Glendale Federal Bank V Us

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I.   Compensatory Damages
     A. General
             1. Direct/General Damages
                   a. The measure of general damages is usually loss in market value due to the injury (i.e.
                      the value of the thing prior to the injury and its value post-injury). If there is no easily
                      ascertainable market, courts will sometimes allow the  to recover replacement or
                      repair costs (Trinity Church).
                   b. Those damages that each and any  would suffer from this harm; compensate  by giving the
                      value
                   c. Use FMV unless there is no way to get FMV
             2. Special/Consequential Damages
                   a. Value depends on the position or posture of the  (idiosyncratic)
             3. Substitutionary remedy for harm that has already occurred (money for harm)
             4. Legal b/c of historic reasons; Not discretionary and not subject to irreparable injury rule
             5. Rightful position rule – the position  would have been in but for the wrong
             6. Theories
                   a. Corrective justice
                           1)  should be entitled to compensation for what  did
                           2) point of view of  who is put in same place as if no K existed
                   b. Law and Economics
                           1) Efficiency
                                     a) Best way to value transactions is in the free marketplace
                                     b) Support damages in order to force s to internalize the costs of their
                                          conduct
                                     c) Efficiency as defined by economists not courts is a transaction that is
                                          profitable to the  after the  has paid all the costs attendant to that
                                          transaction
                                     d) Rather than look at , really looks at the controlling behavior of the 
                           2) Transaction is efficient if the  is profitable and the  is made whole
             7. United States v. Hatahley
                   a. Government trespassed and took Indian’s livestock but could not determine damages based
                      on Indian’s subjective view of the value of the horses
                   b. If choice between subjective and objective valuation, objective is always the better criteria to
                      demonstrate an individuals loss
                   c. Problem is may not always be able to afford an award to a  b/c cannot always determine the
                      amount
                   d. Rule – the fundamental principle of damages is to restore the injured party as nearly as
                      possible to the position he would have been in but for the wrong (i.e. before the K)
     B. Value as the Measure of the Rightful Position
             1. United State v. Fifty Acres of Land – value
                   a. Landfill condemned by U.S. as part of flood control project but FMV is $225K and
                      reasonably substitute would cost $723K; Supremes give  FMV thus leaving them to pay
                      $500K of their own to get a new landfill
                   b. Court argues  will realize the benefit of the new landfill at the time which you would have
                      had to purchase a new one (the old one would have been filled); early payment for future
                      benefits; may need to alter some b/c acceleration affects finances and allocation of monies
                   c. Government only has to pay the value of the property lost, not the value of the new property
                      purchased to replace the property lost
                   d. Replacement value goes toward the value of the asset lost (usually look objectively at
                      FMV)
                   e. Rule
                           1) When have a loss, court will compensate FMV (especially when it can be
                               calculated objectively);
                           2) Anytime you have a choice b/w known value and speculative value, court will
                               always chose the known value
                                   – Remedies – Professor Channick – Spring 2000
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               f.   Hypo: You have a car that you’ve kept immaculate. You get into a car accident, insurance
                    will not fix your care. They’ll say its totaled. You only get FVM of $4,000. (To fix it would
                    be much more). You buy a brand new car for $20,000. Have you been made whole again?
                    You have to spend 16k out of pocket to replace the car lost, but all you’re going to get is
                    4,000 for your loss. According to the law you’ve been made whole b/c all you’re entitled to
                    is $4,000.

        2. Trinity Church v. John Hancock Mutual Life Insurance Co. – value
              a. Construction next to church caused stone masonry of church to crack
              b. General Rule – use diminution in market value to measure property damage
              c. Exception – if dealing w/ special purpose property (unique or no market for churches) or if
                 FMV is not easy to calculate then there is generally no active market for which diminution in
                 market value may be determined therefore use replacement cost
              d. If there is no easily ascertainable market, courts will sometimes allow the  to recover
                 replacement or repair costs
              e. Here court used cost of reproduction less depreciation (replacement cost)
                      1) Here church had historical records of surveys done on church cracks
                      2) B/c of excellent records could prove church was not near takedown
                      3) Regardless if do not rebuild, b/c can prove loss not a windfall via records
                      4) Would have been same result as Fifty Acres (use FMV) but FMV was not
                          ascertainable here
        3. Decatur County Ag-Services v. Young – value
              a. After crops were sprayed, damage occurred
              b.  may risk selling harvest at later time but this risk is not chargeable to the 
              c. Rule – Value of crops are measured at time of harvest
C. Reliance as Measure of the Rightful Position
        1. General
              a. Reliance – The position  would have occupied if she had never made the K (exam)
              b. FMV, the usual measure of the damages, does NOT give adequate compensation for the
                 buyer’s breach in situations where the seller has an unlimited supply of the commodity and the
                 demand is limited
        2. Neri v. Retail Marine Corp.
              a.  ordered a boat from  and put down a deposit;  breached the K but seeks return of the
                 deposit
              b. Should the value be measured by the position  would have occupied if she had never made
                 the K (reliance) or by restitution
              c. Rule- under the UCC 2-718, the buyer is entitled to restitution of the down payment in
                 excess of the seller’s damages. In this case, the seller’s damages are
                      1) The profit he would made (i.e. expectancy); and
                      2) Incidental Damages such as expenses incurred in stopping delivery, in the care and
                          custody of the goods, in connection w/the sale (i.e., reliance loss) had the buyer
                          performed
              d. The fact that the seller was able to resell the particular boat to another buyer for the same
                 price is immaterial b/c the seller had an unlimited supply of the boats to sell. Thus, the
                 buyer’s breach deprived him of the profit he would have made on the sale
              e.  has restitutionary remedy (unjust enrichment of ) and  has reliance remedy ( must pay
                 for consequential and lost profits) and thus both will be put in rightful position
              f. Unjust enrichment focuses on the ’s position and what he was unjustly enriched with to
                 measure the value of the rightful position for 
D. Expectancy as Measure of the Rightful Position
        1. General
              a. The position the  would have occupied if the K had been performed
              b. Measured by the difference b/w the value warranted (promised) to the value obtained
                 (delivered)
              c. Law usually protects the non-breaching parties expectancy
                             – Remedies – Professor Channick – Spring 2000
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        2. Chatlos Systems v. National Cash Register Corp.
             a.  ordered computer that promised to perform at the rate a $207,826 computer would perform;
                  got a good deal when negotiated a price of $46K; computer received was valued at $6K;
                 court gave expectancy of $201,826
             b. Court protects the benefit of the bargain and if promised a product worth a particular
                 amount, then  is entitled to what they expect
                      1) Problems is this is a huge discrepancy and should courts protect unreasonable
                          expectancies
                      2) Court helped by programmer knowing computer could not do what he told  it could
                          do; overeager salesperson exaggerated abilities of product
             c. Form of remedy sought – if reliance was the remedy sought,  would have only received
                 $40K
             d. Policy
                      1) Deterrence
                      2) May be seen as punitive, but not really b/c used to encourage normative conduct
        3. Smith v. Bolles
             a.  sold  worthless stock and  wanted to recover in tort for fraudulent inducement and not
                 for breach of K
             b. Old Rule – a  cannot recover expectancy in tort
             c. New Rule – today can get expectancy in tort and K
                      1) Rationale is that what you plead should not define your reward
E. Consequential Damages
        1. General
             a. Immediate result of the wrongdoing that flows from the injury of a particular 
             b. Idiosyncratic – depends on the position or posture of the 
             c. Subject to a lot of limitations (hard to prove)
                      1) Prove  knew or should have known (foreseeable)
                      2) Show not too remote
                      3) Limited by foreseeability, mitigation, avoidability, proximate cause, certainty
                      4) Must be realized to be recovered (demonstrate really had a loss)
                      5) Historic bias against consequential damages
             d. Consequential damages differ from general damages b/c, although they are caused by
                 the ’s harm, they are idiosyncratic to the , and tend to replace lost income or profit
                 rather than losses to balance sheet. Consequential damages must be realized to be
                 recovered and are limited by the principles of foreseeability, avoidability and certainty.
        2. Buck v. Morrow
             a. ’s grazing cattle were displaced and had to hire extra hand and lost some cattle
             b. If consequential damages are foreseeable and provable (clearly happened as a result of
                 the breach) then can be recovered
        3. Meinrath v. Singer Co.
             a.  did not receive bonus and claimed missed chance for investments b/c did not get bonus in
                 time
             b. If too remote and speculative then no consequential damages
                      1) Further if  could have mitigated (borrowed money) and did not then will deny
                          consequential damages (the interest)
                      2) When money is the П’s loss, he can’t use that as a basis to recover consequential
                          damages. П can cover easily (go out and borrow the amount of money, and mitigate
                          the loss) and if interest is recovered, then П is made whole again
                      3) Interest is the usual limit to consequential damages
        4. Texaco v. Pennzoil Co.
             a.  knowingly interfered w/ agreement b/w  and another entity and  brought an action for
                 tortious interference w/ contractual relations (in tort b/c wanted punitives)
             b.  receives $7 billion in consequential and $3 billion in punitive
             c. Court focused on replacement cost model in order to give  expectancy

