What is a declaratory judgment? A method by which a person fearing injury from another can clarify and conclusively determine rights prior to actual injury.

What is a declaratory judgment?What is a declaratory judgment?

A method by which a person fearing injury from another can clarify and conclusively determine rights prior to actual injury occurring.

◦ Example:◦ Wallace plaintiff seeks a judicial declaration that

Tennessee’s excise tax on gasoline purchased elsewhere but stored in Tenn. violates the commerce clause and 14th Amdt. prior to the tax actually being assessed and/or D’s refusal to pay.

Declaratory judgments are a purely statutory creation:◦ Uniform DJA – adopted in Missouri (Mo. Rev. Stat.

527.010-080)

◦ Federal DJA – 8 USC '' 2201-02

In what types of situations does one In what types of situations does one most commonly use declaratory most commonly use declaratory judgments?judgments?

Constitutional challenges to statutes or regulations◦ Does the law as applied to P (e.g., Wallace) or on its face

violate state or federal constitutional provisions?

Intellectual Property litigation◦ Patent or trademark validity in the midst of an infringement

dispute

Insurance Coverage litigation◦ Insured may seek determination of scope of insurance

coverage while in dispute with insurer or third party

Will Contests◦ Beneficiary/potential beneficiary may seek declaration that is

entitled to recover (or entitled to a certain amount) during a will contest

Contract disputes (or avoidance thereof)◦ Party to contract may seek declaration as to the parties’

rights to resolve uncertainty and avoid further dispute.

Declaratory Judgments & Threshold Declaratory Judgments & Threshold Requirements – based on Requirements – based on WallaceWallace

TN law requires P to pay a gasoline privilege tax (for storing w/in Tennessee gasoline that was purchased out-of-state). P claims tax violates commerce clause & 14A. To enjoin future enforcement of the TN statute in Wallace, P would have to show irreparable injury and a ripe threat of harm.

Does P have to show irreparable injury to get a declaratory judgment that the statute is unconstitutional? 28 USC § 2201(a) & Mo. Rev. Stat. § 527.010

Does P have to show a threatened injury is ripe in order to get a declaratory judgment that the statute is unconstitutional? Was the threat ripe in Wallace?

Ripeness & potentially Ripeness & potentially unconstitutional laws:unconstitutional laws:

Can P simply challenge a law once its enacted (assuming P engages in activity w/in laws parameters) or must P show that the State has actually threatened to enforce the law against him? In other words, is there a ripe threat of harm merely because the statute exists and can be enforced against P?

Courts answer this differently:•Some say the coercive effect of the law creates a ripe threat of injury and P can sue for a declaratory judgment

• This tends to be more true if the cost of compliance is high or the risk of escalating penalties for non-compliance is significant (e.g., daily penalties for non-compliance)

•Others say the state must make some movement toward enforcement before an injury is ripe.

• But that movement toward enforcement can be as insignificant as a warning letter or statement to P

““Ripeness” in Ripeness” in Cardinal ChemicalCardinal Chemical

Facts: Morton files lawsuit against CC for patent infringement;

CC denies infringement & counterclaims that patent is invalid.

Fed. Cir. finds for CC on infringement issue. BUT dismisses the counterclaim re invalidity as “moot” because the infringement issue is no longer pending.

SCT reverses the Fed. Cir. on its mootness ruling – Why? Is there any reason to hear CC on the validity issue

now that the infringement dispute has gone away? Is there any “ripe” controversy?

A situation unripe for declaratory A situation unripe for declaratory judgment:judgment:

Wycoff : Plaintiff (hauling business) seeks a declaration that it is engaged in interstate commerce. SCT says P’s request for a declaratory judgment is not ripe because P asked for a declaration of status rather than a declaration of rights.

What could P have done to make the Court view this as an actual ripe controversy?

Court discretion to deny a Court discretion to deny a declaratory judgmentdeclaratory judgment

Uniform DJA/Mo. Rev. Stat. 527.060 The court may refuse to render or enter a declaratory judgment or decree where such judgment or decree, if rendered or entered, would not terminate the uncertainty or controversy giving rise to the proceeding.

In what circumstances will a declaratory judgment likely NOT terminate uncertainty?

P wants a declaration that Y’s will was invalid due to undue influence. As a beneficiary, P would normally be able to do this in a

will contest. But Y is still alive. And even if undue influence occurred, she could still change the will so a DJ re this will wouldn’t help.

Often in such cases, you can argue that the particular dispute simply isn’t ripe.

