Outline for Remedies – Fall 2004
Professor Peter Tiersma
I.
Introduction to Remedies
A.
Type and Examples of Remedies
1. Coercive Remedies
a) Injunctions
(1) Preventive – directly prevents the harm
(2) Restorative – fixes the problem
(3) Prophylactic – indirectly prevents (or removes) the harm
(4) Structural – regulates an entire institution
b) Specific Performance
2. Damages
a) Compensatory Damages
b) Punitive Damages – to punish and to deter
3. Restitution
a) Legal Restitution
(1) Quasi-contract
(2) Replevin
(3) Common counts
b) Equitable Restitution
(1) Constructive trusts
(2) Equitable liens
4. Declaratory Relief
B.
Limits on Remedies
1. Statutes
a) CA Statute: where a personal right has been violated, statute providing for damages
is not exclusive of injunctive relief (Orloff v. LA Turf Club)
b) CA Statute: caps non-economic damages for medical malpractice
2. Equitable Defenses
a) Unconscionability (equitable defense) cannot be used to create a cause of action
(Cowin Equipment v. GM)
3. Private Associations (and Due Process)
a) Courts will review decisions of a private organization only if it is a matter of economic
necessity (Treister v. American Academy of Orthopaedic Surgeons)
4. Judicial Immunity
a) Judicial immunity bars only damages, not injunctive relief (Pulliam v. Allen)
C.
Characterization of Remedies
1. Damages or Restitution?
a) Insurance policy covering damages (compensation for injury) will not be interpreted to
cover restitution (prevention of unjust enrichment) for gov’t performing environmental
clean-up (Maryland Casualty v. Armco)
2. Back Pay & Front Pay
a) Both BACK PAY and FRONT PAY are ‘tied to reinstatement’ and thus an equitable
remedy (Brunecz v. Houdaille, Pollard v. DuPont)
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II.
Injunctions
A.
Preventive Injunctions
1. Generally, injunctions look to prevent future conduct
2. Elements:
a) No adequate legal remedy
(1) Recurrent invasions
(2) Multiplicity of lawsuits
(3) Difficult to calculate damages
b) Irreparable (or great) harm
c) Balancing the Equities
d) Not be adverse to Public Interest
(1) … Or better dealt with by gov’t regulation?
3. Notice: Injunctions must be fashioned w/enough specificity such that defendant has NOTICE
4. Crime: Generally, it’s difficult to get an injunction against crime
5. Cases:
a) Court refuses to issue an injunction to D to repair drive-in theater where legal remedy
is adequate (Thurston Enterprises v. Baldi)
b) Legal remedies may never be adequate in a case which involves the use and
enjoyment of land (Wheelock v. Noonan)
c) Court awards an injunction against truck racers where there has been great harm
and no adequate remedy at law (Muehlman v. Keilman)
d) Court balances hardships to both parties before granting an injunction to rebuild
causeway (Triplett v. Beuckman)
e) Court balances hardships in issuing a PROPHYLACTIC injunction to photographer
not to come within 25 feet of Jackie O (Galella v. Onassis)
f)
Court considers public health when balancing hardships, and fashions a narrow
prophylactic injunction (US v. Rainbow Family)
g) Private party raises public need for cement and jobs before Court refuses to issue
an injunction against cement factory (Boomer v. Atlantic)
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B.
Interlocutory Injunctions
1. Generally, interlocutory injunctions are given DURING the trial to preserve STATUS QUO
2. Types of Interlocutory Injunctions:
a) Temporary Restraining Order (TRO)
(1) Rare and done quickly in judge’s chambers
(2) Lasts for only 10 days (+ 10 day extension)
(3) Gives party time to file a motion for preliminary injunction
(4) Non-appealable
(5) Requestor must post bond ($)
(6) Judge may grant TRO ex parte
b) Preliminary Injunction
(1) Granted after a motion is made
(2) Other party must have NOTICE and chance to argue
3. Phrasing the Injunction:
a) Mandatory injunction
(1) You MUST do something
(2) AUTOMATICALLY stayed on appeal
b) Prohibitory injunction
(1) You must NOT do something
(2) NOT automatically stayed on appeal
4. Elements:
a) No adequate legal remedy
(1) Recurrent invasions
(2) Multiplicity of lawsuits
(3) Difficult to calculate damages
b) Irreparable (or great) harm
c) Balancing the Equities
d) Not be adverse to Public Interest
e) Substantially likely to prevail
5. Alternative Test:
a) Sliding Scale Rule: If ‘likelihood of success on merits’ is WEAK, look at other factors
to see if they are STRONG
6. Copyright Presumption: Federal courts make a presumption of irreparable harm once P
shows likelihood of success on copyright claim
7. Constitutional Presumption: Courts also make the same presumption for claims regarding
Constitutional violations
8. Bankruptcy Exception: An injury compensable in money is NOT irreparable unless company
would go bankrupt
9. Cases:
a) Court issues a preliminary injunction to prevent further loss of benefits to P and the
public, and to preserve the status quo (Metropolitan Sports v. Minnesota Twins)
b) Court denies preliminary injunction to stop recounting votes in FL b/c no showing of
irreparable harm (Siegel v. Lepore)
c) Court balances irreparable harm to doc’s reputation w/ threat to public health
(elderly) before rejecting a preliminary injunction (Cassim v. Bowen)
d) Court uses the alternative test and finds that likelihood of success is not strong, and
other factors are weak; thus no preliminary injunction issued (Caribbean Marine
Services v. Baldrige)
e) Court holds that TRO may not be extended beyond 20 days w/o consent of parties
(Sims v. Greene)
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C.
