2002
Pam, a resident of State X, brought suit in state court in State X against Danco, a corporation with its principal place of business in State Y. The suit was for damages of $90,000 alleging that Danco breached a contract to supply Pam with paper goods for which she paid $90,000 in advance. In her complaint, Pam requested a jury trial. State X law provides that contract disputes for less than $200,000 must be tried to a judge.
Danco removed the case to federal court in State X. Danco moved to strike the request for a jury trial. The federal court denied the motion.
A few days before trial, Pam learned for the first time that Danco was incorporated in State X. She moved to have the case remanded to state court on this ground. The federal court denied the motion.
At trial, Pam testified that she paid for the goods but never received them. Danco admitted receiving Pam’s payment and then presented evidence from its dispatcher that it had sent a truck to Pam’s office with the paper goods. Danco also called as a witness Rafe, who works in a building next to Pam’s office. Rafe testified he saw a truck stop at Pam’s office on the day Danco claimed it delivered the goods. Rafe also testified he saw the truck driver take boxes marked “paper goods” into Pam’s office that same day.
At the close of all the evidence, Pam moved for judgment as a matter of law. Danco opposed the motion, and the court denied the motion. The jury returned a verdict in favor of Pam.
Danco then moved for judgment as a matter of law, which Pam opposed. The court denied Danco’s motion.
Did the court rule correctly on:
1. Danco’s motion to strike the request for a jury trial? Discuss.
2. Pam’s motion to have the case remanded to state court? Discuss.
3. Pam’s and Danco’s motions for judgment as a matter of law? Discuss.
Berelli Co., the largest single buyer of tomatoes in the area, manufactures several varieties of tomato-based pasta sauces. Berelli entered into a written contract with Grower to supply Berelli its requirements of the Tabor, the only type of tomato Berelli uses in its pasta sauces. The Tabor tomato is known for its distinctive flavor and color, and it is particularly desirable for making sauces. The parties agreed to a price of $100 per ton.
The contract, which was on Berelli’s standard form, specified that Grower was to deliver to Berelli at the end of the growing season in August all Tabor tomatoes that Berelli might require. The contract also prohibited Grower from selling any excess Tabor tomatoes to a third party without Berelli’s consent. At the time the contract was executed, Grower objected to that provision. A Berelli representative assured him that although the provision was standard in Berelli’s contracts with its growers, Berelli had never attempted to enforce the provision. In fact, however, Berelli routinely sought to prevent growers from selling their surplus crop to third parties. The contract also stated that Berelli could reject Grower’s tomatoes for any reason, even if they conformed to the contract.
On August 1, Berelli told Grower that it would need 40 tons of Tabor tomatoes at the end of August. Grower anticipated that he would harvest 65 tons of Tabor tomatoes commencing on August 30. Because of the generally poor growing season, Tabor tomatoes were in short supply. Another manufacturer, Tosca Co., offered Grower $250 per ton for his entire crop of Tabor tomatoes. On August 15, Grower accepted the Tosca offer and informed Berelli that he was repudiating the Berelli/Grower contract.
After Grower’s repudiation, Berelli was able to contract for only 10 tons of Tabor tomatoes on the spot market at $200 per ton, but has been unable to procure any more. Other varieties of tomatoes are readily available at prices of $100 per ton or less on the open market, but Berelli is reluctant to switch to these other varieties. Berelli believes that Tabor tomatoes give its sauces a unique color, texture, and flavor. It is now August 20. Berelli demands that Grower fulfill their contract in all respects.
1. What remedies are available to Berelli to enforce the terms of its contract with Grower, what defenses might Grower reasonably assert, and what is the likely outcome on each remedy sought by Berelli? Discuss.
2. If Berelli elects to forgo enforcement of the contract and elects instead to sue for damages, what defenses might Grower reasonably assert, and what damages, if any, is Berelli likely to recover? Discuss.
