Remedies Outline
Prof. Lind
Spring 2010
I. INTRODUCTION
Ø Classifying Remedies (Brief Overview)
o Compensatory Remedies: compensate P for harm they have suffered
§ Compensatory damages: sum of money designed to make P as well off as he would have been if he never had been wronged.
o Preventative Remedies: designed to prevent harm before it happens so issues of compensation don’t arise
§ Coercive Remedies:
· Injunctions: court order requiring litigants to do or refrain from doing some specific thing.
· Specific Performance Decree: orders D to perform their K (this is a specialized form of injunction).
§ Declatory Remedies: these remedies authoritatively resolve disputes about the parties’ rights, but do not end in a direct order to D.
· Prevent harm to litigants by resolving uncertainty about their rights before either side has been harmed by erroneously relying on its own view of the matter
· Declatory Judgments
o Restitutionary Remedies: restore to P all that D gained at P’s expense
§ Sometimes restitutionary remedies award to P the profits D earned by conscious wrongdoing even if those profits exceed P’s damages
§ Traditionally administered through a variety of devices: quasi-K, constructive trust, equitable lien, accounting for profits, recission, and subrogation.
o Punitive Remedies: designed to punish wrongdoers
§ Punitive damages—in civil cases
§ Criminal Punishment—in criminal cases
o Ancillary Remedies: designed in aid of other remedies
§ P’s court costs & Attorney’s fees
§ A way to enforce the primary remedy against a recalcitrant D or securing the possibility of later enforcement. i.e. punishment for contempt is ancillary to all remedies that end in $ judgments.
§ When D doesn’t voluntarily pay, the means of collecting the $ are: execution & garnishment
· Writ of Execution: sheriff seizes D’s property, sells it, and then uses the proceeds to pay P’s judgment
· Garnishment: court orders people who owe $ to D to pay P instead.
Ø Substitutionary and Specific Remedies
o Substitutionary Remedies: P suffers harm and receives sum of $
§ Includes compensatory damages, attorneys fees, restitution of the money value of D’s gain, and punitive damages
o Specific Remedies: seeks to prevent harm, or undo it, rather than let it happen and compensate for it.
§ Prevent harm to P, repair the harm in kind, restore the specific thing P lost
§ Include: injunctions, specific performance of K’s, restitution of specific property, restitution of a specific sum of $
§ Example: Consider remedies for sale of defective goods
· P’s substitutionary remedy is damages, measured by the difference between the value of goods as promised and the value of goods as delivered.
· P’s specific remedy is specific performance or cancellation. Specific performance gives the P goods that conform to the K in exchange for his payment of price. Cancellation gives him a full refund.
Thus, this example evidences the hallmark of substitutionary relief:
· P who gets damages gets neither what he started with (his money, nor what he was promised—i.e. the goods as promised). Instead he gets defective goods and money to compensate for the defect.
· The sum of money P receives is based on the fact-finders valuation of loss
Specific performance aspires to avoid both of these by giving P the very thing he lost if that is what he wants.
Ø Legal and Equitable Remedies
o Legal remedies: Damages (compensatory and punitive)
§ Most are substitutionary
o Equitable Remedies: injunctions, specific performance, and receivorships
§ Most are specific
o Declatory Judgments: not classified either way (they are created by statute)
II. COMPENSATORY DAMAGES: PAYING FOR HARM
Ø Under this analysis: We let the harm happen, then compensate the P by giving him $
Ø Considered a substitutionary remedy b/c we substitute money in exchange for the P’s rightful position
o Goldilocks theory: not too much…not to little…but just right!
Ø Restoring Plaintiff to His Rightful Position
o U.S. v. Hatahley
§ Family of Indians owned livestock that grazed on public property—their livestock was taken away without notice and sold to glue factory—this amounts to trespass to chattels
§ This case demonstrates that “P’s rightful position” should be determined by the position he would have come to but for D’s wrong—this is the essence of compensatory damages.
· Here, P’s rightful position includes the mental distress from the taking and killing of their animals.
§ Importance of this case:
· Damages are supposed to be individualized—i.e. the P herself
· Damages must be proved with adequate certainty
· Use objective measures of the value of what is lost—usually fair market value, unless FMV is unascertainable (we will see this later)
o Cultural values are disregarded in determining market value
o Hatahley Rule: Fundamental principle of damages is to restore the injured party (P) to the position he would have been had it not been for D’s wrong.
o P has the burden of proving an amount of damages and liability
o The measure of damages is the fair market value (FMV). FMV would include the availability of like animals, and all other elements.
o Notes on the Rightful Position
§ (1) The traditional argument for restoring plaintiff to his rightful position is based on corrective justice. Plaintiff should not be made to suffer because of defendant’s wrongdoing, and if we restore P to his rightful position, he will not suffer. To do less would leave part of the harm unremedied; to do more would result in a windfall gain to P. The remedy is always in dollars—substitutionary b/c they substitute $ for what P lost
§ (2) Under the law and economics theory the function of compensatory damages is to force law violators to take account of the harm they inflict. Compensation and corrective justice have nothing to do with this view of damages; the point is to manipulate incentives of potential Ds.
