EQUITABLE REMEDIES: PROTECTING "WHAT WE HAVE COMING TO US".

• Author: Katz, Larissa

INTRODUCTION 1116 I. WHAT WE HAVE COMING TO US 1120 II. MULTIPARTY UNJUST ENRICHMENT 1125 III. RESTRICTIVE COVENANTS 1130 IV. NUISANCE AND WHAT OWNERS HAVE COMING TO THEM 1132 V. WHAT COMPETITORS HAVE COMING TO THEM (AND WHY) 1134 VI. GOODWILL 1136 VII. MUTUAL (AND JOINT) WILLS 1138 VIII. INTERLOCUTORY INJUNCTION 1140 CONCLUSION 1145 INTRODUCTION

The core claim in this Article is that equitahle remedies (1) of specific performance (and relatedly, injunctions and constructive trusts) are best understood as setting out and protecting distinct equitable rights through what we might call "negotiable duties." I will argue that these equitable remedies cannot be understood in the same way as legal remedies, as reparations for wrongs or continuations in remedial form of a preexisting legal right. On my account, these equitable remedies enforce a distinct equitable right against the obstruction, diversion, or expropriation of what we have coming to us--as parties to an agreement, as neighbors, as competitors--by anyone with notice of the equitable interest and the power to compromise it. (2) A distinctive feature of this kind of right, I will argue, is that, unlike private law rights, it is protected through negotiable duties--duties that travel from one person to the next, sometimes to third parties who stand in no preexisting legal relationship to the complainant and who have not themselves committed any private law rights violation.

A specifically performable contract is thus a composite of two distinct rights: the contractual right and an equitable right that extends beyond the contractual right, both in terms of its content and in terms of its enforceability. An equitable right is free of the confines of contractual privity: it is enforceable against third parties to the contract who bear the power to compromise the protected interest, with notice of it. One important implication of this account is that the equitable interests and duties that arise in conjunction with specific performance need not and often do not track what the parties actually agreed upon. Consider specifically enforceable contracts for the purchase and sale of land, a standard context in which equity intervenes with a decree of specific performance. (3) Where a vendor in an agreement for purchase and sale transfers land before the purchase price is paid, what she has coming to her is the purchase price. Now she has an enforceable contractual right to be paid. But equity gives her something more: a secured debt. She has the right to resort to the land itself to realize the purchase price owing. The vendor's equitable lien is not something she bargained for: she bargained for an in personam duty to perform the contract by paying an agreed-upon sum, not a lien attached to the land itself. This equitable right in the form of a lien also gives the vendor priority in a bankruptcy, which no contract can pull off. What the vendor has coming to her--the purchase price--is now protected against obstruction in the form of breach or diversion to other creditors in a bankruptcy through the vendor's lien recognized and enforced in a decree of specific performance. The same two features of this kind of equitable right are evident on the buyer's side, too, in a specifically enforceable agreement for purchase and sale. In a decree of specific performance, equity intervenes to recognize and enforce the buyer's equitable interest in the land itself--again an interest that is binding on anyone who acquires the power to compromise that interest with notice of it. (4) The agreement itself figures in equity's reasoning about what we have coming to us: it is because there was an agreement to buy and sell that equity takes the view it does of what the vendor/purchaser had coming to them.

This account runs against conventional ways of thinking about specific performance in private law theory as either a reparative remedy like damages, representing the next best thing when the first best is unavailable, (5) or the direct enforcement of the primary duty to perform a contract--both tracking the logic of an underlying contractual relationship. (6) I will argue, by contrast, that specific performance involves a form of right, different from secondary remedial rights to compensation for breach, that requires its own normative and conceptual footing. (7) This, on my account, is the equitable right to what we have coming to us.

