Bar Examination Sample Q&A - July 2008
Questions and Sample Answers
Civil Procedure
Criminal
Constitutional Law
Property
Evidence
Contracts
Torts
Because they were running late for soccer practice, Mom and her ten-year-old daughter, Lisa, went to McBurgers for dinner. Mom pulled up to the drive-through window and ordered 2 burgers, a soda, and a coffee. The clerk handed Mom a cardboard container with the soda and hot coffee and a bag containing the burgers, sugars, and creamers. Mom placed the cardboard container on the console between the seats and handed the bag to her daughter.
Mom drove away from the drive-through and was stopped waiting to enter the highway. Lisa, trying to be helpful, took the hot coffee cup from the cardboard container and put it between her legs. She never looked at the small lettering on the bottom of the cup that said “caution contains hot coffee.” Lisa took off the lid in order to pour the creamers into the coffee. Mom saw an opening in the flow of traffic and quickly accelerated onto the highway. The car jolted forward and the hot coffee spilled onto Lisa’s lap. Lisa screamed in pain. Mom tried to wipe up the spill, but Lisa’s bare thighs were soaked. Mom was very upset, but was able to drive to the hospital where Lisa was treated for third-degree burns and Mom was given a sedative.
Lisa still has burn marks on both thighs, and the doctors cannot know if these will be permanent scars until she is finished growing. Mom is still having nightmares and is treating with a psychiatrist. Mom comes to your office and wants to file suit.
Your investigation reveals the following: (1) McBurger’s operations manual requires coffee to be served at 185 degrees; (2) the American Coffee Brewers Association recommends serving coffee at 170-180 degrees for optimal taste; (3) coffee at 185 degrees can cause third-degree burns in 3 seconds; (4) coffee at 170 degrees can cause third-degree burns in 30 seconds; (5) McBurgers has settled hundreds of burn cases during the past 10 years; and (6) McBurgers manufactures its own coffee cups.
You are an associate in the law office. Prepare a memorandum as to all causes of action Mom and Lisa can pursue and any defenses that may be raised.
PREPARE THE MEMORANDUM
SAMPLE ANSWER A – TORTS
Memorandum
To: Senior Partner
From: Associate
Re: Causes of Action for Mom and Lisa and Relevant Defenses
Below you will find a complete analysis about all the relevant facts and circumstances to Mom and Lisa's possible causes of action and possible defenses.
Lisa's Claim(s) and Relevant Defenses
Since Lisa is only 10 years old, her mom can bring claims on her behalf but will be subject to the same defenses as Lisa would be subject to.
Strict Liability
Mom, on Lisa's behalf, will probably succeed in a strict products liability claim against McBurgers for inadequate warning/defective design of the coffee cups. Under tort law, in order to be liable for strict products liability, there must be a manufacturing defect or design defect in a product, that remains unaltered when sold, that causes damages from foreseeable use or foreseeable misuse of the product. A defect is a attribute of the product that makes it unreasonably dangerous. To be liable for design or inadequate warning, the plainiff must show that the design or warning could have been improved with little cost or quality sacrifice by the manufacturer.
The coffee cups involed in the accident were manufactured by McBurgers. Furthermore, they clearly caused the injuries to Lisa's legs as they held the hot coffee that spilled on her legs and contained a warning that failed to prevent the injuries. The most relevant claim is an inadequate warning. The coffee only had a small script that stated the coffee was hot. However, the company could have made the warning much larger and more pronounced for little cost, especially considering that McBurgers had settled many similar cases in the past 10 years.
McBurgers will try to defend first by stating that Lisa, by removing the lid and placing the cup between her legs was not using the product as intended. However, removing the lid to add creamers and holding the cup is clearly a foreseeable misuse of the product that does not cut off liability. McBurgers may also claim that by removing the lid, Lisa altered the product. However, the cup and more importantly the warning remained unaltered.
McBurgers may also contend that their product was not the actual proximate cause of the spill. Thoough this has merit since Mom sped up quickly in the care and Lisa had removed the lid and was holding the cup between her legs, Lisa will probably be able to show that a better warning would have caused Mom and Lisa to take more precautions.
McBurgers may also contend that the damages are speculative as Lisa's permanent scarring is not certain. However, this will not prevent recovery for medical expenses, pain and suffering and other related costs. Therefore, such a defense is of little consequence.
Finally, McBurgers may try to defend on assumption of the risk or contributory negligence grounds. However, only assumption of the risk, knowing appreciation and confrontation of a risk, is a defense to strict liability. Since Lisa was only 10 and it is unapparent whether she even read the warning, it is unlikely that Lisa knew of and confronted the risk of spilling hot coffee. Overall, Mom, on Lisa's behalf, will probably succeed in the strict liability action.
Negligence
Mom, on Lisa's behalf, will probably be successful in a negligence action against McBurgers. Negligence requires a duty to the plaintiff, breach of that duty, and legal and proximate causation of damages to the plaintiff. Defendants owe a duty of reasonable care to all foreseeable plaintiffs.
First, Lisa can establish that she is a foreseeable plaintiff, to whom a duty of care is owed, because she was a customer of McBurgers and could easily be injured by their negligent acts. McBurgers also likley breached that duty by the warning inadequacy described above and the temperature of the coffee. Although experts suggest that coffee at 170 degrees has its full flavor and that 170 degree coffee takes 10 times as long to cause severe burns, McBurgers still required its coffee to be served at 185 degrees. Additionally, McBurgers was on notice of the dangerous condition as it settle many similar burn cases in the past. Clearly the conduct is not reasonable, but is a negligent breach of the duty owed to Lisa.
On the issue of causation and damages, liability is also clear. The coffee is the legal "but for" cause because had the coffee been served at a lower temperature, Lisa would not have been burned, especially because her Mom wiped the coffee off right away. Furthermore, it's the proximate causes as the temperature directly caused the injury to Lisa. Lisa's damages are also clear. She suffered 3rd degree burns and faces possible permanent scarring.
McBurgers may try to defend by claiming that both Lisa and her Mom were contributorily negligent. Depending on the law, contributory negligence can cut off liability (contributory negligence system) or reduce liability proportionally (comparative negligence system). However, McBurgers will need to show that Mom or Lisa was negligent. Mom's possible negligent conduct was her quick acceleration. But with no knowledge of her daughter's conduct, it was probably reasonable to quickly accelerate onto a highway. Furthermore, Lisa's negligence is questionable. Though she didn't treat the coffee with much care, she will only be held to the standard of a child of similar age, experience and education. Since she is only 10 years old, her careless conduct with regard to the coffee is probably not neglient. Therefore, Mom, on Lisa's behalf, will probably recover, albeit possibly reduced, damages for McBurgers' negligence.
Intentional Tort – Battery
Mom, on Lisa's behalf, will probably not recover for the intentional tort of battery. Battery requires the intentional harmful or offensive touching of another person. Clearly here, there is an offensive touching that occured since Lisa was severely burned by McBurgers' coffee. However, there is not evidence that McBurgers intended the coffee to spill on her. Although McBurgers was clearly on notice of the possibility of harm from past settlements, there is not evidence of intentional conduct. Therefore, liability on this issue is unlikely.
Mom's Claim(s) and Relevant Defenses
Negligent Infliction of Emotional Distress (NIED)
Mom will probably not be able to recover for NIED. Under tort law, NIED requires negligence conduct that causes severe emotional distress with physical symptions. Causation must be proximate in that the defendant must be in the zone of danger of the negligent conduct, or the defendant must be foreseeable by having a clost relationship with an injured party and present at the time and place of injury.
Since Mom suffered no physical injuries, her best cause of action is NIED. She was given a sedative at the hospital and was very upset that her daughter was burnt. Therefore, this probably qualifies as severe emotional distress. She's also a foreseeable plaintiff as she was in the car at the time of the burning and saw her daughter in severe pain.
McBurgers will probably defend by arguing that there were no physical syptoms, precluding liability under NIED. Since there is no evidence, other than the sedative prescription, that Mom had physical distess symptoms, this defense is likley valid. Therefore, Mom will probably be unsuccessful in an NIED claim against McBurgers.
Intentional Infliction of Emotional Distress (IIED)
Mom will probably not be successful in a claim for IIED. Under tort law, IIED requires extreme and outrageous conduct that causes severe emotional distress. Although concluded above that Mom may have suffered severe distress, McBurgers conduct probably falls short of extreme and outrageous. McBurgers will argue that although it was on notice of possible burning, it gave warnings and a cardboard case and lid to prevent burns. Therefore, while the conduct may be negligent, its not extreme and outrageous and liability will not attach under IIED.
SAMPLE ANSWER B – TORTS
To: Partner
From: Associate
Re: Mom and Lisa’s Causes of Action; Defenses
Lisa’s Claims
Lisa can assert a variety of successful claims based on products liability theory, arguing that the designs warning and manufacturing defects of McBurger’s cups, lids and/or coffee made the cup of coffee, as a whole unreasonably dangerous.
First Lisa can argue the (1) the cup and lid and (2) the coffee contained design defects that make McBurgers strictly liable for the damages they caused. At issue will be whether each contained a design defect. The applicable rules state that a manufacturer, supplier or other party in the “commercial chain” of a product is strictly liable under a theory of products liability for damages caused by that product due to a defective design. A defective design is the type of defect in the design that makes a product unreasonably dangerous to users. One way of determining the existence of a defective design is when a product can be made safer at a similar cost and with similar utility by use of an alternative design. Generally, the plaintiff much show the use of existence of such a design. Also, the product must leave the defendant with a defect. If such defect causes damages to the plaintiff, the defendant will be strictly liable.
