DOCSLIB.ORG

Rescission, Restitution, and the Principle of Fair Redress: a Response to Professors Brooks and Stremitzer

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Rescission, Restitution, and the Principle of Fair Redress: a Response to Professors Brooks and Stremitzer Valparaiso University Law Review Volume 47 Number 2 Winter 2013 pp.1-78 Winter 2013 Rescission, Restitution, and the Principle of Fair Redress: A Response to Professors Brooks and Stremitzer Steven W. Feldman Follow this and additional works at: https://scholar.valpo.edu/vulr Part of the Law Commons Recommended Citation Steven W. Feldman, Rescission, Restitution, and the Principle of Fair Redress: A Response to Professors Brooks and Stremitzer, 47 Val. U. L. Rev. 1 (2013). Available at: https://scholar.valpo.edu/vulr/vol47/iss2/22 This Article is brought to you for free and open access by the Valparaiso University Law School at ValpoScholar. It has been accepted for inclusion in Valparaiso University Law Review by an authorized administrator of ValpoScholar. For more information, please contact a ValpoScholar staff member at [email protected]. Feldman: Rescission, Restitution, and the Principle of Fair Redress: A Re Article RESCISSION, RESTITUTION, AND THE PRINCIPLE OF FAIR REDRESS: A RESPONSE TO PROFESSORS BROOKS AND STREMITZER Steven W. Feldman* I. INTRODUCTION Analyzing a remedy that the reporter for the Restatement (Third) of Restitution and Unjust Enrichment describes as having “[e]normous practical importance and theoretical interest,”1 scholars in recent years have produced a flood of articles covering contract rescission and restitution.2 In their 2011 Article in the Yale Law Journal, Remedies on and off Contract, Professors Richard Brooks and Alexander Stremitzer weigh in on the discussion.3 Relying on microeconomic theory, which reflects the perspective of rational buyers and sellers, the authors’ thesis is that current legal doctrine is too restrictive in allowing buyers’ rescission and too liberal in granting them restitution.4 Although other commentators * Attorney-Advisor, U.S. Army Corps of Engineers, Huntsville, Alabama. The author expresses deep appreciation to Dr. Gayla Feldman for her love and support, including our springtime walks discussing law and economics. Thanks to Meredith Miller and Doug Rendleman for their input and especially to Andrew Kull and Jeremy Telman for their extensive and challenging critiques. This Article is written in honor of Joseph Perillo and Stewart Macaulay, two giants in contract scholarship who also graciously provided helpful comments in its preparation. All opinions are solely those of the author. 1 Andrew Kull, Restitution as a Remedy for Breach of Contract, 67 S. CAL. L. REV. 1465, 1491 (1994). 2 See Symposium, A Conference on Restitution and Unjust Enrichment, 92 B.U. L. REV. 763 (2012); Symposium, Restitution Rollout: The Restatement (Third) of Restitution & Unjust Enrichment, 68 WASH. & LEE L. REV. 865 (2011); Symposium, The Restitution Roundtable, 65 WASH. & LEE L. REV. 889 (2008); Symposium, Restitution and Unjust Enrichment, 79 TEX. L. REV. 1763 (2001). These symposia issues are four prominent examples of the spate of articles covering contract rescission and restitution that have been produced in recent years. 3 Richard R.W. Brooks & Alexander Stremitzer, Remedies on and off Contract, 120 YALE L.J. 690 (2011) [hereinafter Brooks & Stremitzer, Remedies on and off Contract]. Richard R.W. Brooks is Leighton Homer Surbeck Professor of Law at Yale Law School, and Alexander Stremitzer is Acting Professor of Law at UCLA Law School. Both authors hold doctorates in economics in addition to their law degrees. The authors have reprised their views from their Yale Law Journal article in a contribution to the Washington and Lee Law School’s symposium, Restitution Rollout: The Restatement (Third) of Restitution and Unjust Enrichment. See Richard R.W. Brooks & Alexander Stremitzer, Beyond Ex Post Expediency—An Ex Ante View of Rescission and Restitution, 68 WASH. & LEE L. REV. 1171 (2011). 