REMEDIESTORT – CONTRACT – PROPERTY

Briefed By: Tiffani L Hume 2L

Gilberts Law Outlines “Remedies (2006)

Determine if there are legal remedies available

Determine if there are equitable remedies available

Determine if there are any equitable defenses that may apply

How do you approach a remedies essay question?

Determine what substantive law is involved AND

Establish if the plaintiff has a case

What must you do before discussing remedies in an essay question?

Legal Remedies Equitable Remedies

What are the primary 2 categories of remedies?

First look for LEGAL remedies Secondly, look for equitable remedies Reason: legal remedies must be analyzed

first because equitable remedies are not available UNLESS the plaintiff can first show that no adequate legal remedies were available

In what order must remedies always be analyzed and why?

Damages are legal remedies Compensatory damages Punitive Damages Liquidated Damages Nominal Damages Statutory Damages Statutory damages are available when a statute provides for a

minimum recovery amount in the case of violation. P must prove the statute was violated and that the violation caused the plaintiff actual harm before any recover can exist

DAMAGES

Intended to prevent the Defendants unjust enrichment and work to disgorge the defendant of benefits wrongfully obtained.

Can be both Legal and Equitable Lets flip to the next slide to look at the legal

and Equitable remedies

RESTITUTION

Remember, we want to always go for the legal remedies first

Thus, we look to the legal restitution: Money (This is not money damages, it is more like disgorging the D of

benefits he gained wrongfully) Replevin Ejectment Quasi Contract (unjust enrichment)

Legal Restitution

Constructive Trust Equitable Lien Rescission Reformation

Equitable Restitution

Used to force an individual to either do a certain act or to refrain from doing a certain act

If they do not follow the orders give them by the court – they are in contempt

Coercive remedies include: Injunctions (torts) Specific Performance (Contracts)

COERCIVE REMEDIES

Damages Compensatory Damages Consequential Damages Nominal Damages Punitive Damages RESTITUTION Money Replevin Ejectment

Review: Legal Remedies in Tort

Equitable Restitutionary Remedies Constructive Trust Equitable Lien

Equitable Coercive Remedies Injunctive Relief

Equitable Remedies Available in Tort - Review

Damages Compensatory Damages Consequential Damages Liquidated Damages Nominal DamagesRestitutionary Quasi Contract Replevin Ejectment

Contract – Legal Remedies

Constructive Trust Equitable Lien Rescission Reformation Specific performance

Contract Equitable Remedies

Let’s break down Damages

COMPENSATORY DAMAGESCompensatory damages are calculated on the cost of the injury to the Plaintiff and areIntended to compensate the plaintiff for her loss

In tort cases, we want to put the plaintiff BACK into the position they were in prior to the harm suffered (or as close as possible)Paulsgraph

In Contracts, we want to put the innocent party in the position they WOULD BE IN if the contract had been fulfilled (expectation)Hadley v. Baxendale

Definition: the expectation interest provides the non breaching party with the profits it would have received had the contract been performed

Rule: Compensatory damages for breach of contract usually are computed based on the non breaching partys expectation interest

Contracts Expectation Interests

Definition: Reliance interest seeks to place the non breaching party in the position it would have been in had the contract never been created

Rule: Compensatory damages for breach of contract are computed based on the reliance interest when the non breaching party suffered harm due to its reasonable reliance on the contract

Contracts: Reliance Interest

D must breach a duty or contract The breach is the actual and proximate

cause of the harm or injury in dispute Harm was foreseeable at the time of the

breach Damages can be calculated with reasonable

certainty AND P made all possible mitigations

What is required to get compensatory damages?

Rule: Actual Damages must be certain and not speculative The amount need not be “absolutely certain” but they need to be

able to be approximated under reasonableness Example: a restaurant owner has been in business for 5 years, he

has made 100k a year in profits for those last 5 years on an average – Joe Dry Cleaner next door has a fire that burns down Restaurant owners business. Restaurant owner can claim that his damages were 100k because it has been reasonably certain and established that he has made 100k a year and expected to make the same amount this year, but for the fire.