Here, the cup and lid, viewed together, likely did not contain a design defect because it seems that they could not have been designed more safely at a similar cost and utility. (Issue of inadequate warnings will be discussed later.) The cup and lid might have been designed as a single unit, probably at a similar cost, and this would make such spills less likely. However, doing so would decrease utility by making it more difficult to initially fill the cup with coffee (perhaps through a small hole in the lid). At any rate the coffee likely contained a design defect, if it was McBurgers’ design to brew coffee at 185 degrees. This design makes the product unreasonably dangerous, because the coffee at this temperature causes third degree burns in three seconds, whereas coffee served with recommended temperatures takes considerably longer to burn. McBurgers manufactured the coffee at this temperature, and the coffee caused Lisa’s burns, so McBurger will be strictly liable.
Similarly, Lisa may allege inadequate warnings regarding the coffee cup. At issue will be whether McBurgers included a warning that, in content and form, reasonably apprised a user of the coffee’s dangers. The applicable rules indicate that a failure to adequately warn is a specific type of design defect. It exists when a product contains an inherent and unavoidable dangers adequately, and it is strictly liable for damages caused if it does not.
Here, the warning was inconspicuous because it was in small lettering on the bottom of the cup. The substance was also inadequate because it failed to warn that this coffee was particularly “hot”, indeed hotter than recommended. Thus McBurger will be liable for its inadequate warnings.
Lisa may also be allege a manufacturing defect in the coffee. At issue will be whether this particular pot of coffee was brewed at a higher temperature then McBurgers’ other coffee, in a way that made it unreasonably dangerous. In addition to the general rules regarding products liability, above, the rule is that a manufacturing defect exists is a product is not made to the manufacturers specifications in a way that makes it unreasonably dangerous.
Here, it is not clear whether it was McBurgers’ policy to brew coffee at 185 degrees, but if it was to cooler, the coffee had a manufacturing defect for which it is strictly liable (since the increased temperature caused the burns).
Lisa can also allege a successful negligence claim. At issue will be whether McBurgers failed to conform to the duty of a reasonably prudent restaurant in McBurgers’ position, including any special knowledge McBurgers had. The rules state that a claim for negligence requires a duty to the plaintiff, a breech of that duty by failure to confirm to the applicable standard of care, causation and damages. Generally, the defendant must meet a “reasonably prudent” standard, including any special knowledge it has.
Here, McBurgers settled many past burn cases and a reasonably prudent actor, in its position reasonably should have known that its coffee was too hot, so, it thereby breached the duty it owed to Lisa, as a consumer of the coffee. The increased temperatures caused her burns, so it is liable to her.
McBurgers can argue, against Lisa’s product liability claims, that Lisa misused its product by opening it while her mother was pulling into traffic. At issue will be whether such “misuse” is foreseeable. The applicable rule is that only unforeseeable misuse will be excuse liability.
Here, it is entirely foreseeable that a drive through patron will open coffee while driving and entering traffic, so this defense will fail.
McBurgers can also argie that Lisa was contributoraly negligent, which will likely succeed. At issue is whether Lisa was herself negligent by opening the coffee while her mother entered traffic. The applicable rules state that negligence, for children is generally specific to that child’s age, education and experience. A finding of contributory negligence barred recovery at common law, but in most jurisdictions today, minor contributory negligence will only reduce the plantiff’s recovery.
Here, Lisa was likely minorly contributorally negligent, because she, as a 10 year old, should still have known of the dangers of taking the lid off the coffee at that point. In most jurisdictions, her recovery will be reduced by the percentage of comparative fault.
McBurgers can also argue Lisa assumed the risk (AR). AR occurs when the plaintiff encountered a known risk and voluntarily proceeds in the face of it. Here, there is no indication that Lisa subjectively appreciated the risk, especially of this extraordinary hot coffee, so this defense would fail.
Finally, McBurger can argue that Mom pulling into traffic was a supervening act of negligence that cuts off liability. At issue is whether McBurgers’ own negligence was nonetheless a substantiated factor in Lisa’a injuries. Here, it undeniably was. If the coffee was at a reasonable danger, despite any possible negligence by Mom, Lisa would not have been burned.
Mom
Mom can successfully claim negligent infliction of emotional distress (NIED). At issue is whether the elements of a “bystander” claim can be made out. The rules states the NIED occurs when, in a “bystander” case such as here, the defendant’s negligence causes death or serious bodily injury (SBI) to a close relative of the plaintiff, the plaintiff must witness the death or SBI.
Here, Mom was present and witnessed Lisa’s severe burns (SBI) caused by McBurgers’ negligence so her claim will succeed. The defense discussed above could also be argued against this claim.
Essay Question #2 – Constitutional Law
The State of Whitney (the “State”) has enacted legislation (the “Act”) designed to: (i) curtail election fraud, (ii) combat soaring energy prices, and (iii) promote growth in its flagging economy. The Act requires “citizens voting in person to provide government-issued photo identification, such as a driver’s license photograph, as proof of their identity.” The Act’s unintended result is that Alexa, like thousands of other elderly citizens, cannot vote because she is no longer eligible for a driver’s license and has no other form of government-issued photo identification.
The Act also permits the State’s executive branch, in its sole discretion, to “waive any and all laws” determined to be “necessary to ensure the expeditious construction” of off-shore oil-drilling and gas-drilling platforms (the “Platforms”). The State invokes this provision to suspend building of residential and commercial dwellings along the waterfront indefinitely. Alexa owns a large parcel of ocean-front property and has planned to build a large condominium complex there. As a result of the State’s building moratorium, however, Alexa’s project stops, and the value of her ocean-front property plummets.
The Act, lastly, requires any contractor seeking to bid on and to build Platforms to use a workforce of which at least seventy-five percent of the workers are bona-fide, State residents. Alexa, who owns a Platform construction business located in a neighboring state, has her bid rejected because the workforce does not meet the seventy-five percent resident workforce threshold.
Alexa comes to your office seeking advice on what constitutional claims, if any, she may assert against the State. She also seeks your counsel on the defenses the State may raise and the procedural hurdles she may face if her claims are litigated in federal court. Your Senior Partner asks you to prepare a memorandum addressing Alexa’s concerns.
PREPARE THE MEMORANDUM
SAMPLE ANSWER A – CONSTITUIONAL LAW
The first issue is whether the legislation by the State that requires “citizens voting in person to provide government issued photo-id”, violates the equal protection clause of the 14th amendment.
The equal protection clause prevents states from discriminating against individuals based on “individual classifications.” It also prevents the state from discriminating against any group being denied a fundamental right. Any of these classifications require strict scrutiny (“SS”). To surpass SS the government must show the legislation is necessary and narrowly tailored to achieve a compelling government interest. There can be no less restrictive alternatives available.
In order for the classification to receive SS, there must be a discriminatory purpose/intent to the law, or the law must be discriminatory on its face.
Voting is fundamental right. The legislation enacted by the State requires government issued ID and as a result, elderly people who can not obtain a driver’s license are denied the right to vote.
Alexa will contend that this law violates her 14th Am. Equal protection right. She will claim that there are less restrictive ways to achieve the goals enumerated in the facts. The government should issue special IDs to elderly people in order for them to have access to the voting booths.
The government will claim that this law is not intended to discriminate, it merely results in a classification. It is a law of general applicability with no discriminatory purpose or intent. Furthermore, the government has a compelling interest in curtailing election fraud, combating high energy prices, and promoting growth in its flagging economy. In all likelihood, the only one of the other interests that is compelling is to curtail election fraud.
The government will claim that the law is narrowly tailored to achieve that interest. The law does not require a driver’s license to be displayed in order to gain access to the voting booth. It allows any government issued ID. Since the elderly have other means of obtaining government issued ID (i.e., a passport), the law is the least restrictive means of achieving this goal. Therefore, this law meets SS.
It should be noted that discrimination on the sole basis of age, is not a suspect classification and would warrant only rational basis review. Since the fundamental right of voting is involved it requires SS.
The 2nd issue is whether the executive branch has the power to waive laws, and whether waiver of a law can result in an unconstitutional taking.
In order for a law to be passed, or repealed, the constitution requires the bill to pass through the house and the senate—this is known as bicameralism. Then the bill must be presented to the President who either signs it in as a law, or vetos (sic) it back down to the Senate. The Executive Branch does not have the power, by itself, to waive any law without bicameralism and presentment.
The law that prevents the executive branch to “waive any and all laws determined to be “necessary to ensure the expeditious construction, etc.” is unconstitutional. Although Congress may delegate its power to the executive branch, it may not give power that the Congress itself does not have. Since the law permits the president to waive laws without bicameralism and presentment, the law is unconstitutional.
Even if the law was constitutional, application of the law to Alexa does not amount to a taking.
The government is authorized by the constitution to take private property for public use provided just compensation is paid. If the government passes a law that deprives a landowner from all economic use of the land, that is a taking and the government must pay the value lost to the owner.
As a result of this law, Alexa’s property plummets in value. The law does not remove all economically viable use of the property, it merely decreases the property value. Therefore, this law does not result in a taking.
The third issue is whether requiring 75% of workers on a workforce to be state residents violates the Privileges and Immunities Clause of (“P&I”) Article IV and the Dormant Commerce Clause (“DCC”).
The P & I Clause of Art. IV prohibits states from discriminating against out of staters by depriving them of fundamental privileges such as employment. In order for the State to discriminate in such a manner, the law must meet SS and no less restrictive means can be available.
Here, Alexa had her bid rejected because her workforce comprised of less than 75% state residents. Since there is no compelling interest for this and out-of-state workers are being denied employment, this law violates the P&I Clause.
The State may say that this law is valid under the “Market Participant” exception. If the State is merely acting as a market participant in government funding or government programs, then they may favor their own citizens. Since this law is not a participation in government funding or government program, they will not succeed on this contention and this law is unconstitutional.
It should be that this law also violates the dormant Commerce Clause. The negative implications of the Commerce Clause is that the federal government has plenary power when it comes to regulating interstate commerce and the state may not place an “undue burden” on interstate commerce. If the state does this by discriminating against out of staters, SS will apply and the law will likely fail.
