July 2012 MEE Questions

Trusts and Future Interests Question

Thirty years ago, Settlor entered into an irrevocable trust agreement with Trustee. Pursuant to the terms of this trust, all trust income was payable to Settlor’s Husband, and upon Husband’s death, all trust assets were to be distributed to “Settlor’s children.” The trust also provided that Husband’s income interest would terminate if Husband remarried after Settlor’s death.

When the trust was created, Settlor and Husband had three children. Five years later, Settlor and Husband had a fourth child.

Ten years later, Settlor died.

This year, when the trust principal was worth $750,000, Husband wrote to his four children. Husband noted that he was about to retire and wanted cash to buy a retirement home. He asked the children to agree to terminate the trust and to direct Trustee to distribute $250,000 of trust principal to Husband and the remaining $500,000, in equal shares, to the four children. All four children agreed to Husband’s proposal. Husband and the four children then wrote Trustee the following letter:

We, the only beneficiaries of the trust, direct you to terminate the trust and distribute $250,000 of trust assets to Husband and the remainder, in equal shares, to Settlor’s four children.

Trustee’s response stated:

I cannot make the requested distribution to you for the following reasons:

(1) The trust is irrevocable and cannot be terminated.

(2) Even if the trust were terminable, termination would require the consent of all beneficiaries. This is not obtainable because, if a child of Settlor predeceases Husband, one or more of Settlor’s future grandchildren might be entitled to trust assets at Husband’s death.

(3) Even if the trust were terminable, only the three children living when the trust was created have a beneficial interest in the trust; therefore no distribution of trust principal can be made to Settlor’s youngest child.

(4) The actuarial value of Husband’s interest is only $150,000. Therefore, even if the trust were terminable, any distribution of trust principal to Husband in excess of that amount would be a breach of trust.

Is Trustee correct? Explain.

Criminal Law and Procedure Question

At 9:00 p.m. on a Sunday evening, Adam, age 18, proposed to his friend Bob, also age 18, that they dump Adam’s collection of 2,000 marbles at a nearby intersection. “It’ll be funny,” Adam said. “When cars come by, they’ll slip on the marbles and they won’t be able to stop at the stop sign. The drivers won’t know what happened, and they’ll get really mad. We can hide nearby and watch.” “That’s a stupid idea,” Bob said. “In the first place, this town is deserted on Sunday night. Nobody will even drive through the intersection. In the second place, I’ll bet the cars just drive right over the marbles without any trouble at all. It’ll be a total non-event.” “Oh, I’ll bet someone will come,” Adam replied. “And I’ll bet they’ll have trouble; maybe there will even be a crash. But if you’re not interested, fine. You don’t have to do anything. Just give me a ride to the intersection—these bags of marbles are heavy.”

At 10:00 p.m. that same night, Bob drove Adam and his bags of marbles to the intersection. Adam dumped several hundred marbles in front of each of the two stop signs at the intersection. Adam and Bob stayed for 20 minutes, waiting to see if anything happened. No one drove through the intersection, and Adam and Bob went home.

At 2:00 a.m., a woman drove through the intersection. Because of the marbles, she was unable to stop at the stop sign. Coincidentally, a man was driving through the intersection at the same time. The woman crashed into the side of the man’s car. The man’s eight-year-old child was sitting in the front seat without a seat belt, in violation of state law. The child was thrown from the car and killed. If the child had been properly secured with a seat belt, as required by state law, he would likely not have died.

Adam has been charged with involuntary manslaughter as defined at common law, and Bob has been charged with the same crime as an accomplice. State law does not recognize so-called “unlawful-act” involuntary manslaughter.

1. Could a jury properly find that Adam is guilty of involuntary manslaughter? Explain.

2. If a jury did find Adam guilty of involuntary manslaughter, could the jury properly find that Bob is guilty of involuntary manslaughter as an accomplice? Explain.

Constitutional Law Question

Congress recently enacted the Violence at Work Act (the Act).

Title I of the Act provides that an employee who has been injured in the workplace by the violent act of a coworker has a cause of action for damages against that coworker.

Title II of the Act imposes several duties on employers subject to the Act and creates a cause of action against employers who do not fulfill those duties. Section 201 provides that all employers, “including all States, their agencies and subdivisions,” who have more than 50 employees are subject to the Act. Section 202 requires employers subject to the Act to (i) train employees on certain methods of preventing and responding to workplace violence, (ii) conduct criminal background checks on job applicants, and (iii) establish a hotline to report workplace violence. Section 203 provides that if an employer subject to the Act does not fulfill the duties imposed by Section 202, an employee who has been injured by the violent act of a fellow employee may recover damages from the employer for the harm resulting from that violent act. Section 204 provides that any action brought pursuant to Section 203 may be brought in federal or state court and that “if brought in federal court against a State, its agencies or subdivisions, any defense of immunity under the Eleventh Amendment to the United States Constitution is abrogated.”