                            – Remedies – Professor Channick – Spring 2000
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                      1) K to purchase 3/7 of all of entities barrels at $3/barrel but cost to replace would be
                          $10/barrel therefore recovery is $7 billion (really is consequential b/c  did not have
                          a K w/  but will give  what was expected if not for ’s tortious interference)
              d. Expectancy plus consequential
              e. A  in an action for inducing a breach of K is entitled as a matter of right to interest on
                  the amount of recovery, measured from the date of the accrual of the cause of action
F. Limits on Basic Principle (rightful position)
        1. Limits by Agreement
              a. K Exclusion – Kearney & Trecker Corp. v. Master Engraving
                      1) ’s brochure promised an efficient and reliable piece of equipment that failed thus
                          normally could get any remedy
                      2) General Rule – parties have the power to specify a remedy in a K
                      3) Exception – unconscionability
                      4) Parties can limit their liability by agreement and, at least under the UCC,
                          contractual limitations of remedies are enforceable unless unconscionable.
                      5) Even if a K fails of its essential purpose, a consequential damages exclusion
                          clause from that K will survive as long as the clause is not unconscionable (i.e.
                          unequal bargaining power)
                      6) Allocation of Risks
                                 a) Exclusions are an attempt by parties to allocate the risk
                                 b) Court respects private bargaining, risk allocation and no bright line rule
                                     should be applied to reallocate the risk
                      7) Conflicting values
                                 a) Private bargaining is held higher than quantum of remedy
                                 b) Court resolves the conflict in favor of private bargaining
                                 c) Courts value private bargaining more than risk allocation
              b. Ashcraft v. Gerel v. Coady (Liquidated Damages)
                      1) П had an employment K containing a liquidatied damages clause
                      2) Rd 2d K 356-damages for breach by either party MAY be liquidated, but only at an
                          amount that is REASONABLE in light of the ANTICIPATED or ACTUAL loss
                          caused by the breach and the difficulties of proof of loss
                      3) Δ is arguing that the liquidated damages clause is unreasonable b/c it has no
                          relationship to the loss. Ct. says they’re reasonable- 1) determines that he was
                          important to the Boston branch and 2) the original amount was $50k, it went up.
                          Reflects the fact that the firm was thinking about his value to the firm in each year he
                          was there.
              c. K Exclusion – Farmer’s Export Co. v. M/V Georgis Prois
                      1) Ship could not leave b/c of employee strike and K stated $5K/hour overtime
                      2) Liquidated Damages Clause is not a penalty and thus valid if
                                 a) Damages are normally difficult to compute (could be evidenced by
                                     custom)
                                 b) Parties made a good faith effort to estimate liquidated damages;
                                     whether or not liquidated damages are close to actual damages
                      3) Burden to show not a penalty
                                 a)  has a heavy burden to prove not a penalty
                                 b) court severely scrutinizes these clauses (heavily policed) regardless of
                                     equal bargaining power b/c want to be sure it is not a penalty
              d. K Exclusion – Northern Illinois Gas Co. v. Energy Cooperative
                      1)  contracted to purchase 56 million barrels over 10 years from  but breached when
                          it became cheaper to purchase from someplace else
                      2) Liquidation of damages clause is a limitation on remedy and prevents a party in
                          a breach of K action form seeking an alternative measure of damages
                      3) Policy
                                 a) If allow recovery of consequential damages the potential liability for a
                                     business is too high (i.e. giving lost profits)
                              – Remedies – Professor Channick – Spring 2000
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                        b) Best to allocate the potential loss to the businesses via liquidated damages
2. Limits Imposed by Law (Doctrine of Avoidable Consequences)
     a. S.J. Groves & Sons Co. v. Warner Co.
             1)  suffered additional damages after  breached by failing to supply materials on time
             2)  had option to continue w/ breaching supplier, K w/ another supplier, supplement w/
                 another supplier
             3) П continued to use Δ even though another concrete company was available. П
                 subsequently sued and was awarded damages; however, consequential damages were
                 denied b/c П failed to mitigate damages by employing the other concrete company
             4) A  is entitled to recover damages as long as the  chooses a reasonable
                 alternative even though it not the most reasonable choice
                        a) A  does not have to cover (avoid the loss) as long as what they did do was
                            reasonable
             5) Reasonableness is judged prospectively NOT retrospectively (not after the fact)
             6) Policy
                        a) If  could have mitigated to avoid their breach then should also be
                            responsible
                        b) Do not want to reward the breaching party
3. Limits by Proximate Cause (Doctrine of Avoidable Consequences)
     a. Pruitt v. Allied Chemical Corp.
             1)  negligently released chemical into bay killing fish and affecting retailers,
                 commercial fisherman, sport fishermen, sellers etc.
             2) Problem – s do not have a property interest in the bay
             3) Policy – to make sure  is punished for doing bad act
             4) In order to balance competing policy issues court creates rule so that  has some
                 liability but not unlimited liability
             5) General Rule-Economic Harm Rule-Act as a bar to recovery
                        a) Can’t recover for indirect harm unless there is physical impact=economic
                            and physical impact
                        b) For some classes of П’s, we will bend the rule
             6) Court allows constructive property interest otherwise no one would be able to
                 recover however  must be able to show physical impact of personal property
                 causing damages if the only damage being sought are economic damages
             7) Cts allow the commercial fisherman to recover b/c their sole source of income from
                 the bay whereas the restaurants etc. their primary source of income is from people
                        a) commercial fisherman cant’ relocate and get their livelihood from the bay
                        b) restaurants can relocate and get fish from somewhere else
             8) Cost of harm must be same as or greater than cost of prevention so the Δ does
                 chooses to prevent the harm instead. (Polluting the lake must cost Δ more money
                 than NOT polluting the lake)
             9) Recovery may be obtained for damages proximately caused by Δ’s negligence. It
                 was foreseeable that pollution to the bay would cause the harm
     b. Evra Corp. v. Swiss Bank Corp.
             1)  has K with another company stating payment must be made on time or K is
                 cancelled but  fails to make wire transfer for  and  entered into new K at a higher
                 price of $2 million (consequential damages)
             2)  can recover consequential damages only if they can show damages were not
                 avoidable, they can prove causation, and if those damages are foreseeable
             3) Foreseeability/avoidability of a loss is best determined by the person who has
                 knowledge (notice) of what the loss would be
4. Limits by Certainty Requirement (Doctrine of Avoidable Consequences)
     a. Bigelow v. RKO Radio Pictures
             1)  commits antitrust violation and  seeks recovery for losses over 5 years by
                 showing comparable earnings of similar theatres and comparing last 5 years w/
                 period prior to antitrust violation
                   – Remedies – Professor Channick – Spring 2000
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                   2) General – damages cannot be recovered unless the  can prove the damages
                       with a reasonable amount of certainty
                   3) Exception – wrongdoer bears the risk of uncertainty b/c when  causes problem
                       and makes it difficult for  to prove damages, the court will give  the benefit of
                       the doubt
                              a) When  can’t prove w/ certainty, a jury is allowed to make reasonable
                                  inferences form the case that causation has been satisfied
                              b) However  must still prove damages w/ some degree of certainty
G. Damages Where Value Cannot be Measured in Dollars
       1. Personal Injuries and Death – Pain and Suffering (non-economic)
            a. Pain and suffering, medical, loss earning, loss of consortium, property damage, wrongful
               death
            b. Beagle v. Vasold
                   1) Pain and suffering is difficult to objectively determine a dollar amount b/c no
                       market value thus a ’s attorney should be able to suggest an amount to the jury
                       even though it is not evidence
                   2) An award for pain and suffering must be based on reasonableness
                   3) Often juries in personal injury cases are left to guess what constitutes fair
                       compensation for pain and suffering w/o much guidance. Some jurisdictions
                       permit both ’s and ’s attorneys to make “per diem” arguments although these
                       arguments do not constitute evidence (Beagle v. Vasold).
                   4) Policy
                              a) Do not want to leave the jury w/ no guidance
                              b) Jury is not an expert and does not know what is reasonable
                              c) Jury will still be able to make a decision based on adversarial arguments
       2. Dignitary and Constitutional Harms
            a. General
                   1) Dignitary – assault, false imprisonment, malicious prosecution, IIED, libel/slander,
                       invasion of privacy and battery
            b. Levka v. City of Chicago
                   1)  was strip searched and claimed violated 4th and 14th Amendments and awarded
                       huge amount by jury
                   2)  must show actual injury/damage and prove those damages; cannot just
                       recover for emotional distress
                   3) A jury verdict can be set aside if the award is monstrously excessive or so large
                       as to shock the consciousness of the court (punitive not compensatory) and thus
                       out of line with other awards of this nature given by the court
            c. Carey v. Piphus – defamation
                   1)  was suspended from high school and claims violated procedural due process
                   2) Damages from a constitutional right violation are not presumed and thus do no flow
                       from the constitutional violation itself
                   3) Deprivation of a constitutional right is nominally compensable for the
                       deprivation alone, anything more (proven actual damages) must be proven
                   4) Defamation is an exception to the general rule that damages are not recoverable
                       w/o proof of damages.
       3. The Value of Money – Lost wages
            a. Jones & Laughlin Steel Corp. v. Pfeifer
                   1)  was injured during employment and is entitled to compensation for future wages
                       under Act
                   2) Number of working years X annual income – discount rate = present value
                   3) Future earnings – paid today although not entitled to it today if  had not been
                       injured (remaining work life X annual income)
                   4) Problem is  gets lump sum and could invest for a reasonable rate of return
                   5) Present value – discount by estimating what each dollar would be worth in the future