Structural Injunctions
1. Generally, purpose of structural injunctions is to REFORM AN INSTITUTION
2. Characteristics:
a) Requires judicial supervision over both policies and practices
b) May utilize lower courts or defendants themselves to PLAN and REFORM
c) Comprised of smaller & more specific preventive and prophylactic injunctions
3. Cases:
a) Supreme Court ordered school boards to come up with a plan of desegregation;
District Courts would review plans (Brown v. Board of Education)
b) Supreme Court places 30-day limit for isolation as part of a structural injunction
against Arkansas prison system (Hutto v. Finney)
III. Specific Performance
A. Generally, specific performance is a type of injunction applied to CONTRACTS
B. Elements:
1. Valid contract
2. Plaintiff has substantially performed (and can perform remaining obligations)
3. Defendant is able to perform (remaining obligations)
4. Plaintiff has no adequate legal remedy
a) Uniqueness
b) Difficulty or Uncertainty in calculating damages
c) UCC: “Other proper circumstances” (replacement is expensive and cumbersome)
5. Adequate consideration
a) Measured at the time of contract FORMATION
6. Mutuality of remedies
a) Both sides must be able to get specific performance
b) Required at time specific performance is sought
c) Most JDX have abolished this requirement
7. Terms sufficiently definite (for court to know what to enforce)
8. (Specific performance) must resemble performance promised in contract
C.
D.
E.
Fashioning SP Orders: Courts will BALANCE inadequacy of legal remedy w/burden of supervision
Property: Uniqueness still applies to SALE of property
Personal Services: Courts do not make orders of specific performance for personal service contracts
1. Exception: Specific performance to prohibit services b/c employee was bound by a noncompetition clause in an employment contract
F. UCC: Expands use of specific performance to situations where a replacement cannot be obtained w/o
considerable expense, delay, and inconvenience
G. Cases:
1. Court denies specific performance b/c damages are calculable (Van Wagner Ads v. S&M)
2. Court grants specific performance for the return of nuclear power plant materials b/c replevin is
not an adequate legal remedy (Niagra Mohawk Power v. Graver Tank)
3. Court grants specific performance in a personal services contract where the personal services
had already been conveyed (Henderson v. Fisher)
4. Court grants specific performance ordering D to keep business open b/c enforcement is easy
(Dover Shopping Center v. Cushman’s Sons)
5. Court grants specific performance for a contract for a sale of goods b/c replacements cannot
be obtained without considerable expense, trouble, or loss (Sedmak v. Charlie’s Chevrolet)
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IV. Equitable Defenses
A. Generally, raised only for equitable claims
B.
Types of Equitable Defenses:
1. Laches
a) Unreasonable delay
(1) Statute of Limitations – where SOL has run, assume unreasonable delay
b) Prejudicial to the defendant
(1) Defense prejudice
(a) Loss of records
(b) Witnesses no longer available
(c) Memories have faded
(2) Economic prejudice
(a) Back pay (sometimes)
2. Estoppel
a) Four-part Test:
(1) Party (to be estopped) must know the facts
(2) Party must know (or likely know) that his conduct will induce action
(3) Other party must be ignorant of the true facts
(4) Other party must rely upon former’s conduct to his injury
b) Government: Very hard to get estoppel against government
c) SOL: Estoppel can be used as a defense to the defense of Statute of Limitations
3. Unclean Hands
a) Elements:
(1) Serious misconduct by plaintiff
(2) Misconduct must be related to underlying action
b) Unclean Defendant: Generally, only Plaintiff’s posture is at issue
c) Unclean Litigation: Misconduct during litigation does not work for unclean hands
4. Unconscionability
a) Generally, standard for unconscionability is “shocks the conscience”
b) Signs of Unconscionability:
(1) Procedural Unconscionability
(a) Unfair surprise
(b) Fine print, hidden terms
(2) Substantive Unconscionability
(a) Terms (price)
(3) Surrounding Circumstances
(a) Difference in bargaining power
c) Defense: Remember, unconscionability is only a DEFENSE
d) UCC: Under UCC §2-302, unconscionability can be used as a defense for any
contract action (whether legal or equitable)
(1) Timing: Evaluated at the time of contract formation
(2) Judge: Unconscionability is a question for the judge, not the jury
(3) Severability: In finding unconscionability, Court may choose to excise the
unconscionable term(s) or refuse to enforce the entire contract
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5.
C.
Election of Remedies
a) Generally, the ACT of electing one remedy will PRECLUDE recovery on the other
b) Three Elements of Election of Remedies Defense
(1) Inconsistent Remedies
(2) Plaintiff must elect
(a) Most JDX: Plaintiff must elect a remedy before going to jury
(b) Sometimes, judge will ask Plaintiff to elect
(c) Sometimes, Plaintiff may elect a remedy without realizing it:
(i) Request for Worker’s Comp
(ii) Asking for rescission
(iii) Filing motion for partial summary judgment
(3) Defendant’s Reliance on election
c) Double Recovery: Some JDX focus on prevention of Double Recovery
d) UCC: UCC §2-703 expressly ABOLISHES election of remedies unless other party
‘materially changes position in reliance’ on the action
e) Worker’s Comp: Courts are split on whether a Worker’s Comp claim forecloses
employee from later asserting a common law tort cause of action
Cases:
1. Court rejects LACHES b/c there was no prejudice to the defense since records still exist and
not witnesses are required (Cornetta v. US)
2. Court dismisses case on grounds of LACHES b/c statute of limitations has passed
(unreasonable delay) and back pay accrued (economic prejudice) (Gruca v. US Steel)
3. Court rejects defense of ESTOPPEL b/c other party was not necessarily ignorant of the true
facts (US v. Vanhorn)
4. Court allows claim because defendant is ESTOPPED from asserting defense of statute of
limitations (John R. v. Oakland Unified School District)
5. Court refuses to enforce a fraudulent agreement b/w wrongdoing dentist and assistant b/c of
UNCLEAN HANDS (Senter v. Furman)
6. Court allows defense of UNCLEAN HANDS in a suit for equity (reinstatement) and damages
(back pay) (Byron v. Clay)
7. Court allows defense of UNCLEAN HANDS in a suit for specific performance of a noncompete clause in an employment contract (N. Pacific Lumber v. Oliver)
8. Court allows defense of UNCONSCIONABILITY in a suit for specific performance of an output
contract for carrots, where terms were very one-sided (Campbell Soup v. Wentz)
9. Under UCC §2-302, Court finds PRICE UNCONSCIONABILITY and chooses to reform the
contract (Jones v. Star Credit)
10. Court rejects ELECTION OF REMEDIES and holds that remedies of damages and restitution
are not inconsistent (Head & Seemann v. Gregg)
11. Court rejects ELECTION OF REMEDIES even though remedies are inconsistent b/c thereis no
chance for double recovery and no reliance (Atom v. Hawes)
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V.
