Examination Essay Questions - July 2001
MODEL ANSWER - QUESTION I - JULY 2001
1. For Eve to obtain a relief from abuse order she must prove by a preponderance of the evidence that Alice (a) abused (b) a family or household member and (c) that there is a danger of further abuse. Abuse is defined as (a) attempting to cause or causing physical harm or (b) placing another in fear of imminent serious physical harm or (c) abuse of children pursuant to 33 V.S.A. § 4912. See 15 V.S.A. § 1101. Alice's being drunk, being angry and cleaning her guns would not likely be found to be abuse. The threats against Cable would not be sufficient as Cable is not a family member or member of the household. Eve would need to show that Alice's conduct placed her or the children in fear of imminent serious physical harm and or constituted "emotional maltreatment" of the children within the meaning of 33 V.S.A.§4912. Therefore, Eve will most likely lose her claim for a permanent relief from abuse order at the hearing.
2. As to the temporary custody issues as Alice and Eve have not entered into a civil union, and Alice never formally adopted Kayna, Alice has no custody rights as to Kayna. While they lived in Texas for an extended period of time, Texas would not recognize a common law marriage between this same sex couple. As to Cain, Alice does have custody and/or visitation rights because she is the adoptive parent of Cain. The court will set appropriate legal and physical rights and responsibilities for Cain between Alice and Eve pursuant to the best interest of the child standard and the criteria set forth in 15 V.S.A. §665.
3. As to temporary support issues, there would not exist any duty for Alice to support Kayna as there is no legal responsibility here. The child support obligation to Cain would be based upon the financial resources available to both Alice and Eve. Here, if Alice is unable to access her repair shop at the home occupied by Eve, this would not constitute voluntary underemployment by Alice and could significantly limit Alice's child support obligations.
4. Alice has been criminally charged for violation of the emergency Abuse Prevention Order. Most likely Eve complained to the police that Alice was violating the order by harassing or stalking her and the children by following them into Kmart and thereby interfering with Eve's personal liberty. Every Abuse Prevention Order issued includes a warning that a violation of the order is a crime subject to a term of imprisonment or a fine. To be effective and enforceable a copy of the emergency and/or final order must be served on the defendant. Therefore, Alice may have a technical defense that Eve's placement of a copy of the order on her windshield was insufficient service.
Alice may also have a valid defense that the occasion of her and Eve being in K-mart at the same time was not harassment or stalking but mere happenstance which lacks the necessary criminal intent for a criminal violation of an Abuse Prevention Order.
MODEL ANSWER - QUESTION II - JULY 2001
1a) Clare s not personally liable for the VLB claim as a shareholder. A purchaser from a corporation of its own shares is not liable to the corporation or its creditors with respect to the shares except to pay the consideration for which the shares were auhorized to be issued or specified in the subscription agreement. A shareholder of a corporation is not personally liable for the acts or debts of the corporation except that he or she may become personally liable by reason of his or her own acts or conduct. There is nothing to indicate any conduct of Clare would expose her to liability.
A close corporation can elect not to have directors, however, if they do have directors, since Ophelia did not advise Clare of any action with respect to VLB, Clare would not be liable as a director. A director shall discharge his or her duties as a director, in good faith; with the care an ordinarily prudent person in a like position would exercise under similar circumstances; and in a manner the director reasonably believes to be in the best interests of the corporation. A director is not liable for any action taken as a director, or any failure to take any action, if the director performed the duties of his or her office in compliance with these standards.
Clare, as secretary, also had no knowledge of the actions by Ophelia, the President and Treasurer. Ophelia’s actions, taken at face value, would have appeared legally authorized to VLB, and there may have been no reason for Clare to be involved. The by-laws set out the duties of officers. Without some higher level of knowledge on Clare’s part, she has no personal liability.
1b) Ophelia has the same protection from liability as a shareholder as Clare.
As a director, Ophelia appears to have breached most of her duties as set forth above, and as such, would be liable to VLB for any losses sustained if Clopco could not discharge the loan.
Although we do not have the by-laws to guide us on the duties of officers, Ophelia may well have had authorization as President and Treasurer to incur indebtedness on behalf of Clopco. As long as she was acting in good faith, she would not be personally liable.