                           – Remedies – Professor Channick – Spring 2000
                                                                                                                       7
                             6) The lower the discount rate (i.e. interest rate) the higher the settlement amount;
                                the higher the discount rate the lower the settlement amount
                             7) Factoring Inflation ( argument)
                                       a) Wage Inflation – wages would increase over the years
                                       b) Price Inflation – costs of good and services increase over the years
                                       c) Thus lower discount rate
                             8) Inflation is related to discount rate (rate of return)
                                       a) Difference b/w interest rate and inflation rate equals the discount rate (real
                                           interest)
                             9) Since courts generally award lump sum lost wages awards which represent
                                streams of future income, the job of ’s counsel is to argue for certain
                                assumptions about future unknowns. These unknowns include factors such as
                                the number of years the  would have worked but for the injury, the ’s total
                                compensation, whether the lump sum should be computed net of expenses and
                                taxes, how wage and price inflation should be factored in, and what discount
                                rate to apply to the computed lump sum to reflect present value.
II.   Injunctive Relief
      A. General
               1. Classes
                     a. Reparative – where an in personam order would repair a harm that has already occurred and
                         prevent any future harm
                     b. Preventative – to prevent future harm from occurring
                     c. Structural – an injunction against one institution used more to cure a large societal problem
                         (i.e. segregation)
                              1) Prophylactic – an injunction which goes beyond the rightful position rule b/c goes
                                  beyond what  is asking for; prevents future risk of otherwise lawful conduct
               2. In Personam
                     a. Injunctions are in personam so if it is violated the party can be put in contempt
               3. Specific b/c order the  to do or not do something specific
               4. Types – TRO, Preliminary. Permanent Injunctions
               5. Require that the  demonstrate that harm will occur unless the court gives an injunction
                     a. Have to show that harm is imminent; that there is no other better or easier remedy; ripeness
               6. Irreparable Injury Rule
                     a. Need irreparable injury to get an injunction and if none will bar  from getting injunction
                     b. Non entitled to equitable relief if legal relief would be sufficient (pursue damages first)
                     c. Those kinds of cases where court refused to give equitable relief
               7. In order to obtain a preventive injunction, the  must demonstrate both remedial ripeness, i.e.
                   that he injury is likely to occur, and irreparable injury, i.e. that the legal remedy is
                   inadequate.
               8. Ripeness is easily demonstrated if a harm ahs already occurred.
               9. Irreparable harm requires that a legal remedy not be as good, practical or efficient as the
                   equitable remedy.
               10. The irreparable injury rule is one of the few pre-merger holdovers; pre-merger, courts of
                   equity had jurisdiction only when courts of law did not.
               11. Need to argue that money is inadequate b/c (1) w/o an injunction the  will have to bring
                   multiple law suits to recover for the harm, and (2) the injury of loss is speculative an difficult
                   to calculate. Generally difficulty of measurement and multiplicy of lawsuit is sufficient
                   reason for a court to grant injunctive relief.
               12. The injunction inquiry also looks to a balance of the hardships b/w the  and . If the burden
                   of an injunction to the  outweighs the benefit to the , courts will generally refuse to grant
                   the injunction notwithstanding the  having satisfied the ripeness and irreparable injury
                   requirements (Van Wagner)
      B. Preventative Injunctions
               1. Ripeness – Humble Oil & Refining Co. v. Harang
                     a.  wants preliminary injunction to prevent destruction of docs
                                   – Remedies – Professor Channick – Spring 2000
                                                                                                               8
               b. Party seeking injunction must show imminent threat of harm to prevent irreparable
                  injury
               c. Mere fear that  may destroy evidence is NOT enough for an injunction
               d. Imminence of harm
                       1) No imminence if no ripeness
               e. To get an injunction,  must prove
                       1) There will be imminent threat of harm if court does not issue injunction
                       2)  will suffer irreparable harm that cannot be compensated by money damages
        2. Scope – Marshall v. Goodyear Tire & Rubber Co.
               a.  alleges age discrimination and sought to enjoin  from further violations nationwide
               b. Injunctive relief on a broad scale should not be granted when it is based on isolated
                  facts that are limited to a small area; should not be broader than the evidence
                  warranting it
               c. The narrower an injunction, the more likely it will be upheld; the broader the injunction the
                  less likely it will be upheld
        3. Mootness – United States v. W. T. Grant Co.
               a. Mootness is when a court no longer has jurisdiction over a case b/c the issues are no longer in
                  controversy
               b. Antitrust action b/c directors sat on all 3 boards but the threat ceased b/c  resigned from
                  board
               c. There must be some cognizable danger of recurrent violation and proof that relief is still
                  needed
               d. A case is moot if  can demonstrate that there is no reasonable expectation that the wrong
                  will be repeated
C. Reparative Injunctions
        1. Scope – Winston Research Corp. v. Minnesota Mining & Manufacturing Co.
               a.  developed tape recorder and  developed similar product and  wants to be repaired by
                  restoring  to its original position and preventing  from selling its product
               b. Injunction must be tailored to ’s specific injuries
               c. The appropriate measure of injunctive relief should prevent unjust enrichment and
                  restore  to pre-violation position, but nothing more
               d. Unfair competition should be enjoined for the amount of time it would take to develop a
                  similar product after public disclosure thereof
               e. Policy
                       1) Do not want to deny what would come from normal research and development b/c
                           would chill creation of new technologies
        2. Measure – Bailey v. Proctor
               a.  bad faith to receiver of trust
               b. A court of equity has inherent power to appoint a receiver to liquidate a corporation or
                  investment where fraud, mismanagement or abuse of trust is present regardless if the
                  trust is solvent or insolvent
               c. Insolvency is not a necessary prerequisite to liquidating an investment enterprise
D. Structural Injunctions
        1. General
               a. Tends to go beyond the scope of the violation
               b. De Jure Segregation – segregation which violates the Constitution and must be remedied
               c. De Facto Segregation – segregation which is from all other causes except the deliberate
                  conduct of state officials; no violation of Constitution
               d. Policy
                       1) Structural injunctions push the boundaries of separation of powers thus sometimes
                           some societal ills are best cured by the legislature and cannot be remedied by the
                           courts
        2. Desegregation – Missouri v. Jenkins
               a. Schools were segregated and ordered desegregated but district did not have funds to comply
                  with ruling thus increase in income tax ordered
                             – Remedies – Professor Channick – Spring 2000
                                                                                                                      9
                     b. Freeman Test – factors to inform court in ending a desegregation order
                              1) Full and satisfactory compliance w/ the decree
                              2) Whether judicial control is still necessary to oversee compliance; and
                              3) If the school district has demonstrated to the public and aggrieved parents and
                                  students satisfactions, its good faith commitment to the decree and constitutional
                                  provisions
                     c. A federal court may order government authorities to obtain funds to pay for court-
                         ordered desegregation by raising taxes
                     d. A court seeking to remedy an intradistrict violation that has not directly caused significant
                         interdistrict effects exceeds its remedial authority if it remedies w/ an interdistrict purpose
                3. Prophylactic
                     a. Madsen v. Woman’s Health Center, Inc.
                              1)  are pro-life protesters outside of ’s clinic and  wants protection of its patients
                                  and clinics
                              2) Competing interests
                                         a) Freedom of speech (lawful conduct) and protection of patients privacy
                              3) Test – Do the challenged provisions of the injunction burden no more speech
                                  than is necessary to serve a significant government interest
                              4) Prophylactic – the injunction prevents
                                         a) A future risk; and
                                         b) An otherwise lawful conduct (prevent only amount that is necessary)
                     b. Rightful position plays a part here as well but prophylactic is broader b/c it goes beyond what
                         s are asking for
                              1) Gives  more remedy then they are entitled to
III.   Choosing Remedies
       A. Irreplaceable Losses
                1. Pardee v. Camden Lumber Co.
                     a. ’s land was being cut w/o his permission and  was denied an injunction
                     b. General rule – when there is a remedy at law (money damages), there is no need for a remedy
                         at equity (fairness)
                     c. Problem here is would only get money to grow new trees, but would not be able to replace
                         the view/forest
                     d. When what is being destroyed is irreplaceable, or cannot be purchased w/ money, the 
                         is likely to get equitable relief (legal remedy alone is not adequate)
                     e. Uniqueness – real property and everything attached to that property is always considered
                         unique (thus different from horses) and gets more protection to protect from trespassing etc.
                2. Campbell Soup Co. v. Wentz
                     a.  sues for specific performance of K to purchase all of ’s carrots; no other carrots were
                         available to 
                     b. Specific performance is a specific form of injunction which is an order to actually perform
                         the K
                     c. A party may have specific performance of a K for the sale of chattels if the legal remedy
                         is inadequate
                     d. Based on irreparable injury (no carrots)
                     e. Expectancy is only an alternative to actual performance
                3. Thompson v. Commonwealth
                     a. State contracted w/  to purchase counting equipment and to furnish spare parts but 
                         reneged on supplying spare parts that were unobtainable anywhere else
                     b. General rule – personal property Ks are not subject to specific performance
                     c. A court will decree specific performance of a personal property K if the legal remedy is
                         inadequate (no other parts available)
                     d. Risk Allocation - risk will fall on breaching party
       B. Undue Hardship (exception to irreplaceable loss) – Balance of hardships
                1. Van Wagner Advertising Corp. v. S & M Enterprises
                     a.  leases unique billboard space from  but  sells to another party who refuses to adhere to K
                                    – Remedies – Professor Channick – Spring 2000
                                                                                                          10
              b. General rule – money damages are never adequate for loss of property (billboard)
              c. A court will not give injunctive relief (specific performance) even though there is no
                  question that there is irreplaceable loss (i.e. carrots) b/c of undue hardship on  to
                  comply (inability to develop property thus inequitable to the )
              d. To recompensate  w/ specific performance would put an undue hardship on  w/o
                  some concomitant equity
              e. Injunction inquiry looks to a balance of the hardships b/w the  and . If the burden of
                  an injunction to the  outweighs the benefit to the , courts will generally refuse to
                  grant the injunction notwithstanding the  having satisfied the ripeness and irreparable
                  injury requirements.
        2. Ariola v. Nigro
              a. Balance of equities –  irreparable injury vs. undue hardship of 
              b.  encroached onto ’s land and continued to build and being informed of encroachment and
                   wanted an injunction
              c. General rule – mandatory injunctions for encroachments are o.k. as long as the burden on the
                   is less than the loss of the 
              d. Safe harbor – if the cost of removing the encroachment outweighs the benefit to the 
                  (undue hardship) then  will not have to remove the encroachment and just pay money
                  damages
              e. Exception – if encroach recklessly or intentionally, the  loses safe harbor
              f. When an encroachment is found to be intentional, the courts will not conduct the
                  traditional balancing of equities thus even if undue hardship to remove encroachment of
                  a few inches, it still must be done
              g. Policy
                       1) To discourage people from trespassing and later arguing too burdensome to remove
                       2) The policy reason for granting injunctive relief is to prevent the  from
                           obtaining a private right of eminent domain w/ regard to the ’s use of his
                           property. Law does not want a policy that encourages private takings b/c the
                           only sanction is compensation.
C. Burden on the Court (exception to irreplaceable loss)
        1. Northern Delaware Industrial Development Corp. v. E. W. Bliss Co.
              a.  was not progressing as quickly on expanding ’s plant and  wanted court to order more
                  workers be put on shifts
              b. Equity is denied when too burdensome on court to oversee
              c. Absent special circumstances or a compelling public interest, a court of equity should
                  not order the specific performance of any construction K in a situation in which it
                  would be impractical to carry out such an order
              d. Policy
                       1) Too burdensome for court to supervise this kind of relief
                       2) Court would oversee if K is being performed
                       3) No certainty that remedy will help the hurt
                       4) Forcing work is like slavery 13th Amendment
D. Substantive or Procedural Policy (exception to irreplaceable loss)
        1. Willing v. Mazzocone – TRO for defamation
              a.  picketed ’s office w/ a sandwich board and  wanted a permanent injunction to stop her
              b. A court may not enjoin a  from exercising her freedom of speech (1st Amendment) b/c
                  it trumps ’s right not to be defamed (balance of equities)
        2. American Broadcasting Companies v. Wolf
              a.  worked for  and now wanted to work for a competitor;  cannot force  to work for them
                  thus seek 90 day injunction against working for competitor
              b. Cannot force personal services K
              c. When a personal service K has terminated, equitable relief is available only when a
                  danger of unfair competition or other tortuous conduct exists
              d. Policy
                            – Remedies – Professor Channick – Spring 2000
                                                                                                         11
                     1) Balancing burdens show burden greater on  b/c affects livelihood
                     2) Only real damage to  is competitive edge
E. Preliminary and Permanent Relief (exception to irreplaceable loss) – belongs in injunctive
        1. General
             a. Preliminary
                     1) Done prior to an adjudication on the merits b/c moving party will suffer irreparable
                         harm (harm that cannot be compensated w/ money) – helps to maintain status quo
                     2) Bias against preliminary injunctions b/c of information is incomplete and courts
                         afraid of making mistakes
             b. Permanent
                     1) Entitled to equitable relief if satisfy the irreparable harm element
        2. TRO
             a. Granted prior to adjudication on the merits for limited time w/ little or no notice; when
                 violation is capable of repetition may transformed into preliminary injunction
             b. TRO is an in personam order made prior to an adjudication of the merits of a legal
                 dispute.
             c. TROs are granted in emergency situations on a showing that irreparable harm will
                 occur if not for the grant.
             d. Generally, a hearing on a motion for a TRO is non-adversarial and very attenuated; it
                 does however, require notice to the adverse party unless the moving party can
                 demonstrate that unsuccessful efforts were made to notice the adverse party and that
                 irreparable injury will result to the moving party unless the TRO is granted ex parte.
                 (FRCP §65 (b))
             e. Under FRCP §65 (b), all TROs must be noticed or must include an affidavit showing
                 that the moving party attempted to give notice and was unsuccessful. Unnoticed TROs
                 expire automatically in 10 days; noticed TROs can last longer.
             f. Notice constitutionalized in speech cases (Carroll v. President of Princess Anne).
             g. Thus need to both notice the  and demonstrate irreparable injury unless the TRO is
                 granted.
             h. Ordinarily, interlocutory orders are unappealable.
             i. TROs are unappealable usually on the theory that they are of such short duration that
                 they will expire prior to the time of appeal.
             j. Some exceptions to the rule of TRO unappealability such as the “capable of repetition
                 but evading review” doctrine.
             k. A TRO issued for an unlimited period of time, particularly pursuant to an adversarial
                 hearing, is to be construed as a preliminary injunction (Sampson v. Murray). To hold
                 otherwise is to insulate a lengthy or unlimited preliminary order by a trial court from
                 appellate review.
        3. Preliminary Injunction
             a. Granted just after an adjudication of merits
             b. A preliminary injunction is an in personam order granted prior to an adjudication on
                 the merits of the case.
             c. Courts are very wary of granting a prelim b/c (1) the nonmoving party’s due process is
                 highly attenuated due to the limited opportunity to prepare a defense; and (2) b/c of the
                 real possibility that the court will make a mistake.
             d. Preliminary injunctions, although interlocutory orders (i.e. granted prior to an
                 adjudication on the merits), are appealable under 28 U.S.C. §1292 (1988) (statutory
                 exception).
             e. The rationale of this statute is that orders granting or denying injunctions may do
                 irreparable harm before any appeal from a final judgment can be heard.
             f. Standard of review from Los Angeles Memorial Coliseum that he lower court must have
                 either abused its discretion or based its decision upon erroneous legal premises.
             g. Factors to look at for grant of a preliminary injunctions (see Coliseum)
        4. Permanent Injunction
             a. Granted after adjudication of the merits

