REMEDIES
Spring 2005
Prof. Lind
I.
OVERVIEW
A.
Introduction
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B.
The study of judicial civil remedies is about what lawyers and courts can actually do
to help someone who has been, or is about to be, wronged.
Classifications of Remedies
1.
Substitutionary versus Specific Remedies
-
Substitutionary remedies occur when P receives money as a substitute for
the right which was violated.
-
Specific remedies operate to restore to P the exact item or state of being of
which she was wrongfully deprived.
-
Specific and substitutionary relief are not necessarily alternatives; it is
often necessary to award both specific and substitutionary relief in order to
make P completely whole.
2. The Four Major Remedial Categories: Damages
Remedies, Coercive Remedies, Declaratory Remedies, and Restitutionary
Remedies
a.
Damages Remedies
-
b.
c.
Damages are substitutionary remedies. The primary forms are
compensatory damages and punitive damages. Other forms include
nominal, statutory and liquidated damages. See page 3 for
descriptions of each form.
Coercive Remedies
-
Coercive remedies are specific remedies and are capable of being
enforced through the court’s contempt power. Coercive remedies
are the most effective and powerful remedies wielded by the courts
today.
-
The primary forms of coercive remedies are injunction and
specific performance. When the court orders to do something it is a
mandatory injunction. When it orders someone to refrain it is a
prohibitory injunction.
-
The goal or purpose of coercive remedies is to prevent irreparable
harm before it occurs.
Declaratory Remedies
-
Declaratory relief is neither substitutionary nor specific, in that no
court order or directive results from the action.
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d.
The goal or purpose of declaratory relief is simply to provide an
authorative pronouncement regarding the rights, obligations or
legal relationship of the parties.
Restitutionary Remedies
-
The primary specific forms are constructive trust, equitable
subrogation, rescission and reformation, accounting for profits,
ejectment and replevin. The primary substitutionary forms are
equitable lien and quasi contract.
-
The goal and purpose of restitutionary remedies is to prevent
defendant’s unjust enrichment, by making defendant give back that
which defendant wrongfully or unjustly gained at plaintiff’s
expense.
3.
-
The distinction between the two still makes a difference in five contexts.
See page 7.
4.
C.
D.
Provisional versus Final Remedies
-
Provisional injunctive relief, in the form of a preliminary injunction or
temporary restraining order, can provide critical protection pending trial on
the merits to a plaintiff who makes a very strong showing of the need for
such extraordinary relief.
-
Obviously, they can only be justified in exigent circumstances to prevent
irreparable harm from occurring before the merits of who’s right and who’s
wrong can be adjudicated.
Enforcement of Remedies
-
All a money judgment really gives a victor is an adjudication of liability entered into
the official record. Nothing happens, unless P takes further action.
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Coercive remedies are “in personam” commands which, if not obeyed, can subject
D to contempt penalties such as stiff fines or jail, until she obeys the court’s
commands.
-
Courts also use the contempt power against lawyers, litigants and witnesses to
protect dignity and order in the courtroom.
Choice of Remedies
-
II.
Legal versus Equitable Remedies
One reason why good lawyers always think, early on, about rights and remedies is
that in the vast majority of cases there are alternative claims, legal theories and
remedies available – some of which are inconsistent with each other or could become
unavailable if the putative P is not carefully advised.
EQUITY AND EQUITABLE REMEDIES
A.
A Historical Perspective
1. The merger of law courts and equity courts did not
eliminate the use of equitable remedies or the limitations and conditions
applicable top those remedies.
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2. Over time, as equity courts heard more petitions,
they began to develop “rules” or “maxims” governing equitable relief.
B.
a.
He who comes into equity must come with clean hands;
b.
He who seeks equity must do equity;
c.
Equity is a court of conscience;
d.
Equity does not suffer a wrong to go without a remedy;
e.
Equity abhors a forfeiture;
f.
Equity regards as done that which ought to be done;
g.
Equity delights to do justice and not by halves;
h.
Equitable relief is not available to one who has an adequate remedy at
law;
i.
Equitable relief is discretionary;
j.
Equity aids the vigilant, not those who slumber on their rights;
k.
Equity regards substance rather than form;
l.
Equity acts in personam;
m.
Equity is equality;
n.
Equity follows the law;
o.
Equity will not aid a volunteer;
p.
Where the equities are equal, the law will prevail;
q.
Equity imputes an intent to fulfill an obligation;
r.
Where the equities are equal, the first in time will prevail.
The Development of Equity in the United States
1. With merger, most jurisdictions have abolished
distinctions between legal and equitable actions. Rule 2 of the Federal Rules of
Civil Procedure is illustrative providing that “there shall be one cause of action
known as the ‘civil action.’”
C.
Equitable Remedies Today
1.
Standards for the Availability of Equitable
Relief
a.
Conscience and Equity
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a.
b.
Equitable Remedies Are Granted In Personam
a.
c.
Equitable remedies are only available when “equity” and
“conscience” demand them. Court’s use the maxims as well as
their own sense of morality.
When a court renders an “in personam” judgment, it orders
the defendant to do, or refrain from doing, some act. A
defendant who refuses to comply can be held in contempt and
subjected to prison or fine.
Inadequacy of Legal Remedy/Irreparable Harm
a.
Equitable relief is not available except when plaintiff’s legal
remedy is inadequate. This principle is also known as the
“irreparable harm” requirement.
b.
CASE: Fortner v. Wilson, (1950). Fortner’s rule was codified
in Uniform Commercial Code, § 2-716: “specific performance
may be decreed where the goods are unique or in other proper
circumstances.”
c.
CASE: Schiller v. Miller, (1993). Injunctions may not be
granted for the retention of personal property unless it is found
to be unique or otherwise peculiar, and unless the plaintiff
demonstrates that there is no adequate remedy at law.
d.
There is no general rule for determining when harm is or is
not irreparable, in some circumstances equitable relief is so
routinely granted that categories of inadequacy have emerged.
The basic categories are:
i. Inability to restore or buy a substitute with
money. This category is comprised primarily of
property which is unique or unduly difficult to
replace with an equivalent or important personal
interest or civil rights.
ii.
Absence of other remedy.
iii.
Damages are too difficult to estimate.
iv.
Problems with collecting a money judgment.
v. Multiple judicial proceedings will be
necessary.
vi. Other procedural or practical difficulties with
legal remedies (e.g., pre-trial delay, jurisdictional
problems, immunity rules, etc.).
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d.
D.
Equitable Relief is Discretionary
a.
A court may deny equitable relief even though plaintiff’s
legal remedy is inadequate.
b.
CASE: Georg v. Animal Defense League, (1950). Even
though the presence of the proposed animal shelter may result
in some annoyance to appellants, their remedy is not by way
of injunction but they are relegated to an action for damages.
c.
CASE: Grossman v. Wegman’s Food Markets, Inc., (1973).
Contracts which require the performance of varied and
continuous acts will not, as a general rule, be enforced by
courts of equity, because the execution of the decree would
require such constant superintendence as to make judicial
control a matter of extreme difficulty.
Equitable Defenses
1.
Unclean Hands Doctrine
a.
The “unclean hands” doctrine states that “he who comes to equity
must come with clean hands.” Equity will deny relief to a plaintiff who
comes with “unclean hands.”
b.
CASE: Sheridan v. Sheridan, (1990). No one shall be allowed to
benefit by his own wrongdoing, nor enrich himself as a result of his
own criminal acts.
c.
CASE: Seagirt Realty Corp. v. Chazanof, (1963). Exception to unclean
hands. The clean hands doctrine only applies when the plaintiff has
acted unjustly in the very transaction of which he complains.
d.
CASE: American University v. Wood, (1920). A court of equity is a
court of conscience, and will exercise its extraordinary powers only to
enforce the requirements of conscience. It is no part of its function to
aid a litigant in the promotion of a fraud upon the public.
e.
“Unclean hands,” includes all misconduct and wrongdoing that is
sufficiently related to the plaintiff’s claim. Almost any conduct
considered to be unfair, unethical or improper – including, of course,
the illegal – can be raised as a bar against equitable relief.
2.
Unconscionability
a.
Since equity developed as a “court of conscience,” courts feel free to
deny equitable relief on the grounds of conscience.
b.
