Remedies (Final Outline) PDF

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Remedies Final Outline. ...

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Remedies Outline Equitable Remedy – Court ordered action that directs parties to do or not do something. (Injunctive Relief or Specific Performance) … Equity courts are a thing of the past but equity remedies are still applied today. Equitable Remedies are granted In Personam. The court is ordering the defendant to do something or refrain to do something. Requirement – irreparable harm – relief is only available when Plaintiff’s legal remedy is inadequate. Harm is irreparable when the legal remedy of damages is inadequate to provide relief.      

When property is unique. When damages are difficult or impossible to calculate. When defendant is insolvent. When it is impossible to collect a monetary judgment. When plaintiff will be required to bring multiple proceedings to vindicate his rights. When plaintiff’s injury is such that the remedy of damages is substitutionary and ineffective. (Civil Rights)

Equitable Remedies (Tested) – Specific Performance, Equitable Estoppel, Subrogation, Equitable Liens, Compensation, and Injunction. Equitable Remedies (Not Tested) - Rescission, Rectification, Proprietary Remedies, Appointment or Removal of Fiduciary, Interpleader, and Account of Profits. Types of Injunctions – 1) Preliminary 2) Temporary Restraining Order (TRO) 3) Preventative 4) Mandatory … Injunctions will not be issued against someone who is beyond the court’s jurisdiction. Objective of Injunctions 1. Preventative – to protect against continuing or threatening harm 2. Reparative – requires defendant to restore plaintiff to their rights 3. Structural – used to bring governmental organizations into compliance with legal requirements Mandatory Injunction – Compels an act

Prohibitory Injunction – forbids an act

Preliminary Injunctions 

Provisional remedy invoked to preserve the subject matter. Its purpose is to prevent dissolution of the plaintiff’s rights.

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To obtain preliminary injunctive relief, plaintiff must show: That is will suffer irreparable harm in the absence of an injunction and either: 1) A likelihood of success on the merits or 2) Sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly in its favor. Mainly used when immediate relief is needed. It is not conclusive and does not determine the merits of a case.

Preventative Injunction – Directs someone to refrain from doing something. It protects a threatened injury or preserves a status quo, or restrains continued commission of an ongoing issue. Mandatory Injunction – Compels specific performance. Courts don’t favor them and rarely grant them because they are harsh. Temporary Restraining Order (TRO) – Granted to preserve the status quo of the controversy until a hearing on the status of the application for a temporary injunction. Suspends everything until the injunction can be heard. They are prohibitory and mandatory – they restrict the doing of an act and require compliance. Plaintiff must show they will suffer immediate or irreparable harm. Permanent Injunction (perpetual) – Granted by the judgment that ultimately disposes of the case. Always ordered at the time of the final judgment. Four factor test: Plaintiff has suffered an irreparable injury, monetary damages are inadequate, a remedy in equity is warranted, public interest will not be disserved by issuance of an injunction. “The Final Say” Mareva Injunction  

Imposes a temporary freezing order against the assets of a defendant or potential defendant, which may later be required to satisfy a judgment in the plaintiff’s favor. It is designed to prevent the defendant from disposing of assets by moving them from or within the jurisdiction.

Hearing Requirement   

Judicial orders should only be issued after a contested hearing. This requirement is mandated by due process. But when TRO is sought, there is not always time for a contested hearing – because plaintiff may suffer serious and irreparable injury.

6 Categories of Nonparties that may be bound by Injunction 1. Agents of the enjoined party

2. 3. 4. 5. 6.

Aiders and abettors Persons cognizant of the decree Successors in interest of the enjoined party Those coming in contact with particular res Members of a class action suit

Notice Requirement  

Only TRO’s can be issued ex parte. Actual service on the defendant must meet the two-part test in order to be sufficient. It must proceed from a source entitled to credit; and it must inform the defendant clearly and plainly from what act he must abstain.