                            – Remedies – Professor Channick – Spring 2000
                                                                                                                  12
                    b. In order to be entitled to a permanent injunction, the  must demonstrate remedial
                        ripeness, i.e. likelihood that he harm will occur, and irreparable injury, i.e. that the 
                        cannot be made whole w/ substitutionary relief, namely damages.
               5. Los Angeles Memorial Coliseum Commission v. National Football League
                    a.  sought preliminary injunction to stop NFL from imposing its bylaws which  claims are
                        unlawful and prevent  from obtaining Raiders
                    b. Preliminary Injunction (balanced against ’s due process)
                             1) Strong likelihood of success on the merits
                             2) Possibility of irreparable injury to  if preliminary relief is not granted
                             3) Balance of hardships favoring the ; and
                             4) Advancement of the public interest
                    c. There has been no adjudication on the merits as to whether NFL has broken the law,
                        thus the courts are hesitant to grant the preliminary injunction and have discretion to
                        do so
                    d.  could only show monetary loss and not irreparable harm
               6. Coyne-Delany Co. v. Capital Development Board
                    a. General rule is interlocutory orders are not appealable but preliminary injunctions are the
                        exception
                    b. Injunction Bond – only way  can get relief if a TRO is erroneously granted; used b/c there
                        is no where to recover damages if there is no bond
                    c. Generally speaking a non-moving party that is injured b/c of an erroneous grant of a
                        preliminary injunction can only recover for the amount of the bond
                    d. FRCP 65 (c) requires the triggering of the injunction bond to pay the damages of any
                        party “wrongfully enjoined or restrained.”
                    e. The moving party posts an injunction bond in the amount of anticipated damages to the
                        nonmoving party in the event of an erroneous grant of the prelim. The bond is just a
                        surety agreement. The moving party’s liability is generally said to be limited to the
                        amount of the bond.
                    f. Policy
                             1)  knows how much is at risk and may not have decided to proceed otherwise
                             2) On appeal  can appeal the amount of the bond
               7. Carroll v. President of Princess Anne
                    a.  got ex parte TRO (no notice) restraining white supremacist group from rallying for 10 days;
                        court later issued 10 month injunction
                    b. In the absence of a showing of impossibility, ex parte (w/o notice) abridgements of First
                        Amendment rights are improper
                    c. Can appeal a TRO if its capable of repetitionexception to mootness
               8. Sampson v. Murray – TROs are appealable
                    a.  fired and claims denied procedural due process and now wants TRO;  cannot show harm
                        would be irreparable b/c if  prevails, the claimant will be vindicated;  given TRO that was
                        later extended indefinitely
                    b. A preliminary injunction is improper in a wrongful discharge suit. It is in basic equitable
                        relief that legal remedies must be inadequate. Wrongful termination can lead to lost income,
                        which is compensable at law
                    c. TROs are not appealable b/c of short duration, thus when extended longer they should
                        be treated like preliminary injunctions that are appealable
               9. Granny Goose
                    a. An adverse party is not in contempt of a TRO once the TRO has lapsed (i.e. expiration
                        of 10 days) and thus cannot be held in contempt
IV.   Declaratory Judgments
      A. General
               1. Constitutional doctrine
                    a. Courts do not render advisory doctrines
                    b. Asking court for an adjudication not action induced relief