CASE: Campbell Soup Co. v. Wentz, (1948). The contract involved is
too hard a bargain and too one-sided an agreement to entitle the
plaintiff to relief in a court of conscience.
3.
a.
Laches
Laches is any unreasonable delay by the plaintiff in instituting or
prosecuting an action under circumstances where the delay causes
prejudice to the defendant.
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b.
CASE: Stone v. Williams, (1989). Plaintiff in asserting her rights was
guilty of unreasonable delay that prejudiced the defendant because
there was no excuse for the delay in filing suit and evidence was lost.
c.
CASE: City of Eustis v. Firster, (1959). The test of laches is whether
there has been a delay which has resulted in the injury, embarrassment,
or disadvantage of any person, but particularly the persons against
whom relief is sought.
d.
CASE: Nahn v. Soffer, (1991). In determining whether the doctrine of
laches applies in a particular case, an examination is made of the
“length of delay, the reasons therefor, how the delay affected the other
party, and the overall fairness in permitting the assertion of the claim.”
4.
E.
Estoppel
a.
Estoppel is a doctrine that can be used both offensively and
defensively.
b.
CASE: Feinberg v. Pfeiffer Company, (1959). A promise which the
promisor should reasonably expect to induce action or forbearance of a
definite and substantial character on the part of the promise and which
does induce such action or forbearance is binding if injustice can be
avoided only by enforcement of the promise.
c.
CASE: O’Sullivan v. Bergenty, (1990). Any claim of estoppel is
predicated on proof of two essential elements: the party against whom
estoppel is claimed must do or say something calculated or intended to
induce another party to believe that certain facts exist and to act on that
belief; and the other party must change its position in reliance on those
facts, thereby incurring some injury.
The Right to Trial by Jury
1. CASE: Dairy Queen, Inc. v. Wood, (1962). Where
both legal and equitable issues are presented in a single case, only under the
most imperative circumstances, circumstances which in view of the flexible
procedures of the Federal Rules we cannot now anticipate, can the right to a jury
trial of legal issues be lost through prior determination of equitable claims.
2. CASE: Ross v. Bernhard, (1970). The right to jury
trial attaches to those issues in derivative actions as to which the corporation, if
it had been suing in its own right, would have been entitled to a jury.
3. CASE: C & K Engineering Contractors v. Amber
Steel Company, Inc., (1978). Because plaintiff’s suit for damages for breach of
contract was based entirely upon the equitable doctrine of promissory estoppel,
the gist of the action must be deemed equitable in nature and, under well
established principles, neither party was entitled to a jury trial as a matter of
right.
III.
ENFORCEMENT OF EQUITABLE DECREES
A.
Contempt Defined
1. “Contempt” is broadly defined as an offense
against the dignity of a court.
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2. CASE: In re Little, (1972). The vehemence of the
language used in court is not alone the measure of the power to punish for
contempt. The fires which it kindles must constitute an imminent, not merely a
likely, threat to the administration of justice. The danger must not be remote or
even probable; it must immediately imperil.
B.
Civil v. Criminal
1.
Civil and Criminal Contempt Distinguished
a.
CASE: United States v. Professional Air Traffic Controllers
Organization, (1982). The purpose of a criminal contempt proceeding
is the vindication of the court’s authority by punishment through the
fine or imprisonment of the contemnor for his past conduct. Civil
contempt proceedings are for the purpose of coercing compliance with
the orders of the court and/or to compensate complainant for losses
sustained by defendant’s noncompliance. A definite fine which is
neither compensatory, nor conditioned on future violations of the court
order is punitive and can be imposed only in criminal contempt
proceedings.
b.
CASE: Yates v. United States, (1957). When a witness is jailed for
civil contempt, it is inappropriate to hold the witness in jail after the
grand jury’s term ends. Since the witness can no longer purge the
contempt, no coercive reason remains for keeping the witness in jail.
However, the judge may hold the witness in criminal contempt, and
impose a punishment for a continued refusal to testify.
c.
CASE: Bagwell v. International Union, (1992). The punishment,
whether fine or imprisonment, is deemed to be criminal if it is
determinate and unconditional, and such penalties “may not be imposed
on someone who has not been afforded the protections that the
Constitution requires of such criminal proceedings.” The punishment is
deemed to be civil if it is conditional, and a defendant can avoid such a
penalty by compliance with a court’s order. Civil contempt sanctions
are either compensatory or coercive. Compensatory, civil contempt
sanctions compensate a plaintiff for losses sustained because a
defendant disobeyed a court’s order. Coercive, civil contempt sanctions
are imposed to compel a recalcitrant defendant to comply with a court’s
order.
2.
Civil Contempt Damages
a.
CASE: Time-Share Systems, Inc. v. Schmidt, (1986). If any actual loss
or injury to a party in an action or special proceeding, prejudicial to his
right therein, in caused by such contempt, the court or officer, in
addition to the fine or imprisonment imposed therefore, may order the
person guilty of the contempt to pay the party aggrieved a sum of
money sufficient to indemnify him and satisfy his costs and expenses,
including a reasonable attorney’s fee incurred in the prosecution of
such contempt. Indemnity must be based on proof of damages actually
suffered or it cannot be sustained.
b.
CASE: Vermont Women’s Health Center v. Operation Rescue, (1992).
When imposed as a coercive sanction, the fine must be purgeable – that
is, capable of being avoided by defendants through adherence to the
court’s order. Further, the situation must be such that it is easy to gauge
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the compliance or noncompliance with an order. The fine will be due
only upon a further violation of the injunction by one of the class of
persons to which it is directed, with service or actual notice of its
provisions.
C.
Procedural Requirements
1. CASE: In re Yengo, (1980). When the contempt is
in the presence of the court, the judge may act summarily without notice or
order to show good cause. On other occasions, the proceedings shall be on
notice and on an order for arrest or an order to show cause. Supreme Court’s
dual test for summary contempt powers: (1) the act or omission must occur in
the presence of the court so that no further evidence need be adduced for the
judge to certify to the observation of the contumacious behavior and (2) the act
must impact adversely on the authority of the court.
2. CASE: Bloom v. Illinois, (1968). Criminal
contempt is a crime to which the jury trial provisions of the Constitution apply.
3. CASE: Illinois v. Allen, (1970). There are three
constitutionally valid ways to handle an unruly defendant: (1) bind and gag him,
thereby keeping him present; (2) cite him for contempt; (3) take him out of the
courtroom until he promises to conduct himself properly.
D.
The Duty to Obey: Collateral Challenges
1. CASE: United States v. United Mine Workers of
America, (1947). An order issued by a court with jurisdiction over the subject
matter and person must be obeyed by the parties until it is reversed by orderly
and proper proceedings. (Collateral Bar Rule) Violations of an order are
punishable as criminal contempt even though the order is set aside on appeal, or
though the basic action has become moot.
2. CASE: Walker v. City of Birmingham, (1967).
Order cannot be disobeyed even if Constitutionally invalid. (Collateral Bar
Rule)
3. CASE: In re Providence Journal Company,
(1986). There is an exception to the Collateral Bar Rule for court orders that are
transparently invalid. Still, as a general rule, if the court reviewing the order
finds the order to have any pretense to validity at the time it was issued, the
reviewing court should enforce the collateral bar rule.
IV.
INJUNCTIONS
A.
Nature and Purpose of Injunctive Relief
1. Courts use injunctions to order litigants to engage
in, or refrain from engaging in, an act. Sometimes injunctions are classified as
being either mandatory or prohibitory: an injunction which compels an act is
referred to as mandatory, while one which forbids an act is a prohibitory
injunction.
2. Any in personam order which is enforceable by
contempt is in fact an injunction.
B.
Standards for Issuance of Injunctive Relief
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- Some injunctions are permanent in nature: they are issued after a determination
of the merits of a lawsuit and are designed to apply prospectively and
permanently unless modified or dissolved.
- Other injunctions are temporary in nature including the temporary restraining
order (TRO) and the preliminary injunction (a.k.a. temporary injunction).
o A preliminary injunction is issued at the beginning of litigation and is
designed to prevent irreparable harm from occurring during the
pendency of a suit (i.e., before the merits can be decided).
o A TRO can be issued ex parte and is designed to maintain the status
quo until a hearing can be held on whether to grant a preliminary
injunction.
1.
a.
b.