Quite apart from the statutory duties of directors and officers, Clare and Ophelia have an obligation to observe the formalities of a corporate organization. A close corporation has the benefit of fewer formal obligations than conventional organizations. If, however, Clare and Ophelia were found to be utilizing the corporate situation as their “alter ego” to avoid personal responsibility, then a court could pierce the corporate veil and impose personal liability on Clare and Ophelia. In this case, while Clare’s lack of interest in the business aspects of Clopco could be said to be negligent, she did not use the corporation for her personal benefit. Similarly, while Ophelia may not have exercised good business judgment by investing in the stock market for the benefit of the corporation and she may have liability to Clare for acting without any express corporate authority, she was not using the corporation for her own personal benefit. All of her actions were on behalf of Clopco and the corporate veil should not be pierced.
2a) The Articles of Incorporation (as well as the by-laws, an agreement between shareholders or an agreement between shareholders and the corporation) can restrict Clare’s ability to sell her shares. A restriction does not affect shares issued before the restriction was adopted unless the holders of such shares agree in writing to the restriction, or voted in favor the restriction. A restriction on the transfer of shares is valid and enforceable against the holder if the restriction is authorized its existence is noted conspicuously on the front or back of the certificate. Unless so noted, a restriction is not enforceable against a person without knowledge of the restriction. A restriction on the transfer of shares is authorized: to maintain the corporation’s status when it is dependent on the number or identity of its shareholders; to preserve exemptions under federal or state securities law; for any other reasonable purpose. A restriction on the transfer of shares may: obligate the shareholder first to offer the corporation or other persons (separately, consecutively, or simultaneously) an opportunity to acquire the restricted shares; obligate the corporation or other persons (separately, consecutively, or simultaneously) to acquire the restricted shares; require the corporation, the holders of any class of its shares, or another person to approve the transfer of the restricted shares, if the requirement is not manifestly unreasonable; prohibit the transfer of the restricted shares to designated persons or classes or persons, if the prohibition is not manifestly unreasonable.
2b) Since Ophelia will not agree to voluntarily dissolve, Clare must go to the Superior Court for a judicial dissolution. She must prove the directors are deadlocked in the management of the corporate affairs, the shareholders are unable to break the deadlock, and either irreparable injury to the corporation is threatened or being suffered, or the business and affairs of the corporation can no longer be conducted to the advantage of the shareholders generally because of the deadlock; the directors or those in control of the corporation have acted, are acting, or will act in a manner that is illegal, oppressive, or fraudulent; the shareholders are deadlocked in voting power and have failed, for a period that includes at least two consecutive annual meeting dates, to elect successors to directors whose terms have expired; or the corporate assets are being misapplied or wasted.
The Court can issue injunctions, appoint a receiver or custodian pendente lite with all powers and duties the court directs, take other action required to preserve the corporate assets wherever located, and carry on the business of the corporation until a full hearing can be held.
A Court in a judicial proceeding brought to dissolve a corporation may appoint one or more receivers to wind up and liquidate, or one or more custodians to manage, the business affairs of the corporation. The Court shall hold a hearing after notifying all parties to the proceeding and any interested persons designated by the Court, before appointing a receiver or custodian. The Court appointing a receiver or custodian has exclusive jurisdiction over the corporation and all of its property wherever located.
If after a hearing the Court determines that one or more grounds for judicial dissolution exist, it may enter a decree dissolving the corporation and specifying the effective date of the dissolution, and the clerk of the Court shall deliver a certified copy of the decree to the secretary of state, who shall file it.
After entering the decree of dissolution, the Court shall direct the winding up and liquidation of the corporation’s business and affairs and the payment of claims.
The dissolved corporation shall notify its known claimants in writing of the dissolution at any time after the effective date.
A dissolved corporation may also send and publish notice of its dissolution and request that person with claims against the corporation present them in accordance with the notice. The notice must be published on time in a newspaper of general circulation in the county where the dissolved corporation’s principal office (or, if none in this state, its registered office) is or was last located, and sent ot the office of the attorney general.
