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California Bar Exam MBE Outlines
TORTS CONTRACTUAL DAMAGES Actual/ Nominal/ Punitive Expectation/ Consequential/ Liquidated RESTITUTION Legal: money/ replevin/ ejectment
Eq: Constructive trust, Eq Lien Legal: replevin / unjust enrichment
Eq: Sp Perf/ Rescission/ Reformation INJUNCTION TRO / Preliminary Injunctive Relief / Permanent Injunctive Relief
Compensatory Damages: Plaintiff is entitled to compensatory damages to put her in the position she would have been had the wrong not occurred. Must show:
Causation: Actual cause “But for…”
Foreseeability: Proximate. Injury must have been foreseeable at time of the tortious act
Certainty: The damages cannot be too speculative.
Applies to economic losses (special damages, must be specially pleaded); but not to non-economic damages (general damages: pain and suffering, disfigurement), jury can award any amount but gral damages must be foreseeable
All or Nothing Rule: For future damages, plaintiff must show that they are more likely to happen than not.
Unavoidability: The plaintiff must take reasonable steps to mitigate the damage
Calculation: single lump sum payment, discounted to present value. Forget inflation.
Nominal Damages: Where the plaintiff has no actual injury, the court may award nominal damages to serve to establish or to vindicate the plaintiff’s rights.
Punitive Damages: Where the plaintiff’s injury results from “willful, wanton, or malicious conduct” on the part of the defendant, the court may award punitive damages to punish the defendant, not available if D merely negligent.
Plaintiff must first have been awarded compensatory, nominal, or restitutionary damages.
Calculation: Must be relatively proportional to actual damages. USSC: single-digit multiple of actual damages unless the defendant’s conduct is extreme.
II. RestituTionary Remedies (A, B, & C: legal; d & E equitable)
Restitutionary Money Damages: Where the defendant has been unjustly enriched, the court may award damages based on the benefit to the defendant.
The amount is calculated based on the value of the benefit.
However, where both compensatory and restitutionary damages are available, plaintiff cannot get both. Instead, she must make an election of the two. Generally, the plaintiff should be awarded the larger sum of the two.
Replevin: Allows plaintiff to recover possession of specific personal property.
Must show that: (1) P has a right to possession, and (2) wrongful withholding by D.
Timing: As long as D is still in possession, P can recover the chattel before trial.
But, to do so, plaintiff will have to post a bond.
And, defendant may defeat an immediate recovery by posting a re-delivery bond. Through which, the defendant can keep the chattel until after the trial.
Generally coupled with damages for lost use of the benefit during the wrongful withholding.
No recovery if sale to a Bona Fide Purchaser
Ejectment: In an action for ejectment, the plaintiff may recover possession of specific real property.
Must show: (1) P has a rt to possession, and (2) there is a wrongful withhold by D.
Only available against defendant who has possession of the property (not trespasser).
Usually coupled with damages for lost use of the benefit during the wrongful withholding.
Constructive Trust: Equitable remedy imposed by the courts to D who improperly acquired title through wrongdoing, when the retention of property by D-wrongdoer would result in unjust enrichment. D serves a “trustee” and must return the property to P.
Legal remedies must be inadequate (D is insolvent or the property is unique).
Tracing: P can follow the property to whatever form it takes, as long as the trust re can be id-ed (cannot be used when D has used the property to improve another).
Bona fide purchasers prevail over plaintiff
Plaintiff prevails over unsecured creditors.
Equitable Lien: where the defendant has improperly acquired title to a property, an equitable lien allows the court to order an immediate sale of the property, and the monies received will go to the plaintiff. (good when property lost value in D’s possession or cannot be traced)
Must show (1) D misappropriated P’s property creating a debt or obligation to pay, (2) P’s property can be traced to property held by D, (3) retention would → unjust enrichment.
If the proceeds from the sale are less than the fair mkt value of the property when it was taken, a deficiency judgment will issue for the difference and can be used against D’s other assets (no preference in enforcement a/ other creditors though).
Where misappropriated money is used to improve property, only an equitable lien is available. (e.g house remodel)
Same rules as constructive trusts: tracing allowed; BFP’s prevail.
III. INJUNCTIVE RELIEF
Temporary Injunctive Relief: “D is ordered to do or refrain from doing something; maintaining status quo until decision on the merits.” To recover to recover temporary inj. relief, P must meet a two-part test:
Irreparable Injury: P must show that without the injunction, she will incur irreparable injury while waiting for a full trial on the merits (timing is critical).
Balancing Test: harm to P if injunction is denied v. harm to the D if injunction is granted (relevant in nuisance cases)
Where D created the hardship balance likely to weigh in P’s favor
Likelihood of success: P must show that he/she has a strong likelihood of success on the merits. The court will look to the probability of this success.
This is not an inquiry on success of obtaining a permanent injunction.
The court should also impose a bond requirement on the plaintiff to reimburse D if the injunction injured him/her and the plaintiff does not succeed.
