One high-scoring answer to the 2020 Remedies final exam.
I assume you understand that, like any other essay answer, this answer will have mistakes and
underdeveloped sections.
1)
The Showroom Causes of Action:
With the showroom, there are a multiple issues and possible causes of action that the parties have against
one another. In 2018, Fiona constructed the stand alone showroom about 50 yards away from her
factory. It cost Fiona about $1 million to build. The showroom was built on Gar’s land.
At that moment, Gar had a cause of action to sue Fiona for breach of the lease for violating Section 4. At
that time, however, Gar did not sue. Hero Health, however, did sue Fiona later in 2020 for the showroom
and the breach of the lease. As such, I will analyze this issue between Hero Health (HH) and Fiona, not
Gar. In Arlandria, the statute of limitations for breach of contract is 3 years. Thus, the statute of
limitations is no bar to HH bringing this action. Regarding the breach, Fiona has a defense that she did not
breach the contract and counter HH’s suit by asking for reformation of the contract. Reformation is an
equitable remedy where the court declares a contract modified so as to be consistent with the parties’
original intent and actual agreement. There are two grounds for reformation: (1) mutual mistake, as seen
in Castle where the parties accidentally conveyed the deed to include both the barn and the hayfield, and
(2) unilateral mistake induced by fraud, as in Hand. Here, Fiona has a strong argument that the contract
should be reformed because the parties made a mutual mistake. When entering the lease in 2005, Fiona
and Gar understood that Gar wanted an industrial park that that would be productive and profitable. Gar
hoped that Fiona’s robotics business would be a strong anchor to attract other similar businesses to
become tenants. As such, Fiona can argue that both she and Gar understood Section 4 to mean that she
only use the facilities for her robotics business, which, her showroom is directly related to. As such, Fiona
can argue that both her and Gar made a mutual mistake in not making that more clear in the contract and
that the lease should be reformed to reflect that original intent. If Fiona successfully argues that the lease
should be reformed, she is thus not in breach by building her showroom.
Even if the lease is reformed, there are still other issues left with the showroom. HH took the showroom
off the land and sold it to Tabitha. Like the owners of the government bonds in Newton, Fiona has a
cause of action against HH in conversion and Tabitha in conversion and unjust enrichment. First, Fiona
can sue HH in conversion for taking the showroom off of its foundations, towing it off of the land, and
selling it to Tabitha. HH, however, can argue that it did not commit the tort of conversion because the it
acquired property ownership in the showroom by arguing that it was a fixture to its land and that it
acquired it through annexation. This is similar to the argument that the property owner made in
Somerville. Like the mistaken improver in Somerville, however, Fiona can argue that she also is a
mistaken improver and that HH thus did not acquire ownership in the showroom. The mistaken improver
defense here is made in equity. To prove the mistaken improver defense, Fiona must show that she
placed the permanent improvement on HH’s land in a reasonable mistake of fact and in a good faith
belief that she owned the land. Because this is a defense in equity, the court has ample discretion in
examining the facts, balancing the equities, and choosing the remedy. Here, Fiona has a strong mistaken
improver defense. As discussed above, Fiona genuinely and reasonably thought that here showroom was
valid under the lease and that she could build it for her robotics business. A court looking at the facts of
the case will likely side with Fiona here. As such, if Fiona successfully argues the mistaken improver
defense, she can pursue her conversion claim against HH. HH committed the tort of conversion by
removing the showroom, taking it off the land, and selling it to Tabitha. Fiona’s remedy here would be in
restitution to get her showroom back. Because HH sold it to Tabitha, Fiona may want to seek a
constructive trust on the money that HH made from the sale ($1.5 million). A constructive trust is an
equitable remedy and the test to satisfy and obtain a constructive trust is outlined in Paoloni and Erie
Trust. Here, Fiona satisfies the first element in that HH committed a traditional equitable wrong, which
was conversion (just as in Erie Trust). Here, HH sold the showroom to Tabitha and made $1.5 million.
As in Erie Trust, Fiona can directly trace those profits to the original wrongdoing that occurred (the
conversion of the trust). If HH deposited that money in a bank account and commingled it with other
funds, Fiona can ask for a constructive trust over that money. Alternatively, if HH used that money to
purchase some other property, as in In re Mesa where the wrongdoers used the money to renovate their
house, Fiona may instead ask for an equitable lien on whatever the money from the sale to Tabitha was
used for.
Fiona can also sue HH for any property damage to the robots and personal property that it removed from
the showroom and returned to Fiona. This damage would be measured by the lesser of (1) diminution in
market value of the goods or (2) the repair/replacement costs of the goods.
