Class One: 8/9/2021
I.
Introduction to Remedies *injunction on midterm but not final. Maybe.
● The law of remedies
- This is the type of relief a court can grant a party.
- Somewhere between substance and procedure. Remedies give meaning to obligations imposed by
substantive law.
- The potential consequences of violations of civil obligations imposed by our legal system. It’s not a
“body of law” in itself.
● Classifications of remedies
- Damages
o Compensatory and punitive are damages. These are remedies at law.
- Injunctions: Preventive and coercive. These are equitable remedies.
- Declarative is declaratory judgments.
- Restitution returns specific property. This is S from D’s gain, not Ps loss.
o Equitable remedy but involves the payment of money.
- Ancillary is attorney fees, interest and costs, collection.
II.
Right to Jury Trial
● Early dispute resolution methods
- Compurgation= oath helper swore that something was true.
o This was a defense primarily used in medieval law.
o You establish you are innocent by getting 12 men to swear they believed you.
- Trial by ordeal/divine intervention.
o Person’s truthfulness measured by whether a wound inflicted by the church healed.
o Ex: Heat an iron or water, put arm in it up to elbow, bind it and wait 3 days. If it got infected
you were guilty/lying. If it was clean you were innocent/truthful.
- Trial by battle
o After 1066 “new” and improved method of ordeal for non-criminal matters. You fought it
out.
- Romans
o Used juries to extract information to make tax assessments.
- 12th– 16th Centuries
o King henry II started using juries to establish the King’s court.
o The original jurors knew the parties and were able to provide their own knowledge into the
resolution of the dispute.
o Common law: developed using a writ system. Expensive and complex. Juries allowed.
o Equity: more flexible, no jury trials.
● Jury trials in the US
- United States Constitution, 7th Amendment: “in suits in common law where the debt or demand is
more than 20.00 the right to trial by jury shall be preserved.
o How was this claim evaluated when the country was founded? Did this exist then?
o What is the remedy? Most important part because the first question is usually going to be no.
- Chauffeur’s Local 391 v. Terry 1990
o Truck drivers, plaintiffs, were in dispute with other truck drivers who had been fired. They
were both a part of the union but the union only represented the OG employees. The
plaintiffs filed suit against their union for inadequate representation. The issue was whether
this was a common law or equitable action.
o The court asked
1. Historically, was this type of case governed by the common law in 1791? Historically
would this be the type of suit that would have been at common law?
2. What is the remedy?!: is the plaintiff seeking a legal remedy or an equitable remedy? The
type of remedy will govern if historical analysis is not directly on point.
o Here the remedy was back pay. That restores future pay, not pay they have already lost. The
union argued there weren’t really damages, it was an equitable restitutionary remedy.
o The SC here said back pay was damages more than an equitable remedy. It wasn’t
restitutionary for the union, it would have been for the employer. The right to a jury trial
exists here because the remedy is damages. Damages= legal (at common law).
o GENERALLY, MONEY= JURY TRIAL.
● Tennessee- Jury Trials.
- Our jurisprudence
o Favors the common law remedy. For example, a basis for denying equitable relief is that an
adequate remedy at law exists.
o Reluctant to find loss of right to jury trial absent specific historical tradition/precedentinjunctive relief or statutory elimination.
- Jury trials in TN
o Right to jury trial in TN as it existed at common law is protected by the TN Constitution.
There is no state constitutional right to a jury trial for claims or proceedings established after
the adoption of the State Constitution in 1796.
o The General Assembly is free to fashion new remedies that do not include use of a jury.
- Tennessee jury rights
o Chancery and circuit courts in TN
▪ Circuit court
▪ Traditionally a common law court. has always been a place for jury trials.
▪ General sessions court
▪ Arm of the circuit court. does not have jury trials. They are available by e
novo appeal to Circuit Court.
▪ Chancery Courts
▪ Have jury trials.
▪ TCA § 21-1-103: either party to a suit in chancery is entitled to a jury to try
and determine any material fact in dispute save in cases involving complicated
accounting. This section has been interpreted to extend the right to a trial by
jury to cases of purely equitable nature.
- TN. R. Civ. P. 39
o Trial by Jury
▪ Rule 39.0: jury demand for a jury trial- will have on all issues unless the court finds
that no jury trial right exists under the law.
▪ Rule 39.02: even if technical demand failure- court may allow in discretion.
*basically if they don’t do it right the court can still allow them to have a jury.
o Sneed v. City of Red Bank, TN. 2014
▪ Sneed sued the city after being fired as the chief of police. He claimed it was age
discrimination. The issue was whether he was entitled to a jury trial or not.
▪ The court determined the TN Human Rights Act applied, not the Govt Tort Liability
Act.
▪ The court determined he was entitled to a jury trial under the THRA age
discrimination claim because
1. The legislature chose not to prohibit jury trials on these claims against govt entity
employers.
2. They did not distinguish between governmental and nongovernmental employers
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3. Vesting jurisdiction of such civil actions in chancery court, where the right to trial
by jury is statutorily guaranteed.
o Note: Jury trials are allowed in all post 1796 created matters except in matters expressly
excepted by the … Code.
▪ What is excepted by the Code?
▪ Administrative law matters
▪ Workers comp
▪ Contempt
▪ Govt tort liability act
Constitutionality
o McClay v. Airport Mgt. Services. TN SC 2020
▪ Personal injury action against the airport seeking damages for injury she received at a
store there. McClay was allowed non-economic damages by the jury and the judge
applied the cap under the law. Plaintiff argued the cap was unconstitutional, violated
the jury right, and the separation of powers. The court held the statutory cap on
non-economic damages is constitutional.
1. It doesn’t violate right to trial by jury. The jury gave them the damages. The judge
just applied the cap.
2. Doesn’t violate equal protection. Legislature can do away with any right.
3. Does not discriminate against women.
o Lindenberg v. Jackson National Life, 6th Cir. 2018
▪ Held punitive damages caps are unconstitutional. They said McClay was wrongly
decided.
● Additional Important cases
- Beacon Hill, US 1959
o Cannot deprive the d of right to jury trial by filing an equitable action. D can file
counterclaim that is a common law remedy and seek a jury.
- Tull v. US, US 1987
o Government suit for injunctive relief and civil penalty. D is entitled to jury trial on issue of
liability for civil penalty.
III.
Intro to Damages and Compensatory Damages
● Legal damages vs any other type of relief
- Damages
o Award of money as compensation for loss
o In suits a common law damages were the only remedy.
- Injunction
o Order to stop doing something
- Restitution
o Return of money/property
o Allocation of benefit (gain)
- Ancillary relief
o Attorney fees, interest, etc.
● Compensatory Damages ****
- Basic measure of damages. The fundamental principle is to restore the injured party as nearly
as possible to the position he would have been but for the wrong doing. ****ON MIDTERM!
- TN Version: to restore the injured party, as nearly as possible, to the position the party would have
been in had the wrongful conduct not occurred. Waggoner Motors v. Waverly Church of Christ.
- US v. Hatahley, 10th Cir. 1958
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8 Navajo families lived for generations on range land owned by the US. US rounded up their
horses and burros and sold them to a glue factory. They wrongfully took animals belonging
to the P’s. The trial court awarded 395 for each horse, pain and suffering of 3500 per person,
plus damages for the loss of use.
o The court reversed. You must always have proof. All horses and all burros were not worth
the exact same amount nor was every person’s pain and suffering the same.
Tennessee Pattern Jury Instruction: T.P.I- Civil 14.01
o Award damages that will reasonable compensate the P for claimed loss or harm which has
been proven..
How do you prove value?
1. Expert testimony
2. Prior quotations in an active market.
3. Owner’s opinion.
o Owners testimony is admissible as to the value of the owner’s own property.
o May still attack credibility-challenge how much weight to give the testimony but it is some
evidence.
In re Sept 11th Litigation S.D.N.Y. 2008
o Suit by owner of WTC against the airlines and others for negligence. The issue was what
measure of damages for the loss of the WTC. The Lesser of the 2 Rule- in NY when property
is totally destroyed. Plaintiff is entitled to diminution of the fair market value or replacement
cost, WHICHEVER IS LESS. Other arguments that were rejected here were specialty
property and lost rent.
o The court looked at the value at the time of the damage so it did not fall under the special
purpose property exception. They just had determined the value of the property when he
bought it 2 months before the terrorist attack. Thus, you couldn’t argue it was any more than
that.
o WTP didn’t win on the lost rent argument because it’s a negligence case NOT a contract
case. It wasn’t an intentional act, it was a negligent act so there is a different analysis.
Special purpose property
o Trinity Church Case in Boston was damaged during construction of Copley Tower. It was
built in 1877 and it suffered damage in the 1980s from blasting for Copley Tower. Church’s
counsel came up with special theory of damages. The “take down” theory measures the
damages as what is it going to take to fix the church so the extend of its life is not
diminished by the damage. The point is if special purpose property, may be able to
suggest special damage measure.
o Some special purpose whose value may not necessarily be reflected in the “market” value. If
you are able to establish its special use property, it allows you to come up with a way to
reasonable calculate damages.
▪ Church property
▪ Government property
▪ Maybe a classic entertainment venue Ex: Ryman auditorium.
Measuring value: basics
o Lesser or 2 Rule (as modified in Tenn): reasonable repair cost or if not reparable difference
in fair market value (fmv) before the injury and after the injury.
o General valuation rule: P is entitled to be made whole but in the least expensive way.
▪ P is entitled to 1. The cost of repair or 2. The diminution in fair market value
whichever in less.
o Sentimental Value
▪ Generally, not recoverable even as evidence of mental anguish.
▪ P is only entitled to fair market value of property lost. Not sentimental value.
▪ TCA 29-39-102(k): Noneconomic damages are not permitted for any claim arising
out of harm or loss of property, except as authorized by statute.
● Important universal rules
- One satisfaction rule: P may recover under multiple theories, but gets only 1 satisfaction.
- One collection rule: a judgment against multiple Ds, if paid in fully by one, releases them all.
- General lesser of 2 rule: P may recover the lesser of the diminution of the property’s market value
or cost to repair.
o Diminution of fair market value is generally the measure of damages for damage to property.
● TN Rules
- T.P.I. 14.45 Damage to Real Property
o The measure of damage to real property is the less of:
1. The reasonable cost of repairing the damage to the property; or
2. The difference between the fair market value of the premises immediately before and
immediately after the damage.
- TN- Real Property and Personal Property Rules are slightly different
o The measure of damages for personal property in TN is
▪ If it can be restored to its function, value and appearance, the cost of repair.
▪ If it can’t be restored to its function, value and appearance.
▪ Then the measure is the difference in market value and after the damage.
o T.P.I. 14.40
▪ Cost of repair, unless cannot be repaired. If it cannot repair then the difference in fair
market value. Tire Shredder case.
o T.P.I. CIVIL 14.42 Personal Property Destroyed
▪ The measure of damages for personal property either lost or destroyed is the fair
market value of such property at the time and place of its loss or destruction.
o T.P.I. CIVIL 14.43- Loss of Use NOT destroyed
▪ The measure of damages for loss of use is reasonable compensation for being
deprived of the use of the property during the time reasonably necessary for repair of
the damage caused by the incident.
▪ You may consider the reasonable rental cost of an automobile for that period of time.
o Bickers v. Chrysler Credit *just an example case.
▪ Chrysler repossessed Bickers’ truck. He paid and regained possession then sued for
damage to his truck while it was in the Ds possession. Trial court awarded 250 and
disregarded the owner’s testimony that FMV of truck was diminished by 1500. Court
of appeals affirmed.
▪ If its capable of being repaired, it’s the cost of repairs. If not, they get the fair market
value. Owner chose to put on proof only of diminution of fair market value. Its not up
to P to chose.
o Durkin v. MTown Construction Tenn. Ct. App. 2018
▪ Durkin purchased historic home in Memphis. He was getting MTown to replace the
roof and a storm hit. The house severely flooded due to faulty tarps used by the Ds.
Ds insurance company estimated 24, 678 in damage. Durkin hired his own contractor
who estimated it to be 33, 455 more than the insurance co had said. Durkin hired
another consultant who estimated the mold and mildew restoration to be 60,791 and
roof defects another 7,000.
▪ Trial court said it was the diminished value of the home which they found to be
118,500. Court of appeals said proper damages were the less of either the reasonable
cost of repairing the injury or the difference in value immediately before and after the
injury. The trial court did not make a finding on the reasonable cost of repair so it was
remanded to determine that. Proof must be offered as to both.
o Tire Shredders v. ERM Tenn. Ct. App. 1999 *GO TO CASE FOR LOST PROFITS IN THE
CONTEXT OF DESTROYED PROPERTY*
▪ ERM entered into a contract with Nissan to destroy and dispose of some boats at their
facility. ERM subcontracted with a few people to get the job done. TSI provided a
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shredding machine and it was completely destroyed in a fire. TSI was in the business
of using this machine for profit. The FMV of it was 183,000 and TSI also sued for
lost profits. TSI said there was an exception to the general rule when the
destroyed property is commercial property and cannot be replaced within a
reasonable period of time.
Trial court allowed TSI to pursue for lost profits. Jury awarded 183,000 plus
1,117,000 in lost profits. Court of appeals agreed. Since the machine could not be
replaced within a relatively short period of time TSI may recover its loss profits.
It was reasonable here for the D to pay for lost profits because there was a
contract. They were getting a new machine but it was going to take awhile. It
wasn’t speculative here. They couldn’t say they didn’t know what they were
using the machine for, everyone was present at the job site and it was in the
contract.
Value of machine was recovered + lost profits since it was a contract case.
● Condemnation cases- Eminent Domain
- Market value only measure in federal eminent domain cases. At the federal level there is no
incidental or consequential damages.
- TN Eminent Domain
o If the state takes your property, the recoverable damages are:
▪ The fair market value of the land actually taken plus the injury done to the residue
of the tract.
o The measure of FMV=the highest and best use (not its actual use)
Class Three: 8/23/2021
● Spoden’s guidelines
- Thomas and Betts v. Hosea Moving Co *Spoden represented Hosea
o T and b hired Hosea to move manufacturing plant from Boston to Mexico. There was 16
machines and the 2 was damage beyond repair on sept 6. T and b got an estimate for 67,500
dollars for a replacement machine that was similar on October 24 but never replaced the
machine and they did not pay Hosea the balance of the contract. T and B claimed damages
for the loss of the machine and 7 million dollars in lost profits (before trial it was decreased
to 1 million). They claimed the lost profits arose out of increased cost to make parts on other
machines due to the loss of 2 machine.
o T and B said on the moving form that the machine was worth 30,000 dollars but they then
argued it was not the fair market value. T and B’s expert said it was 200,000 but didn’t have a
formal appraisal on it.
o Hosea argued the fair market value was 67,500 dollars.
o The jury found for T and B for the lost machine for 87,500 dollars. Gave them 0 for lost
profits. The jury found for Hosea for 260,00, 180,00 for contract and 80,000 for prejudgment
interest, for failure to pay for the balance of the contract.
- Compensatory damages include all non-punitive damages, including direct, incidental, and
consequential damages. *just focus on putting the plaintiff in the place they would have been
without the wrong.
- Direct and ordinary damages are synonymous
o Damages that are ordinarily expected to flow from certain conduct.
- Cover damages are direct/ordinary damages.
o UPC 2-712
▪ Buyer may “cover” by purchasing goods in substitution for those due from seller.
▪ ****ON TEST: Buyer may win the difference between the cost of cover and the
contract price + any incidental and consequential damages.
- *Important- Incidental damages: These include:
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Cost of effecting “cover”
Additional finance charges
Expenses in inspecting and testing the goods
Amounts paid for insurance
Cost of storage, care, and custody of damaged property.
Buyer’s remedies if seller fails to deliver or buyer properly rejects or revokes acceptance
▪ Damages are the amount of cover price over contract price + incidental and
consequential damages.
- Special damages
o Tenn. Rule Civ Pro 9.07: when items of special damage are claimed, they shall be
specifically stated. They must be pled in the complaint.
▪ Basically nobody knows what they were so they plead everything.
o Attorney fees are special damages.
o Prejudgment interest and front and back pay are NOT.
- *Important-Consequential damages
o *Plaintiff is usually entitled to these damages absent some contractual provision to the
contrary. BUT the level of the proof needed is different here than incidental damages.
o Damages arising as a consequence of D’s conduct.
o Need to be direct. Indirect damages are generally not recoverable.
o Lost profits are a classic example.
- Breach of real estate contract
o Seller is entitled to the difference between the contract price and the fair market value of the
property at the time of the breach. Note: often seller is able to resell at same or greater
price-so no lost profit damages.
o Seller may also recover consequential damages. These are a requirement within the
reasonable contemplation of both parties at the time the contract was made.
▪ Music studio in house example.
o Hadley v. Baxendale: p is entitled to recover for those consequences of breach that were
within the contemplation of the parties when they made the contract.
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● Lost profits
- The biggest problem is overreaching by P. do not think that means that lost profits are not
recoverable.
- Properly proven lost profits are recoverable.
- Profit ****
o Revenue is the dollars received from sales and expenses are what you expended. Revenue+
expenses = profit.
o Expenses
- Turner v. Benson Tenn. 1984
o Turner entered into a contract with Benson to sell their home for 75,000. It was modified to
be a daycare center and Benson knew that. He also knew they planned to stop the day care
after selling the house and move. Turner contracted to buy another house when they knew
Benson had secured the funding for the house. Benson failed to close so Turner had two
residence. They didn’t resume operations of the daycare. Turner ultimately sold their house
for 76,000 and then bought suit for 30,000 in damages. Trial court awarded 14,500 which
was everything turners wanted (incidental damages for the cost of the loan they had to get in
interest to keep the second house) except lost profits. The court didn’t award
consequential damages because the Turners had no intention on continuing to run the
daycare once it was shut down and it wasn’t in the reasonable contemplation of both
parties. They didn’t restart the daycare either so they weren’t entitled to that money.
- Ferrell v. Elrod Tenn. Ct. App. 1971
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Elrod owned a property and agreed to lease it to Ferrell. Ferrell planned to run a cosmetology
school and it was a lease for 400 per month for 10 years. The lease stated Elrod would do a
lot of the adaptations to make it into a cosmetology school. She didn’t do that so Ferrell
never moved in. Ferrell got another place for substitute premises 100 more a month. Ferrell
couldn’t move into the new premises for 9 months. The trial court gave 100 per month for the
difference and lost profits for the 9 months.
o Elrod argued she wasn’t entitled to the lost profit because it was speculative. Different time
and location and they used the tax returns for the year after. It was a new business that she
had never started. Ferrell was looking backwards. At the time of the breach she had no
experience. She was entitled to seek consequential damages but the entitlement to recover
them is based on the legitimacy of the proof she presents.
o The court said she was able to recover the lost profits because her first 9 months in
operation she had a ton of sales. She defeated the new business rule because she was
successful. Normally new businesses are not thought to do well because alot of them
don’t last. She had good proof.
Black v. Love and Amos Goal Tenn. Ct. App. 1947
o They entered into a contract to deliver coal over a long period. L and A failed to deliver 122
of the agreed upon cars of coal so Black sought lost profits of 1. 62 per ton= 9,150. Black
was awarded lost profits and L and A challenged them.
o The tax returns that she submitted showed a loss, not a gain. Black’s proof was lacking.
Supreme Court affirmed the award. They gave her 2,000 dollars because the judge went
through and found the reasonable amount for what she would have gotten and how much
reasonably was her cost of business and calculated it out. Basically because the market
conditions she was entitled to some damages even though she didn’t prove it well.
Ingram Barge case
o Large lost profit award. Even though the company did not suffer loss of profit by the
company as a whole. Loss of profits on specific contract still allowed.
● Reliance v. expectancy
- Reliance damages can be thought of as your out of pocket damages.
- Expectancy damages are measured by what was expected had the contract been performed. These
are measured by the benefit of the bargain.
o Benefit of the bargain
▪ Generally, in a breach of contract case damages are measured by this rule. The
presumption is that you should live up to your promises.
- Measure of damages for breach of warranty ** don’t miss this on Midterm
o UCC 2-714: Difference between the value of the good as represented and the value of the
good actually delivered. Plus incidental and consequential damages.
o UCC 2-715(2): any loss the seller had reason to know as being likely at the time of
contracting and which could not be reasonably prevented by cover. Anything proximately
resulting from the breach.
- Chatlos Systems v. NCR 3rd Cir 1982 *probably wouldn’t be the same ruling today.
o Chatlos paid 46, 020 for computer system from NCR. The computer didn’t get programed till
much later than it was supposed to. Chatlos brought a breach of warranty claim. Chatlos
expert testimony said that a computer as warranted by NCR had a value of 207,826. NCR put
on no proof other than that the purchase price of the computer was 46,020. NCR responded
that this computer could do no more than it really could do. Value as delivered was 6,000
according to the trial court. no consequential damages were sought.
o The sales agreement in this case warranted that the system would be free from defects for 12
months, excluded liability for consequential damages, and limited NCR’s responsibilities to
the correction of any errors or defects within 60 days. The court here agreed that the limited
repair remedy had failed its essential purpose but reversed the trial court’s award of
consequential damages. The difference between the value of the goods accepted and the
value the computer would have had if it had been warranted = 201,826.50.
- Tort vs. Contract
o Tort cases: compensate for loss by putting the party in the position they were before the loss.
Reliance damages.
o Contracts: parties voluntarily enter into transactions with certain expectations that are
expressed in the contracts themselves. Expectancy damages.
o NOTE: Look for statutes!
▪ Smith is now covered by the Securities Act of 1934.
▪ Tennessee Consumer Protection Act provides for treble damages 3x in cases of
willful misrepresentation.
o Smith v. Bolles US 1889
▪ Bolles bought stock in Mining Co for 1. 50 per share and Smith told him it was worth
10.00 per share. Is Bolles entitled to his expectancy damages or reliance damages?
▪ There are NO EXPECTANCY DAMAGES IN TORT CASES. You only get what
you lost. He only lost money up to 1.50 per share here.
- Buck v. Morrow Tex. Civ. App. 1893
o Morrow leased pasture to Buck for 5 years at 125 dollars per year. The lease provided that if
Morrow sold the land, Morrow should compensate Buck for any and all losses caused by the
sale. He sold the land when the lease term ended. Buck ran 140 head of cattle on the land and
was unable to find a replacement land. He had to use an open range and hire additional hands
at 1.50 per day. He lost 15 cattle anyway that were worth 15 a piece.
o Trial court held that Buck’s damages were limited to the value of the pasture for the balance
of the lease, aka no consequential damages. The court of appeals reversed. The trial court
was correct for the direct damages, but the consequential damages Buck suffered were
recoverable especially giving the terms of the lease.
● Money debt rule
- *this applies to any agreement for the payment of a debt in money. Only damages that P can recover
in a suit for failure to pay money are the debt plus the interest.
o Interest=only type of consequential damages available in a suit for repayment of a debt.
o WHY? Money is the only thing contemplated by the contracting parties.
- Merinrath v. Singer
o Merinrath sold computers and programs. Singer breached a contract by not paying.
Merinrath. Meinrath claims “consequential damages” in the amount of U.S. $770,000. This
claim is based upon allegations that Singer knew at the time it entered into the contract that
Meinrath had substantial subsisting business ventures that would survive the Agreement; that
Meinrath repeatedly apprised Singer and its representatives of the necessity for prompt
payment of the bonus compensation as it became due in order to provide working capital for
his Unicard ventures; and that as a direct, foreseeable result of Singer’s failure to make
timely payments to which he claims he was entitled but defendant denies, Meinrath’s other
businesses suffered substantial losses.
o The court held that as a matter of law plaintiff’s consequential loss is too remote from the
main injury to be compensable and too speculative to be ascertainable; plaintiff is barred
from recovering such damages. No consequential damages are available for failure to pay
money. They could only recover the debt plus the interest here.
Class Four: 8/30/2021
● Limited Remedy Provisions *super common. *limited remedy for breach of warranty.
- Keamey Trecker Corp v. Master Engraving *majority rule.
o KTC made a specialized engraving machine for Master for 167,000. In the first year it
malfunctioned multiple time making it inoperable 25-50% of the time. The sales contract in
question here excluded consequential damages but included a repair and replacement
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warranty. The jury rendered an award for 57,000. Issue:If a limitation or exclusion of
consequential damages is not unconscionable when the contract is made, must it be held
unenforceable if the limited remedies provided in the contract do not achieve their intended
purpose? no.
o The court held that UCC 2-719 does not require the invalidation of an exclusion of
consequential damages when limited contractual remedies fail their essential purpose. It is
only when the circumstances of the transaction, including the seller’s breach, cause the
consequential damage exclusion to be inconsistent with the intent and reasonable commercial
expectations of the parties that invalidation of the exclusionary clause would be appropriate.
o ROL: The seller has to be able or willing to replace or repair the machine within a
reasonable time to hangout to the limited remedy provision in the contract. The buyer
wins by showing that the remedy failed its essential purpose by showing seller’s failure
to repair or replace within a reasonable time.
The contract
o No consequential damages.
o Buyers remedy is limited to
▪ Either repair or replacement of the defective part of the product or
▪ At seller’s option, return of the product for a refund of the purchase price.
Overcoming limitation of remedy provisions
o UCC 2-719 can limit remedies by contract.
o Can exclude consequential damages
o If the limited remedy fails of its essential purpose, then you can rely on all of the other
remedies in the code.
▪ A limited remedy fails of its essential purpose, if at a reasonable time seller has not
provided the remedy agreed upon in the contract. If it says “repair or replacement”
then seller must repair or replace the machine within a reasonable period of time.
▪ Thus, if they cannot repair or replace within a reasonable time, it has failed of its
essential purpose.
▪ *If a party gives a warranty, they can limit the remedy. If they don’t live up to
that remedy it’s as if there is no limit on the remedy.
▪ A refund is always an adequate remedy as an alternative to repair and replacement.
o TN Limited Remedy safe harbor
▪ The availability of a refund remedy will prevent a repair and replacement remedy
from failing of its essential purpose.
o Contour Medical Technology v. Flexcon Co *Example case.
