July 2023 Questions and Sample Answers
July 2023 Questions
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July 2023 Sample Answers
MPT-1
Sample Answer
Burton & MENDEL LLP
Attorneys at Law
2024 Kendall Avenue
Bristol, Franklin 33726
Dobson
v.
Brooks Real Estate Agency
BRIEF
LEGAL ARGUMENTS
I. THE COURT SHOULD EXCLUDE DORIS GIBBS' ANTICIPATED TRIAL TESTIMONY
The court should not admit Doris Gibbs' trial testimony because it is not certain that Mr. Dobson heard the statement or that a person in his situation would have responded. Without these elements, Rule 801(d)(2) is not satisfied and the statement is not admissible as an opposing party's statement.
In Reed v. Lakeview Advisers LLC (2015), the Franklin court of Appeals held that the trial court abused its discretion in excluding the testimony of Lakeview's offering of a purported admission by silence. Franklin Rule of Evidence 801(d)(2) excludes from the definition of hearsay any statement made by a party and offered by an opposing party. This includes a statement made by a party that "the party manfiested that it adopted or believed to be true." An adoption by silence is possible where: (1) the party heard the statement; (2) the party understood the statement, (3) the circumstances must be such that a person in the party's position would likely have responded if the statement were not true; and (4) the party must not have responded. The Reed court explained that context is crucial in determining whether an adoption by silence has been made. Additionally, the court can also consider the seriousness of the conversation in assessing whether silence constituted an adoption.
In Reed, a 60-year-old former employee sued her former employer alleging age discrimination under the Franklin Age Discrimination Act. Reed had worked for the LLC for 20 years when she received a notice that her employment was being terminated. When she went to HR director, Beth Adler, Adler told Reed that she was being fired because she had not met the requirements of the role and that she was late to work and did not complete projects in a timely manner. Adler specifically stated: "You know that you weren't doing your job competently," to which Reed did not respond.
The Reed court held that the testimony should have been admitted as an adoptive admission. There are no facts that indicate that Reed did not hear or understand the statement, and Reed certainly did not respond. In assessing the third element of Rule 801(d)(2), the court considered the gravity of the situation. The statements were made in a serious office setting where the parties were discussing Reed's termination from her job of two decades. The court reasoned that a person in Reed's position would have responded for many reasons. A reasonable person who felt that they had been wrongly discriminated against would likely speak up when inaccurate allegations are slung at them that could lead to termination. If Adler made erroneous assertions about Reed's work competency, Adler likely would have responded if the statements were not true.
Here, Ms. Gibbs is Mr. Dobson's neighbor who tended to him after the slip and fall. She visited him several times during his recovery. While at dinner with Ms. Gibbs and her wife, Mr. Gibbs said to Mr. Dobson, "We have all been clumsy before. I bet that you were trying to get to the store quickly. And I would guess, like most of us, you were on your phone at the time." Mr. Dobson did not respond to this statement and no one said anything for about a minute. To analyze whether Mr. Dobson's silence should be admitted as an adoptive admission under Rule 801(d)(2), it is necessary to analyze each element of the rule. All elements must be satisfied for the statement to be admitted.
First, it is undisputed that Mr. Dobson did not respond to the statement under 801(d)(2)(4). This element does not require further elaboration. Second, there is no indication that 801(d)(2)(2) would not also be satisfied, as there is no indication that Mr. Dobson does not speak or understand English. The facts also do not indicate any comprehsnion or communication issues between Ms. Dobson and Ms. Gibbs in the past. Therefore, the second and fourth elements of the rule are satisfied.
However, Rule 801(d)(2)(1) requires that the party heard the statement and it is unclear whether Mr. Dobson was listening. Although Ms. Gibbs said that she thought he was listening because he set his drink down and was looking at her while she spoke, she also said that there was background noise as they were out at dinner in a restaurant with other people. Looking at someone while they are speaking does not guarantee that they heard the speaker's statement without something more like a nod or a smile. Without any further indications, eye contact alone does not equate to hearing. It is possible that the listener could have been distracted by another table's discussion, by his own thoughts, or by any lingering pain or discomfort for his injuries. Additionally, Mr. Dobson had consumed one beer and drinking another one at the time the statement was made. It is also possible that Mr. Dobson's alcohol consumption could have intoxicated him and prevented him from hearing the statement. The fact that Mr. Dobson set his drink down indicates nothing more than that he was done with his drink.
Furthermore, Mr. Dobson suffered a concussion from the accident. It is very possible that this injury would have prevented Mr. Dobson from hearing and responding as he normally would. It also seems that this may have been one of Mr. Dobson's first times out of the house since the accident. The file suggests that Ms. Gibbs had frequently brought food to the Dobsons' home during his recovery, suggesting that Mr. Dobson was unable to leave his home for a significant period of time. It is very possible that the stimuli and excitement of dining out again could have distracted Mr. Dobson from hearing the statement properly to satisfy Rule 801(d)(2). If the conversation had taken place in the privacy and quiet of Mr. Dobson or Ms. Gibbs' homes, it would be much more likely that Mr. Dobson heard the statement. However, given that they were in a busy restaurant and how Mr. Dobson may ahve been distracted after recovering at home, the facts without more do not support the first element of Rule 801(d)(2).
Although it does not seem certain that Mr. Dobson heard Ms. Gibbs, the court will likely address that none of the four dinner guests said anything for about one whole minute after Ms. Gibbs' statement. This lack of further conversation would seem to indicate to the average person that the statement made the table uncomfortable or unsure of how to proceed. This silence may go towards the fact that Mr. Dobson did hear the statement and did not know how to respond.
Moving to the third element, it is also not certain that a person in the party's position would likely have responoded if the statement were not true. There are several points that justify why someone in Mr. Dobson's position would not have responded if the statement were not true. Maybe his concussion prevented a speedy response. Ms. Gibbs had just cooked for and tended to Mr. Dobson so generously over his three-month recovery. SHe visited the home several times to keep Mr. Dobson company. There is no indication was anything but generous and kind to Mr. Dobson during this difficult time. Therefore, it is very possible that Mr. Dobson may not have wanted to disrespect or correct Ms. Gibbs even if she had spoken incorrectly. Also, the Dobsons' invited the Gibbs' out to have a nice dinner and it is posisble that they did not want to disturb that by correcting her statement.
Also, it is possible that Mr. Gibbs did not want to talk more about the event that had already consumed three months of his life and had brought him significant trouble personally and at work. The facts also state that Ms. Gibbs did not make the statement in an accusatory way. Instead, she said it in an understanding tone, making it even less likely that he would feel inclined to speak. While is possible that Mr. Dobson would have been eager to correct Ms. Gibbs given how troubling of an event this was for him, it seems much more likely that a person in Mr. Dobson's position would not have responded if the statement were not true for the reasons above. Therefore, the anticipated trial testimony should not be admitted.
The Reed court also balanced unfair prejudice versus the probative value of the statement under Federal Rule of Evidence 403. Under Rule 403, "the court may exclude relevant evidence if its proabte value. is substantially outweighed by a danger of one or more of the following: unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence." Ultimately, the court held that although the admission had the tendency to weaken Reed's case, it was not unfairly prejudicial as Rule 403 requires. The court further explained that every piece of evidence may be prejudicial to the party against whom it is admitted, but fair prejudice does not warrant exclusion of the evidence.
Here, even if the court found that the statement was admissible, it is unlikely that its admission would cause a Rule 403 violation. As the Reed court thoroughly reasoned, prejudicial statements are admissible as long as they do not rise to the kind of unfair prejudice explained in Rule 403. For all of the reasons stated above, Ms. Gibbs' anticipated trial testimony is likely admissible.
II. THE COURT SHOULD EXCLUDE DR. MILLER'S DEPOSITION TESTIMONY
The court should exclude Dr. Miller's deposition testimony because there are not predecessors in interest who had a similar motive and opportunity to develop the testimony.
In Thomas v. WellSpring Pharmaceutical Co. (2017), the Franklin Court of Appeals affirmed the trial court's decision to grant WellSpring's motion in limine to admit the testimony of Dr. Shaw. To admit former testimony under Franklin Rule of Evidence 804(b)(1), which is identical to the Federal Rules of Evidence, three requirements must be satisfied: (1) the witness must be currently unavailable; (2) the former testimony was given as a witness at a trial, hearing, or lawful deposition; and (3) the testimony is being offered against a party who had - or in a civil case, whose predecessor in interest had - a similar motive and opportunity to develop the challenged testimony at the earlier proceeding. State v. Holmes (2009). If all three of these requirements are met, the former testimony may be admitted.
The dispute in Thomas specifically turned on whether the party against whom the testimony is being introduced (Thomas) is the same party against whom the testimony was previously introduced (Murphy). Specifically, the issue was whether Murphy was a "predecessor in interest" who had a "similar motive to develop" the doctor's testimony in the prior proceeding. The Thomas court explained that in order to satisfy the predecessor in interest element of Rule 804(b)(1), there must be some "similarity of interest between the party in the instant case against whom the testimony is sought to be introduced and the party against whom the testimony was introduced in the prior matter." The court further explained that no Franklin court has explicitly held that an agency reslationship is required to qualify as a predecessor in interest. A similarity of interest is sufficient. In Thomas, the parties were predecessors in interest because their claims for relief were identical: they both sued over the side effects caused by the over-the-counter cold remedy.
The Thomas court also explained that having a similar opportunity and motive to develop the testimony means that the party against whom the evidence was previously introduced must have had "a similar, not necessarily identical, motive to develop the adverse testimony in the prior proceedings." There is a two-part test that is used to assess "similar motive:" whether the questioner is on the same side of the same issue at both proceedings, and whether the questioner had a subtantially similar interest in asserting that side of the issue."
Here, Dr. Miller testified about the extent of Mr. Dobson's injuries and the adequacy of the limited accommodations the City made for him despite his serious injuries in Dobson v. City of Bristol (2022). IIn this previous case, Mr. Dobson sued the City, his employer, for denying him more time away from work and other accommodations for his injuries after the fall. In order to assess whether Dr. Miller's deposition testimony is admissible, it is necessary to analyze the three elements of Rule 804(b)(1).
First, the witness is currently unavailable. Investigator Cole has since confirmed that Dr. Miller died of a heart attack on November 17, 2022 based on her obituary in the Centralia Herald and her death certificate in the County Office of Vital Records. Hence, the witness is currently unavailable due to death so the first element of Rule 804(b) is satisfied. Second, the former testimony was given as a witness at a prior lawful deposition, satisfying the second element. The admissibility of this evidence will depend on whether the testimony is being offered against a party who had - or in a civil case, whose predecessor in interest had - a similar motive and opportunity to develop the challenged testimony at the earlier proceeding like in Thomas.
Mr. Dobson's current filing is a civil case as it is a negligence action. Therefore, we must assess whether the City of Bristol is the predecessor in interest of the Brooks Real Estate Agency and whether the City had a similar motive and opportunity to develop the challenged testimony at the earlier proceeding. Here, neither of these requirements seem to be met. First, the City is not a predecessor in interest of the real estate agency because they did not have a sufficient similarity of interest. Furthermore, Mr. Dobson's claims of relief against the city and against the real estate agency are completely different. The case against the city was a disability discrimination related to his employment. In contrast, the claim against the Brooks Real Estate Agency is a neglience claim for breach of its duty of care by not keeping the sidewalk clean.