Acme Corporation was a publicly traded corporation that operated shopping malls. Because of an economic slowdown, many of Acme’s malls contained unrented commercial space. Additionally, the existence of surplus retail space located near many of Acme’s malls prevented Acme from raising rents despite increasing costs incurred by Acme.
In June 2001, Sally, president and sole owner of Bigco, approached Paul, Acme’s president. She proposed a cash-out merger, in which Bigco would purchase for cash all shares of Acme, and Acme would merge into Bigco. Sally offered $100 for each outstanding share of Acme’s stock even though Acme’s stock was then currently trading at $50 per share and historically had never traded higher than $60 per share.
Paul, concerned about Acme’s future, decided in good faith to pursue the merger. In July 2001, before discussing the deal with anyone, Paul telephoned his broker and purchased 5000 shares of Acme at $50 per share. Paul then presented the proposed merger to Acme’s board of directors and urged them to approve it. The board met, discussed the difference between the current market share price and the offered price, and, without commissioning a corporate valuation study, voted to submit the proposed deal to a shareholder vote. The shareholders overwhelmingly approved the deal because of the immediate profit they would realize on their shares. Based solely on shareholder approval, the board unanimously approved the merger, and all shareholders received cash for their shares.
In December 2001, shortly after completing the merger, Bigco closed most of the Acme malls and sold the properties at a substantial profit to a developer who intended to develop it for light industrial use.
1. Did Paul violate any federal securities laws? Discuss.
2. Did Paul breach any duties to Acme and/or its shareholders? Discuss.
3. Did the board breach any duties to Acme and/or its shareholders? Discuss.
[Trusts] [Professional Responsibility]
Richard, a resident of California, created a revocable, inter vivos trust in 1998 at the urging of his wife, Alicia, who was also his attorney. Alicia drafted the trust instrument.
Richard conveyed all of his separate property to the trust. The trust instrument named Alicia as trustee with full authority to manage the trust and invest its assets. By the terms of the trust, Richard was to receive all of the income during his life. Upon his death, his child by a former marriage, Brian, and Alicia’s daughter by a former marriage, Celia, would receive for their lives whatever amounts the trustee in her discretion thought appropriate, whether from income or principal. Whatever remained of the principal on the death of the last income beneficiary was to be divided equally among the then-living heirs of Brian and Celia. Celia was included as a trust beneficiary only after Alicia convinced Richard that this was necessary to avoid a possible legal action by Celia, although Alicia knew there was no legal basis for any claim by Celia.
Celia had lived with Alicia and Richard from her 10th birthday until she graduated from college at age 21 in 1990. Although Richard had once expressed an interest in adopting her, he was unable to do so because her natural father refused to consent. After Celia’s college graduation, however, she rarely communicated with either Richard or Alicia.
After creation of the trust, and while Richard was still alive, Alicia invested one-half of the trust assets in a newly-formed genetic engineering company, Genco. She lent the other one-half of the trust’s assets at the prevailing market rate of interest to the law firm of which she was a partner.
Richard died in 2000, survived by Alicia, Brian and Celia. Brian, upset with the way Alicia has handled the trust assets, seeks to have the trust declared invalid or, in the alternative, to have Alicia removed as trustee and require her to indemnify the trust for any losses.
1. What grounds, if any, under California law can Brian assert for invalidating the trust, and what is the likelihood Brian will succeed? Discuss.
2. What grounds, if any, under California law can Brian assert for removing Alicia as trustee and requiring her to indemnify the trust, and what is the likelihood Brian will succeed? Discuss.
3. As an attorney, independent of her capacity as trustee, has Alicia violated any rules of professional responsibility? Discuss.
The growth of City has recently accelerated, putting stress on municipal infrastructure. City’s water supply, roads, sewers, and schools are all operating in excess of designed capacity.
The Assembly of Future Life was organized in City not long ago. Its members adhere to certain unpopular religious beliefs. City gave the Assembly preliminary zoning approval for plans to build a worship center on a one-acre parcel of real property the Assembly owned within City’s borders. The Assembly’s plans incorporated a dwelling for its minister. Soon after the preliminary zoning approval, newspapers in City featured articles about the Assembly and its members’ beliefs.
