In re Madert (February 2002—MPT 2) Allie and Bruce Madert have met with the supervising partner at applicants' law firm regarding a noise dispute with their next door neighbors, the Doyles. The Doyles are aspiring rock musicians who conduct loud jam sessions with other aspiring musicians at all hours of the day and night in their house and in a shed behind their house. The music is so loud that when the Doyles and their friends are practicing, the Maderts and their children have trouble sleeping. Their children also are distracted while trying to do homework. The Maderts have repeatedly complained to the Doyles about the noise, but the Doyles have done nothing to make their practice sessions less disruptive. The Maderts recently wrote a letter to the Doyles asking them to stop making so much noise or face legal action. While they wish to resolve the noise problem short of litigation, the Maderts are prepared to seek injunctive relief as well as damages if that is what it takes to abate the nuisance. The supervising partner has asked applicants to write a letter to the Doyles' attorney to persuade him that the noise from the Doyles' band constitutes a nuisance and that if the Maderts were to sue, a court would be likely to grant an injunction and impose damages. The partner also wants applicants to include in the letter suggestions of what steps the Doyles could take to abate the noise. The File contains the instructing memo, transcript of the supervising partner's interview with the Maderts, the Maderts' letter to the Doyles, and a University of Franklin report on noise pollution and control. The Library contains three cases.
MINNESOTA BAR EXAMINATION
FEBRUARY 26, 2002
REPRESENTATIVE GOOD ANSWER
QUESTION #1
February 26, 2002
Mr. George Austin
123 Street Name
Franklin, US 12345
Dear Mr. Austin:
I understand you represent Adrian and Evelyn Doyle. My clients, Allie and Bruce Madert, are neighbors of your clients and there is a problem we are hoping you can help resolve.
The Doyles are attempting to form a rock band and are practicing in a shed behind their home. Unfortunately, the shed is not built to accommodate such a use and my clients are being bothered by the noise the Doyles are creating.
My clients have no ill will toward the Doyles, but they would like the noise to stop. Admittedly, the Doyles made improvements to the shed, however they failed to make such improvements as to contain the noise from their band. My clients, the Maderts, have complained on several and regular occasions, including writing the Doyles a letter asking them to keep it down. To date, their requests have been unacknowledged and the Maderts are seeking to resolve, by legal action if necessary.
In Arundel Fish and Game Club v. Carlucci (Carlucci) quoting from Lawrence v. Simons, the Franklin Court of Appeals stated that liability for a private nuisance applies when interference is intentional and unreasonable, or caused by negligent, reckless, or abnormally dangerous conduct. Further, an actor who knowingly causes an invasion of the use and enjoyment of a person's property in the pursuit of a laudable enterprise without any desire to cause harm also commits an intentional invasion. When an actor is put on notice concerning the harm of certain activities and continues to engage in them with knowledge of the harm, the actor is liable for the creation of a nuisance. In this case, the remedy was an injunction, plus sixty days to fix the noise problem.
My clients, as stated earlier, have asked the Doyles to keep it down to no avail. They have a good case for a private nuisance action against the Doyles as we can show that the Doyle's knew and were put on notice of their invasion to the Maderts.
Gorman v. Sabo (Sabo) also supports the Madert's case. Where the noise causes physical discomfort and annoyance, a private nuisance can be found. The Maderts have lost sleep as a result of the Doyles playing until all hours of the morning. Again, they have expressed their annoyance to the Doyles. Sabo goes on, however, to provide a measure of damages for the invasion, in addition to injunction, of the diminution in the value of the use of the property as a home, elements of which are ordinary use and enjoyment and sickness or ill health caused by the nuisance. Thus the Maderts may be entitled to monetary damages should this not be resolved, as they are being limited in the use and enjoyment of their home with the noise. Finally, the court in Sabo suggested punitive damages may be awarded if the right to compensatory, or at least nominal damages, has been established.
Finally, in Meadowbrook Swimming Club v. Albert (Albert), the Franklin Supreme Court said noise alone may create a nuisance and be the subject of injunction. When the noise is habitual, loud and not inherent to the character of the neighborhood, such that normal people are inconvenienced to the point they cannot sleep, study, read, converse or concentrate until it stops, it is unreasonable and considered a nuisance. When it is a nuisance, injunction is proper. While the neighborhood is known for its diversity and commitment to the arts, this type of artistic expression is not inherent to the neighborhood. In fact, there are artists' cooperatives and a community center for those who want to engage in the type of playing the Doyles engage in and avoid disturbing the neighbors.
As you can see, the Maderts' position is clearly supported by law. Should this matter need to be resolved in court, the Maderts should easily obtain an injunction against the Doyles and they also have a good case for monetary damages.
However, it is not the Maderts' first choice to quash the Doyles' artistic freedom, but rather to get the noise under control or at a level where the Maderts are not inconvenienced. We would like to propose some options.
First, the Doyles could properly insulate the shed where they practice. According to the Maderts, this was their original plan. A properly insulated sound studio, including the windows, would help to reduce the noise to an acceptable level. A study by the University of Franklin, Department of Ecological Studies suggests acoustical glass in the windows.
