Analysis of Property Rights & Transmutations in Marriage: Community & Separate Property, Exercises of Civil Law

Download Analysis of Property Rights & Transmutations in Marriage: Community & Separate Property and more Exercises Civil Law in PDF only on Docsity! California Bar Examination Essay Questions and Selected Answers July 2016 The State Bar Of California Committee of Bar Examiners/Office of Admissions 180 Howard Street • San Francisco, CA 94105-1639 • (415) 538-2300 845 S. Figueroa Street • Los Angeles, CA 90017-2515 • (213) 765-1500 ESSAY QUESTIONS AND SELECTED ANSWERS JULY 2016 CALIFORNIA BAR EXAMINATION This publication contains the six essay questions from the July 2016 California Bar Examination and two selected answers for each question. The answers were assigned high grades and were written by applicants who passed the examination after one read. The answers were produced as submitted by the applicant, except that minor corrections in spelling and punctuation were made for ease in reading. They are reproduced here with the consent of the authors. Question Number Subject 1. Civil Procedure 2. Real Property 3. Contracts 4. Constitutional Law 5. Community Property 6. Professional Responsibility QUESTION 1: SELECTED ANSWER A I. Service of Process The issue is whether Paul properly served process over Valerie and Meyer Corp. Service of process in California can be accomplished in a variety of ways. First and foremost, a defendant may be personally served with a summons and a copy of a complaint. When in-person service does not work, substituted service may be attempted by leaving the summons and a copy of the complaint with the defendant's registered agent or another person who resides at the defendant's domicile. The summons and complaint must also be sent via certified mail to the defendant's address of record. However, process must be served by a person over the age of 18 who is not a party to the case. A. Valerie Here, Paul personally served Valerie with process. Paul might be over the age of 18, but he is a party to the case and therefore cannot properly effect service himself. Though service by handing the defendant process personally is proper, Paul was not a proper process server. Accordingly, Paul did not validly serve process on Valerie. B. Meyer Corp. Paul's service of Meyer Corp. suffers from the same defect as his service of Valerie: he is not a proper process server because he is a party to the case. Additionally, service of process on an international is subject to different rules: process may be served either in compliance with governing international treaties, or via certified mail with a return receipt. Here, Paul mailed the complaint via ordinary mail, rather than certified mail. Further, there does not appear to be an international treaty governing service of process. Accordingly, Paul cannot have validly served process using ordinary mail; he did not validly serve process on Meyer Corp. II. Personal Jurisdiction The issue is whether the San Diego Superior Court has personal jurisdiction over Valerie and Meyer Corp. In personam jurisdiction describes the personal jurisdiction of a court over the parties before it. There are three traditional bases of in personam jurisdiction: when a defendant consents to the court's jurisdiction, when a defendant is domiciled in the jurisdiction in which the court sits, and when a defendant is present in the jurisdiction and is properly served with process while present. When the traditional bases of in personam jurisdiction do not apply, a state long-arm statute may provide an alternative basis for jurisdiction. A. Valerie Here, Valerie appears to satisfy one of the traditional prongs of in personam jurisdiction. She is a resident of San Francisco, and so is domiciled in California and therefore subject to the personal jurisdiction of California state courts. While Paul personally served Valerie in San Francisco after driving there, this service of process was improper as discussed above. Nonetheless, because another of the traditional bases has been met, Valerie is properly subject to the San Diego Superior Court's personal jurisdiction. B. Meyer Corp. 1. Traditional Bases Here, Meyer Corp. does not appear to satisfy any of the traditional bases of in personam jurisdiction. It does not appear that it has consented to California state courts' jurisdiction. Further, it is domiciled only in Germany. Finally, Paul did not serve process on Meyer Corp. in state. Accordingly, none of the traditional bases apply. 2. Long-Arm Statute and Constitutional Limitations However, California also has a state long-arm statute that may provide an alternative basis for personal jurisdiction. California's long-arm statute goes to the full extent of the federal Constitution, subject only to Due Process limitations. For a court's exercise of personal jurisdiction to comport with Due Process, the defendant must have sufficient minimum contacts with the jurisdiction, the exercise of jurisdiction must be related to the defendant's contacts, and the exercise of jurisdiction must not offend traditional notions of fair play and substantial justice. a. Minimum Contacts For a defendant to have sufficient minimum contacts with California, it must have purposefully availed itself of California, such that it was foreseeable that its minimum contacts would cause it to be haled into the California courts. In stream-of-commerce cases, purposeful availment consists of some action by the defendant deliberately targeting the jurisdiction. Here, it is not clear whether Meyer Corp. has purposefully availed itself of California, as it is incorporated in Germany, headquartered in Germany, and conducts all of its manufacturing in Germany. More information is needed into its distribution chains. For example, if Meyer Corp. specifically shipped its snacks to Valerie for distribution in San Francisco, then Meyer Corp. will have purposefully availed itself by intending that its products be sold in California. By contrast, if Valerie purchased the snacks in Germany and decided on her own volition to sell them in California, then Meyer Corp. will not have purposefully availed itself. In the absence of such evidence, it appears that Meyer Corp. does not have sufficient minimum contacts with California. Here, Paul's claim appears to be a tort claim: he appears to be arguing negligence on behalf of Valerie and Meyer Corp. in producing the snacks, or possibly strict products liability. Accordingly, the venue rules for tort actions may also provide an alternative basis for proper venue. In this case, the acts or omissions giving rise to Paul's action occurred in both San Francisco County, where Valerie sold him the snacks, and Germany, where the snacks were manufactured. Accordingly, under the analysis for a tort action, venue remains proper only in San Francisco. C. Contract Actions Paul could also plausibly allege that his action is a contract action, and that Valerie breached, for example, an implied warranty of fitness for a particular purpose when she sold him the snacks. Accordingly, venue is additionally proper in the county in which the contract was entered into, as well as the county in which the contract was expected to be performed. Here, both of those locations are the City and County of San Francisco: Paul agreed to purchase, and did purchase, the snacks from Valerie there. Accordingly, under the analysis for a contract action, venue is proper only in San Francisco. D. Fallback Venue Because venue is proper in at least one county in California, the fallback venue provision of any judicial district in which the court has personal jurisdiction over the defendant does not apply. In conclusion, venue is only proper in San Francisco County Superior Court. Venue is not proper in San Diego Superior Court. IV. Removal to Federal Court The issue is whether Paul's action is properly removable to federal court. A case initially filed in state court is properly removable to federal court when the case could originally have been brought in federal court. Removal is accomplished by filing a notice of removal in federal court within 30 days of service of a document that shows the case to be removable, but cases removable to federal court solely on the basis of federal diversity jurisdiction cannot be removed more than one year after the filing of the action in state court. Here, nothing indicates that Paul's case would be subject to these time restrictions. Accordingly, the issue is whether the case could have initially been brought in federal court. For a case to be properly brought in federal district court, the federal court must have subject matter jurisdiction. A federal court may have federal question jurisdiction or diversity jurisdiction over a case. In cases where at least one "trunk" claim is within the court's federal question jurisdiction or diversity jurisdiction, the court may have jurisdiction over additional claims that share a common nucleus of operative fact with the federal trunk claim. A. Federal Question Jurisdiction Federal question jurisdiction consists of claims arising under the Constitution, treaties, and federal laws and regulations. The question must appear on the face of a well- pleaded complaint. Here, Paul does not appear to be asserting any federal rights. Unless he is asserting any causes of action under federal food safety regulations, for example, he appears solely to be asserting state-law tort claims -- that Valerie and Meyer Corp. were negligent in failing to detect that the snacks were contaminated. Accordingly, the federal court does not have federal question jurisdiction over Paul's action. B. Diversity Jurisdiction Diversity jurisdiction arises when there is a diversity of citizenship between the parties and the amount in controversy in the action exceeds $75,000. 1. Diversity of Citizenship To satisfy diversity of citizenship, each plaintiff must be fully diverse from each defendant. A U.S. citizen or permanent resident alien is considered to be a citizen of the state in which she is domiciled, an alien is considered to be a citizen of the country of his citizenship, and a corporation is considered to be a citizen both of all jurisdictions in which it is incorporated and the state in which it has its principal place of business. However, even when each plaintiff is fully diverse from each defendant, a federal court still will not have subject matter jurisdiction if both the plaintiffs and defendants are aliens and U.S. citizens are not present on both sides of the action. Here, Paul is not a permanent resident alien, as he is present in the country only on a student visa. Accordingly, for diversity jurisdiction purposes, he is a citizen of Mexico. Valerie resides in San Francisco, which is her domicile. Accordingly, for diversity purposes, Valerie is a citizen of California. Meyer Corp is incorporated in Germany only and has its principal place of business in Germany. Accordingly, Meyer Corp is a citizen of Germany. Accordingly, the parties are fully diverse from each other: Paul does not share citizenship with either Valerie or Meyer Corp. However, the alienage restriction nonetheless bars Paul's action from satisfying the diversity requirements. Paul, as the only plaintiff, is an alien. Valerie is a U.S. citizen, but Meyer Corp. is also an alien, as it is only a citizen of Germany. Accordingly, aliens are present on both sides of the action, but U.S. citizens are not. Therefore, diversity of citizenship is not met. 2. Amount in Controversy The amount in controversy is the amount, when plaintiff asserts a monetary damages claim, that a plaintiff seeks from the defendants. When a claim asserted jointly against two defendants, the amount in controversy is the total relief sought from the defendants. For a federal court to have jurisdiction, the amount in controversy must exceed $75,000. that it is proper to serve a Defendant by mail. The summons and two copies of the complaint must be sent by first class mail, postage paid, with a waiver and a pre- addressed and prepaid envelope in which the Defendant can return the signed waiver. California rules of civil procedure also allow service by mail to a person out of the country in a similar manner. CA rules prefer personal service, but the California rules specifically say that a defendant who is out of the country may be served by mail according to the California rules. However, in CA (which governs in this case) the mailing of service is not technically a waiver as it is in federal court but it operates in the same manner. In this case Paul sent a summons and a copy of the complaint to Meyer Corp. in Germany by ordinary mail. This was improper. First, the complaint needed to be sent with one summons and two copies of the complaint. It should have been sent by first class mail, postage paid, and should have included a form for the Defendant to sign with a pre-addressed and prepaid envelope to send the signed documents back to the plaintiff who will file them. Under the California rules, the mailing of a summons and complaint is not actually waiver (it is a form of service) but it operates like the federal waiver. Thus, Meyer Corp. was not properly served. 