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Short Remedies Outline

Remedies – Spring 2021 – Professor Lewis
 Compensatory Remedy: designed to compensate plaintiffs for harm suffered.
 Preventative Remedy: designed to prevent harm before it happens.
o Coercive Remedy: involves orders issued by a court to do or refrain from doing something.
o Declaratory Remedy: authoritatively resolves a dispute about parties’ rights
 Restitutionary Remedy: designed to restore to plaintiff all that defendant gained at plaintiff’s expense.
 Punitive Remedy: designed to punish wrongdoers.
 Ancillary Remedy: designed to aid other remedies.
 Damages: Amount of money awarded to a wronged party from the party who committed the wrong to
compensate for the wrong.
 Injunction: Court order to a defendant too do or not do something in relation to the plaintiff.
 Restitution: money awarded to a wronged party from the party that committed the wrong, measured by
the gain to the party what committed the wrong, and not by the loss to the wronged party.
Substitutionary Relief vs. Specific Relief
 Substitutionary Remedies: gives the plaintiff a sum of money for the harm done
o Compensatory damages
o Restitution of the money value of defendant’s gain
o Attorney fees
o Punitive damages
 Specific Remedy: gives the plaintiff the original thing to which the plaintiff is or was entitled (aspires to
prevent or undo harm rather than compensate for it)
o Injunctions
o Replevin (also a remedy at law)
o Restitution of a specific sum of money
Legal vs. Equitable Remedies
 Legal Remedy: allows the non-breaching party to recover monetary damages  tend to be
substitutionary; focus on making the plaintiff whole
o Compensatory Remedies
o Punitive Remedies
o Restitution
o Replevin (also specific)
 Equitable Remedy: actions the court prescribes which serve to resolve the breach or dispute  tend to
be specific; focus on preventing future harm
o Injunctions
o Specific Performance
o Restitution
 Measure of damages is substantive [Gasperini (1996)]]
 Rule: plaintiff generally cannot obtain an equitable remedy if a legal remedy would be adequate; before
a court will grant equitable relief, the plaintiff must show legal remedies are inadequate.
 Right to Jury: Seventh Amendment right to jury only attaches for those cases that went to jury at the
time the amendment was ratified  no right to jury for courts in equity
Rightful Position Principle: The most important concept in remedies. Says to choose the remedy that puts the
plaintiff back (or keeps the plaintiff) in the position that she would have been in but for the defendants wrong.
[Hatahley (10th Cir.)]
 One-Satisfaction Rule: Plaintiff cannot recover the same item of damage more than once
 Tort: accurately measuring the plaintiff’s losses
 Contracts: accurately considering the gains plaintiff failed to realize because of D’s breach
VALUATION: Market & Replacement Value
 Well-functioning Market Rule: When there is a well-functioning market – i.e. many buyers and sellers
– compensatory damages are calculated using an objective market measure [In re September 11th
Litigation (S.D.N.Y. 2008)]
o Market value: the price at which the property would change hands between a willing buyer and
a willing seller neither by a compulsion to buy nor sell and both having a reasonable knowledge
of the relative facts.
 Evidence of contract price may be relevant to calculation, but it is not controlling
o Market Valuation Examples:
 Value of property taken or destroyed
 Difference between value of property before damage and after damage (diminution)
 Value between contract price and market value of property promised but not delivered
 Lesser of Two Rule: a plaintiff whose property has been injured can recover the lesser of the
diminution of the property’s market value or its replacement cost (always market value unless the cost of
replacement value is lower) [In re September 11th Litigation (S.D.N.Y. 2008)]
o Applies even if the property has been completely destroyed [In re Sept. 11]
 Special Property Exception: Where property is of such character that there is no ascertainable market
value, the property is considered “special property” and replacement cost is considered the proper
measure of fixing damage. [Trinity Church (Mass. 1987)]
o Reasonableness: Where expenditures to restore or replace to pre-damage condition are used as a
measure of damages, a test of reasonableness is imposed
 (1) the cost of replacement or reconstruction must be reasonable; and
 (2) the replacement or reconstruction itself must be reasonably necessary in light of the
damage inflicted by the particular defendant [Trinity Church (Mass. 1987)]
 Note: Many courts have been willing to compensate repair costs viewed as reasonable
even if the repairs cost more than what they add in value
 Special Categories:
o Trees: trees generally have a market value when commercially grown, but may merely carry
intrinsic value on personal property, for which replacement may be appropriate
o Pets: The general rule is that owners of a pet that is killed can recover only the market value of
the pet as property; BUT if the pet is injured, the owner can recover the costs of medical care.
o Consumer Goods: consumer items that were functional and replaceable, courts can award
replacement cost minus depreciation based on the age of the item and its expected useful life.
 Time of Loss Rule: courts usually measure the value at the time and place of the loss in tort cases, or
the time and place for delivery in contract cases; BUT some exceptions may be made for items that
fluctuate in value.
o Stocks: Courts are split  Many states resolve doubts against the D by awarding the highest
value between the time of the wrong and the time of trial, time of filing suit, or similar date.
 NY Rule – BEST Rule: gives plaintiff the highest value between the time of conversion
and learning of the loss and a reasonable time thereafter in which he could have replaced
the property
o Crops: a court might allow damages to be measured from the time damaged immature crops
would have been harvested, rather than the time of loss.
 General Rule: Plaintiff may obtain recovery based on expectancy, reliance, or restitution
o Expectancy Damages: awarded for breach that seek to put the plaintiff in the position she would
be in if the contract had been performed (difference between what was promised and what was
 General Rule: Expectancy damages are recoverable only in contract, not in tort.
o Reliance Damages: damages awarded that seek to return the plaintiff to the position she would
be in if she had not relied on the promises of the wrongdoing party.
 Often sought for cases where neither side can prove expectancy (“second-best option”)
 TORT (Intentional Torts and Negligence)
o General Rule: When a party commits a tort that results in damage to property, the wronged may
recover damages for injuries which are the direct, natural and proximate result of the tortfeasor’s
actions. [In re September 11th Litigation (S.D.N.Y. 2008)]  a form of reliance damages
 Expectancy damages are recoverable only in contract, not in tort.
 Exception: Fraud of Misrepresentation
o States have passed statutes to permit expectancy damages whether sued in
fraud (tort) or warranty (contracts)
o Federal courts follow “out-of-pocket” rule: damages are calculated as the
difference between the actual – fraud tainted – transaction price and the
true value of the security measured on date of transaction (reliance)
o Consequential Damages: In tort, a defendant is liable for all damages, foreseen or unforeseen,
which naturally flowed from the misconduct (direct, natural, and proximate result); no
foreseeability required.
 Tortious Interference: One who is liable to another for interference with a contract is
liable for damages for (a) the pecuniary loss of the benefits of the contract (expectancy
damages) and (b) consequential losses for which the interference is a legal cause
(consequential damages in tort) [Texaco (Tex. Ct. App. 1987)].
o Scope of Liability - Direct Injury Rule: Tortfeasors are not liable for damages that are
insufficiently direct in relation to the harm caused by the tortfeasors. [Pruitt (E.D. Va. 1981)]
 Repeated Expenses for Same Damage: defendant should not be caused to pay repeatedly
for the same damage
 Foreseeability: a plaintiff can recover all his direct damages, even if the extent of his
harm was unforeseeable.
 Negligent defendants are liable only for those harms that result from the risks that
made the actor’s conduct tortious
 An actor is not liable for harm when the tortious aspect of the actor’s conduct was
of a type that was not foreseeable (i.e. the tortious act does not generally increase
the risk of the type of resulting harm).
 Directness between the conduct and the harm [see Hemi (2010) (RICO claim)]
 Economic Loss Rule: plaintiff cannot recover for lost wages or other injuries caused by
the tortious conduct absent physical impact from personal injury or property damage.
 Exception: Does NOT apply where the only kind of harm a defendant can inflict
upon plaintiff is economic harm (ex: accounting malpractice, defamation, deceit,
etc.); Pruitt (where there is no party that can assert physical/property injury e.g.,
only parties that can bring claim can only bring economic loss claims and we
want to do this that way defendant’s tortious behavior does not go unaccounted
for); strangers can bring them too if the economic losses are foreseeable.
Generally applies to negligence and products liability claims; not intentional torts
such as fraud and tortious interference.
It is a third party rule – if other plaintiffs come before the court only alleging that
they suffered economic losses (no physical/property injury) the court will say you
cannot. Rule against recovery of pure economic losses.
Justification for rule found on page 82 in Pruitt.
Further example pg. 89 Note 4 (New Jersey does not have economic loss rule –
they allow people to argue purely economic losses)
Further example pg. 90 Note 7 (Seely v. White Motor Co. – plaintiffs trying to
avoid remedial limitations in contract claims)
CLAIMS IN CONTRACT (Breach of Contract)
o General Rule: Under the benefit of the bargain, usual measure of contract damages is the
difference between the contract price and market price, plus consequential damages defendant
had reason to know about (expectancy damages) [rule derived from Hadley v. Baxendale]
 Option: Courts often given non-breaching parties choice b/w reliance and expectancy
damages, but expectancy damages generally serve as a cap on recoverable damages
 A court may award reliance, rather than expectancy damages in contract when:
 Non-breaching party has a problem with the substantive contract claim (ex: lack
of consideration or statute of frauds)  reliance as estoppel
 Compelling public policy reason to limit damages (ex: failed nose job)
 Non-breaching party has trouble proving expectancy damages
o Compensatory Damages for Non-Breaching Sellers:
 Lost Volume Seller: if a buyer breaches a contract with a lost-volume seller, the seller is
entitled to the profit the seller would have made from full performance plus reasonable
incidental damages associated with resale. [Neri (NY 1972); UCC 2-708(2)]
 Lost Volume Seller: A seller whose supply is sufficiently large enough that, had
the buyers not breached, the seller could and would have had the benefit of the
original contract and the resale contract.