Here, the law discriminates against out of staters, and imposes an undue burden on interstate commerce. By not allowing certain employment to cross state lines. Since there are better ways or less restrictive ways to promote the state economy, this will fail SS. Furthermore, merely attempting to promote the economy is not a compelling interest. Therefore, this law will be unconstitutional under the DCC.
As a procedural matter, the 11th Amendment prohibits suits against the State in federal court. Congress may, however, legislate under section 5 of the 14th Amendment to permit suit against the State so long as the laws made are “congruent and prudential” to remedy the state violations of the federal constitution. Since Congress has legislated to allow suits against the state in all of the above constitutional violations, Alexa may sue the state in federal court.
It should be noted that in all 3 case claims she has standing because they all result in a direct injury to her that can be redressed by a suit.
SAMPLE ANSWER B – CONSTITUTIONAL LAW
To: Senior Partner Alexa has three claims against the State. First, because of the voter identification law, she has a equal protection claim to the enforcement of her fundamental and constitutional right to vote. The 14th Amendment to the United States Constitution requires all citizens to be treated equally, and in the main articles of the constitution (of the United States) all citizens are guaranteed a right to a republican form of government and right to vote. This right is fundamental, and can not be barred without a requisite showing by the government that there is no violation. Here the government would need to show that it had a compelling need for her identification, and the i.d. was the only reasonable and least restrictive way to accomplish that goal. Here, to curb election fraud is an important interest, and some form of identification is one way, if not the best, to make that happen. Under current jurisprudence, the State could claim that an i.d. is permissible on those grounds.
However, the other two interests are not related to fraud, and for those purposes, the i.d. is over inclusive, as it keeps out people from voting until they can obtain i.d., which includes recent émigrés, which could chill travel to the State.
Alexa also has a claim potentially in age discrimination, in that the law has a discriminatory impact on the elderly, who don’t have cars. However, the government has the defense that there was no discriminatory intent against the aged when they made the law. Note that under a Federal Constitutional claim, age discrimination only entitles Alexa to rational basis review, meaning she has the burden of showing that the State law is not a reasonable means of enforcement of a legitimate government interest, or that voter fraud is a legitimate interest. However, brought under the State constitution, she may have a claim, as age is a protected class here, shifting the burden to the State to show that a government i.d. is narrowly tailored to a substantial government interest and was not under inclusive.
2. Alexa also has a claim on the removal of all economic use of her coastline property. Under the Fifth Amendment as incorporated by the Fourteenth Amendment, the government cannot seize the private property of another without just compensation. This has been extended to include the regulatory taking, meaning the government doesn’t seize the property, but eliminates any possible economic use of the property.
The government, though, will claim it has not taken all the economic use of the property, and thus, no taking has occurred. We will want a jury trial for this cause of action as the regulatory taking is usually by administrative regulation, not executive action endorsed by the legislature.
Alexa could try to claim that the granting of power to the executive to waive all laws contrary to a specific purpose as to an unconstitutional delegation of the legislative power to the extent this poses any number of problems, not the least of which is standing, as Alexa does have a controversy with the executive on its deprivation of property, but does not have any direct claims against the legislature. Further, the court may decline jurisdiction on the grounds it is a non-justiciable political question as the state and federal constitution may be ambiguous on this point. Thus, it would be very time consuming and expensive to seek this resolution of invalidating the law, and clients may not have adequate resources.
Third, the state’s law requiring worker be principally of the State appears to be a violation of the Privileges and Immunities clause, as it inhibits from travel into the State. The State would claim they have no involvement directly, but by requiring the allotment of workers, they are specifically directing the private entity, and thus making the private entities, including Alexa, into government agents. This discrimination is subject to intermediate scrutiny, and thus the State has the burden of showing how promoting growth in the flagging economy is an important interest, and how curtailing the number of non-state workers is narrowly tailored. Note: if this is actually intended to keep out alien workers, then the law is subject to strict scrutiny. It may also be an infringement on the commerce clause, and the State would have to show its need for priority to in-state workers not a substantial burden on commerce.
4. 11th Amendment
Please note that since all of these claims are against a State government, the Supreme Court of the U.S. has established that the 11th Amendment sovereign immunity applies both to State and Federal Claims in both State and Federal Court. The way around immunity is by basing all our claims through the 14th Amendment, as it is established since it was enacted later, it works as a limit.
Our best would be to sue the Attorney General in his private capacity and enjoin him from enforcing the unconstitutional laws against Alexa. Although this may likely preclude damages claims for past injuries, it will mean, if successful, that Alexa will be able to hire, rent and vote as she desires.
Criminal
The State of Good Intentions has agreed to build Boondoggle Stadium for its professional football team, The Parasites. After a competitive bidding process, Overrun Construction was awarded the job of managing the stadium’s construction and was to be paid a percentage of the total cost. Acme Concrete was awarded a contract to supply concrete to the project for a price of $100 per ton.
The owner of Acme Concrete, Dan Driver, delivers concrete to the jobsite every day and the site supervisor of Overrun Construction, Joe, checks the delivery and signs a receipt for it. Joe is a disgruntled employee who often complains to Dan about his pay. Dan offers Joe cash payments for signing receipts that indicate Dan has delivered more concrete to the site than was actually supplied. Joe agrees and as a result, the construction of Boondoggle Stadium falls behind schedule and is significantly over budget.
Frances Forsenic is a Senior Inspector in the state’s Office of Budget Management. She has been assigned to oversee funds spent on the construction of the stadium. As part of her duties she discovers the excessive charges for concrete supplied by Acme. She confronts Joe who admits signing the inaccurate receipts. She then meets with the owner of Overrun Construction, Larry Latejob. She demands that the short deliveries stop immediately and informs Larry this if the matter becomes public he could face prosecution. She then tells Larry that if Overrun will reduce its fee for the stadium work, she will consider the matter settled. Larry reluctantly agrees.
The Attorney General’s Office is also investigating the stadium’s construction and obtains records showing the agreement between Frances and Larry.
You are a clerk in the Attorney General’s Office and your supervisor is responsible for presenting this matter to a Grand Jury. She has asked you to analyze the facts and provide her with a memorandum identifying the various charges that may be brought, identifying all possible defendants in the matter as well as any anticipated defenses.
PREPARE THE MEMDORANDUM
SAMPLE ANSWER A – CRIMINAL LAW
Joe & Dan
(1) Conspiracy
The First issue is whether Joe and Dan can be charged with conspiracy. In order to be guilty of conspiracy, there must be an agreement b/n 2 or more persons, the defendants must intend to commit a criminal objection, must intend to enter into an agreement, and an overt act. Here, Dan offered Joe cash payments to defraud Good Intentions. Joe agreed and began signing the receipts, resulting in short deliveries. Upon Joe agreeing a conspiracy between the two had been formed. Dan and Joe will not have any viable defense because both intended to commit a crime, that of false pretense, in an effort to defraud the state of Good Intentions
(2) False Pretenses
Being that Joe and Dane are likely guilty of conspiracy to commit false pretenses, they are both, as co-conspirators, guilty of the underlying crime as well unless one effectively withdraws. In order to be guilty of false pretenses, a defendant must obtain title to a victim’s property with a false statement of past or present fact with the intent to defraud. Here, Joe and D agreed that Joe would sign the statements knowing they were false and using them to obtain full payment for items never delivered by Acme. The statement of falsity was made so Dan could unlawfully profit from his short deliveries and Joe received cash payments for his assistance. Joe may argue he did not intend to defraud Good Intentions but merely wished to get back at his employer for his low pay. Nevertheless, Joe intended the results of his conduct regardless of his motive
(3) Dan may also be individually guilty at solicitation. Solicitation is when a person asks someone to commit a crime with the intent that they do it. Here, Dan asked for Joe’s assistance to defraud Good Intentions. Nevertheless, at common law, the crime of solicitation merges with the completed offense. One who solicits is guilty of the underlying crime once it is completed. Here Dan will be guilty of false pretenses and the crime of solicitation which was completed when he asked Joe to sign the delivery receipts, will merge with the completed offense.
(4) The next issue is whether an employer is criminally liable for the intentional criminal acts of his employer. Larry will not be found guilty of conspiracy. In order for one to be found part of a conspiracy, they must have specific intent to commit the crime and agree to commit the crime. Here Larry never spoke to or agreed to defraud the State of Good Intentions. Further, nothing indicates he was even aware of any short deliveries until Frances Forensic.
A corporation or business, however, can be found liable criminally for the acts of its employee within the scope of his duties. Because the construction project was over budget and behind, Larry might have been aware of some wrongdoing and choose to not investigate. Thus, Overrun Construction may be criminally liable for Joe’s actions
Frances
Frances may be guilty of extortion. Extortion occurs when a defendant, by threat of future harm, that the defendant is not allowed to threaten, intends to coerce a person into relinquishing possession of his property. Here, Frances had no authority to threaten the prosecution of Larry. She had no evidence that he was aware of the wrongdoing. Further, Frances was merely to oversee the stadium funding, not prosecute supposed wrongdoers. Frances had no authority and made the threat in an effort to wrongfully force Larry to rescind contract profits that were rightfully Overrun’s. Thus, Frances will likely be guilty of extortion. Frances will assert her motive was to help the state in its budget concerns from the new stadium. Frances’ motive, however, is not a defense to the crime.
SAMPLE ANSWER B – CRIMINAL
To: AG From: Clerk Cc: Criminal charges
Conspiracy
Dan and Joe shall be charged with conspiring to commit fraud. Can Dan + Joe be charged with conspiracy?
Conspiracy is the agreement between two or more people to commit a crime and an overt act in furthermore of that crime. Here, Dan + Joe have an agreement. The agreement is to commit fraud by indicating that Dan his delivered more concrete than he actually did. They have gone beyond the overt act by actually engaged in that activity.
Since Dan + Joe are two people and they have an agreement to commit fraud, and have actual done it, they will be charged with conspiracy.