Requirements for Provisional Relief
In order to obtain either a TRO or a preliminary injunction, a plaintiff
must show that immediate and irreparable injury will result absent the
injunction.
a.
When a preliminary injunction is sought, plaintiff must show
that this injury will occur during the pendency of the lawsuit.
b.
When a TRO is sought, plaintiff must show that it will occur
before a hearing can be heard on whether to grant a
preliminary injunction.
CASE: Hughes v. Cristofane, (1980). In order to obtain relief by a
temporary restraining order under Rule 65 of the Federal Rules, the
plaintiffs must show:
i. That unless the restraining order issues, they
will suffer irreparable harm;
ii. That the hardship they will suffer absent the
order outweighs any hardship the defendants would
suffer if the order were to issue;
iii. That they are likely to succeed on the merits
of their claims;
iv. That the issuance of the order will cause no
substantial harm to the public; and
v.
c.
That they have no adequate remedy at law.
CASE: Washington Capitols Basketball Club, Inc. v. Barry, (1969).
The purpose of the preliminary injunction is to maintain the status quo
between the litigants pending final determination of the case. In order
for plaintiff to succeed in its motion for a preliminary injunction, it is
fundamental that it show at least first, a reasonable probability of
success in the main action and second, that irreparable damage would
result from a denial of the motion.
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d.
CASE: American Hospital Supply Corporation v. Hospital Products,
LTD., (1986). A district judge asked to decide whether to grant or deny
a preliminary injunction must choose the course of action that will
minimize the costs of being mistaken.
2.
Hearing Requirement
a.
In general, judicial orders should only be issued after a contested
hearing. The TRO is unique because it can be granted ex parte.
b.
CASE: In re Vuitton et Fils S.A., (1979). A temporary restraining order
may be granted without written or oral notice to the adverse party or his
attorney only if (1) it clearly appears from specific facts shown by
affidavit or by the verified complaint that immediate and irreparable
injury, loss, or damage will result to the applicant before the adverse
party or his attorney can be heard in opposition, and (2) the applicant’s
attorney certifies to the court in writing the efforts, if any, which have
been made to give the notice and the reasons supporting his claim that
notice should not be required.
c.
CASE: American Can Company v. Mansukhani, (1984). Ex parte
temporary restraining orders should be restricted to serving their
underlying purpose of preserving the status quo and preventing
irreparable harm just so long as is necessary to hold a hearing, and no
longer.
3.
Persons Bound
a.
A TRO or preliminary injunction is binding only upon the parties to
the action, their officers, agents, servants, employees, and attorneys,
and upon those persons in active concert or participation with them
who receive actual notice of the order by personal service or otherwise.
b.
CASE: Alemite MFG. Corp. v. Staff, (1930). The only occasion when a
person not a party may be punished is when they either abet the
defendant, or are legally identified with him.
c.
CASE: State University of New York v. Denton, (1970). Persons who
are not connected in any way with the parties to the action, are not
restrained by the order of the court.
d.
CASE: United States v. Hall, (1972). WHAT IS THE RULE
HERE????
e.
CASE: Golden State Bottling Co., Inc. v. NLRB, (1973). A bona fide
purchaser, acquiring, with knowledge that the wrong remains
unremedied, the employing enterprise which was the locus of the unfair
labor practice, may be considered in privity with its predecessor.
4.
Notice Requirement
a.
A TRO or preliminary injunction is binding only on those who receive
actual notice of the order by personal service or otherwise.
b.
CASE: The Cape May & Schellinger’s Landing R.R. Co. v. Johnson,
(1882). Where the charge is that the defendant has willfully contemned
the authority of the court, all that need be shown is that he knew of the
existence of the order at the time he violated it. Notice, to be sufficient,
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need possess but two requisites – first, it must proceed from a source
entitled to credit; and second, it must inform the defendant clearly and
plainly from what act he must abstain.
c.
CASE: Midland Steel Products Co. v. International Union, United
Automobile, Aerospace and Agricultural Implement Workers of
America, Local 486, (1991). Criminal contempt must be proven beyond
a reasonable doubt. Proof of the elements of criminal contempt may be
established by circumstantial evidence.
d.
CASE: Vermont Women’s Health Center v. Operation Rescue, (1992).
Plaintiffs must show that defendants acted in concert or participation
with named parties, that the order was specific and unambiguous, and
that they violated the order with actual knowledge of its mandate.
5.
Bond Requirement
a.
One who obtains a preliminary injunction or a TRO must usually post
security to protect the defendant against loss.
b.
CASE: Coyne-Delany Co., Inc. v. Capital Development Board, (1983).
A prevailing defendant is entitled to damages on the injunction bond
unless there is good reason for not requiring the plaintiff to pay in the
particular case. A good reason for not awarding such damages would
be that the defendant had failed to mitigate damages.
c.
CASE: Smith v. Coronado Foothills Estates Homeowners Ass’n, Inc.,
(1977). The majority holds that recovery for wrongful injunction is
limited to the amount of the bond unless malicious prosecution is
shown. A minority allows for damages in excess of the bond amount
when the bond amount is patently inadequate.
d.
CASE: Continuum Co., Inc. v. Incepts, Inc., (1989). If a defendant
might suffer damages in excess of the bond amount, the bond amount
may be increased if it doesn’t impose an undue hardship on the
plaintiff.
6.
Stays
a.
One who believes that a TRO or preliminary injunction was
improperly granted can seek relief from the court that issued the order
if done within 2 days.
b.
If the trial court refuses the relief, the party against whom the relief
was granted can seek a stay from an appellate court.
c.
CASE: Sierra Club v. United States Army Corps of Engineers, (1984).
A court may modify a final or preliminary injunction only where
conditions have so changed as to make such relief equitable, i.e., a
significant change in the law or facts.
d.
CASE: Washington Metropolitan Area Transit Commission v. Holiday
Tours, Inc., (1977). Criteria regarding stays: (1) Has the petitioner
made a strong showing that it is likely to prevail on the merits of its
appeal? (2) Has the petitioner shown that without such relief, it will be
irreparably injured? (3) Would the issuance of a stay substantially harm
other parties interested in the proceedings? (4) Where lies the public
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interest? A court may exercise its discretion to grant a stay if the
movant has made a substantial case on the merits.
C.
Framing the Injunction
1. Every order granting an injunction and every
restraining order shall set forth the reasons for its issuance; shall be specific in
terms; shall describe in reasonable detail, and not by reference to the complaint
or other document, the act or acts sought to be restrained.
2. CASE: Murray v. Lawson, (1994). Injunctions are
supposed to be specific in terms; and describe in reasonable detail the act or acts
sought to be restrained.
3. CASE: Peggy Lawton Kitchens, Inc. v. Hogan,
(1989). To constitute civil contempt, there must be a clear and undoubted
disobedience of a clear and unequivocal command.
4. CASE: Madsen v. Women’s Health Center, Inc.,
(1994). When evaluating a content-neutral injunction, we think that our standard
time, place, manner analysis is not sufficiently rigorous. We must ask instead
whether the challenged provisions of the injunction burdens no more speech
than necessary to serve a significant government interest.
D.
Experimental and Conditional Injunctions
- In some cases, courts are moved by the balance of equities to enter partial
(experimental) injunctions or conditional injunctions.
1. CASE: Boomer v. Atlantic Cement Company,
(1970). When the granting of an injunction would place an undue hardship on a
defendant industry as a whole, the court should grant the injunction on condition
of the payment of permanent damages to plaintiffs which would compensate
them for the total economic loss to their property present and future caused by
defendant’s operations.
2. CASE: Spur Industries, Inc. v. Del E. Webb
Development Co., (1972). Conditional injunctions allow courts to consider the
following remedial options: 1) deny all relief (defendant wins); 2) grant an
injunction permanently abating the nuisance (plaintiff wins); award Boomerstyle injunctive relief, but award plaintiff damages (partial win for each side);
and award Spur-style injunctive relief, but only if plaintiff pays for the cost of
abatement (a win for both sides?).
E.
Permanent Injunctions
- CASE: Garcia v. Sanchez, (1989). For removal of trees as a nuisance, the
damage must encompass more than just damage to plaintiff’s plant life in
order for an injunction to be ordered.
1.
a.
