April 3, 2012

Remedies Bar Exam Outline for Law Students

This is a free sample law school and bar exam outline for the topic of Remedies.



I.       ALWAYS LOOK FIRST TO LEGAL REMEDIES THEN LOOK TO EQUITABLE REMEDIES

A.    First evaluate the adequacy of legal remedies.
1.      Legal remedies are:
a.   Damages: money
b.      Restitution
(1)  Money
(2)  Replevin - recovery of specific personal property
(3)  Ejectment - recovery of specific real property

B.     After you have determined what legal remedies are, or may be inadequate you can move on.
1.      Equitable remedies are:
a.       Restitution
1.      Constructive Trust - court-imposed obligation on the defendant to convey specific property to the plaintiff.
2.      Equitable Lien - court-imposed security interest in specific property.
b.      Injunction
(negative or mandatory order - if contract then a specific performance decree)


II.  ORDER OF PROGRESSION IN ANALYZING TORT PROBLEMS
(must have cause, proximate cause, sufficient certainty, and unavoidability)

A.    Damages - injury to the P arising out of the tort.
1.      Actual damages - compensatory damages that seek to put P back where he was before the tort.  Actual damages in tort look to the past.
2.      Nominal damages - a small or nominal amount of money available when no actual damages can be proved.
3.      Punitive damages - punitive damages punish and deter.  They do not compensate for actual injury suffered by the P.  Remember that there must be some proportionality between actual or nominal damages and punitive damages.  Consider:
a.       wrongfulness
b.      proportionality
c.       wealthy D pays more

B.     Restitution - benefit unjustly retained by the D.  There does not need to be an injury to P.
1.      Legal remedies:


d.      Money - Look for benefit to the D.  Sometimes called “waive the tort and sue in assumpsit.”  If conversion, typical measurement is rental value.
e.       Replevin - recovery of specific personal property.
f.       Ejectment - recovery of specific real property.
2.      Equitable remedies:
a.       Constructive Trust - obligation to convey specific property to the P.
(1)  D must have title
(2)  acquisition is traceable to wrongdoing
b.      Equitable Lien - security interest in specific property.
(1)  D must have title
(2)  acquisition traceable to wrongdoing, but enough if property improvement traceable to wrongdoing

C.     Injunction - order to the D to refrain from doing something (negative injunction) or to do something (mandatory or affirmative injunction).
1.      TRO - ex parte, 10 days, preserve status quo
2.      Preliminary Injunction - not ex parte, preserve status quo, likely success on the merits and balance hardships
3.      Permanent


III. ORDER OF PROGRESSION IN ANALYZING CONTRACT PROBLEMS

A.    Damages - injury to the P arising out of a breach of K by the D.  Always have a duty to mitigate (i.e. merchants make r/b effort to resell; manufacturer make r/b effort to find substitute supplier; job loss — take other job).
1.      Expectation damages - this is the benefit P expected to get out of the K.  Expectation damages look to the future.
2.      Consequential damages - these are damages to P in addition to the lost expectation.  They must be foreseeable at the time the K was entered into.  Forseeability is if at time of contracting:
i.        They are foreseeable to a r/b person familiar with the circumstances, or
ii.      Because they are specifically
3.      Liquidated damages - these are damages specified in the K.  For a liquidated damages clause to be valid, actual damages must be difficult to calculate and the amount specified in the clause must be a reasonable approximation.  If the clause is invalid, it is called a penalty.  If the parties’ intent is clearly expressed, liquidated damages may serve as a true alternative to performance.
4.      Punitive damages - NO punitive unless bad faith breach of insurance K by insurer or bad faith breach of employment K.

B.     Restitution


1.      Money restitution - benefits unjustly retained by the D when there is a void or unenforceable contract, or where the plaintiff chooses not to sue on the contract, permitting recovery in Quasi-K or in quantum meruit.  Remember that a breaching party may sometime recover in restitution even though he or she has breached.  Grounds include mistake, misrepresentation, material breach, K void itself (S/F, frustration of purpose, illegal, incapacity, no K in 1st place).

C.     Specific Performance - order to the D to specifically perform the K.

D.    Special Remedies (sometimes available):
1.      Rescission - in rescission the K is void or voidable and the deal is called off.  Primary grounds are misrepresentation and mistake.  Rescission is a kind of restitution.
2.      Reformation - in reformation the K is valid and enforceable but the written form of the K is wrong.  The K is rewritten correctly and is then enforced.