A dissolved corporation or successor entity which has followed the procedures shall pay the claims made and not barred or rejected, shall post the security offered and not rejected, shall post any security ordered by the superior court, and shall pay or make provision for all other obligations of the corporation or such successor entity. Such claims or obligations shall be paid in full and any such provision for payment shall be made in full if there are sufficient funds. If there are insufficient funds, such claims and obligations shall be paid or provided for according to their priority, and among claims of equal priority, ratably to the extent of funds legally available therefore. Any remaining funds shall be distributed to the shareholders of the dissolved corporation; provided, however, that such distribution shall not be made before the expiration of 90 days from the date of the last notice of rejection given. In the absence of actual fraud, the judgment of the directors of the dissolved corporation or the governing persons of such successor entity as to the provision made for the payment of all obligations shall be conclusive.
A dissolved corporation or successor entity which has not followed the procedures shall pay or make reasonable provisions to pay all claims and obligations, including all contingent, conditional, or unmatured claims known to the corporation or such successor entity and all claims which are known to the dissolved corporation or such successor entity but for which the itentity of the claimant is unknown. Such claims shall be paid in full and any such provisions for payment shall be made in full if there are sufficient funds. If there are sufficient funds, such claims and obligations shall be paid or provided for according to their priority and, among claims of equal priority, ratably to the extent of funds legally available therefore. Any remaining funds shall be distributed to the shareholders of the dissolved corporation.
Directors of a dissolved corporation or governing persons of a successor entity which has complied shall not be personally liable to the claimants of the dissolved corporation
Notwithstanding any other provisions of this chapter, a corporation’s liability to the Vermont Department of Taxes for unpaid taxes and other amounts shall not be affected by the corporation’s dissolution and winding up of this affairs except to the extent provided
2c) Any one or more shareholder desiring to continue the business of a close corporation may avoid the dissolution of the corporation or the appointment of a trustee or receiver by electing in a written instrument filed in the proceeding to purchase the shares of stock owned by the petitioner at a price equal to their fair market value. If a shareholder or shareholders making such election are unable to reach an agreement with the petitioner as to the fair market value of the petitioner’s shares within 30 days after filing of such election, the Court shall, upon said electing shareholders giving bond or other security in an amount fixed by the Court, stay the proceeding and proceed to determine the fair market value of such shares as of the close of business on the day on which the petition for dissolution was filed. Upon determining the fair market value of such shares, the court shall set forth in its order directing that the shares be purchased, the purchase price and the time within which the payment shall be made, and may decree such other terms and conditions of sale as it determines to be appropriate, including payment of the purchase price in installments over a period of time and the allocation of shares among shareholders electing to purchase them. The petitioner shall be entitled to interest at the legal rate on the purchase price of the petitioner’s shares from the date of the filing of the election for a determination of the fair value and all other rights of the petitioner as an owner of the shares shall terminate at such date. Upon full payment of the purchase price, under the terms and conditions specified by the Court, or at such other time as may be ordered by the Court, the petitioner shall surrender the shares of stock to the purchasing shareholder or shareholders.
MODEL ANSWER - QUESTION III - JULY 2001
(1) Is the Montpelier Community Hospital entitled to the assets of the trust? If not, who will receive them? Discuss.
Montpelier Community Hospital’s claim
Frank’s will created an express trust for the benefit of his wife, Mary. Under the terms of the testamentary trust, after Mary’s death the trust corpus was intended to go to the Montpelier Community Hospital (MCH) to be used for specific charitable purposes.
If the husband had simply left the corpus of the trust to the hospital after his wife’s death, there would be no issue. Instead, he linked his bequest to a specific set of circumstances: treating polio victims and engaging in research aimed at eradicating the disease.
Since the husband executed his will, polio has been all but eliminated through the use of vaccines. In addition, the fact statement also makes it clear that Montpelier General Hospital is not at all engaged in treating or researching the disease. The issue, then, is whether the husband’s charitable intent should be carried out, or whether the intended bequest will lapse, with the effect that the assets remain in Frank’s estate.
