Chuck Coach ("Coach")
is a full-time tenured mathematics professor and head soccer coach at
United University ("United") in Smallville. Coach's soccer teams
won the conference championship in each of his first seven seasons at
United. As a result, United's home soccer games routinely drew in excess
of 20,000 fans. In 2000, however, Coach had his first losing season. Attendance
at home games that year was less than half of what it had been in prior
On September 7, 2001,
the United soccer team played in its first game of the season at Centreville
College and won 1-0. On September 12, the day after the terrorist attacks
on the World Trade Center and the Pentagon, the United Board of Trustees
met in an emergency session. All five Board members voted unanimously
to cancel all sporting events and extra-curricular activities for five
days. The Board also decided that, for the remainder of the year, a brief
moment of silence would be observed at the beginning of all of United's
home sporting events. In a press release announcing its decision, the
Board noted the need for all Americans to honor the victims of September
11 and to stand united in the war against terrorism.
Just before the start
of the next United home soccer game on Saturday afternoon, September 22,
the United band played the National Anthem. Immediately thereafter Father
Duffy, a Catholic priest who was dressed in casual clothes, was introduced.
Father Duffy asked the crowd to observe a moment of silent meditation
for the victims of the September 11 terrorist attacks. Jack Eagle ("Eagle"),
one of United's Board members, had asked Father Duffy to lead the moment
of silence because he was a personal friend who had served with Eagle
in the Marines and because the priest had lost a sister in the attack
on the World Trade Center on September 11. Throughout the moment of silent
meditation, Coach continued to talk in a conspicuous way to one of his
assistant coaches. Eagle was in the stands and was outraged by Coach's
actions. He commented to those around him that he would not put up with
this unpatriotic attitude. The United soccer team lost the ensuing game
1. You are an attorney
in Smallville. Al Adams, a United student who attended the soccer game
on September 22, has come to your office. Adams tells you that he was
offended by the religious nature of the pre-game ceremonies and he wants
you to file an action against United.
(a) State what
claims, if any, might be filed on behalf of Adams against United and
discuss the likelihood that each claim would be successful. Explain
(b) Assuming Adams prevailed, state what relief the Court might be
expected to grant. Explain your answer.
>Earlier, on September
13, 2001, a group of twenty United students had applied to the Smallville
Police for a permit to hold a demonstration on Saturday morning, September
22, in Smallville's only public park, which is two blocks from the United
soccer stadium. The park traditionally has been used for social and political
gatherings and demonstrations. The purpose of the students' demonstration
was to protest recent attacks on two Islamic businesses in Smallville.
The application was denied based on a Smallville ordinance that prohibited
the use of the park for any demonstrations or other mass meetings on days
on which there were soccer games at United soccer stadium. The ordinance
had been passed in 1969 after a riot had occurred when drunken fans from
a United soccer game had confronted a group of over 200 anti-war demonstrators.
2. Assume that two of the United students who had applied for the permit
contact you on September 14. They tell you that they wish to go forward
with the demonstration but they do not want to violate the law.
(a) State what claims, if any, might be filed on the students' behalf
against the Smallville Police and discuss the likelihood that each
claim would be successful. Explain your analysis.
(b) Assuming the students prevailed, state what relief the Court might
be expected to grant. Explain your answer.
On Monday, September
24, when Coach arrived at school, he was given a written notice stating
that he had been terminated as head soccer coach effective immediately.
No reasons were given for the termination.
3. Assume Coach
comes to see you the next day, Tuesday, September 25.
(a) State what
claims, if any, might be filed on his behalf against United and discuss
the likelihood that each claim would be successful. Explain your analysis.
(b) Assuming Coach prevailed, state what relief the Court might be
expected to grant. Explain your answer.
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John Farmer owns a large piece of farmland near Laurel,
Delaware. Farmer lives on the property, and raises crops and livestock.
One 10-acre section of Farmer's property is partially wooded and is infested
with groundhogs. Despite years of efforts, Farmer has been unable to rid
that section of his property of the groundhogs and, therefore, it is of
little use to him. As a result, Farmer allows We Got Paintballs, Inc.
("WGP"), a company that operates paintball war games, to use
that section of his property for its outings free of charge.In the outings that it sponsors, WGP provides the members
of two teams of combatants with the gear that they need for the game pursuant
to an express bailment agreement. The gear includes helmets, goggles,
military-style clothing, and paintball guns that fire small plastic balls
filled with paint. The object of the game is for one team to capture the
other team's flag, while preventing the other team from doing the same.
