Winter 2016
[Trusts]
Wendy, a widow, owned a house in the city and a ranch in the country. She created a valid inter vivos trust, naming herself and her daughter, Dot, as cotrustees, and providing that she had the power to revoke or amend the trust at any time in writing, by a document signed by her and delivered to her and Dot as co-trustees. At Wendy’s death, Dot was to become the sole trustee, and was directed to hold the assets in trust for the benefit of Wendy’s sister, Sis, until Sis’s death. At Sis’s death, the trust was to terminate and all assets be distributed to Dot. The sole asset in the trust was Wendy’s ranch.
Years later, Wendy prepared a valid will in which she stated, “I hereby revoke the trust I previously established, and leave my house and my ranch to my son, Sam, as trustee, to be held in trust for the benefit of my brother, Bob. Five years after my death the trust shall terminate, and all assets then remaining in the trust shall be distributed outright to Sam.”
Wendy died. Following her death, both Dot and Sam were surprised to find her will.
Dot has refused to serve as trustee under the inter vivos trust, and claims that, as a result, the trust fails and that the ranch should immediately be given to her.
Sam has agreed to serve as trustee under the testamentary trust, and claims that the ranch is part of the trust. Sam then sells the house, at fair market price, to himself in his individual capacity, and invests all the assets of the trust into his new business, Sam’s Solar. Bob objects to sale of the house and to Sam’s investment.
1. What interests, if any, do Dot, Sam, and/or Bob have in the house and the ranch? Discuss.
2. What duties, if any, has Sam violated as trustee of the testamentary trust, and what remedies, if any, does Bob have against him? Discuss.
answer
[Torts]
Jack believed that extraterrestrial aliens had come to earth, were living undercover as humans, and were planning a full-scale invasion in the future. Jack believed that his next-door neighbor, Nancy, was one of these aliens.
One day, Nancy called Jack on the phone to complain that Jack's children were playing in her yard. Jack yelled that his children could play wherever they wanted to. He also said that he was going to kill her.
The next day, Nancy approached Jack, who was playing in his yard with his children. She reminded him to keep his children out of her yard. Jack picked up a chainsaw and said, "When the invasion comes, I am going to use this baby to cut off your head!"
From the other side of the street, Ben saw Jack angrily raise the chainsaw at Nancy. Ben ran across the street and knocked Jack to the ground and injured him.
Later that week, Jack decided that he could wait no longer. He saw Nancy’s car, which he believed to be an alien spaceship, parked on the street. He snuck over to her car and cut the brake lines, hoping Nancy would have a minor accident and be taught a lesson.
Unaware that her car had been tampered with, Nancy lent it to Paul. When the brakes failed to work, Paul drove off a mountain road and was severely injured.
1. What tort causes of action, if any, may Nancy bring against Jack, and how is each likely to fare? Discuss.
2. What tort causes of action, if any, may Jack bring against Ben, and how is each likely to fare? Discuss.
3. What tort causes of action, if any, may Paul bring against Jack, and how is each likely to fare? Discuss.
answer
Contractor and Lawyer had been in a consensual sexual relationship for months. Contractor could not afford to hire an experienced lawyer to defend him against Plaintiff’s complex construction defect case and to bring a cross-complaint. Contractor told Lawyer, who had never handled such matters, that he wouldn’t sue her for malpractice if she would defend him for half her regular rate. Lawyer felt pressured because of their relationship.
Lawyer told Contractor she would defend him for half-price, but she would only bring his cross-complaint on contingency at her regular rate of 30 percent of any recovery. Contractor agreed. Although they continued to have sexual relations, their personal relationship deteriorated. Lawyer forgot to make a scheduled court appearance in the case.
At trial Plaintiff lost, and Contractor won $100,000 on his cross-complaint. Lawyer deposited the $100,000 in her Client Trust Account. She told Contractor she would send him $70,000. Contractor said Lawyer must send an additional $15,000 because she agreed to represent him for half-price on everything, including the contingency fee.
