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Prof. Reynoso Remedies Class Notes, Fall 2001 Page 1 of 44
Warning: some days are missing.
Warning: more than one ? means I wasn't sure about what was said.
Warning: this isn't really an outline, it's just class notes.
Monday, August 27, 2001 Remed ies Exam half essay half mu ltiguess (objective)
No Class Sept. 4 and Sept 26 Make up Thursday maybe lunch TBA
Nov 8 and 15 at noon makeup classes
1) Remedies: posted the assignment anyway, clients wants the remedy. They don’t care about the cause
of action, they want a remedy.
a) Con Law, statutory law, ad min law. Co mmon law all in fluence remed ies
b) Focus first 5 chapters of the book
i) Equity
(1) Injunctions
ii) Damages often unsatisfactory for the client
(1) Contract (K)
(2) Tort
iii) Restitution
iv) Unjust Enrich ment
v) Declaratory Relief
c) Maybe also speakers, handouts
2) First Chapter was Assigned Intro to Remedies
a) Remedies can be divided into categories
i) Specific Remedies
(1) EG Return of property, ask court for order returning converted property
ii) Substitution Remedy usually substitute money for what litigant lost
iii) Declaratory J udg ment d ifficu lt because runs up against constitutional prohibition on
advisory judgment, need for case in controversy.
(1) Declaration is Judgment fo r Declaratory Relief under Contract Examp le: court declares
the rights of the parties under the contract, so it’s a case in controversy about the meaning
of and rights under the contract.
(2) EG Bro wn v Board of Education US sup ct declared school segregation unConst. In the
U.S. this was a declaration of constitutional law
b) Actions are either actions at law or in equity, which came fro m the Eng lish Co mmon Law. Early on
it was local judges enforcing local customs. Eventually (1300s) the economic situation changed
fro m decentralized feudalism to consolidated power in the cro wn to facilitate trade, and the king
instituted national legal standards and appointed circuit judges who would travel around and
adjudicate disputes that centered on trade. Uniformity of law is impo rtant for co mmerce. Under
these new national courts Writs became more and more formal, co mp laints had to be pled
according to the writ, statute of limitat ions may have passed, so people started appealing to the
king. People asked king to use sovereign powers to admin ister justice. He channeled this power to
the chancellor, chancellors were trained in cannon law. Chancello rs appointed judges.
i) Equi table Remedy Usually a specific order against a person or entity
(1) Came fro m the chancellor’s courts of equitable cannon law.
(2) Issued equitable judgments.
(a) Personal orders to do or not do something Injunction.
(b) Contracts for land were in the courts of equity because $ is not a remedy because land
is unique. Examp le: A sells land to B for 50$ per month and if B refuses to pay then
the land reverts to A. This is not “fair” so they developed the concept of equitable
title. They paid, they have to have a chance to bring their payments up to date, can’t
just have land revert if one pay ment is late.
(c) Judges who are sitting in equity feel they have more options than when they are
sitting at law.
ii) Legal Usually money judgement
(1) Was the original national court designed to consolidate power and facilitate commerce
through uniformity of law.
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 2 of 44
(2) Eventually courts of law only issued money judgments, not equitable judgments.
(3) Third party, such as sheriff, often enforces the judgment.
(a) Can find contempt for failure to obey order.
(b) Can Jail for failure to obey order.
c) Unification of courts of law and equity. Conflicts arose: what if the buyer B defau lts on the
payments, but the court of equity issues an order prohibiting the seller A fro m taking possession of
the land? The court of equity wins over the court of law… There has been an effort at reunifying
the courts. The municipal courts and the superior courts are mostly unified now. But since the
problems came up over conflicts the courts of equity and law were jo ined.
i) BUT you must be clear if the remedy is at law or in equity!!!! Cause of action must state if it is
at law or in equity to satisfy the notice requirement.
ii) Person is generally entitled to a jury when it is a remedy in equity? What if you ask for an
injunction and money damages? If the dominant portion is in equity, then you can get a bench
trial. BUT if you can logically sever the remedy at law, then a ju ry should be brought in to
decide the issue at law.
d) Remedies we won’t talk about.. this class won’t cover everything
i) “The Great Prerogative?? Writs”
(1) Cuo Warranto??? Examp le suit that says that a person is in an official position illegally
(2) Mandamus requires govt to do what it is statutorily or otherwise required to do
(3) Writ of Cert
(4) Habeas Corpus
ii) Workers Co mpensation
e) Unjust Enrich ment
3) Tuesday, August 21, 2001 Class Two
a) Equitable Remedies
i) Usually resulted in an injunction personal to the individual.
ii) Most commonly against an individual (incl. Corp.) but could be against a govt en tity etc.
iii) Somet imes a person wants a protective order
iv) Somet imes a court may retain jurisdiction Tahoe in junction denied and stay denied and city
cut down trees over the weekend before the appeal could be filed.
v) Order o f Child Support
vi) EG crop ready for harvest, disputed easement for access, ask for TRO to allo w harvest.
Concern is for constitutional rights of the person resisting the easement.
vii) Temporary Restrain ing Order (TRO)
(1) Usually around 10 days
(2) Used in emergency situation.
viii) Preliminary Injunction
(1) Preserve the status quo
(2) May combine with hearing on permanent injunction by stipulation of parties
ix) Permanent Injunction
b) Temporal aspects
i) Injunction is for FUTURE HA RM
ii) Money Damages are for PAST HA RM
4) Clinton v. Nagy 411 F. Supp. 1396 (1974) TRO Case
a) Facts:
i) π Girl wants to play football with the bulldogs, mother and coach agree.
ii) City argues no irreparable harm, g irl answers that there are only two games left.
iii) Concept of law: people must act in a timely fashion. Why didn’t the court say you should have
acted earlier? Court doesn’t say, but it is clear that there are only t wo games left.
iv)
b) Requirements for TRO (there are mo re for Prelim. Injunction):
i) Irreparable Harm
(1) What important rights are being taken away fro m the π if she doesn’t play?
(2) Right to participate, teamwork, development, etc benefits of football
ii) Substanti al Likelihood of Success on the Merits of the Case
(1) There really isn’t a dispute on the material facts here.
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 3 of 44
iii) TRO is not appealable
c) Who does the order COVER?
i) In this order it covered the ∆, its agents, and anyone with actual knowledge of the order were
covered.
d) Mandatory vs. Prohibitory
i) Prohibits interference, says enjoined from prohibit ing.
ii) Historically rules are d ifferent for Mandatory Injunctions so courts are careful to phrased them
in the negative.
iii) COA was for a TRO based on violation of Constitutional rights.
5) Adams v. Baker 919 F. Supp.1496
a) Facts: π Girl wants to wrestle.
i) ∆ argu ments: parents object, embarrass guys if they lose to a girl, fear of sexual harassment
lawsuits (note: waiver here), boys are stronger safety factor (note: some boys are more frail
than others and frail boys are not prohibited fro m wrestling, and weight classes takes care of
differences), moral objections (too ambiguous contrasted with clear Const. Right), disruption,
boys learn to dominate girls
b) Preliminary Injuncti on Requirements
i) Likelihood of success on the Meri ts
(1) Constitutional right is clear to equal protection and so burden shifts to ∆ to show that they
didn’t violate
ii) Irreparable Injury Unless the Injuncti on is Issued
(1) Not able to play sport and get benefits,
(2) Equal p rotection is important for other reasons
iii) Threatened Injury to the Moving Party Outweighs whatever Damage the injuncti on will
cause to the enjoi ned party
iv) Injuncti on will not be Adverse to the Public Interest
6) Fogie v. Thorn Americas Inc. 95 F3d 645 (1996)
a) Facts: is “rent to own” contract usurious?
b) Procedure: on appeal fro m court order g ranting summ judgment for π class permanently enjoining ∆
fro m usurious practice.
c) Conclusion: Appellate court agrees with the trial court.
d) Irreparable Harm.
i) Can’t make π keep suing for damages over and over, only makes sense to permanently enjoin
future usurious practices.
ii) Cant identify harm to future vict ims and unidentified vict ims.
7) Injuncti ons:
a) Balancing the Harms:
i) Inadequacy of Legal Remedies: money won’t solve it (see irreparab le harm above).
ii) Burbank A irport neighbors keep suing saying that the noise is exceed ing the noise levels.
(1) Court denied the injunction for reasons of public necessity, balanced the harms, etc.
(2) So they had a harm but still didn’t get an injunction.
(3) They have a remedy at law money damages. They all started suing the airport for
money damages for past harm. The airport said you can’t do that, you must get an
injunction and that failed. The supreme court of CA said no, they CAN sue for money
damages. The airport settled with the homeowners.
b) Irreparable Harm
i) The courts often equate inadequacy of legal remedy with Irreparab le Harm. In other words, to
see if the harm is irreparable, ask “Will money damages solve this for the π?”
8) Summary of Yesterday
a) Stds for TRO and Prelim In junction same
i) Irreparab le In jury not even reached it remedy at law is adequate but courts often talk about them
as if they were the same thing
ii) Substantial Likelihood of success on the Merits
iii) Balancing the Harm applies in all injunctions but in TRO they rarely discuss it
iv) Public Interest applies to all but courts rarely talk about it in TRO
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 4 of 44
v) Notice to Opposing party even required in TRO but low standard and might not even have to
attempt under certain circu mstances??????
vi) Bond required in TRO and Prelim Injunction if harm to D might occur if granted Bond on
Perm Inj if appealed
vii) Appeal Prelim and Perm yes TRO No
viii) Hearing under oath TRO due process concerns but less stringent in TRO than Prelim and
Perm Injunction Emphasis at the permanent inj hearing is the merits but they do look at the
other factors
b) TRO
c) Prelim. Injunction
d)
e) Permanent Injunction
9) Little Tor Auto Center v. Exxon Company US A 822 F.Supp.2d 141 (1993)
a) Facts Little Tor seeks ex parte prelim injunction seeking to prohibit Exxon fro m terminating the
franchise. P calls D (Exxon) and they make an agreement to keep the franchise but Exxon didn’t
have to give any more gas.
b) Judge granted the agreement and issued it as an Order of the court. Federal judge decided to publish
this Order.
c) Why did the P call the D when the judge is authorized to sign the TRO without notice? Judge said I
won’t sign it unless you try to work it out with the other side.
d) Constituti onal Concern of the Judge di dn’t want to sign it absent notice because of 5 th/14 th
Amendment.
i) Historic concern: labor unions/TROs/ 1st amend ment rights
ii) Imperial County Judge ordered farm workers to stop picketing flat injunction they kept
picketing and were arrested
e) Note: lawyer has an ethical obligation to exp lain all of the law both positive and negative when the
lawyer sees the judge ( Federal only??? ex parte only????? There is a duty in Federal court to
disclose adverse law but not in Californ ia)
f) Note: local rules probably require at least a phone call to the other side on a TRO.
g) Irreparab le Harm? M ight be. Vested interest in the ongoing business.
h) Substantial Likelihood of Success? Maybe.
i) Balance of Harm to the P and the D? In favor of P because D doesn’t have to do much and it’s only
10 days
j) Public Interest? Stability of business.
10) Ahmad v. Lond Island Univ. 18 F. Supp. 2d 245 (1998) Note: other circu its are more lenient than this.
a) π has a claim based on Federal and NY state statutes, P files a comp laint and a Order to Show
Cause which was filed on the same day as the complaint Notice to Show Cause why the court
should not issue the TRO/
b) Irreparab le Harm. Not shown by π in this case. π can still work in p rofession, will not be bankrupt
or on the street. Note: Damage to reputation may prevent this professor from getting another job.
c) Remedy at Law is adequate. $ will fully remedy the alleged injury. Note: π is not seeking $
damages, is seeking to prevent termination. Court is sort of wrong here.
d) Co mpare: π here the right is based on statutes, π in Clinton v Nagy right is based on Const. Equal
Protection judge doesn’t care because judge says $ will make you whole.
e) Balancing of Harm. Why does the judge say that $ is an adequate remedy? Because the emp loyer is
in a harsh position if every emp loyee can stop a termination merely by filing a
harassment/discrimination/Tit le VII claim.
11) Ross-Simons of Warwick Inc v. Baccarat Inc. 102 F.3d 12 (1996)
a) Facts: Co mp laint COA is interference with K by Δ. Δ appeals a preliminary injunction that requires
Δ to continue selling crystal to π
b) Preliminary Injunction Standard
i) Likelihood of Success easy because does appear to be interference with the K because of
nondiscrimination clause in K
ii) Irreparab le Harm Co mpare to other cases we have looked at
12) Tuesday, September 11, 2001 M issed class last time Tuesday last week
a) Class cancelled again tomorro w, should be back Wednesday
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 5 of 44
b) We were still finishing up the class action case
13) Ho xworth v. Blindter, Robinson & Co. 903 F.2d 186 (3d Cir. 1990) page 55
a) Contd fro m last Tuesday See Quote top of p 56 trial court said no danger of monetary loss and
chilling effect on π to require a bond, and app. Ct overturned, and yet app ct even quotes 3 rd cir
case saying okay not to require bond when no risk of $ loss to Δ
b) Ct of App simply d isagreed with trial court’s determination that there was no risk of loss to Δ in this
case. Deference to the facts found by Fed. Trial ct. in Fed. App ct. but can reverse if clear error.
c) Should π have to set up a bond is the issue here, and π are arguing fraud and rico violat ions in penny
stock… one of the riskiest stocks possible, so if they have the $ to invest in risky stocks, then they
should have the $ to put up a bond. Is that the way the court should look at bond issues?
i) Prof. thinks not, that really app court should ???
14) Borough of Palmyra Board of Educ. V. F.C. 2 F.Supp.2d 637 (N.J. D.C. 1998)
a) Hearing before ALJ parents prevail and A LJ finds ADD/ADHD child entitled to special edu.
Also ALJ ordered school dist to pay for private school until school bd. Sets up special program in
school for the child. Plus, must pay for past tuition.
b) School Bd’s Right of appeal is to dist. Ct., Ct of App (Dist. Ct.) says no bond required. Seems to be
a pretty clear case where a bond should be required, why not?
i) Barrier to vindication for Federal rights for indigent lit igants if bond requirement is inflexib le
ii) Injunction is for tuit ion $ and parents don’t have the $ for bond or tuition
iii) πs seem likely to prevail on this coa
iv) Board failed to show substantial losses because board could seek reimbursement fro m the
indigent plaintiffs doesn’t make sense except that bond requires money right away and
includes interest, whereas they might be able to pay the district back over time
v) Ct cites extraord inary circu mstances
c) Public Policy: boding requirements for indigent plaintiffs
i) Public interest lawsuit that will benefit more than the parties plaintiff
ii) Δ is usually a government agency being sued to require the govt to carry out statutory duty or Δ
private party being sued to enforce a statutory duty
iii) Eg CRLA suit against large grower with substandard conditions in farmer camps. π are
enforcing a public interest (as a “private attorney general”)
iv) See top of page 63 top of page “permissive language of rule 65(c)”. Then see p 54 for text of
rule “65(c)” “No tro or prelim in junction shall issue… in such sums as the court deems
proper.” is the only quasi permissive language. How do they get away with this? Statutory
construction:
(1) Must expressly take away common law/traditional/past powers of the court. When the
legislature passes a statute, if the legislature wants to change an existing practice3 they
must so state expressly. Courts have had the power to issue bonds or not issue bonds and
determine the amount, and since the rule doesn’t expressly say that it takes away the
equitable power of the court to decide when and if to issue bonds then it is not part of the
law.
(2) Avoid absurd result: legislature could not have meant that under these circu mstances.
(3) Last resort: unconstitutional provisions can be ignored.
d) Injunction Bond Ru le p 63
i) US Sup Ct in footnote adopted the Injunction Bond Rule in Russel v. Farley 105 U.S. (15 Otto)
433, 437, (1882)
ii) If you get a bond and there are no damages, then Δ gets no $.
iii) The bond is the maximu m that the Δ can get if the Injunction was erroneous. (not always true)
e) Notes on Stare Decisis: IN CA THE TRIA L COURTS M UST FOLLOW THE APPELLA TE
DECISIONS A LL OVER THE STATE, W HICH IS UNLIKE THE FEDERAL SYSTEM
WHERE YOU HA VE CIRCUITS.
f) Parker Tampa 2 Inc. v. So merset Develop. Corp 544 So.2d 1018 (Fla Sup Ct 1989) note: in Fla. the
cases get to the sup ct of fla in a weird way : gets question certified by the app. Ct. ??
i) θ wanted injunction for d istrict not to issue sewer permits to another development.
ii) Q before the court: Was the amount of the damages for a wrongly issued injunction limited to
the amount of the injunction bond?
(1) Here everyone agreed that the damages way exceeded the bond amount
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 6 of 44
iii) Arguments for exceed ing bond:
(1) θ Parker were not a party to the suit when the bond was set and so should not be limited to
the bond amount.
(a) But θ Parkerd id make a motion for a hearing on the bond amount, and court denied it
so they did have an opportunity to contest the bond amount. Th e court denied it on
the merits of the motion.
(b) Potential taking issue: must give due process, must have a chance to convince the
trial court judge that the bond should be higher. Here, θ Parker had a chance via
motion to increase the bond amount.
(2) Somerset, on cross-petition, said θ Parker wasn’t entitled to recovery on the bond because
it wasn’t an expressly enjoined party.
iv) There are exceptions to the bond damages limit :
(1) Malicious, bad faith when setting the bond amount
v) Policy:
(1) π needs to understand ahead of time what the damages will be if the injunction is
dissolved and they have to pay. They need this info to weigh the risks when seeking the
injunction.