 Incidental & Consequential Damages: sellers are entitled to incidental damages, but not
consequential damages, under the UCC [UCC 2-710]
o Compensatory Damages for Non-Breaching Buyers: Buyers may recover both incidental and
consequential damages as defined by the UCC
 Warranty: For a breach of warranty, damages are measured as the difference (at the time
and place of acceptance) between the fair market value of the goods accepted and the
value they would have been if they had been as warranted [Chatlos Sys. (3d Cir. 1982);
UCC 2-714(2)]
o Consequential (“Special” or “Indirect”) Damages: Non-breaching party may recover special
damages for a breach that are the natural and proximate result of the breach [Buck v. Morrow
(Tx. Civ. App. 1893)]; BUT a defendant is liable only for those consequential damages that were
objectively foreseeable as a probable result of the defendant’s breach when the contract was
made [Sunnyland (N.M. 2013)]
 Consequential Damages: Damages that arise not from the ordinary course of events due
to the breach, but from special circumstances peculiar to the injured party.  ask: has
the plaintiff been made worse off because of the breach?
 General (“Direct”) Damages: Damages measured by the loss of the value of the
performance promised by the breaching party.
 Probable vs. Possible: the loss must have been foreseeable as the probable result of
breach, not merely a possible result [Sunnyland (N.M. 2013)]
The mere circumstance that some loss was foreseeable, or even that some loss of
the same kind was foreseeable, will not suffice if the loss that actually occurred
was not foreseeable [Sunnyland (N.M. 2013)]
 Exception – “Failure to Pay”: Damages for a breach of contract claim based on the failure
to pay money are limited to the amount owed plus interest at the prevailing rate;
consequential damages are unavailable for failure to pay money [Meinrath (SDNY
 Exception – Insurer’ Bad Faith Refusal: If the insurer refuses or delays payment
in bad faith, knowing it is liable, plaintiffs can sue not only for interest, but also
for consequential damages and, in many states, punitive damages. [Acquista (NY
App. 2001)
 Failure to Loan: majority rule allows damages for a failure to loan promised money
where they are sufficiently foreseeable.
 Tortious Interference: One who is liable to another for interference with a contract is
liable for damages for (a) the pecuniary loss of the benefits of the contract (expectancy
damages) and (b) consequential losses for which the interference is a legal cause
(consequential damages in tort) [Texaco (Tex. Ct. App. 1987)].
o Negligent Negotiation: generally, there is no liability for negligence in the negotiation or
performance of a contract.
o Contracting Around Remedies:
 General Rule: The freedom of contract permits parties to make express contractual
provisions for the limitation or exclusion of damages [Kearney (N.J. 1987); UCC 2-719]
 Limitation of Remedy Clauses – Minimum Adequate Remedy Requirement: at least a
minimum adequate remedy for breach must be available; where no such remedy is
available, the clause is stricken as unconscionable and remedies made available as though
the clause had never existed [Kearney (N.J. 1987); UCC 2-719]
 Consequential Damages Exclusion Clauses: parties may contract to exclude the otherwise
available remedy of consequential damages, unless the exclusion is unconscionable.
[Kearney (N.J. 1987); UCC 2-719(3)]
 Majority Rule: If a contract contains both an exclusion of consequential damages
and express limited contractual remedies, UCC § 2-719 does not require the
invalidation of the exclusion of consequential damages solely because the limited
contractual remedies fail of their essential purpose.
 Liability in Personal Injury: limitations on consequential damages for personal
injury cause by consumer goods are prima facie unconscionable; limitations for
commercial losses are not.
 Liquidated Damages Clause: Liquidated damages clauses are enforceable unless
unconscionable as a penalty. [Comm. Real Estate (Utah 2012)]
 UCC 2-718(1): Liquidated damages clause is enforceable at an amount which is
reasonable in light of anticipated or actual harm, difficulty in proof of loss, and
inconvenience or non-feasibility of obtaining an adequate remedy. Excessive
liquidated damages is void as a penalty
 Liquidated Damages: Amount damages expressly provided in contract intended to
represent parties’ reasonable estimation of damages in event of a breach.
 Clause Fails in its Purpose: Where an otherwise fair and reasonable clause, due to
circumstances, fails in its purpose or operationally deprives a party of the substantive
value of the bargain, the clause is stricken as to give way to the general remedies
otherwise available [Kearney (N.J. 1987); UCC 2-719]
 Repair & Replace: The repair and replace remedy fails of its essential purpose
when seller is unable or unwilling to repair and replace in a reasonable time.
Other Limitations on Compensatory Damages
o Avoidable Consequences (Mitigation) Doctrine: Defendant is not responsible for the avoidable
damages of his wrongdoing [S.J. Groves (3d Cir. 1978)]
 Applies in contract and non-negligent tort
 Damages for Effort to Mitigate: expenses incurred in a reasonable but unsuccessful effort
to mitigate are recoverable as damages.
 Reasonable vs. Unreasonable Steps Requirement: a plaintiff is not required to take
unreasonable steps to help the defendant.
 Refusal to settle is not a failure to mitigate
 Employment: In employment litigation, an employee must take alternative
employment to mitigate only when the employment is not different or inferior
from the promised employment (need not go into another line of work, accept a
demotion, or take a demeaning position)  substantially equivalent standard
 Financial inability
 Burden of proof: on the defendant (affirmative defense)
o Offsetting Benefits Rule: steps taken to avoid loss (mitigation) must be taken into account in
computing the plaintiff’s damages to prevent plaintiff from obtaining double recovery.
o Collateral Sources Rule: If an injured party receives compensation for his injuries from a source
wholly independent of the tortfeasor, this payment cannot be deducted from the damages that the
party would otherwise collect from the tortfeasor [Oden (NY 1995)].
 Legislation & Subrogation clauses in insurance policies  many of new statutes override
the collateral sources rule but do not apply to collateral sources with subrogation rights
 In some states an insurer cannot claim subrogation rights unless the injured victim
was fully compensated.
o Substantive Policy Goals
 Antitrust: For plaintiffs to recover damages on account of §7 of the Clayton Act, must
prove injury of the type the antitrust laws were intended to prevent. [Brunswick (1977)]
 Immigration Status: Back pay may not be awarded to undocumented immigrants not
authorized to work in the United States [Hoffman (2002)]
o Reasonable Certainty Requirement: A jury may not render a verdict based on speculation or
guesswork, BUT the jury may make a just and reasonable estimate of the damage based on
relevant data [Bigelow (1946)]
 Plaintiff has burden to prove.
 Wrongdoers must bear the risk of uncertainty in the amount of damage
 Tort vs. Contract: courts have traditionally required greater certainty in contract than in
tort, but even in contracts, doubts are generally resolved against the party in breach.
 Damage valuation in ability to earn profits
 Going Concern (ex ante) approach: conceives of all damages as happening
simultaneously with the wrong; calculate value of business before and after wrong
with damages set to the difference
 Lost Profit (ex post) approach: calculates the stream of lost profit over time
o Point of comparison: Can compare profits while the wrong continued to
profits before it began or after it ended
o Argument they should not be available:
 Sunnyland Farms – For some legal reason this type of damage is
simply not available.
 New Business Rule – Majority rule: courts give closer scrutiny to lost-profit evidence by
new businesses, quicker to say such evidence is too speculative or insufficiently detailed
o Taxes, Time, and the Value of Money
 Wages & Income Tax: Measurement of a plaintiff’s lost wages must account for what the
plaintiff would have paid in income tax [Liepelt (1980)]
Pre-judgment Interest: In admiralty cases, prejudgment interest is available regardless of
the plaintiff’s contributory negligence. [National Gypsum (1995)]
 Statutory rules: Availability of pre-judgment interest is jurisdiction contingent
 Common-law rule: prejudgment interest awarded only when damages were
liquidated or ascertainable as simple interest at the legal rate.
 Federal courts: prejudgment interest routinely available, but no set interest rate.
 Post-judgment Interest: A judgment, once issued, bears interest at legal rate (statutory).
 Federal courts: awarded at the set rate of the 52-week treasury bill.
 State courts: many states set the rate by statute.
 Present Value: Where there are future expected losses for which an award of damages is
available, a court can take into account foreseeable promotions, foreseeable growth in the
industry, and estimated future price inflation, and should offset the damages total by an
estimated market interest rate reflecting a safe investment [Pfeifer (1983)]
 Discount Rate = Real Interest Rate – Non-inflationary Wage/Care Increase
 Real Interest rate = market interest rate – inflation
 Non-inflationary wage/care increase = annual wage increase – inflation
 Defendants: care and wage inflation low; return on investment high
 Plaintiffs: care and wage inflation high; return on investment low
NON-ECONOMIC DAMAGES: Where Value Cannot be Measured in Dollars
 Personal Injury – Pain and Suffering Approaches
o Per Diem Argument: A suggestion to the jury from a plaintiff that ongoing pain and suffering
should be quantified by applying a specific dollar amount for each day of pain and suffering and
then multiplied by each day that the pain and suffering is endured [Debus (Vt. 1993) (holding not
inherently improper or prejudicial)]
 Rule: 23 states and D.C. allow for a total demand supported by a per diem calculation.
o Golden Rule Argument: most courts disallow asking the jurors to consider how much they would
want if they had suffered the plaintiff’s injury.
o Lump Sum: The majority rule is that counsel may suggest a total number for pain and suffering
and tell the jury how much is requested in the complaint.
