Remedies Outline

REMEDIES

KELLY

FALL 2011

Remedies

I. Damage Remedies:

– Damages are one form on monetary relief, based on the harm the successful plaintiff suffered.

– Damages seek to compensate parties for the harm they have already suffered.

– With some exceptions, the doctrines governing damages seek to keep recoveries as close as feasible to the actual loss suffered by the aggrieved party.

o When recover exceeds the losses, theories justifying compensation lose their force and the recovery begins to look more like a fine or punishment.

– Casey’s Inhaler problem- p. 496

a. General damage principles

i. Basic Measure of Damages

1. Dealers Hobby, Inc. v. Marie Ann Linn Realty Co.

a. Facts: Hobby rented storage space from Marie Ann, landlord responsible for roof, leak and damage inventory, 18 days to repair. Sued for damages to inventory AND the sum of the difference between the fair rental value of the premises as warranted and the fair rental value of the premises as they actually were for entire duration of the lease prior to collapse.

b. Principle underlying allowance of damages is that of compensation; ultimate purpose being to place the injured party in as favorable a position as though no wrong had been committed; plaintiff’s damages are limited to its actual loss.

c. Court not allow difference in value of fair rental value, as P suffered no harm from it prior to collapse. Affirmed trial courts dismissal as to the breach of warranty claim.

2. First year you may have learned two different ways to implement the basic measure of damages.

a. Expectation interest

i. Seeks to place the P in the position she would have occupied if the K had been preformed- that is, if the breach had not been committed.

ii. Generally preferred by courts.

b. Reliance interest

i. Seeks to place the P in the position they would have occupied if the K had not been made- that is, if the duty had never existed.

ii. Is an exception, used by courts when the expectation interest in unavailable for technical reasons (such as uncertainty) or when policy reasons will not justify full expectation.

3. Basiliko v. Pargo Corporation

a. Market Value – K price

i. Market value—what a reasonable buyer would pay and what a reasonable buyer would accept, neither one under compulsion

ii. What should market value be?

1. $28k—what Basiliko was going to pay for property

a. Not a good market value because it is a foreclosure sale

b. Foreclosed property is sold for less than market value

2. $35k—what Basiliko was going to resell to Pargo

3. $44k—what Pargo was going to sell to Morgan

b. You cannot collect profits you would have made on resale

c. He is entitled to value of unimproved land, not improved land

d. Court says date of delivery of the land is the proper date to measure the market value

4. Two ways to get at profits (American rule—expectation damages)

a. Foreseeability doctrine

i. Subjective

1. How much you would have earned had you got the land

b. Benefit of the Bargain

i. Objective—that’s what the property is worth

ii. You were suppose to get property that was worth that

c. Expectation damages

i. Plaintiffs position is K performance

1. Where would P be today if K had been performed

5. English Rule—CA follows this (Restitution damages)

a. Purchaser gets his money back

i. Courts limit the recovery to a refund, plus any expenses in pursuance of the transaction (such as a title search), plus interest on these amounts

b. Exceptions to English Rule

i. Matters that were under the exclusive control of seller, and buyer did not know about them

ii. Seller knows that they do not have title

6. Reliance Damages

a. Plaintiff’s position if K not made

i. If P goes out and invests $ to increase the value of the landàrecoverable under reliance

ii. Where would P be today if K had not been made

7. Restitution Damages

a. Defendant’s position if K not made

i. If P goes out and invests $ to increase the value of the landà NOT recoverable under restitution UNLESS defendant captures the investment (D gets to keep the investment)

8. Basic Rule

a. Put the P in the position he would have been in had the wrong not been committed

i. Expectation damages

9. Notes 2 p. 462

a. If Basiliko, after breach, purchased another similar property for $36k, should D pay $8k as damages?

i. Market Value ($44k); Cover Price ($36k); K Price ($28k)

1. Cover Price – K Price

2. Market Value – K Price

ii. Land is unique, so cover may be inadequate

10. Note 3—Basiliko involves a breach of K. Would the process be any different if a tort were involved

a. Owen collects wine. A disgruntled former employee broke into the collection and destroyed several bottles. How should Owen’s recovery be calculated

i. Amount of money necessary to cover + incidental + consequential damages

1. Expectation approach

b. Silas owns an island. Negligent blasting on a nearby island causes Silas’ island to sink into the sea. How should Silas recovery be calculated? Would your answer differ if Silas had a right to buy the island, but had not yet paid for it?

i. Market value—how much would you have had to spend if there had been another island like yours available (K price is 0 since this is a tort)

1. Expectation damages

11. Chatlos v. National Cash Register

a. Issue is limited to measure of damages

i. Value of product as warranted – value of the product delivered

b. Problem is that the product as warranted was an imaginary good