(2) Need to protect Δ, yes, but bond does that to some extent.
g) Provident Management v. City of Treasure Island, 718 So2d 738 (sup ct fla 1998) page 70
i) Facts: Owners of condos were renting out short term in vio lation of residential zoning. City
sought injunction and said they were exempt fro m bond. Judge didn’t require bond fro m City
after city said they didn’t have to post bond. Statute says city doesn’t have to post bond
ii) Procedure: trial court found for city, app ct reversed,
(1) Court agreed with city that it was an improper use, issued Temp In junction for all renting
by agencies
(2) City sought permanent injunction, was granted in part and denied in part
iii) supreme court of Fla said
(1) On the bond issue
(a) Bond not required for public entities undefr ru le 1.610(b) state statute
(i) Most states have the no bond statute for govt. πs seeking injunctions
(2) Damages: Majority Ho wever, when they refuse to post bond the public entity is liable for
full damages because we let them waive bond
(3) Wants to protect the interests sought to be protected by the no bond requirement
(a) Delay, inconvenience
(b) Assumes govt will not improperly use extreme remedy of injunction
(c) Normally govt has resources to pay for damages
(4) Maybe bonds are advisable so the parties know where they stand
iv) Dissents
(1) Sovereign Immun ity fro m suit can’t sue the govt without the govt’s permission
(waiver). Has this statutory scheme waived the sovereign immunity?
(a) Dissent by Overton says no, sovereign i mmunity is wai ved only for torts and K.
this is the MAJORITY view. Dissent says if there is no bond, have to sue here
under a
(i) malicious prosecuti on or
(ii) takings COA (constitutional cl ai m) or
(iii) estoppel
(b) Concurrence by Wells says yes, when they invoke EQUITAB LE jurisdiction of
the court, they wai ve their sovereign i mmunity. Also
(2) Here we are talking about damages because the city got a temp. in junction that got
appealed. In retrospect, it’s easy to say the lawyers make a mistake because there was
already a court of appeals case that said there could be damages. What else could the city
atty have done to minimize the risk? Other ways to enforce the ordinance:
(a) Litigate (permanent injunction) rather than temporary injunction. Usually Δ will
NOT be entitled to damages if the appeal on the PERM In junction is won by the Δ.
(b) Declaratory Relief. City atty should have advised seeking declaratory relief. Once
the judgment came down they could have enforced the judgment.
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 7 of 44
(c) City could fine them, they appeal, and then it’s decided either way who is in the right.
v) Tort Theory Allows Damages Ct of Appeals says it’s a TORT to get a wrongful in junction so
sovereign immun ity is waived.
h) Wednesday, September 12, 2001
i) Tragedy be careful in ju mping to conclusions about who is responsible for the d isaster.
ii) Provident Management case continued (added Above
iii) Alternate Remedies EG: ru le changes to allow city manager to take office voted on [by person
who now holds office] some years earlier when that person was on the city council.
Prosecutor is filing criminal charges, should probably be a civil suit.
i) Nintendo of America Inc v Lewis Galoob 16 F3d 1032 (9th Cir 1994).
i) F & P bond had issued and bond had increased several times. Galoob was seeking
declaratory relief, Nintendo then filed for a prelim in junction for copyright infringement for
Game Genie
ii) Trial Court decided that the damages easily exceeded the bond
iii) Nintendo’s appeal
(1) One Trial court failed to weigh equitable considerations before decidin g to execute the
bond. DE NOVO REVIEW by 9th Cir on the decision to execute the bond and the
equitable considerations.
(a) Good Faith. Nintendo said they proceeded in good faith (Public Policy argu ment,
rejected by most courts), and Nintendo would be harmed by these competitors
(b) Quasi Bad Faith. Galoob didn’t raise all of their defenses at the prelim in junction
hearing and Nintendo and the court were suckered into thinking that Galoob had a
weaker case than they really d id have.
(c) Long line of cases in the 9th cir protected intellectual property as a matter o f public
policy, shouldn’t be any damages.
(i) Court says that only comes into play with at PERMANENT INJUNCTION.
Doesn’t really apply to the preliminary injunction. More procedural protections
and fuller hearing with permanent injunction.
(2) Improperly found that the injunction harmed Galoob. Rebuttable Presu mption that there
are damages according to 9th Cir.
(a) Nintendo said that the NES units were still being used so that Galoob wasn’t really
harmed, in fact, they could sell M ORE game genies because there were more NES
out there.
(b)
(3) Nintendo disputed the way that the damages were calcu lated on several fronts. CLEA RLY
ERRONEOUS STD of review by 9th cir.
(a) Looked at economics, took lower ends of the range, said that’s rough ly the amount of
the bond, gave the full bond amount.
(b) 9th Cir says that’s a very traditional way o f doing it, not clearly erroneous.
j) Walgreen v. Sara Creek Property Co. 966 F2d 273 (7th Cir. 1992) Posner case
i) Walgreen is a “discount” pharmacy store and they have a K with Sara Creek that says that Sara
Creek may not put another pharmacy in the mall. Sara Creek is going to put in a “deep
discount” store and will p robably drive Walgreen out of business.
ii) Walgreen seeks an injunction, this is beyond the breach of K COA, Walgreen can still sue for
breach of K
(1) Are $ damages (at law) adequate?
(a) Δ Sara Creek says damages are traditional and adequate according to a line of cases
(b) Court says there are also lots of cases where the court HAS issued injunctions see p
86
(c) Court says damages are normal for other than non-permanent injunction, wh ich is a
different analysis
(2) Court says for Perm. In junction, should look to see if it is better for both parties to
substitute permanent injunction for the normal damages.
iii) Monday, September 17, 2001
iv) When should judge issue an injunction according to Posner?
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 8 of 44
(1) Cost shifting fro m court to parties when in junction can be issued without further judicial
supervision.
(2) Costs and damages are hard to calculate.
(3) Injunction will still allow parties to negotiate for a solution. Part ies can still enter into an
agreement.
(a) With the injunction the party with the K right being enforced has an extra bargaining
chip. Maybe walgreen’s deserves the injunction because they had a k right.
(b) This assumes that there will be a negotiated settlement based on market forces. The
market should determine the value of the injunction, not the court. He says this is a
bilateral monopoly, and so they will settle.
(c) But if they were really going to settle, wouldn’t they do that before trial?
(d) Isn’t the market value harder than that to calculate? Also, is this really a market, or is
this a situation in which only the three parties are interested in the commodity (the
lease)?
(e) There are considerations beyond $, some co mpanies care about jobs for employees,
service to community etc.
(4) Do you have to agree with Posner to agree with the result of issuing the injunction to
Walgreens?
(a) Sitting in equity the court can issue the injunction if the in junction meets the factors.
(5) Boomer cement case…
(a) Posner says bad case for injunction for ho meowner because the homeowner wou ld
have too much leverage and there are too many parties (ho meowners).
(b) Posner says too many rounds of negotiations. Too much at stake, too many parties.
k) Balancing the Equit ies cost benefit analysis
i) In Boo mer, cost of shutting down the cement factory too much, society needed the cement
factory.
ii) In Walgreen v Sara Creek, what is the analysis on issuing the injunction (don’t just look at the
(1) Cost creates bilateral monopoly for bargain ing purposes(is this a cost or a benefit???),
better bargaining position for Walgreen, new round of negotiations (according to Posner,
prof. disagrees that it will necessarily follow or that it needs to be considered.)
(2) Benefits no more judicial supervision, damages too hard to calculate, fairness because
Walgreen’s probably has a right to a specific performance equitable remedy when they
have a K and they relied on it.
(3) But what about the fact that Walgreen may not negotiate and the mall fails other than
Walgreens? Posner (and Megan Smith) may be wrong. Walgreen’s may NOT be wil ling
to negotiate any more. But the result is the same here
l) Smith v Western Electric Co 643 SW 2d 10 (Mo Ct App) 1982
i) Trial court denied the in junction and dismissed the case. App Ct judge Dowd reversed and
remanded the cause.
ii) Note: no statute needed, Common law duty in New Jersey? Missouri? to provide a safe
workp lace under Shimp v. New Jersy Bell Telephone Co
iii) Damages for continuing injury is sort of like a continuing trespass, you could compensate
every time after the inju ry, but that’s not what courts do when there is a duty not to injure.
iv) Requirements for Permanent In junction
(1) Win on the merits at trial and show need for injunction eg here Duty and Breach
(2) Irreparab le Harm aka Show that remedy at law is inadequate continuing injury means
usually don’t require them to co me back over an over for co mpensation. When injury will
likely result, should issue injunction.
(3) Balance the Equit ies
(a) Costs
(b) benefits
m) Hypo constructive termination. Employee says they can’t stand it any more and they quit.
i) Remedy at law is probably better for these reasons:
(1) Doesn’t need the protection any more, probably won’t ever work there again.
(2) Only money will work to co mpensate.
(3) Too hard to repair the employer emp loyee relationship.
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 9 of 44
(4) Damages are pretty easy to calculate based on lost wages
(5) Note that if they seek reinstatement then that is an injunction.
15) Matlock v. Weets 531 N.W. 2d 118 (1995) Sup ct IA
a) Basic stalking case, π wants temp and perm injunction. Δ jailed fo r vio lating TRO. Judge at trial
found π/he was follo wing π and issued injunctions. Δ appealed
b) Requirements for Permanent In junction
i) Merits in junction warranted on the Facts
ii) Do minant Issue: Irreparab le Damage. Usually when there is a criminal o ffense (at law) that is
considered sufficient, and in junction (in equity) will not issue. But here police had not been
willing to get involved (crim) and $ wouldn’t help here.
iii) Balancing the Equit ies
(1) Cost justice system will probably have to be involved in the future. Supervision. One
of the costs of an injunction is supervision. Normally it’s not true, but here it’s likely that
these two people will end up in court again over this in junction. This is a PERMANENT
injunction. This Δ may push the limits of the injunction.
(2) Benefit There is no other remedy.
16) Citibank N.A. v. Citytrust, 756 F.2d 273 (Ct. App. 2nd Cir. 1985)
a) Defenses to inunctions: LACHES
b) F: City Bank of New York started 1812 (π Citibank). Citytrust started using “City Trust” in
Connecticut in 1929. Citytrust moves to
c) Prelim In junction
i) Merit Liklihood of Success on Merits due to similarity of names
ii) Irreparab le Harm not shown. Waited to file suit, can wait a little more
d) Specifically said not laches, why? Because laches dismisses coa. Too drastic.
17) Citibank N.A. v Citytrust 644 F. Supp. 1011 (1986)
a) Permanent Injuction
i) Merits Cit ibank
ii) Irreparab le Harm
iii) Balancing the Equit ies
b) Laches
i) Knowledge by π
(1) Did Citibank know that Citytrust was entering the market, and if so when?
(2) Newspaper
(3) Citibank went to Con. where Citytrust was based
(4) Same industry, Citibank should know
ii) Delay by π
(1) Did Citibank delay? Yes, at least somewhat
iii) Prejudice to Δ due to the del ay (this is an affirmat ive Δ)
(1) Reliance Citytrust invested in the move. But here not enough to find laches.
(2) When weighing the prejudice, must weigh against the coa itself. Trying to determine if the
prejudice is enough for laches, must look at weight of coa.
c) Policy behind laches based on equity
i) Reliance
ii) Stability won’t fear suit forever, encourages business
iii) Won’t protect rights if people sit on their rights
18) Dangerfield Island Protective Soc v. Lu jan 920 F2d 32 (1990) ct app
a) Facts:
i) 1970 exchange agreement (EA) With Fairchild for Dyke Marsh environ mental protection in
exchange for a right to an easement to access property behind the marsh.
ii) National Park Service
iii) Easement granted pursuant to the 1970 EA
iv) 1986 o rig inal
v) Lu jan is secretary of the Interior, and is the Δ because π is trying to get Dept. of Interior to
enforce environmental regs/not let go of the EA
b) Procedure:
i) District court dis missed the coa on summary judgment for two reasons:
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 10 of 44
(1) Laches based on:
(a) Delay
(b) Purpose of the original K (EA) was to protect the environment by preventing the land
(2) No undue prejudice
(a) Don’t just look at the dollar amount, look to the total projected project amount.
(b) Laches is disfavored in environ mental cases because you have to see if the damage
can be undone. There was nothing to undo here.
(c) The expenditures were preliminary, no construction had started.
(d) Laches is very strong, it’s like a SOL. Your COA goes away.
(e) This was a really long delay, but still d idn’t find enough prejudice to wipe out the π
who are trying to protect the environment.
(f) Want to hear the case on the MERITS unless the environmental damage can’t be
undone.
19) Unclean Hands
20) North Pacific Lumber Co. v. Oliver (19)
a) Δ Oliver had a NCA (no co mpetit ion agreement) with π NPacLu mber in h is emp loyment K. He
quit and went to work for a co mpetitor. He v iolated NCA. While Δ Oliver worked for π he
engaged in unfair business practices.
b) Δ raises affirmative defense of unclean hands. Here Δ wins because Δ says he QUIT because of the
unfair business practices.
c) Note that if π could prove that Δ Oliver also had unclean hands, court would refuse to get involved.
d) Note that if it was just a general policy and Δ was not affected, court would not allow the
affirmat ive defense. Δ has to be affected by the policy. Here Δ was personally involved in the bad
policy.
e) Hypo: can you use the Δ of unclean hands for a prelim in junction, or does it involve only a final
judgment? It ’s all equity so court can apply whenever court feels like it if court is acting in
Equity.
21) Original Great American Chocolate Chip Cookie Co. v. River Valley Cookies, Ltd. 970 f2d 273 (7th Cir
1992)
a) F franchizee Δ hired a manager who didn’t keep store clean. Franchise π terminated K. Δ got
batter fro m another company and kept selling cookies.
b) P π franchise sues, Δ counterclaims saying breach of k.
c) Trial court grants prelim injunction, yes Δ you can continue to sell cookies with name and using
batter fro m other co mpany.
i) Merits probable success on the merits, trial judge thinks breach of K
ii) Irreparab le Harm need to keep making cookies.
iii) Balancing the Equit ies
d) Court of Appeal. Posner says Unclean Hands
i) Court of Appeals says Δ had unclean hands, rather than seeking legal remedy on their breach of
K claim, they went out and got other cookie batter.
ii) Responsibility to resolve in court by legal means, should have sought an injunction.
iii) Assume that there was an improper breach of K. No w Δ is in the right. Why do they have
unclean hands? Because of imp roper self help.
iv) This is a powerfu l affirmat ive defense. Maybe the π really was unfair! Maybe the Δ didn’t
have the $ to bring the suit at that time.
v) This is a Raise it or Waive it defense. In your answer you must raise all Yes But (affirmative
defense) in the Answer unless the local rules allow you to amend your comp laint to add a new
aff defense.
22) Choice of Remedies
a) Right is to be made whole but not to receive double indemn ity.
i) Assume inju ry and entitled to 100,000, you have joint and severally liab le Δs. You don’t get full
amount fro m each of them
23) Wednesday, September 19, 2001
24) Es toppel has been so successful in equity that it is even applied at law now.
25) Bright v. Michel 242 Miss 738, 137 So 2d 155 (1962)
a) Unclean Hands π might have unclean hands for bringing the suit, but estoppel is much better
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 11 of 44
b) Laches Knowledge, Delay, Prejudice due to delay. Maybe here, but the expenditures and reliance
probably isn’t enough for laches.
c) Es toppel 9th cir. Elements
i) Estoppee must know the facts
ii) Estoppee must intend [misleading] conduct to be acted on OR Estopper has right to believe
such intent
iii) Estopper must be ignorant of true facts
iv) Estopper must in fact rely on Estoppee’s conduct to Estopper’s INJURY
d) Es toppel Arno ld v. Melan i Elements
(1) Admission, statement, or act inconsistent with the claim afterward asserted
(2) Action by other party on the fait of such admiss/state/act
(3) Injry to party resulting fro m allo wing repudiation of ad miss/state/act
e) Classic Estoppel, assume Δ is trying to estop π based on something π said or did.
i) π said or did something
ii) Δ relied on π’s statement/conduct
iii) π knew or should have known that Δ would rely on π’s statement/conduct
f) Often see Estoppel as an affirmative defense in both law and equity
26) Election of Remed ies
27) Forster v. Boss 97 F3d 1127 (8th Cir. 1996)
a) Δ Pro mised in K to Obtain Boat dock permit, remove swim dock, d idn’t do it. π wants better access
to the lake. Didn’t get it.
b) Trial Court Awarded
i) Injunctive Relief must comply
ii) $ Damages
(1) Co mpensatory
(2) Punitive
c) Problem with the damages: damages are supposed to be figured based on the value of the land as
offered and the value of the land as actually sold. Since the K failures came after the sale, the land
was conveyed as offered and the delay can be cured either by damages or injunction, shouldn’t be
both.
d) Ancillary damages… Could they have sued for damages on a breach of K theory? Damages for loss
of use of property during the delay PLUS in junction.
e) Could the court have remanded for a new t rial on their proper damages, or is that what the court
meant when they said remand for proceedings consistent with this opinion? Jx d iffer on this.
i) Some courts would just give the injunction and the punitive damages.
ii) Some courts would allow π to amend their co mplaint and have further proceedings. Appellate
court would probably have to say so in opinion.
f) Judges depend on the lawyers to structure the case. The lawyers have to structure the proposed
remedy.
g) Fernandez-Roque v. Smith 671 F2d 426 (1982)
i) We have before us an appeal of a TRO. A TRO is not appealable. However, the appellate court
can consider the appeal a request for a writ of mandamus. If the court finds that the TRO
should not have issued, they will tell the judge what to do.
ii) Writ of Mandamus govt official is not doing what should be doing or doing what shouldn’t
be doing. Can be used to force judge to do what appellate court thinks judge should do.
iii) Facts asylum case, cuban refugees, TRO enjo ining the govt from deporting Cuban detainee s
pending further action of the court.
iv) App ct is saying NO d iscretion on the part of the judge. Must rule on the jurisdiction first. Ct
of appeal says must rule on jx before TRO or anything else.
v) In dealing with immigrat ion matters, most courts have said its EXECUTIVE only and courts
can’t hear it. No jx.
vi) Second, petition for habeas corpus, and must exhaust admin istrative remedy first.