1. Did Lawyer commit any ethical violation by agreeing to represent Contractor? Discuss.
2. Did Lawyer commit any ethical violation by failing to make the court appearance? Discuss.
3. What should Lawyer do with the money in the Client Trust Account? Discuss.
Answer according to California and ABA authorities.
answer
[Remedies]
Pop obtained a liability insurance policy from Insurco, covering his daughter Sally and any other driver of either of his cars, a Turbo and a Voka. The policy limit was $100,000.
On the application for the policy, Pop stated that his cars were driven in Hometown, a rural community, which resulted in a lower rate than if they were driven in a city. However, Sally kept and also drove the Voka in Industry City while attending college there.
Subsequently, Pop asked Insurco to increase his coverage to $500,000; Insurco agreed if he paid a premium increase of $150; and he did so. Days later, as he was leaving for Sally’s graduation, Pop received an amended policy. He failed to notice that the coverage had been increased to $250,000, not $500,000.
Unfortunately, while driving the Turbo in Industry City, Pop caused a multi-vehicle collision. At first, Insurco stated it would pay claims, but only up to $250,000. Six months later, Insurco informed Pop that it would not pay any claim at all, because of his statement on the application for the policy that both the Turbo and the Voka were located in Hometown.
Insurco filed a complaint against Pop for rescission of the policy. Pop filed a cross-complaint to reform the policy to increase coverage to $500,000.
1. What is the likelihood of success of Insurco’s complaint, and what defenses can Pop reasonably raise? Discuss.
2. What is the likelihood of success of Pop’s cross-complaint, and what defenses can Insurco reasonably raise? Discuss.
answer
[Evidence]
Mike, Sue, Pam, David, and Ed worked at Ace Manufacturing Company. Mike had been the president and Sue supervised Pam, David, and Ed.
Pam was fired. A week later, David circulated the following email to all the other employees:
I just thought you should know that Pam was fired because she is a thief. Sue caught her stealing money from the petty cash drawer after Pam’s affair with Mike ended.
A month later, Mike died.
Pam sued David for defamation.
At trial, Pam testified that, although it is true she was fired, the remaining contents of the email were false. Pam called Ed, who testified that he had received the email at work, that he had printed it, and that he had received hundreds of other unrelated emails from David. Pam introduced a copy of the email through Ed.
In defense, David called Sue, who testified that she had caught Pam stealing $300 from the petty cash drawer, and that, when Sue confronted Pam and accused her of taking the money, Pam simply walked away. David himself testified that the contents of the email were true. He also testified that he had overheard Pam and Mike yelling at each other in Mike’s office a few weeks before Pam left; that he recognized both of their voices; and that he heard Pam cry, “Please don’t leave me!,” and Mike, in a measured tone, reply, “Our affair is over — you need to get on with your life.”
Assume all appropriate objections were timely made.
Should the court have admitted:
1. The email? Discuss.
2. Sue’s testimony? Discuss.
3. David’s testimony about
a. what Pam said to Mike? Discuss.
b. what Mike said to Pam? Discuss.
Answer according to the California Evidence Code.
answer
On February 1, Bing Surfboards (“Bing”) ordered 400 gallons of epoxy from Super Chemicals (“Super”) using its standard purchase order. Bing’s purchase order provided that delivery would be no later than February 20, but stated nothing about warranties, disclaimers, or remedies. Super responded with its standard acknowledgment, which purported to accept the order and confirmed that delivery would be no later than February 20. It also provided: (1) “Seller disclaims all warranties of merchantability and fitness.” (2) “In no event shall Seller be liable for consequential damages.” (3) “This acceptance is expressly made conditional on your assent to the terms of this acceptance.”
On February 15, Bing received the epoxy.
On February 20, Bing tested the epoxy by manufacturing 50 surfboards. The epoxy did not harden properly, leaving the surfboards useless.
On February 23, Bing emailed Super stating that the epoxy had failed to harden properly and that it was returning the remaining epoxy.
On February 25, not having heard from Super, Bing bought 400 gallons of epoxy from one of Super’s competitors, paying a substantially higher price for quick delivery, which was necessary to avoid a shutdown of Bing’s production line.
On February 26, Super informed Bing that it was shipping replacement epoxy to arrive the following day. The original epoxy had failed to harden because of manufacturing defects of which Super was unaware. Although the replacement epoxy was not defective, Bing rejected delivery and refused to pay.
