July 2018 Questions and Sample Answers
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State of Franklin v. Hale
Memorandum to Examinee
Guidelines for persuasive briefs
Defendant’s brief in support of motion for a new trial
Excerpts from trial transcript
Excerpts from motion hearing transcript
Relevant Franklin statutes and rules
Haddon v. State, Franklin Supreme Court (2012)
State v. Capp, Franklin Court of Appeal (2014)
State v. Preston, Franklin Court of Appeal (2011)
OFFICE OF THE DISTRICT ATTORNEY FOR THE STATE OF FRANKLIN
COUNTY OF JUNEAU
From: Juliet Packard, District Attorney
Date: July 24, 2018
Re: Motion for new trial in State v. Hale, Case No. 17 CF 1204
In April, our office prosecuted Henry Hale for attempted murder. The jury convicted him. The
evidence at trial demonstrated that Hale shot Bobby Trumbull during an argument in the courtyard of Trumbull’s apartment complex. Our only substantive trial witnesses were the investigating detective and Trumbull. The defense did not call any witnesses.
Hale timely filed a motion for a new trial, and the judge recently held a brief evidentiary hearing.
I need you to prepare the “Legal Argument” portion of our brief in response to Hale’s motion for
a new trial, following the office guidelines for drafting persuasive briefs.
Hale’s motion raises three issues, two regarding our purported failure to comply with the
requirements of Brady v. Maryland, 373 U.S. 83 (1963), and one arising under Franklin Rule of
Evidence 804. With each of these issues, you need to discuss not only whether there was a violation of law, but also whether any violation entitles Hale to a new trial under Franklin Rule of Criminal Procedure 33. I have attached a copy of the relevant portions of Hale’s brief, as well as pertinent pages from the trial transcript and the transcript of the hearing on the motion for a new trial.
OFFICE OF THE DISTRICT ATTORNEY FOR THE STATE OF FRANKLIN
COUNTY OF JUNEAU
To: Office staff
From: Juliet Packard, District Attorney
Date: September 5, 2016
Re: Guidelines for drafting persuasive briefs
III. Legal Argument
Your legal argument should be brief and to the point. Make your points clearly and
succinctly, citing relevant authority when appropriate for each legal proposition.
Do not restate the facts as a whole at the beginning of your legal argument. Instead,
integrate the facts into your legal argument in a way that makes the strongest case. The body of
each argument should analyze applicable legal authority and persuasively argue how both the facts and the law support the state’s position. Be sure to cite both the law and the evidence. Emphasize supporting authority but address contrary authority as well; explain or distinguish contrary authority in the argument.
Use headings to separate the sections of your argument. When drafting your headings, do
not state abstract conclusions, but integrate factual detail into legal propositions to make them
persuasive. An ineffective heading states only: “The motion to suppress should be denied.” An
effective heading states: “The motion to suppress should be denied because the officer read the
defendant his rights under Miranda v. Arizona and the defendant signed a statement waiving those rights.”
* * *
STATE OF FRANKLIN
DISTRICT COURT OF JUNEAU COUNTY
STATE OF FRANKLIN,
Case No. 17 CF 1204
DEFENDANT’S BRIEF IN SUPPORT OF MOTION FOR A NEW TRIAL
On June 20, 2017, an anonymous male called 911 to report the shooting of Bobby Trumbull
at the Starwood Apartments. Later that day, Denise Lee, the investigating detective, interviewed
Sarah Reed, a resident of the apartment complex. During discovery, the prosecution provided the
defense with a video recording of the detective’s interview with Reed. In that interview, Reed said that she had been on her balcony watching a video when she looked up and saw defendant Hale arguing with another man in the courtyard. She resumed watching the video and then heard a gunshot.
She looked up and saw Hale running from the courtyard. The other man had fallen to the ground.
After trial, defense counsel learned that Reed had made a subsequent statement to police,
specifically Detective Mark Jones, that recanted her initial statement. The prosecution never provided information to the defense about the second statement.
In addition, after trial, defense counsel learned that the victim, Bobby Trumbull, told the
emergency medical technician (EMT) immediately after the incident that he was not certain who had shot him. Trumbull also called Hale a “rat,” said that Hale thought that Trumbull owed him money, and said that the shooting was “all [Hale’s] fault.” This evidence contradicted Trumbull’s trial testimony that identified Hale as the shooter. The prosecution, however, failed to disclose this evidence to the defendant.
Reed and Hale were married on August 25, 2017, after the shooting and well before the trial.
At trial, Hale asserted the spousal testimonial privilege, preventing Reed from testifying against her husband. The prosecution then sought to admit Reed’s initial out-of-court statement given to
Detective Lee during her interview, under Franklin Rule of Evidence 804(b)(6), arguing that Hale had wrongfully caused Reed to become unavailable to testify. Hale objected. This court overruled the objection and admitted Reed’s highly prejudicial out-of-court statement to Detective Lee, in which Reed identified Hale as the individual in the courtyard with Trumbull. The jury convicted Hale of attempted murder.
I. The Prosecution Violated Brady v. Maryland by Failing to Disclose the Sole Eyewitness’s
Recantation and the Victim’s Exculpatory Statements.
In Brady v. Maryland, 373 U.S. 83 (1963), the United States Supreme Court held that the
government cannot suppress evidence that is favorable to the defendant and that is material to either guilt or sentencing. In analyzing whether Brady has been violated, this court must make three determinations: (1) whether the evidence in question was favorable to the defendant, (2) whether it was suppressed by the government, and (3) whether it was material. Strickler v. Greene, 527 U.S. 263 (1999). A prosecutor’s good faith is irrelevant. Brady.
Reed’s recantation of her prior identification of Hale as the shooter is favorable to the defense.
In Brady, the Supreme Court defined evidence favorable to the defendant as evidence that would
make a neutral fact-finder less likely to believe that the defendant committed the crime with which s/he was charged. Knowing that Reed, the only known eyewitness, had recanted her statement would make a fact-finder less likely to believe that Hale committed the crime. Similarly, Trumbull’s statements to the EMT, in which he admitted that he was not certain who had shot him and expressed ill feelings toward Hale, were favorable to the defendant and directly contradicted Trumbull’s trial testimony. A neutral fact-finder would be less likely to believe Trumbull’s trial testimony if it heard that Trumbull had made these contradictory statements to the EMT.
Information about Reed’s recantation was suppressed by the prosecution. The evidence was
in the possession of the prosecution because it was held by Detective Jones. Evidence that is in the physical possession of an investigating officer is considered to be in the possession of the government, even if the investigating officer does not disclose the evidence to the prosecutor. Kyles v. Whitley, 514 U.S. 419 (1995). Likewise, the information about Trumbull’s statements to the EMT was in the government’s possession. The ambulance service is an agency of the government of Franklin City.
Both pieces of evidence were suppressed because the government did not provide this evidence to the defendant.
The prosecutor’s office provided discovery to the defendant through an “open file” policy.
The prosecutor gave everything in her file to the defense. Neither of these pieces of evidence was in the prosecutor’s file. In State v. Haddon (Fr. Sup. Ct. 2012), the court held that the “open file” policy could actually deter a defendant from investigating whether other information might be available. It would be reasonable for a defendant who was the beneficiary of an “open file” policy to assume that all relevant and exculpatory information was in the file and was thus disclosed.
Finally, the evidence at issue is material. Evidence is material if there is a reasonable
probability that, had the evidence been disclosed to the defense, the result of the proceeding would have been different. Id. Where the state has suppressed multiple pieces of evidence, the determination of materiality should be made on a cumulative basis. Id. Here, if the defendant had been given all of the suppressed evidence, there is more than a reasonable probability that the result of the trial would have been different.
A determination that suppressed evidence is material necessitates a finding that the defendant
has been prejudiced. Kyles. Therefore, under Franklin Rule of Criminal Procedure 33, the defendant is entitled to a new trial.
II. Hale was Prejudiced by the Admission of Reed’s Hearsay Statements; He Did Not Marry Her with the Intention of Causing Her Unavailability for Trial.
Hale’s conduct in marrying Reed did not satisfy the requirements of Franklin Rule of Evidence
804(b)(6) for admission of Reed’s hearsay statements. To satisfy that Rule, a significant motivation behind the defendant’s conduct must have been to cause the unavailability of the declarant. Hale did not marry Reed with the intent of making her unavailable for trial. The facts of this case are much like State v. Preston (Fr. Ct. App. 2011), in which the defendant married the witness after the alleged crime. In Preston, the court held that the mere act of marriage did not constitute an intention to wrongfully cause the declarant’s unavailability. And, as a policy matter, it is inconsistent for the court to uphold a particular marriage through the spousal privilege, thereby preventing a spouse from testifying, and then to undermine this same marriage by finding that the marriage itself served to wrongfully cause the spouse’s unavailability in the court proceeding.
An evidentiary rule violation, unlike a Brady violation, requires a separate determination of
prejudice under Franklin Rule 33 to warrant a new trial. Here Hale was prejudiced by the erroneous introduction of Reed’s out-of-court statements. Reed was the only known eyewitness to the events, and the prosecution was allowed to present hearsay that was never subject to cross-examination. But for this error, there is a strong probability that the result of the trial would have been different. Preston.
This error was made even more prejudicial by the state’s Brady violation, which hid from the defense those inconsistent statements that could have been used to impeach Reed and Trumbull. The state was in possession of believable statements by Reed and Trumbull that contradicted their statements admitted at trial.
* * *
Excerpts from State v. Hale Trial Transcript, April 26, 2018
TESTIMONY OF SARAH REED
Prosecutor: Please state your name for the record.
Defense Att’y: Your Honor, could you please excuse the jury for a few moments? [Whereupon the jury was excused.]
Defense Att’y: The defendant asserts spousal privilege under § 9-707 of the Franklin Statutes.
Court: Ms. Reed, when did you marry the defendant?
Reed: August 25, 2017.
Court: When did he propose?
Reed: July 25, 2017.
Court: When did you start dating?
Reed: We dated four years ago for about seven months, but then we broke up. We got back
together in March 2017.
Court: Ms. Reed, did Mr. Hale ever indicate to you that he married you so that you couldn’t
testify at his trial?
Reed: Henry married me because he loves me. He did say that he wanted to marry me
quickly, before the trial started.
Court: Did he ever threaten you or tell you that bad things would happen if you did testify
Reed: He did say that it would be hard for us to stay together if I testified against him. I’m
not sure if he’d really leave me because of this, but I hope I don’t have to find out. I
do know that we love each other.
Court: Thank you. The witness will be excused based upon the defendant’s exercise of
spousal privilege. Bailiff, please ask the jury to come back now.
DIRECT TESTIMONY OF DETECTIVE DENISE LEE
Prosecutor: Please state your name for the record.
Lee: I am Detective Denise Lee of the Franklin City Police Department.
Prosecutor: Did you have occasion to investigate the shooting of Bobby Trumbull at the Starwood Apartments on June 20, 2017?
Lee: Yes.We received an anonymous call stating that a man had been shot in the courtyard
of the Starwood Apartments. I arrived after the victim, Mr. Trumbull, had been taken
to the hospital. We could locate only one witness to the shooting, and that was Sarah
Prosecutor: And what did Ms. Reed tell you?
Defense Att’y: Objection. Hearsay.
Court: I am going to excuse the jury and hear your argument for why this is or is not
admissible evidence. [Whereupon the jury was excused from the courtroom.]
Defense Att’y: Your Honor, this is blatant hearsay. The state is attempting to introduce Ms. Reed’s out-of-court statements for the truth of the matter asserted.
Prosecutor: Your Honor, Mr. Hale married Ms. Reed after the shooting but before this trial. A
significant motivation for the marriage was to prevent Ms. Reed from testifying in this
case. We have also heard that he threatened to leave her if she testified. Consequently,
the hearsay is admissible because the defendant wrongfully caused the witness’s
unavailability under Franklin Rule of Evidence 804(b)(6).
Defense Att’y: Your Honor, Ms. Reed and Mr. Hale were married on August 25, 2017. There is no evidence in the record that the marriage was intended to wrongfully cause the
unavailability of Ms. Reed. And Ms. Reed herself said that she wasn’t sure what the
defendant meant when he said that it would be difficult for them to stay together if
she testified. She also made clear that she and Mr. Hale loved each other.
Court: The court finds itself bound to respect the marriage as being valid under Franklin law.
Thus this court allowed Mr. Hale to assert the spousal testimonial privilege and ruled
that Ms. Reed could not be compelled to testify. But the question before this court is
a much more nuanced one: whether by virtue of that valid marriage, along with his
statements to Ms. Reed, Mr. Hale intended to wrongfully cause, and in fact did
wrongfully cause, Ms. Reed to be unavailable as a witness. Based upon the evidence
before this court, I am going to overrule the defense’s objection and admit the
statement. Bailiff, please bring the jury back in. [Whereupon the jury was reseated.]
Prosecutor: Detective Lee, could you tell us what Ms. Reed told you later in the afternoon on June 20, 2017, immediately after the incident?
Lee: She told me that she had been sitting on her balcony above the courtyard in the
apartment complex watching a video on her computer. She saw two men yelling at
each other in the courtyard. She recognized one of them as her boyfriend, Henry Hale.
She couldn’t make out what they were saying, but she knew that the two men were
arguing. She went back to watching the video and then heard a shot. She looked up
and saw Mr. Hale running out of the courtyard and saw Mr. Trumbull collapsed on
Defense Att’y: Did you ever find any forensic evidence linking Mr. Hale to the crime?
* * *
DIRECT TESTIMONY OF BOBBY TRUMBULL
Prosecutor: Please state your name for the record.
Trumbull: Bobby Trumbull.
Prosecutor: What happened on June 20, 2017, in the courtyard of the Starwood Apartments?
Trumbull: Well, I was arguing with Mr. Hale [witness points to the defendant], and he pulled out a gun and shot me in the shoulder.
Prosecutor: What were you arguing about?
Trumbull: I guess I owed him some money and he wanted it back.
Prosecutor: Did you owe him the money?
Prosecutor: Did you in any way provoke him before he shot you?
Defense Att’y: You did owe Mr. Hale money, didn’t you?
Defense Att’y: And have you ever paid him back?
Defense Att’y: And, in 2014, you were convicted in Franklin of the felony of fraudulently obtaining money, weren’t you?
* * *
Excerpts from Hearing on Defendant’s Motion for a New Trial, July 17, 2018
DIRECT TESTIMONY OF DETECTIVE MARK JONES
Defense Att’y: Detective, does your file contain notes about Ms. Reed’s recantation in this case?
Jones: I’m not sure I would characterize it as a recantation. But as my notes indicate, she did
come to the police station on August 26, 2017, about two months after the incident. I
met with her, and she told me that Mr. Hale was not the shooter at the Starwood
Apartments on June 20, 2017. I asked her who was in the courtyard with the victim
and she said she didn’t know. I asked her why she lied to Detective Lee on the day of
the crime and she just shrugged. I asked for more details and she shrugged and said,
“He just told me to tell you that he didn’t do it.” I asked her who the “he” was who
told her to recant her statement and she just shrugged. She never made eye contact
with me, and she appeared to be nervous. I asked her if she was afraid of her husband
and she shrugged.
Prosecutor: Detective Jones, were you involved in the investigation of the shooting of Bobby
Jones: Yes, I was part of the team that worked on this case.
Prosecutor: Do you happen to know whether Ms. Reed was married to the defendant at the time
she came to your precinct?
Jones: Yes, she told me that they had just been married the day before. She also told me that
her husband had told her that she would not have to testify in court because they were
now married and that he was going to tell the court to keep out her testimony.
Prosecutor: Did you place notes about Ms. Reed’s August 26, 2017, statement in the case file?
Jones: Yes, I did.
Prosecutor: Did you provide information about this second statement to the prosecutor’s office?
Jones: I was out on medical leave when the prosecutor’s office requested information from
our file. I don’t know who processed the request. I assumed that all information was
given to the prosecutor.
DIRECT TESTIMONY OF ASSISTANT DISTRICT ATTORNEY LUCY BEALE
Defense Att’y: Ms. Beale, you were the chief prosecutor in this case, correct?
Defense Att’y: Did you give the defense information about Ms. Reed’s August 26th statement to
Beale: No, I didn’t. But I didn’t know about it until after the trial.
Defense Att’y: Were you provided with information about the August 26th statement?
Beale: No. I asked the police department for their file. I received what I thought was a
complete record, but there was no information about a statement on August 26, 2017,
or any information suggesting that Ms. Reed had made a second statement.
Defense Att’y: Before trial, did you give the defendant access to everything in your office’s file?
Beale: Yes, our office follows an “open file” policy.
DIRECT TESTIMONY OF GIL WOMACK
Defense Att’y: You are an emergency medical technician for the Franklin City ambulance service?
Defense Att’y: Is the ambulance service part of the City government?
Defense Att’y: Did you help transport Mr. Trumbull to Franklin City Hospital on June 20, 2017?
Defense Att’y: Did Mr. Trumbull say anything to you?
Womack: He blurted out, “I don’t know exactly what happened or who shot me, but that rat
Henry Hale thinks I owe him money. This is all his fault.”
Defense Att’y: And what happened?
Womack: After that he went to sleep—we were giving him heavy narcotics intravenously. . . .
