More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 1 of 46 REMEDIES CLASS NOTES PROFESSOR JAMES M. FISCHER SOUTHWESTERN UNIVERSITY, FALL 2004 TED FINAMORE & NANCY LAM, SCALE II PAGE REFERENCES: Understanding Remedies, by Fischer TABLE OF CONTENTS 1. UNDERSTANDING REMEDIES 4 § 1 BASIC REMEDIAL GOALS 1 4 § 2 TYPES OF REMEDIES 3 4 § 3 RELATIONSHIP WITH SUBSTANTIVE LAW 10 4 § 4 PUBLIC POLICY 12 4 2. GENERAL PRINCIPLES CONCERNING COMPENSATORY DAMAGE 4 § 5 THE ELEMENTS OF COMPENSATORY DAMAGES 17 4 § 6 VALUE 25 5 § 7 MEASURING COMPENSATORY DAMAGES 44 7 § 8 FUTURE DAMAGES 51 7 § 9 LOST PROFITS 59 8 § 10 DUTY TO MITIGATE DAMAGES 62 8 § 11 OFFSETTING BENEFITS 72 9 § 12 COLLATERAL SOURCE RULE 76 10 § 13 PREJUDGMENT INTEREST 85 11 § 14 TAXATION OF AWARDS 96 11 § 15 LOSS CAUSATION 102 12 § 16 NON-ECONOMIC DAMAGES 123 14 3. GENERAL PRINCIPLES CONCERNING EQUITABLE REMEDIES 17 § 20 THE HISTORICAL RELATIONSHIP BETWEEN LAW ANDEQUITY 144 17 § 21 ADEQUACY OF THE REMEDY AT LAW/IRREPARABLEINJURY 148 17 § 22 EQUITY ACTS IN PERSONAM 161 18 § 23 EQUITABLE DISCRETION 164 18 § 24 BURDEN ON THE COURT/SUPERVISION 168 18 § 25 STATUTORY EQUITABLE REMEDIES 170 18 § 26 NATURE OF RIGHTS PROTECTED 175 19 § 27 INJUNCTION OF CRIMINAL ACTIVITY 179 19 § 28 RIPENESS AND MOOTNESS 181 19 4. REMEDIAL DEFENSES 20 § 30 EFFECT OF MERGER OF LAW AND EQUITY 194 20 § 31 LACHES & STATUTES OF LIMITATIONS 195 20 § 32 UNCLEAN HANDS AND “IN PARI DELICTO” 214 21 § 33 OTHER DEFENSES 224 21 § 34 EQUITABLE DEFENSES AGAINST THE GOVERNMENT 237 22 5. EQUITABLE RELIEF 22 § 40 TEMPORARY INJUNCTIVE RELIEF 244 22 § 41 INJUNCTION BONDS 256 23 § 42 NOTICE AND HEARING REQUIREMENT 262 23 More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 2 of 46 § 43 APPELLATE REVIEW OF ORDERS GRANTING ORDENYING TEMPORARY RELIEF 266 24 § 44 RESERVED 271 24 § 45 PERMANENT INJUNCTIONS 271 24 § 46 MODIFICATION OF INJUNCTIONS 280 24 § 47 SPECIFICITY 289 25 § 48 PERSONS BOUND BY INJUNCTIVE RELIEF 294 25 6. GENERAL PRINCIPLES GOVERNING RESTITUTIONARY RELIEF 25 § 50 INTRODUCTION TO RESTITUTIONARY REMEDIES 302 25 § 51 UNJUST ENRICHMENT 304 25 § 52 PRIMA FACIE CASE 312 26 § 53 QUASI CONTRACT ACTIONS 318 26 § 54 VALUATION OF THE BENEFIT 322 26 § 55 EMERGENCY SITUATIONS 325 26 § 56 APPORTIONING BENEFITS 326 26 § 57 RESTITUTIONARY REMEDIES 332 27 § 58 TRACING PRINCIPLES 360 29 7. REMEDIES FOR BODILY INJURIES 29 § 60 BODILY INJURY REMEDIES 370 29 § 61 LOST INCOME 371 30 § 62 MEDICAL EXPENSES 380 30 § 63 NON-ECONOMIC DAMAGES ARISING OUT OF BODILYINJURY 383 31 § 64 MEDICAL MONITORING 396 31 § 65 APPORTIONMENT OF DAMAGES 399 32 § 66 REMEDIES WHEN THE PLAINTIFF DIES 400 32 § 67 CONCEPTION-RELATED CLAIMS 419 32 8. REMEDIES FOR INJURY TO PERSONAL PROPERTY 33 § 70 GENERAL PRINCIPLES 426 33 § 71 PROPERTY WITH NO MARKET VALUE 431 33 § 72 LOSS OF OR INTERFERENCE WITH POSSESSION —DAMAGES 435 34 § 73 RETURN OF PERSONAL PROPERTY — SPECIFICRELIEF 443 34 § 74 RESTITUTION 454 34 9. REMEDIES FOR INJURY TO REAL PROPERTY 35 § 80 GENERAL PRINCIPLES 458 35 § 81 NATURAL RESOURCE DAMAGES 465 35 § 82 REMEDIES FOR UNAUTHORIZED OCCUPANCY OF REALPROPERTY — EJECTMENT 470 35 § 83 REMEDIES FOR UNAUTHORIZED TAKING, OCCUPANCY,OR INCURSION ONTO REAL PROPERTY —TRESPASS 472 36 § 84 REMEDIES FOR INTERFERENCE WITH AN OWNER OROCCUPANT’S USE AND ENJOYMENT OF LAND —NUISANCE 480 36 § 85 WASTE 490 37 § 86 GOOD FAITH IMPROVERS OF PROPERTY 493 37 10. FRAUD AND MISREPRESENTATION 38 § 160 NATURE OF THE FRAUD CAUSE OF ACTION 500 38 § 161 FRAUD ECONOMIC DAMAGES 502 38 § 162 NEGLIGENT MISREPRESENTATION 507 39 § 163 PROMISSORY FRAUD 509 39 § 164 INJUNCTIVE RELIEF 510 39 § 165 FRAUD CAUSATION 511 39 § 166 RELIANCE 514 39 More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 3 of 46 § 167 NON-DISCLOSURE AS FRAUD 517 40 § 168 FRAUD BY FIDUCIARIES 520 40 § 169 FRAUD AND PUBLIC POLICY 523 40 11. RESCISSION 41 § 190 NATURE OF THE REMEDY 525 41 § 191 FORMS OF RESCISSION 527 41 § 192 NOTICE OF DEMAND OF RESCISSION 530 41 § 193 ELECTION OF REMEDIES 532 41 § 194 RESTORATION OF THE STATUS QUO 537 42 § 195 SCOPE OF REMEDY OF RESCISSION 541 42 § 196 GROUNDS FOR RESCISSION 543 42 16. BREACH OF CONTRACT REMEDIES 42 § 250 INTRODUCTION 624 42 § 260 EMPLOYMENT CONTRACTS 627 42 § 261 EMPLOYEE’S DAMAGES REMEDIES AGAINST EMPLOYER 628 43 § 262 REINSTATEMENT OF EMPLOYEE TO POSITION 633 43 § 263 EMPLOYEE’S ACTION FOR QUANTUM MERUIT 636 43 § 264 EMPLOYER’S DAMAGES REMEDIES AGAINSTEMPLOYEE 639 43 § 265 EMPLOYER’S EQUITABLE REMEDIES AGAINSTEMPLOYEE 641 43 § 266 EMPLOYER’S REMEDIES FOR EMPLOYEE’S BREACH OFDUTY 645 44 § 270 CONSTRUCTION CONTRACTS 649 44 § 271 OWNER’S REMEDIES FOR CONTRACTOR’S BREACH 650 44 § 272 CONTRACTOR’S REMEDIES FOR OWNER’S BREACH 657 44 § 280 BREACH OF CONTRACT TO SELL REAL PROPERTY 663 45 § 281 BUYER’S REMEDIES FOR SELLER BREACH OFCONTRACT TO SELL REAL PROPERTY 664 45 § 282 SELLER’S REMEDIES FOR BUYER’S BREACH OF CONTRACT TO PURCHASE REAL PROPERTY 668 45 § 283 INSTALLMENT LAND SALE CONTRACTS 672 45 17. SPECIFIC PERFORMANCE 45 § 290 INTRODUCTION 677 45 § 291 CERTAINTY 679 45 § 292 ABILITY TO PERFORM 680 45 § 293 MUTUALITY OF REMEDY 682 45 § 294 FAIRNESS 684 46 § 295 FLEXIBILITY 686 46 § 296 ABATEMENT 687 46 § 297 SPECIFIC PERFORMANCE AND/OR DAMAGES 690 46 More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 4 of 46 1.. UNDERSTANDING REMEDIES § 1 BASIC REMEDIAL GOALS 1 To restore π to whole; to original position she was in before the wrong occurred. § 2 TYPES OF REMEDIES 3 [a] Legal v. Equitable Remedies 4 [b] Specific v. Substitutional Remedies 4 [c] Damages 5 [d] Injunctions 5 [e] Restitution 6 [f] Declaratory Relief 6 [g] Punitive Damages (we don’t need to know) 6 [h] Nominal Damages 7 [i] Presumed Damages 8 § 3 RELATIONSHIP WITH SUBSTANTIVE LAW 10 § 4 PUBLIC POLICY 12 2.. GENERAL PRINCIPLES CONCERNING COMPENSATORY DAMAGE § 5 THE ELEMENTS OF COMPENSATORY DAMAGES 17 [a] Expectancy Interest 18 Refers to the fulfillment of an aggrieved party’s expectancy of gain if the bargain to which he was a party had been carried out and performed. Usually for contracts, but courts will also allow for torts but may require more proof, because of the speculative nature of the interest. [b] Reliance Interest 19 Refers to the loss or detriment caused by the legal wrong of another. This interest seeks out to undo the loss or detriment by giving the plaintiff a sum of money equal to the loss or detriment sustained. Differentiate this from out of pocket losses: this measure of recovery includes the loss or detriment caused to the plaintiff as a result of her reliance on the defendant’s misrepresentation. There may have been no reliance, but there were losses caused by the def’s legal wrong or breach of duty. More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 5 of 46 [c] Restitutionary Interest 20 Restoration, return, or transfer to the Plaintiff of benefits received by the def due to or arising from the Plaintiff’s performance or efforts. This seeks recovery of a benefit unjustly held by the other. [d] General Damages v. Special or Consequential Damages 21 GENERAL: damages that flow necessarily and inherently from the wrong. SPECIAL /CONSEQUENTIAL: damages are all other damages that are caused by the wrong. To get special damages, the Plaintiff must show: -the causal relationship between the loss and the wrong -the courts must allow for special damages to be recovered with this particular harm -trier of fact must be able to resolve general and special damage amounts with each other [e] Economic v. Non-Economic Damages 24 ECONOMIC: Are generally objectively verifiable monetary losses such as medical expenses, lost earnings or profits, cost of repair, diminution in value. NON ECONOMIC: are generally subjective and non verifiable losses, such as pain and suffering, emotional distress, injury to reputation, etc. § 6 VALUE 25 [a] Determining Value 26 -MARKET: comparison of like sales of like property -REPLACEMENT COST LESS DEPRECIATION: cost of physically replacing that which was damaged -INCOME OR CAPITALIZATION OF EARNINGS: involving the calculation of the income the property would have generated [b] Diminution in Value. 29 The difference in value pre-injury versus post-injury. [c] Cost of Repair v. Diminution in Value 30 Cost of Repair is not itself a damage or injury, but it is a means of measuring the loss caused by the legal wrong inflicted on the plaintiff. This is simply the cash expense necessary to restore damaged property to its pre-damaged condition. The P doesn’t have to make the repair, they can keep the $ and live with the dent in the car. ** the idea is that the P is limited to which ever is lesser, the diminution in value or the cost of repair. (think of car accident example) because either way, the P will be restored. When it doesn’t restore P, like fixing a Ming vase, then the court will require whatever will restore P. [d] Burden of Proof 31 It is the P’s responsibility to establish her loss and the amount of compensation necessary to return her to her rightful position. Once she establishes either type of value, then it’s the def’s burden to argue that the P chose the “greater of” rather than the “lesser of” value. More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 6 of 46 [e] Betterment 32 this is when they are restored to a better position, ie a new pier rather than a used pier. [i] Determining Betterment 33 As an economic value, is reflected in a higher price because the repair made the property more desirable than it was in its pre-injury state, or the repairs extended the useful life of the property beyond that which it would have enjoyed in its pre-injury state. The basic test: whether the repairs or replacement in fact added economic value to the pre-injury value. [ii] Allocating Betterment 33 If there is actually betterment, then the Def is entitled to a credit against the cost of repair or replacement for the added value or betterment. Furnace example: more life after repair? Straightline depreciation: used when the useful life of the repaired property equals the original useful life of the repaired property. If there is MORE useful life after repairs, calculate the proportion extra. This is what percentage the P should pay for the damages. [f] Value as a Function of Time 35 [i] General Rule 35 Breach of contract: market fluctuations after the contract is breached is NOT relevant in measuring contract general damages. Tort: date of injury [ii] Foreign Currency Obligations 36 -Breach date -Judgment date -Payment date: the date that the P would have been paid [iii] Fluctuating Value 39 General rule: The more egregious the def’s misconduct is, the more leeway the court will allow the P in selecting a valuation date that will maximize recovery. This only applies with property that is known to fluctuate in value, not just any type of property that happened to change in value. The dominant theme is to restore the P to the range of elective action which def’s wrongdoing deprived the P from enjoying. [g] Value as a Function of Place 42 Manufacturing cost, wholesale cost, and retail cost. Consider where in the chain of distribution the product was when the damage occurred, as well as what replacement market the P would enter to purchase what was lost. If the P already sold the property, use that value. More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 7 of 46 § 7 MEASURING COMPENSATORY DAMAGES 44 [a] Excessiveness 44 Courts will not allow an overly compensatory award. ECONOMIC: the question to ask is whether there is a plausibly reasonable explanation for the award. If so, then it will withstand judicial scrutiny. NON-ECONOMIC: harder to measure – does the damage award “shock the conscience” or evidences a “miscarriage of justice” Another approach is to compare to other similar awards. [b] Harsh and Mild Measures 47 This is dependant on the nature or degree of the def’s culpability. MILD: applied when the wrong was innocently done, by mistake or inadvertence. HARSH: when the facts show maliciousness, full knowledge, or willful disregard of P’s rights. [c] Certainty 49 2 requirements: 1. causality: did the def’s misconduct result in or cause the P’s damages? 