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Remedies Outline

Remedies Outline

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Published by: rvillar1 on Jun 25, 2012
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1
Legal
 
Equitable
 
Torts
Compensatory damages,punitivesinjunctions
K
Compensatory damages
 
Reliance, expectancyInjunction, aka specific performance
UE
P holds title D holds TitleReplevin AssumpsitEjectmentConstructive Trust (D title + other situations where breach of fiduciary duty)Equitable lienSubrogation
COMPENSATORY DAMAGES
T
HE
IGHTFUL
P
OSITION
P
RINCIPLE
 
P’s rightful position = the position the P rightfully would have been in but for the D’s wrong.
 
Compensatory
damages are meant to place the P in his or her ―rightful position‖ by converting the
harm by D into a monetary damage award. There are multiple theories re: how to calculate theproper measure of damages (e.g. value, reliance, expectancy, etc).US v. Hatahley (10
th
Cir. 1958): Indians used open range land owned by US for their livestock, then USrounded up animals and sold them to glue factory. The district court determined a set amount of damagesfor each animal and multiplied that amount by the number of animals lost by each P & it also arrived at asum for mental distress and awarded each P an equal amount
Court got it very wrong
Held 
: Reversed the damage award, b/c the calculation methodology isn’t ―reasonably certain.‖ Need individualized accounting re: value of each lost animal (as breed, age, training, etc affects an animal’s
value), pain and suffering of each individual (as one person might be affected more than another), etc.
 
By making a blanket damage determination, the court failed to consider the damages actuallyincurred by each P
different levels of economic harm and emotional distress incurred
Rule: ―
The fundamental principle of damages is to restore the injured party, as nearly aspossible, to the position he would have been in had it not been for the wrong of the otherparty.
‖ 
 
Policy: Don’t want to give out arbitrary damage awards that bear little relation to actual lo
sses. Awardsthat are tied to actual losses leads to consistency and precision, since you know what an animal is worthon the open market at any time.Law and economics approach:
 
If the damage award will be less than the profits that will be made from the breach, then thebreach should occur.
 
Law and economics approach to Hatahley would say that rounding up the animals to provide notice
is inefficient, burdensome, and costly… it w
ould be cheaper to round the animals up, send them tothe glue factory, then pay damages for the actual value of the animals.
*****
 
2
V
ALUE AS THE
M
EASURE OF THE
IGHTFUL
P
OSITION
 
Value of Property as a Measure
:
 
In the case of destroyed property, replacement value will only sometimes restore P to the RP
 
Lesser of Two Rule
: a P whose property has been injured may recover the lesser of thediminution of the property's market value (MV) or replacement cost (money you would need to getback as close as possible to the thing lost)
o
 
P is entitled to be made whole but the D is generally entitled to make the P whole in theleast expensive way. Court will pick the cheapest way to the D every time
o
 
In the case of total destruction, the diminution of property's value and replacement cost arenot always the same
 
The diminution in MV in the case of replacement is the MV because the thing gotcompletely destroyed (diminution is total)
 
Rightful Position looked at from a societal perspective (won’t take into accoun
t sentimental value)In Re September 11
th
Litigationa.
 
Property = leases
 
P bought the right to 99 years of leases to the WTC (he didn’t purchase the
building, he purchased the right to lease the buildings)i.
 
Present value of leases $2.5 mil (how much money he was buying the leases for)ii.
 
Buildings were destroyed. How do you compensate? Court articulates the lesser of two ruleiii.
 
P says he should get the replacement value = $16.2 billion. Argues that the lesser of 2 rules
doesn’t apply because due to his K, he's on the hook for damages to the property. Basis of 
argument is
specialty property exception
: property was unique and thus doesn’t have a
FMV (
can’t apply the lesser of 2 Rule because you can’t determine the F
MV) No robustmarket place that would allow us to set a MV (church, school, etc).1.
 
Court says there's a market
he was a participant in the very market that wascreated for the WTC after privatization2.
 
Illustrates that there can be something with special
characteristics, but doesn’t meet
exception.
Key is whether there's a market for it
. If it has a value in the businesscontext, we stop.b.
 
Diminution of MV is 2.5mil (total diminution = value reduced to 0 because of destruction)c.
 
Loss of Use
: Court doesn’t
look at loss of use to compensate (like Hatahley case)i.
 