Therefore, there was no similarity of interest to qualify the parties as predecessors in interest. Based on the numerous inherent differences between Mr. Dobson's claims in these two cases, it is likely that the questioning of the physician would have differed based on the unique and specific needs of each case. The questioning of the doctor in the previous case focused on what Mr. Dobson's injuries would mean for his recovery and any necessary time off. Examination in the new case would likely focus on how the fall happened and the conditions that caused it.
Although there are not predecessors in interest, it is worth explaining that due to their dissimilarity of interests, the defendants in the two cases did not have a similar motive and opportunity to develop the challenged testimony. The questioner would be on the same side, but their interests would still be dissimilar to prevent the third dlement of Rule 804 from being satisfied. Therefore, Dr. Miller's testimony should be excluded.
The Thomas court also balanced unfair prejudice versus the probative value of the statement under Federal Rule of Evidence 403 that is described in Section I. The court found that the probate value of Dr. Shaw's testimony was very high and outweighed any danger of unfair prejudice. Here, there is no indication that undue prejudice would exist upon admission of the evidence.
III. THE COURT SHOULD ADMIT THE INSURANCE POLICY TO PROVE OWNERSHIP OR CONTROL ONLY
Under Rule 411, evidence that a person was or was not insured against liability is not admissible to prove wehther the person acted negligently or otherwise wrongfully. But the court may admit this evidence for another purpose, such as proving a witness's bias or prejudice, or proving agency, ownership or control. To prove breach there must have been a duty to act which will come from whether the agency had ownership of the place of the fall. Here, Investigator Cole confirmed that the property insurance on the building explicitly covers sidewalks adjacent to the business's property. Therefore, the evidence should be admitted for this reason only but not to prove negligence or fault as this would violate the Franklin Rules of Evidence.
Sample Answer
To: All Associates
From: Applicant
Date: July 25, 2023
Re: Dobson v. Brooks Real Estate Agency
CAPTIONS
STATEMENT OF FACTS
[FILL]
LEGAL ARGUMENT
I. The anticipated trial testimony by Doris Gibbs regarding her converstion with Plaintiff should be excluded because it would constitute inadmissible hearsay, no relevant hearsay exception applies, and would otherwise run awry of Franklin Rule 403.
In this case, the defense will likely call Doris Gibbs as a witness and ask her about her converstion with Mr. Dobson regarding his injuries. In short, Mr. Dobson's silence after speaking to Ms. Gibbs is inadmissible because it does not qualify as an opposing party statement under the hearsay rule.
A statement is hearsay when the declarent, or individual making the statement, does not make it while testifying at the current trial or hearing and a party then offers the statement to prove the truth of the matter asserted. Here, the defense will likely try to introduce Mr. Dobson's silence after speaking with Ms. Gibbs when she said to him "we have all been clumsy before. I bet that you were trying to to get to the store quickly. And I would guess, like most of us, you were on your phone at the time." Non-verbal conduct may constitute an assertion or statement so long as the declarent intended it as an assertion. See generally Rule 801. A statement is not hearsay when it is made or offered against an opposing party or one that the party manfested that it adopted to be true.
Moreover, in Reed v. Lakeview Advisors LLC (2015), the Court that Franklin Rule of Evidence 801(d)(2) allows parties to introduce admissions by silence when (1) the party heard the statement; (2) the party must have understood the statement; (3) the circumstances must be such that a person in the party's position would likley have responed if the statement were not true and (4) the party must not have responded. Indeed, context is extremely important in determining whether a party acquiesced to a statement by silence and in State v. Patel (Fr. Ct. App. 2010), the Court held that a statement would not be admitted because it was not clear whether the defendant heard and understood the statement while attending a party with many social guests. The Patel Court explicitly reasoned that when at a loud social event, defendants are not reasonably expected to respond to every statement that they otherwise would in a quieter setting.
Here, Ms. Gibbs made her statement to Mr. Dobson at a dinner table with multiple guests and in the middle of a busy restaurant. Indeed, Ms. Gibbs admits that she is not certain if anyone at the table, including Mr. Dobson heard her comment and additionally, no one at the table responded to Ms. Gibbs for a minute after she made her inappropriate comment to Mr. Dobson. Thus, the facts in this case clearly indicate that Ms. Gibbs either failed to speak loud enough or no one at the table heard her. Moreover, there are no facts to indicate that Mr. Dobson heard the statement, and likewise, these are not such circumstances that would require one in Mr. Dobson's position to respond, even if the statement were not true. One is not required to provide an explanation or reason for their actions everytime a dinner guest makes a rude comment in a noisy restauranty. Accordingly, Mr. Dobson's silence at the dinner table should be excluded as inadmissible hearsay and may not be used to prove that he acted clumsy in any way when he slipped, fell, and suffered serious bodily injuries as a result of defendant's negilgence.
Secondly, even if the Court were to find that Mr. Dobson's silence at dinner constitutes a statement under Rule 801(d)(2), the court should still exclude his non-response on Rule 403 grounds because it would subtantially outweigh an probative worth with respect to his failure to respond. In this case, Ms. Gibbs had no personal knowledge of Mr. Dobson's fall except the comment she made to him at dinner. Essentially, the only thing her testimony would prove is that Mr. Dobson remained silent at dinner after she asked him an uncomfortable question. Indeed, the Court may exclude "relevant evidence if its probative worth is substantially outweighed by a danger of... unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or neddlessly presenting evidence." See Rule 403. Probative value is defined as the tendency evidence has to make a fact in consequence more or less likely than not and prejudice is defined as the tendency to reach a decision on an improper basis, commonly though not necessarily, an emotional one."
Here, inclusion of Mr. Dobson's silence would likely lead a jury to believe that he was clumsy and likley result in the jury reaching their decision on the erroneous belief that Mr. Dobson adopted Ms. Gibbs' statement when their is nothing to indicate that he even heard it other than the fact that he was sitting at the same table with Ms. Gibbs.
Accordingly, the Court should exclude Ms, Gibbs' anticipated testimony regarding plaintiff's silence because it is inadmissible hearsay and should otherwise bvarred as overly prejudicial pursuant to Rule 403.
II. The deposition testimony of the emergency room physician who examined Mr. Dobson should be excluded because it is inadmissible hearsay and not within the former testimony exception.
Certain exceptions to the hearsay rule apply when a declarent is unavaiable for one of the reasons set forth in Rule 804 (including death - see death certificate in county office of vital records.) so long as the elements for the exception are satisfied. Here, the former tesimony of the emergency room physician who treated Mr. Dobson should be excluded because Mr. Dobson did not have the same or even a similar motive to develop testimony at the prior hearing.
A declarent is considered unavailable if the declarent cannot testify at the present hearing because of death. Moreover, a deceased declarent's former testimony will be admissible when the previous statement was given as a witness at a trial, hearing, or lawful deposition and is now offered against a party who had - or, in a civil case, whose predecessor in interest had - an opportunity and similar motive to develop it by cross or re-direct. In Thomas v. WellSpring Pharm. Co. (2017), the Franklin Court of Appeals held that even when former testimony is offered against one's "successor in interest", the later party must still have had the opportunity to develop similar testimony at the previous trial or hearing. Courts require a similar, not identical motive and will typically apply a two-part trest to see whether "the questioneris on the same side of the same issue and whether the questioner had a substantially similar interest in asserting that side of the issue. Id. As to opportunity, the primary question is whether the party had the "opportunity" to develop the testimony and not, whether they actually did.
In this case, Dr. Lena Miller previously testified at a deposition where Mr. Dobson's attorney representing him the employment matter defended the deposition. Although the statements regarding the extent and seriousness of Mr. Dobson's injuries were discussed during the deposition, Mr. Dobson had absolutely no motive to develop testimony regarding defendant's liability nor the extent of damages he suffered as a result of defendant's conduct. Indeed, the deposition did discuss the extent to which Mr. Dobson's injuries prevented him from working, however, Mr. Dobson only needed to prove his injuries to the extent necessary to show what accomodations he was entitled to from his employer. Indeed, the accomadations Mr. Dobson would be entitled to for his injuries is completely different from what he would recover as a result of damages suffered a result of another party's neglience.
Thus, Dr. Miller's deposition testimony re the broken arm and leg and that plaintiff should not have too much pain, would be fine with ibuprofen, and would heal completely in a couple of weeks is inadmissible because it does not satisfy the former testimony exception under Rule 804.
In any event, the risk that Dr. Miller's statements would either confuse or mislead the jury is high, because the former case involving Mr. Dobson's employment is entirely seperate from his action against the defendant in this case for negligence. Although the injuries are the same, the standards and the applicable rules differ and what Dobson was entitled to worker's compensation is not reflective of what he is entitled to asa result of defendant's negligence. Thus, even if the defendant could satisfy the former testrimony exception with respect to Dr. Miller's testimony, it would still be excluded on 403 grounds.
III. The insurance policy on the property owned by Brooks Real Estate should be admitted because
Even though evidence of liability insurance is inadmissible to prove negligence or fault, it may nonetheless be used to prove ownership or control. In this case, the liability insurance policy proves that defendant owns and is therefore responsible for the sidewalk that plaintiff slipped and fell on.
Evidence that a person was or was not insured against liability is not admissible to prove whether the person acted negligently or otherwise wrongfully. However, the court may admit such evidence for another purpose such as to prove a witness's bias or prejudice, or proving agency, ownership or control. Moreover, when relevant evidence of insurance is admitted to prove any fact other than fault or lack of fault, the court should admit such evidence in the absense of any of the enumerated dangers set forth in Franlklin Rule 403.
Here, the evidence of Brooks' liabillity insurance is being used to prove that they own the subject property after they dispute that they are not responsible for its repair. Here, the defendant will likely try to argue that the Deed confirms property on Elm Street is owned by Brooks and therefore the liability policy should not be admitted as it would be voluminous. However, based on these facts, only the insurance policy explicity covers the sidewalk adjacent to property where Mr. Dobson fell and Brooks is dentying that they are respnsible for the sidewalk.
In such circumstances, evidence of liability insurance should be admitted despite the public policy exception against using such policies to prove negligence or fault. Lastly, the court would not exclude this evidence on 403 ground because even though the Deed shows that Brooks owns the propery, it is not clear whether the Deed reflects Brook's ownership of the sidewalk.
Accordingly, the liability insurance policy should be admitted over Brooks' objection.
Conclusion
For the foregoing reasons, Mr. Dobson's silence in response to Ms. Gibbs' statement should be excluded, the former deposition testimony should be excluded, and Defendant's liablity insurance policy should be admitted to prove ownership of the property.