TRO: emergency measure until regular adversary hearing can be held, can be issued ex-parte under same test.
Permanent Injunctive Relief: P must meet a five-part test [I Put Five Bucks Down]
Inadequate Legal Remedy: Money damages may be too speculative; D may be insolvent; the sheriff may be unable or unwilling to enforce a replevin or ejectment action, irreparable injury may result, avoid multiplicity of actions.
Property Interest/Protectable Interest:
Traditional View: equity will grant relief only were there is a protectable property right involved (always easier to protect land in equity).
Modern View: Any protectable interest will suffice.
Feasibility of Enforcement: only an issue with mandatory injunction. Enforcement problems may stem from (1) the difficulty of supervision by court or (2) concern with effectively ensuring compliance. Negative injunction poses on enforcement issues. Watch out for fact patterns with great taste, skill or judgement, or when out of state act is required.
Balancing of Hardships: Plaintiff’s benefit v. Defendant’s hardship + the public’s hardship; “gross disparity between D’s detriment and P’s benefit [But, if the defendant’s conduct was willful, no balancing]
Defenses, lack thereof:
Laches: Where there has been an unreasonable lapse of time between when the P learned of the injury and when the P filed the lawsuit, and that lapse of time is prejudicial to the D, laches will cut off the right to injunctive relief (but not $ damages).
Unclean hands: The persons seeking equitable relief must not be guilty of any improper conduct that is related to the lawsuit.
Impossibility: it would be impossible for the D to carry out the terms of the injunction.
Free Speech: Injunction may be denied on free speech grounds. (defamation)
I. Damages (LEGAl)
Compensatory Damages: based on injury to the P
Requires: (1) causation; (2) foreseeability (tested at the time of formation; (3) certainty (evidence and D’s culpability considered); (4) unavoidability (mitigation)
Consequential damages: available for related damages foreseeable at the time of formation, may include reputation if foreseeable, usually lost profits.
Seller breaches a land sale K: CD = out-of-pocket loss OR benefit-of-the-bargain
Nominal damages are also allowed. But, punitive damages are NOT allowed (if D’s conduct is willful, characterize as a tort, so you can get PDs)
Liquidated damage clauses are permissible, if they are valid
Damages are very difficult to ascertain at the time of K formation
This was a reasonable forecast of what they would be.
Result: if valid → only liquidated damage amount; if invalid → actual damages available.
If K is unenforceable AFTER the P has performed (e.g. mistake, capacity, SoF, illegality)
P can get restitutionary damages for property/money give to, or services rendered for D for the VALUE of the BENEFIT.
Not necessary to find that the D actually benefited, only that D received a benefit
If the value of the services is greater than the K rate, P can still recover it.
P can get the property back if it is unique or D is insolvent.
Quasi-K: P awarded the reasonable value of D’s ill-gotten gain or the difference between the present value of the good less the value before the benefit conferred by P.
If K is breached…
Where P is the non-breaching party:
P may recover restitutionary damages for property/money given to, or services rendered for D for the VALUE of the BENEFIT (even if > K rate).
Where P is the breaching party:
Traditional View: P may recover NOTHING
Modern View: P may recover restitutionary interest, but it CANNOT be greater than the K rate and is reduced by any damages suffered by D as a result of the breach.
Replevin: (UCC Art 2) legal restitutionary remedy for recovery of specific chattel wrongly taken or detained by defendant. Applies in two cases:
Buyer who has made at least partial payment may recover if purchase was for personal, family or household.
To recover undelivered, identified goods if buyer is unable to secure substitutes.
III. Specific Performance (equitable)
Court order to party to perform according to what she promised under the contract. 5 part check-list – [I’m Doing Fine Mom and Dad] P must show:
Inadequacy of legal remedies. Damages may be inadequate b/c (1) they’re speculative, (2) defendant is insolvent; (3) multiple suits are necessary; (3) the thing bargained for is unique (tested at the time of litigation, not K formation). Liquidated damage clause ≠ $ is inadequate
Definite and Certain Terms: Terms of K must be sufficient certain to constitute a valid K
Feasibility of enforcement. Jx. over the parties? Too much court supervision needed?
Mutuality of remedy: P performed or is ready and able. Must show the other side can also secure performance. Only an issue where P lacks capacity: ct will reject mutuality if it feels secure that P can and will perform.
Lack of Defenses: Unclean hands; laches; unconscionability; mistake; misrepresentation; equitable conversion (sale to BFP); SoF (satisfied if (i) valuable part performance -2/3 of RP (ii) in reliance on K).
Deficiencies fact pattern
Seller as P: CAN enforce K if the defect is minor. CANNOT enforce K if the defect is major unless the seller can cure the K before closing.
Buyer as P: CAN enforce the K even if the defect is major (abatement – court will “abate” the purchase price to take into account this defect). CANNOT enforce the K if the defect is very major.