28) Nutrasweet Co. V. Vit-Mar Enterprises Inc. 112 F3d 689 (1997) page 124
a) π Nutrasweet filed suit 5/ 14/ 96 and applied for emergency TRO enjoin ing Doe Δs fro m dealing
“NutraSweet Pre-Entry Product.”
b) TRO was issued, court treated it more like a prelim.
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 12 of 44
i) TRO was extended, was of indefinite duration, mo re than two months
ii) Usually TRO is very limited duration so no appeal, but when more than 10 days will usually be
converted to Prelim. In junction.
iii) Since TRO is long term here, must give same safeguards as in prelim in junction. Beco mes
appealable.
iv) Can also appeal TRO if treat appeal like a writ of mandamus.
v) Sent back to trial court for fu ll prelim in junction hearing.
vi) Trial court should have had a prelim. In junction hearing because TRO is supposed to be
limited duration.
c)
29) Makeup Thurs sept 27 Noon
30) Monday, September 24, 2001
a) SCFC ILC Inc v. Visa USA Inc 936 F2d 1096 (10th Cir. 1991)
i) Visa said no to Sears for visa and said retailer like Sears can’t get Visa. SCFC wholly owned by
Dears who also owns Mountainwest bank who has K with Visa. MountainWest then asks for
a ton more v isa cards. Sears alleges antitrust violation (Federal) and fair trade practices
(State?) vio lation by Visa.
ii) Prelim In j. Granted by dist court. Why?
(1) Irreparab le Harm miss market opportunity to issue visa cards. Just the right time to
issue the visa cards. Need prelim injunction to not miss window of o pportunity.
(2) Merits Doesn’t analyze the merits.
(3) Balancing the Interests.
(4) Not adverse to Public Interest
iii) App ct says it was error to issue prelim in junction.,
(1) Abuse of discretion because the injunction altered the status quo so the burden shifted to
MountainWest/Sears to show that the 4 factors “weighed heavily in MountainWest’s
favor” 1.5 million visa cards is not status quo according to app ct. Heightened burden
“compelling” “weighed heavily”
(2) Note that District court would say that the status quo is that MountainWest has a K
RIGHT to issue the cards, that is the status quo. Nu mber of cards doesn’t matter.
(3) Abuse of discretion here: gross misunderstanding of the facts that rises to the level of
wrong application of the law to the facts. Isn’t the appellate court supposed to defer to
the trial court’s factual determinations? Well, if the app ct wants to mess with the
determination of the facts they just say “abuse of discretion.”
b) Appeals go to 3 judge “panel” issue is whether there will be protection pre-appeal. Must ask court to
stay application of the prelim or perm injunctions. Discretion by judge. If part ies want a stay, then
court denies, then can ask court of appeal to issue a stay.
i) Appellate courts have power to ask for a stay. The reason for the stay is to protect the status quo
and to protect the subject matter of the appeal. Appeal may become moot if the stay is not
granted.
c) FRCivPro 62 (a), (c) (d) (g) Stay of Proceedings to Enforce A Judgment
i) 62 (a) Automatic Stay: Exceptions: Injunctions, Receiverships, Patent Accountings
(1) Unless otherwise ordered by ct inj not stayed until appeal is taken or until
ii) 62 (c) Inj unction Pending Appeal
iii) 62 (d) Stay Upon Appeal
iv) 62 (g) Power of App Court Not Limited
d) Fed Rule of Appellate Procedure 8(a) Stay of I njunction Pending Appeal
i) Stay must ordinarily be sought in the first instance in district ct, motion for stay in app
ct..appellate court.
ii)
e) Michigan Coalit ion of Radioactive Materials Users INC v. Griepentrog 945 F2d 150 (6 th Cir. 1991)
i) Δ seeks stay of judgement after court granted summary judgement in favor of π.
(1) Δ are heads of agencies in other states that have administer waste disposal sites. MI was
required by statute to develop its own disposal sites but wasn’t complying and so
wouldn’t have its own sites ready as required so the other states sued to deny MI access
to waste disposal in their states.
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 13 of 44
(2) MI was not comply ing with Federal Regs for Radioactive Waste disposal. Perm. In j
granted in favor of MI. Recipient of the waste was unhappy, asked for a stay.
(3) App ct said they were entitled to a stay in this case.
ii) Dist Ct vs App Ct
(1) Success on the Merits
(a) Dist Ct .
(b) App Ct. Looks like Δ will probably win. BUT don’t need to be convinced that the
side will win, just must be a serious question as to the merits.
(2) Irreparab le Harm
(a) Dist Ct Harm to MI
(b) App Ct Prelim. Injunction = no irreparable harm to MI
(i) Yes, MI has waste, but once other states take the waste the other states Δ will
have to keep it.
(ii) Also MI didn’t show that MI couldn’t hold it until the case was decided.
(3) Balancing the Harm (Harm to Others here)
(a) Dist Ct
(b) App Ct
(i) MI can hold on to it for now.
(4) Public Interest
(a) Dist Ct
(b) App Ct
(i) Strong public interest in proper disposal of the waste.
iii) Full hearing only on Permanent Injunction, so courts are careful and don’t want to grant them
lightly. They are pretty extreme because they order parties to do or not do things. App ct is
deferential but will balance the equities anew and call it “abuse of discretion” if need be.
31) Prior Restrai nt of First Amendment Rights
a) Carroll v President and Commissioners of Princess Anne 393 U.S. 175, 89 S.Ct. 347 (1968) Justice
Fortas 1st A Prior Restraint case
i) Rally TRO for 10 days upheld by app and sup ct, 10 month Prelim Inj reversed.
ii) Ex Parte Order for Prior Restraint of 1st Amend ment Rights
(1) Notice: Why is notice so important here?
(2) Adversary Proceeding before restraint is issued
iii) Heavy presumption against prior restraint of speech.
iv) Order restricting speech must be narrowly tailored, and must have notice and adversary
proceeding to determine how to narro wly tailor the restrictions
v) State said that under the law, even with ex parte order can get a hear ing within two days, but the
rally was supposed to be the next day, have a right to have the hearing BEFORE the restraint
is imposed. Judge must assure consideration of the entire matter.
32) Tuesday, September 25, 2001, no class tomorrow, Makeup THURSDA Y at noon
a) National Socialist Party of America v. Village of Skokie, 432 US 43, 97 S.Ct 2205 (1977) Per
Curiam p 147
i) Procedure:
(1) How d id this get to Justice Stevens from the denial of the stay by the Ill Sup Ct.? The
country is divided up: Stevens in this case, Brennan in the next case, can get one supreme
court justice to decide not on the merits. Here, though, the court treated the application
for a stay that they applied to Justice Stevens, Justice Stevens referred it to the supreme
court and they decided to treat the application for stay as a writ of cert iorari…
(2) but must be a FINA L ORDER in order for it to go to the supreme court.
(a) Somet imes even a trial court order can be a final order for purposes of referral to the
supreme court if there is no appeal. Why?
(b) Because it is separable fro m the merits, a timing issue, are they entitled to have the
rally WHEN they want to, in other words before the trial is over… they declined to
issue a stay which impinges on the 1st A rights of the π National Socialist Party of
America. The restraints must be reasonable and here they were going to be delayed
for the whole t ime during the court case, and so this is a final ruling on their right to
have the parade or rally during the trial.
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 14 of 44
(c) See page 147, cites to Cohen v. Beneficial Loan Corp 377 US 541, 546, 69 SCt. 1221,
1225 (1949).
(3) Merits:
(a) When i t is a PRIOR RES TRAINT of 1 st Amendment rights:
(i) Must have i mmedi ate appellate review OR
(ii) Must instead allow a stay
(b) What should they do if they suspect violence? Well, have a hearin g, maybe require a
buffer zone, or something, and provide for immed iate appeal of that order.
b) M.I.C. Li mited v. Bedford Township, 463 US 1341, 104 S.Ct. 19 (1983)
i) Matter could have been resolved more quickly, instead delayed and didn’t give immed iate
appellate review.
ii) Appellants had exhausted avenues for relief
iii) The delay would only be a few months here, but Brennan says that since they didn’t give them
the most immed iate appeal available and MIC d idn’t have a chance to prove that the films
aren’t obscene…
iv) Rule stated here: When state wants to restrict based on content, must provi de strict
procedural safeguards includi ng i mmedi ate appeallate review
v) Issues a stay pending disposition of the appeal in the Mich igan courts
33) Modi fications of Permanent Injunctions
a) FR CivPro 60(b)(5): On motion and when just court may relieve a party fro m a final judg ment for
the following reasons, jump to reason 5, it is no longer equitable that the judgment should ave
prospective application or 6, any other reason justifying releif fro m operation of the judg ment.
b) Doctrine of Changed Circu mstances
c) Bellevue Manor Assoc. v. United States, 165 F3d 1249 (1999)
i) πs, landlords of section 8 housing, had a written K with HUD (govt) that said how much $ they
would get. Govt (HUD) wanted to use a new formu la for calcu lating co mpensation. π says
we have a valid K, that’s breach to change the formu la.
ii) Why did landlords lose this battle?
(1) District Court: said that HUD met the most stringent test so district court didn’t need to
decide what standard should apply.
(a) Statutory Amendment Sect ion 8.01 now said HUD had to take into account market
values.
(b) Rufo was more flexible than Transgo case, allowed HUD to take into account market
values because of the new law.
(c) Equity: there was only so much $ to go around and giving too much to certain
landlords was unfair to others and to prospective renters. Ru le 60(b)(5) Equity
standard. Three Part Test:
(i) Substantial change in the circu mstances or law since the order was entered,
(ii) Extreme AND unexpected hardship in co mpliance with the order AND
(iii) a good reason why the court should modify the order.
(d) But isn’t it unfair to change the K and to change the order of the court? Isn’t the past
order of the court sort of like a K that the parties agreed to?
(e) Is a 9th cir case interpret ing Federal rules, not necessarily t ied to a summary judg ment.
Really says that the courts have the power any time if fairness requires a change to
change an order.
iii) Penn Township case
(1) Consent decree between parties, is like a K. Municipality alleges zone vio lations between
parties, parties entered into a consent decree saying how the business person will use the
area, not violate zoning regulations. When it goes before the trial court, the trial court
changes the final consent decree order, says we think that Δ should have the right to
dump vegetive waste on some of the properties. We think that Δ doesn’t need the 100,000
bond before he dumps this vegetative waste.
(2) City appeals, goes to sup ct of Penn, and sup ct of Penn reverses.
(3) Why did sup ct of penn reverse? Because consent decree should be treated like a K. since
there was a consent decree on the injunction, it’s not fair to later be changing the
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 15 of 44
injunction because they sat down and agreed to it. this is really akin to a K between the
parties. This court is saying once the folks agree it is not equitable to let them change.
(4) This is the Pennsylvania rule and is different fro m the federal ru le enunciated by the 9 th cir
in the Bellvue case.
(5) There are a few jx where they say treat as K, interfere only if Fraud Accident or Mistake,
can interpret cannot interfere.
34) Enforcing Injunction Make up late Thurs noon 9/27
a) Contempt
i) Types
(1) Direct in presence of judge, can find contempt immediately
(2) Indirect out of presence of the judge, usually this type for injuctions
(3) Civil
(a) Fine, can send to jail if it will make them talk
(b) Only supposed to be civil if judge thinks it will make them talk
(c) Main purpose: to force person to follo w the order
(d) Secondary Purpose: Remedial, for the benefit of the co mplainant (see Wronke case p
176)
(e) Can hold indefinitely because can get out of jail by co mplying with the order.
(4) Criminal
(a) defined time in jail. Cannot give an indefinite sentence.
(b) Due process, but not jury not bail, not full trial.
(c) Punitive, to vindicate the authority of the court (Wronke case p 176)
(d) Must give jury trial if hold ing for mo re than 6 months and criminal.
ii) US v. Wilson, 421 U.S. 309, 95 S.Ct. 1802 (1975) p 163
(1) Immunity granted to Wilson and Bryan for T in bank robbery. No legal right not to I
(2) Judge held them in conte mpt, direct b/c right in front of judge.
(3) Summarily sentenced to 6 mo in jail, said he might reduce the time if they did T later.
(4) App Ct says Defined time = criminal contempt.
(a) Due process required for criminal contempt:
(i) Notice
(ii) Hearing
(iii) Jury
(iv) Bail
(5) Sup. Ct says yes, criminal contempt but Due Process as listed above isn’t required when
applying Rule 42(a). Constitutuion permits judge to impose judgment when the judge
knows all the facts and the conduct is sufficiently outrageous.
(6) Rationale: must give judges the power to control their courts. Don’t need the kind of
hearing for protection when this all happens right in front of the judge. Judge must have
the power to punish right away or the
(7) Since they were already in jail, can’t the judge just suspend the o ther sentence while they
serve their contempt sentence?
(8) But can’t just suspend the trial until they decide to testify, and they don’t seem like they
are going to testify, all you can really do is punish them criminally. Civil contempt is
permissible here but he tried to make it sort of civ il by saying he would resonsider if they
would testify.
iii) Right to a jury in “civil” contempt cases:
iv) Shillitani v. US, 384 US 364, 86 S.Ct. 1531 (1966)
(1) W refused to T before a grand jury. Judge did say they would be released immediately if
they testified, said that it was criminal.
(2) Supreme court reversed the CHA RACTERIZATION of the contempt, said it is civil
because the witnesses “have the jailhouse keys in their own pocket.”
(3) Since civil then it is civil due process not criminal due process. No jury, no bail.
v) Famous case, Irish lottery, civ il contempt, held h im until judge became convinced he wasn’t
going to comply. Then judge ordered a new hearing, criminal, sentenced him. He served the
sentence. Went and got his money.
vi) Eventually ct of app will say must find criminal contempt if the person is never going to talk.
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 16 of 44
vii) Codispoti v. Pennsylvania 418 US 506, 94 S.Ct. 2687 (1974) p 169
(1) Δs were pro se/pro per with appointed advisory counsel
(2) Judge had a contempt hearing at the END of the trial and sentenced them to one or two
years for each count of contempt to run consecutively
(3) Supreme court faced with issue: when is person entitled to a jury in a criminal case.
(4) If the punishment is over six months then they should get a jury trial, and here where
counts were aggregated and the hearing happened at the same time, the Δ should also get
a jury trial. Look at the aggregate sentence.
(5) Six months is just traditional, it’s “petty” and more than six months is “serious.”
(6) Dissent says no need for jury. Why does the majority disagree.
(a) Some issues are so serious that the abridge the rights of the parties and so you have a
right to a jury … this was a pretty long sentence here.
(b) Here the judge waited to the end of the trial, so presumably could give more due
process.
(c) A lot of time the judge ought to give the criminal due process even if they might
impose civil contempt because might be criminal.
(d) Juries prevent judicial abuses.
viii) Ervin v. Iowa Disctrict Court 495 N.W. 2d 742 (1993)page 172
(1) Criminal contempt: must show not only violation of a court order, must also show willfu l
failure to co mply. Here quasi criminal for the initial 20 days.
(2) Civil Contempt: don’t have to show that it was willful.
(3) Burden of proof on willfu lness shifts to the alleged contempter to show that it was not
willfu l. The BOP according to this case is a burden of persuasion or production?
(a) Persuasion
(b) Production
(4) Δ Ervin claims physically and financially impossible to comply.
(5) Court says must at least attempt to comply, here Δ Ervin must at least start to open the fire
lanes.
ix) Wronke v. Madigan, (1998) page 175
(1) Divorce case in Federal court on writ of habeas corpus under 28 U.S.C. § 2254. Also
ordred to pay back child support and remove a sign with names of his children.
(2) Contitutional issues: wronke argues
(a) In jail for more than six months so entitled to a jury trial because criminal =.
(b) Indefinite sentence
(3) Court says
(a) Can hold for more than 6 months without a jury trial if civil and this is civil. True that
if criminal must give jury trial if criminal.
(b) Indefinite sentence okay because could comply and get out of jail
x) US v. Tennessee 925 F. Supp. 1292 (1995)
(1) Facts
(a) TN runs a hospital for DD people.
(b) Finding that hospital vio lates minimu m stds.
(c) Court Asks parties to submit a remedial p lan
(d) Court accepted the remedial p lan, plan beco mes a court order
(e) Noncompliance with the remed ial p lan.
(f) New orders ordering co mpliance.
(g) Judge issues emergency order, orders co missioner to spend every 4th weekend at the
hospital until co mp liance with certain provisions.
(2) Problem for the court:
(a) Judge ordered the US govt file a brief suggesting to the court what other options the
court had. Said TN may also submit a brief saying what other options the court had.
(b) This is a co mmon problem, co mes up in hospitals, prisons, jails, schools where there
are minimu m standards. Leg islature doesn’t approve the money to improve the
situation.
(c) Legislature and the governor has control of the money, so why is the court dealing
with the co mmissioner of the hospitals rather than the legislature and the governor?
