Board of Bar Examiners of the Supreme Court of Delaware
You represent Paula Plaintiff ("PP") in a lawsuit filed by PP in the Delaware Superior Court against Derrick Defendant ("DD") seeking an award of damages for serious personal injuries PP received when DD, driving a pick-up truck, ran a red light and broadsided her car. DD lives in New Castle County, Delaware.
1. In accordance with your directions, the Sheriff of New Castle County personally served the Summons and Complaint on DD at his home. DD acknowledged service by signing the return-of-service form that the Sheriff gave him. Nonetheless, before filing an answer to the complaint, DD's attorney, Victoria Vile ("VV"), moves to dismiss the action on the ground of insufficiency of service of process. The motion claims that DD never received the Summons or the Complaint. You call VV to ask, politely, whether she knows that DD in fact was served and that he signed the return. VV admits to you that she knows that service on DD was properly effected, but that she filed the motion in order to get more time because she is very busy and does not have time to investigate the facts sufficiently to prepare an answer. She refuses to withdraw the motion even when you offer an extension of time to file the answer.
You are not particularly worried that the motion to dismiss will be granted, but you and PP are angry about the waste of time and money involved in responding to the motion.
What recourse, if any, is available to PP under the Superior Court Civil Rules? Explain your answer and discuss all applicable rules.
2. You have certified, in good faith, that PP's damages are in excess of $100,000 exclusive of costs and interest and, accordingly, the case is not assigned to compulsory arbitration. Instead, it is assigned to a judge who schedules an initial pretrial conference.
What subjects are likely to be discussed at this conference?
3. As part of the discovery that PP is seeking of DD, you serve on VV a request to have the truck driven by DD made available for inspection by an auto mechanic you have retained as an expert witness, to determine whether the brakes show signs of defects. VV files a motion for a protective order against producing the truck for inspection. To your surprise, the judge grants the protective order in a decision you believe to be clearly incorrect under established case law.
Discuss whether interlocutory review of that decision by the Supreme Court is available to PP and the likelihood of success.
4. Assume that at the time of the accident DD was driving a vehicle owned by his employer, Embarrassed Employer ("EE"), a Delaware corporation. The accident occurred on July 1, 1998. Your complaint, filed in the Superior Court on June 27, 2000, names only DD as defendant. On September 30, 2000, having learned of EE's ownership of the truck, you file a motion to amend the Complaint naming EE as an additional defendant, on a theory of respondeat superior.
How should the Superior Court rule on your motion to amend? Explain your answer and discuss all applicable rules.
5. Assume that you are successful in joining EE as a defendant. Pre-trial discovery initiated by EE has disclosed that at the time of the accident DD did not have EE's permission to be operating the vehicle. Assume also that it is well-established that an employer cannot be held liable for its employee's negligence on a respondeat superior theory where the employee is acting without the employer's permission. EE has moved for summary judgment.
What standards are applicable to the Superior Court's consideration of EE's motion for summary judgment? What materials may the parties submit in support of or opposition to the motion? Explain your answer and discuss all applicable rules.
Tom owns a small shopping center in Seaford, Delaware. The rent that he receives from its tenants constitutes his principal source of income. Growing older, Tom decides that he no longer wants the bother of being a landlord. He therefore executes and delivers to his younger sister, Sandy, a deed that grants and conveys the shopping center to her. When he gives the deed to Sandy, he says, in the presence of their brother, Bob:
I am transferring the shopping center to you, but I want you to manage it for me and pay the income to me on a regular basis so I can pay my bills. When I die, I want the shopping center to benefit the Seaford Children' s Soccer Consortium. You know that youth soccer has always been important to me. I want the Soccer Consortium to receive the income on a regular basis. Thus, I would like the shopping center to be held in something of an endowment fund.
Shortly thereafter, Tom suffers an incapacitating stroke.
Sandy encounters personal financial problems. She reviews the deed to the shopping center. She notes that it is in standard form and that it makes no reference to any rights retained by Tom.