Once a player is hit with a paintball, that player is out and must leave
Because of the dangerous nature of the paintball games,
WGP requires all players to sign a release form before allowing them to
play. The release form reads as follows:
I request permission
to participate in paintball games sponsored by We Got Paintballs, Inc.
("WGP"). I fully understand that paintball games may be extremely
dangerous and involve the risk of serious injury or death and involve
the risk of property damage.
I agree that I alone
am responsible for my safety while playing paintball. I also specifically
acknowledge that none of WGP, its owners, employees or guests, nor any
landowners, landholders or other persons making property available to
WGP, is responsible for my safety. I, for myself and for my heirs, assigns,
guardians and legal representatives, specifically RELEASE and DISCHARGE,
in advance, the parties listed above from any and all liability whether
known or unknown, even though that liability may arise out of negligence
or carelessness of the persons or entities mentioned above or of others.
Two brothers, Andy
and Bob Prescott, went to WGP's offices to arrange a paintball game for
a group of their friends. Andy and Bob explained to the WGP employee that
they had never played a paintball game before, but they wanted to give
it a try. WGP arranged for a game for Andy and Bob and their friends for
the upcoming weekend at Farmer's farm. A WGP employee provided to Andy
and Bob release forms for all of the players to sign and to bring with
them to the game that weekend.
At the appointed time, all of the paintball players arrived at Farmer's
property. A WGP employee first collected the signed release forms. Each
of the players turned in a signed release form except Andy. The WGP employee
did not notice that Andy had failed to turn in a signed release form.
The WGP employee then distributed all of the equipment to the players.
The WGP employee did not give the players any instruction on the use or
the dangers of the paintball guns.
During the game, Andy was shot with a paintball by one of the other players.
Because he was only "wounded," and intending to be funny in
front of his friends, Andy decided to commit a mock suicide with his paintball
gun. He pointed the paintball gun toward his helmet and fired. The paintball
hit Andy's goggles. The goggles were not made of shatterproof material.
The fragments of the shattered goggles entered Andy's right eye and caused
1. Assume Andy filed
suit against WGP.
(a) State what
claims Andy should assert against WGP, the elements of any such claims
and whether or not the requisite elements can be established in this
(b) State what defenses WGP should raise and whether or not the defenses
are likely to be successful. Explain your analysis.
During the game,
Bob was running across a field and stepped in a groundhog hole. He tore
the ligaments in his knee and separated his shoulder when he fell.
2. Assume Bob filed
suit against Farmer and WGP for the personal injuries that he suffered
during the game.
(a) State what
claims Bob should assert against Farmer and WGP, the elements of any
such claims and whether or not the requisite elements can be established
in this case.
(b) State what defenses WGP should raise and whether or not the defenses
are likely to be successful. Explain your analysis.
(c) State what defenses Farmer should raise and whether or not the
defenses are likely to be successful. Explain your analysis.
On December 15, 2001, Bill Builder ("Builder"), owner and operator
of Bill Builder Construction, Inc. ("BBC"), entered into an
agreement with Ralph Realtor ("Realtor"), a real estate agent,
for Realtor to act as Builder's real estate agent in selling property
in Builder's new housing development of Bubbling Creek. Builder told Realtor
that the terms of any sale had to be approved by Builder. Builder gave
Realtor an office in the model home and business cards bearing the BBC
On January 1, 2002, Realtor obtained a signed contract from Otto Owner
("Owner") for the purchase of the property located on Bubbling
Creek Lot #3 ("Lot #3") for $550,000. The contract provided
in bold type: "ALL MODIFICATIONS OR ADDITIONS TO THIS AGREEMENT
MUST BE APPROVED IN WRITING BY BILL BUILDER." Realtor submitted
the contract to Builder on the same day Realtor received it. After Builder
reviewed it, Builder signed the contract.
While negotiating that contract, Realtor had learned that Owner was considering
listing his property in another neighborhood near Sandy Beach for sale
at $250,000. Realtor knew Builder would soon publicly announce his plan
to develop a boat marina and restaurant in Sandy Beach near Owner's lot
and that the value of Owner's lot would likely increase substantially
after that announcement. Realtor offered to buy the beach lot from Owner
for $250,000. Realtor did not tell Owner about Builder's impending announcement
regarding the boat marina and restaurant in Sandy Beach. Owner told Realtor
he would consider Realtor's offer and respond shortly.