 Wrongful Death Cases: In many states, the ability of a person to recover wrongful death damages
depends upon a wrongful death statute.
o Funeral Expenses: All jurisdictions award funeral expenses
o Financial Support: All jurisdictions award some measure of compensation for financial support
that the decedent would have provided to dependents, and most permit recovery for the monetary
value of the services the descendent would have provided (including household chores,
nurturing, training, education, and guidance). [Liepolt (1980)]
o Loss of Society: A small majority of jurisdictions permit dependents to recover for loss of
“society,” including love, affection, care, attention, companionship, comfort, and protection.
 A minority of states recognize a parent’s right to recover for loss of consortium upon the
death or injury of a child
 Majority denies unmarried cohabitants the possibility of recovery
o Grief: Most jurisdictions do not allow recovery for grief, mental anguish, emotional distress, or
other negative experiences resulting from the death.
o Loss of Inheritance: If the decedent’s earnings were large enough to accumulate excess beyond
what they would have spent, the surplus cannot be recovered as a loss of support, but some
jurisdictions may permit it to be recoverable as a loss of inheritance.
o Survival of Personal Injury Actions: In some states, personal injury actions survive death,
enabling surviving family members to recover for damages for any pain and suffering that the
tort victim suffered before his death.
 Dignitary & Constitutional Harms
o Examples: assault, false imprisonment, malicious prosecution, intentional infliction of emotional
distress, libel, slander, invasion of privacy, batteries which are offensive but not physically
o General Rule: Juries may award damages which are “reasonable”
o Judicial Review: Courts must defer to the judgment of the jury unless the award is “monstrously
excessive” or “so large as to shock the conscience of the court” [Levka (7th Cir. 1984)]
 Traditional Rule: Other verdicts are irrelevant to considering the reasonableness of a jury
 Minority Rule: Courts may consider whether the award is out of line compared to other
awards in similar cases. [Levka (7th Cir. 1984)]
 When courts are called upon to determine whether a jury award is excessive, they must
“make a detailed appraisal of the evidence bearing on damages.” [Grunenthal (1968)]
o Remittitur: A reduction, or proposed reduction, of a damages award.
 The court grants a new trial unless plaintiff remits part of the verdict, as consistent with
the right to a jury trial
o Additur:
 The only remedy for an unreasonably low verdict in federal court.
 In states that permit it, it works like remittitur – defendant must be given a choice of a
new trial or paying the increased amount.
o Emotional Distress: Recoverable in intentional tort, but not in negligence without some
additional threshold showing; plaintiff who suffers physical injury can generally recover for
associated emotional distress.
 Severe or substantial: there is a poorly defined requirement that emotion distress be
severe or substantial
 Fear of Disease: On policy grounds, some courts hold that defendants cannot be liable for
emotional distress damages for fear of getting a disease, unless the plaintiff can prove
that she is more likely than not to actually get the disease [Potter (Cal. 1993)]
 Contract: Emotional distress is generally not compensable in contract, but bad-faith
breach of insurance contracts may be compensable in tort, opening the door to emotional
distress and punitive damages
o Deprivation of procedural due process: for the deprivation of procedural due process, the
plaintiff must prove that he actually was injured by the deprivation before he may recover more
than nominal damages [Carey (1978)]
INJUNCTIONS (Equitable Remedy)
Injunction: court order, enforceable by sanctions of contempt of court, directing defendant to do or refrain from
doing a particular thing.
Specific Performance: an injunction ordering a breaching party to a contract to perform as promised.
General Rule: Injunctive relief is a drastic remedy, not to be applied as a matter of course [Marshall (5th Cir.
1977); Nicholson (Conn. 1966)]
 Preventative Injunctions: the scope of past violation determines the scope of the remedy against future
violations [Marshall (5th Cir. 1977)]  look to ripeness; how wide is the threat
o Prophylactic Injunctions: The federal court has broad discretion to enjoin acts which are of the
same type or class as unlawful acts which the court has found to have committed. However,
merely finding a violation does not justify enjoining future violations unlike and unrelated to that
with which he was originally charged.
Limits: (1) aimed at the legally cognizable harm identified in the case; and (2) there must
be a factual nexus between the order and the legally relevant harm sufficient to justify the
 Culpability: the more egregious the violation, the greater the fears of further defiance and
evasion, and the greater desire for prophylactic injunctions.
 Examples:
 Orders requiring establishing a training program
 Court ordered monitoring of compliance with the injunction
 Nationwide or company-wide injunction against further violations is only appropriate
when the proof establishes a company policy or practice that is in violation of the statute.
[Marshall (5th Cir. 1977)]
 Individual vs. class, nation-wide: “Plaintiff’s remedy must be tailored to redress
plaintiff’s particular injury, . . . and remedy must be limited to the inadequacy that
produced the injury in fact that the plaintiff established.” [Gill (2018)]
 First Amendment: injunction can restrict speech no more than necessary to serve the
significant government interest [Madsen (1994)]
o Injunction to obey the law: FRCP 65(d)(1) generally precludes injunctions that merely tell
defendants to obey the law or are broadly written
 Order granting injunction or restraining order must: (a) state the reason why it issued; (b)
state its terms specifically; and (c) describe in reasonable detail the act or acts restrained
or required [FRCP 65(d)(1)]
Reparative Injunctions:
o One-satisfaction Rule: A plaintiff cannot recover both compensatory damages for a breach of
contract and injunctive relief for specific performance of the contract. [Forster (8th Cir. 1996)]
o Reversing last-minute violations: where a defendant with notice in an injunction proceeding
completes the acts sought enjoined, the court may restore the status quo. [Porter (1946)]
o Trade secrets: An injunction for non-disclosure in a misappropriation of trade secret action is
appropriate for a duration consistent with the time it would take a third-party competitor to
develop a competitive product after public disclosure of the secret. [Winston (9th Cir. 1965)]
o Receivership: courts have power to appoint a receiver to liquidate a corporation or investment
trust for fraud, mismanagement, or abuse irrespective of solvency [Bailey (1st Cir. 1947)]
o Liquidation: liquidation is a drastic remedy for extraordinary cases or where special or peculiar
circumstances apply. [Bailey (1st Cir. 1947)]
 Permanent Injunction Rule: A permanent injunction requires a showing of:
o (1) Propensity: requires plaintiff show harm or realistic threat of harm from the defendant
 Ripeness: threatened injury not merely remote and speculative [Almurbath (D.C. 2005)]
 Plaintiff must demonstrate that “there is a real danger the acts to be enjoined will
occur” – threat of harm must be real [Humble Oil (E.D. La. 1966)]
 Plaintiff must show that she personally will be harmed by plaintiff’s wrongful
conduct [Lyons (1983)]
 Reasonable certainty: Injunction cannot be granted based solely on fears and
apprehensions of speculative future actions [Nicholson (Conn. 1966) (nuisance)]
 Inevitable Disclosure Theory: Plaintiff may prove a trade-secret misappropriation
claim by showing defendant’s new employment will inevitably lead him to rely
on plaintiff’s trade secrets. [Pepsico (7th Cir. 1995)]
 Reparative injunctions: do not raise ripeness issues, because the harm has already
occurred, they may raise causation or remoteness issues
 Mootness: The necessary determination is that there exists some cognizable danger of
recurrent violation, beyond mere possibility [W.T. Grant (1953)]
Power to grant injunctive relief survives voluntary cessation of the violative
conduct, requiring a credibility determination that the alleged wrongful behavior
could not reasonably be expected to recur.
 Credibility Determination: [W.T. Grant (1953)]
o Bona fides of the expressed intent to comply
o Effectiveness of the discontinuance
o Character of past violations
 Burden: Plaintiff has the burden of proving propensity at the burden of the case
(ripeness), but defendant has the burden of proving that an injunction is no longer needed
(mootness) [Parents Involved (2007)]
 Defendants must show that “subsequent events ma[ke] it absolutely clear that the
allegedly wrongful behavior could not reasonably be expected to recur.”
o (2) Irreparable Injury: a legal remedy, such as damages, is not as good a remedy as injunction;
 Compare Legal Remedy: legal remedy is as “complete, practical, and efficient” as the
equitable remedy [Pardee (W.Va. 1911)]
 Ex.: monetary damages for cutting down plaintiff’s timber are inadequate to
compensate for damage to the land [Pardee (W.Va. 1911)]
 No provable damages: An injunction may be issued because damages are inadequate
where the damages would be difficult and expensive to prove. [Continental (9th Cir.
1994) (enjoining discount coupon sales)]
 Domestic violence or risky conduct  damages insufficient
o (3) Balance of Hardship: Considering balance of hardship between plaintiff and defendant,
remedy in equity is warranted; and [Ebay (2006)]
 Hardship to Defendant: Generally the hardship must be disproportionate to any benefit
the plaintiff will derive.