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 17 of 44
(d) Lack of $ TN never raised the defense of impossibilty because they could just tax
more. Constitutuional violation cannot be excused by an agency saying no $.
(e) Good faith is not a defense.
(f) Intent is not a defense.
(g) Why not hold gov and legis in contempt? Respect fro m one branch of govt to
another. Usually have a writ of mandamus, goes to the last p erson who must act on
it. not a good procedure to hold the highest officials responsible or order them to do
something. Usually goes to the person who writes the check (treasurer) to order
them to write the check, hopefully the governing body will relent and approve the $.
(h) Fine in this case was $1000 per day but was mostly symbolic.
(i) Fines don’t work, what will work? Pretend you are the US/A G
(i) Order that the governor go to the hospital every 4th weekend.
(ii) Order that the hospital hire a specific psychiatrist
(iii) Order that the administrator be fired
(iv) Order that the state pay the fines and not fed govt
(v) Order all the top officials to take a con law class
(vi) Order the top officials to write a weekly essay on their duties
(vii) Order that funds be diverted fro m some other fund
(j) Receivership co mmon way to enforce is to appoint a receiver to report back to the
judge, to run inspections to see if the court order is being obeyed.
(3) This case is a hearing on partial co mp liance and relief fro m o rder to spend time in this
hospital.
(4) Purging contempt
b) Intl. Union, Untied Mine Workers v. Bagwell 512 su 821, 114 SCt 2552 (1994)page 186
i) Long bitter strike, p ickets, orders saying no pickets, allow ingress/egress
ii) Found 72 vio lations of the court order.
iii) Fined and said extraordinary fines if later vio lation of the court order but set aside later
because should have been criminal procedure.
iv) Later hearing, finds 700 violat ions
v) Civil discovery, imposed reasonable doubt std on the BOP, no ju ry, fined union 64 million
vi) There was a settlement and asked the judge to dismiss the case and the contempt orders.
vii) Judge said have to pay the $ ordered on contempt.
viii) US sup ct said this is a criminal case and so must comply with criminal p rocedure.
ix) Tuesday, October 02, 2001
(1) Factors:
(a) Could define ANY criminal rule as : if you break this in the future, you will go to jail.
Prospective, future act. But not that useful because civil orders also say obey or else
I will charge you.
(b) Amount of the fine maybe a factor, but not that useful.
(c) Co mpeting interests, decide where the interest lie.
(i) Economic interest of company and everyone who depends on it
(ii) Emp loy ment rights and conditions, union interests
(iii) Court interests in respect for court orders
(d) Here, the main interest is in respect for jud icial authority, so it is criminal in nature.
Court wants to punish the parties for past conduct despite the settlement, so it is
criminal in nature.
x) The union will probably be destroyed by this fine. If the step is this serious, then the union is
entitled to criminal procedure. This isn’t really expresed in the case.
xi) Scalia concurrs, takes a different view. Says you must have factfinding, too much power to
judge to issue finding of fact when the result is this serious. You have to be sure of your facts
and the jury is needed to make sure that the factfining is fair. This is a constitutuional right to
a jury.
xii) Ginsberg concurs, she agrees with maj and says when you have a purely coercive order (can
easily comp ly with it) then it is civil. When the judge’s order says I will automatically find
you in contempt if you do this and as here they already did the act, then it is criminal. But the
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 18 of 44
original order said don’t be involved in v iolence… not really the way Ginsberg laid it out
because she made it seem like they had already done the violence when the corder was issued.
xiii) Court can still enforce the dignity of the court, but when that is the only interest then must
provide criminal procedure.
xiv) Note that you can’t tell until the end if it will be found civil or criminal because here the end
result was criminal only because the sanctions were so huge because the union violated the
order so many times.
xv ) Historically judges had used their power to break unions and so there is a historical sense that
unions should be entitled to a jury to make sure that the judge is being fair.
xv i) Prosecution: Federal, must be a public official. State: sometimes permit non -public o fficial to
prosecute because many are domestic relations and burden on state if req public official.
c) Cancer Research Institute v. Cancer Research Society Inc. page 203
i) Trademark infring ment case, required Δ to send out notice to publishers to not list them in
publications
ii) Δs said we asked our ad agency to send out notices and it isn’t our fault. We tried to obey the
court order
iii) But π said:
(1) Δ didn’t check to see if the ad agency complied
(2) Ad agency normally waited till the last minute
iv) problem for the court: Δ had comp lied but π still had damages
(1) how do we make the π whole? π submitted speculative evidence as to what dmg might
have been but had no hard evidence on dmg
(2) nevertheless, the judge came up with damages ordered discovery based on theory for
figuring the damages. Theory for figuring damages: Unjust En rich ment
(a) issue is how much did the defendant profit fro m the failure to co mp ly
(b) courts call it Unjust Enrich ment
v) judge denied atty fees
(1) negligence not enough for atty fees in this jx
(2) Δ not willfu l so no atty fees
vi) Punitive d mg denied
(1) Judge said no punitive damanges, compensatory only
vii) Why civil not criminal?
(1) Not going to put the Δ out of business
(2) No great danger to the Δ, just must give up improperly obtained $
(3) Judge can assess damages ancillary to the in junction that was violated, it is established
judicial equtiable power to allo w this
d) Jones v. Clinton page 204
i) Original case: Allegation of improper sexual advances by Gov. Clinton.
ii) Contentious discovery, judge sits in but usually they have discovery magistrate. Judge had to
make rulings all the time during discovery, it was exceptional in that regard.
iii) In a depo the Δ was asked about a potential W (monica) and later judge became convinced that
Δ had lied about that potential W
iv) Case had settled, Δ had been tried and acquitted by the senate
v) Judge issues order w/o a hearing
(1) Direct contempt: Contempt took place in front of the judge.
(2) No need for fact finding, can say contempt took place.
vi) Interest: preserving dignity of the court, prevent lies in court.
vii) Civil or criminal contempt? In the end it was civil because she fined Δ and it was substantial
but not outrageous. The sanctions were traditional civil sanctions.
viii) Could have said “this might be criminal, I will hold a criminal hearing.”
ix) Problem with publicity in cases: if the pool of jurors has been tainted then general rule is you
can get a change of venue. But: not always, and often people just don’t follo w any news at
all.
e)
35) Missed class
36) Contempt Continuted
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 19 of 44
a) People v Conrad 55 Cal. App. 4th 896 (1997) First District App ct page 228
i) App ct. disagreed with trial court that Δ acted “in concert” with first group. P 231
ii) Could infer that they were act ing in concert if the groups had the same aims and there were a
whole series of groups coming in
b) US v. Hall 472 F.2d 261 (1972) famous desegregation case 5th circuit
i) Facts: desegregation ordered. Order qu ite detailed and had both mandatory and prohibitory
language, enjoined fro m and prohibited fro m a number of acts.
(1) The order enjo ined students and other persons actin independently or in concert with
them and having notice of this order…
(2) Hall tresspassed on school property
ii) This Δ, Hall, appeals saying
(1) Not a party to the original Mims lit igation, not subject to order under common law that
nonparty who violates an injunction solely in pursuit of his own interests cannot be held
in contempt
(2) FRCivPro 65(d) limits the in junction order to “parties, etc or people acting in concert
with them” and who have actual notice
iii) Court says
(1) If can’t enforce against community, then court has not power to enforce the order and thus
no power to make a binding adjudication of the parties properly befo re the court.
(2) Theory: At common law the courts could issue an order that protected certain geographic
areas (In Rem). EG prosecutor could get an order against a house of ill repute or
gambling, and it was an order against the whole world. Then noone cou ld go in that
place.
(a) The constitutuional problem: NOTICE. Those types of orders have been issued
concerning a courthouse… no picketing at the courthouse… the courts have cut back
the use of In Rem Jurisdiction,
(b) But here they were p rotecting the student’s constitutuional rights
(c) And here, he did get served with the order, see p 233
(3) FRCivPro 65(d) can’t be read as preventing judge fro m rendering a binding judg ment.
iv) This is one of the few cases that uses an In Rem theory. What other theories could the court
have used to reach the Δ Hall?
v) What other remedies could the court use against Hall? Could use trespass (probably).
(1) If this were a modern case, court woul d probabl y say “use criminal law and issue
order against Hall.” Notice is the concern.
(2) Maybe a court today woul d do the same thing… they coul d. Here he had been
served, so maybe coul d use In Rem theory.
vi) Not that different than conrad where they also said they knew about the order.
c) Collateral Attack Rule
i) Must obey order until it is dissolved or set aside, even if it is an improper
order.
ii) Can’t raise defense that the order is improper if charged with contempt.
iii) Exceptions:
(1) Lack of jx of court.
(2) 1st A Prior Restraint
iv) Bandera Do wns Inc. v. Alvarez t x (1992)
(1) Injunction: don’t hold a race. They have the race. Order: hold the money. They don’t
hold the money.
(2) Bandera Do wns argues: didn’t exhaust administrative remedy, so not entitled to orders.
Court didn’t have jx to issue the injunction in the first place.
(3) Can an order be issued without proper jx? NO
(4) Admin istrative Remedy
(a) Don’t bother us with this if ad min agency can make part ies whole. Here the racing
commission actually had the power to make the racetrack hold the $.
(b) What if π could show that the $ would disappear and admin agency couldn’t protect?
Maybe court TRO.
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 20 of 44
(c) Burden is on the party asserting that the agency doesn’t have the power to make the
parties whole.
v) Walker v. City of Birmingham, 388 U.S. 307, 87 S.Ct. 1824 (1967) page 239
(1) Facts
(a) Permit for gathering required by City of Birmingham. Δs had no notice at all that π
(city) was going to seek the TRO. TRO issued
(b) Demonstration held, there was some vio lence
(c) Order to show cause before trial court why didn’t follow in junction
(2) Δ Argues / Petitioner argues
(a) Δ says couldn’t get permit, City wouldn’t give it to them, had no notice
(b) Δ found guilty of criminal contempt, sent to jail
(c) Constitutuional Argument
(i) Order facially vio lates 1st A. it is a prior restraint
(ii) Vague hard to tell what you can legally do
(iii) Equal p rotection city won’t let black people protest
(iv) Notice on orig inal hearing for TRO
(3) Court Majority says
(a) Must obey until you can get the order set aside by writ
(b) Had several days to try to get trial judge to change mind or clarify the order
vi) Tuesday, October 09, 2001 Walker Case continued
(1) Dissents: Warren, Brennan & Fortas join
(a) Status quo per majority is peaceable streets. Status quo per dissents is 1st amendment
that protects our speech.
(b) TROs have been used to do away with rights of people who need to have
constitutuional right protected now, not later eg labor cases, especially in 1 st A
context.
(c) Officials took exact word ing of local ord inance put inot a court order. Power of the
court was being used to allow officials to
(i) turn a civil vio lation into a criminal vio lattion (contempt)
(ii) and to turn it into prior restraint.
(2) Douglas, Brennan and Fortas join
(a) Can ignore unconstitutuionally vague (transparently invalid) court order, that’s not
contempt
(3) Brennan, Warren Douglas and Fortas join
(a) Court refused to hear evidence of Δ attempts to obtain a permit properly
(b) The injunction was unconstitutuional, violates the 1st A, majo rity agrees with that
(c) Disagreement of dissent: balancing the constitutuional right against the public policy
of the state court enforcing the order. Constitutuion should outweigh the order, not
only that, court should hear the arguments.
(4) This case is still important con law doctrine, but…
vii) In Re Prov idence Journal Co 1st circu it ct app 820 f 2d 1342 (1986)
(1) Tapes of mafia type guy embarassing to him and his family. Son of deceased got an
order against the newspaper saying don’t publish it. Newspaper published anyway.
(2) Other case: Private secrets involving crimes in sierra county local paper republished
even though some facts were published earlier, family won suit for invasion of privacy.
(3) Court hearing: newspaper was in contempt of the order.
(a) Why criminal contempt? Already done, can’t undo, can’t be remedial.
(b) 1st Amendment
(i) Looks at Walker case, valid court order must be obeyed even if it might be
unconstitutuional prior restraint. Walker 1st Am analysis doesn’t apply because
of modern 1st A doctrine in NYT v. Sullivan
(ii) Court says this is obviously invalid because it is unconstitutuional prior restraint
(See NYT v. Sullivan, prior restraint is unconstitutuional.)
(iii) Cause of Action for damages will suffice for privacy and defamation, prior
restraint won’t do because 1st Amendment is too important.
(iv) Best remedy for family is prior restaint, but you just can’t get that.
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 21 of 44
viii) If you need an emergency order you call the clerk and say the trees will be cut down or the
person will be put to death, the judge will co me out and give you a decision. It’s not common
so if you need an emergency order you have to ask for one.
d) Damages, Chapter 3
i) Tort Damages Court is balancing making the person whole with fairness to the Δ
ii) In K can only g ive $, give the benefit of the bargain. What would they have gotten if the K
went forward, with a few exceptions.
iii) Rejectment
iv) Replevin (getting property back)
v) Chapter 4 – restitutuion looks not at what you have lost but at what the Δ has gained. If Δ
got something improperly, π will get what the Δ got improperly. Many lawyers don’t
understand that restitutuion is a viable concept in every jurisdiction . So met imes better
remedy for client that damages.
37) Monday, October 15, 2001
a) Daanen Inc v. Cedarrap ids Inc p 270
i) π has machinery that doesn’t work, sues person who sold the machine to person who sold the
mach ine to the π
ii) Note: this is Federal court cert ified question of State law -> must decide how state court would
decide. Fed court can certify back to state court if Fed court can’t figure out how the state
would deal with it.
(1) Some states say too much like an advisory opinion, won’t do it.
(2) Some states will answer the Fed. and say there is a matter properly before them.
iii) Question of the Case Tort COA damages here, or li mited to K COA?
(1) Here, π doesn’t have privity of K with the Δ
(2) Can only sue the person who sold them the product/machine on K theory
iv) Tort theory of Econo mic Loss COA barred because π didn’t get express warranty fro m seller
(Cedarrapids). Δ Cedarapids did have warranty fro m Aring (mfgr) that applied to Δ
v) Majority says
(1) When product damages only itself, policy favors onl y K theories and not tort because
in K people are free to allocate risk. In tort we ask the court to intervene.
(2) Sue the person who sol d the machine to π and let π seek indemnity or counterclai m
against the negligent mfgr
(3) Excepti ons: [Tort law] When the defecti ve product damages another product or
causes personal injury, the economic loss doctri ne is not barred for lack of pri vity.
(a) Policy: don’t have to all ocate risk in the K for damage outsi de the K
relationshi p.
vi) Page 276 Hap’s Ariel Enterprises Inc. v. General avaiation corp (1992)
(1) Negligent maintenance of aircraft, had to re-do the work, π brought lawsuit against corp
who did the negligent repair.
(2) Good COA for econo mic loss in Hap’s, why here and not in case above?
(3) Court says service not product is the reason but it makes no sense.
(4) Real reason to award the damages here: risk of damage to innocent θ is too high with
aircraft parts to find that the risk is internal to the K.
(5) Cert ified Public Accountant, architect,
(6) But Wisconson expressly disapproved of parts of Hap’s that disagreed
vii) Debate about confining to K relat ionship
(1) Public Policy minority says rationale should apply in tort to mfgr despite lack of p riv ity
because should encourage mfg r not to make defective p roduct
(2) Majority answers shouldn’t give them remedy outside of K because want to encourage
parties to allocate risk within the K
viii) Aikens v. B&O RR (1985) Penn Sup Ct.
(1) π sued for derailment that destroyed place of business which caused π s to lose their jobs.
(2) Δ demurred (so what) and court agreed, no good COA
(3) Economic loss Tortious interference with a Kontractual relationship [emp loyment]
(a) cannot sue under common law for economic loss for negligence, must show
intentional tort or special relationship between the parties
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 22 of 44
(b) Foreseeability helps determine if the tort is merely negligent or rises to the level on
intential tort. Foreseeability helps determine if Δ knew or should have known that the
event would occur.
(c) Tort Px Cause. car accident near a bridge, cars all back up and everyone is ½ hour late
for work. Can they sue the person who caused the accident for being late for work?
No, too attenuated even though foreseeable. Have to cut it off so mewhere.
(d) EG of intentional tort of interference with K offering one party to K a bunch of $
to break the K???
(e) EG of special relationship In some jx if there is a special relationship as with
General Contractor and subcontractors to the builder, the builder might be able to sue
the subcontractor. Calif allows, see below.
(4) All or at least most jx agree with this case.
(5) Policy considerations in this case
(a) Undue burden on business to protect against this type of loss
(b) K parties should allocate risk within the K, could say if our business burns down we
will pay you for two months afterward or buy you unemployment insurance or
whatever
ix) J’aire Corp v. Gregory Cal. case subcontractor (HVA C) didn’t fin ish on time restaurant didn’t
open on time, interference with prospective economic advantage, coa for negligent and
intentional interference. Different fro m case above (B&O rr) because the relationship between
the K and the subK. Here subK has K with the county and not with the restaurant. Spec ial
Relationship majority view or minority view.
x) Aikens? Airplane case hypo negligent mfgr
(1) Tort theory suit for damage to reputation as safe airline. Negligent maintenance, K exists,
(a) Δ wins on demurrer because π has a K COA
(2) Hypo: passenger sues mfgr in tort for fear caused in near crach
(a) Δ wins on demurrer because π does not have privity of K with the mfg r. The
passenger should sue the airline, the airline can sue the mfgr if they really caused it.
xi) Erlich v Mendez page 279
(1) Breach of K COA and add emotional suffering damages
(2) Jury finds Breach of K
(3) Jury awards 50,000 each for pain and suffering (π husband has heart condition) and
15,000 fo r lost earnings
(4) Question: negligent Breach of K enough for tort pain and suffering damages?