By the time the closing on Lot #3 was held on March 1, 2002, Owner had
not yet responded to Realtor's offer to buy Owner's Sandy Beach lot. At
the closing, Owner surprised Realtor by telling him that Owner would not
close the sale of Lot #3 and would not sell the Sandy Beach lot to Realtor
unless Builder agreed to remove three poplar trees from Lot #3. Owner
knew that removal of the trees was not included in the original contract
signed by Builder. Realtor told Owner that all changes to the contract
required written approval by Builder. Realtor left the room, telephoned
Builder and told Builder that Owner would not close on the sale unless
Builder removed one tree from Lot #3. Builder responded, "Tell Owner
that I will not agree to remove a tree, and I will not accept his conditions.
This contract is cancelled. Besides, I have another buyer for Lot #3 at
a higher price."
Realtor ignored what Builder told him and, instead, returned to the room
and told Owner that it was fine to: "close the sale under the signed
contract with Builder and the three poplar trees will be removed."
Owner told Realtor: "I accept your promise to remove the three poplar
trees and your offer to purchase my lot in Sandy Beach for $250,000."
1. Is Builder bound by Realtor's promise to remove the three poplar trees?
the closing, Realtor called Builder and informed him that, despite Builder's
instructions to the contrary, Realtor closed the sale to Owner and promised
Owner that Builder would remove one poplar tree. Realtor said nothing
to Builder about Realtor's purchase of the Sandy Beach lot from Owner.
Builder was furious and told Realtor: "The tree removal is your problem
and you owe me $150,000 because you disregarded my instructions and closed
the sale of Lot #3 to Owner. I have a signed offer from another buyer
for Lot #3 at $700,000."
2. Assuming that
there was no binding contract between Builder and Owner for the sale
of Lot #3 to Owner at any time prior to completion of the closing, is
Realtor liable to Builder for closing the sale of Lot #3 to Owner contrary
to Builder's instructions? Explain your answer.
Larry Landscaper ("Landscaper"),
who handled all of the landscaping and tree-cutting services for BBC,
had a contract with BBC that provided, among other things:
provide all landscaping and tree-cutting services on all projects of
The specific services
to be rendered and the materials to be used by Landscaper were required
to be specified and approved in advance by Builder; and
Builder had sole
authority to control and supervise Landscaper's work.
The contract between
Landscaper and BBC stated in bold print: "LANDSCAPER UNDERSTANDS
HE IS AN INDEPENDENT CONTRACTOR AND NOT AN EMPLOYEE OF BILL BUILDER
CONSTRUCTION, INC. AND THAT THIS CONTRACT IS TERMINABLE AT WILL BY
BILL BUILDER CONSTRUCTION, INC."
On January 2, 2002,
the day after Owner and Builder executed the contract for the sale of
Lot #3, Builder told Landscaper that the only work required on Lot #3
was sodding, which Landscaper completed the next day. Without Builder's
authorization, on March 2, 2002, the day after the closing of the sale
of Lot #3, Realtor told Landscaper to remove three poplar trees at the
back corner of Lot #3 immediately. Landscaper was busy, so he told his
17-year old nephew, Ed Excavator ("Excavator"), to remove the
three poplar trees at the back corner of Lot #3. Although Builder was
unaware that Landscaper told Excavator to remove the three poplar trees,
Builder knew Excavator routinely assisted Landscaper with work on his
Later on, Builder
had a change of heart regarding his refusal to remove one tree from Lot
#3. Unaware of Realtor's instructions to Landscaper, Builder called Landscaper
on March 2, 2002, and left a message on Landscaper's answering machine
instructing Landscaper to "ask Owner to identify the tree he wished
to have removed from Lot #3, remove only that tree and do nothing further
on Lot #3."
3. Did Builder's
message left on Landscaper's answering machine ratify Realtor's promise
to Owner to remove three poplar trees? Did it ratify Realtor's instructions
to Landscaper regarding the tree removal? Explain your answer.
Excavator met Owner
when Excavator arrived at Lot #3 in Landscaper's truck. Owner instructed
Excavator to remove three poplar trees in the back corner of the lot.
Owner also offered to pay Excavator $100 cash on the side if Excavator
would also remove a fourth tree between Owner's driveway and his neighbor's
driveway. Excavator agreed. Excavator and Owner also agreed not to tell
Landscaper or Builder about the removal of the additional tree. Unfortunately,
Excavator was not very knowledgeable about tree species, and he negligently
removed three pine trees instead of three poplar trees from Lot #3. Furthermore,
while attempting to remove the tree between the driveways as Owner had
requested, Excavator caused the tree to fall on and damage neighbor's
4. Assume that Excavator
was negligent in removing the three pine trees. Are Landscaper and/or
Builder liable to Owner for the negligence? Explain your answer.
