Anda di halaman 1dari 337

BAR/BRI Bar Review, Summer 2007 1. Criminal Law a. 33 questions on the MBE i. 20 Crim Law ii.

. 13 Crim Proc b. Overview i. Jurisdiction & Other General Matters ii. Essential Elements iii. Accomplice Liability iv. Incumbent Defenses v. Defenses vi. NY Distinctions c. General Matters i. Degrees of Crime in NY 1. Generally, everything is 2nd Degree a. Add a gun 1st Degree b. Remove another factor 3rd, 4th Degree ii. Jurisdiction 1. Situs 2. Conduct or Result must occur in the State where the crime was charged a. Ex. Man standing in Conn. shoots a man in NY, both states have jurisdiction 3. Crimes of Omission Jurisdiction lies where the act should have been performed. iii. Merger of Crimes 1. Generally, no merger allowed in American law 2. Exceptions a. Solicitation or Attempt Merges into the subst crime i. I did it = Defense to an attempt b. Conspiracy Does NOT merge with the subst crime i. Allowing conviction for conspiracy to commit robbery AND robbery 3. Merger not allowed for crimes which involve different victims (see transferred intent, infra) d. Essential Elements (Actus Reus & Mens Rea) i. Act any bodily movement 1. Some acts do not qualify for criminal liability a. Conduct NOT the product of your own volition i. D pushes you into V who gets hit by train ii. Your act is not volitional b. Convulsive Act Epileptic Seizure c. Act performed while unconscious or asleep i. Sleepwalking

Page 1 of 337

BAR/BRI Bar Review, Summer 2007 ii. NOT falling asleep at the wheel 2. Generally, there is no Legal Duty to Rescue (failure to act), except: a. By Statute File your tax returns b. By Contract lifeguard/nurse c. By relationship between the parties loco parentis d. By Voluntary assuming a duty of care & then NOT performing such duty i. Ex. you see man drowning and say, Ill save him, swim to the man, you see he is your enemy and swim away e. When the Ds own conduct creates the peril i. Ex. pushing someone into a pool who cannot swim and then not saving them ii. Mental State 10 of 33 questions 1. 4 common law mental states a. Specific Intent b. Malice i. Murder or Arson c. General Intent i. Almost every crime d. Strict Liability no intent required i. Any defense which negates intent cannot be a defense 2. Crimes of Specific Intent a. Inchoate Crimes (Incomplete crimes)\ i. Solicitation ii. Conspiracy iii. Attempt st b. 1 Degree Murder i. This is NOT common law murder 1. Common law murder = 2nd Degree, a crime of malice c. Assault (only if using the attempted battery definition thereof) d. Common law felonies against property i. Larceny ii. Embezzlement iii. False pretenses iv. Robbery v. Burglary vi. Forgery 3. Crimes of General Intent a. All crimes not so far mentioned unless they qualify for strict liability b. Transferred Intent Shoot a P1, hit P2 i. General Intent to Kill P1 transfers to P2

Page 2 of 337

BAR/BRI Bar Review, Summer 2007 ii. No merger of crimes allowed when different victims, meaning 2 crimes occurred here: 1. attempted murder of P1 2. murder of P2 4. Strict Liability Crimes a. IF crime is in the ADMIN, REGULATORY, or MORALITY area AND the statute contains NO adverbs (knowingly, willingly, etc.) THEN the crime has no intent requirement b. See Ques. 16 & 17, p. 478 (released ques. & drills book) e. Accomplice Liability i. Accomplice liability extends to the crime itself AND all other foreseeable crimes 1. Mere presence NOT enough 2. failure to call police is NOT accomplice liability 3. ONLY OCCURS when aiding, abetting or actively participating in the crime ii. NY Law on Accomplice Liability 1. Accomplices cannot benefit from a principals defense that negates his mental state a. Ex. Interposition of an insanity defense by D1 cannot remove liability of the accomplice, D2 2. Accomplice is NOT absolved of liability even though the principal may not be prosecuted or is absolved of liability 3. HOWEVER in NY a D may not be prosecuted solely based on the uncorroborated testimony an accomplice iii. Conspiracy & Other Inchoate Offenses 1. Solicitation a. Asking another to commit a crime b. Crime is completed upon the asking c. If the asked party agrees AT THAT POINT the crime merges into conspiracy 2. Conspiracy a. When parties agree to a solicitation, a conspiracy occurs b. Ds objective(s) must be unlawful i. Ex. Parties agree to take their own silverware from their home and pawn it off = NO CRIME (its your stuff), thus no conspiracy c. Elements: i. Agreement need not be express ii. Intent to agree iii. Intent to pursue an unlawful objective d. No merger with the substantive offense i. 2 separate crimes exist murder and conspiracy to commit murder

Page 3 of 337

BAR/BRI Bar Review, Summer 2007 e. Co-Conspirator Liability Each conspirator is liable for each crime committed by the other co-conspirators in furtherance of the conspiracy IF such was foreseeable f. The conspirators NEED NOT know each other i. Ex. - Drug dealers and their distribution supply chain g. OVERT ACTS in a Conspiracy i. Majority & NY rule - Conspirator liability requires: 1. An Agreement + an Overt Act a. Overt Act any little act will do (Ex. showing up at an agreed place for a robbery, calling others to sign them up for the conspiracy, etc.) ii. Minority & Common Law Rule Only agreement NO overt act necessary h. Impossibility is no defense to a Conspiracy i. Withdrawal even if adequate will never withdraw a D for liability for conspiracy ONLY for the subsequent crimes of the conspirators 3. NY Law on Conspiracy a. NY follows majority rule, Agreement + Overt Act i. No Overt Act removes liability of D for acts of CoConspirators b. D can conspire with an undercover police officer c. D can withdraw from conspiracy, which requires: i. D must Renounce the Conspiracy, AND ii. Prevent commission of the crime iv. Attempt 1. Specific Intent + Substantive Step (beyond mere preparation) f. Defenses i. New York Penal Law Defenses, 2 types: 1. Defenses a. Once raised by the D, the D.A. must immediately disprove beyond a reasonable doubt (Ex. - self-defense, infancy) 2. Affirmative Defenses a. D must raise and prove by a preponderance (Ex. Duress, entrapment, insanity) b. Once proven, D.A. must disprove beyond a reasonable doubt ii. Insanity - defense to all crimes (incl. Strict Liability) 1. McNaughton Rule At the time of his conduct, the D lacked ability to know the wrongfulness of his actions OR understand the nature and quality of his actions 2. Irresistible Impulse D lacked capacity for self-control or free choice 3. Durham Rule Ds conduct was a product of mental illness