(a) Ct App agreed with the lower court, said can have a tort resulting fro m a b reach of K
(b) Sup Ct says yes can have tort from breach of K but must rise above negligence.
The conduct must be intentional, not merely negligent.
(i) Fraud would result in tort damages.
(ii) Insurance company who fails to pay a claim, often π argues breach of K and tort
of failure to fulfil statutory duty. Legislature has created the statutory duty as a
matter o f public policy, wants insurance carriers to fulfil ob ligations.
(iii) Physical in jury would result in tort damages.
(iv) In this case, sup ct says will the mere breach of K based on negligence lead
to tort damages or special damages? NO because cost of doing business will be
too great if tort damages are possible for mere negligent breach. Not foreseeable
that you will end up with additional costs.
(c) Basic Po licy resolve in K law not tort law. If that is really their dream house, then
they should provide for special damages if the house isn’t done on time. If all you
have is negligence, then you are limited to K damages.
(d) Even if you stick to a K, can you show special damages for a breach of K? Not unless
there is some special factor in favor of special damages. You only get traditional K
damages. Damages must be predictable on the face of the K absent some special
circu mstances.
(e) In CA VER Y tough to end up with tort coa when you have a K, unless it is separate
tort such as fraud, is with insurance company, or other special circu mstances.
(f) How do you protect yourself by K?
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 23 of 44
(i) If you are the builder, you can K to exclude tort causes of action.
(ii) If you are the landowner, you can K fo r special damages.
(g) Arguing for the other side If you want to find a tort COA here, you want to hold
contractors responsible for the negligence, and the only way to make them co mp ly
with the build ing codes and so on, then hold them responsible in tort.
xii) Johnson v. Baker KS (1986) p 285
(1) General Ru le damages much have some element of certainty. Speculative damages are
disfavored as a general rule.
(2) Legal malpractice in divorce case. Improper filing of documents. Daughter was supposed
to get four years of education paid.
(3) π wants damages for daughter for education. Trial court reduces award by amount
received in scholarships and grants.
(4) Why only two years rather than 4 years of education? Two year program, four years is too
speculative. Π has the burden of proof, and the two years is proven but the four years is
too speculative. Court could have reached a different factual inference.
(5) Collateral source reduction in damages she got the $ fro m the university, doesn’t mean
that the Δ should profit fro m that. St ill gets the full damages despite grants and
scholarships.
xiii) Speculation, certainty of damages etc by preponderance of the evidence is going to be a
concern of the court. May run factual inferences, and lewis it is mo re co mplicated
xiv) Lewis River Go lf Inc. v. OM Scott & Sons sup Ct Wash 845 P 2d 987 (1993) page 287
Role of Expert in determin ing damages.
(1) Facts previous suit over bad sod. Π was awarded over a million $, reversed on appeal,
retrial, π had sold the business. Now looking at losses in the sales, loss of good will due
to bad sod.
(2) Generally, exerts are allo wed to give opinions that lay witnesses are not permitted to give
(once qualified as expert W and on topic helpful to trier o f fact)
(3) Expert testimony as to value of good will sup ct says experts can differ on special
damages. Expert assumed certain facts, such as ability to sell sod, how much business
there would be, costs.
(4) Not too speculative just because experts differ. Here experts considered similar factors
but used different mult ipliers, such as 4 for one and 9.5 for the other.
xv ) Related problem not in this case: how to value good will when business is new. Hypo: 2
business people come up with an idea for equip ment in shopping centers (Jukebox that
actually delivers record rather than music?).
(1) How would a p laintiff prove lost profits?
(a) Look for similar products. But here part of the value is the novelty!
(b) Look at how records are sold?
(c) Look at the business projections and the market plan.
(d) How d id they get this financed, they must have convinced a bank that they would
profit.
(2) Arguments against π:
(a) Lots of businesses fail
(b) Too speculative
(c) Maybe the financing was out of the financier’s speculation fund, might use it as a
write off.
(3) Judge decided this was too speculative.
xv i) Notes: the pig that never made it to the fair.
(1) If π proves that the pig had a 1in3 chance of winning $1000, the damages should be $333
because the pig did lose the chance…. But authority is split on this
xvii) Note 4, accepted methods of calculating lost profits
(1) History of profitability
(2) Actual existence of lost contracts
(3) Dissent says uncertainty is more important in determining the existence of liability. There
can be some uncertainty in the amount of damages. The burden for proving damages is
lower than the burden for proving liability. Judges differ on how they approach this, and
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 24 of 44
the lawyer should argue that once loss due to negligence is established, should lower the
burden.
(4) Burden of proof is certainty by a preponderance of evidence. More t han 50%, for sure,
but how much more than 50% d iffers fro m court to court.
xv iii) George H. Swateck v. No rth Star Graphics, 587 A 2d 629 (1991) N.J.
(1) Issue: Prejudgment Interest can it be awarded when the damages are unliqudated?
(2) Court says that we don’t consider the damages liquidated or unliquidated because the
current case law (in some jx) authorizes prejudgment interest when the damages are
certain even if tort damages rather than K damages.
(3) When damages are liquidated, then may award prejudgment interest
(a) Theory: π was entitled to that $ for the whole time that the suit was pending, so π gets
the interest.
(4) When damages are unliquidated, usually don’t award prejudg ment interest because the
right to the money wasn’t vested in π until the judgment was pronounced.
(5) Some Jx allo w prejudgment interest in both Tort and K and others allow prejudg ment
interest on K only.
(a) Theory is that in K π is entitled to $ on breach, but right to the $ doesn’t vest in π until
Δ is found liable.
(6) New theory for prejudgment interest in torts: you are entitled to the $ fro m the date you
are in jured.
(7) General rule: must have certai nty in both K and tort for prejudg ment interest.
(8) Post Judg ment Interest is established by statute.
xix) Whisper Corp. V. California Commerce Bank 49 Cal App 948 p 299 (1996) page
(1) π Whisper sued Δ for negligently allowing Employee of Aurich, (Aurich was hired by
Whisper to manage apartment co mplex owned by Whisper) Ben itez to open an account.
Benitez had a past conviction for embezzlement.
xx) Monday is on paper
xxi) Tuesday, October 23, 2001
xxii) When is it a Co llateral source?
(1) Gifts fro m family, including employer if family.
(2) Benefits unrelated to litigation such as employer program that applies to all emp loyees.
Examples include lost wages and medical benefits.
(3) Insurance that the π purchased.
xxiii) When is it NOT a collateral source?
(1) Public benefits such as food stamps that are intended for all poor.
(2) Emp loyer paid medical bills in anticipation of some liab ility.
(3) Emp loyer pays lost wages anticipating liability.
(4) Emp loyer’s insurance pays anticipating liability.??
(a) Worker’s co mpensation?
b) Minpeco S.A. v. Contico mmodiy Services Inc (1987) p 315
i) Π Govt. of Peru (M inpeco) harmed by Δ’s manipulat ion of the silver market.
ii) Π sues and Δ claims that Δ is entitled to set-off of amount that π benefitted from Δ’s tortious
and illegal manipulation of the silver market.
iii) π gained $ due to Δ’s illegal acts, and are not entitled to doubly benefit fro m Δ’s actions.
(1) Minpeco actually HAD silver, and so they could sell the real silver at the artificially h igh
price ($25) per
iv) π lost profits on the silver market because the price was art ificially high and Minpeco was
trading futures and “betting” that the price would go down (?) and it went up instead
(1) Minpeko had made K for sale at maybe $8
(2) Silver is trading silver at $25
(3) Minpeko has to honor the K and they lose 17 $ each time
v) Limitation on offset
(1) Same circu mstance and same activ ity
vi) Treble damages for π for actual economic loss
vii) See case mentioned concerning Oakland Raiders. Rules said can’t move w/o permission but
rules also said you get a monopoly which benefitted them. Setoff for benefit of monopoly.
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 25 of 44
c) Snead v. Hollowman (1991)
i) Failure of Δ to mit igate damages by follo wing doctor’s exercise regimen
ii) Judge did not instruct on duty to mitigate damages.
iii) Error: must let jury decide if it was reasonable to refuse to exercise to mitigate damages.
d) BMW v. Go re (1996)
i) Co mpensatory 4,000 and 4 million punitive.
ii) Nov 8 and 15 at noon makeup classes
e) Wednesday, October 31, 2001
i) Punitive damages in K are not allowed unless you associate a tort with the breach.
ii) Liquidated damages in K are normal and courts approach has shifted somewhat.
f) Truck Rent A Center v Puritan Farms Case page 344
i) π said Δ didn’t take proper care of the trucks, judge said not true, π had performed the K
ii) Δ had substantially performed
iii) Δ liab le for the 50% due under the K, about 88,000 and affirmed on appeal
iv) What test was used by the trial court to see if the liquidated damages provision was
enforceable? Judge decided it was enforceable
(1) Were the damages reasonable in the context of the breach. If grossly disproportionate the
court will not enforce.
(2) At the time that the K was made, was it a fair estimate of the damages if there was a
breach in the future?
(3) Damages were not certain at the time the K was made. If the damages are really clear
when the K was made, then liquidated damages are not appropriate. Because if the
damages are really c lear then use the ACTUA L damages, not the estimated liquidated
damages.
v) App court says enforce unless unconscionable and contrary to public policy. Why are
liquidated damages when the damages are clear and certain contrary to public policy?
(1) Because it’s like punit ive damages if you let them K to make huge liquidated damages
when actual damages will do.
(2) Under co mmon law the parties couldn’t get liquidated damages because it was seen as the
role of the court to set the amount of damages. Damages were supposed to be public and
not subject to the private contracting. Now courts say parties know better than the courts
what the damages might be.
(3) Punitive damages or forfeiture are against public policy because it will make people afraid
to K if they might be subject to punitive damages or forfeiture. Breach of K isn’t a tort,
there isn’t wrongdoing, and the person probably thought they were going to perform. We
don’t want to punish people when there was no wrong. If there was a wrong then bring a
tort cause of action.
(4) Note that the amount of liquidated damages may be bargained for and so courts are mo re
deferential now.
vi) Dissent
(1) BUT you could say that since we know the actual damages here, then we should just
award the actual damages because anything more is just a penalty.
(2) All we should do is make the π whole, and there isn’t uncertainty in the damages here.
You could figure them out even at the time of contracting.
(3) This was a printed form, and so maybe the liquidated damages were not really looked at
to see if the damages were certain.
vii) What if the K said that renter had to pay 100 % rather than 50% of the rent due if there was a
problem and the K was breached?
(1) Would be unfair because they would get to keep the trucks and still get full rent.
g) Kelly v. Marx (1999) page 348
i) %5 down on the house and liquidate damages if they didn’t buy the house. Δ says can’t buy the
house because not able to sell other house
ii) Trial Court Su mmary Judgment for Δ
iii) App court reverses
iv) Sup ct mass no actual damages, looked at the actual damages rather than damages at time
that the K was made
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 26 of 44
(1) This court looked at TOC to see if fair, and said under the facts of this case where there
were no actual damages it wasn’t fair
(2) Π can’t show that they actually had any damages and liquidated damages are to
compensate for damages actually suffered
(3) So why did they say ?
(a) Because don’t want courts to second guess every K
(b) Still look at fairness, so in this case have to look at the time o f K and it was fair
(c) Δ would have to make an unconscionable market argu ment but most courts agree that
%5 is reasonable in RP Ks.
(d) Note that buyer can condition the purchase on sale of own house and that seller won’t
get 5% or liquidated damages if buyer can’t sell own house.
(4) Could look at liquidated damages as insurance that the other person will not breach.
Should probably argue uniqueness of the item or service if you are going for this
argument for huge liquidated damages.
(5) Hypo: will be one day late with payment under the K, should π get 100% of the provided
liquidated damages? Court might say trivial breach and not entitled to liquidated
damages.
h) Monday, November 05, 2001
i) Alyska Pipeline v. The Wilderness Society (1975) p 352
(1) Injuction issued against the pipeline construction co based on action by the wilderness
society and others.
(2) Π said they were entit led to atty fees because they were acting as a private atty general and
vindicating a public interst., and app ct agreed.
(3) Sup ct said no, not entitled to atty fees. General rule is that winner doesn’t get atty fees.
Note that in england and in other countries winner does get atty fees.
(a) Statues Sup ct said statutes allow atty fees in certain cases.
(i) Anti-trust , equal emp loyment Title 7 (to allow π to get justice lack of resources,
fee shifing only if you win,note that can technically lose the case but win
something important enough to get atty fees anyway.)
(ii) Access to courts, encourage lawyers to take the cases.
(b) Co mmon Law Can also get atty fees without statute if opponent advances a bad faith
argument.
(i) Co mmon trust in class action shareholder suits(???)
(4) Prior to this case you could often get more fees if the case was comp licated. Now the
lodestar percent of the award is starting to be used more. Lodestar discourages litigation
in the public interest because if you lose you get nothing and if you win you get a limited
amount. Only if there is a statute or a clear co mmon law doctrine such as bad faith will
you get the atty fee.
ii) Bell v The Birmingham News p 358 in note 3 (1991) city council was holding meet ings in
private and suit was to say no and ct awarded atty fees based on private atty general theory
iii) CA Case civ il engineers said can’t contract out, must use civil service emp loyees in CA.
Award of atty fees.
iv) Distinguishing both bell and the ca case from A lyeska one distinction is statutes in CA and
alabama seemed to authorize fee shift ing.
v) Calculating the fee amount
(1) Lodestar % of the fund calculation percent of award
(2) 5th circuit 12 factor determination nu mber of hours spent times reasonable atty fee per
hour for this type of case. (comp lexity, experience of lawyer, customary fee, fee fixed or
conteingent, time limitations imposed by client or other factors, awards in similar cases.
(3) Assume atty has a contingency agreement to get 40% of the award, court might not allow
that to be the amount paid by the losing party.
(4) What if the orig inal law firm associates a few mo re law firms to help them…
vi) Evans case page 352 note 8 (1986) settlement offer said we will settle only if you wave atty
fees. This is pretty unfair because π lawyer has to communicate the offer to the client.
Brennan dissent says shouldn’t allo w Δ to make an offer with waiver of atty fees because will
discourage lawyers fro m taking cases. This case is out there but Δs don’t tend to make offers
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 27 of 44
that require the π to waive atty fees. Instead, the amount (Lodestar) has been limited and that
is having a limiting effect on public interest suits.
38) Chapter 4 Un just Enrich ment and Restitutuion
a) Note: don’t just focus on what the π lost, also look at what the Δ gained.
b) Assume that tort is conversion by fraud, Δ stold a car worth 10,000 and sold it for $20,000
i) Recover in tort 10,000 for loss of π
ii) Recovery in equity 20,000 for unjust enrich ment
c) Minor defrauds you in K
i) K remedy: NONE, minor can’t enter a k
ii) EQUITY restitution is a cause of action to which minors can be party
d) If the action or the remedy is at law, this is often called “quasi K”
e) If the action or remedy is in equity, often called “constructive trust”
f) Kossian v. American Nat ional Insurance p 366 (1967) Unjust enrich ment
i) Π and Reichert have a K for π to clean up debris after a fire and turns the property over to Δ and
goes bankrupt
ii) Δ owns a deed of trust on the property, and submits a claim to ins co for cost of cleanup
iii) K gets nothing from Reichert and so π contractor sues Δ
iv) Trial court dis misses because no K between π and Δ, app ct reverses, finds equitable obligation
based on unjust enrichment. Δ can’t get ins $ and debris cleanup too.
v) Δ did not co mmit a tort, Δ d id not have a K with π, but it’s still unfair to let Δ get the cleanup
and the ins $ too. However, Δ only has to pay back the amount that Δ profited via the ins $.
vi) But for th is theory of unjust enrichment the π would get nothing.
g) Bastian v Gafford (1977) 369
i) Trial court entered judg ment for Δ on the grounds that Δ was not unjustly enriched.
ii) App ct says no, only look for unjust enrichment in quasi k but here the analysis and the
pleadings support implied in fact K.
iii) In K imp lied in fact you look to see what was offered, what performance was tendered, and
and how much the compensation should be. Here the owner said prepare plans and the π said
okay and did prepare plans. This was a tradit ional K and trial ct misunderstood what to look
for.
iv) If the Δ had actually used the plans, then the court could easily find a contract imp lied in law
because π benefitted.
v) Here the K was implied in fact
h) Moses v. Macferlan (1760) King’s Bench p 370 note 1
i) Moses endorsed notes to Macferlan so that Macferlan could collect $ that Jacob owed to Moses
instead of Moses paying Macferlan direct ly. Macferlan agreed not to come after Moses.
ii) Macferlan got $ fro m Moses in law suits and court in those law suits said can’t look at the
indemn ity. They did not have the power to look at an affirmative Δ. Macferlan took the $
iii) Π wins despite the agreement. Why? Because Moses shouldn’t have had to pay Macferlan
because of the indemnity and so was unjustly enriched when Macferlan got the $.
i) Crawford ’s Auto Center v. Menn. (1995) p 374
i) Crawford towed and stored vehicles for the penn state police (PSP), vehicles were evidence
ii) Crawford had vehicles for a long time and the PSP only paid for part o f the time
iii) Crawford asserts imp lied in fact K for the time the vehicles were stored and the court agrees.