4 See Brooks & Stremitzer, Remedies on and off Contract, supra note 3, at 693. 399 Produced by The Berkeley Electronic Press, 2013 Valparaiso University Law Review, Vol. 47, No. 2 [2013], Art. 22 400 VALPARAISO UNIVERSITY LAW REVIEW [Vol. 47 in prominent journals have cited this Article with approval,5 I respectfully suggest that it has some fundamental flaws on both legal and economic grounds. In my Article, I summarize the authors’ argument, identify my concerns, and propose an alternative formulation. Brooks and Stremitzer write that a limited rescission model is “excessive” and based on a “misunderstanding” of the economic effects of these remedies.6 Their key premise is that legal authorities have exaggerated the threat to contract stability and other normative values posed by liberal access to rescission.7 Therefore, the authors posit that rational parties from an ex ante perspective would often bargain for broad rights of rescission even if damages for breach “were fully compensatory and costless to enforce.”8 While they oppose rescission where the promisee acts opportunistically to avoid unfavorable bargains, Brooks and Stremitzer contend that the existence of a buyer’s expanded ability to rescind after a breach, even if not implemented, influences contracting behavior in several ways.9 First, the seller will reduce the likelihood of promisee rescission by investing to enhance the quality of performance.10 Second, the seller will minimize the buyer’s possible use of rescission by reducing prices.11 In this regard, the authors say that allowing the buyer greater rights of rescission would actually benefit the contracting system by allowing rational parties to create efficient incentives to avoid breach.12 The authors further argue that, with regard to monetary redress, the law is trending inappropriately from “‘rescission and restitution’ toward ‘rescission and expectation’ [damages].”13 Brooks and Stremitzer’s major concern is that the Uniform Commercial Code (“U.C.C.”) allows buyers 5 See Daniel Friedmann, Does the Dead Contract Rule Restitution from Its Grave?, 92 B.U. L. REV. 811, 817 n.30 & n.32 (2012); Eric A. Posner & Alan O. Sykes, Efficient Breach of International Law: Optimal Remedies, “Legalized Noncompliance,” and Related Issues, 110 MICH. L. REV. 243, 252 n.26 (2011); Note, (In)Efficient Breach of International Trade Law: The State of the “Free Pass” After China’s Rare Earths Export Embargo, 125 HARV. L. REV. 602, 605 n.17 (2011). But see generally Michael Aikins, Off-Contract Harms: The Real Effect of Liberal Rescission Rights on Contract Price, 121 YALE L.J. ONLINE 69, 69–70 (2011) (criticizing Brooks and Stremitzer’s Yale Law Journal article solely on economic grounds and concluding that they present an incomplete analysis of the effects of rescission on the marketplace); see also infra Part III.E (discussing an additional economic critique). 6 Brooks & Stremitzer, Remedies on and off Contract, supra note 3, at 693. 7 Id. 8 Id. at 699. 9 Id. at 693. 10 Id. 11 Id. 12 Id. 13 Id. at 702. https://scholar.valpo.edu/vulr/vol47/iss2/22 Feldman: Rescission, Restitution, and the Principle of Fair Redress: A Re 2013] A Response to Professors Brooks and Stremitzer 401 returning defective goods to revoke their acceptance and to obtain expectation damages, including lost profits.14 The authors deem these cumulative remedies as especially harmful because they give the rational buyer an improper incentive to rescind as a dominant strategy.15 Yet another critique is that the disaffirming buyer receives a windfall of expectation damages if he gets to both exit the contract and obtain the same payoff (except with a losing contract) as though the bargain had been fully performed.16 This legal trend, Brooks and Stremitzer contend, ironically “poses the real threat to contractual stability.”17 Therefore, the authors suggest the law should be changed so the buyer must elect between