Decrees Affecting Third Parties
CASE: Hills v. Gautreaux, (1976). In the event of a Constitutional
violation all reasonable methods are available to formulate an effective
remedy, and every effort should be made by a federal court to employ
those methods to achieve the greatest possible degree of relief, taking
into account the practicalities of the situation.
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b.
CASE: General Building Contractors Association, Inc. v.
Pennsylvania, (1982). Remedial powers of the federal courts can only
be exercised on the basis of a violation of the law and can extend no
further than required by the nature and the extent of that violation.
2.
Modification
-
On motion, and in such terms as are just, the court may relieve a party
from a final judgment for the following reasons: it is no longer
equitable that the judgment should have prospective application.
a.
CASE: Ladner v. Siegel, (1930). The modification of a decree in a
preventative injunction is inherent in the court which granted it, and
may be made, (a) if, in its discretion judicially exercised, it believes the
ends of justice would be served by a modification, and (b) where the
law, common or statutory, has changed, been modified or extended,
and (c) where there is a change in the controlling facts on which the
injunction rested.
b.
CASE: Board of Education v. Dowell, (1991). Compliance with an
injunction may sometimes be enough to have the injunction terminated
if the compliance was enough to allow the injunction to dissolved (look
at the purpose of the injunction and the current effects after
compliance).
c.
CASE: Rufo v. Inmates of the Suffolk County Jail, (1992). A party
seeking modification of a consent decree must establish that a
significant change in facts or law warrants the revision of the decree
and that the proposed modification is suitably tailored to the changed
circumstance.
3.
Statutory Injunctions: The Effect of Legislation
on Equity
a.
F.
CASE: Weinberger v. Romero-Barcelo, (1982). In determining
whether statutes allow injunctive relief that violates a statute, the
question becomes one of statutory construction and legislative intent.
The Limits of Equity
1. CASE: Lynch v. UHlenhopp, (1956). “Religion
Rearing Case” A court will strike portions of an injunction, thus making them
unenforceable, if they are vague or uncertain. In this case, the mother was to
raise the child in the Catholic religion. Rearing the child in a religion is to vague
a concept to enforce.
V.
INJUNCTIONS IN CONTEXT
A.
Injunctions Against Criminal Activity
- In general, courts have been reluctant to enjoin the commission of future crimes.
1. CASE: State v. Samuels Company, Inc., (1973). A
repeated violation of a statute may receive equitable relief, not because the acts
are in violation of the statute, but because they constitute in fact a nuisance.
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2. CASE: Goose v. Commonwealth, (1947). If the
statutory violation can be construed as a nuisance, a court of equity can grant
appropriate relief.
B.
Injunctions Against Litigation
1.
State Court Injunctions Against Foreign State
Litigation
- Assuming that a state court can obtain personal jurisdiction over the parties, a
state court may have the power to order parties not to proceed with foreign
litigation (enjoin them from).
a.
CASE: James v. Grand Trunk Western Railroad Company, (1958).
Courts generally recognize foreign court’s efforts to prevent litigation
in the native court as an impediment to their jurisdiction and are free to
disregard the foreign state.
b.
CASE: Vanneck v. Vanneck, (1980). At least where the claim of a
sister state is colorable, the court must heed the statutory command to
defer adjudicating the dispute and communicate with the foreign court.
2.
State Court Injunctions Against Federal
Litigation
a.
CASE: Donovan v. City of Dallas, (1964). Generally, state and federal
courts should not interfere with or try to restrain each other’s
proceedings. An exception has been made in cases where a court has
custody of property, that is, proceedings in rem or quasi in rem. Here
the court has no power to restrain federal-court proceedings.
3.
Federal Court Injunctions Against State
Litigation
a.
CASE: Younger v. Harris, (1971). A court of the United States may
not grant an injunction to stay proceedings in a State court except as
expressly authorized by Act of Congress, or where necessary in aid of
its jurisdiction, or to protect or effectuate its judgments. Even
irreparable injury is insufficient unless it is both great and immediate.
b.
CASE: Mitchum v. Foster, (1972). In order to qualify under the
“expressly authorized” exception to the anti-injunction statute, the test
is whether an Act of Congress, clearly creating a federal right or
remedy enforceable in a federal court of equity, could be given its
intended scope only by the stay of a state court proceeding.
4.
Injunctions Against Officials
- These structural injunctions are designed to eliminate past violations and
regulate the way a school, prison, or police department functions in the future.
a.
CASE: Rizzo v. Goode, (1976). Must show that there is immediate and
irreparable harm that the officials are conducting, not just those
activities of persons under the officials.
b.
CASE: Hutto v. Finney, (1978). Here the officials themselves were
conducting the irreparable harm via non-compliance with an earlier
injunction. Therefore, it was enforced against them.
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c.
C.
CASE: Missouri v. Jenkins, (1995). Federal judges cannot make the
fundamentally political decisions as to which priorities are to receive
funds and staff, which educational goals are to be sought, and which
values are to be taught.
Extra-territorial Decrees
1.
a.
CASE: Deschenes v. Tallman, (1928). A court cannot convey title to
land located in a foreign jurisdiction. A court of equity, having
authority to act upon the person, may indirectly act upon real estate in
another state, through the instrumentality of the authority over the
person.
b.
CASE: Burnley v. Stevenson, (1873). Courts cannot enforce the
performance of foreign decrees by compelling the conveyance through
its process of attachment; but when pleaded in our courts as a cause of
action, or as a ground of defense, it must be regarded as conclusive of
all the rights and equities which were adjudicated and settled therein.
c.
CASE: The Salton Sea Cases, (1909). A court of equity can never
compel a defendant to do anything which is not capable of being
physically done within the territorial jurisdiction of the court. Effects of
the defendant’s acts felt within the territorial jurisdiction suffice.
2.
a.
D.
Decrees Affecting Land
Decrees Affecting Personal Property
CASE: Madden v. Rosseter, (1921). Personal property may be
managed with the help of the federal government and other states.
Injunctions Against Defamation
1. CASE: Near v. State of Minnesota, (1931). A
greater evil is committed by placing prior restraints on a publication that that of
the publication. The appropriate punishment should take place after such abuses
of the publication.
2. CASE: Kramer v. Thompson, (1991). The courts
will not enjoin a retraction of libelous claims.
E.
Privacy
1. CASE: Eastwood v. Superior Court, (1983). Any
person who knowingly uses another’s name, photograph, or likeness, in any
manner, for purposes of advertising products, merchandise, goods, or services,
or for purposes of solicitation of purchases of products without such person’s
prior consent shall be liable for any damages sustained by the person injured as a
result thereof.
2. CASE: Galella v. Onassis, (1972). The
Constitution creates a “right to be left alone.” The law of privacy comprises four
distinct kinds of invasion (1) commercial appropriation of one’s name or
likeness, (2) intrusion, (3) public disclosure of private facts and (4) publicity
which places the plaintiff in a false light in the public eye.
F.
National Security
15
1. CASE: New York Times Company v. United States,
(1971). Prior restraint may only arise when the nation is at war, during which
times no one would question but that a government might prtevent actual
obstruction to its recruiting service or the publication of the sailing dates of
transports or the number and location of troops.
G.
Leafleting
1. CASE: Organization for a Better Austin v. Keefe,
(1971). Any prior restraint on expression comes to the court with a heavy
presumption against its constitutional validity. A prior restraint on peaceful
leafleting is unconstitutional.
H.
Injunctions Against Obscenity
1. CASE: Times Film Corporation v. City of Chicago,
(1961). The liberty of speech is not absolute. Submission to a licensing board of
a film prior to exhibition is valid.
2. CASE: Freedman v. State of Maryland, (1965).
Submission of a film to a censor is only valid if 1) the burden of proving that
film is unprotected expression rests on the censor and 2) the manner in which it
is administered cannot lend an effect of finality to the censor’s determination
whether a film constitutes protected expression.
I.
Admission Cases
1. CASE: Falcone v. Middlesex County Medical
Society, (1961). Generally, courts will not interfere with membership
associations, however, here there was an association that is viewed as “an
economic necessity” which advanced the public welfare. Therefore, a properly
qualified applicant could not be denied membership.
2. CASE: Blatt v. University of Southern California,
(1970). Here there was no indication that the association was one of economic
necessity and thus plaintiff was properly not admitted.
J.
