Question 1 | Question 2 | Question 3 | Question 4
Question 5 | Question 6 | Question 7 | Question 8

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QUESTION 1

Donald Driver and William Witness routinely play golf together at their club, North Country Club (the "Club"), in Delaware. Witness and Driver played together on May 4, 2002. As Driver was preparing to hit his first shot on the tee at the 13th hole, Peter Parker, another Club member, walked onto the golf course where Driver was aiming. Witness spotted Parker and said to Driver: "don't hit your shot until that guy is out of your way." Driver responded: "I don't see anyone but if I hit him it will teach him a lesson."

Parker was hospitalized with a fractured skull for two weeks. After Parker was in the hospital for a week, he had a visit from Driver. Parker told Driver that he believed Driver was liable for his injuries. Driver said: "I didn't yell 'fore,' but you were drunk." Driver told Parker that even though the claim was disputed, Driver was willing to offer to pay Parker the amount of his medical bills plus $1,000 to settle all claims Parker may have against Driver. Parker refused the offer.

A year later, Parker brought an action against Driver in the Superior Court of the State of Delaware, asserting Parker's injuries were caused by Driver's negligence. Parker asserts Driver unreasonably disregarded Parker's safety by hitting his shot while Parker was on the golf course and failed to shout "fore" to warn Parker. In defense to Parker's claims, Driver asserts that Parker's negligence caused the injury. Driver asserts Parker was intoxicated and put himself in the line of fire by wandering onto the golf course. Parker denies he was intoxicated.

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QUESTION 2

The Backwater is a popular bar/restaurant in Dewey Beach, Delaware. It has an outdoor deck overlooking the Rehoboth Bay with an attached dock used by patrons who arrive by boat. Prominently displayed on the dock is a sign that states: "Establishment is not responsible for personal items left on board."

Joe Ford and his wife Linda enjoy the food and entertainment at the Backwater and frequently arrive by boat. After the couple finished dinner on the deck one summer evening, Joe paid for dinner inside the restaurant, and then walked down to the dock while Linda stayed on the deck to finish her drink. Joe started his new 25-foot, 250 horsepower racing boat while the only person on the dock, Sam Sneed, staggered over to admire the boat. Sneed, who was visibly intoxicated, had just been ejected from the bar by a bouncer. The bouncer had confiscated Sneed's car keys, but did not arrange a ride home in a taxi, contrary to Backwater's policy for handling intoxicated patrons.

Joe left his ignition keys in the boat with the engine idling, and started to walk up the dock toward the restaurant. From a distance he heard Linda arguing with their waiter about the dinner bill. Other deck patrons who were witnesses said that the waiter told Linda that they had not paid for the dinner bill. Linda angrily denied this assertion and, according to some witnesses overhearing the conversation, may have personally insulted the waiter before she turned and tried to walk away. The waiter grabbed Linda's arm to stop her, and the physical confrontation quickly escalated. As the waiter and Linda grappled together near the edge of the deck, Linda fell over the railing, hitting her head as she fell. The blow knocked her unconscious before she landed in the water. When Joe saw what had happened, he leapt into the water and managed to keep his wife afloat until paramedics arrived. While holding his wife above water Joe banged against a piling that supported the deck, fracturing his elbow. Joe's elbow eventually healed, but the accident left Linda a paraplegic. During the commotion, Sneed hopped into Joe's boat, gunned the engine, and raced out into the bay.

At about the same time, Rick Rafter was returning home from fishing in a small motorized boat. Rafter was accompanied by his fishing buddy, Charlie Caldwell, and Charlie's six-year-old son Mickey. Rafter's boat had a "dead man's clip" designed to shut the engine down immediately if the operator fell overboard. The clip was, however, very sensitive and frequently shut off the engine, much to Rafter's annoyance. On a previous fishing trip, Charlie and Rafter permanently disconnected the "dead man's clip" to keep the engine running.