 Culpability: Courts give heavy weight to defendant’s culpability and plaintiff’s diligence
or acquiescence
 Deliberate encroachment: If an encroachment upon land is deliberate, an
injunction may be issued ordering the removal of the offending structure without
considering the hardships of the parties. [Whitlock (Ill. App. 1999)]
 Feasibility: an injunction may be denied as infeasible if it would compel the parties to
continue a commercial relationship or require the court to closely monitor the caliber of
the performance. [Lord & Taylor (4th Cir. 2015)]
 Consider: Advantages to be gained from injunctive relief as well as the harm
suffered if an injunction is denied as infeasible [Lord & Taylor (4th Cir. 2015)]
o (4) Public Interest: Public interest would not be disserved by the injunction
 Free Speech & Prior Restraint
 Right to a jury trial: in most places, inunctions are issued without jury trials
Preliminary Injunctions
o Elements: A preliminary injunction requires a showing of: [Winter (2008)]
 (1) Likelihood of plaintiff’s success on the merits;
 (2) Likelihood of suffering irreparable harm in the absence of preliminary relief;
 Plaintiffs are required to show the injury is likely, not merely possible [Winter
 Sufficiency: risk of injury must be sufficiently high and sufficiently irreparable to
override risk of error and shortcuts around Defendant’s due process rights.
 (3) That the balance of equities tip in plaintiff’s favor; and
 Courts must balance the competing claims of injury and consider the effect on
each party of the granting or withholding of the preliminary relief sought [Winter
 (4) Injunction is in the public’s interest
All or balanced?  Winter indicates a showing of all four elements is required; Nken,
Chafin, Benisek, and Trump indicated a discretionary balancing of interests is
o Damage Payments: in most jurisdictions, the law has no preliminary injunctive relief for damage
o Statue Quo Test: Courts commonly hold that preliminary injunctions are designed to preserve the
status quo (last, peaceable, uncontested status quo)
o Injunction Bonds: A form of security that is required to be posted in order to issue an injunction
to ensure that a party can pay for damages that may result from the injunction, if it is overturned
 Some courts waive the requirement in the interest of justice
 Amount of recovery – majority rule: A defendant who prevails against a preliminary
injunction is entitled to damages on the injunction bond, up to the amount of the bond,
unless there is a good reason for not requiring the plaintiff to pay in a particular case.
[Coyne-Delany (7th Cir. 1983)]
 Exception: Defendant may be able to bring a claim of malicious prosecution for
additional damages where the preliminary injunction was sought in bad faith.
 Enforcement: court has broad discretion whether to require and/or enforce a bond
it does require. [Russell (1882)]  dated and debated
o Ex: defendant failed to mitigate damages [Coyne-Delany (7th Cir. 1983)]
 Restitution: Plaintiff may be liable in restitution for benefits conferred by
preliminary order [Fleer Corp. (Del. 1988)]
 Amount of Bond: at the discretion of the trial court based on a limited sketch of potential
 FRCP 65(c) requires an injunction bond; BUT
 Federal courts have made it discretionary such that it can be nominal or even
waived altogether [City of ATL (5th Cir. 1981)]
 Liability on the Bond: Liability on a preliminary injunction bond is not equated with
whether the preliminary injunction had properly issued [Camenisch (1981)]
o Appealability: Preliminary injunction orders are appealable in federal courts [28 USC §1292]
o Duration: may remain in effect pending a final judgment of a case
Temporary Restraining Orders:
o Standard/Elements: essentially the same as the standard for issuing a preliminary injunction (ie:
immediate irreparable injury unless the order is issued).
o Notice Requirement: A temporary restraining order cannot be granted through ex parte
proceedings unless it is shown that serving or notifying the opposing parties would be
impossible. [Carroll (1968)]
 Impossibility includes immediate and irreparable injury, loss, or damage would result to
the movant before the adverse party can be heard in opposition [FRCP 65(b)]
 Courts generally require the moving party to provide some kind of notice (formal or
informal) as a matter of constitutional imperative.
o Appealability: Orders granting or denying a TRO are generally not appealable, EXCEPT
 (1) TRO with notice lasts for more than 14/28 days  morphs into a PI [Sampson
 (2) TRO disposes of the entire case  appealable as final judgment [Wood (7th Cir. ‘61)]
 (3) TRO threatens to inflict irretrievable harm before TRO expires
 (4) TRO Possesses the qualities of a preliminary injunction  Court held an adversary
hearing, the basis of the order was strongly challenged, and it has or will remain in effect
for longer than the 14/28 day.
o Duration:
TRO without notice: a TRO issued without notice may not exceed in duration beyond 14
days unless the court extends it, for good cause, for up to another 14 days or the adverse
party consents to its extension. [FRCP 65(b)]
 Dissolves after its set time (not to exceed 28 days)
 TRO with notice: the rules do not set forth a time, but courts generally follow the
morphing principle.
o Stays and Injunctions Pending Appeal: Judges at all levels may issue an injunction pending
appeal; one generally must first be sought from the trial court.
REPLEVIN (legal remedy)
REPLEVIN: if return of the property sought is possible, it must be returned [Brook (Ok. 1967)]
 Enforcement: execution  sheriff seizing the property and returning to plaintiff
 Scope: narrower than injunction – it lies only to recover the goods and does not prevent a threat of
destruction or dispossession.
SPECIFIC PERFORMANCE (equitable remedy)
SPECIFIC PERFORMANCE: Specific performance may be awarded as a remedy for breach of a contract
involving the sale of chattels if a legal remedy would be inadequate. [Campbell (3d Cir. 1948)]
 Inadequacy: inadequacy of the legal remedy is necessarily a matter to be determined case-by-case based
on the facts. [Campbell (3d Cir. 1948)]
o Look to: scarcity, time constraints, sheer size of the contract make it difficult or impossible to
cover, damages are difficult to measure
o UCC 2-716: specific performance of sales contracts “if the goods are unique or in other proper
circumstances.” [UCC § 2-171]
o Undo Hardship Defense: Specific performance is improper if damages adequate and equitable
relief would impose a disproportionate burden on breaching party [Van Wagner (NY 1986)]
 Uniqueness of the property under a lease is not dispositive.
o Real Estate: Traditional rule – damages are never an adequate remedy for loss of real estate or
damage thereto.
 Routinely applied to leases, as well as sales AND other real estate claims
(encroachments, interference with easements, violation of condo restrictions, etc.)
 Plaintiff’s Return performance: Many courts require that the plaintiff be able to show s/he is/was “ready,
able, and willing” to perform his/her end of the contract terms. [DiGiuseppe (Tex. 2008)]
 Personal Service Contracts: courts do not order specific performance of an employee’s promise to work;
but MAY enforce non-compete agreements or trade secret limits
 Feasibility: specific performance may be denied as infeasible if it would compel the parties to continue a
commercial relationship or require the court to closely monitor the caliber of the performance. [Lord &
Taylor (4th Cir. 2015)]
 Judicial discretion: courts have broad discretion to decide whether to entertain a declaratory action
[Wilton (1995)]
o Declarations for non-liability: there is a strong presumption that defendants should get to choose
their form [BASF (8th Cir. 1995)]
Ripeness Requirement: the case must retain the essentials of an adversary proceeding, involving a real
(not hypothetical) controversy [Wallace (1933)]
o “Refined” ripeness test:
 (1) Adversity of the parties;
 (2) Conclusiveness of the judgment; and
 (3) The utility of the judgment
 Standard: uncertain, probably lower than propensity and irreparable harm for injunction
o Some states require ripeness under state DJ acts.
o “Credible threat” of enforcement  reasonable fear of liability standard
o Objective: to settle and afford relief from uncertainty and insecurity with respect to rights,
status, and other legal relations
o Mootness: DJ claim can become moot just as an injunction claim can – look to adversity
NO irreparable injury requirement [Wallace (1933)]
Existence of another adequate remedy does not preclude declaratory relief [Wallace (1933)]
Supplemental relief may also be granted, including compensatory damages caused by a failure to
comply with the declaratory judgment.
Claim/Issue Preclusion: Declaratory judgment has force and effect of a final decree [28 USC 2201(a)]
o Issue preclusive in subsequent litigation with respect to issues actually decided
o Claim preclusive only if the initial action for declaratory relief sought more than just the
declaratory judgment, most courts hold that all related relief should have been sought then.
Independent Interest in Adjudication: a party seeking a declaratory judgment of invalidity presents a
claim independent of the charge for infringement [Morton (1993)]
o Practice of disposing of DJ counterclaim upon finding no related wrongdoing on the part of the
defendant-counterclaimant was improper  must still rule on the merits of the DJ claim
Burden of proof: follows the substantive law
 Scope: Plaintiff may sue to quiet title in personal property as well as real prop. [Newman (N.C. 1969]
 Ejectment vs. Quiet Title: In some states, whether the plaintiff is still in possession determines the right
to a jury title – if the defendant is in possession, the action is an ejectment (or analogized with
ejectment) and either party can demand a jury; if not, it is considered removing a cloud to quiet title and
it is equitable.
 Cancellation: an equitable remedy closely related to the bill to quiet title whereby an instrument is
 Re-Execution: Equity will order re-execution of a lost instrument is there is clear proof of its original
execution and terms.
 Reformation: An equitable remedy by which a court amends the terms of an agreement to give effect to
the true intent of the parties.
