FALL, 1995

Court Systems:

U.S. Supreme Court Tenn. Supreme Court

6th Circuit Court of Appeals

District Court Circuit / Chancery Court

General Sessions

Tennessee-dual trial level system

1. Circuit Court - by statute the two courts have concurrent 2. Chancery - jurisdiction, except that the circuit court has exclusive jurisdiction of tort cases ("unliquidated damages"). So, tort cases can not be tried in Chancery court over an objection. So, if the defendant fails to move to dismiss or object to the court then the Chancery court can try a tort case.

General Sessions - tries cases up to $10,000. If you lose in General Sessions (no jury trials) then you have an automatic appeal to Chancery court. "De novo" trial on appeal. The monetary cap is gone.

Court of Appeals - court of last resort in our state as a practical matter.

Tenn. Supreme Court - petition the court for an application for permission to appeal.

Chancery Court - jury trials allowed by statute but by and large they are not requested. Business type deals and state matters.

Circuit Court - deals with wrecks.

Probate court - part of Chancery Court

Statutes of Limitations and Repose

Statutes of limitations and repose limitations are limits on remedies. An obvious limitation on remedies is a statute of limitations. Another is a contractual limitation that you have agreed to. For example, insurance contracts. You can contractually limit the four year statute of limitations on the sale of goods to one year. Title 28 of the Tenn. Code Ann. covers statutes of limitations.

Statutes of Limitations:

A. 6 months - slander (when it occurs), bulk sales act-selling all inventory and fixtures, etc. Buyer is required to notify the general creditors of the seller (unsecured creditors). If you don't then creditors come after the buyers.

B. 1 year - 1. personal injury (even with Worker's Comp.) 2. wrongful death 3. medical malpractice 4. legal malpractice 5. accountant malpractice 6. libel (when you know about it) 7. malicious prosecution 8. false imprisonment 9. consumer protection act 10. sometimes federal civil rights actions - borrows states statutes of limitations 11. breach of a fiduciary duty (comes with a three year statute of repose).

Carrell v. Bottoms - when does the statute start running? When the malpractice is so bad that nothing can be done to correct it - an irremedial act. Carrell allows that statute to start running after an irremedial act has been committed and the client finds out about it.

C. 3 years - property damage, economic loss, conversion or detention, usury

D. 4 years - UCC sale of goods

E. 6 years - contracts generally (real estate, etc.), Detainer actions (thrown out of apartment)

F. 10 years - Demand note - payable on demand, runs from date of execution of the note. Judgments-renew every 91/2 years. Catchall-if no other statute fits then this is the default statute.

What if it is a combination? Personal Injury (1 year statute) and Breach of Warranty (Sale of goods) (4 year statute)

Gravamen-the gist of the cause of action. These situations come up also in construction cases- Property Damage v. Breach of Contract

When in doubt you can count on the court going with the shortest time.

McCroskey v. Bryant Air Condition - 524 SW2d 487

If you plead your case in warranty then you get the benefit of the longer statute - 4 years from the date of purchase v. 1 year personal injury statute.

Statutes of Repose:

The cause of action itself evaporates once the statute has run.

1. 3 year statute of repose for doctors

2. Products Liability - sometimes a 1 year statute of repose if you have a product that has a government expiration date (usually 10 years) Silicone - 25 years. Private airplanes - 18 year federal statute.

3. Construction lawsuits - improvements to real estate. The suit must be brought within 4 years after substantial completion of the project.

*Many states have stricken their statutes of repose -- TN upholds them under the theory that the legislators at least had a rational basis. (Ex. a Dr. could not get medical malpractice insurance)

4. Consumer Protection Act - 4 year statute of repose starts at the time of the deceitful act.

*If you nonsuit then you can come back in under the savings statute, T.C.A. 28-1-105, as long as the dismissal was not on the merits. One year to recommence the suit. You get two free nonsuits.

*Don't use the nonsuit if you are suing the government under the Govt. Tort Liability Act because the savings statute doesn't apply.

Federal Civil Rights Cases- statute creates the cause of action.

Don't nonsuit! The savings statute won't apply.

X X . . . . X . . . . X . . . . X

File suit 1 yr. Nonsuit 1 yr. 2 yrs. later

statute Order Savings Another nonsuit

You only get 1 year savings period once. Must do it all within one year which is not likely to happen. The one year runs from the entry of the Order of Nonsuit. You can take two nonsuits but the third filing of the suit must be within one year of the date of the 1st nonsuit.

p. 13 Orloff

P wasn't allowed in Turf Club. Wanted an injunction as relief. Court allowed it even though it wasn't specifically in the statutes.

Hodges v. S.C. Toof and Co.

Hodges was called to jury duty. The Co. didn't like this and Hodges was demoted. TN has employment at will doctrine. P said that violated public policy--the P wasn't satisfied with statutory remedy. Jury agreed and awarded $200,000. Court held that the statutory remedy was not exclusive and allowed the P to rely upon tort remedies.

Previous opinion on savings statute (Bruce v. Hamilton) said that it is fatal to take a nonsuit when the statute of repose has run. However, the Tenn. Supreme Court reversed this decision in Cronin v. Howe, 20 T.A.M. 37-3. You may now safely take a nonsuit even though the statue of repose has run. The savings statute and the Med. Malpractice Act can be construed together. As long as you file your suit w/in the limitations period and the statute of repose period then you can go ahead and take a nonsuit.

Statutes of Repose and minors - cases say the minor can sue w/in one year of becoming 18. Braden v. Yoder, 592 S.W.2d 896.

The Code has a general tolling statute for minors.

Products Liability Act - allows actions to be brought w/in one year of reaching 18. T.C.A. 29-28-103.

Construction Statute of Repose-repose period is four years after substantial completion. Provision in the statute that if you're injured during the 4th year then you have an extra year. Pigg v. Barge-Waggoner -case was over the design defect of a swimming pool. You don't get the benefit of the tolling statute for minors if the injury occurs after the 4 year statute of repose in the construction statute.

Worker's Compensation claims - statute will give rise to more retaliatory discharge actions. T.C.A. 50-1-304: 1. if you blow the whistle on your employer's illegal (both criminal and civil illegal activity) and you're subsequently fired then you have a cause of action; 2. if you refuse to participate in illegal activity and you're fired then you also have a cause of action.

Corporate law - one year statute of limitations when suing a corporate officer for breach of a fiduciary duty. Repose statute also covers breach of a fiduciary duty. Repose period is three years from the date of the fiduciary duty.

Worker's Compensation

Tennessee - handled in the court system rather than administratively. No tort action! Limited remedy. Non-jury cases.

The Code sets out various monetary remedies for each type of injury.

T.C.A. 50-2-103 et seq. covers only work-related issues:

1. Permanent total disability

2. Permanent partial disability

3. Temporary partial disability

There's a difference b/w medical and occupational injuries:

1. Medical -AMA guide. The injury carries a 5% disability. Payments are made up until 65 years of age.

2. Occupational - vocational rehabilitation. Experts try to convince the court that the occupational disability is more than the medical disability. Payments are based on 2/3 of your average weekly wage.

"Multipliers" - general principle is that the occupational disability is capped at 2 1/2 times the medical disability. Unless, certain exceptions exist: If the person has no transferable job skills then the cap doesn't apply. If the person has no meaningful return to work for 7-8 years then the person can return to court and the 2 1/2 multiplier doesn't apply --it becomes a 6% cap.

*Multiplier caps only apply to the body as a whole.

Schedule members - disability only to the left arm

"Commutation to a lump sum" - do you want the client, the worker, to get at least part of the payment as a lump sum? Must show that it's in the client's best interest and the person won't waste it. Statute limits the atty's fee to 20% but you can get some of the atty's fees out of the lump sum.

Appeal - technically straight up to the Tenn. Supreme Court, but the Tenn. Supreme Court has set up a Worker's Compensation panel (2 retired justices and 1 sitting justice) who decide the case on review.

Note: the trial judge determines the occupational disability based upon the proof.

20 T.A.M. 29-5

20 T.A.M. 23-5 Bailey case

*Note: You must furnish a copy of any unreported cases to the opposing counsel and to the judge. Check to see what if any action the Tenn. Supreme Court has taken on the case and the date--write that information on the front of the case. Ex. For the Pigg case you would write on the front "no appl. perm. app." meaning no application for permission to appeal has been filed.

*p. 16, Note 3, Note 4 - Tenn. has abolished a cause of action for alienation of affections and criminal conversations.

p. 18 - Cowin Equipment

The court said that a franchisee can not cancel an order for heavy equipment. Can't ask for a recision of the order. The doctrine of unconscionability doesn't give you a tort cause of action. (Plaintiffs shouldn't rely on it.)

p. 19 - Title VII - 42 USC 1981(a) - In 1991, Title VII was amended to give us a right to a jury trial and a right to damage remedies (but there are some caps -- the limit varies w/ the size of the employer):

Big employer (over 500 workers) - $300,000 cap

small employer (at least 15 workers) - $50,000 cap

Expert fees and atty's fees are recoverable since 1964. The Hudson case is being appealed to the 6th Circuit b/c the jury handled the case prior to 1991 amendments and the judge decided the case after 1991. Paine asks, "Can you legitimately argue that it's a $300, 000 cap per count?"

Americans with Disabilities Act

42 USC 1221 et seq. It ties in to Title VII b/c it sets out what constitutes discrimination to a disabled person. Then it sets out damages, reinstatement, back pay, atty.'s fees, expert fees.

State statutes-1. Tenn. Human Rights Act, 4-21-301 et seq.

2. Tenn. Handicapped Discrimination Act, 8-5-103

p. 20 Norris-LaGaurdia Act

Example of how sometimes by statute there's simply no remedy. Federal judges have no power to grant an injunction in this case.

p.21 Treister

Court says we won't give you the remedy of an injunction b/c you haven't shown "economic necessity" What happens to a doctor who isn't admitted to certain hospitals? Remedy sought= antitrust violation. Treble damages = multiply the jury's award by three.

p. 26 Pulliam

1983 case. Judge was requiring bail bonds of all claimants. Split opinion holds that judges are absolutely immune from injunctions, but you may get an injunction to prevent future injustices.

p. 30


1. Jury trial consequences -depending upon the remedy you seek you may or may not want a jury

2. Insurance coverage

3. Method of enforcement

p.31 Maryland Casualty

Suit to clean up environmental waste (injunctive relief) and to reimburse prior clean-ups. The insurance company did not want to pay for the injunctive relief awarded against its insured. Court says that the insurance policy only covers damages which do not include reimbursement of prior clean-up costs and injunctive relief for future clean-up costs. "Pollution exclusion" clause - almost every policy has such a clause.

One of the consequences of how you term your remedy is that you might not have insurance coverage.

p. 36, Note 3 -Bankruptcy issue- once the bankruptcy is filed then creditors must stay away. (The 6th Circuit is contra to this case from the 3rd circuit) U.S. v. Whizco, 841 F.2d 147 (6th Circuit).

p. 37 Brunecz

*No damage remedies then no jury trial in Ohio. This decision is contra to Tenn. law - we do allow plain old compensatory damages

Sasser v. Averitt Express, 17 T.A.M. at 217

The principle is that back pay (equitable remedy) or reinstatement should be decided by the jury.

p.39, Note 3 - jury trials in Title VII cases


Chancery court - principle is to right those wrongs where there's no common law cause of action.

Recall the two court systems in Tennessee today --by statute, either court can take any kind of case. But wreck cases and tort cases are not justiciable in Chancery court over an objection.

p.40 Criteria for Equity Jurisdiction -what must we show the Chancellor to get equity relief:

1. inadequacy of legal remedies - no common law remedy is adequate

2. irreparable harm

3. relative hardships -"balancing the equities"

4. practicality -would an injunction be practical?

5. public interest

6. tribunal integrity

p.41 Thurston

Damage to drive-in-theater. Should we let the P get equitable relief? Law court relief would be inadequate because of the repetition of the harm. Relief=past harm damages and an injunction will be issued for the future.

p.44 Wheelock

Noncontractual license to put rocks on a lot. Boulders are there. Affirmative injunction to make them take away the rocks rather than a refraining injunction.

Likelihood of repeated trespasses in the future satisfies the requirement that the legal remedy be inadequate. Coal v. Dych, 535 S.W.2d 315 (Tenn.)

*If you want to get equitable relief then argue hard inadequacy of legal remedy and irreparable harm.

p. 47 Compute-a-call, Inc.

Debt-you get a judgment at law then you execute on the property of the debtor. No equitable remedy given here b/c no irreparable harm is shown or inadequacy of legal remedy.

p.47 1. Equity jurisdiction -the term simply means the propriety of granting equitable relief.

p.48 K-Mart

Because of a mistake the builders followed plans which had been rejected. Other stores were being built right in front of the K-Mart. Court finds irreparable harm. Too difficult to speculate on the damages --what's the price of goodwill and irresistible impulse to shop b/c you can't see the sign?

p. 50 Muehlman

Lots of noise from diesel engines being charged. Judge carves out an equitable remedy--he tells them not to fire up the engine until 7:00 a.m. The irreparable harm = sleep deprivation.

p. 52, Note 1 - Compare the adequacies

Balancing the Interests and Practicality

Hasty, 641 SW2d 741, case on "covenants not to compete." A covenant not to compete is a restraint on trade.

Tenn.- yes, but if they're reasonable then they're valid. If they're legitimately reasonable then they're okay. Are there legitimate business reasons for them? I.e. trade secret cases

Central Adjustment Bureau v. Ingram

Problem - many times the covenant is not signed as a condition to employment. If you sign it as a condition to employment then there's consideration. No consideration for post-employment signing.

Court - keeping the person on the job is construed as a consideration substitute.

*Covenants not to compete must be reasonable as to the length of time that they run and the geographical limits.

Note: the Tenn. Chancellor has the power to revamp an unreasonable covenant.

p. 54 Triplett

Easement around an island. Causeway is built. To get a judge to "take a view" then videotape the location. Result= build a bridge where a boat can go under it.

p. 58 Galella v. Onassis

Balancing the privacy interest and the security interest v. the photographer's commercial interest and free speech interest.

Result=the court sets boundaries; the photographer must be 25 yds. away from the kids.

p. 62 Contempt of court - if you violate an injunction then you are haled into court for contempt.

Public Interest and Tribunal Integrity

p. 63 Rainbow Family

The U.S. is trying to shut down these people because it costs so much to clean up after them. Judge's decision = limited injunction as to health and sanitation. The point of this case is to show the conflict between a public interest and freedom of speech.

Adequate legal remedy=criminal sanctions

Note: the general proposition is that you don't enjoin crimes. Will the criminal sanctions be adequate? How many people will you have to enjoin?

p. 68 Boomer

Public interest in keeping the plant open because of jobs. Damage fines are sufficient - an injunction is not necessary.

See Note 4 on p. 72

See Note 2 on p. 74 - Welton case - If you build your 20 story building with the knowledge that there's a pending appeal of your victory in the trial court on the variance then you might lose on appeal. Court -- tear it down and build it right.

Specific Performance

The court says, "I enjoin you to execute a deed (or take some other personal action)"

Factors in deciding whether to order specific performance:

1. Inadequacy of the legal remedy?

2. Will the P also perform?

3. Can the D perform if ordered to do so?

4. Balancing the equities


1. Land and buildings by their nature are easy to get specific performance

2. Rarely get specific performance with services -- constitutional objection to ordering someone to perform services. But you can enjoin someone not to perform services. Ex. Covenant not to compete

*Mutuality of Remedies - Mutuality of Obligation

p. 79 Cost-Benefit Analysis

p.77 Walgreen Co.

"Exclusivity" clause in the lease -- the co. wants to be sure there's no other drug stores in the shopping center.

Walgreens asks the court to make the landlord kick out the other drug store. Court - injunctive remedy is the best relief; damage remedies are too difficult to assess.

p. 82 Van Wagner

Real estate lease - specific performance case

Result = the court leaves tenant to the tenant's damage remedies for breach of lease because they are found to be adequate.

p. 85 #1. Contracts for sale of land are proper for specific performance. Bush, 598 SW2d 777, the court has the power to judicially transfer the property because Ms. Caffee promised to sell the house.

#2. What if there's a 2nd contract with a 3rd party?

The general rule is to make the seller sell the house to the purchaser as promised.

Hudson v. Hardware Store, 666 SW2d 51

Predominate Factor Test-in cases where you have some services and some goods then look to see what is the predominate factor.

a. What law do we apply to the contract if it's predominately services? The common law

b. What law to the contract for sale of goods? The UCC

*You apply the applicable law to the entire contract.

p.86 Niagara

Services contract with a termination clause. You have to go to court to enforce the termination clause by specific performance. The goods also are supposed to be turned over under the termination clause.

Replevin - recovery of personal property. Argument that there's an adequate legal remedy.

Risk of multiplicity of lawsuits

Security agreement - what happens?

Risk of self-help

Thumbnail sketch of replevin doctrine and enforcement of security agreements under T.C.A. 29-30-101 et seq.:

1. Petition or civil warrant (filed in General Sessions court) - Sworn pleading to persuade the court that there's a need for possession prior to the hearing.

2. Bond executed to cover the value of the property

3. Fiat signed by the judge

4. Judge gives the person a writ of repossession - enables the sheriff to take the property

5. The court must make provision for an expedited, prompt hearing

*General Sessions Court - usually limited to $10,000 but in replevin cases there's unlimited jurisdiction!

What happens if property is already destroyed? There's an alternative monetary remedy but it's limited to $25, 000.

p. 89 Henderson

"quasi specific performance" because one party is dead. People only perform care for 18 days but they still get the house

No Mutuality of Remedies - we don't grant specific performance to one party unless (if the case is reversed) we can grant specific performance to the other party.

Court says to view the contract at the time the complaint for specific performance was filed. Then there's no problem because we're not ordering someone to do personal services in violation of the 13th amendment.

*We can't order someone to perform personal services under the 13th Amendment!

Ledgeers v. Deloch - 140 Tenn. 259

Security Land Co. v. Touliatos - 716 SW2d 918 (most recent case)

721 at 250

Buyer and Seller in real estate deal. The problem is that the Seller only has the title to 2/3 of the land. Mutuality of Remedies argument from the Seller's side - an example of the defense of mutuality of remedies at work. . . .

Seller says to the judge, "I should not be commanded to turn over 2/3 of the property for 2/3 of the purchase price b/c under the Mutuality of Remedies doctrine I would not have the same remedy. . . you would not force the Buyer to take 2/3 of the land for 2/3 of the price."

Waters v. Holloway - similar case, 6 T.A.M. 47-3

"Perm. app. denied" goes on the front of your pleading. Denied C.R.O. (Concurring with the Result Only) with the date

No Mutuality of Remedies problem here because once the Buyer files suit he's tendering his own specific performance - thus, you never reach the specific performance question.

Can a Seller get specific performance of a buy-sell land contract? There's no rule against it. The Seller can ask the court to make the Buyer perform the sale. However, the damage remedy is adequate more often than not.

Quine - 597 SW2d 728

The Sellers are asking for specific performance to make the Buyers go ahead and buy the weird house (weird style and financing is difficult).

Court says that the damage remedy is not adequate (breach of contract) because it's too difficult to find somebody else to buy the house. The result is that specific performance is granted.

p. 96 Dover Shopping Center

p. 100 Wooster

Specific performance for a contract to buy a tv tower. Option to buy in the lease. Buyer says, "We're only leasing the tv tower right now so you can't force us to buy it."

Two types of land sales:

1. Sale of land by the acre

2. Sale of land in gross

Example - Paine says to sell me Lot #18 for $30,000 containing 2 acres. Caselaw says it's a sale in gross because the purchase price is for the whole parcel of land. Paine offers to sell me 2 acres of land for $15,000/acre then it's a sale by the acre.

Faithful v. Gardener, 799 SW2d 232

Sale in gross but it turned out that after the land was purchased and Buyer surveys it the land only contained 1 and 3/4 acres. No refund if it's a sale in gross. If it was a sale by the acre then you can get a refund.

Note: if the discrepancy is so great as to "shock the conscience of the court" then you might get a refund"

Contracts for the Sale of Goods

Specific performance-this remedy is usually acquired with real estate, but it does not normally exist where the dispute is over personal property. The remedy is also difficult to get for goods. Why? Goods are usually not unique.


1. Exception to the general rule for "unique goods"

2. "Other proper circumstances"

p.112 Kaiser

Part of the Code says that you can get specific performance under "other proper circumstances"

p. 114 Ace Equipment

Case shows other proper circumstances. Paine says it's a questionable example.

p.117 Equitable defenses raised by the defendant in equity.

Equitable maxims-he or she who comes to equity must come with clean hands.

1. Equity will not let a wrong go unremedied

2.Equity regards substance rather than form

3. Equity follows the law

4. One who comes in to equity must come with clean hands

5. Equity aids the vigilant and not those who sleep on their rights

*The defendant raises the burden of proof, but it must be pleaded. Prove by including the facts.

Rule 8 - list of affirmative defenses. Review the list when drafting your answer.

Laches and Estoppel

Laches = equitable defense

p. 119 Cornetta

Lawsuit after the statute of limitations had run. Some cases where the P's claim of Equity will fail because of laches and not the statute of limitations. The statute may be 6 years but the case fails after 5 years.

p. 121 Court will consider:

1. How much delay?

2. Was the D prejudiced by the delay?

p. 121 Soldiers' and Sailors' Civil Relief Act - it essentially puts everything on hold. It tolls the statute of limitations while the P is in the armed forces. No case addressing what the Act does to statutes of repose. Cornetta v. U.S. - case where the Sailor's Act gave the guy some more time on the statute of limitations.

p. 123 Gruca

Court finds that the delay was inexcusable and the Defendant was prejudiced by it, thus, the claim was denied/dismissed under the theory of laches.

John P. Swad & Sons v. Nashville Thermal Transfer - 715 SW 2d 41

Waste oil used to heat hotels. Bad waste oil (goods) delivered.

Initial installment delivery did not conform to the contract, so nothing was delivered for about 5 years. John P. Swad files a suit within the statute of limitations but the court found that it was barred under the theory of laches. Prejudice was that the old records were lost or destroyed.

p. 126 Vanhorn

The U.S. sues a doctor saying it wants its scholarship money back. Under the statute, the U.S. is entitled to treble damages. Judge directed a verdict for the government. Generally, you do not get the defense of estoppel when the plaintiff is a government entity.

p. 129 Beacom v. EEOC

Lawyer closes his private practice to go to work for the EEOC. The court held that the govt. was estopped from raising the defense that there was no formal approval of his application.

Tenn. Board v. Eyear Corp. - 400 SW 2d 734


Doctoral dissertation case. Court says that they knew or should have known that no faculty member had the authority to tell them to plagiarize, so they were estopped from raising that defense.

*Can you use estoppel as a plaintiff to prevent a defendant from raising a particular defense? Yes. See John R. v. Oakland Unified School

p. 130 Young man was threatened with dire consequences for blowing the whistle on the abusive teacher

Baliles v. City Service Co. - 578 SW 2d 621

Baliles got an assignment from lot owner, so he could build his house. Statute of frauds under sale of real estate statute. Part performance exception to the real estate statute of frauds but Tenn. has never recognized the part performance exception to real estate statute. The statute says there's no fraud if there's part performance. Court says it's not fair to prevent Baliles from building his house. Court says to the company, "You are estopped from raising the defense of fraud."

Unclean Hands and Unconscionability

p. 133 Senter - doctor decides to fraudulently convey property to his nurse to keep it out of his creditors hands. Doctor claims that she was holding the property in a constructive trust. Court says we don't provide relief to people with unclean hands.

Best - 773 SW 2d 260 (Tenn.)

p. 134 Byron v. Clay - Judge says that this guy doesn't want to work. The case was decided on the doctrine of unclean hands.

p. 137 The College Star's Secret - Ole Miss football player. Court says to the first team who formed the contract that the contract violates the NCAA rules so it's unenforceable.

p. 137 North Pacific Lumber Co.

*The unclean conduct must directly relate to the subject of the lawsuit. The Lumber Co. has unclean hands and moreover the uncleanliness directly relates to the employment relationship which is the subject of the lawsuit.

Hypothetical of divorce litigation. Statutory cause of action but it's considered equitable in nature. Can we possibly deny a person a divorce because they have such incredibly unclean hands? Important for alimony purposes. Rehabilitative alimony. Sometimes we have permanent alimony.

Inman v. Inman - 14 TAM 47-5

"affirmed and modified and reversed on other grounds" 811 SW2d 870

The husband claims under oath that the didn't commit adultery. Court is outraged by his lying in court so the court tells him to get out and denies his divorce.

Unclean hands = lying in deposition and in court

How can you get out of the defense? Tell the court or show the court that the other party's hands are even dirtier.

Goldberg v. Goldberg - 20 TAM

Mrs. Goldberg burglarized his house to get some of his financial documents. Court decides it's too harsh to dismiss her case altogether because Mr. Goldberg is a scumbag. The court only says that she can't use the documents.

Note: If your only defense is unconscionability then don't take the case. Courts have largely ignored the doctrine.

p. 141 Campbell Soup

Output contract for the sale of carrots--all the carrots they can grow! Court tells Campbell soup that its contract clause is so drafted in favor of the co. that it's unenforceable because it's unconscionable.

p. 144 Jones

Court finds the contract unconscionable. Paine says it's a ridiculous finding. He thinks that both Campbell Soup and Jones are bad decisions.

Unconscionability Doctrine outside the UCC

Uniform Residential Landlord & Tenant Act - URL&T Act

In counties where these Acts apply you can attack part of your lease as unconscionable.

p. 145 Two elements of unconscionability:

1. Was the contract unconscionable when it was made?

2. Unconscionability is an issue for the court alone

T.C.A. 66-28-204 Landlord Tenant Act

Our state constitution has a class equal protection clause; you can find the state constitution in the first volume of T.C.A.

"The state shall not pass class legislation unless there is some rational basis."

Paine says, "The only attack on the Landlord Tenant Act that's going to be effective is an attack under the state constitution."

State v. Tester, 879 SW2d 823

Leading case attacking class legislation; work release law allowed DUI offenders to be put on work release. It used to apply only in counties with a metropolitan govt. or with a certain population. The problem is that Moore County is another metropolitan county. The Supreme Court said that there was no rational basis for this law being passed in 2 big counties and 1 small county. The law violates class legislation clause. The court said the legislators intended to apply the law only in certain counties, thus it was unconstitutional.

Show there's no rational basis for the law to be applied in only some counties. Next problem: under the doctrine of elision will you get the court to strike out the unconstitutional part of the law.

General contractors and some subcontractors have to have a license under this law: T.C.A. 62-6-101. Thus, your contract has no remedy if you have no license. The problem is that it only applies to certain contractors and subcontractors.

Election of Remedies

Some confusion here-The majority rule is that there's no election of Remedies or the majority rule may be a modified version of that rule. Yes, we have the rule in Tennessee.

p.146 Do you affirm the contract and sue for damages? or Do you rescind the contract and ask for restitution of the price?

When do you elect your remedy?

1. Prejudicial-your acts before the suit

2. When you commence your lawsuit? When you file your complaint? No, because the Rules of Civil Procedure allow you to plead in the alternative

3. When judgment is entered?

4. When you satisfy the judgment?

*Most courts say the answer is when the judgment is entered.

*The UCC has expressly rejected this doctrine.

p. 153 Altom

Wife sues husband and a judgment is entered against him for conversion (converting furniture). But he doesn't have anything. Can she go back up and sue in replevin to try to get the furniture back? Why not res judicata? Because two different parties. Why not collateral estoppel? Not the same cause of action (Conversion in case #1 and replevin in case #2). In the jurisdiction in the book, she's able to proceed in the second case--no doctrine of election of remedies.

*On the bar exam-Tennessee adheres to the minority position that there's no collateral estoppel unless you have the same parties in case #1 and in case #2. Mutuality of parties is required.

Barnes v. Walker-191 T.A.M. 364

In Tennessee, the election of remedies is made at the time the judgment is entered.

Police officer case-Remedy of mandamus. Remedy of damages under the civil rights act. If you proceeded to judgment in the first case then you can't change your remedy.

Combination of Remedies

There's nothing wrong with combining remedies if they are consistent with each other.

Issaacs v. Bokor-566 SW2d 53

We will allow the Buyer to rescind the contract and get the rescission price of the contract. He also recovers the expenses thus far in building the mansion. The Supreme Court allowed the P all three remedies: Rescission, Restitution of purchase price, and punitive damages.

p. 151, Note 3 - You want to sue in tort because there's no $ limit on the monetary recovery as there is under Worker's Comp. If you go one route and make a mistake then you can sue in tort law.

Tort first-no good- then you can go to Worker's Compensation

Worker's Compensation first-no good-then you can go to Tort

*Tenn.-yes, you may go the other route if you're unsuccessful.

Election of Remedies problem: the Soldier's and Sailor's Civil Relief Act might prevent you from claiming an ADA injury. The likely scenario is that a successful Worker's Comp. claim will prevent you from recovering under the ADA.

Under the ADA, an employer must know what sort of ?'s they can ask about disabilities, etc.

Chapter 6 - Interlocutory Injunctions

Temporary Restraining Orders-sometimes you can get them ex parte if you can show dire irreparable harm. Brief duration.

Preliminary injunction-hearing with other side present. Hearing is very significant.

Substantive requirements:

1. Irreparable harm

2. Likelihood of success at trial

3. Balancing of the equities

4. Public interest

p. 165 Harding v. U.S. Figure Skating

Generally, courts do not interfere with the interworkings of private organizations. Preliminary injunction issue to give Tonya more time.

p. 173 Caribbean Marine Services

Court says no preliminary injunction because there's no irreparable harm. You have the burden of proof in the balancing of interests, and the public interest is not there. Good example of a case where the public interest is important.

Procedural Requirements

p. 183 A comparable State of Tenn. procedural rule is Rule 65.


1. A restraining order is prohibitory in its effect-"I restrain you."

2. Short in duration

3. Typically ex parte

4. Typically without notice

5. Must be bonded - $ will be recovered from the surety if the tro is violated.

Procedure: Petition for the tro with an affidavit attached. In the affidavit you must allege that your client will suffer immediate irreparable injury. In federal court, certify to the court why you didn't give notice and what if any attempts were made to give notice. Always put on the tro application-"This is the first application for extraordinary relief." The D is bound at the moment of actual notice-you can call them on the phone. They must obey the tro upon notice and can be held in contempt of court.


federal court - 10 days

Tenn. state court - 15 days unless it's a tro in a domestic relations case. Then it lasts until the hearing.

Order of Protection - domestic relations cases; duration of one year

Right to appeal - you cannot appeal a tro!

It must be bonded!

p. 232 UNW v. Bagwell

p. 185 Fengler - court held in error for issuing an injunction without a hearing. It's a nonjury hearing where the court makes findings of fact and conclusions of law.

Rule 52 and the injunction rule requires a hearing-some judges will borrow from the practitioner's proposed findings of fact.

p. 189 Carroll - you have a much heavier burden when you're trying to enjoin a person's free speech rights. Must provide notice to the people whom you are enjoining.

p. 192-93 Injunction Notes and Bonds are required. Conquina Oil - the appellant has no jurisdiction if no bond.

*The 6th Circuit is contra to the Conquina Oil decision. Roth, 583 F2d 527. The 6th Circuit says we do have jurisdiction, but we simply remand the case to the lower court to set the bond.

p. 194 Coyne-Delango Co. - What do you do if the tro is erroneous or misapplied? Go after the bonding company if the tro is wrong or misapplied. The tro halted the project and resulted in delay damages here.

Chapter 7 - Contempt

Problems that can arise:

1. The tro/injunction must be specific and clear - p.211, Note 2

2. Was the D bound by the tro? Sometimes an unnamed party might be bound by the tro. Ex- an agent, privity (p. 211)

3. Does this person have the ability to comply with the tro? It's the ability that's important.

4. Is the contempt civil or criminal? If it's criminal then what procedural safeguards does the accused have?

Criminal Contempt - the public has an interest in upholding the power and dignity of the court. Two types of criminal contempt:

1. direct contempt - committed in the presence of the court. Rule 42 (a) Ex.-curse in front of the judge. Under Rule 42(a) you don't have many rights at all. . . .you can be punished summarily.

2. indirect contempt - outside the presence of the court. Procedural safeguards. Rule 42 (b)

p. 201 Walker v. City of Birmingham

Challenge the improper judicial order through the court system if the injunction is wrong. You can be criminally punished for violating an invalid or void injunction. You can't say that since it's void then you don't have to obey the order.

p. 205, Note, 2nd Paragraph- Rights under Criminal

-5th Amendment

-Burden of Proof

-Jury trial


-Right to Counsel

-Right to Subpoena witnesses - Summary Process

-Double Jeopardy

-Right to Present a Defense

Note:If there's potential jail time over 6 months (6 mos. and 1 day) then it's no longer a petty offense and you have a right to a jury trial. No potential confinement or confinement less than 6 months - no help from the federal constitution. Look to the state constitution for help.

State v. Dusina - 764 SW2d 766

Look at the facts of this case. Right to a jury trial under state constitution. There's more protection under the state constitution.

Brown case - Can you throw people in jail under a statute which requires 6 mos. in jail for failure to pay child support? The Supreme Court will have to address this issue. The problem is if the right to a jury trial applies then does it apply in all these cases. The court system will be overloaded.

p. 206, Note - Criminal Contempt must be willful. "Mens rea" is required.

In Re Stewart

Outside the court's presence, the employer retaliates against the employee for serving as a juror. Judge mistakenly calls it civil contempt when the employer's actions were really criminal contempt.

p. 210 T.C.A. 29-9-101 et seq.

p. 208 Definition of criminal contempt - if it's punitive in nature and there's no way to terminate your sentence (defined definite punishment) because of compliance. Separate proceeding with procedural requirements.

Civil contempt - you hold the keys to the jailhouse door. As soon as you comply you are freed from being in civil contempt.

p. 212 Ex parte Daniels

When the judge can't see the lady resisting is it in the presence of the court? If it's in the court's presence then the judge can summarily punish the person. In the court's presence if the judge saw or heard the contempt.

Indirect contempt - if the judge doesn't see or hear the contempt then all the procedural rights under 42 (b) apply.

State v. Creasy - 885 SW2d 829

Creasy tells the DA, the prosecutor, that she's a Communist and a Dictator. He could not summarily be held in contempt of court because the court was not in session. It was not in the presence of the court or so near there as to obstruct the administration of justice.

p. 223 U.S. v. UMW of A

Injunction issued by a federal court telling a Union that they can't strike. The court says "even if the federal court had had no jurisdiction then the court still has the power to issue something." You can not violate even a void injunction. Recall the Walker case.

p. 225 Civil Contempt and Coercive Civil Contempt

Coercive contempt - seeking to compel present and future compliance

Compensatory civil contempt - give $ to a person who's been harmed by the contemptuous conduct.

p. 226 Time-Share Systems- the D destroys the software despite the court's order not to do so. Example of Compensatory Civil Contempt. One of the requirements of any damage remedy is that they are proved with reasonable certainty.

p. 228, Note 3 - If you have compensatory civil contempt and a final judgment is entered then it's appealable. If coercive civil contempt then it's nonappealable. You cannot appeal because you must wait to the end of the case to appeal your contempt. What would your only remedy be in that case? Your remedy would be an interlocutory appeal--go to the court and the appellate court. For an extraordinary interlocutory appeal go directly to the appellate court.

p. 229 U.S. v. Darwin

Make the corporation pay so much money per day to hurt the corp.'s finances because you can't put the corp. in jail (corp. is not a person).

p. 232 UMW v. Bagwell

Court tells the Union it will fine them a lot if they continue to protest, picket, etc. They violate the injunction and the court fines them. Union says that was criminal contempt and therefore we're entitled to a trial by jury. (Union thinks some jurors would be sympathetic.)

Why was it criminal contempt?

1. There was a determinate punishment. Once you did the acts you couldn't purge yourself of the fines. Counter argument is that it was civil contempt because the Union was told in advance.

2. It was not in the presence of the court - (Paine says this doesn't matter.)

3. Widespread violations

p. 238 Latrobe Steel v. United Steel Workers

Labor dispute. Federal courts cannot enjoin labor disputes, so the injunction was void. Civil contempt for violating the injunction, but because it was void there was no civil contempt. Recall the Walker case--they were punished for violating an injunction that was void. . . .talking about criminal contempt, so they still had to obey the injunction. Can't ignore it.

"collateral bar"

Pro-choice movements-civil contempt sanctions that had to be paid to the abortion clinic.

Civil-no appellate jurisdiction until the entire underlying case is completed and appealable.

Criminal-separate trial, so you can appeal as soon as you're sanctioned.