Sneed, exceeding the harbor boat speed limit, raced in front of Rafter's boat's path creating a huge boat wake that threw all three occupants out of Rafter's boat and into the water. Rafter's boat ran over Charlie with the engine still running, and its propeller lacerated his leg, resulting in serious injuries. Mickey was not wearing a life preserver and, after floundering for a short while, he sank beneath the water. A nearby boater rescued him and applied CPR, but Mickey's brain was deprived of oxygen too long. He remains in a permanent vegetative state. The police quickly found Sneed at a nearby marina. His blood alcohol level was 0.17, well over the legal limit of 0.10.

In answering the following questions, assume that federal maritime law does not apply to this case, only Delaware law. Also assume that Sneed's operation of the boat was negligent. Also be aware that Delaware statutory law provides that operators of recreational boats must ensure that children under twelve years are wearing lifejackets when in the boat.

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QUESTION 3

You are an attorney with the Office of Attorney General for the State of Delaware. Among other roles, the Attorney General's office defends state laws when their constitutionality has been challenged. It also advises state agencies in connection with the drafting of proposed legislation. For purposes of the following questions, assume that the legislature has the power to enact otherwise constitutional laws governing local school districts.

1. The Delaware legislature has become increasingly concerned with illegal drug use among young people in Delaware. To combat that growing problem, proposed legislation has been drafted that requires every middle and high school student who participates in extracurricular activities to submit to a urinalysis drug test: a) when they sign up for the extracurricular activity; b) at randomly selected times while engaged in the activity; and c) at any time upon reasonable suspicion. The tests are designed to detect only illegal drugs.

Under the draft legislation, a same-sex faculty monitor waits outside a closed restroom stall for the student to produce the sample. Test results are confidential and are not disclosed to any law enforcement agencies. Any student who tests positive is prohibited from engaging in the extracurricular activity but there is no other discipline or any academic consequences. The covered extracurricular activities include athletics, debate team, band, choir, cheerleading, chess club, Future Homemakers of America and Future Farmers of America.

Please advise the legislators as to (a) the constitutional rights of the students, if any, that may be impacted by the legislation; (b) the constitutional analysis that would be applied by a court if the legislation becomes law under these facts; and (c) how a court would likely rule on a constitutional challenge to the legislation.

2. The legislature recently enacted a law that permits parents with children attending public schools in the Failure City district to apply for vouchers for state funds of up to $2,500 per year per child. Under the voucher program, qualifying low income families living in the Failure City district can use the funds to send their children to private schools, whether secular or religious, or to public schools in adjacent districts. Other options available to qualified low-income families under the law include tutorial aid of up to $500 per child per year for students wishing to stay in Failure City's public schools, and the option to attend publicly funded, independently controlled schools outside the city. The legislature enacted the law after finding that Failure City's public schools had badly failed their educational mission. The Failure City Board of Public Education has brought a suit against the State of Delaware in the Court of Chancery challenging the law's constitutionality and alleging that the $2,500 cap on the voucher program would almost fully fund tuition at the nearby lower cost religious schools, but would provide only a portion of the tuition cost for the nearby private secular schools.

Please advise the legislature: (a) what federal constitutional rights, if any, are impacted by the claim in the suit; (b) the constitutional analysis that would be applied to the claim by the Chancery Court; and (c) how the Chancery Court will likely rule on the claim. Do not discuss state constitutional law issues.

3. A private nonprofit organization called Citizens for a Strong Public Education ("Citizens") comprised of parents in the Failure City School District, brought a separate suit against the school voucher program discussed in question 2 above. Citizens brought its suit in the United States District Court for the District of Delaware and named the State of Delaware, the Governor and the Secretary of the Delaware State Board of Education as defendants.

The Citizens' suit alleges that the school voucher program does not comply with certain requirements of the Federal Educational Assistance Act ("FEAA"), and it requests both injunctive relief and damages. The FEAA provides federal funds to the states, including Delaware, which the State Board distributes to local public school districts to help fund their public education. In order to receive such funds, states must agree to use the funds exclusively for public education.

Please advise the three State defendants whether there is a constitutional basis for them to defend the suit brought by the Citizens? If so, please identify (a) the basis of the constitutional defense; (b) the constitutional analysis the District Court would likely apply; and (c) how the District Court will likely rule on the defense.