2. PERSONAL JURISDICTION A. DOES THE SUPERIOR COURT OF CALIFORNIA HAVE PERSONAL JURISDICTION OVER VALERIE Personal jurisdiction over the Defendant is required for a court to hear a case. It refers to the court having authority over the defendant. To have personal jurisdiction (PJ) over a defendant traditionally occurs when a Defendant is served with process while voluntarily in the state, the defendant is domiciled in the state, or the Defendant consents to the court exercising its power over him/her. If there is not a traditional basis for jurisdiction the court will look to see if there are minimum contacts with the forum state so as not to offend traditional notions of fair play and substantial justice. In evaluating this the court looks to three factors: (a) contacts with the forum state focusing on whether the defendant has purposeful availment and reasonably foresees being sued in the forum state; (b) Relatedness which occurs with general or specific jurisdiction in the forum state; and (c) fairness looking at if the defendant will be so gravely inconvenienced as to cause a substantial unfairness. The court will also look at the plaintiff's interests and the state‘s interest in effectuating justice under the fairness prong. In this case Valerie is a resident of San Francisco. This means that Valerie is domiciled in California because she lives in a city (San Francisco) that is located in California. Therefore the court has personal jurisdiction over Valerie because she is domiciled in the forum state (California). Further, the court also has a traditional basis of jurisdiction over Valerie because she was personally served while voluntarily in California. Valerie was in San Francisco voluntarily because she lives there and was served with process while there. Thus, the court does have personal jurisdiction over Valerie according to two of the traditional bases of PJ. B. DOES THE SUPERIOR COURT OF CALIFORNIA HAVE PJ OVER MEYER CORP Personal jurisdiction over the Defendant is required for a court to hear a case. It refers to the court having authority over the defendant. To have personal jurisdiction (PJ) over a defendant traditionally occurs when a Defendant is served with process while voluntarily in the state, the defendant is domiciled in the state, or the Defendant consents to the court exercising its power over him/her. If there is not a traditional basis for jurisdiction the court will look to see if there are minimum contacts with the forum state so as not to offend traditional notions of fair play and substantial justice. In evaluating this the court looks to three factors: (a) contacts with the forum state focusing on whether the defendant has purposeful availment and reasonably foresees being sued in the forum state; (b) Relatedness which occurs with general or specific jurisdiction in the forum state; and (c) fairness looking at if the defendant will be so gravely inconvenienced as to cause a substantial unfairness. The court will also look at the plaintiff's interests and the states interest in effectuating justice under the fairness prong. California's long-arm statute allows PJ over a defendant as long as it does not offend the constitution. Therefore the analysis of California's long-arm statute is merged with the constitutional analysis. The constitutional analysis is the minimum contacts test described above and analyzed below. Meyer Corp. is a German company. It is incorporated in Germany with its sole place of business in Germany. Meyer Corp. was not served while voluntarily present in California. Further, there is no evidence that Meyer Corp. has consented to California having PJ over it. Because of this there is no traditional basis for personal jurisdiction. Therefore we must analyze PJ with the constitutional test of Minimum Contacts. MINIMUM CONTACTS There must be minimum contacts so as not to offend the traditional notions of fair play and substantial justice. This is analyzed looking at purposeful availment and foreseeability of being dragged into court. PURPOSEFUL AVAILMENT To have PJ Meyer Corp. must have purposefully availed itself into the forum state (CA) as such that it used the protections of its laws. In this case Meyer Corp. is a snack company. Its sole place of business is in Germany; however, the snack did get to California. If the company sold its products, advertised its products, or in some other way targeted California there will be purposeful availment. If Valerie brought these snacks back from Germany and the corp did not in any way reach out to CA, there will be no purposeful availment. There will be purposeful availment if Meyer Corp. directed sales to CA. It is unclear where and how Valerie came to get these snacks so the purposeful availment prong is unclear. FORESEEABILITY If Meyer Corp. did target CA in any way (by selling there, advertising there, selling In conclusion, the action cannot be removed. QUESTION 2 Al owned a farm. In 1990, Al deeded an easement for a road along the north side of the farm to his neighbor Ben. Ben immediately graded and paved a road on the easement, but did not record the deed at that time. Al and Ben both used the road on a daily basis. The easement decreased the fair market value of the farm by $5,000. In 2009, Al deeded the farm to his daughter Carol and she recorded the deed. In 2011, Ben recorded his deed to the easement. In 2012, Carol executed a written contract to sell the farm to Polly for $100,000. The contract stated in part: “Seller shall covenant against encumbrances with no exceptions.” During an inspection of the farm, Polly had observed Ben traveling on the road along the north side of the farm, but said nothing. In 2013, Carol deeded an easement for water lines along the south side of the farm to Water Co., the local municipal water company. The water lines provided water service to local properties, including the farm. Water Co. then recorded the deed. The easement increased the fair market value of the farm by $10,000. In 2014, after long delay, Carol executed and delivered to Polly a warranty deed for the farm and Polly paid Carol $100,000. The deed contains a covenant against all encumbrances except for the easement to Water Co. and no other title covenants. Polly recorded the deed. In 2015, Polly blocked Ben’s use of the road and objected to Water Co.’s construction of the water lines. Ben has commenced an action against Polly seeking declaratory relief that the farm is burdened by his easement. Polly in turn has commenced an action against Carol seeking damages for breach of contract and breach of the covenant under the warranty deed. 1. What is the likely outcome of Ben’s action? Discuss. 2. What is the likely outcome of Polly’s: a. Claim of breach of contract? Discuss. and b. Claim of breach of the covenant under the warranty deed? Discuss. QUESTION 2: SELECTED ANSWER A QUESTION ONE At issue is the outcome of Ben's (B) action against Polly (P) for blocking the access to the road that he received an easement from Al (A) to use. Express Easement An easement is the right to enter onto someone's land and use a portion of that land for a specific purpose. Easements may be granted expressly to an individual by deed. An express easement by deed must meet the deed formalities to be valid, including a valid writing, and other statute of frauds requirements. Moreover easements are deemed to be perpetual in nature unless otherwise indicated. Here in 1990, A deeded an easement to B for using a road along the north side of his farm. There are no facts indicating whether or not the deed itself meets the formalities of a valid writing; however it can be presumed here because there are no facts to the contrary. Therefore given that A created an easement by deed, that expressly named the easement in the deed, an express easement was likely created for B's use. Thus in 1990, after A's valid deed, B obtained an express easement to use the road on the farm. Reasonable Use/Scope An easement must usually be used reasonably within the scope of the granting instrument if an express easement. This typically allows the holder of the easement to improve the land where the easement lies and to enter on to it to repair it. Here after A granted B the easement, B immediately graded and paved the road for his use. These actions are likely valid given that B was entering onto the property to pave a road. It would be implied that the holder of this easement for use of a road could enter onto land to improve the land, grade it and maintain the road. Therefore it would appear that B has been validly using the easement and comporting with its ramifications. used in many jurisdictions because it often results in unfair outcomes. Here B recorded in 2011 and P recorded in 2014. Thus under a race jurisdiction B would win as well. Conclusion In total, P cannot use a recording act to argue that she as a SBP should take title without B's interest. She had notice of B's usage of the land and moreover she did not record first. Thus the common law rule applies of first in time and first in right and B's interest is superior. P would lose to B's claim as B's easement would automatically run with the land. Shelter Rule Under the shelter rule, a SBP may be able to step into the shoes of a previous grantee and argue that the previous grantee could have validly used a recording in order to defeat a previous claim. The shelter rule may be used despite the fact that a SBP may have had actual knowledge. Here P could argue that C was a SBP under a recording act and therefore P could step into C's shoes to invalidate B's claim. C as SBP A SBP must typically pay value for title to the land and take subsequently to the competing interest. Here B got his easement in 1990 and C took title in 2009. Therefore C was subsequent. But it is not clear that C paid for the land. Her father was A and he just deeded her the land. If she did not pay value for the land then she was a mere donee and not a valid SBP. Any value is enough; typically only a "mere peppercorn" would suffice; but if someone did not actually give value then they are not a SBP. Thus if C was not a SBP then she could not use a recording act. As such it is unlikely that the shelter rule could be used here. Recording Claim Under a race notice and a notice jurisdiction it is likely that C would be charged with inquiry notice. Since B built and paved a road on the farm, that would have went from his farm to C's farm, any inspection of the farm that C was to take title to would charge with her inquiry notice. She would have seen the road and been charged with asking what it was. Moreover given B's usage of the road, she likely would have seen him, especially if this was her father’s farm before it was hers. Thus under a race and race-notice jurisdiction it is unlikely that C would prevail since she likely took title with notice. Under a race recording statute C would probably prevail however, since she did record before B did, as she recorded in 2011 and B recorded in 2014. Conclusion - Shelter Rule In total, P cannot likely use the shelter rule here to step into C's shoes because C was probably not a SBP. Moreover under a notice and race-notice recording statute she would not win since she probably would be charged with notice of B's claim. However she may win under a race recording statute if she was a SBP because she recorded first. Overall Conclusion In conclusion, B's claim against P would likely be valid. B can establish that he had a valid express easement and that it automatically ran with the land when it was transferred from A to C and then to P. Moreover P cannot argue she did not have notice of the easement nor can she use a recording statute. Moreover she cannot use the shelter rule here either since C was not likely a SBP. QUESTION TWO At issue is the likely