In addition to the remedies above, Fiona may want to ask for punitive damages against HH. Punitive
damages are reserved for when a defendant behaves maliciously towards the plaintiff or acts with
reckless disregard of the plaintiff’s rights in a way that greatly harms the plaintiff. Here, Fiona has a
strong case for punitive damages. Even if HH genuinely thought that Fiona was in breach of the lease, it
didn’t even consult with here before demolishing the foundation and removing the showroom. Knowing
that Fiona built the showroom for her robotics business, it deliberately decided to remove it of its own
accord. This is especially egregious because it violated Fiona’s property rights, which are held as sacred
in our legal system. As such, a court will likely award Fiona punitive damages. Punitive damages,
however, are held to statutory and constitutional limits. Arlandria may have a set ratio for compensatory
damages to punitive damages or it may have a cap on punitive damages. Even then, the court will need to
follow the Gore guideposts (modified by Philip Morris) and be sure that it doesn’t set the punitive
damages as too excessive. Following State Farm, punitive damages that have a single digit ratio to the
compensatory damages are more likely to comport with due process. If they are excessive, HH will likely
appeal, arguing they are excessive under both state law and the 14th Amendment of the U.S.
Constitution.
Alternatively, Fiona could instead choose to pursue an action against Tabitha for conversion of her
showroom, however Tabitha will have a defense. Tabitha can argue that she is a good faith purchaser
and thus is not liable to Fiona for the purchasing the showroom. When assessing the good faith purchaser
defense, we must first ask if the good is a non-cash equivalent property or a cash or near cash
equivalent. Here, the property is the showroom, which is not cash. To successfully argue this defense,
Tabitha has to satisfy four elements that were described in Newton: (1) the property passed in a voidable
transaction, (2) the property was acquired via a purchase, (3) the third-party acquired the property in
good faith/without constructive notice, and (4) that the third party acquired it in exchange and paid fair
value for it. Here, the key element is whether Tabitha obtained voidable title to the showroom when she
purchased it from HH. HH knew that Fiona had built the property on its land, but it was not 100% clear
that it was HH’s property by annexation. As such, HH took and sold the showroom without knowing that
it was indeed there property. Thus, HH most likely passed on void title to Tabitha, not voidable title.
Tabitha thus likely cannot successfully argue the good faith purchaser defense. Fiona thus has an action
against Tabitha for conversion and unjust enrichment, for which here remedy is restitution. Because
Tabitha has the showroom, Fiona will likely want to obtain a constructive trust over the showroom. Fiona
can directly trace Tabitha’s purchase of the showroom to HH’s original wrongdoing of removing the
showroom. If Fiona decides to obtain a constructive trsut over the showroom, she may also want to
obtain an injunction against Tabitha so that she does not destroy or sell the showroom. To get an
injunction, Fiona needs to satisfy the four elements outline in eBay and Winter: (1) she is likely to
succeed
on the merits, (2) she is likely to suffer irreparable harm, (3) the balance of the equities is in favor of
Fiona, and (4) granting an injunction will not disserve the public interest. Fiona has already shown that
she
is likely to succeed on the merits. Satisfying the irreparable injury element will be easy because Fiona is
suffering from a property tort (conversion) and property injuries generally always inflict irreparable injury
(see Pardee). Further, the balance of the equities tips in Fiona’s favor. This is an affirmative injunction
that will be easy to administer and does not require Tabitha to do anything that will cause her undue
hardship, unlike in the Lord & Taylor and Whitlock). Lastly, granting an injunction here is in the public’s
interest because preserving and protecting property rights benefits everyone.
Fiona’s Other Claims:
Fiona may also want to sue Gar for his breach of the lease when he assigned the lease to HH. This case
is similar to Lord & Taylor, where the parties entered into the mall lease agreement with the intention of
running the mall continuously. The property owner intended L&T to be the anchor to attract new tenants
and L&T expected to have their business run continuously and supported by the rest of the mall. Here,
Gar expected Fiona’s business to be the anchor to attract new business and Fiona expected Gar to
create
a large industrial park. Thus, Fiona can sue Gar for breach of the contract for assigning the lease to HH,
who has a different purpose in mind. Here, Fiona would probably want to argue for specific performance
of the contract, which implicates Section 25 of the lease where Fiona waived her right to ask for specific
performance. The UCC recognizes that parties can specify and limit their remedies in contracts, most
often in disclaiming the right to consequential damages and outlining liquidated damages provisions, as
done in this contract. When reviewing limits on a party’s remedies, courts will enforce terms so long as
the term is not unconscionable and there are at least minimum adequate remedies available to the buyer.