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QUESTION 4

You are a junior prosecutor assigned to review the following police report, which was written after a lengthy investigation:

Tommy Trafficker, a 25-year old male, who has never been to Delaware, mailed contraband narcotics from his California home to a Delaware post office box, expecting that his 18-year old acquaintance, Dan Dealer, a Delaware resident, would pick up the narcotics from the post office box. Before picking up the narcotics, Dealer visited his 15-year old girlfriend and engaged in voluntary sexual intercourse with her. After leaving his girlfriend's house, Dealer stopped at another friend's house for a party. In less than 2 hours, Dealer voluntarily consumed 12 beers. When Dealer left the party to go pick up the narcotics at the post office, he ran a red light and rammed his car into another car legally moving through the intersection. Dealer suffered serious internal injuries in the accident, but still fled the scene. The driver of the other car was not as lucky and was pronounced dead at the scene of the accident.

Trafficker, who was upset that Dealer failed to pick up the narcotics, called his old friend, Eddy Enforcer, and asked Enforcer to pay a visit to Dealer. While Dealer was recuperating at home from his injuries, Enforcer stopped by Dealer's house intending only to scare Dealer a bit by roughing him up. When Dealer opened the door, Enforcer, unaware that Dealer had suffered serious internal injuries in the accident, punched Dealer once in the stomach and said "This one is for Tommy. Next time don't mess up!" Enforcer then left Dealer's house. Unbeknownst to Enforcer, his one punch to the stomach aggravated an internal injury suffered in Dealer's car accident, causing internal bleeding. After Enforcer left, Dealer lapsed into a coma, and ultimately died 15 months later.

Trafficker, still upset that his narcotics did not reach their ultimate destination, decided to come to Delaware to finish the delivery himself. While in Delaware, Trafficker paid a visit to his aunt and uncle, Lola and Larry Loser, both of whom had significant problems of their own. Lola was terminally ill with a rare degenerative disease that caused death in every known instance in which the disease was diagnosed. Larry, on the other hand, had been a mental health outpatient for most of his life, but had managed to stay out of trouble with the law in the recent past by staying under the watchful eye of his loving wife, Lola. Although Larry understood the difference between right and wrong, when he was not under the watchful eye of Lola, he was compelled by imaginary voices to commit crimes. While Trafficker was visiting Larry and Lola, Lola's condition worsened such that she could no longer keep an eye on Larry. Without Lola's supervision, Larry listened to the compelling, imaginary voices and went on an armed robbery spree. While Larry was in custody, the police executed a valid search of Larry's home and confiscated his home computer. As it turned out, the police discovered that Larry's hobby was the collection and storage of child pornography on his computer.

Unable to bear her family's troubles anymore, including her own declining health, Lola asked her nephew, Trafficker, to assist her to commit suicide. Trafficker, deeply saddened and affected by his favorite aunt's declining health and other family troubles, agreed to assist Lola to commit suicide.

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Question 1 | Question 2 | Question 3 | Question 4
Question 5 | Question 6 | Question 7 | Question 8

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QUESTION 5

Atlantic Beachfront Company ("ABC") is a Delaware corporation that develops and sells luxury homes along the East Coast of the United States. ABC was founded ten years ago by Dan Davis, who has served continuously since then as a member and chairman of ABC's board of directors. Throughout that ten-year period, the four other members of ABC's five-member board have been: Evan Eaton, a former U.S. Senator; Fran Frost, an independent investor who owns 3% of ABC's stock; Greg Davis, the son of Dan Davis and a ten-year ABC employee who became ABC's president in 2001; and Hope Davis, the wife of Dan Davis and an economics professor at a prestigious university. Evan Eaton and Fran Frost have no other business or familial relationships with ABC or the Davis family. Collectively, Dan Davis and his family own 25% of ABC's stock.

ABC's certificate of incorporation provides that ABC "shall indemnify the corporation's directors to the full extent permitted by the Delaware General Corporation Law." ABC's certificate of incorporation also provides that ABC's directors are exculpated from liability to ABC and its stockholders to the maximum extent permitted by the Delaware General Corporation Law.

