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Rough Lecture Notes ROUGH LECTURE NOTES Remedies – U of H Law Center (Brent E. Newton) Caveat: Although I am willing to distribute my lecture notes to students as a study aid, you should not rely on these notes in lieu of reading the casebook, Re & Re, Remedies (2005 6th ed.). These notes are truly “rough.” They were not written with the intent of distributing them to students as a study aid. Thus, for exam purposes, if there are any inconsistencies (real or perceived) between these notes and the casebook, the casebook controls. In addition, these lecture notes were written when this class used the 5th edition (2000) of the casebook, so certain cases in the 6th edition are not mentioned in these notes. Abbreviations used in these notes: “P” and “D” for plaintiff and defendant. “S-O-L” for statute of limitations. “S-O-F” for statute of frauds. “P & S” for “pain and suffering.” CLASS NOTES #1 & #2 Ubi jus, ubi remedium – always true? Example of Bush v. Gore History of Equity: roots in Roman law, church law, and – most importantly – English law beginning in the 1400s * The King of England’s “Chancellor” – eventually developed into a “court of record” Merger of actions “at law” and “in equity” – NY (1840s) & Fed. R. Civ. P. (1930s) Proliferation of modern statutes supplanting/modifying common-law equitable remedies Equity is “DISCRETIONARY” -- even if caselaw supports your theory of relief, a judge still must consider the totality of the facts/circumstances and exercise “sound discretion” in deciding to grant or deny the requested equitable relief -- NOTE HERE: on appeal, an appellate court applying an “abuse of discretion” standard of review could be faced with two identical cases, one in which one judge granted the requested equitable relief, the other in which another judge denied it; so long as each judge properly considered the applicable rules of equity, an appellate court is likely to affirm both cases Affirmative vs. Defensive Use of Equity -- sword vs. shield Ex. of affirmative use -- a plaintiff sues for specific performance Ex. of defensive use -- a plaintiff sues for money damages for alleged breach of contract and the defendant counters by contending that, because of inequitable conduct on part of plaintiff, the court should rescind or reform the contract *courts are more willing to grant equitable relief when in the “defensive” posture -- less inequitable conduct required for relief to be granted in this situation Riggs v. Palmer (NY 1889) -- case of the grandson who murdered his grandfather in order to receive inheritance -- there was evidence that, at the time of the murder, the grandfather was threatening to revoke the will naming the grandson as the primary beneficiary -- Court refused to apply probate statute according to its terms (which would have given the inheritance to the grandson, because of his “unclean” hands -- indeed, his bloody hands) Dissent: took the position that a court must apply a statute as written, without consideration of any extra-statutory equitable principles * Case also stands for the proposition that, inequitable conduct on part of a party can result in “absurd” consequences if an applicable statute is applied as written (“absurdity” exception to the “plain language” doctrine of statutory construction) Graf v. Hope Building Corp. (NY 1930) Case of the draconian mortgage acceleration clause -- mortgagor’s arguably “innocent” mistake (“mere negligence”) in failing to make a complete mortgage payment within the 20-day grace period -- mortgagee fully aware of mortgagee’s mistake but sat silently -- waited until day 21 and then pounced. Court, in a 4-3 decision, held that, too bad, contract must be enforced, no “unconscionable” or “inequitable” conduct *Cardozo’s famous dissenting opinion -- considered small amount in default, “innocent” mistake, fact that mortgagee knowingly exploited mortgagor’s mistake -- would be “unconscionable” to enforce acceleration clause under totality of the circumstances SPECTRUM OF INEQUITABLE CONDUCT -- Riggs v. Palmer at one end (virtually everyone agrees it was the right result) <--------------------> Graf -- much closer case [Texas cases on Mortgage Acceleration Clauses -- Crestview, Ltd v. Foremost Ins. Co., 621 S.W.2d 816 (Tex. Civ. App. 1982) – generally enforceable, even if draconian results, absent inequitable conduct on part of mortgagee] Weinberger v. Romero-Barcelo (US Sp Ct. 1982): Puerto Rican nationalist sued to enjoin Navy from practice bombing in Puero Rican waters, relying on the Clean Water Act; trial court found that, although Navy failed to obtain a permit from the EPA to drop bombs in the ocean, the bombs did not cause any water pollution. Trial court denied injunction. Court of Appeals held that injunction required under Clean Water