Remedies Cases Flashcards
P nine years prior got severely burned by electrical wire —> removal of scar tissue and grafting of skin from his chest to replace. surgeon said he’d guarantee to make the hand 100% perfect hand or 100% good. Hand got worse and hairy. Trial court ruled for awarded damages based on (1) pain, and suffering from the operation, and (2) positive effects of operation beyond existing injury.
Can the patient recover losses beyond the measures of damages as defined as the difference in value of performance versus actual performance of the present condition?
No. The non-breaching party may recover damages based on the difference between the value of of a contract as fully performed in the actual value of the non-breaching parties present condition, plus any incidental damages reasonably foreseeable to all parties at the time of contract formation.
- We are putting him in a position if the contract was fulfilled as promised
In contract contract for loss of the bargain benefit of the bargain (compensatory )
Hawkins v. McGee (1929)
Parties entered into a written agreement, where the promised of supply water to P for 10 years. Neighbors became hostile —> 1964 water supply was intermittently shut off by D. P sought Compensatory and punitive damages. Found for P: $10 compensatory, $2k punitive. Court reduced $10 to $1.
Was the trial court correct in (1) reducing compensatory damages from $10 to $1, and (2) awarding $2000 in punitive damages?
(1) No. P proved that they suffered certain inconveniences as a result of the breach of contract and that inconvenience was recoverable as compensatory damages. Therefore, the jury award of $10 was reasonable.
- inconvenience = actual injury —> compensatory damages should be reinstated
(2) No. Punitive damages may be awarded for a breach of contract in the tort context because of efficient breach, no tort was alleged in this case.
- Punitive damages are not available and breach of contract actions— true, even if the breach is willful (as in this case). No tort, no punitives.
- if Ks are supposed to be “morally neutral” honoring mutual wealth enhancement, then we should be agnostic about breach as long as the breaching party “honors” the K
- pay to play
White v. Benkowski (1967)
P leases a billboard space facing New York tunnel to airport. The owner of building D sells a space to another owner who terminates the lease with P. P wants specific performance.
Can the leaser demand specific performance for damages or the value of the lost space if its uniqueness can be readily determined by market comparisons ?
No. Specific performance is only proper if there is no other adequate remedy available.
- the value of unique qualities the façade can be fixed with a reasonable certainty. It’s in the advertising contract with the third-party.
Specific damages are only awarded when damages are adequate (uncertain due to its valuation being idiosyncratic)
For houses there is specific performance because the value is not based on market value, but on subjective feelings about its idiosyncratic characteristics —> this is not contracts law. This is the housing market.
- this case is not considered traditional real estate
Van Wagner Advertising Corp. v. S&M Enterprises (1986)
Propane supplier D gets into contract with P gas distributor to provide propane for P distributor to give to residential developments. Only distributor has the conditional right to terminate the K. Supplier had a shortage of propane and then the price increased —> distributor demanded explanation —> supplier terminated contract because it lacked mutuality
Can a court order specific performance via an injunctive relief onto a supplier of propane who canceled a long-term requirements contract with a propane distributing utility, where the utility relied on the supplier of propane and exchange for an agreed-upon price, and the contract allowed the distributor but not the supplier to cancel?
Yes. Can order specific performance via injunctive relief.
(1) P distributor’s right to cancel is neither arbitrary nor unrestricted, but limited to certain terms and requiring notice —> the unilateral right to cancel, does not undermine the mutuality of consideration
(2) this contract was for the supplier to continuously supply propane to meet P distributors requirements; although there are other suppliers, unlikely the distributor will be able to secure a comparable long-term supply contract —> specific performance is appropriate
Specific performance is granted because of the uncertain value and difficulty of obtaining the service elsewhere for a long-term contract (are unique UCC 2-716, or would be inadequate 359)
Laclede Gas Co. v. Amoco Oil Co (1975)
Walgreen pharmacy’s long-term exclusivity contract with a mall includes a monopoly clause where no other pharmacies could be leased in the mall. Mall buys out largest tenant on the brink of bankruptcy and installed in its place a discount store that contains a pharmacy.
Can the court order specific performance via permanent injunction to the mall to retain Walgreens pharmacy ?
Yes.
- Can’t determine the damages through projection of sales, figures, and financials. Without other useful measures for calculating damages, a permanent injunction is the most efficient and cost-effective remedy
- Very few cost associated with imposing permanent injunction beyond prompting increased negotiations between the parties to work out the terms of their lease agreement
When the loss is not readily, the judicial remedy requires a benefit analysis .