Prosecutor: Mr. Womack, other than transporting Mr. Trumbull, were you in any way involved in the prosecution or investigation of the attempted murder of Mr. Trumbull?
Womack: No, I wasn’t even called as a witness.
Prosecutor: If Mr. Hale’s attorney had asked to speak to you before trial, would you have
voluntarily spoken to him?
Prosecutor: And would you have told him everything you just testified to today?
Womack: Yes, I would have told him exactly what I just testified to.
Relevant Franklin Statutes and Rules
Franklin Rule of Evidence 804. Hearsay Exceptions; Declarant Unavailable
(a) Criteria for Being Unavailable. A declarant is considered to be unavailable as a witness if the declarant:
(1) is exempted from testifying about the subject matter of the declarant’s statement
because the court rules that a privilege applies; . . .
(b) The Exceptions. The following are not excluded by the rule against hearsay if the declarant is unavailable as a witness: . . .
(6) Statement Offered Against a Party That Wrongfully Caused the Declarant’s
Unavailability. A statement offered against a party that wrongfully caused—or acquiesced
in wrongfully causing—the declarant’s unavailability as a witness, and did so intending
Franklin Criminal Statute § 9-707. Spouse’s Privilege Not to Testify Against Spouse
One spouse cannot be compelled to give testimony against his or her spouse who is a defendant in a criminal trial. Only the accused may claim the privilege. The spouses must be married at the time that the privilege is asserted; so an ex-spouse can be compelled to give testimony about a defendant to whom he or she was previously, but is no longer, married.
Franklin Rule of Criminal Procedure 33
Upon the defendant’s motion, the court may vacate any judgment and grant a new trial if an error
during or prior to trial violated a state or federal constitutional provision, statute, or rule, and if the defendant was prejudiced by that error. In appropriate circumstances, the court may take additional testimony on the issues raised in the motion. No issue may be raised on appeal unless it has first been raised in a motion for new trial.
Haddon v. State
Franklin Supreme Court (2012)
Defendant Miriam Haddon appeals her conviction of robbery on the ground that the
prosecution failed to satisfy its obligations under Brady v. Maryland, 373 U.S. 83 (1963). The
Franklin Court of Appeal affirmed the conviction. We reverse and remand.
Haddon was working as a prostitute, and she was accused of taking money from one of her
customers while threatening to harm him. At trial, the customer, Tim Morgan, testified that
Haddon took $1,000 from his wallet and threatened to “cut him in little pieces” if he tried to stop
her. The robbery occurred while they were in a motel room; there were no other witnesses to the
incident. The motel owner testified that he had seen Morgan and Haddon when they checked in
and that Morgan’s wallet “was full of money—all sorts of bills.” In addition, a clerk from a nearby convenience store testified that Haddon entered the store shortly after the time of the alleged robbery and had “a purse full of money.”
Haddon argues that the prosecution suppressed two pieces of evidence: (1) inconsistent
statements Morgan made to police on various occasions and (2) forensic tests that found none of
Haddon’s fingerprints on Morgan’s wallet. Defense counsel learned of this evidence after trial
from the investigating detective. The evidence was not given to the defense before trial.
Brady established the requirement, under the due process clause of the Fifth and Fourteenth
Amendments, that the prosecution not suppress any exculpatory evidence. Later opinions
established that the government’s burden is to provide the defendant with all material exculpatory evidence, regardless of whether the defendant requests it. There are three components of a Brady violation: (1) The evidence must be favorable to the defendant; (2) the government must have suppressed the evidence, either willfully or unintentionally; and (3) the evidence must be material.
Strickler v. Greene, 527 U.S. 263 (1999).
Thus, first, we must determine whether the evidence was favorable to the defendant.
Evidence which will serve to impeach a prosecution witness is “favorable” evidence. Giglio v.
United States, 405 U.S. 150 (1972). Here, the evidence consisted of police interviews with Morgan in which he gave conflicting accounts of the alleged robbery. In one account, he claimed that nothing happened. In another, he claimed that he voluntarily gave Haddon the money. This
evidence would serve to impeach Morgan and is therefore favorable to Haddon. It would have
benefitted her case had the defense been able to cross-examine Morgan about the conflicting
statements that he made to police officers. Likewise, the forensic evidence is favorable. A neutral
fact-finder who learned that Haddon’s fingerprints were not found on Morgan’s wallet would be
less likely to believe that Haddon had committed the crime.
Next, we must determine whether the government suppressed the evidence. The
government claims that it did not intentionally suppress evidence. Indeed, this prosecutor’s office
has an “open file” policy—it provides everything in its file to defense counsel, even if providing
such information is not required by the Rules of Criminal Procedure. But under Brady, it does not matter whether the suppression was intentional. The investigating officers possessed exculpatory information that the government failed to provide to the defense before trial. Brady violations occur whether the suppression was intentional or inadvertent. When the prosecution has adopted an open-file policy, “it is especially unlikely that counsel would have suspected that additional impeaching evidence was being withheld.” Strickler. Because the prosecution here had an openfile policy, the defense would have had no reason to believe that there were conflicting statements to police that were not in the prosecution’s file.
Finally, we must determine whether the evidence was material—that is, whether, had the
jury been provided with the evidence, there is a reasonable probability that the result would have
been different. When the state suppresses evidence favorable to the defendant, the only fair
determination of materiality is a collective one. The state’s obligation is not a piece-by-piece
obligation. Rather, it is a cumulative obligation to divulge all favorable evidence. Any other result would tempt the state to withhold evidence, in the hope that, individually, each piece of evidence would not make a difference.
We have concluded that the evidence in question was favorable to Haddon and was
suppressed by the state. We further conclude that, had the state timely disclosed the evidence to
the defendant, there is a reasonable probability that the result of the trial would have been different.
There is a paucity of evidence of Haddon’s guilt. Morgan’s testimony is critical to establishing
that Haddon committed robbery. Morgan’s prior inconsistent statements to the police were
believable. Had the jury heard those statements, it would likely have been more hesitant to convict Haddon. Disclosure of the evidence would probably have affected the outcome of the case. Having found that the evidence was material, we necessarily find that Haddon was prejudiced by its suppression.
Reversed and remanded to the trial court for further proceedings consistent with this ruling.
State v. Capp
Franklin Court of Appeal (2014)
In this interlocutory appeal, defendant Vincent Capp challenges the trial court’s decision
denying his motion to dismiss a pending murder charge. We affirm.
Capp is charged with murdering his wife. The state’s theory is that Capp injected her with
a lethal dose of narcotics. The defense claims that the cause of death was suicide. The couple had
a history of domestic violence: Capp was charged four times for assaulting his wife.
Capp claims that the state failed to comply with its responsibilities under Brady v.
Maryland, 373 U.S. 83 (1963). The basis of this claim is that the state suppressed his deceased
wife’s medical records, made many months prior to her death, that show that she was at risk of
harming herself. The records are in the possession of a county hospital.
We first determine whether the government “suppressed” the evidence. The first question
raised by “suppression” is whether the evidence at issue was in the “possession” of the government.
Evidence can be in the “possession” of the government even if the evidence is unknown to the
prosecutor. If the evidence is in the possession of the investigating police department or another
government entity involved in the investigation or prosecution, the evidence will be deemed to be in the possession of the government. Kyles v. Whitley, 514 U.S. 419 (1995). However, it would stretch the law too far to charge the government with possession of all records of all government agencies regardless of whether those agencies had any part in the prosecution of the case. If a government agency was not involved in the investigation or prosecution of the defendant, its records are not subject to disclosure under Brady. The role of a hospital is to treat patients, not to investigate crime. Thus we hold that, here, the government did not “possess” the records housed at the county hospital and therefore did not suppress them.
Although not essential to the determination of this case, we further hold that a prosecutor
is not required to furnish a defendant with Brady material if that material is fully available to the
defense through the exercise of due diligence. Capp’s defense and the prosecution had equal access to the wife’s medical records. Defense counsel could have subpoenaed the records as easily as the government might have. The records were not solely within the control of the prosecution and thus were not subject to Brady disclosure.
State v. Preston
Franklin Court of Appeal (2011)
Defendant Reginald Preston appeals his conviction for theft over $1,000. He alleges that
the trial court erroneously allowed the government to introduce the out-of-court statements of his
wife. We reverse and remand.
Preston was convicted of having stolen artwork from the local library. There was no
forensic or other physical evidence linking him to the crime. The only witness who could connect Preston to the theft was his wife, Felicity Carr. At the time of the theft, Preston and Carr were not married. Carr was questioned by police and stated that she saw Preston steal the artwork.
Preston and Carr were engaged, with a wedding date arranged, at the time of the theft and
the time she made her statement to the police. They were married before the date of the trial. At
the trial, Preston successfully asserted spousal privilege to prevent Carr from testifying.
When Carr did not testify due to the spousal privilege, the government sought to introduce
her pretrial statement to the police in lieu of her in-court testimony. Preston objected that Carr’s
out-of-court statement was inadmissible hearsay. The government successfully countered that, by
making Carr unavailable as a witness through marriage, Preston had forfeited the right to challenge admission of her hearsay statements.
Rule 804 of the Franklin Rules of Evidence provides that certain hearsay evidence may be
admissible if the witness is unavailable. A witness who claims spousal privilege is considered to
be unavailable. FRANKLIN RULE OF EVIDENCE 804(a)(1). The issue, then, is whether the hearsay
statements meet any of the exceptions defined in Rule 804(b). Franklin Rule of Evidence 804(b)(6) allows for the admission of a hearsay statement which is “offered against a party that wrongfully caused—or acquiesced in wrongfully causing—the declarant’s unavailability as a witness, and did so intending that result.” Importantly, the Rule requires that the conduct causing the unavailability be wrongful; it does not require that the conduct be criminal.
Under Rule 804, then, the question is whether Preston engaged in conduct designed to
prevent the witness from testifying. The trial judge found that the defendant married the witness
with the intent to enable him to claim spousal privilege and thereby prevent his wife from testifying against him. See FRANKLIN CRIMINAL STATUTE § 9-707. We conclude that this finding was erroneous. The defendant and his wife were engaged to be married when the theft occurred and had set a date for the wedding. Their marriage appears to have occurred in the normal course of events. A court’s finding of wrongful causation must be rooted in facts establishing that a
significant motivation for the defendant’s entering into the marriage was to prevent his or her
spouse from testifying. In this case, there is no evidence that the defendant’s purpose in marrying
was to prevent his wife from testifying. All of the proof establishes that the couple had intended
to marry even before the crime occurred.
The trial court erred in admitting Carr’s out-of-court statement. We also find that Preston
was prejudiced by the introduction of the hearsay testimony. But for the error, there is a strong
probability that the result of the trial would have been different. Felicity Carr was the only witness who connected Preston to the theft. By erroneously admitting Carr’s statement, the trial court allowed the prosecution to convict the defendant with blatant hearsay that was never subject to cross-examination. Preston was clearly prejudiced by that error. See FRANKLIN RULE OF CRIMINAL PROCEDURE 33.
The defendant’s conviction is hereby reversed, and the case is remanded to the trial court
for a new trial.
I. THE PROSECUTION DID NOT COMMIT A BRADY v. MARYLAND VIOLATION AS IT HAD NO DUTY TO DISCLOSE THE SOLE EYEWITNESS RECANTATION OR VICTIMS EXCULPATORY STATEMENT
A. THE PROSECUTION DID NOT VIOLATE BRADY AS TO TRUMBALLS STATEMENTS TO THE EMT AS THE PROSECUTION DID NOT 'POSSESS' THE RECORDS.
Under the ruling of State v. Capp, Frank App. (2014), which provides in pertinent part that 'if a government agency was not involved in the investigation or prosecution of the defendant, its records are not subject to disclosure under Brady," the prosecution in the present matter did not violate Brady v. Maryland by failing to disclose evidence of alleged contradictory testimony made by the victim to the EMT during transport to the hospital in which the victim stated he did not know what happened or who shot him.
In Brady v. Maryland, the United States Supreme Court held that, "the government cannot suppress evidence that is favorable to the defendant and that is material to either guilt or sentencing." Additionally, courts have established three determinations the court must make to analyze whether the Brady standard has been violated which includes ,"(1) whether the evidence in question was favorable to the defendant, (2) whether it was suppressed by the government, and (3) whether it was material." Strickler v. Greene, 527, US 623. However, the facts of this case do not provide for a Brady violation as it pertains to the victims statement because the defense cannot satisfy the second prong for the Brady test because it was not supressed by the government.
The Court in State v. Capp Frank. App. (2014), held that in determining whether the govenrment supressed the evidence, it must first be determined whether the evidence was in the government's possession. Id. Furthermore, the court stated that evidence in the possession of the investigating police department or another government entity involved in the investigaiton or prosecution, the evidence will be deemed in possession of the government. Id. The Defendant in Capp was pending a murder charge for the murder of his wife and claimed that the State committed a Brady violation where it failed to produce his wifes medical records assisting in his defense that his wife committed suicide and showing that she was at risk of harming herself. The Court in Capp found no error and stated that 'if a government agency was not involved in the investigation or prosecution of the defendant, its records are not subject to disclosure under Brady,' Id. Additionally, the Court stated that 'it would stretch the law too far to charge the government with possession of all records of government agencies,' . . .'the role of a hospital is to treat patients, not to investigate crime " Id. Lastly, the Court stated that, " we further hold that a prosecutor is not required to furnish a defendant with Brady material if that material is fully available to the defense through the exercise of due diligence." Id.
Similarly, the prosecution in the present case was not in 'possession' of the statement made by the victim to the EMT and therefore did not fail to comply with Brady. An EMT is an emergency medical technician who provides assistance and treatment in emergency situations. At trial, the EMT testified on cross-examination that he was in no way involved in the prosecution or investigation of the attempted murder of the victim. Additionally, the EMT testified that that if the defense attorney had asked to speak with him before trial, that he would have voluntarily spoken with counsel, meaning that had the defense exercised due diligence by interviewing the EMT, they would have obtained this information themselves.
Though it can be argued that this evidence is favorable to the defendant as it serves 'to impeach a prosecution withness and is thus considered favorable evidence,' as the court did in Haddon v. State, where it held that the government committed a Brady vi0olation by supressing inconsistent statements ade to police by a witness giving conflicting accounts of a robbery. The inconsistent statements made by the victim may possibly be considered favorable to defendant, but the victim in the present case made his statement to an EMT, not to police, and therefore the governmetn was not in possession of the evidence. Furthermore, the victim was under heavy narcotics when he made the statement to the EMT which could potentially effect it's credibility and therefore its materiallity as materiality is based on whether there would have been a reasonable probability that the result would have been different if given to the jury, and a statement made by a person heavilty medicated on narcotics is seemingly unreliable and therefore would not change the probability of the jury finding the victims court testimony reliable and thus changing the outcome of the trial.
In Sum, the prosecution was not in possession of the evidence as it was held by a hospital and therefore not required as a brady disclosure and furthermore, could have been found by due diligence of the defnese and therefore, there has been no brady violation of the defendantas he was not prejudiced and he is not entitled to a new trial pursuant to Franklin Rule of criminal procedure 33 which provides ' the court may vacate any judgment and grant a new trial if an error during or prior to trial violated a state or federal constitutional priovision, statute, or riule and if the defendant was prejudiced by that error.
B. THE PROSECUTION DID NOT VIOLATE THE BRADY STANDARD BY FAILING TO DISCLOSE THE RECANTATION OF DEFENDANTS WIFE AS IT COULD HAVE BEEN OBTAINED BY DEFENSES DUE DILIGENCE
In Brady v. Maryland, the United States Supreme Court held that, "the government cannot suppress evidence that is favorable to the defendant and that is material to either guilt or sentencing." Additionally, courts have established three determinations the court must make to analyze whether the Brady standard has been violated which includes ,"(1) whether the evidence in question was favorable to the defendant, (2) whether it was suppressed by the government, and (3) whether it was material." Strickler v. Greene, 527, US 623. However, the facts of this case do not provide for a Brady violation as it pertains to the victims statement because the defense cannot satisfy the second prong for the Brady test because it was not supressed by the government.
However,The Court in State v. Capp Frank. App. (2014), held that in determining whether the govenrment supressed evidence, it must first be determined whether the evidence was in the government's possession. Id. Furthermore, the court stated that evidence in the possession of the investigating police department or another government entity involved in the investigaiton or prosecution, the evidence will be deemed in possession of the government," and in pertinent part that, ' the Court stated that, " we further hold that a prosecutor is not required to furnish a defendant with Brady material if that material is fully available to the defense through the exercise of due diligence." Id. The Defendant in Capp was pending a murder charge for the murder of his wife and claimed that the State committed a Brady violation where it failed to produce his wifes medical records assisting in his defense that his wife committed suicide and showing that she was at risk of harming herself. The Court in Capp found no error and stated thatCapps' defnese and the prosecution had equal access to the wifes medical records, that defense could have subpoenaed the records as easily as the government might have and lastly that the records were not in the sole control of the prosecution and thus were not subjec tto Brady disclosure.' Id.