18 USC 248-establishes sanctions for both civil and criminal contempt. Commerce Clause attacks on this statute are frequent.

Madson v. Women's Health

Supreme Court decision. Failure to pay child support=contempt, so you don't have standing in court to appeal the amount of the payments. Statute allows you to get standing in court to attempt to modify future payments. Statute allows standing if your failure to pay back payments is not intentional.

Contempt power of the courts=ten days in jail and a $50 fine

Under the Tenn. constitution, a Tenn. judge has no power to fine more than $50 without a jury trial.

Profanity in court-Class C misdemeanor. 30 days in jail. $50 fine.

Walker v. Walker

Chancellor found 72 different contempts. He told Walker he had to spend 720 days (72 x 10) in jail. Can you tack together these time periods? Can you put somebody in jail for 6 months under a statute that says it's illegal not to pay child support? Paine says that the tacking together of time periods is probably illegal.

Civil contempt-you have the keys to the jailhouse door; you can comply anytime you want.

p. 245 Dr. Elizabeth Morgan's case. She had to remain in jail under civil contempt until she told the court where the child was. Special law was passed.

Contempt=the teeth in injunctive relief.

Chapter 8 - Modern Injunction Forms

p. 246 Four Types of Modern Injunctions:

1. Preventive injunction - to prevent future wrongs

2. Restorative injunction - to undo a past wrong

3. Prophylactic -to minimize the risk of a future wrong (common in civil rights arena)

4. Structural - the court system takes over an administrative duty (or an executive duty like administering the jails)

p. 247 Vasquez - state right-to-work law. Restorative remedy because the remedy is reinstatement.

p. 250 Bundy - prophylactic injunction. Post notices and set up a procedure so that if there's a complaint you'll get immediate relief.

*Tenn. Small Schools Case-federal judges can exercise equitable powers to come up with flexible remedies.


Structural Injunctions

Tenn. Small Schools cases-equalization also includes equalization of teachers' salaries.

p. 261 Hutto

Because the legislature and the executive department did not take care of the jail system the court system had to step in.

Voting and Reapportionment

3 judge panel in Tenn.-Rural West Tenn. African American Affairs Council v. McWherter, 877 F. Supp. at 1096

Do we need apportionment with respect to state judicial elections? Do we need a racial balance with respect to the apportionment for voting for state judges? The answer is that we don't know.

Cousin v. McWherter-46 F.3d 568

Chapter 9 - Special Issues in Equity

p. 270 TVA v. Hill - at the time the law mandated an injunction to stop the dam from endangering the endangered species.

p. 278 Northern Cheyenne - no mandatory injunction because the law did not mandate it.

p. 284

Enjoining Speech or Litigation

1. Notice is important so you probably won't get a tro.

2. Heavy burden on the Plaintiff because the plaintiff is asking for a prior restraint

3. Injunction order must be specific so we only shut down speech that we absolutely must shut down.

p. 286 Willing - legal remedy is defamation and burden is too heavy to get an injunction.

p. 290 Mabe - it's difficult to shut down speech

p. 292 Pavilonis - the court's power to enjoin the professional plaintiff from filing frivolous lawsuits is upheld.

p. 294 Norcisa

Trying to stop potential future criminal prosecution - Injunction is invalid. Legal remedy is adequate here -- when the court prosecutes you for the crime of operating without a license then you can raise constitutional issues.

Younger v. Harris 401 U.S. 37

Abstention case. Once a state criminal prosecution has begun the federal courts should abstain even though some constitutional rights are being trampled. Why? Because habeas corpus review is possible as well as Supreme Court review. Federal courts should abstain from enjoining state criminal prosecutions.

Enjoining Crimes and Nuisances

Arkansas case over the Xmas tree lights-injunction issued to prevent the Xmas tree lights. U.S. Supreme Court denied certiorari.

Firing range to shoot at targets -- the suburbs shut down the firing range b/c they moved out there after the suburbs were already there.

How do you execute on the judgment procedurally?

p. 300 Harrison

Can the homeowners go into court and get an injunction to shut down the recycling plant? Courts say no not immediately; we won't shut down the plant. Remedy at law - the court says we'll give you the legal remedy of damages. Also, the zoning laws did not permit heavy industry in this part of town.

p. 306 Village of Wilsonville

On balancing the equities, the court decides it should shut down the plant. "Coming to the nuisance theory" - if somebody moves to an area where a nuisance already exists then the person doesn't have much of a claim. In Village, the houses were there first.

p. 312 Spur Industries

The "Coming to the nuisance" theory applies here. The cattlefeed lot is there first. The court says that the theory shouldn't always apply. Why not? The theory gives eminent domain power to a private person. After balancing the equities and deciding that the "coming to the nuisance" theory is not an absolute defense, the court decides to enjoin the feedlot to move further out of town but makes the development company pay.

T.C.A. 39-17-316: the statute is where the theory works; if the firing ranges was there first and it operates under the ordinance then you can't shut it down.

Paduch case says that you can now enjoin a city or a county. But, at one time you couldn't enjoin a city or a county.

p. 319 Akau

Who has standing to sue for a right-of-way on the beach? Usually, the private person must show that he has an injury separate from the general public.

Can you get an injunction to prevent future crimes? No, because there's an adequate legal remedy. However, there's an exception in the Meyer case on p. 324. Rare case where the court thought that the criminal sanction was not adequate.

p. 327 Bates case - domestic abuse. T.r.o.s are common.

An Order of Protection is used with domestic abuse cases.

Note: If you're under an "Order of Protection" then it's a violation of a federal law to possess a weapon which affects commerce under 18 USC 922g.

In domestic abuse cases, arrest is the preferred response unless there is a compelling reason not to arrest the person.

There's a new statute, 18 U.S.C. 2261 et seq., which makes it a federal crime to cross the state line.

Stalking law - T.C.A. 39-17-315 - The stalker no longer has to intend to put a person in fear. Would a reasonable person be put in fear?

Abuse of the elderly - T.C.A. 71-6-119

p. 330 People v. Lim

A public nuisance can sometimes be enjoined because the legal remedy requires repeated prosecutions. Gambling casino.

p. 336 Bay Mills Indian Community

No injunctive remedy in the Assimilative Crimes Act.

Bad check law - drawer stops payment on the check. Some people think that if you stop payment on a check then you're not liable for the debt. Statute, T.C.A. 47-29-101, says that if the person stopped payment on the check with fraudulent intent and the bank sends them a certified letter requiring payment within 30 days then treble damages up to $500 plus costs can be awarded.

Remedy of Reformation - equitable remedy. The Chancellor says we'll rewrite this instrument if it becomes obvious to the judge that the parties intended to do one thing.

Execution on the Judgment

There's no help in the Rules of Civil Procedure. F.R.C.P. 69 says that you did it the same way that you do it in the state court. Same method in state court as in the federal court.

If you have a case where land is in dispute:

"lien lis pendens" - a lien pending the outcome of the litigation. Take a copy of the complaint and register it with the Deed Book so that if anybody's checking title on Blackacre they'll see the lien. The P who filed the suit has the lien on the property. *Record your judgment in the Register of Deeds Office - judgment lien. It lasts for three years in the county where you filed the judgment (so file it in every county where there's property). It covers only real property.

Exemptions from Execution:

1. Homestead - $4,000 for a single person. $7,500 for a married couple. It doesn't amount to much.

2. You get to pick $4,000 worth of exemptions plus other items: school book, clothes, family portrait, etc. Claim your exemption before the judgment is entered. File them with the court clerk.

Garnishment of Wages:

*Execute by garnishing - the theory is that somebody might owe the debtor money. Ex. - banks or employers. Tell the employer to pay the judgment creditor instead of the debtor. Do it 30 days after the judgment is entered. Ask the court clerk to give you a writ of garnishment. Paine says you can go ahead and file the writ without waiting 30 days. The court will serve the garnishment on the garnishee (the bank). Establishes a garnishment lien which lasts 6 months. The lien must leave the debtor with 50% of their income. Garnishee is entitled to file an answer saying "We don't owe any $ to the debtor." Conditional judgment - tells the garnishee to pay attention. The garnishee will owe the $ themselves unless they show cause why they shouldn't.

Various Ways to Execute on the Judgment:

1. Garnishment

2. Discovery in Aid of Execution of the Judgment - see Rule 69. You can sit the judgment debtor down in a deposition and ask them questions about their credit, bank account, etc. They must reply to your Interrogatories. Bench warning - judge will tell a court officer to go out and find the debtor and bring them to the court for a bench warning if they're ignoring the requests for discovery.

3. Writ of Execution - "Fieri facias" - You seize the debtor's property and sell it in order to recover on the judgment. As a practical matter, you must locate the property. But, the deputy will enforce the writ. All that the writ of execution does is hand over the property to the State of Tennessee.

*Tenn. rule that you execute against personal property first and then real estate. More protective of real estate. Mandatory rule!

"Nulla bona" - no goods. The person has no personal property. File a "nulla bona" return which lets you then go against the real estate.

Levy - the sheriff exercises dominion and control over the property (personal or real estate). Make sure that you are secured/ perfected before the moment of levy. Tenn. law - a case says that you cannot levy on $ on the person of the judgment-debtor. Why not? It would be unseemly. It doesn't matter even if it's one million dollars. Carmack - 181 Tenn. 551

4. Judgment lien - 3 years long.

5. Execution lien - applies to personal property. At the moment of levy (it is a retroactive lien) the execution lien kicks in and goes backwards in time to the test date (the date that the clerk issued the writ of execution) Why? The judgment-creditor may have priority over the Buyer if the Debtor sold the personal property.

Keep Fresh Filters v. Reglui - 19 TAM 39-1; 888 SW2d 437

In Tenn., in order to execute in the D's equitable interest in real estate (most people don't own unencumbered real estate) you've got to file a second lawsuit in Chancery Court to ask that the Chancellor use his equitable powers to seize the real estate. Take the deed to the land to the deputy.

6. Paper Levy - Deputy says, "I levy on Blackacre" which brings Blackacre within the control of the State of Tennessee.

7. Bond=Indemnity Bond. Most judges will want you to post a bond in case the sheriff makes a mistake.

8. Sale - must be between 10 AM and 4 PM. It must be advertised 3 times. Serve notice on the landowner at least 20 days before the sale. (The third notice must be at least 20 days before the sale.) Post notice at 5 places in the county. Post notice in the most commonly travelled place in the D's neighborhood and at the courthouse. Certain notices must go to the governmental entities. Must notify the IRS at least 25 days before the sale. These requirements apply. Typically, the sale takes place at the courthouse door. The sale must be at least 50% of the fair market value.

Tenn. - slow pay statute. The debtor can ask the judge to let him pay in installments. The judge has the discretion to let him do that. But the payment schedule must be realistic.

Judgment Renewal - A judgment has a ten year statute of limitations, but you can renew it. Ask the court that a "scire facias" be served on the judgment debtor. It asks the debtor to show cause why the judgment should not be renewed for 10 more years. "Fiat" = an order from a judge to the court clerk. The court clerk will then issue the "Scire facias."

Part III - Damages

Chapter 10 - Contract Damages

What is the measure of damages for a sale of goods contract, personal injury, etc.?

Measure of damages = coming up with a formula to determine what the damages are. Trying to achieve a remedy; attempts to put the innocent party in the same financial position had the contract been performed.

p. 341, 42 Model case: expectancy interest - what the franchisee expected to get out of the deal; lost profits (they must be proven with certainty). Reliance interest - the $ paid out in reliance. Ex.-$10,000 spent on advertising. Restitutionary interest - $25,000 franchise fee.

Buyer laid an extra $1,000 for an option on the land next door. Reliance interest = $500 for survey and $500 for loan fee.

Court says, "But you won't get reimbursed for the $500 because then double recovery because the expectancy interest of $20,000 is going to be paid. You would have had to pay the survey and loan fee to get the expectancy."

p. 342 Eastlake Construction Co.

Construction contract = services contract with some goods.

Court says, "If the contractor does it wrong then we won't order the contractor to specifically perform (tear it down and rebuild it correctly) because that's wasteful economically. The general rule is not to make the contractor redo the building. Instead, let's come up with damages to award the Plaintiff. How much was the value of the condo lowered by the defective condition? Award the ps the difference?

p. 347 Jacob & Youngs & Kent

Some judges think that this is strong medicine. The difference is awarded to the P.

Edenfield v. Woodlawn Manor - 462 SW2d 237

Residential construction contract. The specs called for rectangular a/c vents. The contractor installed the wrong a/c vents so it wasn't cooling properly. The court made the contractor redo the cooling system correctly. If residential property then you can probably make the contractor redo it. This decision is probably limited to residential contracts. The usual rule is that we don't require specific performance; we award the difference in value!


1. Register the judgment in the Register of Deeds Office to tie up the property.

2. Garnishment - Do you want to garnish wages? Is the debtor employed? **Before you can get a writ of execution or garnishment you must wait 30 days for the judgment to be final. If the debtor appeals the judgment then he must bond the amount of the judgment-- the debtor can beg to bond less, but most judges won't approve.

3. Take some discovery before you issue the writ of execution -- a request to produce document should probably be issued.

The writ of execution allows you to go against real property. Be sure to renew the writ every 9 years, so the statute of limitations doesn't run.


1. Wage assignment - T.C.A. 36-5-501 - The way you actually get the money.

2. Uniform Reciprocal Support Act - T.C.A. 36-5-201 - Interstate cases: If the supporting spouse is in a state different than the spouse-to-be then the issuing state . . . .

3. Uniform Foreign (as in another state) Judgment Act - T.C.A. 26-6-103 applies to all judgments even domestic relations cases.

4. Uniform Fraudulent Conveyance Act - T.C.A. 66-3-101

Note: If there's already a secured creditor on property then the judgment creditor is in a 2nd position to the 1st creditor.

Construction Contracts

Breach in a construction contract - an example is where the contractor walks off the job. Owner vs. Contractor lawsuit. It makes a difference as to when the breach occurred.

Breaches by the Builder:

1. Builder breaches at inception (before anything is done) - the general rule is that we ask what will it take to put the owner in the same place as where he would have been if the job were completed? The owner will get the additional amount it costs to build the house according to the specs. (it will usually amount to more).

2. Builder breaches halfway through the job. Owner recovers the additional amount to get it done.

3. Builder breaches at substantial completion. Owner must pay the contract price minus some amount - Owner gets to deduct either the diminution in value or the additional cost to complete.

Breaches by the Owner:

1. Owner breaches at inception - Give the builder lost profits.

2. Owner breaches in midstream - Give the builder the cost of labor and materials plus lost profits but no more than the contract price. Don't give the builder a windfall. The contract price = the ceiling.

3. Owner breaches at time of substantial completion. Give the builder the contract price minus either diminution or the actual cost of full completion.

p. 348 Gruber v. S-M News Co.

Why not a UCC case? B/c the Ds had promised to distribute the Xmas cards. Services contract. What's the net worth of the cards? Nobody cared much about old UN Xmas cards. Don't give Gruber the expectancy damages b/c evidence was not reasonably certain -- too speculative. Give Gruber his reliance damages.

p. 351 Campbell

Campbell is hired by somebody at TVA who doesn't have the authority to do so. The contract price is $30,200. Capbell sues TVA but there's no contract because the TVA official had no authority to contract. Quantum meruit/restitutionary basis of recovery. The court says, "Don't let Campbell have the contract price because there's no contract." But, the jury gives Campbell the contract price.

p. 356 The dissenter goes into orbit because the remedy is wrong.

Employment Contracts

Tenn. - employment at will doctrine. Employee can be fired for no reason. The usual rule is no contract damages. But, if I am fired because I refuse to do something which I was told to do because it would violate the law then I have a cause of action. Or, if I speak out against my employer. Even though there's no contract remedy there may be a tort remedy -- retaliatory discharge.

Note: the employee has a duty to mitigate damages by trying to find a 2nd job. Make the worker who walked off the job pay the extra amount it costs to hire somebody new.

List of Buyer's Damages and Seller's Remedies:

I. Rejection / Revocation of acceptance = most important Buyer's remedy

II. Contract damages for the Seller's nondelivery of goods or late delivery

III. Warranty breach damages - we get the goods but they're defective or not up to our expectations.


I. Recovery of identifiable goods

Specific performance (doesn't work well)


p. 358 Wilson v. Hayes

1. Exception to the UCC Statute of Frauds = part performance exception.

Tenn. - No part-performance exception to the real estate statute of frauds. Yes, part-performance exception to the sale of goods statute of frauds.

To the extent performed, a contract for $500 or more will be enforced (even though it's not in writing). If we deliver 2/3 of the brick then we will make the Buyer pay 2/3 of the price.

2. Custom goods

3. Admission exception - if there's an admission during discovery that the contract existed then it's a valid contract. If one party admits in court testimony or a pleading or a deposition then you're stuck/bound by the admission. Roth Steel v. Sharon - 705 F2d 134

4. Merchant Buyer - must have an oral agreement. Merchant Seller doesn't sign anything. Buyer signs something. If Merchant Seller is silent for 10 days then it's a valid contract.

II. Case of nondelivery

1. Wilson v. Hayes (cont.) - the innocent Buyer recovers the overpayment in the downpayment. What is the measure of damages to the innocent Buyer? The innocent Buyer is entitled to the high market price minus the low contract price = the measure of damages when the guilty Seller breaches the contract.

2. Alternative remedy is that the Buyer pays - What if the Buyer had to buy reasonable substitute goods (referred to as "cover"). You can go out and cover the problem. "Cover" means to go out and get reasonable goods in replace of the goods you contracted for. High cover price - low contract price = measure of damages.

Note: If the cover price isn't higher than the contract price then the Buyer doesn't get damages but does get restitutionary damages. Duty to mitigate when talking about lost profits. But, there's no duty to "cover."

IV. Measure of Damages for Repudiation

Does the Buyer have to make cover? Is the Buyer obligated to cover? The general rule is no.

p. 362, Note 3 - Example of trying to mitigate by way of getting substitute workers. You must convince the court that you attempted to mitigate your damages; the Buyer must show an attempt to cover or otherwise if the Buyer wants consequential damages. In a goods contract, the breaching Seller must have had reason to know (an objective standard) that the Buyer would suffer consequences.

p. 362 Gerwin

Innocent Buyer elects to get the market value minus the K price. But the Buyer wants more; the Buyer wants consequential damages, but he can't get them because he didn't attempt to cover. He loses ultimately b/c the Seller had no reason to know at the time of execution that dire consequences would follow. Buyer's proof of lost profits was too speculative. You can ultimately recover lost profits, but it's difficult. Must prove damages with reasonable certainty.

Joy Floral Supplies - 563 SW2d 190

When is the time to look at market price? It's at the time that the Seller anticipatorily repudiates.

1. Is that the time when the Buyer learns of the anticipatory repudiation?


3. 6th Circuit rule is in Roth Steel v. Sharon Steel, 705 F2d 134

When = when part performance is due. The question of when is a question for the trier of fact according to the court in Hurt, 539 SW2d 133.

p. 368 AM/PM Franchise

Class wants consequential damages = lost profits, loss of customer goodwill. Warranty case - you promised to make this gas of merchantible quality.

The Measure of Actual Damages = the value of these goods as warrantied (often the price; what the goods should be worth) - the value of the goods in their defective condition (bring in an expert to testify as to how much it would cost to repair).

Measure of Consequential Damages = put on statistical proof as to how much $ was lost by way of gas sales; loss of goodwill was attempted to be proved.

General Damages - necessarily, directly, and naturally flow from the breach (foreseeable damages)

Special Damages - must be proven as reasonably foreseeable

Exclusion of consequential damages - they may be excluded altogether by a contract written between the Buyer and the Seller prior to performance. Are these exclusions legal? It's legal unless it's unconcionable -- it's unconscionable typically in a personal injury case or death case in a consumer goods contract. "Prima facie" unconscionable in such cases. Rarely unconscionable in a commercial contract.

p. 377 Cannon

Restaurant owner v. customer. Customer finds a worm in a can of peas. Customer runs the owner out of business. Owner can't recover lost profits. Why not? Problem with causation - court says you have not proved that the customer shut down your business; you also have not proved lost profits.

p. 381, Note 4 - Generally, emotional distress damages are not allowed on a pure contract case. However, you can have disclaimers of warranty in a contract to limit any potential damages (but there are certain exceptions in consumer goods contracts).

p. 382 Aries

Consequential damages= 1. loss of use - measured by the rental value for that period of time and 2. cost of removing the mast

p. 385 Loss of use/rental value - some courts won't allow it, but Tenn. courts will allow it under the Marble v. Jackson Bros. Chevrolet, 8 TAM 4-4, case. Under this case, you can get loss of use in a breach of contract case.

Other Buyer's Remedies

(See handout)

1. Rejection - theory in Code that if all goods are delivered at once then the tender must be perfect (single delivery). Courts generally want to find a substantial defect. Seller has a right to cure the defect. As long as the Seller had reason to believe the goods conformed then the Seller has a commercially reasonable time to cure the defect. (This theory usually doesn't work.) Schroder - 20 TAM 17-9. *Don't forget about the Seller's right to cure.

In cases where you do reject the goods the procedure to follow is:

1. Reject within a reasonable time after tenure

2. Notify the Seller

3. Keep the goods - don't dispose of them

2. Revocation - there must be a substantial impairment.

Three situations:

1. Most common = where the defect isn't obvious

2. Where the Seller lied about conformity

3. Seller says he can cure the problem, but the

In situations where there's a substantial impairment, even though there's been an acceptance you can revoke it.

Procedure to follow:

1. Revoke within a reasonable time after discovery of the breach

2. Before there's been a change in the nature of the goods

3. Notify the Seller

4. Keep the goods for the Seller's instructions. Hold on to them and wait for the Seller's instructions -- you can't just stick them out on the sidewalk.

3. Recovery of Identifiable Goods

Situation where a Buyer makes installment payments -- the Buyer ought to be able to recover the goods. Under the Code, the Seller must become insolvent within ten days after the Seller received the first installment. The problem is that it's impossible to prove the date of insolvency.

Group IV on the handout:

6. Incidental Damages

latent defect - you can recover the cost of testing for the defect

Section 607 - just as important as statutes of limitations

Once the Buyer discovers a breach he must notify the Seller within a reasonable time of the discovery of that breach. Otherwise, the Buyer has no remedy. Immediately fire off a letter to the Seller.

Revocation of Acceptance: Buyer must revoke before he changes the goods in any way (I.e.- puts them in his product, etc.). If he does then the buyer may still have a remedy in breach of warranty.

UCC - where the Buyer accepts, he must do so within a reasonable amount of time to send notice to the Seller that a breach has occured or he'll be barred from any remedy forever.

Back to handout on Remedies:

#3 Buyer's side - disclaimer language in the contract that disclaims warranty will do away with damages (not disclaimers of fitness). This deals with disclaimers of implied warranty - merchantibility. The product must be good enough to be used for ordinary use, etc.

Under the UCC, if the Seller wants to get rid of this warranty then he must:

1. The clause must be conspicuous (larger print, difference in color, etc.)

2. Must be contemporaneous with the tender of goods, can't do it afterwards

3. Must use the word "merchantibility"

Code also says there are other ways to do it:

1. Conspicuous

2. Contemporaneous

3. Say that the Buyer accepts goods "as is" (This will not disclaim Consumer Protection Act remedy.)

*For breach of warranty in sales contracts, who has the burden or proof under the UCC, Article II? The breaching party has the burden of proof. Bradford Flying S Charlais Ranch Ltd. v. Wood - Tenn. is to the contrary - Tenn. case holds that the P has the burden.

Consumer Protection Act - T.C.A. 47-18-101

Failure to inspect by buyer -- he doesn't notice or walks by an obvious defect -- Code says no warranty for this.

Code says that tissues, blood are not goods -- they are services so there's no claim for breach.

15 USC 2301 - applies only to consumer goods sale. If the Seller makes an express warranty then the contract can not have a complete disclaimer of implied warranties. Merchantibility will still be there.

Exclusion of consequential damages:

-another part of the Code lets you exclude damages remedy altogether

-repair or replacement of parts only - is the only remedy enforceable

Effective unless the limited remedy fails its essential purpose --it doesn't fix the defect

Moore v. Howard Pontiac - Moore was entitled to sue for damages because they kept messing up other things when they tried to fix problems (never cured). T.C.A. 55-24-201 "lemon law" applies to new vehicles. If you have taken the car in 4 times or it has been in the shop for a total of 30 days then it is presumed that the limited warranty is void.

p. 386 Sprague - case on the Seller's Remedies

2 remedies possible:

Contract price - market price = measure of damages


Contract price - resale price = measure of damages

The second measure available didn't work in Sprague because the Seller had a private resal instead of a public sale in which case there was a notice requirement. Must give the Buyer notice of intention to resale. In this case, the court awards the contract price - market price. Why can't the Seller get consequential damages -- the Code doesn't award them to Sellers.

p. 391 Notes. When will we ascertain market price? At the time and place of tender.

Contract execution tender two years later

What if the party changes its mind the day after execution? Then you must go with when the Seller learned of the repudiation because the trial comes before the date of tender.

Handout (cont.) #7 on Seller's side - Lost profits

p. 392 National Controls

Weighing scales. Break Sellers down into three categories:

1.Lost volume Seller - car dealership

2. Middleman Seller - gets commission

3. Manufacturer can get profits when there's a breach

Prospective profits are generally not recoverable by new businesses.

2nd category - Capital City Office Machines v. Nashville Board of Education - 632 SW2d 142 - Jobber got lost profits remedy.

p. 396 Note #2 - What do you have to do to mitigate damages? Busting up pool tables to sell for firewood--can't do this.

p. 397 Neumiller Farms, Inc.

Lost profits remedy = alternative to actual damages (#5 on our chart). Where regular damages remedy is inadequate you can use lost profits remedy.

p. 400 Note 2 - Trans World case = prevailing view is that you drop down to the lost profits remedy only when the Seller can not be adequately compensated by the regular remedy.

p. 402

Price Remedy

This subject will be on the exam several times.

CR Daniels - sales contract so the UCC applies. Buyer accepts the goods and the Buyer accwepts the tender of delivery. But the Buyer then decides not to pay the Seller. What is the Seller's remedy? The price.

Section 607 - What causes the counterclaim to fail? The Buyer failed to give notice of the breach of warranty within a reasonable time of notice of the breach. Buyer claimed that the goods wre defective, thus breach of the warranty.

Section 709 of the Code outlines the price remedy.

Situations where price remedy is used:

1. #1 Situation = situation where goods are accepted

2. 2nd Situation = risk of loss situation with a consumer buyer. The risk of loss is casualty loss. The goods are broken, lost, destroyed by fire, etc. The risk of loss passes to the consumer when they pick up the goods. Ex - buy beer from Sam's party store.

Commercial Buyer - the risk passes at the moment of tender and not at the moment of actual delivery. Ex - Commercial buyer buys beer from Sam's Party Store and goes to pay for it and pick it up, but says I'll be back in 15 mins. and there's a casualty then the consumer buyer is responsible.

F.O.B. = "Free on Board"

Seller's place of business Buyer's place of business

Knoxville Nashville

F.O.B. Knoxville - all the Seller has to do is load the goods on a truck to Nashville. The risk of loss passes as soon as the Seller loads the truck. The Buyer should buy casualty insurance because the Buyer carries the loss during transportation.. Seller's remedy is the price remedy.

3. 3rd Situation = goods are custom-made or are not marketable then we force the Buyer to pay the price. An example is in the following case: Schroder - sale of custom-built hoist system (customized for the particular Buyer). What is the remedy we give to the Seller? Example of goods that cannot readily be resold on the market. The Seller gets the price.

Ace Industries v. Mastercraft - situation where the goods were shipped to the Buyer and the Buyer accepted them but refused to pay the Seller.


What happens when the Buyer goes bankrupt and can't pay off his creditors? And you have an unsecured Seller? The trustee generally has priority over the unsecured creditors such as the Seller. Remedy of reclammation - give notice of reclammation to the broke Buyer within ten days of the day that the Buyer received the goods. That gives the Seller priority over the bankruptcy trustee. If the Buyer had misrepresented its solvency within the past three months then there's no time limit on the notice. If the financial statement of the Buyer is false then you're not bound by the ten day notice requirement.

p. 401 Problem - give the price remedy - $30,000

give lost profits to the coins not yet manufactured - $8,000

give the cost to store the coins - $800

as incidental damages

Buyer - You can treat the repudiation of a contract as a breach so you don't have to continue to perform.

Right to demand assurances (on the essay portion of the bar exam) -Buyer hears rumors that the manufacturer is in bad financial shape. The party who has reason to believe that the other side may not be able to perform has a right to demand in writing assurances. Code gices you 30 days to respond with adequate assurances.

What is adequate? A letter from the company president might be deemed adequate. A letter from the co's banker might be adequate.

Issues: Did the demanding party have just reason to demand assurances? Was the assurance adequate? What if the assurance wasn't adequate? Then the demanding party can treat the matter as an anticipatory repudiation.

Bulk Sales Act -(they've asked about this Act in the essay portion of the last several bar exams) Issue of coverage - when does the Act apply? It applies where a Seller is in the business of selling inventory. Ex. - JC Penny makes a deal with Proffits to buy all of Proffits' inventory. Bulk transfer so the bulk Seller and the bulk Buyer have certain duties. Bulk Seller makes a list of all the inventory and draws a list of the names and addresses of its creditors. Bulk Buyer makes sure that each one of the unsecured creditors is sent a notice (at least 10 days before the date of the sale) that a bulk sale is going to take place. Bulk Buyer must see that the proceeds from the bulk sale are applied to the debts owed to the unpaid creditors. Sale is ineffective if the Act is not complied with - the unpaid creditors can claim the goods. General creditor must act fast (file suit within 6 months from the improper bulk sale or 6 months from discovery of the sale if it was concealed).

B.F.P. for value - Bona Fide Purchaser ("someone who has no clue")

If the Bulk Buyer makes a second sale to a B.F.P. then it's immunized. You can't touch that sale.

p. 404

Liquidated Damages

Often referred to as agreed damages because they are often agreed to beforehand; contracting parties may stipulate a specified sum of $ that would be payable as damages to the nonbreaching party.

p. 405 Criteria:

1. You must have a contract situation where viewing matters at the time of inception actual damages would be difficult to ascertain.

2. On the other hand, you can't have a figure beyond the likely actual damages.

CEO has a deal. 1.6 milion dollars under the liquidated damages clause. But, he is able to get another good job. Court says that the actual damages are difficult to ascertain at the time of execution of the contract. Look at the potential damages at the time of execution of the contract. Don't consider that he got another good job. The actual potential damage to Mr. Boyle was high.

Code - deals with sureties. T.C.A. 29-33-101 et seq. T.C.A. 47-12-101. A surety is a co-signer. A bonding company or a guarantor. They sign only on the front of a promisory note or on the back of the note in order to lend their credit. They will have to pick up the tab. The essential thing is that the surety is the first person the creditor will sue when the debtor doesn't pay.

Statute - If the principal (person who got the loan proceeds) is about to become insolvent or about to migrate from the state then notify the creditor to put the case to suit. Must prove the service on the creditor by two witnesses. If the creditor fails to commence a lawsuit within 30 days of that notice then your client, the surety, is off the hook. The creditor's lawsuit can be either against the principal or the surety.

p. 411 Truck Rent-a-Center, Inc. V. Puritan

Good idea to put the parties' intentions in the contract. Put some facts in your contract to suggest that actual damages would be hard to ascertain at the outset. The court upholds the liquidated damages clause where the agreed remedy in the event of a breach was to pay 1/2 of the remaining payments.

p. 417 Lake River Corp.

Judge Posner decides not to uphold or enforce the liquidated damages clause.

1. No uncertainty

2. The amount wasn't closely related to any actual damages

*View both these criteria from the perspective of the date of execution. Know the criteria!

p. 415 Note 5 - two criteria tests are merged into one.

* If the liquidated damages clause is enforced then it's the exclusive remedy.

Liquidated = contractually agreed to damages

Statutory damages = statute determines the damages

Laws with references to liquidated damages:

1. The Code punishes anyone who knowingly obtains, discloses, or uses personal information from motor vehicle records. The court may award actual damages but not less than liquidated damages in the amount of $25,000.

2. Electronic law - if somebody illegally taps your line then you're entitled to $10,000 in damages.

6th Circuit - it's no excuse to be a part owner of the property. It's still a violation of the law to tap your own phone line. Exception if you're a party to the conversation.

p. 422

Land Sales Contracts

Two situations:

1. The general measure of damages where the Seller sues the Buyer is: high contract price

- low market value

measure of damages

2. The Buyer sues the Seller in a situation where the Buyer gets a good deal: high market value

- low contract price

measure of damages

Note: Consequential damages can be added to the measure of damages and any expenses saved are deducted. Ex - no closing costs.

Hypothetical: The closing date arrives and the Seller can't come up with marketable title -- the Seller doesn't have unfettered title to the land at the time of closing. Thus, the Seller breaches. What's the Buyer's remedy?

1. Majority "American rule" - the Buyer can get the expectancy interest. The benefit of the bargain is awarded.

2. Minority English rule - the Buyer only gets restitution of amounts paid on the contract plus reliance expenditures. No expectancy interest awarded unles there's bad faith.

Tenn. - expectancy interest will not be awarded.

p. 423 Southeastern Land Fund

Liquidated damages case - forfeiture. Usually liquidated damages clauses are enforceable.

p. 427 Vines v. Orchard

Contract said that liquidated damages would be 10% of the contract price. Court said that the clause was enforceable but they sent it back to see if the breaching Buyers could get some restitution - the value of the condo was increasing, so maybe the Buyers could get their downpayment back.

p. 431 Donovan

Case highlights the difference between the American rule and the Tenn. rule.

American rule - you get both the expectancy interest and the down payment.

Mason v. Lawing - 78 Tenn. 264 - The Buyer gets the purchase $ paid back with any interest.

Isaacs v. Bokor - 566 SW2d 532 - A more recent caes citing to Mason

p. 440, Note 4 - There's a difference between a sale in gross and a sale by the acre. Is there a lump sum for blackacre or is it so many dollars per acre? Look at how the land is priced.

Tenn. remedy - vendor's lien statute - T.C.A. 66-10-101 et seq.

Deed of trust = mortgage. The vendor retains the land with one sentence in the deed. The vendor takes security saying I get the property back if you miss a payment. Enforced in Chancery Court - the court can order the land sold.

p. 422 Car wreck - what would be the damage remedies as to each item? Is it the cost to repair or the diminution in value? Do we give the student the fmv of each clothes item or the subjective value? For the stereo, is it the repair cost or the diminution in value? Handmade quilt - will we allow recovery for sentimental value?

Chapter 11- Tort Damages

1. Personal property damage rules

2. Real property damage rules

p. 442 Should the measure of damages be diminution in value or the cost to repair? Sometimes, the measure of damages is the same. Clothes are completely destroyed in this hypothetical - should the measure be the fmv of the clothes before the wreck or the value of the clothes? For the stereo, its the repair cost, but the problem is whether you can get repair costs even if they exceed the diminution in value. For the quilt, it's either the market value or the repair cost. Because it has sentimental value there's difficulty on pricing sentimental value.

p. 443 Long v. McAllister

What is the measure of damages for a totaled car? The measure of damages is the fmv of the car just before the wreck.

Note: The owner of property can testify as to the car's value. Can you get the rental cast even if you don't go out and rent a car during the interim? The modern view is yes, you can get in addition to the fmv before the wreck the lost use of the car (rental value).

Three situations:

1. Totaled car - remedy is the fmv just before the wreck plus lost use. Damaged so badly that the repair cost will exceed the fmv of the car.

2. Situation where repairs will restore the car - remedy is the cost to repair plus the rental value.

3. Repairs will not restore the car to it's prewreck situation - give the P the diminution in value plus lost use.

* Tenn. - the insurance carrier has the option to repair or replace in most insurance contracts.

Stoops v. First American Fire Ins. 160 Tenn. 239

Senter v. Tenn. Farmers 702 SW2d 175

The carrier gets the option only when the car can be restored to its prewreck value.

Tenn. statute - presumption that your repairs are necessary and that your costs are reasonable. Under T.C.A. 24-5-114, you can attach the repair bills to your complaint or to the civil warrant (initial pleading in General Sessions court.) The statute only gives you the presumption up to $1,000.

p. 447 Irving Pulp

Storage roof collapsed and fell down on the pulp - six week delay getting the roof off the gulp. Declining market in wood pulp during the delay - will the P be able to take advantage of the declining market? The typical rule in a fluctuating market is that it's immaterial.

p. 449, Note 2 - situation where you have either stocks or futures commodities. The New York rule has been expressly adopted by Tenn. - the injured P gets the highest value between the date of conversion (or the date of discovery) and the outer end of the reasonable time within which you should have been able to replace the securities.