Fiona can argue that this express waiver is unconscionable and that she doesn’t have adequate
remedies
at law to recover for this breach (the facts show that the liquidated damages provision will not cover all
of Fiona’s losses. However, the facts reveal that the provision was “bargained for” so the court will likely
enforce it. Additionally, a court will likely enforce the provision because allowing the remedy of specific
performance here would not only cause undue hardship to Gar, but it would also be infeasible on the
court. Again, this case is very similar to Lord and Taylor and the court in this case does not want to force
Gar to continue running an industrial park that is not that profitable, nor does it want to continuously
watch over to ensure that Gar is performing. Fiona, however, could argue that this case is different from
Lord and Taylor in that the industrial park is not in economic ruin like the mall was, but that it is simply
just not as profitable as Gar expected, which is not a reason to breach. However, I think a court will likely
enforce this clause and leave Fiona to her remedy at law.
Next, Fiona can argue that her liquidated damages from the breach re not enough and thus ask for
consequential damages. Gar could argue that the liquidated damages clause is unenforceable and thus he
owes nothing to Fiona. There are four different tests to review liquidated damages clauses: (1) the
disfavoring penalties test, (2) the shock the conscience test, (3) the restatement test, and (4) the
unconscionability test. Courts divide over whether to review liquidated damages ex post or through an ex
ante perspective. Regardless of which perspective or which test the court in this case uses, the liquidated
damages clause here will likely be upheld. The parties both wanted a liquidated damages provision and
they both bargained for this. This is not a penalty, nor does it unduly favor one party. Further, the
liquidated damages clause here is not grossly excessive, as it does not even cover all of Fiona’s losses.
As such, a court will likely enforce the liquidated damages clauses here.
Because the liquidated damages clause does not cover all of her losses, Fiona can argue that she is not
put back in her rightful position as remedies law aims to achieve (Hatahley). Thus, Fiona can argue that
she deserves consequential damages for Gar’s termination of the lease. This case is similar to Buck v.
Morrow. In Buck, the parties contemplated that the lease may terminate in the future. The parties
outlined a remedy for that, but the tenant still had difficulty finding a pasture for his cattle. As a result he
lost some cattle and had to hire extra hands. The court allowed the tenant to recover those consequential
damages because they are reasonably foreseeable, especially when a lease terminates suddenly.
Similarly, Fiona is suffering consequential damages in that now she has to find a new place for her
factory. Fiona did find a new place and it is costing her a rent increase in $4 million. Fiona can argue that,
like the tenant in Buck, her consequential damages are foreseeable and proximately result from Gar’s
termination and will put her in the rightful position. Gar could try to argue that Fiona did not fully
mitigate
her damages, but that will likely fail because Fiona made a good faith and reasonable attempt to mitigate
her damages by finding a close and ready to made facility. Fiona may also want to argue for punitive
damages too.
Lastly, in the alternative, Fiona can argue for disgorgement of Gar’s profits of $14 million for terminating
the lease and selling the property to HH. As in May v. Muroff, Gar breached opportunistically knowing
he would get a windfall from the sale. Thus, Fiona can sue for disgorgement. Because disgorgement is an
equitable remedy in restitution, however, Fiona cannot recover both compensatory damages and
disgorgement (no twosies). Fiona will therefore have to choose here remedy.
Hero Health’s Claims
Actio1n. Against Fiona for the Sign Damage
HH can sue Fiona for breaching the lease when she altered the landlord’s signs and fixtures. HH,
however, may also want to sue for dignitary damages and punitive damages as well. Dignitary damages
are reserved for plaintiffs when the defendant treated you in an undignified manner, as in Alcorn and
Levka. Here, Fiona acted deliberately in writing on the sign and damaged HH’s reputation. The dignitary
damages, however, must not be execssive; they will be reviewed on whether the shock the conscience
and compared to damages in similar cases. Alternatively, HH could seek punitive damages for Fiona
acting reprehensibly. Lastly, it is important to note that this case is similar to Willing where the lady
demonstrated against here lawyers. HH cannot obtain an injunction against Fiona to stop here form
saying bad things about HH because, udner Willing, that would be contrary to the freedom of speech
protected by our Constitution and against the public interest. If Fiona continues to do actions like this, HH
can sue for defamation and continue to pursue dignitary and punitive damages.