 Fraud Rule: As an exception to the general rule of being responsible for contracts signed, where the
neglect to appreciate the terms as written is the result of fraud by the other party, reformation of the
contract to the terms as they were believed written is available. [Hand (6th Cir. 1965)]
 Unilateral Mistake: Many courts permit reformation where one side knew about the other’s unilateral
mistake and said nothing.
 Mutual Mistake: Where there is a mutual mistake of fact as to contract terms, reformation is proper.
o Evidentiary Challenges: plaintiff must prove by clear and convincing evidence that both sides
intended and agreed to something inconsistent with what is written.
Reformation vs. Recission: Where the contract is a losing contract, the plaintiff likely prefers recission;
in cases of a contract with appreciating value, reformation is likely preferred.
o In cases of mutual mistake without fraud, there is no choice between reformation or recission.
Third Parties: the standard for protecting third parties in recission cases generally includes an essential
element of reliance.
 Nominal Damages: Minimal damages awarded to a plaintiff to show that he was correct, usually in
instances where the plaintiff has not suffered substantial injuries.
o Used as a means to reach the merits
o Enables punitive relief
o Attorney fees in a nominal damages case are “usually zero;” but might be a reasonable award
where the plaintiff also sought a declaratory relief or injunction. [Farrar (1992) (O’Connor,
Restitution: a specific remedy in equity, which generally requires a person to give up unjustly acquired gain.
 Based upon the defendant’s gain, rather than the plaintiff’s losses
 Unjustified Enrichment: enrichment that lacks a legal basis; the transfer is made in a manner insufficient
to establish a conclusive change in ownership rights. [Restatement 3d]
o Unjust: Whether the benefit was unjust turns on the reasonable expectations of the parties
[Bonina (Mass. App. Ct. 2017)]
 Contracts
o Failure to Contract: restitution is generally unavailable to a claimant who should have made a
contract but failed to do so [Restatement 3d]
o Existing Contract: Where there is a specific contract governing the parties in the relationship and
subject to the claim, restitution is not proper [Toulson (11th Cir. 2017)]
RESTITUTION FROM INNOCENT DEFENDANTS (or those treated as innocent)
 Mistaken Payment: A person who mistakenly pays money to another is entitled to restitution from the
payee even though the mistake is due solely to the payor’s lack of care or mistake [Sauer (Mo. Ct. App.
o Restitution will be ordered when payment is made under a mistake of fact
 A party making risky expenditures cannot seek restitution when the gamble fails
 Voluntary Payments Rule: Cannot recover payments made in the face of uncertainty
o Change of Position Defense: A change in position defense requires the defendant to prove a
sufficient change in position, absent any notice of the underlying mistake in payment, to warrant
denial of restitution.  equity
 Notice requires only knowledge of facts sufficient to make it prudent to conduct further
inquiry that would reveal the truth.
o Measurement: where an innocent defendant is enriched by a money payment, the Restitutionary
measurement is the amount of payment OR the resulting increase in the defendant’s net asses –
whichever is less. [Restatement 3d]
 Improper Improver: One who, through a reasonable mistake of fact and in good faith, erects a building
entirely upon the land of another with reasonable belief that he owns the land, is entitled to recover the
value of the improvements from the landowner, or, in the alternative, to purchase the land from the
landowner for the value of the land minus the improvements. [Sommerville (W.Va. 1969)]
o Notice of the Improver: In general, a plaintiff who builds despite actual notice that she might be
mistaken will not recover; a plaintiff who has only constructive notice will not be barred from
o Knowing Misconduct: The improver who knows he is building on someone else’s land will get
no remedy; an innocent improver will get a much more generous remedy against an owner who
knows what is happening and says nothing hoping to get a windfall.
Emergency Services: One who reasonably provides essential goods or services in an emergency is
excused from not securing a contract agreement and may thus sue for unjust enrichment.
o Life Saving: a professional who confers benefits in an emergency is eligible for restitution
 Measurement: the market value of treatment, whether or not successful
 Good Samaritan: the good Samaritan rescuer should not receive restitution even if the
rescuer suffers “crippling” injuries as a result of the rescue, unless the rescued party made
a promise to pay the rescuer [Restatement 3d § 20]
o Property Saving: restitution is available if circumstances justify intervention without request and
it is reasonable to assume the owner would want such action performed [Restatement 3d § 21]
 Measurement: If one intervenes in an emergency to protect property, the value of the
benefit is the value of the services or the value of the property damage avoided,
whichever is less – it cannot be more than the property’s value.
Performing another person’s duty to a third party: must arise from emergency/urgent intervention
when the person who owes the duty is unavailable, incapacitated, or refusing to perform
Joint Ownership of Property: the owner who pays for necessary expenditures has a claim of unjust
enrichment for the others’ proportionate share [Restatement 3d]
o BUT cannot claim discretionary improvements
Court Orders Later Reversed: money paid or collected pursuant to the order of a court or
administrative agency which is later vacated or reversed must be refunded.
Cohabitation & Improvements: Someone who contributes to improving another’s property during an
unmarried, cohabitating relationship may recover restitution for unjust enrichment [Bonina (Mass. App.
Ct. 2017)]
o Unjust: Whether the benefit was unjust turns on the reasonable expectations of the parties
[Bonina (Mass. App. Ct. 2017)]
o Restatement applies only to persons who “formerly lived together in a relationship resembling
marriage” [Restatement 3d § 28]
Partial Performance on an Unenforceable Contract: A party that partially performs an agreement at
the request of the other party is entitled to recover the fair and reasonable value of the work performed,
even if the original agreement is not enforceable. [Farash (NY 1983)]
o Quantum Meriut: a measure of contract damages when there is an enforceable contract without a
specific price term; a measure of restitution when there is no enforceable contract
o Some disagreement among courts/jurisdictions re: benefit requirement in such cases
o Part-Performance Doctrine: part performance takes the case of the statute of frauds, rendering if
specifically enforceable [Messner (NY 1999)]
o Promissory Estoppel: doctrine for enforcing otherwise unenforceable promises when there is
detrimental reliance
 Recovery limited to reliance damages
Enforceable Contracts+: A plaintiff who is compelled to do more than the contract requires can
recover for the extra work if she performs under protest. [Restatement 3d § 35]
General Principles in Measuring Recovery:
o Measured by the defendant’s gains; never plaintiff’s losses
o Lesser of Cost or Value Rule: Where plaintiff can recover, the benefits are to be valued by the
measure that yields the smallest recovery [Restatement 3d § 50(2)(a)]
o Costs to confer the benefit may be evidence of, and relevant to, determining the benefit received.
[Bonina (Mass. App. Ct. 2017)]
o May consider: [Restatement 3d § 49]
 Cost to plaintiff
 Market value
 Agreed upon price
 Value “in advancing purposes of the defendant” demonstrable value to the recipient
o Choosing between them: If the benefits were conferred at the recipient’s request, the presumptive
measure is market value or an agreed upon price; Market value also applies to emergency
interventions to save life or health. [Restatement 3d § 50(2)(b)]
 Tort vs. Assumpsit: A plaintiff may choose to waive tort recovery and sue under a theory of assumpsit
where the defendant tortfeasor has benefited from his misconduct. [Olwell (Wash. 1946)]
o Misconduct: actionable interference with claimant’s legally protected interests from which the
defendant is liable
o Statute of limitations for contract claims is usually longer
 Elements - Disgorgement:
o (1) Show defendant earned profits from the fraud;
o (2) Causation (profits were derived from the fraud); and
o (3) Quantify the profits
 Scope of Liability – Disgorgement: [Olwell (Wash. 1946)]
o If the defendant was tortious in his acquisition of his benefit, he is required to pay what the other
has lost although that may be more than the recipient benefitted.
 Wrongdoer is liable for interest, rental value, or use value, whether or not he actually
earned interest, rent, or other form of income. [Restatement 3d § 53]
o Where the defendant was consciously tortious, restitution is measured by all profits defendant
earned from his tortious conduct at plaintiff’s expense.
 Defendant’s enrichment must be at plaintiff’s expense.
 Conscious wrongdoer: knowledge of the underlying wrong or known risk that the
conduct in question violates claimant’s rights. [Restatement 3d § 51]
 Deliberate Infringement: Under the Lanham Act, a plaintiff may be awarded damages
based on an accounting of the profits of a defendant that has intentionally infringed upon
a plaintiff’s trademark based on unjust enrichment even where the two products do not
compete with each other. [Maier (9th Cir. 1968)]
 Direct Competition: use an accounting of profits to return diverted profits
 No direct competition: use an accounting of profits based on unjust enrichment
o If the defendant was no more at fault than the claimant, he is not required to pay for losses in
excess of benefit received by him and he is permitted to retain gains which result from his
dealing with the property (unclean hands doctrine)
 Measuring Profits:
o Apportionment: In computing an award of profits against an infringer of a copyright, there may
be an apportionment so as to give to the owner only that part of the profits found to be
attributable to the use of the material. [Sheldon (1940)]
 Objective: rational separation of the net profits so that neither party has that which
rightfully belongs to the other.