Page 4 of 337

BAR/BRI Bar Review, Summer 2007 4. Model Penal Code D lacked the ability to conform his conduct to the requirements of the law 5. NY Rule (McNaughton Revd) At the time of his conduct, as a result of mental disease or defect, D lacked the substantial capacity to know the wrongfulness of his actions (similar to McNaughton) Intoxication 1. Voluntary Alcoholics, addicts, self-induced a. Defense only to crimes of specific intent (inchoate crime, assault, property crimes, etc.) 2. Involuntary Must be held down, slipped a roofie a. Form of Insanity, defense to all crimes (incl. Strict Liability) Infancy 2 rules 1. UNDER 7, no criminal liability 2. UNDER 14, rebuttable presumption of no criminal liability SelfDefense 1. Use of deadly force a. Majority Rule Deadly force may be used at any time the victim believes deadly force may be used on them b. Minority Rule & NY Rule Prior to the use of deadly force there is a duty to retreat, Except: i. If you are in your home ii. If you are the victim of a robbery or rape iii. A police officer has no duty to retreat c. Defense of a Dwelling i. Deadly force may NEVER be used to solely defend your property (Ex. Spring guns) ii. This is different then when a burglary occurs with YOU or YOUR FAMILY in your home 2. Use of non-deadly-force a. Victim may use non-deadly force at any time the victim reasonably believes force will be used 3. The Original Aggressor will NOT get the benefit of self defense UNLESS: a. Orig. aggressor runs to the door (withdraws), AND b. Turns around and says, Im done, communicated to victim Duress 1. If you dont commit this crime, I will kill you 2. MBE Duress is an affirmative defense to ALL crimes BUT homicide 3. NY Duress is an affirmative defense to ALL crimes, including homicide Mistake of Fact 1. Varies upon mental state 2. Can only negate a crime of Intent 3. Must be a reasonable mistake of fact, EXCEPT if the crime requires a specific intent, THEN the mistake may be unreasonable

iii.

iv.

v.

vi.

vii.

Page 5 of 337

BAR/BRI Bar Review, Summer 2007 a. Unreasonable mistake of fact stealing someone elses car b/c you thought the car was your own Mistake of Fact Mental Application of State Defense Specific Any mistake Intent reasonable or unreasonable Malice/ Reasonable General mistakes only Intent Strict NEVER Liability viii. Consent Almost Never a Defense ix. Entrapment Very Narrow 1. Predispositions by D to commit crime negates entrapment= 2. NY entrapment is an affirmative defense, D must prove by a preponderance a. Not just an offer, officer must actively pursue the Defendant g. Common Law Crimes i. No state has common law crimes ii. All modified by statute iii. 10 questions on the MBE iv. BATTERY 1. Completed assault 2. general intent crime, never strict liability v. ASSAULT 1. 2 types: a. attempted battery (missed punch to face) i. as an attempt crime, this requires specific intent ii. if statute defines assault as an attempted battery, then a specific intent is required and you get increased # of defenses with which to defend (unreasonable mistake of fact, voluntary intoxication) b. assault as a threat (threaten bodily harm) i. crime of general intent vi. HOMICIDE 1. victim must be human 2. murder, without more = 2nd degree, NOT 1st degree 3. 1st degree murder is a specific intent crime ( # of defenses) a. any reasonable or unreasonable mistake of fact would reduce murder 1 to murder 2 4. 2nd degree murder is a crime of malice 5. There are 4 requisite intents for murder

Page 6 of 337

BAR/BRI Bar Review, Summer 2007 a. Intent to Kill; OR b. Intent to inflict great bodily harm; OR c. Highly reckless conduct, (depraved indifference); OR d. Felony murder 6. Exceptions self-defense, provocation 7. NY Murder, PL Art. 125 a. 1st Degree: i. Intentional Killing + Aggravating Factors (kill a cop) nd b. 2 Degree: WATCH OUT FOR SUAREZ INDICTMENTS i. Intentional w/o aggravating factors ii. Depraved indifference murder (highly reckless) 1. 1 on 1 killing is NEVER a depraved indifference murder iii. Felony Murder 8. Defenses to Felony Murder a. MBE 5 Defenses: i. Defense to the underlying felony ii. Felony itself CANNOT be the killing iii. Death must be foreseeable iv. Death caused while fleeing felony = felony murder, BUT when D reaches a point of temporary safety any death thereafter is not felony murder v. D not liable for death of Co-D as a result of resistance by victim or the police 1. BUT if the victim or police kills another bystander and NOT a D, then felony murder has occurred b. NY Defense to felony murder, must prove ALL elements: i. D did not commit or aid in commission of killing; ii. D not armed with a deadly weapon; iii. D had no reasonable belief that any other participant was armed; AND iv. D had no reason to believe any Co-D would engage in conduct likely to result in death vii. MANSLAUGHTER 1. 2 types: a. Voluntary Manslaughter i. ONLY EED passion ii. Killing from a fight where there is no time to cool off b. Involuntary Manslaughter i. Killings which arise on account of criminal negligence 1. Ex. - Falling asleep at the wheel and hitting people