▪ Plaintiff, Contour, is a manufacturer and distributor of devices used in health care to
administer electrocardiogram tests. Their devices require an adhesive that sticks to the
device on one side and the patient on the other. Contour purchased these from the
defendant. The alleged defect is that the material did not adhere correctly. Contour
brought suit and the trial court entered partial summary judgment against the
defendant on Contour’s request for consequential damages. Plaintiff appealed. The
issue was whether the partial summary judgment for D was error.
▪ In the terms and conditions of the seller’s contract it stated they would not be liable
for any general, consequential, or incidental damages. It allowed a remedy for repair
of the materials or shipment of new equivalent materials. The invoice also stated their
liability is limited to the value of material or replacement of the same. Refund was
also listed. Contour argued the limited remedy failed of its essential purpose but they
didn’t offer any proof that the D did not repair or replace.
▪ The court held that it had not failed entitling them to consequential damages. The law
states that consequential damages may be limited or excluded unless the limitation is
unconscionable and there was no evidence of that here. Contour only argued as to
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the enforceability of the limited remedy provision, they didn’t show proof to
point out that it failed of the essential purpose.
Baptist Memorial Hospital v. Argo Const. Corp
▪ Baptist Hospital, the plaintiff, hired Argo Construction for a drainage project at the
hospital. Argo contracted with Hanson, the other defendant in this case, to
manufacture and provide concrete pipes. Argo put these pipes in and after
construction a sink hole developed in the parking lot. Baptist sued Argo and Hanson
and Argo crossclaimed against Hanson seeking indemnification. Hansom moved for
summary judgment on the indemnity claim arguing it was banned because of the
exclusive remedy provision in their contract. Argo said it wasn’t and the defect in the
pipe was not discoverable so the exclusive remedy in the contract failed of its
essential purpose.
▪ Trial court and court of appeals held that it was barred. Argo appealed.
▪ The exclusive remedy provision states that if the product fails to conform to Hanson’s
warranty, Argo’s remedy is limited to repair, replacement, or refund of contract price.
The Supreme Court held that claims for indemnity are included in the language of the
exclusive remedy clause in the contract and is barred. Argo argues that it did not find
the defect until after the 1-year statute of limitations was up, therefore he could not
get the remedy of the refund as the contract provided for. The court held that the
fact that the alleged defect in the pipe was latent does not cause the contractually
limited remedy to fail of its essential purpose because Argo basically assumed
the risk in the contract. Because it was latent did not cause the limited remedy
provision to fail.
Class Five: 9/13/2021
● Liquidated Damages Provisions *agreement between the parties as to a method of calculation of
damages.
- Liquidated damages are defined as a sum stipulated and agreed upon by the parties at the time they
enter their contract, to be paid to compensate for injuries should a breach occur.
- The certainty of liquidated damages is preferable to the risk of having to prove actual damages.
Liquidated damages permit the parties to allocate business and litigation risks.
- Analysis: at the time the contract was formed was the liquidated sum
1. A reasonable estimate of potential damages AND
2. Were actual damages difficult to measure.
o If so the provision will be upheld.
o If it intended to merely penalize for breach of contract, then it is unenforceable as against
public policy.
- Severance pay
o In Cleo, Court said if severance pay then it does not have to be reasonable. Recovery by the
employee is absolute in the event of his termination regardless if the amount was a
reasonable damage assessment.
o Thus, severance is enforced to the amount agree upon period. No need to use the liquidated
damages analysis.
- Guiliano v. Cleo Inc Tenn. 1999 **** Leading Case
o Guiliano was a VP of Marketing for Cleo Inc. He signed a contract for a 3 year term from
1992-95 and had an annual salary of 103,000. Paragraph 7 of his contract stated
“compensation ceases if voluntarily quit or are terminated for cause” and paragraph 9 stated
“termination without cause, salary continues from the date of termination through 10/31/95.
in fall of 1994 he was relieved of his duties, but remained an employee and worked from
home. He was not allowed to use the company’s credit cards and Cleo no longer answered a
phoneline for him. He found a new job on December 13, 1994. His starting salary at the new
job was 110,000 and Cleo stopped paying him. He sued for the remainder of his contract
o
o
o
under paragraph 9. Cleo said this was an unenforceable penalty. Issue was whether the
provision was for severance pay or was liquidated damages and whether he should recover
anything.
Trial court gave G 90,125 in salary remaining under his contract and pre-judgment costs.
Court of appeals affirmed that it was constructive termination but reversed damage award.
They said it was a liquidated damages provision but he received no actual damages so it was
an unlawful penalty. Cleo argues it was a penalty because he had new employment and the
award was grossly disproportional to the actual damages suffered.
*contract doesn’t have to say liquidated damages for there to be some. Court has to look at
the agreement of the parties that details how damages are going to be determined. DOESN’T
MATTER HE DIDN’T HAVE ACTUAL DAMAGES!!! Parties agreed to it.
They adopted the ****Prospective approach and held he was entitled to the severance
pay because the parties agreed. If the liquidated sum is
1. A reasonable prediction of potential damages and
2. Damages are difficult to ascertain at the time of the contract formation
Then the courts will generally enforce the liquidated damages provision.****
● Liquidated Damages under the UCC
- Damages for breach may be liquidated in a contract.
- Only an amount which is reasonable considering
o The anticipated or actual harm caused by the breach
o The difficulties of proving loss and
o The inconvenience or non-feasibility of obtain an adequate remedy.
- A term fixing unreasonably large liquidated damages is void as a penalty. TCA 47-2-718(1)
- Northern Illinois Case 1984
o Case demonstrates that parties may agree upon “under liquidated damages”. P had 305
million in actual damages and the contract contained a method of calculating in the event of a
default. Net result of agreed damages provision was 13 million. Parties were limited to that
provisions.
● Avoidable Consequences/Mitigating Damages
- Basic rule
o P must take reasonable action to avoid the consequences of a civil wrong by another.
o Logically corollary to the no better position rule.
- Burden of proof is on the defendant.
o TPI 14.52 Property Damage- Duty to Mitigate
▪ A person whose property has been damaged by the wrongful act of another is bound
to use reasonable care to avoid loss and minimize damages.
▪ A party may not recover for losses that could have been prevented by
▪ Reasonable efforts or
▪ By expenditures that might reasonably have been made.
- Luten Bridge case 1929
o County and Luten Bridge Co had a contract for Luten to build a bridge. Before construction
began the county cancelled the contract, but Luten built the bridge anyway. The bridge was
in the middle of the forest and went to nowhere. The court held that Luten was only entitled
to recover loss up to the date of cancellation. This was a consequence of failure to mitigate
damages.
- Frye v. Memphis State
o Frye was a tenured professor at Memphis State. He was fired after being accused of using the
school computers for his personal business. He filed suit after his appeals within the school
were not successful. The trial court awarded him 429,258 but then limited that to 39,515.00
because he failed to make a reasonable search for replacement employment, therefore he
-
failed to mitigate his damages. Plaintiff appeals arguing that he was justified in not seeking
employment because he believed those efforts would be futile because of how harmed his
reputation was.
o An employee who has been wrongfully terminated his required to mitigate their
damages, which requires the claimant to use reasonable diligence in finding suitable
employment. They do not have to accept things that are outside their expertise or are lower
pay. The big difference here and other cases was he was a tenured professor which shows his
professional reputation was his most valued asset. Multiple people within the psychology
community said they would never hire him. The court believes he proved his attempts
would have been basically worthless and futile. Thus, the employer failed to prove their
burden that the plaintiff did not act in a reasonably diligent manner to find employment.
Wrongful termination
o They should look for another job and document it. reasonable diligence is required to
mitigate.
Economic loss rule *only when there is no personal injury or anyone else.
o Is there personal injury? If NOT the economic loss rule applies. The rule is that a consumer
does not have an action in tort for purely economic damages under strict liability.
▪ Products liability context: Economic loss is defined as the diminution in the value
of the product because it is inferior in quality and does not work for the general
purposes for which it was manufactured in sold.
o Lincoln Ins v. Detroit Diesel
▪ Senators Rental purchased a bus from Prevost Car that caught fire and was destroyed
while driving it. no personal injuries occurred from this incident. Lincoln insurance
was their provider and paid them 405,250 for the fire damage pursuant to their
insurance policy. Lincoln then sued (they were able to stand in the shoes of Senators
Rental because of subrogation) Prevost and Detroit Diesel alleging breach of express
and implied warranties, negligence, and strict products liability. Detroit Diesel moved
to dismiss based on their tort claims being barred by the economic loss doctrine.
▪ There are three approaches (1) majority approach which has a bright line rule
precluding recovery in tort when a product damages itself without causing personal
injury or damage to other property. (2) minority approach permits tort liability for
purely economic loss and (3) and intermediate approach that Lincoln wants the court
to adopt. This permits tort recovery for damage to the defective product alone under
limited exceptions that turn on the nature of the defect, type of risk, and the manner in
which the injury arose.
▪ This court adopted the bright line rule precluding recover. They held that TN law
does not recognize an exception to the economic loss doctrine under which
recovery in tort is possible for damage to the defective product itself when the
defect renders the product unreasonably dangerous and causes damages by
means of sudden, calamitous event.
▪ The owner of a defective product that creates a risk of injury and was damaged during
a fire or a crash is in the same position as the owner of a defective product that
malfunctions and simply does not work.
▪ The remedies available to these similarly situated product owners should derive from
the parties' agreement, not from the law of torts, lest we disrupt the parties' allocation
of risk.
o Milan Supply v. Navistar 2021
▪ Truck issue. The limited remedy of repair didn’t work. They sued for breach of
warranty but also fraud in the inducement. The court held that fraud in the
inducement claim was barred by the economic loss doctrine when 1. No personal
injury or injury to other property, 2. Alleged fraud concerned the very property that
was subject of the contract itself and 3. 30,000,000-million-dollar verdict was
reversed.
▪ Should have brought a contract case! There was no tort claim. No fraud claims as to
the subject matter of the contract.
● Indirect economic harm rule
- General rule is that P cannot recover for indirect economic harm.
- Indirect vs direct harm. Only entitled to DIRECT HARM.
- Pruitt v. Allied Chemical 1981
o Ps brought this action against Allied Chemical Corp for its pollution of the James River and
Chesapeake Bay with a chemical agent. It significantly affected the wildlife and caused the
river to be closed for 13 years. There were many plaintiffs including fisherman, but the D
challenged the right of those who buy and sell to direct users of the Bay.
o The court held that plaintiffs who purchased and marketed seafood from commercial
fishermen suffered damages that are not legally cognizable because they are insufficiently
direct. The court held that the owners of the fishing boats, tackle and bait shops and marinas
have suffered legally cognizable damages. Rejected the economic loss rule here.
● Personal injury damages
- What is the value of a human life or decrease in the quality of their life?
- Phelps v. Magnavox 1972
o Wrongful death case.
o Judge explains how to assess damages:
▪ Fixing the amount of damages in a personal injury or death case is peculiarly befitting
a jury. Requires NO legal acumen
▪ Does required common knowledge, common experience, and common understanding.
o There is no marketplace simply because there are no buyers for the human miseries of pain,
suffering, and death.
- TPI Civil 14.01 Compensatory Damages- Personal Injury
o No definite standard or method of calculation. No opinion of any witness is required
here.
o Medical expenses
o Loss of earning capacity
o Physical pain and mental suffering
▪ This is reasonable compensation for any physical and mental discomfort suffered by
the plaintiff and the present cash value for pain and suffering is likely to be
experienced in the future.
▪ Mental suffering includes anguish, grief, shame, or worry.
o Permanent injury
▪ An injury that the P must live with for the rest of the P’s life that may result in
inconvenience or the loss of physical vigor.
▪ Damages for permanent injury may be awarded whether or not it causes any pain or
inconvenience.
o Disfigurement
▪ Permanent injury that impairs a person’s beauty, symmetry, or appearance.
o Loss of the enjoyment of life.
▪ The loss of the normal enjoyments and pleasures in life in the future as well as
limitations on the person’s lifestyle resulting from the injury.
- Overstreet v. Shoney’s 1999
o Waitress at Shoney’s dropped a plate and a shard of glass went in the plaintiff’s eye. She was
eventually left blind in that eye and suffered physical impairment because of that. Jury
awarded her 2,013,000 in damages. She was a nurse who was planning to pursue an advance
nursing degree. She couldn’t do that anymore. Shoney appealed the award.
o
Shoney’s argued that the loss of earning capacity was speculative because she hadn’t started
her program yet or even applied. The court found no reversible error and the damages were
supported by sufficient evidence to support the award.
● Wrongful death
- TCA 20-5-106(a)
o Right of action passes at death to your spouse or children/next of kin.
- TCA 20-5-106(c) Wrongful Death of a Fetus
o Vitus has to be viable at the time of the injury. viable means it could reasonably be expected
to be capable of living outside the uterus.
- TCA 20-5-113 Damages
1. Mental and physical suffering, loss of time, and necessary expenses resulting to the
deceased from the personal injuries and
▪ This is from the time of the death and includes physical pain and mental suffering,
medical expenses, funeral expenses, lost wages and earning capacity.
2. The damages resulting to the parties for whose use and benefit the right of action
survives.
▪ The pecuniary value of life of the deceased to the surviving parties. This means what
value does the surviving party suffer as a result of someone who died.
▪ Factors to consider are
1. Age
2. Condition of health
3. Life expectancy
4. Strength and capacity for work and earning money through any art, trade,
profession, occupation, or business.
5. Personal habits as to sobriety and industry and
6. The value of the loss of consortium suffered by the decedent’s surviving spouse
and child.
a. Tangible services provided by a family member and
b. Intangible benefits each family member receives from the continued
existence of other family members.
c. Such intangible benefits include love, affection, attention, education,
guidance, care, protection, training, companionship and cooperation. For
spouse sex is included.
d. Also includes damages for the loss of one’s child. Consider the age of the
deceased and the parents, closeness, dependence and any other factors that
reflect a relationship.
o NOT ENTITLED TO HEDONIC DAMAGES- loss of enjoyment of life.
- Spencer v. A1 Crane Service Inc 1994
o Spencer was killed in a construction accident when the Defendants crane operator tore down
a wall crushing Spencer. His widow brought a wrongful death action and received 1,000,000
in damages from the jury. The Plaintiff appealed because value of enjoyment of life charge
was rejected by the trial judge, aka hedonic damages.
o Hedonic damages are the value of enjoyment of life. This includes the pleasure,
satisfactoriness, or the unity that human beings device from life, separate and apart from the
labor or earnings value of life.
o TN RULE: The court held there was no recovery in wrongful death of loss of enjoyment of
life.
- Levka v. City of Chicago
o This case involved a woman who was arrested and subjected to a strip search by police. She
sued for distress and emotional damages. The jury awarded her 50,000 dollars. The court
held that this was excessive. They compared this case to others involving the same situation
-
and there were no aggravating circumstances, cavity search etc, to warrant such an award. It
was set aside and remanded.
How do you prove economic portion of pecuniary loss and value of a life?
o Age, life expectancy, skills and earning capacity, personal habits.
Flax v. Daimler-Chrystler Corp
o Ms. Sparkman’s 8 month old son Joshua Flax died in a car accident where the seat came lose
during the wreck causing him brain damage. Ms. Sparkman was driving and suffered
emotional distress from the wreck and seeing her son injured. They sued the manufacturer
and the other driver for his injuries.
o Trial court gave the parties damages and held that Ms Sparkman was entitled to punitive
damages for NIED. Court of appeals reversed because it did not meet the heightened
standard in Camper for a stand alone claim. They argued this was not stand alone because
they had a wrongful death suit.
o The court held that the wrongful death claim was the child’s not the mother. Therefore she
was still required to prove the heightened standard but she failed to do so. They did not
present expert proof as to this claim which is required if there isn’t a physical injury.
● Reputation damages
- Myers v. Pickering Firm inc
o This was a defamation case involving reports completed and published by Pickering Firm
that caused Myers to lose business. The jury returned a verdict of 600,000 in compensatory
for libel and 100,000 in punitive damages. Furthermore, they awarded 750,000 for breach of
contract damages. Defendant appealed.
o The court held there was no material evidence to support the 200,000 verdict to Plaintiff for
injuries to its reputation or 250,000 in pecuniary loses. But the award for 150,0000 for
emotional distress and 100,000 for punitive damages was supported.
Class Seven: 9/27/2021
● Tennessee Tort Reform 2011 and damages
- TCA 29-39-101 through 104. Claims after October 1, 2011.
o Provides for a non-economic damage cap and a punitive damage cap.
● Types of compensatory damages in Tennessee and Limitations
*make sure to understand the difference between the two.
- Economic damages- no limit.
o Includes medical expenses, loss of earnings, loss of income, loss of use of property, repair of
property, loss of employment, loss of business.
- Non-economic damages- capped.
o Includes pain and suffering, emotional distress, physical impairment, disfigurement, loss of
consortium, injury to reputation, humiliation, loss of enjoyment of life (can’t get loss of
enjoyment of life if it’s a death case).
o Capped at $750,000 for all injuries based on a single act or omission or a series of acts or
omissions.
o Exception- catastrophic injury
▪ $1 million.
▪ This includes
▪ spinal cord injuries,
▪ amputation of two hands, two feet, or one of each.
▪ Third degree burns over 40% of your body.
▪ Wrongful death of a parent of a minor child.
o Other exceptions **applies to punitive too
▪ Caps do not apply to personal injury or wrongful death actions if D
▪ Had specific intent to inflict serious physical injury;
▪
-
Intentionally falsified, destroyed, or concealed records containing material
evidence with the purpose of wrongfully evading liability, or
▪ Was under the influence of alcohol, drugs, or any other intoxicant or
stimulant.
o Other limitations
▪ Vicarious liability for non-economic damages determined separately from that of any
agent or employee.
▪ Section 102(k): No non-economic damages for any claim arising out of harm or
loss of property except as authorized by statute.
- Punitive damages- Capped.
o Limited to 2 times the amount of compensatory damages or $500,000, whichever is greater.
o Exceptions *same as the exceptions for non-economic damages. No cap if those apply.
o Vicarious liability exception also applies.
o No punitive damages if D is substantial compliance with applicable federal or state
regulations. *only applies to punitive damages.
- 2014 Damage Caps: Tennessee Human Rights Act (employment cases)
o Tenn. Code Ann. § 4-21-313
o Compensatory damages for future pecuniary losses, emotional pain, suffering,
inconvenience, mental anguish, loss of enjoyment of life, & other non-pecuniary losses, shall
not exceed, for each complaining party:
▪ $25,000 for employers with between 0-14ees
▪ $50,000 for employers with between15-100ees;
▪ $100,000 for employers with between 101-200ees;
▪ $200,000 for employers with between 201-500ees, AND
▪ $300,000 for employers with over 500 employees.
*Caps CANNOT be disclosed to the jury *
Heath care protections expanded: TCA 29-26-101
o Medical malpractice act.
o Procedural protections.
o Expanded to apply to any person or entity providing healthcare series. Basically, all health care
personnel.
● Dignitary and constitutional harms
- Constitutionality
o McClay v. Airport Management Services 2020
▪ Caps are constitutional. They do not violate the right to a jury trial, equal protection, or
discriminate against women.
▪ Right to jury trial does not entitle anyone any particular cause of action or remedy.
o Levka v. City of Chicago 1984
▪ Lady got strip searched by the policy. The city of Chicago’s strip search policy for all
arrested individuals was held unconstitutional. Jury returned a verdict of 50,000 for only
emotional distress.
▪ The court held there were no aggravating circumstances here like in other cases involving
strip searches so it was remitted to 25,000.
- Constitutional harms
o Measure of damages difficult and unpredictable
o Hampton v. Dillard
▪ Security guard accused African American woman of shoplifting. Emptied her purse onto
the counter. Not arrested or expelled from store. Impassioned testimony of the
humiliation caused in front of her children
▪ Jury verdict of $56,000 compensatory & $1.1 million punitive upheld on appeal
o Elrod v. Walmart
▪
Christmas eve store manager mistakenly accused Elrod of harassing a female employee.
He got into a shouting match and hit the manager with a cart. He was detained and the
employee said it was the wrong guy. He was charged with battery. Jury awarded $3,500
in damages.
- Dignitary harms
o Similar to constitutional harms but these are only reputation, humiliation is at stake here.
o Woman sued for wrongfully identified as a participant in an orgy. Awarded 7 million but was
reduced to 1500.
o Employment cases allow recover for humiliation and embarrassment.
▪ NO medical proof required.
▪ Examples here are sexual harassment, primary injury to dignity. Federal and state allow
recovery.
▪ Title VII amendments of 1991 limited compensatory damages to 300,000.
● Back pay is NOT considered compensatory damages so it is not subject to a
federal statutory cap.
● Remittitur and additur
- Remittitur TCA 20-10-102
o Procedure by which trial and appellate courts can reduce a jury verdict. The court will grant a
new trial unless plaintiff accepts the decrease.
o Argue it will destroy the jury verdict. Characterize it as some error, you can correct an error
but you cant just throw it out destroying the verdict.
o If you are the P, argue it is supported by material evidence.
o Meals ex rel Meals v. Ford Motor Co
▪ Child severely injured in a car accident and permanently paralyzed. Jury gave a
verdict of 43.8 million, with 6,570,000 attributed to Ford.
▪ Trial judge affirmed verdict but the court of appeals granted remittitur to 1, 935,000.
Supreme court reversed saying the jury verdict was supported by material evidence
and was within a range of reasonableness.
▪ You MUST have material evidence and it MUST be within a range of reasonableness.
- Additur 20-10-101
o Increase in the verdict if its inadequate.
o Allowed in Tennessee. The trial judge acts as the 13th juror.
o NOT allowed in federal court system. You just get a new trial.
o Bonner v. Deyo
▪ The person here was rear ended. She was 51 years old, did not go to the hospital after
the accident, but went later for dizziness and headaches. She had issues with neck
pain after that. There was not a lot of consortium damage proof here. There was
personal injury and loss of consortium. The jury awarded 3,577 for medical expenses,
that’s it. the trial judge suggested an additur of 10,000. Defendants protested.
▪ Additur is only appropriate when the court 1. Disagrees with the amount and 2.
When additur does not totally destroy the jury verdict. Court of appeals said this
did not destroy the jury verdict just because they jury did not award any damages for
pain and suffering and that was basically what the additur did. The attitiur was not
grossly out of line with the evidence because the evidence of pain and suffering and
loss of enjoyment of life was undisputed.
● Collateral source rule
- If the injured party receives some compensation for the injuries from a source wholly independent of
the tortfeasor, such payment should not be deducted from the damages the plaintiff collects from the
tortfeasor.
- Reason is that you want someone to benefit when they have invested in that insurance for years.
- NOT SUBROGATION.
o
Insurance company is entitled to subrogation, it has the right to be paid from plaintiff’s
recovery.
- Fye v. Kennedy 1998
o Wrongful death case where fye died in a car accident. The hospital gave a receipt of 75,000
because Medicaid forgave 673.120. defendants argued that the plaintiffs cannot seek the
entire amount because the estate did not incur the expense.
o The rule is that the plaintiff received payments from a collateral source, other than the D, is
not admissible in evidence and does not reduce or mitigate the defendant’s liability. Entire
bill remained admissible here.
- Plaintiff recovered money from the tortfeasor,
o the collateral source rule does not apply here. D will get credit for what they have already
paid.
o Dedmon v. Steelman 2017
▪ Dedmon was injured in a car accident and sued cook. Cook denied the entire medical
bill stating it was not reasonable or necessary.
▪ The defendant tried to use the holding in WEST which held that under the hospital
lien act, reasonable charges were what the insurance company pays not what the
hospital charges. They wanted us to apply that to personal injury cases here.
▪ The collateral source rule did not affect the admissibility of paid medical expense
records.
- Workers compensation disability insurance
o TCA 50-6-114(b): any employer may set off any payment made to an employee under an
employer funded disability plan for the same injury provided that the disability plan permits
such an offset.
- Medical malpractice tort reform TCA 29-26-119 *more aggressive exception of this rule.
o Modifies the collateral source rule in medical malpractice damages.
▪ Damage award may include actual economic losses suffered by claimant only to the
extent that such costs are not paid for by insurance provided by an employer, by
social security benefits, or unemployment benefits
▪ Costs covered by Insurance paid for by the claimant or his family may be awarded
▪ In other words, plaintiff’s damages are reduced to the extent paid by non-plaintiff
owned insurance.
● Emotional Distress
- Negligent infliction of emotional distress damage MUST be supported by expert medical or
scientific proof.
o Camper v. Minor 1996.
- Generally, emotional distress damages not recoverable in breach of contract case. However, the tort
of intentional infliction of emotional distress will lead to damages. No expert proof needed.
- Flax v. Daimler Chrysler
o Car was rear ended and the front seat collapsed into the child’s head. His head was smashed
in and he died the next day. Mother brought action for defective seats and failure to warn.
She said this caused his death and her emotional distress. No proof of her emotional distress
presented. Jury from for P and awarded 5,000,000 for compensatory damages for his death
and 2,500,000 for NIED claim.
o Court of appeals reversed compensatory award and stated that the mothers claim was a
stand-alone claim that required expert proof. ONLY stand-alone NIED claims need expert
proof.
o Supreme court held that that the mother’s claim was a stand-alone claim. Thus, she
needed expert proof. Wrongful death is separate from her claim and that claim was the
child’s not hers.
● Statutory bad faith remedy TCA 56-7-105
- This is a claim by the insured against the insurer for wrongfully denying their claim.
-
Cases
o Insurance company can be liable to its insured if it denies a claim or refuses to settle a claim
in bad faith.
- Only applies in Tennessee to 1st party insurance cases.
o If company refuses to pay a loss not in good faith they may be liable up to 25% of the loss
plus the insured’s expenses AND attorney’s fees.
o Insurer not automatically liable for bad faith penalty if they have a legitimate defense, even if
it is invalid, no bad faith penalty.
o Cary v. Piphus
▪ Student deprived of a hearing. Cannot recover damages even though there were no
actual damages. No presumed damages for constitutional harm, there has to be
an actual harm. Nominal may be awarded.