 Requires “reasonable approximation,” usually attainable through experts
 Credit for defendant’s contribution: defendant may receive credit for his contribution in
money spent on carrying on the business, but will ordinarily be denied credit for
contribution of services or for expenditures related to carrying out the wrongdoing
[Sheldon (1940); Restatement 3d §51]
o Deducting Overhead: overhead expenses sufficiently related to production or sale of the
infringing product may be deducted in calculating a defendant’s profits using a fair, accurate, and
practical method of allocating the overhead to the infringement. [Hamil (2d 1999)]
 (1) determine what overhead expense categories are actually implicated by the infringing
conduct; and
 Limit the inquiry to the sufficiency of the nexus between the expense category
and the infringing act
 Need not scrutinize particular items within the category, once identified
 (2) arrive at a fair, accurate, and practical method of allocating the implicated overhead
 The infringer has the burden of offering a fair and acceptable formula
 Reasonableness of formula is a question of fact
 When the infringement is willful, courts should give extra scrutiny to the claimed
overhead categories.
 All presumptions should be drawn against the infringer.
 Burden of Proof: Defendant has the burden of proving its costs and residual risk of
uncertainty in calculating profit is assigned to defendant
o Taxes: conscious wrongdoers cannot deduct taxes paid on the profits they disgorge.
Breach of Contract
o Disgorging Profits from Opportunistic Breach
 General Rule: A party that deliberately breaches a contract is not permitted to profit from
the breach [May (Fl. App. 1986)]
 Requires distinguishing conscious from unintentional breach
 Restatement 3d § 39 Rule:
 Breach must be profitable; and
 Deliberate; and
 For which the damage remedy is inadequate;
o Contract Recission
 Availability: Non-breaching party is entitled to restitution if other party substantially
breached a contract or communicated its intent to do so. [Mobile Oil (2000)]
 Grounds for recission must be “substantial;” minor dispute is insufficient
 If the property is of the kind that fluctuates in value, plaintiff seeking recission
must demands it promptly after learning of the grounds [Baumel (4th Cir. 1969)]
 Choice: plaintiff gets to choose whether to rescind or sue for damages.
 Plaintiff with a losing contract sues for reliance damages  no recovery
 Plaintiff with losing contract sues for recission  back to status quo
 Exception for Financial Lenders: One who lends money or sells on credit cannot
rescind or reclaim property when the debtor fails to pay
 Other Applicable Contexts:
 Fraud
 Undue Influence
 Mutual Mistake of Fact
 Unilateral Mistake, Not Relied On
 Duress
 Constructive Trusts: equitable device to compel the owner of property to convey that property to the
victims of that owner’s fraud.
o Objective: prevent unjust enrichment of a party who receives title to property but is not legally
entitled to that property  prevent the defendant from being unjustly enriched at plaintiff’s
o No Wrongdoing Required: the party holding the subject property need not have performed a
wrongful act for constructive trust to be imposed. [Paoloni (D. Colo. 2004)]
o Trustee is the legal owner; beneficiary is the equitable owner.
 Strict fiduciary duties of the legal owner
o Requirements:
 Traceable: The claimant’s money must be “distinctly traced” to the action, fund, or
property made subject of the trust [Ruffin (Va. Ct. App. 2000)]
 Plaintiff’s Expense: The defendant’s unjust enrichment must be acquired at plaintiff’s
expense or through violation of claimant’s rights
 Reminder: no unjust enrichment claim where there is an enforceable contract, so,
failure to pay (a contract) is not subject to Restitutionary relief
o Limit - improvements: A constructive trust is generally not available for mere improvements
o Choice: any plaintiff entitled to a constructive trust can choose to have an equitable lien instead.
o Timing: A constructive trust arises at the time of the transaction giving rise to the duty to
reconvey the property [In re Leitner (Bankr. Kan. 1999)]
o Bankruptcy: plaintiffs who have restitution claims and can still identify their property in
defendant’s hands can reclaim their property
 Basic tenant  all unsecured non-priority creditors share equally
 No preference if they cannot identify property or proceeds
 Ordinary creditors get no preference even if they can identify their proceeds
 Plaintiff must have a claim to restitution in kind, and the claim must be one of a
dispossessed owner and not a mere creditor.
 Successful claimants can reclaim original property and new assets shown to have been
purchased with their property
o Tracing: A constructive trust may be imposed on specific property, funds, or assets into which
fraudulently obtained cash is traced. [In re Erie Trust (Pa. 1937)]
 Lowest Intermediate Balance Rule: Where money has been commingled with other
moneys, the beneficiary is entitled to the lowest balance to which the commingled fund at
any time became depleted.
 Presumptions: the law permits the plaintiff to presume with perfect hindsight that which
otherwise defies probable intention, but not too defy chronological possibility.
 The wrongdoer spends his own money first on bad investments
 The wrongdoer spends plaintiff’s money first on good investments
Equitable Liens
o Homestead exemptions: A homestead exemption will not be granted for property used as an
instrumentality of fraud. [In re Mesa (Bankr. S.D. Fla. 1999)]
o Choice: Where a constructive trust is available, an equitable lien is also generally available, and
the plaintiff has choice of remedy in cases of a conscious wrongdoer/misappropriating fiduciary
o Improvements: equitable lien is the standard remedy when plaintiff’s money is traced into
improvements to defendant’s property
Subrogation: Someone who must pay off another’s debt to protect a property interest is entitled to
equitable subrogation into the other’s priority position. [Mort (9th Cir. 1990)]
o Elements: [Mort (9th Cir. 1990)]
 (1) subrogee made the payment to protect own interests;
 (2) subrogee did not act as a volunteer;
 Not a Lender
Assignors: general rule is that where a valid assignment of a mortgage has been
consummated with consideration, the assignee is vested with all the powers and
rights of the assignor
 (3) subrogee was not primarily liable for the debt paid
 (4) subrogee paid off the entire encumbrance; and
 (5) subrogation would not work any injustice to the rights of the junior lienholder
 OR, also
 Whenever one person, not acting as a mere volunteer or intruder pays the debt for which
another is primarily liable, and which good conscience should discharge the latter
o Constructive knowledge does not bar equitable subrogation
o Scope of subrogated rights: the person asserting subrogation gets exactly the rights of the
subrogor. [US v. Cal. (1993)]  rights as they existed before the subrogor was paid.
 Bona Fide Purchasers: the equitable right to recover stolen property or follow the proceeds continues
and attaches to any security or property in which the proceeds were invested, so long as they can be
traced and identified and the rights of a bona fide purchaser have not intervened. [Newton (NY 1877)]
o General Rule: A plaintiff is entitled to recover stolen property from the thieves who stole the
property or an assignee with notice, including the proceeds of the sale of the stolen property and
any property purchased with those proceeds. [Newton (NY 1877)]
 Equity stops when the means of ascertainment fails or the first of a BPFV, without notice
of the trust, have intervened.
o Bona Fide Purchaser for Value:
 Bona Fide: Good faith – without notice
 Notice: information sufficient to cause a reasonable person to conduct a further
inquiry that would reveal the claim
 Purchaser: taking by sale, lease, discount, negotiation, mortgage, pledge, lien, security
interest, issue or reissue, or any other voluntary transaction creating an interest
 Ask: Was there consideration in exchange?
 Exception: people who acquire their interest without consent  judicial lien
o Rules:
 A BFPV can get good title to cash, superior to a restitution claim, without exception
 A BFPV can get good title to other property, superior to a restitution claim, unless the
property was stolen or acquired in a transaction so tainted by wrongdoing that law treats
it as equivalent to theft.
 A recipient is not a BFPV if taken with notice of restitution claim or did not give value.
Payment/Discharge for Value: a beneficiary that receives money for the payment of a debt by mistake
has no duty to repay the funds as long as the beneficiary did not have knowledge that the funds were
erroneously sent and made no misrepresentation [Banque (NY 1991)]
o Reliance: one who pays money by mistake can recover that money until or unless someone
without notice relies on the payment.
 Prevailing Rule – outrageous conduct: punitive damages are generally limited to. cases where a
defendant’s conduct is “outrageous,” owing to “gross, negligence,” “willful, wanton, and reckless for the
rights of others,” or behavior even more deplorable. [Exxon (2008)]
Reasonably Predictable in severity: penalty should be reasonably foreseeable and threaten a fair
probability of like damages for like damage. [Exxon (2008)]
o A single-digit maximum ratio to compensatory damages is appropriate in all but the most
exceptional of cases and a lesser ratio may be appropriate where compensatory damages are
substantial [Exxon (2008)]
Vicarious Liability: about half of states require managerial employees be implicated in the outrageous
conduct before punitive damages can be assessed through vicarious liability.
Federal Claims: punitive damages are available for federal constitutional claims & some statutory claims
 Reasonably Predictable in severity: penalty should be reasonably foreseeable and threaten a fair
probability of like damages for like damage. [Exxon (2008)]
o Single-digit ratio & Due Process: Awards of punitive damages by state courts that exceed a
single-digit ratio between punitive damages and compensatory damages are usually “grossly
excessive” and violate the Due Process Clause of the Fourteenth Amendment.