Sharie Holder is the record owner of 100 shares of ABC's stock, which she purchased in 2002. Holder is a real estate agent in Rehoboth Beach, Delaware, where she occasionally develops and sells homes in competition with ABC. Recently, Holder became concerned that ABC has been managed in a way that has unfairly favored members of the Davis family at the expense of ABC and its other stockholders. The main basis for her concern is that ABC's chief financial officer ("CFO") told her that ABC awarded Greg Davis a lavish and unprecedented package of stock options when he became president in 2001, and that, in early 2003, Dan Davis acquired several luxury homes from ABC at bargain prices, and then resold them for substantial profits. The CFO also informed Holder that the options awarded to Greg Davis and the discounted home sales to Dan Davis were approved by ABC's board of directors. Holder is considering filing a suit in the Court of Chancery for damages against ABC's directors in connection with the options awarded to Greg Davis and the property sales to Dan Davis.

1. Before initiating litigation, Holder wants to investigate the facts further. She writes ABC a letter, which she signs under oath and delivers to ABC's registered agent in Delaware, demanding that she be permitted to inspect and copy ABC's board minutes and other documents concerning the 2001 stock options and the 2003 property sales transactions. Her letter states that her purpose in seeking the documents is to investigate mismanagement in connection with the questioned transactions. ABC refuses to produce the requested documents, claiming that Holder's demand is legally deficient, that her purpose is improper, and that she should be denied the documents because she is a competitor of ABC. If Holder files a proceeding in the Court of Chancery to compel the requested inspection and copying, what will she have to prove, and how should the Court rule? Explain your answer.

2. If Holder wishes to commence a derivative suit asserting claims against ABC's directors for breaching their fiduciary duties in approving or participating in the 2001 stock options to Greg Davis as well as the 2003 property sales to Dan Davis, will Holder have standing as a stockholder to assert any or all of such claims derivatively on behalf of ABC? Explain your answer.

3. Assume that Holder files a derivative complaint for monetary damages against ABC's directors, alleging that Dan Davis, Greg Davis and Hope Davis breached their fiduciary duties by approving the 2003 property sales to Dan Davis on unfair terms that personally benefited the Davis family, and alleging that Evan Eaton and Fran Frost were grossly negligent in approving the sales transactions or permitting them to occur. Further assume that Holder did not, before filing her suit, demand that ABC's board of directors cause ABC to file its own suit against the directors. Explain what Holder's complaint should allege to avoid dismissal of her derivative action due to her failure to make a pre-suit demand on ABC's board of directors.

4. In Holder's suit against ABC's directors, what standard of review will the Court use to judge the directors' conduct? Explain who will have the burden of proof and how the standard of review will otherwise be applied.

5. Can any or all of ABC's directors successfully defend against Holder's suit based on the provision in ABC's charter that exculpates ABC's directors from liability to the maximum extent permitted by the Delaware General Corporation Law? Explain your answer.

6. In considering and approving the property sales to Dan Davis, what procedures could ABC's board of directors have employed to reduce the likelihood of a successful challenge to the propriety of the sales transactions? Explain how the procedures should have been followed to maximize their effectiveness, and explain also how the employment of such procedures would affect the standard of review and burden of proof that a court would apply in evaluating the transactions.

7. Assume that the outcome of Holder's suit is that four of the five directors -- all except Evan Eaton -- are held liable to ABC for damages. Further assume that two of the directors -- Evan Eaton and Fran Frost -- each hired and paid for their own personal attorneys to defend them against Holder's suit. If Eaton and Frost ask the Court of Chancery to order ABC to reimburse them for their respective defense costs, what standards will the Court apply, and how is it likely to rule on their requests?

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QUESTION 6

On December 31, 2001, Joe Badluck, then 17 years old and a resident of Newark, Delaware, attended a teen-only New Year's Eve party with some friends. Sometime in the early morning hours of New Year's Day, Badluck hopped into the back seat of the car driven by one of his friends for a ride home. While traveling down Main Street in Newark, Delaware, the car was struck broadside by a van driven by Sam Tipsey, also a Newark, Delaware resident. Tipsey worked for Ace Plumbing, Inc., a Maryland corporation, located in Elkton, Maryland, and was driving a company van at the time of the accident. Tipsey told police he was returning from making a house call to service a leaky faucet when the accident occurred. Badluck was badly hurt in the accident and rushed to the hospital for emergency treatment. Following an extensive investigation, the police charged Tipsey with disregard of a traffic control device. Tipsey later pled guilty to the offense.