Bond Requirement  

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Anyone who obtains a preliminary injunction or a TRO must usually post security to protect the defendant against loss. ONLY IN CIVIL, not criminal. In the absence of a bond, there can be no recovery for damages sustained from the wrongful issuance of a preliminary injunction, aside from suit for malicious prosecution or unjust enrichment. Even when a bond is posted, a party’s liability is limited by the terms of the bond or the order of the court that required the posting. When a low injunction bond is imposed ex parte, and the trial court wrongfully rejects defendant’s request for an evidentiary hearing on the size of the bond, the court might permit a wrongfully enjoined party to recover more than the amount of the bond.

Framing the Injunction 

The order must state… 1) The reason why it was issued 2) Its terms specifically; and 3) Describe in reasonable detail the act or acts restrained or required. CANNOT be vague.

Specific Performance   

A specialized remedy used by courts when no other remedy will adequately compensate the other party. Most commonly used when the subject of the contract is unique. When it's not about the money or where the true amount of damages is unclear.

Equitable Estoppel – A bar to a party from asserting a legal claim or defense that is contrary or inconsistent with his or her prior action of conduct. Subrogation 

Allows one party to recover money from the third party that caused some or all of the loss.

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Think about insurance companies paying out money to an insured client, subrogation allowed the insurance company to recover money from the third party that caused some or all of the loss.

Equitable Liens – Commonly used as a security for an obligation Compensation  

The amount of any pay earned by the person between the dismissal and the order for compensation; or The amount of any pay likely to be earned by a person between the dismissal and the order for compensation.

Defenses to Prevent an Award of Equitable Relief (Equitable Defenses) 1. 2. 3. 4. 5.

Unclean Hands Doctrine Unconscionability Laches Estoppel Trial by Jury

Unclean Hands Doctrine    

A party asking for a judgment cannot have the help of the court if he/she has done anything unethical in relation to the subject of the lawsuit. In determining the issue of clean hands, we look solely at the conduct of the plaintiff. “A dirty dog will not have justice by the court.” Not intended to bar everyone guilty of wrongful conduct. The wrongdoing or fraud must be connected with the subject of the litigation, and have some relation to the rights of the parties arising out of the transaction.

Unconscionability 

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Describes terms that are so extremely unjust, or overwhelmingly one-sided in favor of the party who has the superior bargaining power, that they are contrary to good conscience. A party who has bargained in getting a tough agreement should not come to court to ask for help in enforcing its terms because the terms are so one-sided. Example – adhesion contracts – in determining whether to enforce the terms of the adhesion contract, the court looks at: The take it or leave it nature of the contract, the parties’ relative bargaining positions, the degree of economic compulsion motivating the “adhering” party, and the public interest affected by the contract.

Laches     

Any unreasonably delay by the plaintiff in instituting or prosecuting an action under circumstances where the delay causes prejudice to the defendant. Defendant must have been prejudiced because of the delay. Prejudice may also be found if, during the delay, the circumstances or relationships between the parties have changed so that it would be unfair to let the suit go forward. In other words, equity does not aid people who slumber on their rights. “You snooze, you lose.” The test of laches is whether there has been a delay which has resulted in the Disadvantage, Injury, or Embarrassment of any person. (D.I.E.)

Estoppel    

A party is estopped (precluded) from alleging or proving that a fact is otherwise what it has been made to appear to be. Estoppel assumes that plaintiff (or defendant) made a misrepresentation on which the other party relied. Equitable Estoppel – adjusts the rights of the parties based upon consideration and good conscience. Four elements to establish defense of Estoppel: Party to be estopped must know the facts, he must intend that his conduct shall be acted upon or must act that the other party asserting the estoppel has a right to believe it is so intended, the latter must be ignorant of the true facts, and he must rely on the former’s conduct to his injury. (Fraud, Silence if duty to speak, Permitted expenditures/exposure)

The Right to Trial by Jury  

7th Amendment preserves the right to a jury trial in common law suits where equitable rights and remedies are at issue. Also seen in criminal law cases.