Assume for purposes of the remaining questions that Sandy has concluded thatshe is required to pay the income from the shopping center to Tom. Sandy does not want the responsibility of operating the shopping center. She is not experienced in managing commercial property, and the shopping center is generating significantly less income than it had when Tom managed it. Sandy decides to sell the shopping center. Larry Lawyer ("Larry") represents the purchaser of the shopping center. Larry knows of Tom's wish that the shopping center be retained as a source of income for him and, later, serve as an endowment for the Soccer Consortium. Because of this, Larry is concerned about Sandy's authority to sell the shopping center.
2. Does Sandy have the right to sell the shopping center? Explain your reasoning.
Assume for purposes of the remaining questions that Sandy has the right to sell the shopping center and, in fact, sells it. Sandy puts 25% of the net proceeds from the shopping center sale into tax exempt bonds; 25% thereof into U.S. Treasury securities; 25% thereof into gold; and 25% thereof into a real estate investment trust. She pays the income from the investments for Tom' s benefit on a regular basis.
Tom dies ten years after the sale of the shopping center. His will gives all of his property to his nephew, Norbert.
3. Sandy, the Soccer Consortium, and Norbert all want the investments held by Sandy from the sale of the shopping center. Analyze the claim of each. Who would prevail? Explain your reasoning.
Assume for purposes of the remaining questions that it is determined that the Soccer Consortium is the beneficiary of Tom's declaration and receives the investments from the proceeds of the sale of the shopping center.
During the ten years between the sale of the shopping center and Tom's death, the Standard & Poor's Index rose an average of 23% per year; the tax exempt bonds paid 6% average annual interest; the Treasury securities paid 7.2% average annual interest; the gold investment lost 50% of its initial value; and the real estate investment trust lost 22% of its initial value. The Soccer Consortium is disappointed by the performance of the investments.
4. Does the Soccer Consortium have a viable claim arising out of the disappointing investment results? Explain your reasoning.
For a few years after Tom's death, the Soccer Consortium uses the income from Tom's gift to support youth soccer in Seaford. Fred, who directs the Soccer Consortium, subsequently endures a family tragedy as a loved one dies from cancer. Fred has effective control over the members of the Soccer Consortium board and induces the board to change the name of the Soccer Consortium to the Seaford Cancer Support Group and to direct all monies of the organization to help victims of cancer and their families; no further funds are to go to youth soccer. Tom's cousin, Colleen, although recognizing that Fred is pursuing a charitable purpose, is upset that the goals of Tom's gift are being frustrated.
5. What, if anything, can Colleen do to assure that Tom's gift benefits youth soccer? What is the likely disposition of the assets that Tom gave to Sandy for the benefit of the Soccer Consortium? Explain your reasoning.
Arthur hacks into Wally's home computer and, while reading Wally's e-mail, discovers that a high stakes poker game is scheduled for next Friday night at Wally's home. Arthur enlists the assistance of his friends Buster and Claudia in a plan to relieve the participants of their spare cash and other valuables during the poker game. Although Buster and Claudia both know Arthur is a convicted felon, they agree to participate in the scheme. Buster volunteers to case Wally's home in advance and to obtain handguns. Claudia says she will handle the getaway, but she refuses to enter Wally's house.
On Thursday afternoon, Buster enters Wally's home through an unlocked window.
While inside, Buster discovers there is a game room in the basement, and, after drawing a quick sketch of Wally's floor plan, he eats a piece of cake he finds in Wally's refrigerator. The following morning, Claudia and her vicious attack dog Spike go to a nearby shopping center where Claudia steals three Halloween masks from a store and, while walking through the parking lot, forcibly takes a 65 year old woman's automobile by threatening to sic her barking dog on her. Later that evening, the group meets again and Claudia hands out the masks to Arthur and Buster. While Claudia is driving the automobile she commandeered earlier that morning to Wally's home, Buster gives Arthur a loaded handgun with obliterated serial numbers and keeps a second similar loaded revolver for his own use. Claudia does not know that the two guns have obliterated serial numbers.