After a month-long hospitalization and $200,000 in medical expenses, Badluck was well enough to be released from the hospital. On February 10, 2002, Joe Badluck's father, Greedy N. Badluck, visited Ace Plumbing and met with its owner and president, Frank Faucet. Faucet told Greedy that he would pay Greedy $1,000 to drop all claims that Greedy might bring on behalf of his son Joe. Greedy said it was not enough money, but accepted Faucet's personal check for $1,000 and said it was "a down payment for past damages." Faucet said in reply that it was "payment for the accident".

On February 20, 2002, Joe Badluck turned 18 years old. The next day, a massive blood clot lodged in Joe Badluck's brain, causing permanent brain damage. Doctors attributed the blood clot directly to the trauma suffered in the accident. Badluck's injury caused the Badluck family enormous stress. Greedy and his wife, Bertha, were subsequently divorced. Bertha has been taking care of Joe Badluck since the accident. Greedy, Bertha, and Joe have retained you to represent Joe Badluck to recover damages caused by the accident.

1.As an initial matter, you need to determine in what Delaware court(s) (state and federal) could Joe Badluck file suit (a) against Sam Tipsey only; or (b) against Sam Tipsey and Ace Plumbing, Inc. as co-defendants? Explain your answer to each question and the relevant jurisdictional considerations.

Thrilled to be handling your first big personal injury case, you take your time and gather all medical bills, doctor reports, and police reports. On Wednesday night, December 31, 2003, you attend a New Year's Eve party. On your way home early on New Year's Day, you think about the Badluck case and suddenly realize it has been two years since Joe Badluck's accident, and the personal injury action is subject to a two year statute of limitations. On Friday morning, January 2, 2004, you quickly draft and file in Delaware Superior Court a one-page Complaint naming Joe Badluck as plaintiff and Tipsey and "Ace Inc." as defendants. The Complaint has a one sentence count claiming Tipsey was negligent. You return to your office and mail a copy by certified mail to Ace Plumbing, Inc. You also hire a special process server to serve Tipsey at Ace's place of business in Maryland. Your process server is unable to serve Tipsey and you assume that service on Ace suffices for service on Tipsey.

2.Is Joe Badluck's complaint timely under the two year statute of limitations for personal injury actions? Explain your answer.

3. Did Joe Badluck's complaint comply with the Superior Court Rules of Civil Procedure for personal injury actions? Explain your answer.

4.What defenses under the Superior Court Civil Rules should Ace Plumbing assert in response to the complaint? Explain your answer. (Do not discuss defenses applicable to the tort of negligence.)

5. Assume Ace Plumbing files a motion to dismiss based on the incorrect name in the Complaint. On what basis could you defend against this motion? Can you correct the improper name without having the case dismissed? Explain your answer.

After motions to dismiss are denied and the case progresses, defense counsel serves interrogatories and requests for documents, as well as requests for admissions. Plaintiff does not respond to the discovery requests within the thirty (30) day period provided by Court rules.

6. What motion can defense counsel make in response to plaintiff's failure to respond to discovery? What relief would defense counsel request for the failure to respond to the interrogatories and requests for production? Explain your answer. What is the effect of Badluck's failure to respond to the request for admissions? Explain your answer.

After the time period for discovery closes, Ace Plumbing files a motion for summary judgment and supporting brief, claiming that the $1,000 check paid to Greedy Badluck resulted in an accord and satisfaction between Joe Badluck and Ace Plumbing. The Superior Court denies Ace Plumbing's motion for summary judgment because there is a split of authority on the standard that must be met to prove accord and satisfaction, and the trial judge has applied a new standard in Delaware.

7.Can Ace Plumbing seek immediate appellate review of the trial judge's summary judgment denial? If so, what would be the procedure, and what standards would have to be met for the Supreme Court to hear the appeal? Explain your answer.