· Economics view of rightful position—believe that the law should generally encourage profitable activity, even activity that harms others, so long as violators pay for damages they cause.
§ One Satisfaction Rule: P may be entitled to judgment on multiple theories and against multiple D’s, but he is entitled to only ONE recovery for each item of damage. Similarly, if P collects from one D, he cannot collect it again from any other. If he settles with one D before trial, other D’s are entitled to credit against any later judgment for same damage. In the past, non-settling D’s got a dollar for dollar credit—the pro tanto rule; or credit can be based on proportionate fault.
· Total damages = $2.1 million, apportioned 30% to P and settling D’s, and 70% to non-settling D’s. Non-settling D’s were liable for 70% of the 2.1 million. Under the pro tanto rule, they would be liable for $2.1 million minus the actual amount of the settlement, whether the settlement was for $1 or $1 million.
Ø Fair Market Value as the Measure of Plaintiff’s Rightful Position
o FMV is to be determined in accordance with the times and geographic place.
o U.S. v. Fifty Acres the condemned landfill; FMV
§ Involves the condemnation of property owned by a municipality. The question is whether a public condemnee is entitled to compensation measured by the cost of acquiring a substitute (new) facility if it has a duty (involuntary) to replace the condemned facility.
§ 5th amendment requires that when the government takes away ones property, “just compensation” must be given for it.
· General Rule: “just compensation” is normally measured by the fair market value of the property at the time of the taking, contemporaneously paid in money.
o Thus, FMV is the default position—reasonable balance between public need and claimants loss.
o “FMV” is what a willing buyer would pay in cash to a willing seller
o Note: Elements to prove:
§ (1) there is a market (use an expert); and
§ (2) the FMV of the property.
· Exception: we deviate from FMV only when it is unascertainable or when its application would result in manifest injustice to the owner or public. Alternatives to FMV include: (use whichever is less)
o Cost of repair or replacement
o Capitalized future earnings: what sum of money must be invested to produce a stream of income equal to the income that would have been produced by the facility over its remaining useful life.
§ Held: P’s were entitled to the FMV of the condemned facility at the time of the taking, and NOT the cost of replacement. Court believed that the FMV achieved a fair balance between the public need and the P’s loss.
· Allowing the P’s to receive the replacement cost would be a windfall as P’s would be getting th
rch to the condition it was prior to the Hancock excavation; however, where expenditures to restore or to replace to predamage condition are used as the measure of damages, a test of reasonableness is imposed.
· The cost of the restoration or replacement must be reasonable
· The restoration or replacement itself must be reasonably necessary in light of the damage inflicted.
§ The court held that Trinity’s method of damage assessment meets the test of reasonableness by quantifying the amount of the incremental damage sustained.
· “Takedown theory of damage assessment”: Idea that at a certain angle of distortion, the structural damage to a building reaches a point where disassembly and reconstruction becomes necessary. This ultimate level of damage is referred to as the “takedown” level of damage.
· How damages were calculated: the church lost 39% of the takedown value. Trinity estimated total takedown cost of $1,724,457. Multiply that by the 39% of which the church lost to get $672,538—the court found this to be reasonable
§ The dissent argues that there isn’t even a loss yet—thus no actual loss b/c construction is not yet needed. “There is no evidence that the church will ever be less usable or less enjoyable than it is now, or that it ever will have to be taken down and reconstructed, therefore Trinity has not sustained its burden or proving loss.
o Notes on Value Unique to Owner
§ The rule that destruction of special use property is compensated by replacement cost depends on the judgment that the congregation is entitled to this church building on this land if that it what it wants
§ Fifty Acres recognized replacement costs where there was no market value
§ Non-market values are recoverable if sentimental value is the only substantial value of the thing lost
o Decatur v. Young (P’s rightful position can be defined by looking at both tort and K)
§ P contracted with D for D to aerially supply an insecticide to his soybean field which was being attacked by grasshoppers. As a result of negligent spraying, P’s crop was damaged, resulting in retarded crop growth. P harvested his soybeans and stored them until the following year, at which time he sold them.
§ The market problem posed here is that the damage is to crops that are in the ground (1/2 grown soybean plants). There is NO market for ½ grown soybeans, thus the court shifts to the market value at the time of harvest and NOT at time of sale.
§ RULE: In the case of crops, damages are measured at the time of harvest (or date of harvest).
§ The Court found ample evidence to support the determination that, but for the damage to the crop, P would have realized fifty bushels of soy per acre. However, the Court determined that the lower court erred in holding that the P’s damages could be ascertained with reference to the market price obtained by him when he sold his diminished crop the following year.
· Held: Because many crops, in their immature state, have no market value, damages are to be computed at the time of harvest, when a market first exists. Because P decided not to sell his harvest at that time, he was speculating that its FMV would be greater at some subsequent date. The risk inherent in this speculation is not chargeable to the D. The lost beans could have been replaced from the market place (buying other farmers’s beans and reselling them) at the time of harvest.
· Thus, whatever the market value was at that time was the gross loss and, in this case, the extent of P’s damages