Hedges v. Burke - 147 Tenn. 247

p. 449 Lane

Used household goods go up in smoke (used clothes, furniture, jewelry). There's not a real market for used household goods. Flea markets, Second hand sales, yard sales, etc. Low value.

Most courts allow the P to recover the value to the owner (that doesn't mean sentimental value). You must prove replacement value minus depreciation.

p. 451 Campins

Jewelry is converted by a jewelry store. Thief sells the store the jewelry (wedding band, awards). The usual measure for jewelry is the market value at the time of loss - jewelry still has a market value. Most courts say that with unique jewelry (heirlooms, wedding rings, etc.) you should get sentimental value. However, in Tenn. we do not allow sentimental value. Royal v. Days Inns, 708 SW2d 411.

p. 457, Note 5 - Pets are considered to be chattels - an injury to the pet is diminution in value. If the poodle is killed then the owner gets market value just before death.

p. 458 Talifero

Judge Posner allowed half of the amount requested because there was no evidence on damages.

Admiralty law - you can have an admiralty case on the Tenn. river.

Pure comparative negligence - even if the P is 99% at fault then the P can still recover 1% from the D.

p. 461 King Fisher

Barge sinks. Tort remedy is the replacement value to get another similar barge.

p. 464 Hewlett

Barge wrecked had no market value.

p. 469

Real Property Damage

Ask yourself, do I have damage to the land itself, damage to trees, damage to growing crops, and/or damage to minerals?

p. 470 Miller

Consequences of the salt mining damage is that you can't grow big crops. The tort theory is a nuisance theory: ask whether the nuisance is permanent or temporary - this matters as to whether the statute of limitations applies.

Kerney - 20 TAM 6-13 Denial of permission to appeal with a qualification. If the nuisance is such that it could be eliminated, solved, or repaired by spending money and labor then it's temporary in nature. Otherwise, it's permanent in nature--presumed to continue indefinitely.

Permanent nuisance - three year statute of limitations runs at the time of the initial damage done by the nuisance.

Temporary nuisance - you can recover damages going back in time for the past three years.

p. 420 Miller

Measure of damages is the diminution of rental value. Proved by showing the lower market price for wheat than for corn. Proved by the difference in value between the two crops. P also gets the cost to repair.

Paduch v. Johnson City - 896 SW2d 767

No longer the law that you can not sue a government municipality (city or county) for nuisance.

p. 475 General Outdoor Advertising

Court says, "We'll give the building owner the cost to repair the damages -- temporary damages." Tenn. - you get the cost to repair temporary damages but there's a cap (you won't get anymore than exceeds diminution in value). Permanent destruction - you get fmv at the time of loss.

p. 479 Laube

Your damage measure for destruction of growing timber was the market value of the timber at the time.

p. 480 Kronlik

Special, ornamental trees. Remedy = market value at the time of destruction plus the aesthetic value. Removal of gravel.

Tenn. statute on timber - T.C.A. 43-28-312 - the exclusive remedy for neglient cutting of timber is double the market value. However, with intentional and knowing cutting you get treble damages. Shade trees, shrubs in front of the house -- the usual measure is the diminution in value. But you might also recover some sort of special value - Pepper v. Gainesboro Telephone - 1 Tenn. 175 - Before and after diminution in value plus some special value for trees that provide shade or ornamental value.


Tenn. law on crops is confusing.

Ducktown Copper Co. v. Barnes - 600 SW2d 593, 607

Case where the fumes from copper mills killed crops. The value of the crops is the value of destruction.

L&N Railroad v. Channel - 2 Tenn. Cir. 154

Discussion of when the particular destruction took place - was it destruction of the seeds or destruction of the crop? Give the land owner the rental value of the land. Early in the season? Then owner gets labor, materials, and rental value for the season thus far. Middle of the season? Then owner gets the value of the crop at market minus any expenses he would have had (labor to get it to the market, fertilizer, etc.). The value at market is what the crop would have sold for. Trout v. Braham, 660 SW2d 502, a more recent case.

It makes a difference whether the trespass (or mining of another's land) was intentional:

1. a. If negligent - we'll give you market value minus what it cost the negligent trespasser to mine the land

b. Or we'll give you the (land owner) the royalty rate

2. If intentional - we'll give the injured landowner the market value

p. 491, Note 2 Clean Water Act - the correct cite is Title 33, 1251

Personal Injury Damages

Tenn. law on comparative fault.

McIntyre v. Balentine - 833 SW 2d 52

Conservative version of comparative fault. If the P is no more than 49% at fault and all other tortfeasors are at fault then the P can get a verdict. Concern among legislators because the Supreme Court had partially gutted the Uniform Contribution Tortfeasors Act. Under McIntyre, we only decide the relative fault of each tortfeasor. Special request for the judge to charge the jury on comparative fault. Jury found that it was more McIntyre's fault than Balentine's. A question presently before the Tenn. Supreme Court is where the P is the work employee and the employer is one of the tortfeasors does comparative fault apply? Hint is in the Volz case (med. mal. case) where the judge says it doesn't matter that one tortfeasor is insolvent. Likewise, it probably doesn't matter that one tortfeasor is immune. Recall that govt. entities have caps on the amount of damages.

"open and obvious" rule - a doctrine that used to be an absolute defense now just part of the mix of things for the jury to consider

Does McIntyre apply in an intentional tort? We don't know. Does it apply in a contract case? Probably in a quasi-contract case.

Two things the legislators did in response to McIntyre:

1. They passed a statute, T.C.A. 20-1-119, which is a savings statute (not the one year savings statute after taking a nonsuit). Once the answer either names or identifies another tortfeasor the savings statute gives the P ninety days to add as a party the other tortfeasor.

2. Passed T.C.A. 29-20-313 which addresses situations where there's some fault on the part of a city of county. Normally, a case against a city or county is not a jury trial. Statute says that where a city is brought in as an additional tortfeasor then you can have a jury trial against both Ds.

Persz v. McConkey - 872 SW 2d 897

Provision says that you must have 5 employees for the Comp. Act to apply. Ms. Perez sued her employer for a tort because she worked in a room that was very hot. She passed out. The defense was that she had assumed the risk. Court said that assumption of the risk is no longer a complete defense but is one factor for the court to consider when allocating the relative parties' fault. However, contractual express assumption of the risk is still an absolute bar, according to Prof. Paine.

There was a question raised after McIntyre as to whether comparative fault applied to strict liability cases. Certified questions to the Supreme Court of Tenn. in Whitehead v. Toyota, 897 Sw 2d 684. Whitehead claims that he wouldn't have been hurt as badly if Toyota's seatbelt had worked. Enhanced injury claim. Court says that, yes, the comparative fault rule applies to strict liablity.

$100,000 - total injuries

$50,000 - enhanced injury claim due to the seatbelt problem

Question: Will there be a comparative weighing of acusation?

Bervoets v. Harde Rawls Pontiac, 891 SW 2d 905

What about contribution? Cactus Jack's bar serves Jackson. Jackson is an underage driver. Bervoets is Jackson's passenger. Heaslthy settlement between Bervoets and Jackson for one million and a quarter. But Jackson wants some help from Cactus Jack's under the doctrine os contribution. Can you still get some contribution after McIntyre adopted comparative fault? Tell jurors to decide if they think the settlement amount was reasonable. If they think so then they decide the relative amount of fault between Jackson and Cactus Jack's. If the jurors think the settlement was too high then decide on a proper amount and allocate what amount each tortfeasor (Cactus Jack's and Jackson) must pay.

Eaton v. McLain - 891 SW2d 587

Grandmother was 40% at fault and the homeowners were 60% at fault. Supreme Court finds that there was no tort committed against the grandmother. Unless there's been a duty violated then don't worry about comparative fault. Court says that lots of other doctrines are consumed by comparative fault: sudden emergency doctrine, rescue doctrine, fault of minor, etc. Just take these things into consideration when allocating fault.

Volz v. Dr. Ledds - 895 Sw 2d 677

Wrongful death suit brought only against Dr. Ledds. Expert testimony shows that Volz had a 60% chance of living if Dr. Ledds had done the right thing when Volz made his first appointment with Ledds. Jury decides the following ratios:

Volz - 10% at fault for not following up with appointment

Ledds - 45% at fault

Lewis - 45% (not a named D)

Dr. Lewis was insolvent, so he wasn't named. Supreme Court said tough luck. What happens if you have a tortfeasor who's immune from suit? Ex. - employers are immune from suit because Worker's Comp. Act. Tortfeasor is protected by the 4 year statute of repose. Ex - restaurant ceiling falls on customer.

Right v. Knoxville - 898 Sw 2d 177

Comparative fault also applies where you have emergency vehicles. Right gets nothing because more than 50% at fault.

Atkinson v. Hemphill - 19 TAM 37-6

Another good situation . . . Suppose that the injured party is subjected to medical malpractice after a car wreck. Old doctrine was that the negligent doctor picks up the whole tab because it was a foreseeable risk. This case holds that you pick up the tab for the hospital's malpractice or negligence if you take the injured party to the hospital.

Ownes v. Truckstops of America

The injury occured prior to McIntyre. Truckstops claimed that it was also the fault of the stool manufacturer, but they weren't named. Can you use the savings statute (90 days) retroactively? Can the other tortfeasors rely upon the savings statute retroactively to bar the claim?


1. Medical Malpractice Act - Volz case. T.C.A. 29-26-115 et seq.

a. To prove your case you must have a doctor who's practiced either in Tenn. or in a neighboring state.

b. one-year statute of limitations

c. three-year statute of repose

d. You don't tell the jury how much you're suing for. . . .

e. statutory limit on atty's fees is 1/3.

2. Products Liability Act - T.C.A. 29-28-101

a. one-year statute of limitations

b. ten year statute of repose (but no statute for asbestos)

25 year statute of repose for breast implants

c. 18 year statute of repose for private airplanes

d. one year statute of repose for products with a govt. mandated expiration date . . . you must sue within one year of that expiration date.

3. Therapist Sexual Misconduct Victim's Compensation Act - T.C.A. 29-26-201

a. two-year statute of limitations - the two year statute won't start until: 1. the therapy is over 2. you're no longer under the therapist's control and 3. you know (or reasonably should know) that the therapy was unprofessional.

b. You must sue within three years of the last communication with the other person.

4. Governmental Tort Liability Act - T.C.A. 29-20-101 et seq. allows you to sue a city or county, but it must be within one year of the tort. *The savings statute does not apply. File cases in circuit court. No jury trial except when the govt. entity is one of several tortfeasors. You can recover against these entities. Minimum limits of $1000,000. Outside limit of $350,000 for the injuries to the whole group.

Personal Injury Remedies/Damages

Monday v. Milsaps - 37 Tenn. App. 371

1. The defense lawyer had better plead an affirmative defense or he will lose the defense . . . he better be sure to add the other tortfeasors in the pleadings or he will lose them.

2. Make sure the demand for damages is high at the end of the complaint.

Tenn. - you can not get a verdict that exceeds the amount you've asked for.

Personal Injury Damages:

1. Medical Expenses

a. past medical expenses

b. future medical expenses

Steel v. Fort Sanders Anesthesia

2. Loss of earning capacity

a. actual wages you've lost up to the time of trial

b. future lost earning capacity (especially if it's a young person)

3. Pain and suffering

4. Loss of consortium - only for married people

5. Loss of enjoyment of life

6. Punitive damages

p. 493 Frankel

Judge explains how he arrives at the damages

1. medicals - past and futured. What will it take to take care of this woman in the future? Adjust that amount to present value -- what damount is needed if the $ is invested.

2. pain and suffering - she's in a semi-coma

3. loss of enjoyment of life - she probably will not be married or have children

Tenn. allows recovery for loss of enjoyment of life which is referred to as hedonic damages.

Tenn. - you can't come back to court and ask for more $. Davis v. Gellico Hospital, 912 F2d 129. Can the defense get a reduction in the amount awarded if the P suddenly dies? NO

Typically, inflation is taken into consideration. See the Monday case.

Cases on loss of enjoyment of life:

Martin v. Southern Railway - 463 SW 2d 690

Sterling v. Belsical Chemical - 855 F 2d 1188

T.C.A. 29-20-404 Absent unusual circumstances, the govt. will not be liable for more than the caps unless the govt. has expressly waived the caps (the express waiver must be contained in the ins. policy).

p. 498 Money awarded over a period of a person's life. Funded by an annuity. You can defer taxes with respect to the fee so that you don't get hit with a big IRS bill.

Martin - 463 SW 2d 690 - case holds that inflation is such a fact of life that courts will take judicial notice of it.

p. 499 Cates v. Brown - they were not able to show with reasonable certainty future lost wages. If there had been reasonable certainty then they would have used gross earnings with no deductions.

Dixie Feed and Seed v. Bird - 376 SW 2d 745

Use gross income to determine lost income

p. 502 Loss of future earnings - focus on the loss of earning capacity. The value of earning capacity that will be reasonably certain. You want an expert to come in with a figure and to look at the lifelong earning capacity. What about housekeepers? They have an earning capacity. What about the unemployed (Note 3)? They have an earning capacity.


The personal injury recovery is not considered income and is therefore not taxable. Dixie Feed and Seed

104 (a)(2) - damages for personal injury or sickness are not taxable.

Punitive damages: usually are considered taxable by the circuit courts. 6th Circuit - contra to most other circuits. Horton - 33 F3d 625

Cir. v. Schleier - 115 S.Ct. 2159 - case holds that the ADEA awards for back pay for age discrimination are indeed taxable. Such an award is not a personal injury recovery.

p. 504 Pure Per Diem Argument - $100 x 365 days/year x life expectancy. The majority of jurisdictions condemn the pure per diem argument. Not much authority on either side of the issue in Tennessee.

Tenn. Code allows counsel to argue the worth.

The Golden Rule argument -ask the jurors to put themselves in the P's position. In Tenn., most trial judges will not allow you to make such an argument.

p. 507 Generally, the judge will instruct the jury to make their own estimate of the pain and suffering - a reasonable amount

p. 509 Healy v. White - car wreck

p. 513, Note 6 - Whose cause of action is it? Is it the minor's or the parent's with respect to hospital bills and medical expenses. The general rule is that the parents are responsible for the minor's expenses so it's the parents' cause of action.

*You only get one verdict at one time.

p. 511, Note 2 What about future medical conditions that the P will probably have later? An expert testifies to the amount of future medicals. In Rolland v. Amonette, 20 TAM 3-8, the court considered a case where silicone implants ruptured. The mental suffering as a result of her fear of contracting cancer because of the rupture -- Tenn. accepts cancer phobia as a future medical cost.

Ingram v. Aetna - 876 SW 2d 91

Asbestos case. There's a twenty year latency period sometimes. The court decided that the D would have to pay for the P's regular checkups to make sure the P doesn't contract anything later.

Loss of chance - shortened life expectancy

* Tenn. says no, we don't allow recovery for loss of chance in Kirkpatrick v. Bryant - 868 SW2d 594

p. 512, Note 4 - Tenn. does not allow court-appointed experts in jury trials.

Loss of Consortium

p. 514 White

The wife gets one million dollars for loss of consortium.

Remittitur/Addittur - the trial judge has the power to reduce or to add to the award. If the jury won't accept the remittitur or additur then the judge says we'll try the case all over again. The reality of waht happens is that the attorney accepts the judge's remittitur under protest and appeals immediately. Can the court of appeals monkey around with a jury award? Yes with remittitur. No with addittur.

p. 517, Note 1 - a wife does have the right to recover for loss of consortium. T.C.A. 25-1-106

Note 2 - Tenn. does not allow recovery outside the spousal relationship.

Still v. Hospital - 755 SW 2d 807. In the child parent relationship, there's no right to recover for loss of consortium in Tenn.

1. Wrongful Conception

2. Wrongful Birth

3. Wrongful Life

1. Negligent tubal ligation - because the ligation did not take you have the birth of a child. Sometimes the child is negligently deficient. It's the parent's cause of action.

2. Negligent failure to test or negligent testing so there's a child born with a genetic deficiency. Again, it's the parent's cause of action.

3. Negligent testing - it's the child's right of action. Most jurisdictions deny this right.

Smith - 728 SW 2d 738

Wrongful conception case. The P is preganant with her 5th child because the tubal ligation did not take. Court says that the doctor does not have to pay the cost of rearing the child. But, the P can recover medical expenses for the failed ligation, pregnancy, medical costs, cost to deliver the baby, etc. The P also can recover pain and suffering for the discovery of the pregnancy. The P also can recover for emotional distress from the time of discovery of the pregnancy to the time at the end of the pregnancy.

Ownes v. Foot - 773 SW 2d 911

Failed vasectomy. The child is born with Downs syndrome. Ps sue for all three causes of action. The court awarded the Ps nothing because they sent the case back.

Evicence Rule 703 on expert opinion says that it's okay to have an expert opinion on things which would not otherwise be admissible. Ex. - hearsay

Read the expert's deposition on the guise that you're attacking the expert witness (the one on the stand)


Wrongful Death and Survival

Idea that beneficiaries are entitled to some right of action for the tortious death of a family member. Tenn. - our wrongful death statutes are conservative. In Tenn., it is the decedent's cause of action and not the beneficiaries'. T.C.A. 20-5-106 - the action that the dead person would have had if they were still around. A dead person includes a viable fetus.

Davidson Benedict Co. v. Severson - 109 Tenn. 572

Jury instruction is that a person's death is alleged to have been caused by the wrongful fault of another.

Two classes of damages:

1. mental and physical suffering; medical expenses and funeral expenses; loss of earning capacity

2. pecuniary value of the deceased's life

The 3.5 million awarded to the P was automatically cut to 3 million because the complaint only asked for 3 million. Judge Brothers reduced the award to 2.5 million under the remititur doctrine.

Factors the court considers when the pecuniary value of the deceased's lide is awarded:

1. age of the deceased

2. condition of health

3. life expectancy (use tables)

4. strength and capacity of the deceased for work and earning $ through any skill or trade or profession

5. personal habits of the deceased for sobriety and industry

Note: Pain and suffering is between the time of the injury and the time of death. Loss of earning capacity is also from the time injury to the time of death. Can you get loss of enjoyment of life? No, not in Tennessee in wrongful death cases according to the cae of Spencer v. A-1 Crane service - 880 SW2d 938. But, you can get loss of enjoyment of life damages in a personal injury case. Note: there's a deduction of the deceased's probable living expenses.

In a wrongful death case in Tenn., you can bring in character evidence and you can show the specific bad acts of the P (Ex.- the car thefts) to show that the P earned his living by stealing cars and led a dangerous life. The pecuniary value of the deceased's life is admissible into evidence, thus character evidence comes in. Remember that it's the deceased's cause of action. Also, it's utterly immaterial if the deceased's beneficiary has remarried because it's the deceased's cause of action.

T.C.A. 20-5-107 and 110 set out who gets the money. The pecking order of the beneficiaries is:

1. Surviving spouse - exception where the surviving spouse killed the deceased

2. Surviving children

3. Next of kin

Spurling v. Johnson - 747 Sw2d 350

The custodial parent in divorce cases is the beneficiary. The Distribution Statute, T.C.A. 20-5-108, says who gets the money. The surviving spouse gets 1/3 or a child's share. The next of kin also gets some money. Under T.C.A. 31-2-104, whatever goes to the beneficiaries is free from creditor's hands. Under T.C.A. 31-2-104, you must pay all child support arrerages in order to get some of the money.

(Get notes on the following for clarification)

Daubert - 113 S.Ct. 2786

Abandones the Frye test. No condition precedent. Hedonic damages

Ayres v. Robinson - 887 F.Supp. 1049

Hein v. Menck - 868 F.Supp. 230


Sullivan v. NY Times - First Amendment consideration.

Gertz - private P and nonmedia D.


1. Public official v. media - must show intentional misconduct or at least reckless indifference

2. Private P v. media - must show the same as in #1.

3. Private P v. nonmedia D - leaves it up to the states to decide

Tenn. - no presumed damages in any defemation case.

Memphis Pub. v. Nichols - 569 SW2d 412

Prem., Inc. v. Voran - 569 SW2d 435

Handley v. May - 588 SW2d 772

Must prove damages: show that one's reputation has been hurt, mental anguish, humiliation, out of pocket losses, etc. Miller v. Piggly Wiggly - 20 TAM 12-8 - the store accused him of stealing cigarettes.

T.C.A. 29-24-103 - if the newspaper/radio will make a retraction then the court will cut out the punitive damages, but you can still sue for everything else.

Slander of title - somebody intentionally files false records in the Deeds office that clouds your title. You can get whatever it costs to clear the title and potentially get punitive damages. Ezel v. Graves - 807 SW2d 700

p. 530

Chapter 12 - Adjustments to Compensatory Damages

Typically happens when an installment payment is missed. There are two types of interest:

1. prejudgment interest - when does it start running? From the time that the account becomes due; from the time of breach. But the judge has discretion to give you prejudgment interest if you don't apply under this statute. In personal injury cases, there's no discretionary function for the judge to award prejudgment interest. Look to the statute for the amount.

2. postjudgment interest

T.C.A. 45-5-401 - Industrial Loan & Thrift Company Act - for relatively small loans you can have an interest rate far in excess of the normal maximum.

Usury statute - the maximum is 4 points over the average prime.

Another statute, T.C.A. 47-14-102, defines interest as . . . . Interest is not a time/price differential. What is a time/price differential? You can charge any amount you want as a differential between the price today and tomorrow. Ex. - $50 today, but if you want to take a year to pay for it then it'll cost you $1,000.

p. 539, Note 5 - Adjustments to take care of inflation:

Give the P a lump sum today that if invested would yield a fair amount in the future. Adequately compensate for lost work.

1. case-by-case method

2. real interest rate

3. don't do anything - they cancel each other out.

Budge - diversity case. Texas law applies. Texas Supreme Court follows case-by-case basis.

Jones & Laughlin Steel - federal question. Federal law applied - used real interest rate.

p. 541 Colver - comes up with rate for all jury trials - below market. Real interest rate method for nonjury trials.

Aldridge - federal employment liability act. Battle of experts.

What is the law in Tenn. and the 6th Circuit on the subject?

Jackson v. Cookeville - 31 F3rd 1354 - split decision. Age discrimination case - discharged P. What about front pay? Expected salary over 11 years and expected pay raises. With each year the sum is discounted to present value. Can get it the same way by multiplying present salary by 11 and don't include raises or discount anything. Tenn. - jury charge seems to emphasize discounting without taking into account inflation. Paine believes that Tenn. does not do this but rather follows the expert test -- put who you want on the stand and let the jury figure it out. Take into consideration inflation and discount to present value.

p. 569 Blake v. Calfano - Title VII sex discrimination case. Congress changed the law as a result of cases like this one. Yes, you can get prejudgment interest in these types of cases.

Under Rule 9, you must plead prejudgment interest specially. Prejudgment interest is what you failed to get because the case has stayed on the docket. Prejudgment interest:

1. Liquidated accounts - T.C.A. 47-14-102, 47-14-109. You get these for sure. Ex. - A contract agreement or a promisory note that spells out what the damages are in the contract. What is the rate? 4 points over the Federal Reserve average prime rate at the date of the breach. If that's not enough then you may get more under Lawrence v. Auto Fin. Services - 19 TAM 2111 - perm. to app. denied - contract allowed for more, so the court allowed it. Insurance contract - 4 points over prime in life is usually five.

2. Discretionary - T.C.A. 47-14-123. Nonliquidated contract case - the court can allow prejudgment interest. Allows 1 to 10% for judge to chose from. Property damage loss - may get. Personal injury - not allowed.

3. T.C.A. 29-17-813 - Condemnation of your land by the government. If you prevail (which is almost impossible) then you can get $ from time of the taking to when the jury verdict is read. You get 2 points over average prime loan rate.

Post judgment interest:

T.C.A. 47-14-121 and App. Rule of Procedure 41: 10% runs from the time of the verdict or the judge's ruling through the appellate process to when you get paid.

T.C.A. 27-1-122 - you can't make a frivolous claim in order to hold on to your $. Federal frivolous appeal statute is 28 USC 1927. Federal statute 28 USC 1961 - Postjudgment interest is the average auction price of treasury bills. Last auction date is used -- the last time it was 5.89%. It runs from the entry of judgment.

Uninsured motorist provision - on an insurance policy, the company that writes the policy must also provide uninsured motorist coverage. Uninsured motorist coverage takes care of a situation where I'm hurt to the extent of $100,000 but the other guy doesn't have this much insurance. Then the insurance carrier pays the difference. Covers uninsured plus underinsured. The carrier must give you the same amount as your policy limits on UM and liability. Bad faith claims - sometimes you can get an adjustment upward on some sort. Bad faith on the part of the insured or on the part of the insurance co.

T.C.A. 56-7-105 - statute says, "if I have a claim against my insurance company then I should serve written notive to the company telling them to pay the claim or I'll go against them for bad faith." If I can prevail on the bad faith issue then I get the 25% extra of my original claim. $100,000 = original claim. $125,000 = total amount awarded to the insured after proving bad faith on the part of the co.

Other side of the coin - Adams v. Tenn. Farmers - 898 SW2d 216 - Adams is an example of the following situation. What happens when the insured commits bad faith? T.C.A. 56-7-106 provides relief to the ins. co. when the insured engages in bad faith. The insured losses the suit and the ins. co. can then go to court to prove they committed bad faith. The ins. co. is entitled to recover what it has laid out to try the underlying dispute - can recover up to 25% of the claim brought in bad faith.

$96,000 - original claim brought in bad faith

$24,000 - 25% of that amount is the max the co. can recover.

One other aspect of bad faith is the following: Suppose that I have a $100,000 liability and I run into you. The P's lawyer is not suppossed to be able to discover the policy limits. The atty. will go to the co. and suggest settling the case for either 1/2 million or policy limits (which is $100,000). What happens when the P prevails for $125,000? The D has a gripe against the insurance carrier because the company has an opportunity to settle the case. The D can claim that the ins. carrier is liable to him for $25,000. Typically, the D will assign the claim to the victorious P who will go against the insurance company for the extra $25,000 owed. See McLain v. Tenn. Farmers - 20 TAM 2-7

What happens if you're riding shotgun? Go first after the UM coverage on the vehicle (the driver's policy or the owner's policy). If you don't get enough then go after the other driver's uninsured motorist policy. T.C.A. 56-7-1201 (iii)(A) and (B). Check into the umbrella coverage!

p. 574

Chapter 13 - Limitations on Compensatory Damages


Foreseeability might mean one thing in contract law and another thing in tort law.

p. 575 Redgrave

Foreseeability in the contract situation. No question that the symphony breached the contract. But what were the foreseeable damages? Redgrave wasn't hired to play the part in a play because of the bad publicity from the symphony's decision. The court did not allow the big ticket item - what Redgrave expected to recover from the movie companies who had hired her. These cos. folded and couldn't pay. Court said that it wasn't foreseeable from the symphony's view that the movie cos. would fold.

Illinois Central RR v. Johnson & Fleming - 116 Tenn. 624

Railroad doesn't get the pipe delivered on time. The consequences was that the co. waiting on the pipe breached a 2nd contract. Court said that it wasn't foreseeable from the RR's point of view that the co. would breach a contract because of the delay. Under foreseeability, you ought to always plead the consequential damages.

p. 592


Loss of profits as damage remedy.

Great American Music Machine v. MidSouth Record Pressing

393 F.Supp. 877

Tenn. law on contracts applied. Issue of certainty. A guy tricked investors to invest in his record career. He goes straight for the album rather than the normal route which is to record a single. The Record Pressing co. did a lousy job and the records were defective. Experts from Music Row were called to say that the music was "ordinary or worse." Judge concludes that the album had a far greater chance of failure than of success. Damages were not proved with certainty. They were speculative.

p. 593 Story Parchment Co.

If you can prove them then you can get treble damages. Whatever the jury awards then the judge gives 3 times that amount.

p. 597 Youst v. Longo

One racehorse bumps another and prevents the horse from winning. Court says it's too speculative to say that the horse would have won.

p. 603 Lakota Girl Scout Council, Inc.

New endeavor or business. Can we recover lost funds for a new business? Majority says that the proof is enough to say that the council lost profits due to the breach of contract. Dissent says no because lost profits are speculative since there's no trade record. Modern rule is that the fact that it's a new business does not necessarily preclude the business from recovering lost profits. (As long as the business can prove them.)

Joy Floral Supply v. South Central Bell - 563 Tenn. 190

The phone company failed to put the co. in the phone book.

Braum - 923 F2d 1232 - Cheap fan manufacturer put fans on the market which looked like Braum's fans but were cheap. Braum claimed that it would have to defend products liability cases because of it. Court held that if Braum could prove the likelihood of increased products liability cases and that consumers confused the two fans then they could include this claim in their damages.

p. 613 Parker v. 20th Century Fox

Personal services contract. She's an actress. The studio breached the contract with her. Did she reasonably refuse the substitute work? Was she required to take the other role in order to mitigate damages? The court said no.

Frye v. Memphis State University - 806 Sw2d 17

Frye was an university professor accussed of using some of the facilities for his own moonlighting business. It turns out that it was a fasle accusation. The University argued that he shouldn't get anything because he didn't mitigate the damages. Frye said that his name was sullied, so he couldn't get a job elsewhere. He also claimed that he didn't have to move away under the law. Court said that the burden is on the employer to show that there was a similar job available. In addition, the employee does not have to put on a nationwide job search. Court said that Frye involved exceptional circumstances.

Breach of Warranty in Sales contracts:

Who has the burden of proof under the UCC, Article II? The breaching party has the burden of proof.

Mitigation of Damages

Negative rule - the P cannot be paid for consequences which the P could have avoided.

Rockingham County

The county says to the Bridge co. to quit working on the bridge. The bridge co. went ahead and built the bridge. The court says that the co. had a duty to mitigate damages, so it only recovers the cost of labor and materials up to the time of breach.

p. 617 Lobermeier

Talking on the phone when lightning strikes liability suit. Must the P go under the recommended surgery to impove his hearing? The general rule is no -- ask the jury would a reasonable person undergo the surgery?

Edwards v. Travelers - 304 SW2d 489

Tenn. case that says the P need not undergo major surgery.

p. 621 No duty to mitigate with intentional torts

p. 621, Note 3 - What about with the seatbelt situation? T.C.A. 55-9-603 provides that you're suppossed to wear your seatbelt. As a matter of law, you cannot introduce the P's failure to wear a seatbelt. Exception for products liability claims. The current law in Tenn. is that evidence about the lack of a seatbelt is not admissible.

p. 621 Sommer

What about a landlord's duty to mitigate? What if the tenant breaches the lease halfway through the lease? The modern trend is that the landlord has a duty to mitigate the damages by finding another tenant.

Uniform Residential Landlord & Tenant Act - (doesn't apply to commercial cases) Under this statute, T.C.A. 66-28-507 (c), there's a duty to mitigate clause. The problem with the statute is that on its face the statute purports to apply to some counties and not others. Population census. Constitutional problem under the state's class legislation clause (similar to the Equal Protection Clause). Paine says that the Tenn. Supreme Court might declare the statue void because it's unconstitutional or apply the doctrine of elision to do away with the unconstitutionl part (the population limitation), thus making the statute apply in all counties.

Karnes v. Motor Co. - 161 Tenn. 331

Haley v. Cunningham - 564 SW2d 392

p. 629

Collateral Source Rule

The rule is that we're not going to adjust the damage figure downward based on the fact that the P has already been reimbursed by a collateral source. The contrary argument is that it allows the P double recovery.

p. 630 Helfend

The case holds that we won't reduce Helfend's recovery simply because he's already been reimbursed by Blue Cross. Usually, Blue Cross will be subrogated.

p. 633 Tenn., like may jurisdictions, decided to change the collateral source rule in medical malpractice cases.

T.C.A. 29-26-119 says you cannot recover against the doctor or the hospital for things that have already been recovered from certain collateral sources:

1. reimbursement by insurance - if the P's employer paid the total premium then the P can't recover from the malpracticing doctor or hospital. Steele - 897 SW2d 270 - it's only where the employer pays the total premium.

2. If you're paid by social security

3. military service benefits

4. unemployment compensation

5. other sources not paid for by the P or the P's family (catchall provision)

Interesting question- what about Worker's Compensation cases? The collateral source rule does not apply because the statute doesn't cover Worker's Compensation cases. So, the Worker's compensation claim doesn't reduce the P's recovery. The court said this was no big deal because the Worker's Compensation carrier has a subrogation right.

p. 635 Craig

Court said we won't reduce your back pay award under Title VII just because you're receiving Worker's Compensation payments. A 1st Circuit case is contra to this view - Lussier v. Runyan, 50 F3rd 1103. Because you are getting veteran's benefits we're going to cut your award under the Act down to $395,000 from $895,000.

p. 638, Note 2 - situations where the so-called collateral source is affiliated with the tortfeasor. Ex - the tortfeasor is the govt. and the payments come from the govt. The key is to look to see whether the funds came out of the general treasury or out of some special fund. General fund case is veteran's disability benefits. Thus, the collateral cource rule does not apply, so the award is reduced.

Special Fund situation - the collateral source rule does apply, so there's no reduction with social security payments.

Medicare - probably treated like Social Security because there is now a special fund for medicare.

Goverment Tort Liability Act - the disabled person will be able to recover under the Act where the govt. is a tortfeasor. Martin v. Casey, 19 TAM 15-6, held that Metro Nashville was able to get off any disability pension benefits from the amount awarded under the Government Tort Liability Act. Note: the collateral source rule applies even where the collateral source is a gratuitous transfer.

Bowers v. Chattanooga - 826 SW2d 427 - little boy on the schoolbus gets off a different side of the street and is hit by a car. Issue of whether the govt. entity is immune under the Govt. Tort Liability Act because it was a discretionary function. Discretion on the part of the driver and not the govt. administrators or higher ups in the govt.

1. Planning level function/decision - the city is immune under the Act

2. Operational level - the city is liable to the limits set out in the Act. No complete immunity. If there is some negligence then you must be able to show that the governmental entity had either actual or constructive notice.

Where do you go when you're suing the state?

The Board of Claims

Claims Commission Division of Claims

(most cases) Administration

T.C.A. 9-8-101 covers the process

T.C.A. 9-8-307 covers what kinds of cases must be filed in the Claims Commission

$300,000 = limit of recovery as to any one incident

1 million = limit of recovery as to any group of injured parties

Consumer Protection Act

Anytime you file a P's complaint, take a look at the Consumer Protection Act. T.C.A. 47-18-101 et seq. Look at the list in Section 104. The legislature adds to this list regularly.

Possibility of injunctive relief - the state decides to shut down a business. But, the Act also gives you a statutory private right of action. 1. It allows for atty's fees 2. If you can show a "wilfull and knowing" violation then you can get treble damages.

1 year statute of limitations. 4 year statute of repose

Note: The prohibition against class actions was removed in 1991. A close question is whether a corporation can be a consumer and therefore a P under the Act. Paine thinks it can be according to the Smith Perona v. Pleican, Inc. case, 784 F.Supp. 452

Contra case is L.I.C. Corp. v. Baskin Robbins, 18 TAM 6-15, where the judge says that a corp. can't be a consumer under the Act. Paine thinks this case is wrong.

Emotional Distress Damages

Contract breach - the general rule is that you can't get emotional distress damages. You might be able to get them in a tort case. In negligence cases, it's more unsure that you'll get emotional distress. One issue is the "zone of danger" doctrine - can you get damages for your emotional distress when you witness a relative or close friend get injured. Most jurisdictions allow recovery.

Shelton v. Russell Pipe - 570 SW2d 861

Shelton doesn't recover because he was at work when the accident happened.

Camper v. Minor

Camper stated that he never feared for his own safety. Minor was not "near and dear" to Camper. Issue of whether to award damages where there are physical consequences but no physical contact.

Trent v. Barroughs - 397 SW 2d 409

Emotional distress damages are awarded when the P witnesses the truck ram into the P's house.

Laxton v. Orkin - 639 SW2d 431

Pysical contact but no physical consequences. Chloradane put in the soil around the Laxton's house -- it gets into the water supply

Carroll v. Sisters of St. Francis - 868 SW2d 585

Can she recover for her emotional distress from fear of contracting AIDS? The Supreme Court said no liability because Carroll had not shown any physical contact with a harmful substance and no physical consequences.

Intentional Torts

Johnson v. Women's Hospital - 427 SW 2d 133

Tenn. allows a tort action for outrageous conduct or intentional infliction of emotional distress. Exception for breach of a burial contract.