outcome of P's lawsuit against C. Part A At issue is P's claim for breach of contract. When parties convey land it is a two- step process: first the parties enter into a contract for the sale of land and then there is a period of escrow. Following escrow, closing occurs. At closing is where the actually deed is delivered and at that point the deal is finished. P's first claim arises under the land sale contract. Land Sale contract - Marketable Title A contract for the sale of land is required to be in a valid writing satisfying the statute of frauds. Here on 2012, P and C executed a written contract to sell the farm to P for $100,000. The contract stated that the seller "shall covenant against encumbrances with no exceptions". This express provision essentially was stating that the land would not be sold with any encumbrances on it. An encumbrance is something that includes easements. In every contract for the sale of land there is the doctrine of marketable title however. This means that upon closing, the land would not have any defects of title in it, including easements. Therefore even though the contract stated that the land would not be sold with any encumbrances on it, this would be implied in the contract. Here at closing the land had an easement on it with the water company as well as B's easement as argued above. Thus at closing two easements existed on the land. The problem however is that at closing, under the merger doctrine, the land contract merges into the deed and cannot be used to provide relief to a buyer. Merger Under the merger doctrine, the contract is said to merge into the deed and the buyer may not use the contract to recover for defects on the property. Here at closing the land sale contract that C and P entered into would be said to merge into the deed. Thus even though the contract was breached at closing, there could be no relief afforded under the terms of the contract. As such, P cannot make a breach of contract claim here. Conclusion In total, P's breach of contact claim would fail because the merger doctrine merged the contract into the deed and it can no longer afford relief to P. value of the land by since the covenant would not extend to that encumbrance as P likely waived it as stated above. Conclusion In total, P can recover under the covenant in the warranty deed for B's easement only and she would likely get only $5,000. Overall Conclusion P's cause of action against C for breach of contract would fail under the merger doctrine. Yet P can recover under her deed against C for B's easement on the property, but not W's easement. QUESTION 2: SELECTED ANSWER B 1. Ben v. Polly Easements An easement is a right in land granted to a third party. Easement may be created expressly or impliedly. Implied easements may be created by prescription, by prior use, or by necessity. Easements can additionally be classified as appurtenant or in gross. Easements in gross have no dominant estate and are personal in nature and are generally non-transferable. Appurtenant easements are those which burden one estate (servient estate) while also benefiting another estate (the dominant estate). Appurtenant easements run with the land to subsequent takers who take with notice of the easement. Notice can be actual, constructive, or inquiry. Actual notice arises when the subsequent taker is actually aware of the easement. Constructive notice arises when the easement has been properly recorded. When an easement has been properly recorded, takers are put on constructive notice of the existence of the easement whether or not they were actually aware of the easement. Lastly, inquiry notice arises when based on the facts or circumstances of the property a reasonable person would have inquired about the existence of any easements or interests in land. Express Easement An express easement must be in writing. Here, in 1990, Al deeded an easement for a road along the north side of his farm to his neighbor Ben. The facts indicate that Al deeded the easement to Ben thus satisfying the writing requirement and establishing an express easement. Further, the easement will be classified as an appurtenant easement because Al and Ben are neighbors and therefore the easement concerns the land and benefits Ben's land by allowing an access road, while burdening Ben's land by granting access to a third party. Additionally, the facts indicate that the easement decreased the fair market value of Al's land by $5,000 which further shows that the easement burdened the farm (the servient estate) thus establishing an easement appurtenant. Because the easement granted to Ben was an easement appurtenant, it will run with the land to successive takers who take with notice of the land. Priority Here, because Al deeded the property to Carol who recorded her deed prior to Ben's recording of his easement, it must be determined who has priority. There are three methods of recording statutes in the different jurisdictions: race, race-notice, and notice. If the recording statute applied in the jurisdiction does not apply, the courts will resort to the common law principles of first in time to determine priority. Under the shelter rule, a subsequent purchaser in land may take shelter and be protected under a recording statute, if a previous transferee of land would have otherwise been protected by a recording statute. Race Under a race notice jurisdiction, priority goes to the first to record. Here, Carol recorded her deed in 2009 and Ben did not record his deed until 2011. Therefore, between Ben and Carol, in a race jurisdiction, Carol would have priority over Ben. Polly would then be able to use the shelter rule, if it applies, to be protected by Carol's priority under the recording statute and thus Polly would have superior title to Ben. However, if the shelter rule does not apply between Polly and Ben, because Ben recorded his deed in 2011 and Polly did not record her deed until 2014, Ben would take priority and Polly would be burdened by the easement. Notice Under a notice recording statute, priority is given to subsequent bona fide purchasers who took property without notice. Notice may be actual, constructive, or inquiry. Actual notice arises when the taker actually knew of the interest. An individual is deemed to have constructive notice when a look into the grantor-grantee index would have put of signing, because the facts indicate that in 2014 Carol executed and delivered to Polly a warranty deed which Polly accepted, the land sale contract has merged with the deed and Polly can no longer sue on the contract and must sue on the deed. Polly may, however, have a claim under the deed which is discussed below. 2b. Polly v. Carol (Breach of Covenant Under the Warranty Deed) Type of Deed Upon the transfer of land, the seller may execute and deliver to the buyer one of the following three types of deeds: general warranty deed, a special warranty deed, or a quitclaim deed. The parties' rights under the deed depend on the type of deed granted to the seller. A quitclaim deed contains no covenants or promises to the buyer and is essentially an "as is" deed leaving the buyer with no rights to sue the seller. Alternatively, warranty deeds may include all or any of the six covenants of title including: the covenant of seisin, the right to convey, the covenant against encumbrances, general warranty, further assurances, and quiet enjoyment. Warranty deeds can be classified as either general warranty deeds or special warranty deeds. General warranty deeds are the most protective deed and warrant that neither the seller, or anyone in the chain of title, has breached the covenants included in the deed. Alternatively, a special warranty deed only warrants that the seller has not breached the covenants of title. Here, Polly is commencing an action for breach of the covenant under the warranty deed. The facts indicate that the deed was a warranty deed containing only the covenant against encumbrances. Because the covenant was included in the deed, Polly may properly sue Carol for breach of the warranty. Covenant Against Encumbrances The covenant against encumbrances in a deed warrants that there are no unknown encumbrances on the property. Under title, encumbrances are defined as any right in a third party that diminishes the value or interferes with the use and enjoyment of the land. Such encumbrances include mortgages, liens, easements, and covenants. Here, Polly is suing for breach of the covenant against encumbrances. There are two possible easements on the property which may be the subject of her claim, the easement to Water Co. and the easement to Ben. Because the deed expressly warrants against any encumbrances other than the easement to Water Co., Polly cannot successfully claim a breach of the covenant in relation to that covenant because it was expressly excluded in the deed. However, Polly may be able to assert a breach based on the encumbrance to Ben. The determination of whether Ben's easement is valid is discussed above and, provided it is valid, Carol will likely argue that Polly was put on notice of such easement based on inquiry notice because the facts indicate that she had observed Ben traveling on the road along the north side, but said nothing. Polly will argue that those circumstances alone did not give rise to suspicion that he claimed an interest in the property; however, considering she was aware of his passing over the land, it is reasonable to assume that a buyer would have inquired into the circumstances. Further, Carol will argue that even if she did not have inquiry notice of Ben's interest, she would have constructive interest of Ben's interest because he recorded his deed in the easement in 2011 before Carol and Polly had entered into the land sale contract. Therefore, while Polly can properly claim a breach of the covenant based on the warranty deed received by Carol, provided it is valid, it will likely be determined that she had sufficient notice of the easement. QUESTION 3 Dirt, a large excavating company, recently replaced all of its gas-powered equipment with more efficient diesel-powered equipment. It placed the old gas-powered equipment in storage until it could sell it. On May 1, Builder, a general contractor for a large office development, and Dirt signed a valid written contract under which Dirt agreed to perform all the site preparation work for a fee of $1,500,000. Dirt estimated its total cost for the job at $1,300,000. The contract states: “Dirt hereby agrees to commence site work on or before June 1 and to complete all site work on or before September 1.” Because no other work could begin until completion of the site preparation, Builder was anxious to avoid delays. To ensure that Dirt would give the job top priority, the contract also states: “Dirt agrees to have all of its equipment available as needed to perform this contract and shall refrain from undertaking all other jobs for the duration of the contract.” On May 29, an unusual high pressure weather system settled over the state. As a result, on May 30, in an effort to reduce air pollution, the state banned use of all diesel-powered equipment. On June 2, Dirt told Builder about the ban and stated that it had no way of knowing when it would be lifted. Builder told Dirt to switch to its gas-powered equipment. Dirt replied that using its old gas-powered equipment would add $500,000 to its costs and asked Builder to pay the increased expense. Builder refused. On June 4, seeing that no site work had begun, Builder emailed Dirt stating that their contract was “terminated.” On June 8, Builder hired another excavating company, which performed the work for $1,800,000. Dirt has sued Builder for terminating the contract. Builder has countersued Dirt for the $300,000 difference between the original contract price and what it paid the new contractor. 1. Is Dirt likely to prevail in its suit? Discuss. 