2. calculation: what quantum and quality of evidence is necessary and sufficient to establish the amount of damages. [d] Jury Damages Awards 50 General rule: to exercise deferential review when damages calculations are made by the jury. § 8 FUTURE DAMAGES 51 [a] Future Losses 52 To get this, you just show that the future loss at the time of trial, be reasonably certain to flow, or probably, or reasonably probable. [b] Future Damage or Future Damages 52 Damage: Possible future injury Damages: Possible future money damages [c] Discounting to Present Value 53 Present value: refers to the amount of money which if invested today would produce the future stream of payments the P would have received and in the manner he would have received them had he not sustained the legal wrong that is the subject of the claim. We need to know: -the amt of future losses -the discount rate: composed of three elements o the real interest rate: the actual value of the deferred enjoyment of money, without regard to the inflation or risk of non-payment of the money loaned o the predicted inflation rate: loss of the purchasing power of the money loaned. More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 8 of 46 o the risk factor: the likelihood of repayment of the money loaned “below market formula” doesn’t take into account the inflation rate § 9 LOST PROFITS 59 [a] The Certainty Requirement 59 To recover lost profits, the evidence must affirmatively show “with reasonable certainty both their occurrence and the extent thereof.” It will be enough if the evidence shows the extent of damages as a matter of just and reasonable inference, although the result is only approximate. Consider the following factors: A. Period of damages: for how long a period of time is the P entitled to claim that the def’s misconduct has caused him a loss? B. Lost Revenue: How much in net sales was lost? C. Determining costs: What costs would have been sustained in generating the lost revenue? D. Present Value: What is the present value of the loss? [b] The New Business Rule 62 At common law, a new business, which lacked a baseline or record of profitability could not sue for lost profits either in contract or tort. They had to be established and in operation in order to get damages. Some jurisdictions have abandoned this rule, and requires the P to demonstrate with reasonable certainty that the start-up venture or business would have been profitable but for the def’s wrongdoing. They can show this by proving: 1. the profits of another person who operated the business the P would have but for the def’s wrongdoing 2. by expert economic damages or 3. by the profits def realizes as a result of its harming or destroying the P’s business or obtaining the benefits the P would have received but for the def’s legal wrong § 10 DUTY TO MITIGATE DAMAGES 62 [a] General Principles 62 A P’s recovery may be reduced if he fails to make reasonable efforts to lessen damages. Keep this separate from “contributory fault” which are actions that the P engaged in PRIOR to the injury. Mitigation is about AFTER the injury. [b] The “Fragile” Plaintiff 64 Def takes the P as he finds him, including any vulnerability of fragility the P presents. More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 9 of 46 [c] Reasonable Efforts 66 A person injured by the wrongful act of another, including breaches of contract, is required to exercise reasonable care and diligence to avoid further loss or minimize the resulting damage. [d] Equal Opportunity to Avoid Losses Rule 67 It is consistently held that the P need not mitigate when the ability to lessen damages is equally available to both the P and the def. [e] Compensation For Mitigation Efforts 68 Expenses incurred by the P in reasonably attempting to mitigate damages are recoverable even if the efforts are unsuccessful, provided that the expenses do not exceed the pre-mitigation damages. [f] Disposal or Repair of Damaged Property 68 A P must make reasonable efforts to repair or recover property. [g] Breached Leases 69 Should the LL seek to sublet after a tenant breaches the lease? CL approach was no duty to mitigate. Modern: yes, there is a duty to mitigate. [h] Employee’s Duty to Mitigate Damages 70 Wrongfully discharged or terminated employee has a duty to mitigate. Wages or earnings the employee could have earned at a replacement job, but did not, will be offset against his recovery. Reasoning for this: 1. P must act fairly toward the def notwithstanding the def’s misconduct 2. the P must act in a socially responsible manner and 3. the P should not be seen as the cause of his damages. So what the def must prove is that the P failed to act reasonably in searching out and finding “suitable” alternative employment. [i] Continued Dealing With Defendant 71 Outside the employment situation, the mitigation rule does not require the non-breaching party to deal with the breaching party in an effort to mitigate damages. [j] Intentional Wrongs 72 P’s duty to act reasonably is influenced by the def’s degree of culpability. So if the def’ engaged in intentional misconduct, then the P’s duty is lessened. § 11 OFFSETTING BENEFITS 72 [a] Special Benefits Rule in Tort 73 When a Defendant’s tortuous conduct causes legal harm to the P or her property but in so doing, also confers a special benefit to the interest that was harmed, the value of the benefit conferred is accounted for in mitigation of damages. The benefit must relate to the same interest that was harmed. More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 10 of 46 [b] Special Benefits Rule in Contract 74 When the def’s breach of contract has conferred a direct and immediate benefit on the P, the def is entitled to an offset against P’s claimed damages. (like if the P can sell the property at a higher price due to def’s breach of contract) [c] Taxes 75 The general rule is that a def may not capture, as an offset against a damages award, the tax benefits a P realized as a result of the def’s misconduct. § 12 COLLATERAL SOURCE RULE 76 [a] Introduction 76 CSR holds that the P may recover damages that include amounts for which the P has already received compensation from sources independent of and collateral to the def. ie: insurance payments The reason that CSR is allowed: 1. It’s not overcompensating the P because they are under obligation to give back to the insurance carrier the damages that they get from D 2. Def’s are deterred because they are not allowed to get away with their conduct for free 3. Wrongdoer should not benefit from P’s good judgment to have ins. [b] Collateral Source or No Damages 78 Sometimes, it’s hard to determine whether a court will look at third party payment and treat it as CS or as an extinguishment of the loss… [c] Independent Source 79 Application of SCR requires that the benefit be from a source wholly independent from the def. [i] United States as Defendant 79 The US has the benefit of being able to offset their damages by using the benefits paid to the P as a result of the tortuous conduct, such as medical treatment through Medicare, Medicaid, or Veterans benefits. These funds are from “special funds” so that’s why the govt can use it to offset. Also, the P is not required to use their government fund to get medical care. If they decide to use their own private insurance, then the govt must pay that back. [ii] Claims Against Employers 81 This is when the Employers provide insurance plans -Courts are split on this. Consider the purpose and nature of the fund and of the payment received. [d] Gratuitous Benefits 81 Def is not permitted to introduce into evidence that the benefit was provided gratuitously, rather, the P can recover the reasonable value of the services actually provided. More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 11 of 46 [e] Tort or Contract 82 Usually limited to TORT actions. Offset will be allowed in Contract. [f] Permissible Inquiries into Collateral Sources 83 Even if the benefit qualifies as a collateral source, evidence that the P is receiving the benefit may be admissible for reasons other than establishing the P’s actual loss. Ie, for establishing that P is lying. [g] Payments by Joint Tortfeasors 84 Payment from Joint Tortfeasors do NOT qualify as a collateral source. [h] Collateral Source Rule and Tort Reform Legislation 84 General movement to prevent CSR so that P doesn’t get double recovery. § 13 PREJUDGMENT INTEREST 85 Prejudgment interest seeks to compensate the P for delay in receipt of money from Def. This period is from the harm to the entry time of judgment. [a] Liquidated v. Unliquidated Claims 87 PI is award as a matter of right to liquidated or ascertainable claims. Liquidated damages are when the damages can be computed with reasonable exactness, without reliance on opinion or discretion. PI is awarded as a matter of discretion when the claim is unliquidated. [b] Interest Rate 90 Courts are split. Consider: -treasury bill rate -how much the P would have had to pay to borrow such funds -the return that the P would have received if they had invested the funds in the market [c] Compound or Simple Interest Rates 92 Common law is to provide simple interest. Modernly, they use compound interest. [d] Date Interest Accrues 93 PI should be awarded from the earliest ascertainable date; ie when a demand was made on the obligation, or the date suit was filed on the obligation. § 14 TAXATION OF AWARDS 96 [a] Personal Injury Awards 96 Personal Injury awards are excluded from being taxed based on gross income. [b] Effect of Settlement Allocation 99 Def wants to steer clear of punitive damages because usually, punitive damages are not insured. More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 12 of 46 [c] Consideration of Taxability of Damages in Arriving at Damages Awards 100 Majority rule: income tax consequences should not be taken into consideration in arriving at damages for loss of future earnings or for impairment of future earning capacity. [d] Non-Personal Injury Awards 101 When taxes are part of P’s compensatory damages, evidence of taxes is evidence of P’s loss, and thus admissible. § 15 LOSS CAUSATION 102 [a] Introduction 102 Contract foreseeability is based on the breaching party’s knowledge at the time of the contract formation. Tort foreseeability is assessed at the time the breach of duty occurs. [b] Contract Cause-in-Fact Causation 103 Certainty Requirement: Damages must be sufficiently certain to avoid claims that they are speculative. The non breaching party must establish by reasonable competent evidence both the occurrence and extent of the claimed damages resulting from the breach. For tort: it is a higher standard, the “but for” measure. [c] Contract Causation — Policy Considerations 104 HADLEY RULE: 1. Where no special circumstances distinguish the contract involved from the great mass of contracts of the same kind, the damages recoverable are those as would naturally and generally result from the breach according to the usual course of things and 2. Where there are special circumstances in the contract, damages which result in consequence of the special circumstances are recoverable, if and only if, the special circumstances were communicated to or known by both parties at the time they entered into the contract. [d] Tort Causation 107 Every cause produces more than one effect and ever effect is the product of more than one cause. Therefore, tort causation is really complicated… The general rule for Loss Causation is substantial certainty; proof of mere possibility is insufficient. [e] Future Losses 109 Losses that accrue AFTER the date of trial. Under American rule, a P must bring all her claims for losses attributable to a single event and obtain a single recover. So therefore, the rule is that damages for the future consequences of a present injury are limited to those that are reasonable certain to occur. (more than 50% likelihood) More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 13 of 46 [f] Lost Chance 110 A traditional preponderance of the evidence or “but for” test may constrain a P’s recovery which is predicated on an increased risk or alternatively a decease in expectancy, rather than linear causation. Ie: 50% more likely to have cancer. [g] Tort Causation — Policy Considerations 112 Causation is less restrictive in torts. Public policy factors include: 1. Whether the injury is too remote from the negligence 2. Whether the injury is wholly out of proportion to the culpability of the negligent tortfeasor 3. Whether it’s retrospectively appears too highly extraordinary that the negligence should have brought about the harm 4. Whether the allowance of recovery would place too unreasonable a burden on the negligent tort feasor. 