Another example: O just started a business which was destroyed by A when A drove his car into the business and it blew up. O sues A for damages. **The damages are too speculative here and O will not likely get much for actual damages because the value of the damages cannot be ascertained.

The “Certainty” Requirement

“All Or Nothing Rule”Rule: To be compensated for future losses, a

plaintiff must demonstrate that the losses are more likely than not to occur. Upon such a showing, the plaintiff can recover in full for all future losses stemming from the injury or breach

How are future losses created

Consequential damages are those that arise as a natural, proximate or probable consequence of the tortious act or breach of contract. The are awarded distinct from and in addition to compensatory damages when it is determined that compensatory damages will not make the plaintiff sufficiently whole.

BAR TIP: Be sure to differentiate between:1) Compensatory Damages = money it will cost P to restore

himself in tort or to reach the position he would have been in if the contract had been completed.

2) Consequential Damages = money the P has lost due to the tort or contract breach (lost income, lost profits, discomfort, annoyance, inconvenience etc)

Consequential Damages

1) The damages must arise naturally from the tortious conduct or breach of contract, AND

2) The damages were reasonably foreseeable

Elements of Consequential Damages

Definition: Nominal Damages are used to vindicate a Plaintiffs right when (1) that right has been violated; (2) No loss is sustained; OR (3) the injury cannot be measured (it is too speculative)

Nominal Damages

For Torts only Used to punish and deter repetitive unlawful acts We need a “hook” to hang punitive damages on

before we can seek them. The hooks you can use are:

1) Compensatory Damages2) Consequential Damages3) Nominal Damages

You will need to establish at least one of these to hang your punitive damages on.

Punitive Damages

RULE - Due Process prohibits the imposition of grossly excessive punitive damage awards against tortfeasors. To determine if damages are grossly excessive, courts balance:

1) The degree of reprehensibility of the conduct2) The disparity between the harm suffered and the amount

awarded, AND3) The amount of damages commonly awarded for comparable

conduct

Punitive Damages

Liquidated means the amount of damages can be approximated, the parties have either agreed on an amount or the amount is certain

Unliquidated means that there is some disagreement on the amount of damages the amount cannot be determined

Liquidated Damages

Definition: Liquidated damages are damages specifically provided for in the contract between the parties

Liquidated Damages

Rule: Parties to a contract are generally permitted to agree on the amount of damages for the manner in which damages will be recovered in the event of breach by either party. A liquidated damages clause will be upheld if:

1) The amount agreed upon is a reasonable estimate of the amount required to compensate for the loss, AND

2) Damages were difficult to ascertain at the time of contract formation

3) The Amount stated in the liquidated damages clause must be compensatory in nature and not punitive.

Contract Liquidated Damages

Definition: Legal restitution damages are based on the value of the benefit conferred on the defendant.

We want to “disgorge” the money from the defendnat

Review: Legal Restitution Damages

Rule: Legal Restitutionary damages can be measured by:1) The reasonable value of the benefit conferred, OR2) the extent to which the Defendants property value was

increased or other interests advancedNOTE:3) A plaintiff cannot be awarded both compensatory AND

restitutionary damages4) Restitutionary damages are not available when the claim is only

for partial damagesBAR TIP: if the plaintiff has suffered an injury AND the defendant has

received a benefit, discuss both compensatory and restitutionary remedies but only award the plaintiff one remedy.