Bing has sued Super for the increased price of epoxy it had to pay to Super’s competitor, and for loss due to 50 defective surfboards.
Super has sued Bing for rejecting its replacement shipment and for not paying under the contract.
1. Is Bing likely to prevail in its suit? Discuss.
2. Is Super likely to prevail in its suit? Discuss.
answer
Summer 2016
Paul, a citizen of Mexico, was attending college in San Diego on a student visa. He drove to San Francisco to attend a music festival. While there, he bought and ate a bag of snacks from Valerie, a resident of San Francisco. The snacks had been manufactured in Germany by Meyer Corp., a German company with its sole place of business in Germany. The snacks contained a toxic substance and sickened Paul, who incurred medical expenses in the amount of $50,000.
Paul filed an action pro se against Valerie and Meyer Corp. in the Superior Court of California in San Diego. In his complaint, he alleged that Valerie and Meyer Corp. should have known the snacks were contaminated and demanded $50,000 in compensatory damages.
Paul drove to San Francisco where he personally handed Valerie a summons and copy of the complaint. He sent a summons and copy of the complaint to Meyer Corp. by ordinary mail to the company in Germany.
1. Did Paul validly serve the summons on:
a. Valerie? Discuss.
b. Meyer Corp.? Discuss.
2. Does the Superior Court of California in San Diego have personal jurisdiction over:
a. Valerie? Discuss.
b. Meyer Corp.? Discuss.
3. Does venue properly lie in the Superior Court of California in San Diego? Discuss.
4. Is Paul’s action properly removable to federal court? Discuss.
answer
Al owned a farm.
In 1990, Al deeded an easement for a road along the north side of the farm to his neighbor Ben. Ben immediately graded and paved a road on the easement, but did not record the deed at that time. Al and Ben both used the road on a daily basis. The easement decreased the fair market value of the farm by $5,000.
In 2009, Al deeded the farm to his daughter Carol and she recorded the deed.
In 2011, Ben recorded his deed to the easement.
In 2012, Carol executed a written contract to sell the farm to Polly for $100,000. The contract stated in part: “Seller shall covenant against encumbrances with no exceptions.” During an inspection of the farm, Polly had observed Ben traveling on the road along the north side of the farm, but said nothing.
In 2013, Carol deeded an easement for water lines along the south side of the farm to Water Co., the local municipal water company. The water lines provided water service to local properties, including the farm. Water Co. then recorded the deed. The easement increased the fair market value of the farm by $10,000.
In 2014, after long delay, Carol executed and delivered to Polly a warranty deed for the farm and Polly paid Carol $100,000. The deed contains a covenant against all encumbrances except for the easement to Water Co. and no other title covenants. Polly recorded the deed.
In 2015, Polly blocked Ben’s use of the road and objected to Water Co.’s construction of the water lines.
Ben has commenced an action against Polly seeking declaratory relief that the farm is burdened by his easement. Polly in turn has commenced an action against Carol seeking damages for breach of contract and breach of the covenant under the warranty deed.
1. What is the likely outcome of Ben’s action? Discuss.
2. What is the likely outcome of Polly’s:
a. Claim of breach of contract? Discuss. and
b. Claim of breach of the covenant under the warranty deed? Discuss.
answer
Dirt, a large excavating company, recently replaced all of its gas-powered equipment with more efficient diesel-powered equipment. It placed the old gaspowered equipment in storage until it could sell it.
On May 1, Builder, a general contractor for a large office development, and Dirt signed a valid written contract under which Dirt agreed to perform all the site preparation work for a fee of $1,500,000. Dirt estimated its total cost for the job at $1,300,000. The contract states: “Dirt hereby agrees to commence site work on or before June 1 and to complete all site work on or before September 1.” Because no other work could begin until completion of the site preparation, Builder was anxious to avoid delays. To ensure that Dirt would give the job top priority, the contract also states: “Dirt agrees to have all of its equipment available as needed to perform this contract and shall refrain from undertaking all other jobs for the duration of the contract.”
On May 29, an unusual high pressure weather system settled over the state.
As a result, on May 30, in an effort to reduce air pollution, the state banned use of all diesel-powered equipment.
