Va Equity

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Equity
-Definition
-General Approach

Back 1

Definition: Equity is concerned with the granting of certain remedies: Injunctive relief, Specific Performance, rescission, and reformation.
Approach:
(1) Is there an eadequate remedy at law?
(2) Are there any countervailing policies making equitable relief impracticable?
(3) Does defendant have any equitable defenses?

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Equity acts only if remedies at law are inadequate.
-When are legal remedies inadequate?

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(i) Damages will not make plaintiff whole (e.g. heirlooms, land, etc.);
(ii) Damages are uncertain or speculative;
(iii) Multiple successive suits are necessary to get relief
(iv) Defendant is insolvent
(v) Irreparable harm results from defendant's conduct, which cannot be fully compensated by a money judgment.

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Equity acts only if practicable.
-When is equity not practicable?

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(i) Orders that require periods of protracted supervision;
(ii) Interference with free speech;
(iii) Compelling rendition of personal services;
(iv) Interference with criminal law

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When can equity act in rem?

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Equity can act in rem in the following procedures:
(i) Establishment of title in realty by contract or adverse possession
(ii) Establishment of title to personalty by contract or prescription
(iii) Attachment
(iv) Foreclosure of mortgages and statutory liens
(v) Partition
(vi) Divorce
NOTE: Under the due process clause, exercise of in rem jurisdiction requires that the res be located in VA and notification be given in a way reasonably calculated to give notice

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Are equitable remedies discretionary?

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YES!
-Court always have discretion to deny equitable relief.
-If the hardship on the person enjoined is disproportionate to any benefit to the persons seeking equitable relief, court may decline.
-Court will "balance the equities" or "Equity will balance the hardships."

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Right of Jury Trial in Equity Actions
-General rule

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There is NO CONSTITUTIONAL right of jury trial on claims for equitable relief or claims based on a cause of action that was traditionally equitable (e.g. action to partition property).
-Mixed Cases: In a case involving both legal and equitable claims, any party may make timely demand for a jury to hear and decide the legal claims. In the same case, the judge will decide the equitable claims.

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Right of Jury Trial in Equity Actions
-Exceptions to general rule

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There is a STATUTORY right to jury trial on equitable claims in two situations (Jury decision is binding):
1. Statutory quiet title actions
2. Where defendant files a plea in equity
-Plea is equity: A defensive pleading which sets forth a single dispositive set of facts which would provide defendant a complete exoneration on plaintiff's claim.
-Advisory Juries: ("Issue out of chancery"). P or D may request a jury (or court sua sponte). The purpose of the verdict is to inform the conscience of the court and is not binding on the chancellor. (Usually for hotly contested issues, swearing contests, credibility, etc.)

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Enforcement of Equity Decrees

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-For performance other than paying money: Enforced through civil contempt resulting in fines or imprisonments or both
-For payment of money: Same manner as that of legal decrees. Imprisonment/fines can be ordered for failure to pay child support, alimony.

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Review of Decision on Equitable Claims
-3 ways

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1. Motion to vacate or modify the judgment or decree.
2. Bill of review
3. Appeal

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Review of Decision on Equitable Claims
-Motion to vacate/modify the judgment/decree

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This must be DECIDED within 21 days of the entry of the decree. Or the court must sign a written order suspending the decree.
May be based upon:
(1) newly discovered evidence
(2) An error of law or fact whether or not the error appears on the record.

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Review of Decision on Equitable Claims
-Bill of Review

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Must be filed within 6 MONTHS of the entry of decree.
May be based on:
(1) Newly discovered evidence
(2) An error of law, when it appears on the face of the record. (This is includes a claim that the court has misconstrued a writing)

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Review of Decision on Equitable Claims
-After-Acquired Evidence in VA

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The standard makes it hard to get a new trial based on newly acquired evidence:
A party seeking to get a new trial must establish that the evidence:
(1) was discovered after trial;
(2) could not have been secured for use at the trial with the exercise of reasonable diligence by the movant;
(3) it is not merely cumulative, corroborative, or collateral;
(4) is material and would PROBABLY PRODUCE OPPOSITE RESULTS ON THE MERITS AT ANOTHER TRIAL (Has to be the smoking gun!)

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Review of Decision on Equitable Claims
-Appeal

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Equity decisions may be appealed.
-In domestic relations cases, appeal is OF RIGHT and to the court of appeals.
-In all other matters, appeal is discretionary (the would be appellant must petition the VA Supreme Court to grant leave)

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Review of Decision on Equitable Claims
-Mechanics of Appeal

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TESTED
-"Notice of appeal" is lodged in trial court within 30 days of the entry of judgment
-Domestic relations cases: briefing schedule in the court of appeals immediately kicks in.
-All other cases: After filing notice of appeal in trial court, appealing party must file "petition for appeal" with the Supreme Court within 3 MONTHS.
-If "writ is granted" it will be heard by the Supreme Court.

