PA: Equity

  1. Answer: Steps
    • (1) Gen reqs for equity are satisfied.
    • >> Legal remedy is inadequate
    • >> Equitable releif is feasible
    • (2) Specific reqs for particular equitable remedy sought are satisfied.
    • >> Injunction
    • >> Specific Performance
    • >> Recission and Reformation
    • (3) If requirements not satisfied, constructive trust or equitable lien available?
    • (4) Equitable defenses preventing relief?
    • >> Unclean hands
    • >> Latches
    • >> Impossibility or undue hardship
    • >> Freedom of speech (prior restraint

    NOTE: Equitable relief is always DISCRETIONARY.
  2. Legal Remedy Must Be Inadequate
    • GEN: Money will not adequately compensate P. Examples --
    • (1) SM is unique/rare.
    • (2) Damages speculative.
    • (3) Multiple lawsuits would be required.
    • (4) Insolvency of D (judgment uncollectable)
    • (5) Irreparable harm results from D's conduct which can't be fully compensated by a money judgment.
  3. Equitable Remedy Must Be Feasible
    • GEN: Requires, in the forum state, either
    • (1) the person who's ordered to act; OR
    • (2) where appropriate, the object that is the subject of the suit.

    • ALSO: Where the injunction at issue concerns an affirmative act, court may decline remedy if:
    • (1) Act to be performed requires the application of taste.
    • (2) Act to be performed requires much skill or is very complex (supervision).
    • (3) Act is beyong D's ability to perform.
    • (4) Personal service contracts.
  4. Cover Goods v. Rare Goods
    • GEN: If you can buy cover goods, usually won't get specific performance.
    • BUT: if goods are rare due to a shortage, might be able to get SP.
  5. Future Injury Req for Trespass
    GEN: Party seeking an induction must establish a probability of future injury from defendant's conduct.
  6. Absence of Person / Property From Forum State
    • GEN: In the absence of both the defendant and the property in the forum state, a court will be unlikely to make an order for specific performance.
    • PROB: ENFORCEABILITY -- Courts don't like to make orders they can't enforce.
  7. Personal Service Contracts and Enjoinment
    GEN: Can't seek injunction requiring someone to perform a personal service contract, but you can seek an enjoinment of that person so that they don't engage in other work (ie. breach and build for a competitor).
  8. Injunctions (Requirements)
    • GEN:
    • (1) Legal remedy is adequate
    • (2) Legal remedy is enforceable (feasible).
    • (3) No equitable defenses preventing relief.
    • (4) Injunction is available for the specific harm sought to be addressed.

    • (1) Trespass to land
    • (2) Conversion of a unique chattel
    • (3) Preventing the continuation of a wrongfully-instituted suit whether that suit is
    • >> (a) Malicious unfounded suit in the forum state; or
    • >> (b) Suit brough in another state based on wrongfully-obtained jdx.
    • >> NOTE: Enjoin individuals, not courts.

    • (1) To eliminate a private nuisance.
    • >> Effects an individual or a definite number of persons in enjoyment of a private right not common to pub.
    • (2) To eliminate a public nuisances (interference w/ interests of gen pub), BUT ONLY IF litigant shows a special injury -- one that's substantially different from that suffered by the average member of the public.
    • (3) Prevention of waste that is --
    • >> (a) Destructive: causes permanent harm
    • >> (b) Permissive: failing to keep up the property (not mere wear/tear).
    • >> NOTE: Gen NOT avaiable is waise is ameliorative (increases value).
    • >>>> Exception: tearing down historic homes to replace with new apartments or cut down old trees.
    • (4) Prevent enforcement of a fraudulently obtained judgment
    • >> Extrinsic fraud (bribing judge/jury) ok.
    • >> Intrinsic Fraud (forgery, perjury): not ok.
    • (5) Inducing breach of contract and/or refusal to deal
    • >> GEN: When D encourages someone to breach a contract with a competitor or to refuse to enter into or continue a relationship with a competition, injunction may be sought UNLESS D's actions privileged.
    • >> PRIVILEGED: The softer the inducement, the more likely it is to be privileged (ie. suggestion v. threat). Also consider the relationship between P and D, and the relationship between D and the third party.
    • (6) Use of Competitor's Trade Secrets
    • >> GEN: Court most likely to grant an injunction where info taken in a wrongful manner and taker stands in a fiduciary relationship to the owner.
    • >> Express contractual covenant is NOT REQUIRED in seeking an injunction against disclosure of TS.
    • >> Court may enjoin the person who has wrongfully taken the TS AND the person who intends to use it.
    • >>>> Property right violation, fiduciary breach, contract breach.
    • (7) TM Infringement
    • (8) Trade Name Infringement
    • (9) Right to Imitate
    • (10) Copyright and Patent Infringement
    • (1) Defamation
    • (2) Trade libel
    • (3) Publication of private facts
    • >>NOTE: Concern in these cases about 1A prior restraint.
    • >> May enjoin, however, if conduct amounts to unfair competition and is nec to protect biz interests.
    • (4) Pending crim proceedings -- not enjoined -- BUT may enjoin threatened crim proceedings under extraord. circumstances.
  9. Injunctions (Temporary Injunctive Relief)
    GEN: Injunction to preserve status quo during the period necessary to detemine the issues in litigation.