Contempt    

Equitable remedies are enforceable through contempt power. Contempt is an offense against the dignity of a court. (Refusal to obey a court order, filing spurious will in probate proceeding, physical attack on court officials) Federal Rules conduct for contempt – failure to obey a judicial subpoena without adequate excuse and violation of the obligation of secrecy by a grand juror. Two types of contempt – Civil and Criminal

Direct Contempt – Applies to conduct that occurs during judicial proceedings and in the presence of the judge.

Indirect Contempt – Involves the violation of a court order beyond the physical parameters of the courthouse. Civil Contempt   

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Willful disobedience to any judgment, decree, direction, order, writ or other process of a court or willful breach of an undertaking given to the court. Failure to comply with a court order. Judges use civil sanctions to coerce compliance – the fine must be purgeable (capable of being avoided through adherence of court’s order) and compliance must be easy to gauge. Sanctions must be wholly remedial.

Civil Compensatory Contempt 

Compensates an injured party for damage that results from violation of a court order. This is NOT appealable until final judgment.

Criminal Contempt - Serves to deter future acts by punishing the offender. Generally, the person gets the same constitutional rights of a criminal defendant.   

Includes jail and/or a fine. Sanctions are punitive. Charges must be proven beyond a reasonable doubt.

Fixed Contempt Sanctions – Court imposes set fine or set jail time. Flexible Contempt Sanctions – Court imposes flexible fine or sentence that is dependent on the defendant’s response. Prima Facie Case for Civil Contempt – Proof of: 1) The contemnor’s obligation to perform an action as required by the decree; AND 2) Contemnor’s failure to meet the obligation. Duty to Obey: Collateral Challenges    

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A court order can be directly challenged by appealing the order to a higher court. Your client may want to know whether it’s required to obey the injunction or whether given the flaws in the decree, it may be violated. Individuals cannot be the judge of the validity of court orders issued against them. As a general rule, an order issued by a court with jurisdiction over the subject matter and person must be obeyed by the parties until it is reversed by court order/proper proceedings. The obligation exists even though the injunction is based on an unconstitutional statute, and even though there is an allegation that the injunction itself is unconstitutional.

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Individuals might be free to violate an injunction which is transparently invalid or has only a frivolous pretense to validity. The preferred approach is to appeal the injunction.

Defenses in Contempt Proceedings … Defendants can claim that they were 1) 2) 3) 4)

Not bound by the decree Did not receive notice of its requirements That is was impossible to comply with the decree Collateral Bar Rule: prior restraints against speech are prohibited by the 1st Amendment

Declaratory Judgment        

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A judgment of a court which determines the rights of parties without ordering anything to be done or awarding damages. It nips controversies in the bud. It simply eliminates uncertainties regarding rights. To obtain declaratory relief, there does not need to be a threat to violate the plaintiff’s rights. Mere proof of operative facts that endangers the security of plaintiff’s rights suffices. The court must then determine whether the dispute, and danger of uncertainty are of such a nature as to justify declaratory relief. Some dangers to the plaintiff’s rights from defendant’s conduct must be evident. The court must be convinced that its judgment will quiet or stabilize uncertain or disputed relations either as to present obligations or prospective obligations. Declaratory relief can be a particularly useful means for resolving controversies regarding the meaning of contracts, wills, trust agreements and other written instruments, patents, copyrights, and trademarks. It enables the parties to minimize risks to transactions, expectations and relations that would be created by breach, repudiation, or an action with coercive consequences. Allows parties to obtain authoritative legal interpretation. BUT the judgment is not absolute.

Decrees Affecting Third Parties – The court may find it necessary to enjoin a third party in order to grant complete relief to a plaintiff. Appeals of Injunction Rulings Jurisdiction  

Permanent injunctions are appealable TRO can be appealed when it has ripened into a preliminary injunction or permanent injunction.

