Ch.2.Equity.part.1.Fall.2014Remedies - Ch. Equity and Equitable Defenses

Ch. 2 Equity and equitable remedies Part 1 1s 11

Remedies Fall 2015 Fordham Law School

Chapter II Equity & Equitable RemediesGeorge W. Conk

Adjunct Professor of Law & Senior Fellow, Stein Center for Law & Ethics

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EQUITY

Ch. 2 Equity and equitable remedies Part 1 2

Categorizing remedies

Equitable injunction accounting trusteeship receivership specific performance partition divorce/equitable distribution

Legal damages (compensatory or punitive) fines

Hybrid restitution declaratory

3Ch. 2 Equity and equitable

remedies Part 1

Remedies - At Law and in Equity

Substitutionary Compensatory damages Counsel fees Costs and expenses Punitive damages Treble damages

Specific Remedies Replevin Specific performance e.g. – Transfer title Perform as a singer Back pay Promote a worker Abate a nuisance Retract a libel


remedies Part 1

Remedies - At Law and in Equity Four major remedial categories

a) damages

- compensatory - non-compensatory (punitive, treble)

b) coercive remedies

- injunctions (mandatory/prohibitve) - specific enforcement - restitution - structural injunctions


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Remedies - At Law and in Equity

c) declaratory remedies

- declaratory judgment interpreting written instrument, statute, etc.

d) Restitution Prevent unjust enrichment by restoration of

unjustly acquired asset - disgorgement of gains - restoration in specie - constructive trust/ equitable lien - subrogation


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Remedies - At Law and in Equity III. Legal vs. Equitable Remedies Rights and Discretion

Law Courts and Chancery Courts

Legal – in rem - enforceable by execution against property

Equitable - in personam/enforceable by contempt

Trial by jury - available in suits at common law - not in Chancery


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IV. Injunctions: Provisional vs. Final Remedies

Temporary Restraining Order (TRO) Preliminary Injunction Inadequacy of remedy at law Irreparable harm Balancing equities Probability of success on merits Security in event of error Permanent Injunction


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“Alternative Dispute Resolution”

Arbitration historically contractual/consensual

Often practically mandatory (statutory (PIP), FINRA, adhesion contracts, shrink wrap contracts)

Enforcement of collective bargaining agreements

Private arbitration Arbitration option (counsel fees) Mediation


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Considerations re grants of equitable relief Law and Justice Primacy of law Conscience In personam Inadequacy of legal

remedy/irreparable harm Balancing - Equitable discretion


Equitable Defenses Laches – unreasonable delay

Estoppel – holding you to your word

Unclean hands – disqualifying conduct

Unconscionability – terms so one-sided as to be unenforceable as a matter of policy


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Equitable Defenses

Laches – neglect to do for an unreasonable and unexplained length of time what in law should be done and with resulting prejudice

Estoppel – "One who misleads is stopped from asserting positions at variance with the appearances he has created."


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Equitable Defenses Unclean hands The Highwaymen’s Case: arbitrating a

dispute re the spoils of a robbery Everet v. Williams (1725)

ex dolo malo non oritur actio "no court will lend its aid to a man who

founds his cause of action upon an immoral or an illegal act“

in plain English, illegal contracts are unenforceable.


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http://everything2.com/title/ex%20dolo%20malo%20non%20oritur%20actio

Injunction or damages?

Law or equity


Campbell v. Seaman (NY 1876) Sic utere tuo ut non laedas What does the maxim mean? How does it differ from negligence What remedies at law are available? What considerations support the

grant (or denial) of an injunction? Why doesn’t it matter that brick-

making preceded the house? What were possible choices in

framing injunction?Ch. 2 Equity and equitable

remedies Part 1 15

Pardee v. Camden Lumber Co. (WVA 1911) p. 19

Our rule permits a mere trespasser to utterly destroy the forest of a neighbor, provided he is solvent and has the ability to respond in damages

Reversed: “A clear case of trespass by

cutting standing timber should always be enjoined”


Specific performance -denied for fungible chattels- granted for real estate


Irreparable Harm58 C.J., Specific Performance, § 247(c)

“… specific performance of a

contract for the sale of personal

property will not ordinarily be

granted, because there is an

adequate remedy at law, as in an

action for damages for breach of

contract. 18Ch. 2 Equity and equitable

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Fortner v. Wilson (OK 1950) p. 20

K for sale of new car # 44 – $1,709 P paid $100 down D demanded P’s used car as trade

in P refused Judgment for specific performance

of the sale denied Why?