In this Article, I will unpack the distinctive nature and structure of an equitable interest in what we have coming to us and the negotiable duty that protects it. I will discuss this theory of equitable remedies with respect to contracts (specific performance, the remedial constructive trust), unfair competition (accounting and injunctions), property (injunctive relief in a nuisance action), and court actions (interlocutory injunctions, asset protection). In all of these instances, equity enters the scene to protect a party's interests in the realization of a legal state of affairs, a state of affairs that is contingent on factors beyond the scope of the legal interests at play. In each instance, equity intervenes to ensure that others do not obstruct or divert what another has coming to her. It does so in respects that are not necessitated by the relationships at the outset (e.g., at the time a contract was entered into) or even at the conclusion (e.g., at the time a contract is performed). (8) In this sense, the equitable rights protected by these remedies are rights to a "flow" of value--inhering in a thing or otherwise--free of interruptions, blockages, or diversions. In the background of this account of equitable remedies is a view of equity as responding to our vulnerability to others' derailing our plans--legitimately hatched through the only legal mechanisms available to us, i.e., the exercise of our powers to contract, the exercise of ownership authority to set agendas for things, the exercise of our liberty to compete, etc.

1. WHAT WE HAVE COMING TO US

   Equitable remedies like specific performance, injunctions, and constructive trusts go beyond the enforcement of legal rights (our property rights, which relate only to what we already have) and contractual rights (which relate only to another's duty to perform as agreed). (9) These equitable remedies stand as the recognition and protection of a distinct equitable right to the free, unobstructed flow of what a person has coming to her, as a party to a contract, as a competitor in a free market, as a neighbor, as a party to a lawsuit, and more. (10)

   The content of this equitable right--what exactly a person has coming to her from equity's standpoint--varies across a range of human interactions. Equity looks to a person's legal relationships in contract or property law--the background rules of fair competition--to construct an (equitable) account of what a person has coming to her as a participant in the private law order. (11) Consider what a person has coming to her as a party to a contract for the purchase and sale of Blackacre or as owner of a holiday property (designed to provide calme absolu), (12) or the holder of a contractual right to remain the beneficiary on another's life insurance policy. In the first case, the buyer does not already have Blackacre (but a contractual right to acquire it), in the second, the owner does not have calme absolu, but the power to set an agenda that might lead to it, and, in the last case, she does not already have the proceeds from the policy, but the contractual right to be maintained as the beneficiary of the policy. Something more has to happen in each case for that person as the holder of the relevant contractual right or the property right finally to emerge as the owner of Blackacre, the enjoyer of calme absolu, the recipient of the insurance proceeds: the seller has to exercise her power to grant Blackacre; neighbors must also deal with their land in a manner that is consistent with realization of peace and tranquility in the countryside in July; the holder of the insurance policy has to die with the policy paid up and without having changed the named beneficiary. The underlying right in contract or property points to what one has coming to her (Blackacre, calme absolu, insurance proceeds)--but it does not guarantee its flow.

   It falls to equity to prevent others from compromising an interest in what one has coming to her. When equity does so, the mechanism it uses is a negotiable duty that constrains whoever now has the power to compromise that interest by obstructing or diverting its flow. This negotiable duty travels to whoever bears the power to compromise the equitable interest. A negotiable duty functions like a negotiable right. Rather than "pay to the person whose name appears here or to the bearer of the note...", we say "demand from the person whose name appears here or the holder of this position...."

   Now the person in the position to compromise another's interest in what she has coming to her is usually the person on the other end of the contract, but not always. Third parties may be in a position to interfere with or to obstruct that equitable interest. The equitable duty can travel from the original party to the contract to a third party who has assumed the levers of power to interfere with the interests of the right-holder, by, for instance, acquiring ownership of land on which the fulfilment of the contract depends (something that explains restrictive covenants as I will explain shortly).

   The need for equity to recognize and to protect our interest in "what we have coming to us" is at the same time a recognition of a gap between what contracts (or property, legal orders, etc.) aim for--to bring about a planned-for state of affairs--and what these legal rights actually do, which is to obligate ordinary people to exercise other independent powers they have to bring about that state of affairs. (13) This point is perhaps...