Contempt
A.
Generally
1. Contempt is a Power of Courts to:
a) Enforce their orders
b) Protect the dignity of the court
c) Protect the integrity of judicial proceedings
2. Terms
a) Contemnor – Person who commits contempt
b) Contumacious – Rebellious; disobeying orders
c) Contemptuous – Being disrepectul
B.
Types of Contempt
1. Criminal Contempt
a) Generally, criminal contempt is used to punish and deter
b) Requires intentional conduct violating court order
c) Types of Criminal Contempt:
(1) Direct Criminal Contempt
(a) Misconduct in PRESENCE of Court
(i) Judge must TESTIFY that he saw or heard misconduct
(ii) Judge must CERTIFY
(b) SUMMARY contempt proceeding
(i) Judge, not jury
(2) Indirect Criminal Contempt
(a) Criminal proceeding
(i) Right to counsel
(ii) Right to jury (for serious criminal contempt)
d) Fines: Fines from contempt go towards the public
e) Underlying Order: If underlying order is vacated, criminal contempt order STANDS
2. Civil Contempt
a) Generally, civil contempt is a remedy available to private parties
b) Does NOT require intentional disobedience
c) Functions of Civil Contempt:
(1) Compensatory
(a) Damages resulting from contemnor’s disobedience
(b) Evidence of actual damages w/ reasonable certainty
(c) May include attorney’s fees
(2) Coercive
(a) Per Day fines
(b) Jail time
(c) Conditional upon SUBSTANTIAL compliance
d) Fines: Fines from civil contempt go towards the private party
e) Underlying Order: If underlying order is vacated, civil contempt FALLS
3. Avoiding Contempt
a) Court gave no notice
b) Court had no jurisdiction
c) Show that injunction was:
(1) TRANSPARENTLY INVALID
(2) FRIVOLOUS
(3) Challenged, but met w/ FRUSTRATION and DELAY
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C.
Cases:
1. Supreme Court rules that even if injunction is unconstitutional, plaintiffs are still in CRIMINAL
CONTEMPT for ignoring it (Walker v. Birmingham)
2. Court overturns conviction b/c defendant was not afforded due process in an INDIRECT
CRIMINAL CONTEMPT proceeding (In re Stewart)
3. Geographical proximity not required for PRESENCE (Ex parte Daniels)
4. Court overturns conviction b/c judge did not CERTIFY that he saw or heard misconduct for a
DIRECT CRIMINAL CONTEMPT proceeding (Greenberg)
5. Court rules that CRIMINAL CONTEMPT for disobeying injunction on appeal will stand even if
injunction is later overturned (US v. United Mine Workers)
6. Court reverses COMPENSATORY CIVIL CONTEMPT penalty for no evidence of actual
damages (Time-Share Systems v. Schmidt)
7. Court rules that (US v. Darwin Construction)
VI. Special Issues in Equity
A. Statutory Injunctions
1. Generally, statutes can affect equitable discretion by:
a) Enumerating or excluding remedies
b) Prohibiting injunctions (in some situations)
c) Requiring injunctions (in some situations)
2. Legislative Intent: Courts must decide whether Congress intended to foreclose certain
remedies, or whether a statute is more permissive
B.
Free Speech and Injunctions
1. Generally, injunctions which act as PRIOR RESTRAINT ON FREE SPEECH are rare
2. Possible if it is the only available form of protection
3. Court will engage in BALANCING:
a) 1st Amendment
b) Privacy (must show defendant intends to HARASS)
c) Public interest
C.
Cases:
1. Supreme Court holds that unambiguous STATUTORY INJUNCTION must be followed; that
there is no room for judicial discretion (TVA v. Hill)
2. Court holds that possible failure of an available legal remedy cannot justify an injunction
against FREE SPEECH (Willing v. Mazzocone)
3. Court dissolves injunction, holding that FREE SPEECH outweighs limited privacy rights of
individual public officials (Mabe v. Galveston)
4. Court allows injunctions against suits which are both deficient and repetitive (Pavilonis v. King)
5. In ABORTION cases, Court balance FREE SPEECH with right to receive health care without
being harassed (Madsen v. Women’s Health Center, Schneck v. Pro-Choice Network)
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VII. Contract Damages
A. Generally
1. Contract damages protect EXPECTANCY interests
2. Non-breaching party should be placed in as good a position as if the contract had been
performed as promised
3. Breaching party should NOT be punished or deterred
B.