5. Whether the allowance of recovery would be too likely to open the way for fraudulent claims or 6. Whether the allowance of recovery would have courts entering a field that has no sensible or just stopping point [h] Economic Loss 114 A significant tort contract distinction is the general unwillingness to compensate for economic loss caused by negligent, tortuous conduct, unless the tort is adjunct or derivative to injury to person or property and in which P has an interest, direct or related, or the misconduct also involves a breach of K. In general, a party may not recover for its economic losses caused by the def’s negligence. The idea is that the Economic Loss rule prevents contracting parties from circumventing their bargained for contract remedies by recovering purely pecuniary losses in tort. [i] Pollution Caused Economic Losses 116 The pollution claims present a unique difficulty for the law because the main impact of the harm often affects public land. When a P did not have the recognized lawful right to use public land, recovery of economic loss was denied. [ii] Property Damage 117 Economic loss that is derivative of physical damages to property is recoverable. [iii] Modern Extensions of the Economic Loss Rule 122 The economic loss rule has been applied in a number of cases outside the tradition area of simple negligence. [i] Occurrence Causation v. Loss Causation 122 A mere cause and effect relationship between the occurrence and the def’s legal wrong may not be sufficient to impose liability for all succeeding losses. More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 14 of 46 (ie, if the result of a simple fall was the P dying. Should the Def be responsible for that too?) that problem is solved by fragile Plaintiff doctrine. However, consider more complicated issues involving market change and fraud. § 16 NON-ECONOMIC DAMAGES 123 Bodily injury, non economic damages. Pain and suffering. Damages that are subjective in nature. Emotional distress. Property damages can be objectively measured. There is no objective measure of distress or pain and suffering. [a] Allowance of Non-Economic Damages 123 Courts are of two minds: 1) it is so subjective that there is concern about awarding non-economic damages; 2) but when the damages are awarded, it is difficult to criticize the jury? How can you criticize or evaluate such a subjective evaluation? No objective way to check the result. Because the concerns are so opposite: concern about giving non-economic damages and concern about criticizing the way such damages are calculated when given. a. Physical Impact Test Common law required some physical impact. That is still rule in a small number of jdx’s. See p. 128. 5 or 6 jdx’s. b. Zone of Danger Test: Courts said that physical impact rule applied a small amount of control over unlimited liability. Zone of Danger still serves same public policy because it doesn’t greatly increase the number of potential π’s. 14 jdx’s. c. Guidelines Test: Dillon v Legg Foreseeability Test Concerns that underly physical impact and zone of danger was unlimited liability. If there are sufficient facts that injury and harm is reasonably foreseeable, then damages should be awarded. All other jdx’s. d. Rules Test: Relationship Foreseability Test Some jdx’s consider it a pure foreseeabilty test and use Dillon v Legg to guide but not control decision making. California and some other jdx’s scaled back the doctrine. It took the Dillon guidelines and translated them into rules of who is a π and who is not. Main change: requirement of a relationship. e. Non Economic Loss for Bar Exam Use all these tests listed above. More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 15 of 46 f. Modern Approach: Physical Manifestation Test Don’t confuse with impact test. Impact test focuses on HOW the non-economic loss occurred. This test focuses on how the noneconnomi loss is MANIFESTED. How do we KNOW that you really suffered emotional distress? Did you change your routine in any way? How did your life change? What is your evidence that you suffered a loss. There must be some OBJECTIVE manifestiation of your loss. Example: headaches, nausea, crying. Expert Testimony or medical testimony is best way to meet this burden of proof. g. Sub Cellular Injury Mostly used in toxic torts. Your emotional distress is really related to bodily injury as a result from exposure to toxic chemicals. You can’t show that presently you have a diagnosable injury such as cancer. If you could, then you could sue for pain and suffering as a result of bodily injury. So, here lawyers are trying to re-define what a bodily injury is. Examples of sub cellular injury: Chromosomal damage Studies are Helpful But Not As Helpful as X-Rays Try to show a picture of a healthy cell lining and a thickened cell lining. Clean lungs versus smokers’ lungs. Cells that have engulfed the asbestos fibers. Use those slides. Breast implant litigation: scar tissue photos that formed around the silicone. h. “Fear of” vs. “Preponderance of Evidence” Some Jdx’s require only that you show a fear of cancer. Other jdx’s require you prove by a preponderance that you are likely to contract the injury [b] Recovery For Negligent Infliction of Emotional Distress 130 Young v Bank of ? 41:00. Woman goes into store, tenders credit card issued by B of A. Clerk runs it and says bank declined the card and he must keep the card. But the bank made an error. She sued the bank for negligent infliction of emotional distress. Jury gave her $50K. Sounds like a lot. [c] Measuring Non-Economic Loss 132 [i] Excessiveness 135 Courts tend to look at these seat-of-the pants approach. Shocks the conscience type of analysis. Miscarriage of justice analysis. One thing Courts do that juries can’t is to use comparative awards. Judges will look at other emotional distress awards in the jdx or for the same facts to see how far off the current decision is. More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 16 of 46 Judge Weinstein uses standard deviation to see how far off the awards. Other Courts disagree to a formula. They say non-economic awards are so subjective by nature that they must be dealt with on a case-bycaas basis. Appellate Courts will look at comparable awards but will not allow lawyers to present such evidence to juries. Concern about giving jury unbridled discretion. [ii] Discretionary Decision Making 137 What instruction will the jury get? Probably a very broad standard. The lawyers can provide some guidance. a. Golden Rule You the jury should award as much money as you would like to receive if you were the π. Courts don’t allow this argument. Courts are concerned that you’ve taken the juror out of her role as an objective weigher of evidence and made her biased. b. Per Diem Arguments Try to make non-economic loss more logical. You can break expenses out by hour, day, week. Try to get the jury to accept your interpretation of what an hour of distress is worth. Then just multiply. π’s lawyers like this. California permits this. Usually a cautionary instruction is given saying it’s just a technique Some jdx’s don’t allow this because it gives the appearance of objectivity to subjective evidence. c. Opinion of Counsel (Lump Sum) Lawyer suggests what the jury should award. Why does a lawyer do this? Behavioral science tells us that uninformed people anchor to suggested numbers. Anchoring bias. Example: how many countries are there in Africa. On average people said about 36 or 37. In another group they said it was over 14. Another group they said it’s less than 64 and they came up with 52. The Answer given was influenced by the number given. 1 x 2 x 3 --------x8 = Lower Award 8 x 7 x 6 --------x1 = Higher Award Anchor to a higher reference. Try to suggest a high end number so you’ll get closer to that number. [iii] Quality of Evidence 139 More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 17 of 46 Since Non-Economic damages are so vague, courts have expressed concern when the distress claim is based solely on the P’s testimony. [iv] Pre-Impact Fear of Death 140 Many courts have permitted the award of pre-impact fear of death, distress damages without require prior physical injury. However, it is hard to prove that the victim did in fact suffer pre-impact distress before his death. Death is not required though, to obtain pre-impact fear of death. 3.. GENERAL PRINCIPLES CONCERNING EQUITABLE REMEDIES § 20 THE HISTORICAL RELATIONSHIP BETWEEN LAW AND EQUITY 144 § 21 ADEQUACY OF THE REMEDY AT LAW/IRREPARABLEINJURY 148 [a] Justification for the Requirement 148 Requirement that the remedy at law be inadequate. [b] The Content of the Requirement 153 [i] Frustration of Relief Sought 154 Irreparable injury has been found when delay in obtaining legal redress would effectively deprive the plaintiff of the beneficial use of the rights he seeks to establish. [ii] Economic Harm 154 Mere economic harm is usually not sufficient to constitute irreparable injury. [iii] Problems in Measuring the Legal Remedy 155 Irreparable injury has been found when the proof needed to establish the amount of legal damages would be difficult to establish, measure, or quantify. It is not enough to claim that the damages are difficult to measure or determine. The claim must also be credible and supported by the record. If the court finds that monetary damages can be reasonably calculated, then it may find that no irreparable injury exists. [iv] Nature of the Injury 157 Irreparable injury is presumed to exist in certain circumstances. When a def’s conduct infringes or deprives one of a constitutional right or guarantee, courts often find that no further showing of irreparable injury is needed. [v] Loss of Chance 157 When the loss of chance cannot be compensated by a legal remedy. It’s an irreparable harm. More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 18 of 46 [vi] Insolvency 158 The inability of the def to respond to a monetary award is recognized as an irreparable injury. The insolvency must be real. [vii] Multiple Lawsuits 159 The need to bring additional or multiple lawsuits to vindicate a legal right has often been seen as evidencing the inadequacy of the remedy at law. [viii] Uniqueness 160 Equity jurisdiction is commonly asserted when dealing with real property, under the fiction that each piece of real property is unique and therefore a substitutional remedy will not adequately compensate the P for what has been lost. § 22 EQUITY ACTS IN PERSONAM 161 Equity courts can only assert jurisdiction over property when it could secure the personal appearance of the def before the court. § 23 EQUITABLE DISCRETION 164 Discretionary Decision Making: each case in equity was to be decided on its own merits and with the goal of achieving fairness and justice with reference to the facts of the particular case. The ideal that like cases should be decided alike was achieved only through happenstance, not as a goal of decision making. Consider however, the modern need for uniformity and judicial review, which would overturn any divergent holdings. Abuses of discretion are reviewed on a denovo standard. § 24 BURDEN ON THE COURT/SUPERVISION 168 The idea that Equity courts act in Personam, is to ensure that the def’s conscience is changed and will act according to the court’s orders. However, to achieve this, the courts have the burden to make sure the orders are carried out, and they are reluctant to involve themselves in matters that would require substantial judicial efforts to ensure compliance. When performance is unreasonably difficult to enforce or would require lengthy judicial supervision, the court will refuse to require the equitable injunctive relief. § 25 STATUTORY EQUITABLE REMEDIES 170 [a] Statute Expanding Equitable Remedies 171 When a statute expressly authorizes equitable remedies, the most common consequence is judicial finding that one or more of the requirements of the prima facie case for injunctive relief has been satisfied. When a P make a prima facie case, they are entitled to statutory injunctive relief as a matter of course. The def can try to rebut and assert that the court should not grant relief in this particular case. [b] Statute Restricting Equitable Remedies 174 When statutes restrict equitable remedies, it causes problems with separation of powers because the constitution grants judicial power to the courts. More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 19 of 46 However, when the statute is specifically clear that they want to restrict the equitable remedy, the court will recognize it. When it’s ambiguous though, the court will not likely infer restriction. § 26 NATURE OF RIGHTS PROTECTED 175 Substance of the right: was the interest such that it should be protected in equity. Usually, when the courts DON’T provide equitable remedy, the cases fit in one of the below categories. 