rescission and damages.18 As another part of their proposal and to promote more efficient contracting, Brooks and Stremitzer argue that restitution after rescission should only “come at a price.”19 This concept means the relief should be limited to restoration of the purchase price or the other benefits that the buyer has conferred upon the seller.20 Therefore, the authors do not support redress for the buyer’s damages in reliance on the contract.21 They also do not endorse a remedy for disgorgement of the seller’s ill- gotten gain from the breach, such as where the defaulting seller has taken the buyer’s payment, invested it, and earned additional profits.22 Brooks and Stremitzer contend that the latter remedies conflict with sound economic theory because they disincentivize the above seller’s investments and price reductions.23 The authors also advocate that these recoveries contradict the fundamental objective of restitution as restoring the status quo ante, because these remedies can leave the seller worse off or the buyer better off than if the contract never existed initially.24 In their critique, Brooks and Stremitzer focus almost exclusively on economic issues and sources. Even though they strongly contend that current contract law undermines sound economic theory, they do not 14 Id. at 701–02 n.28. 15 Id. at 701–02. 16 Id. at 698. 17 Id. at 694. 18 See id. at 693 (“Hence, the final point of our argument: the remedy in restitution following rescission should be limited to restoration of price or other conferred benefits to the promisor under the contract.”). 19 Id. at 719. 20 Id. 21 Id. at 692–93. While in several passages the authors favor only restoration of the purchase price and other benefits conferred upon the seller, they do hedge on the buyer’s entitlement to reliance damages. See infra notes 299–312 and accompanying text. 22 Id. at 719. 23 Id. at 704–11, 719. 24 Id. at 718 n.81 and accompanying text. Produced by The Berkeley Electronic Press, 2013 Valparaiso University Law Review, Vol. 47, No. 2 [2013], Art. 22 402 VALPARAISO UNIVERSITY LAW REVIEW [Vol. 47 adequately analyze whether the restricted rescission and excessive restitution model actually exists in statutory and case law.
Load more

Recommended publications
  • Classifying Crime Victim Restitution: the Theoretical Arguments and Practical Consequences of Labeling Restitution As Either a Criminal Or Civil Law Concept
    LCB_18_3_Art_15_Shephard_Final.docx (Do Not Delete) 10/30/2014 1:21 PM CLASSIFYING CRIME VICTIM RESTITUTION: THE THEORETICAL ARGUMENTS AND PRACTICAL CONSEQUENCES OF LABELING RESTITUTION AS EITHER A CRIMINAL OR CIVIL LAW CONCEPT by Bridgett N. Shephard* Introduction ......................................................................................... 802 I. Civil Law and Criminal Law Have Become Increasingly Similar and Interrelated, and the Historical Conceptual Divide Has Become Ambiguous .......................... 803 II. The State of Victim Restitution in the American Justice System ............................................................................. 804 A. The Nature of Restitution and a Comparison with Other Remedies ................................................................................... 804 B. Protecting Victims’ Rights in Federal Criminal Proceedings: The Mandatory Victim’s Restitution Act (MVRA) .............................. 806 C. Protecting Victims’ Rights in State Criminal Proceedings with State-Specific Victim Restitution Statutes ..................................... 807 III. The Theoretical Reasons for Classifying Restitution as a Criminal Law Concept ....................................................... 808 A. Theoretical Arguments in Favor of Viewing Restitution as a Civil Concept ............................................................................ 808 B. Theoretical Arguments in Favor of Viewing Restitution as a Criminal Concept .....................................................................