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NY CLS UCC2-716. Buyer's Right to Specific Performance or Replevin

(1) Specific performance may be decreed where the goods are unique or in other proper circumstances.

(2) The decree for specific performance may include such terms and conditions as to payment of the price, damages, or other relief as the court may deem just.


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NY CLS UCC2-716. Buyer's Right to Specific Performance or Replevin

(3) The buyer has a right of replevin for goods identified to the contract if after reasonable effort he is unable to effect cover for such goods…

In the case of goods bought for personal, family or household purposes, the buyer's right of replevin vests upon acquisition of a special property, even if the seller had not then repudiated or failed to deliver.


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Copylease Corp. of America v. Memorex Corp. (S.D.N.Y. 1976)

"Specific performance is no longer limited to goods which are already specific or ascertained at the time of contracting. The test of uniqueness under this section must be made in terms of the total situation which characterizes the contract. Output and requirements contracts involving a particular or peculiarly available source or market present today the typical commercial specific performance situation . . . 22

Ch. 2 Equity and equitable remedies Part 1

http://www.lexis.com/research/xlink?app=00075&view=full&searchtype=get&search=408+F.+Supp.+759


Copylease Corp. of America v. Memorex Corp. (S.D.N.Y. 1976)

Uniqueness is not the sole basis of the remedy under this section for the relief may also be granted 'in other proper circumstances' and inability to cover is strong evidence of 'other proper circumstances." Cal.U.C.C. § 2716, Comment 2


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Schiller v. Miller Schiller took possession of

engagement ring and other jewelry and put it in safe deposit box

They also bought a house together (in which he lives)

Miller seeks order that it stay in safe deposit box

Why does the court grant that relief?


Schiller v. Miller (p. 25, N. 9)

The "jewelry", is (a) One handmade platinum ladies engagement diamond ring with a center pear shaped diamond of 5.81 cts., G-H in color, S12 in clarity with matching tapered baguettes with 1.40 cts. total weight.

(b) One florentine tennis bracelet containing 34 genuine brilliant round cut diamonds, eye clean, near colorless weighing approximately 8.04ct. hand set in a 14K gold mounting.

(c) One ladies aquamarine and diamond ring.

(d) One ladies tourmaline necklace.)


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http://www.lexis.com/research/xlink?app=00075&view=full&searchtype=get&search=621+So.+2d+482

Unique goods A few months after the purchase of each of

the aforementioned pieces of jewelry, same were appraised for considerably more than their original purchase price. …

The engagement ring which was purchased for $38,000.00 and that a few thousand dollars more was spent on baguettes for same appraised for $ 60,000.00.

The market value of the aforementioned four pieces of jewelry is difficult to ascertain as they are all unique one of a kind creations and that inasmuch as neither of the parties hereto could ascribe a value to same, this Court cannot place a value on the jewelry.


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Merrill Lynch v. Callahan (D VT 2003) p. 20 Callahan has taken from Merrill

“names, addresses and phone numbers of their former clients”

For Preliminary injunction P must show:

1) irreparable harm in absence of injunction

2) likelihood of success on merits or 3) balance of hardships decidedly in

P’s favor Why does Merrill lose? What

remedies remain?Ch. 2 Equity and equitable

remedies - Part 2 27

Merrill Lynch v. Callahan, p. 20

Non compete agreement 1 year, 100 miles Confidentiality agreement Action under VT Trade Secret

Act. Why does court refuse to enforce

this apparently reasonable agreement?


