Schwartz-2012-Fall-Remedies-Answer-Copy

Schwartz-2012-Fall-Remedies-Answer-Copy - Student No 7 r r...

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Unformatted text preview: Student No. 7 r r REMEDIES GOLDEN GATE SCHOOL OF LAW — FALL 2012 Prof. Schwartz Points Points Available Received 1. If Peter sues Brian for personal iniupy, will he succeed? Discuss. Personal injury can be caused by negligence or an intentional act such as battery. . . . 3ng . . Compensatom damages: medical costs ($10K), pain and suffering, lost wages ( ), emotional distress. Peter can also try to claim damages from the loss of two prospective tenants, but that is speculative and not related directly enough to the shoulder injury. Punitive damages also available if battery is applicable and Brian acted with fraud, oppression, or malice. Defenses: Peter assumed the risk or was contributorin negligent by entering the construction site without a helmet. However, his shoulder was injured, not his head. Coercive relief: Students were expected to discuss relevant factors or elements for each type. A court will be concerned that the scope of coercive relief might exceed the scope of Peter’s shoulder injury. That said, Peter can request an emergency m to prevent further injuries from the hazardous falling tiles by doing an emergency repair. A preliminam injunction generally is intended to preserve the status quo pending the outcome of the litigation, and here the status quo is dangerous, but it might be possible to prevent further installation of the bad tiles. A permanent injunction could be structured to require removal of the bad tiles and replacement with the proper tiles (full repair). Restitution. P will claim that B must make restitution of the amount he paid for the tiles under the contract, but that is a poor fit with personal injury and a better remedy for Question 2. Election of remedies. Peter should seek a combination of damages to compensate for his shoulder injury and in'unctive relief to revent harm to others, rovided that the two remedies do not contradict each other. 2. If Peter sues Brian for breach of contract, will he succeed? Discuss. Peter will allege that when Brian allowed his agent (subcontractor) to install nonconforming goods, he was in material breach of the contract. Brian of course will argue that the tiles are just decorative and the structure of the building is sound, so the problem is not material. Expectation damages. Peter can demand the difference in value between what he was promised and what he received, or $25,000. However, a better measure is the cost of repair (an additional $40K above the $25K measure) to put him in the position he expected to be. A court could go either way. Conseguential damages. Peter will allege that Brian‘s breach also caused his injuries (see above) and the loss of two potential tenants. Defective workmanship would create foreseeable harm that the parties could anticipate at the time they entered into their agreement. Brian will counter-argue that damages related to potential clients are too speculative, and no actual clients have moved out. Coercive relief. It is too late for rescission, but Peter can demand specific performance, that is, performance of the specifications in the contract calling for the proper tile. Restitution. Peter can demand a refund of the money he paid under the contract for the tiles, since Brian‘s crew member has been unjustly enriched by pocketing the difference in cost between the specified tiles and the cheaper tiles. Brian may argue that he himself has not been unjustly enriched, and the claim is only good against the subcontractor. This is a good argument even though the subcontractor is an agent of the contractor. Defenses. Brian can argue that his subcontractor acted independently and without authorization, but this is not likely to be successful. Election of remedies: Peter should seek damaes measured b the cost of repair or specific performance. 3. Suppose for purposes of this question only that discovery reveals that TileCo, the manufacturer of the tiles Steve used, had conducted lab tests indicating that this particular line of tiles was not suitable for exterior use because the tiles tended to fall off when exposed to the sun, regardless of what mortar or other adhesive was used. TileCo ignored these findings of its research and development department, and did not reveal this information to purchasers. Discuss. TileCo is a corporation. Steve most likely will sue in tort for gross negligence or product liability. He may also attempt to obtain injunctive relief to prohibit TileCo from distributing the dangerous tiles. Students diswssed actual damages, but the major issue in tort remedies is punitive damages from a corporation. Peter must show that TileCo acted with conscious disregard for the rights of others despite being aware of probable dangerous conseguences. In measuring punitive damages, there are many tests, but modernly a court will avoid excessive punitive damages in violation of Fifth