- Posner (champion of efficient breach) embodying K as morally neutral is OK with injunction because it won’t deter efficient breach since parties will negotiate on their own after specific performance —> set value of breach but can lead to wasteful negotiation costs and breakdown
- Injunction requires supervision and could lead to deteriorating relationship
Walgreen Co. v. Sara Creek Property (1992)
Contractor enters into an agreement with cabinet company to furnish cabinets and tear out old cabinets. Dispute between parties —> contractor deemed the contract null and void —> cabinet company filed suit saying that the contractor breached after the cabinet company already begun performance
Can the court award expectation damages to put the cabinet company in the position it would’ve been before the breach?
Yes. But only award damages that are appropriate proper.
- Storage cabinets NOT proper because we’re paying for the space regardless— would’ve placed them in a better position if awarded these
- administrative time: PROPER because no additional administrative fees, but there was an opportunity cost of working on this unsuccessful project
- lost profits: PROPER because P expected $30K in profit
Damages = costs already incurred in performance and profits
- why profits? because the doctrine of specific performance yields to the basic contract doctrine that we want to put someone in as good as position as they’ve been in had the contract been performed
- the relevant inquiry is not the amount of profit P would’ve been able to make in the four days the factory was shut down, It’s the amount he would’ve made on the deal as a whole had not breached.
J.O. Hooker & Sons, Inc. v. Robert’s Cabinet Co. (1996)
A black man entered into a written agreement to work for a farm company. Received $15 for consideration for his labor. He stopped working and did not return $15. The company says he violates an Alabama code and the jury found him guilty for $15 and imprisoned him at hard labor for 136 days.
Can the state invoke code of Alabama to find him guilty?
No, that code is in conflict with a 13th amendment (keeping slavery punishment for a crime) by creating an intent to injure/ defraud. They are criminalizing payment of debt to be able to enslave him to do hard labor —> in conflict with 13th amendment and therefore invalid.
We cannot criminalize breach.
Rest 2d 367, contracts for personal service or supervision
(1) a promise to render personal service will not be specifically enforced
(2) a promise to render personal service exclusively for one employer will not be enforced by an injunction against servicing another if it’s probable result will be to compel a performance involving personal relations the enforced continuance of which is undesirable or will leave the employer without other reasonable means of making a living
Alonzo Bailey v. State of Alabama (1911)
Landowner contracts with construction company to haul landfill from a road excavation onto his land. The company finds it’ll be paid more by supplying the same fill elsewhere —> does not supply all landowner as contracted. Landowner couldn’t afford other fill at the time of breach ($8.25/cubic yard)—filed suit claiming damages between this price and contract price ($0.50/cubic yard)
Can a landowner recover for the damages for non-delivery and prejudgment interest calculated from the time of breach?
Yes, the quote P received six months after the breach was based on the materials available at the time of breach. the trial court did not err by calculating damages based on the price.
A court will grant reasonable damages if no other market price can be determined
- court can award prejudgment interest that he would’ve earned over a period of time when entitled to receive the monies
Egerer v. CSR West LLC (2003)
Company is supposed to excavate gravel from peas land, and leave the property at a uniform grade —> company, deliberately breaches by removing only the best scrabble and leaving the ground uneven. Property owner see damages for the cost of completing the contract performance, even though it is significantly more ($60k) than the value of the property of the contract would’ve been performed ($12k).
Is the landowner entitled to the cost needed to excavate the remaining land or only to the cost of diminution of value of property?
Excavating the remaining land—completing the performance. If a party willfully breaches a construction contract, need to give him performance not the difference between the value of the property before contracting and value if the breaching party he had completed the performance.
Non-breaching party is entitled to get what he bargained for for willful breach as as long as it’s not disproportionate to what was breached—value of expected performance.
- idiosyncratic valuation of land ought to be respected
Counterargument: this outcome is outrageous because it gives him 500% of what he bargained for
Groves v. John Wunder Co. (1939)
Farm owner leases his land to excavator for coal mining purposes and excavator, also agrees to carry out remedial work, but fails to complete the remedial portion. It would take 29K to repair $300 dominion value. Court orders to pay $300–is this the right call?
Yes. Cost to D ($29K) is grossly disproportionate to the economic benefit to P $300, should be $300.