● Defamation
- Tennessee
o Purpose is to compensate for injury to the plaintiff’s reputation.
o May recover for economic losses, injury to reputation, emotional distress.
o NO PRESUMED DAMAGES!
o Myers v. Pickering Farm
▪ MK had a contract with LSSM to design and build two elderly housing projects. they
hired Fogelmans/burns to build the home. MK noticed defective work and refused to
certify draw requests. FB sued MK and LSSM under the contract. LSSSM hired
Pickering to review the project. Pickering did a report critical of MK. Pickering
proposed to LSSM to replace MK. LSSM brought cross-claim against MK. LSSM
hired Pickering for the contract management services over MK
▪ MK sued Pickering for defamation and inducement of breach of contract.
▪ Trial court found that Pickering was not liable for the publication of the report.
▪ Jury awarded damages for emotional distress, pecuniary losses, and injuries to
reputation. The defamation award was for 200,000 and the Defendant argued it
wasn’t supported by evidence. The court reversed the award holding there was no
specific evidence of injury to reputation thus it wasn’t allowed.
o Cobb v. Sports Illustrated
▪ Article said he threw a fight. Defamation/libel case. jury awarded 10.7 million. 6th
circuit reversed. They said that he was a public figure. There was no showing that
sports illustrated had actual malice. Actual malice= publication.
- Actual malice
o Requires actual knowledge of the falsity or reckless disregard for the truth. Hard to prove.
Class Eight: 10/4/2021
● Sovereign Immunity & Suits Against Officers in their Official Capacity
- Chisholm v. Georgia 1793
o Held that a citizen of one state could sue another state. everyone freaked out, which lead to
the 11th amendment being ratified and reversing this case.
th
- 11 amendment
o The judicial power of the US shall not extend to any suit commenced against a state for
damages.
- Ex parte young 1908
o A suit for prospective relief is against the state officer in his official capacity, not against the
state.
- Edelman v. Jordan
o Calling the award an “equitable restitution” did not hide the fact that it was damages. The
state didn’t consent thus damages couldn’t be awarded.
- Rule of sovereign immunity
o
o
o
-
-
-
-
Injunctions to comply with the law in the future are permitted.
Compensation for past violations is forbidden unless the sovereign consents.
Line is drawn between prospective and retrospective relief not self-evidence.
▪ Injunctions do cost money.
This immunity does not extend to individuals.
o
o
Waiver
o Sovereigns, to be sued in their own name, have waived sovereign immunity by enacting
narrowly tailored remedies.
o Example is the government tort liability acts. Under these acts, the government can be sued
subject to the limitations.
o State waiver must be express and unambiguous.
▪ States can waive by a signed agreement.
▪ No specific performance of a contract with the state absent consent.
▪ Congress and most states have consented to be sued for damages for breach of
contract.
City of Lavergne v. Southern Silver Inc
o City obtained a temporary injunction against operations of an incinerator company. Later it
was dissolved for lack of proof of a nuisance. Incinerator company counterclaimed for
damages for malicious prosecution. The City relied on governmental immunity defense.
Southern silver argued that it had been waived because they did not plead it.
o Suits shall not be brought unless legislative authority is affirmatory given. It wasn’t here.
Failure to plead governmental immunity as an affirmative defense does not constitute a
waiver of immunity.
TN Governmental Tort Liability Act
o Absolute immunity to governmental entities. Specifically excludes from waiver for
negligence.
▪ If alleged injury arises out of the institution of any judicial or administrative
proceedings, even if malicious.
o TCA 29-20-205 *don’t have to know all these
▪ Immunity is removed for negligence injury unless the injury arises out of
▪ A discretionary function
▪ False imprisonment, false arrest, malicious prosecution, intentional trespass,
abuse of process, libel, slander, deceit, interference with contract rights,
infliction of mental anguish, invasion of privacy, civil rights.
▪ Relates to licensing or inspections
▪ S
▪ The institution of any judicial or a proceeding even if malicious or without
probable cause.
▪ Misrepresentation
▪ Riots, mob violence, and civil disturbances or
▪ Taxes.
Tennessee Claims Commission: TCA 9-8-301
o Claims commission can determine cases against the state for negligent acts of its employees
in 20 defined types of cases.
Stone v. NC Dept of Labor
o NC officials never conducted an OSHA inspection of the facility. A fire broke out and killed
several people. After, OSHA found 83 violations including blocked exits and inadequate fire
protection. Plaintiffs sued for negligence. The court held there was no liability for failing to
prevent harm inflicted by someone else, unless the government undertook to specially protect
a particular person or group.
● Public Duty Doctrine
- “it is not a tort for government to govern”
- Generally, the public duty doctrine prevents suit against public employees for injuries caused by the
employee’s breach of a duty owed to the public at large.
- Other mechanisms exist where individual officials may be held accountable for dereliction of duty
o Internal disciplinary proceedings or formal criminal prosecution.
- Ezell v. Cockrell
o Ms. B and Mr. Hillis were drinking at a saloon in Elkton. An officer saw Ms. B come out and
determined she was too drunk to drive. Mr. Hillis came out and the officer let him drive home
even though he was intoxicated. They wrecked and killed Mr. Ezell. His wife brought suit
against the police claiming negligence. The officer knew or should have known that Mr.
Hillis was too drunk to drive.
o Trial court dismissed the case on the public duty doctrine. This doctrine is not listed in the
TN Governmental Tort Liability Act as an exception to waiver, thus it does not abolish the
doctrine.
o Supreme court affirmed holding that negligence of police is barred by the public duty
doctrine. Tennessee private citizens cannot sue for wrongful acts of public officials
unless they have a special interest or a special injury not common to the public in
general.
● Discretionary/Proprietary
- Federal tort claims act
o No claim based upon the exercise or performance of a discretionary function or duty.
Whether or not the discretion was abused.
● Judicial Immunity- Absolute Immunity
- Absolute immunity- judges
o If judge acts in the clear absence of jurisdiction, then she loses the protection of her
immunity.
o Clear absence means absolutely clear.
- Stump v. Sparkman
o Mother sought to have the court approve her 15-year-old daughter have her tubes tied. Court
approved it, they did it without her knowledge, and she didn’t find out until years later when
she was trying to have children. she sued the judge. Trial court dismissed stating the judge
was absolutely immune. Court of appeals reversed but supreme court affirmed trial court.
- Sanders v. Lanier
o P a youth services officer sued Judge Lanier of Dyer County for sexual harassment. P alleged
he grabbed her butt, made unwelcomed advances, she rejected him, and thus she was
demoted. Trial court dismissed because of absolute immunity.
o Supreme court reversed. Judicial immunity wasn’t the issue here. He was in the role of her
employer, not in his judicial capacity. He can be liable as an employer for wrongful
discrimination.
- Prosecutors- Absolute.
o Van De Kamp v. Goldstein
▪ Prosecutors are absolutely immune from damage suits for prosecutorial acts.
▪ Suits for injury caused by poor training etc are absolutely barred.
- Legislators- Absolute.
o Absolute immune from any kind of suit, including criminal prosecution, damages,
injunctions, and declaratory relief if it involves anything within the deliberative process.
- Presidential immunity- Absolute.
o Absolutely immune from suits for damages for any actions taken in his official capacity.
o Clinton v. jones
▪
▪
Court held that presidential immunity did not extend to unofficial acts that happened
before. like sexual harassment.
The court held that private litigation would not significantly interfere with the
president’s public duties.
Class Nine: 10/11/2021
● Suits against Officers in their Personal Capacity- Qualified Immunity
*Based on Young, claims for certain injuries arising from violation of constitution or statutory
duties, unless there is a waiver of sovereign immunity, suit must be against the individuals.
- Harlow v. Fitzgerald *established qualified immunity
o Conspiracy suit against Nixon aids. Plaintiff was employed by the US, testified about a
overrun on a project, then later got fired.
o Executive officials are entitled to qualified immunity.
o Damage remedies against officers are barred unless the law was clearly established. *this
case set forth the clearly established law requirement.
- Qualified immunity
o Officers are entitled to qualified immunity unless
▪ They have violated a federal statutory or constitutional right AND
▪ The unlawfulness of their conduct was clearly established at the time of
their actions.
o To be “clearly established” for qualified immunity purposes, existing law must have placed
the constitutionality of the officer’s conduct beyond debate.
o This demanding standard protects all but the plainly incompetent or those who knowingly
violate the law.
- 4th amendment rights
o Protects against warrantless searches and seizures. Exception allows warrantless searches in
limited circumstances.
o Jamison v. McClendon
▪ Jamison was a black man who was stopped by a white police officer. He stopped him
for 1 hour and 40 minutes for no reason. He searched his car after asking Jamison 5
times he eventually “consented”. Jamison sued after the fact for violation of his
constitutional rights.
▪ The court held the officer had qualified immunity. It protects officers no matter how
egregious their conduct, if the law they broke was not CLEARLY ESTABLISHED.
▪ An officer cannot be held liable under § 1983 unless every reasonable officer would
understand that what he was doing violates the law.
▪ It does not matter that people are morally outraged or the fact that the
collective conscience is shocked by the conduct, because it does not mean
necessarily that the officers should have realized that the conduct violated a
constitutional right.
o Bivens v. 6 unknown agents ***
▪ Plaintiff was arrested wrongfully by the FBI. Manacled in front of his family,
threatened arrest, searched whole apartment, striped searched him, no warrant. No
charges were filed. He sued for civil damages claiming it violated the 4th amendment.
Trial court dismissed an court of appeals affirmed.
▪ Supreme court held that a private citizen may sue for damages for violation of US
constitution- it was the 4th amendment here. Congress waived sovereign immunity for
the actions of Bivens in response to this case.
▪ Here you can sue for damages for violation of the 4th amendment. The court held
that a private citizen may sue for damages for violations of the US constitution.
o Alexander v. Sandoval
▪
▪
▪
▪
Title VI of the Civil Rights Act of 1964. No person shall on the grounds of race,
color, or national origin, be excluded from participation in, be denied the benefits of,
or be subjected to discrimination under any of these programs.
AL had he benefits of these programs. They administered their driving license exam
only in English. Trial court said this violated the act. court of appeals affirmed.
Issue was whether a private right of action under the regulations enacted to
implement title vi.
Supreme court said no. there is a right to enforce the US constitution only if the
statute provides for a private right of action to enforce the statute does. Only way the
right exists. No private enforcement of regulations unless congress specifically
authorizes it.
IV.
Election of Interests
● Interest
1. Prejudgment interest
2. Post judgment interest
● Prejudgment interest
- This is interest accruing on the amount of a legal award from the time of the injury or damage to the
time the judgment is entered by the court.
- Traditional common law rule is that prejudgment interest is only awarded when damages were
liquidated-ascertainable.
- Not recoverable in personal injury or wrongful death cases!!
- TCA 48-14-123
o They are permitted by statute or by common law
o They may be awarded using equitable principles at a rate not to exceed 10% per annum.
o Except in contract cases when contract expressly provides for a different rate.
o Prejudgment interest is discretionary. It’s a simple interest, not a compound interest.
- Scholtz v. SB International 2001
o Scholtz sued his employer for severance he claimed was due. Jury held for him awarding
111, 632.33 in damages. Trial court denied prejudgment interest because SBI had presented a
reasonable defense.
o The court overruled and ordered prejudgment interest. it is awarded to compensated the
wronged party for the loss of the use of money it should have received earlier, not to punish
the wrongdoer.
o A successful P should recover prejudgment interest when he has been deprived of the
loss of the use of his $ by the D. EXCEPT
▪ P has been inexcusably dilatory
▪ P has unreasonably delayed the proceedings after suit was filed
▪ P has already been otherwise compensated for the loss of time and value of its
money.
o If you win a case for liquidated damages, you are entitled to prejudgment interest.
● Post judgment interest
- TCA 47-14-122
o Fed rate pegged to market rates. Tennessee is now at 5.25% or an amount fixed by the
contract.
o Rate as of date of entry of verdict.
o Any judgment!!
● Future suffering discount for present value
- In a case involving personal injury, the person is going to have suffering that goes on in the future,
you discount that amount as if we are putting it in an account and it will equal that amount for that
period of time. that is the amount you award. The discounted amount.
-
-
Instead, you must determine the present cash value of those damages. You must reduce the award of
those damages to allow for the reasonable earning power of money.
o Present cash value
▪ This is the amount of money that you could take today, invest it at a particular rate,
that is reasonable over the length of time the damages are likely to be suffered.
o Discount for present value ONLY applies to awards for future damages-not damages already
incurred. In Tennessee this issue is submitted to the jury.
Concrete Spaces Case **very important case!!!
o Daltons (lessees) sued Sender (lessors) for compensatory, punitive, and treble damages. They
claimed breach of contract, neg misrepresentation, fraudulent misrepresentation, and
violation of the TN Consumer Protection Act. Daltons said that Sender deceived them about
the quality and availability of the space in Cummins station and that the Sender had
intentionally carried on a plan of harassment and lack of cooperation to force them to
abandon their leases to lease it to others on more favorable terms.
o For fraud/misrep you can get compensatory damages and possibly punitive but no attorney
fees. Under the TN Consumer Protection Act you can get treble damages, attorney fees, but
NO punitive.
o Jury charged on all counts and remedies except the TCPA. Jury held for Daltons for 75,000
plus attorney fees and held punitive damages were warranted so they gave 1.1 million.
Remitted to 500,000 by court.
o **Court of appeals held that they cannot have treble damages and punitive in same
case. supreme court said that it is unfair to require election before a determination of
liability and entitlement to punitive and treble damages has been made. It requires
either a general verdict with special interrogatories OR a special verdict seeking a
verdict from the jury on each claim.
o **P goes to verdict on all claims only after the assessment of the amounts of punitive
and treble damages. Only after the P is required to make an election of remedies.
V.
Punitive Damages
● Purpose
- Punitive damages are to 1. Punish D for egregious misconduct and 2. Deter D and others from
similar conduct.
● Tennessee
- Hodges v. SC Toof *leading TN Case
- Bifurcated trials
o 1st trial jury decides if conduct of D is sufficient for there to be a punitive damages award.
- TCA 29-39-104(a)(1)
o Punitive damages may only be awarded if P proves by clear and convincing evidence that D
against whom punitive damages are sought acted
▪ Maliciously
▪ Intentionally
▪ Fraudulently or
▪ Recklessly
- TCA 29-39-104(a)(2)
o When P seeks an award of punitive damages, the trier of fact in a bifurcated proceeding
shall
▪ Determine whether compensatory damages are awarded and in what amount.
▪ By specific verdict determine whether
o Each d’s conduct was malicious, intentional, fraudulent, or reckless
AND
o Whether a (7) applies.
-
If the jury finds case suitable for punitive damages, they consider
1. **D’s financial condition and net worth
2. **Nature of reprehensibility of Ds wrongdoing
3. The impact of Ds conduct on P
4. The relationship between D and P
5. Ds awareness of the amount of harm and Ds motivation for causing the harm
6. The duration of Ds misconduct and whether D attempted to conceal
7. Expense P has borne in attempts to recover the losses
8. Whether D profited from the activity
9. Whether D has been subjected to previous punitive damage awards based upon the
same wrongful act
10. **Whether D attempted to make amends by offering a prompt and fair settlement for
actual harm caused and
11. Any other circumstances
● Regulation of Punitive Damages by the US Constitution.
- BMW v. Gore 2996
o Gore bought a “new” car for 40,000. Car had been repainted and was not new. BMW had a
policy that all cars with less than 3% suggested retail price damaged=new. Gore said this was
fraud and sued. Jury gave 4,000 in compensatory and 4,000,000 in punitive. Supreme court
remitted to 2,000,000.
o US Supreme Court found no evidence that BMW’s behavior was unlawful in any other state.
Due process clause of the 14th amendment prohibits grossly excessive or arbitrary
punishments. WHICH INCLUDES PUNITIVE DAMGAES!
o 3 guideposts
▪ Reprehensibility
▪ Ratio
▪ State sanctions
- State Farm Mutual Auto Insurance v. Campbell 2003
o Campbell passed 6 vans and killed someone in a head on collision. State farm refused to
settle for the policy limits of 50,000. State farm assured Campbell his assets were safe and
that he had no liability fot he accident. Jury awarded 185,849 against Campbell and State
farm refused to pay the 135,859 above the policy limits. On appeal Campbell lost and state
farm paid the judgment in full.
o Campbell sued state farm for bad faith alleging intentional infliction of emotional distress.
Campbell introduced evidence of state farm’s nationwide policy to reduce payouts. Jury
awarded 2.6 million in compensatory and 145 million in punitive. Trial judge reduced to 1
million for compensatory and 25 million for punitive.
o US Supreme court reversed. Grossly excessive here under the BMW Gore guidelines.
o 1st guidepost: Reprehensibility is the most important factor. You consider
▪ Harm physical or merely economic?
▪ Reckless disregard for the heath and safety of others?
▪ Victim financially vulnerable?
▪ Repeated actions or isolated?
▪ Intentional malice, trickery, or deceit? Or accident?
▪ Absent any of these, the punitive damage ward is suspect.
o
**Out of state conduct
▪ Cannot punish D for conduct that may have been lawful where it occurred.
▪ Jury cannot use out of state conduct to punish for action that was lawful where
it occurred.
▪
A company that operates nationwide can only introduce evidence of incidents in the
state where the case is pending. That is in the constitution too.
2nd Guidepost: Ratio
▪ Few awards exceeding a single digit ratio between punitive damages and
compensatory damages will satisfy due process.
▪ Mathematical limit
▪ Single digit multiplier. Difficult for an award of punitive damages of more
than 9 times compensatory damages to be constitutionality valid.
o 3rd Guidepost
▪ Utah could have imposed a 10,000 dollar fine. 148 million in punitive award exceeds
this by too much.
**TN Statutory Damage Limits
o On punitive damages: 2x Comp OR 500,000 whatever is greater.
**US Constitutional
o No more than 9 times the amount of compensatory damages.
Exxon v. Baker
o In the Valdez case, a 240,000-ton oil tanker captained by a drunken sailor poured 11 million
gallons of oil into the ocean. Exon settled with EPA and Alaska. This case is brought by
those effected by the spill. Trial court awarded 5 billion. Court of appeals reduced to 2.5
billion. Supreme court reduced to 500 million.
o Court used maritime law to limit the punitive damages to a 1:1 ratio.
Flax v. Daimler Chrysler Corp 2008
o Jury awarded 7.5 million in compensatory damages in this wrongful death case. trial court
reduced it to 98 million punitive damages to 13,367,345 because of Campbell.
o TN Supreme Court focuses on reprehensibility, the most important factor. Finds that
Chrysler’s actions sufficiently deplorable to affirm the 13 million award.
o Net ratio of compensatory damages: 2.5M to 13, 367,345= 5.35. If a large award of
compensatory damages 1 to 1 may be more appropriate, court says given that reprehensibility
is the most important factor a 5.35 to 1 ratio is constitutional.
o Court reviewed the third factor. The highest penalty in the state of Tennessee imposed for the
reckless killing of another was 150,000. Per Campbell, substantial deference must be giving
to TN sanction. BUT they determined the first two guideposts were more important.
AFFIRMED.
o
-
-
● Tennessee Consumer Protection Act: TCA 47-18-109
- Codifies the statutory remedy for unfair and deceptive practices. If willful or knowing violation
court may award 3 times actual damages.
- No punitive damages.
VI.
Injunctions *****
● Injunction assignments
- December 6th
o
● What are injunctions?
- Injunctions are court orders enforceable by contempt.
o Directive from the court. There is no jury or any money to be paid.
- Goals
o To maintain Ps rightful position
o To prevent D’s wrongful conduct
- Types of injunctions
o Restraining order/TRO
-
o Preliminary/Temporary Injunction *most common
o Permanent Injunction. *this is the type you get at the end of the case.
Preventative injunctions
o Ripe
o Seek early
o Must have a real threat of irreparable harm. You have to have proof!
o Order must be narrowly tailored to prevent the wrong threatened.
● Universal considerations
- Ripeness
o P must show a substantial threat of unlawful conduct
o This is a matter of timing. An act in the distant future is too remote.
o There must be proof of likely injury. You can show another occurrence of the same conduct
for your proof.
o The injunction must be necessary
o Threat of injury must be REAL.
o Lack of hardship on D is a factor but is not sufficient alone.
o Absent a real danger that the wrongful conduct will occur, no injunction.
o Exception in Tennessee: TCA 36-4-106(d)
▪ Automatic injunction in divorce cases. Upon the filing of a petition for divorce,
except on the ground of irreconcilable differences, the following temporary
injunctions shall be in effect against both parties
▪ Transferring, assigning, borrowing against, concealing, or disposing of any
marital property.
▪ Expenditures. To maintain the marital standard of living and ordinary costs of
operating a business are not restricted by this injunction.
▪ Canceling, modifying, terminating, assigning, any insurance policy.
▪ Harassing, threatening, assaulting, or abusing the other and from making
disparaging remarks about the other to or in the presence of the children of the
parties or to either party’s employer.
▪ Relocating any children of the parties outside of the state, or more than 50
miles from the marital home.
o Regardless of the ripeness rule!!
- Early
o Must seek early and act promptly
o A long delay by P after learning of the threatened harm may be taken as an indication that the
harm would not be serious enough to justify a preliminary injunction.
- Proof
o Al Murbati v. Bush 2005
▪ Ps were Guantanamo detainees. They sought injunction against US for transferring
them. They didn’t want to be transferred without just notice. The actual proof here
was the detainees had reports from the news and guards of threatened harm when
transferred. None were from actual official so there was no actual evidence. US
provided evidence through affidavits of officials that the policy was not transfer to
countries where they’d be tortured but to the countries they were from to provide
humane treatment.
▪ The threatened injury must not be too remote or speculative. Second hand media
reports are not enough.
o Humble Oil v. Harang 1966
▪ Humble Oil sued Harang, their former employee for taking trade secrets, important
documents, etc. They sought an injunction against Harang from destroying
documents. Humble had no proof that Harang intended to destroy documents. Harang
▪
▪
-
testified that he had no intention of destroying anything. The court held that there was
no proof of an imminent threat of destruction of documents.
P seeking an injunction must show a real danger exists of the unlawful conduct.
You have to have a better argument than “the person is violating the law”, they
already have to do that. We need more.
Real
Narrowly tailored
o Marshall v. Goodyear 1977
▪ Secretary of labor sued goodyear for a violation of the ADEA (age discrimination
employment act). proved 1 violation with respect to 1 employee. Sought nationwide
injunction. Denied. 1 violation does not demonstrate the need for relief that broad.
This was only about one act from one manager.
▪ Has to be narrowly tailored injunction to the scope of the problem that is
demonstrated by the facts.
● Violation of injunctions
- May result in contempt of court
- Court has power to put person who violates an injunction in jail.
● Procedural rules
- Tenn. R. Civ. P. 65
o Injunctive relief may be obtained by
▪ Restraining order, shall only restrict the doing of an act.
▪ Temporary injunction
▪ Permanent injunction, an injunction may restrict or mandatorily direct the
doing of an act.
- Tenn. R. Civ. P. 65.02: Requisites of Restraining Order or Injunction
o Who is bound?
▪ The parties, their officers, agents, and attorneys.
▪ Other persons in active concert or participation with the parties.
o When are they bound?
▪ When they receive actual notice of restraining order or injunction by personal service
or otherwise.
▪ **NOT WHEN THEY ARE SERVED! When the judge orders that from the bench
they are restrained at that time. Does not have to wait for the service.
- Tenn. R. Civ. P. 65.03: Restraining order
o When authorized
▪ Clearly shown… that the applicant’s rights are being or will be violated.
▪ And the applicant will suffer immediate and irreparable injury
▪ (Your client will be harmed) Before notice can be served and a hearing had.
o Only injunctive relief can be issued ex parte.
- Tenn. R. Civ. P. 65.04: Temporary Injunction
o Notice. No temp injunction without notice to adverse party.
o when authorized.
▪ Clearly shown that the movant’s rights are being or will be violated by an adverse
party
▪ The movant will suffer immediate and irreparable injury
▪ Pending a final judgment.
o Tenn. R. Civ. P. 65.05: Bond Requirements *P has to post this.
▪ No restraining order or temp injunction shall be granted
▪
▪
Except upon the giving of a bond for the payment of such costs and damages
by any person who is found to have been wrongfully restrained or
enjoined.
No valid RO/TRO or Temp/Prelim injunction without
o Important defense issues
-
Injunction lingo
o All restraining orders or injunctive relief are INJUNCTIONS.
o Pendente lite=pending the litigation
o Tennessee rules
▪ Restraining order
▪ Temporary injunction
o Federal rules
▪ Temporary restraining order
▪ Preliminary injunction.
- Injunction nomenclature
o Tennessee Rule 65
▪ A restraining order: temporary injunctive relief issues without notice. Lasts 15 days.
▪ Temporary injunction: pendente lite relief. Only during the life of the case.
o Federal rule 65
▪ Temporary restraining order (TRO): same as TN. Lasts 14 days.
▪ Preliminary injunction is the same as TN.
● Types of injunction
- Restraining order (TRO in fed)
o Sort of Rare
o Lasts 15 days in TN. 14 days federal.
o Bond required
o D is restrained upon receipt of notice
o Can be issued ex parte
- Temporary injunction (preliminary injunction in fed.)
o Most common.
o Pendente lite, during the pendency of the litigation
o Bond required
o D restraining upon receipt of notice
o Cannot be issued without notice to d
o * Most parties will submit this as the final order since they basically argued everything
at this stage*
- Permanent injunction- after final hearing on merits
o Unusual- must be major dispute
o No bond required.
o Cannot be issued without notice to D
●
Mootness
- Mootness *only with respect to injunctive relief *
o Does not automatically upon voluntary cessation
o Moot if there is no reasonable expectation that the wrong will be repeated.
o Courts are very reluctant to issue injunctions if they are no longer needed.
o Claims for damages are NEVER MOOT.
▪ Always possible to compensate for past injury. if the damages haven’t been paid its
not moot.
▪ Termination of wrongful behavior-common basis for arguing mootness.
- Voluntary termination and mootness
o
-
-
-
-
D must make it absolutely clear that the alleged wrongful behavior could not reasonably be
expected to occur.
o Absolutely clear requires determination of scienter-state of mind.
▪ D’s admission of wrongful act and that it was wrongful.
▪ Characteristics of D like personally and professionally.
