REMEDIES 2011 (GORDON) GENERAL FEEDBACK ON PROBLEM 2: In reviewing your submissions for Problem 2, I see that many of you

u are incorporating the feedback given on Problem 1. Key points concern our attention to accessibility. Whether a memo is one page or twelve or twenty-four or fifty, it must have a transparent organization that helps the reader follow the facts and the arguments. Ordinarily this organization in a motion in King County or a brief, follows certain standards set out in the applicable rules. King County motions have a format that is set out in both the Civil Rules and the Local Rules. Appellate brief formats are strictly regulated by the Rules of Appellate Procedure. Within these frameworks an outline format is generally used to organize the legal argument and to show the hierarchy of ideas: big headings with supporting subsections, etc. Starting a memo with the standard format: To: From: Date: Re: and using proper margins and minimum of 12 point font is the place to start. Accessibility determines whether your memo can be easily read and understood apparent from its grammar and content. As for content, these problems do not require research outside of our casebook. If it helps you analyze the problem, it is not forbidden, however. There are occasions, such as in this problem, where research might reveal Restatement (Second) of Contract 348 and the Washington State analysis. Every year a handful of students find this Restatement and it informs their analysis. This is an achievement and definitely improves the grade for this assignment. These problems are, first and foremost, meant to challenge you to apply what weve discussed in class not only to come up with a comprehensive response to the problem itself. What follows is some general feedback which may be of interest to you. Some have asked to what degree these problems are to be individual work. I believe that discussion of the problems between people in a class just like in a law office may be beneficial. But, in class, as in the office, when it comes to putting the words down on the page, it is usually an individual effort. To be clear, discussions of the issues may be had without guilt but the expression of those issues in written form and the written analysis is to be your individual work. From the time you sit down to write, until the writing is submitted, I am interested in how you, individually, present the thoughts you wish to express. I hope this gives you some guidance. Principles of Organization. The same principles of being comprehensive, accurate, and accessible to the reader apply to this second problem as to the first. Please look over the

feedback on Problem 1 summarizing these principles. Consider how best to use italics, bolding, underlining without cluttering the appearance of the document to emphasize key points and reveal the logical organization of your memorandum, making the overall argument transparent to the reader. The Importance of a Fact Statement. Once again, use of a Summary of Facts or Facts section of your memorandum is of value. It helps set the context and forces you to distill the information provided in a succinct way - while recognizing which facts are important. Is it important that $6,000 was withheld but $194,000 paid? This is, in fact, a crucial fact. The total amount of the contract and how much has already been paid are important to the fairness of the situation as considered by the court and actually form the backbone of the rule that governs these situations. Basically, that rule considers whether the amount withheld to complete the performance of the contract is disproportionate to the total contract amount. Holding back $6,000 out of $200,000 is a lot different than withholding $100,000 or, in a smaller contract, not paying anything at all. Practical Issues of Collection : Whose Holding the Money? Is this an amount held back or new money sought? It may make a big practical difference. Progress payments are made for satisfactory completion of each element of the contract. If other payments were made and this one was held back, it suggests that our client is one who pays for proper work but that this work was immediately observed as unsatisfactory which feels like it may be a plus in terms of credibility. It also will be vital in terms of the practical challenges of collection. The contractor who has to sue to get $6,000 is in a weaker position because of the costs and risks of litigation, than a contractor who has the money and has to be sued to return it. And, of course, in Washington state, the contractor may well have filed a bond for just such situations. (Although the bond is minimal, you can sue on the bond and recover the money from the bonding company to the extent of the bond amount.) Economic Waste. Many of you may be familiar with the Peevyhouse v. Garland Coal & Mining Co., 283 P.2d 109, 114 (Okla. 1962), cert. denied, 375 U.S. 906 (1963) case from first year contracts. There, the coal company had open strip mined the property under a contract that called for the land to be restored after the coal had been removed. The company took the coal and then claimed that it would be economically wasteful to spend more dollars to restore the land than the loss in market value of the land warranted. Based on the economic waste argument - back in the days before the environmental movement had matured public awareness - the coal company won that battle. Then the legislature enacted a statute, the Open Cut Land Reclamation Act, which declared the public policy in favor of restoring strip mined land and requiring the posting of a bond to assure restoration. See Casebook, Laycock. Few believe today that Peevyhouse would come out the same way: it looks like a coal company only performing the half of the contract that benefits it, without assuming its obligations for restoration of the site. The environmental movement has since reversed our collective sense of economic waste and made restoration a requirement for land that had been scarred (and often rendered dangerous because of open pits, etc.) and disfigured because of open strip mining. The law changed in response to a sense of justice which had changed or awakened. The coal companies appeared to have lost the war in a later Oklahoma case that

