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Question 1

What is involved in the equitable restitutionary remedy of disgorgement?

Answer 1

This requires that the defendant surrender to the plaintiff all gains that he unjustly got from his conduct. This happens through a disgorgement order. This takes all ill-gotten gains from the wrongdoer’s hands, but it does not try to compensate the plaintiff. This is limited to the profits that relate to the wrongdoing

Question 2

What is the equitable restitutionary remedy of a constructive trust?

Answer 2

This happens when a defendant is wrongfully possessing property and the court will hold that he is just keeping that property interest for the plaintiff. He has to turn it over to the plaintiff because the plaintiff is the rightful owner. The defendant just becomes an involuntary trustee of the unjust enrichment for the benefit of the P.

Question 3

What are circumstances a constructive trust can be imposed in?

Answer 3

– defendant gets title to the property by fraud, wrongdoing, mistake, coercion, undue influence, duress, embezzlement, conversion, misappropriation of information, unconscionable conduct, copyright infringement, violation of a duty imposed by confidential or fiduciary relationships, etc

Question 4

If there has been a breach of a contract can you get a constructive trust as a equitable restitutionary remedy?

Answer 4

No, this is not available for breach of contract, so you have to get compensatory damages or specific performance for that

Question 5

What are the benefits of a constructive trust?

Answer 5

• the beneficiary has first priority over unsecured creditors of the defendant
  – the beneficiary is entitled to enhancement in value of the trust property to avoid unjust enrichment
  – the plaintiff ends up owning the property after the constructive trust is imposed on it

Question 6

Does unjust enrichment require a wrongful act?

Answer 6

No, it can involve innocent parties that are unjustly enriched. All that is required is that a party holds property that in equity and good conscience he shouldn’t keep

Question 7

If the defendant steals the plaintiff’s phone and sells it to someone and then uses that money to buy a ring, if the plaintiff wants the phone back, what should he do?

Answer 7

He should seek replevin from the person that bought the stolen phone.

Question 8

If the defendant steals the plaintiff’s phone and sells it to someone and then uses that money to buy a ring, if the plaintiff wants the ring, what should he do?

Answer 8

Because the ring was bought with money from the stolen phone, It is traceable to the plaintiff’s property. The plaintiff could have a constructive trust imposed on the ring that requires the defendant to turn over the ring to the plaintiff. This will make the plaintiff the owner of the property subject to the constructive trust, and this applies even if the property has increased in value. If the ring appreciated in value to be twice as much as the original amount, the plaintiff would still get the ring and he doesn’t need to compensate the defendant for the increased value

Question 9

If a fiduciary misappropriated money to buy land, what does the court do?

Answer 9

Imposes a constructive trust to disgorge the land and the profits that are traceable to it from the defendant

Question 10

What are the major elements of a constructive trust as an equitable restitution remedy?

Answer 10

– wrongful conduct by the defendant [liability theory]
– specific property held by the defendant that the constructive trust is imposed on is traceable to the defendant’s wrongful act
– equitable reason for why the defendant shouldn’t keep the property (usually unjust enrichment]

Question 11

How does priority work when it comes to a constructive trust?

Answer 11

Constructive trust and equitable liens give the holder priority over other claimants, but not BFPs

Question 12

If there has been enhancement or improvement of property by someone besides the true owner they get to comingled so much that it loses its identity, what are the three tests that are applied?

Answer 12

– Physical identity test: looks at whether the identity of the property has saltines that can no longer be considered the same property.
– Relative value test: best title in the party that produces the greatest contribution to the finished product
– California Civil Code: differentiates between a principal and the other. If they improve or act in good faith and enhance his property by adding materials, the whole belongs to the owner of the principal parts. If services are used to enhance property, the owner must compensate for the value of the services

Question 13

What is an equitable lien?

Answer 13

This is a restitutionary remedy that allows the plaintiff to have property in the defendant’s possession subjected to a lien in favor of the plaintiff. It is enforced by the power of foreclosure. If the defendant doesn’t pay, the plaintiff can seek judicial sale of the property and apply the proceeds to satisfy the obligation. The whole point is to avoid unjust enrichment.

Question 14

When are equitable liens preferred?

Answer 14

When property has declined in value. Then you can get a security interest in the property plus a deficiency judgement for the balance.

Question 15

What two restitutionary remedies tend to go hand-in-hand and should both be discussed on an essay?

Answer 15

Constructive trusts and equitable liens

Question 16

If property increases in value and you get an equitable lien on the property, can you get that increase in value?

Answer 16

No, you can only get the amount that is owed to you

Question 17

What are the elements for an equitable lien?

Answer 17

– wrongful conduct by the defendant
– the property that is held by the defendant is traceable to his wrongful act
– there’s an equitable reason that the defendant shouldn’t keep the property

Question 18

What is the difference between an equitable lien and a constructive trust?

Answer 18

– constructive trust: plaintiff becomes the owner of that property
– equitable lien: defendant keeps ownership of the property, but it is subject to a lien in favor of the plaintiff

Question 19

What is the reasoning to use an equitable lien instead of a constructive trust?

Answer 19

Sometimes constructive trusts aren’t possible. I.e.: if a thief steals $500 from the plaintiff and adds his own $9500 to buy a car, it is inequitable to make him give plaintiff the car because the money he stole wasn’t a major factor in acquiring the car, so you can’t put a constructive trust on this. But you could use an equitable lien

Question 20

If a defendant fraudulently makes the plaintiff give him $50,000 which the defendant uses to buy land, but the land starts declining in value and is now worth only $40,000, if the plaintiff gets a constructive trust on the land, what happens? And what happens if he gets an equitable lien on the land?

Answer 20

– constructive trust: the plaintiff owns the land but it is worth less than when he gave it to the defendant
– equitable lien: he gets a $50,000 lien and if the defendant doesn’t pay, the plaintiff can foreclose on the property. If it sells for $40,000, that amount is given to the plaintiff in partial satisfaction and the plaintiff gets a deficiency judgement for the rest

Question 21

What is the big bonus of using a constructive trust or an equitable lien?

Answer 21

Then you become a secured creditor of the property, so your claim is superior to any claim by other general creditors of the defendant. This increases the chance that you will be compensated.

Question 22

What is a purchase money resulting trust?

Answer 22

When one party purchases property but the other one supplies the consideration, courts usually impose this on the purchasing party to construe him as a trustee that is holding the property interest for the beneficiary [the party that supplied the consideration].

Question 23

What is a pro rata resulting trust?

Answer 23

If a party paid partial consideration, he gets a pro rata amount