Ace Plumbing's appeal is denied and the matter scheduled for trial. Ace Plumbing's attorney prepares for trial by retaining several experts to testify as to the mechanics of the accident and the extent of the personal injury. Confident that the accord and satisfaction affirmative defense will prevail at trial, Ace offers to settle the matter for payment of $1,000. The offer is rejected by the Badlucks and Ace serves an offer of judgment in the amount of $1,000, which is also rejected by the Badlucks.

8. If the trial verdict against Ace is less than $1,000, what action can Ace take under the offer of judgment? Explain your answer.

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QUESTION 7

1. In 1965, Barbara Black purchased a 100-acre parcel in rural Sussex County, Delaware. The parcel, which she named Blackacre, was rectangular in shape and had frontage on both North Street and South Street. That same year, Black built her home on Blackacre. She picked that spot in order to take advantage of a spectacular view of Lewis Bay which was on the opposite side of South Street. Although Black built a formal walk to the front of her house from South Street, she primarily accessed her house by means of a 20-foot wide dirt road from North Street which led to the rear of her house.

In 1970, Black subdivided Blackacre into two adjacent 50-acre parcels, each with nearly equal frontage on both North Street and South Street. The dividing line was also just east of the dirt road which she used to access her house. She retained the western parcel on which her house had been built and which continued to be known as Blackacre. She sold the eastern parcel to Wendel White who had recently moved to Sussex County. White was only 17 at the time, having just graduated from high school 2 weeks after his 17th birthday. He used money he inherited from his parents to purchase the property, which he named Whiteacre. He also used that money to start building his own home. In order to maximize his view of the bay, White decided to build his house near the line dividing Whiteacre and Blackacre (see diagram).

At the closing for his purchase of Whiteacre in June of 1970, White told Black that he wanted to use the dirt road on her property to access his property from North Street. Black did not respond.

Later in 1970, White borrowed $25,000 from Larry Lender to cover significant cost overruns in connection with the construction of his house. He gave Lender a $25,000 promissory note and a mortgage on Whiteacre. Lender immediately took the mortgage and recorded it in the appropriate land records. A month later, and without White's knowledge, Lender sold the $25,000 promissory note and mortgage to the Bay Bank. Six months later, White's home was still incomplete and in order to finish the construction, he borrowed another $15,000 from Major Mortgage Company. He gave Major a $15,000 promissory note and a mortgage on Whiteacre. Major also properly recorded its mortgage.

In 1995, White stopped making payments on the promissory notes to both Lender and Major. After several months in which repeated demands for payment proved fruitless, Major and Bay Bank commenced foreclosure proceedings in Delaware against White and Whiteacre.

Assume you are White's attorney.

2. During the construction on White's house, all of the suppliers and contractors used the dirt road on Blackacre to access the construction site. Black did not like dealing with the trucks. As a result, she stopped using the dirt road to access her house and instead used the South Street entrance from that point on.

After moving into his house in 1971, White consistently and exclusively accessed his house using the dirt road over Blackacre. Over the next 24 years, White also kept the dirt road free of snow and other obstructions.

Assume Whiteacre went to foreclosure in 1996 and it was purchased out of foreclosure by Pete Smith. Smith then promptly subdivided Whiteacre into two roughly rectangular 25-acre parcels, one fronting on South Street and the other fronting on North Street. Smith quickly sold the parcel fronting on North Street to Tom Jones. That deed made no reference to any easement rights. At about the same time, he also sold the parcel fronting on South Street to Danny Developer, together with the rights, if any, to access that parcel from North Street by means of the dirt road on Blackacre. Developer planned to build 25 townhouses fronting on South Street in order to take advantage of the water view. However, because of wetlands issues and parking requirements, Developer needed to access the property from North Street by means of the dirt road which he intended to have paved. By 1996, North Street had become a major thoroughfare while South Street was little more than a poorly maintained paved public lane.

Assume you are Developer's attorney.