Dunn v. Moto Photo - 828 SW2d 747

Ms. Dunn worked at the Stockyard restaurant. She meets this guy and they go home together. They take pictures. Moto Photo keeps the photos. A fellow co-worker at the Stockyard gets a hold of the pictures from Moto Photo. The court of appeals says that the Moto Photo employees were engaged in intentional infliction of emotional distress.

The Therapist Sexual Misconduct Act, T.C.A. 29-26-201, sets up a statutory tort and specifically lists emotional distress damages.

Tenn. Human Rights Act - The leading civil rights statute in Tenn. is T.C.A. 4-21-101 et seq. Sections 306 and 311 deal with remedies. The statute allows you to sue in Chancery Court. Can sue for humiliation and embarassment. Can sue for atty's fees.

Federal Tort Claims Act - 28 USC 2671

The Act says that if state law allows for emotional distress against the govt. then that controls.

p. 665 Crinkley v. Holiday Inns

The majority gave the wife some distress damages because she had physical consequences after bandits robbed her while she was staying at the Holiday Inn.

p. 669, Note 2 - misdiagnosis case. Doctor tells wife she has syphillis, so she thinks husband is cheating on her. Emotional distress

p. 669 Goldberg v. Mallinckrodt, Inc.

Tenn. says that he probably can't recover.

Rowland v. Amonette - 20 TAM

Can you recover for cancer phobia? More and more courts are allowing for that sort of emotional distress damages.

Maze v. Bush Brothers - 9 UCC 1201

Worm in the peas case. Not clear whether there was physical contact. But the Mom had nauseau, so there were physical consequences. Case stands for the recovery of emotional distress.

Tenn. Supreme Court is presently deciding a case where the kid in car sees mother hit and killed. Issue is whether the boy was in the zone of danger?

Tenn. Worker's Comp. cases are more liberal - in favor of the worker: Nurse in hospital working along with AIDS patient. Got sick. Contact with AIDS and was exposed. Got a vocational disability of 20%

1. a Comp. case

2. exposure to a harmful substance

Economic Loss Damages:

1. not a remedy where suing under tort and suing a negligent tortfeasor.

2. it is a remedy under contract cases.

No economic loss damages in strict tort cases. Ex.-cannot recover for economic loss with a disabled tractor

Pyhsical injury to the property? What if property self-destructs because negligently manufactured? No recovery.

Tort of negligent misrepresentation - if a professional has put out misinformation that is relied upon by a foreseeable person then the economic loss remedy kicks in. Ex.- legal malpractice = negligent misrepresentation = potential liability to nonclients. For example, lawyer drafted real estate documents which were relied upon by nonclients; they got hurt and were entitled to the economic loss remedy. It also applies to accountants, doctors, and professionals.

Tenn. - tortious interference with a contract = a tort (hard to prove) with 3 times damages under T.C.A. 47-50-109.

Minority view = low-budget airline, a chemical leak, negligent tortfeasor. Evacuation of airport, economic loss to airline. Most courts say no recovery, but the New Jersey Supreme Court allowed the economic loss remedy. Tenn. follows the majority rule which is not to allow recovery.

T.C.A. 29-34-104 - privity not required for negligence, s/l, or breach of warranty, but delineates types of injury to recover and not include economic loss remedy.

Punitive Damages

Punitives are not a violation of the 8th Amendment, but maybe a violation of due process if there's no criteria, no review. Yes, they are a violation if there are no standards and the trial judge has no review power. Generally, punitives are okay.

If punitives are way too high over compensatories there may be a problem. Ex - ins. premiums pocketed by fraudulent agents - jury gave $200,000 actual, $800,000 punitives. That's close to the line of violating due process.

TXO case - slander of title case. Low actual damages of $19,000 but punitives of $10 million which is 526 times. Supreme Court said okay.

BMW v. Gore - acid rain damage to BMW. Actual damage of $4,000, but punitives of $4 million. Supreme Court has not decided.

Tenn. case - Hodges - Tenn. Supreme Court made standards for punitives (standard jury charge). In Tenn., the jury charge is that the purpose of punitives is to deter. Facts of the case were that an employee did jury duty and was demoted then fired. $200,000 actual, $375,00 punitives. Tenn. Supreme Court sent the case back on punitives with their standards.

Four types of conduct that justify punitives:

1. intentional, fraud, malicious, reckless conduct by the D

2. the proof of the conduct must be clear and convincing

3. bifurcated trial on the D's motion:

a. verdict for P?

b. how much compensatory?

c. clear and convincing evidence of the 4 types of conduct?

d. proof of punitives (the following must be considered)

-D's finances



-how long did it go on?

-was it concealed?

-P's expense to recoup losses (mitigation)

-Did the P make money?

-any prior punitive awards against the D?

- D's remedial action? Subsequent remedial action? Any settlement offers?

-Any other circumstances

In Tenn., the trial judge acts as a 13th juror. The judge has to decide on each element if the judge approves of the award or should decrease it.

When are punitives discoverable for the 2nd stage of a bifurcated trial? The information is sealed at the deposition; there's no disclosure until you can convince the judge by other evidence that a factual basis for punitives exists. Then we'll let the P know.

What happens by way of discovery? Brealt v. Freely = pre-Hodges case (but Drawota wrote both opinions). Drawota got his way because in Hodges he says that you have to prove the P's financial position on punitive damages. The P takes the D's deposition on his financial status. Deposition is then sealed. It won't be opened until trial. The P's attorney might go out and get other evidence of where the D owes punitive damages. P must prove a prima facie case where punitive damages are appropriate. At that point, the P's atty. can go to the judge and say that he wants to open up the D's deposition on his finances and go over it with his client, the P. Of course, if the financial information is about a big corporation then it's public information.

Will the punitive damage award be supported where the underlying award is not compensatory damages? Suppose it's nominal damages of $1. Tenn. - yes, nominal damages are enough. Headrick v. Carter, 897 SW2d 256, Headrick was a doctor who owned a home among a cluster of homes. Nominal damages of only $10 awarded, but $10,000 in punitive damages awarded against him.

What about vicarious liability and punitive damages? The probable answer is yes, punitive damages are possible based on the theory that you pick up the tab on your agent's misconduct. Anderson v. Covert - 193 Tenn. 238

Wood v. Anderson Electric - 19 TAM 34-1 - case allows punitives against the principal when the facts are good enough.

What about equitable relief? Will that support punitive damages? Oakley v. Simmons - 799 SW2d 669 - Neighbors erected a pole near the Ps' airfield. Decision made that the pole was a nuisance. $5,000 in punitive damages awarded against the Ds and the injunctive relief was to remove the pole.

Insurability of Punitives

p. 725 Can you insure against punitive damages? The theory is that if you could then they would not be a deterrent or a punishment because the insurance co. pays. Tenn. - yes, we may insure against punitives. Lazenby v. Universal Underwriters, 383 SW2d 1.

What about uninsured motorist coverage? T.C.A. 56-7-1201 doesn't really say. Tenn. Supreme Court said in Carr v. Ford, 833 SW2d 68, that punitive damages are not covered by UM policies even if the policy is silent or fails to say that it doesn't cover UM punitive damages.

Can a corporation indemnify its Directors against punitives? The probable answer is no. Why? T.C.A. 48-18-502 requires for indemnification agreements to be valid that the Director acted in good faith. If the Director acted in bad faith then no indemnification for punitives.

p. 726 Are punitive damages recoverable under strict tort liability? In Cathey v. Johns Mannual, 776 F2d 1565, the 6th Circuit said that punitive damages are awardable in strict liability cases.

p. 740 What about toxic torts? Punitive damages are awardable in toxic cases.

Will comparative fault principles apply to award different amounts of punitive damages against different Ds? Suppose there are varying degrees of malice. Huckeby v. Spangler, 563 SW2d 555. Yes, the jury can probably divide it up.

p. 765 Can you have punitive damages with a contract breach? The general rule is no. The exception (see p. 766, Note 2) is where you have public carrier cases. Fraud is grounds for revocation of acceptance in a contract. Case says that because there's recission of the contract both Article I and Article II allow punitive damages.

42 USC 1981 (a)(b)(3) - punitives now are probably recoverable under the 1991 amendments to the Civil Rights Act. Depending upon how large the employer is caps exist as to the amount of the punitives. The caps are combined totals of the punitive damages awardable.

Cases on punitive damages:

Taff v. Media General - 11 TAM 52-1

England v. Fleetgard - 878 F.Supp. 1058

Greer v. Sears Roebuck - 18 TAM 7-49

Roberson v. UT - 829 SW2d 141

Exclusive remedies--Can you get punitives under the Consumer Protection Act? No, your exclusive remedy is treble damages. Paty v. Herb Adcock Chevrolet, 756 SW2d 697. Another situation where you have an exclusive remedy is where your insurance co. refuses to pay your policy in bad faith. There's a 25% bad faith penalty.

Shole v. Sheerwood - 19 TAM 392 - case where they sued under the Consumer Protection Act and the common law tort of fraud. Paine says this is a good idea.

Can you get punitives damages in an inverse condemnation action? The answer is not clear. There was a case where U.S. Sprint laid cable/wire along the railroad where Sprint did not get the landowners' permission. Can they get punitives? Meighan v. US Sprint, 19 TAM 43-12.

Can you bankrupt punitive damage awards? I.e. Declare bankruptcy and therefore prevent your punitive award from being taken from you. The answer is no under 552 of the Bankruptcy Code. Can you also have it successfully discharged by the Bankruptcy so that the P won't recover it? No, if you are guilty of fraud in a fiduciary action, by embezzlement, or by arson. Or if the injury was wilfull or malicious then you can't get the punitive award discharged.

Can the P argue to the jurors that the only way the P will get paid is if the jury awards punitive damages because compensatory damages can be bankrupted? Probably not. Why? Excludable under Rule 403. Argument by analogy is that in Tenn. you can't argue about taxes and tax consequences. Note: the IRS might rule in the future that punitive damages are taxable.

*In Tenn., you cannot get a verdict for more than you sue for.

An appellate court can grant a remittitur -- cut down the award. The additur statute can't be used by the appellate court if it was a jury trial. The trial judge can add to the award if it's a jury trial. But, if there was no jury then the appellate court can monkey around with the award.

Coffee v. Fayette Tubular, 20 TAM 34-8, highest punitive damages award in Tennessee.

T.C.A. 56-7-103 - the statute says there are two issues pertaining to misrepresentation:

1. Did this applicant intend to deceive the company - fact question for the jury

2. Did the false answer or misrepresentation materially increase the risk of loss? The co. can argue that it would have charged a higher premium or would not have granted the ins. policy. The judge tries this issue -- ins. co. usually wins on this issue.

Part IV - Restitutionary Remedies

p.770 Introductory information. Restitutionary remedies come out of either: 1. common law 2. equity 3. right of subrogation or 4. an accounting

1. Under the common law there's a. quasi-contract - the law just gives you the contract rather than there being a valid contract. Quantum meruit - "value of your services" - If there's a contract found by law then you'll get quantum meruit for your remedy.

b. replevin - restitutionary remedy in the sense that you get your property back. Writ of replevin.

2. Under equity, there's a. constructive trust and b. equitable lien

Restitution is different than other remedies because we primarily dwell on the unjust enrichment of the D rather than on the harm done to the P. You can get more money for the P sometimes by pleading restitution cases. The D in restitution cases is not always bad. The D is sometimes innocent. Idea that the D was unjustly enriched and must disgorge the profit.

p. 771 Model Case: Owens has suffered no loss. Joe hasn't done anything wrong really. Court says, "Joe must pay Owens for the use of the crane because he was unjustly enriched."

Unjust Enrichment

p. 772 Pyeatte

Oral contract between spouses to provide for each other while each goes to graduate school. What do we do when the Pyeattes decide to separate? Husband backs out of the deal after he graduates from law school. Normally, the case would be handled by property division. But there was no property here. Court says, "We'll give the wife the value of the law school education--cost of books, tuition, expenses--that she provided." He must disgorge the unjust enrichment that he recovered.


T.C.A. 36-4-121: provides for an equitable division of marital property. Equitable does not mean a 50/50 division necessarily. Homemaking services are considered contributions to the value of the property.

T.C.A. 36-5-101: Rehabilitative statute - alimony for spouse to go back to school. Alimony statute says that the contribution of one spouse to the other's further education can be considered by the court to come up with the amount of alimony.

Tenn. - there's no property right in a spouse's professional license. Beeler v. Beeler - 715 SW2d 625. It's rare that you'll get a set amount of money based upon the other spouse's potential future earnings. Court says that you don't know for sure whether he'll make a pile of money or not.

p. 780 Monarch Accounting

Landlord had to disgorge the rent he was getting from the company because he was being unjustly enriched. Restitution is limited to the amount of the D's benefits or gains.

Benefits Acquired by Agreement or Mistake

What do you do when you have this situation? Benefits are acquired by some unenforceable agreement. Paschall's Inc. v. Dozier, 407 SW2d 150. No money can come from the person with whom Pashcall's Inc. contracted with because the young girl goes bankrupt. Paschall's wants to go against the Dozier parents. Court says we believe that the Doziers were unjustly enriched so Pashcall's can proceed directly against the parrents even though there was no contract with them.

p. 785 Alder

The D who benefitted unjustly must disgorge to the inventor the unjust enrichments. Equitable maxim--"He who comes to equity must come with clean hands." Alder had to give back the money.

p. 789 Kelner v. 610 Lincoln

Case deals with the lawyer-client contract. Client breaches the K. Sometimes clients breach the K for cause sometimes clients fire their atty. without good cause. The lawyer has to get out of the case (even if the reason for being fired is frivolous) but the lawyer may get some relief. The lawyer is entitled to either the K rate or quantum meruit. Under the K rate, the lawyer may get either 1. a flat fee or 2. an hourly rate (or some mix of #1 and #2) or 3. a contingency fee. The court in Kelner awarded the contingency fee and announces that rule as the traditional rule-- the lawyer who's fired without cause will get the contingency fee.

p. 790, Note 2 - What would the atty. who has fully performed the services get? The flat fee or the agreed upon contract price? In this case, it turns out that the flat fee was less than quantum meruit would have been.

p. 792 Rosenberg

Flat fee of $10,000 plus 50% of everything we get for over $600,000 (as an incentive). Lawyer is fired without cause and the case settles for 1/2 million. Court says we'll give you what you put into the case (quantum meruit) but no more than the $10,000 or flat fee amount.

*DR 2-106 lists the criteria for what governs the reasonableness of an atty's fee. Tenn. case adopts these criteria as the same criteria for deciding quantum meruit. Connors v. Connors - 594 SW2d 672

p. 795, Note 1 Chambliss Bahner - Chambliss was hired as co-counsel and had a falling out with the other co-counselor. Do we give Chambliss quantum meruit or the K rate? The contract rate would not have put him in the same position as quantum meruit. Judge gave him the lesser amount--the contract rate.

Paine thinks that the state of the law in Tenn. is as follow . . . If a lawyer is fired without cause then it's the lawyer's choice between contract or quantum meruit. Crawford v. Logan - 656 SW2d 360 (opinion written by Drawota) Paine thinks this is the law in Tenn. because it comes from the highest court in the state. The facts of the case were that the atty. should have returned the client's property. The client finds out about it in the fee lawsuit. Supreme Court of Tenn. sends the case back to trial for a hearing on the propriety of his actions. The dictum says that if a lawyer is fired without cause then the lawyer gets the greater of the K price and quantum meruit. If fired with cause then the lawyer gets the lesser of the two.

Adams - 618 SW2d 485 - lawyer is fired without cause. The lawyer gets the lesser amount of the K price versus quantum meruit. This decision is a court of appeals case so it has less authority than the Crawford decision/opinion.

Sale of Goods Remedies and Restitution (on the bar exam)

Restitutionary remedy - UCC 2-718 - situation where we have a breaching Buyer and an innocent Seller. Even wrongdoing Ps are entitled to restitution. The breaching Buyer gets back a certain amount of payments he's made. The Buyer gets restitution of any down payments - 20% of the price or $500 . We let the breaching Buyer have restitution of the down payment and the Seller can keep the lesser of 20% of the price or $500. Why?

Dodson v. Shrader - 824 SW2d 545

Contract with a minor. Minors do not have the capacity to enter into a contract. 16 year old kid buys a pick-up truck for $4,900. He drives it until the engine blows. A hit and run driver hits the truck on the side of the road. Totaled pickup worth $500. The minor gets his money back under the old rule. But, the Supreme Court takes the case and says, "We're not going to allow complete restitution to the minor." Court decides that they'll let the minor be restored but with some deductions. The Seller can deduct for the damage to the truck.

p. 797 Ward v. Taggart

Taggart, broker, pockets the ill-gotten benefits. It turns out that the land was worth $5,000 which was what the 2nd Buyer paid. But, the court was upset with Taggart so they awarded restitution plus punitive damages.

842 Sw2d 605 - Tenn. case where the court says the original owner is entitled to restitution from the bad brokers.

What would the measure of damages for the tort of fraud be?

Tenn. - we follow the benefit of the bargain rule which is value as misrepresented - value received.

p.800 Winslow

Unilateral mistake made by a stock broker. He delivered to the customer preferred stock rather than common stock. Can the broker get restitution of the benefit? The court says yes. Example of how restitution might come up by mistake. If there's a mistake in the performance of a valid contract then we'll give the mistaken party restitution. Note: unilateral mistake is not a defense to the formation of a contract. Mutual mistake might be a valid defense.

p. 803

Waiver of Tort and Suit in Assumpsit

Waiver of the tort of conversion--sue in assumpsit (quasi-contract)

p. 804 Some jurisdictions require that there be a fiduciary relationship between the parties for the constructive trust to kick in (not the case in Tenn.).

Note: If you waive the tort of conversion and decide to sue in quasi-contract then you can get the higher price. The tort may be waived in favor of quasi-contract actions.

Whitaker v. Poston - 120 Tenn. 207 - court talks about a tort action for cutting timber. The problem is that the statute of limitations for the tort of conversion was three years and the statute of limitations for breach of K was 6 years. The cae hold that you can waive the tort action and plead your case in assumpsit and rely on the 6 year (longer) statute of limitations. An action in assumpsit is where the court finds a contract implied by law.

p. 813, Note 2 - Reminds us that we're not talking about just any old tort -- we're talking about the tort of conversion. Trespass to chattel might be another tort that's allowed.

p. 815 Olwell

Court says that you may waive the tort and sue in assumpsit. In this jurisdiction (like Tenn.), you can't recover more $ than you sued for.

T.C.A. 47-25-1301 et seq. covers franchises for farm implements, machinery, utility, and industrial equipment, motorcycles. What's the restitution? If the franchisor says to the franchisee, "We don't want you any more" (sort of like employment at will because most franchisors can do this) then the franchisors must buy back the remaining inventory (pay the net cost plus 5% fee for the shipping and handling).

Constructve Trust Remedy

Memphis State Law Review article on constructive trusts-V.27, p.1

What it is not - a constructive trust is not an express trust which is contractual (you must have the parties' consent). A resulting trust is where there's consent by implication (not the same thing as a constructive trust).

What is a constructive trust? We have a wrongdoer who is in a position of authority and who wrongfully defrauds someone out of their property. The law says that he's holding the property for the person who's the true owner; he's holding the property in trust. The wrongdoer is the constructive trustee.

p.819 County of Cook v. Bawett

Clerk was unjustly enriched, so he becomes a constructive trustee of the $ he's holding. Court says that he's holding the $ in trust for the City and must disgorge it. Usually, your remedy is return of the property. Gives you priority over other creditors and takes care of the other problems. . . . What happens if the property has fallen into the hands of a B.F.P.? Sometimes, you won't get the property itself back.

Staufer v. Staufer

She prevails upon him (under duress) to convey the farm to him. Court says that she has the title of constructive trustee; she's holding the blackacre in trust for her adulteress husband. "In speci" - he actually gets back the property

Insurance policy - what if the husband remarries? We're talking about situations where the husband makes wife #2 the beneficiary on his ins. policy. Have it fixed so that the wife #1 becomes the owner of the property. That way the husband can't change the beneficiary of the policy. If it's too late to change the ploicy then wife #2 holds the ins. policy in constructive trust for wife #1. Proceeds should have never been turned over to wife #2.

Case where Tim Buntin disappeared and was presumed dead. His wife recovered the insurance proceeds because the insured was suppossedly dead. But, it turned out that he wasn't dead. The trust which was distributing the ins. proceeds to Buntin's kids had to pay back what was left of the proceeds b/c Buntin was alive.

*A good question to ask is what the statute of limitations is in our jurisidiction on constructive trusts. There is none. Courts look to statutes which are closest to a constructive trust situation. Fehn v. Schlicking - 26 Tenn. App. 608 - this case says that the statute of limitations on a constructive trust begins to run when the P learns or should have learned about the D's wrongdoing. Use the ten year catchall statute of limitations or you might want to use the six year statute of limitations for contracts (becaues constructive trusts are similar to quasi-contracts).

Rule 60 relief (from the Rules of Civil Procedure) - under Rule 60 if something extraordinary (such as newly discovered evidence or fraud) has happened then you can get a new trial. Fraud has a one year limitations period.

Bankruptcy Court:

Issue as to whether you include property held in constructive trust in bankruptcy claims. Another issue of when bankruptcy hits then everything's tied up (all of the person's assets). What property is to be divided up among the creditors? Issue is to whom does the property belong that was being held in constructive trust? Can that property be excluded from the debtor's estate? The 6th Circuit held in In Rea Omegas, 16 F3rd 1443, that you cannot use the constructive trust to exclude property from the debtor's estate and, therefore, keep it out of bankruptcy.


p. 834 What if the property increases or decreases in value? A possible exam question is why might you want to use a constructive trust over an equitable lien or vice versa? With an equitable lien you can foreclose on the lien, but you can also get a deficiency judgment. Execute on the deficiency judgment. An equitable lien is what you want to choose if the property has decreased in value.

If the property has increased in value then go with a constructive trust because you'll simply get the land back. What happens if the ill-gotten benefits are taken away from the rightful owner and are somehow on the other person's land? See p. 835 Model case -- builder defrauded into making improvements on house. Court will grant an equitable lien.

p. 835 Middlebrooks

Daughter sues parents for repayment of a loan. Problem is that the parents used the $ to add/improve their house. Give the daughter an equitable lien with the right to foreclose.

p. 838 Robinson v. Robinson

Children build on the parent's land. What do we do with property division when the adult children get a divorce? Give the daughter an equitable lien on 1/2 the house value.

Title 66 - statutes on most of the lien laws:

1. Vendor's lien (a Seller's lien -- vendor is a term sometimes used to apply to the Seller of land) T.C.A. 66-10-101 et seq. The Seller essentially finances the deal himself. A vendor's lien might just be a sentence in the deed. Force the lien by filing a Chancery court suit to have the land sold so you can get your $ back.

2. Mechanics and Materialmens' lien - refers to people who build buildings. I.e. - general contractors and subcontractors. T.C.A. 66-11-601. There's a notice that must be given to the owner of the property. Notice explains to the owner that there'll be a lien on the property for improvements on the land for a certain period of time. Except in regards to residential real estate--only the general contractor has a lien on the property in a residential job. The lien is enforced by the liener notifying the owner within 90 days after supplying the stuff. The lien continues for ninety days from that time. Liens are filed in the Register's office. Provision whereby the property owner can file a demand in the Registers' office that all potential lieners are out--demand that all liens be filed within 10 days.

3. Landlord's lien - T.C.A. 66-28-509 - landlord has a lien against the tenant's household goods but only if there's a financial statement filed in the Secretary of State's office. Law is suspect from a constitutional standpoint.

4. Crop lien - T.C.A. 66-12-101 - lien is in the form of a landlord's lien. Gives a landlord a lien on the tenant's crops. Who takes priority . . . the landlord or the buyers of the crops?

7 USC 1631 - Food Security Act - in many cases the buyer does have priority (It mostly comes up with secured transactions)

5. Employee's lien - T.C.A. 66-13-101 - If the boss doesn't pay his employees then they have a lien on his assets.

6. Artisan's, mechanic's, etc. lien - comes either from the common law (they must retain possession of the car until you pay them) or the statute, 66-14-101 et seq. Statute does not require possession. Who has priority? The possessing artisan. Situation where the artisan has released possession - then the secured party prevails.

7. Launder's lien - T.C.A. 66-16-107 - the launder can eventually sell the shirt you leave at the drycleaners.

8. Warehouseman's lien - Title 7 of the UCC. T.C.A. 47-7-101 Statute gives the wharehouseman a lien against the goods--it's a possessory lien. Note: unless the lien is created by statute and the statute expressly defers to Article 9 then the secured party prevails over the wharehouseman. UCC security interest priority.

9. Innkeeper's lien - T.C.A. 66-17-101

10. Garagekeeper's lien - T.C.A. 66-19-103

11. Livery stablekeeper's lien - T.C.A. 66-20-103 - statute says that the temporary loss (possession) of the horse does not relinquish the lien.

12. Garagekeepers lien - T.C.A. 66-19-103

13. Attorney's Retaining Lien - ethics rules don't look favorably on this. DR 9-102(b)(4). Only do this as a last resort. T.C.A. 23-2-102 et seq. gives you a lien on the right of action. Common law lien gives the attorney a lien on the client's documents in the attorney's possession. McDonald Shea & Co. v. The R.R., 93 Tenn. 281.

Accounting remedy is an equitable remedy. Typically a case filed in Chancery court. P asks the court to make the D account back to the P. Typically, a special master is appointed (user lawyer) to act in judicial capacity. Hold hearings, request production of documents, turn over the master's report to the Chancellor. These types of cases are not very fashionable today. Modernly, we use BR filing instead.

Subrogation Remedy

Types of cases where it's common:

1. comes up most often with insurance cases, especially collision insurance cases. Situations where the insured had a wreck and their insurance carrier paid for the damage, but another person caused the wreck. The ins. carrier has the right to go after the tortfeasor or wrongdoer. The insurance co. is subrogated to the rights of its insured. . . . the ins. co. steps into the shoes of the insured. Limitations are that there is no right to subrogation unless the insured has been made whole. Wimberly v. American Casualty - 584 SW2d 200 - case where the insured's damages totaled $44,000. Wimberly was not made whole because he was only reimbursed $40,000. One carrier paid $25,000 and another paid $15,000. Because Wimberly was not made whole the fire ins. carrier had no subrogation rights. The same rule applies even in the personal injury cases. Mullins v. Parky - 17 TAM 18-10. No subrogation rights unless the insured is made whole even when talking about uninsured motorist cases. Same rule in Blue Cross Blue Shield v. Christopher - 20 TAM 19-10.

Electro Mechanical Corp.v. Ogan - 9 F3d 445 - cites to FMC Corp. v. Holiday - 498 US 52 - and ARISA - 29 USC 1144. The U.S. Supreme Court reads ARISA as saying that if you have a claim covered by the statute then the statute preempts all state subrogation rules.

2. also comes up where you have a cosignor on a loan/note. You have to pay the bank as the cosignor if the person taking out the loan defaults. But you have subrogation rights against the loanee Where the bank extends the time for payment does not get the cosignor off the hook. Advise bank clients to give notice to cosignors.

Tenn. Medical Malpractice Act (need some clarification here)

There are some collateral sources where the collateral source rule doesn't apply. I.e. - the employer pays all the medicals. Electro Mechanical had self-funded medical plan (no ins. coverage for employees) which caused it to be covered by ARISA. Suit against malpracticing doctor. No recovery allowed from the doctor--every penny of the medicals came from Electro Mechanical. Normally, the damages paid by a collateral source cannot be recovered from the doctor. 6th Circuit said that once ARISA kicks in then all state laws are void or irrelevant. So, Electro Mechanical can recover $100,000 of the P's recovery which was 1 million.

State Farm v. Tackett - 15 TAM 15-12

Two paragraphs in the insurance policy which were irreconcilable. Under construction of contract principles, you read the first paragraph. There was no right to subrogation under the 1st paragraph.

Hudson v. Hudson Municipal Contractors - 898 SW2d 189

Hudson was killed on the job. The widow was entitled to Worker's Compensation survivor's benefits. He had hish uninsured motorist limits. He was clobbered by an uninsured motorist while working. The UM ins. carrier pays Mrs. Hudson $300,000. The Worker's Comp. carrier says that it is entitled to subrogation rights. Case construes the statutory language in the Worker's Comp. statute as not permitting subrogation rights where the $ comes from a contract and not from the tortfeasor directly.

Summers v. Command Systems - 867 Sw2d 312

File a Comp. claim against the employer and file a tort claim against the tortfeasor. File any claims you have against 3rd party tortfeasors. Atty. says he should be able to deduct his fee for going after the 3rd party because the Comp. carrier would have had nothing without him. Supreme Court says that if the Worker's Comp. carrier doesn't help out with the tort claim then it does have to pay the P's atty. by giving him a deduction in the amount the carrier can get by subrogation from the P's recovery. Whatever the client potentially ends up with the client's atty. should be able to take about 1/3 (But it all depends on how the K is worded).

Chapter 17 - Limitations on Restitutionary Remedies

Tracing example:

p. 847, Note 5 Tracing rule here is the Tenn. rule on tracing. Jessel's Bag Rule. Tenn. case expressly adopts the Old English case, State ex rel v. Bank of Bristol, 165 Tenn. 461. How are we going to trace our $ in the comingled funds--our money is mixed in with the wrongdoer's money. The rule is that the initial withdrawals by the wrongdoer are presumed to be the wrongdoer's funds, so the P can trace to the balance.

Examples of how the rule works:

1. $300 = Sarah's $

$500 = Sarah steals from Russ


Sarah withdraws $300 from the account. That $ is presumed to be a withdrawal from Sarah's own funds. So, Russ can get his $500 back.

2. $300 = Sarah's $

$500 = Sarah steals from Russ


Sarah withdraws $400. We say that $300 is from Sarah' funds. Russ can trace to the lowest intermedicate balance which is $400. By way of tracing, Russ can only recover $400. Tracing is a limitation on your restitutionary remedy. His options are that he should try to go by way of an equitable lien or get a tort judgment for fraud in the amount of $500.

3. $300



Sarah takes out $400 and then puts it back in the account. Under the Rule, Russ can only trace to $400 because it's the lowest intermediate balance.

*You cannot recover by way of restitution (constructive trust, equitable lien, quantum meruit) against a B.F.P. for value. A B.F.P. is a good faith without notice purchaser. A B.F.P. is a limitation on remedies. A donee is not a purchaser. If somebody got the item as a gift then they're not a purchaser. So, you can get restitution.

p. 855 City of Hastings

A good example of a case where it's not a B.F.P. Sale is made from the railroad to Jerry Spady. His atty. had notice of the city's plans. Case holds that it's a general rule that the agent's knowledge is imputed to the principal. So, notice is imputed. So, Jerry Spady was not a good faith without notice purchaser. Therefore, Spady is holding the property in constructive trust. The atty. had knowledge of the wrongdoing. That knowledge is imputed to the B.F.P.

p. 858, Notes-What kind of notice will ruin your B.F.P. status? Any kind--constructive notice, subjective notice, objective notice.

p. 859, Note 3-What does value include? Satisfaction of an antecedent death will give you the value. . . value does not include the executory promise.

Note 5 - what if you have $ transferred and there's a great discrepancy b/w the market price and the B.F.P. price . Majority rule is that that person will not be called a B.F.P.

Note 6 - B.F.P. must get legal title and not equitable title

p. 864, Note 3 - Change of Postition = defense to unjust enrichment, equitable lien, etc. The change of position must have occurred before this person got notice of the resitutionary claim. Change of position case - the supplier supplied the customer with a bunch of stuff. Customer goes bankrupt. Bank wants customer to pay back the over amount. Court says no because that would leave the supplier without any remedy.


General rule is that if you have a volunteer and they're an efficious intermeddler then they don't deserve restitution.

Exception to the rule:

1. If the D had a choice to refuse those services. Ex - somebody finds your pet that's been hurt and they can't find you then that's a situation where the D could refuse by giving the volunteer the pet later. In other words, D could let the volunteer keep the pet.

2. Somebody finds your hurt child and you're not around then the D will have to pay restitution.

p. 866 Everhart

The improvements made by the Buyers could not be taken by the Buyers. Buyers were not efficious. Court held that the Buyers could get restitution.

p. 870 Jako

His position was that he did it for humanity, but he later decided he wanted some $ for it. Court says no because he was a volunteer.

p. 873 Felton

He also benefitted some of the other beneficiaries. His good work gets good results for everyone (even other nonclients). Court says he's a volunteer and the nonclients have no obligation to pay him a fee.

What happens when a lawyer pursues a tort claim and a Worker's Comp. claim: the Tenn. view under Sommers is that the lawyer gets to withhold a fee from the subrogated amount of recovery. Why? Because the comp. carrier could have hired an atty.

Chapter 18 - Completing the Remedial Picture

p. 878 Equitable clean-up doctrine: doctrine whereby the Chancellor could decide some minor common law issues while he's wrestling with major equitable issues. Not a very important doctrine today.

Jury Trials

Title VII case - you get a trial by jury now under Title VII, 42 USC 1981(a). Tenn. Constitution, Article 1, Section 6 provides for trial by jury. What does that mean? Caselaw says that the right depends on whether there was a right to a jury trial back in 1796. I.e. no right to a trial by jury for tax refunds. In Tenn., we have a constitutional right to 12 jurors. Without a waiver, you've got to have 12 jurors in Tenn. Also in Tenn., we have a right to a unanimous verdict (not a right in federal court). In Chancery court cases, there's no constitutional right to a trial by jury but a statutory right under T.C.A. 21-1-103.

Smith County Education Assoc. v. Anderson - 676 SW2d 328

You do have a right to trial by jury, but you don't have a right to a general verdict. Instead, the jurors are told to answer questions. They bring back a special verdict and the Chancellor will apply the law to the facts as the jurors found them.

No right to trial by jury in Chancery Court on certain subjects:

1. No right on subject of laches

2. No right on subject of estoppel

3. No right to trial by jury for failure to negotiate in good fatih

Sasser v. Averitt Express - 839 SW 2d 422

4. Worker's Comp. cases

5. General Sessions court - even in a retainer action

6. Divorce - yes, there's a right on the factual issues of fault. But, not on the issues of custody, visitation issues, and child support.

*You must make a demand for a jury--it will be waived if not requested. Rule 38 says it must be made within 15 days of the filing of the answer.

Brown v. Lathum - case pending in the Supreme Court. Issue as to whether you have a right to a jury trial when you're found to be in contempt of court for failure to pay child support.

Chapter 19 - Attorney's fees

The American rule is that each party pays his or her own atty. No fee shifting. Exceptions where there's a statute that says that you have a right to get atty's fees from the other side. Likely to be true in civil rights law; consumer protection; anti-trust litigation; divorce cases (orders of protection, orders to enforce custody payments); gaurdian "ad litum"; court appointed attornies on certain subjects; shareholders' derivative actions; leases and promisory notes have a provision that atty. fees can be recovered from the breaching party; "vexatious" bad faith litigation; and common fund situations.

Criteria regarding amount of the atty's fee - Connors v. Connors, 594 SW 2d 672, adopts the disciplinary rule covering what constitutes a reasonable fee. Customary fee in the locality, the lawyer's standing, etc.

Pleading atty.'s fees: Ask for atty. fees in your demand! Customary in Tenn. to include at the end of your complaint a prayer for general relief (safety valve).

Fee Caps

Tenn.: 1. 1/3 contingency is the maximum in med. mal. tort cases - has been held to be constitutional

2. Fee cap of 20% in Worker's Comp. cases

General federal fee-shifting statute, 42 USC 1988, for civil rights cases. It was amended recently to cover expert fees.

28 USC 2412

T.C.A. 29-37-101

p. 914 Ferrar v. Hobby

Supreme Court asked the question: to be a prevailing party and recover atty. fees can a party only recover nominal damages of $1? Theoretically, the answer is yes. However, under the facts of Ferrar, the answer was no.

p. 932 City of Burlington

You don't enhance the fee because the atty. was taking a risk by taking a contingency fee.

Upcoming changes made by the legislature:

1. Punitive damages will be taxed.

2. Pure emotional damages without physical injury will be taxed

Dabora, Inc. v. Klein, 884 SW 2d 475

Case said that in rare instances you can have a valid covenant-not-to-compete with a nationwide effect. It must be a reasonable covenant. The services must be unusual. The case was tried in Chancery court. Klein would have been entitled to a jury trial and possibly a general verdict if it hadn't been waived. Possible right to a jury trial in Chancery court, but Chancellors generally don't like jury trials.

Tort of malicious prosecution - part of the P's damages are the atty's fees the P paid to hire an atty. to defend him in the underlying case.