After these newspaper articles appeared, City adopted a “slow growth” ordinance providing for an annual lottery to allocate up to 50 building permits, with applicants for certain “priority status” dwellings entitled to participate first. Priority status dwellings were defined as: (1) affordable housing; (2) housing on five-acre lots with available sewer and water connections; or (3) housing with final zoning approval as of the date the ordinance was adopted. Only after all applicants for priority status dwellings had received permits in the lottery could other applicants participate.
Over 500 applicants for priority status dwellings participated in the first annual lottery. Realizing that its opportunity to participate in a lottery could be years away, the Assembly submitted an application for retroactive final zoning approval and a building permit. City denied the application.
The Assembly brought suit in federal district court against City, alleging that:
(1) City’s ordinance was invalid under the due process, equal protection, and takings clauses of the U.S. Constitution; and (2) City’s denial of the Assembly’s application was invalid under the due process clause of the U.S. Constitution.
What arguments can the Assembly reasonably make in support of its allegations and is each argument likely to succeed? Discuss.
[Evidence]
Phil sued Dirk, a barber, seeking damages for personal injuries resulting from a hair treatment Dirk performed on Phil. The complaint alleged that most of Phil’s hair fell out as a result of the treatment. At a jury trial, the following occurred:
A. Phil’s attorney called Wit to testify that the type of hair loss suffered by Phil was abnormal. Before Wit could testify, the judge stated that he had been a trained barber prior to going to law school. He took judicial notice that this type of hair loss was not normal and instructed the jury accordingly.
B. Phil testified that, right after he discovered his hair loss, he called Dirk and told Dirk what had happened. Phil testified that Dirk then said: (1) “I knew I put too many chemicals in the solution I used on you, so won’t you take $1,000 in settlement?” (2) “I fixed the solution and now have it corrected.” (3) “Don’t worry because Insco, my insurance company, told me that it will take care of everything.”
C. Phil produced a letter at trial addressed to him bearing the signature “Dirk.” The letter states that Dirk used an improper solution containing too many chemicals on Phil for his hair treatment. Phil testified that he received this letter through the mail about a week after the incident at the barbershop. The court admitted the letter into evidence.
D. In his defense, Dirk called Chemist, who testified as an expert witness that he applied to his own hair the same solution that had been used on Phil and that he suffered no loss of hair.
Assume that, in each instance, all appropriate objections were made. Did the court err in:
1. Taking judicial notice and instructing the jury on hair loss? Discuss.
2. Admitting Phil’s testimony regarding Dirk’s statements? Discuss.
3. Admitting the letter produced by Phil? Discuss.
4. Admitting Chemist’s testimony? Discuss.
Theresa and Henry were married and had one child, Craig. In 1990, Theresa executed a valid will leaving Henry all of her property except for a favorite painting, which she left to her sister, Sis. Theresa believed the painting was worth less than $500.
On February 14, 1992, Theresa typed, dated, and signed a note, stating that Henry was to get the painting instead of Sis. Theresa never showed the note to anyone.
In 1994, Theresa hand-wrote a codicil to her will, stating: AThe note I typed, signed, and dated on 2/14/92 is to become a part of my will. The codicil was properly signed and witnessed.
In 1995, Theresa’s and Henry’s second child, Molly, was born. Shortly thereafter, Henry, unable to cope any longer with fatherhood, left and joined a nearby commune. Henry and Theresa never divorced.
In 1999, Theresa fell in love with Larry and, with her separate property, purchased a $200,000 term life insurance policy on her own life and named Larry as the sole beneficiary.
In 2000, Theresa died. She was survived by Henry, Craig, Molly, Sis, and Larry.
At the time of her death, Theresa’s half of the community property was worth $50,000, and the painting was her separate property. When appraised, the painting turned out to be worth $1 million.