3. For many years, Black had orally promised her daughter Carol that she would leave Blackacre to her. In 1996, after a family dinner, Black told Carol that before the end of the year, she was going to sign a deed giving Blackacre to Carol and reserving to Black a life estate. Shortly thereafter, Black did properly execute such a deed, but she put it in her safe without showing it to anyone. The next summer, Black and Carol had a violent disagreement and Black told her that she could forget about ever getting the deed to Blackacre. At about the same time, Developer became concerned whether he would be successful in asserting his easement rights with respect to the dirt road on Blackacre, and he approached Black with an offer to buy Blackacre. Black, who was now 85, agreed to sell Blackacre to Developer immediately with the understanding that she could remain in her house rent free for at least a year in order to give her time to purchase a new home in a retirement community. With that agreement, Black signed a deed transferring Blackacre to Developer, and Developer immediately recorded the deed in the appropriate land records. Two weeks later, Black died and in the course of collecting her belongings, Carol found the earlier deed granting Blackacre to Carol.

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QUESTION 8

In January 1996, Independence Investments ("Independence"), a brokerage firm headquartered in Dover, Delaware, with branch offices in Wilmington, Newark and Middletown, Delaware, hired David Dollar as a broker in the Wilmington office. After Dollar had worked for more than a year, Independence was contemplating giving Dollar a raise in salary. However, before informing Dollar of the raise, Independence requested that Dollar sign an employment agreement (the "Employment Agreement"), which contained, among other things, a provision that prohibited Dollar from working as a broker within 150 miles of Wilmington, Delaware for five (5) years if he ceased working for Independence (the "Non-Compete Provision"). Dollar was reluctant to sign the Employment Agreement because it simply set forth the compensation and benefits that he already was receiving from Independence and he did not want to be bound by the Non-Compete Provision. Although Independence did not suggest that Dollar would be fired if he failed to sign the Employment Agreement, Dollar did not want to upset Independence, so he signed the Employment Agreement, but did not intend to be bound by the provisions of the contract, including the Non-Compete Provision. Three months after he signed the Employment Agreement, Independence gave Dollar a $12,000 raise in salary.

By 2001, Dollar was Independence's most successful broker and had more clients than any of Independence's other brokers. In early 2002, Dollar was recruited by Cape Henlopen Capital ("Cape Henlopen"), another Delaware brokerage firm located in Wilmington. Cape Henlopen's President told Dollar that Cape Henlopen's commission rates for its brokers were substantially higher than Independence's commission rates. Dollar was surprised by this statement because he had heard that Cape Henlopen's commission rates were lower than Independence's commission rates, but he assumed that Cape Henlopen recently had raised its commission rates. In the hopes of increasing his compensation, Dollar accepted Cape Henlopen's offer of employment and signed an employment agreement (the "Cape Henlopen Employment Agreement"), which contained, among other things, a provision to employ Dollar for an initial compensation of "$36,000 per year, plus commissions." The Cape Henlopen Employment Agreement contained a provision that prohibited Dollar from working as a broker within 50 miles of Wilmington, Delaware for two (2) years after he ceased working for Cape Henlopen.

Soon after starting work for Cape Henlopen, Dollar learned that its broker commission rates were lower than Independence's commission rates. Therefore, Dollar quit his job with Cape Henlopen and promptly accepted a broker position with Goldman Lynch, another Wilmington, Delaware brokerage firm.

Anticipating the receipt of some extra money, Dollar called Mike Marble, a tile installer, to get an estimate to install a new tile floor using special tiles manufactured by Turner Tile Company ("Turner"). After speaking with Dollar, Marble called Turner and was advised that the special tiles would cost two thousand dollars ($2,000). A week later, based on the information provided by Turner, Marble verbally offered to install the tile floor in Dollar's home for $5,000, with the installation to be performed on April 15, 2002. Dollar accepted Marble's offer, and on March 7, 2002, Dollar and Marble signed a contract that set forth their agreement. Two weeks later, Marble called Turner to order the special tiles and was informed that, on March 17, 2002, the price of the tiles had increased to four thousand dollars ($4,000) because significant demand for the tiles had resulted in shortages. Marble advised Dollar of the price increase and stated that, as a result, Marble wanted to change the contract price to $7,000. Dollar refused to change the contract and demanded that Marble install the tile floor for $5,000. Marble refused to install the floor on April 15, 2002, so Dollar hired George Grout, Inc., to install the floor at a cost of $11,000.