                                   – Remedies – Professor Channick – Spring 2000
                                                                                                                    13
                2. Used when there is an ambiguity in the law b/w the parties, the parties will step in and give an
                    opinion
                3. Courts must conform to threshold issue of ripeness, whether the action has a case in controversy
                4. Declaratory judgments unlike injunctions are impliedly coercive where as injunctions are expressly
                    coercive
                5. You never see language of irreparable harm in declartory relief cases. П does have to meet
                    irreparable injury, just case and controversy
                6. Courts have jurisdiction to issue declaratory judgments only where the plaintiff has met the
                    Article III, §1 requirement of “case or controversy”. Absent such a showing, the court lacks
                    the jurisdiction to grant a remedy.
                7. The complainant must assert rights which are challenged by the defendant and must present
                    an actual controversy capable of final adjudication.
                8. Classically, declaratory relief actions are characterized by a plaintiff put in the position of
                    having to choose b/w giving up what it believes to be a valuable right or asserting that right
                    and accruing damages or unpaid taxes.
                9. It is common wisdom that courts will not render a merely advisory opinion.
                10. Justiciability argument that harm will cause continuous injury to the complainant, an injury
                    which will require a multiplicity of lawsuits to remediate w/ damages that are speculative and
                    difficult to calculate. If a use is only proposed and there is no showing that an injury will
                    constitute a harm (only that it might, justiciability has not been satisfied.
                11. In Cardinal Chemical, the Supreme Court seems to make clear that a plaintiff will sustain its
                    justifiability burden if (1) ’s conduct creates a reasonable apprehension in  that  will
                    initiate a patent infringement lawsuit, and (2)  has a true interest to be protected by the
                    declaratory judgment.
     B.   Nashville, Chattanooga & St. Louis Railway v. Wallace
                1. The action must demonstrate that a court’s grant of the declaratory judgment would terminate the
                    uncertainty or controversy giving rise to the action
                2. Injured party should not have to choose b/w two negative alternatives
                3. Ripeness – Federal courts may issue declaratory judgment when an actual controversy exists
     C.   Cardinal Chemical Co. v. Morton International – Patent case
                1.  owned patents and filed suit against  for infringement and  counterclaimed for a declaratory
                    judgment that patents were invalid
                2. A finding of one claim in one case doesn’t necessarily moot the finding of a claim in another case
                    b/c both are considered independent claims
                3. Courts may not refrain from deciding a counterclaim for declaratory judgment regarding the
                    validity of a patent infringement cases
                4. In patent law, a party seeking to use a particular technology but uncertain as to whether its
                    technology infringes on existing patents is often put to the choice of using its technology and
                    subjecting itself to damages for patent infringement or, alternatively, either forgoing the right
                    to use its technology or unnecessarily paying a licensing fee to the patentee.
     D.   Hand v. Hand-Hudson-Reformation is a form of declaratory judgment that’s available under certain
          circumstances
     E.   Newman Machine Co. v. Newman-Quiet Title and declaratory judgment