Cost of performance inappropriate where the gap between it and the diminution of value from breaches is great, especially when the performance in question is seen as merely incidental to the larger contract
(Idiosyncratic valuation though generally respected in contract law has limits)
Diminution and value is an exceptional solution, especially when alternatives are available
- idiosyncratic valuation of land, though generally respected by contracts law, has its limits
Recommendation: try to bring these two numbers together
Peevyhouse v. Garland Coal & Mining Co (1962)
County notified a bridge company to cease the construction of a bridge (at $1.9K expenses incurred) and declares the contract invalid, but the bridge company proceeds with construction for nine months ($18K expenses incurred). Bridge company $18K expected profits.
Can the bridge company recover damages for work post notification or is limited to recovery of damages for breach of contract as of the date they were notified ?
P failed to mitigate damages and is limited to recover damages for breach of contract as of the date of breach for labor and materials incurred in part performance prior to repudiation, plus the loss profit realized
If a non-breaching party receives notice of the others breach, they cannot continue performance and can only sue for loss sustained from breach and profits that would’ve been realized from performance.
Damages are reduced to what you failed to do but THERE IS NO DUTY TO MITIGATE
347: injured party has the right to value of the contract to him plus consequentials, minus cost avoided by not having to perform
Rockingham County v. Luten Bridge Co. (1929)
Shirley Parker has employment K to star in Bloomer girl musical producing California for $750,000. Company decides not to produce the film, but offers her a K for a role in Big Country. Big men western in Australia for the same compensation.
Can they expect her to accept an inferior substitute employment offer as an affirmative defense of their initial breach to mitigate damages?
No. The substitute offer was clearly different inferior and she does not have to accept the offer to mitigate damages.
Employees must mitigate damages by seeking similar employment after boss breaches . But employees need not seek other employment of a different or inferior kind.
Whether a substitute job is inferior, depends on the context (justified as “humiliation” R2d 350))
Reasoning: Hollywood rules will be their own contractual flower while every fast food job is fungible. This analysis favors high paying jobs because they see their employment as idiosyncratic.
Notes: outcome is not efficient because she was paid for nothing
Parker v. Twentieth Century-Fox Film Corp (1970)
Michael Jordan (wanting to limit his endorsement in anticipation of a business move) has endorsement deal with a company that goes bankrupt and breaches with two years left in the contract. Jordan claims he’s a lost-volume seller who may receive the full value of the remainder of the contract without mitigating damages by seeking similar employment.
Is he under an obligation to mitigate damages?
Yes. Jordan had no subjective intent to enter other endorsement agreements (he saw his capacity at one) —> he cannot avoid the duty to mitigate as a lost-volume seller.
LVS is not excused from mitigation solely because he has the capacity to enter other agreements. He must also have the subjective intent to enter into them
- hence, sale is not mitigating because could’ve gotten into two contracts and get profits from both
In re Worldcom Inc (2007)
P contracted with a D shipping company to send a new shaft for their mill. The fractured shaft is delayed in sending it back —> p did not receive shaft for several days —> mill was delayed —> lost profits. P mill never told the shipping company that its mail would be shut down until the shaft was delivered.
Will the damages be calculated based on the general damages amount known at the time of contracting? Given that they were unforeseeable circumstance at the time of contracting that the Millers did not know that delivery of a new shaft was dependent on receiving the old shaft as a model.
Yes. The mail never told the shipping company that delay and shipping would lead to loss profits so the shipping company is not liable for the consequences of the special circumstances (lost profits) that were not reasonably foreseeable at contract formation
Can only put the party back to the position had the contract been performed if damages were foreseeable from either being communicated or flowing naturally from the breach
Hadley v. Baden Dale (1854)
Decedents ashes package arrived empty, and remains were lost -> he suffered great, nervous shock, mental anguish, and humiliation
Can brother recover damages from the cremation company for mental distress without physical injury for negligent mishandling of a corpse?
Yes. Thus far courts nationwide have been reluctant to award of plaintiff damages only on a tort claim of mental distress, but there’s an exception for the negligent misshandling of corpses because of: 868 of the rest statement second of torts which recognizes causes of action for an intentional, reckless or negligent conduct which prevents proper interment of a dead body.
Default rule is no consequential damages for emotional disturbances except for mortuary services
- Deal is that you’re taking care of my emotions— that’s why there’s a premium
- damages from emotional suffering usually too unforeseeable except where the emotional consequences are obvious and part of the bargain
Allen v. Jones (1980)