The House and Senate committee reports on the Act note that Congress passed the Act under its power to regulate interstate commerce. To support its use of that power, Congress found that acts of workplace violence directly interfere with economic activity by causing damage to business property, injury to workers, and lost work time due to the violent acts and their aftermath. The House report estimated that total interstate economic activity is diminished by $5 to $10 billion per year as a result of losses associated with workplace violence.

After the Act’s effective date, an employee of a state agency was injured in the workplace by the violent act of a disgruntled coworker. The state agency, which has over 100 employees, conceded that it had not implemented the measures required by Section 202 of the Act. Accordingly, the employee has sued the state agency in United States District Court to recover damages for the harm caused by the act of workplace violence. The state agency has moved to dismiss the lawsuit on three grounds: (1) Congress did not have the power to enact the Act, (2) Congress did not have the power to apply the Act to state agencies, and (3) the Eleventh Amendment bars the employee’s lawsuit.

1. Is the Act a valid exercise of Congress’s power to regulate interstate commerce? Explain.

2. Assuming that the Act is a valid exercise of Congress’s power, may the Act constitutionally be applied to state agencies as employers? Explain.

3. Does the Eleventh Amendment bar the employee’s lawsuit in federal court against the state agency? Explain.

Family Law Question

Fifteen years ago, Mom and Dad were married in State A, where both were domiciled.

Fourteen years ago, Mom gave birth to Daughter in State A. Dad is Daughter’s biological father.

Four years ago, Dad died in State A. After Dad’s death, Mom relied heavily on Dad’s parents, Grandparents. Mom and Daughter moved to an apartment near Grandparents in State A. Thereafter, Grandparents visited Mom’s home at least once a week. Daughter was also a frequent visitor at Grandparents’ home. Grandparents also helped Mom to support Daughter financially.

Four months ago, Mom married Stepdad and moved with Daughter to Stepdad’s home in State B, 500 miles from Mom’s former residence in State A. Stepdad believes that Grandparents discouraged Mom’s marriage to him, and he asked Mom not to invite Grandparents to visit. Mom agreed to Stepdad’s request. However, she allowed Daughter to visit Grandparents in State A during a school vacation.

One week ago, Grandparents sent Daughter a bus ticket. Without revealing her plans to Mom, Daughter used the ticket to go to Grandparents’ home in State A. When she arrived at Grandparents’ home, Daughter telephoned Mom and said, “I hate State B, I dislike Stepdad, and I want to live with Grandparents in State A until you leave Stepdad and return to State A, too.”

On the same day that Mom received this telephone call, she was served with a summons to appear in a State A court proceeding, brought by Grandparents, in which Grandparents seek custody of Daughter. Grandparents’ petition was brought pursuant to a State A statute that authorizes the award of child custody to a grandparent when the court finds that (1) the “child has been abandoned or one of the child’s parents has died” and (2) an award of custody to the petitioner grandparent “serves the child’s best interests.”

Both State A and State B have enacted the Uniform Child Custody Jurisdiction and Enforcement Act (UCCJEA).

Mom has sought advice from your law firm. She asks the following questions:

1. Does State A have jurisdiction to award custody of Daughter to Grandparents? Explain.

2. On the merits, may a court deny Grandparents’ custody petition if Daughter testifies that she wants to live with Grandparents? Explain.

3. Is the State A statute authorizing the award of custody to grandparents constitutional? Explain.

Secured Transactions Question

On March 1, Recycled, a business that sells new and used bicycles and bicycle equipment, borrowed $100,000 from Bank. To secure its obligation to repay the loan, Recycled signed an agreement granting Bank a security interest in “all the inventory of Recycled, whether now owned or hereafter acquired.”

On March 5, Bank filed a financing statement in the appropriate state office. The financing statement listed Recycled as debtor and “inventory” as collateral.

Over the next month, Recycled entered into the following transactions:

(a) On March 10, Recycled sold a new bicycle to Consumer for $1,500. The sale was made in accordance with the usual business practices of Recycled. Both parties acted honestly and in accordance with reasonable commercial standards of fair dealing, and Consumer was unaware of the financial relationship between Recycled and Bank.

(b) On March 15, Recycled traded a used bicycle to Student for a used computer that Student no longer needed. Recycled immediately began using the computer in its business.

(c) On March 31, Recycled bought 100 new bicycle helmets from Manufacturer. The sale was on credit, with payment due in 15 days. The written sales agreement, signed by Recycled, states that Manufacturer retains title to the helmets until Recycled pays their purchase price to Manufacturer. No financing statement was filed. None of the helmets has been sold by Recycled.

Recycled has not paid its utility bills for several months. On April 29, Utility obtained a judgment in the amount of $2,500 against Recycled and, pursuant to state law, obtained a judgment lien against all the personal property of Recycled.