5. Assume that Excavator was negligent in cutting down the tree between
the driveways. Are Landscaper, Owner and/or Builder liable to neighbor
for the negligence? Explain your answer. In answering this question,
do not address whether Owner was negligent.
6. Is Realtor liable to Builder with respect to removal of the pine
trees? Explain your answer.
who is under the influence of alcohol, decides to steal a car rather than
walk home from the neighborhood tavern. Brandishing a loaded handgun,
he forces the driver of an idling car out of her vehicle and drives away
in her car. As Arthur is driving, he suddenly hears the car owner's 8
month-old son crying in the backseat. Before Arthur can stop the car to
release the infant, he notices a marked police car approaching at a high
throws his gun out the window, turns the car around and drives away from
the police. While the police are pursuing him, Arthur approaches an intersection
traveling in excess of the speed limit for the two-lane roadway. Arthur,
who is 80 feet from the intersection, moves to the left lane and attempts
to pass a blue car in front of him even though a Delaware statute prohibits
passing within 100 feet of an intersection. The blue car suddenly turns
left in front of Arthur. The car Arthur is driving strikes the rear of
the blue car. The blue car spins out of control and hits a utility pole,
severely injuring the driver and passenger.
Arthur continues driving. The traffic light in his direction turns yellow.
As Arthur is entering the intersection, a brown car on the intersecting
roadway disregards the red light in its direction and pulls out in front
of Arthur. Arthur hits the brown car broadside, killing the driver instantly.
Arthur staggers from his stolen car and begins fighting with two police
officers, both of whom are injured in the ensuing melee.
giving the police a false name, Arthur offers the police officers $1,000
each to let him go. At the police station, Arthur signs a fictitious name
on the arrest fingerprint card. In the police detaining cell, Arthur swallows
contraband drugs he had hidden in his hollow shoe heel.
that all of the above-described activities occur in the State of Delaware
in calendar year 2002.
(a) Identify all Delaware State criminal charges for which Arthur may
reasonably be prosecuted. If a crime has more than one degree, state
the specific degree that should be charged and explain why.
(b) Discuss any defense that Arthur may assert relating to causation
in connection with Arthur's two motor vehicle collisions.
Question 1 | Question 2 | Question 3 | Question 4
Question 5 | Question 6 | Question 7 | Question 8
Alice purchased a house near Dover, Delaware. After
moving into her new house, Alice discovered that the hot water heater
was not working. Alice called Pete, a local plumber. Pete inspected the
water heater and informed Alice that it needed to be replaced. Pete stated
that he would replace the water heater for $400, and would require a $200
deposit before any work began. Pete stated that he needed the deposit
to pay for the new water heater. Alice explained to Pete that it was essential
that the water heater be replaced by August 24 because her parents were
coming to visit on August 25. Pete agreed that he would complete the job
by August 24, and Alice gave him a $200 check for the deposit.
The day after meeting with Alice, Pete used the full
amount of the deposit to purchase the water heater for Alice's home. Pete,
however, got tied up on another job. He feared that the other job would
prevent him from installing Alice's water heater until August 28. On August
23, Pete called Alice and explained that he would not be able to install
her water heater until August 28. Alice was furious and told Pete that
she would hire someone else to do it.
Alice called Casey, Pete's chief competitor, and asked
if Casey could install the water heater the next day (August 24). Casey
agreed to install the water heater for $400, but demanded an extra $50
for next day service. After Casey explained that the additional $50 charge
was customary for such expedited service, Alice agreed to pay Casey $450
to replace the water heater and, on August 23, signed Casey's standard
services contract. Casey installed the new hot water heater the next morning.
Pete believed that Alice was being unreasonable but he
did not want to lose the job because he had already paid for Alice's water
heater. Therefore, Pete left his other job early on August 24 and went
to Alice's house to install the water heater. Alice informed Pete that
Casey had already installed the water heater and demanded that Pete return
her $200 deposit. Pete refused to return Alice's deposit, and stated that
he was ready to install the water heater as required by their agreement.
Pete threatened to sue Alice for the remaining $200 due under their agreement.
1. Can Pete enforce
his verbal agreement with Alice and collect the remaining $200 that
he claims he is due under that agreement? Explain your answer.
2. Is Pete required to return Alice's $200 deposit even though he used
the deposit to purchase Alice's water heater? Explain your answer.