    [Show full text]
  • 2013-2014 Sheathing Restitution's Dagger 899 Under the Securities
    2013-2014 SHEATHING RESTITUTION’S DAGGER 899 UNDER THE SECURITIES ACT SHEATHING RESTITUTION’S DAGGER UNDER THE SECURITIES ACTS: WHY FEDERAL COURTS ARE POWERLESS TO ORDER DISGORGEMENT IN SEC ENFORCEMENT PROCEEDINGS FRANCESCO A. DELUCA* “Beneath the cloak of restitution lies the dagger to compel the conscious wrongdoer to disgorge his gains.”1 Table of Contents I. First Principles: A Primer on the SEC’s Disgorgement Remedy, Classic Disgorgement, and the Equity Jurisdiction of the Federal Courts ..................................... 903 A. “Disgorgement” in the Securities Context .................. 903 B. Classic Disgorgement .................................................. 904 C. The Equity Jurisdiction of the Federal Courts ............ 907 II. Disgorgement’s History Under the Securities Acts ........... 908 III. An Analysis of Cavanagh ................................................... 911 A. Analysis of Allegedly Analogous Equitable Remedies ..................................................................... 912 B. Analysis of Binding Precedents .................................. 920 C. Analysis of Persuasive Precedents .............................. 926 IV. The SEC’s Disgorgement Remedy Is Not an Equitable Remedy ............................................................................... 930 V. Implications ....................................................................... 931 VI. Conclusion ......................................................................... 933 * Boston University School of Law (J.D. 2014); Roger
    [Show full text]
  • The Application of Quantum Meruit to Attorney Fee Litigation H
    Louisiana Law Review Volume 49 | Number 1 September 1988 The Application of Quantum Meruit to Attorney Fee Litigation H. David Vaughan II Repository Citation H. David Vaughan II, The Application of Quantum Meruit to Attorney Fee Litigation, 49 La. L. Rev. (1988) Available at: https://digitalcommons.law.lsu.edu/lalrev/vol49/iss1/9 This Comment is brought to you for free and open access by the Law Reviews and Journals at LSU Law Digital Commons. It has been accepted for inclusion in Louisiana Law Review by an authorized editor of LSU Law Digital Commons. For more information, please contact [email protected]. THE APPLICATION OF QUANTUM MERUIT TO ATTORNEY FEE LITIGATION* Ratio legis est anima legis. The reason of the law is the soul of the law In recent years, cases involving attorney fees have accounted for a large percentage of the Louisiana jurisprudence concerning quantum meruit. If the reason of the law is the soul of the law, then it may be said that several Louisiana courts have robbed the law of its soul, for they have applied quantum meruit in these cases indiscriminately, relying blindly upon questionable statements of law in past decisions. Since quantum meruit first appeared early in Louisiana jurispru- dence,' the exact scope of the theory as used by the Louisiana courts has been unclear One clear aspect of quantum meruit, its common law origin, has remained largely unmentioned by the courts. 2 The theory can legitimately claim no foundation in the Civil Code. Consequently, quantum meruit is a concept alien to the civil law tradition.
    [Show full text]
  • Mergers & Acquisitions and Corporate Governance Report
    Mergers & Acquisitions and Corporate Governance Report OCTOBER 2011 CLEARY GOTTLIEB Preparing for “Proxy Access” Shareholder Proposals IN THE NEWS BY VICTOR LEWKOW, JANET FISHER AND ESTHER FARKAS ...............................................2 CG represented Bank of America in its sale of shares of China While the SEC's proxy access rule has been judicially vacated, the related Rule 14a-8 Construction Bank for an aggregate sale price of approximately amendments permitting shareholders to make their own proxy access proposals are now $8.3 billion. CG previously represented Bank of America in its in effect. Steps that companies should consider if they receive such a proposal and, 2005 acquisition of an interest in CCB, indeed, in preparing for the 2012 proxy season are presented. which was the single largest foreign investment ever in a Chinese company. CG is advising Google in its $12.5 billion acquisition of Motorola A New Wrinkle in the Interpretation of Anti-Assignment Clauses Mobility. BY BENET O'REILLY AND CASEY DAVISON ..........................................................................4 CG is representing Nortel Networks on the sale of its residual patent assets through a bankruptcy auction A closer look at anti-assignment provisions may be warranted in light of The Delaware to a consortium consisting of Apple, Chancery Court's recent decision in Meso Scale Diagnostics, LLC et al. v. Roche EMC, Ericsson, Microsoft, Research In Motion and Sony for Diagnostics GmbH et al. $4.5 billion. CG represented Stanley Black & Decker in its $1.2 billion acquisition of Niscayah. Considering the Consequential Damages Waiver CG is representing Family Dollar in responding to Trian’s unsolicited BY DAVID LEINWAND ...........................................................................................................6 $7.7 billion takeover proposal and adoption of a stockholders rights plan.