Time of the Essence Clause – w/ forfeiture provision. Equity abhors forfeiture.
Avoid forfeiture (and award SP), where: (1) loss to the seller is small; (2) tardiness is de minims; (3) waiver – seller has accepted late payments in the past; (4) buyer would suffer undue hardship
Modern trend: cts would give P restitutionary relief if SP were not granted. But, if buyer has not made even an initial payment – the forfeiture clause will be strictly enforced.
Equitable conversion: real property interest of the buyer and seller are switched upon execution of the land K.
Thus, the buyer will be regarded as having the real property interest (the specifically enforceable right to the land).
Seller will be regarded as having the personal property interest (the specifically enforceable right to the money).
Personal Services Ks: Covenants Not to Compete
The covenant must protect a legitimate interest
The covenant must be reasonable in both is geographical and durational scope.
Uniqueness may apply to personal property if at time of litigation:
One of a kind, very rare;
Personal significance to the buyer: or
Chattel is unique due to circumstances (oil embargo)
IV. Rescission: equitable remedy whereby one who is fraudulently induced into entering a K may rescind K. 2-Step Analysis:
Determine if there are grounds for the rescission:
Formation grounds: (1) mistake; (2) misrepresentation (3) coercion; (4) undue influence; (5) lack of capacity; (6) failure of consideration; (7) illegality.
Mutual mistake of material fact = adequate grounds
Mutual mistake of collateral fact ≠ inadequate grounds
Unilateral mistake inadequate grounds UNLESS the non-mistaken party knows or should have known of the mistake.
Misrepresentation is adequate grounds if P actually relied on it.
Determine if there are valid defenses: Unclean hands; laches, election of remedies (negligence is NOT a good defense).
Election of remedies:
P sues for damages first: rescission is NOT allowed (he’s affirming K)
P sues for rescission first: damages ARE allowed
Availability of Restitution: if a P who is entitled to rescission has previously rendered performance on the K, can get compensated for it or get the property back via restitution.
Legal Rescission: P accomplishes this by her own actions.
P gives notice and tenders back any consideration received
P then sues for restitution for anything given to D.
V. Reformation: ct. modifies a written agreement to conform w/ the parties’ original understanding. 3-Steps:
Determine if there is a valid contract
Determine if there are grounds for reformation
Unilateral mistake IF non-mistaken party KNOWS of mistake
Determine if there are valid defenses: unclean hands, laches may prevent reformation. Negligence, SoF or PER don’t don’t prevent reformation
CONTRACTUAL REMEDIES AVAILABLE IN COMMON HYPOS
PERSONAL PROPERTY SALES Compensatory damages Seller’s breach (does not convey, delivers non conforming)
Buyer’s breach (doesn’t pay) Restitution Unenforceable / breached Ks Specific performance Uniqueness issue in personal property Rescission Reformation REAL PROPERTY SALES Compensatory damages Sellers’ breach (not conveying)
Buyer’s breach (doesn’t pay) Restitution Unenforceable / breached Ks Specific performance 1. Land is unique; 2. Buyer AND seller can get sp perf, 3. Lookout for “deficiencies” fact patterns Rescission Reformation CONSTRUCTION CONTRACTS Compensatory damages Builder’s breach (not completing, defective)
Buyer’s breach (doesn’t pay) Restitution Only builder for work done, not available if owner pre-paid Specific performance Only owner with very difficult enforcement problems AVAILABLE TORT REMEDIES IN COMMON HYPOS
FRAMEWORK FOR EQUITY DAMAGES:
Are legal remedies INADEQUATE?
Is injunctive relief decree FEASIBLE?
Should hardships be BALANCED?
PERSONAL PROPERTY TORTS
DESTROYED OR DAMAGED PROPERTY Compensatory damages DISPOSESSION Compensatory damages Restitution If D benefits Replevin Mandatory injunction If chattel unique and replevin won’t work Constructive Trust/ Equitable lien D insolvent or “tracing” facts involved Self help Reasonable non deadly force to recapture.
2. REAL PROPERTY TORTS
SIMPLE TRESPASS DESTRUCTION/ DAMAGE Nominal damages Compensatory damages Restitutionary Injunction Injunction Constructive Trust/ Equitable lien Self help
ENCROACHMENT NUISANCE Compensatory damages Compensatory damages Injunction: balance hardship problem? Injunction: balance hardship problem? NO Restitutionary NO Restitutionary
3. PERSONAL INJURY TORTS
REMEDIES Compensatory damages Economic losses/ Special Damages: lost wages: Certainty
Non economic damages/ General damages (pain & suffering), certainty not required.
Lump sum discounted to present value w/o inflation Injunction Exceptionally against prospective tortious conduct
REMEDIES All legal damages Constructive Trust/ Equitable lien Punitive damages may apply (not under contractual basis)
Remedies 7/16/16 pg 1 of 6
Lump sum discounted to present value w/o inflation Injunction Exceptionall