Cases such as this have given rise to the cy pres doctrine, which is an equitable remedy used by courts to carry out the charitable intentions of testators under certain specific circumstances. Vermont has codified the cy pres doctrine at 14 V.S.A. § 2328, which provides that “if a devise or bequest for charity, at the time it was intended to become effective, is illegal, impossible or impracticable of enforcement and if the settlor or testator manifested a general intention to devote the property to charity,” the Superior Court may order an administration of the devise or bequest “as nearly as possible to fulfill the general charitable intention of the settlor or testator.”
In determining whether or not Montpelier Community Hospital should receive the trust assets, the Washington County Superior Court will have to determine whether the bequest is “illegal, impossible, or impracticable of enforcement” and whether Frank manifested “a general intention” to devote the property to charity, rather than a specific intention. The court will most likely find that the bequest is either “impossible” or “impracticable of enforcement,” given that polio is no longer a major health threat and MCH is not engaged in any polio-related research.
It is less clear whether the court will find that Frank demonstrated a general charitable intent in bequeathing the trust corpus to MCH. One could argue that he did, in that he gave the entire corpus to the hospital, rather than just a stated portion or dollar amount. On the other hand, it can be argued that Frank’s bequest was so directly related to addressing polio — the disease that robbed him of his only son — that the gift was too specific to evidence a general charitable intent. While it is impossible to predict with certainty what a court would do, given the facts of this case it is likely that the court will find that Frank’s will shows a general charitable intent, and would either give it to another hospital engaged in researching polio (which is still with us, although in much reduced form) or would give it to MCH for treating and researching other diseases.
Disposition of the estate
If the cy pres doctrine is not invoked by the Superior Court, the $35,000 remaining in the trust becomes an estate asset for distribution according to Frank’s will. However, the will does not make any provision for distribution of the assets once his wife dies other than to the hospital.
In general, if estate assets are not fully distributed under the terms of a will, courts look to the laws of descent and distribution to determine where the assets should go. Vermont law provides for distribution to family members and next of kin. 14 V.S.A. §§ 551 – 559.
In this case, Frank’s wife has died, and Frank had no children of his own. The facts do not indicate that he had any other family members. Sam and Janet are not Frank’s children, and therefore have no rights of inheritance under the laws of descent and distribution. Based on the facts as stated, then, it looks like there are no next of kin to inherit the $35,000.
When someone dies leaving property, either real or personal, in Vermont, and there are no heirs to take the property, Vermont law provides that the assets escheat to the towns in which they are located to be used for the towns’ schools. 14 V.S.A. § 683. In this case, the $35,000 in the trust will escheat to the town in which Frank had lived (presumably Montpelier) for use by its schools.
(2) Do the recipients of the trust proceeds have any recourse against the Montpelier Savings & Trust Company with respect to the diminished value of the estate? Discuss.
Trustees are fiduciaries and as such, have a number of obligations. The fundamental duty of a trustee is to administer the trust according to the intent of the testator, to the extent the trust is valid and is not impossible to perform. Trustees are obligated to act in good faith and to be loyal to the trust and to the interests of the trust’s beneficiaries. Trustees also have a duty to use reasonable care and skill to both preserve the trust assets and to make them increase — in other words, to keep trust funds properly invested in productive property.
These duties extend not only to the primary beneficiary (in this case, Mary) but also to successor beneficiaries (in this case, either Montpelier Community Hospital or the town to which Frank’s money will escheat if no other heirs exist).
Trustees may be held personally liable for breaching their fiduciary duties, including being required to use their own resources to replenish a trust that has been mishandled.
Montpelier Savings & Trust Company (MST) acted well within its fiduciary duties by taking the estate assets and investing them. In doing so, however, MST was subject to a standard of care: to exercise the same care, diligence and skill that an ordinarily prudent person would exercise in the conduct of his or her private affairs under similar circumstances and with a similar object in view. In addition, trustees with special or professional knowledge or expertise have a duty to exercise that level of knowledge or skill. In this case, MST arguably acts frequently as a trustee, and so might be held to an even higher standard of care.
In making investments of trust assets, the key objectives are safety (preserving the trust assets) while at the same time producing income for the trust. Preserving the estate is the primary duty, however.
In this case, it appears as though MST breached its fiduciary duties either as to Mary, as the original beneficiary, and/or as to the eventual beneficiary upon Mary’s death.