MPT-2
Sample Answer
Dear Mr. Martin,
I hope this email finds you well. I am writing to you in regards to your legal rights as they pertain to the issues surrounding your purchase of your Irish wolfhoud puppy, Ash. My understanding is that, since your purchase of Ash, you've discovered that he has a congenital condition called a "liver shunt" that will require an expensive surgery to correct. As a result, you would like to pursue a claim against The Den Breeder to recover the amount you paid for Ash as well as the cost of the corrective surgery. You would also like to keep Ash. After researching the law in this area, I've broken down your situation into three fundamental questions, included below. The answers to these questions should give you a clear understanding of your rights and your options moving forward.
Question 1: Does the Dog Purchase Agreement prevent you from recovering money damages from The Den Breeder?
Short Answer: Because the Dog Purchase Agreement is silent with respect to money damages, a Franklin Court would likely find that it does not prevent you from recovering money damages as a remedy.
Even though a contract may purport to limit your remedies in the event that something goes wrong, such provisions in a contract are not necessarily exclusive or enforceable where the contract is ambiguous. For example, in Cohen v. Dent, a case with very similar facts to yours, a pet purchase agreement included a one-year guarantee against the pet having a congenital condition but it failed to specify the start date for that year. And although the contract appeared to require the buyer to make a choice between several remedies, it was silent as to refunds or other monetary damages. Cohen. Noting that, when a contract contains ambiguous terms, a court must construe it most strongly against the party who prepared it, and favorably to a party who had no voice in the selection of its language, the court determiend that the pet purchase agreement did not foreclose the buyer from pursuing monetary damages. Cohen (citing O'Day v. Schmidt (Fr. Sup. Ct. 1947)).
The purchase agreement in your case is not as ambiguous as that in Cohen, since it contains more specific language regarding the procedure for recovery in the event that the dog is found to have a health defect ("the dog may be returend to Breeder within 48 hours of purchase;" "Buyer must notify Breeder in writing within 24 hours of the diagnosis"). Notwithstanding, and as in Cohen, the agreement is slient as to monetary damages in cases such as yours where you would like to keep the dog instead of returning it. Considering this, and the fact that you had no say in draftign the language of the contract, it is likely that a court would not prohibit you from seeking monetary damages on the basis of the agreements language.
The answers to the next two questions, below, explore what such monetary damages might look like.
Question 2: What rights do you have under the Franklin Pet Purchaser Protection Act (FPPPA)?
Short Answer: Under the FPPPA, a person in your situation may (a) return Ash and recieve a refund; (b) return Ash and recieve a replacement animal; or (c) retain Ash and be reimbursed the veterinary costs incurred for his surgery, so long as you obtain a certification from Dr. Turner that states that Ash is unfit for purchase.
The FPPPA governs the sale of all household pets, including dogs. Franklin Animal Welfare Code Section 753. Pursuant to the Act, a purchaser such as yourself may benefit from the Act's remedies if the purchaser obtains, within 180 calendar days following the sale of an animal, a certification by a licensed veterinarian that the animal is unfit for purchase due to a congenital malformation that adversely affects the health of the animal. Thankfully, in your case, it has not yet been 180 days since Ash's purpose and Dr. Turner indicated in her email to you a willingness to sign such a certification.
Since you will be able to clear that first hurdle under the FPPPA. The question becomes what remedies are available under the Act. The act specifies three remedies: you may (a) return Ash and recieve a refund; (b) return Ash and recieve a replacement animal; or (c) retain Ash and be reimbursed the veterinary costs incurred for his surgery.
In your case, however, you would like to keep Ash, be reimbursed for his surgery, and recover Ash's purchase price. This is not one of the specifically enumerated remedies. Fortunately, the three remedies I just outlined are not your only options for recovery, because the FPPPA does not limit your rights or remedies to those available under the Act. Franklin Animal Welfare Code Section 753(d). The Franklin Court of Appeals has determined that, if someone in your position can establish a separate basis to recover the purchase price of the animal you may do so in addition to keeping the animal and recover the vet costs. Cohen.
The next question analyzes whether you can make out a separate claim to recover Ash's purchase price in this instance.
Question 3: What rights do you have under the Uniform Commercial Code?
This question is necessarily divisible into three sub-questions. For clarity, I address each sub-question in kind below.
Question 3a: Does the UCC apply here?
Short Answer: Yes, the UCC applies to your purchase of Ash.
The Uniform Commercial Code, or UCC, is a statute that governs the sale of goods, including animals. Franklin courts have uniformly held that dogs are "goods" under the statute and that pet stores and breeders such as The Den Breeder are considered "merchants." These categorizations are relevant because they determine which sections of the UCC apply.
Question 3b: Might you be able to recover under the theory that Ash is a nonconforming good?
Short Answer: Yes, Ash is a nonconforming good and you may therefore be entitled to monetary damages on that basis alone.
Under the UCC, a buyer of nonconforming goods may recover damages for the loss resulting from the nonconformity of the goods. In Cohen, the Franklin Court of Appeals determiend that Buddy, a bulldog who suffered from hip dysplasia, was a nonconforming good because the buyer did not get what she bargained for: a healthy dog. Cohen; see also Jackson v. Mistover Kennels (Fr. Ct. App. 2005) (holding that a Maltise was a nonconforming good where the buyer paid a premium for a "tea cup" Maltese and received a standard Maltese instead).
Here, you bargained for a healthy dog and did not recieve one. As such, it seems very likely that you will be able to recover at least some monetary damages on that basis. However, you may be able to recover more damages under a theory of breach of the implied warranty of merchantability, discussed next.
Question 3b: Did The Den Breeder violate the implied warranty of merchantability?
Short Answer: Because Ash's defect prevents him from from function as a happy and lively companion, he is not fit for the ordinary purpose for which he was purchased. This constitutes a breach of the implied warranty of merchantability.
Under the UCC, the sale of an animal creates an implied warranty of merchantability that guarantees that the good is fit for the ordinary purpose for which such goods are normally used. In Cohen, for example, Buddy was not fit for the ordinary purpose for which he was purchased because he could not walk, run, or jump with his hip dysplasia. Cohen; see also Dalton v. Jackson (Fr. Ct. App 1977). In your case, Ash's condition causes him to be depressed, lethargic, and uncoordinated. It causes him to spend time pacing in circles, particularly after eating food. These symptoms prevent Ash from being the happy, lively, and friendly companion that you sought out. Indeed, the dog purchase agreement states that the dog is being sold as a companion. Based on these facts, it is likely that a court would find that the sale of Ash given his condition breached the immplied warranty of merchantability.
Notwithstanding, The Den Breeder is likely to argue that you are precluded from receiving damages under this theory because Ash's condition was not discoverable at the time of sale. Compare Taly v. Paradise. Here, both Dr. Turner's opinion and the article on Liver Shunt Basics for Wolfhound Puppies explain that the defect that Ash suffers usually does not cause symptoms until the puppy is 8, 10, or 12 weeks or even older. In fact, "most specialists recommended delaying a test until 16 weeks of age." However, unlike in Taly, where there was "unrebutted testimony that an examination would have disclosed the heart condition at the time of sale," there is a difference of opinion about whether Ash's condition is detectable or not. Per Dr. Turner's email, "most reputable Irish wolfhound breeders test puppies before sale and provide the results of the test to purchasers." Testimony to that effect could be helpful in rebutting The Den Breeder's counter argument.
If the court determines that The Den Breeder could not have known about Ash's conditions for this reason, then the implied warrant of merchantability argument might fail, and you might have to rely on the nonconforming goods theory instead.
Question 3c: What would the measure of damages be if The Den Breeder were found to be in breach of warranty?
Short Answer: The entire purchase price of Ash may be recoverable.
In Cohen, the court rejected the argument that the reimbursement of the whole purchase price of a dog (there, $7,000) was unreasonable. Here, Ash was far less expensive ($2,500). Therefore, provided that a court finds a breach under some theory of the UCC, it is likely that you would be able to recover the entire purchase amount.
I hope these answers are helpful as you decide what the proper next steps are. Please do not hesitate to reach out with any further questions.
Sincerely,
Examinee
Sample Answer
To: Anthony Martin
From: Examinee
Date: July 25, 2023
Re: The Den Breeder
Memorandum
I. Discussion
This advice letter will discuss the strengths as well as any potential weakness that Anthony Martin ("you") your claim against Den Breeder ("Breeder") has arising from your dog ("Ash") being diagnosised with a liver shunt.
II. Dog Purchase Agreement
The issue is whether there is ambiguity within the dog purchase agreement ("contract"). The dog purchase agreement between you and breeder is a written contract for the sale of ash, which contains ambiguity.
When interpretting a contract first step is to review the language in the document, the contract, itself.Cohen 2020. If the terms are unambigious, those terms are applied to the dispute unless relevant statute conflicts. Id. However, if the terms of the contract are ambigious, then the ambiguity is resolved in reliance on those statutes. Id. If there is ambigiuity it is construed most strongly against the party who prepared it, here the breeder, and favorably against the party who had no voice in the selection, here this would be you. In Cohen the court has stated that the ambigities must direct affect the resolution of the disoute.
Here, within the contract the provision "congential defect that would prevent the dog from being a companion," is ambigious because it does not clarifiy what congential defects qualify or what the breeder is defining as being a companion. Additionally, the provision in the contract states "the dog may be returned to the breeder within 24 hours after it is determined that the dog suffers any serious illness." The serious of the illnesses are not defined. Thus, these ambigious terms are viewed favorably towards you and the ambigiuity is resolved in reliance on any statutes.
II. Franklin Pet Purchaser Act
The issue is whether your remedies are limited to those expressed within the contract. The Franklin Pet Purchaser Act ("FPPPA") governs the sale of household pets, which includes the sale of dogs. Under FPPPA you may be entitled to additional remedies from those provided in the contract if you provide the breeder with the certificate from the vet within 180 business days.
Under the FPPPA if the purchasers provide a certification by a licensed vet about the animal's condition then the purchaser is entitled to remedy. When the diagnosis is a congential defect the purchaser must provide the certificate from the vet within 180 business days from purchase of the dog. FPPPA 753. Ash was purchased on June 12, 2023. Thus, the 180 business days has not expired yet. As provided by the email from the Vet regarding Ash's diagnosis the vet states that the liver shunt is a congential defect of the liver and the diagnosis was on July 16, 2023. Thus, the 180 business days under the FPPPA have not passed. To qualify for the remedies provided undeer FPPPA the certificate from the doctor must be provided to the breeder. The remedies provided under the FPPPA are 1) the right to reuturn the animal and receive a refund; 2) the right to return an animal and received a replacement; or 3) the right to retain the animal and be reimbursed vet costs incurred fr the purpose of curing or attempt to cure the animal. Therefore, third remedy would provide you with the ability to keep Ash and seek reimburse from Breeder to the liver shunt surgery. The Breeder may try to assert that by not including these remedies within the contract its a waiver. However, in Cohen the court stated that where a contract contains signficant ambiguties there is no waiver. Thus, the contract between you and the breeder does not waive these remedies.
III. Uniform Commerical Code
The issue is whether under the Uniform Commerical Code ("UCC") if the dog is considered a non-conforming good. Under the UCC, a non-conforming good is when the purchaser does not get what the purchaser baragined for. Thus, Ash would be considered a non-conforming good and you would be entitled to remedies under the UCC.