Page 7 of 337

BAR/BRI Bar Review, Summer 2007 ii. Misdemeanor manslaughter or committing a felony that is NOT on the felony murder list c. NY Manslaughter, PL Art. 125 i. 1st Degree: 1. Intent to do Serious Bodily Harm; OR 2. Provoked Killing - EED ii. 2nd Degree: 1. Recklessness iii. 3rd Degree: 1. Criminally Negligent homicide viii. KIDNAPPING 1. MBE = a KID and a NAPPING 2. NY Kidnapping a. 1st Degree: i. Abduction; AND ii. Ransom, OR restraint with intent to inflict serious physical injury OR victim dies nd b. 2 Degree: i. ALL OTHER ABDUCTIONS c. Any degree of kidnapping qualifies for felony murder ix. RAPE 1. The slightest penetration without consent x. STATUTORY RAPE 1. Strict Liability consent OR mistake of fact are NOT defenses xi. CRIMES AGAINST NATURE 1. Generally NOT tested xii. LARCENY 1. Elements a. Taking unlawfully; AND b. Asportation (the slightest carrying away); AND c. Without consent; AND d. With the intent to permanently deprive the owner of possession 2. taking property which you believe is yours is NOT a larceny 3. taking = possession, NOT title 4. taking from a persons presence (liberally construed) xiii. EMBEZZLEMENT 1. Embezzlement requires at least lawful possession, THEN some form of illegal conversion 2. Generally done by a Ttee of a Trust 3. No need to benefit themselves 4. possession acquired BUT NOT title xiv. FALSE PRETENSES 1. Conveyance of title 2. Representing to the title holder a past or present fact which makes them transfer title

Page 8 of 337

BAR/BRI Bar Review, Summer 2007 3. ** FALSE PROMISE to do a future act is NOT Acquisition by false pretense ** xv. ROBBERY 1. Larceny + Assault a. Assault = small amount of violence OR putting a person in fear of imminent violence i. Fear must be a present fear, A FUTURE FEAR IS NOT AN ASSAULT/ROBBERY, rather an extortion (future harm) 2. NY Robbery a. 1st Degree: i. Forcibly steals property; AND ii. Causes SERIOUS physical injury to another; OR iii. Displays a firearm b. 2nd Degree: i. forcibly stealing property; AND ii. AGGRAVTING FACTOR 1. aided by another 2. causes physical injury (not serious) 3. displays a firearm rd c. 3 Degree: i. forcibly steal property ii. NO physical injury iii. NO firearms xvi. EXTORTION 1. Blackmail 2. Same as robbery BUT need NOT take from a person or their presence AND the harm is in the future NOT the present/past 3. Either you do _______, or I WILL ______. xvii. BURGLARY 1. Offenses against the habitation 2. Elements: a. Breaking i. Actual OR Constructive ii. Actual breaking can occur once already inside iii. NO ACTUAL when door/ window open iv. Constructive by threat or fraud b. Entering a DWELLING HOUSE OF ANOTHER i. Any part of Ds body crosses intro persons house NOT their barn c. AT NIGHT i. NOT while the sun is setting d. With intent to commit a felony within i. Intent at time of entry ii. Intent NOT created AFTER entry and D is inside 3. NY Burglary

Page 9 of 337

BAR/BRI Bar Review, Summer 2007 a. 1st Degree: i. MUST be a dwelling; AND ii. burglar armed OR injury to a non-participant b. 2nd Degree: i. dwelling house; OR ii. injury to a non-participant; OR iii. burglar armed rd c. 3 Degree: i. breaking OR entering OR remaining inside ii. any structure iii. any time of day iv. with intent to commit ANY crime inside xviii. ARSON 1. Malicious burning of the dwelling house of another 2. NOT explosions 3. NOT smoke damage 4. NOT water damage 5. Material wasting of fiber by burning from fire a. Lighting carpet on fire IS NOT arson, doesnt touch the dwelling (the walls) 2. Criminal Procedure a. The Exclusionary Rule i. Remedy of American Constitutional Law ii. A person who is a victim of an illegal search or a coerced confession can have the same excluded from a criminal prosecution iii. Limitations on Exclusion 1. Does NOT apply to GJ proceedings a. Thus, a W can be compelled to testify based on illegally seized evidence 2. Does NOT apply to civil proceedings 3. ONLY APPLIES IF the search violates: a. a federal statute; OR b. the federal constitution 4. Does NOT apply in parole revocation proceedings 5. Does NOT apply when a good faith defense exists - 3 scenarios: a. No exclusion when good faith reliance on a judicial opinion which is later overturned by another judicial opinion b. No exclusion when good faith reliance on a statute which is later declared unconstitutional c. No exclusion in good faith reliance on a defective Search Warrant i. THERE IS NO GOOD FAITH EXCEPTION TO THE WARRANT REQUIREMENT IN NY 6. Does NOT apply to the use of excluded evidence in trial if used for purposes of impeachment of the D who testifies in a criminal trial

Page 10 of 337

BAR/BRI Bar Review, Summer 2007 a. Only Defendants trial testimony NOT other Ws 7. Does NOT apply to the failure to knock and announce prior to the execution of a search warrant a. As long as the warrant in all other respects is validly executed iv. Extension of Exclusionary Rule The Fruit of the Poisonous Tree Doctrine 1. All evidence which is obtained in exploitation of the initial illegality a. Exceptions to the Fruit of the Poisonous Tree Breaking the Chain 3 instances: i. Independent Source ii. Inevitable Discovery iii. Intervening Acts of Ds free will 1. Ex. - D after being legally arrested and released, hires counsel, goes to bed, wakes up the next day and volitionally goes to the police confesses b. GENERAL EXCEPTION If the original illegality was a Miranda Violation, any evidence attained as a result of the statement which was not Mirandized IS NOT Excludable. b. Law of Arrest i. Generally, arrest warrants are not required to arrest a D in a public place ii. BUT non emergency arrest of an individual in his own home requires an arrest warrant 1. NY Arrest Warrant AND Search Warrant (Payton) iii. Station House Detention 1. Cops need PC to arrest D to compel him to come to the police station for fingerprinting or identification. iv. NY Police Authority to Arrest, the DeBour Factors 1. 4 Levels (lowest to greatest level of intrusion) a. Request for Information i. Ofcr may approach ii. Cannot be on mere whim or caprice iii. D can runaway, D can fail to answer 1. Neither can Escalate or establish PC b. Common Law Right of Inquiry (CLR to I) i. Founded Suspicion that Criminal Activity is Afoot ii. Questions may be asked iii. Detention must be short iv. ANY explanation by D requires his release c. Reasonable Suspicion i. Stop and Frisk allowed ii. Terry Search iii. Ofcr ha reasonable inference that crime may be committed in the future d. Probable Cause i. Crime has been or is being committed ii. Allows Full Arrest