Though it can be argued that this evidence is favorable to the defendant as it serves 'to impeach a prosecution withness and is thus considered favorable evidence,' as the court did in Haddon v. State, where it held that the government committed a Brady vi0olation by supressing inconsistent statements ade to police by a witness giving conflicting accounts of a robbery. The inconsistent statements made by the victim may possibly be considered favorable to defendant, but the victim in the present case made her statement the day after her and the defendant got married and made a comment during her statement that 'he just told me to tell you that he didn't do it.' The retraction of her initial statement naming her husband as the shooter seemed fake and coerced by her husband, which could potentially effect it's credibility and therefore its materiallity. materiality is based on whether there would have been a reasonable probability that the result would have been different if given to the jury, and a statement made by a person married to the defendant 24 hours prior, coerced to do so and threatened is seemingly unreliable and therefore would not change the probability of the jury finding the victims court testimony reliable and thus changing the outcome of the trial.
Furthermore,the argument can be made that because the prosecution in the present matter had an open file policy which provides all documents in the case file to the opposing party even if such rules are not required by the RUles of Procedure, that it would be ,"especially unlikely that counsel would have suspected that additional impeaching evidence was being witheld." Haddon v. State, Fr. Sup. Ct (2012). However, as stated in the aformentioned argument, with due diligence the defnese in the present matter could have subpoened the file from police and obtained the wife's alleged contradicting statement as easily as the prosecuti0on could have.
In sum, the prosecution did not commit a brady violation by failing to disclose the defnednat's wife's retraction of her statement because the defense could have obtained i the evidence with due diligence, the statement was not reliable and would not have changed the probability of the jury finding her initial statement unreliable and thus not changing the outcome and therefore defendant was not prejudiced and is not entitled to a new trial pursuant to Franklin Rule of criminal procedure 33 which provides ' the court may vacate any judgment and grant a new trial if an error during or prior to trial violated a state or federal constitutional priovision, statute, or riule and if the defendant was prejudiced by that error.
II. DEFENDANT WAS NOT PREJUDICED BY THE ADMISSION OF REED'S HERESAY STATEMENTS AS HE MARRIED HER WITH THE INTENTION OF CAUING HER UNAVAILABILITY AT TRIAL.
Under Rule 804 of the Franklin rules of evidenc provides that certain heresay evidence may be admissible if a witness is unavailable. A witness who claims a spousal privilege is unavailable. Franklin Rule of evidence3 804 (6)(b) allows for the admission of a hearsay statemebt which is 'offered against a party that wrongfully caused- or acquiensed in wrongfully causing - the declarants unavailability as a witness, and did so intending that result.' Importantly, the rule requires that the conduct causing the unavailability be wrongful, it does not require that the conduct be criminal. State v. Preston Fr. Ct. App (2011).
In State v. Preston, the court found that the trial court erroneously allowed the government to introduce the out-of-court statements of his wife at his trial for theft. Preston and his wife were engaged to be married prior to the theft, while the theft occured, had a date set for the wedding and were married before trial. THe court stated that the marriage in Preston appeared to have occured in the normal course of events. Id. A courts finding of causation must be rooted in facts establishing that a significant motivation for the defendant's entering into the marriage was to prevent his or her spouse from testifying. Id.
Conversly, In the present matter, defendant and Reed dated for about seven months, four years previously but broke up and got back together in March of 2017. Mr. Hale (defendant) indicated to her that he wanted to marry her before the trial started and claimed that 'it would be really hard for us to stay together if she testifyed against him.' Reed indicated that she believed they loved eachother, but also stated to police one day after the wedding that the defendant told her to tell the police that he didn't committ the crime.
Differing from Preston wherin the defendant and his wife were engaged before the crime, the defendant in the present matter proposed 5 days after the crime was committed and expressly stated he wanted to be married before trial. There is a clear distinction between the present matter and Preston as it is obvious that the defnedant in the present matter wrongfully caused the unavailability of Reed as a witness by proposing 5 days after the crime and marrying her prior to trial. Importantly, the rule requires that the conduct causing the unavailability be wrongful, it does not require that the conduct be criminal.
In sum, Defendant's conduct in proposing right after the crime, expressly stating that he wanted to be married before the crime and stating it would be hard for Reed and he to be together (essentially threatening her) was wrongful conduct and caused Reed's unavailabikity as witness and therefore the defendant was not prejudiced by the admission of Reed's heresay statement and is not entitled to a new trial pursuant to Franklin Rule of criminal procedure 33 which provides ' the court may vacate any judgment and grant a new trial if an error during or prior to trial violated a state or federal constitutional priovision, statute, or riule and if the defendant was prejudiced by that error.
STATE OF FRANKLIN
DISTRICT COURT OF JUNEAU COUNTY
STATE OF FRANKLIN
v. Case No. 17 CF 1204
PROSECUTIONS BRIEF IN RESPONSE TO DEFENDANT'S MOTION FOR A NEW TRIAL
I. PROSECUTION SATISFIED IT'S OBLIGATIONS UNDER BRADY V. MARYLAND, 373 U.S. 83 (1963) AS IT PROVIDED DEFENSE COUNSEL WITH ALL FAVORABLE AND MATERIAL EVIDENCE IT HAD IN ITS POSSESSION PRIOR TO TRIAL.
Prosectuion satisfied its obligations under Brady v. Maryland, 373 U.S. 83 (1963) as it provided Defense Counsel with all favorable and material evidence it had in its possession prior to trial. In Brady, the United States Supreme Court held that the government cannot suppress evidence that is favorable to the Defendant and that is to material to either guilty or sentencing. In analysing whether Brady has been violated, this Court must make three determinations, (1) whether the evidence in question was favorable to the Defendant, (2) whether it was surpressed by the government, and (3) whether it was material evidence to the guilt or sentencing. Here Defense Counsel raises to seperate allegations that Prosecution failed to meet the requirements and duties under Brady.
First, Defense alleges that Prosecution failed its obligations under Brady by not disclosing the recanted statement of the main witness in this case, Ms. Reed. Prosecution did not fail to meet its obligation under Brady, as the information that was provided to it was not material to meet the third prong of the test laid out under Brady. In Haddon v. State (2012) the Franklin Supreme Court held that for evidence to be material, the question is whether there is a reasonable probability that the result would have been different had the evidence been turned over to the court. Namily, the States obligation is not a piece by piece obligation, rather it is a comulative obligation to divulage all favorable evidence. The evidence in question here was a statement given by Ms. Reed the day after she had married the Defendant, where she openly states that "He (Defendant) just told me to tell you that he didn't do it". This evidence is not material to the defense of the case, it is not reasonable to assume the introduction of a clearly coerced statement after the marriage of Witness and the Defendant would have likley resulted in a different outcome in the case at hand. The Defense will argue under Brady that that based on Haddon and Brady the evidence at hand violates the consitution as it is favorable, was suprressed and it material. However, the evidence which lead tot he reversal of convictions in Haddon, was a direct contradiction given to police not under the threat or coercion. The evidence presented here is not material, as stated previously it is not reasonable that this evidence would likely alter the outcome of this case considering the circumstances.
Second, Defense alleges that Prosecution failed its obligation under Brady by failing to disclose the statement given to the EMT by the victim Mr. Trumbull in this case, which goes to the motivation for the allege crime. Prosecution clearly, did not violate this Brady by not including this in the disclosure of evidence which was provided to Defense. The standard for Brady, which is cited aboved, is clearly reference in Capp v. State. In Capp the Defense had moved for a new trial under Brady alleging that Prosecution failed to present evidence of Medical Records. The court held that evidence is in the possession of the investigating police department or another government entity invovled in investigation, the evidence will be deemed in possession of the government. It further held that, it would be too far to charge the government with posesesion of all records of all government agencies. Here, the evidence was readily available to the Defense, the witness clearly indicates he was willing to testify or give his account to Defense. Further based on the holding in Capp, these records were not in the possession of the government and could not have been disclose or required to be disclosed under Brady. WHEREFORE, Defendant's motion for new trial should be denied on these grounds based on both legal precedent and the facts at hand.
II. MS. REED'S STATEMENT TO POLICE WAS PROPERLY ADMITTED, AS THE MARRIAGE OF THE WITNESS AND THE DEFENDANT WAS CLEARLY DONE WRONGFULLY TO CAUSE DECLARANTS UNAVAILABILITY SATISFY THE REQUIRMENTS OF FRANKLIN RULE OF EVIDENCE 804(b)(6)
Defendant's conduct in marrying witness Reed satisfied the requirements of Franklin Rule of Evidence 804(b)(6) which states that a statement offered against a party that wrongfully causd - or acquiesced in wrongfully causing - the declarant's unavailablty as a witness, and did so intending that result. Here, based on the facts at hand Defendant clearly intended to cause the Witness to be unavaible to testify based on spousal immunity.
Presently, the Defendant and Witness were not engaged at the time of the shooting nor, when the witness statement was given to the police. The testimony shows that the shooting occurredo n June 20th, Defendant proposed on July 25th, and the marriage ceremony was on August 25th just a month after proposal. There is a clear rush here to have this done before trial, as indicated in Ms. Reeds testimony where she states that "He did say that he wanted to marry me quickly, before the trial started." In contrast to these facts, the Court in State v. Preston upheld a vioaltion of 804(b)(6) when the Defendant and witness were engages, with a wedding date arranged, at the time the crime was committed and the statement was made to police. The facts in Preston clearly differentiate from the facts presented in the case at hand. Defendant and Witness were not engaged at the time, and clearly rushed the marriage to get it done before trial to keep out the testimony of Reed. Defense could argue that it is unfair to assume the marital process and the apparent rushing could have been done out of love, but based on the testmony Ms. Reed gave and the testimony of Detective there is an apparent and obvious attempt to have this marriage done before trial not for love, but out of evidentiary reasons as exemplified in the statements of Defendant to Ms. Reed. Defendant was not unduly prejudiced by the introduction of the testimony as it legally admissible WHEREFORE, Defendant's motion for new trial should be denied on this ground based on both court precedent and the facts at hand.
WHEREFORE, Prosecution requests this Honorable Court deny Defendant's motion for a new trial, as Prosecution acted properly under both Brady v. Maryland and the Franklin Rule of Evidence 804(b)(6)
Rugby Owners & Players Association
Memorandum to Examinee
Transcript of client interview
Initial Draft of Articles of Association of ROPA
Excerpts from Walker’s Treatise on Corporations and Other Business Entities
Schraeder v. Recording Arts Guild, Franklin Court of Appeal (1999)
Sorborg, Kaminstein & Ringer LLP
One Madison Plaza
Franklin City, Franklin 33705
FROM: Abraham Ringer
DATE: July 24, 2018
RE: Rugby Owners & Players Association
The Rugby League of America (“the League”) and the Professional Rugby Players Association
(“the Players”) have retained our firm to form an unincorporated membership association under
the Franklin General Associations Law. The Rugby League of America consists of the owners of
all eight teams in the professional rugby league, and the Professional Rugby Players Association
is the labor union representing all 176 players on those teams.
The Rugby Owners & Players Association (ROPA) will be a joint venture of both the League
and the Players, formed for the purpose of holding and exploiting certain properties (both
tangible and intangible) on behalf of the League and the Players. While ROPA will not itself
operate on a profit-making basis, the revenues it earns (after the deduction of expenses) will be
distributed to the League and the Players.
The principal governing document of ROPA will be its Articles of Association. Formation of
ROPA presents an interesting legal challenge, in that the League and the Players are normally on
opposite sides of the bargaining table in many respects. Hence, neither side will allow the other
to control the governance of ROPA.
I have communicated separately with both parties, and they have consented to our joint
representation. We have received informed written consent from both parties in conformity with
the Rules of Professional Conduct.
Given the many legal issues to be dealt with in forming ROPA, others in the firm will deal with
the liability, tax, intellectual property, real property, and antitrust aspects of the task.
Please draft the relevant portions of the Articles of Association that deal with ROPA’s
governance, as set forth in more detail in the attached materials. I have included an initial draft
of those governance provisions of the Articles, indicating the issues that you should address in
your draft. The initial draft will also provide an example of the type of language used in such
In drafting the relevant portions, please use the following format, as illustrated below:
• State the article number.
• Draft the recommended language.
• Provide an explanation for why you drafted each the way you did (including, if
appropriate, brief citations). In each of your explanations, you should take into account
the clients’ goals, the governing law, and the advantages and disadvantages of your
Your explanations are important, as I will use them as a basis for advising the clients as to the
choices made. Address only those articles that indicate that the language and explanation are to
be completed. Do not restate or address any articles that have already been completed.
ARTICLE II – DURATION OF THE ASSOCIATION
Language: The Association shall exist for a renewable duration of 99 years.
Explanation: As set forth in the client interview, the two entities plan for a long-term, mutually
profitable project. Because the parties want the duration to be as long as possible and because
Franklin law limits unincorporated associations to a renewable duration of 99 years (see Walker
on Corporations and Other Business Entities § 10.2), I recommend the maximum duration.
Transcript of Attorney Ringer’s Client Interview with
Marybeth Fischer, Representative of the League, and
Ralph Peters, Representative of the Players
July 16, 2018
Abraham Ringer (Attorney): It’s a pleasure to see you both. Thanks for retaining us to form
your new venture. Tell me about it.
Marybeth Fischer: As you probably know, we operate the Rugby League of America—a
professional rugby league. Our hope is that we can transform rugby into a
significant sport in this country—it has all the attractions of football and soccer,
and we think our players are much more accessible to the public. From the team
owners’ standpoint, we think we can create sufficient fan interest to turn our
league into a highly profitable, long-term venture for the benefit of current and
future owners and players.
Ralph Peters: Our players see this as a great opportunity. All have played rugby in college or at
an amateur level, and many have played professionally in other sports like soccer.
We’ve negotiated a collective bargaining agreement with the owners—not
without a lot of give and take, some of it pretty hard-fought—and we’re ready to
move forward now.
Attorney: Tell me about the structure of the league.
Fischer: The league itself is an association of the owners of the eight teams. And who
knows, maybe in the future, if we really catch on, we can expand to more teams.
We’ve modeled ourselves on the existing professional sports leagues. There are
22 players on a rugby team, and, as Ralph noted, we’ve got a collective
bargaining agreement with the Professional Rugby Players Association, which is
But we know that, as we try to get the league going and interest sparked in the
game, we as owners are going to have to bear considerable start-up expense until
the sport turns profitable for us. So we want to maximize every revenue
opportunity we can. Obviously, we will have revenues from attendance at the
games, concessions, and broadcast and cable rights. But there are other sources of
income we want to mine.
Attorney: Such as?
Fischer: For example, we see merchandising as a major possible income source. Each team
has a logo that it owns, as does the league. Fans want merchandise with those
Peters: And fans want items with the names and images of their favorite players, which
only the players have rights to. And there are physical items like game-worn
jerseys that can fetch considerable income. Then there are endorsement deals . . . .
Fischer: Yes, like the “official luxury car of the League.” We’ve all agreed to pool all the
properties of this sort that we own and market them for our mutual benefit.
Attorney: By “we all,” you mean the owners and the players?
Fischer: Yes indeed. To speak candidly, in our negotiations with the players over the
collective bargaining agreement, our owners wanted to get all the necessary
property rights and control this marketing, but the players refused.
Peters: That’s right—the owners aren’t exactly paying our players huge sums of money,
and we weren’t about to give them even more without our fair share. Because of
our distrust, equal voting power is what both sides want, but we’d like to know
from you what the pros and cons are of that choice.
Fischer: Well, the owners think they’re paying a fair price for the players’ services. The
fact is that it is better if we are in the lifeboat together. But be that as it may, we
agreed to form a new entity, an association of both the owners and the players,
which would exploit all these tangible and intangible properties and market them
for our mutual benefit. We’re calling it the Rugby Owners & Players Association,
Peters: We figured that the owners’ properties, such as the team logos and trademarks,
and the players’ properties, such as their likenesses, were about equal in value,
and by sharing the revenue from all the properties in a unified marketing scheme,
we’d all do better.
Attorney: Is each side sure that it wants to share revenue from all these sources equally?
Fischer: Yes, we’ve been over that. We’re just starting out, and we need any source of
income that we can get. We know that we need to cooperate to make this
Attorney: How is it going to work?
Peters: That’s what we need you for. We would never agree to allow the league’s counsel
to set this up, and the owners would never agree to allow the players’ counsel to
do so, so we’ve come to you to represent us both in forming this venture.
Attorney: Now I understand. Just off the top of my head, I can see many legal aspects to
getting this done, involving questions of governance, liability, tax, and more.
Let’s start with governance. As a general matter, how did you envision ROPA to
Fischer: Well, we agreed that, like the league, it would be a membership association.
Attorney: The governing document of an unincorporated membership association in
Franklin is its Articles of Association, so our first task is to draft that document
for you. Let me ask you some questions that will help us draft it. As this will be
a membership association, who would be the members?
Fischer: From the owners’ side, the members of ROPA would be each of the eight teams.
Peters: And from the players’ side, it would be each of the 176 players.
Attorney: So the owners—that is, the teams—and the players would be separate classes of
members. And the governance of ROPA? How would the board of directors
Peters: Let’s get something clear at the outset. Marybeth and I are friends. But
professionally, they are management and we are labor: we don’t trust each other.
So however ROPA is structured, we can’t have a leg up on them, or they on us.