Recycled is in default on its repayment obligation to Bank, and it has not paid the amount it owes to Manufacturer.

Bank claims a security interest in all the bicycles and bicycle helmets owned by Recycled, the bicycle bought by Consumer, and the computer obtained by Recycled in the transaction with Student. Manufacturer claims an interest in the bicycle helmets, and Utility seeks to enforce its lien against all the personal property of Recycled.

1. As between Bank and Consumer, which has a superior claim to the bicycle sold to Consumer? Explain.

2. As between Bank and Utility, which has a superior claim to the used computer? Explain.

3. As among Bank, Manufacturer, and Utility, which has a superior claim to the 100 bicycle helmets? Explain.

Torts Question

Susan, a student at University, lived in a University dormitory. Access to Susan’s dormitory was restricted to dormitory residents and guests who entered the dormitory with a resident. Entry to the dormitory was controlled by key cards. Dormitory key cards opened all doors except for a rear entrance, used only for deliveries, that was secured with a deadbolt lock.

On November 30, at 2:00 a.m., Ann, a University graduate, entered the dormitory through the rear entrance. Ann was able to enter because the deadbolt lock had broken during a delivery four days before Ann’s entry and had not been repaired. Ann attacked Susan, who was studying alone in the dormitory’s library.

Jim, another resident of Susan’s dormitory, passed the library shortly after Ann had attacked Susan. The door was open, and Jim saw Susan lying on the floor, groaning. Jim told Susan, “I’ll go for help right now.” Jim then closed the library door and went to the University security office. However, the security office was closed, and Jim took no other steps to help Susan. About half an hour after Jim closed the library door, Susan got up and walked to the University hospital, where she received immediate treatment for minor physical injuries.

One day after Ann’s attack, Susan began to experience mental and physical symptoms (e.g., insomnia, anxiety, rapid breathing, nausea, muscle tension, and sweating). Susan’s doctor has concluded that these symptoms are due to post-traumatic stress disorder (PTSD). According to the doctor, Susan’s PTSD was caused by trauma she suffered one month before Ann’s attack when Susan was robbed at gunpoint. In the doctor’s opinion, although Susan had no symptoms of PTSD until after Ann’s attack, Ann’s attack triggered PTSD symptoms because Susan was suffering from PTSD caused by the earlier robbery. The symptoms became so severe that Susan had to withdraw from school. She now sees a psychologist weekly.

Since the attack, Susan has learned that Ann suffers from schizophrenia, a serious mental illness. From August through November, Ann had been receiving weekly outpatient psychiatric treatment from her Psychiatrist. Her Psychiatrist’s records show that on November 20, Ann told her Psychiatrist that she “was going to make sure” that former University classmates who were “cheaters” got “what was coming to them for getting the good grades I should have received.” Ann’s Psychiatrist did not report these threats to anyone because Ann had no history of violent behavior. Ann’s Psychiatrist also did not believe that Ann would take any action based on her statements.

At the time of the attack, Susan knew Ann only slightly because they had been in one class together the previous semester. Susan received an A in that class.

Susan is seeking damages for the injuries she suffered as a result of Ann’s attack and has sued University, Jim, and Ann’s Psychiatrist.

1. May Susan recover damages for physical injuries she suffered in Ann’s attack from

(a) University? Explain.

(b) Jim? Explain.

2. Assuming that any party is found liable to Susan, may she also recover damages from that party for the PTSD symptoms she is experiencing? Explain

Federal Civil Procedure Question

Plaintiff, a female employee of Defendant, a large manufacturing firm, sued Defendant in federal district court for violating a federal statute that creates a right to be free of sex discrimination in the workplace.

Plaintiff alleged the following: (1) Plaintiff worked for Defendant in a position for which females had seldom been hired in the past. (2) Shortly after Plaintiff was hired, male coworkers began to make sexually charged remarks to Plaintiff. (3) Plaintiff’s male supervisor asked her out on dates and became angry each time she refused. (4) There were occasional incidents in which the supervisor or another male worker “accidentally” made contact with various parts of Plaintiff’s body. (5) No one from company management ever took steps to monitor or limit behavior of this sort. (6) As a result of this behavior, Plaintiff began to suffer from various physical ailments that were related to stress. (7) Plaintiff made no complaint to management about the situation because the job paid very well and there were, to her knowledge, no comparable opportunities that would be available to her if she lost this particular job.

Defendant’s answer to the complaint admitted that Plaintiff was an employee and that the individual named as her supervisor was her supervisor. Defendant denied all allegations relating to the alleged sex discrimination.

A well-established affirmative defense is available in cases of this sort if the defendant employer proves that (a) the plaintiff employee was not subject to any adverse job action (firing, demotion, loss of promotion opportunity, etc.), (b) the employer exercised reasonable care to prevent and promptly correct any sexually harassing behavior, and (c) the plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer.