Page 11 of 337

BAR/BRI Bar Review, Summer 2007

c. Law of Search and Seizure i. Overview Evaluation Process 1. Does D have a 4th Amendment Right at all? a. Was the search initiated by Government Conduct? b. Did the D have a Reasonable Expectation of Privacy i. Objective AND Subjective 2. If D did have a 4th Amendment Right (above) THEN a. Did Police have a Warrant i. YES Test Warrant: 1. Validly Executed OR 2. Good Faith Exception to its Invalidity ii. NO Did the Search fall into any of the exception to the Warrant Requirement? ii. Government Conduct 1. Publicly Paid Police a. Always = Government Conduct b. On duty OR Off Duty 2. Any party acting at the direction of the police Agency Theory 3. Privately Paid Police a. Generally = NO Govt Conduct b. Exception if the paid private officer has been deputized with the power to arrest THEN ANY SEARCH is deemed to be government conduct iii. Reasonable Expectation of Privacy - Did the Defendant exhibit a subjective expectation of privacy which under the circumstances would be considered Objectively Reasonable 1. No reasonable expectation of privacy IF the Defendant had no standing to object to the illegality of the search a. Automatic Standing 4 situations i. Ds own premises searched ii. D lives in the premises searched iii. Overnight Guests 1. HOWEVER a D who is a drug dealer, briefly entering a premises to cut up drugs DOES NOT have standing to object to a search don on the premises iv. NY any statute charging criminal possession of a weapon automatically confers standing on the Defendant to contest the illegality of the search (69 N.Y.2d 514) b. Sometimes Standing i. Legitimately present when the search took place 1. Passengers in cars DO NOT have standing to object to the search if the property seized DOES NOT belong to them

Page 12 of 337

BAR/BRI Bar Review, Summer 2007 ii. The D owns the property subject to seizure 2. A Defendant has no standing to contest a search of property to which he has no reasonable expectation of privacy Plain View Doctrine a. Seizure of the following implicates no right of Ds privacy i. Sound of voice ii. Handwriting exemplar iii. Paint on the outside of a car iv. Bank account records v. Monitoring location of car which id held on a public street or in a driveway vi. Open fields 1. NOT IN NY vii. Anything seen whilst flying over public air space viii. Odor emanating from luggage / auto ix. Garbage set on the curb for collection iv. The Warrant and Its Requirements 1. Did the Police have a Search Warrant? a. YES i. Was warrant based on PC? 1. Use of hearsay allowed to establish PC a. Police need not rely on personal observation 2. Thus use of informants allowed IF: a. MBE The affidavit indicates the informant is reliable and credible under the totality of the circumstances b. NY The affidavit MUST: i. Sufficiently detail underlying facts and circumstances to show how the informant got the information, AND ii. Support the reliability and credibility of the informant as shown by their past history and success ii. Did Warrant fulfill other Warrant requirements? 1. A warrant must describe with sufficient particularity: a. Place to be searched, AND b. Things to be seized 2. Warrant must be issued by a neutral and detached magistrate a. Neutral from law enforcement b. NOT any ATTY GENERAL they are the principal law enforcement agency

Page 13 of 337

BAR/BRI Bar Review, Summer 2007 c. NOT a judge paid for every warrant signed d. NOT judge who accompanies officers e. A Court clerk CAN issue a warrant for violation of city ordinances b. NO i. Then PC Must fall into 1 of 6 Exceptions: 1. Search Incident to a Lawful Arrest 2. Plain View 3. Hot Pursuit / Evanescent Evidence / Exigent Circumstances 4. Consent 5. Automobile Exception 6. Plain Touch / RS / Stop & Frisk ii. Search Incident to a Lawful Arrest 1. Arrest must be Lawful 2. Search must be Contemporaneous with time and place of arrest 3. Search only as far as the Person & Grabbable Area 4. Belton Doctrine Where a person is arrested whilst in a motor vehicle, THE WHOLE CAR is deemed the grabbable area EXCEPT for the trunk iii. Automobile Exception 1. If PC to Arrest exists, the ofcr can search ANYTHING IN THE ENTIRE CAR that can reasonable contain the item for which the arrest is being effected, including the trunk 2. PC must arise before the search 3. PC can arise after the car is pulled over 4. PC CANNOT arise after search (see Belton, supra) iv. Plain View 1. The ofcr MUST be legitimately present when they do the viewing 2. If legitimately present, and contraband, instrumentality or deodant is subject to seizure and an arrest v. Consent 1. Consent must be knowing, voluntary and intelligent 2. SCOPE of consent = SCOPE of search 3. Ofcr who says we have a warrant, and warrant is fake, negates consent (Bumper v. NC)

Page 14 of 337

BAR/BRI Bar Review, Summer 2007 4. Ofcr need not warn you that you can refuse to consent 5. 3rd Party Consent Where 2 or more person haven an equal right to use the property, either party can consent to the search, BUT if one person says no, then no search allowed vi. Stop & Frisk, RS, Plain Touch 1. For the safety of the officer 2. NY When ofcr observed 2 teenage boys pushing computer down a street in a baby carriage at midnight = RS 3. Guns or weapons found as a result of this type of search is ALWAYS admissible 4. Search of evidence of other crimes, NOT weapons depends on whether from an outside pat-down (its plain touch) whether it would have been reasonable to infer that such was a weapon or contraband if so, admissible vii. Hot Pursuit / Evanescent Evidence 1. Hot Pursuit = pursuit of a fleeing felon, must be REAL HOT (w/in 15 min of D) 2. Search upon hot pursuit allows search of the whole house, not just where D found, such search NEED NOT be contemporaneous 3. Evanescent evidence = evidence which is subject to immediate destruction v. Wiretapping / Eavesdropping 1. Requires a Warrant 2. Exception The Unreliable Ear a. Every person assumes the risk that anyone you speak to is recording OR would consent to such recording b. THUS any phone convo may be recorded by one person without the others consent d. Miranda Violations and the 5th Amendment i. Custody + Interrogation = Miranda Required 1. custody = at time of interrogation the D is not free to leave a. probation interview AND traffic stops ARE NOT deemed custodial 2. interrogation = any conduct which is likely to elicit an incriminating response a. THUS spontaneous statements do not require Miranda (D blurts something out) ii. Waiver 1. Must be a knowing intelligent and voluntary waiver (Zerbst)

