Term Paper on "Legal Remedies the First Issue"

Term Paper 5 pages (1779 words) Sources: 1+

[EXCERPT] . . . .

Legal Remedies

The first issue presented by Jack Jones' legal tangle with Bill Black and Wisa is the fact that, despite having knowledge that Jones had obtained a temporary restraining order (TRO) preventing Wisa from paying Black, a Wisa clerk erroneously wired the payment to Black's account. Actually, the violation of the TRO presents two issues, because Jones is seeking not only to have Wisa credit his account for the $45,000 it erroneously wired to Black, but also to have Black and Wisa held in contempt for violating the TRO. In order to determine those issues, it is necessary for the court to know more facts about the TRO and the notice received by the parties.

From the information given, it appears that the TRO obtained by Jones directed Wisa not to pay Black the disputed sum. Therefore, the parties to the TRO appear to be limited to Jones and Wisa. While Wisa is prohibited from releasing the funds to Black, Black is not restricted from accepting the funds. Furthermore, there is no evidence that Black had any notice about the contents, or even the existence, of the TRO. The only evidence of service is a call that Wisa received from Jones' attorney. The party seeking the contempt sanction has to establish a valid and definite order, service or other notice to the defendant, and a violation of the order, by clear and convincing evidence. See Vermont Women's Health Center v. Operation Rescue, 159 Vt. 141, 146-49, 617 A.2d 411, 414-16 (1989). There is no evidence that Black was aware of the TRO, therefore he cannot be held in contempt for violating it.

Furthermore, according to the facts, Wisa had received notice by telephone that the TRO had issued. However, for a party to be held liable for violation of a TRO, the party has to have had notice of the TRO, which clearly and plainly informed the party what it cannot do. Furthermore, this notice has to have come from a source entitled to credit. Jones' attorney was not a source entitled to credit, as the attorney had no authority to issue the TRO, and Wisa had no reason to rely on the truth of his statements. If Jones' attorney had wished to ensure that Wisa received notice, he could have sent a copy of the actual signed TRO via fax to Wisa or asked the issuing judge or court to call and give notice of the TRO. A copy of a signed court document or a phone call from a court coordinator would have provided a source entitled to credit; a phone call from opposing counsel did not.

The secondary issue presented by Wisa's payment of the $45,000 to Black's account is whether or not Jones is entitled to have the $45,000 credited to his account. Determination of this issue would actually involve construing the agreement between Wisa and Jones. Many credit card companies include agreements to withhold payments in the event that a purchase is disputed. If Jones agreement with Wisa includes such a provision, the phone call from Jones' attorney notifying them of the TRO, would have been sufficient to invoke that provision, and Jones would be entitled to have the $45,000 credited to his account, at least until the dispute between Jones and Black could be resolved. On the other hand, if the cardholder agreement did not contain such a provision, then Jones became responsible for the purchase at the time he bought the ball, without regard to whether or not the signature on the ball was genuine. In that case, Wisa is not obligated to refund him any money; instead, Jones must seek to recover any money he expended from Black.

The next issue is whether or not Black is entitled to credit for the proceeds of the credit-card insurance supplied by Wisa to Jones, which will reimburse Jones up to $10,000 for any loss he incurs from this transaction. Even if Wisa is ordered to credit Jones' account with the $45,000 wired to Black, that does nothing to change the fact that Black has received payment in full for the contracted price for the ball, because the refund money will come from Wisa, not from Black's bank account. Therefore, even if the signature is determined to be Wee Willie's, Black is not entitled to the insurance money. In addition, if the signature is determined not to be Wee Willie's, Black is still not entitled to the insurance money. First, the insurance agreement is between Jones and Wisa and is intended to protect Jones from liability for fraudulent purchases. Sellers are not intended third-party beneficiaries of such agreements. Furthermore, even if sellers were intended third-party beneficiaries, the purpose of such insurance is not to enrich a fraudulent seller. Remedies are intended to place the wronged party in the same position it would have been in if the breaching party had full performed. If Black fraudulently misrepresented the signature on the ball, then he is the breaching party and is not entitled to a windfall by virtue of Jones' insurance agreement with Wisa. Furthermore, under an equity approach, Black cannot recover if his hands are unclean, and perpetrating a fraud on the other party constitutes unclean hands. See Sheridan v. Sheridan, 247 N.J. Super. 552, 589 A.2d 1067, 1069-70 (1990).

The resolution of the remaining issues is determined by resolving the contract dispute between Black and Jones. Before Jones' claims can be resolved, the court must determine whether or not the signature on the ball belongs to Wee Willie. If the signature on the ball is not a forgery, then Black has complied with the terms of the contract and is not in breach. If Black is not in breach, then he has already received the $45,000 from Jones' Wisa account, which means that Jones has complied with the terms of the contract. Black may be entitled to attorney's fees and costs from Jones, but those issues are not before the court.

However, if the court determines that the signature on the ball does not belong to Wee Willie, then Black has not complied with the terms of the parties' contract and Jones is entitled to damages. Jones is seeking to be awarded lost profits from resale of the ball, punitive damages, damages for mental distress in the amount of $1 Million, and payment of his attorney fees. Because each type of damages falls into a different category and is judged by a different standard, they must be considered individually.

The primary issue to be resolved is what compensation Jones is entitled to because of Black's breach of contract. The goal of contract damages law is to put the aggrieved party in the same position that it would have been in if the breaching party had fully performed the contract. There is no question that Jones is entitled to the $45,000 he paid to Black for the ball. However, the return of those funds will not place Jones in the same position he would have been in if Black had fully performed the contract, because of Jones' belief that he had a buyer in Japan who would pay $75,000 for the ball. The fact that Jones was unable to ascertain whether or not the buyer would have actually paid that amount for the ball would not prevent him from recovering his expectation interest, because it was Black's conduct in providing the fraudulent ball that prevented Jones from selling the ball to his Japanese buyer. Black cannot benefit from the uncertainty he caused. See Vitex Manufacturing Corporation, LTD v. Caribtex Corporation, 377 F.2d 795, 795-96 (1967). However, even if the court determines that Jones' expected profit is too speculative, Jones will still be able to recover his reliance interest, which includes any money he spent finding the Japanese buyer, as well as the $45,000 spent to purchase the ball. See Security Stove & Mfg. Co. v. American Ry. Express Co., 51 S.W. 2d 572, 574 (Mo. Ct. App. 1932). Because of the limited availability of signed baseballs, Jones would not have been required to cover to mitigate his losses.

After determining the amount of restitution that Jones is entitled to under the contract claim, the court must focus on whether or not Jones is entitled to punitive damages. Punitive damages are intended to punish and deter misbehavior. Therefore, in order to receive a punitive damages award, Jones must show that Black not only attempted to sell him a ball with a forged signature, but also that Black was aware of the forgery. If so, Black's deliberate disregard of Jones' rights will provide proof of the bad motives necessary to justify a punitive damages award. Sturm, Ruger & Co., Inc. v. Day, 594 P.2d 38, 46 (Alaska 1979). If Jones is unable to prove that Black knew or should have known that the signature was a forgery, then he will not be able to recover punitive damages from Black. Without malice, bad motives, or reckless indifference, there… READ MORE

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