QUESTION I - FEBRUARY 2003
PLEASE NOTE: QUESTION I was a "Multistate Performance Test" (MPT) and is not reproduced here.
QUESTION II - FEBRUARY 2003
You are consulted by Tommy Trustee, who is serving as the trustee of a trust established under the will of Danny Decedent. The provision of the will establishing the trust reads, in part:
I give, devise and bequeath all the rest, residue and remainder of my estate, of every name, nature and description, wherever situated, to my Trustee, hereinafter named, and my Trustee’s successor or successors, for the following uses and purposes: My Trustee shall take, have, hold, manage, control, invest and reinvest the same, receive the income therefrom derived, and, after deducting the necessary and proper expenses of administering said trust, shall pay or expend said income from said trust and such part of the principal as may be necessary to provide an education, particularly a college education, for the children of my niece, Erin. Said trust is to continue until the last child has received her or his education and the Trustee, in the Trustee’s discretion, has determined that the purpose hereof has been accomplished.
At such time as the above purposes have been accomplished and the Trustee has so determined, the income from said trust and such part of the principal as may be necessary shall be used by said Trustee for the care, maintenance and welfare of my niece, Erin, and her spouse, Fred, so that they may live in the style and manner to which they are accustomed, for and during the remainder of their lives and that of the survivor. Upon the demise of the survivor, the trust estate, together with any accumulated interest, shall terminate and be paid over to their lawful issue, per stirpes.
Tommy Trustee has fulfilled his duty in administering the trust funds to educate Erin’s children, the youngest of whom has graduated from college and entered the job market. Tommy Trustee now has begun to distribute income to Erin and Fred, who live a comfortable but modest middle-class lifestyle from their home in Addison County.
Erin and Fred have contacted Tommy Trustee and asked him to terminate the trust, stating that the sole remaining purpose of the trust now is to maintain their lifestyle, and that distribution to them of the remaining trust assets is necessary to accomplish that purpose. They also presented to him the written consent of their children to the termination of the trust and distribution of its assets to their parents.
1. What factors should be considered in evaluating the request? What position should you take? Why?
2. What concerns arise if Tommy Trustee complies with their request? If he agrees with the request, how should he proceed?
3. If he refuses to comply, what is Erin and Fred’s recourse? What avenues are available to them?
QUESTION III - FEBRUARY 2003
Paul is a carpenter by trade, but his passion is model trains.
Several years ago, Paul decided to build a model train in his basement. At the local book shop, he purchased a copy of a popular national publication for model train hobbyists, "Making Tracks." After reading an article in the magazine, he decided to buy the heavily-promoted 1995 Special Edition Gold Rush Rail Starter Set, which included a Gold Rush Locomotive engine, several train cars, and tracks.
He ordered the train over the phone from the manufacturer, Durable Locomotives, Inc.-- a small, family owned company with its sole shop in San Diego, California. The train was delivered to Paul’s carpentry workshop in Lamoille County, in January, 1995. After inspecting the delivery, Paul brought the new train set to his home in Orleans County.
Paul’s new hobby suited him well, and through the ensuing years he acquired more engines, tracks, and cars, transforming his entire basement into an elaborate maze of tracks weaving through several distinct model towns and clusters of houses. He would sometimes run four or five trains at once, carefully monitoring the track switches to guard against collisions.
On January 11, 2000, Paul was operating his train network when he got distracted and failed to operate the track switches properly. In a loud and dramatic train wreck, his prized Gold Rush Locomotive engine collided head on, and at high speed, with his newer Atlantic Coast Express engine. Upon impact, much to his surprise, the Gold Rush engine burst into flames and literally exploded, sending shards of metal flying through the air. Paul put out the flames with the fire extinguisher. After all the commotion, Paul noticed that his right hand was bleeding profusely.
Shortly thereafter, Paul learned that this was not the first such explosion of a 1995 Special Edition Gold Rush locomotive engine. Paul read in "Making Tracks" that the welding material used in the manufacture of that engine had contained chemicals which, when heated, and when combined with the special paint used on the Gold Rush engines, created a dangerously volatile mixture. The added heat of a head-on collision was all it took, in Paul’s case, to ignite the gases.
The cut on Paul’s hand healed, but it never felt quite right after the injury. He found his carpentry work more difficult in the summer of 2000, but figured that his hand just needed more time to heal. Through the next season, in 2001, his hand got worse, to the point that he could not do his carpentry work any more. The doctor he visited in July, 2001, x-rayed the hand and discovered a piece of metal– shrapnel from the Gold Rush engine explosion– that was causing his problems. Paul had the metal removed surgically, and then suffered complications from that procedure, too. He still has not been able to return to work as a carpenter, and it doesn’t look like he’ll ever be able to resume his lifelong vocation.
Paul has come to you today to find out what recourse, if any, he has against Durable Locomotives.
QUESTION IV - FEBRUARY 2003
Phillip and Patience purchased a mobile home. They planned to set it up on a parcel of land which they had under contract to purchase, using the funds from a mortgage loan provided by the Home Lenders Savings & Loan, a Vermont bank, to buy the land.
The mobile home was purchased with some funds which Phillip and Patience had been able to save for that purpose. The balance was provided by Mobile Home Bank, through an arrangement with the mobile home dealer. Mobile Home Bank had Phillip and Patience sign a promissory note and a security agreement on the mobile home and all of the furniture and furnishings in the mobile home for the amount of the loan. Mobile Home Bank held the mobile home title certificate in the bank's vault as security until the loan was paid off. Nothing was recorded in the land records to reflect Mobile Home Bank's loan.