Page 15 of 337

BAR/BRI Bar Review, Summer 2007 2. If the D shrugs or does not respond, there is NO valid waiver of Miranda iii. Right to Counsel within the 5th Amendment 1. Once a D asserted a right to terminate interrogation and requests an attorney, re-initiation by police of the interrogation without an attorney violates the Ds 5th Amendment right to an attorney a. This arises only in ONE INSTANCE: i. WHEN upon hearing Miranda the D says I WANT AN ATTY this has been construed to mean that a D needs an attorney for any and every custodial process (for ALL police interrogatories) 1. This is NOT offense specific (cf. 6th amendment right to counsel) 2. Under the 6th Amendment when a party requests an attorney it is only for that specific offense and related crimes 2. HOWEVER if D solely requests to remain silent or stop the interrogation AND DOES NOT request an attorney the ofcrs may resume interrogation after a reasonable period of time 3. NY and the Right to Counsel a. NY afford protections the indelible right to counsel attaches to the Defendant in certain situations: i. When the D is in custody and the ofcrs are engaging in activity overwhelming to a layperson and D requests an attorney ii. At arraignment iii. Upon the filing of an accusatory instrument iv. ANY significant judicial activity (this includes warrant execution) b. WAIVER of the NY right to counsel post-attachment who is actually known to be represented by an attorney may only occur by D IN THE PRESENCE OF THEIR ATTY e. Pre-Trial Identification i. Meant to insure that the W is really remembering the D from the crime and NOT from pre-trial proceedings ii. Remedy is to exclude the in-court identification of D 1. Remedy is not automatic and con be overcome by the independent source doctrine a. The W saw the D for a long period of time during the crime b. The W has a past history with the Defendant iii. 2 methods within which to attack the Pre-Trial ID: 1. D was denied his right to counsel during the identification a. Only for post-charge lineups or show-ups as the right to counsel has already attached b. No counsel necessary to be present for photo ID

Page 16 of 337

BAR/BRI Bar Review, Summer 2007 2. Ds right to DPC was denied a. Pre-trial, pre-charge b. Only excludable if the lineup was unduly suggestive f. Bail i. Preventative Detention is Constitutional, thus bail can be denied ii. Bail Issues are Immediately Appealable g. Grand Jury i. Not for MBE ii. NY Requirements 1. 16 to 23 persons a. 12 must agree to an indictment 2. Right to Counsel a. W who has been granted transactional immunity may consult with their atty BUT not in the GJ room b. W who has waived immunity may be accompanied by their atty into the GJ room 3. GJ indictment must be based on legally sufficient evidence a. This is evidence which would be admissible at trial 4. Any W that testifies before a GJ receives transactional immunity a. Transactional Immunity Immune from any transaction which he has testified to in response to a question asked by the GJ 5. If a D gives notice and waives immunity he MUST be allowed to testify in front of the GJ h. Prosecutorial Duty to Disclose Evidence i. Not for MBE ii. NY Requirements (CPL 240.20) 1. The D is entitled o discover and inspect: a. His own stmt or that of a CO-D, including GJ testimony b. Tapes of bugged conversations c. Relevant photos / drawings d. Reports of physical, mental or scientific tests e. Any other property obtained from the D f. The approximate date, time and place of the offense g. Anything that the State of Federal Constitution requires to be disclosed prior to trial (Ex. Brady Material) h. All specific instances of Ds conduct that DA intends to use at trial to impeach the Defendants credibility 2. Between the time the jury is sworn and the DA opens the DA must provide the D with a list of all Ws, any of their prior stmts and their criminal records known to the DA 3. D must notify prosecutor within 30 days of NG plea of imposition of an insanity defense

Page 17 of 337

BAR/BRI Bar Review, Summer 2007 4. Within 20 days after arraignment, the DA may request alibi notice a. Upon request the D has 8 days to notify the DA 5. Damon Material a. Before Ds case-in-chief, D must make available any prior stmts of Ds Ws AND any reports or scientific experiments the D intends to introduce at trial 6. REMEDY = REVERSAL ONLY IF the D shows that failure to disclose materially prejudiced the Ds case and that such failure impacted the result of the Ds trial i. Right to a Jury Trial 7th Amendment i. Any time a D is tried and the maximum sentence EXCEEDS 6 months, the D has a constitutional right to a jury trial 1. If the sum of sentences for criminal contempt is > 6 months then the contemnor has a right to a jury trial ii. # of Jurors AND Unanimity of Jurors 1. minimum # = 6 a. If 6, must be unanimous 2. no federal constitutional protected right to a unanimous 12 person jury trial a. NY REQUIRES unanimity amongst all 12 jurors iii. Cross-Sectional Requirements 1. The jury pool must reflect a fair cross-section of the community from the county in which the D is charged with the crime 2. Preemptory Challenges & Batson a. It is unconstitutional for a DA or a D to exercise a preemptory challenge to exclude a prospective juror on account of their race or gender j. Ineffective Assistance of Counsel i. NY essay only ii. Lay out the standards and UNLESS a D would otherwise be found not guilty of retrial you should probably deny the relief iii. D must show: 1. deficient performance by counsel; AND 2. BUT FOR such deficiency the result would be different a. NY is slightly more liberal than the USSC in granting claims for ineffective assistance of counsel k. Guilty Pleas & Plea Bargaining i. (includes waiver of right to a jury trial) ii. USSC does not like to disturb guilty pleas after sentence UNLESS: 1. Plea was involuntary (Ex. no colloquy, see infra) 2. Court lacked jurisdiction 3. Ineffective Assistance of Counsel 4. ** Failure of DA to keep agreed upon plea bargain **