What rights, if any, do Henry, Craig, Molly, Sis, and Larry have to:
1. Theresa’s half of the community property? Discuss.
2. The life insurance proceeds? Discuss.
3. The painting? Discuss.
Answer according to California law.
[Real Property]
Able owned Whiteacre in fee simple absolute. Baker owned Blackacre, an adjacent property. In 1999, Able gave Baker a valid deed granting him an easement that gave him the right to cross Whiteacre on an established dirt road in order to reach a public highway. Baker did not record the deed. The dirt road crosses over Whiteacre and extends across Blackacre to Baker’s house. Both Baker’s house and the dirt road are plainly visible from Whiteacre.
In 2000, Able conveyed Whiteacre to Mary in fee simple absolute by a valid general warranty deed that contained all the typical covenants but did not mention Baker’s easement. Mary paid Able $15,000 for Whiteacre and recorded her deed.
Thereafter, Mary borrowed $10,000 from Bank and gave Bank a note secured by a deed of trust on Whiteacre naming Bank as beneficiary under the deed of trust. Bank conducted a title search but did not physically inspect Whiteacre. Bank recorded its deed of trust. Mary defaulted on the loan. In 2001, Bank lawfully foreclosed on Whiteacre and had it appraised. The appraiser determined that Whiteacre had a fair market value of $15,000 without Baker’s easement and a fair market value of $8,000 with Baker’s easement. Bank intends to sell Whiteacre and to sue Mary for the difference between the sale price and the loan balance.
The following statute is in force in this jurisdiction:
Every conveyance or grant that is not recorded is void as against any subsequent good faith purchaser or beneficiary under a deed of trust who provides valuable consideration and whose interest is first duly recorded.
1. What interests, if any, does Baker have in Whiteacre? Discuss.
2. What interests, if any, does Bank have in Whiteacre? Discuss.
3. What claims, if any, may Mary assert against Able? Discuss.
[Professional Responsibility]
Betty, a prominent real estate broker, asked her attorney friend, Alice, to represent her 18 year-old son, Todd, who was being prosecuted for possession of cocaine with intent to distribute. Betty told Alice that she wanted to get the matter resolved Aas quickly and quietly as possible. Betty also told Alice that she could make arrangements with a secure in-patient drug rehabilitation center to accept Todd and that she wanted Alice to recommend it to Todd. Although Alice had never handled a criminal case, she agreed to represent Todd and accepted a retainer from Betty.
Alice called her law school friend, Zelda, an experienced criminal lawyer. Zelda sent Alice copies of her standard discovery motions. Zelda and Alice then interviewed Todd. Alice introduced Zelda as her A associate. Todd denied possessing, selling, or even using drugs. Todd said he was Aset up by undercover officers. After Todd left the office, Zelda told Alice that if Todd’s story was true, the prosecution’s case was weak and there was a strong entrapment defense. Alice then told Zelda that she, Alice, could A take it from here and gave her a check marked A Consultation Fee, Betty’s Case.
Alice entered an appearance on Todd’s behalf and filed discovery motions, showing that she was the only defense counsel.
At a subsequent court appearance, the prosecutor offered to reduce the charge to simple felony possession and to agree to a period of probation on the condition that Todd undergo a one year period of in-patient drug rehabilitation. Alice asked Todd what he thought about this, and Todd responded: A Look, I'm innocent. Don't I have any other choice? Alice, cognizant of Betty’s wish to get the matter resolved, told Todd she thought it was Todd’s best chance. Based on Alice’s advice, Todd accepted the prosecution’s offer, entered a guilty plea, and the sentence was imposed.
Has Alice violated any rules of professional responsibility? Discuss.
[Contracts]
Travelco ran a promotional advertisement, which included a contest, promising to fly the contest winner to Scotland for a one-week vacation. Travelco’s advertisement stated: A The winner’s name will be picked at random from the telephone book for this trip to Golfer’s Heaven.= If you’re in the book, you will be eligible for this dream vacation!