UCC Article 2 governs the sale of animals and dogs have uniformly been considered goods under the UCC. Additionally, in order for the UCC to apply the seller must be a mercant. A merchant is a seller who sells these kinds of good in there ordinary course of business. Here, the breeder is a merchant because the breeder is a seller who sells dogs in the ordinary course of their breeding business, rather than a hobby. In Cohen the court stated that when the bargain is for a healthy dog and a nonhealthy dog is received the purchaser receives non-conforming goods. 2020. Here, the vet within her email confirmed that when Ash ate he become weak, lethargic, disoriented and lacked corrdination as well as spent time pacing in circles. Vet Email. These conditions made the dog non-conforming because it could be viewed as a defect in the dog.
Additionally, the court in Jackson stated that when a purchaser paid a premium for a teacup maltese and received a standard maltese this was considered a non-conforming good. Thus, if you paid the premium of $2,500, compared to other dogs, for a healthy dog from a breeder Howevr, received a non-healthy dog with the common liver shunt could be considered a non-coforming good. Also,as stated in the email attachment from the vet it was important for the breeder to contduct a liver test or at least instruct you to conduct a liver test and this information was never provided to you.
When a purchaser receives a nonconforming good and have given notice, the purchaser may recover as damages for any nonconformity tenders the loss resulting in the ordinary course of events from the seller's breach as determined in any manner which is reasonable. UCC 2-714. Here, the breeder had notice of the non-conforming good, ash, because you informed him of Ash's condition. Additionally, it resulted in the ordinary course of events from the seller's, breeder, breach because it resulted from the dog's blood vessels not closing properly rather than an illness resulting from your care of Ash. Vet Attachment. The vet even asserted in her email that Ash appeared well fed and cared for, which strengthens the claim.
The measure of damges is the difference at the time and place of acceptance between the value fo goods accepted and the value they would have had if they were warranted. Thus, the damages would be the $2,5000 you paid for ash and the difference between the value of Ash determined from him suffering from the liver shunt, $8,000 for cost of surgery.
Therefore, remedies under the UCC for purchase of a non-conforming animal is available.
IV. Implied Warranty
The issue is whether the purchase of the dog created an implied warranty of merchantability. Under the UCC the sale of an animal created an implied warranty of merchanitability if the goods pass without object in the trade under the contract description and are fit for the ordinary purpose for which such goods are used. The implied warranty of mercahntability applies to the purchase of Ash because the Liver Shunt is undetectable by looking at Ash and Ash is fit for the ordinary purpose of a dog.
Under the UCC for the implied warranty of merchanitability to apply the seller must be a merchant. As provided a above, the breeder would be considered a merchant and thus the implied warranty of merchanitability may be available. In Cohen the court stated that the Vet in the certificate expressed that the dog was unfit for purchase, establishing that the dog would not pass without objection. 2020. The purchaser in Cohen asserted that the dog could not walk, run, or jump without pain. Id. Here, the vet in her email stated that surgery can fix Ash's conditions essentially asserting that without he would not pass without objection. Vet email. In Tarly in the parties contract it expressly stated that the purchaser was to test within 2 days of the purchase. However, did not. That is not the case here. Within the vet email it is stated that the most reputable breeders for this breed test puppoes before sale and provide the results of the test and the breeder in the contract asserted that to the best of their knowledge that the dog was healthy. However, if this is the custom for the most reputable breeds this strenghtens the case, because it was as the breeder was willfully blind to diagnosising Ash's defect or informing you of the commonality of it in this breed.
The remedy available is measure of damages is the difference at the time of the sale between the dog as warranted and the actual dog. The court in Cohen has asserted that often this results in an entire refund because no biyer would agree to purchase the animal if it knew of its defect that might lead to death or require expensive surgery.
Therefore, you may be entitled to the cost for Ash, the $2,500.
V. Conclusion
Base on the above, the remedy that may provide you with the cost of Ash's surgery is under the FPPPA if a certificate to the vet is supplied within 180 business days of the purchase of Ash.
MEE-1
Sample Answer
1. The wife will be unable to suceed on her negligence claim because she cannot show breach or actual causation.
A negligence action requires the plaintiff to prove by a perponderance of the evidence: (i) duty, (ii) breach of that duty, (iii) causation, and (iv) damages. People generally have a duty to act reasonably towards potential plaintiffs. Whether that duty is breached can be based on a number of factors. Under a theory of "per se negligence" when a person violates a statute and in doing so harms someone who is meant to be protected by that statute, the person is deemed negligent as a matter of law. However, the inverse is not true. Just because someone acted in accordance with a law does not mean they weren't negligence. To measure if someone acted reasonably courts will weigh the harm that occured and the likelyhood of the harm occuring, against the cost of additional preventative measures which would have prevented the harm. Causation requires both actual cause and proximate cause. An act or omission actually causes a harm when the harm would not have occured but for that act or omission. An act or omission proximately caused a harm if that harm was within the scope of liability of the act or omission. Proximate cause is limited by whether this kind of harm was forseeable and whether there were any unforseeable intervening circumstances that will cut off the scope of liability. Damages require some form of concrete harm.
Here, the farmer owed the wife the standard duty of care, to act reasonably. While the statute outlawing the use of GS being overturned does not necessarily mean the farmer was not negligent, it does show that the mere use of GS will not result in negligence. To determine whether the farmer breached his duty of reasonable care it is helpful to look at what actions he could have taken to avoid the harm. Since the farmers fields were less than 1 mile from the wife's home, the farmer's only apparent options would be to relocate or not use GS. Each of these has a high cost. To relocate a farm would be expensive, and the last time GS use was stopped the county lost $500 million in revenue from farming. Further, the farmer did everything he was supposed to do under the statute, including only using GS once the ban was lifted and attending the safety training. Yet still, the harm allegedly suffered is high, Cancer is wide ranging but any form constitutes a profound harm upon a person. The harm is not likely, however, since the county does not have a higher than average cancer rate. When balancing the possible preventive measures against the low risk of giving people additional cancer, the farmer likely did not breach his duty of care.
Even if he did breach his duty, the wife cannot show actual causation because a doctor will be unable to show that but for the GS, the wife would not have gotten cancer. Therefore, even though this harm may have been forseeable because of the cancer studies in mice, and the wife did actually suffer damages, she will not suceed in a negligence suit.
2. Husband's trespass claim will fail because he cannot show that the GS even invaded his property.
Trespass requires the negligent entering or remaining on private land upon being excluded. A person who rents their home is able to bring a claim of trespass the same as a home owner. Further, gasses can make one liable for trespass. One need not enter on to land with their own persons in order for a trespass claim to move forward. However, the plaintiff must be able to show that their is some actual invation of their land.
Here, husband cannot show any actual invation of land. While GS is used under a mile from his home, and he has respitory issues, there is no actual evidence of GS being on Husband's land. Therefore, husband will be unable to suceed on his trespass claim.
3. If the husband prevails on his trespass claim, it is still unlikely that enjoin the use of GS within one mile of the house because money damages is sufficient for a trespass claim.
An injunction is a court order which requires someone to do something or refrain from doing something. A perminent injunction means that the injunction will remain in place unless some further action is broguht. A perminent injucnction requires (i) sucess on the merits, (ii) irreprable harm, (iii) balance of the equities favoring the plaintiff, and (iv) public policy favoring the plaintiff.
Here, we are assuming that husband suceeded on the merits. However, there is no irrepaerable harm. Irreparable harm is a harm that cannot be compensated by money damages, but the damages for trespass are monetary. The damages alleged in a tresspass claim are not related to the cancer or respitory issues of the family - instead the husband would get a monetary award.Further, the public policy and balancing of the equities likely weighs in favor of the farmer since the GS is so vital to his industry.
The husband cannot get a perminent injunction even if he suceeds on his trespass claim.
Sample Answer
1. What must the wife prove to establish her negligence claim? Will she prevail?
It is unlikely that the wife will prevail in her negligence claim against the farmer. The issue is whether the wife has established all four elements of a prima facie negligence claim against the farmer.
To establish a prima facie negligence claim, a plaintiff must prove all four elements of negligence: duty, breach, causation, and damages. For the element of duty, all people owe others a duty to protect them from an unreasonable risk of harmm. This duty is owed to all people within the zone of danger because these are the foreseeable plaintiffs. Breach will be found if the plaintiff is found not to have conformed to this duty. Causation consists of both actual and proximate causation. Actual causation, or but-for causation, means that the defendant's breach was the actual cause of the plaintiff's harm. Proximate harm means that the defendant's breach made the plaintiff's harm foreseeable. The plaintiff must have also suffered damages.
Here, the wife has suffered damages because she has been diagnosed with cancer. Moving back to the first element, the wife must be able to establish that the farmer had a duty, which he did. Under the reasonable person standard of torts, the farmer had a duty to administer the GS in a reasonable manner as a reasonable preson in a like situation would have. The facts state that the local farmer attended the safety seminars that were required by the health department. These seminars included inforamtion on various risks of GS use and instruction on prudent GS application. Next, the wife would have had to prove that the farmer breached this duty by applying the GS in an imprudent or unreasonable manner. The facts do not indicate any such breach. In fact, the facts state that the farmer applied GS according to the application safety recommendations presented in the seminar. In making her claim, the wife would have to find some other evidence of breach of duty.
Negligence per se is worth mentioning although most likely not applicable to these facts. Most courts treat the breaking of a law that imposes criminal penalties as both a duty and a breach. However, this does not seem to be applicable here becuase in order for negligence per se to apply, the plaintiff has to be in the class of people that were aimed to be protected by the statute and the harm has to be the type of harm that the statute was designed to protect against. There is no indication of a statute here, only a safety seminar that the farmer seemingly complied with. Regardless, cancer is likely not the type of harm that the seminar was designed to protect against.
Lastly, the wife must be able to prove causation. The facts state that several studies have linked GS exposure to cancer in mice but that no study has definitively linked GS exposure to cancer in humans. The fact that the wife was diagnosed with cancer last year does not by itself establish either actual or proximate causation from the lift of the ban two years ago. There are no other facts to suggest that her cancer diagnosis was not completely unconnected from the lift of the ban. It is true that GS is highly toxic and can be fatal and the cause of serious respiratory problems. The facts vaguely state that some scientists believe that GS causes cancer, but without more, there is simply not enough for both elements of causation. A belief that something is possible may make her cancer foreseeable under proximate causation, but it does not establish actual causation.The facts also state that cancer rates in the country are consistent with the state rate although the rate has risen above other counties. However, this is still unlikely to be enough to establish causation.
Because the wife would likely be unable to prove either breach or causation, she likely would not prevail in her negligence claim against the farmer.
2. What must the husband prove to establish his trespass claim? Will he prevail?
To make a successful claim for trespass, the husband must show that the chemical entered his land. The issue is whether the chemical, regardless of the farmer's knowledge or intent, entered the couple's property.