2. Is Builder likely to prevail in its countersuit? Discuss. all of its equipment available as needed to perform this contract..." When Dirt and Builder communicated on June 2, Dirt communicated to Builder that using its old gas- powered equipment would cost an additional $500,000 and asked for the increased payment. The parties will contest what was meant by the term of the contract, and whether Dirt breached the term of the contract by not having gas-powered equipment ready. Dirt will contest that "all of its equipment" refers to the equipment its business employs in carrying out excavation contracts, which, at present, is diesel-powered equipment. Builder will argue the equipment provision mandated for Dirt to have any and all necessary equipment ready to perform. Builder likely has the stronger argument on these facts. Builder can likely demonstrate that the failure to have the necessary equipment to perform the excavation -- the very purpose for which Dirt was hired -- is a material breach of the contract. It is material, Builder will assert, because it deprives Builder of the entirety of the benefit of its bargain; without proper equipment, the contract cannot even begin to be performed. Therefore, as a material breach, Builder has grounds to terminate the contract. Dirt's counter-argument that it had the reasonably foreseeable necessary equipment to begin likely won't succeed -- Dirt did still have gas-powered equipment, although it was in storage; when Builder contracted with Dirt, it could expect that Dirt would employ all equipment that it owned in performing the contract. Therefore, Builder likely has a stronger argument that by not having gas-powered equipment ready Dirt was not able to meet the requirement of the contract to have "all of its equipment available as needed to perform this contract." Such a material breach would give proper grounds to terminate the contract on Builder's part, but Builder's argument is by no means a clear and certain winner. Anticipatory Repudiation Versus Perspective Inability to Perform An anticipatory repudiation occurs when one party, in a fully bilateral executory contract, communicates explicitly and unequivocally that it will not be able to perform its duties or obligations under the contract. An anticipatory repudiation discharges the non- repudiating party's duty to perform and that party can 1) treat the contract as discharged 2) sue immediately, 3) wait and sue on the contract date, 4) attempt to urge performance by the other party. A perspective inability to perform is a statement by one party to the other expressing doubts or reservations about a potential ability to perform an obligation or duty under the contract. It differs from an anticipatory repudiation in its explicitness and unambiguousness. Here, Dirt told Builder that using its old gas-powered equipment would add $500,000 to its costs and asked Builder to pay the increased expense. Builder refused the request. Nothing in Dirt's language would rise to the level of an anticipatory repudiation -- it made no representation that it absolutely could not perform under the contract or that it would not, despite an increased cost. It merely requested a greater sum of money due to the elevated cost of performance. Builder could not justifiably have treated Dirt's comment as an anticipatory repudiation. Dirt's comment may have constituted a prospective inability to perform, but analysis as to whether it did or not is largely superfluous derivative of the fact that, even if it was, Builder's duties under the contract would only have been suspended. Builder could not treat the contract as discharged via a perspective inability to perform. Concluding, Builder could not treat the contract as discharged on grounds of an anticipatory repudiation or perspective inability to perform based on Dirt's comments regarding the increased cost of performance. Frustration of Purpose Builder can seek to advance the argument that frustration of purpose provided grounds to discharge its contract with Dirt. Frustration of purpose occurs when a supervening event, which was unforeseeable to the parties, and which neither party expressly assumed the risk of, frustrates the purpose of the contract (i.e., deprives the contract of value and benefit.) Builder will seek to argue that the state's banning of diesel-powered equipment frustrated the purpose of its contract with Dirt, as state regulation due to the unusual weather system was unforeseeable, and that the value and purpose of the contract have been frustrated via this unforeseeable event. Builder will seek to argue neither party assumed the risk, and the change was not foreseeable to the parties at the time the contract was entered into. Dirt will likely have a winning counter-argument to Builder's claim of frustration of purpose. While the state regulation has changed the cost of the contract -- and has changed the cost of the contract to Dirt alone -- the underlying value and benefit of the contract has remained. The purpose for which the parties contracted is still achievable, and increased cost alone does not frustrate the entire purpose of a construction contract. A court is more likely to favor Dirt's argument, especially because Builder, in seeking to advance an argument of frustration of purpose, is not in fact the party enduring hardship in this contract from increased cost. While the cost of performance has changed via the state regulation, the basic purpose and value of the contract remains -- the land can be excavated for the purpose of constructing a building subsequently. Impossibility Builder could seek to argue, ultimately unsuccessfully, that impossibility and impracticability should allow the contract to be terminated. Impossibility refers to the situation where a subsequent event, which was unforeseeable, which undermined a material element of the contract (or a basic assumption upon which it was formed), and which neither party assumed the risk of, has rendered performance of the contract (by one or both parties) illegal. One form of impossibility is illegality, occurring where the subject matter of the contract has subsequently become illegal after the contract was entered into. Builder's arguments are likely to fail because, despite the intervening illegality of the use of diesel-powered equipment, the contract itself, and the purpose for which it was formed, has not been rendered illegal. A required-by-law change in the instrumentality used to carry out the contract would not render the contract itself dischargeable on grounds of impossibility. Impossibility would therefore not serve as a viable grounds for impossibility grounds. Frustration of Purpose Dirt's arguments regarding frustration of purpose will similarly fail for the reasons outlined above -- the value, benefit, and purpose of the contract remains despite an increased cost to Dirt. The essence of the contract and its purpose was the excavation, not what type of machine Dirt used in the process. Dirt's arguments will fail on frustration of purpose grounds. Mutual Mistake Dirt could seek to argue that his performance is excused via mutual mistake. Mutual mistake applies when both parties are mistaken as to a basic assumption, material to the contract, upon which the contract was formed. Here, Dirt would argue mutual mistake occurred in regards to "equipment available." Dirt could seek to argue there is ambiguity in the term, as Dirt meant diesel-powered equipment while Builder expected the use of all of Dirt's equipment. Dirt's argument will likely not fail -- the term is plain on its face -- "all of its equipment" -- and would be interpreted to require of Dirt to employ all the equipment it owns, which includes gas-powered equipment. While Dirt may have intended a different meaning for the term, because the term is plain on its face and there was not an actual "mistake" regarding the meaning of the term, Dirt's argument will fail. Dirt's subjective belief will not constitute a mutual "mistake" in the eyes of the court. Damages An owner's countersuit in a construction contract which has not been fully performed by the breaching party can recover damages in the amount of the difference between the contract price (with the breaching party) and the cost of completion (obtained via the hiring of a third party.) Here, that would provide Builder with the $300,000 damages outlined as the amount of its lawsuit. Conclusion If Builder succeeds in showing that failure to have all equipment available was a material breach by Dirt, it can rightfully treat the contract as discharged. Furthermore, it can recover damages from Dirt if a court determines that the difficult to Dirt did not rise to the level of impracticability (the most likely finding). Alternatively, if no grounds existed to discharge the contract because the court does not find Dirt has breached a material term, then Dirt can recover the profits it would be entitled to from the contract. If the contract was rightfully discharged but Dirt's performance did rise to the level of impracticability, then Dirt would not be paid to force damages. Builder prevailing in regard to both breach and damages is the most likely outcome. QUESTION 3: SELECTED ANSWER B Introduction Applicable law The issue is whether the UCC applies. The UCC applies to the sale of goods. Goods are things movable and identifiable at the time of contracting. Here, the contract is for the performance of construction services. Construction services are not goods. Therefore, the UCC does not apply. Therefore, the common law governs. 1. Is Dirt likely to prevail in its suit? Anticipatory repudiation by Builder The issue is whether Builder anticipatorily repudiated the contract. Anticipatory repudiation occurs when one party unambiguously and clearly states that it will not perform the contract. An anticipatory repudiation counts as a breach. The non- breaching party can either find someone else to do the performance, sue the breaching party, or do nothing. Anticipatory repudiation generally applies to executory contracts. In the event that the contract is wholly executory, then the non-repudiating party can immediately sue for damages, regardless of the date of performance. If the non- breaching party has already performed, then it cannot sue until the time for the other party's performance is due. For anticipatory repudiation in construction contracts before anything has begun, the general measure of damages is the non-breaching party's expected lost profits. Here, the parties made a valid contract on May 1st. The contract provided that construction would begin on June 1 and that performance was due on September 1. On June 4, Builder stated that the contract was terminated. Saying that a contract is terminated is an anticipatory repudiation--is unambiguous and clear. Builder had no In the event that the start date is considered a promise, then the common law doctrine of substantial performance applies. Substantial performance holds that a non- breaching party has a duty to perform if the breaching party has still substantially performed her end of the bargain. There must be a "material breach" in order for the non-breaching party to be completely discharged. When determining whether there has been substantial performance, the courts take into account (i) prejudice to breaching party; (ii) prejudice to breaching party; (iii) amount of performance rendered; (iv) whether the breach was willful; (v) cost of fixing the problem; and (vi) a variety of similar factors. In service contracts, time for completion is generally not considered a material breach if performance is completed slightly late. The only time when a complete breach and forfeiture might be found is when there is a "time of the essence" clause, which must be very explicit. There was no such clause in this contract, and the breach only applied to the start of performance, so it would be very unlikely for a court to find that Dirt materially breached to the extent that Builder will be completely discharged form performance. Conclusion Overall, it appears that Dirt would have a good case against Builder for breach of contract for the amount of $200,000. Is Builder likely to prevail in its countersuit? Anticipatory repudiation by Dirt This is the same argument as has been described above. Essentially, Dirt's statements over the course of the June 4 conversation are unlikely to constitute a full-blown anticipatory repudiation. Builder should have first demanded further assurances before terminating the contract and hiring someone else. Breach of promise/condition by Dirt This is the same argument as has been described above. Essentially, it is unlikely that a court would find the start date to be a condition precedent to effectiveness of the contract. Moreover, it is unlikely that Dirt's failure to start completely on time would count as a material breach justifying Builder's non-performance. Impossibility-defense Dirt might argue in defense that it would be unable to perform its end of the contract due to supervening impossibility. Indeed, in many cases, a subsequent law or regulation may render a