IV. CHECKLIST FOR GRANTING INJUNCTIVE RELIEF IN TORT

IBFBD

Look first for a breach of legal obligation.  Has defendant committed a tort, or is he or she about to?

A.    Are the legal remedies INADEQUATE?
1.      Damages and Money Restitution - Damages may be inadequate because they are too speculative or too small to compensate fully for the actual injury.  There may be a multiplicity of suits.  The injury may be irreparable.  There may be injury to land.
2.      Replevin - replevin may be inadequate if the D can keep the property by posting bond.  Or the sheriff may be unable to find the property.
3.      Ejectment - ejectment (plus mesne damages) is an adequate remedy if the plaintiff only wants a trespassing defendant off hie or her land.  Ejectment is an inadequate remedy if the P wants removal of an encroaching structure.

B.     Is a PROPERTY RIGHT involved?
(Point out that most courts today protect both property and personal rights by injunction)

C.     Is an injunctive decree FEASIBLE?
1.      Must the court exercise to much supervision?
2.      Is a negative or mandatory injunction appropriate?

D.    Should the hardships be BALANCED?
1.      Balancing may be required in two situations:


a.       Encroachment - if the encroachment is intentional there will be no balancing.  P will always win on this issue.  If the encroachment is innocent (including negligent), the court will balance, but will lean strongly in favor of the P seeking removal of the encroachment.
b.      Nuisance - always balance the hardships in a private nuisance case.

E.     DEFENSES?
1.      Laches - the effect of the passing of time.  Has the P’s inaction encouraged or allowed the D to act to his detriment?
2.      Unclean Hands - P must come into equity with “clean hands.”  Must be related to the transaction in the suit.
3.      Freedom of Speech - First Amendment rule against prior restraint.  See exceptions for national security, and for trade libel, particularly in conjunction with another business tort.  No injunction for personal defamation.
4.      Criminal Act - equity maxim, “equity will not enjoin a crime.”  See exceptions for nuisance and public nuisance, and partial exception for crime that also constitutes a tort.

V.    APPLICATION TO SPECIFIC TORTS

A.    Injury to Personal Property
1.      Destruction of Chattels - value at time destroyed, less salvage, plus interest.
2.      Injury to Chattels - either diminution in value or cost of repair, plus loss of use.
3.      Conversion - generally market value at time of conversion, plus interest and expenditures in pursuing property.  If price fluctuates then highest value w/in reasonable time.  If sale to 3rd-party then value at time of sale.  If you ask for it back then value at time of refusal controls. 
a.       Tracing Rules
(1)  Lowest Intermediate Balance Rule
(2)  If D intends to put money back into an account then you can get EL on whole account.
(3)  P can chase money where she likes.
(4)  P gets proportionate share in a CT.

B.     Injuries to Real Property
1.      Encroachment
b.      If permanent then FMV of strip occupied.  If temp then rental value.
c.       Restitution is never used in encroachment problems.
d.      Injunction is possible if early enough in the action.
2.      Simple Trespass
a.       Damages - if no harm then probably nominal.
b.      Restitution - yes (KY cave example).
c.       Injunction - if continuing then injunction is certain.
3.      Trespass Causing Severance
a.       Damages - diminution in value attributable to the severance. (Severance is often accompanied by conversion and therefore the damage remedies will be the same).


b.      Restitution - look to benefit for D o the severance.
c.       Injunction - “I” is always satisfied because land is unique.  Key is to catch before severance starts or the act is finished.
4.  Trespass Effecting Ouster
a.       Remedy is ejectment plus rental value.
b.      Injunction - not available.

C.     Miscellaneous
1.      Defamation - ordinarily only get damages for defamation.

2.      Business Torts
a.       Inducing Breach of K - majority gives damages as those equal to all damages P caused.  Minority view is that even though suing tortfeasor you get the same damages as if you had sued the contract breacher.
b.      Interference w/ Prospective Advantage - damages usually speculative.  P can seek restitution of the benefit D would otherwise not have obtained.
c.       Trade Libel - no action unless special damages.  Traditionally no injunctive relief was available for Constitutional reasons.  Modern view is that harm outweighs Constitutional considerations.

