Remedies outline

2 goals: 1) What remedy to choose 2) and once chosen how to measure it?
What does the court do for a successful plaintiff? Grant specific relief usually specific performance or an injunction ³in personam remedy´ operates against the D¶s person Award substitutionary relief or money damages Award= adjudicate, decide after consideration ³in rem´ operate against the D¶s property Award restitution based on defendant¶s gain or unjust enrichment What court may do to the defendant? Require D transfer title or possession of property Order D to do something Prohibit D from doing something Direct the D to be confined (contempt) to coerce him to obey any of the above except to force payment Enter a money judgment to compensate P, to prevent D¶s unjust enrichment, or to punish D Equitable versus Legal Remedies Principle equitable remedies: Injunction, specific performance, constructive trust- associated to specific or in personam relief For judge to grant equitable relief P must show legal remedies inadequate, without equitable relief will suffer irreparable injury Major legal or common law remedymoney damages substitutionary or in rem relief Differences between equitable and legal remedies No right to jury trial for equitable remedies


Judge will enforce an in personam equitable order by holding the defendant in contempt; in contrast to the plaintiff¶s collection of money damages with a writ of execution, garnishment, and judgment lien. Tort Remedy Goals 1. Prevent a tort from occurring- injunction 2. Restore the Status Quo- can be done through specific performance, restitution or restoration for a property tort 3. Compensate the P for Loss- compensation or indemnity principle- can award damages for P¶s physical or mental injury, pain and suffering, lost income, and loss of property value, etc. 4. Deter Future Torts- market economic analysis stress structuring actual or potential P damages awards should encourage D¶s to take precautionary goals to prevent future mishaps 5. Establish, Declare, Vindicate P¶s Rights- declaratory judgment different than injunction for it neither commands nor forbids anything 6. Punish wrongdoers- punitive damages for aggravated wrongful act Remedies goals in Contract 1. Fulfill Plaintiff¶s expectancy of gain- may consist of specific performance or money damages if SP not available 2. Special Damages to restore plaintiff¶s losses and reliance expenditures P incurred 3. Restitution- court¶s rescission of K or agreement followed by restitution will restore the plaintiff and the defendant to respective situations prior to the transaction 4. Punish or deter the D- by granting the plaintiff¶s expectation and special damages will deter D¶s from breaching Ks. (market economist). A court will almost never award P punitive damages when a defendant breaches a K. 5. Declare or terminate parties contractual rights or duties- may grant declaratory judgment either before or after a parties breach


Remedy goals for Unjust Enrichment 1. Restore the benefits D unjustly holds, restitution- primordial concept. 2. Punishment and deterrence- subordinate goals when D has give up benefits she has unjustly reaped. Summary of Historical Crap Common law courts tort-property actions 1. Specific relief/ restitution of property Ejectment-to recover possession of real property/land. Detinue- developed from writ of debt, and to be used against an unfaithful bailee, let the D either return the chattel or pay plaintiff its value Replevin- to retrieve P¶s personal property from a D. 2. Compensatory Damages- money for harm Trespass- historically to someone¶s person, to chattel, or to land allowed for damages Trespass to the case-to compensate the P for injuries ranging from indirect & negligent injuries to the person to nuisances and various business torts Trover- for D¶s conversion of P¶s chattels allowed for compensatory damages 3. Punishment- historically would allow jury to award Ps punitive damages bc of ³detestation´ of act itself 4. Prevention- Common law Courts could not award equitable remedies, had to go to Court of Chancery (Court of Equity) thus major deficiency- dual courts 5. Declaration of Rights, obligations and status- problem in common law courts, but could award nominal damages. Contract Breaches historicallyAccount- originally D¶s breach of fiduciary obligation- fell out of favor cumbersome procedure for dual lit. in both court systems Covenant- no covenant if debt is applicable- only for instruments under seal. Debt- oldest personal action, D¶s duty to pay P a certain amount either by contract, custom (statutory required payment), or record (collect money judgments)


Assumpsit- 2 formsspecial assumpsit- P¶s action on a simple express contract supported by consideration, whether executory or partially executed. General assumpsit- used common counts, including work done or quantum meruit used by contemporary courts to develop the remedy of legal restitution and concept of quasi contract. Chancery Court- used if common law court fell short, equitable court Granted equitable relief- such as declaratory, uses and trusts, as well as mortgages Enforcing a lien still considered to be equitable matter; separate equitable defenses such as ³Laches´ and ³unclean hands´ evolved. Specific performance and injunctions- decisions were not necessarily precedent thus criticized for being unpredictable and vague All reformed by Field Code in 1848; led to FRCP: Today ³only one action a Civil Action´ R.2 FRCP

Chap 2- Money Damages
Injured P principal civil remedy is money damages; performs two functions 1) a plaintiff is compensated for loss and 2) damages deter particular defendant and other potential defendants from incurring future liability, thus they take reasonable precautions. Damage determinations require a lay jury because states and Fed Const. require it 7th Amendment: ³In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law´--- historical reasons for jury- prevent tyranny etc. Very few cases even heard by juries bc they settle Rules encourage settlement- FRCP pretrial conference 16(A)(5) and FRE 408 parties settlement offers and negotiations not admissible.


FRCP 68 any litigant that rejects a settlement offer and receives a less favorable judgment pay other sides attorney fees. Most jury trial parties share four common characteristicsIntransigent Party- unwilling to agree Reputation to protect Outcome is uncertain Stakes are unusually high Controversial doctrines: Pain and suffering Punitive damages American Rule requiring each side to pay attorney¶s fees Gavcus v Potts (USCA 7th Cir. 1986) p.17. Stolen silver Coins- compensatory damages and Att Fees Gavcus brought action against stepfamily for trespass and conversion of her silver coins from late husband. Jury awarded her special verdict of new locks, alarm and Att Fees from prior action concerning possessory interest in coins and punitive damages. DC set aside jury verdict and gave her $1. C of A affirms DC decision- ³nominal damages can be awarded when no actual or substantial injury has been alleged or proved, since law infers some damages from the trespass´ also ³consequential damages can be awarded for actual or substantial injury to realty.´ & ³CD can be recovered for a trespass, since a trespasser is liable for all injuries which are the natural and proximate result of trespass´ Trespass can cause mental distress and illness or physical harm. No emotional distress in Gavcus bc failure to proof to nature extent and causation of ED Att Fees- recoverable from prior action only if 1). prior litigation was the natural and proximate result of the subsequent def. wrongful act and 2). involved the P and a third party. Punitive damages only if compensatory damages Dura Pharmaceuticals v Broudo (SCOTUS 2005) p20 Stock fraud- FDA approval, false profits


P brought action against D for stock fraud- governed by statute- Throw complaint out bc did not even meet Conley requirement of ³short and plain statement´ as to provide the D with fair notice of what the plaintiff¶s claim is and the grounds upon which it rests.´ Did not show causation that Dura¶s fraud caused an economic loss Bc price fell after FDA not approved came out but gained back all value within a week. Sec Ex Act 1934 forbids use of deceptive device in connection with sale of securities Basic elements of stock fraud: 1. a material misrepresentation ( or omission) 2. scienter, i.e. wrongful state of mind. Or knowledge/intent 3. a connection with the purchase of security 4. reliance or ³transactional causation´ 5. economic loss 6. loss causation- causal connection between misrepresentation and loss Dura argued P did not prove last two elements, SCOTUS agrees says ³Given the tangle of factors affecting price, the most logic alone permits us to say I that the higher purchase price will sometimes play a role in bringing about a future loss.´ Must chow causation not simply ³touch upon´ Related to Dura p.118 Randall v Loftsgaarden tax benefits incurred due to capital losses should not be subtracted from claim Youst v Longo (SC Cali. 1987) p25 ³I could have been a contender´ Horse Racing interference ³it is well settled law that interference with the chance of winning a contest, such as the horserace at issue here, usually presents a situation too uncertain upon which to base tort liability.´ P sought Compensatory damages between actual finish (5th) and finish which allegedly would have occurred but for D¶s interference. Punitive of 250K also sought Did not plead physical personal injury or property damage RST 774B actual discusses such scenario in comments ³not sufficient certainty to entitle P to recover´ To speculative to recover Compensatory Damages


Notes case point to some curious cases where some contestants allowed to recover. I.e. Beauty contest disqualified bc not notified of earlier start time A railroad breached agreement for delivery thus getting contestant 2nd instead of first Puzzle contest, answer erroneously marked wrong, given amount equal to odds times the prize money. Other speculative claims: Lost chance to survivein malpractice cases Smith v State Dept of Health and Hospitals (Louisiana SC); x-ray cancer MD no follow up, man died shown he had 10% chance of life if notified on day of x-ray. So damages totaled and then only 10%. 3 recognized methods for calculating Lost chance of survival 1. focus on chance of survival lost due to negligence (used above) 2. Plaintiffs approach- if any chance than MD pays full claim 3. -Adopted by lower court in Smith- percentage more favorable outcome ± becomes percentage probability. Can recover damages for fear of cancer as part of pain and suffering damages if also liable for P¶s physical injuries. Medical monitoring 3 sub types- 1) D pays a lump sum to each individual P for future medical attention 2) P¶s Md¶s send monitoring bills to D 3) a Court supervised monitoring program is sought such as in Henry v Dow Chemical Co. (Sc Mich 2005) p30 Class action for Dioxin Exposure in Tittabawssee flood plain in Mich. Court supervised Medical monitoring sought Court denies as plaintiffs have suffered no actual harm yet; only potential for injury thus P¶s have failed to state a valid negligence claim and grants Sum. Judgment ³It is present injury, not fear of an injury in the future, that gives rise to a cause of action under negligence theory.´ Importance of requirement of present physical injury 1) who actually possesses a cause of action 2) reduces the risk of fraud by setting a minimal threshold 3) would force Court to compromise judicial power to uncertainty, ³Our common law jurisprudence has been


guided by a number of prudential principles. Among them has been our attempt to avoid capricious departures from bedrock legal rules as such tectonic shifts might produce unforeseen and undesirable consequences´ Not emotional distress bc no physical manifestations of such distress Court not in business of crafting policy in the dark, deference to Legislature already created the Mich Dept of Env. Quality Dissent p.39 Plaintiff¶s physical harm secondary to defendant¶s economic health P¶s claim for med. Monitoring warrants equitable relief- P exposed to dioxin at over 80 times deemed safe ³Court has equitable jurisdiction to provide remedy where none exist at law, even if the parties have not specifically requested an equitable remedy.´