▪ Sincerity of D’s assurances.
US v. Grant 1953
o Antitrust case. under the clayton act, interlocking corporate directorates are made illegal. US
sued claiming a violation. Director resigned and company voluntarily terminated the claimed
illegal activity.
o Company moved for summary judgment. the trial court granted the motion because the
injunction claim was moot.
State ex rel Cunningham v. Feezll 1966
o P sought to enjoin a proposed crematory in a rural residential area. Claimed that would cause
mental anguish, depress feelings, physical discomfort, and lower property values.
o The purpose of the huge smokestack was to burn human bodies. The proof was this greatly
horrified the community.
o The court held a mere possibility of fear of future injury is not enough. Fear alone is not
enough.
West v. Luna
o May 1982 order enjoined Holt from operating a speedway until such time as he can and will
operate where the noise level will not be a nuisance. Holt operated it under this order for 14
years. 1986 Luna started changing the operation of the track for stockcar races. Lots more
cars that were louder, loud speaker would be used, and 15,000 fans. Trial court was
convinced this was a nuisance. They enjoined luna from holding any races at the track.
o Court of appeals vacated this order. Because stock car racing is a legal activity, trial court
must limit the injunction to those activities that create the nuisance.
NIMBY: Nuisance challenges
o Important whether the conduct is legal or not, but that is not always dispositive.
o Consider time place manner restrictions.
Shore v. Maple Lane Farms 2013
o Mid 1980s, Schmidt acquired 225 acres in Blount county. 2003 Velda Shore moved to the
farm adjacent to that area. MLF had multiple attractions like helicopter rides, open air
concerts, and fireworks. Shore complained to officials. Blount county limited MLF to 1
activity per year. Shore sued in chancery court for an injunction specifically asking to enjoin
2008 Strawberry Jam Festival. Chancery court denied the temporary injunction. MLF had
more concerts after the festival. P and others testified about the noise and D relied on the
right to farm act, which provides that farming activities are not nuisances. Trial court ruled
for MLF and Shore appealed. Court of appeals affirmed.
o Supreme court held that the right to farm act presumption does not apply to music concerts. It
only applies to the farm operations.
o **TN General assembly changed the law to include “agriculture” to include entertainment
activities.
● Coercive remedies at law *like injunctions but they aren’t.
- Mandamus *common law remedy.
o Order of public or corporate official to perform a ministerial duty. (secretary of state
certifying election results. This is a duty they have no discretion in doing).
o A type of mandatory injunction. Duty to perform the act must be clear and nondiscretionary.
o Not available remedy if plaintiff has another adequate remedy.
- Habeas corpus
o
o
o
o
To compel a person holding another in custody to bring the prisoner to court and show why
he should be held.
Commonly used to challenge the constitutionality validity of a conviction.
Not so limited, remember the right to habeas corpus is in the US constitution.
Article I. Section 9 of the US Constitution.
▪ The privilege of the writ of habeas corpus shall not be suspended unless when in
cases of rebellion or invasion the public safety may require it.
Class 11: 10/25/2021
● Power to issue injunctions
- No longer any distinction between law and equity courts.
- We have general sessions courts, circuit courts, chancery courts, federal district courts.
● Elements to injunction ****
- Preliminary/temporary injunction
▪ Irreparable harm
▪ Balance of burdens
▪ The public interest
▪ Likelihood of success on the merits.
- Permanent injunction
▪ Irreparable harm
▪ Balance of burdens
▪ The public interest.
● Enforcement of non-compete agreements
- Central Adjustment Bureau v. Ingram *leading case in TN.
o Ds were managers and salesmen who had client contact. Non-compete agreement provided
that for 2 years after termination Ds cannot compete with CAB. This agreement barred
owning a competing business, divulging confidential information, or calling on any
customers of CAB. Ingram set up a new business before he left CAB and immediately began
calling customers. Ds used the knowledge and personal contacts they gained at CAB.
o CAB sued to enjoin the former from violating CAB’s agreement. Chancellor said CAB had a
protectable interest and found the non-compete to be too broad but enforced them more
restrictively and prevented Ds from calling customers they had while at CAB. Basically, the
chancellor just changed them to be less broad. Court of appeals reversed.
o Supreme court affirmed the trial court and adopted the rule of reasonableness. Absent bad
faith of an employer the court will enforce non-competes to the extent reasonably
necessary to protect the employer’s interest without imposing undue hardship on the
employee, as long as the public interest is not adversely affected.
- Undue burden does not equal bar from chosen employment, so long as the employer has a
protectable interest it can have an enforceable non-compete, even if the scope is too broad the court
will rewrite it to make it enforceable.
● Protectable interest *key to beating a non-compete.
- CAM Int’l v. Turner *spoden’s case.
o CAM automotive parts wholesaler tried to enforce a non-compete against a former salesman
who acquired customer information from public source. These salesman were just cold
calling salesman. No relationship was present. Trial court denied the injunction because there
was no protectable interest.
- If the employer does not have a protectable interest, a trade secret or something not publicly
available, then there is nothing to protect with the non-compete. You will not get an injunction or
damages.
-
Ways to show a protectable interest.
o Sufficient training
o Access to private information
o Some legitimate trade secret.
- This is how you bust a non-compete!!
- Trade secret law
o TCA 47-25-1701-1709.
▪ A trade secret is basically any information that derives independent economic value
from not being generally known to, and not being readily ascertainable by proper
means, and is the subject of reasonable efforts to maintain its secrecy.
● Public policy
- MTMC v. Udom 2005
o MTMC had a non-compete agreements with its doctors. Udom wanted to go out on his own.
In 1991 the court held that non-competes invalid per se between lawyers. Here the supreme
court found it unenforceable for doctors too.
- Rational for doctor non-compete agreements
o AMA says non-competes impact negatively on health care and are not in the public interest.
o Importance of publics’ right to choose. Confidential information given to the doctor, like a
lawyer.
- After Udom- TCA 63-1-148.
o Legislature enacted a statute that allows dr non-competes to be legal if they are signed by a
physical, no more than 2 years in length, and limited to 10 miles from the office or same
county whichever is greater.
● Damages AND injunctions?
- Forster v. Boss 1996
o P sued for fraud in sale of real estate on a lake in the Ozarks. D misrepresented that P could
obtain a permit for a boat dock. P sought damages and injunction. Jury awarded damages of
12,250 for compensatory and 10,000 for punitive. P also received a permanent injunction
directing D to turn over his boat dock permit.
o 8th circuit says you cannot have both compensatory damages and a reparative injunction. On
remand, P must elect their remedy. Did not change punitive damages award.
- Generally
o It is possible.
o In forster, damages for loss of use of the dock during the time the D possessed the permit and
injunction compelling turning over the permit. Injunction would be preventative and damages
would be the pre-injunction remedy.
- Reparative relief
o This type of injunction is to fix the harm of past violations of rights.
o Bell v. Southwell 1967
▪ This was a voting rights case. the voting lists were segregated by race and sex. Black
women voters excluded from white women’s booth and black representative denied
right to view election and was struck. Whites allowed to crow the polls to intimidate
black people. Black people, who were the plaintiffs here, were ordered by the sheriff
to leave and when they refused they were arrested.
▪ 5th circuit reserved and ordered a new election. GA statute permitted the ordinary to
appoint the officer taker if an election is voided. The court said, we will not be
prevented from a rational remedy- to repair this clear violation of federal law- by this
state statute.
o Bailey v. Proctor
▪ There was an investment trust, kind of like a mutual fund. The court appointed a
receiver originally because the investment trust was insolvent. Not insolvent anymore
o
because I had a big hit on a speculative investment. The court wanted to liquidate the
trust.
▪ Trust structure was a problem because the people controlling it had so little invested.
The court saw the structure of the investment trust as essentially tending toward being
unfair to the investors. Trust was liquidated even though solvent.
▪ The underlying structure led to the fraud that contributed to it being insolvent, thus
the court exercised the discretion to enforce liquidation.
Apple Corps v. ADPR 1993
▪ Plaintiff was the owner of the rights, trade names, and trademarks of the Beatles.
Defendant was the tribute band, 1964 as the Beatles. P sues under Tennessee personal
rights protection act, TCA 47-25-1105(a) to enjoin Ds performances. Initial hurdle
was if D is entitled to first amendment protection.
▪ The court held that no first amendment protection for the use of the names and
likeness of The Beatles.
▪ Ds undisputed goal was to look and sound as much like the Beatles as possible. P
can’t be made whole by an award of damages. P owns the right to control the use of
the names and likeness of the Beatles. Ds unauthorized use infringes on and detracts
from the value of Ps marks D recurrent misappropriations shows that legal remedies
are inadequate.
▪ D was permanently enjoined from using the combination of the names of the Beatles
or their members. Includes prohibition on use of the name The Beatles in the name of
the group.
● Elements in detail
*as long as you don’t have a clear loser on one of the elements, you will be able to save it with a clear
showing of another element.
*address every issue but if you have a grand slam on one of the elements you will probably win.
1. Irreparable injury rule (ear-rep-ra-bal)
- Rule 65
o Ps rights are being or will be violated and p will suffer IRREPARABLE INJURY.
- In general: Adequate remedy at law
o If damages will remedy the Ps injury then there is an adequate remedy at law and P is not
entitled to injunctive relief.
o Equity will only act to prevent irreparable injury.
o Definition
▪ ****The legal remedy is adequate only if it is as complete, practical, and efficient as
the equitable remedy.
- Pardee v. Camden Lumber Co.
o Pardee sued to enjoin Camden from cutting timber on Pardee’s land. Former rule allowed
total destruction of forest if wrongdoer was solvent (aka as long as they could pay for the
timber). The issue here was whether damages are always adequate?
o Generally, there is no equitable relief if legal relief is adequate. But the owner of the land has
a right to possession, dominion, and immunity from injury UNLESS the property can be
substantially replaced.
o Equity goes no further than necessary. It will permit destruction of unique property or
conversion of property from one type to another. equity permits an owner of property to
maintain the condition he desires.
o The nature of the property converted the property from real property to personal property.
Here the timber is unique and would take half a century to replace. Irreparable injury present
here because the damages could not substantially replace the property.
- Compensation for property
o
o
-
-
-
When property may be substantially replaced with money.
When personal property has some peculiar (unique) value to the owner
▪ Equity will uphold the right to possession and immunity from injury
▪ Equity will find that the legal remedy- money- is inadequate to protect the owner’s
right in something unique.
▪ Conversion of the property: a good fact to argue for an injunction is that the nature of
the property was changed from real to personal.
Replevin
o Common law writ (remedy at law) = write of possession.
o Legal principle is where the specific property is capable of being returned, it shall be
returned.
o This is a way for you to get in front of the creditors, it’s yours.
o Brock v. Cullimore and Co 1967
▪ Cullimore sued Brook in replevin seeking specific personal property. replevin is a
common law writ seeking the return of specific property. not seeking money. P
wanted the property not the money. D tried several ways to pay the money but the
court said this was not an option. D agreed that the debt would be secured by this
specific property, thus P has the option of gaining possession of the property by
replevin.
o Irreplaceability is irrelevant in replevin because it is a common law remedy not subject
to the irreparable injury rule.
o Injunction vs. Replevin
▪ Sheriff going to get the property whereas an injunction would be the sheriff seizing
the D for contempt.
▪ Court can order d by mandatory injunction to return the property.
▪ Only by injunction (not restraining order)
▪ Must show irreparable injury.
Continental Airlines v. Intrabrokers 1994 *basically an exception don’t try to argue this haha.
o Continental issued coupons to Intrabrokers in 1991 and 1992 that stated that they could not
be sold. After 1992 continental told Intrabrokers to stop selling the coupons. Continental
sought injunction against Intrabrokers for selling the coupons but they could not show
financial injury.
o The court held for continental because they stated the coupons are there property. continental
was entitled to dictate rules under which they are used or transferred. Damages were not
adequate here because it would have taken them a lot to prove. If damages are conceivable an
adequate remedy, you still have to prove them. The Defendant couldn’t point to anything else
that said to the contrary. Showing of financial harm is NOT required.
o Here it was sufficient that it was there property and they were entitled to do what they want
with it + the fact that it would be super hard for the P to prove their damages.
Involuntary servitude
o Nether slavery nor involuntary servitude, except as punishment for crime whereof the party
shall have been duly convicted, shall exist in the US or any other place subject to their
jurisdiction.
o Curb v. McGraw 2012
▪ Curb had a contract with McGraw where he was required to deliver masters on a
certain schedule. He delivered the first 3 then delivered 4 more as required. The 5th
year he delivered an album called emotional traffic but Curb contended it did not
meet the contractual obligations. Curb sought an injunction against McGraw
recording with any other label. The contract gave curb absolute discretion and they
said this album was not acceptable.
▪ Trial court found that curb established likelihood of success on breach of contract
claim but not irreparable injury. denied request. court of appeals affirmed. Although
-
-
courts can order specific performance of unique and extraordinary services
sometimes, they did not here. The contract was too indefinite and enjoining McGraw
would amount to involuntary servitude.
Injunction re Employment
o Almost never have an injunction requiring someone to work somewhere but injunctions are
pretty common preventing someone from going to work somewhere.
o The only way to get someone to work for you under a contract is extraordinary
circumstances. That didn’t even work in McGraw.
o Main Line Pictures Inc v. Basinger
▪ After staring in batman, Basinger told producer she would star in his movie. She read
the script and didn’t like it so didn’t make the movie. There was no injunction here
but there was a 8,135,216 judgement against Basinger.
Specific performance
o UCC 2-761(1) specific performance for sale contracts where the goods are unique or in other
property circumstances.
o Tennessee law is clear, specific performance is an equitable remedy
▪ Requires same showing as an injunction case.
▪ Unique means only one.
o Campbell Soup Co v. Wentz 1948
▪ Campbell agreed to buy from wentz all of a particular type of carrot. Campbell
provided Wentz with the carrot seeds and agreed to pay 30 dollars a ton for the
carrots. There were 100 tons produced that year. The type of carrot on the market was
90 dollars per ton. Wentz sold 62 tons to Lojeski. Campbell learned of the breach and
sued for an injunction to require Wentz to deliver the carrots to Campbell.
▪ The trial court denied injunctive relief because Campbell had an adequate remedy at
law, damages. Third circuit reversed because the carrots were unique. This would
harm their reputation because they had based their product line on this carrot.
Campbell was entitled to specific performance of the contract to deliver the carrots.
▪ Burden of producing the carrots that Campbell contracted for was with Wentz. If
Campbell had to go out and purchase them at a premium price, Wentz should go out
and purchase them at a premium price and provide them Campbell. Campbell soup
wants to avoid the trouble and the hassle and the court agreed.
Class Thirteen: 11/8/2021
● Balance of the Burdens/Undue Hardship
- Uniqueness- usually sufficient for irreparable injury.
- Williamson Co Broadcasting v. Intermedia Partners 1988 *normal breach of contract case
involving injunctions.
o Contract between Ormes and Matrix where Ormes was to receive compensation if he brings
cable TV to Franklin. Part of his compensation was exclusive sales agent for advertising.
o The trial court ordered specific performance of that promise because it was unique. Court of
appeals reversed. Ormes had an adequate remedy at law= damages. Nothing to suggest that
Ormes cannot be made whole with an award of damages. *this is a normal outcome for
breach of contract cases. Campbell soup and Continental were special cases.
- Van Wagner Advertising Corp v. S&M Enterprises 1986
o Van Wagner leased a space on the side of a major building for a billboard. The building
billboard is located out of a very popular tunnel street and is the most heavily trafficked. It
was a great location. He was there for 6 months and S&M bought the building and cancelled
his contract. S&M wanted to tear the building down. Van Wagner sought specific
performance to entitled it to continue to lease the space, which was the billboard. It is real
estate here, the interest in real estate is considered unique and it was unique location with no
other like it.
o
-
-
-
Interest in real estate is always unique. IT WAS JUST A LEASE HERE FOR THE
BILLBOARD. It wasn’t an ownership interest.
▪ Traditionally damages never were adequate when real estate is involved. Leasehold
interest in property facing the midtown tunnel was very unique here.
o The court did not award the specific performance here anyways because damages can
compensate him. The court said this was just a lease and damages were adequate. The court
examined the undue hardship on the owner of the real estate here to have control over his
whole building, to facilitate the lease. If the plaintiff got the injunction here the defendant
wouldn’t have been able to tear it down as they wanted. They balanced the burdens that
showed the burden on D was great and the burden on P can be covered with damages.
o You cannot buy a building and just terminate existing leases? NO!
Whitlock v. Hilander Foods Inc 1999 *ILLINOIS RULE
o Hilander foods planned to build a retaining wall at its property line. The neighbor, Whitlock,
gave him permission to have the workers and equipment on his property during the
construction. Whitlock noticed that the construction was on his property and told an
employee who agreed to negotiate payment for being on their land. Whitlock didn’t do
anything further at this time.
o Parties were unable to agree and Whitlock withdrew his permission and Hilander kept the
building there. It was 18 inches on Whitlock’s property and he wanted 32k a year for it.
Whitlock sued for an injunction.
o Trial court denied the injunction request because it was a negligent encroachment and
unreasonable delay on the part of Whitlock. Appellate court reversed. Hilander knew it was
on Whitlock’s property so the encroachment was intentionally. If he knew, then the
encroachment must be removed regardless of the burden. All they have to show is that
it was intentional. Hilander contributed to the delay because he told Whitlock they would
come to a compromise. You cant allow the defendant to take property away from someone
intentionally and then pay for it to get away with it. still doesn’t give the property back to the
owner.
Laches
o Equitable defense. If the delay in bringing suit prejudices the defendant, then they have a
valid defense.
Ariola v. Nigro Illinois 1959*ILLINOIS RULE
o The parties were residential neighbors in Chicago and their houses were very close together.
Nigro, who was a builder, build an addition to his property that was a couple inches onto
Ariola’s property. Nigro was told to stop and he continued and finished the addition. Ariola
sued seeking an injunction requiring him to remove the wall. His defense was that it would
be an undue burden to require him to tear down an addition for mere 1 to 2 inches trespass
and it wasn’t causing any real harm to Ariola.
o This court said when the encroachment was intentional there is no balancing o the equities.
Injunction was issued without regard to the undue hardship or burden. The cost to build this
building was 350,000.
Tennessee Rule ****
o Morrison v. Jones I 1968 *still the law in Tennessee
▪ There were builders in Fayetteville and Jones warned Morrison that they would be
going into his property. Morrison built 3 to 10 feet onto Jones property. Morrison had
this survey done and Jones said it was wrong because the tree is the boundary marker
and the survey ignored that tree.
▪ Chancellor said the survey failed to show the description of the tree still there.
Chancellor followed natural monuments rule and granted Jones a mandatory
injunction which required Morrison to remove the portion of the building that
encroached onto Jones property.
▪
o
o
o
o
o
Court of appeals agreed finding for the survey but reversed injunction. They noted
that Jones did not sue immediately and found it would be a hardship to
Morrison to remove the building even though Jones told Morrison he was
encroaching. Removal of the building encroachment would have little to NO benefit
to the Plaintiff. No injunctive relief here and it was sent back to the trial court for
damages. Morrison gets to pay Jones for the land he has taken.
▪ *don’t wait to file suit. It bite him in the ass here.
Morrison v. Jones II 1968
▪ Trial court assessed the damages and gave 1,605.66 in compensatory and punitive
damages of 1,500. Morrison appealed. Court of appeals did not touch the damages
award. Affirmed and said Morrison was fortunate for getting off this light.
Tindell v. West 2012
▪ Tindell sued West claiming that fence was built on his land. West lost and court
issued an injunction ordering West to remove the fence. The trial court awarded
damages equal to cost of the survey.
▪ Distinguished from Morrison
▪ Court of appeals affirmed fence removal and distinguished this from
Morrison. Burden of removal was minimal it was just a fence.
▪ In Morrison, the true owner of the encroached property more or less lulled the
encroacher into making substantial improvements. In Tindell, P acted
promptly.
▪ Burden of moving a fence is much different than an entire building.
Bomer v. Atlantic Cement
▪ Cement plant was using the best available technology. Mass dust was going onto
neighbors’ houses. 7 homeowners sought injunctions against operation of the plant
because it was a nuisance. Court agreed. The plant is a nuisance but refused to give
the injunction because it was a hardship.
▪ This would have been a loss of 300 jobs and a 45-million-dollar investment. So, they
awarded damages of 185,000 for the reduced value of the homes.
Peevyhouse v. Garland Coal
▪ This was strip mining case. The lease required Coal Co to restore property to original
condition and Coal Co refused. Peeveyhouse sought specific performance and was
denied.
▪ Balance of the hardships.
▪ Cost of reclamation was 29,000
▪ Value of reclamation was only 300 more than without reclamation.
▪ The court denied the specific performance because it would only increase the
value of the property to 300.
Lord and Taylor v. White Flint LLP 2015
▪ White flint leased land to Lord and Taylor and promised to develop a 1st class
shopping mall. Mall opened in 1977 and they had a 65-year reciprocal easement
agreement. The mall closed in 2015 and White Flint wanted to redevelop the site.
This would be a change other than what they agreed to with Lord and Taylor in the
lease agreement.
▪ L and T sought an injunction forcing White flint to honor its agreement. Trial court
denied this injunction. Ordering them to redevelop the mall after I had closed due to
lack of business was infeasible. Burden too great. 4th circuit affirmed.
▪ Court considered the practical realities, that the mall was not working, and that it
would require intense oversight by the courts so this burden was too great for
everyone. The court was not going to make the business operate at a huge loss.
Class 15: 11/15/2021
2. Public Interest
- Willing v. Mazzocone
o Lawyers sought injunction against protest by former client. Paraded outside their offices,
blew whistles, carried a board that said “Law Firm stole money from me and sold me out to
the insurance company”. She was upset that during her workers comp case her lawyers had
gotten 25 dollars of the 150 that was for her doctor.
o Trial court said that the client was obsessed by reason of eccentricity or mental instability and
granted the injunction. Appellate court reversed. General rule is that equity will not enjoin a
libel. Damages are an adequate remedy even where party is obviously insolvent.
o No injunction against false speech.
- Prior restraints NOTE
o Prior restraints of speech have been upheld by the US Supreme Court in these types of cases.
▪ Fraud,
▪ Trade secret theft,
▪ Misleading advertisements, and
▪ Breach of secrecy obligation.
- Ebay v. MerchExchange
o Merch was a patent holder. They claim business method patent on ebay’s way of doing
business. The trial court held in favor of Merch on the patent issue but denied the injunction.
Fed circuit reversed.
o Supreme court held that the trial court misapplied the law and remanded. *weirdly they gave
4 elements, they broke up the irreparable injury rule into two elements instead of 1.
o After the trial court denied injunctive relief and awarded Merch 30 million in damages.
- Winter v. NRDC 2008
o NRDC sought to enjoin Navy’s use of sonar technology in training exercises without an EIS,
which is required by the federal statute, because it would damage marine life. Sought
preliminary injunction enjoining them.
o Court held no, public interest and balance of the equities outweigh this. national security
interest outweighed the statutory EIS requirement.
● Preliminary Injunction
- Purpose is to preserve the status of quo ante litem, the state of affairs before the litigation.
- LA Coliseum v. NFL
o Raiders agreed to move to LA. NFL rule prevented the move. LA Coliseum sought a
preliminary injunction against the NFL rule. 9th circuit reversed because irreparable injury
was not shown. No threat of injury. the loss of revenues was damages. The trial court failed
to consider the hardship of the injunction on the NFL. Injunction denied. The trial court
considered the hardship on the Raiders but they were not a party.
o Post script
▪ Permanent injunction granted against the enforcement of the rule that permitted the
raiders to move to LA.
▪ Affirmed on appeal. No discussion of irreparable injury/adequate remedy at law.
▪ NFL rule was a clear violation of the antitrust laws making other issues less
important.
● Sliding Scale
- 3 elements of a permanent injunction
- 4 for a preliminary injunction
- All element on the sliding scale are important.
o Some will be more important than others.
o While the sliding scale has the practical effect of eliminating the need to prove some
elements, make sure to address them all.
- Status quo effect *use this!!!
o General bias in preserving the status quo. Use this bias.
o
Rees v. Panhandle Eastern Pipe Line 1978
▪ Rees threatened Pipe co with violence if they did not stop clearing his land. Pipe Co
sought preliminary injunction and it was granted to enjoin Rees from interfering. The
status quo was the ongoing clearing operation.
▪ Appellate court affirmed. Imminent risk of harm from Pipe Co not being able to
aerially inspect for gas leaks.
3. Likelihood of Success on the Merits *preliminary/temporary only
- How to address this in your argument
o This is how likely you are to succeed on the merits of the underlying issue of the case.
o Just makes sure there is a legitimate dispute.
o Usually focus on the merit or lack of merit of the underlying legal issue.
- Fisher v. Hargett 2020
o Registered voters sought temporary injunction to require the state to permit vote by mail for
all registered voters during COVID. Trial court granted it. supreme court vacated injunction
because voters were not likely to succeed on the merits.
o The state’s position is that the statutory eligibility criteria do not include fear of becoming ill
or spreading covid. If they are quarantined they can vote by absentee mail as a person who is
ill. On the appeal the only remaining issue is whether a temp injunction should issue for
those who fear becoming ill or spreading COVID.
o The trial court found that the fundamental right to vote guaranteed by the Tennessee
Constitution required the State to expand vote by mail to all who desired it due to the
Covid-19 pandemic. The trial court found the State’s justification for not so expanding vote
by mail to be hollow. The temp injunction simply required the State to permit all registered
voters who applied for an absentee ballot to be entitled to one due to the presence of the
Covid-19 pandemic.
o
o
o
Court 1st considered the “burden on Ps” caused by the State’s
▪ unwillingness to expand vote by mail to all during a pandemic. Court concludes that
the burden on Ps who have no special vulnerability is moderate because of the State’s
protective measures
▪ social distancing
▪ screening questions for poll workers
▪ plexiglass shields for check-in procedures,
▪ mandatory masks and gloves for poll workers ü recommended masks for voters
▪ single use pens for voters to use
▪ single use styluses for voters to use
▪ and frequent and regular sanitation of surfaces.