Differences between preventive Differences between preventive injunctions & declaratory injunctions & declaratory judgments (judgments (WallaceWallace example): example):

Injunction Dec. Judgment

What must P prove? 1) Irreparable injury2) Ripeness

1) No irreparable injury required2) Ripeness

What does the order say?

Wallace shall stop collecting the gas privilege tax from the railroads.

The gas privilege tax is unconstitutional as applied to the railroads.

What if D ignores the order or grabs P’s property for unpaid taxes (e.g., as in Wallace)?

1) D is in contempt

2) Injunction has res judicata effect

1) D is not in contempt – BUT can get an injunction to enforce the DJ (28 USC '2202 & Mo. Rev. Stat. 527.080)

2) DJ has res judicata effect

RestitutionRestitution

Basic Premise:◦ In cases where D has been unjustly enriched

at P’s expense, D must return the amount of his/her unjust enrichment

Restitution Is a Hybrid:◦ It is one of 3 forms of substantive liability

◦ It is also a possible remedy when the source of liability is contract, tort or statute

Blue Cross v. Sauer Blue Cross v. Sauer – substantive – substantive restitutionrestitution

Why are the Sauer’s liable for the return of the mistaken payments from Blue Cross?

◦ Did they do anything wrong? How easy would it be to prove?

◦ Assume they had been on an extended vacation & payments were directly deposited – would the court have required them to return the payments?

So what is (would be) the easiest source of their liability forcing them to return the payments from Blue Cross in either situation?

Restitutionary Remedial DevicesRestitutionary Remedial Devices

Why was Sauer so concerned w/ the manner in which restitution occurred? Restitution encompasses many different devices, which effect return in different ways – some examples:◦ Constructive Trust – P can trace into specific,

identifiable property in D’s hands and keep it even if it has increased in value (as long as traceable to wrongfully taken property from P)

◦ Quasi-Contract (aka “Money Had & Received” in Sauer) – results in simple money judgment for value of unjust enrichment to D

For wrongdoers who have received mistaken payments of money, P’s must rely on restitution as substantive cause of action & remedy:◦ P’s limited to restitutionary devices giving them a

simple money judgment

Somerville v. Jacob Somerville v. Jacob – restitution and – restitution and innocent improversinnocent improvers

Could Somervilles get restitution if they deliberately improved the Jacob’s land because the Somervilles thought the land really needed it and it would improve the Jacob’s property values?

What remedy if the Somerville’s negligently built a building over the shared property line onto the Jacob’s land?

What are the options when the Somervilles innocently improve the Jacob’s land thinking it is their land and mistake is discovered after improvement is finished?◦ Somervilles get nothing because they should have known of

problem

◦ Jacobs should pay Somervilles for actual cost of improvements

◦ Jacobs should convey land to Somervilles in exchange for value of unimproved land

What does the majority say? Why does the dissent balk?

RestitutionRestitution & Mistake & Mistake

A truly innocent mistake by P/improver/payor is most likely to result in restitution.◦ As P’s culpability increases, courts are less

likely to grant restitution

Also with a truly innocent victim (D/improvee/payee), courts may “balance the hardships” and refuse to grant restitution if returning the benefit will be hard on D

(But see Somerville)

◦ Bottom line – whether restitution is granted depends on culpability of both parties and hardship on D. (See Restatement 3rd)

Measuring the unjust benefit to be Measuring the unjust benefit to be returned – innocent wrongdoersreturned – innocent wrongdoers

Often there are different ways to measure D’s unjust gain – this isn’t clearly self-defining or there are simply two available measures.

◦ What measure do courts use when the D is innocent(ish)?

Theme throughout restitution with innocent wrongdoers:◦ When given a choice of measurement of unjust

enrichment, courts will usually choose the lower amount (which it believes represents unjust enrichment to innocent D)

Grounds for restitution with Grounds for restitution with innocent(ish) wrongdoersinnocent(ish) wrongdoers Mistake – see previous slides

Emergency – one who reasonably provides essential goods/services during emergencies is excused from getting promise to pay beforehand

◦ Measurement of U.E. for lives saved – FMV of treatment (NOT value of life saved)

◦ Measurement of U.E. for property saved – lesser of value of services or property damage avoided

Performance of Duties to 3rd Parties – e.g., paying brother’s bills

◦ Measurement of U.E. – reasonable value of services/bills paid for

Joint Ownership of Property – payment of necessary expenses

◦ Measurement of U.E. – reasonable value of other’s proportionate expenses

Quantum Meruit or Unenforceable Contracts◦ Four Different Measures - Cost to Plaintiff, Market Value,

Agreed Price, or Value in advancing D’s purposes