Calculating Contract Damages:
1. Cost to complete: Courts will generally award COST TO COMPLETE for contract damages
2. Diminution in Value (Re §348): If cost to complete is disproportionately high (e.g., twice the
loss in value) then courts may award the diminution in value
3. Reliance Costs: If damages are too SPECULATIVE, courts will award RELIANCE COSTS
4. Limits on Reliance: Contract price is a limit on reliance; or where you have a losing contract,
reliance costs will be reduced by the amount the plaintiff would have lost on the contract
5. RESTITUTION: For an implied-in-law contract, Courts will award restitution, measured by:
a) Reasonable value of the benefit
b) Fair market value (where value too difficult to calculate)
C.
Buyer’s Remedies
1. Under the UCC:
a) §2-711 Buyer may recover (pre-)paid amount; and
(1) Reasonable cover (§2-712) = [cost of cover] – [cost of contract], OR
(2) No cover (§2-713) = [fair market value] – [cost of contract]
b) §2-715 And [incidental or consequential damages] – [expenses saved]
(1) From requirements or needs that seller knew (or had good reason to know)
(2) And could not reasonably be prevented by cover
c) §2-714 For non-conforming goods, buyer may recover
(1) [Value of goods as warranted] – [value of goods as accepted]
d) §2-713 Damages for seller’s repudiation calculated at time buyer learned of breach
(1) Time of breach (encourages seller to repudiate)
(2) Time of performance (encourages buyer not to cover)
(3) Commercially reasonable period after breach (balances concerns)
2. Consequential Damages
a) Generally, consequential damages do NOT naturally flow from the breach, but are
nonetheless a foreseeable result of the breach
b) Requirements for Consequential Damages
(1) Seller must know (or have reason to know) of buyer’s requirements and
needs at time of contract formation
(2) Buyer could not have REASONABLY prevented damages by covering
(3) Proximate cause (for BREACH OF WARRANTY)
c) Lost Profits – New businesses lack history of revenue and operating expenses, and
thus courts often rule that lost profits are too speculative
d) Lost Use – Calculated by [reasonable rental cost] x [time of actual use]
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D.
Seller’s Remedies
1. Under the UCC:
a) §2-703 Seller may recover:
(1) If resell (§2-706) = [Contract price] – [resale price], OR
(2) If no resale (§2-703) = [Contract price] – [fair market value], OR
(3) Cancel the contract
b) §2-706 Resale
(1) Made in good faith (REASONABLE NOTICE of PRIVATE RESALE)
(2) Made in a commercially reasonable manner
2. Lost Profits:
a) UCC prohibits recovery of consequential damages for the seller
b) Seller’s Lost Profits (Three Ways):
(1) Lost Volume Seller (§2-708-2)
(a) Must establish that if the breaching buyer had performed, seller
would have had profits from TWO SALES
(i) Retailers must have inexhaustible supplies
(ii) Manufacturers must have sufficient production capacity
(2) Weak Market
(3) No Market
3. Acceptance and Breach of Warranty:
a) §2-709 Buyer must provide REASONABLE NOTICE of any Breach of Warranty after
goods have been accepted
E.
Land Sales
1. Generally
a) DAMAGES = [Contract price] – [Fair market value] + [Consequential damages]
2. Liquidated Damages
a) Generally, contractual term for ‘agreed damages’
b) At the time of contract formation:
(1) Damages are difficult to calculate (or uncertain)
(2) Intend to fix fair compensation for breach (NOT PENALIZE)
(3) Reasonable estimate of the anticipated damages
(4) DOUBLE-LOOK DOCTRINE: Actual damages at time of breach
(a) If damages are $0, then we do NOT enforce liquidated damages
c) Parties should intend to be BOUND by liquidated damages clause
3. American Rule
a) Under the English Rule, buyer can only recover deposit and expenses
b) Under the AMERICAN RULE, buyer can recover EXPECTATION damages
(1) [Expectation Damages] = [Fair market value] – [Contract price]
(2) If [FMV] < [K Price], then NO Expectation Damages
4. Closing Delays
a) Generally, Courts will ‘readjust the equities’
b) Buyer’s Damages
(1) Lost use of house (RENTAL VALUE)
(2) Interest Rate Differential
(a) [Difference in %] x [Years of Residency]
c) Seller’s Damages
(1) Lost use of purchase price (INTEREST)
5. Punitive Damages
a) Typically not allowed unless there is a BAD FAITH breach of contract which also
amounted to an independent tort of conversion
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F.