    • TYPES:
    • (1) Interlocutory (prelim) injunction
    • (2) Temporary restraining order

    • REQS: Written notice, hearing (generally), and injunctive bond, including a showing that --
    • (1) Necessary to preserve the status quo pending trial to avoid irreparable harm.
    • (2) P must show a likelihood of prevailing at trial.

    • Can be obtained w/o a hearing but it is effective for a very short period of time (hearing required in 3-5 days)
    • Must show: immediacy of injury.
  10. Injunctions (Penalty: Contempt)
    • GEN: Method of enforcement. Failure to comply w/ an injunction can result in civil or criminal punishment.
    • REQ: D must have disobeyed a specifically detailed, unequivoacable judicial command, AND must have had the ability to obey the command.
    • EFFECT: Binding not only on parties but those in privit with them (including those in active concert)
    • >> IF restrictions known to peropl not parties, those people may not aid or abet its violation by others, and if they are within the class whose conduct is intended to be restrained, they may not themselves violate the order.

    • GEN: instituted by a private party in order to
    • (1) Compensatory CC: Compensate P for damages caused by disobedience of court order; OR
    • (2) Coervice CC: Compels D's compliance with a court oder to prevent further losses.
    • >> Fees, jail.
    • NOTE: CC will fail if underlying order is vacated.

    • GEN: Brought by the government to punish errant behavior. Purpose is to uphold the dignity of the court.
    • (1) Direct: Occurs in the presence of the court -- punishment metted out summarily.
    • (2) Indirect: Outside the presence of the court -- testimony / production of evidence.
    • NOTE: CC stands even if underlying order is vacated.
  11. Specific Performance (requirements)
    • GEN: party to a contract ordered to perform according to its terms.
    • REQS:
    • (1) Legal remedy is adequate
    • (2) Legal remedy is enforceable (feasible).
    • (3) No equitable defenses preventing relief.
    • (4) SP is available for the specific harm sought to be addressed.

    • (1) Valid contract
    • >> Certainty of material terms (ID parties, price, time/manner of payment, description of subject matter)
    • >>>> Equity requires a contract to be somewhat more definite and certain in its terms than a court at law.
    • >> Consideration -- adequacy not considered unless unconscionable.
    • (2) All contract conditions fulfilled
    • >> Fulfillment of conditions precedent and a readiness to perform all concurrent conditions.
    • >>>> Time is of the Essence Clause: courts generally honor UNLESS (i) tardiness is de minimus, (ii) loss to other party is slight, (iii) undue hardship to forfeiting party, and/or (iv) waiver.
    • >>>>>> The more you can show, the better.
    • >>>> Seller of land must convey marketable title: if cannot convey MT, no grant of SP UNLESS: (i) deficiencies are minor, in which case SP may be granted with a reduction in price, OR (ii) buyer waives the deficiencies, accompanied by a reduction in price.
    • >>>>>> NOTE: If defect can be cured before or at closing, deficiency will be set aside and SP granted.
    • (3) Mutuality of remdies exists
    • >> Seller and Buyer can enforce the remedy.
    • >>>> Both parties must be capable or performing AND counter-performance may be suff. secured to the satisfaction of the court (court can compel the P to perform what he is promising).
    • >>>> IE. S sells B (17yo) land, but S ultimately refuses to turn it over.
    • >>>>>> Today: ok.
    • >>>>>> Traditionally: B can't enforce K b/c minor and no mutuality of remedies.
  12. Specific Performance (Equitable Conversion)
    • GEN: Real estate contracts
    • >> buyer has the risk of loss if the bdg is damaged/destroyed before closing.