Review: Legal Restitution Damages -

Definition: Replevin is the restitutionary remedy that allows the plaintiff to recover possession of “personal property”

Replevin

RULE: Replevin is available when the Plaintiff establishes:1) He had the legal right to the possession of the property and 2) The defendant is wrongfully withholding the propertyNOTE: The plaintiff can recover the personal property before trial IF:3) A preliminary judicial hearing is held AND4) The plaintiff posts a bond5) The plaintiff may also request monetary damages for the loss of

use while the property was wrongfully withheld (loss of money, rental value etc)

Replevin

Definition: Ejectment is a legal restitutionary remedy that allows a plaintiff to recover possession of real property

Ejectment

Rule: Ejectment is available when the plaintiff establishes:1) She had the legal right to possession of the property, AND2) The Defendant is wrongfully in possession of the property3) Self Abatement is not allowed!4) The execution of a writ of ejectment must be carried out

by the sheriff.5) Again, discuss the monetary damages as well if an

ejectment issue arises because the plaintiff may have a loss of rental value, loss of profit, etc..

Ejectment - Rule

Definition: Quasi Contract relief may be available if a contract fails and results in the unjust enrichment of one of the parties.

Contracts: QUASI CONTRACT

Rule: Quasi contractual relief will be available when the plaintiff can show that:

1) One party has conferred a benefit on the other2) The conferring party has a reasonable expectation of being

compensated3) Benefits were conferred at the express or implied request of the

other person AND4) Unjust enrichment would result if the D was allowed to retain the

benefits

Contracts: Quasi Contract Rule

Constructive Trust:Definition: A constructive trust is an equitable restitutionary remedy

used to return legal title to property in which the defendant has improperly acquired the title to the proper owner

Rule: a court may create a constructive trust over the property and declare the defendant as trustee with the sole duty being to return the legal title to the rightful owner. A constructive trust is generally available only if a legal remedy would be inadequate

Note: If the defendant has transferred title to the plaintiffs property to a third person, a constructive trust can still be imposed over the property unless the transferee was a bona fide purchaser

Equitable Remedies

Definition: An equitable lien is an equitable restitutionary remedy used to reimburse the plaintiff for a benefit conferred on the Defendants property, or a benefit gained by the defendant through improper taking of use of the plaintiffs property

Rule: A court may provide the plaintiff with a security interest in property owned by the defendant to reimburse the plaintiff for a benefit conferred on the Defendant. An equitable lien is generally available only if a legal remedy would be inadequate. (D is insolvent - Bankruptcy issues)

Note: Since this is a security interest, P may foreclose the lien by forcing a sale of the property and applying the proceeds to the payment of the claim if the defendant does not pay.

Note: The purpose of this is to provide P with a security interest in D’s property. We want to do this when D has a potential of filing for bankruptcy and getting out of paying his debts all together. When D tries to sell, liquidate or file for bankruptcy P will be paid the amount of the debt or part of it based on the actions of D.

Equitable Lien

Definition: A mandatory injunction is a court order that compels a party to perform an affirmative act

Example: the court orders joe criminal to pick up trash along the highways for one week

Tort – Mandatory Injunction

AKA – negative injunction A court order to prevent or stop the D from

doing an act

Tort – prohibitory injunction

Definition: Injunctive relief is an equitable coercive remedy in which the D is ordered to engage in or refrain from doing a specific act.

Injunctions are enforceable through the courts contempt power

Two types of injunctions1) Temporary restraining order (TRO)2) Permanent Injunctive relief

Tort Injunctive Relief

Definition: a TRO is used pending a hearing to determine whether a temporary injunction should be used

Rule: To obtain a TRO the P must show that:1) Immediate and irreparable injury will occur without the order2) No adequate remedy at law exists3) The plaintiff is likely to succeed on the merits of the case4) Issuance of the order will not cause substantial harm to the public AND5) The harm to the plaintiff if the TRO is denied outweighs the harm to the

defendant if granted (balancing of hardships)Notes:6) A hearing for a TRO can proceed ex parte7) TRO is limited to 10 days8) P must provide notice to D or make a good effort9) P must usually post a bond

Tort: Temporary Restraining Order

A temporary injunction is issued at the beginning of litigation and is intended to prevent irreparable harm from occurring before the merits of a suit are decided

This can also be called a preliminary injunction so that you don’t confuse it with a tro.