Claudia, wearing her mask, waits outside Wally's house in the car with Spike. Buster uses a crowbar he has brought along to rip Wally's back door off its hinges, and Arthur and Buster enter the house wearing their disguises. In the basement game room, Wally and five others are playing cards, and cash amounting to several thousand dollars is sitting on the table. Not being sure what type of gun Buster would secure, Arthur has also brought along his own loaded handgun as a backup.
Brandishing the three handguns, Arthur and Buster burst into the game room demanding money and the Rolex watches worn by each of the six card players. After seizing all the cash and taking a Rolex watch from each poker player, Arthur and Buster are preparing to leave when the poker players suddenly rush them. Arthur shoots two of the players, killing one and seriously injuring another, while Buster fatally shoots a third player. As Arthur and Buster run from the house, Wally calls the police and gives a description and tag numbers of the car Claudia is driving.
About a mile from Wally's house, a marked police car begins pursuing Claudia and her associates. Claudia refuses to stop and tries
to elude the police, but when they encounter a police roadblock, the three abandon the car and, after a foot chase, are apprehended by the police. While running from the car, Claudia commands Spike to attack the police officers, but the dog is maced and taken into custody.
Assume that all of the above-described activities occur in the State of Delaware in calendar year 2000.
(A) Identify all Delaware State criminal charges for which Arthur, Buster and Claudia reasonably may be prosecuted and separately sentenced.
(B) If a crime has more than one degree, state the specific degree that should be charged and explain why.
You are an associate at a law firm in Delaware. One of the partners at the firm has been calle d to court unexpectedly and has asked you to cover her appointments for the day.
Your first meeting is with Mr. Good, an old client of the firm.
Mr. Good tells you that his 26 year old daughter, Gwen, was killed in an automobile accident two weeks earlier. She had been a front seat passenger in a car driven by Danny Driver ("Danny"), who is 17 years old. Danny lives at home with his father, Tom, who owns the car Danny was driving. Riding as a passenger in the back seat of the car was Frank Fearless ("Frank"). Mr. Good tells you that Frank lived with Gwen, but that they were not married. Frank and Gwen have a young son, Billy, who is Mr. Good's only grandchild.
On the day of the accident, Gwen and Frank had left Billy with a sitter and took a bus to Danny's house. They stayed for several hours. A neighbor reported that she saw Danny and another man in the back yard smoking marijuana around 5:00 p.m. that evening. The neighbor said that there was a woman with the men, but that she did not see the woman smoking anything. The neighbor indicated that earlier she had seen the two men selling marijuana to kids who lived nearby. She stated that, at about 7:00 p.m. that evening, she saw the woman and the two men get into the car owned by Danny's father and drive away.
Mr. Good explains that the accident occurred later that evening on a twisting road in southern Kent County, Delaware. The police estimate that Danny was driving at approximately 80 miles per hour on a road with a speed limit of 35. He lost control of the vehicle, spun off the road and flipped over several times before coming to rest in a nearby field.
Frank later told police that he talked to Gwen for several minutes before the ambulance arrived to take her to the hospital. Gwen also spoke to one of the nurses at the hospital upon her arrival. She died approximately one hour later.
Danny was charged with several traffic violations. The police are now awaiting the results of lab tests before deciding whether to charge him with vehicular homicide as well. Mr. Good is concerned about the outcome of the investigation because the investigating officer was quoted in the local newspaper as having said, "Gwen GooMr. Good is distraught by his daughter's death and the suggestion that his daughter was selling illegal drugs. He has been seeing his minister for grief counseling and recently was prescribed medication to calm his nerves. Mr. Good emphatically denies that his daughter was a drug pusher, and explains that only recently she was required to receive clearance from the police as a condition to being hired as an aide at a day care center. She made only $8.00 an hour at that job, but it was enough to put food on the table for Frank, Billy and her.
Frank was treated at the hospital and released. Since the accident, he has been treated by his doctor and referred to physical therapy for his neck and back injuries.
Mr. Good tells you finally that he has learned from the police that Danny's father, Tom, had signed his son's driver's license application; however, Tom had not given his son permission to drive the car on the day of the accident.
Mr. Good wants to know the following:
1. What potential causes of action can be brought on behalf of his grandson, Billy, and against whom may they be asserted? Are there any potential defenses with respect to such claims? What damages are recoverable in an action brought on Billy's behalf?