(1) K was not written out, but did agree upon request of PSP to pick up and store the vehicles
(2) PSP knows that crawfo rd tows and stores vehicles for a fee
(3) However, the terms were d ifferent than prior agreements because prior calls fro m PSP
were for wrecks and the owners of the vehicles were billed. Usually in th ese cases PSP
would sell the wrecks for scrap metal wh ich would co mpensate them for the towing.
iv) What should the price for the service of storage be? Resonable market value, lower court must
determine.
v) Could this be a contract implied in law rather than in fact? Yes because police would be
unjustly enriched by free storage. However, K imp lied in fact also supported by these facts.
vi) Note: coa accrues when PSP refuses to pay invoices because can’t sue until they breach.
j) Olwell v. Nye & Nissen (1946) p 379 egg washing case.
i) Machine was in storage because labor was scarce during WWII.
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 28 of 44
ii) Δ used the machine a few t imes a week fro m 1941 to 1945 without permission
iii) Π finds out, offers to sell it for $600 and Δ says no, $50 and they can’t agree
iv) Δ had committed the tort of conversion, improper use of the property of another
(1) Damages are a forced sale of the property to the Δ
v) Π wanted $ for the use instead, $25 per mo fo r use, and won in the lo wer court
vi) Δ says no way, this should have been a tort coa for conversion not a coa for use of the
mach ine.
vii) Court says no way, π has a choice between a tort coa or a coa in asumpsit on the imp lied K.
(1) This is imp lied K and so π must show harm, damages. Since the mach ine was in storage
there was no damages, π didn’t even know that Δ wasuing the machine
(2) Court says damages are loss of use of machine, doesn’t matter that they never tried to use
the machine. (note: what about wear and tear on the egg washing machine?) this is a
quasi k, so must look at what the reasonable K amount would have been if there had been
a K.? NO, the court loo ked at the profits that the defendant derived from the use of the
mach ine, not clear how they determined that profit. Probably would look at the rental
value of the machine. You look to the benefit to the Δ because it is unjust enrichment.
Then you assume that the loss to the π equals the benefit to the Δ.
(3) However, the court exceeded the amount prayed for in the award so must reduce the
award to the amount prayed for. The rental fees would have been $10 per week
according to the court but can’t let the judgment be higher than the prayer.
viii) In Calif. You could proceed with both causes of action and not decide which coa to pick until
the end.
ix) Maglica v. Mag lica (1998) p 382.
(1) Husband owned a business. The success of the business was largely due to the efforts of
the wife. They weren’t really married but lived as if married.
(2) Π wife sues, and court says can compensate based on
(a) How much it would have cost to hire a person to do her work
(b) How much the corporation benefitted
(3) Jury says based on quantum meruit, $84 million.
(4) App ct reverses. Reversal, no fiduciary duty, instructions were wrong to jury should be
based on the value of the services performed and not the “benefit conferred” because it
should have been based on cost of her work if they hired someone. court said quantum
meruit should look at how much it would cost to hire a person for the position. 84 million
is too much for wages, must have decided that she was entitled to a share of the business
itself./
(5) App ct says Quantum meru it is not the benefit to the Δ but rather the value of the services
rendered by the π.
(6) Can you get more than the market price? Maybe yes if past relationship supports it.
(7) Prof thin ks this case is just plain wrong. Shouln’t limit to the market price as the court did.
(8) Court did say that if there was an agreement that she should get over market price she can
get it.
(9) The court must have concluded that there was a K in fact so look at quantum meru it as the
traditional limited sense, so only the value of the services rendered on the market and
ignoring her special skills and imag ination.
(10) Basic concept of quantum Meruit is that you don’t have actual K terms so you have to
figure out what the value of the thing is or should be. Courts themselves are sometimes
confused about how they should figure out the value. Prof d isagrees with court in this
case because of how they applied the concept.
(11) Use quantum meruit for K in fact (not this case)
(12) Usually use quantum meruit for K at law because it is unfair for the person not to get
paid who did work or whatever. Hard to figure the value to the π so they look at the
benefit to the Δ.
(13) Court said that the common law marriage doesn’t mean that they agreed to share
property in californ ia because we don’t have common law marriage. Court seemed to
think that the jury considered common law marriage. However, the fact that they lived
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 29 of 44
together might be one fact among other facts that supports the conclusion that there was
an implied agreement in fact to share profits.
(14) App ct is saying that the tri al court shoul d not have allowed the jury to find a K
implied in law, shoul d only have i nstructed on k i mplied in fact.
(15) The measurement of k implied in fact usually is quantum meruit, and using a traditional
formulat ion of quantum meruit only look at market value of her services.
(16) K in Law unfair to let person profit fro m the labors of another unfairly.
x) Fuller v. Seater p 386 (1999)
(1) Lease, tenants can’t pay, owner lets them stay anyway. Tenant lets some other people put
some soil on the land to imp rove the yard. Δ had only agreed to hold them harmless, had
not agreed with the people bringing in the soil to pay them. The tenants left and didn’t
pay the rent and were forced out. Soil people billed about 17,000 to the owners.
(2) Trial court said there is no written K, cant even find a K imp lied in fact because owner
never ordered the soil. Ho wever, Δ should not get the profit fro m the services for free.
Therefore, K imp lied in law.
(a) Quantum meruit, th is is services and the soil itself. Judgment fo r the π for 17,000 plus
costs.
(3) Ct of app says wait, this is a K implied in law. Isn’t the value received by the Δ the way to
figure this out?
(a) Market price for delivery of the soil is one way. Maybe quantum meru it market price
is a good way to go!
(b) Another way is the increase in value to the property
(4) Note: Δ FAILED to raise trespass and dirt removal as an affirmative defense.
xi) May v. Watt p 389 apro x
(1) Ho me designer has a K to design a huge condo complex. This is going to be his legacy.
Included an artists veto in the K.
(2) Things never go the way you plan, the plan changes, and the architect complains and later
sues.
(3) π sues for recission and breach of K. trial court says I will instruct the jury only on the
breach of k
(4) app ct says no, must give an instruction on recission. The k is wo rth nothing to the π
without the artist’s veto.
(5) Why should there have been an instruction on recission of the K?
(6) K implied in law found, quantum meruit “at law” used. That means use benefit to
defendant.
(7) K implied in fact makes more sense, because cut rate for artist’s veto. Benefit o f the
bargain. Value of the services shouldn’t be market value because discounted what
normal charge would be for artist’s veto was given here.
k) Makeup Tomorrow noon with Canned Immun ity Tuesday, November 13, 2001
l) We have been looking at remedy of $, either damages or constructive trust.
39) Equitable Restitution
a) Hunter v. Shell Oil
i) Facts & Procedure: Δ Hunter told confidential in fo to people in exchange for various stuff,
including property.
(1) Trial court set up advisory jury rather than a regular jury. The jury was to make factual
findings that judge won’t be bound by but will help determine facts. Equitable COA so
not entitled to a jury. Judge will use power of equity to decide the case.
(2) Judge finds: 59 of 74 pieces of property subject to constructive trust
(3) Innocent Bona Fide purchasers get to keep RP but π gets the $
(4) If purchaser knew about fraud then not innocent and π gets the property
ii) Why did shell go after equitable coa for constructive trust rather than simp ly damages?
(1) Maybe the value of the property went up
(2) Court has power to declare constructive trust only in equity, and not at law.
(3) More difficult to collect on a $ judgment. Have to file against the property to collect if
damages are at law rather than in equity.
iii) Why did the court find that the constructive trust was proper
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 30 of 44
(1) RP was purchased with the ill gotten gains… Hunter either got the RP direct ly in
exchange for the info or used the $
(2) The interest in the company was also granted to Shell
(3) Concept of Tracing info or $ stolen fro m you was used to purchase something, you can
get that thing in constructive trust.
(a) What if the $ Δ stolid is commingled with Δ’s own money? Can still get constructive
trust on the entire piece of property. Policy is to not reward Δ, but seems unfair.
More often than not the judge will order an accounting and divide the int erest or
limit it to the portion purchased with your $.
(b) What if sold to bona fide purchaser before the judgment is rendered? No constructive
trust on that property but you are entitled to the $. If the house is sold for more than
stolen, you might get the excess but Δ might get to keep costs associated with the
sale.
(4) π many COA and went after d ifferent pieces of property. Court said that can mix
remedies: quasi K, equitable lien, equitable trust, tort (breach of fiduciary duty)
(5) equitable lien you get how much you put in or how much of your $ was used to buy it
iv) Bender v. Centrist Mortgage
(1) Π bender is former emp loyee
(2) S&L taken over by RTC (Govt)
(3) Bender seeks Constructive trust
(4) App ct says not entitled to constructive trust
(a) Cannot reach assets unrelated to litigation when not acting in equity
(b) Must at least trace your $ to the asset in the case of fraud or tortious breach of
fiduciary duty
(c) All π is saying here is “we are entitled to $”
(5) Π will beco me a judgment debtor
v) GM
(1) Embezzling 78 million $
(2) Life insurance purchased for embezzler’s wife with $
(3) Trier of fact decides that 10% of ins premiu ms were embezzeled $
(4) What is employer entit led to now?
(5) Trial court said constructive trust on PP and RP and 10% of life ins proceeds
(6) App ct said only entitled to repayment of $ stolen plus interest and not ins proceeds
(7) Cup ct Oklahoma OK purpose is to prevent unjust enrichment for Δ. question here is θ
benficiaries. The rule is the stolen $ π gets % of the proceeds. But technicality: only
prayed for embezzled amount in the co mplaint and cant get more than you pray for.
vi) In Re Mahan & Rowsey p 402
(1) Only entitled to lowest amount (that the bank had even though cheated out of more than
42,000
(2) What theory would the court use to award the entire 42,000
(a) Constructive trust debtor was trustee of the $
(b) There was some $ there depspite the bankruptcy
(c) Debtor argued for exp ressed trust
(3) On what theory would the court use to give less?
(a) Money was comingled
(b) Use the lowest amount in the bank account since the 42,000 was deposited and before
the bankruptcy
(c) The money that is in trust for the π is not part of the bankruptcy estate
(d) Π still has judg ment for the rest of the $ but has to get in line with the other debtors.
(4) Probably makes them trace the $ because there are all those other debtors out there.
b) Equitable Liens
i) Verity v. Verity page 405
(1) Facts: married, RP in husband’s name, wife spend about 1,400 maintining the property.
She also did the accounting, paid the taxes.
(2) Wife sues for constructive trust on the property for value of the wo rk she performed. She
wanted the title transferred to them as tennants in the entirety for each of them.
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 31 of 44
(3) Married Wo man’s Property acts husband could pay wife for work or not and woman
could own property. It was her wifely duty to do the work.
(4) Constructive Lien she did put money into the property and she mus t have worked for
someone to get that $. NY is not a separate property state.
(5) Lien vs partition
(6) Hypo: assume this case was filed last year, what would help this wo man?
(a) K implied in fact based on promise he made “don’t worry about it”
(b) Constructive trust might work now based on the wrongful inducement to put in
this labor to enhance the value of the property
ii) VRG Co rp v GKN Realty
(1) K between shopping center and realtor. Getting tenants means getting part of the lease
proceeds (6%) to go to realtor
(2) Facts are unclear as to exaclty when but shopping center owners sell the shopping center
and buyers knew about the K. buyers insisted that sellers would have to hold buyers
harmless for the rent owed to the realtor
(3) Realtor tries to establish an equitable lien on the 6% of the rents due
(4) Court says no equitable lien because suit should be for money damages under the K.
(a) Equitable lien can be based on either express agreement between the parties or on
equity and fairness
(b) Realtor should sue seller for 6% of the rent as provided in the K.?
(c) Realtor should sue buyer for 6% of the rent and let the buyer go after the seller?
(d) Court says there was no agreement to create a lien and no unjust enrichment
(5) Should you look at the unjust enrichment issue?
(a) Court says that the buyer paid market price and so no unjust enrichment. Prof says
way did they try to get the hold harmless clause?
(b) The buyers also knew about the K for the 6% of the rent.
(6) Dissent says liens are about equity and the lien should be granted because equity
demanded it not because of express agreement
(7) Thursday, November 15, 2001
c) Subrogation
i) Classic Example: Insurance. Car accident, ins co pays to driver of other car, but the ins co
probably gets money if you are at fault and other ins co pays some too.
ii) Equitable Subrogation can happen if you have a judgment that says someone owes you $ and
iii) Cedar Lake Case page 413
(1) Purchase of house, payments made, default because the buyers can’t pay the balloon
payment. Action by sellers against buyers, Δ in that action for forclosure say that they
have some equitable rights during the foreclosure. Assume they have been paying on this
for a long time, they have an equitable right to try to pay the remain ing $ and not lose the
house after all that time. Π says you can’t get equity when you bought the house with
stolen $ (embezzled fro m A merican Roofing).
(2) This lawsuit: π sues to quiet title. The person fro m who m the $ was embezzeled filed to be
subrogated for the buyers. American Roofing
(3) On remand, everything including the payments are on the table for the court to look at in
equity.
(4) Judge will look at what is fair to the seller. The innocent party who normally would be
able to take over (the seller) would normally get to quiet the title, but the person who was
embezzeled fro m (american roofing) also has an equitable defense.
(5) The court uses subrogation but not as to the “dirty hands” for the embezzlement.
(6) Did subrogate as to the payments made but not subrogate the “dirty hands” for the
embezzlement
(7) For unjust enrich ment you need enrichment for the person against whom the court will
rule. Is there really unjust enrich ment here? If they get to keep the embezzled money that
was paid to them AND the property, that is unfair to an innocent buyer and to the person
embezzled fro m. The equitable defenses by the embezzlers
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 32 of 44
(8) What will the judgment by the court look like by the end of the case? Probably the trial
court will have a hearing and issue a judgment. The court will impress an equ itable lien
on the property held by the π.
(a) Now the π will file the judgment.
(b) Now there is a notice against everyone else that there is a lien against the property.
(c) If your lien is the first one you will co me before everyone else.
(d) If you want the $, you have all the rights that a person with a mortgage has. If they
won’t give you the $, you can foreclose and force a sale of the property.
(e) If you want to know what to do with the judgment, look in the practice books for your
jurisdiction.
(f) Money judgements are different, but you can do what is called a “judgment debtor
examination” and ask them what assets they have and execute against them.
(i) Exceptions: homestead, car, one mule and so on.
(ii) Other than that, you can execute. You can attach/garnish their wages.
(9) Equitable Subrogation is important when you need to step into the shoes of another.
40) Defenses to Equitable Remedies Ch 4 continued.
a) Review Types of Equitable Remedies
i) Liens
ii) Constructive Trust
b) Property Development inc. v. Sto-Kent Lanes page 417
i) Facts: π and Δ agreed to split the cost of widening the street. City is going to require it. bowling
alley o wner made clear they didn’t want to pay 50%, offered to pay 20,000 only wh ich was
only a small fract ion of the cost. π paid to expand the pavement and it improved the value of
the bowling alley. Δ was benefited by the activity.
ii) Π argues PE (p ro missory estoppel). Δ had withdrawn the offer to split the cost and so reliance
wasn’t reasonable. Also, π was required by the city ord inances to widen the payment s o the
reliance argu ment also fails.
iii) Court does see the benefit to the Δ, but there was no unjust enrichment because the Δ did
induce the π to rely and because π had to pave the street anyway.
iv) How could you argue that it was unjust? π would have to show that they wouldn’t have gone
ahead with the development plan absent promises of Δ and based on reliance on the
discussion with the Δ bowling alley to split costs.
c) Hi Land v City of Hillsboro page 420
i) City wasn’t doing job and so neighbors got together and fixed the problem and then sued the
city for reimbursement
ii) Trial court ru led for π. Duty of city to fix potholes and remove the snow. π probably talked
about safety and necessity. π probably argued they weren’t volunteers and they had paid
property taxes and so on in order to get the benefits of liv ing in city limits.
iii) App ct reversed. Ct of appeals said that the action was voluntary and so they weren’t entitled to
reimbursement. They engaged in self help and public policy says if you allow people to
engage in self help and then get reimbursed then there will be a flood of people doing this.
Also, this will only allow people with $ to get their streets fixed.
iv) There is another legal remedy when the city wont’ do their job: WRIT of MANDAM US.
Court will order public officials to do their jobs. Judge will take into account if the city has
the resources to fix the problem and what other problems are there and how serious the
problems are.
v) Can’t let people cut out the considerations the court would look to in considering the writ of
mandamus.
d) Issue here: were services rendered with expectations and what were those expectations?
i) Courts can disagree on how to interpret the facts.
e) Vo rit v Chevron p 422
i) Π seeking quantum meruit based on joint venture (imp lied in fact) K. π gave confidential info
to Chevron, Δ Chevron drilled.
ii) Trial Ct. agreed with π on some findings of fact, including that Chevron and π would enter an
joint agreement for production of oil and gas.
iii) App ct diagreed b/c no expectation on the part of π for pay ment for the info and the work.
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 33 of 44
(1) How can app ct disagree with trial court’s finding of fact?
(a) Error o f law
(b) Facts are so clear that as a matter of law can’t so rule or so find or g ive su ch
instruction. No reasonable person could interpret the facts the way the trial court
interpreted the facts.
iv) Sup ct of TX reversed, said that the expexted payment doesn’t have to be $, can be any form of
compensation. What was π’s expected payment?
(1) To have Chevron drill and refine the resources and for π to share in the profits becaue π
shared informat ion that facilitated drilling?
v) Dissent says could not be an expectation of compensation under these facts.
f) Dusenka v. Dusenka (1946) p 424
i) H was married, had kids, remarried. H owned ½ interest in his business. H transferred his 1/ 2
interest in the business to son of 1st marriage IN CONSIDERATION OF son’s promise to care
for and maintain H. W2 does not know about this transfer of interest. W2 cared for husba nd
and also worked at business. W2 was not paid for the work and sued for services rendered.
ii) Trial court enters summary judgment for Δ.
iii) Sup Ct M N? (M innesota) Court says W2 would have cared for H anyway so no compensation.