Pro se representation - assuming that you have a contract or a fee-shifting statute (which are exceptions to the American rule) then are you entitled to atty's fees when you represent yourself? Case of Waller Lansden, 851 SW 2d 131, says that it doesn't make a difference whether it's pro se or not--the P is still entitled to atty.'s fees.

Rule 54 - discretionary costs. Covers a very few instances where the judge can allow you some discretionary costs over and above court costs. It doesn't cover atty.'s fees. It does cover court reporter fees for depositions and trial. It also includes expert witness fees for depositions and trials. (It also covers the cost for the expert to wait around for trial). But, does it cover the expert's expenses? The rule doesn't say. The Supreme Court has said, yes, you can get expenses in Miles, 896 SW2d 773. Generally, you can not get expenses for the expert's preparation time for trial.

Gaurdian ad litem fees are covered by the rule. Interpreter's fees are covered by the rule.

Ingram v. State Industries - 20 TAM 47-3 - the expert's examination fee should be covered by the rule.

Nominal Damages

Nominal damages are a common law type of declaratory relief. Nominal damages will support atty's fees. Nominal damages will support punitive damages. Nominal damages will support court costs.

Question: can we go into court at the initial conflict stage (before suit is filed) and get a declaratory judgment? Statutes

such as T.C.A. 29-14-101 et seq. allow for this. Uniform Declaratory Judgment Act. 28 USC 2201 et seq. These kinds of cases are normally filed in Chancery court. Ex. - insurance coverage cases are the typical kinds. To get the issue of coverage decided, the insurance company will ask the Chancellor to declare that the co. has no duty to defend.

Can you get a declaratory judgment and also get some punitive damages? Paduch v. Johnson City - 895 SW2d 767- case says yes, it's possible to get them.

Does Sarah have any idea what she is doing in this class? Probably not, as was held in Herring v. Whiteside, a Tennessee Supreme Court split decision. The court determined that while Ms. Hardison seemed to work exceptionally hard, when she was placed in settings with other people, she was unable to concentrate, stifled by her loquacious nature, plagued by an intense desire to converse in a social way. As a result, the court could not find any way to agree with Plaintiff that Ms. Hardison knew Remedies worth a damn.


A. Present Value and Inflation

1. An adjustment to damages awarded is necessary to take into consideration the amount of interest that an investment of the lump sum will earn over time. A damages award should be the amount of $ at the date of the judgment that will = the lost wages when place in safe investments.

2. There is no consensus as to what percentage rate should be used for discounting and to what extent, if any, the inflation should impact the projected earning stream.

3. Budge v. Post (p. 488) -- P tennis player contracted w/D to be the pro at its resorts for five years. D discontinued payments, and P sued; jury award for P. Trial judge instructed jury that damages are = to the sum of $, if any, paid now in cash that would compensate the P. Held: No error w/instruction but jury had obviously not followed it. Reversed and remanded for recomputation.

4. Jones & Laughlin Steel Corp. v. Pfeifer (p. 490) -- D was injured during the course of his employment loading coal on a barge. Ct neither increased award to a/c for future inflation nor discounted it to reflect the present value of the future stream of income. SCt specifically refused to adopt a rigid rule for calculation of award for loss of future income. Ltd its decision to case before it (involving 5(b) of Longshoremen's and Harbor Worker's Compensation Act). It is up to the district judge to determine the proper discount rate, and it should be chosen on the basis of the factors that are used to estimate the lost stream of future earnings. "The average accident trial should not be converted into a graduate seminar on economic forecasting."

5. Adjustment for seniority or experience raises and merit raises should be included in the stream if they can be established with reasonable certainty. P's wages may change for societal reasons (new technology, growth in industrial productivity, etc.), and some cases have allowed evidence of the probable effect of such societal factors.

6. Ways to adjust damages awards to a/c for the effect of wage and price inflation:

a. "case by case" method -- fact-finder predicts all of the wage increases P would have received (inc. expected adjustments for future inflation) and then discounts that income stream to present value using the market interest rate;

b. "real interest rate" method -- fact-finder predicts wage increases attributed to merit or industry productivity, but does not attempt to predict the wage increases that might result from inflationary pressure on wages. The resulting income stream is discounted by a below-market discount rate b/w 1 and 3%;

c. "total offset" theory -- future wage increases, inc. the effects of future inflation, are presumed to offset exactly the interest a P would earn by investing the lump sum damage award.

7. Culver v. Slater Boat Co. (p. 498) -- 5th Cir. reconsidered a case in front of it in light of Pfeifer. Held: In the absence of a stipulation by the parties concerning the method to be used, fact-finders shall determine and apply an appropriate below-market discount rate as the sole method to adjust loss-of-future earnings awards to present value to a/c for the effect of inflation. To allow cts to choose their own methods was, according to the ct, and invitation to litigants to turn trials into graduate economics seminars.

8. Aldridge v. B. & O. R.R. Co. (p. 503) -- FELA case. D R.R. appealed from judgment against it. Issue was whether reduction to present value was indispensable element of P's claim for future lost wages or whether, absent contest by D, the P sufficiently proves his claim by evidence of the gross amt of the lost wages. Held: The party who would benefit from the application of a particular economic formula has the burden of producing competent evidence to prove it.

9. Parties in a private suit may stipulate to the "total offset" method before trial, thus eliminating the need for the production of evidence on inflation and discount rates. Monessen Southwestern Ry. Co. v. Morgan -- SCt held that if the parties do not stipulate, the trial judge in a FELA case may not require the jury to accept one method of calculation; the Pfeifer decision requires that the present value calculation be made as a "deliberate choice" by the trier of fact.

B. Prejudgment Interest

1. Interest payable on a judgment from the time period running from actual accrual until entry of the judgment. Basis for imposition may be pursuant to agreement of parties, by statute, or in equity as a restitutionary device to prevent unjust enrichment.

2. Usual limitations are that prejudgment interest is recoverable when (1) the date the claim accrued was definite, and (2) the amount of damages was readily ascertainable at that time. Cts historically have denied prejudgment interest in personal injury cases b/c certain elements, such as pain and suffering, inherently are unliquidated until determined by the trier of fact. Prejudgment interest awards have typically been reserved for breach of K actions.

3. Anchorage Asphalt Paving Co. v. Lewis (p. 509) -- P contracted w/D to have some roads in his mobile home park paved. The work was shoddy and P w/held payment. D sued for the balance of the K and P counterclaimed; trial ct ruled that D was liable for the pavement failure and awarded P a bunch of $. D argued that the trial ct had determined damages at the wrong time by determining damages as of the date of trial rather than as of the date of breach. Held: Trial ct did not err in determining damages w/later date. The date of breach is the most appropriate date for determining damages; but it is not an inflexible rule where, as here, limiting the P to damages as of the date of the breach would subvert the remedial purposes of the damage award. The trial ct had also allowed prejudgment interest. Held: P.J. interest award improper given the allowance of damages as of date of trial -- to allow both ='ed compound recovery.

4. Prejudgment interest awards have 2 purposes: (1) they compensate P's w/the true amt of $ damages they have suffered, and (2) they promote settlements and deter D's in cases where liability and the amt of damages are fairly certain from attempting to benefit unfairly from the inherent delays of litigation.

5. Common law = where amt of damages is readily calculable, cts routinely allow prejudgment interest. Where the amt of damages is unascertainable (pain and suffering), cts generally have not allowed prejudgment interest.

Distinction b/w ascertainable and unascertainable loss generally controls recovery in tort as it does in K. Unascertainable losses in tort inc. pain and suffering, emotional distress, and injury to reputation.

6. In typical car crash case, ct will not award prejudgment interest in the personal injury, but will include this element of damages for any injury to the car.

7. Moore-McCormack Lines v. Richardson (p. 513) -- D appealed from judgment awarding damages (resulting from the capsizing of one of its steamers) against it to 11 P's. Four death claimants cross-appealed on the ground that the dist ct should have allowed interest as damages from date of death to date of decree on the awards for pecuniary loss to the decedents' dependents. Held: Claims remanded for calculation of pre-judgment interest. Ct construed Death on the High Seas Act and determined that there was nothing in the language of the Act to indicate that Congress did not intend damages to compensate for all pecuniary loss. Claimants were not, however, entitled to prejudgment interest at the full legal rate.

8. Generally cts have assessed just simple interest when assessing prejudgment interest. In restitution cases where a wrongdoer has wrongfully acquired proceeds and acquired compound interest on them, he may be required to disgorge such compound interest.

9. Poleto v. Consolidated Rail Corp. (p. 518) -- P sued under FELA and got judgment but no prejudgment interest. Both parties appealed. Ct seemed to really want to award prejudgment interest, but then decided not to where no other circuit cts do (and FELA has been around since the turn of the century) and where Congress did not intend prejudgment interest under FELA.

10. The purpose of prejudgment interest is to compensate for the loss of the use of $ from losses that accrued before trial. Therefore, prejudgment interest is appropriate only for past losses and not for future ones.

11. Blake v. Califano (p. 526) -- P's won $ in the trial ct on a sexual harassment claim and appealed, arguing that the trial ct erred in not awarding prejudgment interest. Held: Affirmed. Trial ct did not have authority to order U.S. to pay prejudgment interest. It is well established that interest is not allowed on monetary claims v. the fed gov't unless Congress plainly authorizes it, and there is no indication in Title VII that Congress intended to authorize it.

12. Cts may award prejudgment interest in restitution to prevent the unjust enrichment of the D.

13. In response to perceived inequities, Congress enacted the Back Pay Act, which specifically provides for prejudgment interest in suits by fed agency ees. covered by the Act.

14. Cts almost universally deny prejudgment interest on punitive damages.

15. Ct may exercise its discretion to limit or deny prejudgment interest if the P has delayed unduly in pursuing its suit.


A. Foreseeability

1. Limitation on compensatory damages for breach of K is that loss must be reasonably foreseeable from the perspective of the breaching party at the time the K was formed. Role of foreseeability in tort affects the nature of the duty imposed by law upon the actors; once that duty is established the actor is responsible for all the ensuing harm proximately caused by the conduct in breach of the duty.

2. Redgrave v. Boston Symphony (p. 532) -- Boston Symphony had a K w/Vanessa Redgrave that it cancelled in the wake of protests over her support of the PLO. She sued, and jury awarded her $100,000 in compensatory damages. D argued that P's claim was essentially one for damage to reputation, which Mass. law does not permit P's in breach of K claims to recover consequential damages for. Held: Claim advanced by P is not one to her gen'l reputation, but that specific movie and theater performances that would have otherwise been offered to her were not after the BSO cancellation (and also that those offers that were made to her were lower than usual). However, evidence presented by P was sufficient to support an award of only $12,000. P failed to present evidence sufficient to allow a reasonable jury to find a causal connection b/w her BSO cancellation and a drop in the quality of film offers she received.

3. Principle that breaching party bears responsibility for damages contemplated when the K was made is found early in Hadley v. Baxendale. Objective test adopted by R2d K 351 based on what the breaching party had reason to foresee as the probable result of the breach.

4. Spang Industries v. Aetna (p. 539) -- P had subcontracted to deliver some steel for a bridge to D (who had contracted w/the state of N.Y. to build a highway. P performed late, and the delay caused D to have to do a rush job on the bridge and incur add'l expenses. D w/held $ from P and P sued to recover on subcontract. D counterclaimed for damages resulting from delay in performance. Dist ct awarded P balance on subcontract minus amt of $ D expended due to P's delay. P appealed, arguing that the $ awarded to D were for special damages which were not reasonably w/in the contemplation of the parties at the time the K was made. Held: At the time that P committed to a delivery date, it knew, by virtue of its experience in the field that if the bridge wasn't erected in time, freezing whether would delay its erection until the following spring. D's expenses were incurred in a good faith effort to mitigate its damages and were appropriately allowed to offset P's recovery.

5. Cannon v. Yankee Products (p. 542) -- P restrauteur purchased canned peas from D and customer discovered worm in them. Customer freaked out and yelled. P had to refund the $ to that customer and a lot of others who walked out and never came back. According to P, his previously loyal customers hit the road and his business hit the skids. Trial ct awarded P damages based on diminution of sales for 12 months following incident. Held: Trial ct erred b/c damages not foreseeable.

Lost profits may be recovered as an element of damages for breach of K where it appears that the loss was the natural consequence of the breach, that the loss was w/in the contemplation of the parties, and that the profits were not so uncertain as to be incapable of reasonable proof.

6. Evra Corp. v. Swiss Bank Corp. (p. 545) -- Swiss negligently bank failed to wire some $ to boat owner that P had chartered with, and boat owner lawfully terminated the K, resulting in P's having to recharter at double the original K rate. P sued to recover its expenses for an arbitration hearing that it went through with the boat owner and the profits that it lost as a result of the cancellation of the charter. Trial ct awarded $2.1 million to P. Held: Reversed. Damages to P were not reasonably foreseeable b/c D had no clue that its failure to wire $27,000 would result in its liability to the tune of $2 million.

7. In tort law, the role of foreseeability in determining what injuries are proximate is a continuing subject of debate. It is universally agreed that foreseeability does not limit damages in cases where the extent of a personal injury is greater than anticipated -- "thin skulled P" rule. Palsgraf v. Long Island R.R. Co. -- There must be a duty established toward the injured party first, and that duty arises from the foreseeability of harm to that person. In the absence of such foreseeability, there is no duty and thus no liability.

B. Certainty

1. Injured party must prove damages w/reasonable certainty. P must satisfy this burden by producing evidence that would allow damages to be calculated w/o speculation or conjecture. Mathematical exactitude is not required, and an injured party who fails to meet the requisite burden of proof may be entitled to nominal damages.

2. Story Parchment Co. v. Patterson Parchment Paper Co. (p. 553) -- P sued D's under the Sherman Antitrust Act, and jury verdict was for P in the amount of $65,000. Trial ct submitted to items of damages to jury for consideration: (1) the difference b/w the amounts actually realized by the petitioner and what would have been realized by it from sales at reasonable prices except for the unlawful acts of respondents, and (2) the extent to which the value of petitioner's property had been diminished as a result of such acts. Held: The evidence was sufficient to support the jury's verdict. The rule which precludes the recovery of uncertain damages applies to such as are not the certain result of the wrong, not to those damages which are definitely attributable to the wrong and only uncertain in respect to their amount.

3. Youst v. Longo (p. 557) -- P racehorse owner sued for damages after D's horse "caused" his to come in 5th rather than 1st in a race. Held: No $. Determining the probable expectancy of winning a sporting event contest is impossible.

4. Certainty requirement tougher for K claims than for tort claims. Ex. -- Grayson v. Irvmar Realty -- P sustained hearing impairment and fractured leg as result of D's negligence. Allowed to recover damages based upon future earning capacity b/c there was credible evidence that she had a "bright future," despite the fact that she had never earned any $ as an opera singer.

5. Lakota Girl Scout Council v. Havey Fund-Raising Mgmt. (p. 563) -- P girl scout troop contracted w/D for D to manage a fund raise that was supposed to bring in much $. D was sloppy, and P got a lot less than expected. Jury awarded P $35,000 in lost profits damages. Held: Verdict O.K. Lost profits are recoverable under Iowa law provided that (1) there is direct proof that some loss occurred, (2) that such loss flowed directly from the agreement breached and was foreseeable, and (3) there is proof of a rational basis from which the amt can be inferred or approximated.

6. Requirement that damages be proved w/reasonable certainty often articulated reason for denial of lost profits for breach of K to a new or unestablished business. SCt in Bigelow v. RKO gave 2 generally approved methods of proving lost profits: (1) the before and after test and (2) the yardstick test. Yardstick test is good for new businesses and consists of study of the profits of business operations that are closely comparable to the P's.

C. Avoidable Consequences

1. Affirmative side of doctrine allows damages reasonably incurred to mitigate damages; negative side precludes injured party from recovering damages that could have been averted by taking reasonable steps following accrual of the harm.

2. Rockingham County v. Luten Bridge Co. (p. 571) -- D cancelled a K w/P, and P completed performance (built a bridge) after it had been notified of cancellation, even though it had barely started. P sued to recover amounts due under K, and trial ct awarded full amounts. Held: P was entitled only to materials and labor expended prior to repudiation plus profit that would have been realized had K been carried out according to its terms.

3. Expenditures reasonably incurred by an injured party in an attempt to mitigate are recoverable even if the mitigation proved unsuccessful. Factors to evaluate mitigation effort: (1) good faith, (2) reasonable skill, prudence, and efficiency, (3) reasonably proportioned to the injury and consequences to be averted, and (4) reasonably justified belief that it will avoid or reduce the damage otherwise expected.

4. Parker v. 20th Century-Fox (p. 574) -- D co. breached K w/ P actress to make a movie (musical). Subsequently offered her a role in a western drama which she refused to take. Held: P was entitled to damages for breach of K. A wrongfully discharged ee may reject or fail to seek employment different from or inferior to that which she was entitled and not be in trouble for failure to mitigate.

5. Gen'l rule for breach of K is that injured party must make every reasonable effort to minimize damages and may not recover for damages which could have been avoided by reasonable efforts under existing circumstances. However, where the offer of a substitute K is conditioned on surrender by the injured party for its claim for breach, one is not required to mitigate losses by accepting an arrangement w/the repudiator which is made conditional on the surrender of rights under the repudiated K.

6. Ford Motor Co. v. EEOC -- SCt held that er charged w/sex-discrimination could toll the continuing accrual of backpay liability by unconditionally offering Title VII claimants the job previously denied.

7. Lobermeier v. General Telephone Co. of Wisconsin (p. 578) -- P's eardrum was ruptured as the result of an electrical charge that came through the phone during a storm w/lightning. A lot of the damage that he was seeking compensation for could have been corrected w/surgery. Held: Matter of fact for jury whether a reasonable person under the circumstances would submit to 2d operation.

8. The injured party is required to pursue only reasonable measures in attempting to mitigate losses.

9. Cts are divided on whether P's failure to wear seat belt should limit damages recoverable by application of the doctrine of avoidable consequences. Majority = no.

10. Sommer v. Kridel (p. 582) -- D defaulted on a lease after his fiance refused to marry him and he was discharged from the army. Landlord did not re-enter the apartment or show it to any prospective tenants, and in fact refused to show it to a woman that made a specific inquiry. P sued for rent, and trial ct found in favor of D. Held: Reversed and remanded. A landlord has a duty to mitigate damages where he seeks to recover rents from a defaulting tenant.

11. Carnation Co. v. Olivet Egg Ranch (p. 585) -- D failed to make payment to P for chicken feed it had purchased from P. P sued and D cross-claimed, alleging that the poor quality of the feed had caused a decrease in D's egg production. Ct granted nonsuit on D's claim for damages for loss of goodwill on the ground that D had not met its burden of proving that it had made reasonable efforts to mitigate damages. Issue was which party bears the burden of proof of the adequacy or inadequacy of efforts to mitigate consequential damages under U.C.C. 2-715(2)(a). Held: Burden of proving inadequacy of efforts to mitigate damages falls on the allegedly breaching party.

D. Collateral Source Rule

1. Compensation or other benefits which an injured party receives from a source unaffiliated or independent of the responsible party are not deducted from the D's liability. D may not introduce evidence that the P has insurance coverage or has received gifts or benefits from some other source.

2. Helfend v. Southern CA Rapid Transit Dist. (p. 591) -- Verdict in favor of P on tort claim.D requested permission to show that 80% of P's hospital bill had been paid by Blue Cross ins. carrier. Issue was whether collateral source rule applies in tort actions involving public entities and public ees in which the P has received benefits from his medical ins. coverage. Held: Yes.

3. The majority of cases that have addressed the issue have upheld the constitutionality of provisions modifying or abolishing the collateral source rule in med mal cases.

4. Craig v. Y & Y Snacks (p. 596) -- P got judgment against D for sexual harassment, and trial ct deducted unemployment compensation from her gross backpay award. Held: Unemployment comp should not be deducted from a Title VII backpay award. Statutory language talks about interim earnings; if Congress had intended other deductions, it would have provided for them. Unemployment comp resembles a collateral benefit ordinarily not deducted from P's recovery.

5. Line b/w affiliated and collateral sources can be blurry, esp. where 1 gov't agency has liability under the FTCA while a separate branch renders medical services. Cts typically allow an offset to liability where the benefits come from unfunded gen'l gov't revenues and not deducting benefits from a special fund.

6. Hueper v. Goodrich (p. 601) -- Father sued for medical expenses incurred in caring for his son who had been in a car accident. Verdict for P, and D appealed, arguing that the trial ct had erroneously allowed the father to recover $ for services that had been provided free of charge by the Shriners. Held: Trial ct correctly applied the collateral source rule b/c to limit its application would be to invite a flood of litigation.

7. Cts have split over the issue of whether the collateral source rule should be applied to allow an injured party to recover the reasonable value of gratuitously supplied medical services.


A. Liquidated Damages

1. K'ing parties may specify a sum of $ which would be payable as damages to the non-breaching party for a material breach of the K. Ltd by refusal of cts to enforce unconscionable bargains.

2. Liquidated damages provision valid only if it corresponds w/general notions of damages as a substitutionary measure for performance in the event of breach. If the ct perceives the clause as an attempt to compel performance through the threat of onerous damages, the provision will be an unenforceable penalty.

3. Traditional test to evaluate validity of liquidated damages clause: Whether, at the time of the K, (1) damages resulting from a breach would be difficult to determine, and (2) the stipulated amt had a reasonable relationship to the potential damages if a breach occurred.

4. U.C.C. 2-718(1) and R2d K 356(1) = reasonableness of liquidated damages clause may be shown based on either the anticipated or actual harm from the breach. Amt fixed may be validated if it approximates either alternative.

5. Unless the K expressly provides otherwise, cts generally will construe the K to allow the non-breaching party to pursue other available remedies, such as specific performance.

6. Boyle v. Petrie Stores (p. 608) -- P was President and CEO who was fired after being in the position for only a couple of months by a chairman of the bd w/an explosive temper. K provided for $2,000,000 as liquidated damages, and D argues that the clause was a penalty. Held: P entitled to the $. The amt did not exceed the total amt of compensation provided for in the K, and P had specifically negotiated the clause b/c he knew of chairman's temper. Also, both parties were represented by counsel, and neither party was able to overreach the other. The fact that P had taken a job as a vice-president of another co did not serve to mitigate the damages -- once the parties have provided for valid liquidated damages, the sum payable becomes fixed and there is no further inquiry to be made as to possible mitigation by subsequent employment.

7. Threshold requirement of enforceability of liquidated damages provision = that the terms be expressly stated in the K.

8. Whether a clause is a liquidated damages provision or a penalty does not depend on the label given it by the parties.

9. Truck Rent-A-Center v. Puritan Farms (p. 612) -- D leased a fleet of milk trucks from P, and there was a liquidated damages provision that in the event of breach the lessee would be liable for 1/2 of all rentals that would have become due had the K run its full course. The K also had a clause providing D an option to purchase the trucks at any time after 12 months following the beginning of the lease. D breached, and it worked out that the amt owed under the liquidated damages provision was more than the amt that would have been owed had D elected to purchase the trucks. Trial ct found in favor of P, and appellate ct affirmed. That lessee could have made a better bargain for itself by purchasing the trucks was irrelevant.

10. Lake River Corp. v. Carborundum Co. (p. 618) -- P contracted w/D to serve as D's mid-west distributor for its product "Ferro Carbo" -- a powder used for making steel. D required that P install a new bagging system to handle the K, and P insisted on a minimum-quantity guarantee and an agreement that if D had not shipped the minimum quantity in 3 yrs, D would receive the full K price minus the amt already shipped. D breached and P sued for $241,000 in liquidated damages. Issue was whether minimum-guarantee clause was unenforceable penalty. Held: Unenforceable penalty b/c designed to always assure P more than its actual damages.

B. Distress Damages

1. Substantive law restricts damages available when P suffers mental distress in the absence of other injury. The gen'l rule in tort is that there is no substantive claim for negligently caused distress w/o physical injury. Exceptions inc. "witness" cases -- where P's suffer distress from viewing the injury of a loved one while they were in the zone of danger of the accident, they can recover for distress in most states. Some states allow recovery to distressed witnesses even if the claimant is not in the zone of danger if certain specific criteria are met. When a P has established a claim for invasion of an interest in person or property, distress damages are recoverable as "parasitic damages;" limits on such recovery are governed by the remedial limitations of foreseeability and certainty.

2. The general rule is that a K claim will not support distress damages.

3. Crinkley v. Holiday Inns (p. 625) -- P's (husband and wife) were attacked by the "Motel Bandits" in their hotel room. D knew of the "Motel Bandits" but refused to increase security. P wife suffered heart attack and had to undergo bypass surgery. Jury verdict for P's, and D appealed, alleging that there was not a sufficient causal link b/w P wife's medical expenses and the assault. Held: There was sufficient evidence to connect the 2.

4. In personal injury cases, damages for mental distress are routinely allowed and inc. any physical or psychological consequences of the distress even if an ordinary person would not have suffered the add'l injuries.

5. Intentional infliction of emotional distress claims are not subject to the physical harm requirement. When D's have acted recklessly or maliciously to inflict mental distress in outrageous and socially intolerable circumstances, P's may recover if they suffer "sever distress" w/o physical manifestations.

6. Goldberg v. Mallinckrodt (p. 629) -- Dr. who used D's defective dye for myelograms sued for emotional distress he suffered after watching two of his patients damaged by the dye. Held: No recovery. N.Y. law = for bystander to recover for emotional distress, damage must be serious and verifiable, tied to the observation of the serious injury or death of a family member, and witness must have been w/in the "zone of danger" (exposed to a risk of bodily harm by the conduct of the D).

7. Jackson v. Johns-Manville (p. 632) -- P, a sufferer of asbestosis from exposure to D's product, was awarded damages for emotional distress he suffered as a result of his fear of contracting cancer. Held: Affirmed. MS law = damages for mental distress are recoverable where either the P's mental suffering is accompanied by a physical injury or where P establishes that D's conduct was wilful, gross, or wanton. Here, P's distress was accompanied by physical injury -- asbestosis.

8. Rubin v. Matthews Int'l Corp. (p. 635) -- D failed to deliver a memorial stone on time and P sued for breach of K, negligence, negligent infliction of emotional distress, and intentional infliction of emotional distress (there was some sort of religious significance to having the stone on the date it was supposed to be delivered). Trial ct granted D's motion to dismiss. Held: Trial ct correct w/respect to 1st 3 counts -- mental distress damages not recoverable under those counts. Trial ct erred w/respect to intentional infliction claim b/c reasonable men could have differed on whether D's conduct was sufficiently extreme and outrageous to result in liability.

C. Economic Loss Damages

1. In tort, traditional view precludes any recovery for economic losses absent physical harm to personal property.

2. Clark v. Int'l Harvester (p. 639) -- P's (farmers) purchased defective tractor from D and sued for lost profits, alleging breach of implied and express warranties and negligent design of the tractor. Trial ct awarded judgment in favor of P's. Held: Reversed. P's could not recover for lost profits b/c there was no personal injury or property damage incurred by them.

3. When economic loss is suffered as a result of an atty's malpractice, it is recoverable w/o physical harm to person or property.

4. People Express Airlines v. Consolidated Rail Corp. (p. 645) -- D's negligent conduct (chemical spill) allegedly interfered w/P's business (airline) after P's ees were forced to evacuate the terminal they operated out of. There was no personal injury or property damage. P sued for its economic losses. Held: P's stated a cause of action. A D owes a duty of care to take reasonable measures to avoid the risk of causing economic damages, aside from physical injury, to P's w/respect to whom D knows or has reason to know are likely to suffer such damages from its conduct. D failing to adhere to this duty of care may be found liable for such economic damages proximately caused by its breach of duty.

5. Pruitt v. Allied Chemical Corp. (p. 651) -- P's sued D for allegedly polluting James River and thereby injuring the wildlife in that river. P's (fishermen, seafood wholesalers and distributors, restaurateurs, marina and baitshop owners) sued for loss of prospective profits resulting from their inability to sell contaminated seafood. Held: Fishermen allowed to recover. P's who purchased and marketed seafood from commercial fishermen not allowed to recover b/c damages were insufficiently direct. To the extent that P boat and marina owners suffered loss of sales of goods and services to sportsfishermen, they stated a legally cognizable claim.

6. Stop & Shop Companies v. Fisher (p. 656) -- D's collided w/a bridge that connected folks to P's store, thereby obstructing that bridge and cutting off access to P's store. P's sued for economic loss on a nuisance theory. Held: An established business may state a claim in nuisance for severe economic harm resulting from loss of access to its premises by its customers. P must suffer special economic harm b/c otherwise it would be a public wrong for which a private individual cannot recover. (Ct. noted that its holding is the majority view.)


A. The Unjust Enrichment Concept

1. Restitution is civil liability based on unjust enrichment.

2. Common law cts developed restitutionary device called "quasi K" based on the action of assumpsit; theory was unjustly enriched D became a party to a K implied by law. K fashioned by ct was fiction to oblige payment to the P in the amt of the unjust enrichment. Ex. -- quantum meruit, which allows recovery of the value of services rendered under circumstances not covered by express K.

3. Equity cts developed different restitutionary remedies like constructive trusts and equitable liens.

4. Remedial aspect of restitution focuses on the measurement of a benefit in the hands of a D. Whether a D is a wrongdoer is not the key; the substantive q's are whether the D has been enriched and whether the retention of such enrichment would be unjust.

5. Pyeatte v. Pyeatte (p. 713) -- Husband and wife entered into oral agreement wherein they agreed to take turns putting each other through school. As soon as husband graduated from law school, the marriage dissolved. Wife sued and the trial ct awarded her $23,000 in damages. Held: P entitled to restitution, but award ltd to financial contribution by P to D's living expenses and direct educational expenses. Furthermore, the award to P should be limited to the amount of the anticipated benefit to her.

Restitution is available to a party to an agreement where he performs services for the other believing that there is a binding K, and is available absent any showing of mutual assent.

6. Implied in fact K = true K, differing from an express K only insofar as it is proved by circumstantial evidence rather than by express written or oral terms. Contrast w/quasi-K, which is not = to a K but is a duty imposed in equity on a party to repay another to prevent his own unjust enrichment.

7. The existence of a valid express K covering the subject b/w the parties will preclude recovery on a quasi-K theory. P may plead the K claim and the restitution claim, however, as alternative theories of recovery.

8. Monarch Accounting Supplies v. Prezioso (p. 720) -- P leased an office building from D, and D subsequently leased the roof to an advertising co. to erect a sign. Trial ct awarded half the roof rental received by D to P, and D appealed. Held: Trial ct erred -- should have awarded full value of roof rental to P. D did not reserve control of the roof premises under the terms of the lease to P and therefore did not have right to lease the roof premises. Ct also erred insofar as it awarded portion of rent from date of judgment until end of term of P's lease b/c that amt had been neither received nor retained by the D.

9. In cases where P has incurred X amount of expenses and D has received a lesser amt of benefit -- absent evidence that the D acted improperly, restitution will be ltd to the measure of the D's gains.

10. It is not necessary to prove tortious, illegal, or fraudulent conduct by the D to establish that the enrichment is unjust.

11. Cablevision v. Tannhauser (p. 723) -- P was supplying some of D's condo units w/cable, and D pirated cable for the rest of the units. Held: Appropriate case for P to recover damages on quasi-K theory.

To recover on quasi-K theory, P must show (1) that a benefit was conferred on the D by the P; (2) that the benefit was appreciated by the D; and (3) that the benefit was accepted by the D under such circumstances that it would be inequitable for it to be retained w/o payment of its value.

B. Benefits Acquired by Agreement or Mistake

1. P can recover specific benefit or its value in restitution where it is conferred by mistake.

2. Alder v. Rudis (p. 727) -- D was hired by P inventors (invented 3-D movie device) to market its product. D paid them $5,000 and was given the letters patent to the product for safekeeping. D discovered some sort of fraudulent behavior on behalf of the P's and cancelled the K. P's demanded their letters patent back, but refused to give back $5,000. P's sued for claim and delivery and declaratory relief against D. Trial ct awarded P's possession of patent letters and $20,000 in damages. Held: Delivery of letters patent should have been conditioned on return to P of $5,000. P's were not entitled to an award of damages.

3. Kelner v. 610 Lincoln Road (p. 731) -- D's jewelry store was robbed and they hired P attorney to collect $ from ins. co.; 40% contingent fee agreed upon. Atty negotiated for ins co to pay full face value of policy, but after his fee and the consignors's settlement were taken out, there was nothing left for D's. D's fired P and hired an atty who got a better settlement w/the consignors. Jury found that atty was entitled to 40% of $100K. Held: Affirmed -- no reason where jury settled the matter to restrict atty's fees to quantum meruit.

4. Quantum meruit is not available where a K has been completed and all that remains is the payment of the K price. As a quasi-K theory, it's available only for partial completion of a K.

5. Rosenberg v. Levin (p. 734) -- D hired P attys on a contingency basis to perform services for him and then discharged the attys and settled the matter. P's sued on a quantum meruit theory, and trial ct awarded them $55,000. Appellate ct lowered award to $10,000, the max they could have received under the contingent fee agreement. Held: Appellate ct correct. Ct officially adopted the modified quantum meruit rule, which limits recovery to the maximum amount of the K fee in all premature discharge cases involving both fixed and contingency employment K's. Further, ct held that in contingency cases, cause of action for quantum meruit arises only upon the successful occurrence of the contingency.

6. Chambliss, Bahner & Crawford v. Luther -- TN app ct rejected P atty's argument that quantum meruit should be the basis for the recovery even if its exceeds the K fee.

7. Ward v. Taggart (p. 739) -- D real estate broker lied to P and said that he was the broker on some land when he wasn't. What actually happened was D bought the land from the seller w/o telling P, then pretended that he was representing the seller and sold it for more $ than he had paid for it, realizing a $1,000 profit per acre. P sued in tort on a fraud theory, and ct awarded compensatory and exemplary damages. Held: B/c there was no proof that P's suffered any out-of-pocket loss, they could not recover in tort for fraud. They were still entitled to compensatory damages, however, on a restitution theory. D argued that there could be no exemplary damages w/an unjust enrichment award, but ct disagreed b/c restitution has little or no deterrent effect.

8. Benefits conferred by an agreement that was induced by fraud can be the subject of a claim in tort for misrepresentation or of a claim for restitution.

9. Winslow, Cohu & Stetson v. Skowronek (p. 742) -- P accidentally delivered securities to D of a greater value than the ones D purchased. P sued after D had already resold the securities, alleging claims sounding in unjust enrichment, conversion, and wrongful possession. Held: There was no conversion b/c there was not a timely demand to return the securities. Undue enrichment and restitution were, however, available theories. Payment of $ under a mistake of fact may be recovered, provided that such recovery will not prejudice the payee. P was awarded the amount received by D from the sale in excess of what D would have received from the sale of the stock he was supposed to have and the difference b/w the dividends received by D and the amt of the dividends D would have received on the correct stock.

C. Waiver of Tort and Suit in Assumpsit

1. Primary function of this basis of recovery is to recover profits from wrongdoers where the relationship b/w the parties does not support the imposition of a constructive trust. P can bring an action in assumpsit against a thief. Another function is to gain the typically longer K stat of lims.

2. Not all torts may be waived in favor of quasi-K actions. Cts most commonly have permitted waiver of conversion, and waiver of trespass to chattel has also been allowed. Cts are split on whether to allow waiver of trespass. Cts have rejected waiver of other torts such as defamation.

3. Taylor's Fire Prevention Service v. Coca-Cola Bottling Corp. (p. 747) -- P provided fire extinguishers to D and after the K expired, D failed to return all of them. Trial ct found that P waived its conversion claim and treated the action as a purchase and sale of cylinders, thus entitling it to the longer stat of lims. D argued that b/c the gravamen of P's claim was the taking of chattels, the shorter stat of lims should apply. Held: Where there is a waiver of tort and suit in assumpsit, the stat of lims relating to actions in assumpsit rather than torts applies.

4. Some cts have refused to allow a waiver of tort and suit in assumpsit unless D made a resale of P's goods. Old rule not followed in most jurisdictions.

5. Advantage of quasi-K theory based on writ of $ had and received is that P could recover the D's profits of the resale of the P's goods was at a price higher than market price. Legal fiction is that D acts as P's agent during the sale. When no resale occurs, quasi-K is based on the old writ of goods sold and delivered. Legal fiction is that D personally purchased the goods from the P at fmv.

6. Felder v. Reeth (p. 752) -- Very confusing fact pattern. Basic holding of the case was that an injured party may choose to waive the tortious taking of his property as well as ignore a subsequent sale, thereby making the appropriate award of damages fmv rather than the subsequent sale price (a deal if that price was lower than fmv).