Proving the amount of damages p.47
Court can easily determine some of P¶s damages; i.e. lost wages, medical expenses, the value of damaged property, expectancy and reliance damages for breach of contract However some difficult to prove: lost business profit (mind games v western pub.) Future pecuniary damages hard to calculate Some compensatory hard to calculate such as P¶s pain and suffering or mental anguish To prove damages first must prove the fact of damages then must prove amount of damages- however even if damages amount uncertain ³the tortfeasor, not the P, should bear the burden of some uncertainty in the amount of damages´

Plaintiff¶s lost capacity to earn (past wages)(aka economic damages)
Washington v Am. Comm. Stores Corp (SC Neb 1976) p48 Jury verdict of 76K arising out of car crash P , 24, was successful collegiate wrestler and working as adult parole officer at time of crash. Had a life expectancy of 49.9 years no dispute to permanency of P injuries or that injuries prevented P from wrestling. ³It is well settled law that loss of earning capacity is distinct from loss of wages, salary, or earnings, is a separate element of damage.´ Loss of past earnings is an item of special damage and is specifically pleaded and proved Impairment of earning capacity is an item of general damage and proof may be had under general allegations of injury and damage. Factors include- P¶s age, life expectancy, health, habits, occupation, talents, skill, experience, training, and industry. Agree with jury sufficient evid. to find P pursuit of wrestling career valid. Again general damages thus no specific evid needed to recover. Childs v US (USDC Georgia 1996) ³unborn General´ Lawsuit for wrongful death under the Fed Tort Claims Act- State subs. Law governs


Car crash 3rdpassenger, mother and unborn child ³General´ die immediately when struck by postal truck. P bring action under FTCA, D admit liability, and have stipulated to estate of Debra and General are worth $8794 for funeral and medical ex. Plus some more for damage to the car. Issue is to amount of damages for P wrongful death claims. Debra 33,, had life expectancy of 47 years- also 8 months pregnant with General, life expectancy of 73. Debra worked as produce manager at Kroger Lost future income 4 elements 1. base year or entry level income (projected before tax income) 2. income growth rate (inflation, progression, productivity gains) 3. worklife expectancy (how long someone would have remained in workforce) 4. discount rate (present value of decedents future income) (PV) personal tax offset; personal expense/consumption offset; (some don¶t use) +lost fringe benefits (includes health insurance, pension benefits, social security.) usually 15% of PV of decedents lost income. Lastly +lost household service (hours spent doing housework times minimum wage). Battle of experts for amount of lost future income damages varied between $890K and $195K. Total economic loss equals all of above added together, difference in Childs, for debra- 1.148 million versus 398K Generals lost future incomeNo lost household services for unborn child, but lost future earnings and lost fringe benefits- Differences astounding $1.7 million versus $433K ³Who will fail and who will succeed and who will either enjoy or suffer through life, is a game of fools´ & ³the mathematical precision the experts put on General¶s death illusory´ Both experts paid to see what they saw- P overvalues, D undervalues Difference in Debra¶s economic damages explained by difference in worklife expectancy, used P expert¶s calculations for Debra fringe benefits bc talked to Kroger, both calculations for lost household service too high. Total economic loss 1.35 million


General more speculative , big caring family, but from single mother so 1.08 million Sept 11th compensation- administrative remedy set up within two weeks, based on male tables, still victims families wanted more, 1st year ass. at law firm. Also subrogation (infra) reduced payments, except workers comp and private charity Use stat mortality tables and work-life expectancies as authorities, not binding on court though. Waldorf v Shuta (p.61)- consideration as future attorney, when a high school dropout far too speculative Good notes p.60-68

Pain and suffering (p68) (aka, nonpecuniary, general damages, hedonic- when
referring to loss of enjoyment) Also compensatory damages. Premised on P has been through trauma has lost more than earnings or medical bills. Pain is physical. Suffering takes many forms: grief, bereavement, fear, and frustration. Referred to as noneconomic, but are they? Posner thinks not, economic but nonpecuniary. ³Two shortcomings to awarding pain and suffering- 1) money awards do not make them whole, 2) there is no rational scale that justifies the award of any particular amount., in compensation for a particular amount of pain.´ Consorti v Armstrong Are Pain and Suffering damages used to pay attorney fees? P.69 Subjectivity of pain and suffering, conversion to dollar amount is difficult and expensive Parts of pain and sufferingVictims anguish and terror felt in the face of impending injury and death Victims tangible physiological pain at time of injury and through recovery V¶s loss of enjoyment of life- hedonistic damages V¶s loss of consortium Hard to prove- must discuss V¶s life before accident, during, and after, what therapies


Loth v Truck-a-way (Cali CA 1998) p71 ³Active lady struck down/Whore expert´ PI from a auto accident- P awarded general damages and D argued not admissible, expert testimony to hedonic damages, but it is admissible F: P car struck by 24-wheel truck, she walked away, continued business trip then cut short went to Dr. complained of headaches and back stiffness. Saw army of Dr¶s but none able to stop pain. D conceded liability only issue was damages. P¶s expert testified to hedonic damages. however should have been precluded bc of double recovery -pain and suffering and hedonic. Only one collection of pain and suffering and hedonic included in that figure. No separate jury instructions because one figure Only personwhose pain and suffering is relevantis the P¶s. can ask for per diem basis for pain and suffering (the norm in Fla.) No formula for calculation (SCOTUS); Smith¶s calculation does just that. ³a life is not a stock, car, home, or other such item bought and sold in some marketplace.´ $890K verdict not excessive although Smith¶s testimony could lead to runaway verdicts and should be inadmissible. Still remand bc curative instruction did not properly correct prejudice of Smith testimony. Notes: Unit of time break down not allowed in some jurisdictions, Ok in Fla. Some states all right if come with line at end that this is just an estimate McDougald v Garber (NY CA 1989) p80 ³Comatose Caesarean´ P permanently comatose after botched Caesarean section by D and anesthesiologists. Jury awards $9.6M + $1M for pain and suffering + $3.5M for loss of pleasures and pursuits of life. Trial Judge reduced to 4.9M and 2M for pain and suffering (one award) Can she suffer conscious pain and suffering if comatose? No! ³Cannot experience the pleasure of giving it away´ award must have utility to victim to be compensatory Dissenting opinion ± basically she is suffering even if she does not know it. highly emotional response, majority injects an extra element into equation by creating utility. ³to obtain the benefit of this legal fiction the law requires a prerequisite to recovery that the V of a tort have cognitive awareness´ & ³therefore the P has the


threshold burden of proving consciousness for at least some time following an accident in order to justify an award of damages for pain and suffering´ Notes p.87 ³[Above] burden can be satisfied by direct or circumstantial evidence but mere conjecture, surmise, or speculation is not enough´ ³often when unconsciousness or death occurs shortly after a tort, it is difficult, sometimes impossible, to determine if a decedent suffered or was actually conscious of any pain´

Limitations on Damages Recovery
Avoidable Consequences/ Avoidance
Williams and Robbins v Bright (NY SC 1997) p90 ³Jehovah¶s Witness can¶t see the Dr.´ P victim in car crash driven by her father, some evidence he fell asleep. P religious beliefs do not discharge duty to mitigate damages. She claimed Jehovah¶s not allowed blood transfusions. Then she became wheel chair bound after necrotic development of bone structure in knee. She got ³reasonably prudent Jehovah standard´ at Trial Court, in effect discharging her of any duty to mitigate. Relied on Ballard Appeal: ³State does have a compelling interest in assuring that the proceedings before its civil tribunals are fair. And that any litigant is not improperly advantaged or disadvantaged by adherence to a particular set of religious principles.´ Courts purposes must be secular, unfairly advantaged to P in instant case. Dissent- distinguished Ballard; court gave right charge below, new instruction impermissible 1st Amend. Violation

Collateral Source Rule
Exception to the rule barring P from recovering compensatory damages that exceed the P¶s losses.Plaintiffs can still recover full amount from defendant tortfeasors even though they have already received compensation for their injuries (i.e. medical or car insurance). Not always insurance!


Such as Shriners in Moulton v Rival Co. ³a plaintiff who has been compensated in whole or in part by a source independent of the tortfeasor is nevertheless entitled to a full recovery against the tortfeasor, to prevent the tortfeasor from gaining a windfall.´ Even Posner agrees not a windfall for P. Tort Reform sought though b/c some P¶s collecting from disability and court judgments In Fla. Reduce the amount of damages paid to the claimant from collateral sources however if right of subrogation exists (i.e. insurance) than no reduction in damages. Subrogation-Conventional Subrogation gives third party (mostly ³insurer´) right to ³step into P¶s shoes´ and recover from D the expenses incurred by third party in putting P in the rightful position;[also equitable subrogation related to restitution] Subrogee (payor) and Subrogor (victim) Lagerstrom v Mertle Werth Hospital-Mayo Health System (SC Wis 2005) p102 ³I owe Medicare´ P estate sues hospital and insurers for wrongful death/med mal. Get judgment of $55,755.00 ; D at trial presented evidence that out of pocket expenses were only $755. Collateral Source evidence brought in by D, but P not allowed to rebut with evid that may need to reimburse Medicare $89K. Opinion saturated with statutory interpretation. Ultimately finds ³« evidence of collateral sources is admissible and if presented then P must be allowed to show any potential obligations of subrogation or reimbursement.´ Dissent-heavy disagreement bc US not joined as a party, so would affirm lower decision 2ndDissent-majority against legislative intent thus full dissent, ³some litigants use the rule to get around the cap on noneconomic damages [aka pain and suffering]´ legislative history is clear ³does not require juries to make offset bc of collateral sources but permits them to.´ Notes p118 ³Benefits rule provides that if defendant¶s tortious conduct confers a benefit, as well as a harm, on the plaintiff jury may weigh the value of benefit against the claimed harm.´ i.e. negligent digging discovers oil well

Enhancement and adjustment of compensatory damages

Prejudgment interest
Jurisdictionally set at around 8 to 9%, and compound ³calculated on principal and interest from prior period´ Present value of money more than future value, ³a dollar today is worth more than a dollar tomorrow´ Prejudgment interest- from the time claim arose to judgment Post-judgment or judgment interest- from the time of judgment to payment, set by statute and often very low Contract interest- interest a debtor agrees to pay a creditor Jurisdictions split on awarding interest- left over medieval crap that interest perpetuates feudalism and only awarded if D knew exactly what it owed. Pendulum swinging to award prejudgment interest