On June 2, Dirt told Builder about the ban and stated that it had no way of knowing when it would be lifted. Builder told Dirt to switch to its gas-powered equipment. Dirt replied that using its old gas-powered equipment would add $500,000 to its costs and asked Builder to pay the increased expense. Builder refused.
On June 4, seeing that no site work had begun, Builder emailed Dirt stating that their contract was “terminated.”
On June 8, Builder hired another excavating company, which performed the work for $1,800,000.
Dirt has sued Builder for terminating the contract. Builder has countersued Dirt for the $300,000 difference between the original contract price and what it paid the new contractor.
1. Is Dirt likely to prevail in its suit? Discuss.
2. Is Builder likely to prevail in its countersuit? Discuss.
answer
State X has a valid contract with public school teachers providing a fixed salary schedule. State X recently passed legislation to address its failing public schools. Now, when a school falls below established standards, each teacher at that school has 10% of his or her salary withheld each pay period for a maximum of two years. The withholding ends, and the money is returned with interest, upon the completion of a ten-hour certification program or termination of employment.
City High is a public school in State X where salary withholding has begun.
Bob has been a teacher at City High for the past three years. Paige is a highly regarded probationary teacher at City High. A probationary teacher may be terminated for any reason upon written notice within the first year of employment.
Bob and Paige have been outspoken opponents of the State X law and its application to City High, appearing at various community and school board meetings throughout the school year.
Shortly before the end of Paige’s first year of employment, City High served her with written notice terminating employment, and refunded the money withheld with interest.
Bob and Paige have sued State X, the Attorney General of State X, and City High in federal court seeking damages and injunctive relief. State X and the Attorney General have moved to dismiss the suit based on standing and the Eleventh Amendment.
1. Did City High’s termination of Paige without a hearing violate the procedural due process guaranty of the Fourteenth Amendment to the United States Constitution? Discuss.
2. How should the court rule on the State and the Attorney General’s motion? Discuss.
answer
In 2003, while planning their wedding, Harry and Wanda, a California couple, spent weeks discussing how they could each own and control their respective salaries. Sometime before their wedding, they prepared a document in which they stated, “After we marry, Wanda’s salary is her property and Harry’s salary is his property.” At the same time, they prepared a separate document in which they stated, “We agree we do not need legal advice.” They signed and dated each document. They subsequently married.
In 2004, Harry used his salary to buy a condominium and took title in his name alone. Harry and Wanda moved into the condominium.
In 2005, Harry and Wanda opened a joint savings account at their local bank. Each year thereafter, they each deposited $5,000 from their salaries into the account.
In 2015, Harry discovered that Wanda used money from their joint account to buy rental property and take title in her name alone.
In 2016, Harry and Wanda permanently separated and Wanda moved out of the condominium. Wanda thereafter required emergency surgery for a medical condition, resulting in a hospital bill of $50,000. Harry later filed a petition for dissolution of marriage.
What are Harry’s and Wanda’s rights and liabilities, if any, regarding:
1. The condominium? Discuss.
2. The joint savings account? Discuss.
3. The rental property? Discuss.
4. The hospital bill? Discuss.
Answer according to California law.
answer
Len, an attorney, is a member of Equal Ownership Inc. (Equal), a nonprofit organization that seeks to help low-income families purchase homes throughout the state. Len does not represent Equal as an attorney. Equal helped to get a statute enacted that requires that all new residential developments contain a certain percentage of low-income housing.
ABC Development Corp. (ABC) is a corporation that wants to challenge the statute. Pat, the President of ABC, asked Len to represent ABC and Len agreed. Len does not personally agree with ABC’s objective, but moves forward with the representation nonetheless by filing a complaint challenging the statute. Len personally thinks the statute is a good law and secretly hopes that ABC is not successful in its lawsuit.
During the course of Len’s representation of ABC, Pat informs Len that he (Pat) has filed false reports with the State Environmental Protection Agency regarding the disposal of non-hazardous waste, and is planning to file another false report next month. Filing a false report makes a person and his or her employer liable for a substantial civil fine. Len does not take any action with respect to the impending filing of the false report.
What ethical violations, if any, has Len committed? Discuss.
Answer according to ABA and California authorities.
answer