Simply put, neither side can control the organization. We have to structure ROPA
so that we’re required to cooperate, or it won’t work. We both will need
guarantees, for example, that neither side can force something through the board
of directors without the other side’s consent. So you have to keep that in mind,
however ROPA is set up.
Fischer: I think that Ralph is right. I mean, we can never require unanimity, because then
just one team or one team’s players could veto something that everybody else on
both sides wants. Certainly, there are some items that will come to the board’s
attention that are just pro forma. But for serious matters, we’d have to protect
each side against unilateral action by the other. So I’ll answer your questions from
the owners’ perspective, and he can do so from the players’. We figured that each
of the teams would have a seat on the board. Each team would name its own
person to sit on the board.
Peters: And that would mean that the players would need to have the same number of
seats on the board as the owners. Each team’s players already elect a
representative to act as a liaison with the union, and that representative would sit
on ROPA’s board as that team’s players’ representative.
Attorney: I see. To protect each side against unilateral action, you probably want to require
some minimum number of directors from each side as a quorum, and perhaps
specify that board actions require the support of both sides. How long will
directors serve, and how will any vacancies on the board be filled?
Fischer: We thought that each team’s owner would name its director. We figured that the
director filling each owner’s seat would continue in office until the ownership of
the team changed or the individual named was no longer named to that position
by the team.
Peters: And basically it would be the same for the players if the specific team’s players’
representative to the union changed.
Attorney: The sort of structure you’re suggesting poses interesting points about deadlock,
presiding officers, and the like. We’ll look into possible solutions for you. We’ll
need to provide you a caution about the implications of a 50–50 arrangement
when we explain our draft proposal. To avoid deadlock, you could appoint a
Fischer: I see your point, but it’s much more important for us to have equal representation.
Attorney: I understand. Many organizations that choose equal representation find a way to
work together because they want to take advantage of opportunities for profit.
Peters: We do have a significant disagreement on one of the points you mentioned, and
we’re looking to you for guidance. We know there must be a chair of the board of
directors to preside at board meetings. To avoid any favoritism to one side or the
other, we think the chair should be the CEO as a nonvoting director.
Fischer: We, on the other hand, don’t want any other directors sitting in the board meeting,
whether voting or not, so we think the chair should rotate between both sides. And
you should know that neither of us wants an independent director in any capacity,
including as a chair.
Attorney: We’ll look at that, give you the advantages and disadvantages of each approach,
and make a recommendation. Now, how would the rights and properties be
transferred to and owned by ROPA?
Fischer: We’d need your advice.
Attorney: I would suggest a membership agreement that each member would have to sign.
Peters: Sure, but it’s important to us that the owners and players be equal, that each
would have the same rights and obligations in ROPA under that sort of membership agreement.
Attorney: Okay, we can deal with that. Now let’s get to the money. How do you envision
any income being handled?
Fischer: We are expecting that the costs of running ROPA will be covered by the income it
receives. So the question is what to do with the amount remaining after expenses
are paid. We’ve agreed that it will be divided 50–50 between, and paid to, the
league and the players’ association. Then each side will, on its own and outside of
ROPA, figure out how to apportion the amount paid among its constituents.
Peters: But we want to make sure that our 50–50 arrangement can’t be changed by a
Attorney: Who is going to run ROPA? I mean, you can’t expect the board of directors to
take charge of the day-to-day running of the organization, with all that would
Peters: Certainly. We expect to hire a chief executive officer, who will then hire
employees and run the place. The CEO would be named by and report to the
board. And of course, it’s important that he or she wouldn’t be beholden to either
the league or the players alone—he or she would have to be entirely neutral
Attorney: I really want to thank you for bringing this matter to us. I’ll get back to you after
we’ve written a draft of the Articles of Association and analyses of all the other
issues that can serve as the basis for further discussions.
INITIAL DRAFT OF
ARTICLES OF ASSOCIATION
RUGBY OWNERS & PLAYERS ASSOCIATION
ARTICLE I — OBJECTIVES
SECTION 1. We constitute ourselves a voluntary membership association under the name
“Rugby Owners & Players Association” (the Association) for the following purposes, to wit:
a. To exploit certain properties and rights, both tangible and intangible, which the
Association’s members may from time to time grant to the Association
b. To acquire, own, and sell real, personal, and intellectual property, and to accumulate
and maintain a reserve fund to be used in carrying out any of the objectives of the Association
c. To distribute all revenues earned by the Association, after deduction of expenses and
reserves, as further set forth in these Articles
d. To do any and all other acts which may be found necessary or convenient in carrying
out any of the objectives of the Association or in protecting or furthering its interests or the
interests of its members
SECTION 2. The principal office of the Association is to be located in Franklin City, Franklin.
ARTICLE II — DURATION OF THE ASSOCIATION
The Association shall exist for a renewable duration of 99 years.
ARTICLE III — MEMBERSHIP
SECTION 1. CLASSES OF MEMBERSHIP. There shall be two classes of members: (1) each of
the teams in the League and (2) each of the players on each of the teams in the League.
SECTION 2. MEMBERSHIP AGREEMENT. Each member shall execute a membership
agreement, which shall be uniform in form for all members, as shall be prescribed by the Board
ARTICLE IV — BOARD OF DIRECTORS
SECTION 1. GOVERNMENT. The government of the Association shall be vested in, and its
affairs shall be managed by, a Board of Directors, consisting of [number of directors or other
language to be inserted], who shall represent each class of members as follows: [Language to
SECTION 2. ENUMERATED POWERS OF THE BOARD. The Board shall have power to
manage the affairs of the Association for the common benefit of the members, and to do and take
all actions that are lawful.
SECTION 3. ELECTION OF DIRECTORS. Each of the Directors representing each team in the
Rugby League of America shall be elected by the owner of that team; each of the Directors
representing the roster of players of each such team shall be that team’s players’ representative to
the Professional Rugby Players Association.
SECTION 4. TERM IN OFFICE OF DIRECTORS. Each Director representing a team in the
Rugby League of America shall serve until replaced by the owner of such team; each Director
representing the roster of players of a team shall serve until replaced as the players’
representative of that team to the Professional Rugby Players Association.
SECTION 5. VACANCY IN BOARD OF DIRECTORS. [Language to be completed]
SECTION 6. MEETINGS OF THE BOARD.
a. Frequency of meetings: The Board shall meet at least twice each calendar year.
b. Quorum: [Language to be completed]
c. Voting: [Language to be completed]
ARTICLE V — OFFICERS
The Board of Directors shall appoint the following officers: a Chair, a Secretary, and a Treasurer.
The Chair shall be [Language to be completed]
ARTICLE VI — MANAGEMENT OF THE ASSOCIATION
The management of the Association shall be conducted by a Chief Executive Officer, who shall
be named by the Board of Directors. The Chief Executive Officer shall report solely to the Board
ARTICLE VII — APPORTIONMENT & DISTRIBUTION OF REVENUES
[Language to be completed]
ARTICLE VIII—AMENDMENT OF ARTICLES
These Articles may be amended by [Language to be completed]
Excerpts from Walker’s Treatise on Corporations and Other Business Entities
Section 10.0 – Unincorporated Membership Associations Generally
10.1 Franklin Membership Associations Generally: Franklin law allows for the
formation of unincorporated membership associations—a form of legal entity that is not a
corporation, but rather allows individuals and other juridical entities to join together for common
purposes. Examples are veterans and fraternal organizations, musical performing rights
organizations, and sports leagues. Franklin law requires such organizations to adopt Articles of
Association, which may include the items one would find in a certificate of incorporation, but
also contain far more detail as to the governance and functioning of the association (e.g., dealing
with matters of structure and the election of the board of directors, obligations of members, and
the classes of members). That said, matters of corporate governance for membership associations
are generally comparable to those for corporations. This portion of the treatise will analyze
issues for such associations as compared to those for corporations, and will highlight differences
only where they exist.
10.2 Duration: Under Franklin law, unincorporated membership associations are
limited to a renewable duration of 99 years.
10.3 Classes of Members: Membership associations frequently have more than one
class of members (e.g., musical performing rights organizations have classes of composers,
lyricists, and music publishers). Whether those classes have differing rights and obligations is a
matter for the association to determine. The issue is invariably dealt with in the Articles of
Association of the organization. What those rights and obligations are can be dealt with either in
the Articles or in a membership agreement.
10.4 Number of Directors: Franklin law requires a minimum of three directors for the
association’s board of directors. Boards usually have an odd number of directors, to prevent a
voting deadlock. However, when more than one class of members is represented on a board, an
even number of directors for each class may be named. Although this might lead to a deadlock in
voting, it also may encourage cooperation among the various classes, as the board would not
otherwise be able to take action. See also section 10.10.
. . .
10.8 Vacancy in Board: Vacancies in the board of directors (e.g., by resignation or
death) may be filled in a variety of ways (e.g., by holding a special election of members;
allowing the remaining directors to fill the vacancy for the remainder of the term of the
resigned/departed director; or specifying in the Articles of Association an alternative method,
such as allowing each class of members or directors to fill vacancies in that class).
10.9 Conduct of Board Meetings: Franklin law provides that a quorum of a majority of
board members is necessary to take any action. In the case of boards that have members from
different classes, there may be additional requirements of attendance to ensure class
representation in the quorum. Boards may, by resolution or provisions in their Articles of
Association, require that certain matters of great importance (e.g., amendment of their articles,
hiring key employees, or allocation of revenues and expenses) be passed by a supermajority of
two-thirds of those present and voting, or even of the entire board.
10.10 Officers: Franklin law requires that boards name, at the very least, a chair, a
secretary, and a treasurer. In cases where the board is made of different classes of members, a
disinterested, independent, nonvoting chair (e.g., an outside director or the corporation’s chief
executive officer) may be named to preside instead of naming a chair from one of the classes. In
such a case, that person would constitute his or her own class of directors. Typically, an
independent director will be elected by a supermajority of the entire board. Even though the chair
might be seen as a merely administrative office, simply presiding at meetings, the chair’s rulings
could run counter to the position of a particular class. This could pose a problem for a chief
executive officer named to be chair, for the chief executive officer, as an employee of the board,
would be expected to be neutral as between such positions. As an alternative, when there are
different classes of members, the chair may rotate among directors from the different classes.
10.11 Operations: The chair has the power to preside at board meetings. The day-to-day
running of the association is usually delegated to an employee such as a chief executive officer.
Schraeder v. Recording Arts Guild
Franklin Court of Appeal (1999)
Dorothy Schraeder and 11 other members of the board of directors (collectively,
“Schraeder”) of the Franklin Recording Arts Guild (“the Guild”) sued to enjoin the Guild from
effectuating a resolution allegedly adopted by the Guild’s board of directors. The trial court
granted the injunction, and the Guild has appealed.
The Guild is an unincorporated membership association, formed under the laws of
Franklin. The Guild’s purpose is to market and license various properties created by musical
performing artists and owned by record companies, for their mutual benefit. The Guild is
controlled by a board of directors of 12 performing artists and 12 record company
representatives. The position of chair alternates every six months between a performing artist
director and a record company director. Although they have joined together for a common
purpose in creating and operating the Guild, it is fair to say that the two sides do not have the
highest degree of trust in each other. The governance structure of the Guild therefore contains
various safeguards against one side or the other gaining an unfair advantage in the operation of
The Articles of Association of the Guild provide that a quorum of 13 of the total 24
directors must be present for the conduct of business (a majority, as Franklin law requires), but in
addition (1) that at least two representatives of each class of members be present for that quorum,
and (2) that a majority of directors present and voting from each class vote in favor of any
proposed resolution for it to be adopted.
In December 1998, the Guild’s board met to conduct a regular meeting. The meeting was
attended by all 12 record company directors and 9 performing artist directors. Quoting verbatim
from the minutes of the meeting best conveys what occurred at the meeting:
Mr. Carson [a record company director] proposed that the allocation of revenues of the
Guild be changed from the present even division between record company members and
performing artist members to a 60%–40% division in favor of record company members.
His proposed resolution was seconded by Ms. Aguero [a record company director]. After
discussion, [eight performing artist directors] left the meeting [in protest]. Ms. Schraeder,
the sole remaining performing artist director present, raised a Point of Order and
demanded a quorum call. Mr. Ray [a record company director], Chairman, ruled the
demand out of order. The board then voted, 12–1, in favor of the resolution. [The minutes
then identify how each director cast his or her vote: the 12 affirmative votes were cast by
record company directors, while the sole negative vote was cast by Ms. Schraeder, the
only performing artist director present and voting.]
Ms. Schraeder and her fellow performing artist directors have brought this action to
enjoin the Guild from putting the proposed resolution into effect. The trial court granted the
injunction, and we affirm, for the following reasons:
The voting provisions of the Guild’s Articles of Association were designed to prevent
either side from gaining a material advantage over the other in the conduct of the Guild’s
operations, such as by changing the allocation of revenues to advantage one side, as was
attempted here. By requiring that a quorum include at least two directors from each side, the
Articles effectively prevent either side from gaining such an advantage should the other side not
be present to vote. Further, once a quorum is present, the Articles require that a majority of
directors from each side who are present and voting vote in favor of any action.
That there was only one performing artist director present when the vote was taken does
not invalidate the vote for lack of a quorum. Franklin law provides that, once a quorum (in this
case, 13 directors, including 2 directors from each class) is present for a board meeting, it
continues to exist for the duration of the meeting.
However, Schraeder argues that the board action was ineffective because a majority of
one class of directors—Ms. Schraeder, the sole performing artist director present and voting—
voted against the resolution.
To adopt any resolution, the Guild’s Articles of Association require that a majority of
each class of directors present and voting vote in favor of that resolution. That requirement was
not met. Hence, the disputed resolution could not take effect.
SECOND DRAFT OF
ARTICLES OF ASSOCIATION
RUGBY OWNERS & PLAYERS ASSOCIATION
ARTICLE IV - BOARD OF DIRECTORS
SECTION 1. GOVERNMENT.
The government of the Association shall be vested in, and its affairs shall be managed by, a Board of Directors, consisting of sixteen (16) directors, who shall represent each class of members as follows:
Language: One director shall be appointed by the owner as a representative for the owner of each of the eight teams and one director shall be elected by each team's players as a representative of the players of each of the eight teams, resulting in eight directors representing the owners and eight directors representing the players.
Explanation: Franklin law requires a minimum of 3 direcrors for the Board. Because there are two classes of members represented, an even number of directors may be named. As it is the desire of both the owners and the players to be represented equally, an even number of directors should be appointed here, with half of the Board representing the owners and the other half representing the players. Although deadlock could occur with an even number, it could encourage both classes to work together and could inspire cooperation. This is even more so important because the two classes want to take advantage of opportunities for profit, so each side should be equally represented so that it has an equal opportunity to share in fair profits that it is entitled to. Although there are 176 players and only 8 owners, I believe an equal representation between the two classes is warranted as the players are representing the 8 teams and their interests will likely be adequately represented by the players' representatives. As a result, because there are eight teams, I recommend one director to represent the owners side for each team, and one director to represent the players side for each team, collectively sixteen directors.
SECTION 5. VACANCY IN BOARD OF DIRECTORS.
Language: In the event of a vacancy on the Board of Directors, the vacancy in a respective class can be filled by a majority vote of members of that respective class.
Explanation: Franklin Law, section 10.8 in Walker's Treatise, allows board vacancies to be filled in a variety of ways. As understood in the client interview, the parties have distrust between each other and as a result wish to have equal voting power so that neither side can control the organization. Because the Board furthemore has two classes of membership, it would be favorable to have a provision in place that allows the classes to fill their respective vacancies. This would balance the distrust of power on the Board and could alleviate the Board members worries that a vacancy could be filled by someone who could disrupt that balance. As such each class should be allowed to name their replacement to fill a vacancy resulting in their respective class through a majority vote. This should balance the distrust of power, and allow for an equitable vote between members of a particular class.
SECTION 6. MEETINGS OF THE BOARD.
Language: A quorum of 9 of the total 16 directors must be present for the conduct of business.
Explanation: Franklin law provides that a quorum of a majority of board members be necessary to take any action in rule 10.9 of the Walker's Treatise. I believe that this would be a fair provision for this organization given it's insistence on balance between the two classes.
Language: In order for any proposed resolution to be adopted, (1) at least two representatives of each class of members must be present for that quorum, and (2) a majority of directors present and voting from each class must vote in favor of any proposed resolution in order for it to be adopted. Votes to change the apportionment of revenue distribution between the classes must be approved by a supermajority (two-thirds of those present and voting) vote.
Explanation: To prevent an issue like the one that occured in Schraeder v. Recording Arts Guild, the Articles should include a provision that states that even if a quorum is present, a majority of those directors present must vote in favor of any proposed resolution. This could help maintain balance of power as it did in Schraeder, where only one member of a particular class was present for a vote, voted against that resolution, and was able to prevent it from being adopted because as the sole vote representing a class, it constituted a majority of that class. I believe this is necessary to have in place because a proposed resolution should only be adopted if both sides are adequately represented and heard in a meeting, so that neither side can control the organization. Prong (2) allows the Board to do so and function in a way that is appealing to the client's desire to maintain equitable balance between the classes. The requirement for the change in revenue apportionment is based on the client intereview where the clients indicated that they did not want the board to have the ability to change revenue arrangemnet by a simple majority. A supermajority vote will better protect the board's interests and allows hightened protection for this important change for the organization. I did not opt for a unanimous vote for this change because in the event that the distrubtion of revenue income (as it is now pretty equal) changes in the future as hopefully more teams expand, it can be changed in a more flexible way than a unanimous vote could allow.