or Fourteenth Amendment b considerin: (1) deree of rerehensibilit cannot be established b extra-'urisdictional evidence ; (2 ratio between compensatory and punitive damages; and (3) difference between punitive damages and civil or criminal sanctions available. In general, punitives against a corporation should adhere to a 1:9 maximum ratio to compensatory damages (State Farm v. Campbell). lf actual damages are large enough, court should use a 1:1 ratio between compensatory and punitive damages (Exxon). Punitives should not be based on harm to persons who are not litigants in a suit (Phillip Morris). In this case, TileCo ignored its own lab tests indicating that this particular line of tiles was not suitable for exterior use because the tiles tended to fall off when exposed to the sun, regardless of what mortar or other adhesive was used. TileCo did not reveal this information to purchasers such as Steve. However, the testing did not make clear that there were probable dangerous consequences. Experience seems to show that was the case, however. If the court finds the danger was probable, then Peter can claim that distributing heavy exterior tiles that cannot be firmly affixed is reprehensible. The ratio to compensatory damages would likely be in the 9 to 1 range. We do not know if there are criminal sanctions for such misconduct. TileCo has no affirmative defenses, since Steve did not have access to the negative information about the tiles. Some students also discussed the three types of injunctive relief, identifying the test for each. In sum, a court will be concerned that the scope of coercive relief might exceed the scope of TileCo’s conduct. That said, a plaintiff can request an emergency m to prevent further distribution of tiles causing injuries. A preliminam in'unction may also be available pending the outcome ofa suit against TileCo. A permanent in'unction could revent an further manufacture of the tiles. 4. Suppose for purposes of this question only that Brian sues Steve for the $5,000 he pocketed. Steve deposited the money in his bank account, bringing the total balance to $10,000. Steve used all the money in the account to purchase two tickets for airfare and a luxury cruise in the Bahamas next month. Steve is othenivise insolvent and has no other assets. What remedies does Brian have against Steve? Discuss. M Damages. Brian can sue Steve for fraud, conversion or embezzlement. He can claim compensatogy damages for the $5,000 and punitive damages (treble) for Steve’s willful misconduct. Because the funds in the account were commingled, an accounting will be necessary to trace to Brian. Since the account is now empty and Steve is insolvent, devices such as a li_ep or constructive trust may be necessary. Coercive relief. Brian will need to obtain a TRO to prevent Steve from using the tickets to travel to the Bahamas and will can ask the court to attach the tickets (Steve's only assets) as a prejudgment or provisional remedy in the hope that he (Brian) can liquidate them to satisfy any future judgment. Restitution. Brian can demand that Steve return the $5000 to him in restitution, but Steve is insolvent. Therefore, as a post-judgment remedy, Brian can place a constructive trust on the one ticket/tour that was purchased with Brian’s money. He can also place a Leg against the account in case money is placed in it. Defenses. Steve may be able to allege contributory negligence or hardship, but other defenses do not seem to apply. Breach of Contract. This assumes Brian and Steve had an enforceable contract (contractor/subcontractor). Expectation Damages. Brian will need to show the difference between what Steve promised and what he delivered. Clearly there is a $5000 difference (the money that Steve “pocketed”). Conseguential damages: any liability Brian incurs from injuries caused to others by Steve’s breach. Restitution. Brian can demand restitution of the $5000 overpayment under the contract. Coercive relief. Brian can demand specific performance of the terms of his contract with Steve. Defenses. None — the evidence is really stacked against Steve. Election of remedies. Brian should demand expectation damages and consequentials he owes Peter or others, and can use restitutiona measures such as a constructive trust or lien to obtain recove . 