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
Room [email protected]
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Categorizing remedies
Equitable injunction accounting trusteeship receivership specific performance partition divorce/equitable distribution
Legal damages (compensatory or punitive) fines
Hybrid restitution declaratory
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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
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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
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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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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
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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”
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Specific performance -denied for fungible chattels- granted for real estate
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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.
20Ch. 2 Equity and equitable
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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
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?
Ch. 2 Equity and equitable remedies Part 1 24
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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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
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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?
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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.
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Balancing, not bright lines
Equitable relief is discretionary
Ch. 2 Equity and equitable remedies Part 1 30
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
Ch. 2 Equity and equitable remedies Part 1
Discretionary ReliefGeorg v. Animal Defense League
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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Discretionary ReliefGeorg v. Animal Defense League
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”
Ch. 2 Equity and equitable remedies Part 1 36
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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Equitable relief is discretionaryGrossman v. Wegman’s Food Markets
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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Equitable relief is discretionaryGrossman v. Wegman’s Food Markets
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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Equitable relief is discretionaryGrossman v. Wegman’s Food Markets
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”
Ch. 2 Equity and equitable remedies Part 1 42
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?
Ch. 2 Equity and equitable remedies Part 1 46
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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Unclean HandsSeagirt Realty v. Chazanof
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.
48Ch. 2 Equity and equitable
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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.”
49Ch. 2 Equity and equitable
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Unclean HandsSeagirt Realty v. Chazanof
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”
50Ch. 2 Equity and equitable
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Unclean HandsSeagirt Realty v. Chazanof
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.”
51Ch. 2 Equity and equitable
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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
52Ch. 2 Equity and equitable
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Unclean HandsSeagirt Realty v. Chazanof
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.
53Ch. 2 Equity and equitable
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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.
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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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Unclean hands - the pot calling the kettle blackAmerican University v. Wood (1920)
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
Ch. 2 Equity and equitable remedies Part 1
Unclean hands - the pot calling the kettle blackAmerican University v. Wood (1920)
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
Ch. 2 Equity and equitable remedies Part 1
Unclean hands - the pot calling the kettle blackAmerican University v. Wood (1920)
[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.
58Ch. 2 Equity and equitable
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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?
Ch. 2 Equity and equitable remedies Part 1 60
Rewarding illegal conduct?
Q. Should illegal aliens be able
to recover workers comp
payments for lost time?
Ch. 2 Equity and equitable remedies Part 1 61
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