Remedies for Tort

Question 1

Remedy at law

Answer 1

money damages to compensate a plaintiff for a loss and it is the remedy preferred by the courts.

Question 2

Restitution remedies

Answer 2

prevent the unjust enrichment of the defendant. Restitution remedies can be legal (money or return of property) or equitable.

Question 3

Remedy in equity

Answer 3

Not the preferred remedy. One must establish that remedy at law is inadequate to receive equitable remedy.

Question 4

Election of remedy

Answer 4

P may choose one of several available recoveries in satisfaction of a single loss, but not all of them at the same time.

Question 5

Compensatory damages

Answer 5

awarded to compensate the plaintiff for injury or loss. They are measured by the monetary value of P’s harm.

Potential issues that can limit compensatory damages (frequently tested):

1. Causation: damages must be caused by the tortious act. This is actual but-for causation analysis.
2. Foreseeable: damages must be foreseeable by a reasonable person at the time of the tortious act.
3. Certainty: damages must be capable of being calculated with certainty and not be overly speculative.
4. Unavoidability: P has a duty to take reasonable steps to mitigate his losses.

Question 6

Past and future damages

Answer 6

When calculating general and specific damages, one must account for both past and future damages.

1. Past losses: P can recover for past losses.
2. Future losses: P can recover for anticipated future losses, so long as they can be calculated with reasonable certainty.

Question 7

Pure economic loss

Answer 7

not recoverable for most torts, absent a showing of property loss or personal injury.

Exceptions: the tort of intentional interference with business relations does allow for pure economic loss recovery.

Question 8

Nominal damages

Answer 8

awarded where P’s rights have been violated but P sustained no loss. Nominal damages serve to vindicate P’s rights.

Question 9

Punitive damages

Answer 9

awarded where D has displayed willful, wanton, or malicious tortious conduct. Punitive damages are only awarded if:

1. Actual damages are awarded (compensatory damages, nominal damages, or restitutionary damages); and
2. Culpability of defendant is greater than “negligence”; and
3. They are relatively proportionate to actual damages.

Question 10

Legal restitution

Answer 10

appropriate where D has derived a benefit, or been unjustly enriched, and it would be unfair to allow D to keep that benefit without compensating P, or where P wants his property back.

Goal is to prevent unjust enrichment.

Question 11

Money restitution

Answer 11

legal remedy where P is awarded the monetary value of the benefit received by D. It is measured by the value of D’s gain.

Question 12

Replevin

Answer 12

allows the recovery of a specific chattel wrongfully taken from P, who has the right to possession. The property is ordered return and P can receive damages for the time he was deprived of his chattel.

Question 13

Ejectment

Answer 13

allows the recovery of specific real property from which P who has the right to possession was wrongfully excluded. The property is ordered returned and P can receive damages for the time he was deprived of

Question 14

Equitable restitution

Answer 14

only available when the remedy at law, money damages, is inadequate. The goal of any equitable remedy is to prevent unjust enrichment.

• constructive trust
• equitable lien

Question 15

Constructive trust

Answer 15

a fictitious trust created by a court to compel D to convey title to unjustly retained specific property to the plaintiff and restores the property to the plaintiff that has been wrongfully acquired by the defendant. The sole obligation of the constructive trustee D is to transfer the property back to P.

Question 16

Equitable lien

Answer 16

Equitable lien creates a security interest in property held by D where the property acts as collateral for the money owed to P.

Question 17

Requirements for constructive trust and equitable lien

Answer 17

1. A wrongful act has led to the retention of property from its rightful owner (e.g., embezzlement, fraud, theft, conversion, etc.)
2. D has legal title to convey: D must have wrongfully obtained legal title to the property, mere possession is not enough. (Caveat: a thief is deemed to have legal title to wrongfully obtained cash in his possession, but not legal title to wrongfully obtained property.
3. Inadequate legal remedy: the remedy at law, typically money damages, must be inadequate.

Question 18

When is legal remedy inadequate in the context of a constructive trust/equitable lien?

Answer 18

1. Money damages are too speculative to calculate with certainty.
2. Insolvent defendant such that any damages award is worthless.
3. Replevin is unavailable because the property has been sold and thus can’t be ordered returned to P.
4. Property is unique so money damages are inadequate to compensate for the loss.

• real property is always unique
• personal property is not unique, except if it is one-of-a-kind or very rare, or if the item has special personal significance to P.

Question 19

Property must be solely traceable to current form for constructive trust

Answer 19

If the property has changed form because it was sold or exchanged for new property, the rightful owner can “trace” and obtain a constructive trust for the new property.

1. P receives the benefit of any increase in property value accrued by the passage of time or the change in property form because it would be unfair to allow the wrongdoer to receive the benefit of any gain.
2. Property must be solely traceable to current form and not commingled with other property because title to the new property will be given to P.

Question 20

When is the property traceable if commingled with other funds? (applies to both equitable lien and constructive trust)

Answer 20

Lowest intermediate balance rule applies when D commingles wrongfully obtained funds with his own funds in a single account:

1. investor fiction presumes D invests his own money first, so any investments are deemed to come from D’s own funds first, with any balancing coming from the wrongfully obtained funds after his own funds are exhausted.
2. Spender fiction presumes D spends his own money first, so any purchases are deemed to come from D’s own funds first, with any balance coming from the wrongfully obtained fund after his own funds are exhausted.
3. once traced proceeds are withdrawn, they are gone. If the wrongfully obtained funds cannot be traced to a new piece of property, the funds are gone and P cannot get a constructive trust.

