Remedies

Fall 2015
Fordham Law School
Chapter II Equity & Equitable Remedies
Part 2
George W. Conk
Adjunct Professor of Law & Senior Fellow, Stein Center for Law & Ethics
Room 8-122
gconk@law.fordham.edu
212-636-7446
Torts Today: http://tortstoday.blogspot.com
Otherwise Commentaries on Law, Language & Politics
Blackstonetoday.blogspot.com

Ch. 2 Equity and equitable

remedies - Part 2 s

Unconscionability

An affirmative defense
Contracts the courts refuse to
enforce
Usually K so one-sided there is no
real agreement
Sometimes synonymous with
`unsupportable or `unenforceable
or void (e.g. counsel fee claims)
Ch. 2 Equity and equitable
remedies - Part 2

NY CLS UCC 2-302

At common law, an unconscionable

contract was one that "no man in
his senses and not under delusion
would make on the one hand," and
one that "no honest and fair man

would accept on the other."

In re Estate of Friedman (1978, 2d Dept
NY)
Ch. 2 Equity and equitable
remedies - Part 2

UCC SECTION 2-302. UNCONSCIONABLE

CONTRACT OR TERM

If the court finds the contract or any term of

the contract to have been unconscionable at
the time it was made, the court may
refuse to enforce the contract
enforce the remainder of the contract without
the unconscionable term
limit the application of any unconscionable
term as to avoid any unconscionable result

Ch. 2 Equity and equitable

remedies - Part 2

UCC 2-302

(2) When it is claimed or appears

to the court that the contract or
any clause thereof may be
unconscionable the parties shall be
afforded a reasonable opportunity
to present evidence as to its
commercial setting, purpose and
effect to aid the court in making
the determination.
A Due process necessity!
Ch. 2 Equity and equitable
remedies - Part 2

Unconscionability

No legislative definition is supplied

No cause of action for damages is
created
Unconscionability provides
1) a defense for party who opposes
enforcement of contract or
2) grounds for rescission of a
contract
Ch. 2 Equity and equitable
remedies - Part 2

Unconscionability
The Uniform Commercial Code
merely codified the common law
doctrine of unconscionability which
was used to invalidate contracts

unconscionability may be found

under either aspect:

substantive - is one or more

contract terms unreasonably
favorable to one party?
Ch. 2 Equity and equitable
remedies - Part 2

Unconscionability factors

Procedural (contract formation

process)
Factors include:
size and commercial setting of
transaction
were deceptive or high-pressured
tactics employed
fine print
Confusing contract provisions
experience and education of party
claiming unconscionability
disparity in bargaining power.
Ch. 2 Equity and equitable
remedies - Part 2

Unconscionability Campbell v. Wentz p. 45

'Grower shall not be obligated to deliver

any Carrots which he is unable to harvest
or deliver

Nor shall Campbell be obligated to receive

or pay for any Carrots which it is unable to
inspect, grade, receive, handle, use or
pack at or ship in processed form from its
plants in Camden

(1) because of any circumstance beyond

the control of Grower or Campbell, or (2)
because of any labor disturbance, work
Ch. 2 Equity and equitable
stoppage, slow-down,
or strike9 involving
remedies - Part 2

Unconscionability Campbell v. Wentz

Campbell shall not be liable for any

delay in receiving Carrots due to any
of the above contingencies.
During periods when Campbell is
unable to receive Grower's Carrots,
Grower may with Campbell's written
consent, dispose of his Carrots
elsewhere.
Grower may not, however, sell or
otherwise dispose of any Carrots
which he is unable to deliver to
Ch. 2 Equity and equitable
remedies - Part 2

10

Campbell - does this meet the common law test?

Campbell is excused from

accepting carrots under certain
circumstances. But even under
such circumstances the grower,
while he cannot say Campbell is
liable for failure to take the carrots,
is not permitted to sell them
elsewhere unless Campbell agrees.

This is the kind of provision which the

late Francis H. Bohlen would call
'carrying a good joke too far.'
Ch. 2 Equity and equitable
remedies - Part 2

11

Exculpatory clauses

May be unconscionable if
Business is suitable to public
regulation
Party seeking exculpation is
- performing a service of great
importance to the public
- holds himself out as willing to
perform this service for any member
of the public
- possesses decisive bargaining
advantage
Ch. 2 Equity and equitable
remedies - Part 2

12

Tunkl factors: California (1963)

- Standardized adhesion contract of

exculpation
No option to pay additional
reasonable fees and obtain
protection against negligence
Person or property of the purchaser
is placed under the control of the
seller subject to the risk of
carelessness by the seller or his
agents
Ch. 2 Equity and equitable
remedies - Part 2