1. Cases where the claimed right raises collateral issues that warrant nonintervventio by an equity court: so it might cause them to coordinate with other branches of the govt. 2. Cases where the claim right is legally insignificant and not deserving of protection on the merits 3. Cases that raise concerns over the propriety and advisability of judicial involvement. § 27 INJUNCTION OF CRIMINAL ACTIVITY 179 Although Equity possess no criminal jurisdiction, the mere fact that an act sought to be enjoined is punishable as a crime will not preclude equitable relief. Equity will enjoin threatened criminal activity when the injunction is direct at activity which unreasonable interferes with the public health and safety and is defined as such a public nuisance by the legislature. For example, gang activity, operating brothels, obscenity, and gambling. They can also enjoin by statutory authorization. § 28 RIPENESS AND MOOTNESS 181 [a] Ripeness 182 Ripeness: whether the threatened harm or wrong which the injunction is designed to remedy, will occur. REASONABLE LIKELIHOOD. Equity will not interfere when the apprehended injury or harm is doubtful or speculative. [b] Mootness 185 Mootness: whether the threatened harm or injury, which the injunction was designated to remedy will reoccur. [i] Voluntary Cessation 187 It is consistently recognized that the mere fact that a def has ceased the conduct that threatens the future injury does not necessarily mean that a claim for injunctive relief is moot. This threshold is much lower than the “reasonable likelihood” required for ripeness, some courts have used a “mere possibility” test. [ii] Capable of Repetition 188 This applies where: 1. The challenged action was in its duration too short to be fully litigated prior to its cessation or expiration and 2. There was some reasonable expectation that the same complaining party would be subjected to the same action again. More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 20 of 46 [iii] Continuing Effects 191 If the completed activity is still generating harmful effects, injunctive relief may be appropriate to remove the source of the continuing harm. 4.. REMEDIAL DEFENSES § 30 EFFECT OF MERGER OF LAW AND EQUITY 194 The transfer of equitable defenses over to the law side and vice versa has not been completed. There is still a law-equity divide. § 31 LACHES & STATUTES OF LIMITATIONS 195 The general focus of both of these is the concern over delay in bringing the action. [a] Laches 195 Traditionally equitable. The essence of this doctrine is unreasonable delay by the P causing material prejudice to the def. DELAY: -the mere passage of time is not delay. Delay occurs when a P with actual or constructive knowledge of the facts which support the claim for relief in equity, fails to act to secure his legal rights. -Delay becomes unreasonable when there is no good explanation for the delay. PREJUDICE: three kinds 1. defense prejudice: injury to the def’s ability to defend against the claim. 2. economic prejudice: when the delay causes more liability 3. unfair exposure to risk: similar to economic prejudice, but this is just “exposure to risk” of economic harm [b] Statutes of Limitations 201 Traditionally legal. Failure to timely file lawsuits results in barring the P from obtaining affirmative relief; hence we speak of this time bars, SOLs as operating against the remedy, not the right. This is a POLICY issue. [i] Accrual 204 The general rule is that the P’s ignorance will not postpone accrual. [1] Discovery of Injury or Harm 204 Cause of action accrues when the P knew or should have known that actionable harm was committed. 1. When P discovers any manifestation of the injury, whether physical or psychological 2. When P discovers that she has been substantially injured 3. When P discovers that she has been harmed as a result of a specific Def’s conduct or 4. When P discovers that her injuries are permanent. [2] Continuing Injury or Violation 208 More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 21 of 46 This rule applies when the def’s conduct is ongoing rather than a single event. [ii] Tolling 210 Tolling suspends the running of the SOL. Some reasons for allowing tolling include: • when the P is imprisoned and can’t sue • when there was concealment • when extraordinary, unforeseen events render timely commencement of a lawsuit within the SOL is impossible (ie, I get in a car accident and lay in a coma) [c] Merger of Law and Equity 213 SOL and Laches remain separate principles because SOL is about delay, Laches is about prejudice. § 32 UNCLEAN HANDS AND “IN PARI DELICTO” 214 [a] Unclean Hands 215 Equitable remedy -A court should neither provide aid in the commission of a wrong nor relieve a party of the consequences of his participation in a wrong. This defense is not provided for the benefit of the def, but rather for the protection of the court. The integrity of the judicial process is said to be endangered when used to assist persons whose very presence before a court is the result of some fraud in inequity. The fact that a P’s hands have been dirtied does not mean that they cannot be washed. For example, when the def was already predisposed to such conduct. [b] “In Pari Delicto” 221 Legal counterpart -This means “in equal fault” and is applied to those situations when the P’s culpability regarding the matter at issue is equal to or greater than the def’s culpability. This means that In Pari Delicto is more than just unclean hands, that the P is more liable than the def. [c] Merger of Law and Equity 223 There is a movement toward recognizing unclean hands as an available defense to legal claims. § 33 OTHER DEFENSES 224 [a] Equitable Estoppel and Waiver 224 [i] Equitable Estoppel 225 Equitable Estoppel is designed to prevent the actor from profiting by exploiting action or inaction he has induced another to take. Requires proof on two elements: 1. Must be misleading conduct in the form of words or actions by the party to be estopped. More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 22 of 46 2. The misleading conduct must induce the other party to act or refrain from acting in a way that is prejudicial to his legal interests. Recognized in BOTH legal and equitable actions. [ii] Waiver 228 Waiver focuses on the conduct of the actor himself in disavowing a right. This is the intentional relinquishment of a known right. [b] Duress 230 This permits a party to avoid an obligation based on an act that was compelled because of the wrongful threat of another which precluded the party’s exercise of free will. The victim must show: 1. that he was subject to a wrongful or unlawful act or threat and 2. that the act or threat deprived him of his unfettered will. [c] Illegality 235 No legal aid or assistance will be provided to parties to an illegal transaction. There has to be some sort of connection between the illegal transaction and the harm done. Ie, excessive force during arrest is not related to the illegal action. § 34 EQUITABLE DEFENSES AGAINST THE GOVERNMENT 237 [a] Laches 237 The general rule is that the government’s claims are not subject to the equitable defense of laches. The rule is not consistently applied, especially when the government sues on behalf of specific individuals. [b] Equitable Estoppel 239 The general rule is that the defense of equitable estoppel cannot be asserted against the govt. However, the court has allowed such defense, but has refused to call it an equitable estoppel defense. When allowed, the cts require proof that there was affirmative misconduct by the govt through it’s employees. Inaction will not suffice. [c] Unclean Hands 240 Once again, the general rule is that this defense of unclean hands cannot be asserted against the govt. This is because the govt cuts corners all the time, and since they represent the public as a whole, they have public rights to assert. Allowing unclean hands to be asserted against the govt would frustrate the whole point of having a govt. 5.. INJUNCTIVE RELIEF § 40 TEMPORARY INJUNCTIVE RELIEF 244 [a] Forms of Relief 244 The TRO and the preliminary injunction More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 23 of 46 The TRO is less formal, given the time restraints that attend to true emergency situations and the need for immediate legal relief. Preliminary injunctions are more formal and require noticed motions. This is designed to provide injunctive relief until the dispute can be finally resolved in plenary proceedings. [b] Basic Tests for Issuance of Temporary Injunctive Relief 245 [i] Likelihood of Success on the Merits 248 [ii] Irreparable Injury will result if the TIR is not granted 249 [iii] Balancing of Hardships or Equities lies with the P 252 [iv] Public Policy or Public Interest will be served 253 [c] Maintenance of the Status Quo 254 TIR should not disturb the status quo. TIR should maintain the status quo until the final judgment is rendered. [d] Stipulated Injunction 256 this is allowed when the contract provides for it. § 41 INJUNCTION BONDS 256 A P awarded TIR is usually required to obtain a bond. This bond serves 2 functions. 1. A secure source of funds from which a wrongfully enjoined def may collect damages. 