    • RESULT: Seller entitled to specific performance without a reduction in price.
    • NOTE: Buyer may have the right in equity, under a constructive trust theory, to any insurance proceeds collected by the seller.
  13. Specific Performance (Enforcement)
    • METHODS:
    • (1) Ordering seller to convey or buyer to pay; OR
    • (2) Transferring title by court order upon payment.

    • (1) Buyer and property present: court can order buyer to pay and trhough the court order the transfer of property (if necessary).
    • (2) Only Buyer and Seller Present: Court can order the biyer to pay and the seller to convey.
    • (3) PROBLEM: Only Seller and Property Present: Can order the seller to convey or can transfer property by court order, BUT CAN'T ENFORCE.
    • >> No buyer.
  14. Unlawful Cometition (Gen)
    • Different Elements
    • TORT: Using confidential info appropriated form a former employee resulting in competitive injury.
    • >> Trade Secret: (1) gives possessor a competitive advantage; AND (2) must not be otherwise available.
    • >> REMEDY: Injunction.

    • CONTRACT: Covenant not to compete. Can forbid acts of competition in a specified area for a specified time.
    • >> SP requires that the contract is reasonable as to (1) activities prohibited (only coveres extend necessary to protect the employer; (2) geographic area; AND (3) duration of time.
    • >> Blue Penciling: PA courts will modify covenants if parts of the non-compete are unreasonable.
    • >> REMEDY: SP.
  15. Recission
    • GEN: Voidable contract is put to an end and the parties are excused -- like it never happened.
    • REQ:
    • (1) Mutual mistake as to a material fact -- unless there was a compromise as to a disputed fact which proved mistaken.
    • (2) Misrepresentation as to a material fact (induced a reasonable recipien to make the contract).
    • (3) Unilateral mistake -- sometimes, see below.
    • (4) Duress, fraud, undue influence, lack of capacity.

    • NOTE: Unilateral mistakes DON'T normally suffice.
    • >> They may result in RECISSION, however, if one party knew or should have known about the mistake OR the resulting contract would create an undue hardship on the mistaken party.

    NOTE: In event of recission, restitutionary relief is generally available to recover any value exchanged prior to recission.
  16. Reformation
    • GEN: Treats the contract as valid and changes a writing setting forth or implementing the agreement to conform to the originally intended agreement.
    • >> Typically a problem with the writing, want contract to better reflect parties' intent.

    • (1) Mutual mistake (can be minor)
    • (2) Unilateral Mistake Coupled with Fraud
    • (3) Misrepresentation
  17. Equitable Defenses
    (1) Unclean Hands: D guilty of improper conduct WRT the SAME transaction involved in litigation.

    • (2) Latches: available where there is a delay that is (i) unreasonable based upon when P obtained knowledge of the wrong, AND (ii) that delay resulted in prejudice to P.
    • >> Prejudice:
    • >>>> DEFENSE: evidence destroyed, witnesses moved
    • >>>> ECONOMIC: reliance, money spent, ect. (more common)
    • >> Note: Latches may be found even where SoL has not run. If applied, P can still seek a legal remedy.

    (3) Hardship/Impossibility: if not feasible.

    (4) Freedom of Speech
  18. Constructive Trust
    • GEN: Imposes an equitable duty on D to convey property acquired under certain circums to the rightful owner.
    • >> based on concerns re: unjust enrichment.
  19. Equitable Lien
    • GEN: Encumbrance on property, available where P can trace misappropriated funds or other property to its product.
    • >> Holder of lien has an a security interest ot the extent of the benefits unjustly held.

    NOTE: Lienholder cannot compel conveyance, but it can foreclose on the property in order to realize payments, and can seek D's other assets in the event of a deficiency.
  20. CT v. EL
    • EL: When the property has declined in value!
    • >> Also where there is not a severable interest in D's property against which P is making an equitable claim.

    CT: ALl other cases.
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PA: Equity