5. Suppose for purposes of this question only that Brian knew what Steve was doing and insisted that Steve give him $1,000 to ignore Steve's actions and “look the other way.” Can Brian obtain recovery from Steve? Discuss. Brian is unlikely to obtain legal relief or equitable relief from Steve because he conspired with him to keep the money intended for the specified tiles. Brian has acted in pari delicto with Steve in defrauding Peter. Both Brian and Steve are equally at fault in committing the malfeasance. The doctrine of unclean hands also applies as a defense in which Steve will argue that Brian is not entitled to obtain an equitable remedy against him because Brian acted unethically or in bad faith by “looking the other way” when Steve substituted the bad tiles. Another possible defense based on Brian’s conduct is estoppel, since Brian, by inorin the situation, ave tacit consent for Steve to use the tiles. ID ; Remedies_LSN_Schwart z_Final_2 O 12 FL ID: f (Exam Number) Exam Name: Remedies_LSN_Schwartz_Final_2012FL Grade: Page 1 of 11 Exam taken with Sofi'est v11.0.2106.11253 ID ; Remedies_LSN_Schwalrt z__Fina1__2 O 12 FL 1) ======== Start of Answer #1 (2661 words) ======== 1. Peter (P) v Brian (B) Negligence: P likely has a claim against B for negligence. P may seek comgensatoLy damages which cover his medical costs, out of pocket expenses, and lost wages/time. Here, P's medical costs were $10,000 and he lost four weeks of work at approximately $10,000 as well. P may also assert any out of pocket expenses he may have incurred due to the injury. Along with compensatory, P may seek non-monetam relief of Pain and Suffering if the injury will cause him ongoing pain or decreased abilities. Pain and Suffering can be assessed in a per diem (daily value of p&s), a make whole instruction (how much would a jury member need to be paid to feel whole from this injury), and the selling price instruction (how much a jury member would need to be paid to incur the injury that the plaintiff did). This number is variable so it would be difficult to calculate before presenting it to a jury. lf gross negligence were to be found, P could seek recovery of punitive damages. Punitive damages are awarded to a plaintiff when an individual defendant (not corporation) acts with malice, oppression, or fraud in breach of a duty owed not stemming from contract. Here, it is likely that B did not act with malice, oppression, or fraud- it appears that B was just negligent- so it is unlikely P could recover punitive damages. In the present situation it is unlikely that coercive relief would be applicable. The injury happened, the defendant's conduct is not an ongoing harm, so it is unlikely that P could assert a remedy of coercive relief against B. Page2 of11 ID ; Remedi e s__LSN_Schwa‘rt z_Fina l__2 O 12 FL Under a theory of m, a plaintiff would attempt to recover any unjust enrichment conferred upon the defendant. Here, P has not conferred any unjust enrichment upon B, so restitution would not likely apply. Battery: P may have a claim against B for battery. Battery also allows for the recovery of compensatory damages. These would be the same as those mentioned in negligence. Unlike ordinary negligence, P would be entitled to punitive damages because (bc) battery is an intentional tort and malice is present. If P can prove that B intentionally caused the harm to P or it was reasonably foreseeable that P's harm would occur based on B's conduct, P may be able to recover punitive damages.Punitive damages are calculated at 3 times compensatory damages, when sought against an individual. Coercive:Again, like negligence, coercive and restitution remedies are not likely to apply (see above). Defenses: B's available defenses to remediation are (1) P assumed the risk of his injury by entering a construction site without a hard hat; (2) P was contributorily negligent by not wearing a hard hat; (3) P waived his right to recovery by his actions of not wearing a hard hat on the site; (4) the collateral source rule, where a plaintiff receives payment of a third party source, if a private insure (for P's medical expenses) than B is liable for the full amount, if P has a public insurance coverage then B may be able to limit his liability by what he has paid into the public insurance. None of B's defenses are complete bars to P's recovery, they are likely to only limit the amount that P can recover from B. Election of Remedy: P may not enjoy double recovery from B, therfore he must pick the remedy he would like to recover. The remedies under battery offer the availability of punitive damages, however, it will be difficult to show that B acted with malice, Page3of11 ID : Remedies_LSN_S chwa’rt z_Fina l_2 O 12 FL oppression or fraud, and nothing in the facts directly leads one to believe that there was any intent on the part of B. Therefore, P's most lucrative remedy would be battery, but P has a better chance at recovery under negligence. B would like the remedy to be barred be of P's actions (defenses above), but it is very unlikely that B would be able to shield himself from all liability. Also, P may be able to seek attorney's fees if it is available in a statute or ordinance for this type of suit. Enforcement: If P did obtains a judgment against B his options for enforcing his judgment would be (1) ask B to write him a check for the amount owed; (2) place a lien against property to which B has good title; (3) P could seek execution of the judgment; (4) P could seek to garnish B's wages. In conclusion, it is likely that P has a valid claim for negligence against B, therefore he will likely succeed, but may incur limited recovery based on his own actions (defenses above). 