ARTICLE V - OFFICERS
Language: The Board of Directors shall appoint the following officers: a Chair, a Secretary, and a Treasurer. The Chair shall be a member of the Board, elected by a majority of the Board and shall rotate every six months between directors from each class. No Board Member shall be elected Chair more than once in a 3 year period. The Secretary and Treasurer shall be elected by a majority vote of the Board, and shall rotate every year between directors of each class. All three positions cannot be held by members of one class.
Explanation: Although the Players believed that CEO should be a nonvoting director on the Board, I recommend that the director be one of the sixteen members of the Board. Distrust between classes is especially heightened in this scenario and I believe that by appointing the CEO to the board, this could further cause additional problems to the disparancies between the classes. This equal balance of power on the Board is especially important here and I think that having a CEO on the board could run counter to the position of a particular class, especially since the CEO who is expcted to be a neutral as possible. However, I understand that this might not be ideal as the nonvoting position of the CEO has some benefits. The CEO has a unique perspective on the inner workings of the organization and could provide valuable insight. Overall though, I believe the burdens of allowing a CEO on the Board might be too much because the CEO is expected to be entirely neutral between the two parties and that might be very difficult if he/she has a seat on the Board and the Board makes decisions that are contrary or hurtful to the CEO. Therefore, I have elected to refrain from adding him/her to the Board as a nonvoting director. The protections put in place rotating Chair, Secretary, and Treasurer positions between classes every six and twelve months should adequately protect the interests of both sides. As the position of Chair is of utmost importance, I suggest the Board rotates that position more frequently than that of Secretary and Treasurer. The restaint on being elected Chair more than once in a three year span also allows for an equal chance for other Board members to be Chair, and to restrain one person's attempt from overpowering the Board many times as Chair.
ARTICLE VII - APPORTIONMENT & DISTRIBUTION OF REVENUES
Language: Revenue of the organization existing after expenses are paid shall be distrubuted equally between the classes of owners and classes of players. Each share shall be paid to the respective league and players' associations.
Explanation: The client interview constantly reiterated the importance of balance and equality between the two classes. Both sides agreed to a 50/50 split, so this provision adequately represents the interests of both sides. As each side is sure that it wants to share revenue from different sources such as owners' properties, logos and trademarks and player's properties such as their likeness (as each side is pretty equally contributing to the pool of revenue), I believe that a 50/50 split is warranted and fair for this organization.
ARTICLE VIII - AMENDMENT OF ARTICLES
Language: The Articles of Association may only be amended through a supermajority vote of the Board of Directors.
Explanation: The clients indicated in the interview that they did not want to require unanimity because then one team or one team's players could veto something that everybody else wants. Althought I think a unanimous vote to amend the Articles is pretty common and has susbtantial benefits given the importance of the Articles, I understand and appreciate the concerns of each side. As such, I have provided that the Articles can be amended by a supermajority vote of the Board of Directors.
ARTICLE IV-BOARD OF DIRECTORS
Language: The government of the Association shall be vested in, and its affairs shall be managed by, a Board of Directors, consisting of sixteen directors, who shall represent each class of members as follows:
1. Each team owner will select one representative as director, for a total of eight directors.
2. Each team of players will be represented by their elected union liason, who will also be a director of ROPA.
3. The number of directors will increase or decrease accordingly, with the addition or subtraction of new rugby teams.
Explanation: The owner and player sides of ROPA are in agreeance that both sides should be afforded equal control over the board of directors. During the interview process, each side gave their ideas for who they wanted to represent them as directors. Therefore, it was imperative that each side be given an equal number of directors. It may result in gridlock, but collaboration was a key theme throughout the interview of Peters and Fischer. An even number of directors will force cooperation between the ownership and players. The representative for ownership wanted each team owner to select a representative, and the players' representative wanted to to use the union liason under the CBA, for each team of players. These decisions make sense, because owners will have faith in an appointed representative, and the players will have faith in an elected representative. Lastly, the third provision regarding increases or decreases is neccessary, because both sides are hoping to expand the league, and new teams should be given representation on the Board.
SECTION 5. VACANCY IN BOARD OF DIRECTORS
Language: Any vacancy on the Board of Directors will be filled according to the provisions of this section. If a director representing a team owner vacates their position for any reason, including removal by owner, incapacity, resignation etc., the owner of the team who has a vacancy will select a new director to fill the position. In addition, if a team comes under new ownership, the new owner may select a new director to represent them on the Board. In the event that a director from the players' side vacates their position as director, the team of players with the vacancy will vote in a new representative to fill the position. In addition, if the players vote in a new union liason, that representative will also replace the current representative on the Board of Directors.
Explanation: Both parties wanted continous terms for each director, unless the owner of a team or players decided to select a new director, or ownership of a team changed. It was also clear that the sides want the ability to remove and replace a director at any time. The above language allows allows both issues to be accomplished. There is no term of years set for any directors, and owners may remove a director at any time. Additionally, each team's players may vote to elect a new union representative, which in turn replaces their current director on the Board.
SECTION 6. MEETINGS OF THE BOARD
Language for b: Quorum: A quorum of directors will be set as the attendance at a meeting of a majority of both classes of directors. Therefore, there must be at least five player directors, and five owner directors in order to hold a valid meeting. This number will be adjusted as teams enter or withdrawl from ROPA.
Explanation: Both parties continously emphasized the issue of equality. The parties are somewhat distrustful of eachother's intentions with the leauge. Thus, both sides want to make sure that each side is adequately represented on the Board during meetings. Franklin law only requires a majority of overall directors to be present for a quorum, however, the law allows for special conditions when there are multiple classes of members. Here, the players are a class, and the owners are a class. So, it makes logical sense to require a majority of each class to be present for a quorum.
Language for c: Voting: In order to adopt any resolution in the regular course of business, there must be a majority vote of approval by a majority of each class of director. (Extraordinary Issues See Article VII/VIII)
Explanation: Again, both sides of the ROPA are distrustful of eachother. In addition, each side also wants to foster cooperation amongst the parties. By cooperating, the hope is to prosper and increase revenue and notoriety of rugby in America. Voting arrangements are the key to cooperation or a lack thereof. In this case, both sides were concerned with either the players' side or owners side being able to ram through a resolution at a meeting. The language in c. requires a majority of both sides to agree to pass a resolution, which requires the sides to meet in the middle. Coupled with the quorum requirements above, it will be extremely difficult for either side to obtain an advantage in directing the league.
Language: The officers of ROPA will consist of a CEO, a chair, a treasurer, and a secretary as follows:
1. The CEO will be selected by a majority vote of the Board, and will be responsible for hiring employees, reporting to the board, and for overseeing day to day operations.
2. The chair position will be filled by a representative selected by a majority vote of the ownership directors, and a second person selection by a majority of players' directors. The two chairpersons will rotate on a montly basis.
3. The secretary and treasurer will each be selected by a majority vote of the Board.
Explanation: The most logical solution to the equality problem would have been to appoint a disinterested independent director. However, both parties were strongly against that idea. The owners' side suggested using the CEO in both roles. However, CEO's are put in a difficult position when they are also acting as chair. The CEO may be partial to ownership, and therefore could conduct meetings to the detriment of the players. So, the CEO will only be responsible for business operations. The chair position is set up to rotate between a representative from the players and the owners on a monthly basis. Thus, each side will have their goal of equality met. Lastly, Franklin law requires a secretary and a treasurer to be named. Even though neither party expressed desire to have a secretary or treasurer, it must be included to be in compliance.
ARTICLE VII-APPORTIONMENT & DISTRIBUTION OF REVENUES
Language: The owners and players will share all ROPA profits 50-50, and the profit sharing arrangement can only be amended by a two-thirds supermajority vote for the change by both classes of director.
Explanation: After hard fought negotiations, the owners and players came to an agreement that profits would be shared on a 50-50 basis. In addition, both sides wanted to insure that the arrangement could not be changed by a simple majority vote at a Board meeting. Therefore, the language includes the requirement that two-thirds of both classes of director agree to any change in revenue sharing.
ARTICLE VIII-AMENDMENT OF ARTICLES
Language: These articles may be amended by a two-thirds supermajority vote in favor of amendment by both classes of director.
Explanation: In order to facilitate trust, cooperation, and stability, it is imperative to make amending the ROPA articles a burdensome process. Requiring a two-thirds supermajority of both classes of director to amend the articles requires the Board to carefully weigh the pros and cons of an amendment, and protects all the team and player interests in the organization. While this language makes the process potentially drawn out and difficult, the trade offs of stability and cooperation are benefcial to the fledgling ROPA league.
MEE Question 1
In Gonzales v. Raich, 545 U.S. 1 (2005), the Supreme Court held that Congress has the power under the Commerce Clause of Article I, section 8, of the Constitution “to prohibit the local cultivation and use of marijuana,” even when applicable state law permits such cultivation and even when the cultivation and use are entirely within state borders. At the time of that decision, at least nine states authorized the use of marijuana for medicinal reasons. Since the decision, medicinal use of marijuana has been approved in numerous other states, and some states have also begun to allow the recreational use of marijuana.
Concerned with the widespread disregard of federal law in states that have “legalized” marijuana use, Congress recently passed the Federal Drug Abuse Prevention Act. Sections 11 and 15 of that Act provide as follows:
Section 11. Any state law enforcement officer or agency that takes any individual person into custody for violation of any state law must make a reasonable investigation within five business days to ascertain whether the individual in custody was under the influence of marijuana at the time of the alleged offense. Such officers or agencies must file monthly reports with the federal Drug Enforcement Agency on the outcome of these required investigations, including the name of any individual determined to have been under the influence of marijuana at the time of his or her alleged offense.
Section 15. No state government, state agency, or unit of local government within a state shall be eligible to receive any funding through the federal Justice Assistance Grant program unless use of marijuana is a criminal act in that state.
The Justice Assistance Grant program has been in existence for many years. It is the primary program through which the federal government provides financial assistance for state law enforcement agencies. Last year, the federal government made approximately $300 million in grants to state and local law enforcement agencies through this program. Congress has appropriated another $300 million for such grants in the upcoming fiscal year.
State A has a population of about 4 million people. Its crime rate is below average. Last year, total spending by law enforcement agencies in State A was $600 million, of which $10 million came from federal grants under the Justice Assistance Grant program.
State A recently adopted legislation decriminalizing the use of marijuana for all purposes by persons over the age of 21.
As applied to State A,
1. Is Section 11 of the Federal Drug Abuse Prevention Act a constitutional exercise of federal power? Explain.
2. Is Section 15 of the Federal Drug Abuse Prevention Act a constitutional exercise of federal power? Explain.
An as-applied challenge, states that the regulation is not unconstitutional on its face, but that the application of the act is unconstitutional.
1. Section 11: Section 11 of the Act is unconstitutional, as applied to State A. The issue is whether Section 11 is an attempt to commandeering state agency officers.
The 10th Amendment states that all rights and powers not specifically enumerated to the United States ares reserved exclusively to the state. The states have a general police power to legislate for the health, safety, and welfare of its citizens. The federal government, however, does not have a federal police power, and can only act under the enumerated powers. Under the 10th Amendment, the Supreme Court has stated that the Amedment protects the states from federal legislation which seeks to commandeer state agents. Under the anti-commandeering principle the federal government cannot commandeer state agencies and state officials to enforce federal programs. However, under the 10th Amendment, states are still subject to legislation by the federal government.
Because Congress is acting under the Federal Drug Abruse Prevention Act ("Act"), the legislation is federal and is subject to limitations under the 10th Amendment. Congress purported to pass this legislation because of concern for the widespread disregard for federal marijuana legislation. However, in seeking to enforce its federal legislation, Congress cannot commandeer the states. Section 11 requires any state enforcement officer or agency to make a reasonable investigation within 5 business days to ascertain whether the individual in custody was under the influence of marijuana. Although the 10th Amendment does not preclude the states from federal legislation, Section 11 specifically proscribes the actions that state law enforcement officers and agencies must take. Not only does Section 11 use state agents to enforce and promote federal programs, it requries the state agents to investigate and report.
Congress cannot avoid the limitation of the 10th Amendment by tacking the responsibility to actions the state agency is already taking to enforce its own legislation.
Therefore Section 11 is unconstitutional.
2. Section 15: Section 15 of the Act, applied to State A, is constitutional. The issue is whether the conditional grant is unduly coercive.
One of the federal government's enumerated powers is the power to Tax and Spend. Under the Spending Clause, Congress has the discretion to spend for any federal program or purpose it believes is in the best interest of the United States. Under the Spending power, Congress can promote its own programs, and can condition spending--or grant of federal funds--on a State's participation in the federal program. However, when the federal government condition's receipt of a federal grant on the state's actions, several limitations apply: (1) the program must be for an area that Congress can legislate, (2) the condition imposed by Congress must be reasonably related to the program, (3) the condition must not be unduly coercive--meaning that the states are adequately provided a choice of whether to comply and the condition does not unduly require performance. A condition is unduly especially where federal grant of funds are a significant portion of the state's spending on a public welfare program.
Here, Congress, as the Supreme Court stated in Gonzales v. Raich, has the power to legislate the use and sale of marijuana under the Commerce Clause. Therefore, conditioning federal grants on compliance with federal law in the area is proper. Section 15 of the Act states that no state agency or unit of local government shall recieve funding through the Justice Assistance Grant (JAG) program unless the use of marijuana is a criminal act in the state. The JAG program is a primary program though which the federal government provides financial assistance to state enforcement agencies. Therefore, conditioning spending from that program to compliance with federal criminal statutes is reasonably related. As applied to State A, the Act is not unconstitutional, because it is not unduly coercive.
The grant program to State A is not unduly coercive because, the JAG program appropriates $300 million to state enforcement agencies across the United States. In State A, the federal grants provides only $10 million to the budget for law enforcement. The State generally has a budget of around $600 million, so the removal of the federal grant would not severly injure the state. That leaves State A with the option to decide whether to comply with the federal program, or to forgo the funds. State A has the power to regulate for the health, safety, and welfare of their citizens.
Therefore, as applied, Section 15 of the Act is constitutional.
A. Section 11
Federal government may not commandeer states to act a certain way in their soveriegn capacities.
While federal laws are the supreme law of the land under the Supremacy Clause, the 10th Amendment protects states's individual sovereignty. Under the 10th Amendment, a state is free to exercise its sovereign power over its citizens, provided it does not violate any individual rights. Included in this is that the federal government may not "commandeer" a state into exercising its sovereign powers in a certain way, even if it is an area under an enumerated power of the federal government. Commandeering may occur where the federal government commands a state to act in the state's governmental capacity, including to enact legislation or to enforce laws.
Here, Section 11 likely violates the anti-commandeering rule of the Constitution because it purports to command states' law enforcement agents to investigate the federal crime of possessing or ingesting marijuana. Section 11 would require state law enforcement to make a reasonable investigation whether anyone in custody was under the influence of marijuana. Addtionally, it would require those officers to report monthly to the DEA and hand over teh names of any individual under teh influence of marijuana. While growing, possessing, and buying marijuana affect the nation-wide commerce in marijauana, that the federal government may legislate regarding marijuana does not allow it to command states to use their sovereign powers to that end. Further, while Section 11 would not command the state itself but rather officers or agencies of the state, those officers and agencies would be required to comply with Section 11 while they perform the state's governmental power of law enforcement. Thus, Section 11 would likely be an unconstitutional exercise of federal power.
B. Section 15
Under the Spending Clause, teh federal government may spend for the general welfare. This power includes teh right to make conditions on expenditures to different entities, including states. Thus, if a state receives federal funding, the federal government may make that receipt of funds dependent on the state's fulfillment of some condition. However, to prevent the federal government from "commandeering" a state to comply with federal wishes by placing conditions on funds, a condition on an expenditure must in itself be to advance a purpose that is constitutional, must be related to the purpose of the expenditure, and must not result in undue influence on the state.
The purpose of Section 15 is constitutional.
Section 15 would require that to receive funds through teh Justice Assistance Grant program (JAGP), a state must criminalize the use of marijuana. For a state on its own to criminalize the use of marijuana would be constitutional, as many states currently do. It would also be within the federal government's own powers to prohibit the use of marijuana under teh Commerce Clause because such a use would affect interstate commerce. Further, since the state would not be forced to enact such legislation, only if it wanted to receive funds through the JAPG, the state's enacting such legislation would not violate the 10th Amendment's anti-commandeering rule. Therefore, the purpose of Section 15 would be constitutional.
The condition is related to the grant's purpose
The condition is related to the purpsoe of the expenditure because the JAGP is the primary means by which the federal goverment supports state law enforcement. Making receipt of such funds dependent on the state's criminal justice system is thus related to the purpose of the grant.
Section 15 would likely not result in undue influence on the state to criminalize marijuana use.