Actio1n. for Fault Line Damage
Hero Health also has cause of action against Built-It for the damage it caused to the fault lines of the
property. HH’s cause of action is in property, so HH’s compensatory damages would be the lesser of (1)
the diminution in the market value of the property or (2) the repair cost to fix the fault lines. HH could try
to argue that its lot fits the special property exception and obtain the repair cost if it is higher than the
diminution in market value. HH probably will not succeed in making that argument however because the
special property exception is usually preserved for properties that have a unique value to the owner and
thus no market value, like the church in Holy Trinity or hospitals. Here, however, the property is a vacant
lot that does have some market value to it. HH can also ask for consequential damages. Here, Gar
expected to sign a lease for the lot with another tenant, and expected to make $1.5 million on that lease.
To get consequential damages, HH would have to prove that Built It’s shocks and creation of the fault
line was both the but-for and proximate cause of the damage resulting in it not being able to lease the lot
to the new tenant.
In bringing this suit, however, Built It has a strong statute of limitations defense. The statute of limitations
for property torts caused by negligence is six years. Built It caused this damage in 2006. Thus, HH and
Gar had to have brought their suit by 2012, but it is now 2020. To counter that defense, HH can argue
that the discovery rule applies because it the fault line damage was latent, therefore making it impossible
to know about it until HH did its investigation. Under the discovery rule, as described in Debiec, the
statute of limitations is tolled until P knows or reasonably should know that (1) he has been injured or (2)
that his injury has been caused by another party’s conduct. This is an objective test, meaning courts
examine the facts to see when a reasonable person should have known about the injury. The burden here
is on HH and Gar to show that it exercised its due diligence. As shown in Debiec, this test relies heavily
on the facts of the case and his heavily litigated. Here, Built It has a strong argument that HH and Gar do
not satisfy the discovery rule and that there suit is thus time barred. In 2006, Magnus sued Built It in strict
liablity for ultrahazardous activity and for nuisance. At that time, Magnus also sued Gar. While the fact
pattern does not state explicitly that Magnus knew about the shocks, it is reasonable to assume (and Built
It can argue here) that Magus’s suit against Built It put Gar on notice about the shocks. If there was
damage to Magnus’s property, Built It can argue, then Gar was on constructive notice that there might
be
damage elsewhere on the lots Gar owned. As such, Gar should have known about it then and thus the
statute of limitations started running then. HH can argue that Magnus’s suit was not enough to put Gar
on
notice and that the fault line problem remained latent until HH conducted its investigation. Thus, the court
will have to weigh the facts to decide if the discovery rule applies or if HH’s suit for property damage is
time barred.
In the event that HH successfully argues the discovery rule and can bring its suit, HH will be able to
recover for the diminution in market value of the property and argue for consequential damages, as
discussed above. HH should also seek the appointment of a receiver. This case is similar to that in
CongressKenilworth
in that BuiltIt’s
CEO Rachel is incorporating a new company and putting all of
Built It’s assets in the new company. To get a receiver, HH needs to show that (1) it has a clear right to
the property itself or has some lien on it or that the property constitutes a special fund and (2) that the
possession of the property by the D was obtained by fraud, or that the property itself is in danger of loss
from neglect, waste, or misconduct or insolvency. The main trouble with the receveirship test here is the
second element. Here, HH would be trying to get a receiver because of fear of diversion of funds, but, as
in Congress-Kenilworth, there is not enough evidence that Built It is incorporating the new company for
nefarious purposes.
Question #1 Final Word Count = 3477
2)
The corona virus epidemic is a serious health threat to the people of Arlandria. The State of Arlandria
has not only the right, but the duty to protect the people of Arlandria. As such, the Arlandria court should
grant the Attorney General’s request for both declaratory and injunctive relief, which I address in turn.
Declaratory Relief
First, the Attorney General’s motion that the businesses, schools and churches are public nuisances
during the present epidemic of the COVID-19 coronavirus should be granted. To obtain a declaratory
judgment, the movant needs to satisfy two elements: (1) that the action is ripe, meaning this is an actual
case or controversy that is both real and immediate, and (2) that granting declaratory relief will indeed
terminate the controversy. Here, the Attorney General can satisfy both elements to obtain declaratory
relief.