Punitive damages (aka exemplary damages, vindictive damages, smart money)
Awarded in addition to compensatory damages and aimed at making an example out of D Tuttle v Raymond, III (SC Maine 1985) p122 ³Trying to pass 6 people´ D drove car excessive fast in a 25mph zone, struck P causing serious injury Punitive damages properly awarded when D acts with ³malice´ does not over compensate P but serves to deter D¶s Other jurisdictions use different words but basically higher degree of negligence needed for tortious conduct- aggravated tortious conduct, willful, wanton, outrageous, etc. Double Jeopardy not in play with civil punitive damages Hard to measure, similar to pain and suffering, and emotional distress Relevant is D¶s wealth, Cali have to show D can pay before allowed to ask In this case D did not act with required malice Also clear and convincing standard for burden of proof of such damages in over half of jurisdictions Notes: Louisiana, Mass, NH, Wash lack common-law punitive damages only when statute provides. Nebraska no punies whatsoever, state constitution forbids them. 2nd RST § 908(2) ³punitive damages may only be awarded for conduct that is outrageous, because of def¶s evil motive or his indifference to the rights of others.´


Rarely available in Contract Breaches[unless accompanied by a tort]: contrary to concepts of Contract law for freedomof/and stable transaction. ³K transactions do not usually engender as much resentment or mental and physical discomfort as do torts´ Examples where granted in K breach: violation of non-compete agreement was an egregious breach of a covenant. Constitutional challenges to punitive damages Under 8th Am. ³excessive fines´ Previous challenges survived 1/526 [TXO] ratio of compensatory to punitive, compelled states to include post-verdict factual eval. of jury¶s punitive awards for excessiveness Constitutional Analysis is not done under 8th Am but rather 14th Am. Due Process BMW v Gore (SCOTUS 1996)(from Alabama SC) p133 ³BMW paint job´ Dr Gore bought BMW, damaged in transit, repainted in America and then sold to him told it was brand new, constituted fraud. He sued for price of car plus punitive damages of $500K; won award of $4M; AL SC reduced to $2M; SC said still grossly excessive In 14th Am. Analysis look to states interest the punitive award is designed to serve And the degree of reprehensibility of the defendant¶s conduct. Max civil penalties in AL for deceptive trade practices was $2000, coupled with BMW was only trying to fix its car, still a BMW so punitive damages excessive. Scalia Dissent, no guideposts Ginsburg Dissent, leave AL SC decision undisturbed because only trying to follow our decision in TXO, further every state recognizes punitive damages, it is a state concern On remand AL gave $50K said civil penalty not applicable bc they are weak and AL P¶s should choose courts to remedy D¶s wrongs. State Farm v Campbell (SCOTUS 2003) ³Insurance Company left him´ Reaffirms Gore uses same three guideposts UT man filing bad-faith insurance lawsuit v State Farm. He passed 6 cars on highway and killed 1 person injuring others. After trial State Farm abandoned him and claimed owed no liability. TC returned verdict of $2.6M in compensatory and $145M in punitive damages. Analyzed under three guideposts


1. Reprehensibility of D¶s conduct 2. Proportional. Is the ratio outrageous ³few exceeding single digits´ are not. Presumption against 145 to 1 Suggested 1 to 1. Not followed though 3. Disparity between punitive damages and civil penalties authorized $145M neither proportional nor reasonable. Did not follow 1 to 1 on remand awarded $9M to campbells When are employers responsible for employees tort leading to punitive damages? A. Restatement view, adopted by California, 4 scenarios where principal can be assessed punitive damages 1. Principal authorized the doing2. Agent unfit and principal was reckless in employing him 3. Agent was in managerial capacity and was acting in scope of employment 4. Employer or manager ratified the act B. Most courts willing to extend broader exposure, if employee acting within the scope of his/her employment. Courts not sympathetic to Defendants in mass tort and have imposed successive punitive damages awards against them from multiple P¶s. Reasons for Remittitur, ruling by a judge to reduce amount of damages from a jury verdict. Usually because amount awarded exceeded amount asked for. Subsequent remedial measures (407) should not be reason to reduce punitive awards Mathias v Accor Economy Lodging (USCA 7th 2003) p155 ³bed bugs´ P¶s got bed bugs at Red Roof Inn. D willful and wanton conduct $186K punitive damages and only $5K in compensatory. D knew about bed bugs, told by exterminator to close down hotel so it could be sprayed down, D¶s district manager refused thus imputing D. Total damages equaled $1000 per room in hotel (191) ³the judicial function is police a range, not a point´

Attorney feesp160
The ³American Rule´ both winning and losing litigants bear their own expenses.


Tort reform activist want loser pays or one way loser pays (only losing D¶s pay). Primary exceptions1. contract, 2. statute, 3. judicially created exceptions a. bad faith litigant (controversial) b. ³common fund´ doctrine- analogous to quantum merit- litigant who starts class action can collect from other members of the plaintiff class awards. Nilsen v York County (USDC Maine 2005) Did not go over, recognizes ³common fund´

Tort Reformp178
Controversial provisions ± passimBest v Taylor Machine Works SC Ill. 1997 p180 ³Worst Forklift Accident Ever´ P was injured while working, operating a forklift, mast broke moving slabs of hot steel, flammable hydraulic fluid caught on fire and engulfed P. P broke both ankles jumping and suffered 40% burns on body, face. Suing Forklift manufacturer, seller, and hydraulic fluid maker. Asking to strike down (declaratory and injunctive relief) Tort Reform which caps noneconomic damages at $500K. Cap not rationally related to a legitimate government interest. Undermines the power and obligation of the judiciary to reduce excessive verdicts. Cap struck down. Dissent- legislation passes rational basis test, need not approve only that question is debatably and rational answer. Notes: Ill passed a new malpractice cap at $1M Workers comp, removed most employer-employee damages claims from the jury, no doubt that it is a legislative usurpation of courts.


Gourley ex rel. Gourley v Neb Methodist Health System, Inc. (SC Neb 2003) p191 ³Cap on noneconomic damages for baby Colin´ Neb-Medical Liability Act caps medical mal actions to $1.25M. DC ruled denied gourley¶s EqP and R¶t to jury trial. Negligent care during pregnancy, Baby Colin born with cerebral palsy; awarded $5.625M. ³It is commonly held that courts will not reexamine independently the factual basis on which a legislature justified a statute, nor will the court independently review the wisdom of the statute. This court does not sit as a superlegislature to review the wisdom of legislative acts´ Uphold statute, reassess damages at $1.25M, law does not violate any provision of Neb. Constitution briefed or argued. Concurring opinion rips act for not making cap only apply to noneconomic damages Therefore P cannot fully be compensated for economic damages such as hospital bills. Dissent special legislation and thus violates Neb Const. bc unfairly advantages D Notes: Neb legislature listened to concurrence and raised limits to $1.75M Caps also struck down in Petrucelli v Wis Patients Comp. (2005) Wis limited cap to $350K ³the leg. enjoys wide latitude in economic regulation. But when the legislature shifts the economic burden of medical mal. from insurance companies and negligent health care providers to a small group of vulnerable, injured patients, the leg. action does not seem rational.´ Failed even rational basis test

Chap 3 Equitable Remedies- the Injunction p217
1. Equity acts in personam
Most used equitable remedy the injunction; others include the constructive trust, an equitable lien, subrogation, accounting for profits, equitable rescission, reformation, and specific performance. ³Equity acts in personam´ common function of equity remedies is the personal response or conduct each requires form the defendant. For in personam to work the judge will wield contempt against a recalcitrant or disobedient def. ³A court with personal jurisdiction over the defendant is able to order the defendant in personam to act or refrain from acting in another state.´ 19

When is international trademark injunction proper, Lanham Actfactors include 1. Whether D¶s conduct has a substantial effect on US commerce 2. Whether D is US citizen 3. Whether extraterritorial enforcement of the trademark will encroach upon foreign trademark rights. Tabor & Co. v McNall (Ill CA 1975) ³Dueling Courts´ Tabor, Nevada Corp., doing business in Ill. Contracted with McNall Bros., a Wis. Co, for purchase and delivery of grain in Illinois. McNall defaulted. Tabor filed suit in Illinois, McNall contested personal jurisdiction, then D filed suit in Wisconsin. Illinois Trial Court ordered an injunction against Wis. Court from not litigating in Wis. CA says improper to grant such injunction, in personam, joins the party not a foreign court Notes: ³once a D is hooked, can always jerk him back to obedience by the threat or fact or personal constraint.´ Some courts recognize out-of-state courts simply as matter of comity. Full faith and credit clause applies to judgments, not necessarily injunctions Statute prohibits a fed court from enjoining state court litigation, even if lawsuit in exception to statute fed court can abstain, Younger v Harris. Matarese v Calise (SC RI 1973) p231 ³Some property in Italy´ p231 TJ ordered D to convey land by deed to be recorded in Italy, and issued injunction enjoining def from transferring property to anyone but the P. Court had power over D and therefore had power to order conveyance even though land was situated in Italy. Court does not transfer legal title of property but orders it so, and enforces such order through contempt, attachment or sequestration. US v McNulty (USDC 1978) ³Irish lottery winner´ p234 D won Irish lottery roughly, $128K, IRS came to collect winnings, which D had tried to secretly collect and deposit in foreign bank. D¶s money still in bank but D in prison for


tax evasion and subject to tax penalties of $68K. D¶s only way of satisfying judgment is money in foreign bank. Court ordered D to repatriate his assets from the bank and deposit them with clerk of court. Again ³in personam´ jurisdiction thus can order D to transfer funds and can punish him for not doing so.

