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

“in personam remedy” operates against the D’s person

Award substitutionary relief or money damages

Award= adjudicate, decide after consideration

“in 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

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 Major legal or common law remedy-

money 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

2
 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

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 3. Punishment- historically would allow jury to award Ps punitive damages bc of

“detestation” 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 historically-

Account- 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 forms-

special 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 “Laches” and “unclean 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 “only one action a Civil Action” R.2 FRCP

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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: “In 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 characteristics-

Intransigent 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.

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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- “nominal damages can be awarded when no actual or

substantial injury has been alleged or proved, since law infers some damages from

the trespass” also “consequential damages can be awarded for actual or substantial

injury to realty.” & “CD 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 “short 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:

6
 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 “transactional 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 “Given 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 “touch 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

“I could have been a contender” Horse Racing interference

“it 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 “not 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

7
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 survive in 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

“It 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

8
Court to compromise judicial power to uncertainty, “Our 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

“Court has equitable jurisdiction to provide remedy where none exist at law, even if the

parties have not specifically requested an equitable remedy.”

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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 “the 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.

“It 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.

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Childs v US (USDC Georgia 1996) “unborn General”

Lawsuit for wrongful death under the Fed Tort Claims Act- State subs. Law governs

Car crash 3rd passenger, mother and unborn child “General” 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 income-

No lost household services for unborn child, but lost future earnings and lost fringe

benefits- Differences astounding $1.7 million versus $433K

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“Who will fail and who will succeed and who will either enjoy or suffer through life, is

a game of fools” & “the 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 non-

pecuniary.

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“Two 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 suffering-

Victims 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 “Active 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 person whose pain and suffering is relevant is 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.

13
“a 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 “Comatose 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! “Cannot 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.

“to obtain the benefit of this legal fiction the law requires a prerequisite to recovery

that the V of a tort have cognitive awareness” & “therefore 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 “[Above] burden can be satisfied by direct or circumstantial evidence but

mere conjecture, surmise, or speculation is not enough”

“often 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”

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Limitations on Damages Recovery
Avoidable Consequences/ Avoidance
Williams and Robbins v Bright (NY SC 1997) p90 “Jehovah’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 “reasonably prudent Jehovah standard” at Trial Court, in effect discharging her

of any duty to mitigate. Relied on Ballard

Appeal: “State 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. “a 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

15
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 “insurer”) right to

“step 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

“I 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 “… 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

2nd Dissent- majority against legislative intent thus full dissent, “some litigants use the

rule to get around the cap on noneconomic damages [aka pain and suffering]”

legislative history is clear “does not require juries to make offset bc of collateral sources

but permits them to.”

Notes p118 “Benefits 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

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Prejudgment interest
Jurisdictionally set at around 8 to 9%, and compound “calculated on principal and

interest from prior period”

Present value of money more than future value, “a 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 “Trying 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 “malice” 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

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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) “punitive 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 freedom of/and stable transaction. “K 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. “excessive 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 “BMW 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

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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) “Insurance 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 “few 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 doing 2. 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.

19
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 “bed 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)

“the judicial function is police a range, not a point”

Attorney fees p160

The “American 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 exceptions-

1. contract,

2. statute,

3. judicially created exceptions

a. bad faith litigant (controversial)

b. “common 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 “common fund”

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Tort Reform p178
Controversial provisions – passim-

Best v Taylor Machine Works SC Ill. 1997 p180 “Worst 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

“Cap 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.

“It 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

21
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 “the 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.

“Equity 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.

“A court with personal jurisdiction over the defendant is able to order the defendant in

personam to act or refrain from acting in another state.”

When is international trademark injunction proper, Lanham Act factors include

1. Whether D’s conduct has a substantial effect on US commerce

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 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) “Dueling 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: “once 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 “Some 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) “Irish lottery winner” p234

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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 “in 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 “political 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 “Transient store”

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P owned retail store, Board said she needed pursuant 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

“True 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.

“not 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 “very special circumstances”

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5. Equity lacks jurisdiction to enjoin a crime
People ex. Rel. Gallo v Acuna (SC Cali 1997) p248 “Latino 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; “to qualify as a public nuisance the

interference must be both substantial and unreasonable.” Backed up in RST

substantiality as proof of “significant harm” further defined as “real and appreciable

invasion of the plaintiff’s interests”, one that is “definitely offensive, seriously annoying

or intolerable” objective measure: “if 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 “Pullman 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 “ultimate 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 Dissent peaceful 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.

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Provisions of preliminary injunction too vague , prohibitions encompass much lawful

activity that not defined as public nuisance. “Unfortunately, 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 “The 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 “Guy 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.

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Cochran died, case is moot but

“an 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.

TRO- after a hearing, can be done ex parte usually called “ex 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 “pregnant 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

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 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 “modified

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) “copyright 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

“suit at common law” because no legal rights ascertained.

Historically copyright infringement has been adjudicated in courts of equity since 17 th

century. Common law rule “in 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].

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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 “Subcontractor

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 “honest 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

“to avoid injustice” – equitable

“a 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.

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3. Equitable Cleanup
Ziebarth v Kalenze (ND SC 1976) p292 “Specific 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 3 rd party

Overrules “law of substituted legal relief” which is espoused in UCC § 2-716 [specific

performance] and in subpart 2 states: “the 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

“Academy 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 “the 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 “bombing off PR”

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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.

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 “Schisters 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; “in 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 “Hank Williams baby”

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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 “everything 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. “equity 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.

“The evidence of fraud which the AL SC found persuasive, makes SJ on the grounds of

laches inappropriate.”