Page 18 of 337

BAR/BRI Bar Review, Summer 2007 iii. USSC the K theory of plea bargaining 1. Terms ought to be revealed and the parties must abide by those terms iv. Colloquy is required to determine the voluntariness of the Ds entry into the guilty plea this is questions by the judge to the D stating in pertinent part: 1. what the D has been charged with 2. the maximum authorized sentence and any mandatory minimum; AND 3. The D has the right to plead not guilty and have a trial 4. ALL OF THIS MUST BE DONE ON THE RECORD v. Defects result in a withdrawn guilty plea, where the D must then plea again l. The Death Penalty and the 8th Amendment i. Any death penalty statute that does not give the D a chance to present mitigating evidence is unconstitutional ii. There can be no automatic category for imposition of the death penalty 1. Ex. you kill a cop, you get the chair 2. HOWEVER, such may be an aggravating factor iii. The state may not by statute limit the mitigating factors ALL relevant mitigating evidence must be admissible or the statute is unconstitutional iv. ONLY A JURY AND NOT A JUDGE may determine the aggravating factors that justify imposition of the death penalty v. NY THERE IS NO DEATH PENALTY m. The Double Jeopardy Clause i. Not in civil trials ii. Jeopardy attached when 1. Jury trial the 1st juror is sworn 2. Judge Trial the 1st W is sworn iii. After jeopardy attaches NO retrial for the same offense is allowed UNLESS: 1. hung jury unable to agree on a verdict 2. mistrial for manifest necessity (the D gets hospitalized mid trial) 3. Retrial after a successful appeal 4. ** Breach of an agreed upon plea bargain by the D ** iv. SO, What is the same offense? 1. MBE the Blockburger Test a. 2 crimes ARE NOT the same offense IF each crime requires proof of an additional element that the other does not i. Ex. Fall asleep at the wheel, hit & run and manslaughter ARE NOT the same offense 2. NY ALL crimes which arise out of the same criminal transaction or series of events MUST be tried together v. Being put in jeopardy for robbery (greater offense) bars retrial for larceny (lesser offense) and vice versa 1. Exception a D is tried for battery and victim dies, the D may then again be tried for murder vi. The Rule of Separate Sovereigns 1. NO Double Jeopardy Violations

Page 19 of 337

BAR/BRI Bar Review, Summer 2007 2. Retrial for the same offense by a different sovereign is valid a. Fed State = Valid b. State Fed = Valid c. State 1 State 2 = Valid

n. Right to Compelled Self-Incrimination i. Applies to ANY case (civil or criminal) and ANY party (W or D) ii. Must be asserted the 1st time a person is question or it is deemed waived 1. Party CANNOT then after claim privilege such prior admission has been made iii. This privilege DOES NOT bar the government from using our bodies (hair sample / DNA) BUT DOES bar government from compelling our testimony (lie detector tests OR custodial interrogation iv. It is Unconstitutional for a DA to make negative comments to jury on: 1. Ds failure to testify; OR 2. Ds remaining silent upon hearing Miranda v. Privilege eliminated in 3 ways: 1. Grant of Immunity a. MBE Use and Derivative Use Immunity i. DA can thereafter use evidence proffered by such immunized party if DA can prove that such evidence was acquired PRIOR to the granting of immunity b. NY transactional Immunity (broader) 2. No Possibility of Incrimination the SOL has run 3. Waiver a. By taking the W stand, a criminal D waives all his 5th Amendment privilege as to ALL LEGITIMATE subjects of cross (whatever was w/in the scope of direct) 3. New York Practice a. Introduction i. Most Commonly Tested Areas 1. SOL 2. Service of Process 3. PJ 4. Mat Law Jsdctn 5. MTD / MSJ 6. Contribution / Impleader 7. Provisional Remedies 8. Arbitration b. Subject Matter Jurisdiction i. Competence 1. A court must have SMJ to hear controversy 2. Lack of SMJ may be raised as a defense AT ANY TIME

Page 20 of 337

BAR/BRI Bar Review, Summer 2007 a. Even sua sponte by court 3. The court of general and original SMJ is a trial court 4. The only court in NY with general jsdctn (the power to hear it all) is the Supreme Court a. 1 Supreme Court in each of the 62 counties b. If 1 Sup Ct has SMJ then all the Sup Cts do (this does not mean venue is proper on all 62 counties) c. Supreme Court is the only court with FULL equity jurisdiction d. Monetary damage amount is unlimited e. Lack of residency of parties and lack of relationship the claim may have to the State does NOT bar the court of jscdtn i. These issues are properly raised in a motion to dismiss based on Forum Non Conveniens the absence of a substantial nexus of the claim to NY 1. FNC must be done by motion NOT sua sponte ii. Exceptions to the Supreme Courts General Jurisdiction 1. Where federal law confers exclusive jsdctn 2. Claims for money damages in tort or contract against NY a. Court of Claims i. NY is the ONLY D in the Ct of Claims ii. P sues NYS Trooper and NYS 2 separate c/a reqd : 1. P v. Trooper Sup Ct 2. P v. NYS Ct of Claims iii. ANY SUBDIVISIONS of NYS are NOT to be sued in the Court of Claims Counties, Cities, Villages, and Towns must be sued in the Sup Ct iii. Supreme Court has Exclusive Jurisdiction Over: 1. Matrimonial Actions (Divorce, Separation, Annulment, Declaratory Judgment of a Marriage) 2. Article 78 Proceedings a. Writ of Certiorari b. Writ of Prohibition c. Writ if Mandamus to Compel d. Writ of Mandamus to Review 3. Declaratory Judgment Actions a. Judgment of the rights and obligations of the parties to an actual controversy before one of them engages in conduct that could cause liability (normally under K) iv. All other courts have monetary limitations on damages they can award this establishes SMJ 1. $25k County Courts and NYC Civil Court 2. $3k Small Claims Court c. Statute of Limitations i. Generally 1. SOL is and affirmative defense to be raised in an answer or a MTD