Second, we would suggest that the Doyles amend the hours and days they practice. This is probably the most practical suggestion and easiest to implement. We would suggest that the Doyles refrain from practicing after 10:00 PM on weekdays and after midnight on Friday and Saturday nights. This would allow them sufficient hours after work and on the weekends to practice while allowing the Maderts sufficient hours for sleep and evening enjoyment. We would also suggest that they be limited to three days per week of practice at their home.
Third, we would ask that the Doyles practice at the artists' cooperative or community center as often as possible. This would allow them the freedom to practice whenever they choose without concern for disruption to the neighbors.
Finally, we would suggest that the Doyles, if they must insist on practicing at home, install a decibel meter in their yard to monitor the noise. This would help them to limit the volume to an acceptable level in a residential neighborhood.
Mr. Austin, I am confident that your clients would prefer to work this out, out-of-court, as opposed to in-court and face an injunction and the possibility of monetary damages.
I look forward to hearing from you and resolving this matter between our clients.
Sincerely,
QUESTION #2
Taxpayer Dobbs, a certified public accountant, is charged with federal tax evasion by failing to report $100,000 in income for 1999. The matter will go to trial soon. The prosecution will offer the following evidence:
1.) Dobbs' 1999 Federal Individual Income Tax Return (Exhibit 1) which shows that he reported $200,000 in income for 1999. All of this income appears on his W-2 as income from his position as an in-house accountant to a local company.
2.) Three witnesses will be called to prove the unreported income.
Tom Tubman will testify that in March 1999, he spoke with Dobbs and asked if he (Dobbs) would help prepare Tubman's 1998 tax return which was due the following month. Tubman's regular accountant had insisted Tubman disclose earned gratuities (tips) and Tubman did not want to do so. Taxpayer Dobbs, according to Tubman, said he would complete the return, excluding the gratuities, but at extra cost. The total fee, he said, would be $10,000. Tubman agreed. Taxpayer Dobbs then prepared the return and Tubman filed it. Tubman then gave Taxpayer Dobbs a check for $10,000 drawn on Tubman's account, dated April 20, 1999, and payable to Taxpayer Dobbs (Exhibit 2).
Kerri Kurner will testify that in April 1999, she paid Taxpayer Dobbs in cash for his assistance in preparing her tax return. Kurner does not remember the exact amount of the payment. But Kurner's diary (Exhibit 3) shows she wrote an entry every evening describing the events of the day, including an entry on April 10, 1999, stating that she paid Dobbs $8,500.
Mr. Dobbs' wife, from whom he has been separated since January 1, 2001, is willing to testify for the prosecution. Mrs. Dobbs will testify that some time in the late fall of 1999, as they were planning a vacation, Dobbs told her that his side business netted about $100,000 in 1999.
Assume you are a law clerk for the federal judge before whom the matter will be tried. The judge has asked you to review the facts as described above and advise her of all possible evidentiary issues which may arise at trial. Advise how she should resolve these evidentiary issues and why.
MINNESOTA BAR EXAMINATION
FEBRUARY 26, 2002
REPRESENTATIVE GOOD ANSWER
QUESTION #2
There are numerous evidentiary issues with regard to each item of evidence to be offered as follows:
I. Dobbs' 1999 Federal Income Tax Return.
The defense will raise an objection of authentication, hearsay and possibly best evidence rule. They should be resolved as follows:
a) The document must be authenticated. This must be accomplished by (1) Dobbs admitting it is his, or (2) proof that the signature is his. The jury may compare this tax return signature with another specimen of his signature; the prosecutor may introduce a handwriting expert; or the prosecutor may put a lay person on the stand who was familiar with Dobbs' signature before he was indicted/charged to verify it is his. This should not be difficult to accomplish.
b) The defense will argue that the tax return is hearsay. However, it is not being offered for the truth of the matter asserted (i.e. that Dobbs made $200K income in 1999), but rather to show that this is what he claimed. Therefore, it is not hearsay. Moreover, it is a party admission (out of court party statement offered against party in court) therefore excluded from the definition of hearsay.
c) Defense will raise a 'best evidence' rule – objection which applies to legally operative documents or documents which contain evidence that constitutes a witness' sole knowledge of the matter re: which one witness is testifying. The tax return is a legally operative document, so the original or a photocopy must be produced. This is unlikely to be difficult to do.
II. Tom Tubman.
Tubman ("T") seeks to testify re: his illegal arrangement with Dobbs. Defense will object that character evidence may not be introduced to prove that Defendant acted in conformity with such character in the present occasion under Rule 406. That is, defense will argue that T may not testify that Dobbs previously committed tax evasion to prove that he did so again in this occasion, and this is correct. However, prior acts of misconduct may be admitted to show (1) motive, (2) intent, (3) plan, (4) common scheme, (5) control, or similar non-propensity matters. Here, the evidence that Taxpayer Dobbs received illegally obtained income (i.e. the $10K he charged T) shows motive to conceal such income; therefore it should be admitted, provided its probative relevance is not substantially outweighed by its prejudicial effect. Here its probative value is very high; therefore it should be admitted.
Moreover, Dobbs' statements to T should be admitted in any case, as they are party admissions (statements made by a party out of court, offered against the party in court).