2. It caps the amount of damages that can be collected from the P when the def is wrongfully enjoined. Exceptions include: • when the P would have difficult posting the bond and the def faced a low burden of harm from it’s absence • where there was no proof that the def would be hard by the issuance of the injunction • cases where the amt in dispute was deposited into court • cases where the P is indigent • cases where bond requirement would deprive a group access to court to litigate an issue affecting the public interest • cases where the injunction issued to aid in the preservation of the jurisdiction of the court § 42 NOTICE AND HEARING REQUIREMENT 262 TIR should not be granted unless notice is provided to the def of a P’s intent to seek such relief. For TROs and cases involving exigent circumstances, the order may be sought ex parte and without notice. More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 24 of 46 § 43 APPELLATE REVIEW OF ORDERS GRANTING OR DENYING TEMPORARY RELIEF 266 Many jurisdictions permit an aggrieved party to appeal an order granting or denying a request for preliminary injunction but they do not permit immediate appeal of a grant or denial of a TRO. § 44 RESERVED 271 no text here § 45 PERMANENT INJUNCTIONS 271 This is issued AFTER a trial on the merits. It is designed to provide final and complete relief and is thus distinguishable from temporary injunctive relief. [a] Scope of Injunctive Relief 271 It should be narrowly tailored to fir specific legal violations. [b] Entitlement to Permanent Injunctive Relief 275 To claim for PIR, a P must demonstrate: 1. That she has a valid claim against the def 2. That the future harm is imminent and irreparable 3. That the hardships to def of compliance are not disproportionate to the benefits to P of compliance 4. Implied element: that the issuance of the injunction be in the public interest. [c] Length of Permanent Injunctive Relief 279 Permanent doesn’t mean forever. It is permanent in the sense that it is final, but its duration is determine buy the particular use. A P is entitled onto to that amount of injunctive relief that is needed to restore her to her rightful position. § 46 MODIFICATION OF INJUNCTIONS 280 [a] Temporary Injunctions 280 It is not uncommon for temporary injunctions to be modified on appeal. The focus here is whether a change in circumstances warrants modification of the injunction to prevent unfairness. The modification is proper only when there has been a change in circumstances between the time the injunction was issued and the time modification is sought. [b] Permanent Injunctions 281 Permanent injunctions are permanent so long as the conditions which produce the injunction remain permanent. After the conditions that create the need cease, the need for the injunction ceases. So if the injunction completely resolves the matter, modification is not needed. However, when the injunction places a continuing burden of compliance on the def, it is consistently recognized that the def may seek to modify the More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 25 of 46 injunction when changed circumstances render continued compliance with the terms of the original injunction inequitable. To grant modification of a Permanent Injunction: 1. a clear showing of substantial change in circumstances since the injunction was issued 2. extreme and unexpected hardships in compliance with the injunctions existing terms and 3. good reason why the court should modify the injunction [c] Consent Decrees and Structural Injunctions 285 Consent Decrees are agreed upon, not usually a result of adjudication. They do the same thing as a permanent injunction though. Structural injunctions are a particularized form of permanent injunctive relief. ---he didn’t lecture on this, I don’t think we need to know it. § 47 SPECIFICITY 289 An injunction must be “specific and definite” if it is to be enforceable. Injunctions would be construed narrowly in order to make sure that the person who is subject to them have clear notice as to what the injunction requires them to do or not do. STRICT CONSTRUCTION: the injunction must be clear and unambiguous and ambiguities must be resolved in favor of persons charged with violating the order. § 48 PERSONS BOUND BY INJUNCTIVE RELIEF 294 An order granting equitable relief is only binding upon the parties to the action, their officers, agents, servants, employees, and attorneys and upon those person in active concert or participation with them. 6.. GENERAL PRINCIPLES GOVERNING RESTITUTIONARY RELIEF § 50 INTRODUCTION TO RESTITUTIONARY REMEDIES 302 Restitution is based on the goal of avoiding unjust enrichment. § 51 UNJUST ENRICHMENT 304 When a benefit has been unlawfully acquired by the def (ie fraud or duress). Should the def be able to keep it? Or is it unconscionable? [a] The Volunteer Principle 305 A person, who without request, at his own insistence, and without a valid reason, confers a benefit upon another, is not entitled to restitution. She can recover, however, if she thought she had a moral obligation to act. [b] Bypassing the Person Benefited 308 A def who retains a benefit he is not able reject easily or without substantial cost divest himself is not unjustly enriched when he retains that benefit. More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 26 of 46 [c] Mistaken Payment 309 When a person receives something with knowledge of the circumstances evidencing that the transfer is mistaken, that person may be held to have been unjustly enriched. The fact that the person conferring the benefit acted negligently does not excuse the recipients duty to make restitution. [d] Expectation of Payment or Compensation 310 In situations where goods or services have been provided, that the benefit must be conferred on the defendant under the circumstances that raise an expectation on the P’s part, of payment or compensation. However, when goods or services are provided for the P’s own benefit, no unjust enrichment exists. [e] Restitution and Irreparable Injury 311 There is some confusion between these two doctrines. Generally speaking, the irreparable injury requirement is not applied to unjust enrichment claims. § 52 PRIMA FACIE CASE 312 Elements for Unjust Enrichment: o A benefit conferred upon a def by the P with the expectation of payment o Awareness, appreciation or knowledge by the def of the benefit and o Acceptance or retention of the benefit by the def under such circumstances as to make it inequitable for the def to retain the benefit without payment to the P. § 53 QUASI CONTRACT ACTIONS 318 An action in quasi contract is a means for avoiding unjust enrichment. A contract is presumed in order to use the contract form to redress the aspects of the relationship that constitutes unjust enrichment. § 54 VALUATION OF THE BENEFIT 322 Three ways to measure: 1. cost of producing 2. market value of the thing produced and 3. the value to the def of the thing produced. § 55 EMERGENCY SITUATIONS 325 When goods are provided in emergency situations, the criteria for awarding restitution are relaxed. Restitution will be allowed even though the goods or services were provided without the knowledge or consent that of the def if the P acted with the expectation of payment and under circumstances where he acted “immediately to satisfy the requirements of public decency, health or safety. § 56 APPORTIONING BENEFITS 326 The defendant may receive a benefit, but the scope and extent of the benefit may be imprecise. [a] Feasibility 327 An apportionment will not be made if the court treats the benefit as indivisible. Only the contribution made by the infringing factor should be More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 27 of 46 apportioned to the P. To the extent the benefits were attributable to factors other than the infringement, those profits were properly retained by the defendant. [b] Defendant’s Culpability 329 The more culpable def’s behavior, and the more direct the connection between the profits and the wrongdoing, the more likely that P can recover all def’s profits. [c] Extent of Apportionment 331 This is to be a determined on a case by case basis, no general rule. Consider who’s efforts and how much effort produced the results. § 57 RESTITUTIONARY REMEDIES 332 [a] Disgorgement Orders 332 Purpose of disgorgement is to deter violations of the law, particularly statutory law, by depriving wrongdoers of their ill gotten gains. Disgorgement is an ancillary equitable remedy which a court may exercise under its general equitable power to afford complete relief. How is it different from restitution? -restitution is not designed to make the victim whole -disgorgement is more about “an injunction in the public interest”. Disgorgement has been limited to those profits that directly relate to the wrongdoing. [b] Subrogation 334 Where A has paid the obligation of B who is primarily liable, it is fair and just that the A receive reimbursement from B, otherwise B would be unjustly enriched. A – the person who pays, is the Subrogee B – the person whose obligation is paid, is referred to as the Subrogor. [i] Steps into Subrogor’s Shoes 335 Subrogation is in function a form of equitable assignment; consequently, the subrogee’s rights can rise no higher nor be any greater, than those of the subrogor. [ii] Superior Equities Doctrine 336 The right of subrogation may be invoked against a third party only if he is guilty of some wrongful conduct, which makes his equity inferior to that of the subrogee. – ie, car accident person who is at fault should pay the insurance company of the innocent party [iii] Priority to Funds 337 When the subrogee’s claim is based on a payment of a loss, the subrogee must or may stand aside and permit the subrogor to prosecute the claim. Once they get the funds, there are a variety of ways to split the proceeds. There is no majority holding.. either party could be paid first. [iv] Loss of Subrogation Rights 341 More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 28 of 46 Because subrogation rights are derivative, the subrogee may lose its claim because the subrogor has no claim. [v] Subrogee’s Restitutionary Obligations to Fund Creators 341 When the subrogee claims an interest in a fund created by others, the subrogee may be required to pay the fund’s creator the reasonable value of her services, else the subrogee would be unjustly enriched. [c] Indemnity 342 The remedy of indemnity provides for reimbursement when one person pays or discharges a debt of liability which another person should have paid or discharged. The essential element is that one party has paid more than its fair share and therefore another person has been unjustly enriched to that extent. This remedy is not available unless the indemnitor could be held directly liable to the person injured. [d] Constructive Trusts 347 A constructive trust is an equitable remedy that provides for specific restitution, ie return or restoration of the property which has been wrongfully acquired by the def. The def is said to hold the property involuntarily as a “trustee” for the benefit of the person with a superior equitable claim to the property. [i] Trust by Analogy or Metaphor 347 A constructive trust is a remedy, not a trust. The reference to the trust here is Metaphorical. Similar to how a quasi contract is a fictional contract. [ii] Elements of Constructive Trust 349 1. a wrongful act 2. specific property acquired by the wrongdoer which is traceable to the wrongful behavior and 3. an equitable reason why the person now holding the property should not be allowed to keep or retain possession of the property. [iii] Application of Irreparable Injury Requirement 351 Since constructive trusts is an equitable remedy, the issue of irreparable harm comes up. There is a split of authority, but in some case the irreparable injury requirement appears to have been abrogated. [iv] Scope of Constructive Trust 353 Because a constructive trust is a specific restitutionary remedy, the beneficiary recovers the property with any and all enhancement and improvements made to the property by the possessor. [v] Priority 356 A constructive trust treats the beneficiary as the actual owner of the property impressed with the constructive trust. That property is, More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 29 of 46 therefore, not subject to claims by creditors of the constructive trustee. [vi] Compared with Equitable Lien 357 An equitable lien differs from a constructive trust in that it provides security for the equitable debt whereas a constructive trust provides specific restitution of the property or it’s cash equivalent. [vii] Time Interest Attaches 358 An equitable lien or constructive trust gives the holder of the equitable claim a priority over other claims to the property – that is if they act before other BFP’s attach. § 58 TRACING PRINCIPLES 360 [a] Following Property 360 The essential element of tracing is the idea that the rightful owner of property is entitled to follow what is his through subsequent transactions in which the property is sold, exchanged, or transferred. As long as the owner can identify his property, he can trace it through an unlimited number of transactions. [b] Limitations on Following Property 362 [i] Strict Tracing in Bankruptcy 362 The general approach of bankruptcy courts is to impose on the party seeking to trace property out of commingled funds “the burden of tracing the alleged trust property specifically and directly back to the illegal transfers giving rise to the trust. [ii] Lowest Intermediate Balance Rule and Tracing Fictions 363 This rule applies when a trustee, actual or constructive, commingles “trust” funds with other funds in a single account. The rule provides that once the single account is reduced, the amount expended is dissipated and cannot be deemed to reappear in subsequent deposits. [iii] Tracing and Equal Treatment 367 Different cases will result in different outcomes for tracing principles. When recognition of a constructive trust would accomplish an injustice, such as by giving the P an unfair preference over similarly situated individuals, the remedy of a constructive trust may be denied. 