2. What potential causes of action can Mr. Good bring? Against whom may they be asserted and what, if any, potential defenses exist with respect to such claims?
3. What potential causes of action can be brought by Gwen Good's estate? Against whom may they be asserted and what, if any, potential defenses exist with respect to such claims?
4. What potential causes of action can be brought by Frank Fearless? Against whom may they be asserted and what, if any, potential defenses exist with respect to such claims?
Telmar Corporation ("Telmar" or the "Company") is a Delaware corporation with its principal place of business in Dallas, Texas. Telmar has 10,000,000 shares of common stock outstanding. Telmar is primarily engaged in the manufacture of internet communication products. However, the Company also has various other lines of business that date from its inception in 1982. The founder of the Company is Andy Andrews (" Andy"), who still owns 1,000,000 of the outstanding shares of common stock. Telmar's certificate of incorporation, which has never been amended, contains only the items required by 8 Del. C. §102(a); i.e.,Telmar's name, registered office and agent, purpose, authorized stock, and the name and address of its incorporator.
Telmar has a board of five directors (the "Board"). Andy is Chairman of the Board and Chief Executive Officer. The other members of the Board are Mike Millman ("Mike"), who is a Senior Vice President of Telmar, Rodney Richman ("Rodney"), who is a Texas politician, Sam Steward ("Sam"), who is a communications professor at Texas Communications College, and Peter Perry ("Peter"), who is an attorney for an environmental law firm. Rodney beneficially owns 500,000 shares of common stock, registered in the name of his brokerage firm, Invest Wise. Sam does not own any Telmar common stock.
Mike and Peter each own 500,000 shares of common stock. In 1987, they transferred all of their Telmar stock into a voting trust. These shares constitute all of the holdings of the voting trust. The written voting trust agreement has been filed with Telmar's registered agent. The voting trust states that the two voting trustees may vote the stock so long as it remains beneficially owned by Mike and Peter or for as long as Delaware law, including any subsequent statutory amendments, permits, whichever is shorter. The voting trust agreement does not specify how the stock held by the voting trust will be voted if the two trustees do not agree. There have been no modifications, extensions or changes made to the voting trust agreement since it was signed.
On January 25, 2000, Telmar completed the sale of its last remaining non-internet business, TelmarKit, which was also its only profitable division, to a California based communications company for $25 million. The Telmar Board determined to proceed with the sale based upon its conclusion that the Company's internet operations were its future, even though those operations currently produce limited revenue and no profit. No stockholder approval was sought or obtained in connection with the sale of TelmarKit.
At a January 25 Board meeting, the Board discussed how the proceeds from the sale should be used. The Company's investment adviser, while available, was not present at the meeting because he had not been asked to attend.
During the meeting, Peter suggested that most of the sale proceeds should be invested in INCO, a new venture that would improve internet video transmission. Peter, who prefaced his remarks by disclaiming any special investment expertise, reported that he had heard of INCO through a former associate, Brenda Bright ('"Brenda"), who had read a magazine article about INCO. Peter told the Board that Brenda had a great legal mind and an MBA degree and had done so well investing in internet stocks during the last few years that she had retired from the practice of law to manage her portfolio. Brenda believed INCO would go public soon and, therefore, that the investment should be made immediately. Peter said that Brenda believed Telmar could make a fabulous return by investing in INCO now, then selling some of its position once INCO went public. After discussing the issue briefly, the Board unanimously passed a resolution that authorized Andy to negotiate a $20 million investment in INCO. The minutes of the meeting reflect that all Board members except Mike attended, that the meeting lasted an hour, and that each member in attendance voted for the investment in INCO.
Shortly after Telmar invested $20 million in INCO common stock, the stock market declined sharply, particularly for the stock of internet companies, and INCO abandoned its plans for an initial public offering. Holders of INCO debentures filed suit, claiming that INCO's failure to go public by April 30, 2000 accelerated their right to payment of all principal and interest under the terms of their indentures, and won. INCO was forced to pay $22 million in principal and interest, depleting all of the funds Telmar had invested. INCO could not secure additional financing and its remaining funds ran out. Telmar lost its entire investment when INCO went into bankruptcy in May 2000. Telmar's financial condition was negatively affected by the loss of its $20 million investment.