Expulsion
1. CASE: Board of Curators of the University of
Missouri v. Horowitz, (1978). To be entitled to the Due Process protections of
the 14th Amendment (notice and opportunity to be heard) it must be shown that
you were deprived of either a liberty or a property interest.
2. CASE: Tedeschi v. Wagner College, (1980).
Guidelines and rules conditioning the membership to an association must be
observed, but the violator is still entitled to review by a board if the rule calls for
one.
VI.
RESTITUTION
A.
General Principles
- The purpose of restitution is simply to prevent a defendant from retaining
benefits unjustly derived from plaintiff (“unjust enrichment”).
1. CASE: Beacon Homes, Inc. v. Holt, (1966). Even
though a reasonable mistake of fact resulted in a house being built on another’s
16
property, the owner of the property must pay the amount by which the value of
the property was increased.
2. CASE: Stewart v. Wright, (1906). If defendants are
more culpable than plaintiffs then defendant’s unjust enrichment may be
recovered.
3. CASE: Western Coach Corporation v. Roscoe.
(1982). A person who without mistake, coercion or request has unconditionally
conferred a benefit upon another is not entitled to restitution, except where the
benefit was conferred under circumstances making such action necessary for the
protection of the interests of the other or of third persons.
B.
Measuring the Enrichment
1. CASE: Frambach v. Dunihue, (1982). A court of
equity may give restitution to a plaintiff and prevent the unjust enrichment of a
defendant by imposing a constructive trust or by imposing an equitable lien
upon the property in favor of the plaintiff. However, where the plaintiff makes
improvements upon the land of another under circumstances which entitle him
to restitution, he is entitled only to an equitable lien upon the land and he cannot
charge the owner of the land as constructive trustee and compel the owner to
transfer the land to him.
2.
CASE: Bron v. Weintraub, (1964). Can’t figure out
the rule here.
3. CASE: Iacomini v. Liberty Mutual Insurance
Company, (1985). An equitable lien may be imposed to prevent unjust
enrichment in an owner whose property was improved, for the increased value
of the property. Measured by defendant’s gain.
C.
Special Restitutionary Remedies
1.
The Constructive Trust
a.
CASE: Sieger v. Sieger, (1925). Constructive trusts arise by operation
of law, without any reference to any actual or supposed intention of
creating a trust, and frequently directly contrary to such intention.
b.
CASE: Fletcher v. Nemitz, (1966). A constructive trust is one that
arises by operation of law against one who, by fraud, actual or
constructive, by duress or abuse of confidence, by commission of
wrong, or by any form of unconscionable conduct, artifice,
concealment, or questionable means, or who in any way against equity
and good conscience, either has obtained or holds the legal right to
property which he ought not, in equity and good conscience, to hold
and enjoy.
2.
a.
Equitable Lien
CASE: Leyden v. Citicorp Industrial Park, (1989). An equitable lien is
a creature of equity, is based on the equitable doctrine of unjust
enrichment, and is the right to have a fund or specific property applied
to the payment of a particular debt. A person has notice of a
constructive trust or equitable lien on a property when he knows them,
or should have known them thru reasonable inquiry.
17
b.
CASE: Jones v. Sacramento Savings and Loan Association, (1967). A
general doctrine of equity permits imposition of an equitable lien where
the claimant’s expenditure has benefited another’s property under
circumstances entitling the claimant to restitution.
c.
CASE: Rolfe v. Varley, (1993). Where debts or claims against property
are paid in good faith by another on the express or implied request of
the owner of the property, the one so paying is entitled to an equitable
lien on the property for his reimbursement. However, a person is not
entitled to such a lien if he voluntarily pays the debts of another without
such other’s request.
3.
Special Advantages of Constructive Trusts and
Equitable Liens
a.
b.
c.
Tracing
a.
CASE: G & M Motor Company v. Thompson, (1977). Where
the wrongdoer mingles wrongfully and rightfully acquired
funds, owner of wrongfully acquired funds is entitled to share
proportionately in acquired property to the extent of his
involuntary contribution.
b.
CASE: In re Allen, (1986). Neither an equitable lien nor a
constructive trust is available against a bona fide purchaser for
value. They can extend to 3rd parties if the 3rd party is not a
bona fide purchaser.
c.
CASE: Mattson v. Commercial Credit Business Loans, Inc.,
(1986). Tracing doctrine operates against innocent transferees
who receive no legal title and transferees who are not bona
fide purchasers and receive legal but not equitable title. An
innocent purchaser is one who has no reasonable grounds to
suspect that the person from whom he buys an article did not
have good title.
Priority Over Other Creditors
a.
CASE: In re Radke, (1980). A person defrauded is allowed a
preferred claim over general creditors.
b.
CASE: Cunningham v. Brown, (1924). Constructive trusts and
equitable liens get precedence over unsecured creditors who
can go after what is left.
Circumvention of Debtor Exemptions
a.
d.
CASE: Palm Beach Savings & Loan Association, F.S.A. v.
Fishbein, (1993). Can’t force the sale of a property unless
through mortgage or government tax lien.
Subrogation
a.
CASE: Wilson v. Todd, (1940). Subrogation is the
substitution of another person in the place of a creditor, so that
the person in whose favor it is exercised succeeds to the right
of the creditor in relation to the debt.
18
b.
VII.
CASE: Banton v. Hackney, (1989). Where property of one
person is used in discharging an obligation owed by another or
a lien upon the property of another, under such circumstances
that the other would be unjustly enriched by the retention of
the benefit thus conferred, the former is entitled to be
subrogated to the position of the oblige or lien-holder.
DECLARATORY JUDGMENTS
A.
Generally
1. The basic purpose of declaratory judgment is to
determine rights, obligations or status.
2.
A declaratory judgment does not act coercively.
3.
Declaratory judgments primary purpose is to
eliminate uncertainty.
B.
Case or Controversy
1. Declaratory judgments operate only in “a case of
actual controversy.” There is no exemption from requirements of standing,
subprinciples of mootness and ripeness and the prohibition against collusive
actions or advisory opinions.
2. CASE: Aetna Life Insurance Co. v. Haworth,
(1937). The controversy must be definite and concrete, touching the legal
relations of parties having adverse legal interests.
3. CASE: United Public Workers of America v.
Mitchell, (1947). Courts will not issue advisory opinions through declaratory
judgments.
C.
Jurisdiction
1. Absence of personal or subject matter jurisdiction
is fatal to declaratory judgments.
2. CASE: Skelly Oil Co. v. Phillips Petroleum Co.,
(1950). Jurisdiction means the kinds of issues which give right of entrance to
federal courts (diversity, federal question).
D.
Standards of Review
1.
Adequacy of Remedy
a.
Unlike injunctions, declaratory judgments generally are not
conditioned upon the inadequacy of remedial alternatives. Although
inadequacy of other remedies is not a prerequisite for a declaratory
judgment, courts properly exercise their discretion in denying such
relief if convinced that it would be less effective than another
methodology or is unnecessary.
b.
CASE: Community for Creative Non-Violence v. Hess, (1984). Sound
discretion withholds a declaratory judgment where it appears that a
challenged continuing practice is, at the moment adjudication is sought,
19
undergoing significant modifications so that its ultimate form cannot be
confidently predicted.
c.
CASE: Provident Tradesmens Bank & Trust Co. v. Patterson, (1968).
A federal district court should, in the exercise of discretion, decline to
exercise diversity jurisdiction over a declaratory judgment action
raising issues of state law when those same issues are being presented
contemporaneously to state courts.
d.
CASE: Katzenbach v. McClung, (1964). In cases where the state
criminal prosecution was begun prior to the federal suit, the same
equitable principles relevant to the propriety of an injunction must be
taken into consideration by federal district courts in determining
whether to issue a declaratory judgment, and that where an injunction
would be impermissible under these principles, declaratory relief
should ordinarily be denied as well.
e.
CASE: Wilton v. Seven Falls Co., (1995). The propriety of declaratory
relief in a particular case will depend upon a circumspect sense of its
fitness informed by the teachings and experience concerning the
functions and extent of federal judicial power.
2.
E.
Judicial Discretion
a.