3.      Nuisance
a.       Private Nuisance - activity on one property unreasonably interferes with use and enjoyment of another property.
(1)  Temporary Nuisance
(a)  Damages - if temporary then diminution in use and enjoyment during period (rental value) plus costs to abate.
(b)  Restitution - not available.
(c)  Injunction - “I” is uniqueness of land and multiplicity of suits.  “B” can include community interests.
(2)  Permanent Nuisance
(a)  Damages - diminution in fair market value attributable to nuisance plus costs incurred to abate nuisance.
(b)  Punitives - not allowed.
b.      Public Nuisance - need to show public interest at large is put at risk (i.e. polluter, unlicenced doctor, outdoor rock concert, seller of impure food).
(1)  Damages - not available.
(2)  Restitution - not available.
(3)  Injunction - yes.  Two factors making justifying inadequacy factor:
(a)  legal remedy inadequate:
(b)  public legal remedy inadequate because:
iii.    Public authority will not enforce.
iv.    Punishment so slight is better to pay fine then comply.
(4)  Defenses to Injunction - exception where it is OK to “enjoin criminal activity.”




VI. CHECKLIST FOR GRANTING SPECIFIC PERFORMANCE RELIEF IN CONTRACT

IDFMD

Look for breach of a legal obligation.  Is there a valid K?  Has the D breached the K or is he or she about to?

A.    Are the legal remedies INADEQUATE?
1.      Damages and Money restitution - Damages may be too speculative or too small to compensate fully for the injury.  There may be a multiplicity of suits.  There may be an irreparable injury.  P may seek to recover a unique chattel.  A K for purchase or sale of land may be involved.
2.      Replevin - Defendant can post a bond.  The sherif may be unable to find to property.
3.      Ejectment - (typically not involved in an action on a K)

B.     Are the terms of the contract sufficiently DEFINITE AND CERTAIN?
1.      Remember that the terms of a K may be sufficiently certain to constitute a valid K, but an equity court may still be unwilling to grant specific performance of that K if it cannot tell exactly what the parties intended.

C.     Is a specific performance decree FEASIBLE?
1.      Is there JX over the parties or the property?  Watch for land outside the state.
2.      Is there too much supervision by the court?
3.      Is a negative injunction appropriate?  Watch for personal service contracts where the employee tries to breach and to work for a competitor.

D.    Is there MUTUALITY of obligation?
1.      Remember that the old test was whether the remedy of SP was mutually available (i.e. to both parties) at the time of contracting.  The new test is the security of performance test.  Under the new test, ask whether the performance of the P’s obligations can be secured to the satisfaction of the court.

E.     DEFENSES?
1.      Laches - the effect of the passing of time.  Has the P’s inaction encouraged or allowed the defendant to act to her detriment.
2.      Unclean Hands - P must come into equity with “clean hands.”  Must be related to the transaction in the suit.
3.      Freedom of Speech - First Amendment rule against prior restraint not used b/c typical situation is suit between private parties where one enjoins the other from publishing results of joint work.


4.      Hardship - in a suit to specifically enforce a K, a court of equity may refuse to enforce a K in which there is inadequate consideration (low price) and there are onerous terms (harsh terms).


VII.     APPLICATION TO SPECIFIC CONTRACTS

A.    Contract to Buy / Sell Personal Property
1.      Damages - usually available.
2.      Specific Performance - available if chattel unique or damages highly speculative.

B.     Contract to Buy / Sell Real Property
1.      Damages
a.       Seller Breach
(1)  out-of-pocket expenses
(2)  reliance damages
b.      Buyer Breach
(1)  benefit of the bargain (difference between market price and K price).
2.      Restitution - only if fraud or material breach.
3.      Injunction

C.     Construction Contracts
1.      Damages
a.       Owner Breach
(1)  When owner breaches and nothing has been done on K, builder entitled to profit on the bargain.
(2)  When owner breaches after some performance then figure out the rate of profit and extrapolate over the life of the K
(3)  If ½ done then that amount
b.      Builder Breach
(1)  If substantial performance (minor problem) then owner gets cost of repair or diminution in value (look at efficiency of replacing).
(2)  If owner has to hire another to finish then owner can get whatever is necessary from the builder which was spent to finish the project.
2.      Restitution
a.       Owner Breach - value of services performed.
b.      Builder Breach - give to innocent party unless there is a windfall.
3.      Specific Performance - usually not granted at CL.

D.    Employment Contracts
1.   Damages
a.       Employer Breach - employee gets wages due less avoidable damages.
b.      Employee Breach - employer gets costs of finding a replacement.


2.      Restitution
a.       Employer Breach - employee gets reasonable value of the services rendered.
b.      Employee Breach - employer gets restitution of paid but unearned wages.
3.      Specific Performance
a.       Feasibility problem because of “involuntary servitude.”  May be available if unique personal services.