Cases:
1. For a construction contract, court uses COST TO COMPLETE to calculate damages unless
disproportionately high; then, use DIMINUTION IN VALUE (Eastlake Construction v. Hess)
2. Where expectancy damages are too SPECULATIVE, court awards plaintiff RELIANCE costs
of printing Christmas cards (Gruber v. S-M News)
3. Where IMPLIED-IN-LAW contract exists, Court awards RESTITUTION, focusing on
defendant’s gain rather than plaintiff’s loss (Campbell v. TVA)
4. Court refuses to award lost profits as part of CONSEQUENTIAL DAMAGES b/c nonbreaching party did not reasonably cover (Wilson v. Hays)
5. Court finds that the non-breaching party could not reasonably cover, but still did NOT award
CONSEQUENTIAL DAMAGES b/c breaching party did not know of seller’s needs AND lost
profits for new businesses are too speculative (Gerwin v. 7th Day Adventists)
6. Court rejects claim for lost profits resulting from breach of warranty for want of PROXIMATE
CAUSE (Cannon v. Yankee Products)
7. Court awards LOST USE of a yacht calculated by reasonable rental value as part of
consequential damages (Aries v. Palmer Johnson)
8. Court gives contract-market differential instead of contract-resale differential b/c seller did not
provide REASONABLE NOTICE of a private resale (Sprague v. Sumitomo Forestry)
9. Seller recovers LOST PROFITS by proving he is a LOST VOLUME SELLER and that he had
CAPACITY to produce scales for two sales (National Controls v. Commodore Bus. Machines)
10. Court rules that if market becomes extremely weak, seller is entitled to LOST PROFITS
(Neumiller Farms v. Cornett)
11. Court rules that buyer cannot recover for breach of warranty b/c they failed to provide
reasonable NOTICE to the seller of a breach of warranty (C.R. Daniels v. Yazoo)
12. Court finds that an ambiguous term is NOT actually a liquidated damages term b/c parties did
not intend to be bound (Southeastern Land v. Real Estate)
13. Court uses the DOUBLE-LOOK DOCTRINE to determine, at time of breach, if liquidated
damages bears a reasonable relationship to the breach (Vines v. Orchard Hill)
14. Court applies the AMERICAN RULE, allowing buyer to recover expectation damages, but still
does not allow recovery of INTEREST RATE DIFFERENTIAL (Donovan v. Bachstadt)
15. Court allows buyers to recover INTEREST RATE DIFFERENTIAL for reasonable amount of
residency as part of EXPECTATION DAMAGES (Stratton v. Tejani)
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VIII. Tort Damages
A. Generally
1. Tort damages’ function is to “make the injured whole” by substituting money for losses
a) Contrast: Restitution’s function is to disgorge benefits unjustly retained by defendant
b) Other goals: Economic efficiency & promoting out-of-court settlements
B.
Harm to Personal Property
1. Total Destruction Rule:
a) Damages = [Fair market value of property right before destruction] + [interest]
(1) PLUS [Lost use] = [Rental value] x [Reasonable time to replace]
2. Partial Destruction Rule:
a) Damages = [Cost-of-repair] (if economically feasible)
b) Economic feasibility = [Cost-of-repair] < [Fair market value right before destruction]
c) Here, [FMV] is a cap on amount of recovery for partial destruction
(1) PLUS [Lost use] = [Rental value] x [Reasonable time to repair or replace]
3. Fluctuating Commodities
a) New York Rule:
(1) Highest price between:
(a) [Time of conversion] and
(b) [Reasonable time after person learns of conversion]
(2) Reasonable time is the time necessary to replace the converted commodity
4. Personal Belongings (Non-commercial Goods)
a) Applies to clothing, cookware, etc.
b) Actual value = [Original price] – [Depreciation + Wear and Tear]
(1) Consider replacement costs
(2) Consider cost-of-repair
(3) Exclude sentimental value
(a) Minority jurisdiction will allow ‘objective’ sentimental value
c) Unique Commercial Property = [Time and efforts to reconstruct]
(a) Must have some evidence for damages
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C.
Harm to Real Property
1. Pollution
a) Permanent
(1) Damages = [FMV before injury] – [FMV after injury]
(2) Injury if fixed and property will always remain subject to that injury
(3) Damages are for the past, present, and future; generally irreparable
(a) Exception: Court will award [Cost-of-repair] if:
(i) Owner has a personal reason
(ii) Owner is likely to repair
(4) Statute of Limitations: Cause of action accrues when injury occurs
b) Temporary
(1) Damages = [Reasonable cost-of-repair] + [Lost use] + [Loss of rental value]
(a) PLUS [Lost profits for crops]
(b) CAP = [Fair market value]
(2) Each injury causes a new cause of action (i.e., successive law suits)
(3) Possible abatement of causative condition; stop misconduct  injury abates
(4) Statute of Limitations: Cause of action accrues after each discrete injury
c) Cumulative Effect: Sometimes temporary injury  permanent injury
2. Trees:
a) Alternative theories for damage to trees:
(1) Ornamental damage = [FMV before injury] – [FMV after injury]
(2) Timber = [Current FMV of timber]
(3) Fruit = [Current FMV of fruit] (?)
(a) Some courts allow value of crop at either:
(i) [Time of market]
(ii) [Time of sale]
(b) Some courts allow [Lost profits]
3. Minerals:
a) Willful Trespass Damages = [FMV, minerals at surface]
b) Non-willful Trespass Damages = [FMV, minerals in place]
(1) [FMV, minerals in place] = [FMV, minerals at surface] – [cost of extraction]
(2) Use [Royalties] if royalties were actually paid
4. Environmental Damages
a) For lands held in preservation:
(1) [Lost Preservation Use] = [% of FMV]
b) Where plaintiff is a State (or some other sovereign) acting in a sovereign capacity:
(1) [Environmental Damage] = [Cost-of-repair with NO CAP] + [Lost Use]
(2) May be reasonably reduced
(a) Ex: Cost of purchasing a few animals to begin reproducing, instead
of replacing all of them at once (Puerto Rico v. SS Zoe)
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D.
Personal Injury Damages
1. Generally
a) Focus on plaintiff’s condition, not defendant’s conduct
b) Lump sum: Most courts award lump sums (instead of periodic payments)
c) Children: When a child is injured, the child can sue (on his own behalf) AND the
parents can sue (on behalf of the child) for medical payments
2. Present Worth
a) Future damages must be reduced to present worth:
(1) Lost earning capacity = [Annual salary] x [# of working years]
(a) Reduce to amount if properly invested today, would result in total
lost earning capacity after # of working years
(i) Consider inflation
(ii) Consider rising wages or wage increases
(iii) Consider other factors (‘marriage & kids’ stereotype)
(2) Future medical costs = [Cost per day] x [365 days] x [# of remaining years]
(a) Reduce to amount if property invested today, would result in total
future medical costs after # of remaining years
(i) Consider inflation
(ii) Consider rising medical costs
3. Types of Personal Injury Damages
a) Past medical expenses – Calculated easily by looking at bills
b) Pain & suffering – Requires that plaintiff actually feel pain
(1) Many JDX do NOT allow ‘per diem’ instructions for the jury
(2) Economic experts are not allowed to testify about pain & suffering
c) Lost earnings = [Rate] x [Time] (Temporary injury)
d) Lost earning capacity = [Difference in earning capacities] x [Time] (Permanent injury)
(1) MINUS [Costs avoided] (e.g., going to college)
e) Loss of consortium
(1) Types of consortium
(a) Tangible (economic)
(i) Support – Money received from spouse
(a) Note: Courts are weary of a duplicative award
with a spouse’s lost earning capacity
(ii) Services – Household services
(b) Intangible: Love, Companionship, & Sex
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E.