The UDJA explicitly authorizes courts to refuse a declaratory
judgment or decree when such judgment or decree would not terminate
the uncertainty or controversy giving rise to the proceeding. Other
factors may include the availability of more effective relief, existence
of another action that will resolve the issue more comprehensively,
tactical maneuvering calculated to harass, delay or achieve res judicata,
procedural fencing, an inadequately developed record and demands of
federalism.
b.
CASE: National Wildlife Federation v. United States, (1980). Among
the factors to be considered in deciding whether to grant declaratory
relief in a particular case is the public interest vel non in resolving the
controversy.
Declaratory Judgments in Context
1.
Written Instruments
a.
A contract may be construed by a declaratory judgment either before
or after there has been a breach thereof.
b.
CASE: Federal Kemper Insurance Company v. Rauscher, (1986). This
was a dispute over the terms of coverage of an insurance policy. Once
the case in controversy requirement and diversity jurisdiction were
established, the court concluded that it could issue a declaratory
judgment.
2.
a.
Intellectual Property]
CASE: Treemond Co. v. Schering Corporation, (1941). An “actual
controversy” does not exist until the patentee makes some claim that
his patent is being infringed.
3.
20
Constitutional Claims
F.
a.
Although not statutorily prohibited, federal courts have been reluctant
top resolve constitutional controversies by means of declaratory
judgments. Such reticence is driven by the judiciary’s generally
professed inclination to avoid constitutional controversies whenever
possible.
b.
CASE: Penthouse International, LTD. v. Meese, (1991). Where it is
uncertain that declaratory relief will benefit the party alleging injury,
the court will normally refrain from exercising its equitable powers.
This is especially true where the court can avoid the premature
adjudication of constitutional issues.
The Effect of Declaratory Judgments
1. Declaratory judgments, like any final judgment
entered by a court bind the parties. Although a declaration of rights, obligations
or status effectively may resolve a controversy, both the UDJA and FDJA
provide for further relief to the extent necessary and proper. Both federal and
state law establishes that a request for declaratory relief does not preclude other
remedies, essential to a full resolution of the controversy, even if coercive in
nature.
VIII.
CONTRACT REMEDIES
A.
General Damage Principles
1.
Monetary Compensation
a.
The primary objective of contract damages law is to provide monetary
compensation that will place an aggrieved party in the same position
that would have been realized had the breaching party fully performed.
Contract damages are premised on compensation of the aggrieved party
rather than compulsion of the breaching party.
b.
CASE: Peevyhouse v. Garland Coal & Mining Company, (1962). In
building and construction contracts, the owner is entitled to the money
which will permit him to complete, unless the cost of completion is
grossly and unfairly out of proportion to the good to be attained. When
that is true, the measure is the difference in value.
2.
The Expectation Interest
a.
The expectation interest is protected by awarding the benefit of the
bargain, or “profit,” that would have been realized through
performance.
b.
CASE: Vitex Manufacturing Corporation, LTD. v. Caribtex
Corporation, (1967). In a claim for lost profits, overhead should be
treated as a part of gross profits and recoverable as damages, and
should not be considered as part of the seller’s costs.
3.
a.
Other Protected Interests
Reliance Interest
1.
The reliance interest seeks to place the aggrieved party in as
good a position as would have been realized had the contract
21
not been created. This is good when the aggrieved party
changed his or her position on reliance of the contract.
2.
b.
CASE: Security Stove & Mfg. Co. v. American Ry. Express
Co., (1932). Where a party is aware of peculiar circumstances
under which the contract is made, which will result in an
unusual loss by the other party, the breaching party is
responsible for the real damage sustained from the nonperformance.
Restitution Interest
1.
Restitution interest seeks to restore to the aggrieved party any
benefit that he or she has conferred upon the breaching party.
It is not generally preferred by plaintiffs because it is limited
to the amount that the plaintiff has conferred upon defendant.
2.
CASE: Campbell v. Tennessee Valley Authority, (1969). To
protect a party’s restitution interest, damages can be measured:
1) by the reasonable value to the other party of what he
received in terms of what it would have cost him to obtain it
from a person in the claimant’s position, or 2) the extent to
which the other party’s property has been increased in value or
his other interests advanced. Restitution is not available when
the breach gives rise to only a claim for partial damages.
4.
-
a.
b.
Other Loss and the Applicable Limitations
In addition to the benefit of the bargain, an aggrieved party is entitled
to recover any other loss that was caused by the other party’s breach of
contract. The availability of any recovery for expectancy damages is
subject to the traditional limitations of avaiodability, foreseeability, and
certainty.
Avoidability
1.
The aggrieved party cannot recover damages for any loss that
he or she could have reasonably avoided.
2.
CASE: Oloffson v. Coomer, (1973). When defendant has
materially breached the contract, the aggrieved party can 1)
for a commercially reasonable time await performance by the
repudiating party; or 2) resort to any remedy for breach.
Foreseeability
1.
CASE: Sun Maid Raisin Growers of California v. Victor
Packing Co., (1983). If a breaching party knew or should have
known that the breach would have resulted in consequential
damages of plaintiff, the breaching party is responsible for
those damages. Knowledge or reason to know can be
established by the ordinary course of business practice, or by
special circumstances beyond the ordinary course of business.
The aggrieved party must still cover in order to minimize
losses.
5.
22
Certainty
a.
Any element of loss that cannot be proven with a reasonable degree of
certainty cannot be recovered; but other elements (general damages)
can still be recovered.
b.
CASE: Handi Caddy, Inc. v. American Home Products Corporation,
(1977). There are three general principles which the courts apply to
determine when lost profits will be allowed as compensation: 1) in both
tort and contract actions, lost profits will be allowed only if their loss is
proved with a reasonable degree of certainty, 2) in both contract and
tort actions, lost profits will be allowed only if the court is satisfied that
the wrongful act of the defendant caused the lost profits, and 3) in
contract actions, lost profits will be allowed only if the profits were
reasonably within the contemplation of the defaulting party at the time
the contract was entered into.
6.
B.
Liquidated Damages
a.
Subject to certain limitations, the law generally permits parties to a
contract to agree on the amount or the manner in which damages may
be recovered for a breach.
b.
Contract remedies are intended to be compensatory in nature, not
punitive. Thus, the validity of a liquidated damages clause may be
challenged on the theory that it constitutes a penalty.
c.
CASE: Greenbach Bros., Inc. v. Alfred E. Burns, (1966). For a
liquidated damages amount to be upheld, the amount agreed upon must
represent the result of a reasonable endeavor by the parties to estimate a
fair average compensation for any loss that may be sustained. The
damages amount must also be difficult to ascertain.
Contracts In Context
1.
Sales of Goods
- Contracts for sale of goods retain the basic common-law measure of expectation
damages, but incorporate some additional measures.
a.
Buyers’ Damages
1.
Cover
i. The preferred damage measure awards the
buyer the difference between the cost of cover and
the contract price together with any incidental or
consequential damages, but less expenses saved in
consequence of the seller’s breach.
ii. CASE: Huntington Beach Union High School
Dist. v. Continental Information Systems Corp.,
(1980). The test of proper cover is whether at the
time and place the buyer acted in good faith and in a
reasonable manner, and it is immaterial that hindsight
may later prove that the method of cover used was
not the cheapest or most effective. Consequential
damages resulting from the seller’s breach include
23
any loss resulting from general or particular
requirements and needs of which the seller at the time
of contracting had reason to know and which could
not reasonably be prevented by cover or otherwise.
2.
Damages for Breach of Warranty
i. CASE: Chatlos Systems, Inc. v. National Cash
Register Corporation, (1982). The correct measure of
damages is the difference between the FMV of the
goods accepted and the value they would have had if
they had been as warranted. Award of that sum is not
confined to instances where there has been an
increase in value between date of ordering and date
of delivery.
ii. CASE: Nelson v. Logan Motor Sales, Inc.,
(1988). A common method for establishing the
difference in value between the goods as warranted
and as delivered is to prove the cost to repair the
deficient aspects of the goods.
3.
Consequential Damages
i. CASE: Erdman v. Johnson Brothers Radio
and Television Co., Inc., (1970). In order to get
consequential damages it must be shown that there
was 1) a breach of a contract that 2) proximately
caused the injury complained of.
b.
Sellers’ Damages
1.