Modifications of TRO and Preliminary Injunction

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Either party may move the trial court to dissolve or modify an injunction. The standard is the same as when the court issued the injunction. Use the same test. Parties can also seek pre-appeal relief. Two forms: 1) If the party has appealed the issuance of an injunction, pre-appeal relief would involve a stay of the injunction pending appeal. 2) If the party has appealed the denial of an injunction, pre-appeal relief would take the form of an injunction ending appeal of the denial.

Injunctions Against Litigation   

Assuming that a state court has personal jurisdiction over the parties, a state court may be able to enjoin litigation in other states. The court does so by ordering the parties not to proceed with the foreign litigation. Just because a state has the power to enjoin litigation does not mean that it should exercise that power.

Restitution   

A person who is unjustly enriched at the expense of another is subject to liability in restitution. Most commonly seen in quasi-contract issues. Quasi-Contract - an obligation of one party to another imposed by law independently of an agreement between the parties.

Defenses to Restitution Accord & Satisfaction  

The accord is the agreement to discharge the obligation and the satisfaction is the legal consideration which binds the parties to the agreement. It’s where two parties agree to discharge a tort claim, contract or other liability for an amount or based on terms that differ from the original amount of the contract or claim. It’s used to settle legal claims prior to bringing them to court.

Unjust Enrichment 

If one party pays money to another party under a mistake of fact that a contract or other obligation required such payment, the payor is entitled to restitution.

Enforcing Restitution 

A court may give restitution to a plaintiff and prevent the unjust enrichment of a defendant by imposing: 1) A constructive trust or 2) An equitable lien upon the property in favor of the plaintiff.

Constructive Trust  

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Arises when a person has acquired property, the title to which in equity she should hold for another. The circumstances commonly seen in unjust enrichment arise where money has been paid by mistake either inadvertently or under some misimpression of fact, fraud, in breach of trust or fiduciary obligation, or more broadly in contravention of a relationship of confidence. It requires the defendant to hold the property in trust.

Equitable Lien    

Three types of liens: Statutory, Common law, Equitable Instead of requiring the defendant to hold the property in trust, the court imposes a lien against property as security for plaintiff’s interest. Secures the obligation of the defendant to pay the claimant the amount of the defendant’s unjust enrichment as separately determined. Equity permits imposition of an equitable lien where the claimant’s expenditure has benefited another’s property under circumstances entitling the claimant to restitution.

Liens 

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Statutory – a lien arising solely because of a statute. It is created automatically by operation of a statute or law. It does not require any subsequent judicial action such as a lawsuit or court judgment. Common law – a lien against personal or real property that is not a statutory lien, a security lien created by agreement or judicial lien. Equitable – claim on goods or property conferred by law, whether or not the lienor has their possession. (Ex. A vendor’s lien) It is enforceable on all buyers who are aware (given notice) of the lien.

Restitution in the Context of Marital Relationships 1. Cases in which the couples have accumulated substantial marital assets over a period of time from which assets the wife received large awards of property, maintenance and/or child support. Courts have refused to apply restitution on the basis of unjust enrichment in this case. 2. Those cases in which the parties are divorced soon after the student spouse receives his degree or license and there is little or no marital property from which to order any award to the working spouse. Advantages of Constructive Trusts and Equitable Liens

1. Tracing – once a claimant establishes a proprietary base through a constructive trust or equitable lien, she has a right to trace that property. Tracing is a process. A procedure to identify property that has been taken from the claimant involuntarily. Relies on the claimant having an equitable interest in the property, and can succeed where the property has been mixed with other property. 2. Priority over other creditors. 3. Circumvention of debtor exemptions. 4. Subrogation – the substitution of another person in place of a creditor, so that the person in whose favor it is exercised succeeds to the right of the creditor in relation to the debt. Damage Remedies – Various types of damages that a party can recover and how the law determines the amount of compensation a party may recover. Four types of damages: 1) Compensatory (includes attorney’s fees) 2) Punitive 3) Nominal 4) Statutory (presumed) Compensatory Damages (Four Categories) 1. General Damages – those which are the natural and probable conseque...