Injuries Resulting in Death
1. Generally, determined by each jurisdiction’s statutes
2. Survivorships (or Survival Acts):
a) Estate can recover the following damages:
(1) Medical & Funeral Costs
(2) Lost Earning (during illness)
(3) Other Causes of Action (Tort, contract, punitive)
b) Focus on decedent’s losses (not family’s losses)
3. Wrongful Death:
a) Close relatives who are injured by decedent’s death:
(1) Spouses
(2) Parents + children
(3) Domestic partners (in CA)
b) Can recover the following damages:
(1) Medical & Funeral Costs (if Estate cannot pay)
(2) Tangible loss of consortium
(a) Financial support, services, or gifts that decedent provided
(i) This is NOT decedent’s earnings
(ii) Unlikely that parents could recover support provided by
deceased children unless it’s a unusual circumstance
(3) Intangible loss of consortium
(a) Love, companionship, & sex
(b) For children: Parental education and guidance
c) Can NOT recover the following damages (in CA):
(1) Pain, suffering, and disfigurement of deceased
(2) Grief of spouse or children
4. Bystander Liability
a) Separate tort where parents, spouses, and children can recover if they SEE their
loved on being killed
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F.
Cases:
1. In admiralty case, court awards COST-OF-REPAIR for PARTIAL DESTRUCTION to a
worthless barge (Hewlett v. Barge Bertie)
2. Court fixes damages for stolen gold using NEW YORK RULE awarding highest value b/w time
of conversion and a reasonable time after P learns of conversion (Roxas v. Marcos)
3. Court fixes damages for destruction of PERSONAL BELONGINGS by calculating ACTUAL
VALUE to the owner, but excludes sentimental value (Lane v. Oil Delivery)
4. Court does not consider SENTIMENTAL VALUE in calculating actual value of videotapes
destroyed by police during seizure of marijuana (Landers v. Anchorage)
5. Court awards damages based upon time and efforts to RECONSTRUCT for destruction of
unique manuscript (with no market value) (Taliferro v. Augle)
6. Court modifies TOTAL DESTRUCTION rule to allow LOST USE for time to replace a totaled
car (Long v. McAllister)
7. Court characterizes an abatable pollution injury as TEMPORARY thereby awarding
reasonable COST OF REPAIR and LOST PROFITS (Miller v. Cudahy)
8. Court awards COST OF REPAIR for a PERMANENT INJURY b/c owner has a PERSONAL
REASON to repair the property (Roman Catholic Church v. Louisiana Gas)
9. Court fixes damages for TREES using current fair market value as timber (Laube v. Thomas)
10. Court fixes damages for NON-WILLFUL TRESPASS in removal of minerals is equal to FAIR
MARKET VALUE OF MINERALS IN PLACE (Kroulik v. Knuppel)
11. Court awards a percentage of fair market value for LOST PRESERVATION USE (Chenega
Corp. v. Exxon; also see Puerto Rico case)
12. Courts will reduce personal injury damages in the future to PRESENT WORTH but should also
consider INFLATION (Frankel v. US)
13. Courts will award damages for LOST EARNING CAPACITY based upon difference in
earnings from lost market value of the plaintiff’s services (Wilburn v. Maritrans)
14. Court calculated LOST EARNING CAPACITY for injured 15-year old by calculating
probabilities of higher education and career preferences (Athridge v. Iglesias)
15. Court allows parents to sue on behalf of their injured child for medical costs (Healy v. White)
16. While many jurisdictions do NOT allow it, Court allows jury to be presented with a reasonable
PER DIEM argument for calculating pain & suffering (Debus v. Grand Union)
17. Court does not award LOSS OF (TANGIBLE) CONSORTIUM to the wife b/c husband was
already awarded with LOST EARNING CAPACITY (White Construction v. Dupont)
18. Court interprets wrongful death statute to include LOSS OF SPOUSAL CONSORTIUM
damages (Jordan v. Baptist Hospital)
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IX. Limits on Compensatory Damages
A. Certainty
1. Substantive Entitlement: FACT of damages must be reasonably certain
2. Extent of Accountability: AMOUNT of damages does not have to be as certain
3. Contests & Sports:
a) American Rule: Generally, no recovery for LOST CHANCE of winning unless P was
very likely to have won
b) English Rule: Value of Opportunity Lost = [% chance] x [Total price]
B.
Mitigation of Damages
1. Generally
a) Once there is a breach or repudiation, injured party cannot “pile on” damages
2. Breach of Employment Contract:
a) Damages: [Salary (agreed)] – [Salary (actual) OR Salary (mitigation)]
(1) Duty to Mitigate is a reasonable one
(2) Employee has a reasonable duty to seek alternative employment
(3) Employee need not accept dissimilar or inferior replacement employment
3. Torts
a) Injured plaintiff has only a reasonable duty to mitigate
(1) Burden shifting: D has burden of proof to show P’s failure to mitigate
(2) P has a reasonable duty to submit to ordinary and non-dangerous surgery
to mitigate damages from further injury
C.
