Remedies Outline

Remedies Outline Part 1

Introduction

· Remedies: “the autopsy of human relationships”
· Averting the dispute before litigation
o McCally study: posed question of what people would do in either side of a contract.
§ Lawyers, law professors, and judges àremedy should be a lawsuit in 80%.
§ Business men and womenàa lawsuit should be brought in only 10%.
· Litigation can be personal…not rational!!
o ExampleàNye & Nissen Co.: egg washing machine…made them pay every $ they saved, even though it was more than value to P. Value of theft to the thief…rather than the value to the P. (this is substitutionary, but equitable at the same time).
· Often distracted from questions of remedies by problems with liabilities
o ExampleàfamousMcDonald’s coffee cases.
o For this class: presuppose that lawsuit could have been avoided, but it wasn’t. Assume there is no question of liability. Start from assuming they are liable.
· Types of remedies:
o 1) Compensatory damages: compensate plaintiffs for harm they have suffered
o 2) Preventative damages
§ A) Coercive remedies
§ B) Declaratory remedies
o 3) Restitutionary remedies
o 4) Punitive remedies
o 5) Ancillary remedies
· Laycock’s division of remedies:
o Laycock divisions: (fall into two general categories)
§ A vs. B
§ Specific vs. Substitutionary
§ Equitable vs. Legal
§ Coercive vs. compensatory.
o Notes on Laycock’s divisions:
§ Restitution: can fall into either A or B; depends whether it is the actual property (Category A) OR the value of the wrong conversion (Category B).
o Examples of remedies in division A & B:
§ Division A: specific performance, injunction.
o Exotic difference between A and B: Difference between A and B is in the exotic aspect of A that includes in personam control over the body of the named party.
§ Pain of contempt can be used to enforce compliance with category A : A uses the pain of contempt to get person to do something or not do something.
· ExampleàInjunction (Category A): if you don’t comply with injunction, you’re in contempt, and have to go to jail.
· ContrastàMoney damages (Category B): In B, if you don’t pay the $, you won’t be held in contempt (and go to jail or be fined). Contempt doesn’t ordinarily attach itself in law. It attaches itself in very narrow circumstances (A).
· Overview of types of damages:
o Categories of Damages: Tort and Contract
§ Tort:
· 1) General: amt of $ that it would take for you to purchase substitute happiness; Difference between in-tact body and your depleted body.
o Dobbs: “the in-tact value of the person”;
o Posner: “the cost of purchasing substitute happiness”
o Criticism of general damagesà “sob story damages”:
§ ExampleàI’m not the same…give me $.
§ Deep skepticism of general damages in tort law
· 2) Special:reflect injury to income stream. (same as consequential in K law)
o Ex. Had to buy wheelchair, doctor, etc. (expenses) Can’t work anymore (or decrease in revenue)
o Less skepticism of special damages (when compared to general damages)àSeen as the “real damage”
· 3) Punitive:
§ Contract:
· 1) Market (same as general damage): Expresses value of the in-tact exchange.
o UCC provisions:
§ UCC 2-706: Seller’s remedy (contract price – retail price)
· UCC 2-708(1): cover for seller.
§ UCC 2-712: buyer’s remedy (when contract price – market price)
· UCC 2-715: Cover for buyer: Contract price/market price difference. Like Campbell’s soup carrot case.
o Less skepticism of market damages (when compared to general damages in tort)
§ Rationalà market damage can be assessed much easier than general damages in tort law, so people aren’t as skeptical.
· 2) Consequential:reflect increased expenses, OR lost down-stream business.
o Ex. Campbell’s couldn’t make soup without the carrots. Could have lost business. Store could cancel order.
o UCC provisions:
§ UCC 2-712; 13;14; 15: buyers always get these.
§ UCC 2-710: sellers don’t usually get consequential damages, they get $ owed, and interest (which is market damage)
§ Rule of thumb: it’s always good to be the buyer (rather you are breacher or breachee)
o Deep skepticism about consequential damages in K cases.
§ RationalàIs this infoverifiable or can it be manipulated?
· 3) No third category in K (i.e. nothing in K law is comparable to punitive damages in tort).
o Notes on analyzing damages:
§ Have to askàis reeducation for replacement of happiness or replacement for injury to income stream?
· Noteàthere are often difficulties in classifying damages as one or the other.
§ Examples:
· 1st example: Because of actions of D (dr) with medical malpractice, I can’t work anymore as a PE teacher. But I do want to stay in teaching, so I am going to reeducate myself in German, so I can teach German.
o ResultàSpecial damages
· 2nd example: Because of Dr, I can’t play golf anymore, so I am going to go to school to brush up on German as a hobby:
o ResultàGeneral damages
PART I: PROPERTY RULES