Act. USSC held that an injunction was improper since no “irreparable harm” shown, notwithstanding violation of Act. Contrast TVA v. Hill (snail-darter case, in which Court found that Congress clearly intended to supplant common law equitable requirements for an injunction). Romero-Barcelo stands for proposition that, unless the legislature “clearly” intends to supplant traditional common law equitable remedies with statutory remedy, courts will still require traditional common law requirements. “Irreparable harm” is a basic requirement for an injunction (along with “inadequate remedy at law”). *** EQUITABLE MAXIMS [pages 30-31 of Casebook] J.R. v. M.P. (English 1459) -- classic in personam equitable jurisdiction case -- M.P. & J.B. assumed debts owed to J.R.; however, the way in which they were conveyed prevented M.R. & J.B. from recovering from the original debtors unless J.R. conveyed the sealed instruments to them, which he refused; in other words, they became indebted to J.R. but they had no ability to collect the debts from the original debtor -- at that time (1400s), no common law remedy available to them (despite lack of consideration), so they go to Chancellor on a “writ”; J.R. ordered “in equity” to either release them from debts or give them sealed instruments, so that they could collect debts; he refused and was sent to prison [contempt]. J.R. (now as P) then sued Ds on the notes to collect. Ds “demur,” contending that, based on the Chancellor’s equitable decree, J.R.’s legal action was barred (res judicata of sorts). Court of Common Pleas, by a divided vote, appeared to hold that decree of chancery was only in personam and not in rem -- thus, the decree did not cancel the legal effect of the Ds’ obligation to P and the Ds could not assert the decree as a bar in the legal action. Note: HERE THERE IS A “RIGHT,” BUT THE “REMEDY” IS FRUSTRATED SINCE J.R. CHOSE TO STAY IN JAIL RATHER THAN LET THE Ds OUT OF THEIR OBLIGATION [inherent limit to traditional equitable remedies] * traditionally, courts of equity cannot vacate prior judgments of legal courts -- rather, equity courts can only order parties to do something on the threat of holding them in contempt (and fining them or sending them to prison) WHAT WOULD HAVE BEEN A BETTER EQUITABLE REMEDY IN J.R.? make him pay a restitution to Ds and, if he refused, have a third party serve as a receiver of a constructive trust or issue a “WRIT OF SEQUESTRATION” (which is the closest thing to in rem equity jurisdiction), assuming that such modern remedial devices then existed in 1400s Excerpt from Langdell’s 1883 Equity Treatise [pages 35-38 in the Casebook] talks about traditional equity court’s greatest “strenghth” was also its greatest “weakness” – i.e., an equity court’s power to compel litigants through contempt power (largely lacking in traditional courts of law). MERGER OF LAW & EQUITY -- historically, two different courts or two different “sides” of the same court (two different dockets) -- from mid-1800s to 1930s, most jurisdictions, including federal court, “merged” law and equity into the same trial courts Traditional nomenclature: “Bills” filed “in equity”; “complaints” or “petitions” filed in legal actions; “decree” in equity case vs. “judgment” in action at law * Casebook, at page 42 -- breakdown, as of year 2000, of the three types of approaches to merger (or non-merger) in American jurisdictions * Generally speaking, in a merged system, if law and equity conflict, equity prevails * EQUITABLE RELIEF REFERRED TO AS “SPECIFIC RELIEF”; LEGAL REMEDIES ARE REFERRED TO GENERALLY AS “SUBSTITUTIONAL RELIEF” “EQUITABLE JURISDICTION”: * the term equity or equitable “jurisdiction” is a misnomer – doesn’t really refer to subject- matter “jurisdiction” – really a “prudential” matter of whether court should exercise equitable powers Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc. (US Sp. Ct. 1999) (Note, Casebook, at page 42) -- plaintiff sued defendant on an acceleration clause in an unsecured loan agreement -- because defendant was on verge of insolvency and appeared to be favoring inferior creditors in Mexico to plaintiff, plaintiff moved for a preliminary injunction to restrain defendant from transferring any more assets -- defendant’s involvency would frustrate plaintiff’s ability to collect a potential money judgment. Lower federal courts granted injunction -- USSpCt reversed in a 5-4 decision. Ct’s holding: NO EQUITY “JURISDICTION” -- Scalia, for the majority, looked to the state of the law in 1789, at the time that the Constitution and Judiciary Act of 1789 went into effect. At that time, a legal judgment fixing a debt was required before a court of equity would interfere with the debtor’s use of its property. Thus, majority refuses to permit such a federal
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