13

Time Bars

Statutes of limitation (accrual,

discovery rule)

Statutes of repose

Laches defense of
unreasonable and prejudicial
delay

Ch. 2 Equity and equitable

remedies - Part 2

14

Laches
Stone v. Williams (2d Cir. 1989) p. 50

vigilantibus non dormientibus

aequitas subvenit (equity aids the
vigilant, not those who sleep on
their rights)
statute of limitations FIXED DATE
after which suit is barred subject
to equitable considerations*
Statute of repose FIXED DATE
after which a cause of action
expires and defendant has a
right of repose
Ch. 2 Equity and equitable
remedies - Part 2

15

Laches
Stone v. Williams (2d Cir. 1989)

laches defense asks

Was the plaintiff in asserting her
rights guilty of unreasonable delay
that prejudiced the defendants?
the societal interest in vindication
of a meritorious claim can be
outweighed by the disruption its
tardy filing would cause
Ch. 2 Equity and equitable
remedies - Part 2

16

The discovery rule

Mrs. Lopez overheard a doctor who

had been examining her say to some
other doctors who were present,
"And there you see, gentlemen, what
happens when the radiologist puts a
patient on the table and goes out
and has a cup of coffee." This was,
she says, her first intimation that Dr.
Swyer had been negligent [in his
conduct of radiation therapy].
NJ 1973
Ch. 2 Equity and equitable
remedies - Part 2

17

A rule of equity

a means of mitigating the often

harsh and unjust results which
flow from a rigid and automatic
adherence to a strict rule of law.

Ch. 2 Equity and equitable

remedies - Part 2

18

Prejudical delay
City of Eustis v. Firster

Appeal from a mandatory injunction

requiring the City to remove certain
piers, docks, and boathouses
owned or maintained by the City
Test of laches:
- a delay which has resulted in the
injury, embarrassment, or
disadvantage of any person
- but particularly the persons
against whom relief is sought
Ch. 2 Equity and equitable
remedies - Part 2

19

Prejudical delay
City of Eustis v. Firster

In the present case the appellee

brought his suit to overthrow rights
long since accrued to the appellant
[City] and to third persons almost
ten years after he became aware of
the circumstances.

Ch. 2 Equity and equitable

remedies - Part 2

20

Prejudical delay
City of Eustis v. Firster

Through long years since appellee

acquired his title, the structures have
been maintained by the appellant city
and city funds expended for repairs and
for building an additional boathouse.

Third persons not joined herein have

acquired rights in individual boathouses,
by virtue of leases obtained, with
appellee's knowledge, since he acquired
title, and alsoCh.by
2 Equityvirtue
and equitable of their repairs
remedies - Part 2
and maintenance
of the same.21

Prejudicial delay
City of Eustis v. Firster

Plaintiff is holder of a statutory riparian

view right
The remedy of a mandatory
injunction for removal of
encroachments is a drastic one
the injunction requiring removal of
the encroachments infringes upon
rights long since accrued to the
appellant and to third persons
the defense of laches is shown
injunction vacated
Ch. 2 Equity and equitable
remedies - Part 2

22

Nahn v. Soffer
Action to quiet title p. 50

Appeal from order denying specific

performance
specific performance "is not a
matter of right but is a remedy
applied by courts of equity
the trial court has judicial
discretion to award or withhold the
remedy.
"[a] greater strength of case is
required for a decree of specific
performance than to defeat a claim
Ch. 2 Equity and equitable
remedies - Part 2

23

Nahn v. Soffer
Action to quiet title

option contract is silent as to a

closing date.
contract to purchase real estate time is not ordinarily of the essence
But it is implied that Soffer was
required to close within a
reasonable time after exercising
the option
Ch. 2 Equity and equitable
remedies - Part 2

24

Nahn v. Soffer
Action to quiet title unreasonable delay

21 months passed from the time Soffer

exercised the option to the date set for
closing.
delay not justified by Nahns' repudiation
of the contract and the time required to
seek zoning changes.
From the time the option contract was
executed, the property's value increased
from $ 200,000 to between $ 300,000
and $ 350,000.
Soffer failed to pay the real estate taxes
on the property years as required by the
Ch. 2 Equity and equitable
option contract.
remedies - Part 2
25

Stone v. Williams (1989) p. 54

Cathy Stone born in 1953

Hank Williams, Jr. assigned copyright
interests in fathers music
1967 - GAL aggressively sought to
protect Stone but lost
1973 received inheritance from
Williams, Sr.s mother
1979 adoptive mother says she
might be Williams daughter
1985 files suit for share of royalties
Ch. 2 Equity and equitable
remedies - Part 2

26

Stone v. Williams

What is the prejudice to Defendants

found by 2d Cir. In 1st case?
What was legal consequence of the
fraud found by Alabama court?
When did her cause of action accrue
per 2d Cir.?
What was applicable statute of
limitations?
What about her rights as heir?
Constructive trust as remedy?
Ch. 2 Equity and equitable
remedies - Part 2

27

Promissory Estoppel and reliance

Judge Learned Hand - Porter v. Commissioner
of Internal Revenue, "'* * * promissory
estoppel is now a recognized species of
consideration."

a promise is enforceable if made without

consideration when the reliance on the promise
was reasonable, and the promisee relied to his
or her detriment

How does Feinberg v. Pfeiffer implement that

principle?

