EQUITY AND REMEDIES NUCKOLLS SUMMER 2013
Classification of Damages
Damages: a money remedy aimed at making good the plaintiff’s losses or returning the plaintiff to his rightful position
Restitution: meant to prevent unjust enrichment of the defendant by making him give up what he wrongfully obtained from the plaintiff
Coercive: typified by the injunction, which is a judicial command to the defendant to act or to refrain from acting in a certain way
Declaratory: furnish an authoritative statement of the parties’ rights
The Major Goals
Compensatory relief: make the P whole, not rich
Coercive relief: prevent harm to P w/o undue harm to the D
Restitutionary relief: disgorge the D’s wrongful benefit, regardless of P’s loss
Punitive relief: to punish a wrongdoer
Ancillary relief: designed to aid in other remedies
Other Classifications
Substitutionary vs. Specific
Legal vs. Equitable
LegalÞmatter of right
EquitableÞmatter w/I the court’s discretion (appealing to the conscience of the King)
COMPENSATORY DAMAGES
Definition: A substitutionary money remedy designed to compensate the P
Goal: To restore P to rightful position
Justification: corrective justice; economic incentives to rightful conduct
Evidence: Split the difference or not?
Characteristics of Damages
Traditionally paid in a lump sum
May be enforced by seizure of the D’s property, sale of the property and application of the funds to pay the judgment
Frequently a substitutionary remedy, e.g. where P is compensated for a personal injury. May be a specie remedy when what P lost was the payment of money
The Basic Principle of Compensatory Damages is Restoring the P to his rightful position
US v. Hatahley—Livestock of Native Americans was taken by the gov’t and sold without notice.
The court reversed the award of the lower court b/c the goal is to restore the P to the position he was in as close as possible before the harm.
This is typically achieved by itemizing and individualizing the damages.
Ex. RSBL and verifiable amt per horse X the number of horses sold
NOTE: This case probably would have had a different result had it been a jury trial.
Judges must have conclusions of fact and findings of law (which is why this case was reversed)
Juries can just issue a verdict
What is the appropriate measure for restoring a P to his rightful position? FMV
US v. 50 Acres of Land—US condemned city property for flood control. The city bought new land and built a new facility.
The court awarded the city the FMV of the property b/c that is what truly restores them to the position they were in before the wrong. Awarding the city the cost of a substitute facility ($500k more) would have created a windfall.
There are sometimes that FMV cannot or should not be used. Some alternatives to the FMV measure are…
1) Replacement or Repair and
2) Highest and Best Use.
Trinity Boston v. John Hancock—Church was damaged during the construction of the John Hancock Bldg.
The court found that the church constituted “special purposes property,” for which there is no active market and therefore, no FMV can be determined. The proper award is the RSBL costs of restoring the church to the condition it was in prior to the excavation. (Dissent: There was no evidence that the church was less useable b/c of the damages; therefore, there was no loss.)
Decatur Cty. Ag-Services v. Young—Due to negligent crop spraying, P’s crops were damaged and yielding a lower % of crops—31 instead of 50 bushels.
The court determined the crops should be valued (damages calculated) at the time of harvest, not whenever the P decides to sell.
Neri v. Retail Marine Corp—P agreed to buy a boat, but reneged when he discovered he needed surgery. D refused to refund the deposit and sold the boat to another.
The court found the D needed to be put in the same position that he would have been in had the sale taken place and therefore, D was awarded profit and incidentals.
Volumized Sellers vs. Non-Volumized Sellers
Volume (could have sold the boat twice)—Seller can recover the profit he would’ve made on the K (K price – the cost of producing the product)
The goal is to make him as well off as if the K were fulfilled
Non-Volume Sellers—Seller can recover the K price – the resale price + consequential damages
Chatlos Systems v. Nat’l Cash Register Corp.—P bought a computer system for $46k that D represented would do “everything” and was worth about $208k. The computer he received was “normal” and only worth $6k. P sued for breach of K (contract claim).
The court found that in breach of K cases, P was entitled to his expectancy interest ($208) – the actual value received ($6k)
Smith v. Bolles—P paid $1.50 per share for 4000 shares of stock that D represented to be worth $10 per share, but it was actually worth nothing. P sued for fraud (tort claim).
The court found that in fraud cases, the question is not what the P would have gained, but what he lost or his out-of-pocket damages; in other words, P is entitled to what he paid – what he received.
Buck v. Morrow—Morrow leased to Buck grazing land for a term, but it was agreed that if Morrow wanted to sell during the term, he would cover any and all losses incurred by Buck.
The court held that Buck was entitled to the difference b/t the K price and the rental value for the unexpired term, but also any other expenses that naturally flowed from and were proximately caused by the breach
General Damages vs. Special Damages
General (actual loss contracted for)—the loss of the lease interest
Usually presumed
Special (additional losses incurred)-number of cattle lost, extra hands to round them up, price of acquiring a new pasture
Have to be pleaded with particularity and proved by a preponderance of the evidence.
Except
amages
Unconscionability will defeat
Substitute a different remedy than ones provided in code or otherwise
Fails of its essential purpose defeats
Kearney & Trecker v. Master Engraving—Master ordered an engraving machine under a K that stated that Kearney would not be liable for any incidental or consequential damages and that the remedies were limited to repair/replacement or return/refund.
Though Master fought for expectancy interest, an Exclusion of Remedies is valid unless unconscionable or fails of its essential purpose) and the court found that the remedies offered by the K were RSBL for the circumstances.
Avoidable Consequences (aka Mitigation of Damages)
In general, you must be RSBL in limiting the damages that come to you. This rule denies P recovery for losses that a RSBL person would have avoided.
Ex. It is not reasonable for you to lose your job, not try to get another (or work at McD), and then sue for all of the lost pay.
Ex. If you injure me, I can’t refuse to go to the doctor and then sue you for the initial injury and the aggravation of the injury b/c it was not treated
General Rules
The D is entitled to a credit against liability for any consequential damages the P avoided or minimized
The D is entitled to a credit against liability for any consequential damages the P could have avoided or minimized by RSBL effort and expense, whether or not the P actually avoided or minimized such damages
The P is entitled recover the RSBL costs of minimizing damages under the rules whether or not the damages were successfully avoided or minimized.
When P’s recovery is reduced for failure to avoid harms that could have been reasonably avoided, the reduction is the net amount that the D would have benefited by proper avoidance, after allowing credit to the P for the hypothetical costs of that avoidance.
SJ Groves & Sons v. Warner—PA contracted w/ Amer. Bridge Co. to build a bridge. Groves was awarded a subcontract and contracted w/ Warner for the delivery of ready-mixed concrete. Groves sued when Warner failed to deliver on schedule. The K contained a “no claim for delay” clause
The court stripped Warner of the disclaimer clause b/c of inadequate performance, but also reversed and remanded on the issue that Groves should have hired another supplier—the court cannot substitute Groves’ judgment for its own.