Collateral Source Rule
1. If a party receives compensation for his injuries from a SOURCE WHOLLY INDEPENDENT of
the tortfeasor, such payment should not be deducted from the damages
a) Applies to both CONTRACTS and TORTS cases
b) Both a rule of DAMAGES and a rule of EVIDENCE
c) Often criticized for allowing DOUBLE RECOVERY
d) … but Insurance Co. may have SUBROGATION OF RIGHTS clause in policy
e) Special issues with GOVERNMENT:
(1) DEDUCT: if monies for damages and monies for benefits (e.g., veteran’s
benefits) come from same GENERAL FUND (i.e., US Treasury)
(2) DO NOT DEDUCT: if monies are from separate SPECIFIC FUNDS (i.e.,
Social Security)
D.
Cases:
1. In an anti-trust tort action, where FACT of damage was certain, AMOUNT of damage need be
only reasonably certain (Story Parchment v. Paterson Parchment)
2. Under the American Rule, deprivation of the CHANCE TO WIN a sporting event does not
present a basis for tort liability (Youst v. Longo)
3. Once County repudiated, other party had no right to continue construction of bridge, thus
increasing County’s damages (Rockingham v. Luten Bridge)
4. Court ruled that wrongfully discharged actress had not duty to accept inferior and dissimilar
employment in order to MITIGATE DAMAGES (Parker v. 20th Century Fox)
5. Court ruled that plaintiff did not have a extraordinary duty to mitigate; and thus did not have to
seek psychological services she could not afford or sell her business (Garcia v. Wal-Mart)
6. Court rules that injured plaintiff has a reasonable duty to undergo ordinary and NONDANGEROUS SURGERY if it mitigates damages (Lobermeier v. General Telephone)
7. Court does not deduct payments by Blue Cross from injured plaintiff’s damages b/c of the
COLLATERAL SOURCE RULE (Helfend v. Southern California Rapid Transit)
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X.
Punitive Damages
A.
Generally
1. Objectives:
a) To punish
b) To deter
B.
Employer Liability
1. Employer is liable for punitive damages of his employee if:
a) Employer participated in wrongful conduct
b) Employer authorized wrongful conduct
c) Employer ratified wrongful conduct
d) If conduct was by a manager or supervisor acting within the scope of employment
e) If employer recklessly employed an unfit agent
C.
Standard of Review
1. CA Standard:
a) OPPRESSION: Despicable conduct subjecting person to cruel and unjust hardship
with conscious disregard for that person’s rights
b) FRAUD: Intentional misrepresentation, deceit, or concealment of material fact known
to D with intention of depriving person of property or rights or causing injury
c) MALICE: Conduct intended to cause injury, with a willful and conscious disregard of
the rights or safety of others (includes RECKLESSNESS)
2. Burden of Proof: Clear and convincing
3. Procedural:
a) Upon D’s request, BIFURCATION:
(1) Trial #1  Amount of compensatory + whether to allow punitive damages
(2) Trial #2  Amount of punitive damages
(a) D’s financial affairs and net worth
(b) Past punitive damages for same wrongful act
(c) Any other circumstances
b) Judges can review and reduce EXCESSIVE punitive damages
4. Nominal Damages: Courts are mixed on whether to allow punitive damages for nominal
damages awards
D.
Products Liability
1. Generally, punitive damages are available for products liability
2. Look at the CONDUCT OF DEFENDANT (not the cause of action)
a) Rationale:
(1) Compensatory damages do not adequately deter
(2) Need to give plaintiff incentive to sue
(3) Companies can only raise prices so much
(4) Shareholders inherently take risks anyways
3. ONE-BITE RULE (REJECTED)
a) Most JDX reject the ONE-BITE RULE
b) Courts acknowledge problem of OVERDETERRENCE with multiple plaintiffs in
MASS TORT actions
c) Problem is off-set by using BIFURCATION
E.
Contracts
1. Generally, punitive damages are NOT available for breach of contract
2. Exceptions:
a) Where breach of contract constitutes an INDEPENDENT TORT
b) Common carriers
c) Insurance company denies claim on bad faith
d) Public official discharges a duty
e) Breach of fiduciary duty
f)
Breach of employment contract in bad faith
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F.