V.   Restitution
     A. General
               1. Restitution is not damages. Its not meant to be compensatory. The measure of restitution looks at
                  Δ’s gain, not the П’s loss.
               2. The victim recovers to prevent unjust enrichment to the infringing party
               3. A court will allow  to recover restitution when  is otherwise unjustly enriched, and  has a choice
                  to recovery damages or restitution
               4. In restitution you are not limited by K price
     B. Preventing Unjust Enrichment
               1. Olwell v. Nye & Nissen Co.
                    a.  had egg washing machine and  started using it w/o permission
                                   – Remedies – Professor Channick – Spring 2000
                                                                                                      14
     b. When more than one cause of action is present and  was unjustly enriched by more
        than ’s damages,  is given the choice of substitution of remedy b/c  was unjustly
        enriched
             1) When ’s gain exceeds ’s damages then  can choose between two recoveries (i.e.
                 conversion via tort or restitution via K)
     c.  is ordinarily entitled to recover damages in conversion (measured by loss to the  and
        FMV of the item converted or rental value); However this can be waived and  can see
        recovery for restitution, which is measured by the profits  received as a result of the
        wrongful use of ’s property
     d. Generally courts permit ’s to waive the tort and sue in assumpsit for restitution where
        the ’s restitutionary recovery exceeds his damages recovery. Must still demonstrate
        unjust enrichment.
     e. Policy
             1) As a matter of normative conduct, the law wants to prevent intentional conduct
                 against the property rights of another by using the deterrent of unjust enrichment (not
                 a punitive damage)
             2) Further  mad a conscious and willful choice to convert ’s property thus his profits
                 are unjust
2. Maier Brewing Co. v. Fleischmann Distilling Corp.
     a.  intentionally manufactured beer under ’s label
     b.  is entitled to restitutionary recovery of the profits gained by  as a result of ’s the injury
             1) Reputation of the product label
             2) Consumer association based on label
             3)  profited as a result of infringing on a trademark that has reputational value
     c. Where the Δ has not competed with П’s product, but only traded improperly on the П’s trade
        name, the only kind of remedy possible is RESTITUTION. There are no damages to recover-
        there are no measurable losses to the P.
             1) Only way to deter Δ’s in this kind of situation is to allow restitution
     d. Accounting for profits –An equitable remedy
             1) A demand made by the court on the Δ to account for all the profits the Δ has made
                 through its infringement.
             2) П is entitled to this money. Acts like a money judgment
             3) A restitutionary remedy which looks to ’s gain to calculate the remedy but does not
                 treat the gain as if it were ’s property
             4) Doesn’t require the identification of a particular asset. The court isn’t ordering the D
                 to return to the П this particular asset, but rather to pay the П that amount of profits
                 out of the Δ’s general profits
             5) Gives  an in rem money judgment based on ’s profit
     e. Policy
             1) The restitutionary remedy encourages infringers to practice voluntary
                 transactions (i.e. license or royalty to use the label) where  has a lack of choice
                 in his conduct and thus cannot be held liable for restitution
             2) In order to discourage infringement of trademarks, trademark holders are
                 entitled to the restitutionary remedy of accounting for profits w/o any showing
                 of direct competition.
3. Snepp v. United States – constructive trust
     a.  published book about CIA w/o getting prepublication clearance as required by employment
        K
     b. Constructive Trust is an in personam order requiring the  to turn over certain
        property titled in the name of the  to the  (is an in personam order requiring a  to turn
        over proceeds (fictional trust) to rightful owner ( is fictional trustee and  is fictional
        beneficiary))
     c. In order to be entitled to a constructive trust remedy, the  must demonstrate
             1) ’s bad act
                    – Remedies – Professor Channick – Spring 2000
                                                                                                                15
                     2) Identifiable Res which results in ’s loss (that as a result of the act,  has
                         property that would otherwise be s); and
                     3)  can trace loss to ’s wrong and show property should be ’s if not for the ’s
                         wrongdoing
             d. Policy
                     1) Even if  was not unjustly enriched, policy weighs the deterrence of breaching
                         national security heavier, thus policy dictates doctrine
                     2) Punitive damages are not as efficient as constructive trust b/c may require
                         government to disclose confidential information in order to prove their case
                     3) A constructive trust does not make sense here b/c  did not own the property first
             e. CT makes you a preferred creditor
                     1) a valuable remedy when the Δ is insolvent and the П “but for the constructive trust”
                         would simply be a creditor of the Δ and stand in line with all of the Δ’s other
                         creditors. A constructive trust remedy makes you a PREFERRED creditor. It’s a
                         remedy that runs exactly counter to the principles of bankruptcy.
C. Measuring the Benefit – Apportioning Profits
       1. Sheldon v. Metro-Goldwyn Pictures Corp.
             a.  claims  infringed on his copyrighted play
             b. ’s profits are apportioned pro rata so that  can received those profits that resulted
                 from ’s infringement and  can keep profits resulting form his own effort, otherwise it
                 would be punitive to require the  to disgorge all profits made on the enterprise.
             c. s are entitled to demonstrate that only a portion of profits are attributable to the
                 improper conduct and that some portion of the profits are attributable to the legitimate
                 activity of the s.
             d. In apportionment cases, courts treat ’s gains as a commingled account and awards  an
                 allocable share via separation of profits; This assures the injured party all that justly belongs
                 to him
             e. Apportionment
                     1) Δ’s burden to demonstrate this apportionment
                     2) If d doesn’t raise the issue or fails to demonstrate apportionment, means the П is
                         entitled to ALL net profits.
                     3) To sustain the burden of proof, cts. like to see:
                                a) that Δ has negotiated with the П
                                b) Δ has not bypassed the market
                     4) Can value ’s efforts by looking at the FMV of the script
             f. Calculations
                     1) How Certain? SC says that the certainty need to which Δ proves the amount of its
                         contribution doesn’t have to be absolute. Just “Certain Enough”
D. Deducting Expenses
          1. Hamil American v. GFI
              a. Held-Δ can deduct some of its expenses in making this
              b. Overhead Expenses can be deducted
                        1) Δ can deduct overhead expenses from the net profits. Overhead expenses are
                           expenses that Δ needs to run the business regardless of the volume of your
                           production.

                        2) Two part test
                               a) Δ has to show that the se overhead expenses have a nexus to this
                                  production in this particular case and then
                               b) The Δ has to show how much the appropriate allocation of the general
                                  overhead expenses to this particular production




                              – Remedies – Professor Channick – Spring 2000
                                                                                                               16
                                 c) If Δ can show this, П gets all the profits
             c. General Expenses-ct. disallowed them on the theory that they would have incurred them
                 anyway.
E. Measuring the Benefit – Rescission
       1. Mutual Benefit Life Insurance co. v. JMR Electronics Corp.
             a. JMR bought life insurance for their President but failed to disclose he was a smoker
             b. Rescission treats K like it never exited
             c. A K for life insurance can be rescinded after misrepresentation is discovered as long as
                 the premiums are paid back to the insured to avoid unjust enrichment of the insurer
             d. Rescission is an equitable restitutionary remedy, equitable b/c it takes the form of an in
                 personam order that cancels the transaction, and restitutionary b/c it specifically
                 restores to each party the benefits exchanged pursuant to the original transaction.
             e. Policy
                     1) If allow material misrepresentations to go unpunished, then people would have
                          nothing to lose by making misrepresentations
             f. Ct. says this is not a case for reformation, this is a case of where if the injured party wants
                 recission and can prove
                     1) Prove grounds for recission
                     2) And make restitution, that’s it, the K is gone. End of story.
             g. Risk Allocation-you don’t get to re-write risks after the fact
       2. Cherry v. Crispin
             a. House sold w/ termites and cost to exterminate was $1500, however rescission was sought
                 and buyers got back $ and seller got back the house
             b. Even though there may be a reasonable remedy other than rescission, the risk is
                 improperly falling on the  if you require the  accept damages (i.e. hard to determine
                 loss in value of home b/c of termites)
             c. Rescission is not an automatic right, rather it is used only when it would hurt  more to
                 do otherwise
             d. Rescission and restitution may allow a  to get out of a bad bargain.
       3. Farash v. Sykes Datatronics
             a.  makes improvements after  agrees to rent the building;  never rents and it is determined
                 no K ever existed b/ violates statute of frauds (oral over 1 year); thus  cannot recover in K or
                 promissory estoppel (not recognized in NY)
             b. Quasi-K is a K implied by law and can be used gain a restitutionary remedy for unjust
                 enrichment
                     1) Promisee who partially performs at a promisor’s request should be allowed to
                          recover the fair and reasonable value of the performance rendered, regardless
                          of the enforceability of the original agreement
                     2) Regardless of recovery used (restitution here) the court believes it is fair for  to
                          recover and thus creates a quasi K to do so
                     3) Here used in lieu of promissory estoppel b/c it is not available
             c. Losing K where the K is enforceable but the party doing the work has spent far more than the
                 KP by the end of performance (lose money)
                     1) If there is no breach, the losing party can only take the KP
                     2) However, if there is a beach, the non-breaching party can recover in restitution and
                          take the amount he actually spent even though the K price would have been less
                     3) Policy is unjust enrichment, thus the party can recover the KP plus any amount spent
                          over K price
             d. No benefit to Δ-He never moved in the apartment
                     1) The ct says the lack of benefit doesn’t matter. All that П has to do is show that he’s
                          had a loss based on reliance. The benefit is that its enough that the П relied. The
                          court fictionalizes the benefit.
                                 a) Normally, you cant recover in reliance where the K is unenforebale and
                                     there is no benefit to Δ