7. Olwell v. Nye & Nissen (p. 757) -- P sold his share of co to D but retained rights to an egg washing machine. The egg washing machine was just sitting in storage, and b/c there was a shortage of labor due to the war, D bogarted the machine and started to use it once a week. When P found out, he sued, praying for $25 per month. Trial ct entered judgment for P in the amt of $10 per week. Held: Even though P had sustained no losses, D was required to disgorge the benefits it had received b/c it had acquired the benefits tortiously. Recovery limited, however, to P's prayer of $25 per month.

D. Constructive Trust

1. Imposes an equitable duty on a D to convey property acquired under certain circumstances (fraud, etc.) to the rightful owner. Fiction created by operation of law on the ground that the constructive trustee would be unjustly enriched if it were allowed to retain the property.

2. County of Cook v. Barrett (p. 761) -- D county clerk had been accepting bribes regarding voting booths,, with the result being that the county paid more than it should have to rent the booths. Held: P county entitled to constructive trust imposed by ct of equity on bribe $. P proved abuse of confidential relationship by D. Irrelevant that $ D forced to disgorge were bribe $.

3. Primary advantage to constructive trust remedy is that rightful owner may compel conveyance of the property in specie. Therefore, by obtaining specific enforcement of the trust, the beneficiary will effectively have a 1st priority position over other creditors of the D. The equitable interest will prevail except as against bfp's. 2d benefit is that beneficiary's equitable interest will be effective to obtain specific restitution of property which has been transferred to a 3d party not a bfp. Moreover, if the beneficiary can trace the disposition or exchange of the property, the ct will impose a constructive trust against the property's product in the hands of the D.

4. Stauffer v. Stauffer (p. 766) -- P husband was having an affair w/D wife's sister. Husband was sorry, and the couple decided to stay together. D wife, however, became hysterical and scared husband with threats that sister's husband would sue, etc. Result = P conveyed house to D for sum of $1 and D subsequently sought to dissolve the marriage. D sued to compel reconveyance. Trial ct found for P and conveyed a constructive trust on the house in the hands of D. Held: Constructive trust appropriate. Trial ct could have found that D wife fraudulently induced P into conveying house to her. D argued that P had come into ct w/unclean hands, but ct said no -- P's adultery was unrelated to the transaction at issue.

5. Simonds v. Simonds (p. 770) -- P had entered into marital dissolution agreement w/her ex-husband that required him to maintain $7,000 life ins. on himself w/her as the beneficiary. When he died, the only policies in effect were those naming new wife and kids as beneficiaries. P sued seeking to impose a constructive trust on the insurance proceeds in the hands of the 2d wife to the extent of $7,000. Held: Constructive trust imposed. 1st wife's interest in the original policies extended to the later acquired policies.

6. Some cases have restricted the use of a constructive trust by imposing the following requirements: (1) a confidential or fiduciary relationship; (2) a promise; (3) a transfer of legal title to property in reliance on the promise; and (4) unjust enrichment of the transferee.

7. Snepp v. United States (p. 774) -- D ex-CIA agent published a book w/o submitting it to the CIA for pre-approval, as he was contractually required to do. Held: CIA entitled to constructive trust on the proceeds even though P D had not published any classified info. Ct reasoned that it was the only way to adequately protect CIA's interests.

E. Equitable Liens

1. Operates as a charge or encumbrance on property. Available only where the P can trace misappropriated property to its product. Not like constructive trust insofar as constructive trust treats the title to the property as belonging to the claimant.

2. Circumstances when an equitable lien is preferred:

a. when the property has declined in value; and

b. when there is not a severable interest in the D's property against which the P is making the equitable claim.

3. In re Marriage of Allen (p. 782) -- Husband and wife dissolved marriage and property was divided. Subsequently, it was determined that a large amount of the property was acquired with funds husband had embezzled from his employer. Employer sought to impose a constructive trust on the property received by the wife. Held: Remanded to trial ct w/instructions to set aside the permanent orders and redivide the property taking into a/c employer's interests. Employer was entitled to either constructive trust or equitable lien on property held by the wife. Wife was considered to be a donee (rather than a bfp) and an innocent donee is liable only to the extent to which she is unjustly enriched at the time she acquires notice of the equitable ownership of the other party.

4. Whereas the beneficiary of a constructive trust receives title to the trust property, a P who receives an equitable lien receives only a security interest in the property held by the D. An equitable lien is the proper remedy when some part of the property belongs in good conscience to the D or some 3d party. May be the preferable remedy in which the D has used the P's property to purchase other property and the other property has decreased in value (P has an equitable lien on the later-acquired property and can get a $ judgment against the D for the difference).

5. Neither a constructive trust nor an equitable lien can operate against 3d party who acquired the property for value and w/o notice of the circumstances under which the property was wrongfully acquired.

6. Equitable lien may be less expedient than constructive trust b/c it requires foreclosure of the property.

7. Middlebrooks v. Lonas (p. 789) -- P sued her parents, alleging that they had borrowed $ to build a house from her and not repaid her. Trial ct granted summary judgment in favor of D's. Held: Reversed. Trusts are implied where by fraud one person obtains title to property that rightly belongs to another, and a promise to repay w/o present intent to do so is fraudulent. Regarding adequacy of remedies at law, P had established that the D's had mortgaged the home and lot. If she were to obtain a $ judgment, she would be subject to the rights of the mortgagee, but with an equitable lien, she would take subject to the rights of the mortgagee only if the mortgagee were a BFP.

8. Robinson v. Robinson (p. 790) -- P sued her ex-husband and his parents to establish her rights in a house that she and her ex-husband had built on his parents' farmland (big everybody lives on the family farm kind of deal). Held: While the trial judge didn't call his award an equitable lien, that's what it was. D's were directed to pay P 1/2 the reasonable value of the improvements placed on the land by P and her ex-husband.


A. Tracing

1. Claimant is required to "trace" or follow the misappropriate property into its substituted form. Restitution may be asserted not only against the wrongdoer but also against a 3d party holding the property who is not a bfp.

2. P's who can trace property have 2 advantages: (1) they may obtain specific restitution of property that has subsequently increased in value, and (2) they may receive a priority over gen'l creditors of an insolvent or unavailable wrongdoer.

3. G & M Motor Co. v. Thompson (p. 797) -- Decedent embezzled $ used to pay premiums on life ins policy. Trial ct imposed a constructive trust upon a portion of the insurance proceeds in possession of decedent's wife. Held: Affirmed. Where a wrongdoer mingles wrongfully and rightfully acquired funds, owner of wrongfully acquired funds is entitled to share proportionately in acquired property to the extent of his involuntary contribution. Principle is specifically applicable to life ins policies by virtue of a Restitution Restatement comment.

4. Commingled Funds -- Cts will impose an equitable lien on the a/c to allow restitution of the amt which rightfully belongs to the P.

5. Withdrawals from Commingled Funds -- Tracing is still possible, and cts have dealt w/it in several ways:

a. First In, First Out Rule -- First $ put into a/c presumed 1st $ w/drawn.

b. "Jessel's Bag" Rule -- First w/drawals are presumed to belong to the wrongdoer and the remaining balance is subject to the equitable interest asserted by the P.

c. Restatement of Restitution rejects the tracing approaches and gives the P a proportionate share in the fund and its traceable products, enforceable through either an equitable lien or a constructive trust. This approach has been more generally accepted by Am. cts.

6. Republic Supply v. Richfield Oil. (p. 802) -- Confusing fact pattern. D had some wrongfully acquired funds, and court held that P had sufficiently traced them into the hands of P's receiver. Ct then held that lien would be imposed on the entire property held by the receiver (b/c D had failed to show what amounts its own funds had contributed to the purchase of the property), but not to exceed the lowest intermediate balance of the fund. Proof of the lowest daily closing balances b/w misappropriations and purchases of the identified properties constituted a prima facie showing of the lowest intermediate balances.

7. Difficult tracing problems where wrongdoer dissipates commingled funds but later makes deposits of personal funds into the a/c. Majority view is that if wrongdoer manifests an intention to restore the claimant's funds, the equitable lien will be extended to cover the new deposits.

B. Bona Fide Purchaser and Change in Position

1. Person holding equitable interest in property is precluded from enforcing that interest against a 3d person who has acquired legal title to the property for value and w/o knowledge of the equitable interest.

2. "Change in position" is also a defense to restitution. Ct may deny restitutionary remedy if D would be adversely affected by virtue of circumstances which have materially changed after receipt of the benefit. may not apply if D has acted tortiously.

3. City of Hastings v. Jerry Spady (p. 808) -- P city sued to impose a constructive trust on some land purchased by D. P's atty was also atty for D. Knowing that P had to buy land in question in order to build a rd, atty tried 1st to buy land himself and resell at fat profit to P. When that didn't work out right, he had the deed issued in D's name. Trial ct found for P and imposed constructive trust. Held: Affirmed. Actual knowledge of the atty of the city's interest was imputed to his client, D.

4. A person may be charged w/constructive notice of an equitable restitutionary claim where a deed, will, mortgage, etc. has been recorded in a public office. In certain circumstances, a principal will be charged w/knowledge of an agent acquired during the agency relationship.

5. The requirement for giving value to be a bfp not governed by same principles as consideration for formation of a K.

6. Alexander Hamilton Life Ins. Co. v. Lewis (p. 813) -- P life ins co paid $ over to D's after their daughter had been missing for 7 years and she was presumed legally dead. She subsequently showed up, and a judgment of restitution of half of the $ awarded to D's was entered on behalf of the ins co. P and D both appealed. Held: Ins. co. was entitled to receive full amt of $ paid out to P's. There is no change in circumstances such as to prevent restitutionary relief where $ is used for the payment of living expenses unless the expenses were incurred b/c of the receipt of the $ and the amt of such payment was of such size that considering the financial condition of the payee it would be inequitable to require payment.

C. Volunteers

1. Volunteers can't force others to become their debtors by providing them w/unrequested goods or services and then suing them for the value of the enrichment. If a benefit has been conferred on an unwilling D who has no choice in its acceptance, a ct will deny restitution. Such P's are called "officious intermeddlers."

2. There may be restitution to a P who never intended a gift if the D does have a meaningful choice about whether to receive the benefit.

3. Cts sometimes give restitution to a volunteer even when the D does not have a choice of acceptance. Ex. -- When Good Sam helps a lost child by paying for emergency tx when the parents can't be located, the parents must give restitution for the benefit.

4. Everhart v. Miles (p. 819) -- P's were to buy a farm from D and in anticipation of doing so and during the course of negotiations moved in w/D's approval and operated the farm. Deal never worked out and P's vacated the premises, leaving a lot of improvements and silage. Held: P's awarded restitution. D argued that P's were officious intermeddlers, but ct didn't buy it b/c D knew P's were making improvements, etc. and did nothing to stop them. D received benefits that were neither thrust upon him nor strictly voluntary on the part of the P's.

5. Historically, cts denied restitution in all cases involving real property improvements that could not be removed. Modern cases have tended to allow recovery where the improvements are not fixtures.

6. Jako v. Pilling Co. (p. 823) -- D designed medical equipment as per P's suggestions and called it by his name, as was the custom of the industry. There was no arrangement for compensation, and the relationship went on for years before P out of the blue demanded restitution. Held: No restitution for P. D was not unfairly enriched b/c P had benefitted mankind (which had been his goal) and had his career enhanced w/the use of his name.

7. Felton v. Finley (p. 825) -- P atty represented 2 cousins in will contest. He had originally agreed only to do so if 4 others joined in as his clients. They never did, and he successfully contested the will. 4 cousins who weren't his clients nonetheless got to share in the proceeds of his efforts, and he sued them to recover in restitution for the value of his services. Ct originally held that despite the fact that the cousins had never been his clients and had repeatedly disavowed any interest in pursuing the matter, the atty was entitled to w/hold part of their recoveries for fees. Dissent argued that atty had acted pursuant to K's w/his 2 client/cousins and that the others could not be charged for that work even though they gained a benefit. Ct held in line w/dissent on rehearing.

8. There is no recovery in restitution for benefits incidentally bestowed upon the D while the P pursues matters of personal benefit.


A. Entitlement

1. "American Rule" = Each party pays its own fees.

2. Parties to a K are free to agree in advance of breach that reasonable atty fees can be collected by the non-breaching party as necessary to enforce the K.

3. Common Law Exceptions:

a. Vexatious litigation; bad faith exception that requires more than a showing that the claim, etc. was weakly supported.

b. Common Fund -- When litigation produces a common fund shared by several claimants, atty fees can be taken from the fund before distribution. Ex. -- class actions.

c. Substantial Benefit Theory -- When litigation produces a "substantial benefit" either pecuniary or nonpecuniary in nature, the common law sometimes allows atty fees. Fuzzy.

d. Plaintiff acting as "private atty gen'l." This theory is available only under state common law, not federal. SCt has specifically rejected this basis for awarding atty fees except as specifically authorized by Congress (Alyeska Pipeline v. Wilderness Society).

4. Autorama Corp. v. Stewart (p. 850) -- P filed suit alleging that D's had violated securities regs. Failed to respond to D's motion to dismiss and case was dismissed for lack of jurisdiction. D's moved for atty fees. Held: Each party bears own costs. Case was neither resolved on the merits nor filed vexatiously.

5. Krause v. Rodes (p. 854) -- P's were persons injured and personal representatives of persons killed at Kent State riots. Atty was representing them at 33 1/3 contingency rate. State offered a settlement of $675,000 conditioned specifically on at least $600,000 going to P's and trial ct approved. Atty argued that trial ct did not have discretion to override agreement b/w parties in approving a fee settlement. Held: Atty wrong. Trial ct can do this based on traditional power to resolve fee disputes b/w litigants and their counsel.

6. Newman v. Piggie Park (p. 857) -- P's got verdicts against some restaurants for racial discrimination in claims brought under Title II. Ct of appeals instructed trial ct to award atty fees to P's to the extent that D's defenses were for delay and in bad faith. SCt held that P who succeeds in getting an injunction under Title II gets atty fees regardless of whether the D's defenses were in good faith.

7. One of most important statutory provisions for atty fees is the Civil Rights Atty's Fees Awards Act, 42 U.S.C. 1988.

8. City of Riverside v. Rivera (p. 859) -- Young atty represented "eight Chicano individuals" in 1983 claim v. the city. P's lost on some clams and got pretty low awards on others. Attys had racked up some high fees (dist. ct awarded $245,456), and issue was whether an award of atty fees under 1988 is per se unreasonable if it exceeds the amount of damages recovered by the P in the underlying civil rights action. SCt Held: No.

Way to determine fees under 1988 -- Hensley v. Eckerhart -- start w/the amt of a reasonable fee times the number of hours reasonably expended (lodestar), and then adjust upward or downward based on other considerations, inc. result obtained.

B. Special Issues in Attys' Fees

1. Ct has interpreted the "prevailing party" language in Title VII to = different standards for P's and D's. Cts should allow fees to prevailing P's as a matter of course, and allow fees to prevailing D's in ltd circumstances.

2. Hoover v. Armco (p. 867) -- P brought ADEA claim and the trial ct granted summary judgment for D on the demotion claim. D argued that it should be awarded atty fees incurred defending D's claims. Held: Atty fees should be awarded to D only on P's demotion claim. Standard where there is "prevailing party" language -- D should get award of atty fees upon a finding that P's action was frivolous, unreasonable, or w/o foundation, even though not subjectively brought in bad faith (Christianburg Garment Co. v. EEOC). In this case, D was demoted after he purposefully took a vacation for which the employer had denied leave.

3. Under ERISA, dist. ct may award reasonable atty fees to either party.

4. McKever v. Vondollen (p. 871) --




1. coercive - injunction or specific performance - commands D to do or refrain from doing a specific act

2. Damages

3. Restitution -restore to position b/4 injury

4. Declaratory -used to determine rights or legal relationship between parties- construe K or constituitionality of a statute

B. Remedies at Law and Equity

1. TN Ct system - have a split system

a. circuit ct - ct for c/l civil and criminal actions (split into crim and civil 's

b. Chancery ct - hears equity cases; divided into divisions

c. However, much of this difference eliminated by statute. Chancery ct can hear any case except for unliquidated damages -ex tort cases where damages haven't been agreed to in a K. Chancery can hear all cases except above b/c parties can waive s/m jurisdiction.

d. Other cts in TN

1. General Sessions - Are Trial Justice Cts and can hear all civil suits below $10,000 ($15,000 in Shelby Cty). Have Form for Complaint and oral answer by D. 2 Exception to this $ limit

a. Actions for detainer(rent collection)

b. Repossession of personal property.

Do have right to appeal from Gen Sess. to Cir. and can have completely new trial w. new evid., witnesses, jury trial

2. Law and Equity Cts -Some Counties - Anderson, Blount combine Chancery and Circuit

3. Juvenile Cts

4. Intermediate Cts - CT of Appeals, CT of Crim. Appeals

5. Supreme Ct - by discretion only

6. US Supreme Ct


1. Defined in Title 28 TCA

a. 6 mth for following actions

1. oral defamation/slander - 6 mths from utterance regardless if you heard it or not

2. violation of Bulk Sales Act - sale to bulk buyer but no one tells gen CR's - have to file suit 6mths sale of bulk goods

b. 1 yr for

1. P.I. cases

2. med mal

3. intentional torts

All one year from time of injury

c. 3 yrs for

1. Actions involving injury to property

2. Economic Fraud

d. 4 Yrs from

1. Sale of goods K -Art II UCC

e. 6 yrs for K actions

f. 10 yrs if other statutes don't specifically cover

2. If have ? on what type of action it is cts usually apply the doctrine of the gravaman of an action - ex where it was an action involving injury to prop or K (3 or 6 yr stat of limitation - TN cts usually will hold the lesser stat of limit.

3. If have a p/i or wrongful death claim can also possibly claim breach of warranty whcih carries with it a 4 yr stat of limit instead of 1 yr - Layman v. Keller Ladders

3. STATUTES OF REPOSE -Some states have declared unconstit but TN still has (apply rational basis test)

a. in some sit. the stat of limitations might not have expired but the stat of repose has. Ex- TN has 10 yr stat of repose for Products Liab Actions b/c theory is that 10 yrs after product leaves manuf hands, manuf shouldn't have to worry about liability. Stat of limitations wouldn't start running until someone or something is injured, so if done beyond 10 yrs after product entered stream of commerce - shit out of luck

1. 2 execptions to 10 yr repose on products liability

a. asbestos

b. silicon breast implants



B. Ex 2- med mal- 3 yr stat of repose from time of injury and assuming doctor hasn't fraudulent concealed malpractice then shit out of luck

c. Ex. 3 - 4 yr stat of repose for architects and engineers after substantial completion of project

???? d. Ex 4 - 4 yr stat repose from Consumer PRotection Act

e. Med Mal Act - If have product which has a gov mandated expiration date - 1 yr stat of repose from expiration date forward

4. Soldiers and Sailors Civil Relief ACt, USC Appendix 525 - statutes of limitations are tolled for persons in the military (until they get out?)


To obtain relief P must

1. establish substantive entitlement to relief

2. establish a legal basis for the desired remedy -what this part focuses on.


1. 3 Sources of remedial rights: statutes, federal and state constitutions, and c/l.

a. important b.c the sources of remedies helps show that

1. part. remedy is permissible

2. and also might place some limitations on the remedy


a. Orloff v. LA Turf Club - although stat only allowed damages but ct allowed injuction b/c relief was inadquate

b. Hodges v. S.C. Tuff 833 Sw2d 896- Hodges had Jury Duty and when got back was demoted and harassed- TCA 22-4-108 provided only for reinstatement and compensation for lost wages. ? became whether remedy was exclusive -CT said no b/c at time stat was passed had S Ct case on retaliatory discharge allowing punis and legislature is deemed to know this when they passed the exclusive remedy so that even though they don't specifically allow for punis, they are allowed b/c of prior law

3. TN hasn't capped damages but some states have done so

4. Some states have held unconstitutional the elimination of remedies available at common law -- Heart Balm stat. --In response legislatures have begun to restrict the remedy itself and limiting its application instead of doing away w/it

a. TN has eliminated and not just restricted -- SCT has upheld this as constit

??? 5. Cowen Equip. v. GM - UCC provision concerning unconscionable contracts doesn't create cause of action for damages ie can't use unsconscionabilty statute as a damage remedy source

a. TN Franchise Statutes -47-25-1501(??? ask Bob what this said) and 1301(if cancel franchise have to purchase inventory back in farm equip, machinery, utility and indus equip, or motorcycles

6. NORRIS-LAGUARDIA ACT - Fed cts may not enjoin strikes - have to go to state ct

7. Treister v. American Academy of Orthopaedic Surgeons- Surgeon seeks injunction to get in Academy; CTS WILL ONLY REQUIRE AN PRIVATE ORGANIZATION TO LET A QUALIFIED PERSON IN IF IT IS AN ECONOMIC NECESSITY

a. Ex where can bring suit is if surgeon who gets surgery privleges taken away - can bring Anti-trust action and get atty fees and treble damages

8. Pulliam v. Allen - judge acting w/in powers told D's to post bail even though they couldn't go to jail for their crimes; Ct held that even though can't sue judge for damages, Can get injuction against judge to prohibit him from doing something.


1. The remedial "label" that is given to a certain remedy can affect matters such as right to jury trial, insurance coverage, method of judicial enforcement of remedy - ie imp if $ that pass from D to P is classified as damages or equitable relief

2. Maryland Casualty Co. v. Armco - General Comprehensive liability Ins policy of company regarding environmental section stated that it would reimburse company for any damages that co had to pay.; in this case company ordered by ct to clean up nad reimburse P- Ct said since relief here was injunctive and restitution then insurance policy didn't have to reimburse b/c it was limited to "damages"

a. Note Penn Terra case says that can't seek protection in B/R of automatic stay when hit with a restitution suit for env. damages (CONTRA US V. WIZCO, 841 F2D 147 (6TH CIR.).


TCA 50-6-101 et seq.

207 schedules for various injuries

225 scope of appellate review

A. PREVENTIVE INJUNCTIONS - ct order designed to avoid future harm to P by controlling D's behavior

1. 2 types

a. prohibitory - do not do this

b. mandatory - Remove this obstruction

2. Considerations Used in Determining Whether Injunctive Relief should be Granted (Equity Jurisdiction is another term for the appropriateness of equitable relief)

a. INADEQUACY OF REMEDY AT LAW - If remedy at law, usually damages is sufficient then injuction won't be granted--uniqueness of land

1. Thurston Enterprises -Drive-in theater gives easement to neighbor to transport fill dirt- trucks fuck up road. Ct says as to past injuries damages sufficient but as to future grant injuction as other legal remedies inadequate. Damages for past losses is the province of law but prevention of a multiplicity of future suits for damages is a ground for equitable relief

2. consider this when determining relief for remedial equity not substantive equity which allows a cause of action for trusts, mtgs, stockholderts derivative actions

3. Wheelock v. Noonan - rocks put on lots which were much larger than expected- Ct issues mandatory injunction b/c of possibility of multiplicity of lawsuits as D could pay damages and continue occupation and just continue to pay when sued

4. Future infringements -another factor along with multiplicity of future suits to consider when determining inadequacy at law. One possibility would be to show a continuing tresspass which requires a showing that D wouldn't follow demand to vacate. Another possibility would be to show repeated tresspass which requires the showing that the D is likely to continue to repeat the invasions in knowing violation of the P's rights.

5. Trespass by trash - Injunction will not be granted if D just littered P's ground with trash. P can pay to have someone clean it up and sue for damages.

b. Irreperable Harm (Great Harm)- usually just alternative phrasing to inadequacy rule - harm is irreperable b/c the damage remedy is inadequate; but in TN need to show both inadequate remedy and that the harm threatened is great.

1. Compute-a-Call v. Tolleson - D failed to pay a bill - ct said not irreperable harm b/c can adequately be addressed by damages- damages suffice

2. Muehlman v. Keilman - injuction granted to prevent D from operating semi-trailer next to P from 8:30 PM to 7 AM b/c of irreperable harm to their health b/c of lack of sleep and enjoyment of their property. Hence, private nuisances will cause injunctions to be issued tif the loss in the use or enjoyment of property is great. But if just slight then no go

c. Relative Hardships - Balancing interests--Hardship on P if don't grant and on D if do

1. Covenant not to compete clauses are frequent situations under this; must have a valid bus reason for having employees sign cov b/4 hiring them- protecting trade secrets, sometimes customer lists but not maintain mkt share

a. Hasty v. Rent-a-Driver, 641 SW2d 471, Ct didn't enforce b/c of lack of bus purpose to sign

Tricky situation also occurs if get employee to sign clause after she's been working.

a. Central Adjustment Bureau v. Ingram 678 SW2d 28 - Can have current employees sign as long as employee continue to be employed for an extended period of time (better if get raises) as this is the same as consideration

If cov covers too long of a time period and is too geographically broad then judges in TN narrow the terms by shortening time and geographic considerations

Can't sign cov not to compete in legal environment as it is a violation of DR 2-108 -note includes refusing to provide deferred compensation to person leaving firm -Speigel v Thomas & Mann 811 SW2d 528

2. Triplett v. Beuckman - bridge across lake torn down and causway constructed. P ask for injunction to tear down causway and reconstruct bridge b/c affecting their enjoyment of water- CT Balances interests and orders some of causway be torn down and bridge be constructed over that portion

3. Galella v. Onassis - Dude taking snapshots of Jackie and the kids. Jackie sues to enjoin; ct weighs D const right of freedom of press and indiv right of privacy and places injuction on G to stay certain distance away

4. Abortion cases have rested strongly on this factor and have used this in enacting buffer zones and prohibiting singing, yelling and use of bullhorns. Note Pub. L No. 103-259 has set up crim and civil remedies for obstructing abortion clinics and making threats; crim -makes penalty 1 yr to life; civil-injunctionas well as damages actual or punis (5000 for each violation; allowed b/c hard to prove actual damages)

D + E lumped d. Practicality -is a ct able to enforce injuction

together e. public interest -

1. Cole v. Dych, 535 SW2d 315 - persons of Gatlinburg have public interest to have easement over pvt property to go to cemetery

2. U.S. v. Rainbow Family -Groovers come out1 yearly for festival at US park but do drugs, disturb public, get naked, spreading of communicable diseases from unsanitary conditions. Ct balances freedom of assoc w/ public interest in health facilities being maintained and places injuction on group to maintain health and sanitation provisions -those required for field military encampments or refugee camps--limit the gathering number to 5000 at one site

3. Boomer v. Atlantic Cement - Ct denied injunction to close cement plant which was polluting air and causing noise pollution. Was the major employer in the town and public interest to keep it open. However, did allow for damages in the amount = decrease in value of residential property

a. Note Fed gov jumped on Clean Air bandwagon by creating CERCLA and RCRA, Clean Air ACt

4. Welton v. 40 East Oak - bldg higher than allowed in zoning ordinance, CT ordered to lop the top off bldg b/c 1. D acted in bad faith b/c built bldg despite knowlege of ord. 2. Public right to sunlight

3. If ct erroneously concludes that equitable relief should be granted, then D must appeal and may not collaterally attack the order by disobedience of it (will be found in contempt)


1. a mandatory injuction the functions to ensure enforcement of valid contractural obligations. It is punishable by contempt if disobeyed. Can be used to get something done even the res is in another jurisdiction. b/c have pers. juris over D can have juris over prop in another state

3. Entitlement to Specific Perf

A. consider 5 factors

1. inadequacy of available legal remedies

2. likelihood of future performance by party seeking enforcement of K

3. ability of breaching party to render performance

4. balance of interests and relative hardships of K parties

5. potential difficulties in supervision or enforcement of decree.

a. one reason why no spec perf for personal service K

B. Usually involve cases where you have unique property -land, heirloom but not for pers. services. For former, damages are inadequte; so if pushing for damages in lieu of specific performance have to show that a comperable substitute is already on the market. K for the sale of land is usually a candidate for specific perf. as each parcel is incapable of duplication and therefore is unique. Note usually the buyer gets specific perf.

C. Van Wagner Advertising v. S & M Enterprises - dispute over unique billboard space in NYC; had breach by D and P wanted injunction so that it could advertise on it; CT said no that specific performance for real property leases isn't normally awarded; just b/c parcel unique doesn't make it a candidate for specific performance as every piece of prop is unique. In asserting that the subject matter of a particular K is unique and has no estaablished market value, a ct is really saying that it cannot obtain, at a reasonable cost, enough information about substitutes to permit it to calculate an award of money damages eithout imposing an unacceptabley high risk of undercompensationon the injured promisee

D. Specific Perf to Buyer of RE - Bush v. Cathey 598 SW2d 777 Ct granted specific performance when CAthey backed out of sale of land K

1. another issue this case raised was the equal dignities rule -most states say that b/c real estate K's have to be in writing signed by person selling it, if you give the power to sign to an agent, that agency K must be in writing as well. TN law is to the contrary - Bush as Mr. Bush had oral authority to sign his wife's name

Specific Perf to Seller

1. Shuptrine v. Quinn, 597 SW2d 728, unique house that cost $325,000 to build. S decided to move and K with Q for $311,000. Couldn't get adequate loan and Q wants to back out. CT granted spec. perf. to seller. Why? b/c damages inadequate b/c the market value is less than the price he pd for it. HENCE LOOK FOR SPEC PERF IS MV<SELLER'S PURCHASE PRICE


F. Niagra Mohawk Power v. Graver Tank & Mfg. -have issue of whether law of personalty or svcs + RE applies to a construction K b/c makes big difference in terms of stat of limit and what law applies (personalty-ucc; RE/svcs-c/l) CT LOOKS TO PREDOMINANT FACTOR TEST (TN follows this) and determines that construction K is K for services even though goods are involved. ONCE YOU DECIDE WHAT K IS THE APPLICABLE LAW COVERS THE ENTIRE K; Owner who had K for services sought specific performance to terminate K and get the remaining materials. Ct granted this request b/c said that determining damages to Graver b/c of breach.

1. note replevin might be an option but b/c of the size of the project and the materials being located in 6 states, don't want to make owner go to 6 different jurisdictions

2. TN follows the predominant factor test -Hodson v. Town & Country True Value Hardware, 666 SW2d 51- sale of hardware store -look to see how price was set -inventory or RE- since RE predominated apply C/L rather that Art. II

G. Henderson v. Fisher -Elderly man makes K with couple that he will give them Blackacre if they take care of them; sign deal and 18 days later he dies; Couple sues for specific perf. -Ct grants and holds based upon mutuality of remedies - look to K at pt of time of person's death (enforcement) and not time of execution.

1. TN Mutuality of Remedies -P can't get specific performance unless D could have gotten spec. perf. from P had the roles been reversed. Leathers v. Deloach 140 Tenn. 259

2. SEC Land Comp v. Touliatos, 716 SW2d 918 and 721 SW2d 250. SEC enters into land K to buy land tract but later finds that T only owned 2/3 of it. SEC wanted spec perf as to 2/3. CT says no b/c if tables were turned, T couldn't force on SEC only 2/3 of what they had originally K' d for.

???? 3. Possibly can get around Mutuality of remedies in TN by using A.A. & O. Land Company v. Dodd 5 TAM 40-12 (1990)m, no application for perm. to appeal. Held look to mutuality not at time of enforcement but at time of filing of complaint

H. Spec. Perf. won't be granted in the case of pers. svc. K b/c unless svcs unique damages would adequately compensate. Also would be difficult to fashion decree to force someone to work for someone and subsequent supervision of it. Have constit problems with involuntary servitude.

I. Negative Injunctions (Restrictive Covenants)- Although won't force someone to work for another, cts may prohibit giving services to others in contravention of existing contratural obligations particularly to comptetitors.(ie you K to give services solely to X Corp). Cts will uphold restr. cov if

1. service involved is unique

2. area covered is related to svc involved

3. time period of restriction is ltd


A. Looks at not only adequacy of legal relief but equitable notions of fairness, public policy, and ability to enforce and supervise order. Hence SP might be denied in sit of fraud, mistake, duress, or unreasonable hardship. REMEMBER MUTUALITY OF REMEDIES

B. TN Distinction of Sale of Land in Gross (SOLG) v. Sale of Land by an Acre (SOLA) -SOLG is I offer to sell you lot 18 in X subdivision for $30,000 which contains 2 acres. SOLA I offer to sell you 2 acres of land at $15,000 per acre. Faithful v. Gardner, 799 SW2d 232 - IF SOLG no abatement of purchase price if don't get acreage unless large disparity. IF SOLA, then get abatement in purchase price b/c you bargained for X acres whereas in SOLG just bargained for lot.

5. K FOR THE SALE OF GOODS- In examining these type of K for specific performance, look at UCC 2-716(2) which states that it will be granted 1. when goods are unique and 2. in other appropriate circumstances.

A. Unique Goods - not just heirlooms or priceless works of art but also contracts involving a particular or peculiarly available souce or market

1. Sedmark v. Charles Chevy - Indy 500 pace car held to be unique good and specific perf granted

2. Weathersby v. Gore -specific performance denied in cotton K b/c damages remedy adequate as readily available product

B. Other Appropriate Circumstances - example comments to UCC is inability to cover.

1. Kaiser Trading v. Assoc Metals & Minerals - All natural mineral used up so have to go to synthetic and supplier cut him off. Ct held that mineral was scarce and buyer couldn't readily cover and needed specific perf to protect its expectation interest.

2. Ace Equip v. Aqua Chem -HAve used electric transformer. Buyer signs K to puchase and K to sell to 3rd party. Orig seller renigs. CT granted specific perf but most cts would not as not unique and damages would suffice. CT influence by fact that BUyer would incur consequential damages from party it had K with


A. Ct usually wil not grant equitable relief if the P has behaved in a way prejudicial to the D or offensive to public policy.

B. 5 Types

1. Laches - bars P's who hasn't acted promptly in bringing action. "Equity aids the vigilant, not those who slumber on their rights." Requires proof of 1. unreasonable delay and 2. prejudicial to the D. Prejudice can be shown by defense prejudice -can't mount defense b/c of delay b/c of loss of records, destruction of evid, fading memories, or unavailability of witness. Also can be shown by economic prejudice --consequences primarily monetary should the claimant prevail. Hence, applies even if stat of limitations hasn't run

a. Cornetta v. US -soldier didn't get promoted b/c got bad reviews but waited 7 yrs to get into ct. CT only didn't grant laches b/c of factual dispute

1. Soldiers Relief Act doesn't toll laches defense

b. Gruca v. US STeel -employee comes back from Vietnam and not given seniority status but waits 9 yrs to file --dismissed b/c of laches

c. TN CASE --John P. Saad & Sons v. Nashville Thermal Transfer, 715 SW2d 41, K to selll waste oil which turned out to be defective. NTT quit taking deliveries from Saad for 5 yrs and upon termination of K, SAAD sues for that part delivery. CT dismissers b.c causes prejudice as records not available

2. Estoppel - involves actions inconsistent with the rights the P now asserts. Can't stand outside and watch neighbor build fence and then demand equity and demand its removal b/c it is over the property line. If government is a D asserting estoppel, usually it can more easily show prejudice. AS a P, gov usually will not be able to be estopped. TN Board of Dispensing Opticians v. Ey-ear Corp 400 SW2d 734

a. Beacon v. EEOC - retired atty hired and had made plans to move, written clients etc. CT applied Defensive estoppel and disallowed gov D from asserting certain defenses. FActs dictated that ct rule against gov contra to general rule

1. Baliles v. Cites Service Comp., 578 SW2d 621, TN ct did same as in Beacon--prevented D through estoppel from raising a Defense of stat of frauds b/c B had already begun making improvements on land he bought

b. Elements

1. 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 ther estoppel has a right to believe it is so intended

3. party asserting estoppel must be ignorant of the true facts

4. he must rely on the former's conduct to his injury

5. IF gov is D must also show that that injustice caused by gov outweighs interest of public not to be unduly damaged by imposition of estoppel

3. Unclean Hands -When party seeking relief has behaved inequitably with respect to the rights being asserted. TEst is whether the the behabior is offensive to the ct; if so P doesn't have equitable calim but only the legal one. THis taint must be directly related to the matter b/4 the ct not collateral to it

a. Senter v. Furman - Dentist in malpractice trouble so deeds prop to nurse with understanding that she will deed it back to him. When she doesn't, ct says tough shit b/c unclean hands

b. Best v. Best -773 SW2d 260, H conveys prop to wife b/c hiding unpd taxes and CRs and when tries to get it back ct says tough shit b/c unclean hands

c. N. Pacific Lumber v. Oliver -stands for prop that while P must have clean hands to get equitable relief only has to relate to substance of the case ie direct rel between bad conduct and issue of case to not be eligible to get equit relief

1. This is big in domestic cases as some cts will refuse to grant divorce if unclean hands- Inman v. Inman 14 TAM 47-5 - Mr. Inman lied in interrogatories and told more lies on the stand. CT denied him the divorce (ie he won't get judgment but wife will)

d. NY GIants v. Flowers -Flowers signs with Giants while still in college in violation of NCAA rules; he then signs with Chargers after Sugar Bowl-- Ct refuses to uphold his Giants K b/c Giants unclean hands

4. Unconscionability -VERY RARE; Specifically used for K remedies (2-302)and used to get K or clause stricken and declared unenforcable when ct finds contractural terms to be so one-sided as to be oppressive. Used primarily with respect to non-fraudulently but shockingly unfair sales practices directed at relatively unsophisticated consumers.

a. Campbell Soup Co. v. Wentz -Pre-UCCFarmer had K with Campbell not to sell his goods to anyone else but he did and Campbell trying to sue to enjoin him from selling to anyone else. Although not illegal ct refused to equitably enforce this K provision

b. Jones v. Star Credit Corp -Buyer who is on welfare purchase $300 freezer for $900. CT held that this was unconscionable. PAYNE SAYS MOST CTS WOULD HOLD OPPOSITE OF THIS

talktoBOB 5. Election of Remedies - Ex have to decide if purchase used car and later discover that dealer fraudulently misrep. something between whether to affirm the transaction and seek damages for fraud or dissaffirm the K and seek restitution. Some cts have held that mere action by P constitutes an election such as taking back the car to the dealer = rejection of K, or sending letter to dealer demanding damages = accepting K. UCC has changes some of this: Cmt 1 to 2-703 states that

This article rejects any doctrine ofelection of remedy as a fundamental policy and thus the remedies are essentially cumulative in nature and include all of the available remedies for breach. Whether pursuit of one remedy bars another depends entirely on the facts of the individual case.

