Fontainbleau Hotel Corp. v. Forty-Five Twenty-Five Inc. case brief

Fontainbleau Hotel Corp. v. 45 25 Inc., Fla. Dist. Ct. App, 1959

FACTS

P, Eden Roc, alleges that D (Font.) construction would interfere with easement (right of use) of light and air and cast a shadow that would render beach wholly unfitted for use and enjoyment of its guests

Rule – Sic Utere: one must use his property so as not to injure the lawful rights of another

Holding – No American decision has revealed that a landowner has a legal right to the free flow of light and air across adjoining land

1. Requires to show an independent property ownership that there is a legal right to light and air  Found no rights

Social utility of the extension outweighs the harm to the P hotel – wealth maximization says doesn’t matter where you put the entitlement because it will end up with the party who values it most.

Law and Economics

Fontainbleau and Eden Roc could have made deal, but Eden Roc would have had to pay more than Fontainbleau would make off of 

-additional things are worth what others will pay for them
-goal in efficiency is increasing wealth of society

voluntary actions are inherently good

Pareto,

1. Wrote about law and economic transactions
2. Pareto superior transaction – makes everyone better off, no one worse
3. Pareto optimal – way of distributing resources which is as good as it can get, if move anything, someone will be harmed; can't make better without making someone else worse

Kaldor – Hicks’ wealth maximization

1. Benefits of transaction outweigh costs
2. Externalities – costs of transaction to others not factored into value (i.e. Ingrids harms by Mikes bar)

Coase theorem

1. If no transaction costs, does not matter which legal rule chosen, any will produce and efficient result
2. If court held for Eden Roc, would increase wealth and both would be better off because Fontainebleau would pay less than 10mill to build and Eden roc would take more than 6 mill to build
3. Allowing damages not injunctive most efficient result
4. All harms are reciprocal and costs are shifted
5. Private parties are free to bargain

Voluntary transactions increase social wealth