    [Show full text]
  • The Restitution Revival and the Ghosts of Equity
    The Restitution Revival and the Ghosts of Equity Caprice L. Roberts∗ Abstract A restitution revival is underway. Restitution and unjust enrichment theory, born in the United States, fell out of favor here while surging in Commonwealth countries and beyond. The American Law Institute’s (ALI) Restatement (Third) of Restitution & Unjust Enrichment streamlines the law of unjust enrichment in a language the modern American lawyer can understand, but it may encounter unintended problems from the law-equity distinction. Restitution is often misinterpreted as always equitable given its focus on fairness. This blurs decision making on the constitutional right to a jury trial, which "preserves" the right to a jury in federal and state cases for "suits at common law" satisfying specified dollar amounts. Restitution originated in law, equity, and sometimes both. The Restatement notably attempts to untangle restitution from the law-equity labels, as well as natural justice roots. It explicitly eschews equity’s irreparable injury prerequisite, which historically commanded that no equitable remedy would lie if an adequate legal remedy existed. Can restitution law resist hearing equity’s call from the grave? Will it avoid the pitfalls of the Supreme Court’s recent injunction cases that return to historical, equitable principles and reanimate equity’s irreparable injury rule? Losing anachronistic, procedural remedy barriers is welcome, but ∗ Professor of Law, West Virginia University College of Law; Visiting Professor of Law, The Catholic University of America Columbus School of Law. Washington & Lee University School of Law, J.D.; Rhodes College, B.A. Sincere thanks to Catholic University for supporting this research and to the following conferences for opportunities to present this work: the American Association of Law Schools, the Sixth Annual International Conference on Contracts at Stetson University College of Law, and the Restitution Rollout Symposium at Washington and Lee University School of Law.
    [Show full text]
  • United States District Court Southern District of Florida
    Case 9:18-cv-80110-RLR Document 92 Entered on FLSD Docket 02/21/2019 Page 1 of 7 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA CASE NO. 9:18-CV-80110-ROSENBERG/REINHART WEBSTER HUGHES, Plaintiff, v. PRIDEROCK CAPITAL PARTNERS, LLC, Defendant. ______________________________________/ ORDER DENYING DEFENDANT’S RENEWED MOTION TO STRIKE JURY DEMAND [DE 84] THIS MATTER is before the Court on Defendant, Priderock Capital Partners’ (“Defendant”) Renewed Motion to Strike Jury Demand (“the Motion”), DE 84. I. Background & Procedural History In brief, Defendant seeks to strike Plaintiff Webster Hughes’ (“Plaintiff”) demand for a jury trial, because only one count, Count III, for Breach of Contract-Implied-in-Law/Quasi Contract, remains at issue in this case. See id; DE 73; DE 66. After summary judgment was granted in favor of Defendant as to Counts I and II, see DE 65, Defendant moved to strike Plaintiff’s jury demand at DE 66. That request was denied without prejudice in order for Defendant to consider and address additional case law cited by the Court, see DE 68, DE 69, DE 71. Defendant renewed its request at DE 73. Plaintiff responded at DE 74, and Defendant replied at DE 77. The Court denied Defendant’s second motion to strike the jury demand without prejudice: Defendant argues its Motion assuming that liability as to Count III has been conceded. See, e.g., DE 73, 2. However, liability has not been formally admitted, through an amended pleading, stipulation, or the like. See DE 10, 12. Accordingly, Defendant is ordered to either seek leave of the Court to amend its pleadings or to file a Second Amended Motion that does not presume that liability has been determined by no later than 2/21/19.