Furthermore Rest. K 378 states that the manifestation of a choice of inconsistnet remedies doesn't bar another remedy unless the other party "materially changes his position in reliance on the manifestation."

a. Head & Seeman v. Gregg - D offers to buy home from P and represents that she has $15,000 in antother home and would pay this to P after selling other home. Relying on this. P accepted D offer to buy and D failed to pay. P sues for recission for fraud damages based on breach of K. Ct abandons election of remedies doctrine holding that the docutrine results in the undercompensation of fraud victems and protection of undeserving wrongdoers

b. Altom v. Hawes - Suit for damages b/c H sold ex W's furniture. W then files replevin suit against person who bought furniture from H. CT refused to apply election of remedies doctrine here b/c H had no $ and person who bought furniture for H didn't change his position by going after H.

c. TN - S Ct held that must have complete mutuality to have collateral estoppel prevent one of the actions

1. Issacs v. Bokar, 566 SW2d 532, Bokar sells H to I who begins to build house on land. B/c of a mutual mistake of I and B, I began to build his house on Landowner's land. Landowner sues and estopps I from building. I sues B for recission of K and restitutionary relief (return of purchase price + expenses). Ct held that I could get both b/c nothing inconsistant about these remedies

2. Seaton v. Lawson Chev. Mazda, 821 SW2d 137, S buys car but dealer fails to tell her it has been wrecked, Jury grants rev. of acceptance and punitive damages. Recission not bar claim for relief nor is it inconsistant w/ damages or other relief

d. Problems w/ Workers Comp v. Tort Actions

1. W comp is exclusive remedy so what if tort suti filed initially and employer claims that can't do workers comp b/c elected to do in tort

a. Hudgins v. Nashville Bridge 172 Tenn. 580 - no election untile time of judgment

b. Barnes v. Walker 191 Tenn 364: 1st case DR suing party for conversion and his atty takes non-suit. 2nd case is that DR sues Sec CR for failure to advertise as as part of the comm. reas jud. sale. Sec CR said election of remedy in first Case bars this, CT said no b/c dismissed and not brought to judgment

e. Petty v. Darin 675 SW2d 714 - Condo owners suing seller for defective floor and want recission or damages in the alternative. Case transferred to Chancery CT for trial on recission. Goes to judgment on recission issue and condo owners lose and then file suit in circuit based on breach of K. Not barred by res judicata b/c same action. Election of remedies bar b/c recission action went all of the way to judgment


A. Expedited relief for short term that ct may give b/4 final adjudication on merits. Given when P needs immediate ct action to avoid irreversible losses while waiting for trial on merits. Requires a strong showing of necessity and P must be prepared to compensate a wrongfully enjoined D for losses caused by order unless P is ultimately victorious in underlying case (usually require bond to be posted). Good faith is no defense if P loses action 2 Forms:

1. TRO - is a short stop-gap measure for a truly urgent situation that can later be replaced witha preliminary injunction after ct has few days to receive greater amt of evid

2. Preliminary Injunction - lasts full trial

B. Temporary Restraining Order (TRO)

1. Rules of Procedure

a. can be done ex parte if specific showing that immediate and irreperable harm will result before opposing party could be notified and be heard

1. Carroll v. Princess Anne - Councilmen of town filed for TRO to estop Klan from rallying. Granted ex parte S. CT held that extraordinary relief that will affect someone's 1st Amend rights will only be granted when the moving party try to give notice of hearing

b. if granted lasts 10 days (Fed in TN lasts 15 days) with extension of 10 days for good cause

1. note that in TN time restrictions don't apply to domestic relations cases in which TRO lasts until end of trial and after trial lasts up to 1 yr

2. Sims v. Greene -When a TRO is extended beyond its lawful life without the consent of the party against which it is issued, it ceases to be a TRO and becomes a PI which cannot be maintained unless the ct issuing it sets out the findings of fact and conclusions of law which constitute the grounds of its action

c. can only be granted to prevent someone from doing something

d. must initiate action in a sworn complaint

e. must state in complaint that this is the first application for a TRO - prevents judge shopping

f. must post bond

g. after granted must give notice to D -can be by phone- becomes effective after notice

h . Can only get rid of TRO by motion to dissolve

i. there is no appeal from a TRO

j. $10 filing fee

??? 2. Pauper Oath - in TN can get TRO dismissed if P lied of pauperism

PUT INFO FROM BOB NOTES IN HERE talking about order of protection (where does $10 fee come in)

C. Preliminary Injunction

1. Elements

a. irreperable injury if relief is denied

1. Winkle Pontiac Motorsports v. Shepherd - W builds and races NASCARs and K with S to race and S withdrew. W brings action to enjoin him from driving any vehicles in races for anyone but them and to prevent S from driving Winkle vehicle in Atlanta race. Ct held that P not irreperable harmed b/c $ damages could help its injury. An injury is only irreperable if $ damages can't undo the injury. Furthermore, w/ failed to cover potential losses which shows that D converting W's car wasn't causing them irreperable harm. A PI would also in this sit would keep S from earning a livlihood which would mean great hardship

2. Classic Components v. Mitsubishi Electronics - Distributorship K's aren't likely source of irreperable harm as $ damages are usually awarded. Also awarded M atty fees b/c frivolous suit

3. Caribbean Marine Svcs v. Baldridge- Tuna Boat cptn tried to keep female observer of its practices off boat b/c would violate its constit privacy rights. Was granted TRO and sought prelim inj. Ct held public need for gender equity outweighed need for prelim inj in this case nad that P could not show definite irreperable harm. CT held that in PI case the moving party must show 1. immediate threat of irreparable injury ito itself and that the balance of hardships tips decidedly in its favor.

b. probability of success on merits

1. Fengler v. Numismatic Americana - PI requires finding of fact and conclusions of law before it is good

2. Contra TN law which states that judge only needs to make them upon request

c. balancing of hardships on each party

1. Cassim v. Bowen -Dr doing unnecessary operations. B/4 a hearing and trial the HHS was going to suspend him from Medicare and publish notice of suspension in a local newspaper. Dr made motion for prelim injuntion to not suspend or publish until evid hearing. CT held that Dr couldn't enjoin the suspension and publication because of his harm to the public b/c of unnecessary surgeries.

d. effect on public interest

2. In Federal Copyright Claims if P shows liklihood of success on the merits then = irreperable harm


3. Procedural Requirements

a. b/4 issued both sides must have reasonable opportunity to present evid

b. if granted lasts the entire trial


1. FRCP 65(c) - bond must be provided by applicant b/4 ct will issue TRO or PI. Bond amt is w/in discretion of ct but enjoined party can request that bond be increased.

a. Coquina Oil Corp. v. Transwestern Pipeline Co. -B/c judge hadn't even given consideration as to bond he couldn't grant PI, so appellate CT didn't have jurisdiction to hear interlocatory appeal of injunction

1. Contra Roth 583 F.2d 527 (6th Cir) which will hear appeal of order where trial judge didn't set bond

2. This bond assures D that it will be compensated for any losses occasioned by a TRO or PI in the event that P doesn't ultimately prevail in the underlying case. They also assure D that P won't be judgment proof

3. These losses include harms caused specifically by order but not humiliation or distress.

4. Bonds usually cap loss recovery

Get fromBOB a. Coyne-Delaney v. Capital Dev. Board -ct set bond at $5000 but damages of D were $50,000

e. TERADYNE V. Mostek - In arbitration situations, can go into ct to get injunction to force other party to preserve its assets during pendency of arbitration


Steps to examine problem

1. Was there some specific injuction that was disobeyed

2. Who was bound by order

3. Did D havd ability to obey? (Most cts look to ability to pay

4. Was contempt civil or criminal

5. What are the procedural safeguards? ie if crim then get right to trial by jury, counsel etc

A. Method by which courts enforce equitable orders. To justify contempt thee D must have disobeyed a specifically detailed, unequivocal judicial command and D must have had ability to ovey order

B. 2 Types

1. Civil -instituted by a private party as part of an underlying action, to recover damages occasioned by the disobediene of the equitable order or to coerce th4e opposing party into compliance with the order

2. Criminal - brought by gov to punish errant behavior and its purpose is to vindicate the integrity of the ct which was offended by D conduct; stands even if order is erroneously issued

3. Criminal v. Civil -

a. Generally sanction will be criminal whenever there is

1. definite fine or jail sentence ($10,000 fine = criminal but $1000 a day until compliance is coercive and therefore civil)

2. no coercive effect in contempt order

3. if trying to punish past intentional conduct as opposed to coerce future conduct

4. if determinable punishment w/ no chance to purge -- ie you don't have the keys to the jailhouse door

5. If a very serious punishment ($64M in fines --Bagwell case)

C. Criminal Contempt


a. D must be capable of performing order

b. D must be named in the order

c. D must be subject to a specific order


a. Direct - committed w/in presence (within vicinity of ct) of ct; ct can summarily impose sanctions and don't have to give trial by jury

1. A contempt conviction based upon disobedience or resistance to a cts order rule or decree must be done so upon an identifiable ct order whcih must be specific enough that the D has an opportunity to know that his behavior is disobedient

a. Downey v. Clauder, 30 F.3d 681

2. Ex parte Daniels - pro se litigant who when ordered to leave ctroom got into a brawl. B/c in ctroom could be held in contempt w/out trial by jury and other Consti shit

3. State v. Green 783 SW2d 548- Green held in contempt for 1. showing up late 2-4, lawyer accusing judge of Bias and 5. comment accusing DA of mental instability. Ct said while first was ok the last 4 contempt charges needed to be tried in front of a new judge

b. Indirect - committed outside presence of ct --due process requirements must be met

1. In re Stewart -if employer fires employee for jury duty then this is action outside ctroom so if judge wants to hold in contempt have to make it a 42B action meaning constit protections; note there are cases holding to the contrary which flies into the face of 42B. They say that w/in presence if demoted while serving as juror

2. brought by state or federal prosecutor to vindicate society's interest in obedience of lawful orders.

2. Criminal D in contempt proceedings unlike civil contempt is entitled to constit safeguards including trial by jury (if sentence sought is > 6 mths in jail) and legal representation

3. If found guilty can be fined ($ turned over to public coffers not to P as in civil)

4. Collateral Bar Rule - Even if there is an invalid injunction, can be punished for criminal contempt if don't obey injunction or challenge through courts

a. Walker v. City of Birmingham- Invalid injuction that banned march but marchers defied the order. S Ct. held that marchers could obey or challenge the injunction but could't directly disobey the order. b. US v. USMWA - Truman seized steel mills during WWII & got fed inj. saying no strikes; however Norris- LaGuardia Act said fed judges couldn't enjoin strikes. S Ct said act only takling about strikes against employers and US wasn't employer in this sit. Note that USMA defied strike after injunction and ct held even if inj would have been invalid D can still be held liable for contempt.

5. USMWA v. Bagwell, 114 S.Ct. 2552 - Virg. coal miners strike; judge said if union didn't behave in future he would fine them $100,000 per violent violation and $20,000 for non-violent; got up to $64M in fines-- gave $12M to comp but owed cities and counties $52M. Union says amt justifies trial by jury. CT held that this was criminal contempt

a. Ct held that mere announcement in advance of penalty for future violation didn't make this civil contempt as any criminal is told what will happen to him b/4 he commits crime

b. D had no opportunity to purge the offense

c. While contempt not made in presence of ct, it was pervasive and widespread scheme of violence over a long period of time

d. punishment was very serious ($52M) and fact it was fixed made it look criminal

e. coerciveness of fine didn't necessarily make this civil

B/c this conduct took place outside of presence of judge, have to follow procedures set forth in 42(b) ie trial by jury and other constit protections

6. TN -

a. 29-9-101 et seq - for contempt can get $50 fine and 10 days in jail -- drafted this way b/c Art VI only gives judges power to levy fines of $50 w/out jury

b. Domestic RElations stat 36-5-104 states that if don't pay child support can get up to 6 months in jail -- issue is can you do this w/out trial by jury

1. Brown v. Latham 19 TAM 44-5, J. Cantrall held can't throw person in jail for set time w/out trial by jury. Previous case law in TN with Pass case, 181 Tenn. 613 saying you could do this and also US S. CT say ok under bill of rights but Dosina v. State 764 SW2d 766 states in dictum that any potential punishment have to have under state const right to trial by jury. HENCE IF BROWN IS UPHELD THEN STAT WILL HAVE TO BE CHANGED

7. Who is bound by injunctions so that contempt procedures would apply for disobeyance?

a. Since contempt power is premised on the disobedience of a binding ct order, have to know who is bound by that ct order. Cts have held that only the parties to the action, their officers, agents, servants, employees, and attorneys, and upon those persons in active concert or participation with them who receive actual notice of the order. Hence 1. named indiv 2. agents 3. those in privity and 4. those who act in concert

8. MAtter of Contempt of Greenberg -Lawyers cannot be found in contempt for insisting for a ruling on their objection - ie can refuse to sit down


1. primary function is to benefit P who recieved original equitable order, not to vindicate the authority of ct which criminal is.

2. Is available to compensate for the resulting losses if any occur, and sometimes to coerce the D into compliance

3. 2 types

a. compensatory - Damages including atty fees incurred to enforce order which must be specifically caused by D disobedience of the ct order. Must be actual and proven with reasonable certainty

1. Time-Share Systems v. Schmidt -D didn't preserve computer data as ordered so in contempt-- remedy is damages + atty fees. Damages must be proven with reasonable certainty.

b. coercive - judges impose fines pd to state or order imprisonment but D has key to jailhouse door-- judge will give determinite sentence but suspend it per good behavior

1. US v. Darwin Const - Contempt for failure to obey IRS summons; remedy $5000 a day until compliance

a. SEE TCA 29-9-104(b)

4. Are appealable when are final orders ie if D can purge himself through voluntary conduct then non appealable(note could get interlocatory appeal)

a. also can get mandamus (TCA 29-25-101) which in chancery and circuit ct forces official to carry out or perform its duties ie go to higher ct to issue writ of mandamus

1. State ex rel Shaw v. Cooper, 107 Tenn. 202

b. Rule 10 of TN Rules of App. Procedure provides method for extraordinary interlocatory appeal where you can go straight to appellate ct without trial judges permission. Rarely granted b/c have to show trial judge abused discretion

5. Civil Contempt fail when underlying injunction is invalid unlike criminal contempt

a. Latrobe Steel v. United STeelworkers of Am -employer trying to get injunction to enjoing strike; employees held in contempt; but injunction was invalid b/c of Norris-LaGuardia Act which states that fed cts can't enjoin strikes so civil contempt fails

6. Dom Rel case - can be held in contempt for not paying child support. Deadbeat dad might try to say that ex-wife is extremely wealthy now but underlying obligation of child support arrearages won't be forgiven but can get modification of future support. B/4 TCA 36-5-101(a)(1) many judges wouldn't hear deadbeat's request b/c dirty hands but now can hear as long as arrearage wasn't result of intentional actions


A. PREVENTIVE - SEE ABOVE -purpose to prevent D from inflicting future injury on P

1. Elements were that P must prove a. D was likely to do harm absent the order b. legal remedies would be inadequate and c. such harm would be irreperable

B. RESTORATIVE - attempts to correct the present by undoing the effects of a past wrong; focuses prospectively as well as retroactively-- ie tainted election process affects future governance but wrong can only be corrected by turning back clock and redoing election

1. Vasques v. Bannworths - farm worker fired for whistleblowing which was violation of TX right To Work laws; Farm Worker gets reinstated per injunction b/c it backs up and restores status quo

C. PROPHYLACTIC - seeks to safeguard P's rights by directing D behavior so as to minimize the chance that wrongs might recur in the future. CT orders b/c its seems that future infractions of P's rights are likely w/out extra protections

1. Bundy v. Jackson- sex harassment case - ct issues injunct requiring corp to takes some step that it otherwise wouldn't have had to tke legally. Ct did this to prevent future harassment

D. STRUCTURAL - modern injunction born from S Ct identification of substantive rights whose enforcement requries substantial judicial supervision. Include trmt of indib. by instit such as right not to suffer inhumane trmt in prison or mental hospital.

1. Brown v. Board of Educ - desegr of schools

2. Hutto v. Finney - S ct upheld structural injunction placed on Ark prison system by DC which defined the standards by which prisoners should live (no more than X to a cell, has to be fed more than 1,000 calories a day. DC found the conditions in the prison to be a violation against Constit amendment against cruel and unusual punishment. Ct was justified in issueing the order to insure against the risk of inadequate compliance


1. Cousin v. McWherter, 845 F.Supp 525 -Order of redistricting for voting puposes as minorities not represented in judiciary

2. Rural v. TN Afr. Am Affairs Council - Reps in Tn had to redistrict



1. Statute may madate explicitly that ct issue inj. upon P's showing that the D conduct has contravened stat. provisions. If stat is clesar that legis has balanced equities in favor of inj relief, the ct will enjoin the conduct upon showing of satisfaction of statuatory conditions. Note this limits judicial discretion under which injunctions were meant to be based. But the ct retains discretion of how to fashion the injunction to carry out legislative intent.

2. Main issue becomes if statute mandate injunctive relief

a. TVA v. Hill - stop Tellico Dam b/c of snail darter; S Ct held that Endagered Species Act mandated injuctive relief so couldn't use discretion in granting or not granting injunction

??? Signif??? b. Northern Cheyenne Tribe v. Hodel -


1. Restraints on 1st Amend or access to cts should be carefully considered and are sometimes necessary if these rights are exercised in a way that seriously interferes with other important rights. Ex harassing litigation can result in restrictive access

a. Enjoining Speech -- notice is very important and P has a very heavy burden. If injunction granted must be narrowly tailored to be no broader than needed

1. Willing v. Mazzocome - Lady picketing law firm who sues to get injunction for her to stop? Ct holds that freedom of expression in 1st Amend more important

a. note ct conceded that P really didn't have a remedy b/c if sued her for defamation, she was probably judgment proof but 1st Amend outweighs any rights of the law firm to redress. But equity relief was adequate to consequence for defamation so no injunction needed

2. Portland Feminist Women's Health Center v. Advocates for Life - Not only must injunctions be narrowly tailored must also meet due proess standards to enforce it with contempt. Order here against anti-abortion protestors prevented them from "shouting, screaming, chanting, or yelling during on-site demonstrations." Also they were enjoined from "producing any noise by any other means which substantially interferes with the provision of the medical services of the Center." Ct upheld this saying not vague even though didn't define loudness and that the persons effected have sufficient assurance of the direction enforcemnt will take

3. Mabe v. Galveston - person handing out pamphlets with councilmen's phone number not enough to warrant injunction as phone numbers are public record anyway. Free expression wins

2. Enjoing civil suits

a. Pavilonis v. King - injunction against litigation held valid b/c aimed at litigant who had filed many frivolous lawsuits and not aimed at judge.

3. Crim prosec injuctions are rare and may only be doneupon strong showing of improper prosecutorial motivation. Even hairier situation comes when prosecution is in another state -- inj only given when great urgency b/c ct has no practical means of enforcement

a. Norcisa v. Bd of Selectman of Provincetown - D prosecuted criminally for operating flea mkt without license, goes to civil ct to enjoing crim action. Ct holds that generally cannot enjoin crim prosecution as havae adequate legal remedies in the crim prosecution ie constit arguments which can be raised. Also burden totally on prosecution

4. Fed cts can attempt to prohibit state prosecutions only if the state official clearly has a improper motive in bringing the prosecution and that threatens fundamental freedoms.

a. Lewellen v. Raff - Generally under Younger doctrine a fed ct will refuse to enjoin a state criminal prosecution b/c states can handle there own matters and give state benefit of doubt (not to mention the chance for US S Ct to review). However, ct enjoined state prosecution in this case b/c found extreme liklihood that state ct wouldn't administer justice to minority D lawyer


1. NUISANCES - is always up to judges discretion never a right

A. P must establish that

1. D conduct was a substantial and unreasonable interference with use and enjoyment of p's prop or public interests

a. Unreasonableness is determined by weighing gravity of harm v. utility of conduct

2. threatened harm is immediate

3. irreperable injury

4. no adequate remedy at law exists

5. equitable considerations balance in P favor

b. Harrison v. Indiana Auto Shredder Co - H attempts to enjoin I's business b/c noise and air pollution even though I is employing counties citizens, helping env. by recycling, and bus operating in area that was zoned for that type of bus. Ct holds that won't enjoin D and will give it time to clean up its a act. But says that P can sue for damages if any prop damage

c. Nuisance actions can have something of an injuctive and damage action

d. Village of Wilsonville v. SCA Services - Surrounding landowners sue Chemical Waste disposal plant to clean up their crap. Ct grants mandatory inj. forcing D to remove toxic waste and make cite like it was before.


1. Spur Indus. v. Del. E. Webb Dev Co. - Co operated cattle feed lot w/ very strong odor. Dev Co sued to enjoin the feed kit as a public nuisance. D says we were here first so P should have known about us b/4 they began to develop subdiv. Ct gives to both - makes Spur move but makes P pay for move

2. Modern cts hold that one who arrives in locale first does not have a prescriptive right to continue the business indefinitely with out possible constraint. It is but one factor considered. IF allowed to be complete defense then would give 1st party eminent domain power over surrounding area for part uses

f. Akau v. Olohana Corp. - P's determined to have suffered injury when D wouldn't permit indiv to go across his land to have access to public beach. This case goes against the general proposition that a pvt individual lacks standing to maintain an action to abate a public nuisance absent a showing that he has suffered harm of a different kind than members of the general public. So if everybody affected then no public nuisance.


A. issue is whether civil ct should issue injuction to prohibit behavior that could be sanctioned by crim justice system. Generally equity cts will not enjoin behavior merely b/c of violation of crim stat.

1. US v. Bay Mills Indian Comm - suit to enjoin operation of casinos on Indian reservations. Ct denied injunction based on general rule that ct may not enjoin the commission of crime b/c 1. crim pros provides adequate remedy at law so that equitable relief is unncessary and 2. injunctive relief may deny D the procedural rights otherwise available in a crim prosecution

a. CT noted that in 3 exceptions to this rule

1. activity is a widespread public nuisance

2. national emergency warrants departure from rule

3. statute specifically provides for injuctive relief

B. Exceptions to Gen rule

1. Meyer v. Seifert - crime to have non-fireproof bldg. with fire walls. D built one anyway and posed great threat to neighboring bldgs. Ct held where potential punishment was too light compared to the petential profit from the enterprise and wouldn't have a very strong deterrent factor on the D($10 - $100 fine per day that remained

2. People v. Lim -gambling house ruled a public nuisance as legal remedy would be inadequate b/c would lead to future infractions

C. TN 29-3-101 abatement of nuisances

1. 110 says if ct finds nuisance then ct shall grant injunction

2. 111 crime to operate a nuisance

3. if have injucntion against nuisance and violate injunction have indirect criminal contempt

4. 112 + 113 say it is nuisance to practice law or medicine without license



A. Recognizes and protects an injured party's expectancy, reliance, and restitutionary interests.

1. Expectancy damages - $ substitute for promised by undelivered performance. Calculated by amt necessary to place injured P in good of financial position as that party would have occurpied if D had rendered remaining performance. Ex lost Profits

2. Reliance + Restit. - available b/c P cannot prove expectancy damages w/ reasonable certainty

EX 1 -- Clark K w/ Am Rest. to buy Uncle Bill's Ribs. $25,000 non-refundable fee and 6% royalty based on monthly gross sales. C spends $10,000 in adv and mking in a promotional campaign. Am terminates K

1. Expectancy - ie lost profits -- hard to propve here b/c new franchise (McDonald's may be different story)

2. Reliance - $10,000 spent on adv and mking

3. Restitution - $25,000 fee

Ex 2- Pur v. Vendor. K for $100,000 --- Appraisal $120,000; P spent $500 for survey, $500 bank fees, $1000 option to buy land next door and $10,000 down payment. Vendor repudiates.

1. Restitution - $10,000

2. Reliance - $500 survey, $500 bank fees, $1000 option to buy

3. Expectancy - $20,000 (Value - KP)


1. Owner v. Builder (Latter breaches)

a. If B breaches at inception or mid-stream- get

1. cost to build - get cost to build or cost to complete regardless of whether it exceeds K price

b. If B breaches at subst. completion

1. Owner will pay K but may deduct either

i. diminution in value b/c of lack of completion; or

ii. deduct cost of taking it to full completion

2. Builder v. Owner (Owner Breaches)

a. IF O breaches at inception

1. B gets lost profits

b. If O breaches mid-stream

1. B reimbursed for material and labor to date and lost profits but in no event can total be more than k price

c. If O breaches upon substantial completion

1. B gets K price - either

i. dimunition in value b/c of lack of completion or

ii. cost to taking to full completion

3. Eastlake Const. v. Hess - Construction K and contractor installs the wrong type of cabinets. The Hess' were commercial developers who weren't going to live in condo but resell it. Ct held remedy was dimunition of value of the condo with the wrong type cabinets b/c would be waste to have him rip out old ones and put in specified. Hence this isn't normal expectancy interst which would be cost to complete b/c would be economically wasteful

4. TN


i. Edenfield v. Woodlawn Manor, 462 SW2d 237 - P had K for rectangular air condition vent but got round. CT ordered it redone. BUT NOTE HERE THAT HOUSE WASN'T COOLING RIGHT B/C IN DIFFERENCE IN VENTS so might not be the case everytime

b. Commercial Purchases - EVEN in commercial settings the rule for residential might apply

i. Estate of Sessee v. White, 633 SW2d 767 - Parking lot not paved according to specs- remedy was to pay enough to pay it right

5. Gruber v. S-M News - Svcs K where outfitter agrees to distrib X-Mas cards. Distrib breached so printer sues. Unable to prove profits w/ reas certainty but get reliance damages ie expenses for material and labor laid out for task to be performed

6. Campbell v. TVA -TVA employee w/out auth K w/ P to put trade journals on microfilm and destroy journals. Although can't get K price b/c not a valid K, could get quantum meruit. Dissent says should get 0 b/c ? whether TVA was enriched or harmed by microfilming journals b/c journals were destroyed


1. No remedy in k if employee is at-will employee.

a. possibly under Civil Rights Act and if tort of retalitory damages

2. Skilled K labor

a. Where Boss breaches - Wkr gets unpd salary for term less salary worker getting at new job

b. Where Worker Breaches - any additional salary it takes to hire a knew worker


1. Remedies for non-breaching buyers where sellers have repudiated or non-deliver but not breach of warranty

choice of a or b a. cost to cover - K price, and any incidental or consequential damages less expeses saved; or

b. if doesn't want to cover, mkt price when buyer learned of breach - KP; or

1. note that there are several interpretations of when B learned of breach (comes into imp consid when mkt is rising)

a. when buyer learned of breach

1. TN follows this -- Hurt v. Earnheart, 539 SW2d 133

b. when buyer learns of breach plus commercially reasonable time

c. when perf is due

1. 6th Cir ruled this was it - Roth Steel v. Sharon Steel , 705 F2d 134

c. if buyer accepts goods, FMV of K goods - FMV goods actually accepted

d. consequential damages - Losses incurred by non-breaching party in its dealing w/ third parties. Result from the general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not be reasonable be prevented by cover or otherwise. In order to recover consequential damages other than those which could not have been avoided by cover or otherwise, the buyer must have made a goods faith attempt to mitigate by cover. But this duty doesn't require the indured party to take measures which are unreasonable or impractical or which requrie expenditures disproportionate to the loss sought to be avoided or which are beyond his financial means

1. Elements

a. causation c. reas. certainty as to amt

b. forseeability d. mititgation by B

2. Seller has to have reason to know of buyer's part requirements and needs at time of k . This reason to know includes an objective inquirey of what a reasonable seller would know and subjective in what seller actually knew

3. Forms of mitigation

a. cover

b. continue to use defective goods to preserve rights to consq damages where replacement goods not readily available or buyers couldn't reasonably effect cover

c. hire extra labor to aid in performing your task in which the good would have

d. lack financial ability to procure substitute goods

4. Wilson v. Hays - no consequential damages for seller who made no effort to mitigate damages by attempting to sel used bricks

5. in commercial K's , UCC 2-719 says that consequential damages can be eliminated by K

6. B of Proof of mitigation of damages

a. Harper & Assoc. v. Printer's Inc - D burden to show lack of mitigation

b. Contra TN - Bradford Flying S Charlos Ranch v. Wood Tenn Ct App W. Sec 1975

7. Aries v. Palmer Johnson, Inc - D failed to deliver yacht causing P to miss America's Cup. Ct allowed consequential Damages as P told D about what they would be in the amt of

a. fair rental value of substitute boat even if didn't rent

b. Removal of masts b/c of last delivery

e. incidental damages - are always held to be forseeable as are essential reliance expenses

1. better to try to frame as incidental than consequential b/c easier to get

2. To get have to prove

a. damages were incident to breach

b. reasonable

3. Examples

1. expenses to travel to cover

2. costs of tests to see if goods are conforming

3. cost of holding rejected goods for seller to get (wharehouse rental fee)

f. rejection - 2-602

1. must be a substantial defect b/4 buyer can reject;

2. seller must be given right to cure

3. Procedure to reject

a. must be w/in reasonable time after tender

b. notify seller

c. hold goods for seller to p/u

g. Revocation of acceptance 2-608

1. Acceptance by Buyer but then realizes that a substantial defect exists; or seller breaks promise to cure or can't cure

2. Procedure

a. revoke w/in reasonable time - calculated from time buyer should have discovered defect

b. must revoke b/4 change in the nature of the goods

c. notify seller

d. hold goods for seller to p.u

2. REmedies for non-breaching seller

a. KP - FMV at time and place of tender; or

1. note can't use time and place of tender when done while in or at trial but use when seller learned of breach

b. KP - Resale Price

supports a + B Sprague v. Sumitomeo Forestry Co. - Sprague sells Sumi some logs. D cancelled K. Ct held that although normally innocent seller would have choice between K - FMV at time and place of tender and K - Resale Price, the latter didn't work here b/c resale was a pvt sale and b/c of that direct notice required to be sent to D. Note if a public sale then all that is required is that the sale be done commercially reasonable manner.

1. case also said that seller's can get incidental damages which include any commercially reasonable charges, expenses, commissions incurred in stopping delivery, in the transportation, care and custody of goods after the buyer's breach, in connection with return or resale of the goods or otherwise resulting from the breach

2. seller may not get consequential damages

c. a seller may not get consequential damages

d. lost profits and reasonable overhead if other damages inadequate

1. Nat'l Controls v. Commodore Bus. Machines - LOST PROFITS WILL ONLY GO TO LOST VOLUME SELLER

a. ex of lost volume seller is car dealer who has innumerable cars on lot, buyer breaches so lose profit b/c could have sold another to B2. k - FMV or K - Resale Price would be inadequate b/c would always be $0

2. Capitol City Office Machines v. Metro Bd of Ed. 632 SW2d 142 - manufacturer can be lost volume seller

3. have to prove lost profits with reasonable certainty

e. incidental damages

1. storage of repudiated goods

2. commission if hire auctionee to sell goods

ON EXAM f. Action for Price - Sometimes can get recovery of K price if you are the seller (flip of Spec. Perf)


1. Where Buyer has

a. accepted goods; and

b. exercised some type of control over them; and

c. the goods are conforming - if not k price can be offset by breach of warranty

2. Where Risk of Loss (Casualty) has passed to Buyer

a. ie goods shipped to buyer and placed in his discretion if stolen or burned then and B doesn't pay -- Seller can get K price

3. Strange or Odd Goods Which Seller Can't REsell at a reasonable price

a. doesn't just have to be custom made goods

. C.R. Daniels Inc. v. Yazoo - had grass catcher bags and buyer refused to pay K price. Buyer tried to counterclaim that these were defective goods but failed to comply w/ 2-607 which says where tender accepted and you think there is a breach must notify seller w/in a reasonable time or be barred from remedy

g. reclamation -

1. insolvent buyer

2. send notice of reclamation w/10 days of buyer's receipt of goods

a. if buyer has misrepresented his solvency status in writing w/in past 3 mths then no time limit to reclaim

h. deposit forfeiture 2-718- innocent seller has right to retain the lesser of :

1. 20% of total value of goods

2. $500

3. Remedies Common to Both

a. Anticipatory Repudiation

b. Right to Demand Assurances - Represent B and S is bldg home -- word on street is that S is in financial trouble; have 2 issues

1. right to make a demand (Factual ?) if yes then

2. Did receiving party w/in 30 days give adequate assurance - if no then treat as anticipatory repudiations by person demanding assurance

4. Buyer's Breach of Warranty Claims (Seller Can't HAVe)

a. Actual Damages for B of W -Value as warranted (Most times this is purchase price) - lessor value as accepted

b. STAT OF limit is 4 yrs from time of tender

c. Disclaimer of Warranties

1. must be conspicuous and contemporaneous w/ tneder of goods

2. If attempting to waive warranty of merchantability must state it in those words or use "as is" but don't have to for fitness

a. can't have W of Merc with respect to blood or human tissue as regarded as sale of svcs and not goods

3. Can't make express warranty in document and then take it away

a. Magnuson Moss Act 15 USC 2301, 16 CFR Part 700- in consumer transaction can't make express warrant and then have a clause in the K limiting or excluding that express warranty

4. 2-719 says you can limit warranty damages to repair and replacement of parts

a. can get @ this by proving that the product failed its essential purpose - Moore v. Howard Pontiac, 492 SW2d 229 car was a lemon and P had to take it back over and over again; ct held the ltd warranties clause failed its essential purpose it dissappears

1. TN also has lemon law 55-24-201 but only applies to new vehicles -- says if take it 4 times and can't fix it or have it in shop total of 30 days then buyer gets presummption that its a lemon

5. TN - WAIVER OF WARRANTY DOESN'T EXCLUDE APPLICABILITY OF TN CONSUMER PROTECTION ACT - 47-18-101 --- Mack's Used Cars v. Morris, 824 S.W.2d 538 -- under this can get treble damages and atty fees

d. Note that if something is obviously wrong with goods delivered so that the reasonable consumer could tell then no warranty


1. Usually specific performance remedy is available especially for buyers b/c of uniqueness of RE but damages can sometimes be awarded

2. Actual Damages

a. S v. B (Buyer breaches)- High K price - Low FMV

b. B v. S High FMV - Low K

3. Can get consequential damages if proven w/ reasonable certainty

4. Marketable Title rule

a. Maj rule is that if seller can't deliver mktble title at date of closing, B can get expectancy interest

1. Donovan v. Bachstadt B given restitutionary interest (down payment); reliance interes (Survey and title expense); and expectancy interest (FMV - KP)

b. Min Rule (TN)-- Mason v. Lawing, 78 Tenn. 264--if no fraud on seller's part then buyer just gets restitution of payments made to date and improvements - rental value of bldge if buyer has been occupying;

5. Liquidated Damages Clauses

a. SE Land Fund v. RE World - Liq. Dam. Clause says deposit forfeited upon buyer's breach. CT disagreed but maj rule is that these clauses are enforcable. Just show that 1. injury caused by breach was difficult if not impossible to accurately estimate and 2. sum stipulated is reasonabl pre-estimate of probable loss ( 1 + 2 conflict though b/c how can you show if reas if can't estimate

b. Vines v. Orchard Hill -L.D. clause of 10% sales price - Ct upheld it but remanded to see if buyer could establish restitution ie condo has so vastly increased in value then the seller shouldn't get 10%


A. Function is to make injured party whole by substituting $ for tangible and intangible losses caused by tort. Must also considered is economic efficiency, avoidance of waste, promotion of out-of-ct settlements by fixing an predictble and objective measure of damages.