2. The Plaintiff¶s inadequate legal remedy, irreparable injury
will not grant specific relief when there exists and adequate remedy at law adequacy doctrine- in chancery courts carried over to American colonies and still the law in almost every jurisdiction Irreparable injury rule- still cited to

3. Equity cannot protect personal, political, or religious rights
Certain domains outside the scope of court¶s powers No remedy available and injunction not proper in ³political thicket´ Bush v Gore Courts lack jurisdiction to issue injunctions (TRO) in religious disputes Decker ex rel Decker v Tshetter Hutterian Brethen (SD 1999) Court may grant an injunction in the area of church-state relations. Court granted injunction to prevent school prayer at public school events. Ingebretsen v Jackson PS Dist. (fed 5th 1996) Courts often issue injunctions to protect P¶s personal and political constitutional rights

4. Equity lacks jurisdiction to enjoin a criminal prosecution
Norsica v Board of Selectman (SC Mass 1975) p242 ³Transient store´ P owned retail store, Board said she neededpursuant to Mass Stat. a $200 transient license and a $500 bond to operate,P also being charged criminally for violating same statute. She filed for declaratory relief that her store not within scope of statute and won. Selectman (D) appeal ³True rule that equity will protect personal rights by injunction upon the same conditions upon which it will protect property rights by injunction. These conditions are 1. That unless relief is granted a substantial right of the P will be impaired to a material degree;


2. That the remedy at law is inadequate and 3. That the injunction relief can be applied with practical success and without imposing an impossible burden on the court or bringing its processes into disrepute´ from Kenyon v Chicopee Concentrated on 2nd prong of Kenyon test The available defenses to the criminal complaint provided an adequate remedy at law thus injunction should not have been granted. Shuman: 6 merchants alleged police threatened to prosecute for not having license to conduct business. No injunction- other adequate remedies at law Kenyon: repeated abuses by prosecution, police, and judges left Jehovah witnesses with no other adequate remedy at law. ³not ground for equity relief since the lawfulness or constitutionality of the statute or ordinance on which the prosecution is based may be determined as readily in the criminal case as in the suit for injunction.´ Also cited Younger abstention unless ³very special circumstances´


5. Equity lacks jurisdiction to enjoin a crime
People ex. Rel. Gallo v Acuna (SC Cali 1997) p248 ³Latino gang members, injunctions´ Preliminary injunction entered against 38 individual members of an alleged street gang in San Jose CA. 5 challenged the Order to Show Cause Public nuisances enjoinable by injunction; ³to qualify as a public nuisance the interference must be both substantial and unreasonable.´ Backed up in RST substantiality as proof of ³significant harm´ further defined as ³real and appreciable invasion of the plaintiff¶s interests´, one that is ³definitely offensive, seriously annoying or intolerable´ objective measure: ³if normal persons in that locality would not be substantially annoyed or disturbed by the situation then the invasion is not a significant one.´ Highwater mark ³Pullman injunction´ ±In Re Debs 1896- broke strike of Pullman railroad employees by public nuisance injunction b/c strike¶s effect on national commerce. Has been limited by state courts People v Lim Cal 1941 ³ultimate legal authority to declare a given act or condition a public nuisance rests with the Legislature´ and court cannot extend definition of public nuisance unreasonably [Repetition or continuance of any criminal act is a public nuisance so vests the court of equity¶s power to abate crimes with injunction.] paraphrased from Lim; proscribing act also must further community and collective interests to vest power of equity courts Paragraph a and k not invalid, pass constitutional muster and behavior of defendants can be proscribed by injunction because record is replete, behavior is a public nuisance. Concurrence and Dissentpeaceful assembly should not be enjoined 2nd Concurrence and Dissent Blanca Gonzalez should not be enjoined, no evidence she is gang member Dissent Montesquieu, Locke, and Madison would be rolling over in their graves. Provisions of preliminary injunction too vague , prohibitions encompass much lawful activity that not defined as public nuisance. ³Unfortunately, there are some who think that the way to freedom in this country is to adopt the techniques of tyranny.´ CJ Earl Warren


Compare Acuna with City of NY v Andrews (NY 2000) where NYC tried to combat prostitution in Queens plaza with similar injunction. Court held ³The city has made it quite plain that it intends to use this injunction to bypass the Criminal Court, which it sees as providing inadequate relief.´ Equity should not intervene bc juries reluctant to convict in criminal prosecutions. Struck down on association and freedom of travel grounds. Buffer-zone injunctions granted in Madsen v Women¶s Health Center (SCOUTS 1994) buffer at 36 feet. Also Schenck (1997) floating buffer at 15 feet Original buffer-zone Jackie Onassis v paparazzo 25-feet floating Vices and other things that injunctions have been issued against; obscenity (porn), crack, AIDS, Love Canal waste sites US v Occidental Chem. Corp. 1997; Illegal gambling, Failed to enjoin- stop Global Warming, repackaged products liability suits against lead paint and gun manufacturers.

6. Equity will not enjoin a libel
Prior restraint rule- an injunction is a prior restraint if it forbids a D¶s speech, think it threatens the D¶s expression more than subsequent punishment. Tory v Cochran (SCOTUS 2005) p268 ³Guy defamed Johnnie Cochran´ Tory engaged in continuous unlawful defamatory activity against Cochran. Court issued permanent injunction that D could not Cochran or law firm in any public forum. Cochran died, case is moot but ³an order issued in this area of First Am. rights must be precise and narrowly tailored to achieve the pinpoint objective of the needs of the case.´

B.Injunction Procedure 1. Interlocutory relief, TRO and Preliminary injunctions
given promptly to eliminate or minimize P¶s irreparable loss before the judge¶s final decision. Preserves the controversy for a meaningful decision after full trial. Must weigh P¶s loss versus protecting D from possible erroneous interlocutory injunction. 24

TRO- after a hearing, can be done ex parte usually called ³ex parte TRO´ Preliminary injunction- before full trial after an adversary hearing Permanent injunction (aka injunction)- only after a full trial. FRCP 65 Roe v Crawford (USDC 2005) p272 ³pregnant prison inmate´ Preliminary Injunction held by telephone call. Pregnant female in women¶s prison filed to have an offsite abortion in St. Louis. D, refused to transport P, thus was stalling which was increasing the health risk to the P. P¶s motion is granted 4-Point Test/ 4 factors: (1) the threat of irreparable harm (2) balance between harm to plaintiff and harm in granting injunction versus the D (3) the probability movant will succeed on the merits (4) the public interest. 1. relied on roe v wade to show irreparable harm 2. harm of P outweighs D¶s bullshit argument 3. P will probably ultimately succeed bc case law supports her position 4. No harm to public interest by granting No more defiance of its orders P wins In general Roman test for granting preliminary injunctions 1. remedy of law inadequate 2. substantive right being infringed on [he has no idea what the fuck he is talking about] Disfavored Preliminary Injunction (notes p275)- one that alters status quo, is mandatory, and gives movant full relief she seeks at trial. Sliding Scale for evaluating these any p seeking one then must show ³modified likelihood on the merits standard´- either Injury really high or high likelihood of success on merits 2.Jury Trial After Merger No jury when party seeks injunction, Feltner v Columbia Pictures Television (SCOTUS 1998) ³copyright old TV shows´ Copyright infringement case Feltner (D) owned several TV stations which showed unauthorized TV shows under copyright by Columbia (P). P won a $8.8M judgment from


judge verdict. D argued should have been heard by jury because damages are juries domain. Even though damages were fixed by copyright statute and thus statutory damages, an equitable relief. Columbia argued this did not trigger jury trial right of 7th amendment because not a ³suit at common law´ because no legal rights ascertained. Historically copyright infringement has been adjudicated in courts of equity since 17th century.Common law rule ³in cases where the amount of damages was uncertain, there assessment was a matter so peculiarly within the province of the jury that the court should not alter it.´ right to jury trial includes the right to have jury determine the amount to damages, if any awarded [to copyright owner]. Note: be careful what you wish for, Feltner got his jury and they awarded Columbia $31.68M C & K Enginering Contractors v Amber Steel Co. (Cal SC 1978) p285 ³Subcontractor water plant´ P suit for damages stemming from a breach of contract based entirely on equitable doctrine of promissory estoppel, neither party entitled to jury trial. D, subcontractor, gave in bid to P, contractor, to do some work on water plant. P gave master bid to city, approved, D backed out claiming bid was ³honest mistake´. Empanelled advisory jury on issue of P¶s reasonable reliance on D¶s promise, jury found reliance reasonable and Judge order D to pay the cost of detriment, another contractor. Promissory estoppel: 1) promise 2) reliance on the promise 3) reliance was reasonable so it was foreseeable and incurred detriment (jury) 4) enforcement is necessary to avoid injustice ***damages are only the detriment incurred Promissory Estoppel and Unjust enrichment would be equitable ³to avoid injustice´ ± equitable


³a jury trial must be granted where the gist of the action is legal´ No jury needed equitable doctrine. Dissent focus not on rights but on remedies, P who seeks damages should be entitled to jury. Also the rule in Michigan.


3. Equitable Cleanup
Ziebarth v Kalenze (ND SC 1976) p292 ³Specific performance cow´ Cattle buyer contracts to buy calves from D. D sells them to someone else, P files suit asking for specific performance. Which is impossible bc D already sold cows to 3rd party Overrules ³law of substituted legal relief´ which is espoused in UCC § 2-716 [specific performance] and in subpart 2 states: ³the decree for specific performance may include such terms and conditions as to payment of the price, damages, or other relief as court may deem just.´ D knew no specific performance, which would trigger non-equity action, in damages thus D should have requested jury did not, so verdict ok. Tipsy Coachman sort of.

C. The Modern Injunction: Discretion and Flexibility 1. The Chancellors Discretion
Navajo Academy v Navajo United Methodist Mission School (NM SC 1990) p297 ³Academy moves in with Mission´ Two schools Academy moves to mission campus (1981), Academy does not charge tuition thus enrollment jumps and swallows mission. Mission enters into year to year subleases (1981-1986) but needs an upgrade of facilities so asks Academy to ask Bureau of Indian Affairs, because free school, for grant which is approved. In 1987 Mission seeks to get Academy evicted. Academy files for damages of $1.8M and ask for continued occupancy. Court grants 3 years it gets to stay and then it is forced to leave. Not outside of Courts discretion because ³the fashioning of an equitable remedy, in a suit involving equitable powers of the court, was an abuse of discretion.´ Improvements to school, but for the Academy, can be viewed as a couple years rent. Weinberger v Romero-Barcelo (SCOTUS 1982) p301 ³bombing off PR´ Gov. and citizens of Puerto Rico suing the Navy, over test bombing off some island. Some bombs did not detonate thus PR argues Navy is violating the Fed Water Pollution Control Act (FWPCA), DC agrees but does not file an injunction, CA orders Navy to stop bombing until they get a permit. Test is whether statute/ Congress permits injunction, or provides other relief. 28

SCOTUS says injunction not the only way of granting compliance but FWPCA does authorize «permanent or temp injunctions and permits DC to order the relief it considers necessary to secure prompt compliance with act.