7.. REMEDIES FOR BODILY INJURIES § 60 BODILY INJURY REMEDIES 370 Traditionally, the remedy for bodily injury cases is an award of monetary damages to reflect what has been lost. This includes: 1. lost income in the form of earnings or earning potential 2. money spent or liability incurred for medical treatment and 3. pain and suffering accompanying the injury. 4. loss of consortium (only when it was a close family member) More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 30 of 46 § 61 LOST INCOME 371 A distinction is drawn between earnings and earning capacity. The distinction is between what the P would have earned but for the injury, usually identified as “lost earnings or wages” and what the P could have or was capable of earning at the time of injury, usually identified as impairment of earning capacity. [a] Self-Employed Plaintiffs 375 When the P is self employed, the compensation which she would have realized but for her injuries is more difficult to determine than for individuals who are employed by others and paid a salary. Therefore, they must distinguish the value of their services to the business from that portion of their compensation that reflects the return on invested capital or the services of others in determining their earnings impairment, if any. [b] Children 376 A catastrophically injured child may recover projected future earnings even though the child has NO earnings whatsoever and no track record on which to base an earnings projection. This rule is a product of necessary, a contrary rule would preclude children who suffered permanent disabling injuries as a result of tortuous conduct from ever recovering for a loss of future earnings. In these cases, permitting awards based in large part on p speculation is seek as the lesser evil. [c] Homemakers 377 The unemployed homemaker is entitled to recover for loss of earning capacity. The crucial issue here is whether to use opportunity cost or replacement cost as the proper measure of damages for earning impairment of a homemaker. Some cases they use both if she was a working mom. Replacement cost: measures the value of the homemaker’s service Opportunity cost: measures the value of any job or profession that the P may have given up to become a homemaker and to which the homemaker could returned (presumably) in the future but for the injury. [d] Aliens 378 If the alien is going to be deported, should he be able to recover for impairment of earning capacity? If the alien cannot be legally employed in the US, the future lost earnings award based on US wage rates is not a measure of what was actually lost, unless the assumption is made that the alien’s undocumented status would have remained concealed but for the accident and resulting injuries. § 62 MEDICAL EXPENSES 380 The recovery for medical expenses is limited to the reasonable value of the medical care and services provided. The amount actually paid or incurred is admissible as evidence of the reasonable value of the services rendered. The proper amt to be awarded however, is the reasonable value of the services necessarily received, not the amt billed. More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 31 of 46 § 63 NON-ECONOMIC DAMAGES ARISING OUT OF BODILYINJURY 383 [a] Pain and Suffering 383 Pain and suffering is a generic label used to identify a variety of noneconnomi harms, such as mental aguish, distress, agony, etc. The problem is that this award does not put the P back in the position prior to the harm. Pain and suffering can’t be undone. [i] Ability to Appreciate 384 If they can’t experience the pain, should they be able to recover? Ie, comatose patients. The fairly consistent approach of courts, however, is to permit infants and the disabled to recover for pain and suffering. [ii] Excessiveness 386 There has traditionally been no set standard for determining whether a pain and suffering award is excessive. [b] Loss of Enjoyment of Life 387 This refers to the P’s inability, as a result of her injuries, to engage in life’s pleasures, such as sporting activities, walking, hiking, etc. The general rule is to classify loss of enjoyment of life as a component of the pain and suffering award. [c] Disfigurement 391 To disfigure means to make less compete, perfect, or beautiful in appearance or character. This may be considered part of the pain and suffering award. [d] Loss of Consortium 391 Both spouses and sometimes even children and parents can recover for loss of consortium. This is recognized when it is based on the disruption of the protected relationship caused by the tortious conduct of a third party. Several elements must be proven: 1. The claim recognizes the delicate and emotional elements of the relationship 2. The loss of consortium claim permits the spouse to recover for the loss of services provided by the other spouse These two elements are often split and awarded accordingly. To award both would amount to double recovery. § 64 MEDICAL MONITORING 396 In order to recover for medical monitoring, the P must establish: 1. P was significantly exposed to a proven hazardous substance through the negligent actions of the def 2. As a proximate result of exposure, P suffers a significantly increased risk of contracting a serious latent disease. 3. That increased risk makes period diagnostic medical examinations reasonably necessary More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 32 of 46 4. Monitoring and testing procedures exist which make the early detection of the disease possible and beneficial. § 65 APPORTIONMENT OF DAMAGES 399 The def is responsible for that part of P’s aggregate injury which was caused by def’s misconduct. When injuries are divisible, def is liable only for those injuries attributable to def’s misconduct. When injuries are indivisible, def’s liability for the total injury turns on causation. If def’s misconduct was a substantial factor in P’s aggregate injury, def is liable for the whole. § 66 REMEDIES WHEN THE PLAINTIFF DIES 400 Usually, the damages are awarded to the estate. It just depends on how much. [a] Survival Actions 401 The survival action permits the decedent’s representative to assert the decedent’s pre-death claims, subject to the limitation that damages must be confined to the pre-death period. [b] Wrongful Death Actions 404 This is a statutory action that natures on the death of the decedent and permits the holders of the cause of action to recovery for the independent injury and loss resulting from the death of the decedent. Two types: 1. loss to estate statutes 2. loss to survivor statutes [i] Wrongful Death Damages 406 can be composed of: • loss of support • loss of services • loss of society • funeral and burial expenses • loss of inheritance • grief and sorrow • punitive damages [ii] Elements of the Wrongful Death Action 413 • status as Decedent • real party in interest • prior settlement or judgment • statutes of limitations § 67 CONCEPTION-RELATED CLAIMS 419 [a] Wrongful Birth/Wrongful Life 419 This refers to an action brought by the parents of a birth-disabled child alleging that due to the def’s misconduct the parents were denied the More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 33 of 46 opportunity to make an informed decision whether to conceive the child or to continue the pregnancy after conception. Consider whether the injury was during birth or prenatal care. As a wrongful birth matter, damages by be limited to extraordinary care and medical expenses during minority. As a prenatal injury case, a P may be entitled to full recovery for his bodily injuries, including his future lost earnings. [b] Wrongful Conception/Wrongful Pregnancy 422 This involves claims by parents for the wrongful failure to provide effect birth control, which as a consequence has lead to a pregnancy and the birth of an unplanned for child. The general trend is to limit the damages to those directly related to the pregnancy itself, and reject claims for child rearing costs and later compensation. 8.. REMEDIES FOR INJURY TO PERSONAL PROPERTY § 70 GENERAL PRINCIPLES 426 [a] Complete Destruction of Personal Property 426 Usual measure for damages for complete destruction of personal property is the fair market value of the property at the time it was destroyed. When market value cannot be determined, consider: replacement cost depreciation expert opinion amt of insurance [b] Partial Destruction of Personal Property 427 The measure of damage for injury to persona property is the difference between the market value of the property immediately before and immediately after the injury, called diminution in value. An alternative measure is the reasonable cost of repair. Plaintiff may recover the lesser of, as long as it fully compensates her. [c] Loss of Use 430 The normal measure of loss of use is the fair rental value of the property. This will either be: 1. the amt P could have realized by renting out the property in it’s pre-tort condition. 2. the reasonable cost of renting a substitute § 71 PROPERTY WITH NO MARKET VALUE 431 Courts may use -“value to owner” measure or • original cost less depreciation due to age, condition or damages resulting from use or decay More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 34 of 46 • replacement cost less depreciation • cost or repair or reproduction § 72 LOSS OF OR INTERFERENCE WITH POSSESSION —DAMAGES 435 [a] Conversion Damages 435 When a def wrongfully interferes with the P’s right of possession to, dominion or, or control over property, the law allows the P to treat the interference as a sale of the property to the def. Usually, conversion is not allowed when it’s money that was converted. [b] Replevin Damages 441 At CL, replevin was a specific remedy that provided for the return of personal property that had been wrongfully taken. Today, some courts allow P to choose between specific and substitutionary remedies. [c] Trespass to Chattels Damages 441 This involves a less serious intrusion into the P’s ownership and possessory interest in personal property than conversion. Since when a P asserts a claim for trespass to chattels, they continue a claim of ownership or right to the item, so therefore, they can claim damage to their chattel too. § 73 RETURN OF PERSONAL PROPERTY — SPECIFIC RELIEF 443 [a] Replevin 443 [i] Superior Title or Equity in Another 447 When the owner seeks the return of her property through replevin, her claim to the property may be negated by a superior equity in the def in possession ---ie, if the def is a BFP. [ii] Statutes of Limitation 449 The statute runs on the replevin remedy at the time the def takes possession of the property or at the time the P demands the return of his property and is refused. [iii] Pre-Judgment or Post-Judgment Remedy 451 they used to require seizure of the property before trial… no more. [b] Equitable Replevin 452 Since replevin brings back the property, and provides relief like an injunction, equitable relief is not frequently invoked because the remedy at law in adequate. § 74 RESTITUTION 454 The def was unjustly enriched when he got the property. To disgorge him of that, the court can create a quasi contract, and allow for the P to recover this value. More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 35 of 46 9.. REMEDIES FOR INJURY TO REAL PROPERTY § 80 GENERAL PRINCIPLES 458 The usual measure for injury to real property is diminution in value, ie the difference between the market value of the property prior to the injury and its market value immediately thereafter. [a] Damage to Buildings 463 When the building is totally destroyed, use diminution in value. When the building is partially destroyed, the usual measure is cost of repair or restoration, subject to the principle that the recovery may not exceed diminution in value. If the property is UNIQUE – use replacement cost less depreciation. [b] Removal of or Damage to Fixtures 465 Use the market value of the