Court characterized the services as a sort of gift or charity or wifely duty.
iv) Question is did Δ wrongfully and knowingly permit π to confer services to Δ due to π’s
mistake of fact as to the ownership of the business. In other words, she has to show Δ
intentionally misled her in order to prevail on the theory of unjust enrichment.
v) Assume you are the app ct, how do you frame the issue so that she would win? Could argue
that Δ is not entitled to the value of her services since he contracted with H for those services.
Also, π got paid after H d ied. She is entitled in quantum meruit if you look at the K that Δ
entered into with H. Did Δ profit fro m π’s services in a manner that makes it unjust for Δ to
keep the profits? This way you don’t have to look for wrongdoing by Δ. all you have to show
is that services were rendered and that under the circumstances it would be unjust to allow Δ
to keep the services.
vi) Restitutuion Claim she didn’t expect to be paid at the time so no unjust enrichent. She was a
volunteer. Court says that she only thought of getting $ after her husband died, so she must
not have expected $. But what if she expected to own the business after her husband’s death,
or at least a third of h is half.
g) Pyeatte v. Pyeatte (1982) p 427 AZ
i) W and H married in 1972. W would work and H would go to law school. H graduated, he
would work and she would go to school. H’s job didn’t pay much so she kept working .
When he finally gets a job that pays enough for her to stop working, he leaves her. She was
working all along and so not entitled to alimony. She was not a “dependent spouse” because
she worked.
ii) π argues express K. If not exp ress K then unjust enrichment.
iii) Trial ct says no express K because terms too indefinite so unenforceable.
iv) Trial ct says is entitled to some restitutuion on the unjust enrichment but not value of her
services but rather what she was expecting. K in law, $23,000 damages
v) App ct says K and execution of the agreement. Quasi K recovery.
(1) Look to benefit to Δ or value to π? Here look to the anticipated benefit to the π. She was
going to go get the degree she was planning to get under the original agreement.
Shouldn’t give her more than she bargained for in the first place.
(2) What was the benefit that the Δ got in this case? An education, law school.
(3) Why not calculate the worth of the legal education in wages etc? Too speculative. Also,
it’s not really fair to Δ to give that much (I th ink).
(4) Why not calculate the actual cost of the legal education? Could have d one that.
(5) Court did something different. Said figure out the what H got, but also look at what W had
bargained for and don’t give her more than that.
vi) H had to pay quarerly payments, H says doesn’t want that. Too bad, court is acting in equity
FAMILY LAW and so can order whatever payment options court wants to within reason.
h) New case, H went to vet school
i) W sued for quasi K, b reach of K, unjust enrich ment, child support
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 34 of 44
ii) App ct agreed with trial court that there was no K COA
(1) Spouse has duty to support other in marital relationship, that’s all that W did. Based on
common law.
(2) Why does court in general find this way? Doesn’t want to intrude into the marriage.
Private relat ionship, court doesn’t want to get involved.
iii) Dissent says there is a general ru le but that is just a rebuttable presumption. Here it is unfair to
let H be enriched by W’s hard work. What could W have done to rebut the presumption?
iv) Is this fair? Should be a rebuttable presumption and was rebutted here.
v) Marvin v. Marv in case in notes: Prior to this case and even in this case Calif. courts say it is
against public policy to have unmarried cohabitation so court would not recognize co mmon
law marriage. Ho wever, this case says can enter into agreement in fact or law or div ide the
property based on quantum meruit or constructive trust.
vi) Note 1 page 435, Berelli case, H agreed to leave nonmarital proerty to W and she took care of
him. The property was not left to her.
vii) Duty and relationship: modern courts might be mo re willing to find equitable prin ciples.
i) Mitchell case p 437
i) Same gender couple, one person moved to work on farm and got rents.
ii) Lawsuit by the π who moved and crossclaim by owner of farm for rent and benefits received by
π
iii) Jury verdict for π based on unjust enrichment
iv) Appeal, App ct (superior court of PA) says like a familial relationship so presumption of
gratuituous services. Not clear and convincing evidence that Δ was unjustly enriched.
v) Trial court emphasized the unconscionability of the deal in a broad sense (because the guy
moved a long distance) while the ct of appeal focuses more narrowly on services.
vi) Standard in light of the presumption is “clear and convincing evidence”
(1) If trial court had instructed on clear and convincing evidence, this app ct might have
overturned because otherwise the app ct would have remanded.
(2) Hypo: child works on farm. Child sues parents, parents are going to win because the
presumption is so strong.
j) Watts case p 440
i) Un married couple lives on farm for 12 years, 2 children, business and W worked there, busine ss
increased in value. Once H made a will leaving 10% to W. In fact H changed the will.
ii) Unjust enrich ment and K implied in fact
iii) Judgment for 10% to W
iv) Court said no K but gave unjust enrichment instruction, and there was a SOL issue on the
wages which had run if wages
(1) No presumption of duty of W to provide services because not married.
(2) Is it okay fo r jury to value the unjust enrichment by looking at how much H aparrently
thought that the services were worth based on the value he left her in the prior will….
(3) She sued for 50% of the increase in the value of the property
v) App ct says that must instruct on K imp lied in fact on remand
k) Co mparing cases: why didn’t trial court here say presumption of family like in the Adkins (same sex
partner farm case)? Courts are just different. Wyoming is Adkin’s case. Maybe it was just the
different judges, especially in equity. Note that in Watts we have more o f a business relationship.
i) Defenses to unjust enrich ment is based on theories of equity and so just argue fairness.
41) Defenses to Unjust Enrich ment: Defense of Change of Position
a) Mes. V GT Murray (the overpaid stock case)
i) Facts: gets extra 9,000 in Aug. and not discovered until Oct. invested in home and other things.
Trial court said change in position is a proper Δ but not under these facts.
ii) Sup ct Wyoming said don’t see damage to Δ in this case so resitutuion is called for for π
(1) What is the reliance with damage if you want to argue it? she probably took out a loan,
she has to repay it, she relied on the $
(2) court said it’s not a change of position (still has value) it’s merely a change in form.
b) see notes:
i) remodeling house, court says no
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 35 of 44
ii) med ical expenses: ins co said would cover and went ahead with operation. Unjust enrich ment?
Should argue that wouldn’t get operation without the coverage and can’t sell the operation
back to doctor. Se page 447 note 2 Also, this is an insurance company and so they have a
higher duty in the relationship with the insured not to induce reliance on coverage. The
analysis depends on the fiduciary duty of the insurance company to the insured.
iii) Note, though that you could argue the facts both ways. Test is not if there is merely a change in
form but rather reliance and damage to Δ to assert the change in position Δ to unjust
enrich ment.
iv) Question: why not just work out a pay ment schedule? Answer: you will have a judgment but
you get post judgment interest. If act ing in equity CAN order payments. If acting in law must
issue judgment in an amount. Part ies could work out payments on their own.
v) Question: can’t person cross-claim for amount it will take to repay, in other words, the amount
of damage to Δ due to reliance on π’s error?
vi) St. Mary’s Med Center v United Farm B Ins co page 448
(1) Ins co goes after the hospital for provid ing services on a theory of unjus t enrichment and
MOF (mistake of fact) because insurance had lapsed. Ins co had no obligation to pay
because ins had lapsed.
(2) Patient didn’t have $ to pay and didn’t have right to have ins pay hospital.
(3) Court says ins co must go after the patient. No unjust enrich ment because hospital did
provide the services. As a matter of public policy, the person who can prevent the error
is the one who suffers the loss despite innocence.
vii) What if patient says I wouldn’t have that elective surgery but for the approval of the
insurance? Court could go either way, say that you have the $ in the bank and must pay back
or might say can’t force them to pay back because they relied to their detriment.
viii) Hypo 3 Δ uses software without proper authorization. Δ packaged and mar keted the
software and sues Δ for improper use of the software. Now Δ says no unjust enrichment
because Δ did all the work. π has a coa for use of software without autorizat ion only for the
value of the software as used? Better read the note because I think I got the facts all wrong
here. Just look at the note, there must be something else going on here.
42) Equitable Defenses
a) Remember, we looked at some earlier in the semester
b) Monday, November 26, 2001
c) Cred itor Collection Serv ice of OC v Cstaldi (1994) cal app 4th dist
i) SOL for unjust enrich ment. Legal or equitable?
(1) Legal defense to coa is SOL. Said SOL was 2 years wh ich had passed.
(2) Can also assert equitable Δ to equitable COA. Here court says legal coa so can’t assert
equitable Δ of Laches.
(a) Laches was asserted here. Δ said depended on the $ for that time, should have acted
earlier.
ii) SOL was 3 years for fraud or mistake in Cal CCP § 338(d) rather than 2 years for Cal CCP §
339 for quasi-contract cause of action.
d) Restitution as the only COA
i) Classic grounds for Restitution COA page 459
(1) Material breach of K
(2) Mistake, duress, undue influence, fraud, misrepresentation
(3) Vio lation of relat ionshp of trust and confidence, breach of fiduciary duty,
(4) nondisclosure
ii) Remember the “Bakersfield Inn case” the only real coa was resitutuion
iii) We do speak of restitutuion as a remedy for tort or K, but sometimes they will accept
restitution as a COA in its own right.
iv) π in resitution COA also in breach of K
(1) BaileyAllen Co Inc v. Kurzet Utah ct app (1994) p 456
(a) Facts and Procedure
(i) House construction underway, owner of land fired construction co because
construction co breached K for failure to get insurance.
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 36 of 44
(ii) Trial court said π was entitled to $11,141 for work done, which was 10% of the
K minus costs to Δ for repairs and materials for fixing mistakes by π
(iii) no tort coa for π and no K coa for π because π breached the k
(iv) Unjust enrich ment theory for π based on work done, which was 10% of the K
(b) App ct says is entitled to recovery in Quantum Meruit on the unjust enrichment theory
but not for recovery in quasi K.
(i) Internally inconsistent to say K basis for damages. Trial court based π’s damages
for unjust enrich ment on 10% of the K
(ii) Also said prejudgment interest was not proper. Lack of mathematical certainty
generally precludes prejudgment interest.
(2) Herrmann v. Gleason 6th Cir (1942)
(a) Rent amount not decided, no rent paid for 20 months.
(b) Once rent was decided, the owner of the land said I should get interest for the rent for
that time
(c) Trial Court says there is nothing in the K saying interest is due.
(d) App Ct says can recover interest.
(i) COA is for assumpsit (money had and received) really, because Δ got the benefit
of keeping the money all that time.
(e) Other argu ments why shouldn’t get interest
(i) Not unjust, no wrongdoing.
(ii) Not clear that π was entitled to the $ until after the rents were worked out. (but it
is clear that π was entitled to the $, just not HOW MUCH $ π was entitled to.)
(iii) If party could have protected itself fro m the loss, then it’s not unjust for other
party to keep it. here, the π could have had an interest clause in the K fo r
disputes in the rents.
(f) Still, the lease is for 99 years with rent re -negotiation every 10 years, there is an
implied provision that the re-negotiation will be in timely fashion.
(3) Fordice Construction Co v. Central States Dredging Co (1986) Miss. SD Fed Dist ct
(a) Facts and Procedure
(i) π is 2nd lowest bidder who lost to lowest bidder who claimed small business
preference and “enterprise mfgr” under Walsh-Healy act
(ii) π lost admin istrative appeal to SBA
(iii) Statute said couldn’t appeal to federal court so appealed to state court, but got
into Fed court on diversity. Since statute did not specifically bar state causes of
action, could sue on the state cause of action.
(iv) State COAs were fraud and unjust enrichment by the lowest bidder. The case
book focuses on the unjust enrichment COA, maybe the fraud stuff was edited
out?
(b) Unjust Enrich ment analysis
(i) If lowest bidder Δ wasn’t really entit led to certification as small business and/or
enterprise manufacturer under, A ND if π proved that because of that π was
entitled to the K, then π can get the profit that the Δ got. What if Δ got greater
profits than the π would have gotten? Unlikely because Δ was the lowest bidder.
(ii) What if Δ lost money in the K because the Δ underbid? Maybe quantum meruit .
(iii) NOTE: can’t look at how much the π could have gotten, will look at how much
the Δ was unjustly enriched.
v) Relationship between restitution and punitive damages
(1) Ward v. Taggart Sup ct cal (1959)
(a) RE Agent taggart fraudulently said he had a listing on a property. Ward offered
Taggart $4000 per acre. Taggart said it was too low, Taggart bought the land for
4000 and later sold it to Ward for 5000 per acre.
(b) This was not a tort because the land might have been worth 5000 per acre.
(c) This was unjust enrichment, and punitive damages will d iscourage a realtor fro m the
improper action, so it ’s okay to award punitive damages without a tort.
(d) Unjust enrich ment is NOT based on tort or K.
(e) Unjust enrich ment is a COA and can be the basis for punitive damages.
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 37 of 44
43) Declaratory Judgment
a) Important doctrine for organizations that have ongoing relationships
b) Must show case in controversy and ripe for adjudicat ion
c) Co mmon defenses are that not in controversy or not ripe, whatever the court does will not finalize
the issue.
d) Quite effective as remedy in litigation
e) Aetna Life ins v. Hayworth Ch 5 p 476 (1937) 1st case under Declaratory Judgment Act
i) π ins co Aetna sued for declaratory judgment against Δ Hay worth
(1) Δ Hayworth said didn’t have to pay premiu ms any more since he became d isabled.
(2) Δ Hayworth continued to submit claims which included affidavits and certificates of
disability by physicians
ii) District (trial) court dis missed on the ground that there was no controversy set forth in π’s
complaint.
iii) App ct bought π’s argument that controversy included
(1) Existence of permanent and total disability as defined in the insurance policy
(2) Continuance of obligations asserted despite the nonpayment of premiu ms.
iv) Question of disputed facts will not bar the action for declaratory judg ment. k
v) Question of what law applies will not bar the action for declaratory judg ment. Courts decide
what law to apply all the time, and the legal consequences of facts.
vi) If insurance company wins this case, it is res judicata and Δ Haywo rth can’t sue for payment
on policy.
vii) If insurance company loses this case, it is res judicata and ins co can expect to have to pay.
f) Other case says:
i) Declaratory action is constitutional, judge can issue a final judg men t.
g) Note: Declaratory Judgment act is not a federal question, it’s a remedy.
h) Gryczan v. State 1997 Mont. P 447
i) Deviant sexual conduct statute criminalizes same sex sexual conduct.
ii) πs declare in the comp laint that they have engaged in the activity and will do so in the future.
Is there are case in controversy here is the question. πs claim that the statue is unconstitutional
under the montana state constitution.
iii)
iv) State says that
(1) without a discrete factual context there is no injury in fact YET so no controversy because
not ripe.
(2) State says πs have no standing because they haven’t been charged with violat ing the
statute
(3) Should seek remedy in the legislature because it is a polit ical question
i) Trial court and App ct and Sup Ct of Montana disagreed with stat e and allowed action to continue
i) State atty general refused to promise that they would not be prosecuted
ii) Is this issue real or theoretical? It ’s real because they suffer because of the statute.
(1) Must show existing and genuine as distinguised from theoretical rights or interests
(2) Controversy must be one upon which the judgment of the court may effect ively operate,
can’t be just debate or purely academic conclusion
(3) Controversy must be one that the requested judicial determination will have effect of final
judgme in law or decree in equity upon the rights, status, or legal relationships of one or
more real part ies in interest, or lacking that must be overriding public interest.
iii) The court can determine constitutuionality of the statute.
iv) Standing requires
(1) Must clearly allege (show) past present or threatened injury to a property or a civil right
(2) Injury must be peculiar to the πs rather than to the public generally but doesn’t have to be
exclusive to π
v) Challenged the statue as APPLIED rather than facially because facially invalid must apply to
everyone.
j) McGillivray v. State 1999 mont p 483
i) Staute said for some offenses only got a jury trial after a court trial and an appeal
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 38 of 44
(1) Mont sup ct said that the law was unconstitutional because Δs had to endure 4 separate
court proceedings in order to get a jury trial. Expense and time.
(2) Had to be convicted before you could access a jury.
(3) Why not injunction? Can’t show that remedy at law is inadequate.
(4) For remedy of declaratory releif don’t have to show that remedy at law is inadequate.
(5) Could ask for a writ of p rohibition but probably not necessary if the supreme court of the
state already said was unconstitutional.
k) Wednesday, November 28, 2001 Test:
i) Case names can be used to describe a concept in essay but don’t have to know them
ii) True/False and Multiguess will be half the exam, hasn’t written yet
iii) Multiple choice: somet imes best answer rather than 100% correct answer
iv) Will give us access through library to exams fro m ucla, may be DIFFERENT subject matter
but will be similar types of questions.
v) Hour and a half of essay, 2 or 3 essay questions, maybe even 4. Will just be sh orter if more
questions.
vi) Weakness in student answers: syllogism of problem and answer and doesn’t explore alternate
answers. Wants us to explore alternate issues and alteranate answers. Should say which
answer is best. Won’t give a zero if you don’t but would like to see alternate answers.
vii) Try to show that you grasp the concepts, that you understand the big picture and how the
concepts fit with the rest of the semester.
viii) Open everything. Can bring whatever you want to the exam.
ix) Half/half g rading
l) Back to cases
i) Med-Tec page 494
(1) Facts/Procedure
(a) Letter saying you’re infring ing on our patent, we want to know how much you’re mfg
respond by certain date, pending litigation
(b) π gets the letter, they didn’t wait to respond to the letter they filed a co mplaint seeking
declaratory judgment
(c) Δ files a motion to dismiss, says no controversy just on the basis of the letter. Based
this on theory that the letter was an offer to negotiate for a licensing agreement on
the patent.