The State contends that it has a compelling interest in the efficacy and integrity of the
election process and that the eligibility requirements for absentee voting by mail serve those
interests.
▪ The State identifies 3 specific interests:
1) prevention of fraud;
2) fiscal responsibility; and
3) feasibility.
Court found that the State’s interests in the efficacy and integrity of the election process are
sufficient to justify the moderate burden placed on the right to vote of those Ps who neither
have special vulnerability to COVID-19 nor are caretakers for persons with special
vulnerability to COVID-19. We therefore conclude that those Ps are unlikely to succeed on
the merits of their claims. Accordingly, the trial court erred in granting a temporary
injunction as to those Ps.
● Differences in temporary and permanent injunctions- BOND!
- Bond ***KNOW FOR MIDTERM.
o The bond is based on the defendants need in case the injunction is unlawfully granted.
o Challenge the bond after its set if you don’t think it will be enough and will cover damages.
Submit proof that you should have it higher.
o If the P cannot post the bond the injunction is invalid.
- Temp
o Bond required
o Mandatory vs prohibitory (protection of the status quo)
- Permanent
o Bond not required
o Protection of status quo not as significant
- Carroll v. Pres of Princess Ann 1968 *Important restraining order case.
o Loud provocative demonstration held on the courthouse steps. Announced another the rally
the next night. County officials sought a TRO preventing them for 10 days. Ex parte with no
attempt to give notice to the KKK. After a hearing the injunction was extended to 10 months.
Maryland court of appeals affirmed TRO but reversed the 10-month injunction due to lack of
proof that the danger of riot would persist this long.
o Supreme court reversed the 10-day restraining order due to the absence of notice to the KKK.
NO TRO IN A 1st AMENDMENT CASE. Has to have notice. Only preliminary or temporary
injunction. The argument for a TRO is that they will suffer injury before you can give them
notice, but they could have been giving notice here.
- Wright Med Tech v. Grisoni 2001 **BOND!!
o Employer obtained temporary injunction barring employee from selling allegedly improperly
obtained medical devise. Bond was posted at 500,000. Trial court found injunction improper
and nullified it. trial court found that employee had suffered 9,000,000 in damages.
o P was liable for damages for erroneously issued injunction however the damages are
limited to the amount of the bond.
- Federal court
o Same as Tennessee. Damages for wrongfully issued injunction are limited to amount of bond.
o If d is dissatisfied with the bond they should seek to increase it.
- TRO/RO’s are not appealable because they will expire, normally before any appeal can be taken.
- Preliminary and temporary injunctions are appealable.
- Boyd v. Green Farmers Coop
o Action involving an interest in real property, party may file a lien lis pendes. File in register’s
office where the land is. If there is no claim of interest in the land you cannot file this. if you
do anyways you may commit slander of title.
Class 16: 11/22/2021
● Structural injunctions
- Plessy v. Ferguson 1896
o Separate but equal was upheld in this case.
- Brown v. Board of Education 1954
o Reversed Plessy. They required integration of all schools. Separate but equal was
unconstitutional. The remedy was to implement integration “with all deliberate speed”.
- De facto v. De jure
o De jure is compelled by law
▪ Brown made de jure segregation unconstitutional.
o De facto is it is so as a matter of fact.
▪ Lower courts had to deal with the post brown de facto segregation.
▪ Lunch counter was an example of this.
-
-
-
Swann v. Charlette Mecklenberg Schools 1971
o Unanimous supreme court. 1 race schools raise a presumption that de factor segregation was
caused by state action (law/policy). Remedy- the court may require children to be bussed
across school district lines in order to accomplish integration.
Miliken v. Bradley I
o De jure segregation in the south. Segregation not caused by a state law, segregation was
caused by school board zone drawing policy. Trial court found desegregation using Detroit
schools alone was impossible. Trial court ordered neighboring townships to be added as D’s.
6th circuit affirmed.
o Supreme court reversed. Outside school districts were not involved in the segregation. Court
cannot not include in this desegregation plan.
o Missouri v. Bradley II
▪ On remand the trial court ordered Detroit only busing and ordered certain quality of
education improvements: teacher training, multicultural testing programs, integration
counseling, guidance programs for vocational students. Supreme court affirmed
remedies.
Missouri v. Jenkins 1995
o Desegregation costs 200 million per year. District judge trying to prevent white flight.
Supreme court reversed, can’t order a certain tax. It is not within the court’s power.
Prison Conditions Cases
o Hutto v. Finney
▪ Arkansas prison was terrible. Trial court issued a series of orders to dept of
correction. Administrators complied somewhat but not entirely. Found prison system
in compliance. Court made specific orders, limit the number of inmates in the cell,
changing diet, limited length of isolation etc.
▪ 8th circuit affirmed and so did the supreme court. it was supported by the facts.
Remedy does not interfere w dept of correction. This was narrowly tailored.
o Lewis v. Casey 1996
▪ Law libraries for inmates. Supreme court ordered that prisoners are entitled to a law
library. Have to do own legal work and were entitled to resources to have access to
the courts. Trial court found state failed to provide for illiterate inmates. Ordered
prison library system throughout the state be revamped and reorganized. Supreme
court said remedy must be narrowly tailored. Non service of 1 inmate did not justify
an order like this.
o Prison Litigation Reform Act of 1996
▪ Imposed limits on judicial action
1. Court must make extensive findings that federal right is being violated.
2. Limits the federal court’s prospective injunctive relief to 2 years.
3. No prospective injunctive relief unless narrowly tailored.
4. Limits prisoner release as a remedy, requires a 3-judge panel for such cases.
o Brown v. Plata 2011
▪ There were serious constitutional issues and overcrowding in this prison. The
remedial order was a required reduction of prisoners. To order a population limit,
prison reform act requires court to find that the overcrowding is the primary cause of
violation of federal right. Majority of supreme court agreed.
o Municipal Bonds Cases
▪ The court ordered that the county or city had to impose taxes sufficient to be able to
pay off the bonds. The court implied power to levy special taxes to pay bonds from
the legislation authorizing the issuance of bonds. It was allowed here for property.
o US v. Virginia 1996
▪ Court found that the VMI school of having a separate school for women was not
allowed.
-
When are structural injunctions appropriate?
o Dobbs on remedies
▪ If remedies are matched specifically to the rights they are intended to support, or in
the alternative, if good reasons can be articulated for providing a remedy greater than
the right itself, the structural injunction should hold its place as an occasional,
troubling, and complex remedy, which nevertheless must sometimes be invoked.
o Structural injunctions must be supported by the facts and involve entrenched legal violations.
o Remedy must be narrowly tailored to meet the factual basis and legal boundaries.
Separation of powers may limit.
Final Material- Class 19: 1/3/2022
VII. Declaratory Relief and Standing
● Standing
- Article III US Const
o The judicial power of the US shall extend to all cases or controversies.
o The constitution only authorizes the court to determine real cases or controversies. No
advisory opinions permitted.
- Nashville, Chatt and St. Louis RR v. Wallace 1933
o Davidson Co Chancery Court. challenged the constitutionality of Tenn. Excise Tax on
Gasoline under the US Constitution. The issue was whether a case asking a court to declare
whether a statute is constitutional presents a sufficient “case and controversy”.
o The court held yes. Only question was whether there was a real dispute in question. Court
cannot issue an advisory opinion but it can render a declaratory judgment. the court looks at
whether there are adverse parties and whether they are seeking a determination of legal
rights. They had a stake in the game here.
- Standing is NOT present if Ps injury is the same as all other citizens.
o Title III ADA Examples
▪ Public accommodation law requires certain physical accommodations for the disabled
in public facilities. Injunction and attorney fees are the only remedies, NO
DAMAGES. P must be affected by the claimed violation.
- Standing requires
1. A distinct and palpable injury;
a. An injury that is not conjectural, hypothetical, or predicated upon an interest that
a litigant share in common with the general public.
2. A causal connection between the alleged injury and the challenged conduct; and
3. The injury must be capable of being redress by a factorable decision of the court.
- Voter ID Statute requirements
o
In 2013 Ps were voters who challenged this statute. Included allegation that two individual ps
had been turned away because they didn’t have a photo id. State argued that such denial in
past election was not proof of standing in current election. Court held that proof of past
denial of right to vote sufficient to show real controversy.
- Colonial Pipelines Tenn. 2008
o Colonial pipelines sought declaratory judgment that certain taxes were unconstitutional.
Held: sovereign immunity does not bar a suit against the state for declaratory judgment
challenging the constitutionality of a statute as long as the suit does not seek damages.
● Declaratory Judgment
- Here you are just asking who is wrong and who is right. You are asking for a declaratory judgment
to COLLECT.
- Do not have to prove money damages.
- No irreparable harm requirement for declaratory judgments.
- Fed. R. Civ. P and Tenn. R. Civ. P
o Existence of another adequate remedy does not preclude a declaratory judgment that is
otherwise appropriate.
- Steffel v. Thomposon US 1974
o Ps were passing out antiwar leaflets on private property. 1 quit and the other was prosecuted
for trespass. Both sued for injunction against enforcement of criminal trespass statute and
declaratory relief that statute as applied violated the first amendment.
o In re younger-courts should refrain from enjoining ongoing state prosecutions. When no state
prosecution is pending, federal court may consider issuing declaratory relief. You cannot seek
a declaratory judgment when there is a pending prosecution. The person who did not have the
pending prosecution COULD.
o Primary question: if no prosecution is pending, is there a real controversy that exists?
- Doran v. Salem Inn US 1975
o Bars challenged city ordinance forbidding topless dancing. Sought declaratory judgment and
injunctive relief. 1 bar, M & L resumed topless dancing and was charged criminally. The
other two weren’t. Trial court lumped them all together.
o Supreme court followed younger and steffel. Cannot seek to enjoin or seek declaratory relief
in a separate proceeding when a criminal prosecution is pending. Non-criminally charged can
seek declaratory relief.
- Campbell v. Sundquist Tenn. Ct. App. 1995
o State criminal sodomy statute held unconstitutional. Court granted declaratory judgment
holding it unconstitutional.
- Grant v. Anderson Tenn. Ct. App. 2018
o Ps sued chancery court clerk in Williamson Co seeking a declaratory judgment that Tenn
marriage licensing laws were unconstitutional based on Obergefell. However, the challenge
was to all marriage licensing laws, not just as applied to same sex couples.
o D moved to dismiss. The court held that it was not justiciable. No standing, not ripe, and no
real adverse interest to protect. No special interest not common to the public generally.
o Here the ministers did not have standing. Their claim was hypothetical, it assumes no valid
marriage license. Citizens alleged right to vote and or instruct their representatives was not
explained.
o Standing is not present if p’s injury is in the same as all other citizens.
- Tenn. Declaratory Judgment Statute: Tenn. Code Ann. § 29-14-103
o any person ... whose rights, status, or other legal relations are affected by a statute ... may
have determined any question of construction or validity arising under the ... statute ... and
obtain a declaration of rights, status or other legal relations thereunder.
o Still, there must be some “real interest” in dispute. Colonial Pipeline.
- Suits to quiet title
o Newman Machine Co v. Newman
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Dispute over who had title to certain personal property, stock in Newman machine co.
court reviews the old bill quia timet.
Defendant said such cases, for quieting title to personal property, were not authorized
by statute. Court said it didn’t matter, such cases were heard in equity and still may be
so determined.
Issue modern day is who owns the property?
▪
● Reformation
- Reformation is appropriate when there is fraud or mistake in a document.
o Fraud makes it unnecessary for there to have been a mistake.
o Unusual remedy, but perfect when the document does not reflect what the parties intended.
- Hand v. Dayton-Hudson
o Attorney/employee settled employment dispute/wrongful termination case with his former
employer. The lawyer/former employee modified the agreed upon settlement document
deceitfully.
o Purpose of reformation is to enforce the actual agreement of the parties. difference between
the remedy for fraud- recission- and reformation.
o You ask the court to re-write the agreement to meet the party’s actual agreement. Fraud
allowed reformation because it showed the original intent of the parties in the first contract.
Class 20: 1/10/22
VIII. Restitution
● Unjust enrichment *most common type of restitution
1. Enrichment is measured by ****
o D’s gain by the D’s profit.
o NOT P’s loss as compensatory damages strive to do.
2. Restore to P the specific thing that he lost or undo a specific transaction.
a. Specific restitution of an item of property.
b. Rescission is an example.
3. Restore to P the value of what he lost.
a. Common criminal justice usage.
b. Is really a misnomer in civil law- same as damages!
- Unjust enrichment= enrichment that lacks an adequate legal or equitable basis.
o Ask yourself: does what I am after have any legal or equitable justification?
● Restitution
- This of this as another possible means to get a result for your client, along with all of the other
damages we have learned.
- Three main types of restitution
1. When P prefers to measure recovery by D’s gain
2. Specific restitution
a. D is insolvent
b. What P lost has changed in value
c. P values item for non-market reasons.
d. Rescinding a transaction.
*otherwise the remedy looks like damages.
- In general- from Moses v. Macferlan, England 1760
o D is obligated by the ties of natural justice and equity to:
▪ Return the property
▪ Unwind the transaction
▪ Refund the money.
o Basically talking about fairness.
- Corollaries to the definition
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A transfer based on an adequate legal or equitable basis is NOT unjust.
Transfer of $ or property
▪ Pursuant to a valid contract
▪ Payment of a valid obligation or
▪ As a valid gift
▪ NOT unjust enrichment generally.
o If there is a contract, you need to look at why its invalid or some way the other party was
taken advantage of to get past it.
Unjust enrichment- limitation
o Restitution is not normally available to the party to a contract OR who should have made a
contract but failed to do so.
▪ Normally, a sophisticated party is going to be limited to its contract remedies.
o Even less than sophisticated parties can be so limited.
o Why?
▪ If D receives $ or property from P because of an obligation imposed by a contract,
then how can it be unjust?
▪ If P could have included the obligation in a contract that it has with D and failed to do
so, then it is not unjust for D to receive the benefit.
o Example
▪ Neighbor borrows lawnmower from owner. Neighbor fails to return it. Obviously, this
is unjust enrichment. Also, a tort🡪 conversion. How should damages for the tort be
measured?
▪ What if the neighbor mows yards of others for a profit during his custody of the
mower? Does that effect the measure of damages? Is what D gained included in the
normal tort measure of damages?
▪ Is there a legitimate basis for the lawn mower borrower D to retain his profits
from mowing the lawns of others with his neighbor’s lawn mower?
▪ Can you think of when there might be a basis for the user to keep the profits?
Some of the profits?
o If D improves it. does that affect the quantum of profit? Maybe.
o It’s a factor on how much they spent improving it, BUT that is only a
factor. Not the answer.
Lingo
o Restitution, unjust enrichment, damages are used interchangeably sometimes.
o Unjust enrichment or D’s gain = the restitutionary remedy.
o Damages= the compensatory damages remedy.
Blue Cross BlueShield Health Services v. Sauer 1990
o William R. Sauer had disability insurance and checked into the hospital saying he was
covered by Blue Cross, but he wasn’t. Clerk entered him as William J Sauer who had
coverage, but used the real William’s address. Blue Cross sent checks totaling 22, 000 to the
wrong Sauer. Either Sauer or his father endorsed and deposited the checks. Blue Cross is
entitled to restitution of money it paid by mistake.
o Contributory negligence or comparative fault are no defenses here. Monies were paid due to
mistake by Blue Cross, but that did not prevent recovery here. D did not have a contract with
Blue Cross, there was no just reason for them receiving this money.
Burkhart v. US Commerce Equip Finance, LLC 2001
o Burkhart and US Commerce Equip had a contract. B used certain theater equipment pursuant
to a lease and the lease included an option to purchase the equipment. Lease was for a
27-month term, lessee was to return the equipment after and if it didn’t, the lease became a
month to month lease.
o After the contract expired, B continued to use the equipment and make payments. He claims
he did so by mistake and he did not realize the lease was up. A year after the contract
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expired, B exercised the option to purchase for 11, 012.75. B sought a refund of the payments
he paid in access of the lease term for 82,439.36. US Commerce refused to refund.
o Trial court held for US commerce. B had 3 options at the expiration of the lease. 1. Return
equipment, 2. Continue using and become a month to month lease, 3. Or option to purchase.
The court held that B essentially chose option 2.
o B argued that US commerce was unjustly enriched by the mistaken payments. The issue was
whether retention of the $ by US commerce would be unjust. The contract provided for
retention of the equipment as long as B continued to pay the monthly lease amount. He kept
it and paid the lease amount, thus it was not unjust for US commerce to retain the funds
called for under the contract.
o If D has a contract with the P and P pays money that looks like it falls under the contract
terms, D gets to keep it. NOT UNJUST!
2 informative cases
o State v. ANW Seed
▪ State won DJ against ANW. ANW appealed but did not post supersedeas bond. This
stops the DJ, but if one is not posted the other party can move forward with purchase.
Executed on 16, 588 worth of ANW’s assets. Court of appeals vacated the judgment.
ANW sought judgment against State for the value of the personal property executed
against, claiming the property was worth 51, 000.
▪ ANW could have stayed execution by posting a bond. ANW points to nothing
wrongful in the execution of the judgment. state followed lawful procedures.
o Anderson v. Schwegel
▪ Anderson hired Schwegel auto body shop to restore a 1935 Plymouth for 6, 000.
Anderson thought deal included all but upholstery. Schwegel thought deal included
only body work. Schwegel subcontracted engine ship to do the engine work, which
that alone cost more than 6,000. Schwegel charged 9,800.27 and Anderson paid
5,000. There was no written contract and the trial court held there was no agreement
reached. They held for Schwegel against Anderson for 4, 800.27= the value of the
services rendered.
▪ Courts allow recovery in unjust enrichment for the value of the services. This is the
typical measure of recovery in a services case.
▪ They usually agree with the party providing the services. But it is the REASONABLE
value of the work.
Unjust Enrichment= Quantum Meruit
o “as much as he deserved”
o Often called a quasi-contract.
o How to determine the value of the services rendered here?
▪ Value to whom? *don’t worry about this for test.
▪ This is the reasonable value to the recipient.
▪ Reasonable value= the lesser of the market value and a price the recipient has
expressed a willingness to pay. Evidence of what D was willing to pay is
relevant, but not controlling.
▪ Restatement: value to the recipient of the benefit. *don’t worry about this for
test. This is the usual measure of enrichment in all cases where an innocent
recipient has obtained unrequested, nonreturnable benefits.
Mechanic’s Liens
o Important statutory remedy when real property has been improved.
o Claimant furnished labor or materials used to improve
1. Party with contract with the owner.
2. Party without a contract with the owner.
o Detailed statutory requirements of notice and filing, including time deadlines that are often
missed.
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If followed, mechanic lien holder has $ lien of record against the real property. this means
that they can execute against the R/e.
o NOTE: this will usually not interfere with the furnisher’s ability to claim unjust enrichment.
o Paschall’s Inc v. Dozier 1966 ****remember this case for the test.
▪ P built bathroom addition in D’s house. P built it on the request of Mary Best,
daughter of D who lived in the house. Best filed bankruptcy and P sued seeking
unjust enrichment. P lost mechanic lien right through some defect. D argued that they
didn’t enter into the contract, the daughter did, and he should try to recover the money
from her.
▪ The value is normally determined by their work, using the price agreed upon by Mary
Best or the regular market value. Quantum meriut may lie to recover reasonable value
of labor and materials furnished. D had an improvement and was unjustly enriched
without the P getting paid for the services.
▪ What are the elements?***
1. A benefit conferred to D by p
2. Appreciation of benefit by D
3. Acceptance of benefit under circumstances that would be inequitable for D to
retain benefit without payment
4. Exhaustion of remedies.
▪ If a landowner has given any consideration to anyone for the improvements, not
unjust for landowner to retain the benefit without paying the furnisher. Here, the D
had not paid anyone.
DT McCall and Sons v. Seagraves 1990 ***remember this case for the test.
o DT was the supplier of the heat pump. Holland was the person who built the house under
contract with the owner. Seagraves was the owner.
o DT supplied a heat pump to Holland and Holland installed it into the house. Seagraves paid
Holland for the house in full. DT sought to recover from homeowner in quantum meruit.
Since the homeowner paid Holland, it was not unjust for the homeowner to retain the benefit.
Class 21: 1/17/22
● Disgorging profits
- Olwell v. Nye Nissen Co***
o Olwell sold to N and N ½ interest in Puget sound egg packers. Olwell retained ownership of
the egg washing machine and stored it at the N and N plant. N and N took it without Olwell’s
knowledge and used it for 3 years. Olwell learned it was being used and offered to sell it to
them for 600.
o Olwell recovered a judgment for 10 per week for 156. 1, 560, which was much more than the
FMV estimate. Olwell’s theory was restitution and sought to recover the value of the use of
the machine. N and N argued why should Olwell be entitled to recover if he wasn’t going to
use it anyways? Conversion remedy would be 600 but the remedy for restitution would be
1,560, which is the benefit to N and N. Olwell had the right to exclusive right to his property,
so the measure was N and N’s gain not his loss.
- Edwards v. Lee’s Admin 1936
o Cave entrance on edward’s property. Cave extended under Lee’s property. Edwards
developed cave as a tourist attraction. Court awarded lee’s estate restitution for the benefit
Edwards gained from showing Lee’s part of the cave. Lee wouldn’t have gotten anything if
Edwards hadn’t developed the cave.
- Vincent v. Lake Erie Transport Co 1910
o D’s ship was tied up at Plaintiff’s docket. A storm came and D’s ship did 500 in damages to
P’s dock. Nobody was negligent but D had to pay for the 500 damage. Could P have sought
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the value of the benefit to D? Emergency situation, no time for voluntariness so there is no
unjust enrichment recover.
Majer v. Fleischmann
o Trademark infringement case. Fleischmann owned trademark for Black and White scotch
whiskey. Maier used for its beer. Lanham act, the trademark statute, stated you can recover
all of d’s profits and any damages sustained by P. Trial court awarded F 34,912 from Maier.
Maier argued it wasn’t trademark infringement because they were making beer not liquor.
The act says it doesn’t matter if it’s the same product or not. F had no lost sell, but
infringement on the trademark results in award of all of Maier’s profits.
CPB Management v. Everly
o 1989 brown hired as agent for Everly. 5% of gross=fee. No written contract. 1990 brown
arranged for European tour for band. Don knew of and did not object to brown putting tour
together. 1991 Everly’s terminated brown. European tour, the band’s gross revenues were
678,000. Everly paid CPB 54, 213.74 which was 5% of Don’s gross revenues. Don expressly
opposed brown earning additional money for the European tour above the 5% gross. Brown
said this was beyond the scope of the agency agreement.
o The tour required that he book dates, something he rarely did under the agency agreement.
Brown had unwritten contract that provided for the compensation. The European tour was
held to be covered under the contract. Thus the receipt of services was not unjust, it was
covered by the contract. No unjust enrifhcment.
Bright v. QSP 1994
o Bright was a salesman for QSP with a written contract. Sought to recover for services beyond
those expressly covered in the contract. The court held that bright does not have unjust
enrichment claim. The contract called for payment of services. Bright cannot complain after
the contract about doing things for which he says he was not compensated.
Culpability is considered.
o Is it appropriate for the Defendant to retain the benefit?
o Ventura v. Everly Brothers Case
▪ In 1984, WWE wrestler Ventura entered into an oral contract with titan sports to be a
wrestler. After suffering an injury, titan agreed for Ventura to be a commentator of its
tv broadcast. There was no mention in either oral agreements about royalties. Titan
paid salary agreed upon but nothing more. In 1987 his agent pressed for him to get
royalties. Titan told him it was against their policy to pay royalties unless you enter
into a featured performer contract.
▪ Titan had made numerous royalty payments to non-featured performers. In 1991
Ventura sued titan for fraud and quantum merit. Jury found for Ventura and awarded
him over 800,000. Court held that Ventura was entitled to pursue quantum meriut
because titan benefitted from his participation. Titan unjustly used his publicity rights
without just compensation. He was also entitled to unjust enrichment because titan
defrauded him into the waiver of royalties.
Keymon v. Hamilton v. Ryker
Class 22: 1/24/2022 ********HIS FAVORITE CLASS! CLEARLY ON EXAM
● Allocation of Profits
- Goal is fair apportionment so that neither party will have what justly belongs to the other.****
- Revenue- expenses= profit.
o Revenue from income and money received by the business, usually from sale of goods or
services.
o Expenses are money paid by the company for rent, wages and salaries, interest, depreciation,
and some expenses are fixed and others vary with the amount of sale.
▪ How to expenses effect profit? If all expenses are deducted, it is simple. Sometimes P
might want certain expenses to not be included.
▪
What about fixed expenses? What about variable expenses that fluctuate with
the sales of the offending product?
Approach it like this: what expenses are deducted? Are any not to be deducted?
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Profit
o What expenses can D legitimately deduct from the profit
▪ D keeps
▪ Makes profit somewhat smaller
o What profit can P disgorge or what can D keep?
Expenses
o Determining what expenses to include for the reduction of profit is materially different than
determining the profit (the amount a D has after deducting expenses) to be disgorged.
Allocation
o P sued for infringement. Proves D’s gain (profit).
o D has the burden to prove that
▪ P failed to include certain expenses.
▪ That profits should be allocated and the rate of allocation.
o P then argues and puts on proof of greater allocation.
Hamilton-Ryker v. Keymon 2010
o Tennessee trade secrets act case. Keymon worked for Hamilton-Ryker and signed a
non-competition agreement. On the last day of his employment with HR he emailed himself
56 HK documents that enabled her to serve Verizon, which was one of HR’s biggest clients.
The info she took was information not readily ascertainable and was held to be a trade secret
by the court. Keymon used the information to supply Verizon and supplant HR. HR asserted
that Keymon made 477,000 profit on the transaction. Keymon defended that HR only
suffered actual lost sales to Verizon of 94,000. Trial court ruled for HR for the 477,000.
Trade secret act doubled that amount.
o Although Ms. Keymon had a non-compete the most significant award was for her violation
of the trade secrets act. trade secrets specifically provides for the recovery of the GAIN to the
D and doubles any willful violation.