Constitutional Limits
1. 8th Amendment:
a) “No excessive fines”
b) Punitive damages are NOT fines  Does NOT apply
2. 14th Amendment:
a) Procedural Due Process Prong:
(1) Requires JUDICIAL REVIEW OF AMOUNT for excessive punitive damages
(2) Requires specific JURY INSTRUCTION on criteria for punitive damages
b) Substantive Due Process Prong:
(1) Supreme Court’s Three Guide Posts:
(a) Degree of Reprehensibility
(b) Ratio (of punitive-to-actual damages)
(i) Must be single digit (State Farm)
(c) Comparable sanctions
(2) States cannot impose punitive damages for conduct occurring outside
jurisdiction where conduct is legal
G. Cases:
1. Court held that University’s indifference towards ‘hazing’ did not satisfy malice requirement for
vicarious liability for punitive damages (Brueckner v. Norwich University)
2. Court held that defendant may request a BIFURFCATED TRIAL to determine amount of
punitive damages (Hodges v. SC Toof)
3. Court rules that punitive damages are available for PRODUCT LIABILITY case, because the
court focuses on the DEFENDANT’S CONDUCT, not the cause of action (Wangen v. Ford)
4. Court acknowledges problem with MULTIPLE P’s FOR ONE INJURY in mass tort cases, but
notes BIFURCATION can off-set (WR Grace v. Waters)
5. Court rules that punitive damages are not available for breach of contract unless the breach
constitutes an INDEPENDENT TORT (Strum v. Exxon)
6. Supreme Court ruled that JURY INSTRUCTION and JUDICIAL REVIEW of AMOUNT OF
PUNITIVE DAMAGES are procedural safeguards for Due Process (Honda v. Oberg)
7. Supreme Court rules that there are Due Process substantive limits on punitive damages, and
provides THREE GUIDE POSTS for determining excessiveness (BMW v. Gore)
8. Court applies THREE GUIDE POSTS test to find that punitive damages award is excessive for
lack reprehensibility, 17-to-1 ratio, and low sanctions (In re Exxon Valdez)
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XI. Restitution
A. Generally
1. Restitution is civil liability based upon UNJUST ENRICHMENT and focuses on D’s GAIN
2. Quasi-contract (implied-in-law): Fiction designed to oblige payment to P for unjust enrichment
3. Quantum meruit: Recovery for reasonable value of beneficial services rendered or materials
furnished where:
a) There is no express contract
b) Retention of benefit would constitute unjust enrichment
4. Elements:
a) Defendant received a benefit
b) Receipt of benefit unjustly enriched Defendant at Plaintiff’s expense
c) In good conscience, Defendant should repay Plaintiff (b/c of an “expectation to pay”)
5. Generally, familial and spousal relationships preclude restitution
6. Property: Measure of recovery for restitution for wrongly leased property is the full amount of
rent received
B.
Contracts
1. When one party breaches, non-breaching party may CHOOSE:
a) Rescission and restitution
(1) No need for restitution analysis b/c we already have a contract
(2) Essentially, ‘undoes the deal’ or returns parties to STATUS QUO
b) Treating as anticipatory breach and seek damages
c) Go forward with contract
2. Attorney’s fees:
a) Most jurisdictions do NOT give expectation damages for discharging a lawyer
b) Courts are worried about chilling client’s ability to discharge their lawyer
c) Instead, RESTITUTION is awarded (where lawyer is fired before case completes)
(1) Restitution (quantum meruit) = [Hourly rate] x [# hours] + [Costs]
(2) EXCEPTION: After a successful recovery, a lawyer can recover expectation
damages if only payment remains (i.e., contingent fee)
C.
Suit in Assumpsit (Waiver of Tort )
1. Generally
a) Based on quasi-contracts
b) Plaintiff must first WAIVE TORT to sue in assumpsit
c) Courts will IMPLY a contract for:
(1) “Money had & received”  Profit a wrongdoer received at expense to P
(2) “Goods sold & delivered”  [Fair market value] of converted goods
d) Advantages of Suit in Assumpsit:
(1) STATUTE OF LIMITATIONS for contracts is 4 years
(2) If D resells goods, P could get profits (“money had & received”)
(3) Disadvantage: No punitive damages
D.
Constructive Trust
1. Generally
a) Constructive trust is a restitutionary device that imposes an equitable duty on D
(constructive trustee) to convey property acquired under certain circumstances to
the P (constructive beneficiary):
(1) Fraud
(2) Mistake
(3) Abuse of confidential relationship to gain an unfair advantage
(a) Doctor-patient
(b) Investor-stock broker
(c) Parents-children
b) There must be a SEVERABLE interest (else see Equitable Liens below)
c) Advantages of Constructive Trusts
(1) Beneficiary will have FIRST PRIORITY over other creditors
(2) Beneficiary can obtain property (via TRACING) which has been transferred
to a 3rd party UNLESS she is a bona fide purchaser
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E.
Equitable Liens
1. Generally
a) Equitable lien is an encumbrance on property available only when P can ‘trace
misappropriated property to its product’
b) An equitable lien is a ‘security interest’ in the property
2. Disadvantages of equitable liens
a) Takes more time to realize payment of lien b/c P must wait for FORECLOSURE
3. Equitable Lien v. Constructive Trust
a) General rule: If you can get a constructive trust, you can instead get an equitable lien
(1) Use equitable lien when property value has declined
(2) Use equitable lien when there is NOT a severable interest in D’s property
(3) Use constructive trusts when there is an increase in value of funds
4. Improvements to Property
a) Generally, where non-severable improvements have been made (with consent of
owners) P is entitled to an equitable lien
F.
Cases:
1. Court awards RESTITUTION to ex-wife b/c she conferred an extraordinary benefit to exhusband (tuition for law school) with an expectation of payment later (Pyeatte v. Pyeatte)
2. Court focuses on D’s GAIN and awards full rent for wrongful lease of property, even though P
suffered no actual damages (Monarch Accounting Supplies v. Prezioso)
3. Court rules that in breach of contract case, rescission and restitution will return parties to
STATUS QUO, and may even afford the breaching party a remedy (Alder v. Drudis)
4. Court rules that wrongfully discharged attorney is entitled to full contingent fee b/c case had
already successfully settled when client discharged him (Kelner v. 610 Lincoln Rd.)
5. Court rules that P may sue IN ASSUMPSIT for D’s failure to return cylinders, thereby awarding
FMV of goods and utilizing UCC Statute of Limitations (Taylor’s Fire Prevention v. Coca Cola)
6. Court imposes a CONSTRUCTIVE TRUST upon bribe money received by a public official in
(Cook County v. Barrett)
7. Court places an EQUITABLE LIEN on parent’s house for promissory fraud where parents
never intended to repay loan from daughter (Middlebrooks v. Lonas)
8. Court places EQUITABLE LIEN on ex-husband’s home b/c of ex-wife’s improvements; but
does not use constructive trusts b/c house is not severable (Robinson v. Robinson)
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