Fraud
Dan & Joe are conspirators committing fraud, as such should be charged with crime of fraud. Can Dan + Joe be charged with Fraud? Fraud is the misrepresentation of a material fact under with the intent to induce someone based on that misrepresentation. Here Dan + Joe are representing that Dan has delivered more concrete then he actually did. This is a material fact because Dan is being paid by how much concrete he delivers. The state is relying on this fact to pay $100 per ton of concrete. Since Dan + Joe are making material misrepresentations and the State of Good Intentions is relying on these facts. Dan + Joe will be charged with Fraud.
Blackmail
Francis Forensic she will be charged with Blackmail. Can Frances be charged with Blackmail. Blackmail is the threat to reveal an otherwise damaging a private fact to the public if payment is not made. There, Frances has information that can damage Overrun Construction + Larry Latejob its owner. This information could bring criminal charges against the Company and Larry Latejob. These facts are private because only a few internal people know. Frances demanded to lower the contract fee in exchange for her silence on the matter is the act of Blackmail.
Since Frances has this private information and threatens to disclose it if Larry Latejob doesn’t agree to lower the fee, she has committed blackmail and will be charged.
She will defend this charge that she doesn’t get the money. If she derives no benefit, it would appear that she didn’t commit blackmail. However, she is in charge of Budget management. If she gets the costs down on the project, it will look great on her. She will likely get a bonus or promotion. When she doesn’t receive the cash in hand from Larry Latejob, she does benefit from him lowering the concrete fee. Since she does receive a benefit from this agreement Larry her defense will fail.
Christine is being prosecuted for federal prostitution as a result of her involvement in “The Client is Always Right Escort Service” (CARES). At a Pre-Trial Conference, the prosecution advised the court it will proffer the following evidence:
1) Christine’s 2007 Federal 1040 Tax Return and attached W-2 showing $200,000 in reported income earned as a part-time “receptionist” for CARES.
2) The testimony of Police Officer Smith, who will state that after approaching Christine he identified himself, and stated he wanted to talk to her about CARES; Christine ran to her car, leaped inside, and fled the scene.
3) The testimony of Dr. Phil, who will state that he counseled Governor Spitfire and his wife, because the Governor spent “tens of thousands of dollars with CARES in order to have intimate relations with Christine,” and his wife was threatening divorce.
At the same Pre-trial Conference, the defense advised the court it will proffer the following evidence:
4) The testimony of Governor Spitfire’s wife, who will testify that the Governor stated to her, on many occasions, “I’ve never paid a woman to have sex with me. Never!”
5) The testimony of Ginger a former “escort” of CARES, who will testify she told Christine, “Governor Spitfire is a very wealthy and generous man who thinks you’re cute. You could do very well being his ‘close friend.’”
6) The testimony of Christine’s brother, Tom, that Christine called distraught about her romantic involvement with a married, high-ranking government official who was lavishing her with monetary gifts.
You are a law clerk for the judge before whom the matter will be tried. The judge has asked you to review the facts described above and to prepare a memorandum discussing the evidentiary issues and their resolution.
PREPARE THE MEMORANDUM
SAMPLE ANSWER A – EVIDENCE
To: Judge From: Law Clerk Re: Prosecution of Christine & Admissible Evidence
All relevant evidence, or evidence that tends to make a material fact more or less likely, is admissible unless barred by a rule of evidence.
1. The first piece of evidence offered is Christine’s tax return form and is admissible as a business record or past recollection recorded. The Defendant (D) will argue that it is an inadmissible hearsay statement, used to prove the truth of the matter asserted (i.e. that she was paid $200,00 by CARES for acting as a receptionist). The statement may however, come in as a business record if an IRS agent can authenticate it as a record made in usual course of business, that these records are normally kept, and that it was made at or about the time of the event. If not it will be barred as hearsay.
The tax return is also admissible under the best evidence rule as a legally operative document. SO long as the original is located or the absence of the original is accounted for, then the tax return will be allowed in, if authenticated (assuming that is likely what the proponent claims to be.)
2. The testimony of Officer Smith will also be admissible as a party admission. Party admissions are any statements made, or the lack of a statement made, that are adverse to the party when the statement is made. Here, however, Christine will argue that her act of fleeing to the car was not a statement.
Alternatively, the prosecution car argue that her fleeing the scene was simply conduct that in indicative of her fearful state of mind, and is not being used as inadmissible hearsay to prove that she did in fact flee from the police officer and since conduct and not testimony is at issue, it should be allowed in unless it violates a hearsay rule.
3. The testimony of Dr. Phil will be inadmissible because it violates the patient-psychologist privilege. A patient and his/her psychologist enjoy a privileged communication when the conversation is confidential, not made in public, and is when the patient is seeking advice from the therapist in his or her professional capacity. The privilege can only be waived by the client, unless the client puts the communication itself in issue. Here, the Governor has not waived the privilege, and it is therefore inadmissible.
4. The testimony of Governor’s wife that Governor told her he never paid for prostitution may be admissible if the marital communication privilege is waived. This privilege prevents either spouse to testify about a confidential communication of one spouse to the other while the two were married. Waiver of the privilege is only valid by both spouses, and the privilege applies to couples that are no longer married. The privilege can only be overcome if the precluded testimony is destructive of the family unit.
In this case, the court would need to ascertain whether the Governor’s statements were made in confidence (i.e. no other 3rd parties present), and whether both the Governor & wife are willing to waive the privilege, If these 2 conditions are satisfied, then the wife may testify.
Otherwise, the statement may be barred as inadmissible hearsay, because it would be made to prove the truth of the matter asserted – that he did not in fact engage in prostitution.
5. The testimony of Ginger is also admissible as evidence of Christine’s state of mind. The statement is not hearsay because it is not made to prove that the Governor is wealthy and that it would be good to be his friend, but to demonstrate Christine’s state of mind, or intent (under mimic exception) to show why she was close the Governor. IT could also reveal motive, in other words, that she associated with him because he was generous and interested in her.
6. Her brother Tom’s testimony about Christine’s distraught phone call may or may not be admissible. If the testimony is proffered to show that the money Governor gave her was actually a gift, and not payment, then it will be hearsay and id admissible only it if falls under an exception to hearsay. Present sense impression, excited utterances, statements of ten existing physical, mental or emotional condition, dying declaration, and business records and statements against interest are exceptions to hearsay.
If Christine’s statement was made under the stress of a startling event, then it would be admissible as an excited utterance. In the alternative, it could be admissible as a statement of then existing mental state, but only if she used verbs in the present tense to describe how she was feeling at that very moment.
The statement may also qualify as a party admission, or statement against proprietary or penal interest at the moment, since she was admitting having an affair with a married man.
The most likely option, however, is that the statement is admissible as circumstances evidence a state of mind. The testimony shows that she was distraught about the affair, which tends to prove that she did not have the intent to engage in an arrangement for prostitution.
SAMPLE ANSWER B – EVIDENCE
I. Admission of 1040 Tax Returns and W-2
A. Relevance
The tax returns are relevant to show that Christine profited from her work at Cares in the amount of $200,000 as a part-time receptionist. Not only does it show Christine profited from CARES, but also that her income is highly disproportionate to her job title indicating she was not a receptionist, but something not legal.
B. Best Evidence Rule
When a party seeks to introduce a document into evidence, the party must admit a duly authenticated original or copy.
Here the prosecution seems to be offering the original tax return. If it cam be authenticated by either Christine, or a knowing IRS worker, it should be admissible.
II. Officer Smith Testimony
A. Relevance
Officer Smith’s testimony is relevant because it tends to prove that Christine knew illegal activities occurred at CARES and that was why she ran from police asking her about it.
B. Scope of Testimony
A witness is eligible to testify to events actually observed. Here Officer Smith witnessed Christine run away after he identified himself and purpose. Thus the scope of the testimony is proper.
C. Hearsay
Hearsay is an out of court statement offered to prove the truth of the matter asserted. Officer Smith’s statements to Christine that he was officer investigating CARES were out of court statements. However, the testimony is offered to show the effect on the listener, not that what was stated was true.
III. Dr. Phil’s testimony
A. Relevance
Dr. Phil’s statements are relevant to give direct evidence that Gov. Spitfire hired Christine as a prostitute from CARES. However, it will not be admissible.
Doctor-Client Privilege
Statements made to a psychologist or similar counselor are protected from being compelled in court so long as the statements were made in the course of receiving psychological care. The purpose of the privilege is to preserve the Doctor patient relationship so that the patient can be honest with the doctor and therefore receive proper care.
Here, Dr. Phil counseled Gov. Spitfire and his wife, the statement were made through the course of this treatment and are privileged. The fact that Dr. Phil was also counseling Gov. Spitfire’s wife does not destroy the privilege.
B. Hearsay
Dr. Phil’s testimony also relates hearsay, as described above. The statements are offered to show Gov. Spitfire hired Christine as a prostitute.
Statements against penal interests are considered admissions and are not considered hearsay under the federal rules.
Thus hearsay would not exclude Dr. Phil’s testimony, because they were statements against penal interest with indicia of truthfulness. Thus, they are not hearsay.
IV. Gov. Spitfire’s Wife’s Testimony
A. Relevance
Wife’s testimony is relevant to show that Gov. Spitfire was not engaging in sexual conduct with Cristine as a prostitute.
B. Hearsay
Wife’s testimony is testimony of a statement made out of court to prove the truth of the matter asserted. Thus unless it falls within a hearsay exception, it is not admissible. Currently, I cannot think of a relevant exception, but will review the issue again.
C. Spousal Privilege
Statements made between current spouses, relating to the relationship are privileged and either spouse can assert the privilege.
Here, Gov. Spitfire’s statements were made to his wide, during the course of their relationship, and related to their relationship. As such, the statements are privileged and not admissible. However, given the subject of the testimony, both spouses would likely waive the privilege.