fixture, separate and apart from the value of the real property or in the alternative, the cost of restoring or replacing the fixture when that can be done at a reasonable cost not disproportionate to the injuries suffered and that cost is less than the dimunition in value of the whole property. § 81 NATURAL RESOURCE DAMAGES 465 [a] Environmental Injury 465 When real property has been contaminated and sustained environmental damage, the preferred measure of redress is cost of restoration. [b] Stigma Damage 467 Even after they restore it, the property’s value may be adversely affected by the fact that the property was once contaminated. Many courts may permit recovery even though allowance of this item results in the total ward for physical injury to real property exceeding diminution in value. [c] Damage to Trees 469 When the injury is to fruit or ornamental trees, courts often permit a nonmarrke measure of recovery. The costs of restoration may not be disproportionate to the market value of the property. § 82 REMEDIES FOR UNAUTHORIZED OCCUPANCY OF REALPROPERTY — EJECTMENT 470 Ejectment allows P to recover immediate possession of the real property. This is used when def is in possession but the P has superior title. Ejectment can be made if the P has the right to immediate possession and the right to demand that the def vacate the property. More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 36 of 46 § 83 REMEDIES FOR UNAUTHORIZED TAKING, OCCUPANCY,OR INCURSION ONTO REAL PROPERTY —TRESPASS 472 Trespass is the usual action, not ejectment. This is the more common issue [a] Damages 472 Damages for trespass is said to be essentially compensatory and not punitive. Depending on intent, a mild or harsh measure may be used. [b] Injunction 476 Since trespass involves an invasion of the owner’s use and enjoyment of real property, it is customary to find that the irreparable injury requirement has been met. Consider: 1. whether the intrusion was minimal 2. the encroachment and it’s interference with the value or the use of the remaining property 3. whether the encroachment was an innocent mistake. [c] Restitution 479 not awarded for trespass claims. § 84 REMEDIES FOR INTERFERENCE WITH AN OWNER OROCCUPANT’S USE AND ENJOYMENT OF LAND —NUISANCE 480 [a] Permanent v. Temporary Nuisance 481 Temporary nuisances will be enjoined by ct and may also include damages. Permanent nuisances will result in damages. [b] Nuisance Damages 482 [i] Temporary Nuisance Damages 482 The award for damages will cover losses up to the date of the commencement of the action or the date of trial. Within that time, the P can measure the loss by: • Diminution in value • Diminished rental value or • Reasonable cost of restoration [ii] Permanent Nuisance Damages 483 With this, the P just recover all damages (past, present, and future) that will result from the activity. The usual measure is diminution in value due to the nuisance. P can also strive for consequential damages, (ie loss in value when she sold the property), or in the case of environmental pollution, cost of remedying the pollution is also allowed. [iii] Annoyance and Discomfort Damages 484 this is available for both temp and perm cases. More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 37 of 46 [c] Enjoining the Nuisance 484 Whether the nuisance will be enjoined depends on: 1. the nature and the scope of the damage to the P 2. whether the nuisance can be fixed by the method other than ceasing the activity and 3. the costs of enjoining the activity on the def and third persons. [d] Limitations Issues Based on Characterization of Nuisance as Permanent or Temporary 486 SOL is different for each type of nuisance, so be careful! [e] Public Nuisance 487 Public Nuisances are: Acts which interfere with the use an enjoyment of public use of property and Acts which are injurious to public health, safety, morals or welfare. § 85 WASTE 490 Anything that causes lasting damage or permanent loss of a fee interest in real property, or which destroys or lessens the value of the fee interest. Economic waste: a remedy which is economically inefficient in the sense that the economic benefits derived from the remedy are outweighed by the costs incurred in providing the remedy. § 86 GOOD FAITH IMPROVERS OF PROPERTY 493 [a] Real Property 494 When an improver is permitted recovery or offset for the value of the improvements made, 2 critical questions arise: 1. What state of mind must the improver have had when he made the improvements? The general requirement is that the improver must have acted in good faith, that he acted under an HONEST MISTAKEN belief that he had a valid claim, title, or right to improve the property. 2. How is the value measured? The value is determined by the difference in the value of land with and without the improvements at the time of dispossession. The cost of improvements to the improver is not the basis for restitution, but it can be used as a cap to what he can recover. [b] Personal Property 496 Doctrine of Accession: this refers specifically to the enhancement of property by its improvement by one other than the true owner Doctrine of Confusion: commingling of property so that it loses its separate identity. These two doctrines combine and provide a means of acquiring title or an equitable interest in the improved property, which may give the improver enforceable rights against the true owner. These doctrines are limited to one who acts innocently and in good faith with respect to the property he improves. So what does this mean? More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 38 of 46 If in fact the improver, acted in good faith, he doesn’t necessarily get to keep the property for free ---the original owner is entitled to restitution from the improver for the reasonable value of the property provided and used by the improver. However, he can’t replevin the improved property. Other tests: Relative value test: which vests title in the party who produces the greatest contribution to the finished product Physical identity test: the court considers whether the physical identity of the property has so changed that it can no longer be considered the same property. 10.. FRAUD AND MISREPRESENTATION § 160 NATURE OF THE FRAUD CAUSE OF ACTION 500 CL requirements for P to prove: 1. A false representation by the def or a past or present fact 2. Def’s knowledge of the falsity of the representation (scienter) 3. The representation was material to the transaction or bargain, ie would induce a reasonably prudent person to rely on the representation 4. P did in fact rely on the representation and 5. P suffered actual damages from reliance on the misrepresentation § 161 FRAUD ECONOMIC DAMAGES 502 [a] “Out-of-Pocket” v. “Benefit-of-the-Bargain” Measure 502 Different jurisdictions use different measures… some will use both! Out of Pocket: the defrauded party recovers the difference between the value parted with (usually the consideration) and the value received. Benefit of the Bargain: the defrauded party recovers the difference between what that party would have received had the representation been true and the value of what was actually received. This is not the same as bargain expectancy (which is the difference between the value presented and the purchase price – what “deal” she got). [b] Consequential Damages 505 AKA special damages, are generally recoverable when they are foreseeable and directly traceable to and result from the fraud. [c] Pecuniary Loss Requirement 505 This just requires that for CL fraud, you have to show damaged caused by the fraud. [d] Distress Damages 506 Since distress damages are usually awarded in tort based theories of recovery and Fraud is a dual concept, some courts allow distress damages, some don’t. [e] Attorney’s Fees and Punitive Damages 507 Statutes causes of action for fraud often expressly allow for the atty’s fees by successful litigants. More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 39 of 46 Punitive damages are also allowed. [f] Statutory Fraud Actions 507 At CL, innocent behavior may not be punished. However, with statutory additions, the result may be different, to protect consumers. § 162 NEGLIGENT MISREPRESENTATION 507 A defrauded party may recover pecuniary losses to the same extent as if the misrepresentation were deliberate. However, the nature of the fraud claim as sounding in negligence as opposed to intention misrepresentation may affect the amt of damages recoverable. How far do we go with the privity requirement? Middle ground of different tests used, is also the majority view: 1. the maker of the misrepresentation intends to influence or the maker of the misrepresentation knows that the party in privity, 2. who receives the information 3. intends to use that information to influence another 4. with regards to that bargain or transaction. § 163 PROMISSORY FRAUD 509 A party may be able to convert their breach of contract claim into a promissory fraud claim to the extent that they can prove that the defendant NEVER intended to perform their contractual obligations. Consider 3 scenarios: 1. promises as to what will be done in the future: action under breach of K 2. promises as to present facts: actionable as fraud 3. promises to present INTENT: actionable as promissory fraud The mere fact that there was a breach doesn’t prove intent… you have to be able to show intent to get promissory fraud!!! § 164 INJUNCTIVE RELIEF 510 Because most frauds are one time deals, injunctive relief is not usually a remedy. Usually, money is enough. However, if the situation is such that the fraud is ongoing, like having to pay on a promissory note, injunctions will be granted. § 165 FRAUD CAUSATION 511 [a] Loss Causation 511 The loss must follow as the natural and proximate result of the defrauded party’s reliance on the misrepresentation. [b] Fraud Economic Loss Rule 513 In order for the application of this rule, the fraud claim must exist independent of the contract to be actionable. However, very few jurisdictions do this. § 166 RELIANCE 514 A victim of fraud does not have a generally duty to conduct an investigation to verify the accuracy of the facts represented to him as true by the fraudfeasor. In some More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 40 of 46 cases, however, a party’s preexisting duty to acquire information about the fraudfeasor may undermine a claim of reliance. So the general rule is that when reliance is required, P’s reliance on the def’s fraudulent conduct must be both actual and justifiable. § 167 NON-DISCLOSURE AS FRAUD 517 Non-disclosure of material facts amount to actionable fraud only when the nondiscllosin party has a duty to disclose. A duty to disclose will be found in 4 situations: 1. statute creates a duty to disclose 2. a fiduciary or confidential relationship exists between the parties to the transaction or bargain 3. a disclose has been made with is partially true and partially false 4. one party has superior knowledge of the true facts and the other party to the bargain or transaction is unable to acquire that same information at a reasonable cost. Fraudulent concealment: active effort and conduct by a party to prevent another from discovering the true facts. [a] Fiduciary or Confidential Relationship 518 If such relationships are present, consider whether or not their relationship requires disclosure. It’s fact specific. [b] Superior Knowledge 519 If the information is of public record, there is no duty to disclose. If the acquisition of superior knowledge was the product of an investment of time and resources, it is given more protection than if it was acquired casually. However, it’s also required that the knowledgeable party appreciate that the other party is unaware of the information. § 168 FRAUD BY FIDUCIARIES 520 When fiduciaries act deceitfully toward those whom their obligation is owed, courts are vigilant to insure that the victims of the misconduct are fully protected. The more vulnerable the victim, the greater the duty to them. [a] Damages 521 For this situation, they allow for benefit of the bargain damages, even if that jurisdiction usually applies out of pocket