Finally, the check for $10K must be (1) authenticated (see discussion above – T will likely authenticate it since he signed the check) and (2) must qualify as non-hearsay or an exception to hearsay. A check is a legally operative document, therefore by definition non-hearsay and should be admitted.
III. Kerri Kurner.
First, defense will again raise a character evidence objection to admission of Kerri's evidence. However, the same exception applies (see Tubman analysis); this is evidence of specific prior misconduct offered to show motive – so it's not character evidence/should be admitted.
The amount Kerri paid Dobbs is clearly relevant ($8,500 indicates suspicion of illegality). Since she cannot recall the exact amount, the defense will object to the use of her diary, saying the diary is hearsay.
Two hearsay exceptions may apply, as follows:
a) Refreshing recollection – if Kerri is testifying on the stand and states she can't remember what she paid Dobbs, prosecutor may show her the diary for her to silently read to refresh her recollections. The diary, as used for this limited purpose, need not be authenticated, as it will not come into evidence (except at defense's request). Defense must be given an opportunity to review the diary.
b) If Kerri still cannot remember, she will be able to read the diary statements to the jury as a "recorded recollection" (exception to hearsay). If she can show (1) that she wrote it, (2) at a time when she had a clear memory, (3) she had personal knowledge of the matter and (4) she wrote the material in a reliable way. (Moreover the diary must also be authenticated which should not be a problem since Kerri will testify it is hers).
Re: the requirements above, they may be met if Kerri admits she wrote it; it appears she wrote it when it was still fresh in her mind (facts state she wrote in her diary "every evening describing the events of the day," – this probably satisfies that requirement). It appears that her memory/writing is reliable (may possibly be shown by other evidence of accurate recordings).
If these requirements are met, the diary may be read into evidence (but the jury may not actually read the diary).
Mr. Dobbs' wife.
Three issues arise with respect to her testimony: (1) whether the testimony is privileged under spousal immunity; 2) whether it's privileged as a confidential mental communication; or (3) whether it's a party admission.
The 'spousal immunity' privilege states that a spouse may not be compelled to testify against his or her spouse in a criminal proceeding, but may choose to do so if s/he wishes. Since Dobbs and his wife are separated, but not divorced, Ms. Dobbs may invoke the privilege if she wishes. The facts state that she is willing to testify – so she may. Mr. Dobbs is not the holder of the privilege.
Confidential Marital Communications.
A spouse may not disclose communications by the other spouse that were made in reliance on the confidential marital relationship. If Dobbs and his wife were married in the late fall of 1999, and Dobbs told her re: his 'side business' income in confidence, she may not testify re: this fact (note this would be true even if they were now divorced, as long as they were married at the time of the confidential communication).
This statement is probably protected by this privilege, which will not be trumped by the fact that it is also a party admission and thus an exception to the hearsay rule. Absent evidence that (1) they were not married at the time or (2) the statement was made in the presence of others/in public, some other indicia of non-confidentiality, Ms. Dobbs' testimony is not admissible.
QUESTION #3
The articles of incorporation of Ergo, Inc. authorize the issuance of 400,000 Class A Common Shares and 1,000,000 Class B Common Shares, all of which are issued and outstanding. Dart owns all of the Class A shares and none of the Class B shares. Ergo's Articles provide that Ergo has seven directors elected by straight voting, with Class A shares to elect four directors and Class B shares to elect three directors.
Several months ago, Ergo's board of directors properly approved an expansion plan for the business that would require $5 million of additional capital. At their regular February 1 meeting, the directors discussed possible sources to fund the expansion plan. One Class B director suggested that Ergo borrow the funds from a bank.
Dart, who had elected herself as one of the Class A directors, suggested that Ergo issue a new class of shares that Dart would purchase for $5 million. The new class of shares (Class C Preferred) would be entitled to a cumulative preferred dividend. In support of this alternative, Dart presented an opinion from an independent investment bank that stated:
(1) $5 million would be a fair value for the Class C Preferred, and
(2) in the long run, payment of the proposed preferred dividend would be less costly to Ergo than interest payments on a loan.
After one hour of spirited discussion of these alternatives, all seven directors voted to recommend to the shareholders that Ergo's Articles be amended to authorize the issuance of the Class C Preferred as proposed by Dart. A special meeting of the shareholders was properly called for the purpose of voting on the proposed amendment to the Articles.
Prior to that meeting, a proxy statement was issued to all shareholders disclosing all relevant information about the plan to issue the Class C Preferred to Dart. However, the proxy statement did not disclose the alternative funding method the Class B director initially proposed. At the shareholders meeting, a quorum was present, and the amendment to the Articles was adopted by the following vote:
In Favor Opposed
Class A Shares 400,000 0
Class B Shares 720,000 100,000
Following shareholder approval, the Ergo board of directors met to consider the issuance of the newly authorized Class C Preferred. All seven directors voted to issue the Class C Preferred to Dart for $5 million in cash.
A Class B shareholder filed a derivative action against the directors to enjoin the issuance of the Class C Preferred to Dart. The Class B shareholder alleged (a) that the directors erred in deciding to issue the Class C Preferred rather than borrow the money from the bank; (b) that the directors had breached their duty of care to Ergo; and (c) that Dart had breached her duty of loyalty to Ergo.
