Va Bar - Equity

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Default divorce in VA

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Doesn't exist -- if D doesn't show and enters default, P must still make evidentiary submissions so a proper record of the grounds for divorce is presented to the trial judge.

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Jury trial

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Only as of right for legal claims, for the most part. If it's a "mixed" case, jury trial for legal claims (and facts found are binding in equity stage) and then judge makes decision on equitable claims.

Must make "timely demand" for a jury.

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Juries in equity cases: by statutory right or advisory

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Statutory right to a jury in equity claims only for
(i) quiet title actions, and
(ii) where D files a plea to an equitable claim--a pleading which sets forth a single dispositive state of facts which, if proven, would provide D a complete exoneration on P's claim; examples: illegality, time bar, accord and satisfaction, res judicata, release, infancy, bankruptcy, and bona fide purchaser status.

(Only the D can set up such a plea, either in a separate plea called a Plea in Equity or by separately stating such a plea in her Answer.)

Advisory juries: trial judge has discretion to call in a jury for equitable claims (called having "an issue out of chancery") but their findings are not binding on the judge, and in fact she must make an independent decision of the case, can't just accept jury's findings without comment.

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Review of decrees (3 ways)

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1. Motion to suspend, modify, or vacate the decree--like with legal judgments, must be made AND RULED ON within 21 days of entry of the decree. May be based on new evidence or any error of law or fact.

2. Bill of Review--must be filed within 6 months after entry of a decree, and must be based on either (i) newly discovered evidence (very strictly construed), or (ii) an error of law that appears ON THE FACE of the record.

3. Appeal--normal process, though note that domestic relations cases get an appeal as of right to the Court of Appeals.

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How to approach any equity question on the bar (3 steps)

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Always address all three!

1. ELIGIBILITY for equitable relief: legal remedy must be inadequate and equitable relief must be feasible.

2. Requirements for particular form of relief: address the elements of the particular form of equitable relief sought.

3. Defenses: state whether or not they apply. Examples: unclean hands, laches, unconscionability, impossibility/hardship, fraud, and estoppel.

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When is the legal remedy inadequate? (5 scenarios)

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(It must be as a precursor to getting any equitable relief)

1. Subject matter is unique or rare (includes ALL real property)

2. Damages would be too speculative

3. Defendant is insolvent (making money damages moot)

4. Multiple lawsuits would be required to protect plaintiff

5. Irreparable harm will occur

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When is equitable relief feasible (2 ways, 2 exceptions)

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(A precursor to getting any equitable relief at all)

Court must have power over either:
1. The person, or
2. The res

Even then, courts will refuse to grant equitable relief if either:
1. Enforcement would require extensive supervision; or
2. Court would lack standards to measure compliance.

And even THEN, mention that equitable relief is discretionary--courts can choose not to grant it if the benefit doesn't outweigh the burdens. ("Equity will balance the hardships.")

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Injunctions (2 types)

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Equity can prevent a threatened wrong through a "prohibitory" injunction, or redress a past injury inflicted via a "mandatory" injunction.

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Torts where injunctions generally are (3), might be (2), and are not (4) available

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Normally available:
1. Continuous or repeated trespass to land
2. Conversion of unique personal chattel
3. Stop unfair competition

Maybe available:
1. Eliminate a nuisance (but never for a public nuisance, only private ones)
2. Prevent waste, but NOT if it is ameliorative waste

Not usually available:
1. Defamation
2. Commercial defamation (trade libel)
3. Invasion of privacy (unless it involves unauthorized use of a person's name or picture, for which VA has a statute that allows injunctions)
4. Pending criminal proceedings; will only enjoin threatened criminal proceedings in extraordinary circumstances.

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Temporary (or preliminary) injunctive relief (4 requirements)

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Requires:
1. Substantial likelihood the moving party will win the lawsuit
2. Irreparable harm to the movant unless status quo is maintained
3. Harm to moving party outweighs the hardship caused to opposing party; AND
4. Public interest will not be adversely affected by an injunction.

Mechanics: generally need to hear both sides before entering one, and moving party normally has to post an injunction bond.

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Specific performance (3 requirements)

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Party to a contract is ordered to perform according to contract's terms.