2.Two maxims of Equity: Clean hands and Laches
a. Clean Hands doctrine Green v Higgins (SC Kan 1975) p310 ³Schisters trying to do business´ Both P and D committed fraud in selling/buying house. Committed fraud against real estate agent, third party with right of first refusal, and each other. Clean hands doctrine; ³in substance provides that no person can obtain affirmative relief in equity with respect to transaction in which he has, himself, been guilty of inequitable conduct.´ To be applied at discretion of court, conduct that amounts to unclean hands must be willful conduct that is fraudulent, illegal, unconscionable and it must relate to the subject matter of the suit. Additionally the purpose of clean hands doctrine is to protect the courts, and not a matter of defense of the party asserting it as an affirmative defense. Not effected by merger, only available in suits of equity. b. Laches Stone v Williams (Stone I) (USCA 1989) p315 ³Hank Williams baby´ Hank Williams Sr., country music star, died at age 29 in 1953 had baby, P, who is suing for her share of copyright renewal rights for all his hits. His estate was litigated in 1967 for his son Hank Williams Jr. She did not know who her rumored dad was till she was 21, also told ³everything has been decided against you´. She had numerous chances to investigate further but finally choose look at documents until 1984 with her attorney. DC ruled doctrine of laches barred her claim. ³equity aids the vigilant, not those who sleep on their rights.´ She should not be penalized for not participating in 1967 proceedings, or for the period between 1974 to 1980 because she did not want to upset adoptive parents. But no excuse for waiting five more years to file until 1985.


Doctrine of laches not a bar because P¶s conduct unexcused it must also be determined whether the D was prejudiced in the delay. If no excuse than any prejudice sufficient, however if mediocre excuse then slight prejudice. Prejudice can be shown through 1. Decreased ability of the defendants to vindicate themselves or 2. Inequity in light of some change in D¶s position to permit plaintiff¶s claim to be enforced. D prejudiced in both ways Stone v Williams (Stone II) (1989) p320 D¶s lawyers intentionally and fraudulently covered up plaintiff¶s identity. D had unclean hands thus decision reversed. ³The evidence of fraud which the AL SC found persuasive, makes SJ on the grounds of laches inappropriate.´ Notes: She eventually won in Stone III ³Some courts have held the running of an analogous SoL creates a rebuttable presumption of unreasonable delay and prejudice flowing therefrom.´Goodman p322

Still must obey the injunction if not then held in contempt Direct contempt- from behavior in the courtroom Indirect contempt ± disobedience from outside the courtroom, Entitled to notice and a hearing 1. What Orders Support Contempt? FRCP 65 (d) Contents and Scope of Every Injunction and Restraining Order. (1) Contents. Every order granting an injunction and every restraining order must: (A) state the reasons why it issued; (B) state its terms specifically; and (C) describe in reasonable detail ² and not by referring to the complaint or other document ² the act or acts restrained or required.


H.K. Porter Co. v National Friction Products (USCA 2nd 1977) p325 Settlement agreement between the parties. P wanted clause enforced had contempt proceedings To have contempt must have been disobedience of ³an operative command capable of enforcement.´ And that command, if it is in substance an injunction, must comply with rule 65(d)[above] of FRCP. DC judgment did not use language which a contractual duty into an operative command. Even if it was an operative command, which it was not, did not conform to mandatory precedents in FRCP 65(d)(1)(C) because it merely referred to the settlement agreement and did not issue an operative command. ³Equitable decrees«trace their origin to the royal command« to obey the chancellors direction. B/c of the risks of contempt proceedings, civil or criminal, paramount interests of liberty and DP make it indispensible for the chancellor to speak clearly, explicitly, and specifically if violation of his direction is to subject a litigant´ to penalty including damages. Even statute not enough, as a reference. 2. What is a violation? Playboy Enterprises v Chuckleberry Publishing (USDC 1996) p328 ³Playboy v Playmen´ Def. Tattilo, Italian man, publishing ³Playmen´ magazine in Italy since 1967, D wanted to bring Playmen to US in 1979. Playboy got Judgment in 1981 which enjoined D from publishing, printing, distributing or selling in the United States an English Language Magazine titled ³Playmen´. D in 1996 has violated judgment now by operating ³playmen´ website from Italy. A Court has the power to hold a party in civil contempt when (1) there is a ³clear and unambiguous´ court order; (2) there is clear and convincing proof of noncompliance; and (3) the party has not attempted to comply in a reasonably diligent manner. **** failure to comply need not be willful**** Cyberspace not a safe haven, Tattilo has violated the Court¶s Injunction, Contempt granted


3. The Puzzle of Criminal Contempt-Coercive Contempt International Union, United Mine Workers of America v Bagwell (SCOTUS 1994) p334 ³Mine workers causing ruckus getting fined´ Unions told not to violate injunction, every violation brings penalty of $100K for violent and $20K non-violent. 7 separate contempt hearings for over 400 offenses racks up $64M in fines for Union. Companies and union settle and vacate $12M in fines but $52M still owed to Virginia and two counties. Union argues fines are criminal contempt and not civil contempt thus needed a jury and higher standard of proof. Civil Contempt- ³carry the key of prison door in your own pocket.´ 1. coerces the D into compliance with the court¶s order, or 2. compensates the complainant for losses sustained Criminal contempt- a fixed sentence of imprisonment and is imposed retrospectively for a ³completed act of disobedience.´ Gompers (had been put in jail for 12 months was criminal contempt)³thus a flat, unconditional fine totaling even as little as $50 announced after a finding of contempt is criminal if the contemptor has no subsequent opportunity to reduce or avoid the fine through compliance.´ What protections are afforded and When? ³Courts independently must be vested with ³power to impose silence, respect, and decorum, in their presence´ Anderson ³inherent Contempt authority´ Gompers Thus direct contempt¶s can still be handled summarily Indirect contempt¶s of complex injunctions demands reliable fact finding and triggers the criminal procedural protections[presumed innocent, advised of charges against them, have an opportunity to respond to charges, right to counsel, right to call witnesses, have a public trial, unbiased judge, right not to testify against oneself, and proof BaRD; and afforded a jury for serious criminal contempt] to prevent arbitrary exercise of judicial power. Fines levied on Union were not compensatory and were punitive thus should have triggered criminal procedural protections such as criminal jury trial. Scalia Dissent $52M criminal, too extreme a case to try and clarify civil versus criminal contempt. Would satisfy all the previous tests.


4. Confinement, Contempt, and Cash money: Ability to comply. Statutes authorize a judgment creditor to institute collection proceedings or discovery proceedings to find the judgment debtor¶s assets. Judge may enforce an order to pay with contempt even though requires him to pay money bc defendants failure to comply considered contumacious conduct. ³Yet cannot get any blood out of a turnip´ contemptor can assert the defense of inability to comply´ Deadbeat dad cannot be forced into civil contempt if he is unable to pay Hughes v Georgia Dept of Human Resources p 344 Contemptor has both burden of persuasion and burden of production on defense of inability to pay. Moss v Superior Court, Ortiz (SC Cal 1998) p345 ³Deadbeat dad has to pay´ There is no constitutional impediment to imposition of contempt sanctions on a parent for failure to pay child support when the parent has the ability to seek and accept available employment. A court order requiring parent to pay child support and thus seek and accept gainful employment is not a violation of the thirteenth Am. Prohibiting involuntary servitude. Neither it is a violation of Cal Const. ³A person may not be imprisoned for a debt´ bc provision has long been held not to apply to imprisonment for crimes or contempt¶s. 5.The Collateral Bar Ex Parte Purvis (Sc AL 1980) p352 ³protestor imprisoned for 3 criminal contempts´ Purvis violated of TRO by striking against his employer, Water Works Board of Birmingham. Sentenced to criminal contempt of 15 days for 3 separate incidents of contempt. Uphold TRO despite Purvis contention that Injunction violated his constitutional rights to freedom of assembly, etc. ³order issued by court with jurisdiction« must be obeyed until it is reversed by orderly and proper proceedings even though it may be constitutionally defective´ unless rare case [If transparently invalid- ridic high standard] where compliance would cause the irreparable injury and appeal would not totally repair the error.


5. Who may obey Because courts cannot make general rules that apply to the masses, such as statutes as made by legislatures, then injunctions only apply to certain people. Can be geographically specific Acuna or Milk Wagon Drivers p359 or 36 feet Madsen People v Conrad (Cal CA 1997) p360 ³Two groups one abortion clinic´ Two groups picket abortion clinic, one group, ³Solano Citizens for Life´ has injunction enjoined against it. ³Operation Rescue of California, another anti-abortion group, claims they are unrelated. ORCal was at clinic to ³test the injunction´. Parties did not know each other and thus could ORCal members could not be enjoined by previous injunction. Did not act ³in concert´ as required by injunction. Ex Parte Davis (Tex 470 SW 2d 647) [Roman asked up to look up] ³It don¶t apply to me´ Beaumont preacher building church against injunction states that an 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 Neither Bible Baptist Church nor Davis were parties to the 1962 temporary injunction. The question here is whether a non-party to the original injunction proceeding, was in active concert or participation with the Brites. This court in Ex Parte Fostersaid that while a person not named as a party is not ordinarily bound by the terms of the injunction decree and therefore cannot be punished for violating its terms, he is µin active concert or participation¶ with the named party if he participated in the original proceeding and was a real party in interest when the decree was rendered

E. The Enforcement of Constitutional and Public Law Through Structural Injunctions
Granted to protect P¶s constitutional rights usually infringed by schools, prisons, jails, and now mental hospitals and even police departments. Future based hard to draft and strain the judiciary, also Separation of powers concerns because may usurp executive


and legislative power. But sometimes needed because other branches too slow to react, i.e. Brown II ³all deliberate speed.´ Courts can hold city council members or other government officials in contempt for not following structural injunctions; Courts can subject injunctions over entire systems as in Dixon v Berry where courts supervised the DC mental health system for over 25 years. A judge may also grant relief from an injunction when the prospective application in ³no longer equitable´ FRCP 60(b)(5). 1. Attempts to remodel an existing social or political institution to bring it into conformity with constitutional demands 2. Typically complex and invasive 3. Likely to involve judge in tasks traditionally considered to be non-judicial, that is, less about rights and duties and more about management 4. Used only as public law remedies for serious and pervasive rights violations 5. Ex. restructure school system to facilitate equality of educational opportunity

F. Injunction Reform
2 big areas: Limits on strike injunctions and injunctions which effect unconstitutional prison conditions Frew ex Rel. Frew v Hawkins (SCOTUS 2004) p374 Texas parents filed a class action lawsuit on behalf of their children against state healthcare officials, claiming deficiencies in the state's Medicaid program. The case was settled through a consent decree, a written agreement similar to a contract that the court approves and has the power to enforce. Two and a half years later, parents were unsatisfied with the state's progress and filed a motion to enforce the consent decree. The district court found that the consent decree was enforceable, but the court of appeals reversed, holding that the state was immune from enforcement under the Eleventh Amendment, which provides that a state cannot be sued by individuals from other states, countries, or its own residents unless it explicitly waives immunity. The court of appeals held that a consent decree is not enforceable against a state or its officials except to vindicate a federal right under 42 U.S.C. § 1983. The court found no violation of a federal right and no waiver of sovereign immunity; therefore, the consent decree was unenforceable.