 Higher ratios may be proper where egregious act resulted in small compensatory damages
 Lower ratios may be proper where high compensatory damages render more than a 1:1
unreasonably large
o Determining reasonableness: the most important consideration is the degree of reprehensibility
of the defendant’s conduct to be determined by considering whether:
 The harm caused was physical as opposed to economic
 The tortious conduct evinced an indifference to or reckless disregard for the health and
safety of others
 The target of the conduct had financial vulnerabilities
 The conduct involved repeated actions or was an isolated incident
 The harm was the result of intentional malice, trickery, or deceit, or was a mere accident
o Penalty on Behalf of Third Parties: Juries may not base punitive damages awards on their desire
to punish a defendant for harming persons not before the court – such awards violate the Due
Process Clause of the Fourteenth Amendment. [Philip Morris (2007)]
 BUT, conduct that risks to harm to many is likely more reprehensible than conduct which
risks harm to a few, and thus a jury may take that into account for considering
 Procedural Due Process: requires meaningful jury instructions on punitive damages and meaningful
appellate review [Oberg (1994)]
 Contract Defense: A court may refuse to grant specific performance or other equitable remedies in the
face of an unconscionable contract; such contracts are voidable [James (Del. Ct. Ch. 2006)]
o Timing: Whether a contract is unconscionable is determined at the time it was made
o Types of unconscionability  If more of one is present, less of the other is required
 Substantive unconscionability: a contact is substantively unconscionable if the terms
evince a gross imbalance that “shocks the conscience”
 Significant cost-price disparity
 Denial of basic rights and remedies
 Penalty Clauses
 Placement of disadvantageous clauses in inconspicuous locations or among fine
print trivia
Phrasing of disadvantageous clauses in confusing language or in a manner
obscuring problems they raise
 Overall imbalance in the obligations and rights imposed by the bargains
 Procedural unconscionability: Whether the procedures that led to the contract’s
seemingly lopsided terms might of resulted from arms’-length bargaining
 Inequality of bargaining or economic power
 Exploitation of the underprivileged, unsophisticated, uneducated, and illiterate
 Use of Printed form or boilerplate contracts drawn skillfully by the party in the
strongest economic position, which establish industry-wide standards offered on
the take it or leave it basis (adhesion contract terms) to the party in the weaker
economic position
 Circumstances surrounding the execution of the contract, including its
commercial setting, purpose, and actual effect
Legal & Equitable Remedy: some courts, including those that follow the UCC for sales contracts allow
unconscionability to be a defense for both legal and equitable relief
o BUT: that a contract is unconscionable is a defense in equity which is grounds for denying
specific performance, though it is NOT a ground for enjoining a suit a law.
 Unclean Hands Defense: an equitable defense whereby the defendant claims that plaintiff’s bad conduct
should bar plaintiff from obtaining equitable relief, such as an injunction [Pinter (1988)]
o Nexus: at minimum, the plaintiff’s improper conduct must relate in a significant way to the claim
he now asserts
o In Pari Delicto Availability: The in pari delicto defense is available only where [Pinter (1988)]
 (1) as a direct result of his own actions, the plaintiffs bears at least substantially equal
responsibility for the violations he seeks to redress, and
 (2) preclusion of suit would not significantly interfere with the effective enforcement of
the laws and protections of the public
 Balances the degree of culpability of plaintiff and defendant (plaintiff’s conduct must be
“at least as bad” as defendant’s
 Recovering Fruits of Plaintiff’s Wrong: the courts will not aid a plaintiff whose claim had its inception
in the plaintiff’s own wrongdoing, whether the victim is the defendant or a third party
 Equitable Estoppel: Where a party, by his own actions or statements, induces a party to act in a way
she otherwise would not, that person is equitably estopped from denying those statements or actions.
[Geddes (Ill. 2001)].
o Summarized: “an act or statement inconsistent with the right later asserted, reliance, and injury”
[Utah’s formulation]
 (1) misstatement or action by plaintiff
 (2) reliance by defendant
 (3) injury to defendant
o Elements: the party claiming estoppel must show [Geddes (Ill. 2001)].
 (1) the other person misrepresented or concealed material facts;
 Representation need not have been fraudulent or intended to mislead/deceive
 (2) the other person knew at the time of the representation that they were untrue;
 (3) the party claiming estoppel did not know the misrepresentations were untrue when
made and when they acted upon them;
 (4) the other person intended or reasonably expected the party claiming estoppel would
act upon the misrepresentations;
(5) the party claiming estoppel reasonably relied upon the representations in good faith to
his or her detriment;
 (6) the party claiming estoppel would be prejudiced by his or her reliance on the
representations is the other person is permitted to deny the truth thereof.
 Notice?  some courts require that the party to be estopped had to know of the
misrepresentation, others say even good-faith misrepresentations that become untrue
because of changing circumstances can be estopped
o Available at Law: Available in suits for damages and suits for injunction
o Can be used as an affirmative defense OR to defeat an affirmative defense
o Gov’t EXCEPTION: the government cannot be estopped
 Waiver: the intentional relinquishment of a known right
o Implied Waiver: When a party to a contract is aware of conduct on the part of the other party that
constitutes a breach and fails to protest that breach while continuing to perform the contract, that
party may be held to have waived its right to rely on the breach in subsequent litigation [CarrGottstein (Alaska 2008)]
 Reasonable Person Standard: Neglect to assert a right may serve as an implied waiver or
estoppel when it is such that “it would convey a message to a reasonable person that the
neglectful party would not pursue the legal right in question in the future.” [CarrGottstein (Alaska 2008)]
 Knowledge giving right to assert a breach
 Unreasonable delay in asserting a breach or claiming benefit
 Acceptance of continued performance
 Intention to waive is immaterial
 Burden of Proof: Courts may require proof implied waiver by clear convincing evidence
o Defendant need not prove reliance
 Laches Rule: A laches defense requires that defendant show: [Arizona Libertarian (D. Ariz. 2016)]
o (1) Plaintiff unreasonably delayed bringing suit against the defendant; and
 Unreasonable delay: court considers
 justification for delay
o Poverty or inability to find a lawyer is insufficient justification
 extent of plaintiff’s advance knowledge of the basis for the challenge
 whether the plaintiff exercised diligence in preparing and advancing his case
o (2) Defendant or the administration of justice suffered prejudice because of unreasonable delay
 Prejudice to Defendant: a court considers only prejudice that sems from the plaintiff’s
delay in bringing suit, not merely difficult that stems from the plaintiff’s bringing suit.
 Ex: lost evidence, speculating at defendant’s expense (leaves risk of loss to
defendant but sues to capture gains if things go well)
 Prejudice to Admin. of Justice: In election litigation, a court considers prejudice to the
courts, candidates, citizens, election officials, and voters
o Laches & Statute of Limitations: Laches cannot be used to bar a suit for legal remedies filed
within the statute of limitations  estoppel might
 Statute of limitations: bars suits brought for legal or equitable relief outside statutory time limits
o Defendants may be estopped from asserting statute of limitations
 Continuing Violations: The commission of a separate new, overt act generally does not permit the
plaintiff to recover for earlier injuries caused by old overt acts outside the limitations period [Klehr
o Damages for the period of injury that accrues during limitations period [Hanover Shoe (1968)]
 Exception: Hostile Work Environment
o Requires that the violation must continue, the harm must continue, and the continuing violation
must cause the continuing harm [Hanover Shoe (1968)]
Claim Accrual: the claim accrues as soon as the right to institute and maintain suit arises [Debiec (3d
Cir. 2003)]
o Discovery Rule (Tolling) Exception: the statute of limitations begins to run when the plaintiff
knows, or reasonably should know (1) that he has been injured and (2) that his injury has been
caused by another party’s conduct. [Debiec (3d Cir. 2003)]
 The party, through no fault of his own, does not discover the injury until after SOL
 Runs when plaintiff discovers her claim, NOT when she gets evidence to prove it
 Tolls the SOL until plaintiff knows of the facts; immaterial whether she knows the law
 Due Diligence Requirement: plaintiff must have exercised due diligence in investigating
his or her physical condition.  reasonable diligence is an objective standard
 Codified for claims of security fraud [28 USC §1658(b)(1)(2)]
 Statutes or Repose: may provide an outer limit barring suit
 Class Actions: if one set of plaintiffs files a class action the SOL is tolled for all members
of the alleged class. [American Pipe (1974)]
 Does NOT apply to statutes of repose
 Does NOT apply to subsequent class actions, only individual claims can take
advantage of the tolling
o Other Possible Approaches: the time in which plaintiff must sue can run from
 the date of defendant’s wrong,
 the date of injury, or
 the date the wrong is or should have been discovered
Fraudulent Concealment Defense (Equitable Tolling): Equitable estoppel allows a claim to be
brought that would otherwise be time barred where representations or conduct induced a party to
postpone bringing suit on a known cause of action or where an action which is unknown to a party is
fraudulently concealed. [Knaysi (11th Cir. 1982)]
o Defendant has control and superior or exclusive knowledge of facts necessary for the plaintiff to
make out a cause of action;
o Defendant by affirmative misstatements conceals these essential facts from the plaintiff
 Majority Rule: mere silence is not fraudulent concealment; except for fiduciaries,
defendants have no duty to disclose
 Due Diligence Requirement: limitations generally run from the time plaintiff should have
known she had a cause of action even if defendant continues to conceal it
 Civil Coercive Contempt: power to impose fines payable to the state or jail time as a means to coerce
defendant’s compliance with the court’s order.
o Ability to Purge: a non-compensatory fine is only civil where the contemnor has the opportunity
to purge; otherwise it is a criminal penalty subject to due process. [Bagwell (1994)]
 In some cases involving civil contempt, criminal due process must be afforded
o Coercive Requirement: Where coercive power is lost, the coercive contempt must be ceased as
improper punishment [Anyanwu (N.J. Supp. 2001)]
 Impossibility: Defendant cannot be imprisoned for failing to do the impossible
 Stubbornness: coercive imprisonment must cease, although compliance is possible, if
there is no reasonable prospect of coercing the defendant’s compliance.