Page 21 of 337

BAR/BRI Bar Review, Summer 2007 2. Normally, SOL accrues (begins to run) when the injury occurs a. Personal Injury 3 yrs from date of accident b. Breach of K 6 years from date of breach c. Some rely on the Ps date of discovery, see infra 3. Court of Appeals has recently held that if an infant is injured in utero, the child has a c/a ONLY IF: a. Child born alive; AND b. SOL accrues as of date of birth 4. To satisfy SOL, c/a must be commenced within the applicable SOL period a. Commencement by filing a copy of the S&C or S&N to the County Clerk b. Town & Village Court actions are commenced by serving D 5. The SOL accrual excludes the day of the injury 6. If the last day to commence falls on a Saturday, Sunday or Public Holiday, such date is extended to the following business day ii. Medical Malpractice 1. 2 years for dentists, doctors, podiatrists, nurses, and hospitals a. This includes c/a for respondeat superior against hospital due to acts of doctor 2. C/A must be for MED MAL - NOT personal injury, negligent hiring 3. 2 Exceptions to the 2 year SOL period: a. Continuous Treatment i. If AFTER the initial medmal, the DR continues treatment FOR THE SAME CONDITION, such extends the SOL until the treatment ends ii. Several Misdiagnoses for the same ailment IS NOT continuous treatment b. Foreign Object Rule i. If the Doctor was responsible for introducing a foreign object into Ps body the SOL is the greater of: 1. 2 years from surgery; OR 2. 1 year from discovery or when P should have, by the use of reasonable diligence, discovered the foreign object ii. Object must be something doctor DID NOT INTEND TO LEAVE BEHIND 1. Thus, NOT a pacemaker, NOT a chemical substance iii. Failure of doctor to remove all the glass which shattered in your body is NOT a foreign object as the doctor did not initially place such in your skin however his failure to remove is med mal iii. Other Professional Malpractice 1. Applies to Non-Medical Professionals

Page 22 of 337

BAR/BRI Bar Review, Summer 2007 a. A professional is an employee who abides by a standard of ethics, is certified, gets extensive education in their field b. Attorney / Architect / Engineer / Accountant c. NOT an Insurance Agent 2. SOL = 3 years - Instead of 6 years for Breach of K 3. Accrual begins on the day the job is finished, delivery of work product to client a. Tax returns filed b. Certificate of Occupancy handed over to owner 4. All Professionals subject to doctrine of continuous representation similar to doctrine of continuous treatment 5. A c/a for personal injury commenced when a building falls in 2001 for a building completed in 1990 is able to be commenced in 2004. a. Personal Injury accrues at date of injury b. NOT date of completion That would be malpractice c. HOWEVER if a building has been erected for a period greater than 10 years notice, discovery and burdens are for the P iv. Products Liability 1. Strict Products Liability has a 3 year SOL 2. Accrual as of date of injury 3. Example A defective widget inures P, P has 3 different c/a, with three different SOLs and accrual periods : a. C/A #1 Negligence 3 yrs, Accrual = date of injury b. C/A #2 Products Liability 3 yrs, Accrual = date of injury c. C/A #3 Brach of Warranty 4 yrs, Accrual = date of delivery 4. SOL for Indemnity & Contribution on a products liability action is 6 years and runs from the date of actual payment by the indemnitor 5. TOXIC Substance Cases a. Any inherently harmful toxin that has latent or slowdeveloping effects has a different SOL period b. Types of substances include HIV, DES, insecticide, asbestos c. SOL is 3 yrs which accrues from the date of discovery or when the party should have discovered by the use of reasonable diligence v. Tolling Provisions 1. Absence a. If D is not in NY at time of accrual OR leaves for a period for a continuous period greater than 4 months THEN the whole period of absence is tolled b. THE EXCEPTION SWALLOWS THE RULE i. If D can be served outside the state (P has a basis for PJ over the D long-arm) then toll does not apply 2. Insanity / Infancy a. Infants or Insane Ps MAY sue regardless of their incapacity BUT they also get the benefit if a toll

Page 23 of 337

BAR/BRI Bar Review, Summer 2007 b. IF at the time of accrual P is an infant or insane the SOL is tolled until the infant is 18 or the insane person becomes sane i. Insanity need not be establish by appointment of committee ii. Insanity for purposes of this sections is ANY mental disorder that makes P unable to function in society c. AFTER THE DISABILITY ENDS i. Original SOL 3 years or more - P gets the greater of: 1. 3 years from the end of the disability; OR 2. the statutory period of accrual a. Brach of K when P = 17, would accrue until P was 23, NOT 21 ii. Original SOL less then 3 years When the disability ends P gets the statutory SOL 10 year rule in 2 situations a. Med Mal & Infants MUST commence w/in 10 yrs of accrual b. ANY c/a by the insane is time barred 10 yrs from accrual Death Toll a. Two different c/a may be commenced upon the death of P: i. Survival Claim pain & suffering (belongs to deceased) ii. Wrongful Death belongs to deceaseds distributees in intestacy b. Each of the two claims are governed by separate SOLs: i. WD SOL period is 2 yrs which accrues from the date of death BUT - AT THE TIME OF DEATH the PI c/a (pain & suffering) must not be expired ii. Survival Claim THIS IS WHERE YOU GET A TOLL 1. IF the personal injury c/a is still valid at the time of death, the Estate representative get the greater of: a. Time remaining in the SOL (3 year period); OR b. 1 year after death iii. If DEFENDANT dies within the SOL accrual period the SOL gets 18 months added on to the end of it. 1. 3 yr SOL becomes a 4 yr SOL NEVER combine separate tolls calculate both tolls separately and take the greater of the two tolls Relation Back CPLR 205 a. In NY if an action is timely commenced, thereafter dismissed, AND the SOL then expires or has < 6 mos. left the P can recommence within 6 mos. of dismissal and the commencement is deemed related back to the original commencement date for SOL purposes

3.

4.

5. 6.