Resale
i. CASE: Coast Trading Company v. Cudahy
Company, (1979). Under this formula, if the seller
resells in good faith and in a commercially
reasonable manner he is entitled to recover the
difference between the resale price and the contract
price together with any incidental damages allowed
under the provisions, but less expenses saved in
consequence of the buyer’s breach.
2.
Lost Profits
i. CASE: R.E. Davis Chemical Corporation v.
Diasonics, Inc., (1987). A volume seller can recoup
lost profits that are an extension from buyer’s nonacceptance.
3.
Action for Price
i.
24
CASE: Integrated Circuits Unlimited v. E.F.
Johnson Company, (1989). When the buyer fails to
pay the price as it becomes due the seller may
recover, together with any incidental damages, the
price: 1) of goods accepted or conforming goods lost
or damaged within a commercially reasonable time
after risk of their loss has passed to the buyer; and 2)
of goods identified to the contract if the seller is
unable after reasonable effort to resell them at a
reasonable price or the circumstances reasonably
indicate that such effort will be unavailing.
4.
Limitation on Specific Restitution
i. A seller who sells goods to a buyer on credit
generally does not have the right to repossess the
goods if the buyer does not pay for them. If the buyer
misrepresented his credit or is insolvent, the seller
may reclaim the goods if done with notice and within
10 days of the receipt.
ii.
2.
Only unique items warrant specific restitution.
Executory Land Sale Contracts
a.
A variety of remedies are available when a contract for the sale of land
is breached including specific performance and damages.
b.
The standard contract measure of damages applies, namely the
difference between the contract price stated in the contract and the
market value of the real property on the date of the breach.
c.
CASE: Kramer v. Mobley, (1949). Where the seller under an
executory contract for the sale of personal property breaches his
contract by failing to deliver the property, the measure of damages is
the difference, if any, between the contract price and the market value
of the property either at the time of the breach or at the time fixed for
delivery. However, if the seller is not guilty of bad faith or fraud in the
sales failure then the buyer may recover any consideration he has paid,
with interest, and any legitimate expenses he has incurred, but he can
recover nothing for the loss of his bargain.
3.
a.
Construction Contracts
Alternatives to Lost Value
1.
If the breach results in defective or unfinished construction
and the loss in value to the injured party is not proved with
sufficient certainty, he may recover damages based on: 1) the
diminution in the market price of the property caused by the
breach, or 2) the reasonable cost of completing performance or
of remedying the defects if that cost is not clearly
disproportionate to the probable loss in value to him.
2.
CASE: Prier v. Refrigeration Engineering Company, (1968).
For defective or unfinished construction the injured party can
get judgment for…1) the reasonable cost of construction and
25
completion in accordance with the contract, if this is possible
and does not involve unreasonable economic waste.
3.
b.
Losing Contracts
1.
c.
CASE: Jacob & Youngs, Inc. v. Kent, (1921). “The Pipe
Case” In this case, the measure of the allowance is not the cost
of replacement, which would be great, but the difference in
value, which would be either nominal or nothing. A property
owner should not be relegated to this measure unless the
contractor has substantially performed.
CASE: Kehoe v. Rutherford, (1893). As an alternative to the
measure of damages based on the expectation interest, the
injured party has a right to damages based on his reliance
interest, including expenditures made in preparation for
performance or in performance, less any loss that the
breaching party can prove the injured party would have
suffered even if the contract had been performed. This is a
good measure when the cost of complete performance would
exceed the compensation promised by the breaching party.
Delays
1.
CASE: W.G. Cornell Company of Washington, D.C. v.
Ceramic Coating Company, Inc., (1980). When the other party
delays in performance of a contract, the aggrieved party can
recover the fair rental value of either the equipment or the
property that is idle as a result of the delay.
2.
CASE: Lorch, Inc. v. Bessemer Mall Shopping Center, Inc.,
(1975). When a landlord prevents a tenant from going out of
business, the landlords actions amount to an unreasonable
delay even if the terms were specified in the lease. This is
based on the complexity and supervision involved in enforcing
the business to stay open.
3.
CASE: Northern Delaware Industrial Development Corp. v.
E.W. Bliss Co., (1968). Specific performance of adding more
workers to cure a delay will not be enforced because of the
complexity and supervision involved in enforcement.
4.
Employment Contracts
a.
CASE: Sullivan v. David City Bank, (1967). For a wrongful discharge,
the plaintiff cannot recover ‘wages’ for services constructively
performed. He can recover only damages for the breach of the contract
of employment. The employee may recover his full damages even
where the action is tried before the expiration of the term of the
employment.
b.
CASE: Mr. Eddie, Inc. v. Ginsberg, (1968). An employee who has
been wrongfully discharged before the termination of his contract of
employment must endeavor to reduce the loss or damage by seeking
other employment. He may, however, recover the reasonable costs
expended in seeking that other employment. Generally, an employee is
not required to accept a position that is different or inferior to the
26
position under the contract, and the employee is not required to leave
the same geographic area for a substitute.
IX.
c.
Covenants not to Compete Unless there exists special circumstances
warranting protection, a business activity has no protectable interest in
its employees leaving and working elsewhere. Must show no adequate
remedy at law and that irreparable harm would result.
d.
Suits by Employees Agreements to perform a personal service will not
be specifically enforced in favor of the employer. One situation in
which the courts will order an employer to reinstate an employee is
when the employee has been discharged in violation of civil rights laws
or free speech.
DAMAGES: INTERFERENCE WITH PROPERTY AND ECONOMIC INTERESTS
A.
General Principles
1.
a.
Compensatory Damages designed to place plaintiffs in the same
position they would have been in had the wrongful interference not
occurred.
b.
Consequential (“Special”) Damages may be awarded to more fully
compensate the victim of wrongdoing.
c.
d.
Nominal Damages awarded in order to vindicate a right.
Supercompensatory Damages awarded in the form of punitive or
exemplary damages.
2.
B.
Types of Damages
Requirement of Certainty
a.
CASE: James Mastandrea v. Chicago Park District, (1994). A loss
need not be proven with absolute certainty, but speculation, remote or
uncertain amounts are improper.
b.
CASE: Bigelow v. RKO Radio Pictures, Inc., (1946). Juries are
allowed to act upon reasonable and inferential, as well as direct and
positive proof in computing estimates of damages.
Interference With Real Property Interests
- Interference with real property interests may be litigated on a number of theories
including trespass, private and public nuisance, and negligence. The measure
of damages remain the same.
1.
a.
Compensatory Damages
CASE: Stevinson v. Deffenbaugh Indus., Inc., (1993). A nuisance is
temporary if it may be abated, and it is permanent if abatement is
impracticable or impossible. Damages for a permanent nuisance are
measured by the difference in the land’s market value immediately
before and after the injury. Damages for temporary nuisance are the
decrease in rental or usable value of the property as well as any special
costs (repair, loss of use, etc.).
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b.
CASE: Terra-Products v. Kraft Gen. Foods, Inc., (1995). In the
context of environmental contamination of land, although deemed a
temporary nuisance, a party should be entitled to recover as damages
any proven reduction in the fair market value of real property
remaining after remediation.
c.
CASE: State of Ohio v. United States Department of the Interior,
(1989). In environmental restoration cases subject to CERCLA, the
correct measure of damages is restoration costs because natural
resources are not fungible goods.
d.
CASE: Scantlin v. City of Pevely, (1987). There is no requirement that
loss of use damages be specifically pled.
e.
CASE: Dodd Properties (Kent) v. Canterbury City Council, (1980). If
an award is given to cover future repairs, the award should be
discounted to its present value.
f.
CASE: Coty v. Ramsey Assocs., (1988). As a general rule, the mere
unsightliness of a thing, without more, does not render it a nuisance,
however, when malice or spite were the motivation, nuisance liability
attaches. The purpose of punitive damages are to punish those culpable.
In order to award punitive damages, plaintiff must demonstrate actual
malice on part of the defendant.
g.
CASE: Riblet v. Spokane-Portland Cement Co., (1954). In an action
for damages for maintaining a nuisance, recovery may be had for
inconvenience, physical discomfort, and illness to the occupant of the
property resulting from the nuisance. This is so even though damages
for property value or rental value are awarded.
2.
C.
Consequential Damages
a.
CASE: Lunda v. Matthews, (1980). Distinct from or in addition to
damages compensating plaintiffs for the diminution in property value
as a result of a nuisance, it is proper to award consequential damages
for discomfort, annoyance, inconvenience and personal injury.