Considering the Class B shareholder's allegations and all possible defenses, who is likely to prevail? Explain.
MINNESOTA BAR EXAMINATION
FEBRUARY 26, 2002
REPRESENTATIVE GOOD ANSWER
QUESTION #3
Issue One: The Directors erred in deciding to issue Class C stock to Dart; and Issue Two: Duty of Care
The Class B Shareholder (BSH or plaintiff) is bringing a derivative suit on behalf of the corporation to prevent Ergo from issuing the stock to Dart. This means that the shareholder must be attempting to help the Corp., not hurt it, or else the board could vote (by a majority of disinterested directors) that the case should not be brought because litigation is too expensive and not helpful to the Corp. In this case however, because of the strong shareholder approval, it is likely that such a suit is necessary to protect minority shareholder interests, so a court would not likely allow dismissal on these grounds.
The BSH believes that the Board acted improperly when it decided to raise money by issuing stock instead of taking out a loan. When the Board of Directors acts at a properly held meeting with a proper quorum present, its decisions will not be set aside unless the members of the board breached their duties of care or loyalty.
Generally a board member must exercise judgement and make decisions that a prudent person running her own business would make. This "duty of care" is meant to force board members to exercise good judgement and make informed decisions on behalf of the corporation. However, the Duty of Care does not require Directors to make good decisions, just well considered decisions. The Business Judgement Rule protects Directors from being punished for bad decisions that looked like good decisions at the time they were made, provided that the Directors made a reasonable inquiry into the decision and evaluated the reasonable choices before making a decision.
In evaluating decisions made on behalf of a Corp., the board is entitled to rely on statements/evaluations from reliable sources inside and outside the corporation.
In this case, the board considered various options for the source of needed revenue. They appear to have considered the option of debt vs. new issuance of stock and decided to issue stock. While they relied on a statement of the benefits of stock from an independent investment bank, that does not hurt them, it helps. This fact shows that the board was making a reasonable inquiry into the choices and deciding based on reliable information that one choice was better. The fact that all seven board members agreed is also helpful assuming that Dart did not exert undue influence on them. The board also discussed its options "spiritedly" for an hour.
Because of the decision making process, the decision of the board is likely to be upheld as a decision based on reliable information and protected by the Business Judgement Rule even if it later turns out to be a bad decision. Additionally, because the shareholders overwhelmingly approved the action, the board may be insulated as well for this decision because the shareholders were properly informed of all required information.
Issue 3 – Dart's Duty of Loyalty
Dart may have breached his duty of loyalty to Ergo. A Director has a Duty of Loyalty to a corporation which requires that he act in good faith and with the reasonable belief that his actions are in the best interests of the corporation. When a Director enters into dealings with his own corporation, the activity is closely scrutinized, as courts will generally find such dealings presumptively a conflict of interest that breaches the duty of loyalty.
These inside transactions can be saved however, if the disinterested director evaluates and decides to make the Corp. to Director sale (in this case issuance) or if the Shareholders approve by a majority (or other amount specified in the Articles) that the dealing is permissible and benefits the Corp.
In this case, Dart is in a Director position and presumably controls the votes of 3 other Directors since he alone elects them. Therefore, Dart has a conflict of interest with his Duty of Loyalty to the corporation. A valid argument could be made that the board members should have voted without Dart participating (other than in decisions about how to raise money). Dart's participation made the decision one by interested Directors. However, because the whole board (i.e. including the disinterested Directors) voted to issue the shares to Dart, there would be little chance a court would find Dart's involvement to be objectionable.
There is no indication that Dart acted with bad faith or that he did not reasonably believe that it was in the best interest of the Corp. to issue more stock. Additionally, the majority of the disinterested shareholders have agreed with the decision. As a result, there has been no breach of Dart's Duty of Loyalty.
Moreover, the board should consider ratifying the decision to issue stock at $5 million by a vote of disinterested Directors. This is because of the general rule that no par stock, must be given a reasonable value by the Directors, and because Dart has a strong conflict here he should not participate in that valuation decision.
Also, the board may have breached a duty to shareholders because it did not give preemptive rights to other shareholders. Generally, preemptive rights are presumed/implied into the articles unless they are explicitly not included. This might be a valid claim for BSH because he lost a percentage of his power in the Corp. when the Corp. issued the extra shares (assuming they can vote).
Finally, BSH will not be able to sue the Corp. to get bought out unless the articles provide for that. This is because an issuance of stock is not a fundamental change to a corporation entitling dissenting shareholders to demand to be bought out.
QUESTION #4
You represent Dale's Computers, Inc. (DCI). DCI is a corporation organized under the laws of the State of Delaware. It sells computer equipment and has its principal place of business in Minnesota. DCI recently sold a number of servers (computer equipment used in Internet commerce) to a corporation named LaLaLand, Inc. (LLL). LLL is a corporation organized under the laws of California and has its principal place of business in California. The sale price of the servers was $70,000. As part of the same transaction, LLL's President, Patrick Zappa, purchased a laptop computer from DCI for $6,000.