When Home Lenders gave the loan to Phillip and Patience to purchase the property, it was aware of the debt which they had to Mobile Home Bank from the information provided on the loan application, including the indication that the mobile home was "mortgaged." Home Lenders took back a promissory note and a mortgage deed on the property. The mortgage included the following language as part of the terms of the mortgage:
Grantor [Phillip and Patience] grants...to Lender...all of Grantor's right, title and interest in and to the following described real property, together with all existing or subsequently...affixed...improvements.
A description of the parcel of land was attached as Schedule A. Under the "Definitions" section of the mortgage, was the following:
Improvements . The word "improvements" means all existing and future improvements [including] mobile homes affixed on the Real Property.
Home Lenders Savings & Loan recorded the properly executed mortgage deed in the land records following the closing.
Immediately after the mortgage loan closing, Phillip and Patience had the mobile home delivered to their property. They set it up, removed the wheels, connected it to their water supply and septic system and began living there.
Within two years, Phillip and Patience ran into financial difficulties and were unable to make the payments on either the mobile home or the land. As a result, both Mobile Home Bank and Home Lenders Savings & Loan declared their loans in default and notified Phillip and Patience they intended to take steps to enforce them. It does not appear that there is sufficient value in the mobile home to fully satisfy the outstanding balance due to Mobile Home Bank, nor does it appear that the property would bring an amount sufficient to pay off the balance of the mortgage loan to Home Lenders Savings & Loan. Both banks would like to be able to recover the full amount due by whatever remedies are available to them, including a liquidation of the mobile home and the land.
In the meantime, Charlie Carpenter, the last contractor who did work on the mobile home for Phillip and Patience, did not get paid and he filed a Materialmen's Lien on the land records a couple of months after he did the work.
Just prior to the purchase of the land, the IRS had filed a lien against Phillip in the land records for unpaid taxes. It remains unpaid and outstanding.
To make ends meet, Phillip and Patience took in his younger brother, Buster, as a boarder about six months before they defaulted on their loan payments. He is still living with Phillip and Patience.
Home Lenders Savings & Loan intends to bring an action of foreclosure in Superior Court to enforce its promissory note and mortgage deed.
1. Who is entitled to receive notice and service of the foreclosure complaint and why?
2. Describe the steps necessary to foreclose on the real property owned by Phillip and Patience.
3. What are the respective rights of all involved parties in:
a. the mobile home,
b. the real property, and
c. the contents of the mobile home.
QUESTION V - FEBRUARY 2003
You have been assigned to assist a senior partner in the defense of Malpractice Insurer, Inc. (“Insurer”) concerning a claim brought in a Superior Court by its policyholder, Accounting Firm, Inc. (“Accounting Firm”), in which it is alleged that Insurer failed to fulfill its obligations under two insurance policies by failing to settle a previous lawsuit entitled Plaintiffs v. Accounting Firm, in which judgment was entered against Accounting Firm for $256 million (“the underlying case”).
Accounting Firm intends to offer the testimony of its President, Joe Ceo, (“President”), who attended an unsuccessful mediation that took place before the underlying case went to trial. The senior partner shares with you a letter he received from the Accounting Firm’s lawyers, in which they say they will prove the following through the testimony of President (who has no other information pertinent to the dispute):
The senior partner asks you to prepare a memorandum, explaining whether this testimony should be excluded from evidence. Please do so.
QUESTION VI - FEBRUARY 2003
You are a new staff attorney at Vermont Legal Aid. You and your supervising attorney have just met with a new client, Pat Parker, for a consultation. She tells you that she is a single mother of three children and currently receives $575.00 per month in Aid to Needy Families with Children (ANFC) benefits.
In November 2002, she visited the District Office of the Department of Prevention, Assistance, Transition and Health Access, the Vermont agency charged by law with adopting rules to administer the ANFC program. She was informed that as of January 1, 2003, she would begin to receive increased welfare benefits in the amount of $780.00 per month. Her caseworker told her that this was the result of a new, duly-enacted rule in effect which enabled the caseworker to exclude Pat’s federal fuel and utility subsidies in calculating her income. Since her income would be lower without including these federal benefits, her ANFC benefit would increase.
Pat was so excited about receiving more ANFC benefits that she rented a bigger apartment for herself and her children at a higher monthly rental amount.
In January, Pat’s ANFC benefits did not increase as she was promised by her caseworker. Pat called her caseworker to complain. Pat’s caseworker told her that the Department determined that there were insufficient funds available for all those recipients who were qualified to receive increases and that the Department instructed the district offices to revert to the original policy of considering the fuel and utility subsidies in income. Pat asked her caseworker if there was to be any meeting or opportunity for Pat to complain about the decision to revert to the old policy. Pat’s caseworker told her that the Department did not provide any opportunity for public input.
Your supervising attorney needs you to research and write a memorandum answering the following questions for her:
1. Does Pat have standing to challenge the Department’s rescission of the new rule? Why or why not?
2. What steps does Pat have to take to challenge the Department’s action?
3. What steps should the Department have taken before rescinding the rule?
Board of Bar Examiners
Mailing address: 109 State St. Montpelier VT 05609-0702
Office Location: 111 State St. Montpelier, VT