Preliminary Injunctive Relief Moving party must show

(a) that it will suffer irreparable harm in the absence of an injunction and

(b) either (i) a likelihood of success on the

merits or (ii) 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.


Balancing, not bright lines

Equitable relief is discretionary


Discretionary ReliefGeorg v. Animal Defense League, p. 26

Animal Defense League proposes to build a kennel

Jury finds it to be a nuisance Judge overturns verdict NOV

and refuses to grant injunction


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Discretionary ReliefGeorg v. Animal Defense League

Could any injunction be crafted?

How is monetary relief adequate?

And for what wrong?

Why not let the jury craft

injunctions?32



In view of the public interest, it is the general rule that a group of private individuals are not entitled to an injunction restraining the operation of an establishment contributing to the common good, but such parties are relegated to their remedy at law in the form of an action for damages.


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A suit for injunction will lie only in the unusual case where there is a disproportion of equities, such as where an offensive although necessary undertaking is carried on in an unsuitable place when it could be as easily and economically carried on in some location where it would give no offense.


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Discretionary Relief -Georg v. Animal Defense League

"The evidence showed that there was a need for the rendering plant to conserve what would otherwise be wasted; and to afford an efficient and economical means of disposing of garbage, dead animals and residue from the packing and slaughter houses in Smith County, Texas.

This was the only rendering plant in the county and served the needs of some 75,000 people to promote better sanitary conditions for all of Smith County."


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Equitable relief is discretionary

Grossman v. Wegman’s Food Markets p. 28 The loss of an “anchor tenant”


Equitable relief is discretionaryGrossman v. Wegman’s Food Markets

Courts have recognized the uniqueness of a percentage lease and have generally implied therefrom an obligation on the part of the lessee to occupy the property and to use reasonable diligence in operating the business in a productive manner.

1 American Law of Property, § 3.66, p. 321 (1952).


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Action to compel specific performance of a lease to operate a supermarket dismissed

"Contracts which require the performance of varied and continuous acts * * * will not, as a general rule, be enforced by courts of equity, because the execution of the decree would require such constant superintendence as to make judicial control a matter of extreme difficulty.“


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The gravamen of the complaint here is not only the possible loss of additional income by way of a percentage of defendant's increased gross sales, but the difficulty in measuring the harm that would come from the withdrawal of one of the members of a semi-cooperative enterprise like a shopping center.

Plaintiff's damages cannot therefore be accurately ascertained, and remedy by way of damages at law would be impractical and unsatisfactory.

Dover Shopping Center, Inc. v. Cushman's Sons, Inc., 63 N.J. Super. 384, 393-394 (App.Div. 1960)


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We have considered Dover Shopping Center v. Cushman's Sons (63 N. J. Super. 384) where specific performance was decreed in somewhat similar circumstances, but have not been persuaded thereby that specific performance should be decreed in the case at bar.


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Equitable Defenses

Unclean Hands In pari delicto Unconscionability Laches Estoppel


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Salomon Smith Barney v. Vockel (2000) p. 30

Vockel provides to his new employer Paine Webber confidential information re clients

Paine signs up Smith Barney clients Injunction denied “we look solely at the conduct of the

one who seeks the aid of the chancellor”


Unclean hands – Sheridan v. Sheridan, p. 34

A court of equity, as a court of conscience, can never permit itself to become party to the division of tainted assets nor can it grant the request of an admitted wrongdoer to arbitrate such a distribution.


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Unclean hands – Sheridan v. Sheridan

Is this fair to the wife?

When should a judge report

misconduct to “proper authority”? What about in Sea Girt?


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Unclean HandsSeagirt Realty v. Chazanof (1963) p. 38

1934 - Seagirt Realty (Jacob) to Alfred (to defraud creditors)

Alfred holds for benefit of Jacob

1945 -Jacob goes bankrupt, denying any interest in real property

1950 - Alfred to Chazanof [Jacob’s son-in-law] contemporaneously: Chazanof to Seagirt

(Deed not recorded)

Deed is lost. Seagirt (Jacob) seeks an order compelling Chazanof to execute a new deed.