The purchases were done over the Internet. DCI's website, which LLL and Zappa used to shop for and order the computer equipment, contains a "user agreement" as part of the checkout process. LLL and Zappa placed their orders from LLL's offices in the Central District of California, and the goods were delivered, as requested, to those offices. The user agreement recites that "the buyer acknowledges that DCI has not solicited an order from the customer and has not purposely availed itself of the benefits and protections of the laws of the jurisdiction from which the customer is ordering." The user agreement also recites that "in the event of any dispute arising from this transaction, any and all litigation concerning the transaction shall be brought, if at all, in the courts within Hennepin County, Minnesota." All customers, including LLL and Zappa, must click on the words "I agree to the user agreement" before they are permitted to checkout and purchase goods from DCI.
LLL and Zappa, as co-plaintiffs, have sued DCI in the United States District Court for the Central District of California. LLL seeks recission of its purchase of the servers and return of its $70,000. Zappa seeks recission of his purchase of the laptop and return of his $6,000. Both allege that DCI committed common law fraud under the common law of California when DCI misrepresented the capabilities of the servers and the laptop. No other causes of action have been asserted. After purchasing the laptop, but before filing the suit, Zappa resigned from LLL and moved permanently to Lake Wood, Minnesota.
On behalf of DCI, what objections (other than lack of venue) could you make to the plaintiffs' choice of forum in the United States District Court for the Central District of California? Be sure to discuss all your possible objections even if, in your opinion, one objection would be dispositive.
MINNESOTA BAR EXAMINATION
FEBRUARY 26, 2002
REPRESENTATIVE GOOD ANSWER
QUESTION #4
DCI can make multiple objections to Plaintiffs' choice of forum. The first, and most dispositive objection would be lack of subject matter jurisdiction. Second, DCI has a strong argument that a California court would not have personal jurisdiction over it. Finally, the forum selection clause, which identifies Hennepin County state courts as the choice of forum, should be enforced.
SUBJECT MATTER JURISDICTION
There are two ways for a federal and district court to have subject matter jurisdiction over a cause of action: Federal question and diversity. Federal question jurisdiction, which requires that plaintiff's well-pleaded complaint allege a cause of action arising under federal law, is not applicable here. Plaintiffs have alleged common law breach of contract claims under California law – not federal claims. Therefore, if there is a no diversity jurisdiction, Plaintiffs cannot maintain this claim in the C.D. of Cal.
Diversity SMJ has two components: complete diversity between plaintiff(s) and defendant, and an amount in controversy of $75,000 or more. Here, there is a problem with both elements. First, there is no complete diversity between the parties. Diversity is measured at the time the complaint is filed and requires that no plaintiff and defendant can be citizens of (domiciled in) the same state. Here, DCI is a citizen of both Delaware and Minnesota, because corporations are considered to be citizens of both their state of incorporation and state where they have their principal place of business. Likewise, LLL is a citizen of California (both incorporated – principal place of business is there). However, before the complaint was filed, Zappa moved permanently to Minnesota. An individual is domiciled in a state where he is physically living with an intent to stay there. As a result, there is not complete diversity between DCI and Zappa and the court cannot exercise diversity SMJ over the entire cause of action (if Zappa were dismissed, there would be complete diversity).
Even if there were complete diversity between the parties, diversity SMJ would fail here because the amount in controversy is not $75,000 or more. Although a single plaintiff can aggregate all of his claims against a defendant to reach the $75,000 threshold (based on a good faith allegation by plaintiff), multiple plaintiffs can aggregate their claims against a defendant only if the plaintiffs are suing on the same interest. Here, although the claims arise out of the same transaction, they are essentially two separate sales: one for $70,000 and one for $6,000. Neither one on its own is a sufficient amount in controversy and under the circumstances they may not be aggregated. Therefore, diversity SMJ would fail for this reason as well. (Essentially, under these facts, plaintiffs cannot sue defendant in a federal district court).
PERSONAL JURISDICTION
A second objection DCI should make is a lack of personal jurisdiction by the C.D. Cal. A federal court can exercise personal jurisdiction to the same extent as a state court in the state it is sitting can. Personal jurisdiction is typically governed by state statutes (providing for personal jurisdiction for its domiciliaries, presence and service, doing business in state or via "long arm statutes" to reach out-of-state defendants). No Cal. Statute is mentioned so the analysis moves to the constitutional limitations on exercising personal jurisdiction. The Due Process Clause requires a state to have "minimum contacts" with a defendant in order to exercise jurisdiction. Additionally, jurisdiction must be reasonable under the circumstances. An out-of-state defendant can be subject to the personal jurisdiction of a state ("haled into court") when he purposefully avails himself of the benefits of that forum.