V. Ginger’s Testimony
A. Relevance
Ginger’s testimony is relevant to show that Christine was Gov. Spitfire’s “friend”, not engaging in prostitution.
B. Hearsay
The testimony offered by Ginger is not necessarily hearsay. Christine could argue that the statement has the effect of molding her believe there was only a close friendship. Thus the testimony was offered for effect on listener.
Christine could argue that the statement was an admission and thus excluded by the hearsay rule as Ginger is available for cross-examination and may inculpate her in the prostitution.
Note that the prosecution would probably not dispute this testimony as it seems as bad for Christine as it is good.
VI. Tom’s Testimony
A. Relevance
Tom’s testimony is relevant to show that the gifts Christine received from Gov. Spitfire were gifts, not payments for services.
A. Hearsay
Tom’s testimony is also hearsay as described above and will be excluded, absent an exception.
Christine may be able to claim 3 hearsay exceptions – spontaneous statement, excited utterance or admission.
1. Spontaneous Statement
Statements that relate to what a speaker is observing presently or immediately after are admissible as a hearsay exception.
If Christine contacted her brother immediately after seeing Gov. Spitfire and receiving a gift, the statements, may be an exception to the hearsay rule as a spontaneous statement.
2. Excited Utterance
Excited utterances are exceptions to the hearsay rule. When a speaker relates information about an event that arouses one’s emotions and the speaker is still under the effect of the excitement.
Here, Christine was distraught when she called her brother, indicating that she was under the emotional effect of an experience that aroused her emotions.
3. Admission by a Party Opponent
Tom’s testimony is also statements made by a part to the trial and may be admissible as an admission by a party opponent, not considered to be hearsay.
You are the law clerk to a New Jersey appellate judge. The following case comes before the court on appeal.
Plaintiffs are a number of former hourly employees of Value-Mart, a national chain of discount retail stores. Value- Mart owns and operates approximately one hundred stores in New Jersey.
Plaintiffs filed a class-action complaint against Value-Mart. The complaint alleged Value-Mart exercised centralized control over employment practices at the individual stores, which were systematic and pervasive and affected all New Jersey stores with a “corporate culture” in which the drive for profitability overrode employees’ rights. The complaint alleged defendant’s actions (1) had denied them and other similarly situated employees (the “Class”) earned break-time for meals and rests during their work shifts, and (2) had forced the Class to work “off-the-clock” (thereby failing to pay them for time they worked),. The complaint alleged these actions violated express and implied contracts, covenants of good faith and fair dealing, and state wage and hour laws. The complaint sought restitution/compensatory damages and disgorgement of profits under an unjust enrichment theory.
Plaintiffs sought class certification to represent the interests of all present and former hourly employees of Value-Mart who had suffered damages as a result of defendant’s actions. The proposed class would include approximately 80,000 hourly workers. In support of their complaint and application for class certification, plaintiffs offered expert reports of statisticians analyzing the hourly-shift time records of twenty Value-Mart stores. The reports concluded that more than sixty percent of hourly workers had been denied earned break time. Defendant’s experts challenged the validity of the conclusions of plaintiffs’ experts. Defendant also asserted that there (i) were numerous differences among employees and their work situations, (ii) many reasons why individual employees would voluntarily miss or shorten breaks, and (iii) wide differences among the employees in damages allegedly suffered, all of which Defendant contended should preclude class certification.
The trial court denied the request for class certification, finding that the likely difficulty in managing the class action prevented class certification and that individual employee issues would predominate over the issues common to the entire class.
Plaintiffs’ motion for leave to appeal was granted, and the appellate court will review the trial court’s decision denying class certification. The judge for whom you work instructs you to prepare a memorandum analyzing the case in light of the standards governing class certification and to make a recommendation on whether the trial court should be affirmed or reversed. You are instructed not to address the standard of review.
PREPARE THE MEMORANDUM
SAMPLE ANSWER A – CIVIL
Class certification is a means of achieving legal efficiency in handling claims that are so similar in nature and are so vast that although joinder would be too unruly, separate, individualized claims would effectively clog the court docket with substantially similar claims. It has been found that class certification is appropriate in situations where joinder of parties is impractical because the number of parties that would be required are too vast. Second, it is necessary that all claims are substantially similar so that the relief and claims are common to the class. The class representatives must have claims typical to that of the class so as to effectively represent the interests of the class. Lastly, it must be found that the respresentatives would fairly and adequately represent the class interests. It is important that the court make a determination as to certification of a class as soon as practicable and to then certify the class counsel. The purpose of certifying a class is to avoid the inefficiencies of having individual claims come before a court regarding the same transaction or occurrence taking time and resources from the court to prove the same facts, while also requiring the same witnesses and parties to continually come to court and re-seat numerous jurors over issues that have already been fully litigated.
Here, joinder would be impracticable. Plaintiffs include 80,000 workers which each individual claim would be unruly. The claims all involve their work under Valu-Mart, which shows they do have some common interests; however, this is better determined when going through the particular form of class being brought.
There are different forms of classes that can be formed. There are those that are seek injunctions or those that join because a limited fund is at stake and its depletion would harm the interests of parties not brought in to the litigation. Although, the plaintiffs could seek an injunction to prohibit the conduct of Valu-Mart in its oppressive corporate culture and behavior towards its employees, the facts state that the complaint seeks restitution and compensatory damages and disgorgement of profits under an unjust enrichmetn theory only. The third form of class, which is the class at stake here involves the type of class seeking damages. Generally this form of class will be certified if the common questions are found to predominate over individual claims and it is desired or more efficient to bring the claim as a class rather than individually. This is a factual determination, which is generally easier to make when involving mass tort actions because all have then been injured by a common defendant and seek to prove negligence; however, issues involving breach of contract can still be combined in a class action if the common questions predominate over individual questions and it is in the interests of justice to bring the suit as a class to preserve judicial resources as well as effectively serve the needs of the parties.
The first question is whether the individual employee issues predominate over the general issues of the class. Plaintiffs include 80,000 hourly workers. Plaintiffs put forth expert testimony that over 60% of these hourly workers had been denied earned break time. This means well over 40,000 plaintiffs are bringing forth this exact claim. The amounts of time each were deprived of may differ, but their general, common claim is all of the same origin. Although there may be circumstances where there are differences among the employees and their work situations and reasons why individual employees would voluntarily miss or shorten breaks, or damages suffered, it does not take away that there claims are substantially similar. Each employee is looking for the same judicial conclusion that Valu-Mart did in fact deprive its employees of adequate break time or time off. This finding would be the starting point to sort out specific damages later, but it would still be more efficient to determine Valu-Mart breached its duty to provide break-time once, rather than 40,000 plus times. There may be a valid reason to break up the class for this issue and maintain a smaller class of those that are directly affected by this issue and have this 60% or so make up there own class on this particular issue and have its own certification if the court wants to narrow down the scope as such. However, calculation would not be as hard for this claim despite the individual circumstances where each is affected because the amount of break per employee per day can at least help in ascertaining an idea of the breach by Valu-Mart and if there is a pattern in how Valu-Mart denied the breaks or cut them short, calculation of the decrease in the break time per day per employee as a standard habit of Valu-Mart would make this practical.
The second common issue to see if there is a common question or if individual issues predominate is the question over whether Valu-Mart forced its employees to wrok "off-the-clock", thereby failing to pay them for time they worked. This is a more fact specific inquiry regarding the acts of the individual employees rather than the overall trend of Valu-Mart. Each individual would have to bring in their time cards and evidence of proof that they worked beyond what can be proved and evidenced on the time cards through testimony. If the class is certified as to this issue, there may be a risk of fraud or fake claims of working over time because these claims are not based on any concrete evidence other than honest testimony. These specific claims on the point of owed earnings may be harder to calculate and may require individual court inquiry.
Corporate culture in which the drive for profitability overrides its employees rights affects all of Valu-Mart's employees. The plaintiffs are all seeking to show the general behavior of Valu-Mart across the board to all employees that has directly lead to their breach of contract and the harm the plaintiffs now seek to recover from.
The over-arching claim of Valu-Mart's violation of express and implid contracts, covenants of good faith and fair dealing, and state wage and hour law is a duty Valu-Mart owes to all of its employees. Valu-Mart's general breach of its warranties to its employees affects all of its employees and its breach is a breach of a duty to all of its employees equally. It may cause more severe individual impact on particular employees, but overall, it is a common issue. It is in all of the employee's interests to find the common breach of contractual duty in order to allow each individal to then use collateral estoppel to prevent re-litigation of the issue. Then, all that must be determined is the amount of damages each individual is due. This issue makes class certification practical at least on the issues of duty and breach. The class may need to be broken down accordingly later to determine damages for each and how each of these particular damages were caused, but for now, it would be more efficient to make a general finding of liability or no liability on the part of Valu-Mart.
The issue on recovery of the disgorgement of profits may also result in a common finding of unjust enrichment brought to Valu-Mart from their oppressive practices. This amount of money recovered based on unjust enrichment might lead to a specific amount of money that is limited in the ability to distribute it accordingly if individual claims were brought. Individual claims could unfairly deplete the pot of money and prevent others from receiving an amount fair acording to their harm or claims. This amount of money may require a certification of a class in itself to ensure that each plaintiff's rights are protected and they are not left with nothing to recover because the pot has been depleted.
Class certification for all 80,000 in one class action may prove more burdensome that beneficial if each employee then has to go through an individual evaluation of how they were affected by the findings anyway. However, this class, being so numerous and vast can be broken down further into classes of those affected by each particular breach of contract by Valu-Mart. Class certification can also be provided as to certain elements of the plaintiff's claim that all require the same finding, such as those that involve the breach of implied contracts of good faith and fair dealing. Once this is proven, then the claims can be broken down. Punitive damages are not generally provided for in contract law so it will be easier to focus on hte amounts due according to the state wage and hour laws that govern and may provide for specific double and treble compensation based on the particular breach, allowing damage recovery to be more mechanical and efficent once the other elements are claimed and proven. Further, if damages are the only remaining determination in certain circumstances, the proof of the elements leading to damages can be maintained in the record and will not have to be re-plead or re-proven over and over again and the same witnesses and parties will not be dragged back into court. This would serve the court's goal in providing for class actions in the first time, preserving judicial resources as well as efficiently resolving disputes.