Chapter 4 ± Unjust Enrichment- Restitution
A. Doctrine of Unjust Enrichmentis an Equitable one, providing oneparty should
not be able to benefit at the expense of another because of an innocent mistake or unintentional error. UE opposite of Officious intermeddler- window washer. Kistler v Stoddard (Ark CA 1985) p384 ³Hey I planted those crops´ Stoddard tenant farmer for 20 yrs. planted crop in Nov. 1980. Farm owner died, estate sold land which Stoddard planted on. New owner unjustly enriched. Stoddard had no equitable or legal claim to the crop, but that does not mean D (Kistler) is entitled to be unjustly enriched. Kossian v American Nat. Ins. Co.(Cal CA 1967) p393 ³Cleanup of Fire in hotel´ The plaintiff was hired by the owner of a hotel to clean up debris after a fire. He performed the work but was never paid. Later, the hotel owner filed a bankruptcy petition. The trustee in bankruptcy abandoned the hotel to the defendant company, which held a mortgage on the property. The defendant took possession of the debris-free premises, and also collected on an insurance policy the hotel owner had maintained for the defendant's benefit pursuant to the mortgage. The insurance contract indemnified the defendant for fire loss, including the cost of removing debris; but, like most insurance contracts, it did not require that the work be done. The plaintiff asserted a restitution claim against the defendant, seeking a money remedy in the amount of the insurance proceeds corresponding to debris removal. Although the defendant never requested the plaintiff's services, and the insurance payment was based on an independent contract between the hotel owner and the insurer, the court allowed the claim. It interpreted the "equitable doctrine of unjust enrichment" to mean that the defendant should not "be indemnified twice for the same loss, once in labor and materials and again in money, to the detriment (forfeiture) of the party who furnished the labor and materials." Patureau-Miran c.(v) Boudier (France 1892) Boudier, manure salesman, supplies Patureau-Miran¶s tenant; tenant evicted and court finds unjust enrichment; action in de rem verso [action for restitution based on the 36

defendant¶s UE] derives from the principle of equity which forbids one to enrich oneself at the expense of another.

Knaus v Dennler (Ill. CA 1988) p396 ³neighborhood lake and dam´ P purchase lake front lot, had ½ earthen dam protecting the neighborhood from flooding. Dam broke now P want D¶s to help pay for dam. Some neighbors contributed to fix dam. Smedleys, one D, neighbors objected to their portion of the dam being repaired. Ill courts recognize quantum meruit but not applicable. ³B/c P¶s instructed the repairs to be commenced notwithstanding defendant¶s opposition and lack of willingness to enter the agreement proposed by P¶s, we are unable to find the Ds voluntarily accepted a benefit, as required to establish unjust enrichment.´ D¶s are freeriders, and get trespass damages of $130. Notes: does common fund fit into UE?

B. Legal Restitution: Quasi-Contracts
Legal Restitution two branches (A) money or value restitution, occurs when a successful plaintiff recovers a money judgment measured by the defendant¶s unjust enrichment. (B) specific or specie restitution includes replevin and ejectment; where the D returns the P¶s exact chattel or real property respectively. 3 ³common counts´ or Quasi-Contract: Complaint for money had and received Quantum Valebant- for goods sold and delivered Quantum Meruit- for service rendered under UE principle Not equity in chancery sense- thus need a jury trial and P prevails then get a money judgment. Many cases, even ones below, confuse equitable and legal restitution; mistakenly use terms interchangeable. Be on the look out for improper vocab. 1. Measuring the defendant¶s benefit-services Occurs because no contract or tort but P has conferred a benefit on the D Campbell v TVA (USCA 1969) p406 ³trade journals for TVA library´


P made microfilm trade journals for TVA, but no K because was ordered by an employee at TVA with no authority to enter into such a contract. Action in Quantum Meruit. Two ways to measure benefit D received: 1. Fair market value or 2. How much the benefit has been worth to the person upon it was conferred? Bc it was TVA library, real benefit to patrons, almost immeasurable. Correct in using fair market value, Only fair market value is to TVA library. Also did not need to follow experts assertion that microfilm could have been done for $10K. Campbell recovery was for $30K. DissentJ. Rives (only one year of college) judgment in exact amount of original invalid contract, thus decision did not even follow their own rule. Maglica v Maglica (Cal CA 1998) p415 ³maglight unmarried seperation´ Unmarried couple who lived together for 20+ yrs, Husband started maglight, wife¶s ideas helped grow company. She got $84M in quantum meruit from Jury. No contract, no marriage bc no ³common law´ marriage ³the fact they remained unmarried is dispositive´ ³The measure of recovery in quantum meruit is the reasonable value of the services rendered provided they were of direct benefit to the defendant.´ ³the idea that one must be benefitted by the goods and services bestowed is thus integral to recovery in quantum meruit.´ Improper jury instructions misled the jury, Quantum meruit is not an implied contract New trial, new jury instructions, more facts about business relationship coupled with facts about living together, holding themselves out as husband and wife, could help wife prevail.

C. Equitable Restitution
1. Constructive Trust more beneficial in three situations, and major equitable restitution 1. D is bankrupt, and P can trace his or her property to identifiable asset


2. D has purchased an identifiableasset with P¶s property, and that asset has appreciated in value 3. D has transformed P¶s property to a 3rd person, and P wants the 3rd person to return the item; operating like replevin or specific restitution P must TRACEso chancellor can find the constructive trust ³res´ Simonds v Simonds (NY CA 1978) p422 ³1st Wife wants her life insurance money´ Decedents 1st wife seeks to apply a constructive trust on proceeds of life insurance policy. Separation agreement required husband to keep life insurance policy, of $7000 to be paid to her. Insurance policy lapsed. ³The separation agreement vested in the first wife an equitable right in the existing policies. Decedents substitution of policies could not deprive the first wife of her equitable interests, which was then transferred to the new policy.´ Cardozo: ³a constructive trust is the formula through which the conscience of equity finds expression. When property has been acquired in such circumstances that the holder of legal title may not in good conscience retain the beneficial interest, equity converts him into a trustee´


2. Tracing Restatement of Restitution § 202 comment c Explains the stealing money lotto conundrum explained in E &E p282 Limits on tracing: creditors: fraud victims of a ponzi scheme should each get a pro rata share US v Durham Life Ins.: embezzled moneythen buy Life Insurance only entitled to amount of embezzled money, interests, and any costs Homesteads: yes can get homestead if take your money and buy a house, However Fla one of the most protectionist states for homestead

C. Defenses to Restitution
Non-affirmative defenses: attack either the unjustness or enrichment tag the P with intermeddler or volunteer status Affirmative Def: a. Time bar- varies if legal then jurisdictions contract statute of limitations or equitable restitution under equitable doctrine of laches b. Change of position-estoppel- if making restitution would be ³inequitable´ or estoppel if bank overtransferred, D asked if it was his money and bank assured him ³money is yours´ then creates estoppel- must show relied on P representation p432 c. Bona Fide purchaser- second hand purchaser no idea, what you purchased was without good title- must show lack of knowledge under UCC d. Discharge for value- when creditor discharges debt owed to them bc thought money was clean or property had good title.

Chapter 5- Restitution in Transactions
A. disqualifying the P for Rescission-Restitution 1. Election of another Remedy FRCP 15 allows P¶s to amend complaint adding or retracting remedies FRCP 54(c) tells a judge to grant the relief to which the successful plaintiff id entitled even if the party has not demanded such relief in the party¶s pleading. 40

UCC remedies cumulative Gannett Co. v Register Pub. Co. (USDC 1977) p436 ³Hart-fraud Times´ Sale of Hartford Times, D overvalued assets and fraudulently inflated circulation stats. P learned of this only after purchase, did not rescind right away. TC held waited two months, to long, to rescind thus affirmed the contract. ³the reasonable time period within which rescission must be demanded starts the moment the injured party is on notice of the fraud.´ To force shares of Hartford back upon Gannett at his stage would be unequitable. 2. Lack of Injury Earl v Saks & Co. (Cal SC 1951) ³How much is that Fur Coat?´ Lady gets Saks to sell fur coat to BF only because she promises to pay difference. She then returns to get coat monogrammed and pays the difference, he tells Saks he is rescinding. He then sues Saks for conversion. But no injury Saks has coat, he has paid nothing, only signed sales slip and Mrs. Earl has paid $916.30 which can be returned. So Contract Rescinded, [in modern day we call this a return] Monetary Injury is a requirement- classic view- Prof. Pomeroy Harper v Adametz (SC of Errors Conn.) 1955 ³Lying Realtor´ Realtor defrauds buyer out of 63 acres by lying to buyer and seller. Ends up purchasing the 63 acres for his son (D). ³Equity will not permit these D to keep a benefit which came to them by reason of Jere¶s fraudulent conduct.´ ³If one acquires property by means of fraudulent misrepresentation of a material fact, equity will assist the defrauded person by fastening a constructive trust on the property´ P gave addition $1000 he had offered and court ordered D to convey 63 acres to P. B. From Defective Negotiations to plain Overreaching 1. Seller¶s right to disclose Reed v King (Cal CA 1983) p455 ³For Sale: mother and her four children murdered´ Murder of five people, 10 years ago, does Seller have to disclose?