party's performance illegal or impossible. In such case, that party may be excused from performing. Generally, the party claiming excuse must have not expressly borne the risk. Here, the government banned all diesel-powered equipment two days before Dirt was supposed to commence performance. This was certainly unexpected, and was the result of the May 29 high-pressure weather system. However, performance is definitely not impossible. Dirt still has its gas-powered equipment, which it could use to complete the project. It might be more expensive to do so, but mere increase in expense is insufficient for an impossibility defense. Therefore, impossibility would not be an effective defense. Impracticability-defense Dirt might argue in defense that it should be excused from performance due to supervening impracticability. Impracticability is a defense where the occurrence of an unforeseeable event happens, which renders performance impracticable. The unforeseeable event must affect an underlying assumption of the agreement. The party claiming excuse must not have borne the risk. Generally, the mere inability to make a profit is not sufficient for a claim of impracticability. Here, the high pressure system was characterized as unusual. Builder might argue that strange weather systems are foreseeable, and that Dirt should have known that this was a possibility. On the other hand, Dirt would claim that a weather system resulting in the banning of all diesel-powered equipment is not foreseeable at all. Overall, it would probably be seen as unforeseeable. Moreover, the ban had an effect on an underlying assumption of the contract. Dirt was expecting to use its diesel equipment--it had put all of its old equipment in storage. Moreover, if Dirt knew that it would have to spend an additional $500,000, it would not have accepted a $1,500,000 contract price. There is no evidence that either party expressly assumed the risk (though sellers generally bear the risk in sale of goods contracts, and a court could, by analogy, deem that Dirt was allocated the risk). The key question is whether the ban makes performance impracticable. Dirt is a large excavation company, which presumably has a lot of contracts. If Dirt had to use its gas equipment, it would expect to see a $300,000 loss on this job. It is unclear the effect that such a loss would have on Dirt, but a court would probably find that such a loss is insufficient to make performance of the contract wholly impracticable. It is possible that a court could find that performance is impracticable, but it is rather unlikely. Mistake-defense Dirt might try to argue that there was a mutual mistake, which should lead to discharge of contractual duties. Mutual mistake occurs when both parties were mistaken about a fundamental aspect of the contract. Dirt could argue that both parties mistakenly assumed that Dirt would be able to use its diesel-powered machines. The fact that a basic assumption has been violated (by Dirt having to use gas-powered equipment) could perhaps render the contract unenforceable and both parties would be excused. This is somewhat of a stretch of an argument. It depends on whether Builder actually had diesel as a basic assumption of the contract, and whether either side assumed the risk. QUESTION 4: SELECTED ANSWER A 1. WHETHER PAIGE'S TERMINATION VIOLATED HER FOURTEENTH AMENDMENT PROCEDURAL DUE PROCESS RIGHTS The Due Process Clause of the Fourteenth Amendment prohibits the states from depriving any person of life, liberty or property without due process of law. Due process generally requires a fair procedure, usually notice and a hearing. Under procedural due process analysis, the first inquiry is whether the plaintiff had a constitutionally protected liberty or property interest. If the plaintiff has a protected interest, the court will then balance that interest against the state's interests under Matthews. The court will also look to the risk of erroneous deprivation and whether additional procedural safeguards would reduce such risk. The issue for Paige (P) is therefore (1) whether she has a protected liberty or property interest, and (2) whether she was entitled to a fairer process. WHETHER PAIGE HAS A CONSTITUTIONALLY PROTECTED LIBERTY OR PROPERTY INTEREST Property Interest The issue is whether P's probationary employment at City High is a protected property interest. Traditionally, the Supreme Court differentiated between "rights" and "privileges" and provided that only "rights" are protected under the Due Process Clause. The Court since Goldberg, however, has held that a property interest is protected by the Due Process Clause if the plaintiff has a "legitimate claim of entitlement." Under Supreme Court precedent, a tenured public school teacher has a protected property interest in their employment; however, a teacher does not have a protected interest if she is terminable at will during an initial probationary period. Kelly. P is a probationary teacher and may be terminated for any reason upon written notice within the first year of employment. There is also no indication that City High made her any assurances that she would not be fired during the probationary period. P, therefore, does not have a legitimate claim of entitlement to her job and thus has no protected property interest. Liberty Interest The Court has also recognized that when a person's freedom of movement is restrained (e.g., detention) or when a person's constitutional rights are denied, the person has a liberty interest that is protected by the Due Process Clause. P may argue that she was terminated during her first year, not because of poor performance, but rather in retaliation for her exercising her First Amendment rights in speaking out against the State's law that withholds teachers' salaries based on the school's performance. If P can make a showing that her First Amendment rights were violated, she could trigger due process protections and seek additional termination procedures beyond the written notice provided to her before she was fired. Some speech is not protected under the First Amendment. Generally, the speech of a public employee made in the course of their employment can be regulated by the government employer. Employees' speech outside the scope of their work and regarding public issues, however, is protected by the First Amendment. P will argue that her outspoken criticism of the State law at community and school board meetings was not related to her job duties and therefore is protected. City High may argue that it was related to the job and therefore not protected. A court will likely find her speech protected. Content-based regulations of speech must meet strict scrutiny; the restriction must be necessary to achieve a compelling government purpose. Content-neutral restrictions must meet intermediate scrutiny; they must be substantially related to and narrowly tailor to achieve an important government purpose. P would need to show that her termination was in relation for her speech, which would constitute a content-based regulation because it is based on her viewpoint. If P can make this showing, the state would have to meet strict scrutiny, and would likely fail. Regardless, P may be able to show that she had a protected liberty interest in her Free Speech rights under the First Amendment. MATTHEWS BALANCING TEST If the court recognizes P's liberty interest, it must apply the Matthew balancing test to determine whether she should have been entitled to any additional procedures beyond her pre-termination notice. The court will balance: (1) the private interest affected by the government action, (2) the government's interest including administrative and fiscal burdens, and (3) the risk of erroneous deprivate and the value of additional procedural safeguards. First, P has a relatively strong private interest in her job. Employment is the way individuals earn money to support themselves. Generally courts have viewed employment interests as quite weighty. Second, the state has an interest in not having to provide a full hearing on this type of probationary termination. The state likely saves a lot of money by not having to develop elaborate procedures to ensure that all of its termination decisions are fair. This interest is therefore quite strong. Finally, P will argue that the risk that she was fired because of her First Amendment rights is high, and that a few additional procedures such as allowing her to present countervailing evidence, or a hearing in front of the school board or committee would allow her to challenge the basis of the decision and force City High to justify their actions, or at least show that the basis of the decision was not to silence her. The outcome of the Matthews test is difficult to predict. However, a court may require City High to provide at least minimal additional protections such as a post-termination hearing. 2. WHETHER THE COURT SHOULD GRANT THE STATE AND ATTORNEY GENERAL'S MOTION TO DISMISS action. In conclusion, the court should grant the motion in part. The claims against the State should be dismissed. The claim for injunctive relief should be upheld against the AG, and potentially also the claim for damages if B and P allege that the AG is liable for damages. QUESTION 4: SELECTED ANSWER B 1. City High's Termination of Paige 14th Amendment--Due Process The Due Process clause of the 14th Amendment prevents the government from taking a person's life, liberty, or property without first giving them due process of law. The due process clause has been interpreted to have two sets of rights: substantive due process and procedural due process. Substantive due process prevents the government from arbitrarily denying rights. Procedural due process requires notice and a hearing before (or sometimes after) the government takes a person's life, liberty, or property. Here, Paige is claiming that she was deprived of her right to liberty in her freedom of speech and her right to government employment without procedural due process. In analyzing a procedural due process claim, the court first determines whether a person's life, liberty, or property has been taken from her. Then, the court determines what process, if any, was due before or after the taking of this right. The Supreme Court laid out this analysis in Matthews v. Eldridge. The court balances three factors: (i) the individual's interest in the right at issue, (ii) the government's interest in efficiency, and (iii) the likely added value of additional protective procedures. Paige's life has not been taken; thus her claim must be that she was deprived of a liberty interest or a property interest. A person has a liberty interest in being free from being restricted in movement and in being free to engage in constitutional rights. Paige was not restricted in movement, but she may argue that she was restricted from engaging in a 1st Amendment right, the right to free speech. Sometimes the right to free speech intersects with government employment and the right of the government to control its employees. This is the case here because Paige is a government employee, but she also has been engaging in free speech as an outspoken opponent at various community and school board meetings of a State X law that affects teacher pay. Generally, a government employee has a right to free speech on matters not connected with her employment, and any government restriction of this right is subject to strict scrutiny; it will only be upheld if the government action is necessary to achieve a compelling government purpose. This is a very high burden to satisfy and the government will usually lose. Here, Paige was engaged in speech not associated with her employment because she spoke out against a State X law in her individual capacity as a citizen, not as an employee. Thus, a court could find that if her firing was based on her speech (as she was a "highly regarded" probationary teacher) then she was denied her right to liberty without due process. To determine the amount of process that was due, the court will balance the Matthews factors and likely find that she was entitled to a hearing before termination. The right to speech is great and highly regarded in society and a hearing would be likely to remedy the wrongful termination to great process is added. Moreover, the government interest in efficiency would not overcome these other two factors. Alternatively, Paige will argue that she has a property interest in her employment. For a person to have a property