basically reversed the Oklahoma state law principles involved. In Rock Island, the court ordered payment from a bond of $375,000 in land restoration even though the market value of the land would only be increased $6,797. Yet, in 1994, in Schneberger v. Apache Corp., the Oklahoma Supreme Court reaffirmedPeevyhouse. The moral is unclear, but it demonstrates the challenges of choosing the measure of compensation: market value or cost of restoration. Trinity Church: Competing Measures of Damage. We need go no further than the Trinity Church case, however, to see how the competing contract measures of loss of market value and costs of repair or restoration interact. In Trinity Church, the court found that for this special use property (a property without a market value reflective of its value), the reasonable cost of restoration was properly awarded as the measure of damages. Trinity Church, however, it must be recalled was not a contracts case. Here, because of the notion of contractual expectation damages, we may be in an even stronger position to ask that the court enforce the expectations of the parties so long as the red tile (rather than the gray tile) was a specification of performance and the costs of performance are not disproportionate to the total contract amount. Use of Award. As in Trinity Church, the court will not control how our client uses the award. Still, if it seems as though the money will be used for costs of repair, it seems that this may help the court award repair costs even if the diminution in market value is negligible. The court might be reluctant to award the cost to complete if Eli does not really intend to complete the contract. It may not want to award a windfall at the contractors expense. Easy questions, but hard answers. Personal Satisfaction as a Contract Goal. How does one balance the intangible value of personal satisfaction against market value? This is, after all, your home and your bathroom. Should a contract you enter for the purpose of pleasing your own esthetic sense be subordinated to what everyone else thinks of your taste which is what market value reflects? Photographs of someone elses pet are not of interest to you. But the market value of the paper, the cost of the photographic processing, the mailing expense, are all the same no matter whose pet is on the picture. Clearly, a lawyer seeking to enforce a contract with the principal purpose of gratifying the subjective sense of the purchaser/homeowner would be well-served by spelling out in specific terms the importance of strict compliance with the specifications and plans. You might even if you are concerned about this point emphasize that the actual cost of strict compliance is essential to the contract. Substantial performance of a contract may be fair in many circumstances. But what if someone builds you a ranch-style split level home instead of the Tudor-style home you wanted and claims that it is of equal or greater market value? They have taken your land and put someone elses idea of a home on it, not only depriving you of the pleasure of your own design, but using your land. To get what you want, you now have to knock the home down and rebuilt from scratch. Economically wasteful? Personal satisfaction? Substantial performance? On some level, should expectancy damages simply give us what we expect and contract for so long as the economic waste is not too great? Otherwise, we are left with people never being able to get what they expect from their

contracts! Where, as here, the chief element of the contract concerns aesthetic considerations, isnt that an enforceable right? That seems different from, say, simply replacing a brand of pipe where one could argue that the difference does not make a difference functionally and there is not any overriding aesthetic component going to the essence of the contract.