If there are individuals who have egregious claims or who have unique claims, they can still opt out and bring individual claims, but if most of the claims are generic and the amounts are only in controversy, class certification would be a beneficial way to represent these claims because the individual recoveries of breaches in providing a 15 minute break might be so slight as to not provide adequate incentive for individual claims to be brought before the court. The claim may only be substantal in the aggregate, so that Valu-Mart would be able to continue its behavior if this claim was not brought as a class action. This is a consideration in the interests of justice in determining whether or not to certify the class.
Further, in determining whether or not to certify the class, it needs to be determined if adequate class representatives are available who have claims typical to that of the class adn who will adequately represent the class. Notice must also be given to each potential class member affected to give them the opportunity to opt out and go forward with their individual case if they so desire.
SAMPLE ANSWER B – CIVIL
To: Judge From: Clerk Re: Class Action Certification
You have asked me to draft you a memorandum analyzing the case in light of the standards governing class certification and to make a recommendation on whether the trial court should be affirmed or reversed. I have analyzed the issues down below for your review.
Class Action Initial Requirements
The trial court decision should be reversed and the class action should be certified. At issue is whether the action brought by plaintiffs satisfies the requirements of certification for a class action.
For a class action to be appropriate, the plaintiffs seeking a class action must satisfy four initial requirements. First, the plaintiffs must establish that the class action is too numerous that joinder is impracticable. In addition, there must be common questions of law and fact. Furthermore, the claims asserted by the class must be typical of those asserted by the class representatives. Moreover, the class must be adequately represented.
In this case, numerosity is satisfied. The complaint alleges that the action taken by Valuemart has affected several stores. The number of employees total that the complaint seeks to join is approximately 80,000 workers. To join 80,000 people to a single action would seem to meet the numerosity requirement because it would be nearly impossible to join all of those individuals who have a claim against Valuemart.
In addition, there are common questions of law and fact in this action. The complaint establishes common business practices by Valuemart against particular employees. Judging from the complaint, it seems that the business practices of Valuemart had created a situation where its profitability took control over employee rights. These rights include denial of earned break time for meals and rests during their work shifts, and forced class members to work off the clock. This prevented the class members to receive payment for the time they actually worked. Thus, common issues would be included in this action. Therefore, commonality is satisfied. Moreover, the claims of the class representatives are typical of those of the class. Those who would represent the class members have the same claims of those who are class members. Plaintiffs sought class certification to represent the interests of all present and former hourly employees of Value Mart who had suffered damages as a result from defendant’s actions. Thus, the clams are typical.
Lastly, there must be adequate representation. It seems that the class representatives would adequately represent the class members since their claims are similar. In addition, adequate representation from counsel can be established because he or she prepared expert findings regarding the stats from the hourly time records of twenty Value Mart stores. Thus there is adequate representation.
Therefore, the initial requirements for the class are satisfied.
Class Certification Requirements
The class certification requirements are also satisfied. At issue is whether the class may be certified. In order to certify a class action, not only do the initial requirements must be satisfied, but the judge must certify the class action. In order to do this, the class action must fall into one of the three categories: (i) a prejudicial action where there may be possibility of multiple lawsuits; (ii) a claim for declaratory relief or injunctive relief; or (iii) a class action for damages. If a claim is based on the third type of case (damages), the plaintiffs must further establish that common questions of law and fact predominate over individual questions of law and fact; and a class action is superior method to resolve the dispute then individual cases.
Here, the plaintiffs are seeking a class action for damages. The complaint asserts relief in the form of restitution, compensatory damages, and disgorgement of profits under an unjust enrichment theory. All of these demands for relief are for damages.
Since the class action is for damages, the class common questions of law and fact must predominate over the individual questions of law and fact. Here, the trial court concluded that the individual questions of law and fact predominate over the class questions of law and fact. Part of the basis of the courts decision came from defendants evidence which established that (i) there were numerous differences among employees and their work situations; (ii) many reasons why individual employees would voluntarily miss or shorten breaks; and (iii) wide differences among the employees in damages already suffered. However, when looking at the evidence more closely, the result is different.
Defendant first claims that there were numerous differences among employees and their work situations. However, each of the employees claims arise from the same corporation. Every employee is bring a claim against Valuemart. In addition, while they may have been at different stores, the behavior of the corporation remained the same. The facts indicate that while it affected many stores in New Jersey, Valuemart exercised centralized control over employment practices at each of the stores. This control was systematic and pervasive and affected ALL New Jersey stores. In addition, the expert’s report shows that 60% of Valuemart’s employees have suffered from the same claim – denied earned break time. Thus, the differences are minimal and seem to be a part of a more systematic combined approach by the company itself and not by individual stores.
Defendant next asserts that there were many reaons why individual employees would voluntarily miss or shorten breaks. This however, should not prevent the class from being certified. The reasons themselves may vary, however, the same legal conclusion has resulted. Valuemart has asserted control over employees time for breaks for lunch and has forced them to work off of the clock. Thus, although there may be different reasons for employees being deducted clock time, it is a matter of fact that Valuemart deducted time from each employee’s paycheck.
Defendant finally asserts that there are wide differences among employees in damages already suffered. However, this should also not prevent class certification. While employees have suffered different damages by Valuemart, each has suffered damages from the same behavior. The amount of damage each employee has suffered should not determine whether a class is certified because in any class action, there are going to be different levels of damages for each class member. Moreover, each of the claims by the class assert relief under express and implied contracts, covenants of good faith and fair dealing, and state wage and hour laws. Judging from these violations, each of the class members have suffered harm from the same type of practice of Valuemart. The violations set forth in the complaint are all applicable to each of the employees. Furthermore, the export reports prepared by the plaintiff class’s expert show that more than sixty percent of hourly workers had been denied earned break time. Thus, the stats are readily available for review in order to determine damages based on each employee. Therefore defendants contentions regarding individual questions predominate over common questions is without merit.
Next, the class action must be the superior method of resolving the dispute over individual suits. It seems likely that the class action is the superior method. While there may be some difficulty in maintaining the class action and supervising it, this alone does not invalidate the reasons for certifying a class. In addition, all of the violations took place in New Jersey. There may be an argument that the violations did not take place at an individual store, but given that the violations occurred only in the state of NJ, it is more practicable to have a class action. The story would be different if the violations occurred all across the United States. In that situation, it would be more impracticable to supervise the class action. Where as here, on the other hand, everyone and Valuemart is located in NJ, it seems that the class action is superior. Thus, the requirements of class action are satisfied.
Therefore, the trial judge’s decision should be reversed on appeal and the class should be certified.
Alex and Chris purchased an investment property as joint tenants. Recently, Fran met with Alex and Chris to discuss buying the property. Alex and Chris indicated they would sell the property to Fran for $350,000 with $35,000 paid immediately as a down payment. Alex and Chris also said they would allow Fran to move in and to make renovations to the property prior to closing. The three discussed holding a closing within a reasonable time.
The day after this discussion, Fran delivered a letter to Alex and Chris stating, “I agree to everything we discussed, except I will pay $300,000.” Enclosed with the letter was a $5,000 check on which Fran noted “down payment.” Without looking at the letter or the check, Alex and Chris gave Fran the key to the property. Fran immediately moved in and began making renovations. Fran spent substantial sums on the renovations.
Before a closing could be held, Alex passed away. Pat is the sole beneficiary under Alex’s last will and testament.
Chris does not want to sell the property to Fran. Fran is pressing for a closing date. Pat has contacted Chris claiming ownership of 50% of the property.
Chris has come to your law firm for advice. Analyze Chris’ potential rights, obligations, and liabilities with respect to Fran and Pat.
PREPARE THE MEMORANDUM
SAMPLE ANSWER A – PROPERTY
Chris is the fee simple absolute owner of the property. Joint tenants own property together with the right of survivorship, meaning after the first joint tenant dies, his interest transfers to the remaining joint tenants. The decedent’s interest in the property does not fall into his estate and will avoid probate.
Here, Alex and Chris were joint tenants. Because Alex died and because a joint tenancy has the right of survivorship in the remaining joint tenants, Alex’s interest passes directly to Chris. Although Pat is a beneficiary of Alex’s will, he takes NOTHING because the interest does not fall into probate but instead goes directly to Chris who now owns the property, 100%. Chris does not owe Pat anything and has no liabilities with respect to him.
The only way Pat will be able to recover anything is if he proves that upon the entering into of a contract with Fran, equitable title passed to Fran, under the doctrine of equitable conversion, and that this voluntary sale severed the joint tenancy. In that case, both Alex and Chris would be tenants in common. This form of joint ownership does not include a right of survivorship. A tenancy in common interest is fully devisable, descendible, and alienable. Therefore, the co-tenancy interest could pass validly to Pat under Alex’s will. Upon closing, Pat would be entitled to half of the proceeds.
An oral agreement for the sale of land is not enforceable. A contract for the sale of land must be in writing because it is within the statute of frauds. An offer is a manifestation of an intention to be bound. Here Alex and Chris offered Fran the land for $350,000 with $35,000 down. This is a contract governed by the common law. The common law requires the application of the mirror image rule, meaning that the terms of the acceptance must be exactly those of the offer. Here Fran attempted to accept with his confirmatory memo. However, because the mirror image rule applies, it was not valid and was merely a counteroffer.
In addition, the contract was not compliant with the statute of frauds. Although there was a writing, it wasn’t signed by the party to be charged (Alex and Chris) and it didn’t sufficiently identify the parties or the property, although it stated the consideration.