B. TN -- 24-5-114 Gen Sessions can handle all prop damage cases up to $1000 - just attach bills to civil warrant -- gives presumption of reasonable and necessary repairs


1. Have to determine 2 questions

a. What losses are compensable? Has property has been completely restored or can it be repaired. B/c P can recover value of destroyed chattel at time and place. Many juris alow loss of use for injured chattel but not for destroyed

b. How should losses be measured?

1. can't get emot loss for loss of chattel

2. difficult with irreparable goods such as heirlooms etc. When not a readuily ascertainable FMV ct considers personal value to P.

2. Ex 1 - Student in wreck on way to school. Loses all personal possessions (stereo (can be fixed but cost to fix > FMV)--clothes; handmade quilt (great cost to fix but lose sentimental value); car is wrecked but can be repaired

a. Car -Cts sometimes will measure in cost to repair -- others in dimunition in value -- sometimes these will differ

b. clothes -- Generally FMV at time and place of destruction but for clothes get value to him

c. stereo - Damage for a reperable item cannot exceed pre-tort FMV

d. quilt - unsure but in most juris gets FMV-- no recovery for sentimental value but usually allow for repair b/c sentimental object

3. Long v. McAllister -car wreck and total loss -

a. When motor vehicle is destroyed or resasonable cost of repair > FMV b/4 and aft inj : Damages = Lost MV + reas value of use of vehicle for time reas. required to obtain replacement

b. If just damaged and can be repaired and cost of repair doesn't exceed FMV b/4 - FMV after, then get reasonable cost of repair + reas value of use of vehicle for time reas required to complete repair.

4. Most Ins comp give themselves option of repair or replace but this is B.s. as Stoops v. First AM Fire Ins 160 Tenn 239 says option to repair applies only where car will be restored to its pre-wrecked value -- which will never will happen

5. Irving Pulp & Paper v. Dunbar Transfer & Storage -Wharehouse stores wood pulp; roof collapses and stays on pulp for 6 mths; B/c roof on pulp P couldn't see extent of losses and renegotiate K with wood pulp buyers. Mkt changed and price falls. Ct holds that if have long delay can get declining mkt price loss

6. Stocks and Bonds - P allowed highest value between time of conversion and reas time for replacement (Hedges v. Burke, 147 Tenn. 247)

7. Lane v. Oil Delivery - Used clothing and furniture burn in fire; measure of damages for clothing = personal value to owner b/c mkt value not readily ascertainable but won't give sentimental value

8. Campins v. Capels - Wedding jewelry lost -can get sentimental value plus mkt value ;


1. Merritt v. Nationwide Wharehouse 605 SW2d 250

2. Adams v. Duncan Transfer & Storage 757 SW2d 338

9. Pets - No sent value for dogs and cats; if injured get dimunition of FMV; if killed get FMV at death

10. Taliferro v. Augle - black man beaten brings Civil Rights action for loss of manuscripts. Too specultative to get potential value for manuscripts -- may be able to get cost of time or materials in reconstructing it but have to have proof


1. Recovery for bodily injury includes compensation for P physical pain and mental suffering

2. Elements

a. loss of earnings or earnings capacity - this is required to be reduced to present value

1. Cates v. Brown - lost wages have to be shown with reasonable certainty - look at gross earnings and not net

a. TN looks to gross - Dixie Feed and Seed (infra)

b. To calculate loss of earnings capacity have to know life expectancy - TN has tables in Code -- don't have to use if have expert

2. loss of earnings capacity - refers to one's marketability in the workplace so perm injured person may have lost future earnings capacity even if unemployed at time of injury. Hence students have

b. medical expenses - past + future

1. Healy v. White - 7 yr old thrown from car - dad who can recover for minor gets medical earnings both past and future

a. parent gets claim for past medicals if they pd; but future meds usually ges to child unless -- usually goes to parents unless ct finds that parents are likely to spend on themselves; parents also can get travel expenses going to see child or loss of svcs of child. punis only can be damage claim of child

b. upon reaching age of maj child is resp for his meds

2. Frenkel v. US - take into consideration present value of award and also inflation; followed single recovery rule which state that jury should award an amt today that will take care of reasonable contingencies in the future - no installment payments

c. pain and suffering

1. Frenkel - get p/s damages for being in a coma

2. Per Diem arg - may atty argue to jury that p + S may be measured in terms of $ for a specific unit of time; so this small number may be astronomical when look at tables

a. Can argue that TN 20-9-304 gives you right to make this arg but Paine thinks it won't fly

b. another example is arguing the golden rule- award the amt that you would award yourself for this type of suffering or for its avoidance -- TN unclear if allowed

d. loss of consortium - definitely for spouse but possibilty for other relatives (TN says only wife can get not children Skill v. Baptist Hospital 755 Sw2d 807

1. White Constr. v. Dupont - excessive $1M loss of consortium award

2. Steel v. Ft Sanders Med. 19 TAM 31-8 - $1.2M consortium award upheld for wife went into hosp came out paralyzed

e. shortened life expectancy (loss of chance)- some cts allow; ie failure to diagnose testicular cancer which would have increased life expectancy (Bolz v. Leeds 20 TAM 4-1

f. special expenses attributable to injury

g. punitive damages

h. loss of enjoyment of life

1. TN has this

a. Martin v. S. Railway - 463 Sw2d 690

b. Sterling v. Velsicol - 855 F2d 1188

3. Note FRE 706 allows cts t0 appt their own experts in these type cases but usually not done

a. Contra TN in cases w/jury

4. Special Medical Malpractice Cases

a. Wrongful Conception - tubal litigation or vasectomy gone array and woman pregnant - as long as child is health parents can't recover but if something wrong w/ child have cause of action

1. Smith v. Gore 728 SW2d 738 - Ct held don't get expenses for health child but do get

a. medical expenses for failed tubal or vasectomy

b. any medicals incident to pregnancy and reasonable post-natal

c. pain and suffering from time of discovery until delivery

d. lost wages

e. loss of consortium

f. emotional distress

g. if choose to have abortion, those expenses plus emotional distress from that

b. Wrongful birth - child born defective b/c of faulty genetic reading and parents don't opt for abortion

c. Wrongful life - child suing for being born -- most cts won't allow

5. In Tn TRCP 15.02 says can only get what you ask for so can't amend complaint post verdict b/c jury gave you big award (Mundy v. Millsaps)

a. In Med Mal cases have to allege amt requested in complaint but jury isn't told what amt is. Note also that have locality rule in med mal case whereby experts in med mal cases can only be doctors from TN for past yr or from one of the border states (29-26-115 et seq); if do med mal on contingency basis cap at 1/3

b. some lawyers get around Mundy by leaving amt out --you should object and get them to put it in

6. Comparative Fault

a. McIntyre v. Balentine,833 SW2d 52, adopted modified comparative fault -- jury considers fault of all tortfeasors including those unnamed

b. Perez v. McConkey 872 SW2d 897 - abolished implied assumption of the risk bar so if P knowingly stumbled into sit., ct said P can still recover and his assumptio of risk in consideration of appropriating fault

c. Eaton v. McClain 19 TAM 15-1 - grandmother falls in child's house; no recovery b/c no proximate cause of daughter's ie daughter or son-in-law not negl

d. Bolz v. Ledes 20 Tam 4-1 - Testicular Cancer; P sought damages for loss of chance (failure to diagnose). Can recover for loss of chance and you do take into your comparative fault consideration insolvent tortfeasors

e. Bervoets v. Hardy-Ralls Pontiac Olds 19 TAM 6-1; right of contribution still exists; jury should be informed of amt of settlement and then if reasonable, get % of fault of D and contribute accordingly

7. Payment of judgment

a. single recovery rule - see Frenkel

1. In TN, Davis v. Jellico Hosp 912 F2d 129 - Davis alive at trial but died 1 mth after verdict. Ct held that single recovery and so his death doesn't = new trial to get $ pd back - this is the big disad of installment payments b/c cease at death

b. usually take present value of lump sum but also consider inflation

a. TN cts will take judicial notice of it --Martin v. S. Railway - 463 Sw2d 690

--Waller v. Skelton 31 TEnn App. 103

c. periodic payments becoming more common -- adv is that $ cannot be lost or mismanaged like a lump sum could; tax adv as well as interest payments but not award itself are taxable

1. usually used in structured settlements than in judgments

2. Formal Opin # 77 -states that periodic payments ok if it is the client's choice - atty fee then can be taken off the top or in installments (would allow lawyer to defer taxes on income until $ received - 103 TC 36)

d. Right to Gen Verdict - ie flat sum and not split up (ie award $1M instead of 100,000 p + S, 500,000 future medicals, 100,000 past med etc.

1. In TN youhave a const right to have a directed verdict in Tenn const. Art I 6 ; see also TRCP 49.03

e. P/i awards are exempt from fed tax and most state income taxes but interest from awards is taxable; split as to whether punitives are taxable

1. Jury is not told of this fact - Dixie Feed & Seed v. Byrd, 376 Sw2d 745.

2. 6th cir held punis not taxable - Horton v. CIR, 33 F2d 625


1. Important in this area to distinguish between injuries to land itself and injuries to structures on the land (bldgs or crops)

2. Permanent v. Temporary Damages

a. Temporary Damages

1. Miller v. Cuday Co - salt mine contaminates land but temporary damage. Trad rule is that remedy is the repair cost This may include loss of use of the property which can include loss of profits

2. In Tn this is capped at maximum of dimunition in value (633 SW2d 763)

b. Permanent Damage

1. Property - P gets dimunition in value to property caused by damage

2. Bldg - Gen Otdr Advert. v. LaSalle Realty Corp - damage to bldg owned by P done by D's sign who had been renting roof to advertise. If temporary get cost to repair regardless if more than dimunition in value (contra TN rule). If permanent get FMV at time of loss (396 SW2d 98)

3. Timber

a. Laube v. Thomas -standing timber with no special purpose including windbreak, shade or ornamental use get Current market value of trees(these trees weren't fully mature); if did have special purpose would have gotten difference in value of realty b/4 and after destr of trees

1. TN - for standing timber get 2X mkt value if negligent cutting but if intentional get treble damages

b. Kroulik v. Knuppel - ornametic and aesthetic tree cut down-- get FMV of tress + aesthetich value which is measured by Dimunition in value of land

1. TN - get dimunition in value of land and possibly aesthetic value (1 Tenn app. 175

4. Minerals

a. Kroulik v. Knuppel

1. non-intentional taking get value of royalties that P could have gotten if mined ie not profits from sale but $ he would have gotten to let person mine

2. intentional - value of minerals at surface - direct cost of extracting

b. TN

1. intentional - get value of minerals at surface and no set-offs for extraction costs

2. Non-intentional - FMV of minerals - extraction costs or roylaty rate???

5. Crops

1. 60 SW 593, 607 - water for irrigation cut off -- get value of crop at time of destruction -

2. Damage occurs b/4 planting -- get value of seed and rental value of land during growing season - 2 Tenn Civ App 154, + 660 SW2d 502

3. DAmage occurs early in season - rental value of land and material and labor

4. Damage occurs mid-season and later -- value of crops at mkt - cost of harvest

6. Treasure Trove

a. current landowner prevails over finder of goods -- Morgan 711 SW2d 220

7. Swamps - ie Wetlands

a. Puerto Rico v. SS Zoe - swamp ruined by Exxon tanker oil spill; damages restoration cost w/no caps on diminution of value and don't have to pay for lost organisms


1. In TN (20-5-106 + 113(damages)) these are combined-- technically it is a right of action by the deceased but for practical purposes have live human being bring it (106)

1. Memphis Street Rlwy v. Casper 313 Sw2d 44

2. Felts v. Magnabox 497 SW2d 898 - P was wife of deceased but married someone else, ct upheld atty's decision to let her not wear her wedding ring and call her by her former name b/c not her action but deceased's action

2. In TN P's awarded 2 class of damages

a. Immediate Damages

1. any mental or physical suffering endured between inj and death

2. med expenses necessitated by injury

3. reasonable funeral expenses

4. lost earnings capacity from injury to death

b. Pecuniary value of life of Deceased - take into act

1. age of deceased

2. health b/4 accident

3. life expectancy

4. capacity for work and earning $

5. personal habits for industry and sobriety

a. Hensley v Harton 782 SW2d 480 - evid introduced that Deceased made livlihood as a theif; D allowed to introduce this evid

b. Sadler v. Bellemy 640 SW2d 20- Deceased screwing D's wife; D allowed to introduce Deceased's trashy character

c. Kirksey v. Overton 804 SW2d 68, Evid that K was a drunk allowed in

c. Subtract probable living expenses from award

1. Wallace v. Couch 642 SW2d 141

??? 3. In wrongful death action, TN will not allow hedonic damages (loss of enjoyment of life --Spencer v. A1 Crane Service 880 SW2d 938

4. W/D awards in Tn have been low

a. If P's lawyer want someone alive and suffering than dead

1. Bush v. Vandy Hosp - parents bring boy to hosp later than should have but his brain swelled and he died; Parents awarded 3.5M but atty only sued for $3M so remitted to $3 and judge cut down again to $2.5

5. Who can P be in w/d action

a. surviving spouse (has priority)

b. surviving children

c. next of kin

d. executor or administrator

e. cutodial parent if parents divorced and child dies (Spurling v. Johnson 747 SW2d 350) but if jt custody ct will look to primary care giver

6. Who gets $

a. 20-5-107 non-custodial parent can share in judgment but no recovery until child support arrearaages and interest are pd in full

b. surviving spouse gets 1/3 or child's share


A. PRESENT VALUE AND INFLATION - B/c purpose of compensatory damages in p/i is to restore injured party to the position held prior to incurring harm, have to take into consideration amt of interest that an investment of the lump sum judgment payment would earn over time. Hence have to take into acct present value. Also have to consider impact of inflation on projected earnings.

1. 4 Approaches

a. don't figure either b/c cancel each other out

bob 1. 6th Cir method -- Jacksonville v. Cookeville 31 F3d 1354 -- decided that considering pay increases would be sufficient; reasonable proximation can be found by multiplying salary x yrs left b/4 retirement

b. Let parties call experts and leave it up to jury (Case-by-Case basis)

BOB 1. Culver v. Slater Boat - FED ? CASE W/ JURY - Jury won't use real interest method but must acct for inflation by using below mkt interest rate

2. Aldridge v. Baltimore & Ohio RR - FED ? W/ Jury - Selects battle of experts method but D has burden of proof of discounting PV; P has burden of proof of calculating inflation (ie at what rate)

c. discount PV but ignore inflation

d. arrive at Real Interest Rate (1-3%) which takes care of discount and inflation problems

1. Jones & Laughlin Steel Corp. v. Pfeifer - FED ? W/ NO JURY leading case on this method; S. Ct didn't mandate this method but recommended it


2. Budge v. Post - State law determines these matters


1. Interest payable upon judgment from accrual of cause of action until entry of judgment; takes care of P's loss of use of $ during trial and also used to promote settlements

2. Discretionary and Can be imposed per agreement by the parties, by statute, or in equity as a restitutionary device to prevent unjust enrichment

3. Anchorage Ashphalt Paving Co. v. Lewis - K breach in paving K - Ct disallowed pre-judgment interest but instead allowed Present Value of judgement to be taken as of the day of judgment instead of the day the breach occurred

4. Moore-McCormack Lines Inc v. Richardson - involves admiralty wrongful death act which is any navigable stream (pure comparative fault). Allowed pre-judgment interest b/c Admir. Death Act allowed for it

a. Contra Poleto v. Consol Rail where FELA was silent and so didn't allow

b. also usually not allowed in torts

5. P can get pre-judgment interest under EEOC Act - 5 USC 5596(b)(2)(a)-(b)

6. TN

a. 47-14-109 states that can get pre-judg interest in liquidated damage claim of prime + 4% if K allows but silent on rate or both parties agree in advance or post or prejudg allowed by law- but note parties may agree in k to prejudgment or postjudgment interest rate

1. Lawrence v. Automotive Financ. Svcs. 19 TAM 21-11 - ct upheld k clause which didn't allow post or pre-judgment interes

b. 47-14-123 Judge has discretion to allow prejudgment interest up to 10% in prop damages action or K breach w/ unliquidated damages; can't get for p/i

c. Time-Price differential are excluded from usury law so can say $50 cost of item but pay me $1000 one yr from now

d. eminent domain

1. 29-17-813--in condemnation cases gov supposed to deposit $ in ct their experts think they owe you. Landowner can take $ or challenge $ offered. IF jury comes back w/ higher award can take difference and apply prejudgment interest of prime + 2% from time of taking to jury verdict.

2. 29-16-101 (123, 124) and 29-17-101 - Inverse Condemnation If gov imposes strict limitations on how you can use your land might be a taking. 124 says 12 mth stat of limitations which begins when one has actual knowledge of occupation. Statute of repose of 3 yrs from occupation regardless of your knowledge


1. TN -Tn Rules AP 41 and TCA 47-14-121- 10% rate running from verdict or "non-jury equiv" (take under advisement) until judgment is pd

2. Fed - 28 USC 1961 - Fluctuates w/ T-Bill Rate

XIII. Limitations on Compensatory Damages

A. Forseeability

1. For breach of K, the loss must be reasonably forseeable at time K was formed from perspective of breaching party

2. For torts, affects nature of duty and once established respondible of ensuing harm proximately caused by conduct

3. Redgrave v. Boston Symphony Orch - Redgrave a commie and BSO cancelled contract for her to sing which lead to future cancellations; Ct said not forseeable for BSO that them turning her down would lead to future cancellations.

4. Hadley v. Baxendale principle - Where two parties have made a K which one of them has broken, the damages the non-breaching party should receive should be those that arise naturally ie according to the usual course of things, from the breach of K itself, or such as may reasonably be supposed to have been in contemplation of both parties, at time they made K.(ie General damages)

4. TN

a. TRCP 9 - have to plead special damages (those which don't naturally flow from injury

b. Livermore Foundry v. union Storage + Compress 105 Tenn. 187, forseeable for seller to see that if machine they sold P exploded then P would be out of work

c. Ill RR v. Johnson & Fleming 111 Tenn. 624, no forseeabilty at execution of K that if breached by late delivery then P would lose other K's

5. Spang Indus. v. Aetna Casualty & Surety - svc K to build bridge b/4 winter; steel delivered late so gen contracto had to speed up things by working people overtime-- ct held breaching supplier should have forseen

6. Canon v. Yankee Products - worm in green peas; seller had warranted that peas were great; rest suing for breach of express warranty and lost profits-- Ct held not forseeable that P would lose profits

7. Evra Corp v. Swiss Bank Corp - GET FROM BOB


1. Injured party also must prove damages with reasonable certainty 2 ?'s

a. has P shown with sufficient definiteness that the D causded a harm to P protected duty and caused resulting harm?

b. If so What extent should the D be held accountable for his misconduct (P has burden of proving damage calculation that doesn't involve speculation)

2.More scrutiny for breack of K action than torts as P + S or emotional distress damages are inherently difficult to quantify wheras loss of earnings easier to quantify

bob 3. TN

a. Harrison (ASK BOB) D produced faulty records and Ct ruled for D as a P not able to show w/ certainty how much Profit he lost

4. Story Parchment v. Pattersons Parchment Paper - P sued for price fixing and said this caused him to lose profits. Ct said this is a tort case and in tort cases Plaintiff has lesser burden to meet w/ certainty so damages here proved w/ reasonable certainty. If damages are reasonably certain then extent or amt may be left to reasonable inference.

a. D who causes difficulty of proof of damages can't complain of uncertainty

5. Interference w/ possible economic benefits of a non-commercial character

1. Youst v. Longo -Tort case w/ harness racing and allegation that one horse hit another; P says damages are purse of race -- Ct says B.S bc no reas certainty or liklihood that horse would have won

a.REST 774b specificallydisallows for horse races

2. To recover have to have a substanial certainty or at least a high probability of success


a. Lakota Girl Scout Inc. v. Havey Fundraising mgt - fundraiser projected that X would be raised and fee based on that projection. Far short of that goal. Ct held that new bus rule precludes recov of lost profits by an enterprise that has no operating history from which profits may be accurately predicted. This ct allows it to stand


1. Ferrell v. Elrod 469 SW2d 678, 686- Ct allows lost profits to new cosmotology in breach of K case

2. Joy Floral v. SCB 563 SW2d 190- Joy says SCB ruined our business b/c didn't list them in Yellow Pages. Ct held can't put evid in of gross profit, must put in evid of expected net profit.

3. Broan Mfg v. Assoc. Distrib 923 F2d 123, Tawain mfg copied broan fans but quality wasn't as good. Broan was mistakingly sued by customers thinking they had bought Broan fan- Ct upheld action for damages espec on evid that in 10% of cases no way for Broan to Defend b/c couldn't tell if their fan or not


1. Allows damages incurred to mitigate damages.

a. Parker v. 20th Cent Fox -Shirley McClaine employed but studio breached but said would give her another film -- Ct said that if give new goods have to be comperable which this film wasn't

b. Employment cases s- P must take reasonably similar but not inferior employment to mitigate

2. Precludes a injured party from recovering damages that could have been aerted by taking reasonable mitigation steps (Excludes damaages that result from failure to mitigate.

a. Rockingham Cty v. Luten Bridge - Svcs K to build bridge, county clearly repudiated K w/ Bridge Contractor who finished built bridge anyway. Ct refused to award damages for completin bridge and just gave cost of labor and materials up to breach

b. TN Frye v. Memphis State Univ. 806 Sw2d 70, Frye was tenured psychology professor who was canned for fraud and theft; he sued and when suit came up 7 yrs later he was still unemployed. S/ Ct held that he didn't have to seek new employment b/c

1. B of Proof lies w/employer to show available similar employment

2. Employer has burden to show lack of diligence

3. CT doesn't require nationwide search (query w/ professors)

4. Ct conceded that this is exceptional case and not the rule

b. Lobermeier v. Gen Telp. Co. of Wisc. - guy on phone pole struck by lightning; could have surgury to mitigate. Ct hold for jury to decide whether reas P would have undergone surgery

1. Edwards v. Travelers 304 SW2d 489 - P need not undergo major surgery or even diagnostic tools


d. Seatbelt Wearing - Seatbelt law in Tn 55-9-603 + 604 -- can't arrest you for not wearing it but can tack it on if you are doing something

1. cannot introduce evid of failure to wear seatbelt unless products liability action. In that action, D must plead that, must show non-compliance, must show that if P would have worn SB would have decreased P's injuries and show the extent


E. LL/Tenant - LL must attempt to mitigate in breach of lease situations

1. TN - ULTA - doesn't apply in all counties - imposes duty to mitigate (66-28-507(c))

2. For those counties which ULTA doesn't apply -(only applies to 4 largest and some medium)

a. commercial leases - ll has duty to mitigate Karns v. Bester Motors 161 Tenn. 331

b. Hailey v. Cunningham 654 SW2d 392 - burden on Tenant to show LL mitigated in comercial lease


1. Carnation Vo v. Olivet Egg Ranch - Breaching party has burden of proof of mitigation

a. CONTRA TN LAW -Bradford v. Flying S Charley Ranch (Jackson TN Clerk June 9, 1975)- innocent P has burden of proof


1. Will not make downward adjustment in P's damages just b/c some of damages claims have been reimbursed by some collateral source; may not even introduce any evidence that some of these expenses were taken care of by a collateral source

a. Rationale is that you have already pd premiums so why shouldn't get $ from ins judgment

b. Helfend v. S.Ca. Rapid Transit Dist. 80% of medicals pd by Blue Cross; Won't deduct from judgent

c. Craig v. Y & Y Snacks - sexual harassment case-- ct hodls that unemployment benefits shouldn't be deducted from back pay award

2. FOR MED MAL has been modified

a. TCA 29-26-119- P can't recover where following collateral sources have pd expenses:

1. Ins that employer has totally pd for

a. where injured party pays some of premium -- Ft Sanders v. Steele 19 TAM 51-8 - if portion pd by P then med mal act limitation doesn't apply

2. Social Security

3. Military Service Benefits

4. unemployment Compensation

5. Other sources not pd for by P or P's family

b. Note since this act didn't mention workers comp this exception doesn't apply to it - Nance v. Westside Hosp 750 SW2d 740

3. Where government is D but collateral sources is a Fund under a gov entity - ? of whether this source is collateral (and not the gov itself who could then cancel out these payments already made) hinges on whether benefit came from gen or special fund

a. Gen Fund - Where person doesn't make monetary contribution but gets funds, cts held that this isn't a collateral source (VA disablity)

1. Martin v. Casey 19 TAM 15-6 Tenn App 1994, Nashville Metro paying disbility and employee had been making no contrib so not a collateral source hence gov can deduct awards

b. Special fund - (Social Security) - person contributes to fund so collateral source

4. Applies to Charitable Entities

a. Hueper v. Goodrich - CSR applies even when grat benefits

B. Ill Central v. Porter 117 Tenn. 13



1. Can't fire employee solely for filing a Worker Comp. Claim - Clanton v. Cain-Sloan 677 SW2d 441 - would defeat purpose of Worker's Comp

2. Anderson v. Standard Register, 857 SW2d 535 -Tn S Ct upheld company policy which said if don't come to work for X days will be fired; in this case lady hurt on job and filed W. Comp but couldn't come back to work. B/c policy facially neutral, not retaliatory in nature, and applied across the board

3. TCA 50-1-304 - A company may not discharge an employee for

a. whistleblowing

b. refusing to participate in illegal activities (criminal or civil violation of any stat or reg)

Statute allows all damages

4. Reynolds v. Ozark Motor Lines, 19 TAM 45-2, Truckers refused to drive truck unless had time to inspect b/4 driving. Ct said can sue for damages b/c have to have time to inspect b/4 driving

BOB B. 1991 Civil Rights ACt - 42 USC 1981(a)

1. modified 1964 Civil Rights ACt by 1. capping some damages--cap on distress and punitive damges which fluctuates depending on # of employees - 15 employees and under cap of $50,000; 300+ $300,000 2. right to jury trial 3. covers expert fees

C. TN Human Rights Act - TCA 4-21-301

1. file suit in chancery ct - can get actual damages which include distress, punis, reinstatement and back pay, injuctive relief, atty fees NO CAPS LIKE ABOVE

D. TN Handicap Discrimination TCA 8-5-103

1. applies to public and private employers - remedies same as TN Human Rights Act

2. Unlike Fed law no requirement for reasonable accomodation ie don't have to spend $ to accomondate individual impairment

E. Americans w/ Disability Act - 42 USC 1221

1. requires reasonable accomendation

2. remedies are reinstatement and back pay, atty fee

F. Workers Compensation in TN

1. Has changed b/c of Workers Comp Reform Act, TCA 50 Supp.

2. In TN, have own ct system that handles workers comp. whereas most states handle administratively

3. Remedies available

ASK BOB a. Medical disability-

1. If have permanent disability get 2/3 avg weekly wage which escalates yearly under theory that you would get raise; also don't get anything over age 65 b/c social security would kick in

2. If permanent partial disability--doctors will rate your disability by percentage which is obtained either in the AMA Journal or Academy of orth. Surgeons ; you get 2.5 times this medical disability;

b. occupational disability -if meet 3 out of following 4 conditions have occupational disability and the 2.5 times limit isn't applicable

1. no high school diploma or GED, or can't read or write at a 8th grade level

2. 55 or older

3. no transferrable job skills

4. no other local work opportunities

If client doesn't fit into this and goes back to work and w/in 400 wks(almost 8 yrs) he leaves for any reason can go back into ct and ct can give up tto 6 times medical impairment

4. Lump sum - judge can award workers comp judgement in lump sum if he decides that

1. it is in workers best interest

2. worker can manage his $

Atty fee-ltd by statute to 20% can come out of this commuted sum

5. Appeal - de novo review --most appealed to workers comp panel make up of 1 S Ct judge and 2 other judges (usually retired). S Ct usually just stamps the decision of the Panel


1. Recoverty of personal property; governed by TCA 29-30-101 et seq

2. If CR can expedite process by meeting the following factors

a. have to have sworn complaint stating why you have to have relief pre-hearing

b. Post bond at least equal to value of prop

c. get order from judge (called fiat)- makes this pass constitutional muster

3. Take fiat to ct clerk who will get sheriff to serve

4. Then have hearing giving D notice and possibly a trial

H. Elise - CK with Bob to make sure this is right

1. the act of striking out language in a statute which would make it unconstitutional. As long as rest of stat is readable w/out the clause and the legislature would have passed the statute anyway, the stat will stand

a. State v. Terter 879 SW2d 823 - Trial Ct struck out 2 concepts of restitution in DWI law so that it would apply to D county. S Ct struck down stat as unconst. b/c concluded that legislature wouldn't have passed the stat w/out this clause which made it unconstit

2. Elision and URLTA - Paine thinks can get URLTA to apply to all counties in TN if you get Judge to elide your county into the statute as the legislature probably would have passed URLTA withoug thes clause which limits its applicability to certain counties as the purpose of the statute was to make state law in this area uniform

I. Class Legislation Clause - TN version of the equal protection clause which states that state statutes cannot discriminate without a rational basis

J. Contractor's Leniency Law - If unlicensed (unlicensed at time of contracting) contractor works on your house, the contract is void so can't sue for damages based on breach of K and he can't enforce his contract w/ you. NOTE MIGHT BE UNCONST


1. TCA 29-6-101 Get writ of attachment -Trying to convince ct that potential D is wasting assets or maybe hiding them

2. Repevin bond - in attachment suits, D can keep property pending outcome of litigation if it posts a replevy bond = 2X the value of the prop

3. If attachment granted, the any sale or encumberance of the property is void


1. Uniform Arbitration ACt - TCA 29-5-1301

a. Only comes about if parties agree by K that they will submit to binding arbit

b. hearsay rule doesn't apply

c. can appeal arbitrator's award per TCA 29-5-313 to an arbitrator's board but ltd to sit of fraud, exceed pwrs, evidence of partiality, arbitrator refused to hear material evid, or no arbitration agreement between parties

**** d. City of Blane v. John Coleman Hayes & Assoc. 818 SW2d 33, if you can show K providing for arbitration was itself fraudulent then you can go into ct w/ recission action

M. ALTERNATIVE DISPUTE RESOLUTION - under proposed TRCP might have to take shot at non-binding mediation w/ lawyer serving as mediator and if things don't work out then you try the case. Also Model Code could be amended to provide for this

BOB N. COLLECTING JUDGMENT -see notes for infor on sources 2/8

justforRP? 1. If dispute involves real prop, File Lis Pendens in Registers Office and include abstract of complaint (TCA 20-3-101)- lets world know that you have a lien pending outcome of litigation

Judgment lien = real prop

Execution lien = pers prop

3yr v. 10yr 2. Once get judgment record judgment in registers office (25-5-101). This places judgment lien on prop and lasts for 3 yrs on prop in cty where register is located.

a. for practical purposes, this 3 yr period will be there much longer as no title lawyer will insure judgment. Furthermore, can renew judgment

1. Can renew the judgment every 10 yr by filing scire facias (petition to show cause) -- in it need to set out statistics --on X date got judgment against X or and show cause

????NEED 2nd 2. show cause order issoue on D to show cause why this shouldn't be revived

b. Exemptions from execution judgment- MUST CLAIM THESE EXEMPTIONS (McFarland v. Watts 19 TAM 48-8)

1. homestead exemption of $7500

2. $4000 pers prop exemption

3. Family Bible, School Books, Clothes and their receptivles

4. Child Support and alimony

?????? 3. Garnishment - note for $ owed to DR not PP OR RP - AN OPTION FOR YOU TO GET YOUR $

a. Writ of garnishment - served on employer of D, Bank of D, debtor of D, someone who holds prop of D or owes D $. Asking those people to pay $ owed to D to them.

b. Procedure - Cir Ct. Clerk put SS # and Tax ID- ???????Rule 62 says D has to post stay of execution bond which is for a sufficient amount to cover judgment

c. Once garnishment issued lasts for 6 months; note after filing garnishment can't execute on anything until 30 days after filing garnishment

d. once file garnishment, garnishee (bank, employer) has to file an answer as to if they have any prop of DR; if they don't respond you can ask judge for cond'l judgment against garnishee and ct will issue show cause order; serve it on garnishee and if don't show cause why they didn't answer get final judgment against garnishee

4. Writ of Execution (fieri Facias (fi fa))

a. Sheriff instructed to directly execute on prop owned by judgment DR

b. IN TN pref is to go after pers prop 1st -- if none issue nulla bona return. If find pers. prop have to find storage space for goods and sheriffs goes and levies

1. Can't levy on $ of judgment DR Karmac v. Nichols 181 Tenn. 551

2. In TN a levy is deemed to relate back to the time the writ of execution was issued (teste date) Keep Fresh Filters v. Rijuli 19 TAM 39-1

c. Once get nulla bona return, can go after real prop which creates problem if more than one ownership interest in RE or mtgs encumbering RE

1. Sheriff doesn't actually have to physically levy but just write I levied on Blackacre(Paper levy)

2. Note if in Cir Ct have to file 2nd suit to levy against equitable interest in encumbered RE

d. Bonds

1. Indemnity Bond - CR gives to Sheriff to Cover His ASs if prop not DR's

2. Delivery Bond - DR can issue to keep prop

5. Sale of RP - Must sell for at least 50% of MV

a. Must give notice at least 3 times and notice To DR

6. Sale of PP - have to post 5 places in cty and most public place in DR's neighborhood and give notice to DR

For both sales notice must be given to

1. IRS - 26 USC 7425

2. Tenn Dept of Rev 67-1-1433

3. Dep't Empl Sec. 50-7-404

7. Slow Pace Statutes - allows DR to beg you to let him pay in installments what is owned (TCA 26-2-216)

a. Harrington v. Harrington 759 SW2d 664, nothing n stat that says judge has to set certain amt for payment or certain # of payments

8. Execution in Domestic Relations Cases

1. wage assigment --36-5-101 -- allows supported parent to have supporting parent's wages assigned to it-- is a judicial order

2. Uniform Reciprocal Enforcement of Judgment Act --36-5-201

3. Uniform Foreign Judgment Act --26-6-103

1. judgment has to be certified in state where debtor is found w/ only defense of DR being that state issuing judgment didn't have personal jurisdiction over D


1. Applies to Gen CR's of sellers in the business of selling inventory

2. Transferor of inventory required to make a list of its CR's and their addresses; Buyer has duty to keep this list and send letter to these Gen CR's at least 10 days b/4 bulk sales; puts them on notice

a. failure to notify Gen CR's of sale means sale is ineffective as to those CR's who can go after bulk buyers and in TN bulk buyer becomes personally liable to those CR

3. Note if 2nd sale and bulk buyer sells to BFP who have no idea that goods were bought in violation of BS Act, then BFP takes free and clear

4. Stat of Limit for Bulk Sales ACtions is 6 mths


1. 66-10-101 vendor retains lien (installment sales K); V can enforce lien by filing in chancery and selling property

Q. REMITTITUR AND ADDITUR - both ask judge to either decrease or increase jury verdict

1. Remittitur - 20-10-102

2. Additure - 20-10-101


1. 10 yr stat of repose but where expiration date --1 yr after anticipated life

2. Compliance w/ stat or reg is a defense

3. retailer is immunized from strict liability claims but not from breach of warranty; so gen must sue manufacturers unless insolvent (THEN AFTER ???)

4. Complaint must state how much damages are sought

5. Sandard is that product has to be unreasonably dangerous or in defective condition (Smith v. Detroit 712 SW2d 42


1. 29-24-103 ALLOWS newspaper, radio, TV to broadcast or print a retraction which cuts off punitive damages.

2. If have public figure or public official (Gertz) have to show actual malice to recover for defamation

3. If have pvt P v. Pvt D (Greenmoss)- per se defamation

a. CONTRA TN LAW - Memphis Publishing Co. v. Nichols 569 SW2d 412 -no per se damages; have to show actual damages

b. Handley v. May 588 SW2d 772 - Tn case uphodlig Memphis Pub and also holding tha tcan get humiliation and mental anguish, out of pocket loss, actual damages to rep

4. Pvt p v. Public D

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