Therefore, the quality and nature of the contacts between DCI and California must be closely examined. There is no evidence that DCI has systematic and continuous contacts with California sufficient to warrant general jurisdiction – most courts have not considered the presence of an internet website on the WWW to be a sufficient basis for general jurisdiction (where defendant is essentially treated as a domiciliary of the state and can be sued on any action). Instead, the analysis here would focus on specific jurisdiction – whether the contacts between DCI and California relating to this sales transaction warrant California courts exercising personal jurisdiction over all causes of action arising from this transaction. DCI has a solid argument that the fact that a California resident ordered goods from it over the internet is not sufficient, by itself, to warrant an exercise of personal jurisdiction. There is no indication that DCI advertised in California or targeted California residents. Although DCI did ship goods into California, it did so at the request of a California resident. Additionally, LLL and Zappa acknowledged and agreed that DCI did not solicit the order and did not purposefully avail itself of the benefits and protections of CA law (although a court would not have to accept this conclusion of law, it does support DCI's argument that it is not targeting Cal.).
Additionally, exercising jurisdiction over DCI in this situation would not be reasonable. The internet raises a lot of complicated jurisdictional questions but here, its as if a Californian came into a Minnesota store, ordered something too big to take home on the plane, had it shipped to CA, and then sued for breach of contract in CA. This would not constitute sufficient minimum contacts. Additionally, DCI could be subject to jurisdiction in any state in which it has a customer. More is required to satisfy due process.
FORUM SELECTION CLAUSE
Finally, the parties agreed to a forum selection clause that provides that all lawsuits should be brought in Hennepin County courts. Courts typically enforce forum selection clauses. Here, LLL and Zappa may argue that it should not be enforced because the contract was not in writing as required by the UCC for sale of goods over $500. However, the circumstances here (performance of the K by DCI and the express written explanation on the website as to the forum selection clause (to which LLL and Zappa would have to agree before being allowed to check out)) prove the contract. Finally, plaintiffs may argue the forum selection clause is enforceable because it is unconscionable (because they had to agree to it before being allowed to check out and purchase the equipment). However, unconscionability is difficult to prove between corporations if LLL and Zappa didn't like the terms they could have taken their business elsewhere.
QUESTION #5
Jane Addams is a real estate broker who owns a successful brokerage business. In the year preceding the current year, Ms. Addams sold fifteen (15) homes for a total of $3,000,000. Several lawyers have been providing her with legal representation. She fears that she has been paying these lawyers too much.
Addams has contacted Jacob Jones, a local lawyer, and has told him that she has been paying fees between $200 and $300 per hour. She explains to Jones the nature of her business and the type of work she would like him to do. She and Jones have negotiated the following agreement: Addams will give Jones all of her legal work for a three-month period during which he promises to provide her with all of the legal services she needs at a flat fee of $150 per hour.
Jones then prepared a written memorandum of the agreement outlining the terms stated above. Both Jones and Addams signed the memorandum.
During the first month, Addams sent Jones all of her legal work and Jones billed Addams $15,000 for his hours.
In the middle of the second month, Addams sent Jones a particularly difficult mortgage to draft for a customer and told Jones that he had to complete the document within 24 hours. She told him that if he did not have the document ready in that time period she would lose a $500,000 sale.
Upon receiving this request, Jones telephoned Addams and told her that he could only do what she asked in the time period she requested for a higher fee, i.e. $300 per hour. Addams objected vigorously to this. Jones then told her that if she did not agree, he would not do the work.
Addams realized at that point that she had no choice but to agree to Jones' demand for a higher fee since she did not have the time to hire another lawyer. She then agreed.
Jones completed the mortgage as requested. He then sent Addams a bill for this work at the higher hourly rate. Addams refused to pay the bill. In addition, she ceased to send Jones any further work.
Subsequently, Jones learned that Addams had hired another local lawyer to do her work and that this lawyer had billed 100 hours to Addams during the remainder of the three-month period. Jones then telephoned Addams and explained his position and demanded that she pay him both for the mortgage work at $300 per hour and for the additional 100 hours of work she had had the other lawyer complete at a rate of $150 per hour as per their written memorandum.
When Addams finished the telephone call with Jones, she immediately telephoned you and asked whether Jones was correct that she owed him both for the mortgage work at $300 per hour and the other work which he had not done (payable at the memorandum rate of $150 per hour). She also asked whether what Jones had done was permissible under the rules of professional conduct for lawyers and whether it would be a good idea to file a complaint against him.
What would you advise Addams as to her contract rights and liabilities in regard to Jones? How would you answer Addams regarding filing a professional conduct complaint?
MINNESOTA BAR EXAMINATION
FEBRUARY 26, 2002
REPRESENTATIVE GOOD ANSWER
QUESTION #5
Contract
In common law services contracts there must be an offer, acceptance and supported by consideration.
An offer is the manifestation to enter into an enforceable agreement if the other party understands all the terms of the offer and accepts. The contract is not enforceable until it is supported by consideration. This is where the offeror has bargained for and the offeree has detrimentally agreed to a promise. In other words, the offeror promises to do something and the offeree promises to give up something in exchange.
Addams has offered to give Jones her legal work. Addams made an offer to have Jones do all of her legal work for a three-month period for $150 per hour.
S.O.F.
This is a services contract that can be performed within a year. The statute of frauds requires all agreements to perform something beyond one year to be in writing. This contract can be performed within a year. It is out of the statute of frauds.
Nevertheless, both parties have reduced the agreement to writing. Addams and Jones appear to have agreed on the terms. Both have supported with consideration.