In the absence of a valid or enforceable contract, Fran cannot recover. However, an exception to the statute of frauds is the doctrine of part performance. Under it, a contract for the sale of property is enforceable where 2 of 3 things are met: (1) Payment, (2) Possession, (3) substantial improvements.
In this case, Fran has moved in and spent substantial amounts of money on improvements. Thus, both possessions and substantial improvements have been met. Both tend to prove reliability and that is why the statute of frauds is waived. In the absence of a defense, Alex and Chris are compelled to transfer title to Fran. A plausible defense would be that there was never an underlying contract. Alternatively, if there was a contract, the contract was one for a landlord-tenant relationship. This could be argued because the actions taken are just as consistent with a lease of property (implied) as they are with a land sale contract. Since the burden of proof will be on Fran to prove, the consistency may make it difficult to prove by a preponderance of the evidence that there was a land-sale contract.
Pat’s rights may be determined by the outcome of the Chris v. Fran action. If Fran is successful in his case, he will be able to bring an action for specific performance, meaning that Chris must transfer the property because land is viewed as unique in the eyes of the law.
SAMPLE ANSWER B – PROPERTY
I. Chris v. Pat
A joint tenancy entitles the joint tenants to a night of survivorship, equal shares of ownership and a right to possess and enjoy the entire property. In order to properly obtain property by joint tenancy, the four unities or such ownership must be established:
(1) the tenants must take the property at the same time, (2) by the same title, or instrument, (3) in equal shares and (4) with the right of survivorship. An interest in a joint tenancy is neither devisable nor descendible because of the right of survivorship. However, an interest in a joint tenancy is alienable and if a transfer of such interest takes place during a joint tenant’s lifetime, the transfer will sever the joint tenancy.
Here, the facts indicate that Alex and Chris purchased an investment property as joint tenants, presumably satisfying the four unities and acquiring the right of survivorship. However, this right of survivorship may have been severed once Alex and Chris contracted with Fran to sell the property. Pursuant to the doctrine of equitable conversion, the joint tenancy is severed on the date the contract for sale of the interest is entered into. However, this depends upon whether a valid contract was formed with Fran.
Thus, because the joint tenancy was severed when Alex and Chris entered the contract with Fran, Chris lost his right of survivorship, making his interest a tenancy in common. Because the right of survivorship was severed, Chris does not take Alex’s half and Alex’s 50% share passes down to Pat.
However, if no contract had ever been formed, the right of survivorship would not have been severed. In such event, Chris owns the property in its entirety, taking Alex’s share upon Alex’s death.
II. Chris v. Fran
The issue is whether a letter written to confirm an oral contract for the sale of property satisfies the Statute of Frauds.
Any transfer of interest in real property must be in writing in order to satisfy the Statute of Frauds and be held enforceable. To comply with the Statute of Frauds, a land sale contract must contain all material terms and be signed by the party to be charged. Such material terms include the price of the sale, identity of the parties and a description of the land. Here, Fran’s letter only contained a price term and no other material terms. More importantly, the letter was not signed by Alex and Chris. Therefore, Fran’s letter does not satisfy the Statute of Frauds and is not enforceable against Chris.
However, there is an exception to the Statute of Frauds for the sale or transfer of real property. This exception for part performance requires that the alleged buyer have performed at least two of three tasks: (1) payment of some of the purchase price, (2) taken possession of the premises, and (3) made substantial improvements on the land.
Here, Fran can assert part performance as an exception to the Statute of Frauds because she has paid $5,000, which although is minor, is some payment of the purchase price. Fran has also taken possession of the property and expended substantial sums on renovations to the land. Thus, a court would likely find that an exception to the Statute of Frauds exists and an enforceable agreement exists for the sale of the property. Therefore, Chris will likely be liable to Fran to transfer the property to if she seeks specific performance. In the event that Fran seeks damages instead of specific performance, Chris will have to return the $5,000 and pay for any costs Fran incurred in renovations. Also, it should be noted that if Fran does seek specific performance, the price of the contract will be in dispute and the court will determine a reasonable value for the property as the purchase price.
Lastly, Chris could contend that Alex’s death before closing terminated the contract with Fran, or excused Chris’ performance. Generally the death of a party will terminate an offer that is revocable but does not affect the rights of the parties once a contract has been entered into. Thus, Alex’s death will likely have no effect on the enforceability of any contract with Fran because the agreement was entered into, or the contract was complete before Alex died. Alex and Chris accepted payment of the $5,000 and granted possession to Fran immediately upon the receipt of her letter. Thus, it is likely that the court would find that an agreement was formed at this point and Alex’s death thereafter would have no effect on its enforceability.
On 2/8/08, buyer and Seller entered into a written real estate form contract (“Contract”) for a house. The contract culminated after lengthy negotiations between the parties through their respective brokers. The Buyer’s broker filled out the contract. The pertinent terms of the Contract follow: the purchase price is $1,000,000; Buyer shall “arrange for a mortgage” within 20 days; Buyer shall “make the $250,000 deposit payment by 2/26/08”; closing shall occur on 3/14/08; Seller “may accept, until the property closes, other contract offers only as backups”; “faxes are acceptable forms of notice and communication”; each broker is “entitled to a 3% commission from Seller.”
On 2/2/08, Buyer applied for a mortgage by submitting a completed mortgage application form. On 2/10/08, the mortgage company appraised the property for $950,000. Upon receipt of the appraisal, Buyer asked Seller to accept the appraisal price. On 2/21/08, Seller faxed Buyer a letter stating Seller would accept the appraised price, if Buyer would close on 3/5/08.
On 2/26/08 Seller received a written contract “back up” offer from clueless Second Buyer for $1,100,000. On the same date, Seller then faxed Buyer a letter: “I am rescinding the 2/21/08 offer and will cancel the Contract unless (a) you make the $250,000 deposit payment by tomorrow, 2/27/08; (b) you obtain a mortgage pursuant to the Contract; (c) you agree to close by 3/14/08.” On 2/26/08, buyer mailed a $250,000 check to Seller, which Seller received on 3/1/08.
On 2/27/08, Seller faxed Buyer a letter canceling the Contract because the conditions of Seller’s 2/26/08 letter had not been met. On 2/27/08, buyer’s broker told Seller’s broker that Buyer had met all of the conditions of Seller’s 2/26/08 letter and was ready to close at the Contract price and date. On 2/28/08 Seller’s broker told Buyer’s broker that Seller “was putting the house back on the market.” In fact on 2/28/08, after speaking with his broker about the broker’s conversation, Seller signed the $1,100,000 contract with Second Buyer. The mortgage company issued Buyer a mortgage commitment on 2/28/08.
Buyer obtains restraints prohibiting Seller from closing with Second Buyer. Buyer then sues Seller, and Seller countersues. Buyer’s broker sues Seller. Second Buyer also sues Seller, and all cases are consolidated. You are the law clerk to the judge assigned to the consolidated case who has asked you to prepare a memorandum discussing all contract causes of action, defenses, and damages the parties may raise.
PREPARE THE MEMORANDUM
SAMPLE ANSWER A – CONTRACTS
To: Assigning Judge From: Law Clerk Re: Assignment on Real Estate Contract Dispute
You have requested that I prepare a memorandum addressing all contract causes of action, defenses, and damages the parties may rise.
Buyer v. Seller
Buyer may assert a breach of contract action against Seller. Seller entered into a written contract for the sale of real estate with Buyer. The terms of this contract required that Buyer pay $1,000,000, Buyer get a mortgage within 20 days, make the $250,000 deposit payment by 2/26, have closing occur on 3/14, and provided that Seller can accept other contract offers (until the properly closes) only as backups, that faxes suffice as notice and communication, and that each broker is entitled to a 3% commission from Seller. There was no "time is of the essence" clause in the contract.
Thereafter, on 2/10, Buyer asked Seller if Seller would accept $950,000. This acted as an inquiry, not as a counteroffer. A counteroffer exists where one party refuses to accept the original contract terms and instead demands new terms. In this case, the Buyer merely asked the Seller if he would accept $950,000. Since there is no indication that Buyer would refuse to conform to the original contract terms, it does not act as a counteroffer and instead is just an inquiry regarding the contract.
Thereafter, on 2/21, Seller stated he would accept the appraised price, if Buyer would close on 3/5. This can be considered a response to the inquiry, which also does not extinguish the original 2/1 contract. Seller has essentially given a conditional acceptance to Buyer's request for a lower price, by adding an additional term to Seller's acceptance of Buyer's inquiry.
Five days later, Seller faxed Buyer that he was rescinding the 2/21 offer and will cancel the contract unless: the $250,000 down payment is made by 2/27, a mortgage is obtained, and closing is by 3/14. Although this seems to operate as a threat to rescind the conditional acceptance, Seller has not imposed any additional duties or terms on the Buyer. Instead, he has actually extended the period by which Buyer must provide the down payment by one day (to 2/27) and may be deemed to have waived the 3/5 closing date (by demanding closing by 3/14). For the most part, then, the terms of the 2/26 letter duplicate the 2/21 offer, except for allowing more time for the Buyer to comply with the contract.
On 2/26, only five days after the conditional acceptance, Buyer mailed a $250,000 check to seller, which was received on 3/1. The mailing of the deposit will likely be deemed an acceptance of the contract. Under the mailbox rule, an acceptance is effective upon posting and placing in the mail system. Accordingly, on 2/26, courts will likely hold that Buyer officially accepted the 2/26 conditional acceptance offer by assenting to the terms of the 2/26 communication. Under this, then, the contract price has been agreed upon at $950,000, with closing by 3/14. Buyer had until 2/27 to pay the down payment, and this was complied with by mailing the payment on 2/26.