Sheldon v. MGM 1950 ****leading case.
o Sheldon wrote a play called the dishonored lady. MGM negotiated with him for the rights to
the play but Sheldon did not agree to MGM’s terms. MGM decided to copy the play when
they knowingly did not have permission. MGM made a movie called Lady Lynton that was
the same. Sheldon sued for all MGM’s profit on the film. There was no dispute this was an
infringement of copyright, the question was how to measure their profit. Their profit was
587,604.37 on the film. 10 million in today’s dollars!
o MGM submitted proof that 30,000 when negotiations broke off. Motion picture rights are not
very valuable. Expert testimony provided that between 5% to 12% of the receipts and said
that the play contributed 0. Sheldon put on no rebuttal and argued he was entitled to
everything.
o District court held Sheldon gets all profits. They held that MGM did more than copy the play,
they added a lot by making it into a movie. Punitive and unjust to award all net profits to
Sheldon.
o 2nd circuit reversed and held that Sheldon entitled to only 20% of the net profits. More than
MGM’s experts but less than all the profits. Supreme court affirmed. Approved
apportionment in a copyright infringement case. this limits Sheldon’s recovery to the unjust
portion of MGM’s gain. They found that exhibition of the play as a movie added distinctive
profit measuring features separate and apart from the use of the infringing material. 20% was
the proper allocation. Sheldon got 117, 524.87.
Mishawaka Rubber v. SS Kresge 1942
o Trademark case. the court allocated gain to the plaintiff for profits from sales to confused
customers but profits from sales to consumers who were not confused were not awarded.
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Hamil America Inc v. GFL 1999 *just an example case.
o GFI copied 1 of Hamil’s fabric patterns and violated their copyright. Trial court did not
include overhead in its profit calculation. 2nd circuit held that overhead must be included in
allocation. Burden is on the infringer but infringer is allowed to reduce profits awarded to
plaintiff by a fair and acceptable formula for allocating a portion of overhead expenses to
manufacture of the infringing product.
3 Boys Music Corp v. Bolton
o Michael Bolton wrote a song of the same name “Love is a wonderful thing’ as the Isley Bros.
The Isley Bros sued claiming Bolton’s song infringed their copyright. Jury found the song
accounted for 28% of Bolton’s profits on his CD and that the original song accounted for
66% of the song. 66% of 28%= 5,400,000. Isley Bros were awarded 5.4 million dollars.
o Consider allocation in the context of this song.
▪ Tune obviously different
▪ Names appeared to be only infringement.
▪ Song only part of the CD.
o Even with allocation P recovered 5.4 million.
Indirect profits
o Frank Music v. MGM 1989
▪ MGM used infringing material from a Broadway play called Kismet in a show called
Hallelujah Hollywood. P attributed success of hotel and casino to success of the
show. Court awarded 10% of the profit from the show tickets (direct profits) and 2%
of profits of hotel and casino.
▪ 10% of profit from ticket sales= 550,000. This is direct profit. 2% of hotel and
casino’s net profit was found to be 700,000. This is indirect profit.
Blurred Lines Case
o Marvin Gaye heirs claimed Blurred Lines violated Gaye’s copyright song Got to Give it Up
copyright by using one of the central rifts. Awarded 5.3 million total. Case affirmed by 9th
circuit. 40% of Rob Thicke’s profits. 15% of Pharrell William’s profits. Balance were from
the profits of the other Ds.
o Thicke’s total profits were 5.7 million. Williams were 5.2. million. Other ds were 4.9 million.
Court allocated the profits and awarded 5.3.
Class 24: 02/07/2022
● Restitution Rescission
- **Generally, not entitled to restitution when a contract is involved because the people entering
into the contract could have protected themselves by putting the terms in the contract.
o For restitution to be a remedy you must give something else to get over that hump.
- Grounds
o Repudiation
o Fraud
o Mistake
- Limits
o Timely assertion
o Not too complex to unwind.
- May v. Muroff
o Seller of land has a contract to sell land to buyer. Seller sells fill off of the land for 240,000.
Trial court held seller liable for damage to the land and measured the damages by a per acre
removal cost, reducing the value of the land by 122,067 NOT the total price seller received
for the fill. Court of appeals reversed awarding buyer all of the gain reaped by the seller.
Purchaser is entitled to the value of the materials removed from the land, which is readily
determined from the record as 240,000.
o This is total disgorgement of profits in a breach of contract case.
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Real estate
o Buyer has the right of specific performance.
o Supporting total disgorgement of profit: If buyer had been able to sue in time, he could have
compelled the sale before the fill was removed.
o Breach of a non-competition agreement in the sale of business context. Muroff situation.
Restatement of contracts 3d § 39(3)
o If a deliberate breach of contract results in profit to the defaulting promisor and the available
damage remedy affords inadequate protection to the promissee’s contractual entitlement, the
promise has a claim to restitution of the profit realized by the promisor as a result of the
breach.
What is rescission?
o Its all or nothing. P cannot keep some of the contract and reject other parts.
o Irreparable injury not required.
o P MUST act promptly. Laches or other complications will prevent a P who consciously waits
too long to lose rescission remedy.
o Passage of time or complexity in unwinding the transaction can limit an otherwise suitable
candidate for rescission.
o Mutual Benefit Life Insurance v. JMR Elec. Corp
▪ Gaon, president of life insurance, answered no to questions regarding smoking. He
died less than a year later and it was found that his smoking answers were not true.
Insurance company refunded premiums. This was a material misrepresentation, which
justifies rescission of the insurance contract. Misrepresentation is material if
increased the risk of loss to the insurer.
Tenn. Code Ann § 56-7-103
o No misrepresentation made in the application (for a policy of insurance) by the insured.. shall
be deemed material or defeat or void the policy UNLESS the misrepresentation is made with
actual intent to deceive or unless the matter represented increases the risk of loss.
o Sine v. Tenn. Farmers Mutual 1993
▪ Real property insureds misrepresented 1. Title, 2. Amount of mortgage, 3. Prior
insurance cancellations. Tennessee farmers issued insurance and then fire destroyed
the home. Insureds sued and lost at the trial court. the trial court said that
misrepresenting the mortgage as 30,000 when it was 43,250 was a material
misrepresentation.
▪ Law in Tennessee is that if a misrepresentation materially increases the risk of loss, it
is material. Court of appeals finds that all 3 misrepresentations materially increased
the risk of loss as a matter of law. This rule changes the rightful position rule a bit. If
the insured had told the truth, the insurance company would not have issued the
policy. Imply undoing the transaction rights the wrong.
o Cherry v. Crispin
▪ Sellers concealed termite infestation. Buyers wanted rescission. Cost of exterminating
was 1,500. Buyers won rescission and had to pay reasonable rental for time in the
house reduced by the value of minor improvements made to the House.
Lamons v Chamberlain
o Lamons agreed in a written contact to buy Chamberlain’s video store. 26,000 down and 200
per week to pay off the balance. Lamons agreed to pay for the insurance of the building and
the inventory. Lamons had a leasehold interest. Lamons took possession in Aug. of 1989. In
December 1990, Chamberlain demanded that Lamons pay the taxes on the store. In Feb.
1991, Chamberlain threatened to evict Lamons if Lamons didn’t pay the back taxes. March
1991 Chamberlain took possession. They insisted that the lease required Lamons to pay the
taxes. Trial court disagreed, nothing in the contract required this. Trial court held that
Chamberlain breached the contract by repossessing the premises. Awarded rescission.
Chamberlain was to return $ paid, 39,800 plus 6% pre-judgment interest.
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o Court of appeals said too much time had run, rescission is not appropriate remedy.
Isaac v. Bokor 1978 *Mutual mistake leads to rescission.
o Isaacs purchased a lot in oak hill from Bokor, a developer. Lot 31 east Hillview drive. Isaacs
looked at the lot several times and Bokor gave plat showing dimensions and location of the
lot. They even walked it together. It was a unique lost and had great views and lots of large
trees. Isaacs hired an architect to design a home for that lot. They recommended that Isaacs
get a survey and they did not. They paid 18,000 for the lot. Bokor submitted a bid to build
home and Isaac hired him for 105,000. Bokor build a road to the lot and Neighbor directed
them to stop stating it was on her land. Bokor was shocked because he was not aware that the
lot he sold to Isaacs was not the lot everyone thought was lot 31. The neighbor offered to sell
the portion on which construction had already begun for 7,500 and no one accepted. Isaacs
notified Bokor that sale was rescinded and demanded restitution. Bokor refused.
o Jury held for Isaacs and gave compensatory damages of 50,000. Isaacs expenditures for the
lot, progress payments on building contract, interest, and other incidental damages. Court of
appeals reversed stating rescission was not proper when contract was partially executed.
o The TN supreme court stated that it was not necessary to have fraud to support rescission.
Mistake can also support rescission. While Bokor was not acting fraudulently, there was
definitely a mistake. The project hadn’t been performed to the extend it shouldn’t be
rescinded. Trial court awarded rescission and restitution was reinstated.
o Why did court allow a complex transaction to be unwinded here? Because P was innocent.
They did not sleep on their rights. D was able to address complexity through financial
restitution.
Hypothetical case
o Assume D misrepresented important qualities of a time share arrangement. On the beach,
view of the ocean. P proves that the time share is not on the beach and you cannot see the
ocean. Assume further that P paid S 25,000 for the time share. What are Ps possible
remedies?
o Damages?
▪ 25,000.
o Injunction
o Rescission? Yes.
o Any other remedies?
o Punitive damages?
▪ Yes, if it was intentional.
Class 25: 2/14/2022
● Constructive Trusts
- Definition in Tennessee.
o The difference in a constructive trust and judgment is that by being able to trace the
theft back to the asset, the holder of the constructive trust has a better remedy than
anyone holding a judgment because creditors. Nobody can reach it in a constructive
trust but the beneficiary.
o A constructive trust will be imposed to prevent unjust enrichment.
o A constructive trust requires some element of
▪ Fraud, concealment, duress, etc, such that a person has obtained property which he
ought not, in equity and good conscience, hold and enjoy.
o ELEMENTS! Constructive trust may be imposed when:****
1. Property is obtained in violation of a duty to the actual owner.
2. Property is obtained by some inequitable means:
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3. Undue influence is used to obtain property:
4. Property is obtained with notice that someone else is entitled to its benefits.
5. Tracing.
o Things to remember
1. Specific property
2. Tracing-must be able to trace to the specific property
3. Serious wrongdoing/culpability.
4. If value is added no constructive trust.
Snepp v. US 1980
o Snepp, CIA Vietnam, wrote a book. It was published without agency approval. Contract
specifically required him to obtain approval. Trial court imposed a constructive trust for CIA
to receive all profits from the publication of the book. An equitable trust for the benefit of a
party that has been wrongfully deprived of its property due to a person obtaining property
which they should not possess. Court of appeals reversed the constructive trust.
o Supreme court reversed and re imposed the constructive trust. A constructive trust is the most
appropriate remedy here. Govt conceded, no classified information was revealed. What
fiduciary obligation has been breached? What obligation was breached? How has the govt
been damaged?
o As constructive trust, Snepp holds his property, the book, for the benefit of the CIA. How is
the remedy different? Because this is an ongoing concern. Better than trying to take the
books of the shelf. Deprives the wrongdoer of any benefit. Culpability from breach of trust.
National security implications!
US v. Bolton *recent case like Snepp.
How important is culpability?
o Culpability doomed Snepp.
▪ It wasn’t that important in MGM. Could MGM have been more culpable?
o Added value. ***way for the wrongdoer to keep profits.
▪ None in Snepp.
▪ None in the Black and White beer case. It was lousy beer.
▪ Value added in MGM clear and substantial.
▪ Consider- was there harm beyond $?
Paoloni v. Goldstein 2004
o Ps invested in the ABG program. A fraud by Doggett. Doggett used funds fraudulently
obtained to acquire a condo that he lived in for 137,00. Ps sought a constructive trust over the
condo. Constructive trust is an equitable device that requires tracing tied to specific property
over which the plaintiff can show a specific right or interest. tracing allows one to follow the
money to the ill gotten asset. P traced the condo back to the fruit of their fraudulently
obtained asset and awarded a constructive trust.
Tracing ***required for a constructive trust.
o The WORSE the conduct, the lesser the need for specific tracing. This is where culpability
comes in.
o In re Erie Trust Co 1937
▪ Erie trust, executor, held funds for the estate of Gingrich. Erie trust became insolvent.
The estate tried to recover funds improperly converted. Court held that converted
assets were converted sufficiently improperly to justify a constructive trust. Can be
recoverable if traceable. Converted to cash or cash equivalents were traceable. This
court said must have tracing to be able to get a constructive trust AND must have
some breach of trust (culpability): breach of fiduciary duty, fraud, or other
significantly culpable conduct. Negligence is NOT enough.
New York Life v. Nashville Trust 1956
o NY life sued Nashville Trust. The holder of the proceeds of funds on life insurance policies
issued on the life of Thomas Buntin. Beneficiaries of the Nashville Trust trust are Buntin’s
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wife and kids. Buntin, an insurance man, disappeared. Nashville Trust sued NY Life to
recover the proceeds of life insurance policies. 1933 Buntin supposedly died. 1942, TN SC
held for Nashville Trust, finding that NY Life owed the benefits, thus NY Life paid the
benefits.
o In 1953, Buntin was found alive. NY Life sued claiming fraud by Buntin. Buntin’s fraud
made his beneficiaries retention of the proceeds of the life insurance unjust. Thus, given the
nature of Buntin’s fraud, 20 years later, NY can recover benefits paid. NY Life won because
of Buntin’s fraud. Constructive trust over the trust res up to the amount of the benefits paid.
o Note: Buntin faked his own suicide and defrauded the court but the money went to his
family, not Buntin. How unjust that the innocent widow has to lose the $? Degree of the
crime was so bad that the culpability of the wife and children didn’t matter.
State v. TCCN 2005
o Tenn Coordinated Care Network was a health maintenance organization that was HMO for
Tenncare. Regulated business in trouble. Commissioner of commerce and insurance directed
TCCN to not transfer any funds without Commissioners permission. TCCN transferred 5.7 M
anyway. Trial court ordered that constructive trust be placed over the sister companies to
whom TCCN had transferred the money.
o Transfer by TCCN was a breach of trust. TCCN knew the order was coming. Knowledge of
the ensuring order-imposed trust obligations on TCCN to hold any money for court approval.
Transferring the money in to avoid the upcoming order was a breach of trust making the
constructive trust the preferred remedy.
o What about the effective date of the trust? Date of transfer or date of order breached by
defendant? Trial court held that the date of the transfer was effective date of the constructive
trust.
Ruffin v. Ruffin 2000
o Divorce case. H ordered to pay child support pendente lite. A week after ordered to pay child
support, H won lottery for 4.9 million off of a 2-dollar ticket. He didn’t pay child support for
4 months. W sought constructive trust over H’s lottery winnings arguing the money used to
buy the winning lottery ticket should have been paid to her in child support. Trial court
denied W relief.
o Appeals court affirmed. For constructive trust, Ps money (in the hands or control of D) must
be distinctly traced into the property sought to be made subject to the trust. Cannot trace
these specific 2 one-dollar bills. Injustice of not paying child support insufficient to grant
constructive trust.
Value added= exempt from Constructive Trust****
o Purpose of unjust enrichment is to recapture the ill-gotten gains, not those achieved by Ds
own efforts.
o Identify the profits and recapture those attributable to the Ps taken property without capturing
the fruits of Ds own labors or legitimate efforts.
o When the value of the property held in trust increases significantly because of Ds efforts, a
constructive trust that passes on the profit of the Ds labor to the P usually goes too far.
o It is not equitable to transfer this billion-dollar brand (Bratz). The value of which is
overwhelmingly the result of Ds legitimate efforts because it may have stared with two
misappropriated names.
o Bratz v. Barbie aka. Mattel v. MGA Entertainment ****
▪ Carter Bryant, a Mattel employee signed an agreement that said “all my inventions
are Mattel’s. in 1998 he took 8 months off and came up with the Bratz doll. He
pitched it to Mattel and they said no. He went to MGM and MGM said YES and
agreed to pay him a salary plus 3% of profits on Bratz. Bryant gave notice to Mattel.
MGA poured resources into the concept and came up with the Bratz doll. MGM
started selling these dolls in 2001.
▪
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Barbie sales started to suffer right away. In 2004 it was down by 15%. Mattel lost 20
million a year from 2004-2008 totally 100 million dollars. MGA’s net profit from the
sale of Bratz was 500 million per year from 2004 through 2008 totaling 2 billion over
4 years.
▪ Bryant’s designs were just concepts, MGA and Larian added the color, spice,
marketing savvy to launce the doll and make it succeed. They even developed a
cartoon tv show using the dolls. MGA spent 250M on marketing and other creative
assets. Experts testify that original design accounted for only 5% of the ultimate
success of the Bratz dolls. MGA too the risk.
▪ In suit, Mattel sought ALL of MGA’s gain=2Billion. Plus an injunction against
marketing Bratz and a constructive trust over the entire Bratz trademarks. Mattel’s
damages=100 million vs. MGA’s gain= 2 billion.
▪ Jury returned a verdict for Mattel. They found that Bryant designed the doll while
employed by Mattel. MGA and Larian stole the Bratz design and converted Mattel’s
property. Mattel owns copyright to Bratz because he created it while there. MGA and
its CEO Larian interfered with Bryant’s contract with Mattel and aided and abetted
Bryant’s breach of his duty of loyalty to Mattel.
▪ ROUND 1: jury awarded 1 hundred million dollars. No stated distinction between
Mattel’s loss and MGA’s gain in jury verdict but they awarded Mattel’s alleged loss.
No gain awarded. No punitive. After this trial, judge entered an injunction against
Manufacture of Bratz dolls and ordered them to destroy all molds for making them.
constructive trust over all trademarks and ordered MGA to issue a public notice of
recall.
Bratz v. Barbie appeal Jan 2009
▪ Court of appeals entered an emergency order and suspended the injunction. Called it
draconian. Bratz dolls remained on the shelf during the appeal. 9th circuit reversed.
Trial court erred in awarding Mattel ownership of Bryant’s ideas and drawing. No
constructive trust where alleged infringer adds much value. BIG TAKEAWAY
FROM THE CASE.
2001 Retrial
▪ In 2011 a new jury returned a verdict for MGA for 88.5 million against Mattel for
unfair competition. Jury found Mattel did not own the Bratz design. Mattel unjustly
enriched by using Bratz design.
▪ In 2012, the CA Trade Secret Statute doubled the verdict to 137 million. 85.5 in
punitive damages. Total judgment for MGA against Mattel was 310,000,000. Court
awarded MGA 133,000,000 for attorney fees and court costs. 443-Billion-dollar
verdict.
2013 Appeal
▪ 9th circuit reversed again. Held that MGA’s trade secret counterclaim was not properly
before the court. strange civil procedure ruling. Affirmed 133, 000,000 in attorney
fees and cost award.
2014 New Suit filed
▪ MGA filed suit against Mattel in State Court alleging new business tort claims and
seeking 1 billion in damages. Mattel filed an MTD and it was denied. CA AC denied
his appeal to denial of MTD. In 2016 MGA discontinues Bratz dolls.
2018
▪ Mattel wins SJ. LA times reported that Larian wanted to merge with Mattel. MGA
announced a limited edition series later that year for a collector series.
2019-2020
▪ CNN reported that MGA(larian) still was trying to buy Mattel. LA times then
announced he was no longer trying to do that. Mattel closed factories and outsourced
production. Nov. 2019 Sj for Mattel affirmed on appeal. Petition for review of SC
denied.
Class 26: 2/21/2022
● Equitable lien
- An equitable lien is a kinder, gentler remedy similar to a constructive trust.
- The party with the lien has the right to or control of the certain property that is the subject to the lien
but the legal owner is not in the position of a trustee for the equitable lien holder.
- This is a money judgment secured by a lien on specific property. Sometimes just its just a lien, not
reduced to a specific amount, but this is rare.
- It is a tracing remedy- below specific property and home was improved by stolen funds.
- In re Mesa 1999
o 1996 Mesa and McKay bought a home. Soon after they commenced an expensive renovation
project. McKay funded renovation with 378K that he stole from his employer, travelers Ins.
Mesa claimed he was unaware of the fraud but the court did not believe Mesa. Mesa claimed
his half interest in home as exempt from the bankruptcy estate under the homestead
exception. At bankruptcy, up to 25K in equity. Travelers objected. Mesa knew of the source
of the funds and mesa would be unjustly enriched if allowed to keep the benefit of the theft.
o Under FL statute, homestead exemption is subject to equitable liens. Travelers right to the
funds imposes an equitable lien on Mesa’s interest in the home. Travelers has an equitable
lien on the property in the amount of 378K.
- Robinson v. Robinson
o Ann and Wylie are getting a divorce. Ann and her soon to be ex-husband built a house on
real property owned by her in-laws, Earl and Alice. Earl and Alice knew of and consented to
the house being built on their property. Wylie and Ann lived there for 8 years. The court
placed an equitable lien on Earl and Alice’s property for one half, Ann’s half, of the value of
the improvements made by Ann and Wylie. Lien imposed when Earl and Alice refused to pay
for ½ of the value of improvements although they did nothing wrong, their property was
improved and they have to pay for it.
● Equitable Subrogation
- LIEN IS ONLY AGAINST THE CLAIM!
- Whenever one person, not acting as a mere. Volunteer, pays a debt for which another is primarily
liable, which in equity and good conscience should have been discharged by the latter.
- Subrogation, putting yourself in someone else’s position, in the position of their legal rights.
1. Party seeking subrogation (subrogee) made payment to protect his own interest.
2. Subrogee is not merely a volunteer.
3. Subrogee is not primarily liable for the debt.
4. Subrogee is paid off the entire debt or obligation. *if they pay half and release the D, they can
still step in their shoes and go after the third party. P has to agree that they have been made
whole for the insurance company to pursue subrogation.
5. Subrogation would not work an injustice.
- Subrogation= substitution.
o Tracing, conceptually, it was a tracing remedy, tracing through the rights of another.
o Is this a situation where equity and good conscious mean that the party who pays the debt or
claim gets to stand in the person’s shoes? Example: junior lienholder in a multiple mortgage
situation.
- Newton v. Porter 1877
o 1869, 13K govt bonds were stolen from P. thief sold the bonds and divided the proceeds.
Warner loaned part of his share to others and took promissory notes in exchange for the
loans. 1870, Warner and others were arrested. Warner assigned to his lawyers the notes as
payment for their services in defending them in a criminal case. apparently, the lawyers sold
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or collected notes recovering 2250. Court found that the attorneys had notice that the notes
were fruit of the theft. Appeals court affirms.
o Equity will follow the stolen proceeds to the end. The only defense is complete lack of
notice. In this case, while the lawyers asserted lack of notice, the facts supported court
finding of notice. Tracing allowed.
Mistake of Fact Doctrine
o Money paid under a mistake of fact may be recovered regardless of the paying party’s
negligence unless the payment caused such a change in the position of the receiving party
that it would be unjust to require a refund.
Discharge for Value Rule
o A creditor of another who has received from a third person any benefit in discharge of a debt
or lien is under no duty to make restitution as long as the creditor makes no misrepresentation
and had no notice of the mistake.
o Electronic funds transfers are desired by commerce and need finality.
o Use of the discharge for value rule assists in commerce.
o Acuity v. McGhee Engineering 2008
▪ Logan Todd Water Commission hired multiple engineers and contractors to build a
water collection project. Logan Todd was the beneficiary of payment and
performance bonds issued by Acuity to ensure completion of the project. Near the end
of the project, a large portion of the embankment collapsed into the river. Logan Todd
declared default and made claim under performance bond for completion. Acuity
hired contractor to complete it. while only 400k remained on the 3.74M contract,
Acuity had to pay 3M to complete. Acuity issued payment and performance bonds
and now seeks to be subrogated to the rights of Logan Todd. Acuity wants such
subrogation rights to be able to sue the engineers for their errors that caused Acuity to
have to pay to complete the project.
▪ Trial court held that Acuity was not subrogated to Logan Todd’s rights. Court of
appeals reversed. Acuity performed its obligations, paying all claims that Logan Todd
had for completion of the project, stands in Logan Todd’s shoes and can seek
subrogation from these third parties.
▪ Equitable subrogation is a doctrine whereby a surety is permitted to stand in the shoes
of the party that benefited from its performance in order to prevent unjust enrichment
on the part of the wrongdoer who caused the surety’s expense.
Make Whole Rule in Tennessee
o General rule: the make whole rule prevents an insurer’s recovery of subrogation unless the
insured is made whole. Classic argument by Ps lawyer against insurance company.
o You are not entitled to subrogation because the settlement did not make the client whole.
o Exceptions: TCA 71-5-117(g)-k)
▪ Whole doctrine cannot prevent recovery of subrogation by either work comp or
TennCare insurers.
o Health Cost Controls v. Gifford 2007
▪ Gifford received serious injuries in an auto accident while riding with his mother. His
medical expenses totaled over 45,000. Prudential paid 37,795.08 and BMC paid
7,358.08. Gifford pursued a claim against the driver, his mother, and received the
policy limits. 100,000 in settlement. Prudential sought recovery in subrogation of the
amount I paid 37,795.08. Gifford defended asserting the made whole rule. He said he
wasn’t made whole by the settlement so prudential gets nothing.
▪ Trial court ordered Gifford to reimburse HCC, Prudential’s agent, the money. the
supreme court reversed holding that the trial court did not adequately consider
whether Gifford had been made whole. Gifford’s lawyer filed Gifford’s deposition
and medical bills.
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Trial court again held that Gifford had not been made whole. Court holds that proof
that he has not been made whole is insufficient.
▪ They made a formula. What is Ps totally recovery? 100,00 from tortfeasor+37,795.08
from Prudential+ 7,359.95= 145 154.03. The next step is a searchingly fierce
examination of Ps claimed injuries and whether the settlement made him whole. Must
determine if the P has been made whole.
▪ Really no inquiry here. Trial court stated his medical bills are high and he had severe
injuries so he has not been made whole. Trial court now must make specific finds
regarding the monetary value of the insured’s recovery from all sources and the
monetary value of Ps injuries including pain and suffering.
Dedmon v. Steelman 2018
o Issue was whether medical expenses may be introduced as evidence even if they have bene
paid. Yes, they may. Collateral source rule lives on.