For trespass, knowledge of the trespass or intent to trespass are completely irrelevant. All that matters is that the crossing of boundary lines occurred. State A's health department found that GS that has been injected into the soil eventually rises above ground and can then drift to nearby land up to one mile from each application point. The couple's home is less than one mile from several points where the farmer applied GS. If the husband could show that the chemical had actually crossed his property lines, he would likely have a valid claim for trespass.
3. Assuming that the husband prevails, is it likely that the court will permanently enjoin the farmer from using GS within one mile of the couple's house? Explain.
Assuming that the husband prevails, it is unlikely that the court will permantly enjoin the farmer from using GS within one mile of the couple's house. The facts state the numerous benefits and justifications for recently lifting the ban on GS such as its need to grow the county's traditional crops, lack of viable substitute crops, lack of other effective pesticides, the estiamted cost of crop losses county-wide, and the low population density in the area. Additionally, it is likely that the court could award damages for the trespass instead of a more extreme permanent injunction that would inhibit the aforementioned benefits.
MEE-2
Sample Answer
1. The issue is whether Parent is liable to VanCo under a theory of partner liability.
A partnership may be formed by two or more natural persons or business entities who agree to carry on a for-profit business as co-owners and share profits. Partners may be natural persons or other business entities. No formal writing or filing is necessary to form a partnership, and the main test for partnership formation is the intent to share profits. Partners are each personally liable for the liabilities incurred by the partnership. While a partnership is its own legal entity and may sue or be sued in its own name, a mere partnership does not shield its partners from liability.
Here, Parent LLC is the sole member of Sub LLC. Parent and Sub are distinct legal entities which work closely together in the same overall business venture. Sub purchases plastic from Parent at market prices, and Sub uses that plastic to make shoes for sale. Parent's access to recycled plastic dictates Sub's shoe production and availability. Staff of Sub and Parent are shared, indicating a deep collaboration of efforts and contribution of labor into a purported partnership.
To determine whether Parent and Sub have formed a partnership, the relevant inquiry is whether they have agreed to carry on a for-profit business together as co-owners, sharing profits. There is no indication from the facts that Parent and Sub share profits. Sub sells shoes and keeps these profits - they are not transmitted to Parent. Parent does sell recycled plastic to Sub, but does so at prevailing market rates. Parent does not provide the plastic at a discount to Sub, nor does Parent exist solely to provide Sub its plastic needs.
Because there is no indication of sharing of profits, despite the close relationship and shared resources between Parent and Sub a court is unlikely to find that a partnership exists. The fact that Greta, the manager of Parent, signed "as agent of Sub" does not negate this conclusion. Any person with capacity and ability to perform the required act may be an agent, and the fact that Greta served as an agent of Sub on this contract does not make Parent a partner of Sub.
Because there is no partnership relationship between Parent and Sub, Parent is not liable to VanCo as a partner of Sub. Parent is merely a member of Sub LLC, and members of an LLC enjoy limited liability from the liabilities incurred by the LLC.
2. The issue is whether Parent is bound by the agreement between Sub and VanCo signed by Greta, Parent's manager.
An agency relationship is formed when an agent (one with capacity and ability to perform an act) agrees to be bound by the instructions of a principal and be subject to the principal's control. The principal must also assent to the agency relationship.
Liability of the principal for actions of their agent depends on the agent's authority / ability to bind the principal and on the degree of disclosure to the third party.
Here, Greta signed the delivery agreement between VanCo and Sub on behalf of Sub. She did so at the request of Sub's manager. When a principal expressly authorizes an agent to perform an act, that agent acts with actual express authority. An agent acting with actual express authority binds the principal.
Further, on the topic of disclosure of the principal's identity and existence to the third party, VanCo was aware that it was entering an agreement with Sub LLC. Greta signed the agreement explicitly "as agent of Sub." By doing this, she expressly disclosed not only the existence by also the identity of the principal. An agent is not liable on a contract entered into with actual authority and where the identity of the principal is disclosed to the third party.
The fact that Greta is the manager of Parent is immaterial, as she was acting as agent for Sub and not as agent for Parent when the contract was signed. Because this was made clear to the third party, who has no reasonable basis to think Parent was a party to the contract, Parent is not bound by the agreement between Sub and VanCo.
3. The issue is whether Parent should be held liable for Sub's obligations to VanCo, i.e., whether VanCo should be permitted to pierce the corporate veil and impose liability on Parent.
An LLC is a statutory business entity which shares characteristics of a partnership (pass-through taxation) and of a corporation (limited liability for shareholders). The limited liability may be defeated by a creditor or other party seeking to "pierce the corporate veil" if it can be shown that the corporation or LLC was merely the shareholder's alter-ego, if the LLC was undercapitalized or insolvent, if business or coporate formalities were disregarded or not complied with, or if the entity was created to perpetuate a fraud. The mere fact that an LLC has a single member is not conclusive proof that the LLC was the sole shareholder's alter ego.
Here, Parent and Sub surely share a close business relationship, as detailed above. They share personnel and work closely together. Sub acquires the recycled plastic it needs from Parent. Parent's projections of plastic availability inform Sub's shoe production schedule. Finally, Sub LLC is a single member LLC, with Parent being the sole member. Though this is not conclusive, it is relevant.
It is also relevant that Sub is insolvent. However, Sub's insolvency is apparently attributable to a slowdown in the upscale shoe market, and not due to an intentional undercapitalization by Parent such that its existence and limitation from liability becomes fraudulent. Sub can argue that it had for a period of time carried on a successful business as its own entity - it was not merely Parent's alter-ego nor was it merely an undercapitalized legal fiction.
There is also no indication of fraudulent intent in the arrangement of business ownership between Sub and Parent. Although Sub is unable to pay its creditors including VanCo, it has also stopped making distributions to Parent. If this were not the case, and Parent were taking distributions from an insolvent Sub at the expense of Sub's contract creditors, a court would likely find fraudulent intent and pierce the corporate veil.
Because Sub discontinued making distributions to Parent, and because it was legitimately its own business affair before becoming insolvent due to market forces, a court should not disregard the separate entity structure between Parent and Sub.
Sample Answer
1. At issue is whether Parent is a partner of Sub.
A partnership is an agreement by two or more persons to operate a for-profit business as co-owners. "Persons" can mean natural persons or other business entities, including Limited Liability Corporations (LLCs). When the persons have agreed to share profits, that is enough to create a partnership; there need to be any specific intent to form that type of arrangement. A partnerships is the default business organization if no other form is established. In a general partnership, partners are personally liable for the partnership's obligations. By contrast, a limited liability corporation protects its members from the obligations of the corporation.
Here, Parent is not a partner of sub. Rather, it is a member of Sub LLC. Parent does not participate in the general management of Sub's operations, but rather selects a manager to do so under the LLC's manager-managed operating agreement. Parent will not be held liable for Sub's contract with VanCo under partner liability.
2. At issue is whether Greta, Parent's employee, was acting with authority when executing the contract with VanCo.
An agent may bind a principal in contract so long as the agent is acting with authority. Authority can be either actual express, actual implied, or apparent. Actual authority exists based on specific instructions given by the principal to the agent, or necessarily implied such that the agent believes that such action is in the best interest of the principal's aims. Apparent authority exists when the principal makes manifestations to a third party such that the third party reasonably believes that the agent is acting within its scope.
If an agent acts outside the scope of authority when signing a contract, the principal may not be bound by the contract, and the agent may be a party to the contract instead. Additionally, an agent may be a party to a contract when they sign an agreement on behalf of an undisclosed principal (in which the agent gives no indication that she is acting on another's behalf) or a partially disclosed principal (in which the agent discloses the existence of a principal but not its identity). When the agent contracts on behalf of a fully disclosed principal, the agent is not a party to the contract.
Here, Greta, an employee of Parent, signed the contract with VanCo "at the request of Sub's manager, who was away from the office." This gave Greta actual express authority to sign the contract.
Further, Greta made clear by her signature that she was not signing on her own or Parent's behalf, but rather "as agent of Sub." This means that Sub was a fully disclosed principal.
Parent, through Greta's actions, cannot be held liable on the contract under an agency theory.
3. At issue is whether the circumstances warrant piercing the corporate veil between Parent and Sub.
Despite the protections from personal liability that the corporate form provides, a court may find that circumstances warrant disregarding the organizational form so that the assets of the members of an LLC may be reached in order to satisfy the LLC's obligations. This is known as piercing the corporate veil. Piercing of the veil is generally disfavored, and requires a plaintiff to show evidence such as: undercapitalization of the corporation, a unity of the members' and corporation's interests, failure to follow the formalities required of corporate structure, such as regular shareholder (or in the case of LLC, member) meetings, abuse of the corporate form, commingling of assets, and that possibly one entity simply functions as an "alter ego" of its members.
Here, Sub and Parent do work closely together. Their shared services of corporate operations in HR, accounting, and government relations, without any arrangement to share the costs of these services, could be seen as commingling of assets. Additionally, the fact that Sub has run into financial difficulties could indicate that Parent, its sole member, has under-capitalized the operation.
However, evidence also weighs against piercing the corporate veil. Sub has not made distributions to member Parent since running into financial difficulties, which would suggest that there is no abuse of the corporate form, as would be suggested if Parent had continued to receive distributions even though Sub was failing. Further, they have two different business functions- one as a supplier of plastics to companies that include, but are not limited to Sub, and the other as a manufacturer and seller of shoes. This would weigh against a finding that Sub is a mere alter ego of Parent. If Parent directly managed Sub as a member-managed LLC, this would be more suggestive of a unity of interest, but as Sub is a manager-managed LLC, the distance there shows some respect for the formalities of the corporate structure.
Therefore, as piercing the veil is disfavored, on these facts, a court will not likely find that piercing the veil is warranted and Parent and Sub will be considered separate organizations. As a member of the LLC, Parent will not be personally liable for Sub's obligations the VanCo on the contract.
MEE-3
Sample Answer
1. The issue is whether the the Court may authorize the trustee to terminate the trust and purchase Annuity A if the daughter consents.
Section 1 of State A's Trust Code provides that "a trust may be terminated upon consent of all beneficiaries, if the court concludes that continuance of the trust is not necessary to achieve any material purpose of the trust."
Here, the income beneficiary (Betty) and the remainder beneficiary (the daughter) are the only two beneficiaries under the trust. Thus, all beneficiaries consent to the termination of the trust.
The question then turns to whether continuance of the trust is necessary to achieve any material purpose of the trust. Here, Tom's stated material purpose of the trust "is to ensure that there will be sufficient funds to provide for [Betty's] care and support for the rest of her life." The trust, as is, cannot fulfill its material purpose because Betty's care costs are greater than the 80% income distributions.
While the trust also would provide for the daughter upon Betty's death, providing assets to the daughter is not a material purpose of the trust. Rather, it is something that Tom did solely so that the trust property would not escheat to the state. Additionally, Section 3 of the State A Trust Code provides that a spendthirft provision, which is contained in paragraph 4 of Tom's trust, is not presumed to consitute a material purpose of the trust. There is no evidence that Tom intended for it to be a material purpose because there is no mention of Betty having creditors or any intention to assign her interest to anyone else.