In general seller of house has a duty to disclose: ³where the seller knows of facts materially affecting the value or desirability of the property which are known or accessible only to him & also knows that such facts are not known to, or within the reach of diligent attention and observation of the buyer.´ 2. Undue Influence Odorizzi v Bloomfield School Dist. (Cal CA 1966) p460 ³homo school teacher resigns´ School teacher forced into resigning after arrested for homosexual activity. Wants declaratory relief reinstating him after charges were dropped Undue influence involves an application of excessive strength by a dominant subject against a servient object Undue Influence certain characteristics of excessive strength: 1. Timing of discussion of transaction 2. Consummation of transaction at unusual place 3. insistent demand that be done immediately 4. extreme emphasis unexpected consequences of delay 5. use of multiple persuaders of dominant party 6. absence of third party advisors 7. statements that there is no time to consult financial advisors or attorneys Remanded to TC for factfinding determination ****Roman- also possible duress and threat of character concerns in Odorizzi 3. Duress-Business Compulsion Selmer Co. v Blakeslee-Midwest Co. (USCA 1983) p466 ³I had to take the offer´ Selmer, P, subcontractor entered into agreement with D, general contractor, D was to supply something to P then P to build and deliver to site. D was late in delivery and P incurred cost of $150K, offered to settle for $120K, D refused to budge from counteroffer of $67K. P accepted because of economic difficulties and now is suing for rest of costs incurred claiming ³economic duress´


³The mere stress of business conditions will not constitute duress where the defendant was not responsible for the conditions.´ 4. Unconscionability ³Doctrinally difficult´ Discover Bank v Superior Court (Cal SC 2005) p472 ³Fucked up cardholder agreements´ Arbitration agreement between Discover and Card holders, arbitration came about because aggregate late payments from class action [payment was late after 1pm]

When a party has superior bargaining power and has carried out schemes to deliberately cheat consumers out of individually small sums, the waiver becomes applicable and is unconscionable. Gave discover card unequal bargaining power

C. No Enforceable Contract Contract may fail bc of SoF, failure of consideration, lack of capacity, party¶s mistake or illegality. 1. SoF Required Writing Rule Marriage Year Land Executor Guarantor Sale of goods over $500 and UCC 2-201 revised $500 to $5000 [revised still not adopted as of 2010] Schweiter v Halsey (Wash SC 1961) p 481 ³SoF land case´ Tried to convey land with an inadequate description of the property. Violated Statute of frauds thus voided whole agreement Abrams v Unity Mutual Life Ins. (USCA 2001) p485 ³preneed funeral insurance´ P, funeral director brought on by Insurance company to start selling ³preneed´ insurance for beneficiaries to cover funeral costs. No written contract despite 7 drafts of a contract


and relationship lasts 6 years. Contract claim is barred bc violates SoF and unjust enrichment claims is barred for two reasons. One it based on the same promise and seeks the same relief of the barred contract claim, thus enforcing it would circumvent the statute of frauds. Second he cannot prove what benefit he conferred on Unity without the draft contract, the fatal flaw resurfaces.


2. Lack of Capacity Halbman v Lemke (Wis Sc 1980) p488 ³minor buys car, car breaks down´ P a minor buys car from D. Car breaks P take sit to garage repair bill $637.00 does not pay bill. Garage removes engine and tows to minor¶s house. Infancy Doctrine- Absolute right of minor to disaffirm a contract Absent misrepresentation or tortious damage to the property, a minor who disaffirms a K for the purchase of an item which is not a necessity may recover his purchase price without liability for use, depreciation, damage, or other diminution in value. Draft of Rst. Of Restitution § 16 Illustration 13 allows Seller to offset depreciation with minor buyers refunded purchase price/consideration D. Ground for restitution 1. Deficient Consideration Johnson v GM Corp, Chevy motors division (Kan SC 1983) ³UCC revocation´ setoff P, bought a new truck, traded in old received a limited warranty. Problems with new truck almost immediately. Continued to drive truck bc seller refused to take back after numerous chances to cure defects. Seller wants setoff for depreciation of truck while litigation on going ³A B that properly rejects or revokes acceptance is first made whole from the injuries resulting from the seller¶s failure to perform his part of the agreement, escapes the bargain, and forces any loss resulting from depreciation of the goods back on the seller.´ B had vested security interest pursuant to 2-711 UCC thus should have kept truck after S refused to retake possession. Get out from under being wrongful to the Seller [2-608(2)(a)] bc transportation is necessity not a luxury thus had to use truck However S gets there setoff 2 ways to calculate: 1. Lease vehicle monthly depreciation 2. Alternative method highway safety method


Chose second method D gets their setoff but also owes P¶s interest at 10% from time of attempted revocation till judgment, ouch!

2. Mistake Renner v Kehl (Ariz SC 1986) p499 ³jojoba farming´ Equitable rescission from a mutual mistake. Buyers of land wanted to start a jojoba farm S thought land was sufficient for jojoba farming. Turns out not enough water a P¶s wanted out of agreement. TC awarded and CA upheld P¶s getting back their down payment and all damages incurred with drilling test wells etc. Ariz SC struck down award and said ³P¶s are entitled to their down payment plus the amount by which their efforts increased the value of the petitioners prop. Not the $229K in damages awarded because that would shift the risk of mistake onto the D¶s which is incompatible with equitable rescission.´ Terra Nova Ins. v Ass. Commercial Corp. (USDC 1988) p504³stolen truck insurance fraud´ Scharbarth commits insurance fraud but insurers pay out anyways, despite investigating realizing Scharbarth probably commits fraud Ins. pays out claim scared of retaliatory claim for bad faith insurer. Scharbarth goes to jail after FBI gets involved. ³Under Wis. Law plaintiff¶s cannot recover from Associates what turns out to be a mistake of fact.´ Scharbarth however owes the full amount plus interest Lenawee County Board of Health v Messerly (Mich SC 1982) p 508 ³leaky septic tank´ Pickles¶ purchased investment property only to discover the septic tank was leaking out onto the ground. The Board moved in and condemned the property, and seeking a permanent injunction until the property was brought into compliance. Injunction granted. Messerly¶s former buyers filed foreclosure and Pickle¶s countered with rescission. TC


found no cause of action, CA found a mutual mistake that went to a basic element of the contract, an income producing property. SC Mich reverses ³In cases of mistake by two equally innocent parties, we are required, in the exercise of our equitable powers, to determine which blameless party should assume the loss resulting from the misapprehension they shared. Equity suggests the risk should be allocated to the purchasers.´ ±no rescission


Mutual of Omaha v Russell (USCA 1968) p 512 ³travel insurance´ Woman tries to buy travel insurance from machine, no change buys it from booth, but buys different insurance, she dies on flight back and is not covered under 2nd insurance because trip lasted one day longer, would have been under 1st insurance. ³The printed contract controls´family gets nothing 3. Illegality- Violation of Public Policy Judge can raise illegality concerns sua sponte Bovard v American Horse Enterprises, Inc. (Cal CA 1988) p517 ³roach clips and bongs´ P, sued to recover promissory notes executed by D¶s in connection with Ralph (other Defendant) purchase of Corp. from P. At trial judge discovered Corp made jewelry but really bongs and roach clips, and sua sponte stopped proceedings and threw out compliant. Discussion of Moran which list several factors 1. nature of the conduct 2. extent of public harm which may be involved 3. moral quality of the conduct of the parties in light of the prevailing standards of the community No enforcement of the K R.R. v M.H. & husband (Mass SC 1998) ³Surrogacy agreement´ Enforceability of surrogacy parenting agreement. Lady backed out after 6 months pregers despite complex agreement which provided for compensation and custody rights. Minority of states outlaw, a few have made them legal, including Fla which requires intended mother to be infertile. Others place restrictions but Mass Legislature silent Examine adoption statutes that require waiting period before mother can give away baby. Thus because of public policy surrogacy agreements are void in Mass. Leaves open door if unpaid and mother waits to give up, then would be legit, but again still unenforceable because then not really an agreement.


What about intended father having to pay child support to adoptive mother despite not being real father? Yes he does have to pay in Cal. In Re Marriage of Buzzanca p527

Chapter 6 - Contort
EVRA Corp. v Swiss Bank Corp (USCA 1982) Hybrid tort, contract Roman hates this shit Scrap metal dealer lost a valuable contract b/c D failed to effect a telex deposit Awarded $2.1M by Trial Judge most of which was for lost profit ****Posner decision**** cites Cardozo ³The sender can protect himself by insurance in one form or another if the risk of non-delivery or error appear to be too great.*** The Company, if it takes out insurance for itself, can do more than guess at the loss to be avoided.´ P is not entitled to recover consequential damages from D

C. Economic Loss Rule
Local Joint Exec. Board v Stern (Nev SC 1982) p539 ³Can¶t work suing over fire at MGM grand´ ³Forseeability of economic loss even when modified by other factors is a standard that sweeps too broadly in a professional or commercial context.´ ³the law does not spread its protections so far´ Robins Dry Dock a. The economic loss doctrine ii. A judicially created doctrine providing that a commercial purchaser of a product cannot recover from a manufacturer, under the tort theories of negligence or strict products liability, damages that are solely ³economic´ in nature iii. Three policies upon which application of the economic loss doctrine to tort actions between commercial parties is generally based: 1. To maintain the fundamental distinction between tort law and contract law 2. To protect commercial parties¶ freedom to allocate economic risk by contract 49

3. To encourage the party best situated to assess the risk economic loss, the commercial purchaser, to assume, allocate, or insure against that risk

****Exxon-Valdez Oil Spill p 540**** Trans-AK Pipeline Liability Fund, set up to pay for damages, and the Courts agree owner¶s losses not proximately caused by the oil spill. Either geography too remote, or impact was on customers who stopped patronizing. Adkins v Trans-Alaska Pipeline

Chapter 7 Breached Sales Agreements
UCC article 2 governs sale of goods First must show UCC applies sale of fungible goods over $500 §2-703 covers Sellers remedies in general and comment 1 tells us that Seller¶s remedies are cumulative, unless facts bar a specific remedy. In addition comment 4 guides us to section §1-106, an umbrella to the entire remedies provisions stating ³remedies are to be liberally administered to the end that the aggrieved party may be put in as good a position as if the other party had fully performed´. §2-711 covers Buyers Remedies and §1-106 also applies McCarthy v Tobin (Mass SC 1999) p557 No UCC b/c about land not goods Preprinted real estate form ±OTP- gave extension passed extension by five days and Same day P signed agreement sent by D¶s lawyer D accepted 3rd parties offer to purchase. P gave agreement to D¶s lawyer the next day. P then filed for specific performance and damages. Was the OTP a firm offer? Controlling fact is intention of parties and OTP was binding and contains familiar contractual language Aug 16 deadline is merely a condition subsequent and was waived bc negotiations continued. Specific Performance appropriate ³because property is unique and money damages will often be inadequate to redress a deprivation of an interest in land.´ B. Buyers Damages for Seller¶s Breach 1. Tort v Contract 50