ERISA
o Federal law, the Employee Retirement Income Security Act preempts state law.
o Montanile case 2016:
▪ Held that equitable lien rights of plan lost if the funds are not traceable. If the person
has spent the funds, they are no longer traceable.
▪ Montanile received 121,000 from the plan for his medical expenses after he was
seriously injured in a car accident. The plan contained a subrogation clause requiring
reimbursement from any third-party settlement or award. Montanile settled his suit
against the drunk driver for 500,000. The settlement was held in the client’s trust
account. When negotiations with the plan about the reimbursement terms were broken
down, Montanile’s attorney notified the plan that it had 14 days and distributed the
remaining funds to Montanile after that expired. 6 months later the plan sued
Montanile seeking reimbursement of what they paid. Trial court held for the plan and
the 11th circuit affirmed.
▪ Supreme court reversed! ERISA gives plans the right to seek equitable remedies and
an equitable Lien is an equitable remedy. BUT the right to seek an equitable lien is
lost due to inability to trace funds. Remanded to determine whether the funds were
traceable.
● Ejectment-Detainer
- Recover possession of land. Ejectment is detainer in Tennessee. You are trying to restore the
landowner to possession of their land/building.
- Detainer warrants are issued in Tennessee by general session judges. No $ limit on the jurisdictional
amount for detainer warrants.
- Tenn. Code Ann. 29-18-101 et seq
o No action for forcible entry and detainer shall lie against any tenant who has paid all rent due
for current occupation of the premises and who is not in violation of any law nor otherwise in
breach of the tenants written lease.
o If D doesn’t pay rent, an action for forcible entry and detainer may be brought.
- 94th Aero Squadron v. Memphis Airport Authority 2005
o No self-help evictions in commercial lease cases. Long understood that had to get detainer
warrant to evict residential tenant. Same for commercial lease DESPITE contrary provisions
in the commercial lease.
Class 27: 2/27/2022
● Fraudulent Transfers
- Different than fraudulent conveyance.
- Uniform Voidable Transfer act aka the Uniform Fraudulent Transfer Act
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Fraudulent transfer is the transfer of an asset with the intent to (or which by virtue of law operates
to) defeat creditor’s rights is void as to the defrauded, hindered, or delayed creditor.
Definitions
o Transfer= any mode of parting with an asset. Includes a gift or change of name in
beneficiary.
o Intent= actual intent. This must be showed or inferred by the circumstances.
o Creditor = person who has a claim.
o Debtor= a person who is liable on claim.
o Person= individuals and any commercial legal entity
o Property = anything subject to ownership.
Types
o Intentional fraudulent transfer
o Constructive fraudulent transfer
Badges of fraud *you can come up with your own too
o Transfer to an insider
o Retention to control after transfer
o Concealment of the transfer
o Transfer on the heels of being sued or threatened to be sued
o All debtor’s assets
o Absconding debtor
o Asset concealed
o Transfer for less than reasonably equivalent value.
o Debtor made insolvent by the transfer
o Transfer made shortly before or after substantial debt incurred
o Strawman transfer-debtor transfers essential business assets to a party who transfers the asset
to an insider of the debt
o Any of these 11 types of transfers may demonstrate intent to defraud which entitles the
challenger to set aside the transfer.
Constructive Fraudulent Transfers
o Constructive fraud= transfer where debtor did not receive reasonably equivalent value in
exchange and
o Debtor was engaged in a business or transaction for which the remaining assets were
unreasonably small or
o Intended to incur or believed or should have believed that debtor would incur debts beyond
debtor’s ability to pay.
Value and insolvency: can plaintiff prove?
o Value: value is given from a transfer if in exchange for the transfer:
▪ property is transferred or an antecedent debt is secured or satisfied.
▪ You have to hire an expert for this. some background in fraudulent transfer
evaluations.
o Insolvency
▪ Balance sheet i.e. assets less than liabilities. Not paying debts as they become due.
Remedies for this
o Avoid and or set aside the transfer
o Attach the asset transferred (put a lien or security interest on it)
o Enjoin further disposition (think of this at the outset and file a lien lis pendence or
injunction).
o Appoint a receiver (good for an income producing asset)
o Execution if judgment is creditor
Innocent purchaser: is the purchaser really innocent?
o Protected to the extent that he/she/it paid for the property in good faith.
o Same protection for other parties down the line.
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Good faith purchaser protected completely only if the consideration given was reasonably
equivalent value.
Statute of limitations
o Generally, 4 years from date of transfer. Intentional fraud has a 1-year discovery rule if
discovery is after the 4-year period.
Stoner v. Amburn 2012
o Judgment against judgment debtor for 789,276.99. after being sued, conveyed property for
109,000. Turned around and purchased property for 107,000 in cash. Put the new property in
the name of the defendant. Received no value for it and it was foreclosed upon. He showed
up to closing with a cash sack and bank bands on the money.
o The court held a directed verdict from the bench. Intentional fraud all nine badges here.
Constructive fraud, the judgment debtor had been sued prior to transfer, did not receive
reasonable equivalent value, and insolvent after transfer.
Bigger v. Fields 2005
o Bigger’s contract with fields was for 332 acres. Purchase price was 182,440.52, 2 grand
down and 850 per month with no interest. POA not a good idea. Fields contract with Smith
was for 210 acres. Purchase price was 50,000, fields put in all work, option to purchase in 6
months for 100,000. Transfer from fields to smith.
o Smith got to keep the property. No proof of actual fraud. Constructive fraud: fair
consideration considering the circumstances. No other analysis needed.
Brandenburg v. Hayes 2010
o Mr and Mrs Hayes were getting a divorce. H abandoned couples wedding chapel business to
an employee-Brandenburg. W sued claiming the asset transfer was a fraudulent conveyance.
H employed Ms. Brandenburg for several years. After H abandoned the business, Ms.
Brandenburg started operating it and actually employed H. in the divorce case, W was
awarded whatever interest H had in the wedding Chapel business. In this case, W sought to
void the transfer from H to Brandenburg.
o Brandenburg had no documentation verifying a transfer of assets to her from H. Offered no
consideration in exchange for the business and its assets. Knew H represented to the
bankruptcy court that he owned the business contradicting her claim that H abandoned it.
Perkins v. Brunger
o P was the nephew of Jonathan Perkins. D was Sarah Perkins Brunger, deceased’s sister.
Decedent was Jesse Perkins. Conveyance- POA and two quitclaim deeds.
o Was the p a creditor? Why not? No. he didn’t have a claim against the estate.
o Could he have become a creditor? Would that have helped?
o Diminished capacity? Does P really have an argument?
o What was the remedy?
Civil conspiracy
o 1. A common design between two or more persons 2. To accomplish by concerted action an
unlawful purpose, or a lawful purpose by unlawful means 3. An overt act in furtherance of
the conspiracy, and 4. Injury to person or property.
o TN Rules of Prof Conduct 1.2: cannot assist anyone in doing something fraudulent. You can
be sued for civil conspiracy.
Class 28: 3/7/2022
IX.
Contempt
● Introduction
- Purpose
o To protect the integrity of the process.
o In the operation of the court, the judge may punish by contempt certain wrongs.
o Can be criminal or civil. Can impose WITHOUT the right to jury trial.
- Types
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o Criminal contempt
o Coercive civil
o Compensatory civil
Contempt-Where was it?
o Direct contempt: contempt of the process.
▪ May be summarily punished
▪ Civil or criminal
▪ Disobedience of an order of the court, not specified by rule or statute.
▪ May or may not constitute criminal law violations.
▪ Key question: where did the offense occur? At what part of the proceeding?
The contempt statute: TCA 29-9-102
o The power of the courts to inflict punishments for contempt of court is limited to the
following:
1. Willful misbehavior… in the presence of the court, or so near thereto as to obstruct the
administration of justice.
2. Willful misbehavior of the officers of the courts in their official transactions.
3. Willful disobedience of any officer of the said courts, party, juror, witness, or any other
person, to any lawful order of said courts.
4. Abuse of or unlawful interference with, the process or proceedings of the court.
5. Willfully conversing with jurors in relation to the merits of the cause in the trial of which
they are engaged, or otherwise tampering with them.
6. Any other act or omission declared a contempt by law.
Rule 42 of Criminal Procedure
o A court may summarily punish a direct contempt if the judge certifies that he saw or heard
the conduct constituting contempt.
▪ If the contempt is committed outside of court, or is unwitnessed by the judge, it is
considered to be an indirect contempt.
▪ Indirect contempt may be prosecuted only on notice, and after a hearing at which the
accused has the right to defend himself.
Protecting the process
o Depositions
▪ Remember from Civ Pro: Depositions are conducted under courtroom conditions,
attendance may be compelled by subpoena, are under oath, examination and cross are
carried out under rules of evidence, witnesses are obligated to answer.
▪ They may be introduced into evidence in court. deposition testimony may be used in
court as though the witness were the present and testifying.
o Dargi v. Terminix
▪ Deposition of P, Steven Dargi. Taken by D terminix at Ps lawyers office in green hills.
P sued D for allegedly missing termite infestation during a pre-purchase inspection.
He had been deposed before during the case and after the deposition gave lengthy
inconsistent explanations in his errata. On Ds motion P was deposed again.
▪ P argued that his misbehavior was not in the presence of the court. his statements
were outside the physical presence of the court. court would not have been affected
by them if D had chosen to play excerpts. P argued that the contempt must be
considered indirect because it was committed 16 days before trial in the offices of the
attorney. Court found Ps conduct deemed to have been committed in the presence of
the court.
▪ Deposition of a party is admissible for any purpose. any statement made at deposition
could have been presented in court. he cursed and insulted the opposing attorney, just
as if he were on the witness stand. Deemed in presence of court. The trial judge found
this was direct contempt. He appealed and court of appeals affirmed.
UMW v. Bagwell
o
Series of violent acts in the course of a strike. Court orders ignored. US Supreme Court found
fines levied to be criminal in nature and requiring a jury trial. federal jury trial right in this
case.
- Overnite Transp. Co V. Teamsters 2005
o During a strike, teamsters committed acts of violence and damaged property. Trial court
enjoined the violent conduct. Ds violated injunctions, 131 times. Court referred criminal
contempts to the DA who did not prosecute. Civil contempts, Overnite sought damages.
Court of appeals held that damages were moot because ceased before hearing.
o Supreme court reversed. If the party who is in contempt ceases the contemptuous conduct
before hearing, the injured party can still pursue damages for the contemptuous conduct.
- Contempt remedies TCA 29-9-105
o If the contempt consists in the performance of a forbidden act,
▪ The person may be imprisoned until the act is rectified by placing matters and person
in status quo, or by the payment of damages.
- Compensatory Contempt
o Court has the power to award compensatory contempt damages under the statute.
o Reed v. Hamilton 2001
▪ Easement dispute between neighbors. Warlick sued the Hamiltons to declare the
existence of the easement. Court issued a number of orders enjoining the Hamiltons
from interfering with the easement and from obstructing or preventing Warlick from
accessing their property. Hamiltons repeatedly violated the court’s order. Trial court
found Hamiltons in civil contempt. Accessed as sanctions and damages against them
of 25,000,equal to Warlick’s attorney fees. The court of appeals affirmed. TN
contempt statute allows party’s injury (damages) to be measured by attorney’s fees
incurred in fighting the prohibited conduct. *notable exception to the American rule.
o Brown v. Latham 1996
▪ Divorce decree called for H to pay child support. W obtained judgment for arrearage
when he failed to pay. W sought contempt for failure to pay child support. H moved
for a jury trial. trial court denied jury trial request. court of appeals reversed. Supreme
Court affirmed. A person charged under the criminal statute for failing to obey child
support is entitled to a jury trial. special child support statute is different than the
contempt of court statutes.
- Criminal contempt
o Up to 6 months.
▪ Not entitled to jury trial in TN State court.
o More than 6 months
▪ Entitled to a jury trial
o Ahern v. Ahern
▪ They got a divorce. H had to pay alimony, child support, medical costs, and school
tuition. W sought order directing H to pay alimony and child support. In the petition,
W sought civil and criminal contempt. H requested jury trial. trial judge conducted a
hearing and found H to be in criminal contempt for failure to pay both. Sentenced H
to 5 days for each contempt for a total of 140 days under TCA 29-9-102. There is
NO jury trial for criminal contempt here.
● Civil contempt vs. Criminal
1. If in the presence of the court= criminal.
2. If for violation of a court order, can be criminal (retrospective).
- Civil contempt
o This is remedial in character and is applied when a person refuses or fails to comply with a
court order. When a court orders imprisonment for finding a civil contempt, the confinement
is designed to compel compliance.
o
-
-
-
-
Compliance with the order will result in the contemnor’s immediate release from
confinement.
Criminal contempt
o This is designed to preserve the power and vindicate the dignity and authority of the court.
o Sanctions for criminal contempt are generally both punitive and unconditioned in nature,
designed to punish past behavior, not coerce directly compliance with a court order or
influence future behavior.
o This is often regarded as a crime providing for certain criminal process protections.
▪ For example, indirect criminal contempt may only be punished after notice and an
opportunity to respond to allegations at a hearing.
o Jury trials
▪ Not all rights afforded to criminal defendants are available for those charged with
criminal contempt. Contemnors are not entitled to a jury trial if the criminal
contempt is not serious enough to require the protection of the constitutional right to a
jury trial.
▪ What is serious enough? The supreme court has not expressly defined it.
▪ Jury trial not required if criminal contempt is punished by confinement of 6 months or
less.
Overview
o Civil= wrongdoer holds the keys to the courthouse by compliance.
o Criminal= court is protecting the court as an institution.
Konvalinka case
o K was a Chattanooga lawyer. Erlanger hospital in dispute over a doctor loss of his staff
privileges. While discovery stay was in effect in that case, K filed separate action seeking
documents. Trial court held that K violated court issued stay. K held in contempt for violating
stay order.
o The court’s power of contempt is purely statutory.
o Court Order did not clearly, specifically, and unambiguously apply to the separate proceeding
Konvalinka initiated Konvalinka could have reasonably believed the order did not prevent his
new, record- access case
Authority for contempt
o TCA 16-1-103
▪ Every court is vested with the power to punish for contempt as provided in this code.
Elements of civil contempt
1. Order alleged to have been violated must be lawful.
2. Order alleged to have been violated must be clear, specific, and unambiguous.
3. The person alleged to have violated the order must have actually disobeyed or otherwise
resisted the order.
4. Persons violation must be willful. Willful means intentional or voluntary.
Simpkins v. Simpkins 2012
o H and W entered into an MDA and were divorced. Part of the divorce required H to sell
marital home by certain date and split proceeds. H also to provide 5000 per month in support
to W and allow W to sell yacht. House listed for 2.5 million but did not sale. H withdrew a
total of 123,000 from an equity line of credit he had against marital home over 10 separate
transactions. Spent large sums on fine dining, gifts, and travel. H sold boat without sharing
with W. he was short on support by 1900. He failed to pay re taxes on martial residence and
failed to secure life ins policy and health insurance policies required by the divorce decree.
W filed petition for criminal contempt and separate one for civil contempt.
o Trial court held H guilty on 14 separate counts of criminal contempt and he was sentenced to
10 days in jail for each. 140 days. Found H in 2 counts of civil contempt for failure to
provide the insurance.
o
-
On appeal, civil contempt was determined to be moot. Criminal contempt upheld. 140-🡪 49
days.
Recalcitrant witness
o Contempt for refusing to testify
o Federal court limited to holding witness for no more than 18 months.
Class 28: 3/15/2022
● Contempt- how do you challenge it?
- Honor court order.
- If civil, challenge whether its violated or not.
- If its criminal, it cannot be challenged if its violated.
● Collateral bar rule
- Only applies to criminal contempt
o Must challenge ruling in the case and on appeal.
o Cannot raise challenges after violating the granted injunction or in a separate case.
- Injunction by a court with jurisdiction
o Must be obeyed even if erroneously granted.
o Party cannot collaterally attach an injunction on the basis of its validity.
▪ Only legitimate challenge must be made in injunction hearing itself and any appeals
therefrom. Ignore at your own peril.
o Walker v. Birmingham US 1967
▪ MLK and other sought permits for good Friday protect in march. Permits were
denied. MLK, Walker held a press conference and stated they were not going to obey.
Birmingham obtained a temporary injunction against 139 people and 2 organizations.
Injunction for no permit and no march. They had the march anyways. Monday, after
marches, hearing was held on whether Walker et al should be held in contempt.
Walker attached the injunction as vague, overbroad, and as a violation of his 1st
amendment rights. Trial court refused to hear these defenses because they can only be
asserted before the injunction is granted.
- Impact
o Despite a possibly invalid order, a party must obey the order and attack it directly. They
cannot rely on raising an issue with the order later to avoid contempt.
- Tenn. v. Boyle 2002
o Tenn statute required private clinic that performed abortions to get a CON. A private clinic
does not need a CON/License, ASTC does. 1994 Boyle filed for a CON and the health
department denied because they needed certain equipment. Dept of health sued Boyle
seeking an injunction against operating without a CON or license. Boyle sought another
CON and it was deferred. Dept of Health sued seeking an injunction and Boyle said this
statute violated constitution. The injunction was granted, but the facility continued to operate.
o Boyle filed suit in fed court challenging statute. Boyle was held in contempt by TN court.
chancery court held him in civil contempt for operating without a CON. Allowed to purge
selves of contempt by disassociating themselves with the facility. Imposed sanctions and
attorney fees.
o Tenn. Court of Appeals held the statute was unconstitutional. Collateral bar rule is not
available in civil contempt.
- Rule 65: anyone acting in active concert with a party enjoined is also enjoyed.
o Planned Parenthood v. Garibaldi 2003
▪ PP had a permanent injunction limiting demonstration activity at their clinic. PP
sought to have injunction apply to Foti and Mr. and Mrs. Garibaldi. Original Ds were
operation rescue and Robert Cochran.
▪ The permanent injunction was very specific.
▪
▪
-
▪ No obstructing passage to the clinic.
▪ No demonstrating on clinic property or within 15 feet of it.
▪ No blocking access to one’s vehicle.
▪ No shouting that can be heard by patient in clinic.
▪ No physical touching of someone entering the clinic.
Injunction applied to the original Ds and their agents, employees, and other acting in
concern with them and all other persons with actual notice of the injunction. The
issue was whether an injunction apply to those solely with notice of its existence?
Court said no. Injunctions are not applicable against the world at large. An enjoined
person cannot accomplish what is banned through a third person. PP asserts that
simple notice should be enough but the court disagrees. Only those working in active
concert with the original ds can be bound by the OG injunction.
Third parties
o US v. Hall 1972
▪ School desegregation case. Jacksonville School Board was ordered to complete it.
The superintendent sought injunction against inference with the desegregation efforts
by certain outsiders.
▪ The court has the power to enforce its orders. If 3rd party attempts to frustrate the
court’s order, he is bound. Here there was no question the third party had notice.
● Discovery sanctions
- Rule 37: Failure to make or cooperate in discovery: sanctions
A. Order that the matter is established
B. Order refusing to allow proof of a claim or defense
C. Order striking pleadings or parts thereof or entering judgment against the disobedient party
D. CONTEMPT.
- General approach
1. Direct sanctions are available for complete failure to make discovery.
a. Failure to appear at depo
b. Failure to serve interrogatory responses
2. If some response has been made
a. Then move for an order requiring a response and then if the party fails to obey,
seek a sanction.
- Alexander v. Jackson Radiology 2004
o Discovery sanction for abuse of process. Dr. Alexander’s deposition. He sued his firm saying
he was wrongfully terminated and sought damages. The terms of his agreement and
compensation were important here.
o At the end of the deposition day 1, Dr. A. pulled the exhibit he had made off the table,
thinking nobody saw him and he threw it away. When confronted his denied destroying
evidence. D filed a motion under rule 37 and case was dismissed.
o The dismissal was the ultimate sanction, Dr. A. argued there should have been an order to
compel. Court said that his direct interference with discovery process rendered dismissal of
his case a viable remedy. Even without an order requiring him not to destroy an exhibit, legit
to expect a witness not to do it.
- Additional remedies for spoliation
o NO CAPS for punitive and non-economic damages
o If d intentionally falsified, destroyed, or concealed records containing material evidence with
purpose of wrongfully evading liability in the case at issue. **JURY QUESTION!
o Evidence Rule: Adverse inference instruction if
1. Control and obligation to preserve the evidence;
2. Records destroyed with culpable state of mind and
3. Destroyed evidence was relevant to the party’s claim or defense.
Class 29: 3/21/22
X.
Ancillary remedies
● Collecting the judgement
- Limited pre-judgment remedies
o These remedies are to secure or hold assets to be available for application against the
judgment.
o Must post bond for these. They are rare.
o Examples
▪ Receivership
▪ Attachment
▪ Lien lis pendens
- Post judgment
o Paying the judgment with the assets of the judgment debtor.
o Examples
▪ Garnishment
▪ Execution
▪ Attachment
▪ Order of sale of real property
● Attachments in Tennessee
- Prejudgment attachment is an exceptional remedy. TCA 29-6-101
o Any person having a debt.. due… either before or after judgment may sue out an attachment
against the property of a debt.
o When a debtor
1. Resides out of the state
2. Is about to remove or has removed himself or his property from the state
3. Has removed or is removing himself out of the county privately
4. Has concealed himself to avoid service
5. Is concealing himself or his property
6. Has fraudulently disposed of property
7. Resides out of state, dies, leaving property in the state or
8. Is a foreign corporation which has no agent in this state upon whom process may be
served.
o P must post
▪ A bond in a sufficient amount to cover any damages d may suffer from any loss of the
use of property.
▪ Bond in amount set by the court.
▪ Thus, an attachment is like an injunction in this respect.
o Commerce Union Bank v. Kephart 1986
▪ Prejudgment attachment. Filed, served, but no levy. Lesson; absent perfection by levy,
no valid attachment.
● Receiverships
- A very sophisticated form of an attachment. A skilled business person or lawyer operates the
business or property as the receiver.
- A prejudgment receiver manages the property, pending resolution of the dispute, for delivery to the
ultimate victor. Its expensive!!!
- Must show
1. Clear right to the property or lien upon it OR that the property constitutes a special fund
to which p has a right AND
2. Possession of the property was obtained by the defendant by fraud OR property or some
income arising from it is in danger or loss from neglect, waste, misconduct, or dishonesty.
- Most common application
o
-
-
Co-owners of a business have a dispute. Good remedy when management is involved in
nefarious activities.
o As a practical matter, bankruptcy has supplanted most receivership cases.
▪ Only remains useful when the business is undisputedly solvent or state regulated
entity like an insurance co.
Erickson Construction v. Congress-Kenilworth 1983
o E had a construction contract with CK to build a water slid for 535,000. 60% was complete,
E applied for payment. He was not paid. CK gave Erickson the deed instead and E completed
the project. E was paid 150,000 for the project but the property was really owned by the us
army. CK entered into a lease with the army. Trial court held that CK claimed it could not
pay because it had no asset so they appointed a receiver. Court found deed worthless.
Hundreds of thousands of dollars were going through CK to thunder MT co.
o Here the worthless deed induced E to continue the work. the court found that E was entitled
to an equitable lien. E had to show that the income from the special fund was being wasted.
o Management of CK’s business by thunder mt was not for any nefarious purpose. Thunder mt
had caused E to be paid. CK’s assets would be diverted away from payment to E. fear alone
isn’t enough. Therefore, the receivership order was reversed.
like an injunction, only granted if threat of imminent and orreplacable loss
● Collection process- post judgment
- Judgment- stay of execution
o Expiration of time for appeal.
▪ 10 days in GS courts.
▪ 30 days in all others. Rule 62.01
o Exceptions for
▪ Receiverships
▪ Injunctions
▪ Actions that remove a public officer
▪ Custody of a minor child
▪ If d is about fraudulently to dispose of, conceal, or remove his or her property,
thereby endangering satisfaction of the judgment.
- Before undertaking collection**** ON FINAL!
o First thing you do🡪 Register judgment in the register of deeds AFTER STAY OF
EXECUTION. This acts as a lien against all real property in county where registered or
wherever you think they have property.
o After registering the judgment, execution
▪ Writ of execution
▪ Writ of possession
▪ Writ of attachment
o Sale
o Garnishment (type of execution- on money)
- Rule 69
o No longer have to execute on personal property first. Execution against personalty need not
precede execution on realty.
o Discovery is available in aid of execution.
o Garnishments, executions on personalty and realty addressed under this rule.
o Execution on personalty- 69.06
▪ Levy is effective when the sheriff with the writ of execution exercises control over
the debtor’s personalty. 69.069(1)
▪ Rule 69.06(2)
▪ 1st judgment creditor to deliver a writ of execution to the sheriff has priority.
▪ Lien of levy remains effective until property is sold.
▪
-
Sale: Rule 69.06(3)
▪ Personalty shall be sold at auction.
▪ Notice of sale to be published at least 10 days in advance unless property is
perishable.
▪ Expenses of sale paid first, balance to judgment creditor next.
Discovery
o Serve immediately!!!!
▪ Interrogatories and document production requests
▪ Follow all the rules promptly to get the information
▪ Watch for fraudulent conveyances
▪ If fraudulent conveyance occurs, seek to enjoin future transfers.
● Garnishments *basically an execution.
- P gets judgment against D (judgment debtor).
o After the stay of execution for appeal.
- P (creditor/garnishor)-🡪bank or employer (Garnishee)
- What is the potential liability of the garnishee??
- Vocabulary
o Judgment debtor is person/entity against whom judgment is entered
o Garnishor is holder of judgment aka judgment creditor
o Garnishee is third party. Bank or employer.
o Scire facias is a show cause order.
- Collecting
o P holds the judgment against d.
o Garnishee (bank or employer) holds property of the D (bank account) or owes D wages
(employer)
o P serves garnishment on 3 party (garnishee)
▪ Garnishee has 10 business days to answer whether it holds any property of d or owes
d any money.
- TCA 26-2-204: the garnishee may be required to answer under oath:
1. Whether such garnishee is, or at the time of the garnishment, indebt to the D, and if so, how and
to what amount and
2. Whether such garnishee had in possession or under garnishee’s control any property, debts, or
effects belonging to d.