After reading Travelco’s advertisement, Polly had the telephone company change her unlisted number to a listed one just in time for it to appear in the telephone book that Travelco used to select the winner. Luckily for Polly, her name was picked, and Travelco notified her. That night Polly celebrated her good fortune by buying and drinking an expensive bottle of champagne.
The next day Polly bought new luggage and costly new golfing clothes for the trip. When her boss refused to give her a week’s unpaid leave so she could take the trip, she quit, thinking that she could look for a new job when she returned from Scotland. After it was too late for Polly to retract her job resignation, Travelco advised her that it was no longer financially able to award the free trip that it had promised.
Polly sues for breach of contract and seeks to recover damages for the following: (1) cost of listing her telephone number; (2) the champagne; (3) the luggage and clothing; (4) loss of her job; and (5) the value of the trip to Scotland.
1. What defenses should Travelco assert on the merits of Polly’s breach of contract claim, and what is the likely outcome? Discuss.
2. Which items of damages, if any, is Polly likely to recover? Discuss.
[Torts]
Manufacturer (Mfr.) advertised prescription allergy pills produced by it as the modern, safe means of controlling allergy symptoms. Although Mfr. knew there was a remote risk of permanent loss of eyesight associated with use of the pills, Mfr. did not issue any warnings. Sally saw the advertisement and asked her Doc (Doc) to prescribe the pills for her, which he did.
As a result of taking the pills, Sally suffered a substantial loss of eyesight, and a potential for a complete loss of eyesight. Sally had not been warned of these risks, and would not have taken the pills if she had been so warned. Doc says he knew of the risk of eyesight loss from taking the pills but prescribed them anyway because this pill is the best-known method of controlling allergy symptoms.
Bud, Sally’s brother, informed Sally that he would donate the cornea of one of his eyes to her. Bud had excellent eyesight and was a compatible donor for Sally. This donation probably would have restored excellent eyesight to one of Sally’s eyes with minimal risk to her. The expenses associated with the donation and transplantation would have been paid by Sally’s medical insurance company. Sally, however, was fearful of undergoing surgery and refused to have it done. Thereafter, Sally completely lost eyesight in both of her eyes.
Sally filed a products liability suit against Mfr. seeking to recover damages for loss of her eyesight. She also filed a suit for damages against Doc for negligence in prescribing the pills.
What must Sally prove to make a prima facie case in each suit, what defenses might Mfr. and Doc each raise, and what is the likely outcome of each suit? Discuss.
[Community Property]
In 1997, Hank and Wanda, both domiciled in Illinois, a non-community property state, began dating regularly. Hank, an attorney, told Wanda that Illinois permits common-law marriage. Hank knew this statement was false, but Wanda reasonably believed him. In 1998, Wanda moved in with Hank and thought she was validly married to him. They used Hank’s earnings to cover living expenses. Wanda deposited all her earnings in a savings account she opened and maintained in her name alone.
In February 2000, Hank and Wanda moved to California and became domiciled here. By that time Wanda’s account contained $40,000. She used the $40,000 to buy a parcel of land in Illinois and took title in her name alone.
Shortly after their arrival in California, Wanda inherited an expensive sculpture. Hank bought a marble pedestal for their apartment and told Wanda it was so we can display our sculpture. They both frequently referred to the sculpture as our collector’s prize.
In March 2000, a woman who claimed Hank was the father of her 6 year-old child filed a paternity suit against Hank in California. In September 2000, the court determined Hank was the child’s father and ordered him to pay $800 per month as child support.
In January 2002, Wanda discovered that she never has been validly married to Hank. Hank moved out of the apartment he shared with Wanda.
Hank has not paid the attorney who defended him in the paternity case. Hank paid the ordered child support for three months from his earnings but has paid nothing since.
1. What are Hank’s and Wanda’s respective rights in the parcel of land and the sculpture? Discuss.
2. Which of the property set forth in the facts can be reached to satisfy the obligations to pay child support and the attorney’s fees? Discuss.
Answer according to California law.