Consequential damages are also recoverable in an action for trespass.
b.
CASE: Davey Compressor Co. v. City of Delray Beach, (1993). In tort
cases, plaintiff may recover all damages which are natural, proximate,
probable or direct consequence of the act, but do not include remote
consequences. Abatement costs are allowed.
Interference With Personal Property Interests
- If the trespass causes harm to the chattel, the trespasser is liable for all damges
proximately caused by the act. In conversion or trover the basis of the tort is
the conversion of the plaintiff’s property to the defendant’s own use (forced
sale). Plaintiff can then receive its full value.
1. CASE: Paccar Fin. Corp. v. Howard, (1993). The
theory of trover (“conversion”) was that the defendant, by “converting” a chattel
to his own use, appropriated the plaintiff’s rights, for which he was required to
make compensation.
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2. CASE: Ehman v. Libralter Plastics, Inc., (1994).
The value of the chattel converted is the FMV of the item at the time of
conversion plus interest. If there is no regular market value for the item, the
measure is the value of the property to the owner at the time of the conversion
plus interest.
3. CASE: Goodpasture, Inc. v. M/V Pollux, (1982).
Damages in a conversion action should compensate for the loss actually
sustained as a result of the tortfeasor’s wrong, and a plaintiff may generally
recover the reasonable market value of the goods converted, as of the time and
place of conversion.
4. CASE: Caballero v. Anselmo, (1991). Damages
recoverable for the conversion of property are limited to the value of the
property at the time of the conversion. However, an exception applies to
property of fluctuating value, such as shares of stock; the measure of damages
for conversion of stock certificates is the cost of replacement within a reasonable
period after the discovery of the conversion, regardless of when the conversion
may have occurred.
5. CASE: Broadwater v. Old Republic Sur., (1993).
The New York Rule: Sets the measure of damages as the highest market price of
the stock between the date of the conversion and a reasonable time following
notice of the conversion. The reasonable time requirement varies with the
particular facts and circumstances of each case.
6. CASE: Badillo v. Hill, (1990). The span of time for
loss of use damages is limited to the period of time reasonably necessary to
procure parts and make repairs and the amount should not exceed the amount of
the greater injury of total destruction.
D.
Tortious Interference With Economic Interests
- Tort law has powerful remedial weapons, not available in breach of contract
cases.
1. CASE: Hinkle v. Rockville Motor Co., (1971). The
“Flexibility Approach” in fraud and negligene cases: 1) If the defrauded party is
content with the recovery of only the amount that he actually lost, his damages
will be measured under that rule; 2) if the fraudulent representation also
amounted to a warranty, recovery may be had for loss of the bargain because a
fraud accompanied by a broken promise should cost the wrongdoer as much as
the later alone; 3) where the circumstances disclosed by the proof are so vague
as to cast virtually no light upon the value of the property had it conformed to
the representations, the court will award damages equal only to the loss
sustained; and 4) where the damages under the benefit-of-the-bargain rule are
proved with sufficient certainty, that rule will be employed.
2. CASE: Texaco, Inc. v. Pennzoil, Co., (1987). One
who is liable to another for interference with a contract is liable for damages for:
1) the pecuniary loss of the benefits of the contract; and 2) consequential losses
for which the interference is a legal cause. Because this suit was brought in tort
and not in contract the measure of damages was the pecuniary loss of the
benefits it would have been entitled to under the contract. Moreover, punitive
damages are recoverable in tort actions where there exists ingredients of malice,
fraud, oppression, insult, wanton or reckless disregard of plaintiff’s rights, or
other circumstances of aggravation. The exemplary damages must be reasonable
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(look to surrounding factors, the wrong, defendant’s conduct, public policy,
etc.).
E.
Punitive Damages
1. CASE: BMW of North America, Inc. v. Gore,
(1996). The Due Process Clause of the 14th Amendment prohibits a state from
imposing a grossly excessive punishment on a tortfeasor. Grossly excessive
damages can be determined by looking at the degree of reprehensibility of the
act, the disparity between the harm or potential harm and the amount of the
award, and sanctions for comparable conduct.
X.
DAMAGES FOR PERSONAL INJURIES
A.
General Principles
1. CASE: Seffert v. Los Angeles Transit Lines,
(1961). For an appellate court to overturn trial court damages, the verdict must
be so out of line with reason that it shocks the conscience and necessarily
implies that the verdict must have been the result of passion and prejudice.
2. CASE: Sharman v. Evans, (1977). The appropriate
criterion for damages must be that such expenses that plaintiff may reasonably
incur should be recoverable from the defendant. Double compensation is to be
avoided.
B.
Economic Losses
1.
a.
CASE: Jones & Laughlin Steel Corp. v. Pfeifer, (1983). An award for
impaired earning capacity is intended to compensate the worker for the
diminution in the stream of income he would have earned; including
fringe benefits. The award should be calculated pertaining to after-tax
wages. Work related costs (uniforms, etc.) should be deducted from the
award. Also, the award should be discounted by the discount rate which
is based on the rate of interest that would be earned on the best and
safest investments.
2.
a.
C.
Earning Capacity
Collateral Benefits
CASE: Helfend v. Southern California Rapid Transit District, (1970).
The collateral source rule allows plaintiff to receive benefits from an
insurance policy and the award from defendant. This is because the
tortfeasor should not garner benefits of the victim’s providence of
buying insurance.
Non-economic Losses
1. CASE: McDougald v. Garber, (1989). Some
degree of cognitive awareness is a prerequisite to recovery for loss of enjoyment
of life.
D.
Loss of Consortium
1. CASE: Belcher v. Goins, (1990). “Parental
consortium” refers to the relationship between parent and child and is the right
of the child to the intangible benefits of the companionship, comfort, guidance,
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affection, and the aid of the parent. Courts are split on this, but the modern trend
is to allow recovery for this to minors and handicapped children who rely on the
parents for care.
2. CASE: Whittlesey v. Miller, (1978). Marital
consortium concerns the loss of society and services of the spouse and includes
impairment for sexual intercourse. Either spouse has a cause of action for loss of
consortium with the other spouse as a result on injury caused to the other spouse
by a third party tortfeasor’s negligence.
E.
Mitigation
1. CASE: Baker v. Morrison, (1992). The mitigation
theory requires the consideration of the doctrine of avoidable consequences and
whether the plaintiff should have anticipated the defendant’s negligence before
the accident occurred. Comparative negligence is now the rule in most
jurisdictions. Comparative negligence decreases the award by the percentage of
negligence attributed to the plaintiff. Proximate cause of plaintiff’s negligence is
required.
F.
Punitive Damages
1. CASE: Sturm, Ruger & Co., Inc. v. Day, (1979). In
order to recover punitive damages, the plaintiff must show the wrongdoer’s
action were done with malice or bad motives or a reckless indifference to the
interests of another. They are meant to punish and deter. The amount must bear
some resemblance to the proportion of actual damages.
G.
Torts and Damages at the Frontier
1. CASE: Sterling v. Velsicol Chemical Corporation,
(1988). In order to collect damages for environmental contamination, plaintiff
must show that the defendant actually caused the contamination and that the
contamination resulted in, or will likely result in, the medical injuries. Mental
anguish damages will be awarded only where such distress is foreseeable or is a
natural consequence of, or reasonably expected to flow from, the present injury.
2. CASE: Marciniak v. Lundborg, (1990). Damages
caused by a negligently performed sterilization practice may be recovered until
the child reaches age of majority and benefits of having that child may not be
deducted from that award.
H.
Wrongful Death
1. CASE: Green v. Bittner, (1980). For the loss of a
child, damages should not be limited to the pecuniary loss of the child (chores,
etc.) and should extend to the loss of companionship as they grow older.
2.
CASE: DeLong v. County of Erie, (1982). What is
the rule here?
3. CASE: Lamm v. Lorbacher, (1952). The plaintiff
in a wrongful death action may recover such damages as are a fair and just
compensation for the pecuniary injury resulting from such death.
4. CASE: Murphy v. Martin Oil Co.¸ (1974). An
action for conscience pain and suffering prior to death is recoverable as a
separate action, and in addition, to the wrongful death action.
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I.
Reform of the Law of Damages
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