State A received 10 million through the JAGP last year, and it will likely receive teh same amount this year if it complies with the Act, since Congress has authorized teh same amount to be spent for the grant. SInce State A's total law enforcement spending last year was 600 million, funds from the JAGP made up 1/60th of its law enfocrcement budget. While this is a significant amount, it is likley not too significant to amount to an effective commandeering of State A. 1/60th of State A's law enforcement is not that great of a chunk that it would seriously cripple State A's law enforcelment activities were that grant to be unavailable--especially given State A's low crime rate. Therefore, Section 15 would likely not result in an unconstitutional commandeering of State A.
Therefore, Section 15 would likely be constitutional.
MEE Question 2
A homeowner, who knew that his neighbor wanted to buy a lawn mower, called the neighbor and offered to sell his lawn mower to her for $350. The neighbor replied, “No way! That price is too high.” The homeowner responded, “The price is a good one. See if you can find another lawn mower as good as mine for as little as $350. I’m confident that you’ll come to your senses. In fact, I’m so confident that not only am I still willing to sell you the lawn mower for $350, but I promise to keep this offer open for a week so that you have time to do some comparison shopping. If you don’t get back to me within a week, I’ll sell the lawn mower to someone who knows what a good value it is.”
Four days later, the neighbor concluded that $350 was, indeed, a very good price for the homeowner’s lawn mower. Accordingly, she decided that she would go see the homeowner the next morning and accept the offer to buy the lawn mower from him for $350. That evening, the neighbor got a telephone call from an acquaintance who lived on the same block as the homeowner and the neighbor. The acquaintance said, “Congratulate me! I just got a great deal on a used lawn mower. [The homeowner] agreed to sell me his lawn mower for $375. At that price, it’s a steal. I’m picking it up tomorrow afternoon.” The neighbor replied, “This must be a mistake; he offered to sell that lawn mower to me.” The acquaintance said, “There’s no mistake; we wrote up the deal and everything. I’ll come by your place right now and show you the signed contract.” A few minutes later, the acquaintance went to the neighbor’s house and showed her a signed document pursuant to which the homeowner had agreed to sell his used lawn mower to the acquaintance for $375.
The neighbor went to the homeowner’s house the first thing the next morning, rang his doorbell, and as soon as the homeowner came to the door, said, “I accept your offer.” The homeowner replied, “Too late. I’ve agreed to sell the mower to someone else for $375. Next time, act quickly when you are presented with such a great bargain.”
The neighbor is furious about the homeowner’s refusal to sell her the lawn mower for $350. In her view, the homeowner was bound to keep his offer open for a week and, in any event, her statement “I accept your offer” created a contract that bound the homeowner to the deal.
1. Was the homeowner bound by his promise to keep his offer open for a week? Explain.
2. Assuming that the homeowner was not bound by his promise to keep the offer open, did the neighbor’s statement “I accept your offer” create a contract with the homeowner for the sale of the lawn mower? Explain.
1. The homeowner was not bound to keep his offer open for a week. Because this question deals with the sale of goods, The Uniform Commercial Code Article 2 applies. At issue here is whether the homeowner's promise to keep the offer open for a week, absent any consideration given in return from the neighbor, was binding. If the UCC's firm offer rule applies, the homeowner was not required to keep the offer open because the agreement was not in writing. Under the firm offer rule, an offer by a merchant in a signed writing to keep an offer open is enforceable for the time stated, or a reasonable time if no time is stated, not to exceed three months. A firm offer does not require any consideration to be given from the offeree in exchange for the promise to keep the offer open. Here, the homeowner promised to keep the offer to sell the lawnmower open for a week, but the agreement was oral rather than in writing; therefore, it does not constitute a firm offer under the UCC.
If the UCC's firm offer rule does not apply (due to the fact that the homeowner was not a merchant), the homeowner was still not bound to keep the offer open for a week because the offer did not qualify as an option contract due to a lack of consideration. An option contract arises under the common law when an offeror agrees to keep an offer open for the offeree for a period of time in exchange for some form of consideration. Here, the homeowner agreed to keep the offer open for a week, but received no consideration from the neighbor in exchange for his promise. Therefore, the requirements for a valid option contract were also not satisfied, the homeowner was not required to keep his offer open for a week, and was justified in offering and selling the lawnmower to the acquaintance four days later.
2. Assuming that the homeowner was not bound by his promise to keep the offer open, the neighbor's statement "I accept your offer" did not create a contract with the homeowner for the sale of the lawnmower. At issue is whether the subsequent sale of the lawnmower to the acquaintance constituted a rescission of the homeowner's original offer to the neighbor. For a bilateral contract to be validly formed, there must be an offer, or a manifestation of intent on the part of the offeror (here, the homeowner) to contract which invites acceptance; an acceptance of that offer by the offeree (here, the neighbor); and exchange of consideration, or bargained-for legal detriment. Here, the homeowner made an offer to the neighbor to sell his lawnmower to her for $350, which invited her acceptance. However, the homeowner rescinded his offer before the neighbor accepted. Rescission occurs when the offeror indicates, by words or otherwise, that he or she is no longer willing to contract and that his or her offer is no longer open to acceptance. Although rescission may occur through the objective words of the offeror, it may also occur by conduct by the offeror that demonstrates an objective unwillingness or inability to contract, provided that the offeree learns of such conduct before accepting. Here, the offeror rescinded his offer to the neighbor by forming a contract to sell the very lawnmower which he offered to sell the neighbor to the acquaintance instead. The neighbor learned of the sale to the acquaintance prior to attempting to accept the offer through both her telephone call with the acquaintance and her subsequent viewing of the contract between the homeowner and the acquaintance. The neighbor's acceptance was invalid because the offer had been rescinded--there was nothing for the neighbor to accept. Therefore, the neighbor's statement "I accept your offer" did not create a contract with the homeowner for the sale of the lawnmower.
I. The homeowner is not bound by his promise to keep theoffer open.
The homeowner is not bound by his promise to keep the offer open because the offer did not meet the requirements for a firm offer or for an option contract. This scenario involves the sale of a lawnmower, which is movable at the time it is identified. As such, it is a "good" under the UCC, and the case is governed by Art. 2 of the UCC.
A person makes an offer when he manifests a present intent to be bound to the offeree upon the offeree's acceptance. An offeror will be bound by a promise to keep the offer open if the offer was irrevocable. There are three ways in which an offer for the sale of goods can be irrevocable. First, the offer can be an option contract. Second, the offer could be a firm offer. Third, the offer can be irrevocable through estoppel.
The promise to keep the offer open did not create an option contract. An option contract is an offer that the seller agrees to keep open that is supported by consideration. Consideration is also know as "the benefit of the bargain". It consists of the bargained for legal detriment of the promisor and the bargained for benefit of the promisee. Often in an option contract, the offeree provides payment as consideration for keeping the offer open. Here, there was no consideration to support an option contract. Neighbor did not pay the homeowner or give the homeowner anything else of value in exchange for the homewonever's promise to keep the offer open. Therefore, the homeowner's promise was not supported by consideration. Because the promise to keep the offer open was not supported by consideration, the promise did not create an option contract.
The offer was not a firm offer. Under the UCC, "firm offers" are irrevocable. A firm offer is a writing by a merchant that agrees by its terms to keep an offer open for a period of time not exceeding 3 months. A merchant is broadly defined and basically refers to any business person. Here, the offer is not a firm offer. First, the homeowner is not acting as a merchant. He is selling his own used lawnmower to another neighbor. He is not giving the offer incident to any commercial enterprise, but instead just as a casual seller. Second, the offer is not in writing. The offer occurred over the phone. BEcause the offer was not in writing and was not by a merchant, the offer did not constitute a firm offer.
The offeror is not estopped from revoking the offer. An otherwise revocable offer can become irrevocable by estoppel. Estoppel occurs when the offeree relies to his detriment on the belief that the offer will remain open. For an offer to be irrevocable by estoppel, the offeree's reliance must be foreseeable to the offeror and the reliance must be reasonable. In this case, there is no evidence that the offeree relied to his detriment on his belief that th offer would stay open. He did not incur any damages or spend any money in prepartion for purchasing the lawnmower. Therefore, the contract is not irrevokable by estoppel.
Because the offer was neither a firm offer or an option contract and the offeree did not rely to his detriment on the offer, the offeror was not bound to keep the offer open.
II. The nighbor's statement did not create a contract.
The neighbor's statement did not create a contract. Before a revocable offer is accepted, it can be terminated by lapse, revocation, or by opertation of law. An offer is revoked when the offeror, by words or conducts, makes it clear that he no longer intends to be bound by the terms of the offer. An offer is revoked by words when the offeror tells the offeree that he is revoking the offer. An offer is revoked by conduct when the offeror engages in conduct that makes it clear to a reasonable person that the offeror does not intend to be bound and the offeree learns of that conduct.
In this case, the offer was revoked by the offeror's conduct. The offeror sold the lawnmower to another buyer. This action makes it clear that the homeowner no longer intends to be bound by his offer to sell the same lawnmover to neighbor, as he no longer owns the lawnmower and therefore cannot sell it. Furthermore, neighbor learned of this sale prior to his acceptance. When an offeree hears that the offeror has engaged in conduct that tends to show revocation, the offeree can no longer accept the offer. Had the neighbor accepted prior to hearing this information, he would have created a contract and would have a remedy in breach. Also, the offeror's conduct was unequivocal. The offorer did not simply offer to sell the lawnmower to someone else, he entered into a written contract to do so. This conduct shows an unequivocal intent to no longer be bound by the terms of the offer. However, because the offer was properly revoked prior to the offeree's acceptance, no contract was made.
MEE Question 3
In 2015, a man purchased a convenience store that sells gasoline and snack-type grocery items. The man’s store is located within two miles of three other convenience stores that are larger and contain small dining areas. When he bought the store, the man planned to expand it as soon as he could in order to offer the same services and products as the other three stores in the area.
In 2017, the local zoning board passed an ordinance that rezoned the district in which all four stores are located from “light commercial” to “residential.” Convenience stores are not “residential” uses. The zoning ordinance contained typical language protecting existing nonconforming uses.
In early 2018, the man decided to expand his store by 1,100 square feet to add a small dining area. To finance this expansion, he obtained a $200,000 loan commitment from a local bank, with the funds to be disbursed at such times and in such amounts as the bank determined to be appropriate if, in the bank’s good-faith judgment, there was “satisfactory progress” being made on the project. Documents reflecting this commitment were signed by the man and the bank, and a mortgage to secure the repayment of the loan was promptly and properly filed in the local land records office.
Two weeks after obtaining the loan commitment, the man signed a contract with a general contractor for construction of the store expansion. In compliance with its loan commitment, the bank disbursed $50,000 to the man, who, in turn, paid that sum to the general contractor. Construction began immediately thereafter.
Four weeks into the project, a plumbing subcontractor installed all the plumbing fixtures. After the general contractor failed to pay the $20,000 agreed price to the subcontractor, the subcontractor immediately filed a mechanic’s lien against the man’s property in the local land records office to secure its claim for $20,000.
Eight weeks into the project, the bank disbursed an additional $40,000 to the man, who, in turn, paid $40,000 to the general contractor. The general contractor used these funds to pay various creditors, but not the plumbing subcontractor.
Two weeks ago, a bank loan officer learned for the first time about the mechanic’s lien. The next day, when the man approached the bank about making another disbursement, the loan officer refused. The man asserts that, under the loan agreement, the bank is obligated to disburse further funds.
1. Is the expansion project a nonconforming use? Explain.
2. Assuming that the expansion project does not violate the zoning classification, is the bank obligated to disburse further funds? Explain.
3. Does the mechanic’s lien have priority, in whole or in part, over the bank’s mortgage? Explain.
1. Whether the expansion project is a nonconforming use?
The issue is whether the man's expansion of his store by 1,100 square feed to add a small dining area is a nonconforming use.
The local zoning board, granted authority by the state, has the ability to pass ordinances that rezone their districts. A nonconforming use is once that does not coincide which the zoning board's oridance. However, when passing a zoning ordiance, the zoning board has the ability to grandfather in nonconforming uses, thereby allowing the owner of the nonconforming use to possess and use the building without being subject to violating the zoning ordinance; additionally, the owner is able to sell the property with the nonconforming use. However, constructing on a property in violation of the zoning ordinance after the ordinance is passed is an impermissible nonconforming use if the owner previously had a nonconforming use and expanded the property and made substantial additions thereto.
Here, the man built the expansion after the zoning ordinance was passed with a prior nonconforming use, but ithe expansion created an impermissible nonconforming use. The man purchased the convenience store in 2015, and at that time only sold gasoline and snack-type grocery items. The local zoning board passed their ordinance in 2017, and the man's store's zone changed from light commercial to residential. The man's convenience store was not a residential use, and thus was considered a light commercial use before the zoning ordinance was passed. Thus, when the man decided to expand the store by 1,100 square feet, he was in violation of the ordinance because he expanded the property substantially (giong from gasoline and snacks to additional services and products).
Thus, the expansion project is a nonconforming use.
2. Assuming the expansion project does not violate zoning classifications, whether the bank is obligated to disburse the further funds?
The issue is whether the man defaulted on the loan when there was a mechanic's lien filed against the property.
Default occurs when an individual fails to meet the obligations under the security agreement or contract, and payment comes due and/or performance is no longer required. Default is subject to the agreement between the parties. Good faith judgment may be inserted into the agreement, and will be subject to what the parties believed would be considered good faith when entering into the agreement.
Here, the man did not default on the security agreement with the bank when a mechanic's lien was filed because the agreement required the bank's good faith judgment that there was satisfactory progress. Satisfactory progress has occurrerd even though there was a mechanic's lien.
Thus, the bank is obligated to disburse funds because not paying after a mechanic's lien was filed, even though there was substantial progress, is considered bad faith.
3. Whether the mechanic's lien has priority, in whole or part, over the bank's mortgage?
The issue is whether the mechanic's lien as priority over the bank's mortgage.
A security agreement creates a security interest in collateral. A security interest is created in collateral when there is attachment and filing, possession, or control. A security interest attaches when the secured party gives value/collateral, the debtor receives the rights to the collateral, and there is an agreement signed by the debtor that authenticates and sufficiently describes the collateral. With respect to priority of security interests, generally, first in time is first in right; thus, the first party to file or perfect their security interest is the party with the superior right. A lien is a subordinate priority interest when it is subsequent in time.
Fixtures are articles that are so connected with the real property that they essentially become part of the property. Generally, the person having the security interest in the real property will have the right to the fixture as well. However, if a contractor wishes to seperate the fixture from the real property, they must properly fiel the fixture with the local county clerk's office where the property is located. Failure to do so will subject the fixture to be taken with the property, and the individual filing the lien due to the fixture will be a secondary right holder.
Here, a security interest was properly attached and possessed when the man received disbursement to the property from the bank. Similarly, the man received the fixture, but it was recieved after the bank perfected their security interest. As between two perfected security interests, first to file or perfect generally wins. In order to gain a priority interest, the mechanic would have needed to file with the county clerk, identifying the land involved and the security interest in the fixture. Because there is no indication the mechanic met the requirements for a fixture filing, the bank will have priority over the mechanic.
Thus, the mechanic's lien does not have priority over the bank's mortgage.
1. Nonconforming Use Issue
The expansion project is probably a nonconforming use.
At issue is whether the 2018 expansion project's nonconformance with the 2017 zoning ordinance violates the ordinance. Where a district is rezoned, the rezoning ordinance typically contains language that protects existing nonconforming uses. However, usually only existing nonconforming uses are protected under the ordinance. A project or building that is begun after the ordinance is passed typically must meet the new zoning requirements, regardless of whether similar nonconforming uses have survived the ordinance. Further, regardless of the landowner's intentions before the new zoning ordinance, a subsequent nonconforming project or renovation will be found to nonconform and therefore violate the new zoning ordinance.
Here, the man bought the convenience store in 2015, before his use was nonconforming. However, in 2017, the local zoning board passed an ordinance rezoning the district from "light commercial" to "residential." Additionally, convenience stores are not "residential" uses. However, the zoning ordinance contained typical language protecting existing nonconforming uses. Therefore, the man's store before the project was probably protected under the new zoning rule. However, the man's subsequent expansion is adding 1,100 square feet to add a smile dining area. Three other stores in the area were larger and contained small dining areas and were considered "convenience stores." Here, therefore, this project will probably be considered nonconforming because it came after the zoning violation, regardless of the fact that three other convenience stores had a similar layout. They were protected because they existed before the rezoning, but the man's project began after the rezoning and is not residential in nature, and will therefore be considered nonconforming, regardless of his intent before the zoning law to complete this project.
2. Bank's obligation to disburse further funds
The Bank is not obligated to disburse further funds.
At issue is whether Bank's obligation to disburse further funds violates its loan committment to the man. Generally, a loan committment is a valid contract whereby the creditor must provide the loan if the conditions of the contract are met. If a contract depends on a party's good-faith judgment, a party will not be bound to the loan committment if it judges, in its good faith, that the conditions for disbursement are not being met.