First, MST had no authority to invade the principal of the trust, even when Mary requested more money. The trust explicitly stated that Mary was to get only the income of the trust. Her request for more money had no legal weight, and MST should not have sold off stock in order to accommodate it. In selling the stock, MST was reducing the trust’s assets in a way that would almost inevitably reduce the overall income — affecting Mary’s beneficial interests, depending on how long she lived — and also negatively affect the ultimate beneficiary (either Montpelier Community Hospital or Frank’s town of residence, as discussed above) by reducing the amount it would take.
Vermont law does allow a trustee to invade the trust corpus, but only in limited circumstances (for example, when it is “beneficial to the trust estate” or “necessary or desirable in order to carry out the terms of the trust”), and then only with the Probate Court’s consent. 14 V.S.A. § 2322. Those conditions do not appear to have been met under the facts as stated.
Second, MST appears to have knowingly invested in risky stocks. In determining whether this was a fiduciary breach, a court would take into consideration not only which individual stocks MST purchased, but the overall composition of the trust’s portfolio. If, in fact, most of the investments were securities with a high amount of risk, a court could well conclude that this was a violation of the “prudent investor” rule. In addition, because MST acts as a trustee on a professional basis (as opposed to, say, a friend or neighbor who has been named trustee), it will probably be held to an even higher standard of care.
Third, MST appears to have breached its fiduciary duties by not reallocating the trust assets to other investment vehicles. The facts state that the value of the stocks had been “plummeting for several years.” MST arguably should have reviewed the trust’s portfolio on a regular basis and, once it understood that tech stocks were losing value, should have sold some or all of them and reinvested them in less risky ventures.
Fourth, MST does not seem to have rendered a regular accounting of its management of the trust, as required by law (see 14 V.S.A. § 2324, which requires a full accounting of “receipts, disbursements and charges” as well as “the condition of such estate”). Had it done so, either Mary or MCH (as an intended beneficiary) might have learned at some point that the trust corpus was being eaten away, and could have taken steps to stop it. (It is not clear whether Mary understood that MST was selling stock to pay her; she could well have been quite ignorant of the reason MST was able to increase her payments.)
The appropriate remedy in this case is for eventual beneficiary of the trust to sue MST for breach of its fiduciary duties, seeking the difference between the $35,000 remaining in the trust and the original trust corpus of $250,000.
MODEL ANSWER - QUESTION IV - JULY 2001
1) Discuss any and all possible causes of action Penelope may have against Dan and/or Jay.
Penelope has a claim against Dan for his negligent operation of his vehicle, which caused serious damage to her car, minor injuries to her person, and serious injuries to her pet. All drivers have to exercise reasonable care in operating their vehicles and have a duty to other drivers, pedestrians, and property owners to avoid injuring them by failing to exercise such care. Dan’s looking away from the road to adjust the radio was a breach of this duty of care, a negligent act, which was the proximate cause of Penelope’s injuries, forcing her to swerve off the road and into a tree. Also, Dan drove over the centerline, which is a violation of a Vermont safety statute. As this statute is designed to prevent just such injuries and accidents as occurred here, Penelope would be entitled to a jury instruction that the fact-finder could find that Dan acted negligently based solely on his violation of that law. (This doctrine is sometimes referred to as “negligence per se”).
Penelope arguably has a claim against Jay for negligent entrustment of his vehicle to Dan, a driver whom he knew to be unlicensed. See: Vince v. Wilson, 151 Vt. 425 (1989). In order to prove negligent entrustment, she will have to prove that Jay knew or should have known that Dan was likely, due to youth, inexperience or otherwise, to use the car in a manner involving unreasonable risk of physical injury to others. Because simply having a suspended license is probably not sufficient to show this level of negligence, her attorney may want to conduct a pre-litigation deposition of Jay or Dan, or both, to find out what other facts about Dan’s driving history and ability Jay was aware of (or should have been). For example, if Dan’s license was suspended because of a DUI conviction, and Jay knew it, that would arguably be sufficient to create a jury question on the issue of negligent entrustment.
2) Discuss any defenses Dan and/or Jay could raise.