(d) Controversy is a continuum, if they are still at the talking stage then motion to dismiss
should prevail. It ’s like a demurrer at this stage, it’s a so what, even if everything π
said is correct don’t have a controversy (yet).
(2) Two part test to determine if there is an actual controversy yet
(a) Conduct of π had reason to wonder if there really was patent infringement.
Reasonable apprehension that a lawsuit would be filed and had a right under the
cases in this jx to find out if they were infringing or not.
(b) Conduct of Δ gave π reason to believe that an actual lawsuit would be filed.
Demanded documents and information that would be used at trial if there was patent
infringement.
(3) Court said this is not mere negotiation, see analysis above
(a) Want to prevent “in terroru m” (in fear) litigation – in other words, don’t want to make
π act out of fear, want to make rights and obligations clear.
(b) If the π was infringing and didn’t quit immediately π would build up huge damages
(c) If the π wasn’t infringing and did quit immediately, π would lose a lot of $
(d) π needs to know where π stands in this case.
ii) Declaratory Judgment
(1) Is there a ripe controversy
(2) Can the court’s order resolve the dispute
44) New assignments: can get through chapter 8 by the end of the semester.
a) Merger of superior and municipal courts is probably similar problems arising when courts of law
and equity merged.
b) Merger of Law and Equity
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 39 of 44
i) Co mmon law said equitable coa dominant, the judge sitting in equity could decide all iss ues
even issues of law.
ii) If it is principallly an equitable action such as injunction plus damages (at law) the same judge
could decide both
iii) coa for reinstatement is equitable, but can also ask for back pay (at law damages $) judge can
still decide it.
iv) However, if you were illegally terminated and were not asking for reinstatement but only back
pay, it was at law and not in equity. If you filed in the court of equity on this one your case
would be dis missed and the sol might have run.
v) The merged court judges would, when acting as a judge acting in equity, still make so me of the
decisions at law even though you normally would get a right to a jury for the remedy at law.
c) Constitutuional concept of juries
i) At common law
(1) Equity was decided by judges
(2) Cases at law, you get a jury
ii) The courts started saying wait a minute, when we’re act ing in equity can’t we recognize the
right to a jury for all decisions at law, even when the dominant cause of action is in equity?
(1) The evolution of the doctrine has been toward recognizing the right to a jury.
d) Ross v. Bernhard p 1177
i) Facts and procedure
(1) Derivative SH suit
(2) Stockholder suit for huge payments to brokers by corporation
(3) SH allege that BOD has interest in the brokerage firm and that’s why the payments are so
huge.
ii) Trial court says entitled to jury because remedy is at law.
iii) App circuit court says not entitled to jury because derivative action is 100% equitable, issues
such as remedies at law can be decided by the judge under the common law. At law the SH
can’t bring this sort of action against the directors, but the courts in equity said it’s not
RIGHT to let the directors breach fiduciary duty to SH. W ill allow in equity a derivative suit.
iv) Why did the supreme court take this case?
(1) SOA between the federal circuit courts, district courts in that circuit have to obey their
circuit court
v) Sup ct says that derivative SH suit entitles them to jury when the corporation itself would have
been entitled to a jury.
(1) Corporation would have been entitled to a jury for issues that were at law.
(2) Which COA(s) entit les the corporation to a jury?
(a) Repayment of the excessive brokerage fees is a remedy at law for $ damages
(b) Constitutuion entitles you to a jury when the remedy is for $ (???)
(c) If there are equitable remedies such as accounting to be ordered, judge can order that.
(3) What is the equity here? The entire derivative COA by the SH in behalf of the corp
e) Monday, December 03, 2001
f) Santiago-Negron v Castro-Dav ila (1989) page 1187 FIRST CIRCUIT has said jury can decide back
pay (this case).
i) Facts and Procedure
(1) Puerto Rico Emp loyment claim, due process and association, § 1983 claim,
(2) Under the old polit ical system in this country, civil servants could be fired at any time and
were fired when new ad min istration came in, new appointments would fo llo w.
(3) In this case, the employees had been working there so long that they had a sort of vested
right despite at will nature. It’s an imp lied (in fact???) contract that the employees will
only be fired for cause.
(4) Jury found reinstatement and back pay, question arises if ju ry is able to make that sort of
decision
ii) Question: LEGA L or EQUITA BLE
(1) Issue of reinstatement is generally equitable.
(a) BUT it was a question of fact for the jury if the tradit ion in that city was to keep the
people or fire them.
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 40 of 44
(b) What bothered the court here is that reinstatement is equitable in nature. The court
will have to issue an injunction ordering them to hire or not hire someone.
(2) Issue of back pay is generally legal.
(a) This is much like a tort case where you get a judgment for a $ amount.
(b) The court did say that the back pay was legal in nature.
(3) Court says give to the jury.
(a) Practical reasons: damages for back pay and other damages, more efficient to have the
jury think through the back pay and other damages. Difficult to g ive jury only part
of the damages and have the judge do the other damages for back pay.
(b) Just because it’s always been equitable, doesn’t mean that we have to have the whole
thing be decided by the judge.
(c) Weigh in favor of giving things to the jury, constitutional righ t to a jury
(i) This case, back pay
(ii) $ Damages
(iii) $ Damages plus some other factual determination that is appropriate for the jury
to decide.
(d) Weigh in favor of bench trial or judge deciding it rather than ju ry:
(i) Reinstatement only such as title 7 COA, equitable only, no $ damages
(ii) Remember, this isn’t the old system where the judge determines legal issues if
ancillary to equitable issues.
(iii) Judges can let jury make findings of fact and then issue equitable order when
acting in equity.
iii) Question: Free speech, freedo m of association (with “wrong” political party.)
iv) Prof said he’s not sure if all the circu its agree with this case but majority seem to.
g) Amoco Oil Co mpany v Torcormian (1983) 3rd circuit page 1194
i) Facts:
(1) π Amoco wants to terminate (see p 1194) K with Δ
(a) eject ment in junction (legal because it’s traditional exception to equitable nature of
injinjunctions)
(b) permanent in junction as to use of station and logo (equitable)
(c) damages for lost profits (legal)
(d) damages for mense (could be either)
(e) atty fees (legal, but traditionally if equitable COA judge could decide)
ii) Jury finds for Δ and wants to enjoin π fro m breaching the K with Δ
iii) Question: Right to jury.
(1) Are they entitled to a jury, specifically is Δ entitled to jury here.
(2) Trial court says no right to jury. Theory: equitable causes of action, judge can decide legal
issues.
iv) App ct says
(1) Damages and ejectment are legal
(2) Says tried to get rid of legal COA and app ct says so what, the court order included
damages so if you wanted the order to be equitable should have removed the lost profits
legal remedy
(3) Counterclaim for injunction and lost profits, court says this is really a breach of K and so
legal.
(4) Court says mixed bag, so right to jury on the legal matters.
(5) Reality is that it’s up to the lawyers to argue and the judge to decide what is proper for the
jury and when there is a right to a jury.
v) Hypos: DISCRETION to judge
(1) injunction sought and damages sought for improper use of a logo for 3 months.
(a) Probably right to jury trial on the damages
(2) Only $100 damages and a permanent in juction
(a) Probably bench trial
(3) 10,000 in damages
(a) probably jury trial
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 41 of 44
(4) Hypo: bench trial and injunction with damages of 10,000. No w, θ sues for unfair business
practices and damages for improper use of the logo. Right to jury? Yes BUT the judge in
the first case already decided the improper use of the logo, probably res judicata and
collateral estoppel.
(5)
(6) Question becomes ancillary damages or mixed bag.
vi) Bankruptcy: 7th Amend ment doesn’t extend to bankruptcy. Purely equitable.
(1) Hypo: Δ is in bankruptcy and creditor claims that the estate is owed $ that is in bankruptcy
and wants $ off the top, creditor thin ks they should come first.
(a) Demand is specific and it is for $. Ent itled to a jury?
(b) It’s NOT a question of how much $ o f damages to award, it’s a matter of equity as to
who gets to put their claim first and to what extent.
(2) Hypo: you have $100,000 and you don’t want it to go into the bankruptcy estate. Right to
a jury?
(a) Depends on what your argument is. If they are saying fraudulent removal of the $
fro m the estate, then that'’ not equitable, it'’s not in bankruptcy court yet because the
$ isn’t in the bankruptcy court’s jx yet.
(b) fraudulent conveyance is like a tort and is a legal coa
(c) But if the $ is in the estate and you’re trying to say it shouldn’t be then it’s eqitable.
vii) Federal circu it court decisions are the fed cts trying to get away fro m the common law on this
issue. The common law was based on the old separation of the courts of law and equity, and
the common law had stretched to allow the judges acting in equity to decide things.
h) Prof says not a right and wrong way to look at this.
i) Could say that constitution meant to keep that separation because that was the tradition when
const was written
ii) Could say that const was new stronger right to jury trial.
i) STATE CASES start here
i) Pelfry v Bank o f Greer p 1201 south Carolina
(1) Facts and Procedure
(a) Ct said right to jury
(b) Derivative action by SH
(c) Trial Court’s analysis
(i) Derivative action is by nature equitable
(ii) But remedy is for damages and corporation had a right to a jury so SH acting for
corp has right to a jury
(2) Sup ct of south carolina says no right to jury
(a) state constituion does not guarantee right to jury other than rights guaranteed at the
time that the state constituion was enacted. At that time
(b) 7th amend ment right to jury this provision of constituion not applied to states by
supreme court so look to state constituion
(i) could follo w federal constitution if they want to but don’t have to
ii) Tuesday, December 04, 2001
iii) Santiago revisited: SOA in circuit court decisions
(1) Most circuits consider a coa for back pay equitable despite the Ross case
(2) In Ross the court found that the coporation’s COA was legal itself.
(3) Big debate in the courts: look to the COA or the REM EDY to determine if right to jury
(4) Santiago looks at the remedy and says that back pay is compensation which is legal
(5) Mere fact that supreme court in Ross said look to COA and that determines right to jury or
not has not precluded circuits courts from looking a the remedy and finding a right to a
jury on that basis.
(6) The cases in the case book don’t cover everything.
(7) What if you sue on an equtiable coa and a counterclaim that is legal, right to a jury?
Another SOA here.
iv) View of state courts: Pelfry case continuted, different view fro m Ross
(1) Review of facts: this traditionally was equitable and did not entitle parties to a jury, and
we are going to look at the law at the time the South carolina const was ratified.
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 42 of 44
(2) Fiduciary duty of BOD that’s an equitable COA
(3) Stockholder suit is in equity, not entitled to a jury.
(4) This is the same issue as Ross but different conclusion despite the Ross case being sup ct
u.s.
v) Hypo: SH suit for declaratory relief to interpret K that they have with Δ, Δ will be enjo ined
fro m co mpeting with the corporation if π wins. Is this legal or equitable?
(1) Injunction is usually equitable remedy
(2) Declaratory relief is considered legal
(3) South Carolina would p robably say no jury because remedy is equitable
vi) Hypo: State statute that says employ ment discrim not permitted and is silent on the issue of
right to a jury
(1) Reinstatement and back pay traditionally equitable, but now back pay might be considered
legal, particularly in federal court after Ross.
(2) Punitive damages are also in the statute, traditionally legal because not traditionally
equitable
(3) What would south carolina do? Can’t be sure wh ich way it would go.
j) C&K Engineering v. A mber Steel Calif. case page 1206
i) Facts and Proceedure
(1) COA by π is breach of K, seems to be a coa at law
(2) Δ wants a jury, court says not entitled to a jury
(3) Pro missory Estoppel theory, which is equitable, is what π is really rely ing on. The K COA
fails but for the promise upon which the π relied, this is an equitable basis for the COA.
(4) Remedy sought: Damages! This is a legal remedy
(5) Question of Historical Fact
k) State ex rel William v. Sloan Missouri adheres to the old equitable formula that judge will decide
damages. “Clean Up” doctrine
i) π seeks to enforce a no competition clause of a K between the doctors
ii) court decides that anticompetition clause of K was violated
iii) Δ asks for a jury trial fo r issue of damages only
iv) Court decides that despite the fact that it’s damages only Δ can’t have a jury, court agrees that
the COA was equitable only but that was taken care of. On remand judge doesn’t have to
empanel a ju ry even though the only issue left is legal.
l) See note 1
i) π wants injunction, actual damages, and punitive damages for surface water run off. Δ wants a
jury because of the damages. π wants a bench trial because it’s properly equitable because of
the injunction.
ii) what would M issouri do? Say it ’s equitable
m) assume NY jx, see note 2, same facts as note 1
i) π asks for a jury, court focuses waiver o f π in NY: if π has both legal and equitable coa the π
waives right to jury in the legal coa.
ii) Δ asks for jury in NY. Probably Δ will get the ju ry because Δ did not waive the right to the
jury by comb ining legal and equitable COAs. Δ is there against Δ’s will.
n) Note: can waive right to jury via failu re to observe procedural requirements
o) Farmer’s Band and Trust v. Ross Indiana case
i) Δ counterclaims based on breach of K
ii) Was Δ entitled to a jury under these circu mstaces? Court says no, even if there is a
counterclaim in law if the case is in equity then the Δ is not entitled to a jury. Th is is a very
Traditional view of the separation of law and equity.
p) Tomorrow section on punitive damages, also read 1169-1176 Arbitrat ion
q) IHP v. 210 central
i) π got Injunction, compensatory damages, and punitive damages
ii) Appeal by Δ arguing that punitive damages are not available t raditionally available to a court
acting in equity
iii) Acillary (punit ive) damages for merger, can they be issued by the court even though
traditionally court acting in equity couldn’t do that?
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 43 of 44
iv) Appellate court said since there was a merger of the courts of law and equity, the court acting
in equity can order legal remedies. Courts have all of the power of the other type of court. The
law permits punitive damages and the court acting in equity can use a remedy at law.
v) The only issue here is the right to a jury, and in NY there was not a right to a jury under these
circu mstances. Thus, the court can use any remedy it wants, even a legal remedy when acting
in equity.
vi) This is accepted by most jx. NO div ision in remedies availab le to the π.
r) When must judge provide a jury?
i) When the only issue is $ and the judge has already decided that an injunction is not proper.
45) Chapter 8 Lists: Equitable vs Legal Causes of Action and Remedies
a) Causes of Action (COAs)
i) Legal
(1) Torts in some cases this includes fraud, see ? case
(2) Declaratory Relief
(3) Breach of K
(4) K i mplied in Law??? Or is this equitable?
ii) Equitable
(1) Deri vati ve Action by SH (but see Ross, may still be entit led to jury in Fed ct.)
(2) Promissory Estoppel (theory to get breach of K COA in Calif.)
(3) Breach of Fi duci ary Duty
(4) K i mplied in Fact?
(5) Bankruptcy who has a right to the $
(6) Divorce/Dissolution of Marriage
b) Remedies
i) Legal
(1) Damages
(2) In some jx back pay is considered legal now
ii) Equitable
(1) Injuncti on except eject ment fro m RP
(2) Reinstatement (tradit ionally, but may not be dispositive)
(3) Back Pay trad itionally
c) Co mpulsory Counterclaims
46) Page 1169-1176 Arb itration
a) Case first
i) π files for
ii) Δ says K requires arbitrat ion
iii) Trial court stayed the proceedings and said must arbitrate un der the K
(1) π won the arbitration including 400,000 punitive damages
iv) Δ appealed saying that K said that NY law applied and the NY law said that Arbitration could
not impose punitive damages
v) Dist ct and ct app agreed with that argument by Δ
vi) Supreme court said everyone else is wrong, the punitive damages were proper
(1) Courts at common law were resistant to arbitration
(2) Unless the statute authorized the public function of the court proceeding to be carried out
by private parties it wouldn’t be allo wed
(3) Now, though, there is more respect for arbitrat ion
(4) Why since NY law said can’t send punitive damages to arbitrator?
(a) Unclear if the K said that punitive damages WOULD be submitted to the arbitrator,
that is a contractual agreement (because said national board of arbitrators ru les
would apply). So, at least, there was no provision saying you couldn’t, and so
construe against the drafter…
(b) If the K said that punitive damages would not be submitted to the arbitrator, court
would respect that too.
(c) Public policy in favor of arbit ration
Prof. Reynoso Remedies Class Notes, Fall 2001 Page 44 of 44
(d) The NY law provision is a choice of law provision not a strict application of all the
laws of NY. Genereral NY law applies, not specific arb itration provision, and
general NY law is what court would do and court would apply punitive damages.
(5) Court didn’t deal with the Federal A rbitration Act preemption issue
(a) Law in NY d id not permit punitive damages and Fed act said okay
(b) This court would probably find that the Federal act preempted if they had to since
there is a federal preference for rememd ies, prof said this but I’m not sure if I got
what he said right. He seems to think that they would have found preemption if they
didn’t find the other reason to allow the punitive damages.
(c) See also case in notes.
b) Arbitration and Mediation can be very useful for resolving disputes
c) Two types of arbitration:
i) Any issue will be submitted to arbitration
ii) Only some issues will be submitted to arbitrat ion
d) Arbitrators have a lot of power
i) $
ii) specific performance
e) Other Remedies:
i) Admin istrative
ii) Legislat ive
iii) Not on final
iv)