· Property Rule vs. Liability Rule
o Property Rule: this rule views what D did as an injury to property right that P has, and P has right to the thing itself and an interest in any gain that D might derive from the wrong
§ RationalàInjury done by D is said to be one in which just paying for cost of injury is not enough and so we disgorge the benefit of the wronged gain and measure recovery by what D got.
· Gives P ongoing interest in D’s exploitation of P.
§ ExampleàCampbell’s soup carrots case.
§ Applies in both K settings and Tort: If we can say that defendant has a property interest, one can recover what the defendant has and damages are not measured by plaintiff’s loss.
o Liability Rule:$ damages…pay for injuries that you cause. Market value of damages (to make plaintiff whole); these are typical damages
o
· RESTITUTION: BENEFIT TO DEFENDANT AS THE MEASURE OF RELIEFàOlwell v. Nye & Nissen Co., p.569
o Olwell v. Nye & Nissen Co., p.569
§ Facts: Olwell (P) owned ½ of egg packing company. Sold this half to Nye & Nissen (D). D didn’t purchase egg washing machine for $1200, but P left it there to store it. D started using the machine (that they didn’t pay for). P found out about this. P offered to sell the machine to D for a reasonable price ($600). D offered much less ($50). P sued D (remember, “the autopsy of human relationships”).
§ Holding: The court determined the damages based on how much money D had saved by using the machine.
· Evidence in the case said reasonable rental value was $25/month…that would have been $900 total over the three years. Olwell originally asked for $900.
o This would have been a market damage (lost rent they would have gotten had they entered into an arm’s length transaction instead of stealing it.)
· Court relied on Property Rule. Entited to $1560. But was only awarded $900, because it was limited by prayer for relief by P, which was $900.
o Question: do you rely on liability/compensation rule OR property/restitution rule?
§ Liability rule: would rely on tort of conversion….remedy would have been compensation in form of damages.
· “Sue in tort (WRIT…suing in)), for the wrong of conversion (WRONG…suing for), for the remedy of damages in the form of compensation/rent (REMEDY)
o WRIT: tort
o WRONG: conversion
o REMEDY: compensation/rent
§ Property rule: would rely on benefit to D.
· Sued IN quasi contract (WRIT) for the wrong of unjust enrichment
o WRIT: quasi contract (CL: “assumpsit”)
o WRONG: unjust enrichment (but not other unjustly enriched party has acted wrongfully… what is unjust is keeping someone else’s property.)
o REMEDY: restitution
· Dobbs: you will see interchangeable use of these terms (unjust enrichment) in law, but that isn’t correct. But it is so common, that’s the way it is.
o Doctrine of election: Olwell elected to waive the tort of conversion and sue in assumpsit (quasi-contract…fiction created).
§ Allowed to elect which claim: Olwell was allowed an election; i.e. Olwell was allowed to elect which claim to bring.
· Don’t have to elect UNLESS not doing so would result in double damages
§ No double damages: Wouldn’t allow Olwell to get rent $ AND D’s savings cost. So Olwell had to elect. In court’s view, Olwell elected to waive the conversion and sue for the wrong of unjust enrichment.
· Sometimes, however, you can combine different types of damages: Wouldn’t say elect between specific performance and consequential damages
o Example: carrot case (i.e. getting carrots back AND lost $ from lost profits). Can’t take carrots AND difference in contract and market price. Will say elect between carrots and market damage. But, you CAN get carrots AND orders you lost during delay…this isn’t double counting
§ CounterviewàTalk of waving the tort is misleadingàLaycock (P 578):says they aren’t REALLY waiving the tort, because if you waive the tort, there is no wrong. But court says you aren’t waiving the tort (i.e. the tort of conversion makes the defendant’s enrichment unjust), you are waiving the tort to recover under the tort of conversion. Instead, you are seeking to recover under the wrong of unjust enrichment (based on the tort).
o Economic justification for imposing property rule/restitutionà want to encourage a system of voluntary exchange; restitution is imposed on conscious wrongdoers:
§ Issue: Why take the “industry” on D’s part away from them? Why not just make them pay rent? P didn’t have any use for the machine.
§ Rational àwant to encourage a system of voluntary exchange: Should discourage people from stealing from others. After the fact rental rate isn’t enough of a punishment to deter misappropriation like this. Conscious wrongdoer has to give back any value they might have derived from it.
· Conscious wrongdoers triggers restitutionà At what point do you want to “throw the book” at D? When he was a conscious wrongdoer.
o ExampleàEdwards v. Lee’s Administrator (p.572, note 5)
§ Facts: Cave case.
§ Holding: Edwards went about the situation in a secret way, so the court treated him as a “conscious wrongdoer.”
o Mistake and the property rule/resitution:
§ General Analysis: Pay attention to presence of absence of wrongdoing AND mistake.
· If you are in weak position (in terms of how responsibility is allocated), no terms of restitution would ever happen. Awarded as a buyer if you know more than a seller.
§ Types of mi