In June 2000, Dan Daniel ("Dan") acquired Telmar stock through a bequest in his father's will. His father had acquired the Telmar stock five years earlier. After his father's Telmar stock had been transferred by Telmar into Dan's name, Dan became aware of Telmar's disastrous investment in INCO. He was angry that this investment had affected the value of his stock adversely and wanted to determine whether the directors had acted properly. Therefore, Dan drafted a letter to the Board, which stated in its entirety: "Dear Board Members: I am a common stockholder of record. I desire to inspect and copy all records and books concerning your decision to invest in INCO. Please advise me when and where I can inspect the records. Sincerely, Dan Daniel." Dan, who lives in the same neighborhood as Andy, placed the letter in Andy's mailbox. A month after Dan placed this letter in Andy's mailbox, he still had not heard a response.
1.) If Dan files an action in the Delaware Court of Chancery seeking inspection of books and records, will the Court grant Dan's request to inspect all records and books concerning the INCO investment? Explain your answer.
2.) Discuss whether Dan may bring an individual or derivative suit challenging the Board's actions. Include a discussion of Dan's standing and the basis for the claim.
At the next Telmar Board meeting, the Board discussed the possibility of a stockholder suit and the potential liability of the Board members for their decisions concerning investing in INCO. The Board, having all members present, passed a resolution amending the bylaws to state that "no member of the Board of Directors of Telmar shall be personally liable to the corporation or its stockholders for monetary damages for a breach of any fiduciary duty as a member of the Board of Directors."
At the next stockholders' meeting, the stockholders ratified the Board's bylaw amendment but voted that the language should also be included in the certificate of incorporation.
3.) Discuss the effectiveness and validity of the Board and stockholder votes to eliminate personal liability of directors.
On May 5, 2000, notice of the Telmar annual meeting had been sent to all stockholders of record as of May 1,2000. The notice informed the stockholders that the Telmar annual meeting would be held at 10:00 a.m. on June 5, 2000 in Wilmington, Delaware. On the agenda was the election of the Board. There were two separate slates to choose from: Slate A (which consisted of the current directors) and Slate B (which consisted of a group of nominees organized by Dan). Upon the closing of the polls, the meeting was convened as set forth in the notice. The Inspectors of Election had received proxies and ballots representing 7,200,000 votes. There was no controversy with respect to 3,000,000 votes, 1,400,000 of which were for Slate A and 1,600,000 of which were for Slate B.
The remaining 4,200,000 votes were as follows:
(a) the two trustees of Mike's and Peter's voting trust submitted by proxy 500,000 shares for Slate A and 500,000 shares for Slate B; however, Mike and Peter appeared at the meeting and also voted these shares. Mike voted 500,000 shares for Slate A and Peter also voted 500,000 shares for Slate A;
(b) Rodney's 500,000 shares were voted twice: Rodney signed a ballot voting 500,000 shares at the meeting for Slate A and Invest Wise executed a proxy in its name 20 days prior to the annual stockholders' meeting and voted Rodney's 500,000 shares for Slate B;
(c) Candy Carter's ("Candy") 500,000 shares were voted twice: a proxy signed by Candy 20 days prior to the annual stockholders' meeting voted 500,000 shares for Slate A and a proxy signed by Candy two days prior to the stockholders' meeting, but not received until 2:30 p.m. on June 5, 2000, voted 500,000 shares for Slate B; and
(d) Xavier Zeato ("Xavier"), who purchased 100,000 shares of common stock from Tim Tyler ("Tim") on May 25, 2000, voted 100,000 shares for Slate B by ballot at the meeting, and Tim had sent in a proxy dated May 12,2000, which voted the same 100,000 shares for Slate A.
4.) Was a valid annual meeting of stockholders held?
5.) You are the Inspector of Election. Determine how the controversial 4,200,000 votes should be counted and explain the reasons for your determination.