Under Section 2 of the State A Trust Code, if the court permits termination, "the trustee shall distribute the trust property as agreed by the beneficiaries." Here, that means purchasing Annuity A as agreed upon by Betty and the daughter.
The testator's intent is the most important consideration that should underscore any decision the court makes. Tom's intent was to care for Betty during her lifetime and the trust is failing to accomplish that objective. Because all beneficiaries consent to the termination of the trust and the purchase of Annuity A, and becuase continuation of the trust is not necessary to achieve any material purpose of the trust, the Court may authorize the trustee to terminate the trust and purchase Annuit A.
2. The issue is whether the Court may authorize the trustee to terminate the trust and purchase Annuity B if the daughter does not consent to such actions.
Section 4 of the State A Trust Code states that "if not all beneficiaries of a trust consent to a proposed termination of the trust pursuant to Section 1, the court may nonetheless approve the termination if the court is satisfied that, if all beneficiaries had consented, the trust could have been terminated under that section, and the interests of the benficiary who does not consent can be appropriately protected in accordance with the testator's probable intention."
Here, the trust could have been terminated under Section 1 if all beneficiaries consented for the reasons set forth above. The question then turns to whether the interests of the daughter, as the non-consenting beneficiary, can be appropriately protected in accordance with Tom's probable intention.
Tom and the daughter were estranged. Tom specifically stated in paragraph 3 of his will that he is leaving the remainder of the trust to the daughter upon Betty's death only because "sadly, [he has] no other relatives, so [he had] little choice but to bequeath the trust to [his] daughter rather than have the trust property escheat to the state." Therefore, Tom's probable intention was that he does not care how much or how little the daughter received. Tom intended for the trust to provide for Betty and then give whatever was left to the daughter.
Annuity B would would provide a cash payout to the daughter after Betty's death. While this payment would be "substantially less than the amount that the daughter would receive under the trust," this does not conflict with Tom's probable intent. To the contrary, terminating the trust and instructing the trustee to purchase Annuity B is more in line with Tom's intent.
Because the trust could have been terminated under Section 1 if all beneficiaries consented, and becuase any form of cash payout to the daughter is sufficient to protect the daughter's interests in accordance with Tom's probable intention (which was that the daughter receive whatever Betty didn't need), the Court may authorize the termination of the trust and instruct the trustee to purchase Annuity B under Section 4 of the State A Trust Code.
3. The issue is whether the Court may authorize the trustee to pay 100% of the income to Betty if it does not authorize termination of the trust and if the daughter does not consent.
Section 5 of the State A Trust Code states that "a court may modify the dispositive terms of a trust if, because of circumstances not anticipated by the testator, modification will further the primary purpose of the trust."
Here, Tom stated that his primary purpose in creating the trust was "to ensure that there will be sufficient funds to provide for [Betty's] care and support for the rest of her life." The annual distributions to Betty of 80% of the income were sufficient for a few years. However, the distrubtions are no longer sufficient because Betty was diagnosed with an illness that required her to move into a nursing home. While Tom may have anticipated that Betty would be required to enter a nursing home at some point in her life, Betty's exact diagnosis and the dramatic increase in nursing home costs are circumstances that Tom did not anticipate.
Additionally, the modification to the percentage of the income paid to Betty (a dispositive term of the will) is in accordance with Tom's probable intention. The reason that Tom specified that Betty receive 80% of the income was so that the other 20% of the income would become principal and generate further growth and income. However, the underlying intention was still to fund Betty's care. Tom would likely have intended that Betty get 100% of the income and be able to pay her costs over growing the principal while Betty could not support herself.
Because the circumstances necessitating a modification to the payment of income were not anticipated by Tom, and because the modification is in accordance with Tom's intention, the Court may authorize the trustee to pay 100% of the income to Betty even without the daughter's consent.
Sample Answer
1. The issue is whether the court may authorize the trustee to terminate the trust and purchase Annuity A, wholly for the benefit of Betty, if the daughter consents.
A trust is a legal mechanism whereby legal and equitable title to property are split. The settlor funds the trust with trust property, whose legal title is held by the trustee and whose equitable title is held by the beneficiaries. The trustee has fiduciary duties to the beneficiaries to act in accordance with several background fiduciary duties and to act in their best interests and according to the terms of the trust. Beneficiaries of a trust often consist of present beneficiaries or lifetime beneficiaries, and future or remainder beneficiaries who take after the present or lifetime beneficiaries' interest terminates.
State A Trust Code provides that a trust may be terminated upon consent of all the beneficiaries if the continuance of the trust is not necessary to achieve any material purpose of the trust. Here, the material purpose of the trust is to ensure sufficient funds to provide for Betty's care and support for the rest of her life. It is arguably not a material purpose of the trust for the remainder to pass to the daughter. Not only was Tom estranged from his daughter, the text of the trust instrument provides that he "has little choice" but to bequeath the trust to his daughter, because it would likely pass to her either way under intestacy statutes if the remainder reverted to Tom's estate at Betty's passing. Thus, it does not appear to be a material purpose of the trust to provide financial benefit to Daughter.
Thus, if Betty and Daughter consent to the termination of the trust, the court is empowered to authorize the trustee to terminate the trust and distribute the trust property as agreed by the beneficiaries. If Betty and Daughter agree that the trustee should purchase Annuity A, then that is a valid agreement. It should be noted for completeness that the trust contains a spendthrift clause, preventing beneficiaries' creditors from reaching their trust interests (clause 4), but the Trust Code provides that a spendthrift provision is not presumed to constitute a material purpose of the trust.
Thus, with B and D's consent, a court is likely to authorize termination of the trust and purchase of Annuity A.
2. The issue is whether a court is likely to authorize the trustee to terminate the trust over the Daughter's objection, with a plan to purchase Annuity B to provide for Betty for life with remainder to Daughter.
The State A Trust Code provides that a court may approve termination of a trust even without all beneficiaries' consent if it is shown to the court's satisfaction that, had all beneficiaries consented, the trust could have been terminated with consent and the interests of the objecting beneficiary can be adequately protected in line with the testator's probable intent.
Here, it was described above that a court would likely authorize the termination of the trust with all beneficiaries' consent, under Section 1 of the trust code. Thus, the court is likely to also authorize termination without unanimous consent under Section 4 of the trust code so long as the objector's (the Daughter's) interests can be adequately protected in accordance with the testator's intent.
The daughter's interests are a future remainder interest in the trust principal remaining after Betty's death. The testator's intent, in Clause 3 of the trust document, is to pay all Trust assets to Daughter at Betty's death. As discussed above, it is unlikely Tom's intent to confer a significant monetary benefit to Daughter, as it seems he would just as well have his property escheat to the state. Thus, the size of the future benefit to Daughter is not likely the dispositive consideration. The main thrust of the testator's intent in this trust was to provide appropriately for Betty during her life.
If the court authorizes termination of the trust and purchase of Annuity B, which provides for Betty for life and a cash payment to Daughter at Betty's death, this would likely appropriately protect Daughter's interest as the objecting beneficiary, and still be in accordance with Tom's probable intention. Betty would have financial security for life, and Daughter would have a financial interest in whatever is left over.
Thus, a court is likely to authorize termination of the trust even over Daughter's objection so long as Annuity B is purchased, preserving the benefit for Daughter.
3. The issue is whether Betty's increased living costs constitute a significant unanticipated circumstance qualifying for modification of the dispositive terms of the trust under Section 5 of the State A trust code.
Section 5 of the State A trust code provides that a court may modify the dispositive terms of the trust if, because of unanticipated circumstances, modification "will further the primary purpose of the trust." The modification should be made, to the extent possible, in accordance with the testator's probable intention.
At common law, present lifetime beneficiaries of a trust were entitled to the trust income, whereas future remainder beneficiaries were entitled to the trust principal. The modern view is to look at the trust portfolio as a whole and distribute it to the extent reasonably calculated to achieve the testator's intent.
A testator may direct the distribution of trust income and principal in different ways as they wish. Here, Tom directed that 80% of the trust income shall mandatorily be paid to Betty annually during her lifetime, with the rest reserved to ensure further growth of the trust.
Section 5 of the trust code allows modification in the face of unanticipated circumstances. Here, the greatly increased costs of nursing home care are an unanticipated circumstance which threatens to interfere with the stated purpose of the trust and the probable intention of the testator. If 80% of income is inadequate to pay Betty's support costs, then the purpose of the trust is not being achieved ("to care and support Betty for the rest of her life").
Thus, a court is likely to modify the trust under Section 5 of the Trust Code to authorize the trustee to pay 100% of the income to Betty annually. This will further the primary purpose of the trust and is in accordance with Tom's probable intention.
MEE-4
Sample Answer
1. The issue is whether Tech properly raised the statute of limitations defense when it failed to raise this defense in its answer.
In its answer to a complaint, a defendant must admit or deny all allegations of the plaintiff (or specify that it is unknown after reasonable investigation), and it must assert any defenses. A defendant must raise any affirmative defenses in its answer to the complaint, or else it waives those defenses. A party has the right to amend its pleading, including an answer, once as of right, within 21 days of when that pleading is served.
Here, defendant Tech Inc. did not raise its statute of limitations defense in its answer, and therefore, it has waived this defense. The entirety of Tech's answer was to admit allegations 1-5 and deny allegations 6-7. It did not raise any defenses to the complaint, including the affirmative defense of the lapsed statute of limitations.
Furthermore, Tech filed its motion for summary judgment, which made the statute of limitations argument, one month after filing its answer. The 21-day window for amending the answer had already passed. Therefore, its motion could not somehow be construed as properly amending the answer to assert this affirmative defense.
Accordingly, Tech has waived its statute of limitations defense by failing to assert it in its answer to the complaint.
2. The issue is how the court should resolve the summary judgment motion if it reaches the contract breach issue.
A motion for summary judgment is appropriate when there are no material facts in dispute, and one party is entitled to judgment as a matter of law on the basis of the facts. Resolving factual disputes is not appropriate at the summary judgment stage. Therefore, the court should not weigh the evidence to determine whether the facts more adequately support one side or the other. A fact is material if it is one that could change the disposition of the case. In evaluating the motion, the court should construe all facts and take all reasonable inferences in favor of the non-movant.
Here, the court should not grant either summary judgment motion. The terms of the oral contract between Diner and Tech are material to the action because this factual dispute will decide the case in favor of one party or another. Therefore, whether the parties agreed to software recognizing only combination meal orders or covering all menu items is a material fact.
There is still a dispute over this fact. Diner has presented evidence, in the form of eight witness depositions, that the oral agreement was for software that would cover all menu items. Tech has presented evidence, in form of the president's affidavit, that the agreement covered only combination meals. Therefore, this fact is still in dispute by the parties.
While it may be such that the evidence weighs strongly in Diner's favor, it is not the role of the court in a summary judgment motion to weigh the evidence in favor of one side or the other. If a jury could reasonably conclude on either side, then the court should not grant hte motion. Taking all facts and inferences in Tech's favor (and vice versa), summary judgment is not appropriate.
Accordingly, the court should deny both parties' motions for summary judgment, as a material fact remains in dispute.