3. In addition to the $200 deposit, Alice would like to recover from
Pete the additional $50 that she had paid to Casey for next day service.
Can Alice recover the $50 from Pete? Explain your answer.
months after Casey installed the water heater, Alice discovered that her
basement was flooded. She immediately called another plumber, Bob, to
determine the source of the water. Bob informed Alice that the water heater
was leaking because it had not been properly installed. Alice paid Bob
$500 to fix the water heater and pump the water out of the basement. As
a result of the water in the basement, certain valuable antique furniture
that Alice had stored in her basement was damaged. Prior to the flood,
the furniture was worth $2,000. Alice obtained an estimate that repair
of the furniture would cost $700. Alice elected not to repair the furniture,
and instead donated the furniture to a local charity. Alice demanded that
Casey reimburse her for the $500 that she paid to Bob, and pay her the
full value of the furniture ($2,000). Casey refused to pay any amount
4. Assuming that
the flood in Alice's basement was due to Casey's failure to install
the water heater properly, what amounts, if any, is Casey obligated
to pay to Alice? Explain your answer. [Note: in answering this question,
ignore the "Limitation of Damages" provision discussed in
the enumerated paragraph 6 of this Question].
5. Assume Alice files suit against Casey. In the complaint, Alice requests
an award of punitive damages. Is Alice likely to recover punitive damages
in this case? Explain your answer. [Note: in answering this question,
ignore the "Limitation of Damages" provision discussed in
the enumerated paragraph 6 of this Question].
Assume that Casey's
standard services contract, which Alice signed on August 23, contained
the following provision:
that his or her sole remedy in the event that Casey shall fail to
perform properly the services referenced in this agreement shall be
the return of half of the amount paid by Customer to Casey with respect
to such services.
In response to Alice's
repeated demands for payment, Casey agrees to return $225 of the $450
that Alice paid to Casey to install the water heater. Relying on the Limitation
of Damages provision in the contract, Casey refuses to pay any additional
amounts to Alice.
6. Is Casey's liability
to Alice limited to $225? Explain your answer.
Shortly after the
flood in her basement, Alice noticed water in her attic every time it
rained. Alice called Ralph, a Dover roofer, to provide her with an estimate
for a new roof. Alice explained to Ralph that she wanted a thirty (30)-year
roof because she never wanted to replace her roof again. Ralph gave Alice
an estimate of $1,500 for the job. Alice hired Ralph to install a new
roof and signed the contract given to her by Ralph, which provided that:
Ralph shall install
new standard shingles on Customer's roof. Customer shall make payment
in the amount of $1,500 upon the completion of installation.
After the contract
was signed, Ralph sent two of his employees to install the roof on Alice's
house. When the job was done, Alice thanked the men and commented that
she was glad she wouldn't have to replace her roof for at least another
30 years. The supervisor responded that the contract provided for the
installation of standard shingles, which were only warranted for 20 years.
Alice refused to pay anything for the roof because a 30-year roof had
not been installed as requested.
7. Ralph files suit,
claiming that he complied with the contract by installing 20-year shingles
on Alice's roof and, therefore, Alice owes him $1,500. At trial, Alice
seeks to introduce evidence regarding her discussion with Ralph prior
to the execution of the contract in which she requested 30-year shingles.
Should the Court consider such evidence? Explain your answer.
8. Assume that the Court interprets the contract to provide for the
installation of 30-year shingles. Will Alice be able to obtain an order
from the Court requiring Ralph to install 30-year shingles? Explain
Wendy Worth, a lifelong Delaware resident, died on March
1, 2002, at the age of 75. For the last year of her life, she lived in
a nursing home in Wilmington, after having suffered a stroke in February
2001. The stroke had left her physically disabled and somewhat confused
and forgetful, but still able to recognize people and hold occasional
At the time of her death, Wendy's second husband, Al,
was still living. Wendy and Al had separated in 1997, but they never divorced.
Wendy was also survived by two sons: Bob, a Delaware resident, a lawyer,
and her son from her 1965 marriage to Al; and Chris, a California resident
and her son from her prior marriage to Dan. Chris had not seen or spoken
to Wendy for many years. Also surviving Wendy were Bob's minor children,
Ellen and Fred. Wendy's first husband, Dan, who had divorced Wendy in
1963, was also still living when Wendy died.