Ch. 2 Equity and equitable

remedies - Part 2

28

Promissory Estoppel
Feinberg v. Pfeiffer Company (1959) p. 61

"RESOLVED, that the salary of

Anna Sacks Feinberg be increased
from $350.00 to $400.00 per month
and that she be afforded the
privilege of retiring from active
duty in the corporation at any time
she may elect to see fit so to do
upon retirement pay of $200.00 per
month, for the remainder of her
life."
Ch. 2 Equity and equitable
remedies - Part 2

29

Promissory Estoppel and reliance

Feinberg v. Pfeiffer Company (1959)

She was told that she could quit

the day upon which the resolution
was adopted
she made no promise or agreement
to continue in the employ of the
defendant in return for its promise
to pay her a pension.
Hence there was lacking that
mutuality of obligation which is
essential to the validity of a
Ch. 2 Equity and equitable
remedies - Part 2

30

Promissory Estoppel
Feinberg v. Pfeiffer Company (1959)

Promissory Estoppel and Reliance

"Q. The question is whether you would have
quit the employment of the company at that
time had you not relied upon this pension
plan?
"A. No, I wouldn't.
"Q. You would not have. Did you ever seek
employment while this pension was being paid
to you
"A. No.
"Q. Were you able to hold any other
employment during that time?
"A. Yes, I thinkCh.so.
2 Equity and equitable
remedies - Part 2

31

 90 Restatement of the Law of Contracts

"A promise which the promisor should

reasonably expect to induce action or
forbearance of a

definite and

substantial character on the part of the

promisee and which does induce such
action or forbearance is binding if
injustice can be avoided only by
enforcement of the promise."
Ch. 2 Equity and equitable
remedies - Part 2

32

Equitable Estoppel
United States v. Georgia Pacific p. 64

an equitable estoppel may be found

against the Government

(1) if the Government is acting in its

proprietary rather than sovereign
capacity and
(2) if its representative has been
acting within the scope of his
authority.

Ch. 2 Equity and equitable

remedies - Part 2

33

Equitable Estoppel
United States v. Georgia Pacific (1970) p. 64

Equitable estoppel prevents a party

from assuming inconsistent positions
to the detriment of another party***
Assertion of rights barred against
one who
- relied in good faith on conduct
- detrimentally relied
And acquires a right of property,
contract, or remedy
Ch. 2 Equity and equitable
remedies - Part 2

34

Equitable Estoppel - U.S. v. Georgia Pacific

Elements:

(1) The party to be estopped must

know the facts;

(2) he must intend that his

conduct shall be acted on or must
so act that the party asserting
the estoppel has a right to
Ch. 2 Equity and equitable
remedies - Part 2

35

Equitable Estoppel - U.S. v. Georgia Pacific

(3) the party relying must be

ignorant of the true facts; and

(4) he must rely on the former's

conduct to his injury.

Ch. 2 Equity and equitable

remedies - Part 2

36

Trial by jury

Ch. 2 Equity and equitable

remedies - Part 2

37

7th Amendment -Right to trial by jury

In Suits at common law, where the

value in controversy shall exceed
twenty dollars, the right of trial by
jury shall be preserved, and no fact
tried by a jury, shall be otherwise
reexamined in any Court of the
United States, than according to
the rules of the common law.
Ch. 2 Equity and equitable
remedies - Part 2

38

State v. Danelsbeck
Danelsbeck was acquitted of
careless driving but found guilty of
DWI and failure to observe a
signal.
Sentenced to 180 days in jail,
fines, 10 years license suspension
and 12 hours of an intoxicated
driving program, since it was his
4th offense

Was he entitled to a trial by jury?

Ch. 2 Equity and equitable
remedies - Part 2

39

Dairy Queen v. Wood (U.S. 1962) p. 73

Complaint sought :
(1) temporary and permanent
injunctions to restrain petitioner from
any future use of or dealing in the
franchise and the trademark;

(2) an accounting to determine the

exact amount of money owing by
petitioner and a judgment for that
amount; and

(3) an injunction pending accounting to

prevent petitioner from collecting any
Ch. 2 Equity and equitable
remedies - Part 2 Queen" stores
40
money from "Dairy
in the

Dairy Queen v. Wood (U.S. 1962)

District judge erred in refusing to

grant petitioner's demand for a
trial by jury on the factual issues
related to the question of whether
there has been a breach of
contract.