Notes: She eventually won in Stone III

“Some courts have held the running of an analogous SoL creates a rebuttable

presumption of unreasonable delay and prejudice flowing therefrom.” Goodman p322

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D. Contempt
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 — and not by referring to the complaint or

other document — 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 “an 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.

“Equitable 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

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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

“Playboy v Playmen”

Def. Tattilo, Italian man, publishing “Playmen” 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 “Playmen”. D in 1996 has violated judgment now by operating

“playmen” website from Italy.

A Court has the power to hold a party in civil contempt when (1) there is a “clear 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 “Mine 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

35
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- “carry 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 “completed act of disobedience.” Gompers (had been put in jail for 12 months

was criminal contempt) “thus 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?

“Courts independently must be vested with “power to impose silence, respect, and

decorum, in their presence” Anderson “inherent 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.

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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.

“Yet 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 “Deadbeat 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. “A 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 “protestor 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. “order 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

37
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 “Two groups one abortion clinic”

Two groups picket abortion clinic, one group, “Solano Citizens for Life” has injunction

enjoined against it. “Operation Rescue of California, another anti-abortion group, claims

they are unrelated. ORCal was at clinic to “test the injunction”. Parties did not know

each other and thus could ORCal members could not be enjoined by previous

injunction. Did not act “in concert” as required by injunction.

Ex Parte Davis (Tex 470 SW 2d 647) [Roman asked up to look up] “It 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 Foster said 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 ‘in

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

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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 “all 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

“no 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.

39
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 Enrichment is an Equitable one, providing one party
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 “Hey 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 “Cleanup 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

40
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

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 “neighborhood 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. “B/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.

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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 “common 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 “trade 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.

42
Also did not need to follow experts assertion that microfilm could have been done for

$10K. Campbell recovery was for $30K.

Dissent J. 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 “maglight 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 “common law” marriage “the fact they remained

unmarried is dispositive”

“The measure of recovery in quantum meruit is the reasonable value of the services

rendered provided they were of direct benefit to the defendant.” “the 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 identifiable asset with P’s property, and that asset has

appreciated in value

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 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 TRACE so chancellor can find the constructive trust “res”

Simonds v Simonds (NY CA 1978) p422 “1st 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.

“The 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: “a 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”

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 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 money then 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 “inequitable” or

estoppel if bank overtransferred, D asked if it was his money and bank assured him

“money 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

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 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.

UCC remedies cumulative

Gannett Co. v Register Pub. Co. (USDC 1977) p436 “Hart-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.

“the 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) “How 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 “Lying Realtor”

Realtor defrauds buyer out of 63 acres by lying to buyer and seller. Ends up purchasing

the 63 acres for his son (D). “Equity will not permit these D to keep a benefit which

came to them by reason of Jere’s fraudulent conduct.”

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“If 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 “For 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: “where 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 “homo 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

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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 “I 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 “economic duress”

“The mere stress of business conditions will not constitute duress where the defendant

was not responsible for the conditions.”

4. Unconscionability “Doctrinally difficult”

Discover Bank v Superior Court (Cal SC 2005) p472 “Fucked 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.

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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 “SoF 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 “preneed funeral insurance”

P, funeral director brought on by Insurance company to start selling “preneed”

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.

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2. Lack of Capacity

Halbman v Lemke (Wis Sc 1980) p488 “minor 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) “UCC 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

“A 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:

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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 “jojoba 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 “P’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) p504 “stolen 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.

“Under 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 “leaky septic tank”

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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 “In 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

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Mutual of Omaha v Russell (USCA 1968) p 512 “travel 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 2 nd insurance

because trip lasted one day longer, would have been under 1st insurance. “The 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 “roach 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) “Surrogacy 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.

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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 “The 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

“Can’t work suing over fire at MGM grand”

“Forseeability of economic loss even when modified by other factors is a standard

that sweeps too broadly in a professional or commercial context.”

“the 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

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 negligence or strict products liability, damages that are solely “economic” 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

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 “remedies 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

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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 “because 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

Selman v Shirley (Oregon SC 1939) p566 “This 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) “4 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.

“No 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.

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Classic expectancy

3. Measuring the Buyer’s Expectancy

Wilson v Hayes (TX CA 1976) p580 “Selling 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:

 good faith—no unreasonable delay—reasonable purchase or

reasonable K to purchase—failure 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 cover—you

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

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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 “asphalt sale”

Basically get more than out of pocket expenses and 2-713 proper application

§1-106 “remedies 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 “No 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

“measure 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 “mirror 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!

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 4. Buyer’s Special Damages: Lost business Profits

AM/PM franchise Ass. V Atlantic Richfield Co. (Penn SC 1990) p604 “Sold 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

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

59
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) “Cleaver 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 “new 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 “leaky 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. “damages 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:

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 1. D has no tort-products liability duty when a defective product causes a P purely

monetary harm Seely 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 “Flagpole 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

“ordinarily 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

“Seller trying to force Condo on Couple”

Guy buys house then transferred to Chicago, stops payment on check, down payment.

Seller, Vendor, asks for specific performance, that agreement be performed in full.

“Specific 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

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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 “lost profit”

2-718 liquidated damages

Jagger Brothers v Technical Textile (Penn AC 1964) p646 “Yarn 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 “Bulldozer 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 “No 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 2-

706(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

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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]

“incidental damages are normally incurred when a buyer repudiates and include

expenses incurred in 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 “lost 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 “if 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 seller not 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 Meruit for coal K breached by D in down months when MP was below

KP. Executed K during winter when KP was below MP.

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“justice 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 “mom 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

“If 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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