Tort - Temporary Injunction

Rule: To obtain a Temporary injunction the P must show that:1) Immediate and irreparable injury will occur without the order2) No adequate remedy at law exists3) The plaintiff is likely to succeed on the merits of the case4) Issuance of the order will not cause substantial harm to the public AND5) The harm to the plaintiff if the TRO is denied outweighs the harm to the

defendant if granted (balancing of hardships)Notes:6) Adversarial hearings are required7) One issued a temporary injunction is in place throughout the trial 8) Cannot exceed 3 years9) P must post a bond

Tort – Temporary Injunction/preliminary

Courts often balance out the hardships on what is called a “SLIDING SCALE”

The showing of hardships required by the party seeking the injunction is inversely related to the strength on the merits of that party’s claims.

In other words: the plaintiffs hardship MUST strongly outweigh the hardship of the defendant.

See the next slide for an example

How do courts balance hardships of the restraining orders?

For example, think of this case scenario: In 1980 P moves into the housing complex, purchases a home knowing that Joe Blast is the towns mining company and the major source of employment for the town. P also knows that occasionally, there is some blasting going on for mining purposes. P lives in the community for 5 years when P becomes crippled from a non related accident and is advised by the doctor to put in a swimming pool for therapy. P does this and in the year 2000 Joe Blast shoots off some explosives, P suddenly has cracks in his pool and sues Joe Blast for damages because his property value went down and he cannot use his pool.

1. Is there a prima facie case?

2. What are the damages?

3. What are the remedies?

We balance the hardships by assessing “Nuisance”, Conversion, Trespass to chattel to look for damages and establish the prima facie case. Then we look to remedies and try to see what can be recovered, HOWEVER In this process, we need to view this like the court would view it:

4. Burden to P

damage to pool

Public Nuisance

Can’t do his therapy as required by the doctor

property damage and devaluation

2. Burden to Joe Blast

1. He is the main source of employment in the town

2. P knew about the blasting and moved into the Nuisance

3. P waited until the 11th hour to make a complaint when the blasting never affected him before

4. The damage to the public would be much greater if Joe Blast was shut down than it would if they kept him open

Balancing example

I want you to remember this because we will come back to this in a minute:

“I PUT FIVE BUCKS DOWN”

“I P F B D”Say this 10 times right now!

WRITE THIS DOWN!!!

Tort: Permanent Injunction

I = Inadequate legal remedies P = Property right F = Feasibility of the permanent injunction B = Balancing of the hardships D = Defenses to the permanent injunction

THIS IS WHAT YOU WILL NEED TO THINK AND TALK ABOUT WHEN YOU ARE FACED WITH A PERMANENT INJUNCTION

LET’S BREAK IT DOWN

A permanent injunction is issued after a full hearing on the merits (or upon consent or default of the opposing authority), and is intended to permanently prohibit an act from occurring or to compel an act be carried out until a dispute is resolved.

“I P F B D” “I P F B D” “I P F B D”

TORT- permanent injunction

Rule: To obtain a permanent injunction, the P must demonstrate:

1) No adequate remedy at law exists2) The plaintiffs property or protectable interest is at stake3) Enforcement of the injunction is feasible AND4) The harm to the plaintiff if the injunction is denied

outweighs the harm to the defendant if the injunction is granted

“I P F B D” “I P F B D” “I P F B D”

Tort: Permanent Injunction

Traditionally: equity would grant relief only when a property right was involved (meaning real property)

Modernly: equity will grant relief when ANY protectable interest is at stake

personal property or real property

“I P F B D” “I P F B D” “I P F B D”

IPFBD - property right

How is the feasibility of enforcing a mandatory injunction determined?

Answer: By The difficulties inherent in court supervision over the D’s actions AND Court concerns with ensuring the D’s compliance with the order Ask yourself, “could a court really do that?” Would a Negative injunction

be better?? Most courts favor a negative injunction because it is easier to enforce.

