fluctuating values?
Three-way split of authority in dealing with fluctuating values: FMV at taking (“stand pat rule”) Highest value between conversion and trial date NY rule: Highest value within a reasonable time of discovery of the conversion
66
How are trees & crops damages handled?
Damages for loss of trees? Not clear whether proper to treat as conversion (award value of item) or damage to land (award diminution in value of land) Damages for loss of crops? FMV of severed crop less cost of extraction (expenses saved– credit for benefit to be studied later)
67
What if the deprivation is temporary (e.g. repeated use of P's land and P gets D to stop)? What is the measure of damages for trespass to land if permanent deprivation?
What if the deprivation is temporary (e.g., a repeated use of P’s land and P gets D to stop)? Reasonable rental value Measure of damages for trespass to land if permanent deprivation? FMV of land or interest taken
68
what are the measures of damages for nuisances?
**If Nuisance is permanent:** DIV **If nuisance is temporary:** * RRV * Discomfort and annoyance * Clean-up costs * Medical treatment of headaches
69
What are the types of contempt?
**Direct vs. indirect** In the judge’s presence vs. outside court **Criminal vs. civil** Goal of punishment and all crim pro rights vs. goal of compensating victim or coercing compliance and only civ pro rights **Retrospective (compensatory) vs. prospective (coercive) civil contempt** Compensation for harm caused П by violation of the order vs. threat of fines and/or imprisonment until Δ complies
70
Of what force is an injunction order?
Force of law They are treated much like criminal statutes: Courts discipline violators Courts interpret them like statutes
71
What is the degree of specificity required for an injunction?
``` FRCP 65(d): An injunction “shall describe in reasonable detail . . . The act or acts sought to be restrained.” ```
72
What are the consitutional prohibitions (and exceptions) on imprisonment for debt and contempt?
State constitutions: No imprisonment for failure to pay civil debt (no debtors prisons) Exception: May imprison for failing to follow court orders (i.e., injunctions or criminal contempt or compensatory or coercive civil contempt) ## Footnote Exception to exception: Inability to pay
73
Collateral bar general rule
Party charged with an invalid order cannot assert the invalidity of the order as a defense, even if the invalidity is based on Constitutional grounds
74
Who is bound by an injunction?
An injunction is binding on parties, their officers, agents, servants, employees and attorneys and those in active concert or participation with them (and who get actual notice by service or otherwise).
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