During Wendy's last year, she rarely had any visitors, except Bob, who
visited her every week. In December 2001, at Wendy's request, Bob prepared
a will for Wendy. The will named Bob as executor of Wendy's estate and
left all of her property to Bob (or to Bob's children if Bob were to predecease
Wendy), except for any specific items of property to be disposed of pursuant
to a separate writing that the will expressly authorized pursuant to 12 Del. C. § 212. In January 2002, Wendy executed the will, and
two competent nursing home staff members duly signed as witnesses, all
in accordance with the Delaware law requirements for valid execution of
At the funeral, Chris learned from one of the nursing home aides that
Bob had often been overheard telling Wendy that he (Bob) was happy to
visit Wendy at the nursing home every week, but that he expected her
to take care of him in return. Based on this fact and the other facts
described above, Chris contends that the will should be invalidated.
Is Chris likely to be successful in his contention? Explain your answer.
(2) Assume that Bob had falsely told Wendy, shortly before preparing
her will, that Chris had a terminal illness and was expected to die
soon. How would this fact affect Chris' contention that the will should
be invalidated? Explain your answer.
(3) Assume that the January 2002 will is valid, and that it was found
in a drawer of Wendy's desk at the nursing home, clipped to a note stating:
"At my death, I want my coin collection given to my friend Greta,
my vacation home in Rehoboth Beach given to my nurse Hilary, and my
IBM stock given to my church." The note is in Wendy's handwriting
but not signed by Wendy. The note is dated October 3, 1999. Is this
note effective to make any or all of the three specified dispositions
of property? Explain your answer.
(4) Assume that the January 2002 will is valid and that Wendy's property
includes $10,000 in a bank account that Bob would prefer to have his
daughter Ellen receive rather than keep for himself. Is there a process
by which Bob can properly cause all or part of the $10,000 to be distributed
directly to Ellen? Explain your answer.
(5) Assume that the January 2002 will is valid. What part of Wendy's
estate, if any, is Al entitled to receive? Explain your answer.
(6) Assume that the January 2002 will is invalid, but that another will,
dated May 15, 1960, was also found in Wendy's desk. The May 15, 1960
will provides for all of Wendy's estate to be given at her death "to
my husband, Dan, if he shall survive me, or, if Dan shall not survive
me, to my issue who shall survive me." Assuming that the May 15,
1960 will was properly executed and witnessed and is otherwise valid,
who is entitled to receive Wendy's estate? If more than one person is
entitled to share in the estate, in what proportions do they share in
the estate? Explain your answer.
(7) Assume that both the January 2002 will and the May 15, 1960 will
are invalid and there is no other will. Who is entitled to receive Wendy's
estate? If more than one person is entitled to share in the estate,
in what proportions do they share in the estate? Explain your answer.
Conglomerate Company ("Conglomerate") has holdings
in various businesses throughout the world. Conglomerate is wholly owned
by Mr. Giant, its chairman and CEO. Conglomerate's principal business
interest in the United States is Health Drinks Sub, Inc. ("Sub"),
a Delaware corporation, which manufactures and distributes popular, vitamin-rich
drinks. To help finance its growth, in 1995, Sub successfully offered
to the public 4.9 million of Sub's 10 million authorized and outstanding
shares at $20/share, leaving Conglomerate with 5.1 million shares and
a 51% interest in Sub. Sub has no provision in its Certificate of Incorporation
exculpating directors from liability under 8 Del. C. § 102(b)(7).
Sub's shares are traded on a national securities exchange.
At all relevant times following the offering, Sub's board of directors
consists of five directors, two of whom are also employed by Conglomerate:
Mr. Giant and Mrs. Money, Conglomerate's CFO. The other three directors
of Sub are Able, Baker and Charlie (the "Outside Directors").
They are persons of considerable financial means and business experience
who are employed by companies unaffiliated with Conglomerate or Sub. They
each own 10,000 shares of Sub.
Sub's share price declined as many investors favored the more popular
technology and biotech stocks. Believing that the market was significantly
undervaluing Sub's stock, Conglomerate announced a tender offer on June
1, 2000 for the purpose of acquiring all of the outstanding shares of
Sub that it did not own at $15/share, a premium over Sub's pre-announcement
trading price of $10/share. The next day, the Sub board met to consider
the offer. Mr. Giant and Mrs. Money announced they would not participate
in the meeting, but urged Able, Baker and Charlie to act quickly. The
Outside Directors retained an investment banking firm ("Banker")
to advise them with respect to the adequacy of the offer.