                              – Remedies – Professor Channick – Spring 2000
                                                                                                            17
                                 b) He couldn’t sue in restitution b/c there was no benefit to Δ so sued in
                                     reliance
              e. This rule of Farash works as long as the П doesn’t try to recover anything in excess of
                 reliance. That is, where reliance and restitution are EQUAL to each other, the П doesn’t have
                 to show a gain to the Δ in order to be able to recover in restitution.
        4. Glendale Federal Bank v. US
              a. Rule-In breach of K cases, unless the breach is profitable and/or opportunistic, the П’s
                 measure of restitution can’t be greater than the Δ’s non speculative gain an usually CAN
                 NOT exceed RELIANCE
        5. Election of Remedies
              a. In rescission cases you do not have to elect a theory of recovery at the beginning, however at
                 some point in time you must choose a remedy
              b. Viable in three situations (p. 593 ?????????)
                      1) Where double compensation of the  is threatened; or
                      2) The  has actually been misled by the ’s conduct; or
                      3) Res adjudicata can be applied
F. Tracing ’s Benefit – Restitution and Insolvency
        1. Insolvency
              a. Whenever there is insolvency, ask if you can get a constructive trust
                      1) Cannot receive a constructive trust unless the property belonged to the  in the first
                          place (problem is cannot explain Snepp)
              b. Ask if  has commingled ’s assets w/ other assets and if so if there is an identification
                 problem
        2. Hicks v. Clayton
              a. Victims were cheated out of their property (identifiable res) and are seeking its return
              b. Where there is a breach of fiduciary duty,  is allowed relief, however if the  is
                 insolvent a legal remedy is adequate and thus court grants constructive trust
                      1) In a constructive trust the beneficiaries are treated as owners of the property
                          rather than creditors and therefore take preference over other creditors in
                          recovering from an insolvent 
                      2) Assumption that home was never an asset of  (fiction) and belongs to , thus the
                          home must be taken out of ’s bankruptcy estate
                      3) This is done b/c of the compelling interest s have in a home fraudulently taken from
                          them
              c. Constructive Trust elements
                      1) In order to get a constructive trust you need to have a wrongful act on the part of Δ
                          AND
                      2) П must be able to race the asset (show that the asset would have belonged to the П
                          but for the bad act of the Δ)
        3. In Re North American Coin & Currency Must have wrongdoing by Δ to get a constructive trust
              a. s invested in ’s company in two week period before bankruptcy and  placed their money
                 in a special trust account to protect investors
              b. A particular class of s will not have any preference in recovery from an insolvent  w/o
                 some distinguishable characteristic from other creditors
              c. Need to have a compelling reason (wrongdoing) to prefer certain creditors from others
              d. There is no preference for this “victim” b/c there was no intent to deceive s (fraud) so they
                 should not be treated differently from those who invested in s company one day earlier
        4. In Re Erie Trust Co. – Commingled Accounts & Tracing
              a. Insolvent bank acting as a fiduciary takes a commission before it is entitled to and thus
                 breaches its fiduciary duty
              b. Damages are no good when a  is insolvent, thus a constructive trust is the appropriate
                 remedy and allows the  to be preferred over other creditors
              c. When the res is difficult to determine b/c of commingled assets, the res must be traced
              d. Fictional Tracing

                             – Remedies – Professor Channick – Spring 2000
                                                                                                              18
                       1) When the restitution has been commingled with the Δ, the П is required to race in
                           order to be able to get a constructive trust imposed over certain assets. It is only
                           when there’s been commingling that tracing fictions are usually required
             e. Tracing Presumption
                       1) If assets are commingled there is a presumption that the wrongdoer spends
                           (withdraws) his own money first and a proportion of what is withdraw and what is
                           left belongs to the  or  can get a lien to secure his claim
             f. Lowest Intermediate Balance Rule
                       1)  can use any account where  deposited money and then use the lowest level of cash
                           and cash items
                       2) Helps when money deposited into a large financial institution with thousands of
                           accounts
             g. If wrongdoer invests, he invests on behalf of the victim
                       1) If victim can show that after money was taken and deposited,  purchased w/ cash or
                           cash equivalents securities/mortgages, then victim can go after that as well
             h. If wrongdoer lawfully deposits (subsequent to the commingling), that deposit belongs to
                  the wrongdoer
        5. Rogers v. Rogers (missing)
             a. Tracing from Third Parties
                       1) Tracing rules are relaxed in exception circumstances
                       2) One does not have superior rights to a constructive trust where there is no notice and
                           no consideration
                       3) First wife is entitled to a constructive trust b/c where parties in a confidential
                           relationship make a promise, and the promise was breached, the party who was
                           supposed to benefit by the promise can invoke restitution and get restitution in
                           order to prevent the unjust enrichment
                       4) This case is a stretch for restitution b/c tracing is a problem here
                                  a) 2nd wife has been unjustly enriched but is not a wrongdoer.
                                  b) Husband was a wrongdoer and his wrong gets transferred to third party (2nd
                                      wife)
                       5) Ct is compelled to make this decision b/c
                                  a) 1st wife gave up good consideration for this K AND
                                  b) 2ND wife paid no consideration to be 3rd party beneficiary of the K
        6. Robinson v. Robinson
             a. Enrichment is not unjust if the benefit was done voluntarily (defense to restitution)
                       1) However, one who builds on the property of another has no remedy, except where the
                           landowner knew he was building and did nothing
             b. An equitable lien is wanted when the value of the thing you are tracing has decreased so
                  that it does not cover your loss
                       1) Money judgment secured by the thing you can trace with
                       2) If property securing money judgment isn’t enough money to pay money judgment,
                           the victim will be presumed as a unsecured creditor like all other creditors for the
                           portion not covered
G. Subrogation – gives standing to bring a cause of action b/c otherwise unjust enrichment
        1. General
             a. Legal subrogation is an equitable restitutionary remedy where a party who is not the real
                  party in interest seeks to be compensated for a loss based upon the possible unjust enrichment
                  to a party in interest
             b. “Conventional” or Contractual subrogation (insurance)
             c.
        2. American National Bank & Trust v. Weyerhaeuser Co. – Legal Subrogation
             a.  works for the Board and  wanted to purchase Board’s stock and the Board told  to sell
                  but box accidentally marked saying not to sell if  can’t buy all stock and thus  did not buy;
                   felt compelled to voluntarily purchase Board’s stock b/c they are an agent of Board and lost
                  $70K selling it on the open market;  wants recovery from  or Board
                             – Remedies – Professor Channick – Spring 2000
                                                                                                                   19
                    b. Legal subrogation gives  standing even though not a party to the K (interested party)
                    c. Elements to satisfy legal subrogation
                             1) The claim or debt under which the subrogee asserts his rights must have been
                                  paid in full
                             2) The subrogee must have paid a claim or debt for which a third party, not the
                                  subrogee, is primarily liable either in law or equity
                             3) The subrogor (Board) must possess a right which he could enforce against a
                                  third party and that the subrogee seeks to enforce the subrogor’s right (enforce
                                  against the third party so that the subrogee is simply stepping in the shoes of the
                                  subrogor)
                             4) The potential subrogee must have acted as a “volunteer” in paying a claim of the
                                  subrogor properly lying against a third party
                                        a) If the subrogee is compelled to pay the claim for the protection of his own
                                            interest and rights, he is not a volunteer (ANB court)
               3. Welch v. Kosasky
                    a. Thief broke into home and stole silver which was later purchased by  who should have
                         known was stolen;  alters silver
                    b.  has a choice between conversion and trespass and court allows her to waive the tort and sue
                         in assumpsit
                    c. There really is no unjust enrichment however court allows remediation by using unjust
                         enrichment as the basis of liability
                    d.  can recover for loss of use of property (conversion) and diminution in value measured by
                         the difference in value at time converted (not versus time returned) and consequentials
VI.   Punitive damages
      A. General
               1. Money awarded in addition to compensatory damages
               2. Used to punish the  for willful, wanton, or malicious conduct and to deter such conduct by the
                   and others
               3. The purpose of punitive damages is to punish the  who has been guilty of malice.
               4. Factors.
               5. Malice can include both evil motive and reckless disregard of the probability that the actor’s
                  conduct will result in injury to others.
               6. Punitive damages are assessed based on the reprehensibility of the ’s conduct, the wealth of
                  the , the relationship to compensatory damages, and the amount necessary to deter this 
                  and others similarly situated.
               7. Some jurisdictions will not award punitive damages unless the  recovers compensatory
                  damages.
               8. If  elects restitution b/c compensatory damages are too difficult to prove or not as great as
                  restitution would be, he may not be entitled to punitives since restitutionary relief is intended
                  to have a deterrent effect in itself.
               9. As a matter of comity, punitive damages could be assessed based only on the harm that
                  occurred in the jurisdiction (BMW v. Gore).
      B. Grimshaw v. Ford Motor Co.
               1. Punitive Damages must hurt and motivate the 
                    a. Punitive damages force the  to internalize the costs of what they have done and to make sure
                          is not motivated to prevent a harm if it is cheaper to pay for the harm
               2. Factors to satisfy doctrine of punitive damages
                    a. Need to act badly (reckless disregard that product will cause great bodily injury)
                    b. Jury instruction is not prejudicial to 
                    c. Malice is needed (includes conscious disregard)
               3. Standards to consider with jury instructions to get an appropriate award
                    a. Direct relationship
                             1) There needs to be a direct proportional relationship b/w amount of punitive damages
                                  and actual damages