Many courts find that if property is completely destroyed, the cost of use is included in the
FMV (Goodman says this doesn’t make sense & they are not reconcilable). What judges now
do to compensate for loss of use for items that have been destroyed is prejudgment intereston the compensatory amount.ii.
 
Majority rule
: If damaged, you compensate for loss of use. If its destroyed, you don’t
(controversial)Consumer Items (that are functional and replaceable): Measure value by awarding [replacement
 depreciation (at instant before destruction)] This is a way of combating the
lemon effect
problem (prices
driven down because buyer wonders what’s wrong with the good, since p
erson is selling
consumersgenerally value their goods more than the market)
 Item that doesn’t have a FMV 
 
Trinity Church v. John Hancock Mutual Life Insurance Co. (VERY IMPORTANT, FOUNDATIONAL CASE)i.
 
Trinity Church's building was damaged during the construction of the nearby John Hancockbuilding, and it sought damages for the structural harm to the church.
Held 
: Since FMV cannot 
be ascertained (as the church is landmarked and can’t be torn down, not going to be sold), the
Court examined the condition of the church before and after the damage, then apportioned compensatory relief proportional to the amount of damage actually caused by D.
 1.
 
Thing hasn’t been destroyed
ii.
 
Property was damaged
(cost of repair v. cost of replacement). Trinity church doesn’t
fit into thelesser of 2 rules
 
3
1.
 
No market for churches2.
 
Cost of repair in this case was uneconomical (only done if considered reasonable oreconomical to do so)ii.
 
Cracks can
’ 
t be repaired, must be replaced
would have to rebuild the wholestructure. Cost or repair/replacement is prohibitive b/c of the kind of masonryinvolvediii.
 
P sues for structural damage. How do you reimburse the P?1.
 
Abandon the lesser of 2 rule2.
 
The "takedown" theory of damage assessment
: Damages measured as how farfrom replacement (1968-1972)i.
 
In 68 = 26%; in 72 = 65%ii.
 
Take cost of reconstruction and attribute to the D the difference between 68 and72 (65-29 =39% of total value)3.
 
Here, measure (unlike WTC) was a reasonable position that still favored the client & theywoniv.
 
Take away from trinity1.
 
In remedies, we don’t stick to the rules all the time
i.
 
Policy underlying lesser of two = try to reimburse the D in the most efficientmannerii.
 
This policy was embodied in Trinity measure of damages2.
 
As long as you reach a conclusion that is justifiable, even if you can
’ 
t tie it to a rule, ok if tethered to existing principlesv.
 
Dissent: damages are only appropriate for actual loss and the church is still going. Argument =that there's no damage
no depreciation (the building is just as useable and just as much of ahistorical landmark than before)1.
 
No depreciation = no measurable loss = no damages2.
 
Majority's response = shouldn’t turn a blind eye to the damage
d.
 
Landmark is a per se fact to show social utility
uniqueness & benefit that goes beyond that to theowneri.
 
No FMV if landmark b/c no robust market
cost of replacement. If too expense, we stray fromthe ruleii.
 
Wouldn’t want to force the idiosyncratic expenses an owner puts into a house on the D
e. The rule we extract from Trinity
won’t always work in other situations
Automobiles: many courts order the cost of repair when it's the appropriate measure + residual change invalue (difference between the value before the accident and the value after repair) to subsidize for thedecrease in value
*****
ELIANCE AND
E
XPECTANCY AS
M
EASURES OF THE
IGHTFUL
P
OSITION
 
A.
 
Buyer’s Breach:
Neri v. Retail Marine Corp:
Ps buy a new boat for $12k & makes a deposit of $40.Seller agrees to immediate delivery in exchange for increased deposit of $4250. P is hospitalizedand rescinds & D refuses to refund the deposit (goods rejected by P). P sues to recover the deposit& D counterclaims for breach of K. D wins.ii.
 
Damages:1.
 
4250 Deposit (P)2.
 
2579 profit;674 incidental expenses (D)3.
 
K for sale of boata.
 
Boat was sold 4 months later to another buyer for the same price
where'sthe harm?i.
 
D argues that he could have sold 2 boats but for the breach
lostsale so D argues he should get profit from lost sale to P4.
 
Everyone wins:a.
 
Profit:
rule is that normally you don’t get lost profits on a breach of K
if the same price (b/c sold to someone else). But here a lost volume

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