Tort: Feasibility

How is the feasibility of enforcing a prohibitory injunction determined

Answer: when a plaintiff seeks negative injunctive relief, no enforcement problem exists- in fact the courts favor this type of injunction.

The courts would rather STOP someone from doing something than to have to somehow monitor the quality of work performance, supervise and document the defendants act. Really the court has no way of knowing if a person is really doing something or not…they have less control over it and thus, would rather put a “stop” to something than to have something done –

Does this makes sense???

TORT: Feasibility part 2

How does the court balance hardships when determining whether to grant an injunction? (notice we are not specifying the type of injunction here)

See the next slide please

Tort: Balancing of hardship

Rule: the courts will balance the hardship the plaintiff will suffer if the injunction is not issued against the hardship the defendant will endure if the injunction is issued. In balancing the hardships, courts will consider:

1) The disparity between the potential hardship suffered by each party from the issuance/non –issuance of the injunction

2) The hardship to the public caused by the injunctions, AND3) The defendants level of culpability

ANSWER

1) Order must state the reason for the injunction or TRO’s issuance

2) Be specific in its terms 3) Describe in reasonable detail the act ordered to

be restrained

TORT: What must be included in a court order for injunction or TRO ?

Parties in privityEmployees and agents of the parties acting

with notice of the order, ANDThird parties acting with notice of the order

Tort: Who is bound by an injunction?

Rule: Injunctions are enforced through the courts power of contempt

Civil contempt = fining the party and or imprisonment until the party complies

Criminal Contempt = fining the party and or imprisoning the party

Tort: How are injunctions enforced

Legal Remedies!!!**REMEMBER TO ALWAYS USE YOUR LEGAL

REMEDIES FIRST**************1) Money Damages2) Replevin3) Ejectment

Alternatives to an injunction

When they are too speculative When the defendant is insolvent When the act has only been threatened Irreparable injury will occur OR Unique property is at stake

Tort: When are money damages inadequate?

When the property cannot be found or indentified OR

When the defendant destroys or threatens to destroy chattel

Tort: when will replevin be inadequate?

Rule: ejectment is inadequate if the sheriff refuses to enforce an ejectment order

TORT: when will ejectment be inadequate??

Definition: an equitable remedy through which the original contract is voided and rescinded

Basically both parties agree to dump the contract and get rid of it – it no longer exists and no party is bound to it

Contracts: RESCISSION

◦ Rule: A contract may be rescinded if the requesting party can prove:1) Mistake a) Mutual Mistake as to a material fact = Rescission is usually

granted b) As to a collateral fact = Rescission is usually denied c) Unilateral Mistake = usually denied A) exception = if the non mistaken person knows or should

have known of the mistake, Rescission will likely be granted2) Misrepresentation – granted if the plaintiff relied on the

misrepresentation3) Coercion4) Undue influence5) Lack of capacity6) Failure of consideration 7) Illegality

Contract Rescission part 2

Definition: Reformation is an equitable remedy through which the court alters a written agreement between parties to conform to the parties original understanding

You may know this from contracts as “Blue Penciling”

Contract Reformation

Rule: a contract may be reformed if the plaintiff can establish:

1) A valid contract exists2) Grounds for reformation exist: a. Mutual mistake b. Unilateral mistake ONLY where the non

mistaken party KNOWS of the mistake

Contract Reformation

Definition: specific performance is an equitable coercive remedy through which the court requires the parties to perform according to the terms of a contract

Contract Specific Performance

RULE: P must prove:1) The contract is valid2) Contract terms must be certain and definite3) The requesting party has performed according to

the contractual conditions4) No legal remedy is available5) Mutuality of remedy

Contracts Specific Performance part 2

Definition: The mutuality of remedy refers to the availability of the requested remedy to both parties of the contract

Rule: To be granted specific performance, the requesting party must demonstrate that the remedy it is requesting would be available to the opposing party

Mutuality of Remedy - contracts

Unclean hands Unconscionability Laches Estoppel Sale to a bona fide purchaser

Equitable Defenses

THE END