Requirements:

1. A valid contract exists (including offer and acceptance--DUH Sinclair!)

2. All contract conditions have been met; AND

3. Mutuality of remedy exists.

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Specific performance--common contract conditions that have to be met

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1. "Time is of the essence" provision. Failure to comply means no specific performance unless court decides not to strictly enforce it due to:
(i) Delay was very slight (a few hours or days at most);
(ii) Other party suffered no injury on account of the delay;
(iii) Invalidating the contract would work extreme hardship on the late party; OR
(iv) The requirement has been waived.

2. Marketable title. If no marketable title, then no specific performance, unless:
(a) Deficiency is minor (in which case you can get SP but with reduction in price); or
(b) Buyer waives the deficiency (also reduces price, though).

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Mutuality of remedy (2 requirements)

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A requirement for specific performance. Basically, one party can't get SP if the other party couldn't too. VA is holding onto this one, even though other jurisdictions are relaxing it.

Remedies are mutual if:
(i) Both parties are able to perform; AND
(ii) Both parties can be bound (aka not incarcerated or under other disability)

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***Unlawful competition*** (Sinclair thinks this one is ripe)

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Tort of unfair competition covers a lot of inappropriate business activities: passing off your product as that of another, interfering with existing business relationships, or using confidential info appropriated from former employer to competitively injure them (if about manufacturing or marketing it can be a "trade secret").

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Trade secret (2 ways to satisfy the test)

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Information must either:
(i) Confidential (aka not otherwise available); OR
(ii) Give the owner a competitive advantage.

This is a very low standard.

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Covenant not to compete

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Part of employment contracts. Can cover unfair competition or action that would otherwise be lawful. Enforceable if limited to specific acts, a specified area, and is for a specified time (all of which are reasonable).

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Equitable relief from unfair competition

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Money damages would always be speculative, so equitable relief is a pretty good way to be protected. Courts will enjoin acts of unfair competition or give specific performance on a covenant not to compete in an employment contract as long as the restrictions are reasonable as to: (i) employer's legitimate interest in protecting its business; (ii) employer's fair opportunity to accept other jobs in the industry; and (iii) the public interest.

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Rescission and reformation

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Very different, but mistake is a trigger for both.

Rescission (often called "cancellation" in equity): a voidable contract is put to an end and parties are treated as though it was never 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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Obtaining rescission (2 main options, 1 rare one)

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Equity will cancel a contract if at the time it was entered into there was:

1. Mutual mistake as to a material fact; OR
2. Unilateral mistake coupled with any form of misrepresentation (even innocent) OR some other form of inequitable conduct; OR
3. (very rare) Duress, undue influence, lack of capacity, or failure of consideration.

Recovery of damages for fraud and rescission of the agreement on the basis of this same fraud are mutually exclusive alternative remedies.

Restitution: relief is generally available to recover any value exchanged prior to rescission--get back to before the contract was made!

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Obtaining reformation

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Must be a valid contract to begin with. Writings will be reformed if there was:

1. Any mutual mistake (not just material ones); OR

2. Unilateral mistake couples with knowing misrepresentation.

These must be shown by clear and convincing evidence, not just a preponderance!

Statute of frauds is never a bar to reformation (?)

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Restitution (2 requirements)

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A set of rules to deal with unjust enrichment. P must show both:

1. D obtained a benefit from P
2. Upon request from the D or in circumstances showing that D should have known P expected recompense.

Restitution is the equitable claim, whereas "quasi-contract" is the legal claim--a jury is often allowed if the latter is pled.

NB: this is NOT available against the Commonwealth because it is immune from equitable causes of action. Counties, cities, and towns, though, may be sued on equitable causes such as this.

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Remedies in restitution claims (4 types)

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1. Dollar damages awards

2. ***Constructive trusts***: if property D wrongfully obtained can be traced to some asset D still has, the court may impose a constructive trust, which in effect declares that P is the beneficial owner of the asset and that D must disgorge it in a specified form.

3. Equitable liens: victim may get a lien on D's property in a specified amount when her money has gone into the property. Equitable liens on realty require a writing.

4. Specific restitution: in an appropriate case, court may order that the specific items of property wrongfully obtained by D be returned to P.

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***Other forms of equitable relief*** (7)

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1. Equitable accounting
2. Receivers
3. Partition of real property
4. Subrogation
5. Contribution
6. Equitable indemnification
7. Creditors' suits

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Equitable accounting

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A form of equitable relief.

Court may order a study of the finances of a person or organization, such as a partnership, to determine the amount of any award appropriate under the facts of the case.