After evaluating Sub, Banker advised the Outside Directors that Sub's
fair value was in the range of $22?25/share. Conglomerate's tender offer
materials accurately disclosed to Sub's shareholders that: (i) in the
opinion of the Outside Directors, the fair value of Sub exceeded the tender
offer price; (ii) Sub's stock might be delisted by the national securities
exchange if only a small number of shares were left outstanding after
the tender offer; (iii) delisting would affect the stock's liquidity;
and (iv) the Outside Directors took no position with respect to whether
shareholders should accept the tender offer. Sub's shareholders holding
3.1 million shares accepted Conglomerate's tender offer. As a result,
as of June 30, 2000, Conglomerate became the owner of 82% of the outstanding
Three months later, on October 1, 2000, Conglomerate sent a letter to
the Sub board expressing an interest in negotiating a merger of Sub with
and into Conglomerate. Under the merger proposal, the shares of the remaining
public shareholders would be cashed out for $19/share, and Sub would become
a wholly owned subsidiary of Conglomerate. At a meeting of the Sub board,
all five directors voted to approve the appointment of the Outside Directors
as a committee of the Board (the "Committee") with authority
to hire financial and legal advisors and to make a recommendation to the
full board with respect to the merger proposal. The Committee hired legal
advisers. Because of the cost incurred in connection with the earlier
tender offer and the recent receipt of Banker's advice, the Committee
decided to rely on Banker's earlier advice that the fair value of the
Company was $22-25/share. The Committee advised Conglomerate that it could
not approve a merger proposal for less than $23.50/share. Conglomerate
countered by increasing its offer to $21/share, but stated that it would
not pay more. Thereafter, the Committee received an expression of interest
from Interloper, Inc., a third party, at $26/share, subject to due diligence
and Conglomerate's agreement to support a merger at $26/share. Interloper
was a competitor of Sub and held 1,000 shares of Sub stock.
The Committee informed Conglomerate of Interloper's interest. Conglomerate
advised the Committee that (i) it would not sell its interest in Sub or
approve a merger with another party, and (ii) its offer of $21/share would
expire if not accepted within one week. Faced with Conglomerate's ultimatum,
the Committee voted to recommend the merger agreement with Conglomerate
at $21/share. Based on the Committee's recommendation, all of the directors
of Sub voted to approve the merger and to authorize its officers to execute
the merger agreement. Thereafter, Conglomerate recommended and Sub's board
agreed to make approval of the merger subject to a condition that the
merger be approved by a majority of the shareholders of Sub not affiliated
with Conglomerate. A shareholder vote on the merger was set for a date
70 days thereafter. Accurate disclosures were sent to Sub's shareholders
regarding Sub's financial condition, the course of the negotiations and
other matters required by federal law. Banker, however, objected to the
use of its prior report, and no disclosures were made of Banker's fair
value analysis issued in connection with the earlier tender offer.
Interloper was surprised by the announced terms of the merger and immediately
sent a notarized letter to the president of Sub demanding to inspect (i)
the financial records of the company so that it could determine the value
of its investment and (ii) the stockholder list so that it could communicate
with other stockholders respecting the proposed vote on the pending merger.
Interloper offered to pay the reasonable costs of inspection, and requested
that inspection and copying of the requested materials occur one week
later. Sub considered Interloper's demand a nuisance and declined to respond.
John Q. Public ("Public") held 1,000 shares of Sub stock before
the tender offer. He sold 500 shares into Conglomerate's tender offer
and he has consulted you about his rights, if any, under Delaware law
with respect to the tender offer, which he now believes was coercive
and inadequate. Public also consulted you with respect to the merger,
which he likewise believes is unfair and against which he will vote
Discuss whether Public may assert claims against Conglomerate or Sub's
directors in connection with the tender offer and any defenses that
these parties might raise. Discuss the legal standards that the Court
of Chancery would likely employ in analyzing such claims and defenses.
(b) Discuss whether Public may assert fiduciary duty claims in connection
with the merger, against whom the claims would be made and any defenses
that the defendants might raise.
(c) Assume that a majority of the disinterested shareholders voted
with Conglomerate to approve the merger transaction. Discuss the effect
that this fact would have on the legal analysis of the Court of Chancery
with respect to such claims.
(d) Discuss whether Public has other claims that he could assert in
connection with the merger, the elements of any such claims, and any
remedy that might be available to Public.
Interloper has asked your advice about obtaining access to the documents
it requested so that it can better evaluate the merger and communicate
with other shareholders about such merger. Identify and discuss any
rights that Interloper has with respect to its inspection demands, how
it would enforce any such rights, and any defenses thereto.