- What happens if they fail to answer? They can be liable FOR THE FULL JUDGMENT.
- Rule 69.05(2)
o Garnishor must serve a copy of the garnishment on the judgment debtor.
o Garnishee’s duty
▪ If garnishee holds any property of debtor, garnishee must mail copy of the
garnishment to the judgment debtor.
▪ File an answer within 10 days accounting for property held.
▪ Within 30 days file money or wages with the court.
- Rule 69.05(4)
o Failure of garnishee to respond, conditional judgment may be entered against the garnishee.
o Order to show cause why the conditional judgment should not be made final.
o If garnishee does not explain within 10 days conditional judgment shall be made final.
o Judgment creditor may execute against the garnishee for the full amount of the judgment!!!
- NCNB v. Thrailkill 1993
o P judgment against D, main owner of Arthurs for 116,277.79. p served garnishment on
Arthur’s registered against for service of process. garnishment was also served on a
managing agent of the individual D. D did not answer. Conditional judgment was entered and
Arthurs’s ordered to show cause why judgment should not be made final. Arthur didn’t
appear. The judgment was entered for 142,736.03 (judgment plus attorney fees) against
o
Arthur’s. under rule 60, Arthur moved to set aside the judgment arguing excusable neglect.
Trial court granted and held that Arthur was not the proper garnishee.
Court of appeals reversed, mere negligence does not equal excusable neglect.
● Execution on real property Rule 69.07
- Lien lis pendens
o Prejudgment
o Applies only to property that is the subject of the suit.
o To affect bona fide purchasers, an abstract of suit, must be filed with the register’s office.
- Judgment lien
o Created against all judgment debtor’s real property upon filing certified copy of the judgment
in the register’s office of the county where the real property is located. (2)
- Levy as long as the judgment lien is effective, no levy is necessary and judgment creditor may
simply move for an order of sale
o Eliminates the old paper levy requirement.
- Execution
o Must file a writ execution to be able to subject interest in personal property to the judgment.
TCA25-5-103
o Must register judgment.
o Writ of execution must be issued for the sheriff to be able to levy upon any personal property.
o No writ of execution or garnishment until 30 days after entry of judgment (10 in GS)
- Judgment lien
o Register judgment in county where judgment debtor may own property.
o Ten is race notice statute, 1st in time between consensual, judgment, or tax liens, has priority.
o Must register the abstract or other memorandum of judgment.
o Real property or an interest in real property is subjected
o Affects after acquired land too
o Lasts for 10 years.
o Can renew after 10 years.
● Important exemptions
- In Tennessee
o Social security is exempt from garnishment.
- Other exempt assets
o Pensions
o Public assistance or benefits including workers compensation, unemployment, etc.
o Damage award
o Insurance and annuities
o Alimony and child support
- Homestead
o Real property where debtor lives up ton 5,000 in value or 7,500 for joint owners.
- Garnishment max
o Tennessee the max is the less or
▪ 25% of disposable income
▪ The amount by which the debtor’s weekly income exceeds 30 times the minimum
wage.
o Personal property, any personal property including money and funds on deposit with a bank
up to 4,000
o Including
▪ All necessary wearing apparel
▪ The trunks or receptacles necessary to contain same
▪ All family portraits and pictures
▪
Family bible and school books.
XI.
Attorney Fee & Ethical Issues
● American rule
- “a party to a civil action may not recover attorney fees absent a specific contractual or statutory
provision” House v. Estate of Edmondson Tenn. 2008
- No recovery of attorney fees unless
o Provided by contract
▪ Agreement of the parties.
o Permitted by statute
▪ Civil rights statutes
▪ Environmental statutes
▪ The trust code
▪ Partition
▪ Class actions
▪ Certain divorce cases.
o Certain other limited situations
▪ Common fund
▪ Contempt (statute construed as damages)
▪ Family law (provided by statute)
▪ Malicious prosecution
o Modern footnote to rule
▪ Only “reasonable” attorney fees
o In most cases the loser does not pay attorney fees.
o Attorney must know when the loser may be obligated to pay.
- Policy rationale
1. Should not be penalized for merely brining or defending a lawsuit.
2. Poor might be discouraged from filling suit to vindicate their rights.
3. Settlement promoted by each party being responsible for their own fees.
4. Burden on courts to litigate issue of attorney fees.
● Divorce cases
- Alimony in solido may include attorney fees, where appropriate. TCA 36-5-121(d)(5).
- Child custody and support
o Reasonable attorney fees incurred in enforcing any decree for alimony and or child support
or in regard to any suit or action concerning the adjudication of the custody or the change of
custody of any child. TCA 36-5-103(c).
● Common fund doctrine
- Attorney fees may be awarded when the efforts of a litigant succeed in securing, augmenting, or
preserving property or money for others to share in common.
- Those who benefit may be required to share in attorney fees.
● Tennessee Corporation Statute
- General assembly specifically declined to include a provision that would have allowed for recovery
of attorney fees in a shareholders’ derivative action.
- No deviation from the American rule.
● Partition
- Joint interest owners in real estate. if they cannot agree the court will order a partition sale.
- Who benefits?
o All interest owners.
o Attorney fees allowed. TCA 29-27-101 et. seq.
● Loser Pays Lite
- TCA 20-12-119(c)(3)
o When the trial court grants a rule 12.02(6) motion to dismiss for failure to state a claim upon
which relief may be granted the court shall award the costs and reasonable and necessary
attorney’s fees incurred.
o Limited to up to 10,000.
- Exceptions: TCA 20-12-119(c)(5)
1. Actions by or against governmental entities or officials
2. Motion filed 60 days after the latest complaint.
3. Any claim that is withdrawn or amended in good faith, but this must be done at least 3 days prior
to the hearing date.
4. Actions by pro se litigants unless they acted unreasonably in bringing, or refusing to voluntarily
withdraw, the dismissed claim.
5. A good faith, non-frivolous claim filed for the express purpose of extending, modifying, or
reversing existing precedent, law or regulation.
6. When the law changes between the time the complaint is filed and the time the motion to dismiss
is granted.
● Best Practices to collect attorney fees from clients.
- Written fee agreements signed by your client.
- Retainer in appropriate cases.
- Segregate retainers from regular funds
- Charge reasonable fees.
- Tenn. Rule 1. 5 of Professional Responsibility
o A lawyer’s fee and charges for expenses shall be reasonable
o Factors
1. Time required.
a. The novelty and difficulty of matter, and
b. The skill needed.
2. The likelihood that other employment by the lawyer will be precluded.
3. Customary fee in the locality
4. Amount involved and the results obtained.
5. Time limitations imposed by the client or the circumstances.
6. Nature and length of the professional relationship with the client.
7. Experience, reputation, and the ability of the lawyer
8. Whether the fee is fixed or contingent
9. Prior advertisements or statements by the lawyer and
10. Whether the fee agreement is in writing.
o Fee agreement requirements
(b) when the lawyer has not regularly represented the client, the basis or the rate of the fee
shall be communicated to the client, preferably in writing, before or within a reasonable time
after commencing the representation.
This does not apply to contingency fees.
(c) fees contingent on the outcome except in matter in which fees are prohibited.
o Shall be in writing and signed by the client.
o Required disclosures
▪ Method by which the fee is to be determined including % to the lawyer if
litigation, settlement, trial, or appeal; other expenses; and
▪ Whether such expenses are deducted before or after the contingent fee is
calculated.
o Upon conclusion of the fee matter, the lawyer shall
-
-
-
▪ Provide the client with a written statement
▪ Stating the outcome of the matter
▪ Whether there was a recovery
▪ Showing the remittance if any and
▪ The method of its determination.
(d) a lawyer shall not enter into an arrangement for, charge, or collect:
1. any fee in a domestic relations matter which is contingent upon
o Securing a divorce or
o Award of custodial rights
o The amount of alimony or support
o Or the value of a property division.
o Exceptions
o Enforcement of the order, collection of the fees, and the arrangement is
disclosed to the court.
2.shall not represent a criminal defendant for a contingent fee.
Fee recovery from opposing party
o By contract. Note the language in the contract
● Any dispute
● Arising out of this agreement
● Incurred in collection.
● Contract has to be enforceable.
o In Tennessee, it does not have the be signed.
● Beech v. Powell
● Beech submitted a form bid, called a job contract to Powell for masonry work for
66,627. Powell did not sign the job contract but proceeded to have Beech do the
work. Powell did not pay final 10,000. Trial court held that the job contract was
not a contract. Powell agreed to the pricing and performance of the job contract.
Powell did not agree to the attorney fee provision.
● Court of appeals reversed. Powell actions consented to the job contract. Attorney
fees provision contained in the job contract were enforceable. Remanded to
determine reasonable fee.
City of Riverside US 1986
o Classic civil rights case fee case. attorney fees allowed by statute. May attorney fees exceed the
recovery by the client? Yes. Civil rights are valuable. Encourage competent counsel to protect
those rights.
McDonnell Dyer v. Select-O-Hits 2001
o SOH hired m/d to handle sale of SOH. MD said it would cost 120,000. No written fee
agreement. Sale of SOH did not occur and SOH refused to pay MD. SOH counterclaimed for
return of the 10k retainer. Trial court held that 120k fee claimed by MD was excessive but
awarded 89,685. Based on the time value of the fee based on standard hourly rates.
o SOH primary defense was that MD could not recover a fee because 120k was clearly excessive.
Flat fees were the norm in securities practice. While 120k was high it was not clearly excessive.
Appropriate to allow recovery of a reasonable fee, nearly 90k here. 10k retainer should applied
to the debt.
● Reasonable fee determinations
- Application is not uniform.
- Example cases
o Commercial Landlord v. Tenant
● Lease provided that landlord can recover its reasonable attorney fees. Tenant
counterclaimed for 200,000 damages and lost in jury trial. landlord won 44,000 damages.
Attorney fees were 150,000. Trial court awarded 25000 in attorney fees.
o
o
Ingram v. Sohr 2013
● Complex business dispute. Parties reached a settlement called the exchange agreement.
Agreement provided that in the event of a dispute, prevailing party recovers their attorney
fees. Jury trial. Sohr won on most, but not all issues. Post trial hearing for attorney fees.
Trial court awarded nearly 700,000 in attorney fees. Court defined prevailing party as “is
one who succeeds on any significant issue in litigation which achieves some of the
benefit the party sought In bringing suit. Court of appeals held that because Sohr defeated
Ingram on nearly all of Ingram’s claims, Sohr was prevailing party. Affirmed attorney fee
award.
Jeff D
● Civil rights class action case. Case settled. Settlement called for Ds to not be responsible
for ps attorney fees. Court held that was allowed. Act does not require an award. Trial
court has the discretion to approve it.
● Catalyst theory
- Assume the governing statute allows for the attorney fees to the prevailing party.
- If p seeks only injunctive relief and D changes its conduct in reaction to the filing of the lawsuit but
before the court rules on ps right to an injunction, is p entitled to attorney fees?
- No. catalyst theory says no.
●
-
Rule 68 Offer of Judgment- defensive move.
Only effective in cases where d may be liable for attorney fees.
Civil rights d may limit liability for attorney fee by making a rule 68.
Tenn rule: either party can make the offer.
Fed rule: only defending party can make offer. Civil rights cases costs include attorney fees in federal
court.
If ultimate judgment is less than the offer, d will not be liable for attorney fees incurred after the offer
was made.
If p accepts offer of judgment, a judgment will be entered against d.
Note: ambiguity in the wording of the offer may leave liability for attorney fees open to determination
by the court.
● Costs, Expenses, and Fees
- Fees= attorney fees
- Costs= the charges assessed by the clerk of the court or otherwise eligible to be taxed as costs under the
rules.
- Expenses= the charges incurred by counsel or the party in the prosecuting, or defending.
- Compare federal cost rule with state cost rule.
o Federal rule 54(d): costs shall be awarded to the prevailing party unless the court otherwise
directs.
o Ten rule: must apply for discretionary costs.
- Cracker barrel v. Epperson 2009
o Parties had contract that said prevailing party recovers all costs and expenses. Court held that
costs are not attorney fees. Expenses aren’t either. If parties want it they should say it.
- Scholtz v. SB International 2000
o S won case. filed motion for discretionary costs. Trial court denied. Court of appeals reversed.
Courts generally award discretionary costs if they are reasonable.
- Discretionary costs
o These are not intended to punish d either for its conduct that caused the litigation or for its
conduct during the litigation. Rather a step toward making an injured p whole.
o There are circumstances in which p would not be entitled to discretionary costs even if it
prevails.
o
-
Litigants who adopt unreasonable litigation strategies or who unilaterally run up extravagant
litigation expenses should not be permitted pass these sorts of costs on their adversaries.
Costs- federal
o Rule 54(d)
● Costs are awarded to the prevailing party.
● Present bill of costs after award and clerk asseses.
● In settlements, always say each party bears their own costs.
o Rule 54.04
● Costs includable are different in Tenn. State court.
● Costs allowed pursuant to a bill of costs very narrow in ten.
● Additional costs awardable as discretionary costs.
● Rule 54.04(2) simple post trial motion to the court.
Class thirty-one: 4/4/22
XII. Remedial Defenses
● Adhesion contract
- Standardized contract + imposed by drafter of superior bargaining strength+ gives other party
opportunity to accept or reject (take it or leave it basis) = adhesion contract.
- 2 significant steps
1. Does the contract fall within the reasonable expectations of the weaker party?
2. Is the contract “unduly oppressive” to the weaker party?
o Oppression
● Weighed both substantively and procedurally.
● Substantive oppression = overly harsh or one-sided aspects. Ex: non-mutuality
● Procedural- will the process be fair?
- Buraczynski v. Eyring **good for exam. You need to list why it’s not enforceable or it is.
o Dr. patient arbitration agreement. Standard form presented on a take it or leave it basis.
Arbitration of malpractice claims was noted in bold print with a right of revocation in 30 days.
It also had a retroactive effect. The court held to be a contract of adhesion but was held to be
enforceable because of its procedural and substantive fairness. Had a retroactive period, clear,
fair document, and was not one sided in process or scope.
● Unconscionability
- Types
o Procedural may arise from a lack of meaningful choice on part of one party.
o Substantively is when terms are unreasonably harsh.
- Taylor v. Butler
o Taylor bough used car from city auto. City auto used a arbitration provision in the sales contract.
It made the buyer arbitrate any claims I had, but did not require city auto to do the same. Taylor
sued and city auto moved to compel arbitration. Trial court granted motion. Taylor claimed that
the agreement was unenforceable. Unconscionability analysis: under the agreement, only Taylor
was required to go to arbitration. Unconscionability bars enforcement. There was inequality of
the bargain and terms were oppressive to a reasonable person.
o If an adhesion contract is substantially or procedurally oppressive it will not be enforced against
the weaker party. Contract was defective because Taylor waived her right to sue while allowing
Butler that same right. This imbalance made the agreement unconscionable.
- Berent v. CMH Homes
o Foreclosure remedy allowed one party, but other party required to arbitrate its claims. Wasn’t
unconscionable here. P relied on Taylor. That case was generally understood to require mutuality,
that both parties had to go to arbitration to resolve any disputes between them. They
distinguished Taylor. Ltd additional remedy to Berent homes to foreclose, it did not render the
requirement of arbitration of other disputes so one sided as to render the agreement
-
unconscionable. Court noted importance of foreclosure remedy and how ordinarily expected it is.
Basically, it can be slightly nonmutual but not the extent it was in Taylor. The court says if
you buy a home and you don’t pay, it’s reasonable to expect the seller to foreclose on the
home and not have to go to arbitration. Ask yourself: are the burdens on the parties relatively
equal?
Mitchell v. Kindred Healthcare
o Mitchell was a nursing home patient that had a long history of problems. 2004 diagnosed with
Alzheimer’s, 2005 had a stroke, and in 2005 he was referred to Kindred, the nursing home.
Contract was signed by wife of Mitchell, lovie. She presented a power of attorney which gave
her authority to make healthcare decisions for Mitchell. POA was signed by Mitchell in 2004.
Lovie had a lot of health problems too. She had chemo for stage 3 cancer and took medication to
treat depression, anxiety, fatigue, and anemia which gave her blurry vision. Lovie signed an
ADR agreement form given to her by the nursing home, whereby Mitchell agreed to submit any
claim against the nursing facility to binding arbitration. Stand-alone agreement, distinct from the
general admissions agreement. Execution was not a precondition to the furnishing of services
and it could be revoked by written notice within 30 days.
o Lovie couldn’t read it so Mr. Lee from the nursing home read it and she signed it. Mitchell died
and she sued. The court denied Kindred’s motion to compel arbitration, holding that lovie was
incapable of agreeing to the ADR agreement. P also argued that the ADR agreement as
unconscionable but trial court did not reach that issue.
o Court of appeals held that lovie had the capacity to enter into it and it was not unconscionable. It
was not buried in a larger agreement, patient had the right to seek counsel, patient could revoke it
within 30 days, and not a precondition to treatment. There was no unfair advantage to the nursing
home. Based on the clarity of the agreement terms, did not change d’s duty to use reasonable
care in
treating patient, nor limit liability for breach of that duty, it just shifted the forum.
o Subsequent case said authorization o enter into ADR is not within the powers granted to the
POA.
● In pari delicto= in equal fault.
- Similar to contributory negligence but this is intentional conduct..*look for whether the plaintiff is
involved in the same misdeeds the other person was.
- Pinter v. Dahl
o Oil investment opportunity. Dahl was a real estate broker and Pinter an oil man. Violation of the
securities act in matter in which interest in company was sold. They used the in pari delicto
defense. P’s own actions and p bears equal responsibility for the violations he seeks to redress.
o This can be used even if it’s a strict liability case. Dahl as a promoter was just as bad as Pinter,
therefore defense would not apply to Dahl barring suit.
● Unclean hands
- Nobody can take advantage of their own wrongs.
- Best v. best
o Divorce case. dispute over which spouse gets the family farm, known as the broken arrow. Titled
in the name of Ms. Best. Mr. best wanted his share of the title to the proper he claimed to be
joint. It was not titled to them both because they were trying to defraud internal revenue service.
Unclean hands defense.
● Estoppel
- Estoppel=misleading.
- Party claiming estoppel must show
1. Misrepresentation or concealment of material facts
2. Reliance
3. Prejudice
● Waiver
- This is a voluntary relinquishment or abandonment of a known right or privilege.
o No reliance required here.
- Knowing waiver
o When an individual does not know of his rights, there can be no effective waiver of those rights.
- Geddes v. Mill Creek CC
o G sued for trespass by CC due to golf balls coming onto property. Before suit, p agreed to not
protest the building of a golf course as long as CC built an 8-foot fence. CC built it and the golf
balls still cleared it.
- Faught v. Estate of Faught
o Estate administrators met with F at a restaurant, penciled out his agreement to waive his rights to
a certain part of the estate in exchange for some items of personalty. Affirms the need for a
knowing waiver. Administrators failed to explain his rights fully and it was not knowingly done.
- Oubre v. Entergy Operations inc
o As part of a termination agreement, O signed a release from all claims against the employer. In
exchange, she received severance pay in installments. The release did not comply with specific
federal statutory requirements for a release of claims under the ADEA. After receiving payment,
she brought suit under the ADEA.
o Employer claims employee ratified the non-conforming release by retaining the money.
employer: release bars claim unless the employee tenders back the money. SC held that because
the release did not strictly comply with the ADEA, it cannot bar ADEA claim.
o If you fail to comply with the ADEA, P gets $ and the company gets no release and p can sue.
- ADEA waiver
o Time to consider
● 21 days if individual
● 45 If two or more.
o Urge review by attorney.
o 7 days to revoke
o Substantive information about a RIF
● Who is eligible, who isn’t and why.
- American Assurance Co v. Ozburn Hessey
o Insurance co may waive defense to claim by failing to raise in coverage denial letter. Usually,
insurance co covers itself by providing a defense under a reservation of rights.
o Court held that insurance co provision of a defense without a reservation of rights waived its
defenses to coverage. Special rule for insurance company.
Class 32: 4/11/22
● Laches
- An equitable defense where D asserts that it would be inequitable or unjust to enforce the P’s rights.
Laches= delay.
- Requires
o Inexcusable, negligent, or unreasonable delay by P
o Which results in prejudice to D.
- Generally, applies only to
o Equitable actions that are not governed by a statute of limitations but may be applied within a
statute of limitations period if gross laches.
- Ariz. Libertarian Party v. Reagan
o AZLP v. Ariz. Sec. of State
-
● Election law required applicant have certain # of signatures to get on the ballot. AZLP
sought to enjoining the implementation of this law, which increased the # of signatures
they’d need to get on the ballot.
● July 3, 2015 AZLP told election director of intent to challenge the constitutionality of a
new statute. End august 2015 AZLP knew of the basis to challenge the law. They filed
suit on April 12, 2016 AZLP filed suit. May 12, 2016 AZLP filed emergency motion for
TRO. June 1, 2016 deadline for nominating petitions to be filed.
● AZLP argued that their delay was caused by the state failing to release signature
requirements but data known to AZLP by jan 2016 showed that the # of signatures they
were going to need was going to increase dramatically under the new law.
o Laches= unreasonably and prejudicial delay.
o Defense to injunctive relief. Prejudice to d to come from delay by p causing d difficulties in
preparing its defense. Delay makes it difficult on the court matters too. Their delay prejudiced
the secretary of state being able to defend. Gave the court only 18 days to decide. A change in
the law at this late of date will hurt the signatures gathering process so laches barred their motion
for emergency relief.
Pro football inc v. Harjo
o Trademark case. trademark cant disparage others. Harjo challenged the Washington redskins
trademark as disparaging to native Americans. 6 redskin trademarks registered from 1967 to
1990. In 1992 native Americans challenged it. act provides that a petition challenging the mark
may be filed at any time. native Americans argued that be statute, there is no laches defense.
o The court held no, laches remains a valid defense. Trial court granted d summary judgment based
on laches.
o Edward Williams, team owner, met with native American leaders near the time of registration of
the trademark. He died between 1967 and 1992. D easily shows financial prejudice. Expanded
use of the marks at great expense. Amount of prejudice needed varies. 8-year delay here was
substantial.
● Statute of limitations
- Laches and Statute of limitations
o Laches is equitable substitution for statute of limitations
o SOL creates a fixed time in which suit must be filed.
● Time starts when claim accrued.
● Suit barred when time runs out.
● Originally only applied to actions at law.
o If there is a SOL it will govern. If no SOL laches may act as a bar.
- McCroskey v. Bryant Air Conditioning. *started the discovery rule in Tennessee.
o Wrongful death case. injury from allegedly defective gas furnace. Furnace manufactured in
1967. Installed in feb 1968. P injured in may 1971. Suit filed July 1971. P died in September
1971. Issue: when did the claim accrue? In this case, where injury is obvious, the claim occurs at
the date of the injury.
- Tolling
o Actions by d induced p to not sue or fraudulent concealment of an action that is unknown to
another party.
o Klehr v. AO Smith Corp: Plaintiff still had to undertake reasonable diligence to discover the
claim. The court held that plaintiff would have discovered it if they checked in 1989, thus they
couldn’t have exercised reasonable diligence. Tolled by the 4 year SOL of the Clayton Act.
o Knaysi v. AH Robins Co
● Dalkon shield case. claimed robins failed to disclose the adverse information it knew
about the Dalkon shield. Ps asserted that robins were equitably estopped from asserting
the statute of limitations defense. Here, robins made affirmative misstatements to the
public in advertising and robins has superior knowledge and p and her dr relied upon
robins public statements and knowledge. Equitable estoppel will prevent robins from
raising defense of statute of limitations.
- Discovery rule
o Claim accrues and the statute of limitations begins to run when
● In the exercise of reasonable care and diligence, p should have discovered the claim.
● If they knew or should have known they had a claim.
o Contract cases *6 years.
1. Discovery rule applies to breach of contract
2. Parties may agree to reduce sol in the contract as long as p has a reasonable time to file suit.
o Potts v. Celotex *unusual
● Statute of limitations for personal injury and wrongful death is one year. Potts=insulation
worker from 1953 to 1987. 1975, Potts was diagnosed as having mesothelioma. He died
in 1987 and his wife sued in 1988. Discovery rule: claim accrues when injury occurs or is
discovered. Or in exercise of reasonable diligence should have been discovered. Single
injury rule: once p is on notice of an injury, suit must be filed on all claims arising out of
that injury or will be barred by res judicata. Unfair to apply that rule when p does not
know he has a particular disease and could have discovered it even with exercising
reasonable diligence.
● Claim for a separate and distinct asbestos related disease does not accrue until that
disease becomes manifest.
● Equitable estoppel
- Party seeking this must show
1. The specific action/promise/inducement
2. That those actions reasonably induced the party to act.
3. And must show that the failure to act was not the result of ps own lack of diligence.
- Hawks v. CD Development
o Developer hired architect. Architect billed developer on April 1999. Developer did not pay
Architect. August 2003 architect registered lien on property. developer promised to pay.
Architect released lien and developer failed to pay. September 2008 architect sued on debt.
Developer asserted 6 year statute of limitations defense. Architect countered: developer is
equitably estopped from asserting the statute of limitations defense.
● By promising to pay upon which architect relied to his detriment and causing architect to
release the lien. Equitable estoppel arises from the equitable maxim, no person may take
advantage of his own wrong.
● The court held that the developer mislead architect to not file suit during the statute of
limitations.
● Statute of repose
- Example: TCA 28-3-202
o Suit for deficiency in construction must be brought within 4 years of substantial competition.
- TCA 28-28-103
o Product 10 years from expiration or 1 year from expiration of useful life whoever is shorter.
- No discovery rule (starts running regardless of discovery)
- Is it possible to toll it?
1. Not tolled during minority
2. Not tolled during ps mental incompetency.
3. May be tolled by fraudulent concealment.
- Walker v. Sunrise Pontiac
o No class actions under TCPA.
● Class actions
- 4 requirements for consideration
1. A. risk of inconsistent verdicts or
B. risk of disposition that would impair others’ interests
2. grounds generally applicable to the class as a whole.
3. common questions predominate over individual questions and
4. does class action provide superior method for fair adjudication.