Jay (and Dan) could argue that as there was no impact between the vehicles, there is insufficient evidence of causation. In order to prevail, Penelope must show that Jay’s negligence was a proximate cause of her damages. When there is no direct impact between two vehicles, the causation issue is a real one that can be argued to the jury. (This is a factual question, so Jay couldn’t win on summary judgment. It is also a weak argument, even before the jury). Jay (and Dan) could argue that Penelope’s damages were caused by her own comparative negligence; i.e. that she overreacted in swerving so violently, and could easily have avoided him without ramming into a tree. Again, this is a fact question that the jury would have to decide. It is possible that a jury might decide that both Penelope and Dan were negligent, and therefore that Dan was responsible for only a portion of Penelope’s damages; e.g. if she was found 20% responsible, Dan (or Dan & Jay, if negligent entrustment was proved) would only be liable for 80% of her damages. Under Vermont law, which uses a modified comparative negligence model, if Penelope was more than 50% responsible for the accident she is not entitled to any recovery.
As to Fifi’s severe and long term injuries, Jay (and Dan) might attempt to argue that Dr. Marker’s alleged negligence is an efficient intervening cause, and that they should not be held liable for these damages. However, the case law is clear in holding that medical malpractice is generally not an efficient intervening cause in negligence cases of this type, and that defendants may be held liable for all of the injuries that the plaintiff suffers, even if they were caused in part by medical negligence. Again, causation is a fact question for the jury to decide.
See 4., below, for discussion of defenses to Penelope’s requested remedies.
3) Discuss whether Penelope has a cause of action against Dr. Marker.
Under the new statute, it appears that Penelope does have a cause of action against Dr. Marker. In order to establish professional negligence, she will need to establish that the doctor breached his duty of care to his patient and that she was injured as a result. She will probably need to obtain expert testimony from another veterinarian to establish what the doctor’s duty of care was, i.e. what degree of care would ordinarily be exercised by a reasonably skillful veterinarian engaged in a similar practice under the same circumstances, and whether he used that degree of care by leaving the tube in Fifi. However, arguably Dr. Marker’s leaving the tube in the dog is so obviously negligent conduct, that Penelope may be able to avoid the necessity for expert evidence, and instead rely on a res ipsa loquitur theory. Res ipsa loquitur applies when a layperson could say of his or her own common knowledge or experience that the event that caused the injury would not have occurred in the absence of negligence. Leaving a sponge in a patient is often suggested as an example of r.i.l. See: Connors v. University Associates in Obstetrics and Gynecology, 769 F. Supp. 578 (1991). Dr. Marker’s failure to diagnose the cause for Fifi’s continued symptoms is also arguably a basis for a claim of negligence. However, Dr. Marker may be able to assert that it is impossible to determine with reasonable certainty which of Fifi’s post-accident symptoms were in fact caused by the trauma of the accident, and which were due to the tube. Expert testimony will be necessary on this question, as well as on the question of whether the failure to diagnose the tube problem is a breach of the applicable standard of care.
4) Discuss Penelope’s potential remedies.
Penelope can recover from any or all of the defendants. Dan and Jay, if both are found negligent, will be jointly and severally liable for all of the damages their negligence proximately caused. Dr. Marker would be liable only for the damage subsequent to the car accident, resulting from his maltreatment of Fifi.
Penelope can seek to recover monetary damages for: 1. the damage to her car, 2. her own very minor personal injuries (including any pain and suffering and emotional distress at the time of the accident or due to the accident itself—e.g. nightmares about the accident), 3. Fifi’s injuries (including, as discussed above, all of her injuries, even those resulting from medical negligence, as to all defendants). For Fifi’s injuries she can recover, arguably: 1. veterinary expenses (including veterinary psychologist), 2. out of pocket losses for travel (carrying her to and from the vet), and lost time due to ensuring Fifi was cared for (e.g. if she took a day off from work to be available when Fifi had surgery), 3. costs related to hiring someone to care for Fifi during her recovery, and 4. out of pocket losses (if any) related to Fifi’s inability to compete in dog shows during her recovery, and possibly during the future due to her injuries, scarring, permanent physical disability, and the like. (For this she’ll need expert testimony as to Fifi’s likely prospects had she been in good health, and as to the length of time for which she would have continued to be able to compete with normal health). Another approach to the damages to Fifi would be to analyze Fifi as an item of property, and to have an assessment of her value before and after the accident/malpractice. At the very least, even if Penelope is unable to recover for her losses due to Fifi’s inability to compete in dog shows, she would be entitled to recover the difference in the dog’s value before and after her injuries (if any).