interest, the Supreme Court has explained that the person must have an entitlement to the property. This entitlement must come from something concrete such as a state law. Generally, employment is at will. In other words, either an employee or an employer can terminate a contract at any time without notice and for any reason (except an illegal reason). Such an employee does not have an entitlement to property because there is no promise of future employment. A tenured employee who can only be fired for cause, on the other hand, has an entitlement to continued employment and is entitled to notice and a hearing before her employment is terminated by the government. Here, Paige was a probationary teacher at City High, a public school. As a probationary teacher, she could be terminated for any reason upon written notice within the first year of employment. While still in this probationary period, City High notified Paige of her termination. City High is a government actor because it is a public school. Thus the only issue is whether Paige had a property interest that could give rise to a right to due process before her termination. A court will likely find that because Paige's employment or foreign countries suing in federal court. There are a number of exceptions to the 11th Amendment's bar on private individual suits against the State, including when the State waives its sovereign immunity, and when Congress authorizes suit within its 14th Amendment powers. Moreover, even though the 11th Amendment bars federal courts from hearing suits brought by individuals against States, it does not prevent courts from hearing cases brought by individuals against State officers in their individual capacity or in their official capacity. However, the Amendment does bar suits brought against State officers in their official capacity if the suit seeks damages to be paid out of the State's treasury. Suit Against the State Here, the suit against State X will be prohibited by the 11th Amendment. This is a suit by private individuals, Bob and Paige, against a State, State X, brought in federal court. As such, it falls within the 11th Amendment's immunity. Moreover, there is no evidence that the State has waived its sovereign immunity. Nor is there any evidence that Congress has abrogated sovereign immunity in accordance with its 14th Amendment powers for cases brought by teachers against the State for termination or withholding of wages. Thus, the case against State X should be dismissed. Suit Against the Attorney General Bob and Paige have also named the Attorney General of State X in their suit. Whether this claim will be barred by 11th Amendment sovereign immunity will depend on whether Bob and Paige are suing the Attorney General in his individual capacity or his official capacity. If they are suing him as an individual, the suit, both for injunctive relief and damages, will not be barred and the Attorney General's motion to dismiss will be denied. The reason is that the 11th Amendment does not protect officials from suit in their individual capacity. If Bob and Paige have sued the Attorney General in his official capacity, the 11th Amendment will have different effects on the suit for an injunction than on the suit for damages. The suit for an injunction will not be dismissed under the 11th Amendment because it does not prevent individuals from suing officials for injunctive relief. The 11th Amendment will, however, bar the suit if the suit is for damages to be taken out of the State's coffers. Such a suit is barred by the 11th Amendment and the Attorney General's motion to dismiss should therefore be granted. QUESTION 5 In 2003, while planning their wedding, Harry and Wanda, a California couple, spent weeks discussing how they could each own and control their respective salaries. Sometime before their wedding, they prepared a document in which they stated, “After we marry, Wanda’s salary is her property and Harry’s salary is his property.” At the same time, they prepared a separate document in which they stated, “We agree we do not need legal advice.” They signed and dated each document. They subsequently married. In 2004, Harry used his salary to buy a condominium and took title in his name alone. Harry and Wanda moved into the condominium. In 2005, Harry and Wanda opened a joint savings account at their local bank. Each year thereafter, they each deposited $5,000 from their salaries into the account. In 2015, Harry discovered that Wanda used money from their joint account to buy rental property and take title in her name alone. In 2016, Harry and Wanda permanently separated and Wanda moved out of the condominium. Wanda thereafter required emergency surgery for a medical condition, resulting in a hospital bill of $50,000. Harry later filed a petition for dissolution of marriage. What are Harry’s and Wanda’s rights and liabilities, if any, regarding: 1. The condominium? Discuss. 2. The joint savings account? Discuss. 3. The rental property? Discuss. 4. The hospital bill? Discuss. Answer according to California law. the wedding, this would not be deemed voluntary, and may even be deemed unconscionable by a court given its unfairness. Additionally, neither spouse executed an additional separate document stating that they understood the rights that they were giving up and that they stated the source where they got information about the other spouse's financial assets and liabilities. Therefore, this prenuptial agreement will not be deemed voluntary. However, it probably will not be deemed unconscionable because it does not appear that the terms were patently unfair, given that both spouses were attempting to transmute their salaries into SP, and it does not appear that either spouse was hiding substantial debts or liabilities or significant assets from the other spouse. In sum, this prenuptial agreement is not likely effective. This will mean that the analysis below will reflect the fact that earnings during marriage will remain CP for purposes of the analysis. Nonetheless, I will still discuss the possibility that this agreement is valid within each spouse's argument, and how that may arguably alter the characterization of property, below. What are Harry's and Wanda's rights and liabilities regarding: 1. The Condominium Title Presumption Property titled in one spouse's name alone is not presumably SP in CA. Here, Henry will argue that he took title in the condominium alone, and therefore it is his separate property. Wanda will argue that this is not conclusive in California, because ownership does not necessarily follow title. Wanda has the stronger argument here. She will argue that the court must trace, using the source rule to determine the character of the condo. General CP Presumption Assets acquired during marriage are presumably CP. Wanda will argue that because the condo was purchased during the marriage, in 2004, it was presumably CP. She will argue that it is irrelevant that the condo was titled in Henry's name alone, because the court can trace. Tracing: Source Rule Under the source rule, a court will trace the assets used to purchase a particular property during marriage to determine its character. Wanda will argue that by tracing, the court will determine that the condo was purchased with Harry's salary during marriage, and therefore it is CP. Harry will argue that the prenup was valid, in which they agreed that his salary during marriage would be his separate property, and therefore by purchasing the condo with his salary, which is SP, and since SP breeds SP, the condo is also his SP. Harry's argument will likely fail because, as discussed above, the prenup is likely invalid and therefore the salaries of both spouses earned during marriage will be community property, and therefore by purchasing the condo with CP funds, the condo itself is CP and it is immaterial that it is titled in Henry's name alone. Transmutation Spouses may alter the character of property from CP to SP, or from one spouse's SP to the other spouse's SP, or from SP to CP. After the "easy transmutation period" ended, courts now require transmutations to be in writing, and consented to or accepted by the spouse whose property is changing in nature, and the writing must explicitly state that a change in property is occurring. Harry will argue that a transmutation of the CP condo occurred when he titled it in his sole name. He will argue that this was a gift from the community to his separate property, and that titling it in his own name was sufficient for a transmutation. Wanda will argue that this was not sufficient for a transmutation because she did not consent to the change of CP to SP and given that she is the adversely affected spouse, her consent or acceptance was required, and that there is also no writing in the title document stating that the property is changing in form from CP to SP. Wanda has the stronger argument here, and the title of the property will not be deemed a transmutation. Gifts Between Spouses As a last ditch effort, Harry will argue that the condo was a gift between spouses and therefore was a valid transmutation that did not need to be in writing. An exception to the writing requirement for valid transmutations is when a gift of a personal nature is given from one spouse to another, and that gift is used primarily by the recipient spouse and is not substantial in nature, taking into consideration the financial situation of the couple. Wanda will argue that a condo is not tangible personal property, and a condo is also substantial in nature, financially, given that they did not come into the marriage with significant amounts of SP, and moreover, the condo was used by both of them because they both "moved into the condominium." Therefore, Harry's argument that the condo was a gift from CP to SP will fail. Conclusion The condo is CP because it was purchased with earnings during marriage and the prenup is likely invalid. Therefore, it will be subject to equal division in kind upon divorce and Harry and Wanda will each take 50% of the proceeds from the sale of the house, assuming it is sold. 2. The joint savings account Jointly Titled Property CP Presumption In CA, when title to property is taken in joint form, there is a presumption that the alone. Transmutation Spouses may alter the character of property from CP to SP, or from one spouse's SP to the other spouse's SP, or from SP to CP. After the "easy transmutation period" ended, courts now require transmutations to be in writing, and consented to or accepted by the spouse whose property is changing in nature, and the writing must explicitly state that a change in property is occurring. Wanda will argue that a transmutation of the CP rental occurred when she titled it in her sole name. She will argue that this was a gift from the community to her separate property, and that titling it in her own name was sufficient for a transmutation. Harry will argue that this was not sufficient for a transmutation because he did not consent to the change of CP to SP and given that he is the adversely affected spouse, his consent or acceptance was required, and that there is also no writing in the title document stating that the property is changing in form from CP to SP. Harry has the stronger argument here, and the title of the property will not be deemed a transmutation. Gifts Between Spouses Finally, Wanda will argue that the rental was a gift between spouses and therefore was a valid transmutation that did not need to be in writing. An exception to the writing requirement for valid transmutations is when a gift of a personal nature is given from one spouse to another, and that gift is used primarily by the recipient spouse and is not substantial in nature, taking into consideration the financial situation of the couple. Harry will argue that a rental property is not tangible personal property, and a rental property is also substantial in nature, financially, given that they did not come into the marriage with significant amounts of SP. Wanda will counter that she, alone, was using the rental property, and therefore that property and any income, profits, or rents derived from it should be her SP because it was used primarily by her. This argument will fail because it is not an item of tangible personal property and thus was not an exception to the transmutation in writing rule. Wanda's argument that the rental was a gift from CP to SP will fail. Rents, Issues and Profits The rents, issues, and profits of CP will be CP, and the rents, issues, and