Ch. 2 Equity and equitable

remedies - Part 2

41

Dairy Queen v. Wood (U.S. 1962)

Since these issues are common

with those upon which
respondents' claim to equitable
relief is based,
the legal claims involved in the
action must be determined prior
to any final court determination of
respondents' equitable claims.

Ch. 2 Equity and equitable

remedies - Part 2

42

Dairy Queen v. Wood (U.S. 1962)

Beacon Theatres (1959) held:

where both legal and equitable
issues are presented in a single
case, "only under the most
imperative circumstances can
the right to a jury trial of legal
issues be lost through prior
determination of equitable
claims."
Ch. 2 Equity and equitable
remedies - Part 2

43

Dairy Queen v. Wood (U.S. 1962)

The complaint alleged breach of

licensing contract:

petitioner had "ceased paying . . .

as required in the contract;" that
the default "under the said
contract . . . [was] in excess of $
60,000.00;"

Ch. 2 Equity and equitable

remedies - Part 2

44

Dairy Queen v. Wood (U.S. 1962)

default constituted a "material breach"

of that contract

Notice given that to continue such

business after the cancellation of the
contract constituted an infringement of
the respondents' trademark

that petitioner's financial condition was

unstable; and that because of the
foregoing allegations, respondents
were threatened with irreparable injury
for which they
had
no adequate remedy
Ch. 2 Equity
and equitable
remedies - Part 2
45
at law.

Dairy Queen v. Wood (U.S. 1962)

Petitioner's primary defense is,

that the contract was modified by
a subsequent oral agreement
a purely legal question having
nothing whatever to do either with
novation, or reformation

Ch. 2 Equity and equitable

remedies - Part 2

46

Dairy Queen v. Wood (U.S. 1962)

Such a defense goes to the question of

just what, under the law, the contract
between the respondents and
petitioner is
in an action to collect a debt for
breach of a contract between
these parties, petitioner has a
right to have the jury determine
not only whether the contract has
been breached and the extent of
the damages if any but also just
Ch. 2 Equity and equitable
remedies - Part 2

47

Feltner v. Columbia Pictures (1998)

p. 76

Licensing agreement terminated due

to delinquent royalty payments
License holders sue for statutory
damages for subsequent copyright
violations
Is an action for statutory damages
like an action for copyright
infringement in England prior to
1791?
Ch. 2 Equity and equitable
remedies - Part 2

48

Ross v. Bernhard (1970) p. 82

The common law did not permit

stockholders to call corporate
managers to account in actions at
law

Why does the court allow a trial by

jury?
Ch. 2 Equity and equitable
remedies - Part 2

49

Ross v. Bernhard (1970)

The directors of the corporation

were accused of converting
corporate assets and of "gross
abuse of trust, gross misconduct,
willful misfeasance, bad faith,
[and] gross negligence."

Ch. 2 Equity and equitable

remedies - Part 2

50

Ross v. Bernhard (1970)

Stockholders demanded derelict

officers "account for and pay to the
Corporation for their profits and
gains and its losses."

Petitioners demanded a jury trial

on the corporation's claims.

Ch. 2 Equity and equitable

remedies - Part 2

51

Ross v. Bernhard (1970)

A derivative suit has dual aspects:

first, the stockholder's right to sue on
behalf of the corporation, historically an
equitable matter;
second, the claim of the corporation
against directors or third parties on
which, if the corporation had sued and
the claim presented legal issues, the
company could demand a jury trial.
Ch. 2 Equity and equitable
remedies - Part 2

52

Ross v. Bernhard (1970)

As implied by Mr. Justice Holmes legal

claims are not magically converted into
equitable issues by their presentation

to a court of equity in a derivative suit.

The claim pressed by the
stockholder against directors or
third parties "is not his own but
the corporation's.
Ch. 2 Equity and equitable
remedies - Part 2

53

Ross v. Bernhard (1970)

Given the availability in a

derivative action of both legal and
equitable remedies, we think the
Seventh Amendment preserves to
the parties in a stockholder's suit
the same right to a jury trial that
historically belonged to the
corporation and to those against
whom the corporation pressed its
legal claims.
Ch. 2 Equity and equitable
remedies - Part 2

54

Ross v. Bernhard (1970)

The Seventh Amendment question

depends on the nature of the issue
to be tried rather than the
character of the overall action.

Ch. 2 Equity and equitable

remedies - Part 2

55