3. The issue is whether there are other problems with the lawsuit that the court should address sua sponte.
The issue is whether there is proper subject matter jurisdiction, when both parties have their principal place of business in State A. Federal courts are courts of limited jurisdiction. To properly hear a suit, the court must have subject matter jurisdiction, which can be federal question (FQ) jurisdiction or diversity jurisdiction (DJ). Subject-matter jurisdiction is a constitutional requirement under Article III, so it cannot be waived by the parties (unlike personal jurisdiction). Therefore, an infirmity in the court's subject matter jurisdiction can be raised at any time in the litigation, including by the court itself. If the court finds that it lacks subject matter jurisdiction, the case must be dismissed.
FQ jurisdiction exists where the case arises under the Constitution or laws of the US; this is not applicable here, where the claim is based on contract law -- where state law typically applies.
To satisfy the requirements for DJ, there must be complete diversity between the parties, and the amount in controversy must exceed $75,000. The plaintiff's good-faith allegation in the complaint of an amount in controversy is sufficient to establish that element. Complete diversity means no plaintiff has the same citizenship as any defendant. A corporation is a citizenship in both its state of incorporation and its principal place of business. The principal place of business is the corporation's "nerve center," which is typically where the corporation has its headquarters.
Here, the case meets the amount in controversy requirement, based on the plaintiff's good-faith allegation of damages exceeding $75,000 on the face of the complaint.
However, the parties are not completely diverse. Diner Inc. is incorporated in State C, and it has its principal place of business in State A. Therefore, it is a citizen of States A and C for purposes of diversity. Tech Inc. is incorporated in State D and has its principal place of business in State A. Therefore, it is a citizen of States A and D. Plaintiff alleged these facts, and Defendant admitted them, which means they are conclusively established for purposes of this action. Because both parties are citizens of State A for DJ purposes, then there is no DJ and the court does not have valid subject matter jurisdiction to hear this case.
Accordingly, the court has a responsibility to raise its lack of subject matter jurisdiction sua sponte, and it must dismiss the case for lack of subject matter jurisdiction (diversity jurisdiction here).
Sample Answer
1. The Issue is Whether the Statute of Limitations Defense was Waived When Tech Failed to Include It in Its Answer
An answer is the defendant's reply to the claims brought against it by the plaintiff. In the answer, the defendant must admit, deny, or assert a lack of information to admit or deny each allegation made in the complaint. Additionally, the defendant must include in its answer any counter claims and affirmative defenses it wishes to raise. An affirmative defense not raised in the answer may be deemed waived. Defenses that must be included in an answer include statute of limitations and laches.
Here, Tech did not include the defense of statute of limitations in its answer. Instead, it chose to file a Motion for Summary Judgment raising the issue. This was not the proper grounds to assert a statute of limitations defense because, as described in more detail below, a motion for summary judgment does not raise new defenses. Instead, Tech should have asserted the defense in its answer. There were no grounds to excuse the failure to do so, because the statute of limitations issue was clear on the face of Diner's complaint which alleged a breach in late 2018.
Therefore, Tech did not properly raise the statute of limitations defense.
2. The Issue is Whether There is A Genuine Issue of Material Fact as to the Contract Breach
To prevail on summary judgment, the moving party must establish that there is no genuine issue of material fact such that it is entitled to a judgment as a matter of law. A genuine issue of material fact exists where a reasonable jury could potentially find in favor of the opposing party. The motion does not raise additional defenses or claims. The court views the evidence, which includes admissions in pleadings and sworn testimony, in weighing a summary judgment motion in the light most favorable to the non-moving party. Upon establishment of a prima facie case, the burden of persuasion shifts to the non-moving party to demonstrate that there is a genuine issue of material fact. If they are able to do so, summary judgment is not appropriate and the motion should be denied. If the non-moving party cannot demonstrate a genuine issue of material fact, summary judgment is appropriate and the motion should be granted.
Here, Tech's motion for summary judgment does not establish a lack of genuine issue of material fact. Its allegations regarding the statute of limitations are not appropriate for a summary judgment motion and should be stricken. Tech presented the affidavit of only its president to support its claim that the voice recognition software was only required to cover combination meals. Even assuming this is sufficient to demonstrate that there is no issue, Diner met its burden of persuasion to demonstrate a genuine issue of material fact by responding with sworn testimony of eight witnesses to the agreements aside from the presidents who testified that they heard the agreement was to cover all menu items. Additionally, two of the witnesses are Tech's own employees. However, Diner's motion also fails to establish that there is no genuine issue of material fact. Tech's admission to paragraph five of the complaint does not conclusively establish a breach of contract because Tech's position is that the contract did not require recognition of all menu items, only the combination meals. The submission of Tech's president's affidavit, in the light most favorable to Tech as the non-moving party, creates a genuine issue of material fact. Although not as strongly supported by the evidence, it is possible a reasonable jury could find in Tech's favor based on this evidence and the fact that the software that was ultimately created conformed to what Tech's president stated.
Thus, summary judgment is not appropriate as to either party's motion.
3. The Issue is Whether the Court Should Dismiss the Case for Lack of Subject Matter Jurisdiction
The issue of subject matter jurisdiction may be raised by any party, or by the court, at any time. Subject matter jurisdiction governs the court's ability to decide cases of a particular type. In federal court, diversity jurisdiction is established when no party is a citizen of the same state as any opposing party, and the amount in controversy is greater than $75,000. The citizenship of an entity is based not only on where the entity is incorporated, but also where it maintains its principal place of business. Generally, the principal place of business is the 'nerve center' where the entity's managers conduct its business, generally the corporate headquarters. Unlike an individual, an entity may have more than one state of citizenship. The amount in controversy is based off the plaintiff's good faith allegations in the complaint, unless it appears that the plaintiff cannot recover to a legal certainty. Alternatively, a federal court may have jurisdiction if the plaintiff's cause of action arises under federal law and a federal question appears on the face of the plaintiff's well-pleaded complaint. A court without subject matter jurisdiction must dismiss the case.
Here, Diner alleged that the court had subject matter jurisdiction in diversity because the amount in controvery is greater than $75,000 and the parties are incorporated in different states (States C and D). However, Diner also alleged that both Tech and Diner maintain their principal places of business in State A. Therefore, Tech and Diner are both citizens of State A. Since both parties are citizens of the same state, diversity of citizenship does not exist and there is not diversity jurisdiction. Additionally, nothing in the complaint demonstrates that the plaintiff's claim arises under federal law. Therefore, the court does not have subject matter jurisdiction over this case and must dismiss it.
MEE-5
Sample Answer
1a. The issue is whether Supplier has an enforceable security interest in the machine. In order for a secured party to have an enforceable interest against a debtor, it must attach to the collaterol. For attachment to occur, a secured party must give value, the debtor must have rights to the collateral, and there must be a valid security agreement. Here, Supplier gave credit of $24,000 to the Company so that the company could obtain possession of (ie lease) the machine. Even though Supplier is retaining title, this is in effect a secured transaction and Article 9 will treat it as such becasue title will be transfered at the end of the term. The written agreement also satisfies the requirements for a security agreement because it is in writing, signed by the party to be charged, and clearly identifies the collateral. Accordingly, Supplier has attached its security interest to the machine.
1b. The issue is whether Lender has an enforceable security interest in the machine. In order for a secured party to have an enforceable interest against a debtor, it must attach to the collaterol. For attachment to occur, a secured party must give value, the debtor must have rights to the collateral, and there must be a valid security agreement. Here, Lender loaned $1 million which serves as value. The Company then granted a collateral interest in "all of its personal property." While the Company does have rights to its personal property, this description is insufficient to attach a security interest. Article 9 requires that the collateral description be more specific, and courts have routinely found this language to be insufficient. Accordingly, Lender has not attached its security interest to the machine.
1c. The issue is whether BigBank has an enforceable security interest in the machine. In order for a secured party to have an enforceable interest against a debtor, it must attach to the collaterol. For attachment to occur, a secured party must give value, the debtor must have rights to the collateral, and there must be a valid security agreement. Here, BigBank loaned $750,000 as value. The Company granted a security interst in "all present and future equipment," which it has rights in, and the transaction and desciption was memoralized in a writing signed by both parties. Accordingly, BigBank has attached its security interst to the machine.
2. In order for a security interest to have priority over other secured interst, it must also be perfected. In order to perfect a security interest, the interest must have attached and the secured party must typically file a financing statement. Other ways to perfect include taking possession or control of the collateral. As explained above, Lender did not properly attach, so there is nothing to perfect. While Supplier attached its interest, it did not file a financing statement or comply with another method for perfection, so its interest is not perfected. BigBank, however, both attached its interest as described above and perfected it by filing a financing statement. The financing statement was valid because it contained the name of the secured party, the debtor, and sufficiently described the collateral. Accordingly, BigBank's interest is attached an perfected.
To determine priority between secured parties, perfected interests are superior to unperfected interests. Accordingly, BigBank's interest is most superior. Supplier's interest is next as an unperfected security interest. Finally, Lender's interest never attached so it would be last.
Sample Answer
I. Enforcable Interests
Supplier's Interest
The first issue is whether Supplier has an enforcable security interest in the machine.
A secured transaction is one where collateral is given to secure the repayment of an obligation. Such a transaction is governed by the UCC. A transaction where the seller sells property on credit and retains title until the property is fully paid is considered a secured transaction, regardless of the language the parties use or their intention. The UCC governs security agreements in goods, which are classified as consumer goods, inventory, farm products, and equipment.
Attachment is the process by which an enforcable security interest is created. Attachment requires the secured party give value to the debtor, the debtor authenticates a written security agreement that sufficiently describes the collateral, and the debtor has rights in the collateral or the ability to transfer those rights to the secured party. Perfection is the process where a secured party holds out its security interest to the rest of the world. Perfection requires attachment and a perfection step, most often the filing of a financing statement describing the collateral.
Here, the transaction between Supplier and Company, although not explicitly defined as a secured transaction, will nonetheless be governed by the UCC. Supplier is selling Company a machine on credit and retaining title until the machine is paid off. Such a transaction is considered a secured transaction and will be governed by the UCC.
Further, Supplier has en enforcable security interest in the machine. It gave value to Company by selling the machine on credit, the Company has rights in the machine it has purchased and has received, and the Company has signed a writing that sufficiently describes the collateral. However, Supplier has not filed a financing statement, so it does not have a perfected security interest.
Supplier has an unperfected but enforcable security interest.
Lender's Interest
The issue is whether Lender has an enforcable security interest in the machine.
The rules for attachment and perfection are stated above. With respect to the written security agreement, such an agreement must sufficiently describe the collateral. A supergeneric description, such as "all of debtor's personal property," will not suffice to create an enforcable security interest.
Here, Lender has given value to Company in the form of the $1,000,000 loan. Additionally, Company has rights in its personal property. However, the written loan agreement, which only describes the collateral as "all of Company's personal property," does not sufficiently describe the collateral. Therefore, Lender does not have an enforcable security interest in the machine. It is immaterial they later filed a financing statement, as a financing statement alone does not create a security interest.