measure. [b] Restitution 521 Agents who act for their own benefit, act deceptively toward third parties, on behalf of their principles, may be required to disgorge to the third parties any benefits they obtained from them. The defrauded party may also capture any profit the defrauding fiduciary acquired. § 169 FRAUD AND PUBLIC POLICY 523 While fraudulent misrepresentations are not consistent with sound public policy, vindicating and remediating the victims injuries may violate a higher and greater public policy. In this context, the preference may be to leave the victim of the More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 41 of 46 misrepresentation without a remedy. (ie, unlicensed contractor, and they knew about it) 11.. RESCISSION § 190 NATURE OF THE REMEDY 525 This allows a party to a bargain to disaffirm and undo the bargain. In order to establish an equitable right to rescind the bargain, the rescinding party must establish: • that timely notice of rescission was provided to the other party, • return or offer to return the consideration the rescinding party received, and • restore any benefit derived from possession of the consideration when retention of that benefit would constitute unjust enrichment. § 191 FORMS OF RESCISSION 527 [a] Rescission at Law and in Equity 527 AT LAW: the essential requirement was a restoration or tender by the rescinding party of the consideration received to the defendant. After the tender, the rescinding party could sue the def in quasi K, since the property was returned and now there was unjust enrichment. IN EQUITY: a tender was not required. The equity court would just order relief on such grounds was fair, just and proper. [b] Tender Requirement 530 See above. § 192 NOTICE OF DEMAND OF RESCISSION 530 There must be timely notice of the intent to rescind. § 193 ELECTION OF REMEDIES 532 This is required to prevent double recovery for a single wrong. If you choose a particular remedy, you have to stick to it. The modern approach is that the def ought to be required to demonstrate that the P has gained benefit, imposed a detriment, or acted inconsistently to def’s prejudice before an election of remedies will be found or forced. This is an affirmative defense, so if not asserted, it will be waived. [a] Seeking Interim Relief 535 Some jurisdictions have held that seeking interim relief constitutes an election. [b] Judicial Estoppel 535 Judicial estoppel bars a party from obtaining an advantage buy taking one position before a court an then seeking a second advantage by taking an inconsistent and incompatible position. The point is to ask whether by taking this new position, the party has unfairly prejudiced the other party or unfairly gained an advantage that a court could not adequately redress if the second position was allowed to be asserted. More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 42 of 46 [c] Election of Right 537 This is another term that Election doctrine is known by. § 194 RESTORATION OF THE STATUS QUO 537 This is the position each would have occupied had the bargain not been entered into. This is the objective remedy of the rescission. From this, it follows that the inability of the court to restore the status quo may be a valid reason for denying rescission. § 195 SCOPE OF REMEDY OF RESCISSION 541 [a] Rescission Damages 541 Restoration to the status quo may not fully redress the harm sustained by the rescinding party. Therefore, compensating the rescinding party for her out of pocket losses caused by the conduct justifying rescission is allowed. [b] Disgorgement of Benefits Received 542 With the cases we have thus far, it is unclear how far disgorgement can go. The more culpable the conduct, the more the rescinding party should get. [c] Punitive Damages 542 not on test… § 196 GROUNDS FOR RESCISSION 543 Rescission is not available as a matter of right when a party’s bargain related expectations have been adversely affected by the def’s conduct. In order to maintain an action for rescission, the P must invoke a proper basis for the claim. These include: 1. fraud, deceit, or misrepresentation 2. failure of consideration or material breach of contract 3. mistake 4. duress or undue influence, particularly by a fiduciary 5. illegality SKIPPED PAGES 544-622 BECAUSE IT WASN’’T ON THE SYLLABUS.. 16.. BREACH OF CONTRACT REMEDIES § 250 INTRODUCTION 624 Factors to consider: • Who was the non breaching party? • Who was at fault? • Breaching party can still recover under the theory of unjust enrichment. • What type of economic loss is at stake? § 260 EMPLOYMENT CONTRACTS 627 A relationship that is terminable at will, creates lesser expectations. If there is a K, stick with K remedies. More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 43 of 46 If the employment is at will, then stick with tort remedies. § 261 EMPLOYEE’S DAMAGES REMEDIES AGAINST EMPLOYER 628 When there is an employment K, the basic recovery is lost expectancy. It should approximate what the P would have received had the K been fully performed. This may include vacation time, car, bonuses, etc. Just think of all the ways to get more money… § 262 REINSTATEMENT OF EMPLOYEE TO POSITION 633 This is an alternative to lost pay, discussed above. Consider all the practical considerations however, to reinstating a person to their job: • Company moral • Bumping people • Seniority • Uniqueness of position • How to pay them for the time they were in litigation § 263 EMPLOYEE’S ACTION FOR QUANTUM MERUIT 636 Quantum Meruit: the reasonable value of the services rendered. This is just limited to what they already earned but did not receive compensation for yet… it’s not like §261 above, where they get all their future pay too. § 264 EMPLOYER’S DAMAGES REMEDIES AGAINST EMPLOYEE 639 The usual measure here is the cost of obtaining a replacement employee. The damages are limited to the remaining term of employment K. The employer may recover for: • Difference between K rates for the defendant and the new guy • The cost of training the new guy • The cost of advertising and interviewing for the new guy If the case is at will, although the employee may assert a quasi contract, here, the employee still retains the right to terminate the at will relationship, which means they don’t have to pay for the replacement. § 265 EMPLOYER’S EQUITABLE REMEDIES AGAINST EMPLOYEE 641 Unlikely to be enforced because you can’t force someone to work for you. That’s slavery! However, when the services are unique and the employee going somewhere else to work would be harmful to the original employer, then the court may grant a “negative injunction” to prevent the employee from going to work for another. The employer may have to continue to pay the employee though. Covenants not to Compete: if it’s there in the K, fine, the courts may enforce it. However, they will not make up covenants not to compete after the firing. To allow for a covenant not to compete to stand, it has to be reasonable!: 1. The scope of activities barred by the def More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 44 of 46 2. The geographic scope or extent of the covenant 3. The duration or length of time the covenant is applicable to the former employee. § 266 EMPLOYER’S REMEDIES FOR EMPLOYEE’S BREACH OFDUTY 645 An employee inherently has a fiduciary duty to their employer. To what extent is dependant on the situation. Different examples: 1. set up competing business to that of his employer 2. accept bribes or kickbacks 3. expropriate to himself or others business opportunities belonging to the employer 4. cause other employees to leave 5. fail to discharge his responsibilities as an employee competently and diligently due to conflicts of interest. The damages that the employer can collect are limited to what he actually lost. He may get more if the employee’s conduct was exceptionally bad… analyze the facts! § 270 CONSTRUCTION CONTRACTS 649 If the Contractor has substantially performed: he can recover the K price even though he didn’t finish his job, less the amt that the owner will need to cure the gap. If the Contractor has not substantially performed: the owner’s damages are measured by the increased cost to the owner of having the contracted for work performed by another. § 271 OWNER’S REMEDIES FOR CONTRACTOR’S BREACH 650 [a] Incomplete Performance 650 Natural remedy is the cost to the owner to complete the project [b] Defective or Deficient Performance 653 No matter what the ct enforces, either less the k price or how much more the owner has to pay, the court wants to avoid economic waste. § 272 CONTRACTOR’S REMEDIES FOR OWNER’S BREACH 657 [a] Anticipatory Breach by Owner 657 Contractor’s remedy is limited to it’s lost profit (aka expectancy interest) The lost profit is the difference between the K price and the contractor’s cost of performing the K. (cost to construct + price = K price) [b] Partial Performance By Contractor 658 Costs already incurred + costs to be incurred for completion = cost to construct. Therefore, in this case, the contractor must calculate the possible increase in the cost to construct and require that owner pay that as well as whatever profit they were expecting. More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 45 of 46 [c] Change Orders 659\ When the contractor has performed additional work for which the owner is responsible as, for example, pursuant to a change order, the contractor is entitled to recover the fair price of the additional work. [d] Delay in Completion Caused by Owner 661 The contractor may recover the additional costs actually incurred as a result of the unexcused delay caused by the owner. [e] Unjust Enrichment 663 If the owners breach prevents the contractor from finishing, the contractor may elect to recover under a theory of unjust enrichment for the reasonable value of the services provided prior to the breach. § 280 BREACH OF CONTRACT TO SELL REAL PROPERTY 663 I’m just too tired to do these four titles… you can look it up yourself. § 281 BUYER’S REMEDIES FOR SELLER BREACH OF CONTRACT TO SELL REAL PROPERTY 664 § 282 SELLER’S REMEDIES FOR BUYER’S BREACH OF CONTRACT TO PURCHASE REAL PROPERTY 668 § 283 INSTALLMENT LAND SALE CONTRACTS 672 17.. SPECIFIC PERFORMANCE § 290 INTRODUCTION 677 Specific performance is a form of permanent equitable injunctive relief. This orders the nonperforming party to the contract to be performed. To get specific performance, the P must demonstrate that the entitlement to equitable relief, that the remedy at law is inadequate. § 291 CERTAINTY 679 The contract to be specifically enforced should be complete and the terms clear, definite and unequivocal. § 292 ABILITY TO PERFORM 680 Specific performance will not be ordered when the def is unable to comply with the order. Thus, while a party may lawfully contract to sell property she does not own, her failure to obtain legal title precludes, as a practical matter, specific performance. § 293 MUTUALITY OF REMEDY 682 This is the requirement that either party must have been able to obtain specific performance of the K. It’s unfair to allow only the one party to ask for it. The modern trend is to reject this requirement, as a condition to obtaining specific performance. More Free Outlines: http://c.finamore.home.comcast.net or http://finamore.net $ASQLaw School Outline -Understanding Remedies.doc Page 46 of 46 § 294 FAIRNESS 684 Courts will not grant specific performance unless the agreement itself was fair. § 295 FLEXIBILITY 686 Specific performance will not be ordered when the performance sought would be impossible, tortious or criminal. § 296 ABATEMENT 687 The def’s inability to comply fully with it’s contractual obligations does not necessarily negate specific performance. They may require that the party perform to the extent that they can. § 297 SPECIFIC PERFORMANCE AND/OR DAMAGES 690 If the court denies specific performance, the court has the power to award damages for breach of contract, as long as the equitable jurisdiction was invoked in good faith by the P. If the court grants specific performance, they may also award compensation to redress the consequences of the def’s non-performance of its contractual obligations.