    [Show full text]
  • Quantum Meruit Limited to Contract Price High Court of Australia Departs from 1904 Privy Council
    Quantum Meruit Limited to Contract Price High Court of Australia Departs From 1904 Privy Council In a move relevant to Singapore contract law, the High Court of Limiting quantum meruit claims in this way accords with the parties’ Australia has held that a contractor’s claim in quantum meruit allocation of risk and prevents windfalls to contractors where it is following repudiation of a contract will generally be limited to the more profitable to engineer a repudiation by the principal than it is contract price (Mann v Paterson Constructions Pty Ltd [2019] to perform the contract. HCA 32). This departs from the Privy Council in Lodder v Slowey Employment contracts were included in the High Court’s analysis, [1904] AC 442 and a line of Australian cases since that imposed indicating that this approach is open where any contract has been no such limit. partly performed at the time of termination but the right to payment Lodder v Slowey held that contracts terminated for repudiation were has not yet accrued under its terms. The terminating party may elect rescinded ab initio with the result that claims for compensation between damages under the contract, or quantum meruit generally were at large, unrestricted by the now non-existent contract. This calculated in accordance with the contract. rescission fallacy was debunked in Australia in McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457, establishing the orthodox position Contacts that such contracts are binding up to termination but not for the future. Rights accrued to termination are enforceable, but claims Cameron S. Ford relating to the future, such as for partially completed stages of work Partner where payment rights have not yet accrued, are not governed by T +65 6922 8673 the contract.
    [Show full text]
  • Cite As: 18 Ny3d 753, 967 N
    967 N.E.2d 1170 Page 1 18 N.Y.3d 753, 967 N.E.2d 1170, 944 N.Y.S.2d 725, 2012 N.Y. Slip Op. 02249 (Cite as: 18 N.Y.3d 753, 967 N.E.2d 1170, 944 N.Y.S.2d 725) on such renewal, where lessee did not pay any ser- vice termination fees and did not pay for services he did not receive. McKinney's General Obligations Law §§ 5–901, 5–903. Court of Appeals of New York. Bruce OVITZ, on Behalf of Himself and All Others Similarly Situated, Appellant, [2] Antitrust and Trade Regulation 29T 134 v. BLOOMBERG L.P. et al., Respondents. 29T Antitrust and Trade Regulation 29TIII Statutory Unfair Trade Practices and Con- March 27, 2012. sumer Protection 29TIII(A) In General 29Tk133 Nature and Elements Background: Lessee of financial information ser- 29Tk134 k. In general. Most Cited vices and equipment brought action against lessor Cases following automatic renewal of parties' subscription agreement. The Supreme Court, New York County, Judith J. Gische, J., denied lessor's motion to dismiss, A prima facie showing under the deceptive trade and it appealed. The Supreme Court, Appellate Divi- practices statute requires allegations that a defendant sion, 77 A.D.3d 515, 909 N.Y.S.2d 710, reversed, is engaging in an act or practice that is deceptive or and leave to appeal was granted. misleading in a material way and that plaintiff has been injured by reason thereof. McKinney's General Business Law § 349(a). Holdings: The Court of Appeals, Jones, J., held that: (1) even assuming that General Obligations Law's lease renewal provisions supported implied private [3] Antitrust and Trade Regulation 29T 179 right of action, lessee did not suffer harm, so as to support claim based on lease renewal; 29T Antitrust and Trade Regulation (2) lessee failed to state claim against lessor under the 29TIII Statutory Unfair Trade Practices and Con- deceptive trade practices statute; and sumer Protection (3) action did not present justiciable controversy 29TIII(B) Particular Practices upon which a declaratory judgment could be rendered 29Tk179 k.