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Review of Decision on Equitable Claims
-Interlocutory Appeals

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Interlocutory Appeal is available on interlocutory order in equitable claims that:
(i) Grant, refuse, or dissolve an injunction;
(ii) require money to be paid or title or possession of property to be transferred; and
(iii) Adjudicate "the principles of the case"

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Injunctions
-Types of injunctions

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Prohibitory: Equity can prevent a threatened wrong or injury through a prohibitory injunction.
Mandatory: Used to redress an injury that has already been inflicted.

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Injunctions
-Torts
---Group 1: Injunctions are USUALLY available for these 3 torts

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1. Continuous/repeated trespass to land
2. Conversion of a unique chattel
3. To stop unfair competition

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Injunctions
-Torts
---Group 2: Injunctions are SOMETIMES available for these 2 torts

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1. To eliminate a nuisance:
-provided it is a private nuisance
-BUT not if it is a public nuisance
-(Difference: Whether there is a direct "physical" contact on THIS plaintiff)
2. To prevent waste (damage to real property) BUT not if it is ameliorative waste (changes character of the land, but will increase its value)

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Injunctions
-Torts
---Group 3: Injunctions are usually NOT available for these 3 torts

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1. Defamation (1st Amendment based)
2. Commercial defamation (trade libel)
3. Invasion of Privacy, unless it involves unauthorized use of a person's name or likeness.
-this is all about concerns over prior restraint
4. courts will not enjoin a pending criminal proceeding. Will only enjoin a threatened criminal proceeding is extreme circumstances

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Injunctions
-Obtaining Temporary Injunctive Relief

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Sometimes injunctive relief is necessary to maintain the status quo until issues can be determined in litigation.
To obtain this relief you must show:
(i) Irreparable harm unless status quo is maintained
(ii) P has reasonable probability of success on the merits; AND
(iii) Public interest will not be adversely affected.
-Mechanics: Only granted after hearing both sides. Sometimes this is available ex parte but only effective for a very short time, and you must show immediacy of injury.

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Specific Performance
-Requirements

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In addition to the general requirements for equitable remedies, you must show:
(i) Valid contract exists including offer and acceptance
(ii) All contract conditions have been met, AND
(iii) Mutuality of remedy must exist

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Specific Performance
-Is Contract Valid?

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Certainty of terms?
-SP is a precise remedy. Terms must be pretty fleshed out. Court doesn't want to wing it.
Existence of Consideration

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Specific Performance
-Have all conditions been met?

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2 most common conditions on exam:
(1) Time is of the essence provision. If party does not comply, specific performance will not be granted unless:
(i) Delay was slight
(ii) Party suffered no injury from delay
(iii) Invalidating the K would work extreme hardship on the late party
(iv) Requirement is waived
(2) Marketable title. If seller cannot convey marketable title, equity will not convey specific performance unless:
(i) defect in title is minor (SP may be granted with reduction in price)
(ii) Buyer waives the deficiency (this is to protect buyers)

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Specific Performance
-Does mutuality of Remedy Exist?

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Mutuality of remedy exists only if both parties are entitled specific performance.
The remedies are mutual if:
(1) Both parties are able to perform
(2) Both parties can be bound

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Unlawful Competition
-Unlawful competition as a tort

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This can cover a wide variety of inappropriate business activities.
-Using confidential information from former employer to injure them.
Trade Secret attributes:
(i) It is confidential and not otherwise available
(ii) Gives possessor a competitive advantage.
-This is a low threshold.

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Unlawful Competition
-Unlawful Competition as a contract matter

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Covenants not to compete.
-Can forbid conduct otherwise unlawful as unfair competition in the tort sense
-Can forbid otherwise lawful activities in a specified area, for a limited time.

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Unlawful Competition
-Obtaining an equitable remedy

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Tort: If the conduct is a tort, the court will enjoin the conduct.
Contract: court will grant specific performance if the restrictions are reasonable as to:
(i) the employer's legitimate interests (the more training, investment in the employee, the more legit)
(ii) the employee's right to make a livelihood
(iii) Sound public policy
-The three aspects of a covenant not to compete are:
(i) Activities prohibited
(ii) Geographical limit, AND
(iii) Duration of non-compete provision (1-2 years is prob ok)
NOTE: court will not change the time period to make it reasonable. Either reasonable or not!

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Rescission and Reformation
-Definitions

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Rescission: Often called cancellation, is a remedy by which a voidable contract is put to an end and the parties are treated as though it never had been made.
Reformation: Treats the contract as valid, and changes a writing setting forth or implementing the agreement to conform to the originally intended agreement.

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Rescission and Reformation
-Obtaining Rescission

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Equity will cancel a contract if, at the time it was entered into, there was:
(i) Mutual mistake as to a material fact; OR
(ii) Unilateral mistake coupled with: (1) any form of misrepresentation (even innocent) OR (2) some other form of inequitable conduct.
(iii) Other grounds like duress, undue influence, lack of capacity or failure of consideration may also justify rescission.
-Restitution: if K is rescinded, restitution may generally be sought for value exchanged prior to rescission

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Rescission and Reformation
-Obtaining Reformation

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The writings will be reformed if there was:
(1) Any mutual mistake; or
(2) Unilateral mistake coupled with knowing misrepresentation
-This is the functional equivalent of fraud
-These must be shown by CLEAR and CONVINCING evidence.
-Reformation requires a valid contract, so if the defect renders the contract invalid, not reformation is available. You may use parol evidence.
-Statute of frauds is no bar.