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Receivers

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A form of equitable relief.

Court may appoint a person to manage a business or property pending ultimate disposition. This is a DRASTIC step, only undertaken when necessary. Notice required and lots of oversight of receiver's activities.

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Partition of real property

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A form of equitable relief.

A co-owner (or a lien creditor of an owner) can sue to partition real property owned by 2 or more people. "Best interests" of owners controls. Preferred outcome is partition in kind; if not feasible then property can be sold and proceeds divided among owners.

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Subrogation

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In addition to contractual subrogation provisions, in equity any person who has paid the obligation of another may be permitted to pursue the rights of the person whose obligation was paid in actions against others concerning the obligation.

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Contribution

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If one joint tortfeasor or joint obligor pays all of a claim, she can seek recovery from other joint tortfeasors or joint obligors. Recovery is PRO RATA only, not proportional to fault (2 tortfeasors split it 50/50, 3 split it in thirds, etc.).

Contribution is NOT available in torts involving moral turpitude, which basically means intentional wrongdoing.

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Equitable indemnification

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In addition to contract-based indemnity rights, equitable indemnification is available when a party who is without personal fault is legally liable for damages caused by the negligence of another. Classic example: blameless principal is obliged to pay for wrongs of her agent; she can sue him for complete reimbursement.

Preliminary requirement, though: must have been a legal determination of the negligence of the party on whose behalf the indemnification plaintiff makes payment (aka agent must have been found liable in prior proceeding).

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Creditor's suits (and 2 common scenarios)

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Judgment creditors and lien creditors may file a "creditors bill" when efforts to enforce their rights under a judgment by normal enforcement and execution remedies at law have failed.

General creditors can only bring a creditors bill in exceptional cases, such as where action is needed to preserve assets of a defunct company.

On the bar, often comes up after a voluntary transfer or a fraudulent conveyance of assets. Two ways to justify a remedy in these situations:
1. Voluntary conveyances will be voided if the creditor can prove that (i) there was not adequate consideration; (ii) the creditor became a creditor before the transfer; AND (iii) the debtor who made the transfer either was insolvent at the time of the transfer or was rendered insolvent by that very transfer. NB: no evil motive on the part of the transferor is required.
2. Fraudulent conveyances will be set aside if the applicant can show (i) that the transferor intended to defraud the creditor AND (ii) that a transfer was made with the effect of hindering or defrauding the creditor. NB: debtor's solvency irrelevant here.

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Equitable defenses (6)

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An equitable defense prevents P from obtaining an equitable remedy otherwise available. (The first two below are the most important . . .)

1. Unclean hands
2. Laches (time bar)
3. Unconscionability
4. Impossibility and hardship
5. Fraud
6. Equitable estoppel

NB: equitable defenses may be raised against all classes of litigants except governmental bodies (states AND localities)

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Unclean hands

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Defense available if P is guilty of improper conduct proximately related to the same transaction for which she seeks equitable relief; this conduct need not be illegal or actionable.

This is a complete defense.

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Laches (2 requirements)

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Equitable defense available where both:
(i) Adult P who waits an unreasonable amount of time, considering when P obtained knowledge of the wrong, AND
(ii) During the delay, there arose prejudice to D (i.e., harder to defend the case)

NB: laches can bar the claim even if a statute of limitations has not run, but it cannot extend the time when suit is allowed PAST the expiration of a statute of limitations even if P pleads a solely equitable claim.

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Unconscionability

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Equitable defense.

Any arrangement that is fundamentally unfair may be unenforceable as unconscionable. Very hard to prove in VA, but at least mention it if the consideration is very low.

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Impossibility and hardship

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Equitable "defenses" that are indicative of the fact that equity will not order relief which is not feasible, as well as that in equity relief is always discretionary. Basically equity won't order anything that's just too hard to do or that will disproportionately benefit the plaintiff.

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Fraud

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Must allege
(i) Knowing misrepresentation
(ii) Of a present fact (not opinion, promise, or statement about future event)
(iii) Seeking reliance by the other party.

NB: must be proven by clear and convincing evidence, a higher than normal burden of proof.

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Equitable estoppel

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Equitable defense for if a party makes a representation which foreseeably induces someone to act in reasonable reliance to her detriment. The party making the representation may be barred by this defensive doctrine from asserting rights inconsistent with the representations.