Selman v Shirley (Oregon SC 1939) p566 ³This house aint got no Logs´ The general rule of damages in fraud is that a plaintiff is entitled to "such damages as naturally and proximately resulted from the fraud." 2. Expectancy Damages v Rescission-Restitution Horton v O¶Rouke (Fla DCA 1975) ³4 families and Federal tax Lien´ Ps, rental agreements to live in houses under construction, moved in then told Federal Tax Lien encumbering at $94K. Assured Lien would be removed, renters continued to rent for 22 months. Finally told lien not going to be removed. Then ousted by other Co. who took control of title. They filed for damages against D construction Co. and original landlord. ³No suggestion of bad faith on D¶s part´ so no damages Standard measure of K damages for benefit of the bargain: Difference between value of the land when it should have been conveyed less the contract price as yet unpaid. Classic expectancy 3. Measuring the Buyer¶s Expectancy Wilson v Hayes (TX CA 1976) p580 ³Selling and buying bricks´ Sell 600,000 bricks for $6K, Seller, Defendant-Wilson delivered only 400,000 bricks. Market value $.05/ brick UCC 2-712 Cover or 2-713 MP: o 2-712: cover   buyer doesn¶t have the goods K¶d for (for a number of reasons) formula: return of buyer¶s purchase price + cost of cover (cost to obtain substitute goods) ± K price + incidental damages + consequential damages ± expenses saved  requirements: y good faith²no unreasonable delay²reasonable purchase or reasonable K to purchase²failure to cover leaves all other remedies intact but may impact consequential damages (cmt. 3)


o you don¶t have to cover but if you have consequential damages (i.e., forward sale) and you don¶t cover²you will be sued for breach and cannot get damages o some cases you can¶t cover, then you have consequential damages o §2-713:when buyer doesn¶t cover return of buyer¶s purchase price + MP ± KP + ID + CD ± ES  timing: mkt. price at time buyer learns of breach location: market price at place of tender Under 2-711 he gets his $2000 back for price paid then under 2-713 he gets the $8000 for non-delivery or repudiation. Texpar Energy v Murphy Oil USA (USCA 1995) p580 ³asphalt sale´ Basically get more than out of pocket expenses and 2-713 proper application §1-106 ³remedies are to be liberally administered to the end that the aggrieved party may be put in as good a position as if the other party had fully performed´. Wolf v Cohen (USCA 1967) p 587 ³No damages in real estate´ Suit for damages out of series of real estate transactions; B, going to resell but never did, supposed 2nd buyer backed out. Then filed damages against Seller ³measure of damages for breach of a contract of sale is the difference between the K price and the fair market value of the property.´ Hourihan v Grossman Holdings (FLA SC 1982) p590 ³mirror image house´ House built mirror image DCA applied Edgar v Hosea SC Fla applies 346(1)(a) of RST of K Diminution of value theory Basically get reasonable costs and in fixing problem or difference in value of the product contracted for and value had performance been received by the plaintiff; if this is possible without economic waste


Oloffson v Coomer (Ill. CA 1973) covers Buyers remedies for UCC 2-711 and 2-713 as well as repudiation 2-610 When Seller repudiated B should have secured new corn that day thus only get market price at time and place of tender. 2-713(2). No 2-712 because not cover had unreasonable delay!

4. Buyer¶s Special Damages: Lost business Profits AM/PM franchise Ass. V Atlantic Richfield Co. (Penn SC 1990) p604 ³Sold Bad Gas´ Agreement required franchises to sells ARCO gas, blended with oxinol and caused consumers to have car problems. Precipitous fall off in gas sales during period in which they started selling this bad gas. Rely on 2-714 and 2-715 2-714: value of conforming goods value of non-conforming goods (general damages) 2-715: incidental and consequential damages  a. 1. loss due to general or particular need 2. known at time of K-ing by S 3. couldn t be avoided through cover or otherwise (only economic damages) b. injury to person or property only economic damages y y y 

Lost profits a form on consequential damages: 3 types of lost profits 1. lost primary profits (difference what B would have earned and what they did earn bc of breach) below only available in breach of warranty cases 2. lost secondary profit (loss of secondary goods) 3. loss of prospective profits (aka good will damages) (AM/PM first case in Penn to allow) 2 and 3 become more speculative


for Good will damages [p given opportunity to set forth but must show (a) such profits were related to the breach of warranty and (b) there is a reasonable basis on which to calculate] 5. New Business Rule Mindgames v Western Pub (USCA 2000) ³Cleaver Endeavor: the most fucking ironic game name ever´ Wanted $40M in expected profits that it never earned bc of D¶s lack of marketing Abrogates ³new business rule´ for Ark [even though fed court] Real question is to undue speculation; P had no track record when he created cleaver endeavor could point to no other games he had made. Plus $40M a bit steep had to have sold 10M copies of game to earn that. 6. Emotional distress stemming breach of contract Erlich v Menezes (Cal SC 1999) p619 ³leaky dream home´ Wanted dream house, but contractor built house that leaked everywhere. Claimed emotional distress had physical illness, heart condition, brought on by shoddy construction. ³damages those likely to result therefrom´ Need separate tort to collect emotional distress damages, not recoverable in breach of contract 7. Economic loss rule revisited (p539 originally) p630 ***Tort or product liability avenues of recovery possess special advantages: it avoids wavier (on labels or packaging), it liberates P from Hadley v Baxendale contemplation limit on special damages, unlocks the plaintiff¶s access to recovery for mental suffering and to possible punitive damages. Line between product liability and contract-warranty doctrines: 1. D has no tort-products liability duty when a defective product causes a P purely monetary harmSeely v White motor Co. only contract damages, when product injures only itself. Second test minority nonexistent


8. Reliance Damages Wartman v Hightower (MD CA 1983) p635 ³Flagpole sitter venture´ Met with attorney to incorporate venture, Att. Ok¶ed selling stocks then realized problem contacted Hightower and offered them to meet with incorporation specialists They refused bc would have cost $10K, Jury gave them reliance damages Appeal over reliance damages ³ordinarily profits lost due to a breach of K are recoverable. Where anticipated profits are too speculative to be determined, monies spent in part performance, in preparation for or in reliance on the contract are recoverable.´ II. Sellers Remedies

A. Specific Performance Centex Homes Corp v Boag (NJ AC 1974) p641 ³Seller trying to force Condo on Couple´ Guy buys house then transferred to Chicago, stops payment on check, downpayment. Seller, Vendor, asks for specific performance, that agreement be performed in full. ³Specific performance«should be confined to those special instances where a vendor will otherwise suffer an economic injury for which his damage remedy at law will not be adequate, or where other equitable considerations require that the relief be granted.´ B. Sellers Damages 1. Sellers expectancy and other damages basic expectancy K price minus market price [at time and place for tender] or KP-MP 2-706 KP- Resale price 2-709 recover price 2-708(2) sellers ³lost profit´ 2-718 liquidated damages


Jagger Brothers v Technical Textile (Penn AC 1964) p646 ³Yarn repudiation´ Agreement to buy 20,000 pounds of yarn at $2.15/lb. buyer repudiate after only taking delivery of 3,723, noticed seller would refuse future deliveries. S awarded $4069.25 in a bench trial, MP $1.90 award represent 16,277 times the $.25 difference between KP and MP. [(KP-MP) x 16,2777] Pursuant to 2-708 judgment affirmed McMillian v Meuser Material and Eq.(Ark SC 1976) p 648 ³Bulldozer resale´ K to sell bulldozer, Buyer breached supposedly over wrong delivery date. S resold 14 months later,sought damages under 2-706,which provides for difference in KP- lower resale price; resale was commercially unreasonably delayed. Remittitur (reduction) of damages award, incidental damages ok¶ed bc reasonable to upkeep Sprague v Sumitomo Forestry Co. (Wash SC 1985) p651 ³No notice of resale Logs´ Logger, P, entered into K to sell logs to D, who cancelled K bc of difficulties at its sawmill. In answer B said mitigate, S then did but failed to notice B as required by 2706(3). Not an affirmative defense for B, rather element of S¶s claim under recovery under 2-706 thus S must prove at trial. So no recovery under 2-706 But 2-703 allows for elections of remedy coupled with 1-106 they must be administrated liberally so can recover under 2-708(1)(classic expectation damages): MP-KP+ID-ExS affirm most of award some discussion of what is difference between ID and CD which are not recoverable under 7-708(1) [but are allowed under 2-708(2) subject to undue speculation dealt with infra] ³incidental damages are normally incurred when a buyer repudiates and include expenses incurredin transporting, storing, or reselling the goods. « Consequential damages do not arise within the scope of the immediate buyer-seller transaction but rather stem from the losses incurred by the non-breaching party in its dealings, often with third parties, which were the proximate result of the breach and which were reasonably foreseeable by the breaching party at the time of contract.´ 2. Seller¶s profits


R.E. Davis Chemical v Diasonics Inc ³lost volume seller´ p655 Medical equipment B breached, S sued claimed entitled to offset of 2-708(2) as a lost volume seller; 2-708(2) provides ³if the measure of damages provided in subsection (1) are inadequate to put the seller in as good a position as performance would have done then the measure of damages is the profit (including reasonable overhead) which the seller would have made from full performance by the buyer together with any ID provided in this article (2-710).´ Lost volume sellernot solely focused on capacity to sell but rather would it have been profitable for the seller to produce both units. D. Seller¶s restitution Wellston Coal v Franklin Paper Co. (Ohio SC 1897) p673 Suit in Quantum Meruitfor coal K breached by D in down months when MP was below KP. Executed K during winter when KP was below MP. ³justice and fair dealing require that the D, having repudiated the K, should pay the market price for the coal at the time it was delivered.´ Dietz v Dietz (Minn SC 1955) p 676 ³mom and son joint tenants´ p676 Mom conveys half of house to son as joint tenants, in consideration for his promise to take care of her for the rest of her life. He gets married and feuds begin, ending with him ousting her through. She files a claim in unjust enrichment thus imposing of constructive trust is proper Constructive trust may be imposed where the plaintiff shows the existence of relationship of justifiable reliance or confidence (or fiduciary duty) and the abuse by defendant of confidence and trust bestowed under it to plaintiff¶s harm.

Calculating Damages 1. General damages: Diminished value v Cost to repair Hewlett v Barge Bertie (USCA 1969) p782


³If reclamation and repair costs exceed the ship¶s just value at the time of casualty, then it is a constructive total loss and the limit of compensation is the value plus interests´


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