Here, the bank and man entered into a $200,000 loan agreement, by which the bank would disburse funds at such times and in such amounts as the bank determined to be appropriate if, in the bank's good-faith judgment, there was "satisfactory progress" being made on the project. Two weeks after, the bank disbursed $50,000 to the man to pay the general contractor. Additionally, the bank disbursed another $40,000 to the man eight weeks into the project. However, later the bank learned for the first time about the mechanic's lien. Because the mechanic's lien signaled to the bank that a party was claiming a security interest in the land, the bank reasonably suspected that progress had halted or slowed. Under the terms of the contract, the bank was entitled to suspend disbursement until it settled whether the mechanic's lean was superior to the bank's interest in the land and would halt the progress of the project. Conversely, the man could argue that depsite the mechanic's lien, progress had not halted, but the bank will probably successfully argue that in its good-faith judgment, they reasonably believe that the lien might impede the progress and can withhold funds until the issue is settled. There is no evidence that the bank is acting in bad faith. Therefore, the bank will probably be able to withhold funds from the man.
3. Mechanic's lien and priority over bank's mortgage
The bank's mortgage has priority.
At issue is whether the bank's mortgage has priority over a mechanic's lien where the mortgage attached and was perfected before the mechanic's lien. While mortgages are security interests in land, Article 9 governs security interests in goods or fixtures. A mortgage is valid where the creditor provides value to the debtor, the debtor has a right in the land to secure it as collateral for the mortgage, and the creditor and debtor enter into a mortgage contract. The holder of a mortgage puts other parties on notice when it validly records its interest in the mortgage. Further, under Article 9, a security interest becomes enforceable when it attaches. A security interest attaches when the creditor provides value to the debtor, the debtor and creditor enter into a security agreement, and debtor has rights in the collateral. Additionally, a creditor perfects his mortgage when he files a financing statement in the local land records office. Usually, where creditors with competing security interests in land both have enforceable security interests, the first creditor to perfect, or record the interest, has priority over the subsequent creditor.
Here, the bank's loan commitment of $200,000, of which it paid $90,000, was secured by a mortgage on the man's property. The man had rights in the property, and the mortgage promptly and properly filed its interest in the local land records office. Accordingly, the bank had a valid mortgage on the land to secure its loan commitment. About six weeks after the bank recorded its mortgage, the subcontractor filed a mechanic's lien against the man's property in the local land records office when the general contractor refused to pay the $20,000 agreed price to the subcontractor. The mechanic's lien, if approved by a court, would be considered a judicial lien. Generally, properly recorded and enforceable security interests in property prevail over subsequent liens. Therefore, the bank's mortgage has priority over the mechanic's lien. Further, the subcontractor and the man never entered into an agreement to provide the property as a security interest for the mechanic's work. Therefore, the bank's mortgage has priority.
MEE Question 4
By his will, a testator created a trust of a small house and an apartment building containing six three-bedroom apartments. The will directed the trustee to sell the house within six months of the testator’s death. The will also provided, in relevant part, that “all trust income will be paid to my cousin, Albert, during his lifetime” and that “upon Albert’s death, all trust principal will be distributed to my granddaughter, Betty.” Neither the will nor the trust made any provision for the testator’s son, who was living at the time the will was executed. Shortly after making this will in 2006, the testator died.
After the trust was created, the trustee sold the house for $100,000 and properly invested the sale proceeds. All six apartments in the apartment building were rented at market rates ranging from $1,200 to $1,400 per month.
In 2010, one apartment, which had been rented for $1,300 per month, was vacated. The trustee thereafter rented this apartment to himself for $1,300 per month. The other five apartments continued to be rented throughout the term of the trust at market rates of between $1,200 and $1,400 per month.
In 2012, a portion of the apartment building’s roof was destroyed by fire. Because the trustee had not purchased a fire insurance policy, he spent $50,000 to repair the roof. The trustee charged this expense to trust income even though the trust had liquid assets of more than $120,000 that could have been used to pay for the repair. Because the roof repair was charged to trust income, Albert received $50,000 less income from the trust in 2012 than he had received in prior years.
In 2013, Betty died. Betty was survived by her husband and a daughter. Under Betty’s duly probated will, she left her entire estate to her husband. If Betty had died intestate, her estate would have been distributed equally between her husband and her daughter.
There is no applicable statute relevant to the disposition of Betty’s interest in the trust.
In 2018, Albert died. Albert was survived by Betty’s husband and Betty’s daughter. Albert was also survived by the testator’s son.
1. What fiduciary duties, if any, did the trustee violate in administering the trust? Explain.
2. Upon Albert’s death, how should the trust principal be distributed? Explain.
Trustee violated several fiduciary duties.
The primary duties of the trustee are the duty of loyalty and duty of care. The duty of loyalty essentially mandates the trustee exercise the utmost good-faith in administering the trust and act with the best interests of the trust in mind. A trustee may breach the duty of loyalty in any number of ways. For instance, if a trustee "self-deals," he will have breached the duty of loyalty. Self-dealing refers to a trustee who directly involves himself with the trust transactions; for example, the trustee buys sells trust res to himself, his friends, invests his own money into the trust, etc. will be held to have breached the duty of loyalty by self-dealing. Unlike corporate law, a trustee cannot escape a breach of the duty of loyalty by ensuring the transaction was "fair." While the beneficiary may ratify the trustee's action, the trustee is still deemed to have breached. The duty of care similarly requires the trustee to exercise the care of a reasonably prudent person operating under like circumstances. In practice (and the non-investment context), this forces the trustee to "earmark" and "segregate" the property; the trustee cannot co-mingle his property with the trust's property, and he must avoid intermingling the trust income from the trust principal.
In this case, trustee breached both the duty of loyalty and the duty of care by renting one of the trust's apartments to himself. That trustee paid fair market value is of no consequence; by renting the apartment, he committed self-dealing, since he essentially served as his own landlord, which in this context is the crux of any self-dealing claim (i.e. it refers to the trustee who deals trust property between himself as an individual and himself as trustee). Moreover, by paying rent into the trust, trustee breached the duty of care, since he co-mingled his own assets with those of the trust. Thus, whatever other duties trustee may have breached, it's clear that his apartment rental violated both the duty of loyalty and the duty of care.
Whether trustee breached the duty of care with respect to the roof repair is a closer question. If the challenger can show trustee's failure to secure fire insurance on the apartments was negligent (i.e. that he acted unreasonably by not obtaining it), it's likely a court will find that trustee breached the duty of care by failing to act as a reasonably prudent person would under similar circumstances (i.e. a reasonable trustee would have gotten insurance). In my opinion, trustee's failure to purchase fire insurance does breach the duty of care, especially considering the trust depended on the property to generate income (i.e. if the property burned, the trust burned with it). However, without more information (was it prohibitively expensive, was it more trouble than it was worth, etc.), a firm conclusion cannot be reached one way or the other.
In executing his duties as trustee, the trustee has several implied duties, which are those the trustee must necessarily possess if he is to execute the terms of the trust. For instance, a trustee who must invest the trust res has an implied duty to enter into contracts, because if he didn't, there would be no point to granting him investment authority. Likewise, a trustee of real property must repair the property. Thus, trustee acted properly when he repaired the roof. The sole question is whether it was proper for trustee to use funds from the trust income. Absent a showing that trustee acted incredibly stupid in using funds from the trust income, his conduct will probably stand. Trustee has a duty to repair the property; unless the terms of the trust indicate otherwise, he has significant discretion in deciding how best to repair the property. If, for instance, trustee elected to use the trust income rather than liquidating one of the assets because he reasonably believed the assets would significantly appreciate in value, no rational court would hold the trustee liable. If, on the other hand, trustee had illicit designs on selling the assets to himself for a bargain, then he surely will be liable for his actions. Ultimately, however, the facts are insufficient to show us whether trustee breached a fiduciary duty by using the trust income to pay for the repairs. Generally, trustee's decision will be entitled to deference, because courts generally grant him discretion over such implied powers in the absence of any guidance from the settlor.
Once Albert dies, the trust principal should be distributed to Betty's Husband. At issue is whether Betty's duly probated will permits Husband to take the trust principal.
Future interests are generally deviseable, descendible, and alienable. Thus, a person may leave a future interest in a valid will to a beneficiary. If the person dies intestate, their future interest will pass accordingly. In this case, testator's valid testamentary trust provided Albert with the trust income for his life, then dictated the principal pass to Betty upon Albert's death. Betty had a valid will that named Husband as her sole beneficiary. At the time Betty died, she had an indefeasibly vested remainder in the trust. Accordingly, Betty had the right to devise that interest to her Husband. Therefore, Husband will receive the trust principal upon Albert's death. It should be noted that if Betty's will were invalid, Husband and Daughter would share in the principal, provided an applicable anti-lapse statute applied. These statutes are present in nearly all States, and most permit sufficiently close family members (e.g. children, parents, spouses, etc.) to step into the shoes of their parent and take their share (some statutes cast a wider familial scope, e.g. cousins, grandparents, etc., while a minority place no restrictions).
The Trustee violated the duty of loyalty and the duty to adminster the trust with reasonable care.
A trustee owes a duty of utmost good faith and undivided loyalty to both the trust itself and to its beneficiaries. Included in this is the duty to protect trust property by properly investing its assets and managing the trust in a way that a reasonable trustee in that position would manage. Protecting trust property could include diversifying and investing trust assests, managing real property, and ensuring that the trust remains as profitable for future beneficiaries.
In this case, the Trustee violated the duty of loyality by self-dealing. A trustee, individually or through people/businesses close to him, can't enter into any personal contracts with the trust or take money from the trust. When the Trustee leased one of the apartments to himself, he violated the duty of loyalty by engaging in self-dealing transaction. Although it seems that Trustee paid a reasonable rental value for the apartment, that is immaterial to whether he breached fiduciary duties. In addition to the self-dealing transaction, Trustee violated his duty to exercise reasonable care in managing/investing/protecting trust assests when he did not purchase fire insurance on the apartment. A trustee is obligated to exercise the same care as a reasonably prudent investor would in the circumstances. The apartment was the majority of the trust property and a reasonable investor would have adequately insured the most valuable trust assest. Moreover, the beneficiaries are entitled to trust property, which would have been the insurance proceeds instead of the $50,000 used from the trust itself to repair the roof. Therefore the trustee's failure to purchase insurance to protect against damage was unreasonable.
Additionally, the Trustee failed reasonably manage trust property/assests when he took $50,000 from trust income instead of its liquid assests. Although a court will normally give Trustee's discretion when it comes to trust managment/investment, the decision to use income instead of liquid assests was unreasonable. Specifically because Albert was expressly entitled by Testator to recieve 'all trust income' during his lifetime and the Trustee took the $50,000 out of Albert's income even though there was other sufficient trust assests.
In conclusion, the Trustee violated the duty of loyalty and the duty to exercise care in managing/investing and protecting the trust assests.
The trust interests should go to Betty's husband, as devised in her will.
A trust can expressly provide for the distrubition of property upon a specificed event, such as a death. Some courts hold that if the person who was desiginated to get the remaining principle is predeceded the Testator, and there is no provision to the contrary, the trust will terminate and revert back to the Testator's estate. However, other courts hold that being a remainder beneficiary has a future interest. In this case, Albert was the beneficiary of the the trust during his life, and Betty was the remainder beneficiary, as indicated by the Trust instrument. Future trust income is transferable and devisable as long as there is no condition to the contrary in the trust instrument itself. Therefore, Betty's husband would recieve the income if the trust assest was devised in a will, and if not then it would pass through Betty's intestate.
MEE Question 5
A woman has sued a man for injuries she received in an automobile collision at a suburban traffic circle in State A on January 1. Both drivers were driving alone, there were no other witnesses, and a forensic accident investigation failed to determine which of the two drivers was at fault.
Among other things, the woman’s complaint alleges the following:
1. The woman was driving her pickup truck in the traffic circle at or below the speed limit when the man suddenly pulled his car into the traffic circle immediately in front of her.
2. The man’s action left the woman no opportunity to slow down, stop, or avoid colliding with his car.
3. The woman observed that the man was texting on his phone when he entered the traffic circle and did not see him look up to check for traffic before entering the circle.
4. The accident caused the onset of significant neck pain for the woman requiring extensive medical treatment and resulting in lost wages.
The man has denied that he was texting at the time of the accident and alleges that the accident was the woman’s fault. According to the man, the woman was driving her truck substantially over the speed limit, her brakes were defective, and despite the fact that the man’s car was far ahead of the woman’s truck when he entered the traffic circle, the woman failed to slow down to avoid a collision.
A jury trial has been scheduled.
The man’s attorney plans to offer the following evidence:
(a) Testimony by a mechanic to the effect that “I inspected [the woman’s] truck a week before the accident. The brakes on the truck were worn and in need of repair. I ordered new parts.”
(b) A written invoice signed by the mechanic stating: “New parts for [the woman’s] truck brakes ordered on December 23 and received on January 2,” found in the mechanic’s file cabinet among similar invoices for other customers.
(c) Testimony by the woman’s doctor, who treated the woman for neck pain after the accident, that the woman told the doctor, “I have suffered from painful arthritis in my neck for the past five years.”
The woman’s attorney plans to call the man’s roommate to testify that “[the man] is addicted to texting and never puts his phone down. He even texts while driving.”
State A has adopted evidence rules identical to the Federal Rules of Evidence.
1. Is the mechanic’s testimony admissible? Explain.
2. Is the invoice for the new parts for the woman’s truck brakes admissible? Explain.
3. Is the doctor’s testimony admissible? Explain.
4. Is the roommate’s testimony admissible? Explain.
The basic rule in evidence is that all relevant evidence is admissible. Evidence is relevant if it tends to make the existenc of a fact of material consequence more or less likely to be true. Generally, evidence relating to the person, places, or timing relevant to litigation are admissible.
Is the Mechanic's Testimony Admissible?
The mechanic's testimony is admissible. The issue is whether the Mechanic can testify as an expert. Opinion evidence is generally inadmissble. However, under some circumstances a opinion evidence may be offered by either a lay witness or by an exper witness. Opinion evidence by a lawy witness is admissible if it is a) helpful to the factfinder b) rationally based on his perception and b) not based on scientific evidence or expertise. Here, the Mechanic's testimony about the Woman's car involves testimony about his experience and judgment as a mechanic. A lay witness would ordinarily not be qualified to testify on such a matter. Accordingly, the mechanic may testify as an expert witness. An expert witness may testify as to his/her opinion when it is a) helpful to the finder of fact b) the expert is qualified as an expert c) the expert is reasonably certain as to his opinin and d) the opinon has proper factual support. An exper witness may testify as to those things that he a) has personal knowledge of b) learned in the court room or c) was given knowledge of for the purpose of the trial and the item is something that an expert would ordinarily rely on in making a determination.
Here the Mechanic will testify that he examined the woman's breaks a week before the accident and that her breaks were in need of repair. Here the expert appears qualified becuase he is a mechanic. Mechanic's are experts for the purposes of the cars they work on. The testimony will be helpful to the jury because it goes to the issue of whther the woman had an opportunity to slow down. There is also proper factual support because the man inspected the vehicle a week before the crash. The tesitmony is also relevant because it tends to make the existance of a fact of consequence (whether the woman had the opporuntity to stop and the man's allegationt that the woman did not have working breaks) more or less likely to be true. Accordingly, the mechanic may testify about his observations of the woman's vehicle.
Is the Invoice for the New Parts for the Woman's Truck Brakes Admissible?
The invoice for new part is admissible. Hearsay is a statement made out of court offered to prove the truth of the matter asserted. Subject to certain exception, Hearsay is inadmissible. The statement is in the document is hearsay because it is an out of court statemetn made by the mechanic and it is offered to prove the truth of the matter asserted (that the woman's breaks were not working). Here, the mechanic's note might fall under two possible hearsay exceptions a) present recollection recorded (which would allow the note to be read into evidence) or b) the record of a regularly conducted business transaction exception.
The present recollection recorded exception applies to memorandum's where a) the witnesses memory cannot be refreshed b) the witness made or adopted the statements in the memorandum c) at time where the event or thing recorded was fresh in the witnesses mind d) and the information is an accurate reflection of the witnesses recollection. Under the present recollection recoreded exception to the hearsay rule the record of the memorandum may be read into the record.
Here, assuming the Mechanic's recollection could not be refreshed the invoice would qualify under this exception. It appers to be made at or near the time of the transaction, by the mechanic and while the it was fresh in the mechanic's mind. The Mechanic singed the document as well. If the Mechanic's recollection cannot be refreshed the statement may be admissible.
A record of a business transaction is admissible if it is a record of a transaction of a business, the transaction is in the ordinary course of business for the corporation and records of such transactions are customarily made, and where the record is authenticated by a person with a duty to report the information as accurate. Here, the memor is record of the transaction to pruchase parts for the Woman's truck. It is a record of a business transaction. It is an invoice and the mechanic's shop probably regularly purchases parts, furhter it apears that the item is customarily made in response to such tansactions because the mechanic kept the record in a file with records of other invoices for customers. Finally, the document was signed by the mechanic, so it was authentic.
Accoridnlgy, the inforamtion contained in the Mechanic's invoice is admissible.
Is the Doctors Testimony Admissible?
The Doctors testimony is admissible. Hearsay is a statement made out of court offered to prove the truth of the matter asserted. Subject to certain exception, Hearsay. The statemetn by the doctor that the woman told her "I have suffered from painful arthritis in my neck for five years." Is admissible under the hearsay rules but may be subject to a claim of privilege by the woman. Here the statement is admissible either under two exceptions a) statement by a party opponent or b) statement made for medical purposes.