    [Show full text]
  • Failure of Consideration As a Basis for Quantum Meruit Following a Repudiatory Breach of Contract
    FAILURE OF CONSIDERATION AS A BASIS FOR QUANTUM MERUIT FOLLOWING A REPUDIATORY BREACH OF CONTRACT KARAN RAGHAVAN* I INTRODUCTION In Renard Constructions (ME) Pty Ltd v Minister for Public Works, the New South Wales Court of Appeal affirmed the right of a builder to elect to sue for quantum meruit, as an alternative to a claim for contract damages, following a repudiation by the principal.1 The Court also held that, in assessing a claim for quantum meruit in this context, the contract price does not limit the amount which the builder is entitled to recover.2 Both aspects of the decision were subsequently followed by the Queensland Court of Appeal in Iezzi Constructions Pty Ltd v Watkins Pacific (Qld) Pty Ltd,3 and the Victorian Court of Appeal in Sopov v Kane Constructions Pty Ltd [No 2].4 Whilst the law in this area can therefore be regarded as settled, the jurisprudential basis for the availability of quantum meruit in this context remains unclear. In Pavey & Matthews Pty Ltd v Paul, a majority of the High Court of Australia held that an award of quantum meruit is restitutionary in nature, and that the claimant’s entitlement to restitution rests upon the concept of unjust enrichment.5 However, as has been emphasised in a number of subsequent cases, unjust enrichment is not a direct source of liability in Australia.6 Rather, it has been described as a legal category which may assist in explaining the variety of situations in which the law has historically imposed an obligation upon one party to make restitution of a benefit received at the expense of another.7 Thus, the High Court has said that a party seeking restitution must establish the existence of some ‘qualifying or * BA, LLB (Hons); Solicitor, King & Wood Mallesons.
    [Show full text]
  • Rethinking Section 142 of the Restatement of Restitution: Fault, Bad Faith, and Change of Position John D
    Washington and Lee Law Review Volume 65 | Issue 3 Article 3 Summer 1-6-2008 Rethinking Section 142 of the Restatement of Restitution: Fault, Bad Faith, and Change of Position John D. McCamus Follow this and additional works at: https://scholarlycommons.law.wlu.edu/wlulr Part of the Legal Remedies Commons Recommended Citation John D. McCamus, Rethinking Section 142 of the Restatement of Restitution: Fault, Bad Faith, and Change of Position, 65 Wash. & Lee L. Rev. 889 (2008), https://scholarlycommons.law.wlu.edu/ wlulr/vol65/iss3/3 This Article is brought to you for free and open access by the Washington and Lee Law Review at Washington & Lee University School of Law Scholarly Commons. It has been accepted for inclusion in Washington and Lee Law Review by an authorized editor of Washington & Lee University School of Law Scholarly Commons. For more information, please contact [email protected]. Rethinking Section 142 of the Restatement of Restitution: Fault, Bad Faith, and Change of Position John D. McCamus* Abstract As a general rule, benefits transferredby mistake, such as moneys paidwhen mistakenly thought due, are recoverable in a restitution claim. Section 142 of the First Restatement of Restitution creates a defense to such claims to the extent that the payee, in reliance on the receipt,engages in a detrimental change ofposition, thereby making it inequitable to require repayment. The defense is unavailable, however, where the conduct of the payee in initially inducing the payment or in subsequent retention or dealings with the payment was either tortious or more at fault than the payer or, further, in the context of subsequent dealings, was undertakenby the payee with knowledge of the circumstancesentitling the payer to recovery.