In a pretrial deposition, Plaintiff admitted that she had suffered no loss of pay or promotion opportunity. Plaintiff also admitted that she was aware of company policies forbidding sex discrimination and sexual harassment, as well as the procedures that employees could use to complain about perceived discrimination. Plaintiff stated that although she was aware of those policies and procedures, she had not seen any effort on the part of Defendant to enforce the policies and was afraid that she would suffer retaliation if she made use of the procedures available to complain of sex discrimination.

After the close of discovery, Defendant moved to amend its answer to add the affirmative defense set forth above. It also moved for summary judgment, claiming that Plaintiff’s deposition testimony sufficiently established the elements of the affirmative defense to warrant a judgment in Defendant’s favor.

Plaintiff opposed both motions. The trial judge ruled in Defendant’s favor, allowing the amendment and granting summary judgment.

Did the judge err? Explain.

Corporations and Limited Liability Companies Question

Acme Inc. manufactures building materials, including concrete, for sale to construction companies. To create a market for its building materials, Acme enters into agreements with construction companies under which Acme and the construction company agree to form a member-managed limited liability company (LLC). The LLC builds the project, purchasing building materials from Acme and contracting for construction services with the construction company.

The operating agreements for these LLCs always provide that Acme has a 55% voting interest, that Acme and the construction company contribute equally to the capital of the venture, and that the parties share in profits at a negotiated rate. The agreements are silent as to the allocation of losses.

Acme entered into such a relationship with Brown Construction Co. LLC (Brown), forming Acme-Brown LLC (A-B LLC) to build 50 homes. The operating agreement for A-B LLC gives Acme a 55% voting interest and provides for a 20%/80% division of profits in favor of Brown.

A-B LLC built all 50 homes and sold them to homeowners. The members received a distribution of profits from the sales, split between them according to their agreement on the division of profits. However, all the concrete manufactured by Acme and sold to A-B LLC for the foundations of the homes proved to be defective. After a year, the concrete dissolved, collapsing the homes and rendering them worthless. In a class action by the homeowners against A-B LLC, the plaintiffs were awarded a $15 million judgment. The LLC has no assets with which to pay the judgment.

Although Acme would be liable to A-B LLC for the loss caused by the defective concrete, A-B LLC has not brought a claim against Acme. Acme has the financial resources to pay damages equal to the amount of the $15 million judgment in the homeowners’ lawsuit and to fully cover A-B LLC’s liability.

Brown has sent a letter to A-B LLC demanding that A-B LLC bring a claim against Acme to recover those damages and pay the judgment to the plaintiffs, after which A-B LLC would be dissolved. But Acme, as the manager of A-B LLC, has refused to do so.

Acme’s lawyer has sent a letter to Brown stating the following:

(1) Acme has no fiduciary obligations to either A-B LLC or Brown that require it to have A-B LLC bring the concrete claim against Acme.

(2) Brown cannot bring a claim against Acme.

(3) Brown does not have sufficient grounds to seek the judicial dissolution of A-B LLC.

(4) Because the A-B LLC agreement provides for a 20%/80% division of profits, the losses arising from the judgment obtained by the plaintiffs against the LLC should also be allocated 20% to Acme and 80% to Brown.

Is Acme’s lawyer correct? Explain.

Decedents’ Estates/Conflict of Laws Question

Zach died a domiciliary of State A. At Zach’s death, he owned a house located in State A. Zach also owned a farm located in State B and had a savings account at a bank in State B.

Zach left a handwritten document containing instructions for the disposition of his assets. The only words on this document were the following:

I, Zach, being of sound and disposing mind, leave my entire estate to my alma mater, University. I appoint Bank as executor of my estate.

Zach’s wife predeceased him. Zach was survived by three children, Alex, Brian, and Carrie. Alex was the biological child of Zach and his deceased wife. Brian was the biological child of Zach’s deceased wife and her first husband, but Zach adopted Brian when Brian was 12. Carrie was the biological child of Zach and a woman whom Zach never married. Zach’s paternity of Carrie was adjudicated during Zach’s lifetime.

State A law provides that a holographic will “entirely handwritten and signed at the end by the testator” is valid. State A law also provides that if a decedent dies intestate and leaves no surviving spouse, the decedent’s estate passes in equal shares to the decedent’s “surviving children.” The phrase “surviving children” is defined to exclude “nonmarital children.” There are no other relevant statutes in State A.

State B law provides that (1) the will of a nonresident that bequeaths real property located in State B must comply with the law of State B; (2) a will is invalid unless it was signed by the testator and two witnesses; and (3) the estate of an intestate decedent who leaves no surviving spouse passes to the decedent’s “biological and adopted children, in equal shares.” There are no other relevant statutes in State B.

How should Zach’s three assets be distributed? Explain.