When Addams gave Jones a difficult task that appeared to have modified their agreement. It appears Addams orally told Jones to complete a difficult mortgage.
The next question is whether the $300 per hour fee is a modification to the original agreement? If it is, it will require consideration. If no consideration, then Addams may refuse to pay the bigger fee because Addams will argue pre-existing duty. The rule is, if a party had a pre-existing duty to do something, then there is no consideration. Jones will argue that adhering to the higher fee she is consideration enough. Addams on the other hand, will argue Jones agreed to do all of Addams legal work for $150 per hour. Jones had a pre-existing duty to work. No consideration. If that is the case, then Addams would not have to pay for the extra $150 per hour.
On the other hand, if Jones argues that she had to give up her precious time to complete the mortgage within 24 hours, that is enough consideration and that Addams should pay the bill.
Perhaps Jones put Addams under duress. Was Addams pressured into agreeing with the new fee? If so, it should be set aside. A party under duress has no right to enter into a contract if they were forced into it. If Addams felt she was pressured, then the agreement to pay the higher fee should be excused.
Furthermore, there appears to be a condition attached to the later agreement. Jones demanded that before doing the mortgage, he would want a higher fee. When Addams agreed, then Jones completed the work.
It appears Addams is in breach. Jones can recover the extra $150 at the time of breach. That will put Jones back in the place he would have been in but for the breach.
Addams on the other hand, may not have to pay. Perhaps Jones had a pre-existing duty to perform for $150/hr. No consideration. No breach.
Furthermore, Jones may sue Addams for breach of original contract. The original agreement was for a 3-month period. Addams hired another lawyer. When a party rescinds a contract, the non-breaching party has a remedy against the breaching party. If that is the case, Jones can demand the $300 fee, plus the amount of fees remaining on the contract. This is provided they are $150/hr.
Under the rules of professional conduct, there is nothing preventing a lawyer from entering into a contract with their client, as long as the agreement does not limit the lawyer's liability or ability to practice.
Jones did not limit his liability. Nor did the contract limit his ability to practice.
A lawyer can charge a flat fee for services rendered, as long as it was not a contingent fee on a criminal case or domestic relations case.
If Jones felt that $300/hr. was reasonable for a mortgage to be drafted in 24 hours, then that was OK. Addams may argue, but it may not be unethical.
However, when Jones threatened not to work, if he did not get paid, may be unethical. Addams will argue a lawyer should not pressure clients into doing something they shouldn't.
I would advise Addams not to bring a complaint unless she felt she was pressured beyond her will.
On the other hand, she may have a claim for breach of contract when Jones refused to work. Addams had no choice, but to seek outside help.
Maybe when Addams agreed to pay the higher fee it created an accord.
When parties disagree on a disputed claim and subsequently create a new claim, satisfaction of payment will suffice.
Jones will argue Addams agreed to the new fee creating an accord. But Addams refused to pay. No satisfaction.
QUESTION #6
Art and Beatta are general partners in "AB Repo," a firm specializing in the repossession of motor vehicles in cases where buyers have become delinquent in making payments on financed cars and trucks. The office manager of AB Repo is Dan, the partnership's only employee. Art, Beatta and Dan each participate in the actual repossession activities from time to time.
Paul came to the AB Repo office and announced that AB Repo had mistakenly taken his truck from his home during the night. He calmly, but firmly, declared that he would sue AB Repo if they did not return the truck to him immediately. Without saying a word, Art and Dan took Paul by his arms, lifted him off the floor, carried him to the rear door, and threw him out of the office (which was down a flight of steps). Paul sustained a broken leg and a broken arm as a result. Beatta had not been present at the time.
Approximately 30 days later, Cal became a partner in AB Repo by making a $100,000 capital contribution to the firm. Thereafter, Art, Beatta and Cal acted as equal partners.
Paul wants to file a civil lawsuit and seeks your legal advice. Identify the potential defendants, then fully analyze and discuss Paul's potential claims against them, as well as the likelihood of his success.
MINNESOTA BAR EXAMINATION
FEBRUARY 26, 2002
REPRESENTATIVE GOOD ANSWER
QUESTION #6
A partnership is not generally liable for intentional torts committed by partners or employees. However, when the business of the partnership involves force or confrontation, the partnership may be liable for the intentional torts committed by partners and employees during the ordinary course of business.
A general partner is personally liable for obligations of the partnership. A general partner is not personally liable for tortious conduct that took place before he became a partner, or more than 90 days after he disassociates from the partnership.
Paul may name the partnership as a defendant. The assets of the partnership may be used to pay for Paul's claims. Even though Cal became a partner after the tortious conduct and thus is not personally liable, his $100,000 capital contribution is a partnership asset that is available to pay for claims.
Paul may also name Art and Beatta as co-defendants. Art and Beatta were general partners when the tortious conduct took place, and as such are personally liable for obligations of the partnership. Art was also directly involved with the tort.
Art, Beatta and the partnership are all jointly and severally liable for the claim. This means that Paul can get the money from whomever has it.
In addition, Paul should name Dan as a co-defendant. Although Dan is not a general partner (only an employee) and is not liable for obligations of the partnership, he was an actor in committing the tort. Thus, he is personally liable for the tort. In addition, the Partnership may be vicariously liable for his tortious conduct. He committed the tort during business hours at the place of business, and the business involved force and/or confrontation.