profits of SP will be SP. Because the rental property is CP, any rental income that Wanda derives by renting it out (the facts are silent about whether she has a tenant) will be CP, and therefore will be subject to the equal division in kind rule. Half of rents must be therefore shared with Harry. Equal Management and Control Each spouse has equal ability to manage and control CP. However, this is subject to certain limitations. For instance, a spouse may not sell or encumber personal property in the home or CP clothing belonging to either spouse or children without consent of the other spouse. Gifts of CP Moreover, spouses may not make gifts of CP without the written consent of the other spouse. A spouse may void the gift upon finding out about it. Harry will argue that he did not consent to Wanda sneaking off and using money from their joint savings account to purchase the rental property and take title in her name alone. He will argue therefore that he should be allowed to void this transaction within one year of finding out about it. He will also argue that he can void this transaction because Wanda disposed of the CP without his written consent. Wanda will argue that because she has equal management and control of the property, she does not need his consent to purchase a rental property with money from their joint savings account because she has a community interest in both of their salaries, and therefore can do what she wants with the money given that she had equal withdrawal rights on the bank account. She will also argue that this was not a "gift" of CP because she got her substantial benefit of the bargain from it: namely, a rental in exchange for the funds. Wanda, unfortunately, likely has the stronger argument here, and she did not need Harry's consent before purchasing the rental and he likely cannot void it and cause the seller to return any of the purchase price despite finding out about the sale/purchase within one year. Breach of Fiduciary Duty Spouses owe each other fiduciary duties similar to those of business partners. They owe each other the highest duty of good faith and to avoid self-dealing. Harry will argue that Wanda breached her fiduciary duty to him as a spouse by going behind his back and taking their joint CP funds and buying a rental and titling it in her own name without his knowledge. He will argue that this breaches her duty of loyalty to him and that this act was not in good faith. Harry likely has a strong argument here, and he may also argue that this lack of good faith should cause the court to deviate from the equal division in kind rule. Conclusion The rental is CP because it was purchased with earnings during marriage, which were held in the bank account which is CP, given that the prenup is likely invalid. Therefore, it will be subject to equal division in kind upon divorce and Harry and Wanda will each take 50% of the proceeds from the sale of the rental, assuming it is sold, and assuming the court does not find justification for deviating from this, in light of Wanda's lack of good faith and fair dealing when going behind Harry's back to purchase the rental. QUESTION 5: SELECTED ANSWER B Harry and Wanda's Rights and Liabilities California is a community property state. In a community property state, the marital economic community begins on the formation of a valid marriage, and ends with the death of a spouse, divorce, or permanent physical separation with intent of one spouse not to resume marital relations. Property, earnings, and debt acquired during the marriage is presumed to be community property. Property acquired by either spouse before the marriage, or at any time via gift, devise, or inheritance, is presumed to be separate property. Property acquired by the couple while living in a non-community property state, if it would be considered community property if acquired in California, is considered quasi-community property upon death of a spouse or divorce. Valid Marriage A valid marriage requires mutual consent, sufficient age (at least 18 years old) and legal capacity, and formalities, including a license and solemnization. Here, though the facts do not specify the details of Harry and Wanda's marriage, we can assume for the purposes of this question that they were validly married. A valid marriage ends upon the death of a spouse, divorce, or physical separation of the spouses with intent of one spouse (or both) not to resume the marital relationship. Here, Harry and Wanda permanently separated and Wanda moved out of the condominium where they had been living together in 2016. Harry also filed a petition for dissolution of the marriage. These actions--the physical separation of the two and the petition for dissolution--indicate that the spouses intended to permanently separate and not resume the marital relationship in 2016. Premarital Agreements Before analyzing Harry and Wanda's rights and liabilities in specific pieces of property, we first must determine whether their premarital agreement is valid and effective. A premarital agreement may alter the couple's ownership status in property if it is valid. To be valid, a premarital agreement must be in writing and signed by both couples, though there does not need to be valid consideration exchanged. Additionally, the proponent of the premarital agreement (as of 2005) bears the burden of proving that the agreement was neither involuntary nor unconscionable at the time it was executed. Voluntariness To prove that the agreement was voluntary, the proponent of the premarital agreement must prove (1) that the other party was represented by independent counsel, or had knowingly waived in a separate, signed writing the rights to separate counsel after being fully informed of the advantages of such separate counsel, (2) that the other party, if not represented by independent counsel, was fully informed of the rights it was giving up, (3) that the agreement was not obtained by fraud, duress, or undue influence by one of the spouses, and (4) other factors that the court may think appropriate and just. (1) Here, neither party was represented by independent counsel. Though the proponent of the premarital agreement may argue that the parties waived their right to independent counsel by saying, in a separate signed document, "We agree we do not need legal advice," it is not clear that this waiver was valid, because the parties likely were not fully informed of the advantages of obtaining legal counsel. It is possible that they could argue that they were both legally sophisticated--as evidenced by their knowledge that they needed a separate signed document to waive--but in the absence of additional evidence of this sophistication, a court would likely hesitate to enforce the agreement on this basis. (2) Similarly, it is not clear from the writing signed by the parties--either the agreement or the separate signed writing--that the parties were fully informed of the rights that they were giving up. Unless the proponent can produce evidence that the other party was fully informed, the court may decline to enforce the agreement. (3) Here, the facts are unclear regarding whether there was fraud, undue influence, or duress. The party seeking to enforce the agreement would bear the burden of showing that these factors did not exist at the time the agreement was signed. Unconscionability To prove that the agreement was not unconscionable at the time it was executed, the proponent of the agreement would need to prove that the other party was fully informed of the assets and liabilities of the proponent party, or that the other party had waived such a right to full disclosure of the assets and liabilities of the proponent party, or that the other party actually knew or had reason to know of the assets and liabilities of the proponent party. In the absence of facts speaking to such disclosure, we assume that the agreement was not unconscionable for the purposes of this analysis. Transmutation Finally, in order to be a valid transmutation (agreement that changes the status of ownership of property), a premarital agreement or other agreement must expressly declare the intent of the parties--particularly the adversely affected spouse--to change the ownership status of property. The spouse aiming to defeat the premarital agreement will argue that saying that "Wanda's[/Harry's] salary is her[/his] property" is insufficiently clear to demonstrate intent to make the property separate property because it does not use the word "separate." However, the other spouse will argue that the intent is clear. Since the earnings acquired during marriage would otherwise be community property, saying that it would be the earning spouse's property is sufficient to demonstrate the parties' intent property should be held as separate property. To defeat the presumption, Harry would need to produce in addition to this express statement--and there does not seem to be such a statement referring to the condominium--evidence of the sort discussed three paragraphs above. Again, in the absence of such evidence, Harry would not be able to rebut the community property presumption. There are no transmutations suggested by the facts (again, assuming that the premarital agreement is unenforceable) that would change the ownership status of this property. Dispositions Thus, again assuming that the premarital agreement is unenforceable, the condominium is likely community property. Upon divorce, the equal division rule applies, and community property is divided evenly between the spouses. Thus, Harry and Wanda are likely each entitled to 50% of the value of the condominium. The Joint Savings Account Source of Funds and Time of Purchase The joint savings account was created in 2005. Both Harry and Wanda deposited $5,000 from their salaries into the account. These deposits of $10,000 a year over the course of 10 years would likely amount to $100,000, plus whatever interest the account has earned in that time. This $100,000 stemmed from Harry and Wanda's salaries. Again assuming that the salaries were community property, because they were earned during the marriage and the premarital arrangement is likely unenforceable, this bank account and the $100,000 it contains is community property. At divorce, the special community property presumption applies (see rule above). Since the bank account is held in both of their names--it is a joint account--it is presumed to be community property, and the income earned on the account is also presumed to be community property. There is no transmutation affecting this joint account. At divorce, community property is divided equally between the spouses. Thus, not addressing for the moment the funds removed from the account to pay for the rental property, which will be addressed below, Harry and Wanda are each entitled to 50% of the account. This would be $50,000 (plus half of the interest) to Harry, and $50,000 (plus half of the interest) to Wanda. The Rental Property Source of Funds and Time of Purchase The rental property was purchased by Wanda in 2015, during the marriage. Wanda used funds from the joint account to purchase the property. Assuming that the funds in the joint account were community property, this would make the rental property presumptively community property, as it was acquired during the marriage with community property funds. Wanda will argue that the rental property was held in her name and that it should thus be separate property. However, this is not enough to rebut the community property presumption. Additionally, the special presumption of title does not apply at divorce, only at death. So, unless she were able to enforce the premarital agreement, which she will likely not be able to do, Wanda will not be able to argue that the rental property is her separate property. Breach of Fiduciary Duty Spouses owe each other fiduciary duties. These duties include the duty to inform the spouse of the status of community property and the duty to obtain consent for major decisions affecting the disposition of community property. If a spouse violates his or her fiduciary duty to the other spouse, as a remedy, the other spouse may have his or her name added to the title of the affected property, the spouse may be entitled to a larger share of the community property, or, if the property was fraudulently concealed, the innocent spouse may request that the court order the other spouse to forfeit the property entirely to the innocent spouse. Here, assuming the joint account was