Arguably, Penelope should be permitted to make claims for negligent infliction of emotional distress against Jay and Dan because she was present in the vehicle at the time of the accident and thus clearly within the “zone of danger,” and she suffered some (though minor) physical injuries. However, her claim would be limited to the emotional distress that resulted from her being in the zone of danger, and related to her own apprehensions about injury to herself. (Proof of such damage could include nightmares about the accident, fears of driving, etc., if she experienced anything of this kind). Under current law, she would not be entitled to recover for emotional distress related to Fifi’s pain and suffering, her apprehension about Fifi’s future condition and ability to compete in shows, etc.
MODEL ANSWER - QUESTION V - JULY 2001
1. Perry’s comments during the election campaign were not improper. In promising to work closely with the state police to see that everything that can be done is done to put an end to these crimes, and to work to see that whoever is responsible for these crimes is brought to justice, he was merely stating the job description. Unlike the comments condemned in State v. Hohman, 138 Vt. 502 (1980), Perry did not say anything that would compromise the defendant’s rights at the plea bargaining stage of the trial; he did not single out an individual suspect, and he did not promise to obtain a conviction.
2. A prosecutor is not required to wait until proof beyond a reasonable doubt has developed to arrest and prosecute a defendant. Rule 3.8 of the Rules of Professional Conduct requires a prosecutor to refrain from prosecuting a charge that he knows is not supported by probable cause, but does not require any greater standard of proof at that stage.
3. Rule 3.6 of the Rules of Professional Conduct prohibit a lawyer who is participating in the litigation or investigation of a matter from making an extrajudicial statement if he knows or reasonably should know that it will have a substantial likelihood of materially prejudicing an adjudicative proceeding in the matter. Notwithstanding this prohibition, a lawyer may state the offense involved and, except where prohibited by law, the identity of the persons involved; information contained in a public record; that an investigation of a matter is in progress; the scheduling or result of any step in litigation; a request for assistance in obtaining evidence and information necessary thereto; and, in a criminal case, the identity, residence, age and occupation of the accused; the fact, time and place of arrest, and the identity of investigating and arresting officers or agencies. None of the information stated by Perry in the press conference exceeded that permitted by Rule 3.6.
4. Rule 3.8 requires the prosecutor to make reasonable efforts to assure that the accused has been advised of the right to counsel and the procedure for obtaining counsel, and has been given reasonable opportunity to obtain counsel. Rule 3.8 prohibits the prosecutor from seeking to obtain unfairly from an unrepresented accused a waiver of important pretrial rights. Rule 4.2 states that a lawyer shall not communicate about the subject of the representation with a person the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the consent of the other lawyer or is authorized by law to do so. Rule 4.3 states that, when dealing with a person who is not represented by counsel, a lawyer may not state or imply that he is disinterested, and when he knows or reasonably should know that the unrepresented person misunderstands the lawyer’s role in the matter, the lawyer shall make reasonable efforts to correct the misunderstanding.
In this case, Denton was represented by another lawyer, but not in the same matter. Accordingly, he is treated as an unrepresented person. There is nothing in the facts to suggest that Denton misunderstood Perry’s role in the process, and Perry made an effort to ensure that Denton understood his right to obtain counsel and the procedure for doing so. There is no suggestion that Perry acted unfairly in hearing Denton out. Thus, none of these rules were violated by Perry’s conduct.
As bar counsel, I would recommend dismissal of the complaint in its entirety.
MODEL ANSWER - QUESTION VI - JULY 2001
1) What can you do to protect Paul in the light of the imminent sale of Dan’s home?