Paul may bring claims against the above named defendants for conversion of chattels and battery.
Paul alleges that AB Repo mistakenly took his truck. Conversion of chattels is the taking and carrying away of the personal property of another with intent to keep it, and denying the owner substantial use of the property.
If AB Repo had no legal right to repossess Paul's truck, then he will win this claim. AB Repo took his truck without right and substantially impaired Paul's use of the truck.
As a remedy for conversion, Paul is entitled to the fair market value of the property at the time it was taken. Alternately, he could accept the truck back with damages to pay for damages to the truck and his loss of use for the truck.
Paul may also bring a claim against the defendants for battery. Battery is the intentional unwanted or offensive touching of another. Art and Dan committed battery when they grabbed Paul by the arms and threw him down the flight of stairs. As such, Paul is entitled to a remedy of damages for his medical expenses, pain and suffering, and other damages such as loss of income from being out of work.
Paul will definitely win this claim.
If Paul has suffered emotional distress from the incident, he may also file a claim for intentional infliction of emotional distress. Intentional infliction of emotional distress occurs when the defendant does extreme or outrageous actions that result in a physical injury to Plaintiff.
If Paul can show emotional distress (e.g., loss of sleep, loss of appetite, etc.) resulting from the battery, then he should win this claim. Being grabbed by the arms and thrown down a flight of stairs is outrageous conduct to one of ordinary sensibilities. Paul obviously can show physical damage with his broken leg and broken arm.
In summary, if the facts are as Paul has described, then all his claims have a strong probability of success.
QUESTION #7
Claude, a bachelor, executed his will on May 1, 1989. It is stipulated that his will was properly executed and attested when Claude had testamentary capacity. Jacob, Claude's lawyer, made it an office practice to retain the original copy of every will prepared by him. Below are the pertinent parts of Claude's will:
ITEM THIRD: I give my antique Kentucky Rifle to my nephew, Rudy.
ITEM FOURTH: I give 1,000 shares of stock in PCMark, Inc. to my niece, Ragnar.
ITEM FIFTH: I give all the rest, residue and remainder of my estate, real, personal or mixed, to my alma mater, St. Bartholomew's College.
The following events then occurred:
In 1991, PCMark declared a stock dividend effective December 30, 1991, issuing one share of common stock for each share owned.
In October 1992, PCMark was bought out by Glitch, Inc. which issued two shares of Glitch stock for each share of PCMark.
In 1997, Rudy died without issue. He was survived by his widow, Marlene, who was his heir.
Jacob, Claude's lawyer, died in 1998. His practice files were turned over to Evelyn, who had all the original wills prepared by Jacob.
Claude died in 2000.
Evelyn and her office staff searched for Claude's original will but could not find it. Claude's original will could not be found in his safety deposit box or in his house.
Claude had spoken about his will to his nurse in the nursing home a month before he died. He said, "I need to look at my will, I don't remember what I did about the gun. Call my lawyer for me."
Claude's executor offered an unsigned office copy of Claude's will for probate. Calvin, Claude's brother (and Ragnar and Rudy's father), filed objections to probate, joining Ragnar as an interested party.
You are the judge's law clerk. Draft a memo analyzing and discussing how each of the issues raised by the above facts should be resolved.
MINNESOTA BAR EXAMINATION
FEBRUARY 26, 2002
REPRESENTATIVE GOOD ANSWER
QUESTION #7
I. Should the copy of Claude's will be probated?
A lost will is generally presumed revoked by the testator. It then becomes the burden of the party offering a copy to prove (I believe to a reasonable certainty) that the copy contains the same intentions as the original. The fact that Jacob kept meticulous records counts against the probate of the copy. (It likely wasn't lost). The testimony of the nurse counts in favor of the copy. The UPC would be more generous with the copy in terms of preserving Claude's intentions. (More likely to admit the copy to probate).
II. Assuming the unexecuted copy is probated, who takes what?
Since the rifle is a specific devise, it should go to Rudy. However, he's dead, so the gift lapses. Under the UPC anti-lapse statute the rifle would go to Rudy's issue (since he's a lineal heir of grandparents in common with Claude), but he has no issue. Hence, the rifle goes with the residue.
The 1,000 shares of stock in its current form (Glitch stock) goes to Ragmar. Stock splits and dividend swaps not initiated by the testator continue on in the new form. Since this was not a specific devise, however, the "now money's – worth" of this stock is also acceptable. (Or, Glitch stock is what would've been 1,000 shares of PC Mark in 1989, after what the Company(s) did to it). Residue including the rifle goes to St. Bartholomews.
III. Assuming the copy is not probated, who takes what?
Under a typical statute governing intestate succession, Calvin, being Claude's closest relative alive at the time of Claude's death, would take the entire estate including the residue.
Other possible evidence bearing on the eligibility of the copy for probate includes: the lucidity of Claude's statement to the nurse regarding his "will," and relevant suspicious actions of Calvin surrounding the disappearance of Claude's will (if any), as he stands to gain a great deal from an intestacy situation.