The Washington State Analysis. In Washington, such contract disputes are often resolved by seeing how much the cost of repair is compared with the total amount of the contract. Is the cost of specific performance or repair/restoration to strict compliance disproportionately large when compared with the balance of the contract? Clearly, our client, Eli, has a harder case if the cost of redoing the tile work is $60,000 instead of $6,000. These cases, although contract cases, often seem to raise questions of fact involving fault in the context of reasonable reliance. For instance, if Eli stood back and watched the entire house being installed with the wrong color tile and acquiesced or begrudgingly went along, it is possible that enforcement of the specification for red tiles may have been waived or acquiesced in or that the contractor proceeded in reliance upon Elis conduct. In such a case, you may see the contractor allege accord and satisfaction, reflecting that there had been an agreement to alter the performance in terms of some mutual benefit (for example, to make one up, that the contractor agreed to provide the more expensive gray tile with no additional charge.) All of these are the kinds of factual disputes that can arise. If the tile replacement was only a small part of the contract, the court would be more likely to specifically enforce performance. Still, if the entire contract was one for tiles and the tile contractor put in the wrong color contrary to specifications, it is quite possible that the court would find that substantial performance had not occurred. Then the court would have to decide whether the appropriate remedy would be diminished market value or costs of repair. Here, given that the contractor failed to follow the detailed specifications, it appears he breached the contract. The Restatement (Second) Contracts provides that to determine whether a breach is material, the court evaluates the extent to which the injured party will be deprived of an expected benefit and the extent to which that party can be adequately compensated for the portion of benefit of which he is deprived. Eli must prove that he was deprived of a benefit, and that the $6000 can adequately compensate him for the benefit of which he was deprived. Washington has adopted Restatement (Second) of Contract 348 as the appropriate rule for determining damages in construction contract cases: if a breach results in unfinished construction and the loss in value to the injured party is not proved with sufficient certainty, recovery of damages may be had based on the (a) diminution in the market price or (b) the reasonable cost of remedying the defects if that cost is not clearly disproportionate to the probable loss in value to him. You do not have to do research for these problems outside of our casebook materials. The Uniform Commercial Code. Some of you looked to the UCC for insight into this

problem. If the goods delivered pursuant to a contract fail in any respect to conform to the contract, a buyer may reject the non-conforming portion within a reasonable time after delivery. RCW 62A.2-601(c); RCW 62A.2-602. But are we dealing with a contract for goods or services? Is it a reasonable time after the contract to wait until the tiles are installed? Was it Elis job to wait at the house and make sure the tiles were the right color before installation? In practical terms, should a prudent contractor wait until the homeowner is there to sign off on the tile color before installation? That procedure might save lots of headaches later on but, is it standard? In this case, the UCC does not answer the questions we need to ask. Remedies. Of course, every situation asks what remedies are available? Enforcement of expectancies? Specific enforcement (coercive) remedies? Here, for instance, it might at first blush make sense to simply order the contractor to tear out the tile and put in new tile. But, in reality, compelling a contractor to do such work might well constitute enforcement of a personal service contract (like ordering an opera singer to sing) and might be unsound as public policy and practically speaking if there is hostility (which there probably would be after litigation) between the parties. Probably it would not be a good idea to have the contractor go back into the house to do this work for what if the tile installation is less than perfect? (It could be too difficult to compel the contractor to do the work and too hard on the parties to force them to deal with one another.) Mediation? Does the contract provide for attorneys fees for the prevailing party in cases of a clear breach (failure to follow specifications) such as occurred here? What would you suggest? The above are some of the issues lurking in Problem 2. Obviously, it would be difficult, if not impossible, to touch on all of these in a one page response. With subheadings, however, you can demonstrate your awareness of these issues. This exercise will be useful for the Bar exam, as well as in practice. Concluding Thoughts. Once again, I have asked the impossible: a one page response where, here, the feedback is nearly six pages long! Do not be disheartened. No one can cover six pages in one page without recourse to microscopic font (forbidden!), so that is not the goal of the assignment. The goal of the assignment is to help you think through some of the issues associated with contract measures of damages: reliance and expectation damages, primarily. When is market value the proper measure? How does the law and your own sense of fairness reconcile these ideas? {See the Restatement. Remember the Restatement is not a statute, but a scholarly summary of the state of the common law by the American Law Institute. So, it is a good way to get a sense of how courts wrestle with and resolve issues.) Some of the big ideas are set out above and a memo that touches on some of these big ideas is exercising the kind of reflection, selection, and editorial discretion that this assignment calls for. Some years ago, a student was disheartened because the student believed that they had so badly bungled the assignment that I had prepared this memo for them alone. This memo represents reflections over a period of years and is intended to supplement our

classroom discussion on the subject using Problem 2 as a springboard. Even if you have not done Problem 2, you should review and study this Feedback. It is not a criticism of your work, but, rather, an extension of our classroom work together. By providing this General Feedback, I am able to save time in my written, individual comments. So, please review this and I think you will be able to see where your own work-product can be enhanced.