Question 21

Priority of P over third parties

Answer 21

1. Bona fide purchaser with legal title prevails over P. (A BFP took for value without notice of the facts giving rise to the potential constructive trust. (secured creditors are BFPs)
2. P prevails over unsecured creditors.

Question 22

Limitation of constructive trust: no deficiency judgment

Answer 22

No deficiency judgment will be awarded for any shortfall. P will receive title to the property and be precluded from obtaining a deficiency judgment for any shortfall.

Question 23

Constructive trust vs. Equitable lien

Answer 23

An equitable lien is similar to a constructive trust, except property can be traced to commingled funds with an equitable lien and a deficiency judgment is permitted.

ALWAYS ANALYZE BOTH CONSTRUCTIVE TRUST AND EQUITABLE LIEN

• Constructive trust is better when the value of the wrongfully acquired property goes up because P will receive the benefit of the increase in value to prevent D’s unjust enrichment.
• equitable lien is better when the value of the wrongfully acquired property goes down because P can still get a deficiency judgment for the difference, or when property can’t be solely traced to its current form.

Question 24

Property need not be solely traceable to current form for equitable lien

Answer 24

Unlike a constructive trust, it is acceptable to trace P’s property to a different piece of property even if the two are commingled and P’s property was used to improve another piece of property properly owned by D. P can obtain an equitable lien on the commingled property in the amount of debt.

Question 25

Equitable lien allows for deficiency judgment

Answer 25

Unlike a constructive trust, an equitable lienholder can also obtain a deficiency judgment for any shortfall. Thus, it is preferred when the property has decreased in value because of the passage of time, or a change in property form.

Question 26

Injunction

Answer 26

An equitable remedy where the court orders one to perform an act (affirmative or mandatory injunction) or stop performing an act (negative injunction).

Question 27

Temporary Restraining Order (TRO)

Answer 27

TRO are designed to preserve the status quo for a short time pending further litigation regarding a preliminary injunction.

• typically 10 days (14 days under federal rules)
• Notice: notice is required, but a TRO can be obtained ex parte in exceptional circumstances, such as an emergency or when notice would result in the very harm one is trying to avoid.

Question 28

Requirements for granting a TRO

Answer 28

1. Irreparable harm during waiting time if the TRO is not granted. (this is the time waiting for the preliminary hearing)
2. Likelihood of success on the merits of the underlying claim.
3. Inadequate legal remedy
4. Balancing of hardships must favor P.
5. No defenses are available. Laches and unclean hands are equitable defenses.

Memorization: Irish Lads Inhale Beer in Dublin.

Question 29

When are legal remedies inadequate in the context of a TRO?

Answer 29

1. Money damages are too speculative to calculate with certainty;
2. Money damages may be inadequate to compensate for the potential loss. e.g. when there is a health or safety concern.
3. Insolvent defendant
4. Replevin or ejectment is unavailable
5. Multiplicity of suits: an ongoing wrong would lead to a multiplicity of lawsuits by the same litigants over the same issue if not resolved by an injunction.
6. Prospective tort where the tort has not occurred yet but is expected to occur (e.g. imminent pollution).
7. Property is unique

Question 30

How does the court do the balancing test of hardships in the context of a TRO?

Answer 30

The court weighs the hardship to P if the TRO is denied against the hardship to D if the TRO is granted.

The court also considers the following factors:

1. a large disparity in hardships weighs in favor of the more severely impacted party
2. Willful misconduct weighs very heavily against the wrongdoer
3. Public interest: the hardship to the public and/or any public benefit can also be factored into the analysis.

INTENSIVE FACTUAL ANALYSIS IN ESSAY EXAM– USE ALL THE FACTS, PRESENT BOTH SIDES.

Question 31

Preliminary Injunction

Answer 31

• designed to preserve the status quo pending a full trial on the merits.
• harder to obtain than TRO, easier than Permanent Injunction.
• same elements as TRO, but the preliminary injunction can never be ex parte.

Question 32

Permanent Injunction

Answer 32

A court orders one to perform an act or stop performing an act after holding a full trial on the merits.

Question 33

Requirements for Permanent Injunction

Answer 33

1. Inadequate legal remedy
2. property interest: the requirement of a protectable property interest traditionally meant an injunction would only apply to property. CA does not require a property right, and modernly, invasions of personal rights can support an injunction too.
3. Feasibility of enforcement: the injunction cannot be too difficult for the court to enforce.
4. Balancing of hardships
5. No defenses Laches and unclean hands are equitable defenses.

Memorization: I Pray For Big Desserts.

Question 34

What impact the feasibility of enforcement for permanent injunction?

Answer 34

1. Negative injunctions are easier to enforce because of the court’s power to order contempt for noncompliance.
2. Affirmative injunctions are more difficult to enforce: series of acts over a period of time can be more difficult to enforce than one required act. Act requiring taste, judgment, or skill is difficult to enforce because of the difficulty in determining if the act has been properly performed.
3. Jurisdictional issues can cause enforcement problems where the court would have to supervise events out of their jurisdiction or assert control over nonparties to the litigation.