Mitch, a free-lance computer software engineer who lives and works in Delaware, decides to do computer consulting work for Cleanit.com, a start-up Internet company incorporated in Delaware (the "Company") that aims to create the first global information clearinghouse on how to best clean any stain from any fabric. Hopeful that the value of Cleanit.com stock will soar when the Company goes public, Mitch signs a Consulting Contract with Cleanit.com under which Cleanit.com promises to issue 50,000 shares of stock to Mitch if Mitch makes himself available for part-time advisory efforts on an as-needed basis over the following year. At the time Mitch enters into the Consulting Contract, the CEO of Cleanit.com tells him that, based on current valuations, the 50,000 shares are worth approximately $50,000. During the ensuing month, Mitch has been asked to work only 10 hours for Cleanit.com, and he has put in that time. At the end of the month, he receives an e-mail from the CEO telling him that Cleanit.com does not foresee needing his services in the future and that to compensate him for the small amount of time he had been asked to work, Cleanit.com will send him a check for $10,000 in lieu of stock.
1. Mitch comes to your office. He says that he is still willing to work for Cleanit.com but wants to sue to get the stock that was promised him.
A. Is specific performance available? Explain why or why not.
B. Would your previous answer change if Cleanit.com offered to pay Mitch $50,000 in cash? Explain why or why not.
C. Mitch tells you that he is reluctant to sue because he told Cleanit.com before he entered the Consulting Contract that he holds a master's degree in computer science engineering, and he is afraid they will discover that he is actually three credits shy of a degree. How does that fact affect the relief to which Mitch may be entitled, if at all? Explain.
2. Assume that after an initial consultation with Mitch, you don't hear from him for six months. He then says he hears that Cleanit.com is doing very well and that he would like to file suit to recover the 50,000 shares of stock; however, he has since cashed the $10,000 check he received from Cleanit.com.
A. Will the fact that Mitch cashed the $10,000 check create a defense to his claim for specific performance? Explain why or why not.
B. Assume, for purposes of this question only, that Mitch could have sued successfully to recover the stock three months earlier despite having cashed the $10,000 check. Will the passage of time alone prevent Mitch from recovering his stock? Explain why or why not.
3. When he signed the Consulting Contract, Mitch also entered into a Confidentiality and Non-Compete Agreement with Cleanit.com prohibiting him from disclosing any of its trade secrets and from providing software advisory services to any other Internet company in the United States during the term of his Consulting Contract and for three years thereafter. Two weeks after being discharged by Cleanit.com, Mitch is asked to join Rubitout.com, a new startup Internet company incorporated in Delaware that hopes to compete directly with Cleanit.com. On Monday, Cleanit.com learns from a reliable source that Mitch intends to start work with Rubitout.com on Thursday.
A. You are now Cleanit.com's lawyer. What judicial recourse does Cleanit.com have to stop Mitch from disclosing its trade secrets? What would Cleanit.com have to prove to get relief?
B. Just as it filed its complaint, Cleanit.com learns that its reliable source was incorrect. It turns out that Mitch will not be starting to work for Rubitout.com for another six weeks. As the lawyer for Cleanit.com, would you advise your client to proceed any differently now to stop Mitch from disclosing its trade secrets? Explain your analysis.
C. Assume that once you file your complaint, Mitch calls to say that he will not go to work for Rubitout.com but instead plans to move to California to help his brother-in-law with a start-up Internet company that aims to match up potential buyers and sellers of used automobile parts. Cleanit.com's CEO tells you that he wants to get Mitch out of the Internet advisory business entirely. Will Cleanit.com be able to enforce its Non-Compete Agreement in this situation? Explain.
A. You are a law clerk for a law firm that has been retained by Chris Collins ("Chris") to offer business advice. Chris is a computer whiz who turned 18 on July 15, 2000. About a year ago, Chris started a business out of his parents' home helping others establish internet websites. When he opened his business, he signed an agreement to purchase certain computer equipment from Ace Computer Services ("Ace") for $20,000. The agreement provided that he would pay Ace $1,000 on the first day of every month for twenty months. He received the computer equipment two (2) days after signing the agreement with Ace, and he paid all of the monthly installment payments through July 1, 2000. His next payment is due on August 1, 2000. Although Chris still owes Ace a considerable sum pursuant to the agreement he signed, the equipment that he purchased from Ace is now outdated. Chris would be able to obtain updated equipment at a better price from Finley Computer Services.