2. P v B Breach of Contract: P likely has a claim for breach of contract against B. P and B had a valid contract for B to build a $1,000,000 building for P. B's building, although structurally sound, does not meet the specifications of the contract bc the exterior tiles a falling off. Under a theory of breach of contract, a plaintiff may seek expectation damages. These can be assessed by looking at the difference between what the plaintiff expected from the contract and what they actually received, they are recovering for their let down expectations. Here, P expected a $1,000,000 building and received a building worth Page4of11 ID; Remedies_LSN_Schwag:t z_Final_2012 FL $975,000. The calculation for the expectation measure here would be the difference between what was paid for and what was received. P received a building worth $25,000 less than what he paid to B. P could recover $25,000 from B for breach. Another calculation of expectation damages would be under a warranty theom. This means that a product in a contract had a warranty of being a specific product and doing a specific function, a plaintiff may seek the difference between the value of the warrantied product and the product that was received. Here, P would assert that there was a warranty for a $1,000,000 building and to bring the current building (one with tiles falling off) up to that warranty (one without tiles falling off) will cost $40,000. P would likely be able to recover $40,000 for repair the building if he can show a warranty in the contract. When expectation damages are not proper, a plaintiff has the option of seeking reliance damages. Reliance damages place the non-breaching party back to their pre-promised position. Here, there has been substantial, if not full, performance by B, the breaching party, so reliance damages are not proper. Consequential damages: Conseguential damages may be awarded for breach of contract when the damages flow reasonably and foreseeably from the breach of the contract and the consequential damages were foreseeable by both parties at contract formation. Here, it is reasonable and foreseeable that if a $1,000,000 building does not look esthetically pleasing, tenants will not want to rent spaces there. The purpose of the building was to rent out available units and make money on that rent. By B not providing a building to the contracted standards it is reasonably foreseeable that P would lose potential tenants and rent. Coercive relief: Specific performance applies to a breach of contract when there is (1) a valid contract; (2) there has been a breach of that contract; and (3) remedies at law are Page 50f11 ID: Remedies__LSN_Schwa,rt z__Final_2 012 FL inadequate. Here, elements one and two are met as there is a contract and it has been breached by B; however, there are adequate remedies at law and therefore a court is unlikely to force specific performance upon B. There are several equitable relief options that may apply but they are unlikely to properly compensate P. (1) Rescission of the contract, opposite of specific performance- the contract is taken back and neither party needs to perform. Here, it is too late for rescission, both parties have substantially performed. (2) Reformation- no mutual mistake, but possible unilateral mistake based on fraud, this would allow a court to reform the contract to fit what P believed to be the state of the agreement. This is unlikely here, bc B is not the party embezzling money the subcontractor is. B would say that subcontractor is the correct party for reformation. Restitution: Restitution in contract disgorges any unjust enrichment conferred upon the breaching party by the non—breaching party. Here, B did not receive any unjust enrichment, the subcontractor is the party keeping money that should be spent on the building. P could seek disgorgement of the $5,000 from B, but is unlikely to succeed, P would be better off seeking repayment form the subcontractor. Defenses: B's best defense is that paying P the $40,000 to repair the tile work would lead to economic waste and courts should not encourage economic waste; also, B may assert that he is the improper defendant as the subcontractor was the party that installed the improper tiles. it is unlikely that B will be successful claiming that he is the incorrect defendant bc he is the general contractor and his job, as contracted, is to oversee and manage the construction of the building at all stages. Election of Remedies: P should seek expectation damages based on warranty of goods. This way P will be able to recover the cost to repair and replace the tiles that had been installed. This will be the $40,000 repair cost. P will also seek consequential Page6of11 ID ; Remedies_LSN_Schwa}rt z_Fina l_2 0 12 FL damages for the loss of tenants based on the appearance of the building. If the contract between P and B has an attorney's fee clause, then P could seek recovery of his attorney's fees if he prevails. B will want to pay the normal expectation damages, difference between what was paid...
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