With regard to the first element, controversy here is both real and immediate. The controversy here is
over the rights of the state to declare these businesses a public nuisance and the rights of the businesses
to operate. This controversy is not abstract or hypothetical. It is real, just as the controversy was real in
Nashville Ry. In that case, the State of Tennessee passed a gas tax that the railroad challenged as
unconstitutional. The controversy was real because there was a dispute about the parties rights: could
the
state impose such a tax and did such a tax violate the railroad’s constitutional rights? Further, the
controversy was real and not hypothetical. The State of Tennessee could implement the tax at any time
and thus threaten the railroad’s rights if the tax indeed was constitutional. Similarly, the State of
Arlandria
claims the right to protect the public health and declare the businesses a nuisance. In contrast, the
businesses declare the right to operate their businesses. Further, Arlandria can enforce this order at
anytime. Thus, the controversy is both real and imminent. Second, granting declaratory relief will indeed
terminate the controversy. Granting declaratory relief will explicitly inform the parties what their rights
are.
Because there is a real controversy here, the court should grant declaratory relief in favor of the
Attorney General (AG). The court should grant this declaratory relief in favor of the AG because the
State of Arlandria has authority to issue this order under (1) its police powers and (2) the public nuisance
statute. States have police powers to protect the public health, safety, and morals of the people. This
was
recognized and affirmed in the Arlandria Supreme Court case of Smith v. Board of Health of City of
Crystal. Not only does Arlandria have this police power, but the legislature recognized and provided
Arlandria with another avenue of practicing and implementing this power when it enacted the public
nuisance statute. That statute allows the Arlandria government to declare actions which endanger
public
safety or health a public nuisance. Accordingly, the court should grant declaratory judgment to the
Attorney General to declare the businesses a public nuisance because Arlandria has the police power to
do so, the legislature has delegated this power to the Arlandria government through the public nuisance
statute, and precedent is on the Attorney General’s side; the Supreme Court of Arlandria has already
once declared that Arlandria can declare activities that endanger the public health a nuisance.
Injunction
Additionally, the court should grant Arlandria the injunction to prohibit gatherings of ten or more in the
listed areas. The Supreme Court of the United States in eBay and Winter outlined four traditional factors
in determining whether to grant an injunction: (1) P’s likelihood of success on the merits, (2) irreparable
harm, (3) balance of the equities (hardship to D) and (4) the public interest. In traditional equitable
practice, the plaintiff was required to provide evidence of the first two factors. For the latter two factors,
the court could raise them sua sponte or the defendant could raise them as a defense and argument in
opposing the injunction. The Supreme Court’s holding in Winter was ambiguous and left the parties’
burdens on these factors ambiguous, which is important here. The narrower reading of Winter is correct.
Under the narrower reading, one reads the case to be consistent with traditional equity practices because
the Supreme Court does not overrule traditional practice without explictly saying so. Thus, under this
narrower reading, the Winter holding stands for the proposition that (1) courts should take the
government’s public interest arguments seriously and (2) that the plaintiff must show a likelihood of
success, not a possibility. The broader reading of Winter – and likely what Helping Hands will argue for
here – maintains that the plaintiff must prove all four factors in order to obtain injunctive relief. In this
case, the court should following the narrower reading of Winter. However, even if the court were to
follow the broader reading, the Attorney General will still prevail in obtaining an injunction.
First, the narrower reading of Winter is correct because the public nuisance statute here states that is is
to “be abated in accordance with the principles of equity.” Under those principles, the plaintiff need
only
show that it is likely to succeed on the merits and likely to suffer irreparable harm. This is entirely
consistent with the narrower reading of Winter. Here, the Attorney General can show a likelihood of
success on the merits and irreparable harm. The State of Arlandria is facing the ongoing harm of the
pandemic. The virus is spreading rapidly, more people are testing positive daily, and more people are
seeking medical attention daily. This could threaten our hospital supplies and put the state at risk of not
being able to care for all of its patients. Further, this harm is irreparable. An increasing number of people
are dying of coronavirus daily. Death is an irreparable harm. The Attorney General has thus proved that
it will likely succeed on the merits and that the harm is irreparable to obtain an injunction.
Helping Hands, however, will likely argue that the balance of the equities tips in its favor and that an
injunction would not serve the public interest. Helping Hands’ strongest argument is that the balance of
the equities tips in its favor because many people will lose their jobs or have reduced hours. But, the
public interest factor strongly favors the government, just as it did in Winter. The state has an interest in
preserving life, protecting the public’s health and safety, and ensuring that the state has enough
resources
to combat the virus and care for patients. Further, the state has ample public assistance services which it
can use to help care for the state’s economy. As such the final two factors – undue hardship and and the
public interest – weigh heavily in the state’s interest.
Lastly, helping Hands may challenge the scope of the injunction but it is clear it only lasts during the
pandemic. If it lasts too long and Helping Hands thinks it should cease, it can always try ot modify the
injunction.
Question #2 Final Word Count = 1167