Burden of Proof: Defendant bears the burden of proving impossibility and cannot rely on
general assertions (be specific)
o Witnesses: A federal witness refusing to testify cannot be held more than 18mo [28 USC § 1826]
o Collateral Bar Rule does NOT apply
 Civil Compensatory Contempt: power of the court to award damages to the plaintiff for defendant’s
failure to comply with the court’s order.
o Defendant injured plaintiff  seek to restore plaintiff to rightful position
o Measuring damages: like an action or damages OR restitution
 Criminal Contempt: power of the court to punish a defendant’s willful failure to comply with the
court’s order.
o Due Process Requirement: Contempt proceedings based on out-of-court disobedience to impose
non-compensatory fines must utilize criminal procedural protections such as the right to a jury
trial. [Bagwell (1994)]
 Right to Jury Trial:
 Defendant cannot be sentenced to more than 6 months in jail without a jury trial
[Bloom (1968)]
 Substantial criminal fines may be imposed without a jury trial, and the upper
limits are undefined, but $52 million in Bagwell did require a jury trial.
o Collateral Bar Rule: the offense of contempt is complete when defendant willfully violates an
injunction, even when the injunction is later determined to be erroneous [Walker (1967)]
 THUS, Defendant cannot question the validity of the injunction in a prosecution for
criminal contempt.
 Contempt of Anticipated Injunctions: Willful removal beyond the reach of the court of the subject
matter of the litigation on appeal is, itself, a contempt of appellate jurisdiction. [Griffin (4th Cir. 1966)]
 Notice – general rule: defendant is not in contempt unless she knows about a clear order and disobeys it
 Execution: a court order seeking to enforce a judgment.
o Process:
 (1) court issues a writ (judgment lien),
 (2) writ is delivered to sheriff or constable,
 (3) she levies on the debtor’s property,
 (4) she eventually sells the property on which she levied
o Dominion: A party becomes a lien creditor when an officer asserts dominion over the property in
the execution of a writ [Moniger (Neb. 1979)]
o Priority: Generally, first in time, first in right  state statute usually sets priority
 Secured creditors properly noticed have a superior right to the judgment creditor
 Exceptions: Federal Tax Liens, Government priority over other unsecured claims
o Exemptions:
 Homestead Rule
 Immediate personal possession; necessities
 Some pension funds (federal statute)
 Garnishment: an independent action against a third-party who owes money to the judgment debtor
o Liability of the garnishee: A garnishee is liable to the garnishor creditor for all debts which the
garnishee owes to the defendant debtor at the time the writ of garnishment is filed as well as any
similar debts incurred up until the garnishee files a complete answer disclosing all such debts.
[Dixie (Fla. App. 1986)]
o Limits: Statutes may limit the amount that can be garnished from wages (federal law caps at the
lesser of 25% of debtor’s wage or 30x minimum wage; exception for family law context)
o Post-judgment discovery is possible, including depositions, interrogatories, etc, and the full array
of contempt powers are available
 Freeze Order: type of preliminary injunction that prevents defendant from transferring specific assets
pending judgment.
o Elements: Plaintiff seeking a freeze order must show:  follows preliminary injunction requ.
 (1) there is a cause of action for which is probable the plaintiff will succeed on the merits;
 (2) irreparable harm would come from a denial of the order
 Balance the harm to the plaintiff if the court fails to grant the order with the harms
to defendant if court erroneously grants the order
o May require a bond be posted
 Attachment: preliminary garnishment or seizure before judgment
o Elements: Plaintiff must show: [In re Hypnotic Taxi (Bankr. NY 2016)]
 (1) there is a cause of action for which is probable the plaintiff will succeed on the merits;
 (2) one of the grounds for attachment applies;
 Generally includes an intent to defraud
 (3) the amount demanded from the defendant exceeds all counter-claims known to
o Third Party Transfers: Courts may attach assets a debtor transfers to third parties with intent to
defraud creditors. [In re Hypnotic Taxi (Bankr. NY 2016)]
 Determining intent to defraud  “badges of fraud” [Hypnotic Taxi (Bankr. NY 2016)]
 Lack of or inadequacy of consideration;
 Family, friendship, or close associate relationship between the parties;
 Retention of possession, benefit of use of property;
 Financial condition of the party sought to be charged both before and after
transaction in question;
 Existence or cumulative effect of a pattern or series of transactions or course of
conduct after incurring the debt, onset of financial difficulties, or pendency or
threat of suits by creditors;
 General chronology of the events and transactions under inquiry
 Receivership: preliminary injunction that allows a neutral third party to run and ono-going business or
take steps to wind it down, during a dispute involving the business.
o Availability: A receiver will only be appointed where the plaintiff has shown that a special fund
exists to which the plaintiff has a right to resort for the satisfaction of his claim and that the
property or the income arising from it is in danger of loss from neglect, waste, misconduct or
insolvency. [W.E. Erickson (Ill. App. 1983)]
 (1) special fund which the plaintiff has a right to resort to in satisfaction of his claim;
 (2) Income arising from the special fund is in danger of loss from neglect, waste,
misconduct, or insolvency
o Application Examples:
 Action by a vendor to vacate fraudulent purchase of property
 Action by a creditor to subject any property or fund to his claim
 Action between partners or others jointly owning or interested in property/fund
 Action by a mortgagee for foreclosure of the mortgage and sale of the property
 Corporation that is insolvent, in imminent danger of insolvency, has been dissolved, or
has forfeited its corporate rights
 American Rule: in the absence of a provision in a contract or as provided by a statute, each side to a
lawsuit bears its own attorney’s fees.
Exceptions to the American Rule:
o §1988: authorizes district courts to award reasonable attorney fees to prevailing parties in
covered civil rights litigation.
 Determining Reasonableness (Lodestar Method): the most useful starting point in
determining reasonable fee is the number of hours reasonably expended multiplied by a
reasonable hourly rate [Rivera (1986)]
 Considerations [Johnson (5th Cir. 1974)]
o Time and labor required
o Novelty and difficulty of the question
o Skill requisite to perform legal services properly
o Preclusion of employment by the attorney dye to acceptance of the case
o Customary fee
o Whether the fee is fixed or contingent
o Time limitations imposed by the client or other circumstances
o Amount involved and results obtained
o Experience, reputation, and ability of attorneys
o Undesirability of the case
o Nature and length of professional relationship with the client
o Awards in similar cases
o What a defendant spent to defend against the claim
 Hours that cannot be proved cannot be counted
 Impact of fee contracts  wholly independent of one another
o Statutory fee award is not limited by the fee agreement
o Plaintiff’s liability under a fee agreement is not limited to the amount of a
statutorily reasonable fee
 Scope of Recovery: Where a plaintiff has obtained excellent results, his attorney should
recover full compensation of fees [Rivera (1986)]
 Not conditioned upon and need not be proportionate to award for money damages
 Settlement Exception: A civil rights defendant is not liable for attorney fees incurred after
a pretrial settlement offer where the judgment recovered by plaintiffs is less than the offer
[Rivera (1986)]
 One-way Fee Shifting:
 Prevailing plaintiffs should recover fees as a matter of course, unless special
circumstances make an award unjust [Albermarle (1975)]
 BUT, prevailing defendants recover fees only when plaintiff’s claims were
“frivolous, unreasonable, or groundless, or plaintiff continued to litigate after it
clearly became so.” [Christianburg (1978)]
 Nominal Damages: in civil rights litigation, where a court awards only nominal damages,
the reasonable fee is often zero; BUT many courts allow attorney’s fees to be recovered if
the litigation, in addition to obtaining a nominal award, “also accomplished some public
goal other than occupying the time and energy of counsel, court, and client.” [Farrar
(1992) (J. O’Connor, concurring)]
o Bad-Faith Litigation Exception: courts have power to award attorney fees to punish bad-faith
litigation [Chambers (1991)]  Not limited by the American Rule and federal courts sitting in
diversity jurisdiction can award them. Even if that state court would not award fees for the same
o Contempt-of-Court Exception: a court may assess fees for the willful disobedience of a court
order [Toledo (1923)]
o Contract Exception: courts will enforce contractual provisions for reasonable attorney fees
o Collateral-Litigation Exception: when defendant’s wrong involves plaintiff in collateral
litigation, plaintiff can recover the expenses of that litigation, including attorney’s fees, as
consequential damages [TXO (1993)]
o Common-Fund Exception: Where a case creates a common fund in which others will share,
plaintiff and her attorney are entitled to. fees from the fund.
o Statutory one-way fee shifting: some statutes expressly only authorize fees to prevailing plaintiff
Prevailing-Party Requirement:
o Partially Prevailing Plaintiffs: Unrelated claims should be treated as separate lawsuits [Hensley
o Partially Prevailing Defendants: Where a defendant shows some, but not all claims were
frivolous, a but-for standard applies: defendant can recover those fees that would not have been
uncured but for the frivolous claims.
o Relief on the Merits Requirement: the prevailing party requirement mandates material alteration
of the legal relationship of the parties in a manner sought to promoted by the fee statute
o Consent Decrees: a consent decree is enough to make plaintiff a prevailing party.