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Restitution
-Definition

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Restitution is a set of rules to deal with unjust enrichment. A claim for restitution exists where a plaintiff can show that the defendant:
(1) obtained a benefit from the plaintiff
(2) upon request, or in circumstances showing that the plaintiff expected recompense and defendant should have known that.
-Both benefit and expectation of recompense must be shown.

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Restitution
-Legal or Equitable

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Plaintiff can sue in equity under restitution theory.
OR can sue under legal theory of quasi contract. Jury often allowed where the legal version is plead.

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Restitution
-Remedies

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(1) Dollar awards
(2) Constructive trusts: If the property wrongfully obtained can be traced to some asset that D still has, P can disgorge the actual specific property.
(3) Equitable Liens: Where P's $ has gone into property of the D, the court may declare that the victim has a lien on the property of the malefactor in a specified amount.
(4) Specific restitution: In an appropriate case, the court may order that the specific items of property wrongfully obtained by the defendant be returned to the plaintiff.

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Other Forms of Equitable Relief
-Equitable accounting

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The court can order the study of the finances of a person/organization to determine the amount of an award under the facts of any case

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Other Forms of Equitable Relief
-Receivers

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A person may be appointed to manage a business or property pending ultimate disposition.
-This is a drastic step

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Other Forms of Equitable Relief
-Partition of Real Property

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A co-owner (or lien creditor of a co-owner) can sue for partition of real property owned by two or more parties.

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Other Forms of Equitable Relief
-Equitable Subrogation

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A person who has paid the obligation of another may be permitted to pursue the rights of the person whose obligation was paid.

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Other Forms of Equitable Relief
-Contribution

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VA allows one tortfeasor who pays all of a claim to seek recovery from the other joint tortfeasors.
Recovery is Pro Rata: (two tortfeasors share 50/50% not according to fault)

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Other Forms of Equitable Relief
-Equitable Indemnification

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Available when a party who is without personal fault is legally liable for damages caused by the negligence of another.
-This is full indemnification not pro rata contribution

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Other Forms of Equitable Relief
-Creditor's Rights Suits

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Judgment creditors and lien creditors may file a "creditor's bill" when efforts under normal enforcement fail.
-This often raises issues of "voluntary transfer" or "fraudulent conveyance" of assets.
(1) Voluntary transfer will be voided if creditor can prove (i) that there was not adequate consideration, (ii) that the creditor because a creditor before the transaction, AND (iii) that the debtor was either insolvent at the time of the transfer or rendered insolvent by the transfer.
(2) Fraudulent conveyances will be set aside if applicant can show that the transferor intended to defraud the creditor AND that a transfer was made with effect of hindering or defrauding the creditor

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Equitable Defenses
-Definition

Back 41

An equitable defense prevents a plaintiff from obtaining an equitable remedy otherwise available.

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Equitable Defenses
-Unclean Hands

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The defense of unclean hands is available if the Plaintiff is guilty of improper conduct proximately related to the same transaction for which the plaintiff seeks equitable relief.
-Doesn't take much, so almost always worth discussing

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Equitable Defenses
-Laches

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The law employs fixed and arbitrary time bars embodied in statutes of limitation. Equity uses a flexible time bar called laches.
The defense of laches is available if:
(1) An adult plaintiff has awaited an unreasonable time before suing (considering when he learned of the wrong) AND
(2) Something must be lost in the defendant's ability to defend the suit (evidence lost)
NOTE: For legal claims, laches can be invoked to time bar the suit only if the time period is LESS than the relevant statute of limitations. Cannot extend the statute of limitations period.

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Equitable Defenses
-Unconscionability

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Any arrangement that is fundamentally unfair may be unenforceable. If consideration is grossly disproportionate to the true value of the deal, this is considered a valid defense.
-Rarely applied in VA though

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時期

Back 45

시기
time, the times, season [time + period]

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Equitable Defenses
-Fraud

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Fraud is a defense to specific performance in VA, OR could be used as the basis for reformation or rescission claim as well.
-To make out a fraud claim, one must generally allege knowing misrepresentation of a present fact (not opinion, promise, statement about a future event)
-Fraud must be proven by clear and convincing evidence, not preponderance

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Equitable Defenses
-Equitable Estoppel

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If a party makes a representation which foreseeably induces someone to act in reasonable reliance, to his detriment, the party making the representation may be barred by this defensive doctrine from enforcing rights inconsistent with the representations

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Equitable Defenses
-Freedom of Speech

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This is basically just an argument based upon the constitutional guarantee of free speech, and may be used to prevent injunctive relief in defamation and invasion of privacy cases where the result would be to stifle speech.