                                   – Remedies – Professor Channick – Spring 2000
                                                                                                                       20
                       b. Wealth of 
                                1) Important b/c this information will help to show what amount will hurt w/o putting
                                    them out of business
                       c. Reprehensibility of the Conduct
                       d. Punitive Damages are Sufficient to Deter
                       e. Relationship b/w punitive damages and state fines/regulatory mechanisms w/ regard to
                           the kind of harm
       C. BMW v. Gore
                 1. Constitutional limits to punitive damages will stop a  from claiming an injury outside of the
                    jurisdiction deciding the case
                 2.  did not satisfy the reprehensibility requirement b/c there was no willfulness or serious deception
                    yet court allows punitive damages for nondisclosure of repainted cars in the jurisdiction of the court
       D. Transcontinental Gas Pipe Line Corp. v. American National Petroleum Company
                 1. There are not punitive damages in K, but there are in tort
                       a. Exceptions – bad faith, intentional
                       b. However need to show that tort caused some kind of damage (actual) in order to get punitive
                           damages
                 2. In cases where there are there is an independent tort plus a breach of K, both claims are coextensive
                    and the independent tort is not sufficient to support a punitive award
                       a. Court overturned compensatory damages which there overturns the punitive damages
                       b.  did not seek compensatory damages in tort b/c limitation on liability clause not allowing
                           compensatory damages in breach of K
                 3. Policy
                       a. Pleading tort damages instead of pleading K to avoid duplicative, allows non-breaching
                           party to get around a clause that both parties agreed on (limit on liability)
                       b. Courts hesitant of expanding the K
       E. Limitations on Punitive Damages
                 1. Need showing of willfulness
                 2. If there is a breach of fiduciary duty courts prefer constructive trust not punitive damages
                 3. Need an independent tort from K cause of action
VII.   Ancillary
       A. General
                 1. Authority of the court to hold the sanctity of the law
                 2. Two types
                       a. Direct – broad powers to find the contemnor in violation of things w/in the court
                       b. Indirect – broad powers to find the contemnor in violation of things outside the court
                 3. Civil vs. Criminal
                       a. Civil contempt – purpose of sanction is to coerce the compliance of the contemnor or
                           compensate the moving party
                                1) If the contempt is civil, the contemnor need not be afforded all constitutional
                                    criminal protections such as right to a jury trial or reasonable doubt burden of
                                    proof.
                                2) Civil contempt sanctions are within the control of the contemnor, thus the
                                    contemnor holds the “keys to his own jail cell.” Bagwell
                                3) At a civil contempt hearing, the contemnor may raise the constitutionally of the
                                    injunction as a defense to its contumacious conduct; the collateral bar rule
                                    doctrine does not apply to civil contempts.
                       b. Criminal – purpose of sanction is to punish past offense
                                1) If the contempt is criminal, the contempt hearing must provide constitutional
                                    criminal protections such as right to a jury trial or reasonable doubt burden of
                                    proof, otherwise a finding of criminal contempt is subject to reversal.
                                2) If the contempt is criminal, the constitutionality of the order must be attached
                                    directly on a motion to modify or dissolve the injunction.
                                3) Collateral bar rule applies at criminal contempt hearings. Walker


                                     – Remedies – Professor Channick – Spring 2000
                                                                                                                   21
         4. If the contempt is to punish and the contemnor is entitled to a jury trial; if the purpose is to coerce it
              is civil the contemnor must pay damages
         5. Contempt is the remedial method by which courts enforce in personam orders. Parties who
              fail to comply with an in personam order are subject to the contempt powers of the court
              which include punishment, coercion, and compensation.
         6. Indirect contempts are contempts that occur away from the presence of the court, require a
              hearing in order to determine whether the order has been violated or whether the contemnor
              had a defense for non-compliance
         7.
B. Contempt – Enforcing the Judgment
         1. Contempt – International Union, United Mine Workers v. Bagwell
                 a. Procedure
                          1) Injunction granted;  violates and in contempt; Order to show cause hearing saying
                              why should not be held in contempt; Court will rule civil or criminal contempt;
                              appeal; uphold or vacate
                 b. Anytime you can control your sanction, it is civil
         2. Contempt – Walker v. City of Birmingham
                 a. Collateral Bar Rule
                          1) Cannot purposely violate an injunction b/c claim it is unconstitutional and later
                              collaterally attack the injunctions constitutionality at the contempt hearing
                          2) You cannot collaterally attack the validity of an injunction at a criminal proceedings
                              for contempt
                 b. Exception to Collateral Bar Rule
                          1) If injunction is so facially unconstitutional (any fool would know) and can raise th2is
                              at your contempt hearing
                          2) If court issuing injunction lacks SMJ this is an exception to the collateral bar rule,
                              thus can attack at contempt hearing on basis of lack of jurisdiction (dissent)
                                     a) Why is this an exception but unconstitutionality is not
                          3) Attempted to do the right thing and prevented by courts which appear to be totally
                              frivolous; want to do the right way but rebuffed thus only thing could do is to violate
                              and then attack collaterally
                 c. Alternative
                          1) Motion to modify – contemnor can move b/c too broad, vague or unconstitutional
                          2) Motion to dissolve
         3. Contempt – Catena v. Seidl
                 a.  would not rat on friends and was in jail for 5 years
                 b. There must be a substantial likelihood that the coercive measure will accomplish the
                     purpose of the order to which the coercive measure was based
                 c. Will cross the line to punitive if no more likelihood of coercion
                 d. Contemnor has the burden of showing that there is no substantial likelihood of coercive
                     measure
         4. Collecting Money Judgments – Credit Bureau of Broken Bow v. Moninger
                 a. Unless do something to create superior rights a creditor must stand in line w/ everyone
                     else
         5. Collecting Money Judgments – Dixie National Bank v. Chase
                 a. Where bank fails to follow procedures of garnishment, they will be liable for their negligence
                 b. Bank is liable for the amount the creditor would have been entitled to if not for the
                     negligence
C. Litigation Expenses
         1. General rule – each party bears its own litigation expenses unless there is some reason to shift
              legal fees to the other party (no fee shifting)
         2. Exception
                 a. Common fund
                 b. Bad faith litigation
                 c. Contempt of court

                               – Remedies – Professor Channick – Spring 2000
                                                                                                                   22
                      d. K
                      e. Family law
                      f. Collateral exception
                      g. Private attorney general
                 3. City of Riverside – private attorney general
                      a. Attorney’s fees far outweighed ’s recovery but b/c of constitutional issue what is won is
                          more than money, but social justice thus justifies high attorney fees
                      b. Attorney’s fees can be larger than the damage award when need to deter bad behavior
                          and encourage good social policy (i.e. uphold civil rights)
VIII.   Defenses
        A. Unclean Hands
                  1. Equitable defense
        B. In Pari Delicto
                  1. Legal defense where  barred by own harm
        C. Unclean Hands
        D. Unconscionability
        E. Laches
                  1. Not brought case in timely fashion and unfairly prejudices  (equitable)
        F. Statute of Limitations
                  1. Legal defense where claim is barred after statutorily specified period of time
IX.     Separation of Powers
        A. Right to a jury trial if
                  1. Suit could have been brought at common law as 7th Amendment requires or
                  2. The claim is a legal one (nature of the remedy)
        B. Right to a jury trial is the only area of remedies law where there is not a complete merger of law and
           equity.
        C. Pre-merger, parties were entitled to juries in civil cases only where the 7th Amendment attached, i.e. “in
           suits at common law where the value in controversy shall exceed $20”. Suits brought in equity were not
           entitled to 7th Amendment protection.
        D. Modernly, in order to determine whether the parties are entitled to a jury trial, the courts look to both
           the pre-merger nature of the claim and of the remedy. Of the two, the remedy is the most important.
        E. If the claim is one that existed pre-merger, then its nature, legal or equitable is clear. If the claim did
           not exist pre-merger, courts will analogize to a modern post-merger claim.
        F. In federal court, right to a jury trial jurisprudence favors a broad grant of the right and may put a 
           who does not want the case to be tried to a jury to the choice b/w giving up a claim to damages or
           conceding a jury trial to the .
        G. Chauffeurs Local No. 391 v. Terry
                  1. If severable issues of law (jury) and equity (judge) then each get their own, but if non-
                      severable then goes to jury first and findings of jury are preclusive on the judge




                                     – Remedies – Professor Channick – Spring 2000

				
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