community property funds, Wanda may have breached her duty to obtain consent for major decisions. She did not notify Harry about using money from their joint account to purchase the rental property, and she took title in her name alone. It is possible that she also intended to keep the proceeds from this rental property, which would be community property themselves, for herself, which would be a violation of the duty of loyalty and highest good faith owed to her spouse. Since there is insufficient evidence of fraudulent concealment of this property, the court is not likely to order that Wanda forfeit the property entirely, but the court may award Harry a larger share of the community property as a result of Wanda's breach. The rental property is thus community property. At divorce, it will be divided evenly between the two spouses, with Harry receiving a larger share as the court deems just due to Wanda's breach of her fiduciary duties. The Hospital Bill Debts of spouses acquired after permanent physical separation are generally the liabilities of the debtor spouse, with that spouse being responsible for the debt payment after divorce. However, even after separation, both the debtor and the non-debtor spouse may be personally liable for payments for the necessities of life of either spouse. QUESTION 6: SELECTED ANSWER A Attorney-Client Relationship An attorney-client relationship is formed when the client reasonably believes it has been formed. The existence of an attorney-client relationship triggers numerous duties, including the duties of competence, confidentiality, loyalty, and fiduciary duties. Breaching one of these duties is a violation of the Model Rules and California Rules. Here, ABC has hired Len (L) to represent them in an effort to challenge the residential housing statute. Thus, it is likely that they reasonably believe an attorney-client relationship exists. One has therefore been formed. The duties mentioned above now apply to this relationship, and any breach will be considered an ethical violation. For similar reasons, L does not have an attorney-client relationship with Equal. Although he has helped them get the housing statute enacted, he does not represent them as an attorney. Thus, we may assume that Equal would not reasonably believe such a relationship existed. Even in the absence of a formal relationship, however, his association with Equal may raise other problems, as discussed below. Corporation as a Client An attorney may represent a corporation as a client. The corporation acts through its duly-appointed representatives, usually officers. However, the corporation, not the officers, is the actual client and the attorney must be careful not to provide legal information to the officers in a personal capacity or to mislead them into believing that the attorney represents them personally. Here, ABC, a corporation, has retained L to handle the representation. This is permissible under both sets of rules. ABC, acting through Pat (P), will likely give L instructions on how to proceed and define what the goals of the representation are. However, L must remember that he represents ABC and not P. Duty of Loyalty An attorney owes his clients a duty of loyalty. The duty of loyalty includes the duty to refrain from conflicts of interest. Conflicts of interest take several forms: conflicts personal to the lawyer, conflicts between current clients, and conflicts between current and past clients. Lawyer-Client Conflict A lawyer may breach his duty of loyalty by representing a client with interests adverse to his own. This often arises when litigation the attorney is handling is adverse to one of his personal interests. When an attorney has a conflict between his or her personal interests and the interests of the client, under the California Rules he or she must provide the attorney with written disclosure of the interest. The model rules, by contrast, require that the attorney get informed consent from the affected client before continuing with a representation that raises a personal conflict. Further, under the Model Rules, the lawyer must reasonably believe that he will be able to provide competent and diligent representation in the face of the conflict. Here, under either rule, L has breached his duty of loyalty. L is a member of Equal, an organization that helped to pass the statute his new client, ABC, is now challenging. L has admitted that he thinks the law is valid and that he hopes ABC is not successful in its suit. Under the Model rules, this would be a violation because he cannot reasonably believe he will be able to provide diligent and competent representation in the face of this admission. Further, under the California rules, there is no indication that he has provided written disclosure to ABC of his personal interest. He may argue that ABC only knew about him because of his work with Equal, and thus ABC was necessarily informed of his interest. However, California requires written disclosure, which was not provided. L has breached his duty of loyalty by representing a client in the face of a personal conflict without disclosure and without a reasonable basis for believing he can continue to provide competent and diligent representation. Client Conflicts A lawyer may breach his duty of loyalty by representing current clients with interests adverse to one another or by representing a current client whose interests are adverse to a former client. Current Clients A lawyer may breach his duty of loyalty by representing current clients whose interests are adverse to other current clients. Under the Model Rules, a lawyer must get informed consent from the adversely affected client and reasonably believe that they can undertake the representation in spite of the conflict. The Model Rules require this consent only for actual conflicts of interest. By contrast, California requires informed consent for either actual or potential conflicts of interest. However, California does not require that the attorney reasonably believe he can prove competent representation in the face of the conflict. Here, although Equal might argue that there is a client conflict, it is unlikely that L has breached either the model or California rules by agreeing to represent ABC. L was a member of Equal, but there was never an attorney-client relationship between L and Equal. There would therefore be no need to get informed consent from ABC or Equal before pursuing the representation of ABC. Former Clients Like a conflict of interest arising from the representation of current conflicting clients, an attorney may likewise breach their duty of loyalty by representing a client with an Model Rules, if the executives of the corporation refuse to take action, the lawyer may report out if he believes it is in the best interest of the corporation. This is an exception to the duty of confidentiality and allows the lawyer to report misconduct to an outside agency. California does not permit reporting out for financial crimes. California permits reporting out only when he or she has reason to believe that (i) the client or a third party will commit an act that creates a risk of death or substantial bodily harm, (ii) he or she has remonstrated the client to not take this action, and (iii) the disclosure is reasonably necessary to prevent the harm. Under the California rules, a lawyer may not disclose financial harms, although he may choose to withdraw from the representation. Here, L has discovered that P has filed false reports with the State EPA regarding the disposal of non-hazardous waste and is planning to file another false report soon. Filing this false report opens the corporation up to a substantial civil fine. As a threshold matter, L should report this matter up the chain of command of the company. However, as it appears that P is the president, it is not apparent who else this could be reported to. Under the Model Rules, since L has exhausted his "reporting up" options, L is permitted to disclose the false report to an outside agency, since this involves a threat of substantial financial harm to the corporation. He may also withdraw from representation. He does not violate the Model Rules by not filing the report, although he may not counsel them on committing this type of fraud. By contrast, L has no ability to report the fraud under the California rules. California permits reporting outside the corporation only where there is a risk of death or substantial bodily harm. The facts indicate that the waste is non-toxic, and thus it is unlikely that there is any risk of bodily harm. Although L may choose to withdraw from the representation and may not counsel the corporation on filing such documents, he is not required (or allowed) to disclose--to do so would be a breach of the duty of confidentiality. In short, L's responsibilities in the situation depend on the rules applied. Under either circumstance, he can likely withdraw from the representation since the client is committing fraud. Under the Model Rules, he may, but is not required to disclose the fraud to an outside agency. Under the California rules, he may not disclose the fraud and would be liable for a breach of confidentiality for doing so. Duty of Candor to the Court In addition to duties owed to the client, an attorney also owes a duty of candor to the court. As part of an attorney's duty of candor to the court, the lawyer owes a duty not to advance or file frivolous claims under both the California and Model Rules. This requires that they not knowingly put forward a claim that is unsupported by the law, although a good faith argument for modification or reversal is not considered frivolous. Here, L has filed a claim seeking to invalidate the residential housing statute, a law that he helped pass. He has admitted that he secretly hopes that ABC is not successful in its lawsuit and that the statute is good law. Thus, there is a substantial likelihood that he will violate the duty of candor by filing a suit seeking to invalidate the law. This is because, if the law is valid, then claiming it is not valid without a reasonable basis is considered a frivolous claim. L will argue that he does not know that the law is good law, he just believes it is. Therefore, because he does not know whether the law is good or not, he is not prohibited from putting forth a good faith argument that it should be modified or overturned. Whether this argument succeeds depends on whether or not he believes there is a good faith basis for challenging the law. If he does not, and he proceeds to litigate the claim anyway, he will have violated his duty of candor to the court. QUESTION 6: SELECTED ANSWER B DID LEN COMMIT ANY ETHICAL VIOLATIONS IN CHOOSING TO REPRESENT ABC? Duty of loyalty A lawyer owes to their client the duty of loyalty. Under the ABA rules, the duty of loyalty requires that a lawyer not take a representation when there is a conflict of interest, unless the lawyer: (1) reasonably believes that his ability to represent the client will not be materially limited by the conflict of interest; and (2) the lawyer discloses the conflict to the client and receives their informed consent to continue with the representation. The California rules are quite similar, except the lawyer only needs to have a good faith subjective belief that his ability to represent the client will not be materially limited by the conflict of interest, and if the conflict is a personal conflict, the lawyer only needs to provide a written disclosure of the conflict in writing to the client. However, if the conflict is not a personal conflict, the client's consent itself, and not just a confirmation of consent, must be in writing. Conflict of interest #1: Len's membership of Equal Ownership Inc. (Equal) Did a conflict of interest exist? Although Len did not represent Equal, a conflict of interest still likely existed because Len was a member of Equal, yet he agreed to represent ABC in its suit to challenge the statute. Equal was the nonprofit organization that helped to get the statute in question enacted. As a member of Equal, Len likely assisted or at the very least approved of and supported Equal in its mission to help get the statute enacted. Now, Len is on the opposite side of the same conflict, seeking to get this same statute struck down. Accordingly, Len had a conflict of interest due to his membership of Equal and his representation of ABC, as Len was required to essentially fight a statute that was supported by the nonprofit which he was a part of.