Chris wants to know whether the agreement with Ace is enforceable and whether there is anything he can do to get out of making the remaining payments. Discuss the issues raised by Chris' inquiry.
B. Chris has also recently purchased some new and unusual office equipment from Original Office Outfitters ("Outfitters") for $5,500. The Agreement of Sale that covered the purchase of the equipment was signed on July 20, 2000 by Chris and Outfitters. It had no provision with respect to subsequent modification. Since the Agreement of Sale was signed, there has been a sharp and sudden upturn in the market for this kind of office equipment. As a result, and prior to delivery, Outfitters advised Chris by mail that the price for these goods would be increased to $7,500. Chris made no objection to the increased price. A few days after receiving the notification regarding the price modification, he called Outfitters and, without mentioning the price increase, asked for expedited shipment of the equipment. He then accepted delivery. Thereafter, he paid Outfitters $5,500 but refused to pay more. Outfitters has threatened to sue Chris for the $2,000 difference.
Chris wants to know if he has any liability to Outfitters for the additional money. Discuss Chris' rights and obligations under these facts.
C. Chris also tells you that he is planning to expand his business to another location. To that end, he entered into an oral agreement on July 17, 2000, pursuant to which he agreed to purchase a building lot in Rehoboth from Roger Realty ("Roger"), the owner. Chris and Roger agreed on a price of $100,000, payable on July 31, 2000, and Chris made a down payment on the property that day in the amount of $500. On July 23, 2000, however, Roger called Chris to report that he had another buyer for $150,000, that he intended to sell the property to that individual instead, and that he would promptly return Chris' down payment.
Chris wants to purchase the property as originally agreed. Discuss what rights he has under his agreement with Roger.
D. Earlier this year, Max Mover ("Max") contacted Chris to create a web page for a new business Max was opening to sell discounted NASCAR items. The parties signed an agreement, pursuant to which Chris agreed to create such a web page for Max by May 15, 2000, the date on which Max planned to begin the business, for the sum of $1,000. Chris fell seriously ill during the month of March 2000, and was unable to finish the web page until July 15, 2000. As a result of the delay, Max claims that he lost $100,000 in profits. In addition, because of this drop in anticipated income, his application for a mortgage to purchase a vacation home at $50,000 below market was denied. Because of this, Max's wife divorced him. Max's attorney has sent a letter to Chris indicating that he expects Chris to reimburse Max for the $100,000 in lost profits, plus $50,000 for the loss in property value, and $50,000 for emotional distress arising from his divorce.
Chris understands that he may have some liability for failing to perform as agreed. Discuss the measure of damages that would be appropriate under these circumstances.
Mary worked in Dover, Delaware for Pegasus Inc. ("PI"), an aeronautical engineering firm, as a senior design engineer. She had a two-year employment agreement that contained, among other things, a restrictive covenant that prohibited her from working for any competing company within the United States for two years after the termination of her employment. In January 2000, PI terminated her employment, stating that she was not sufficiently responsive to PI's clients.
Mary moved to Los Angeles and started her own aeronautical engineering firm. Two weeks later, she received a letter from PI's lawyers threatening to sue her for violating the restrictive covenant.
Hoping to avoid litigation, Mary sent an e-mail message to the President of PI offering to discuss settlement. In the e-mail, Mary admitted that she was in violation of the strict terms of the restrictive covenant, but said that these terms were unreasonable and would not be enforced by any court. Mary's e-mail also stated that, prior to leaving PI, she had discussed with co-workers her dream of starting her own engineering firm and was told that PI had never sued a former employee for a violation of the restrictive covenant. In the same e-mail, Mary offered to pay PI $5,000 in exchange for a release of any obligations under her employment agreement.