1. John Tenant ("Tenant") resides in an apartment complex in
Kent County, Delaware, owned by Landlord, Inc., a Pennsylvania corporation
registered to do business in Delaware ("Landlord"). Tenant complained
to Landlord's resident maintenance man, Mr. Fixit, for several months
that Tenant's upstairs neighbor's plumbing leaked into Tenant's apartment.
Tenant's ceiling and carpet had water spots and some of his favorite DVD
disks got wet, but were easily dried off. Landlord denied there were any
leaks, and suggested that the moisture likely came from Tenant taking
hour-long hot showers several times per day.
Tenant retained Betty Barrister ("Barrister") to remedy the
situation. Barrister filed an unverified Complaint in the Court of Chancery
seeking a temporary restraining order as well as a preliminary and a permanent
injunction against Landlord. In her Complaint, Barrister alleged Tenant
feared the ceiling in Tenant's apartment would crack and fall in if the
leaks were not stopped, that the carpet would become moldy and that the
leaks would damage Tenant's personal property. Barrister asked that Landlord
be compelled to make the repairs to the plumbing and to Tenant's apartment.
No further averments were made in the count for injunctive relief.
Barrister directed service upon Mr. Fixit at the apartment complex. Mr.
Fixit's sole relationship to Landlord was that of a maintenance man at
the apartment complex, a fact made known to all tenants when they leased
an apartment. The deputy sheriff attempted service at Mr. Fixit's apartment
but he was not home. The deputy, however, left the Complaint with Mr.
Fixit's sixteen-year old son, who promptly tossed it in the trash and
did not tell anyone about it.
Under these facts, does the Court of Chancery have subject matter jurisdiction
over this action and, if so, on what basis?
(b) May the Court exercise personal jurisdiction over Landlord?
(c) Assuming the Court does have proper jurisdiction, discuss whether
the temporary restraining order, preliminary injunction and permanent
injunction will issue based on the facts as stated. Explain the factors
the Court would consider.
2. In the same Complaint
filed in the Court of Chancery, Barrister has alleged a second count as
Landlord was negligent
in failing to investigate Tenant's
complaint resulting in damages to Tenant.
No further mention
of negligence, negligent acts or damages was stated in the Complaint.
Tenant's prayer for relief included one million dollars ($1,000,000.00)
for pain, suffering and mental anguish, twenty thousand dollars ($20,000.00)
for damage to his cutting edge technology entertainment system as well
as punitive damages, attorneys' fees and costs. The Complaint demanded
a trial by jury without stating the number of jurors requested. No Certificate
of Value was attached to the Complaint. After reviewing the Complaint
and ruling on the injunctive relief, the Vice Chancellor to whom the Complaint
was assigned transferred the Complaint to the Superior Court for further
Because Landlord was unaware of the Complaint, no answer was filed. Barrister,
on the twenty-first day after the Complaint was left with Mr. Fixit's
son, filed a praecipe with the Prothonotary for a default judgment in
the amount of $1,020,000.00 plus $1,000,000.00 in punitive damages, plus
$672,660.00, or one-third of the total damages, as attorneys' fees. Barrister
filed the necessary execution papers to sell the apartment complex. Landlord
received proper notice of the Sheriff's sale and, one week before the
scheduled sale, came to you. Landlord has asked you to review the situation
and advise it on the following:
(a) Could the Chancery
Court have retained jurisdiction? On what basis could the Complaint
be transferred to the Superior Court? What factors would the Vice Chancellor
(b) Was Count 2 of the Complaint properly pled? Explain your answer
under the Superior Court Rules.
(c) What defenses or motions can Landlord raise to the Complaint and
prayer for relief?<
3. Landlord feels
you are not being aggressive enough in dealing with Tenant. As a result,
Landlord seeks other counsel, who files an action in the Court of Common
Pleas to summarily evict Tenant. Landlord's new counsel also seeks damages
against Tenant for abuse of process in the other litigation, demanding
in excess of $100,000.00 in damages.
What motions might Barrister file on behalf of Tenant in this action?
State the basis for the motion(s).
4. Tenant's suit against
Landlord was tried in Superior Court before a jury of twelve people. At
the close of all evidence, Landlord moved for a directed verdict, which
was denied. Thereafter, the jury awarded Tenant $100,000,000.00 in damages,
including punitive damages.
Assume that all
issues regarding the Complaint were resolved before trial. Advise Landlord
on what post-trial motions, pleadings or appeals concerning the trial
and verdict can be filed and with which Court. Include in your answer
the timing for such motions, pleadings or appeals. Do not discuss the
likelihood of success of any such filings.