    [Show full text]
  • Contra Costa Superior Court Martinez, California Department: 39 Hearing Date: 10/01/20
    CONTRA COSTA SUPERIOR COURT MARTINEZ, CALIFORNIA DEPARTMENT: 39 HEARING DATE: 10/01/20 1. TIME: 9:00 CASE#: MSC16-01102 CASE NAME: DARLA MUTTER VS. MERITAGE HOME HEARING ON MOTION TO DETERMINE GOOD FAITH SETTLEMENT FILED BY SONRAY SOLAR, INC. * TENTATIVE RULING: * Dropped at the request of the moving party on September 18, 2020. 2. TIME: 9:00 CASE#: MSC19-01406 CASE NAME: PEREZ VS. BILL BRANDT FORD INC. HEARING ON DEMURRER TO 1st Amended COMPLAINT FILED BY BILL BRANDT FORD, INC., et al. * TENTATIVE RULING: * Before the Court is a Demurrer by Defendant Bill Brandt Ford, Defendant Rob Brandt, and Defendant Bobby Dell’Aringa. The Demurrer relates to Plaintiff Carlo Perez’s First Amended Complaint. The FAC alleges eleven causes of action, but the Demurrer is directed towards only the causes of action for (8) violation of California Business and Professions Code §§ 17200 et seq.; (9) negligent misrepresentation; (10) civil assault; and (11) negligent retention, hiring and supervision. For the following reasons, the demurrer is overruled-in-part and sustained-in-part, with leave to amend. Factual Background Defendant Bill Brandt Ford employed Plaintiff as a Finance Manager at its Brentwood, California facility. (FAC ¶ 1,2,17.) Defendant Rob Brandt and Defendant Bobby Dell’Aringa were also employed by Bill Brandt Ford at the time of the events of the FAC. (Id. ¶¶ 3,4.) Plaintiff alleges that during his tenure at Bill Brandt Ford, Defendants “engaged in a practice and/or scheme of unlawful chargebacks against Plaintiff’s earned commissions.” (Id. ¶ 18.) Plaintiff further alleges that “thousands of dollars in unlawful chargebacks were not expressly authorized in a written commission agreement between Plaintiff and Defendants.” (Id.
    [Show full text]
  • CLASS ACTION Similarly Situated, 13 SECOND AMENDED COMPLAINT Plaintiffs, FOR: 14 Vs
    Case 3:19-cv-01969-WQH-MDD Document 25 Filed 09/18/20 PageID.676 Page 1 of 43 1 JAMES T. HANNINK (131747) [email protected] 2 ZACH P. DOSTART (255071) [email protected] 3 DOSTART HANNINK & COVENEY LLP 4180 La Jolla Village Drive, Suite 530 4 La Jolla, California 92037-1474 Tel: 858-623-4200 5 Fax: 858-623-4299 6 Attorneys for Plaintiffs 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 FENELLA ARNOLD, KELLY CASE NO. 3:19-cv-01969-WQH-MDD NAKAI, and MICHELE RUPPERT, 12 individually and on behalf of all others CLASS ACTION similarly situated, 13 SECOND AMENDED COMPLAINT Plaintiffs, FOR: 14 vs. (1) FALSE ADVERTISING 15 [Bus. & Prof. Code § 17600 et seq. and HEARST MAGAZINE MEDIA, INC., § 17535] 16 a Delaware corporation; CDS GLOBAL, INC., an Iowa (2) VIOLATION OF THE 17 corporation; and DOES 1-50, inclusive, CONSUMERS LEGAL REMEDIES ACT 18 Defendants. [Civ. Code § 1750 et seq.] 19 (3) VIOLATION OF THE UNFAIR COMPETITION LAW 20 [Bus. & Prof. Code § 17200 et seq.] 21 (4) UNJUST ENRICHMENT 22 DEMAND FOR JURY TRIAL 23 24 25 26 27 28 SECOND AMENDED COMPLAINT Case No. 3:19-cv-01969-WQH-MDD Case 3:19-cv-01969-WQH-MDD Document 25 Filed 09/18/20 PageID.677 Page 2 of 43 1 INTRODUCTION 2 1. This class action complaint alleges that defendants Hearst Magazine 3 Media, Inc. (“Hearst”) and CDS Global, Inc. (“CDS”) violate California law in 4 connection with magazine marketing and subscription programs. Among other 5 things, Hearst and CDS work together to enroll consumers in automatic renewal 6 subscriptions without providing the “clear and conspicuous” disclosures mandated by 7 California law; post charges to consumers’ credit or debit cards for purported 8 automatic renewal subscriptions without first obtaining the consumers’ affirmative 9 consent to an agreement containing the requisite clear and conspicuous disclosures; 10 and solicit payment of money for goods that consumers did not order by sending 11 “invoices” for amounts that are not actually owed.
    [Show full text]