After brief compromise negotiations, PI filed an action in the Delaware Court of Chancery seeking an injunction against Mary operating her new business. Mary denied that she had breached the restrictive covenant and alleged, in a counterclaim, that PI had fired her without good cause and therefore owed her a substantial severance payment under the terms of the employment agreement.
The following evidentiary issues arise at trial:
Question No. 1:
1(A). On cross-examination, PI's lawyer asks Mary if she violated the restrictive covenant. She denies any violation, explaining that her new business would not directly compete with PI. PI's lawyer then asks her whether she had admitted in an e-mail message that she had violated the restrictive covenant and had offered to pay PI $5,000 not to sue her.
Mary's lawyer objects. PI's lawyer responds that PI is entitled to prove Mary's prior inconsistent statement and that this evidence is directly relevant to Mary's liability.
What is the basis for Mary's objection? How should the Court rule? Discuss.
1(B). PI's lawyer calls as a witness one of Mary' s co-workers and asks the co-worker about a conversation with Mary, prior to Mary's discharge, in which Mary discussed starting up her own engineering firm. Mary's lawyer objects, arguing that PI learned about this conversation through the e-mail message that Mary had sent to the President of PI. PI's lawyer concedes that PI learned about the conversation through Mary's e-mail.
Should the Court admit the co-worker's testimony about this conversation with Mary? Explain.
Question No. 2:
2(A). On cross-examination, PI's lawyer asks Mary if she ever misrepresented to PI her educational background. Mary's lawyer objects on grounds of relevance, pointing out that PI did not fire her because of any alleged misrepresentation, but because PI believed that she was not sufficiently responsive to PI's clients.
2(B). PI attempts to introduce into evidence (1) the resume that Mary submitted when she applied for her job with PI, which states she holds a master's degree in electrical engineering, and (2) a letter from Mary to PI's personnel department subsequently clarifying that she was forced to leave graduate school prior to getting her degree due to a death in her family. Mary's lawyer again objects.
Is this evidence admissible? Discuss.
Question No. 3:
PI calls as a witness one of Mary's former co-workers at PI. PI's lawyer asks the co-worker, "From what you have heard other PI employees say, does Mary have a reputation for laziness and dishonesty?"
Mary's lawyer objects, contending that the question calls for impermissible hearsay and reputation evidence.
How should the Court rule? Discuss.
Question No. 4:
On cross-examination, PI's lawyer asks Mary if she has ever been told by a mental health professional that she suffered from any mental or emotional illness or condition. Mary's lawyer objects.
What argument or arguments could Mary's lawyer make in support of this objection? How should the Court rule? Discuss.
Question No. 5:
Mary testifies that she was fired, not due to any problem with clients, but because she had filed a complaint with the Equal Employment Opportunity Commission alleging sexual harassment by PI's Chief Financial Officer (the "CFO"). Mary calls as witnesses two former PI employees who would testify that they were also fired by the President of PI after complaining about sexual harassment by the CFO.
PI's lawyer objects to any testimony as to these prior firings by PI. Mary argues that this testimony will show the propensity of the President of PI to retaliate against persons who complain about sexual harassment by the CFO.
How should the Court rule? Discuss.
Question No. 6:
6(A). During the testimony of the President of PI, PI's lawyer offers into evidence three complaint letters from PI clients that were obtained from Mary's personnel file located within the PI personnel office. In each of these letters, the client complains about Mary's lack of responsiveness.
Mary's lawyer objects to the admission of these letters as hearsay.
How should the Court rule? Discuss.
6(B). PI's lawyer later attempts to introduce, through the manager of the PI personnel department, the PI personnel department's completed evaluation forms regarding these three complaints. The forms record the recollection of a former PI personnel officer (who still works for PI in Dover but recently left personnel) that Mary admitted, when confronted with the three complaint letters, that she had mishandled these three matters. The forms also record the officer's observation that Mary did not seem too concerned about the situation. Finally, the forms indicate that the notations were made immediately after interviewing Mary.
Mary's lawyer again objects on grounds of hearsay. How should the Court rule? Discuss.
Board of Bar Examiners of the Supreme Court of Delaware
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