Nonetheless, the next day Seller faxed Buyer, canceling the Contract, purportedly due to the conditions of the 2/26 letter not having been met. The same day, Buyer's broker told Seller that Buyer had met all the conditions of the 2/26 letter, further indicating Buyer's previous acceptance of the 2/26 letter. Thereafter, Seller sold the property Second Buyer. By doing so, he deprived Buyer of the property at $950,000 as well as denied Buyer's Broker of a 3% commission.
Seller seems to have breached his contract with Buyer upon not checking to see if Buyer had paid the deposit payment by 2/27. After Buyer mailed the check (thereby accepting) but before Seller received notice of the acceptance, Seller repudiated the contract. In a contract, time is not "of the essence' unless the terms of the contract explicitly state so. Thus, one cannot rescind or cancel a contract for a minor delay in time, as this will be deemed a minor breach. A minor breach will not permit a rescission of a contract, and if one rescinds a contract based on a minor breach such as delay, then the rescinding party himself is in breach of the contract. As such, by refusing to close, even upon learning that Buyer had accepted the contract, Seller committed an unjustified breach and will be liable for breach of contract.
Under land sales contracts, land is considered unique and specific performance is typically the appropriate remedy. Since the 2/26 contract governs, the appropriate remedy will be specific performance with the sale at $950,000 and closing by 3/14.
As suggested in the paragraphs above, Seller will probably respond that Buyer breached the 2/26 contract in failing to provide the amount due (250,000) by 2/27. He will probably argue that the down payment did not act as an acceptance of the contract, and thus was not effective upon mailing. Instead, he will argue that the payment of the down payment was instead a condition precedent that had to be met before the contract could be continued. However, courts will probably hold against this argument and hold that it was just a preference for time for performance, and since there was no time is of the essence clause, it will not be required to be strictly complied with. As a result, even if it was not effective upon mailing, the arrival by 3/1 will be deemed satisfaction with the requirement notwithstanding the slight delay in time. It will be merely considered a minor breach, which cannot result in a rescission.
Buyer's Broker v. Seller Buyer's Broker may also assert a claim against Seller as being an intended third-party beneficiary. A third party beneficiary is a third party to the contract, and he is intended if he is named in the contract as a party who will benefit by the agreement between the parties. An incidential third party beneficiary is one who is not named and who receives, as noted, an incidental benefit. There is no main purpose in the agreement between the parties to benefit an incidental beneficiary, whereas the parties intend, among other things, to benefit the intended beneficiary. Finally, the rights of an intended third party beneficiary must vest before he can collect from a promisor. An intended beneficiary's rights vest when he asserts his rights and sues under the original contract.
In this case, the original agreement between the parties provided that Seller would provide both Buyer's Broker and Seller's Broker with a 3% commission. Buyer's Broker was named in the contract and had an expectancy of receiving a 3% commission. When Seller thereafter breached the contract, however, Buyer's Broker lost the ability to recover the 3% commission. This breach of contract with Buyer thus also resulted in a loss of an expectancy with Buyer's Broker, and his rights have vested since he sued under the contract. Thus, since intended beneficiaries can sue the promisors under the contract to recover the amount they were due under the contract, Buyer's Broker can sue Seller for the 3% commission.
Seller will argue that Buyer's Broker is nothing more than an incidental third-party beneficiary and thus not entitled to sue to collect his expected benefit. However, the presence of Buyer's Broker in the agreement and an exact benefit weighs greatly against this argument, and Seller will likely lose on this point.
Second Buyer v Seller Second Buyer may also assert a breach of contract claim against Seller. Although specific performance is the preferred remedy in land sales contracts, it will not be available if against the interests of justice. Here, Buyer is in a better position to assert specific performance than Second Buyer, since Buyer had a pre-existing right to the contract. Courts will not leave Second Buyer without a remedy, however. In this case, the courts will likely award Second Buyer the difference (if any) between the fair market value of the property and the contract price. However, if the courts use Buyer's appraisal price of $950,000, then Second Buyer would not receive any amount since the contract price was $1,100,000 (and thus there is no loss in difference between FMV and contract price). Second Buyer would, however, be able to recover any incidental and reasonably foreseeable consequential damages.
Seller would probably not have any defenses against Second Buyer, but may argue impossibility of performance since Buyer would be entitled to the property. However, this risk is probably going to be placed on Seller in entering contracts with two buyers at the same time; thus he will likely be forced to pay the incidental and consequential damages incurred by Second Buyer.
SAMPLE ANSWER B – CONTRACTS
To: Judge From: Clerk Re: Consolidated cases of Buyer, Seller, Buyer’s broker, and Second Buyer Date: 7/31/08
The various causes of action will be broken down, along with the defenses and damages, by the adversaries to the particular claims.
Buyer v. Seller
Buyer has a valid action for specific performance against Seller under their original contract.
Contracts for the purchase of real property fall under the Statute of Frauds (SOF) and thus must be in writing. Further any modification to the contract must likewise be in writing if the modified contract as a whole would have required a writing if originally writing the modified terms.
Under the common law, which applies to property contracts, modification to existing contracts must be supported by consideration separate from the consideration in the underlying contract.
Any failure to meet the performance required by a contract condition is a breach of that contract. However, under the common law, not all breaches allow non-performance by the opposite party. Rather, non-performance is permitted only if a material breach is committed, i.e. the breaching party fails to substantially perform as required by the contract.
Failures to meet deadlines in a contract are often deemed to be immaterial unless the contract states time is of the essence or circumstances indicate the breach is material.
Here, Buyer and Seller entered into a contract on 2/1/08 which included terms requiring a mortgage to be arranged within 20 days, a $250k deposit by 2/26/08, and closing by 3/14/08. The contract further stated that Seller may accept other offers until closing only as backups.
Between 2/10/08 and 2/21/08, Buyer and Seller attempted to modify their contract. Buyer asked Seller to lower the purchase price and Seller indicated that he would if Buyer agreed to an earlier closing date. While an agreement would have constituted a valid modification due to the consideration as both sides, Buyer never agreed when Seller requested the earlier closing. Thus, the original contract remained fully effective.
Buyer did not obtain a mortgage by 2/21/08, a breach of the contract and undoubtly an argument Seller will make via counterclaim against Buyer. However, this failure does not amount to a material breach. Buyer obtained the mortgage a week later, a full two weeks before the closing date. Buyer mailed the $250k downpayment on 2/26/08 as required and appears to have been willing to close on 3/14/08 as the original contract required. Thus, while Seller is entitled to any damages Buyer’s delay in obtaining the mortgage may have caused, his performance is not erased; Buyer substantially performed under the original contract, which remained effective throughout.
Because real property is deemed to be unique, monetary damages are considered to be an inadequate remedy for breaches of real property contracts, rendering specific performance an appropriate remedy. This case is no exception; Buyer is entitled to specific performance of the original contract at the $1 million price plus by any damages Buyer’s delay in obtaining the mortgage caused.
Seller is likely to argue, in addition to Buyer’s breach being material, that Buyer anticipatorily repudiated the contract by asking for a lower purchase price on 2/10/08. Anticipatory repudiation occurs when one party to a contract makes clear to the other the first party’s intention to not perform under the contract. Once this occurs, the opposite party may immediately sue for breach.
A mere request to modify a contract is not an anticipatory repudiation. Here, Buyer did not state it planned to not perform; it merely sought modification. Absent a further statement from Buyer following the failure to modify, it must be assumed Buyer planned to perform under the contract.
Seller may also claim that the contract was modified on 2/26/08 when Seller requested the downpayment the next day. However, Buyer never accepted this attempted modification, thus rendering it ineffective. Failure to meet the terms by Buyer was of no legal consequence and did not allow Seller to rescind the contract the next day as the Seller attempted to do.
Seller has no excuse for non-performance; the 2/1/08 contract remains valid and Buyer is entitled to specific performance.
Buyer’s Broker v. Seller
Buyer’s Broker (Broker) has a valid breach of contract claim against Seller as a 3rd party beneficiary of the contract between Buyer and Seller.
When a contract benefits one not a party to that contract, that party is a third-party beneficiary. When the parties manifest an intent that a third party should so benefit, particularly by naming the third party in the contract, the third party beneficiary is an intended beneficiary. An intended 3rd party beneficiary can sue for breach of the contract or prevent modification to eliminate the 3rd party beneficiary if his rights have vested. 3rd party beneficiary rights vest if the 3rd party manifests assent to the arrangement in a manner called for by the parties or acts in reliance on the contract.
Here, the contract between Buyer and Seller expressly provided for 3% fees to be paid to the brokers involved by Seller. Broker relied upon this provision in conducting extensive negotiations with Seller and his broker and by working to assure that the closing occurred. Thus, upon Seller’s non-performance, Broker is entitled to sue for breach for 3% of the $1 million closing price. Seller will defend that his performance is excused by Buyer’s breach, but as discussed, this argument will not be successful.
Second Buyer is entitled to damages from Seller for breach of contract, though they may be nominal
A seller may enter two contracts to sell the same land. As long as the second buyer has no knowledge of the first sale, he may enforce that contract. Obviously, specific performance as a remedy will not be acceptable to both buyers. Generally, the first to contract for the land will receive specific performance, and the second buyer will receive damages.
Here, there is nothing to indicate Second Buyer had actual or constructive notice of Seller’s contract with Buyer, nor is there any reason to believe that the contract he entered with Seller is not valid. Thus, failure to perform by Seller (which will be inevitable if specific performance is awarded to Buyer) will be a breach. Second Buyer’s damages, however, will be minimal, as Seller’s failure to perform prevented Second Buyer from paying $1.1 million for a property appraised at $950k. Thus, Second Buyer may only receive nominal damages.
Conclusion
1. Buyer is entitled to specific performance of the 2/1/08 contract. 2. Seller is entitled to damages from Buyer’s delay in obtaining the mortgage. 3. Broker is entitled to 3% of the $1 million purchase price between Buyer and Seller on the first contract. 4. Second Buyer is entitled to nominal damages from Seller on their 2/28/08 contract.