Because the written security agreement does not sufficiently describe the collateral, Lender does not have an enforcable security interest in the machine.
BigBank's Interest
The issue is whether BigBank has an enforcable security interest in the machine.
The rules for atachment and perfection are stated above. Equipment is a catch-all for goods that are not consumer goods, inventory, or farm equipment. Equipment often refers to collateral that is used in a business, but is not sold as part of the ordinary course of business. A security agreement's description of collateral will be sufficient if it identifies the collateral by UCC-type.
Here, BigBank gave Company value in the form of the $750,000 loan, Company authenticated a security agreement describing the collateral as "all of Comapny's present and future equipment," and Company has rights in its present and future equipment. This security agreement, which describes the collateral by UCC-type, is sufficient. Therefore, BigBank has an enforcable security interest in Company's present and future equipment. The machine most likely is considered equipment, as it will be used in Comapny's business but is not being sold as part of Company's normal business operations. Additionally, BigBank filed a financing statement on May 4th, so its security interest is perfected.
BigBank has a perfected security interest in Company's machine.
II. Priority
The final issue is determining who has priority to the machine.
When multiple secured creditors each claim an interest in a single piece of collateral, priority will determine who has rights to that collateral. A creditor with an enforcable security interest will always prevail over a creditor without a security interest. Further, a creditor who perfects their security interest will have priority over an unperfected creditor.
Here, BigBank has a perfected security interest, Supplier has an unperfected but enforcable security interest, and Lender does not have a valid security interest. Therefore, BigBank has priority over both Supplier and Lender, and Supplier has priority over Lender.
BigBank has priority over both Supplier and Lender, while Supplier has priority over Lender.
MEE-6
Sample Answer
(1) The First Issue is Determining How the Trial Court Should Rule on Adam's Motion to Suppress the Incriminating Statement to Officer One?
The Exlcusionary Rule applies to evidence that was obtained in violation of an individuals 4th, 5th or 6th amendment rights. Under the 5th amendment, an individual is entitled to miranda warnings when they are subject to custodial interrogation. If the individual is not provided with Miranda warnings, any statements made in response to a government agent's questions should be excluded unless they were voluntarily made. Further, an individual may challenge the events leading to their statement if they beleive that they were improperly stopped, and that stop led to incriminating evidence. This refers to the doctrine of fruit of the poisonous tree, where one instance of conduct that violates and individual's rights leads to evidence. In that case, an individual may be able to exclude all evidence. When an officer is stopping a car, they may engage in pretextual stops so long as they have probable cause to believe that a crime has been committed.
In this case, the officer's received a calll of four men lurking in an alley. While on patrol, the officers observed a car that was occupied by four men driving with their headlights out, which is a violation. Therefore, even though there was evidence that the officer engaged in a pretexual stop, becuase the officer had probable cause that a crime was being committed (the headlights out) he was justified in stopping the individual. Further, the officer was allowed to order the Adam out of the car and conduct a patdown for what he believed was a weapon. If an officer is concerned about their safety, an individual may be ordered to step out of a car and may be subject to a plain-feel search. While the officer had Adam outside of the car, he began asking Adam questions which Adam replied to asserting his right to an attorney. However, an individual cannot invoke their rights miranda rights prior to a custodial interrogation. Therefore, Adam's invocation and subsequent confession of where he had been located would be admissible. Therefore, Adam would be unable to assert that the statement should be excluded becuase he was not subject to a custodial interrogation, Adam and the officer were on a public road, Adam was informed several times that after the ticket was written he would be free to leave. A reasonable person in Adam's position would have understood that he was not obligated to respond to the officer's inquiry and that he was not subject to a custodial interrogation.
(2) The Second Issue is Determining How the Trial Court Should Rule on Ben's Motion to Suppress the Incriminating Statement to Officer Two?
In General, when an individual is subject to a custodial interrogation, the officers must provide them with adequate miranda warnings. This means that the individual is able to volunatrily consent to a waiver because they have been informed what their rights are. While courts have found that officers who supply miranda warnings sufficient to apprise the individual of their rights are valid and failure to follow the script is not a complete bar to the evidence. A complete failure to capture the essense of miranda warnings cannot be said to be sufficient. However, where a statement is made voluntarily without any police questioning, a court will likely find that statement is admissible becuase the individual offered the statement themselves.
In this case, it is clear that Ben would be subject to a custodial interrogation, he was arrested, brought to an interrogation room, and the police officer attempted to provide Ben with Miranda warnings. However, these warnings would be considered to be woefully insufficient. First, the officer informs him of his rights within the constiution, then he names miranda without actually explaining what miranda encompasses. Therefore, these statements alone would be insuffient to satisfy the 5th amendment requirements of miranda. However, Ben would likely be unable to get the evidence excluded because he voluntarily offered the statements following the offers attempt to give miranda warnings. While a court may find that insufficient warnings and subsequent questioning are inadequate and violate an individual's fifth amendment rights, an individual who makes a voluntary statement without any police questioning will likely be found volunary and admissible.
(3) The Third Issue is Determining How the Trial Court Should Rule on Carl's Motion to Suppress the Incriminating Statement to Officer Three?
Under Miranda, an individual must clearly and uneqivocally assert their rights to remain silent or to have the assistance of counsel, otherwise an officer does not have to stop questioning the individual. Further, where an individual does not properly invoke their rights, an officer is under no obligation to follow up with questions to clarify if the individual was attempting to invoke their rights.
In this case, the officer properly provided miranda warnings to Carl. This is important since Carl was subject to a custodial interrogation. Carl was arrested, and for two hours, the officer continued to question Carl as he sat their in silence. While Carl may have subjectively believed that his maintanece of silence was sufficient to invoke his rights under the fifth amendment, a court would likely disagree. Therefore, the officer was justified in continuing with the interrogation until Carl invoked his rights. However, Carl did not invoke his rights and instead admitted that he was asing the pharmacy two weeks prior and only served as a lookout. Again, a court would likely view these statements being made as voluntary and since no invoccation of his rights was made under the 5th amendment, Carl's testimony would not be subject to the exclusionary rule.
(4) The Fourth Issue is Determining How the Trial Court Should Rule on Dillon's Motion to Suppress the Incriminating Statement to Cellmate?
Generally, an individual's fifth amendment protects them against government actors from interrogating them and obtaining involuntary confessions through coercive conduct. However, in some cases, a government agent may rely on an outside party to aid in their investigation. Normally, if a government agent enlists the assistance of an outside party, that party will be imputed the government responsibilities and will need to abide by certain constitutional protections. For example, a civilian ordered to search another's private property may be able to exclude evidence based on an illegal search even though a civilian conducted the search. However, the purpose of the 5th amendment is to prevent indivduals from feeling coerced into making a statement. Where there is an absence of a custodial interrogation, even if an informant is working with the police, that statement may not be excluded simply because the informant was attempting to elicit the statement.
In this case, Dillon was brought to the county jail. While Dillon was being processed, officer four spoke with an inmate and offered him monetary compensation and an offer to talk with the prosecutor to lessen his charges if he could get Dillon to admit that he and his three other friends were attempting to rob the pharmacy. Three hours later, the informant notified the officer that he did everything that was asked of him and Dillon had bragged about breaking into the pharmacy previously and how they attempted again earlier that night. Here, Dillon's motion to exclude the evidence would likely fail. First, while the officer did engage in conduct that would appear to violate Dillon's constitutional rights, a court would likely disagree. When the informant spoke with Dillon, Dillon was likely no feeling the same pressure as if he were in a custodial interrogation. This is evidenced by Dillon's bragging about the intial robbery and the incomplete robbery. Therefore, Dillon would be unable to assert any protections under the 5th amendment because they would be inapplicable. Dillon was not subject to a custodial interrogation by a government agent. Instead he was conversing with his cellmate and bragged about his illegal conduct.
Conclusion
In conclusion, it is unlikely that any of the motions to exclude the evidence obtained against these four individuals would be granted, as they did not violate any 5th amendment priviledges.
Sample Answer
1. Suppression of Adam's statement to Officer One
The first issue is whether Adam's statement to Officer One that they were coming from behind the pharmecy should be excluded as violative of his Miranda rights. The Fifth Amendment provides the privilege against self-incrimination. To protect this right, officers are required to read a suspect their Miranda rights before any custodial interrogation. Whether the encounter constitutes a custodial interrogation is a two-step analysis: (1) an individual is in custody if a reaonsable person in their position would feel they are not free to terminiate the encounter, and if the relative environment contains the same inherently coercive pressures as a police station, (2) an interrogation occurs if the officer makes any statement or conduct that they know or should not is likely to elicit an incriminating reponse. The exclusionary rule requires the suppression of any evidence obtained in vilation of a suspect's Fifth Amendment rights.
Here, Adam was likely not in custody. Although Officer One did tell Adam he was not free to leave, the side of the road during a traffic stop does not contain the same inherently coercive pressures as a police station. As for interrogation, iit is debatable that because the officer did suspect that they were involved in the prior burglary and did receive the information of men lurking behind the pharmacy again, he might expect an incriminating response from inquiring where they were going when he stopped them. However, because custodial interrogation is a two-step test and the first step (custody) is not satisfied, it was not necessary to give a Miranda warning in this situation. Therefore, Adam's statement need not be suppressed.
2. Suppression of Ben's statement to Officer Two
The next issue is whether Ben's statement to Officer Two must be suppressed as violating his Miranda Rights. Although Miranda requires the suppression of unwarned statements during a custodial interrogation, it does not prevent the admission of voluntary statements made to the government before they render Miranda warnings.
Here, Ben was in custody, as he had been arrested and is in the station house for questioning. Officer Two was about to start an interrogation, and informing Ben that he was going to read him his rights. However, before Officer Two was able to read these warnings, Ben blurted out that they were involved in the burglary of the pharmacy. This was not in response to interrogation, but was rather an impulsive, unncoerced statement made by Ben. Therefore, it need not be suppressed under Miranda.
3. Suppression of Carl's statement to Officer Three
The next issue is whether Carl's statement must be suppressed. To invoke their Miranda rights, the suspect must do so clearly an unambiguously. One does not clearly invoke their right to remain silent by merely remaining silent. If there is no clear invocation of these rights, the officer need not cease questioning.
Here, Carl was read his rights and stated that he understood them. However, Carl did not clearly invoke his Miranda rights. He merely remained silent, and did not make a clear statement to the officers that he wished to not speak. Further, the officers even explained to him that his silence is insufficient to exercise this right. Accordingly, the officers did not violate his rights by continuing to question him, even when he did not speak for two hours. Therefore, Carl's statement need not be suppressed.
4. Suppression of Dillon's statement to Cellmate
The final issue is whether Dillon's statement to Cellmate must be suppressed. When an individual is being questioned by a cellmate, with whom they believe they are building a raport, there is no interrogation, as there is not any coercive pressure like there would be if the statements were made to a governmental authority figure. Here, because Dillon's statement was made to his cellmate, there was no interrogation. Therefore, there is no grounds to suppress this statement as violating Dillon's Miranda rights.