A statement by a party opponet is an exception to the hearsya rule. Here, the woman said "I have sufferd form painful arthritis in my neck for the past five years." The woman is a party oppoonent, the statemetn would be admissible against her. Further, statements made for the purposes of medical treatment are also excpetions to the hearasy rule. It appears that the statement was made to the doctor for the purpose of seeking medical treatment. It is therefore probably addmisisble under that exception to the hearsay rule.
All that said, the statement by the doctor might be subject to the woman's claim of privilege. The federal rules do not recognize the doctor patient privilege. However, if the state in which this calim is being brought does, the woman could claim the statemetn is subject to her doctor patient privilege. Further, the federal rules recognize that statement made by clients to doctors when the doctor is acting as the doctors agent to provide advice to the lawyer as the client's injuries would be protected by the attorney client privilege under the an agency theory of attorney client privilege. Acccoridngly, the statemetns are admissible but may be subject to a claim of privilege by the Woman.
Is the Roommate's Testimony Admissible?
The roomate's testimony is inadmissible. The basic rule in evidence is that all relevant evidence is admissible. Evidence is relevant if it tends to make the existenc of a fact of material consequence more or less likely to be true. However, chacter evidene is inadmissible in civil trials. Character evidence is evidence that shows that a person has a particular disposition and acted in accordance with that disposition at the time in question. An exception to that rule is the habit exception. The habit exception allows evidence of a habit into evidence when it demonstrates a person automatic reaction to a paritcular set of facts. Habit evidence may be offered to show a person acted in conformity with the habit. To qualify a habit must be frequent and particular. Here, the roommate will testify that the man is always on his pohne and that his addicted to it and that he even texts while driving. This evidence is not specifici and particular enough to be habit evidence becuase it does not sho an automatic reaction on the party of the man. The evidene is inadmissible as character evidence outside an excpetion.
Under the Federal Rules of Evidence (FRE) 403, evidence is admissible if it is both logically and legally relevant and otherwise complies with the rules of evidence and the constitution. Logical relevance means that the evidence tends to make a disputed fact more or less probable than if the evidence did not exist. Legal relevance requires that the evidence's substantive value is not substantially outweighed by a danger of undue prejudice, the risk of confusing the jury, the risk of cumulative evidence, or wasting time.
1. The issue is whether the mechanic's testimony is admissible as expert testimony.
The man's attorney seeks to introduce testimony from an auto mechanic to the effect that he inspected the woman's truck a week prior to the accident, the brakes of the truck were in need of repair, and the mechanic ordered parts for the brakes. The mechanic's testimony is logically relevant because it tends to make the fact that the woman's brakes were defective more probable. There is no indication that this evidence's substantive value is substantially outweighed by any of the dangers listed in FRE 403. Therefore, the mechanic's testimony is relevant.
b. Expert Testimony
A lay witness may testify about facts within their personal knowledge not requiring expertise. For testimony requiring expert knowledge, a witness must first be qualified as an expert. The Federal Rules of Evidence and Daubert require that an expert witness must meet certain requirements. An expert is a person who, through training, education, or experience, has an advanced understanding of a certain area of knowledge. An expert is qualified if the expert uses standards, methods, and techniques accepted within the relevant community and applies them to the facts of the case.
In this case, the mechanic is an expert in automobile mechanics. He also has personal knowledge regarding the conditions of the braking system on the woman's truck. Because the mechanic has expert knowledge with regard to auto mechanics and because his testimony will assist the trier of fact, he will need to be qualified as an expert. If his testimony meets the requirements of Daubert, then his testimony will be admissible.
2. The issue is whether the invoice for the new parts for the woman's truck brakes is admissible under the business records exception to the rule against hearsay.
The man's attorney seeks to introduce tangible evidence consisting of a written invoice signed by the mechanic stating that the mechanic ordered parts for the woman's truck on December 23 and that the parts were received on January 2. The accident occurred on January 1. The fact that the parts were received a day after the accident make it more probable that the woman's brakes were not fixed prior to the accident. There is no indication that this evidence's substantive value is substantially outweighted by any of the dangers listed in FRE 403. Therefore, the written invoice is relevant.
b. Business Records Exception to the Rule Against Hearsay
The rule against hearsay prohibits the introduction of an out-of-court statement offered to prove the truth of the matter asserted. The written invoice contains an out-of-court statement that the mechanic did not receive the necessary parts to repair the woman's brakes until January 2. The man's attorney seeks to use this evidence to prove that the parts were not received until January 2. Therefore, the written invoice is hearsay.
An exception to the rule against hearsay is the introduction of business records if such records are regularly kept by the business, were made by someone with personal knowledge of their contents, and lack any indicia of unreliability. Here, the written invoice was found in the mechanic's file cabinet along with similar invoices for other customers. This indicates both that the records were regularly kept and that this particular record lacks any indicia of unreliability. The record was also made and signed by the mechanic, who had personal knowledge of the woman's truck and the parts needed to repair it. Therefore, the written invoice qualifies as a business record and is admissible under the exception to the rule against hearsay.
3. The issue is whether the doctor's testimony is admissible.
The man's attorney seeks to introduce testimony by the woman's treating physician that the woman told the doctor "I have suffered from painful arthritis in my neck for the past five years." This statement makes it less probable that the accident caused the onset of significant neck pain for the woman, as alleged in her complaint. There is no indication that this evidence's substantive value is substantially outweighed by any of the dangers listed in FRE 403. Therefore, the doctor's testimony is relevant.
b. Statement of Party Opponent
The rule against hearsay prohibits the introduction of an out-of-court statement offered to prove the truth of the matter asserted. In this case, the woman's statement that she suffered from painful arthritis in her neck for the past five years was made out-of-court, and it is being offered to prove that the woman's neck pain has been consistent for the past five years. Therefore, the statement seems to meet the definition of hearsay. However, the Federal Rules of Evidence have categorically excluded the statements of party opponents from the definition of hearsay. Therefore, although the doctor's testimony includes an out-of-court statement offered to prove the truth of the matter asserted, it is not barred by the rule against hearsay.
c. Physician-Patient Privilege
Otherwise admissible evidence may be excluded on the basis of privilege. The physician-patient privilege arises when a statement is made to a treating physician for the purpose of obtaining medical treatment. Here, the woman told the doctor that she has suffered from painful arthitis in her neck for the past five years. Because the doctor was treating the woman for neck pain after the accident, this statement was made in the course of, and for the purpose of, obtaining medical treatment. Therefore, the doctor's testimony is inadmissible based on the physician-patient privilege.
4. The issue is whether the roommate's testimony is admissible.
The woman's attorney seeks to introduce testimony from the man's roommate that the man "is addicted to texting and never puts his phone down" and that "he even texts while driving." This testimony tends to make the fact that the man was texting while entering the traffic circle more probable. There is no indication that this evidence's substantive value is substantially outweighed by any of the dangers listed in FRE 403. Therefore, the roommate's testimony is relevant.
b. Character Evidence
In a civil trial, character evidence is inadmissible to prove that a party acted in accordance with a particular trait on a particular occasion unless that party's character is an element of the claim (e.g. character in a child custody case). Character evidence may be used to impeach a party if that party takes the witness stand, and if the evidence relates to that party's character for truthfulness. Specific instances of prior conduct are indamissible unless used to directly contradict a party's testimony.
Habit evidence is admissible to prove that a party acted in conformance with their routine and regular practice on a specific occasion. Habit evidence must establish that a party repeatedly acts in a certain way, based on the witness' personal knowledge of the party's behavior.
In this case, the man's roommate's testimony is being introduced to prove that the man was texting on the particular occasion of the accident. The roommate's statement that "the man is addicted to texting and never puts his phone down" is inadmissible character evidence because it consists of the roommate's opinion as to the man's character.
However, the rommate's testimony that the man "even texts while driving" may constitute habit evidence if the man can support this assertion with specific facts. As the statement exists, however, it is not sufficient to qualify as habit evidence because it is a bare assertion and does not establish a repeated pattern of conduct. Therefore, the roommate's testimony is inadmissible.
MEE Question 6
A woman and a man decided to start a solar-panel installation business in State X. They agreed to incorporate the business and to be equal shareholders. They also agreed that the woman would be solely responsible for managing the business.
On November 10, the woman mailed to the Secretary of State of State X a document titled “Articles of Incorporation.” The document included the name of the corporation (Solar Inc.), the name and address of the corporation’s registered agent, and the woman’s name and address (as incorporator). The woman, however, inadvertently failed to include in the document the number of authorized shares, as required by the business corporation act of State X, which in all respects comports with the Model Business Corporation Act (1984, as revised). The woman signed the document and included a check to cover the filing fee.
On November 20, the woman, assuming that the articles of incorporation had been filed and purporting to act on behalf of the corporation, entered into a one-year employment contract with a solar-panel installer. The woman signed the employment contract as “President, Solar Inc.” and the installer signed immediately below.
On November 30, the woman received a letter from the Secretary of State’s office returning the articles of incorporation and her check. The letter stated that the articles, although received on November 15, had not been filed because they failed to include the number of authorized shares, as required by state law.
On receiving this letter, the woman immediately revised the articles by adding the number of authorized shares. On December 5, the woman mailed back the revised articles to the Secretary of State’s office, along with another check to cover the filing fee. The revised articles of incorporation were received and filed by the Secretary of State’s office on December 10.
Six months later, Solar Inc. went out of business and the installer’s employment was terminated.
1. When did Solar Inc. come into existence? Explain.
2. Is the woman personally liable to the installer on the employment contract that she signed? Explain.
3. Is the man personally liable to the installer on the employment contract? Explain.
1. The issue presented examines whether Solar Inc. existed on November 20th when the woman entered the contract or on December 10th when the Secretary of State filed the revised articles of incorporation. A corporation is formed when a person files the apporpriate papers with the Secretary of State. The state's statutes will determine what items must be filed to fulfill incorporation. The woman did not file the appropriate documents with the Secretary of State on November 10th. The corporation was not formed then because of the missing informaiton such as the number of authorized shares. Solar Inc. was formed de jure on December 10th when the appropriate articles of incorporation were filed with the Secretary of State. Solar Inc. existed therefore on December 10th.
However, in some states, the court will apply a theory of de facto corporation. This requires the members of the corporation to reasonably believe they have formed a corporation and to hold themselves out as a corporation. This is an equitable remedy and requires the corporation and/or the outside contracting party to reasonable believe the corporation is properly formed. The woman relied on the articles she submitted being adequate to incorporate Solar Inc. She entered a contract in her capacity as a manager and acted on behalf of the corporation. She entered the contract on November 20th. In respect to this contractor, Solar Inc. existed by estoppel and can be held liable for the contract entered. For the purposes of that contractor, Solar Inc. existed on November 20th.
2. The issue is whether the woman is personally liable for a contract she entered on behalf of Solar Inc. Promoters are personally liable for contracts they sign on behalf of the soon-to-be corporation. They act on behalf of the corporation before it is fully formed as its agent. Promoters can only shift liability through novation and the corporation will assume liability through adopting the contract. The woman acted in the capacity of a promoter. She entered into a contract before Solar Inc. was properly formed. There was no explicit agreement between the woman and Solar indemnifying her of any liabiliyt. Additionally, there was no agreement between the woman and Solar containing any novation clause. For these reasons the woman is personally liable for the contract she entered. The fact that the corporation had not yet been formed properly is not dispositive. Promoters by custom work before the corporation is properly formed.
3. The issue is whether the man is personally liable for a contract the woman entered under the theory of partnership. A general partnership does not have formal filing requirements. It can be created when two or more individuals decide to partner together to split profit. Partners are personally liable for all contracts the partnership forms after they enter the partnership. The man and woman decided to join together to become equal shareholders. Shareholders split all profits of a corporation. Although they did not express these goals in the terms of a partnership but rather the terms of a corporation, the fact that the corporation was not formed should weigh in favor of the unintentional creation of a general partnership. The man was a part of the partnership when the woman entered the contract and created this liability. He will be personally liable for this contract for these reasons. The man may argue that his lack of management may make him a limited partner rather than a general partner and limit his liabilty. However, limited partnerships have some filing requirement. In addition, limited partners are not determined by their management capacity. Some states allow limited partners to have managerial power and retain their limited liability. The lack of specific parameters around the agreement between the man and woman outside of the woman's role as a manager demonstrates that the organization should be treated as a general partnership. The man should have been on notice that the contract was created before the corporation was created. He should have sought to amend the contract to absolve himself of liability. For these reasons, the man should be considered personally liable for the employment contract.
(1) When did Solar Inc. come into existence?
The issue is whether the corporation came into existence before its correct filing on December 10th. Solar Inc. came into existence as a de facto corporation on Noember 20th. To form a corporation, there must be an incorporator who executed the Articles of Incorporation and delivers them to the Secretary of State. The Articles of Incorporation must state the corporations name, the incorporators name and address, the registered agents name and address in the state, and information regarding authorized shares. When parties attempt to create a corporation but, unbeknownst to them, the corporation fails to come into existence, the parties will be held personally liable because what ended up forming is a general partnership. A general partnership is where two or more people hold themselves out as co-owners of a business for profit. This is the default business form if an attempted corporation fails. However, if the parties were unaware of the failure to form the corporation, they can avoid personally liability by either proving that they formed a de facto corporation or there is a corporation by estoppel. A de facto corporation is proved when: (1) there is a relevant corporation statute; (2) the parties made a good faith, colorable effort to comply with the statute; and (3) the parties were acting as a corporation and exercising corporate privileges. A court will form a de facto corporation only when the parties were unaware of the mistake. Corporation by estoppel is when parties thought they formed a valid corporation and were conducting business as if they were one. They will be estopped from denying the business form and third parties will be estopped from denying that they are a corporation.
Here, the woman, acting as incorporator for the attempted business, mailed the Secretary of State of State X Articles of Incorporation. The document included the required name of the corporation, the registered agent and the incorporator. However, the woman inadvertently failed to include the authorized shares. This failure meant that the corporation was not validliy formed and the woman and man had created a partnership instead. However, the woman can show that the there is a corporate statute, that she made a good faith, colorable effort to comply with it by following every step but that one inadvertently, and that Solar Inc. was exercising corporate privileges because it began entering into contracts. She can also show her good faith attempt to comply by the fact that when she discovered on November 30 that she had failed to properly file, she immediately revised the Articles and mailed them back, showing that she was unaware of her previous mistake. The court would likely rule that Solar Inc. was formed as a de facto corporation when the woman and man entered into a contract with a solar-panel installer becuase that is the first time that Solar Inc. attempted to exercise corporate privileges. Additionally, Solar Inc. and the installer will be estopped from denying that a corporation existed at this point because both treated the contract as if it was with a validly formed corporation. Therefore, Solar Inc. came into existence on November 20th as a de facto corporation and officially on December 10th when the Articles of Incorporation were filed.
(2) Is the woman personally liable to the installer on the employment contract that she signed?
The issue is whether the woman will be personally liable to the contract. The woman will likely not be personally liable to the contract. A promoter is someone who conducts businss with others before a corporation is formed to receive finances or investments for the corporation. A promoter is personally liable on the contracts it makes unless the contracts specify otherwise. The corporation will become liable if it adopts the contract. However, a promoter will remain liable until the third party, corporation and promoter agree to a novation, substituting the promoter for the corporation as the solely liable entity. In general partnerships, each general partner is personally liable for the contracts and debts of the partnership. In corporations, shareholders enjoy limited liability and are not liable for the contracts of the corporation, only the corporation is liable.
Here, if the woman is treated as a promoter because she technically entered into a contract before the corporation was formed, she would be personally liable on the contract until Solar Inc. and the installer agree to a novation. If a court treats this contract as forming through a general partnership, since a corporation had not yet been formed, the woman would also be personally liable to the contract. However, because a de facto corporation was likely formed when the contract was entered into on November 20, the woman will not be personally liable and will enjoy limited liability as a shareholder of Solar Inc. Therefore, because Solar Inc. was a de facto corporation at the time the contract was signed, the woman is not personally liable to the contract.
(3) Is the man personally liable to the installer on the employment contract?
The issue is whether the man is personally liable on the employment contract. The man is not personally liable. Shareholders of a corporation enjoy limited liability and are only personally liable for their own stock. Additionally, directors and officers enjoy limited liability. The corporation itself is responsible for its debts. As noted previously, general partnerships and its partners are liable for the debts of the partnership. In a close corporation, a court can piece the corporate veil if it finds that the shareholders abused the corporate form and fairness requires holding them personally liable. A court will pierce the corporate veil in cases where the corporation has been undercapitalized at its inception or where the corporation is an alter ego for the shareholders.
Here, the if the man and woman formed a partnership and the court holds the employment contract as one of the partnership, the man (and the woman) are personally liable to the installer. However, if the court determines that the a de facto corporation was created, the man is not personally liable and enjoys limited liability. This is not a situation where the court will pierce the corporate veil and hold the man personally liable because there is nothing to suggest that the man was acting through the corporation as an alter ego, or that the corporation was undercapitalized. The corporation itself is reasonable for the employment contract. Therefore, the man will enjoy limited liability and will not be personally liable for the installer's contract.