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Seagirt Realty – an alternative?

Could the court have imposed a

constructive trust in favor of the

defrauded creditors in bankruptcy?


Unclean HandsSeagirt Realty v. Chazanof

Who has the better of it – majority or C.J. Desmond, dissenting?

“What is the sense of perpetuating an erroneous land record in order to penalize A for past misdeeds by causing him inconvenience? Better regard his dirty hands as washed during the lapse of twenty years rather than mess up the recording system."

- Prof. Zechariah Chafee, Some Problems of Equity, 21-22 [1950].


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Majority: “What ought to count is the strong

social policy in favor of making the land records furnish an accurate map of the ownership of all land in the community.

Whatever A's old misdeeds, he is the lawful owner of this lot and the records ought to show this fact.


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Unclean Hands – defense rejectedwrong extraneous to right assertedSeagirt Realty v. Chazanof

wrongs done by Jacob Landau to creditors in respect of the property at some time prior to the acquisition of the title now in issue may not now be raised by this defendant to defeat otherwise available relief.”


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Chief Judge Desmond (dissenting).

I vote to affirm the judgment below because …no right of action can spring from an illegal contract and that courts do not sit to give protection to cheaters or to act "as [paymasters] of the wages of crime”


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Majority: “The property has been conveyed

to plaintiff [Seagirt], who now holds title, both legal and equitable. Defendant [Chazanof] has no interest whatever in the property.”


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Unclean Hands – defense rejectedwrong extraneous to right assertedSeagirt Realty v. Chazanof

“…equitable relief is sought, not to enforce an executory obligation arising out of an illegal transaction,

but to protect a status of legal ownership


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The existing record falsely makes R owner. It may mislead scores of honest citizens –

- people who have strong reasons for wishing to buy the lot, such as creditors of A, creditors of R, or

- lawyers drawing deeds of adjoining lots who are anxious to insert an accurate description.


remedies Part 1

Unclean hands - the pot calling the kettle blackAmerican University v. Wood (1920) p. 42

Complaint to enjoin commercial libel: The bill charged the defendants with

circulating letters and advertising matter among the students and prospective students of complainant containing statements and charges of a character derogatory to complainant and its business, and prayed they be enjoined from further sending out such circulars and letters.


remedies Part 1

Unclean hands - the pot calling the kettle blackAmerican University v. Wood (1920)

Dr. Wood, whose picture was on some of the Chicago University publications, and, following his name, LL.B., D.M.T., Opt. D., D.O., M.D., D.C., was as much responsible for the character of complainant [American's] advertising and the method of conducting its business while he was its president as anyone else and has carried similar methods into the conduct of defendants' business.


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The maxim that he who comes into a

court of equity must come with clean

hands was never intended to bar

everyone guilty of wrongful conduct

from relief in a court of equity56



As a general rule: the wrongdoing or fraud of the

complainant, must be - connected with the subject of the

litigation and - related to the rights of the parties

arising out of the transaction That rule is not applicable to the facts in

this record57



[B]ut on the ground of the public interest and policy we do not think complainant's grievance is of a character to be redressed in a court of equity.

The misrepresentations of complainant in the conduct of its business affected the public, and it would seem a strange thing if a court of conscience should be required to protect a suitor in the commission of a fraud upon the public.


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p. 41 Note 6

Backpay and illegal aliens


Sure-Tan v. NLRB (1984) NLRB ordered reinstatement

with back pay for retaliation

against illegal alien workers who

had voted pro-union in

unionization election - after

which workers were reported by

employer and deported.

What are the arguments pro &

con?


Rewarding illegal conduct?

Q. Should illegal aliens be able

to recover workers comp

payments for lost time?


Rewarding illegal conduct?

Q. Should injured aliens who

used false SS # and were hurt at

work due to unsafe conditions be

able to seek damages for future

wage loss under state tort law?Ch. 2 Equity and equitable

remedies Part 1 62

Ch.2.Equity.part.1.Fall.2014Remedies - Ch. Equity and Equitable Defenses

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