With the sale of the home being scheduled so soon, Paul should hand-deliver to Dan, as the owner of the property, written notice that Paul is claiming a lien for the amount due on the contract. Under 9 V.S.A. §1923, the owner cannot, after having received notice of the lien, deed or convey the property without disclosing the lien to the purchasers.
Paul should also file a notice of lien under 9 V.S.A. §1923 in the Lakeville town clerk’s office. This gives notice to potential buyers and lenders on the property that there is a lien on the property that they are purchasing. It will also put Paul ahead of any future lien holders on the property.
Because the time of the sale is so close as Paul’s attorney I would also go to the Windsor Superior Court and file for an ex parte writ of attachment. The motion for an ex parte writ of attachment should be filed with a complaint and must include an affididavit pursuant to Rule. 4.1 regarding the danger of the sale of the property and the belief that there will not be sufficient assets to pay a judgment in the matter.
The court must make findings that there is a reasonable likelihood that plaintiff will recover judgment in an amount equal to the attachment and that there is no liability insurance or other security available to satisfy the judgment. The court must also find that there is an immediate danger the defendant will sell attachable property to a bona fide purchaser leaving insufficient property to satisfy the judgment. The writ of attachment must be served on the defendant and contain a description of the property. The writ should also be recorded in Lakeville Land Records.
2) What steps should you take on Paul’s behalf to recover the money Dan owes him?
As attorney for Paul, I would need to commence a civil action against Dan and file for a writ of attachment if I had not already gotten the ex parte writ of attachment. A civil lawsuit is the only way to get the money from Dan if he continues to refuse to pay.
Paul should sue under the prompt payment or construction contracts act, 9 V.S.A.§4001 et seq. The plaintiff is entitled to interest 1% per month and a penalty of 1% per month on the amount wrongfully withheld. The substantially prevailing party is also entitled to reasonable attorney’s fees and expenses. 9 V.S.A. §4007.
Any motion for writ of attachment with a supporting affidavit must be filed at the same time as the complaint. There should be a certificate by the attorney filing the complaint and the motion that there is no known insurance or security to satisfy the judgment.
If the lien has been filed with the town clerk’s office, the real estate must be attached within 3 months of that date. 9 V.S.A. §1924. This means the action should be commenced immediately to give the court time to hold a hearing on the motion for writ of attachment. If the property is not attached, the lien under 9 V.S.A. §1921 is lost. The hearing granting the attachment must be held prior to the lapse of the 3 month period.
3) Describe to Paul what Dan’s likely response will be.
Dan will raise a defense or counterclaim for defective work – the skylight that leaks, and possible other problems he has discovered. (See Nadeau Lumber, Inc. v. Benoit, 140 Vt. 298 (1981)). Under 9 V.S.A. §4007, the owner is permitted to withhold payment in an amount equaling the value of his good faith claims against the contractor, including unsatisfactory job progress, defective construction or disputed work. I would inform Paul that Dan’s withholding of the entire $50,000.00 amount due is not in proportion to the claimed defects that Paul is aware of, i.e., the skylight. The withholding is therefore improper. If Dan is to bring a counterclaim, it must be raised at the time he files his answer as a compulsory counterclaim.
4) What discovery tools will you use to find out what Dan’s other complaints with Paul’s work are?
Under Rule 26, Paul can use any or all of the following methods and is entitled to discover any matter not privileged which is relevant to the subject matter of the action. If the evidence sought is inadmissible, it is enough that it is reasonably calculated to lead to the discovery of admissible evidence. Paul should propound Interrogatories under Rule 33 asking Dan to detail the problems and payments he’s made so far, and such topics as the condition of the house prior to and after the renovations. Interrogatories should also request the identity and opinions of any expert witnesses Dan plans to use to support his claims of defective work. See V.R.C.P. 26(b)(4). Requests for production should be made for repair estimates and invoices. Under Rule 34 Paul could also request entry upon the land for purposes of inspection of the alleged defective work. Requests to Admit pursuant to Rule 36 could be used to show that the majority of the work lacks defects and to show that some of the money was wrongfully withheld by Dan. Finally, under Rule 30, a deposition can be requested to ask Dan to verbally identify any faulty work and explain his position under oath in the presence of Paul and his counsel.
Board of Bar Examiners
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