Page 24 of 337

BAR/BRI Bar Review, Summer 2007 b. This rule DOES NOT apply if dismissal of the original c/a was grounded upon: i. Voluntary discontinuance by P ii. Dismissal on the Merits iii. Lack of PJ over D; OR iv. Failure/ Neglect to Prosecute D c. Dismissal of c/a#1 in fed ct for lack of diversity WOULD GET relation back if c/a#2 thereafter brought in NY because diversity is SMJ not PJ d. 6 mos. rule does not apply to dismissal of c/a #1 if such was commenced in a different state vi. The Borrowing Statute 1. If the c/a arises outside of NY and the other state has a different SOL which do you choose? a. If P was a non-resident at the time of accrual i. IF SOL out-of state shorter than NY, out-of state SOL chosen ii. IF SOL out-of-state is longer than NY, NY SOL chosen b. If P was a resident at the time of accrual NY will apply the NY SOL 2. This prevents forum shopping d. Personal Jurisdiction i. Overview 1. To render a valid judgment once which can be enforced AND is entitled to Full Faith & Credit 3 Jurisdictional Elements MUST be satisfied: a. Proper Commencement b. Proper Service c. Proper jurisdictional basis over the person or property involved ii. Commencement Procedures 1. Commencement MUST be done within the SOL, if so, then the action is timely 2. Justice, Town & Village Courts Commencement by Service 3. All other courts Commencement by Filing a. Filing Must Include S&C or S&N, & $ to buy an index # b. Filing MUST be done with the COUNTY CLERK not the supreme court clerk c. THEN P must serve all Ds CPLR 306-b i. From the date of filing P has 120 days to serve D ii. If P has trouble serving D, court can extend 120 day period upon a showing of good cause or in the int. of justice 1. Ex-Parte Motion, requires RJI iii. Form of Process 1. Summons & Complaint

Page 25 of 337

BAR/BRI Bar Review, Summer 2007 a. Must specify the transaction or occurrence b. Must have name of attorney c. Must state damages / relief requested i. In PI, WD, or Med Mal c/a no monetary amount should be stated 2. Summons & Notice a. Notice is 1 page containing: i. A brief statement of the claim, ii. The relief requested; AND iii. Amount of damages 1. Except in a Med Mal c/a 3. Consequence of filing a naked summons no complaint defect is jurisdictional and will result in dismissal. iv. Methods of Service 1. Generally a. Process may be served by: i. Any party who is 18 years of age ii. NOT a party to the action 1. Party DOES NOT include wife of P OR Ps atty b. Process cannot servable on: i. Sunday ii. Saturday, if P knows D celebrates Shabbat iii. Service ALLOWED on a Holiday if its not on Sunday c. If service of process does not strictly comply with the enumerated methods, such defect is jurisdictional and can lead to dismissal d. Service must come within 120 days of the filing 2. Traditional Methods a. Personal Service i. Service is deemed complete upon personal delivery, tender of S&C or S&N directly to D 1. NOT his son, daughter, spouse (re-delivery to actual party is NOT enough) 2. 20 Day response time if service in state 3. 30 Day response time if personally served outside NY b. Deliver and Mail i. Process server may DELIVER initiatory papers to Ds actual residence OR actual place of business; AND ii. Process Server must also MAIL initiatory papers to Ds actual place of business OR Ds last known residence by regular mail 1. Both must be done w/in 20 days of each other 2. Delivery maybe made to a person of suitable age and discretion who is NOT 18

Page 26 of 337

BAR/BRI Bar Review, Summer 2007 3. Delivery to an apt lobby (doorman) is allowed if server not allowed to apt iii. Service is deemed complete 10 days after the affidavit of service is filed STARTS ANSWERING TIME Nail and Mail i. Process server may NAIL / AFFIX initiatory papers to Ds actual residence OR actual place of business; AND ii. Process Server must also MAIL initiatory papers to Ds actual place of business OR Ds last known residence by regular mail 1. Both must be done w/in 20 days of each other 2. Delivery maybe made to a person of suitable age and discretion who is NOT 18 3. Delivery to an apt lobby (doorman) is allowed if server not allowed to apt iii. Service is deemed complete 10 days after the affidavit of service is filed STARTS ANSWERING TIME iv. ** Unlike Deliver & Mail this method of service requires an affidavit which specifies the process servers due diligence ** Requiring a showing of: 1. Multiple attempts to serve by 308 (1) or 308(2) 2. Different days of the week 3. Different times of day Court-Ordered Service i. When all other methods of service upon D are sufficiently impracticable, the court by ex-parte motion may create a suitable alternative to statutory required service (i.e., email) Agent Appointed i. A written contract may expressly specify an agent upon whom service may be made 1. CT Corp Infants i. If infant is under 14, process must be served on: 1. Parent 2. Guardian 3. Party in loco parentis 4. Spouse of infant who is above 18 ii. If infant is 14 or over such service must be made as above AND the infant must be served (2 copies) Retards i. If court has appointed a guardian then both retard and guardian must be served (2 copies) ii. If the court has NOT appointed a guardian then only the retard need be served Service Outside NY

c.

d.

e.

f.

g.

h.

Page 27 of 337

BAR/BRI Bar Review, Summer 2007 i. Method 1. Service for long arm purposes is done the same as an in-state method ii. Party the following parties may serve process out-ofstate: 1. Any party allowed to serve process in NY 2. Any party allowed to serve process in the state of service 3. Any licensed attorney in the state of service 3. Corporations a. Traditional i. Corporate Party carries the corporation around on their back with them ii. Corporate party may be served anywhere in US iii. As long as BASIS (d/b test, LJA) exists any of the following may be personally served: 1. Officer 2. Director 3. Managing Agent w/ general supervising auth. 4. Designated Agent 5. Cashier / Assistant Cashier b. Use of the Secretary of State i. Domestic Corporation OR Licensed Foreign Corp 1. P may personally deliver 2 copies to Secretary of State who then forwards 1 copy to the Corp. ii. Unlicensed Foreign Corporation 1. P may deliver 1 copy to the Secretary of State PLUS mail, by certified mail - return receipt, 1 copy to the corporation c. Other methods [308 (2), 308 (4)] may not be used on a corp. 4. Service by 1st Class Mail + Acknowledgment a. P may send to D initiatory papers, an acknowledgment, and self-addressed stamped envelope b. D may rip up and throw in the garbage i. Thereafter if D is served by another method, D is responsible for the costs of service c. D may send acknowledgment back to P w/in 30 days of receipt i. Service is complete upon mailing the acknwldgmt to P ii. Starting from mailing D has 20 days to answer / MTD d. Cannot be used on Infants or Retards e. Can be used outside NY f. Return of acknwldgmt is NOT a concession of jurisdiction v. Basis of Jurisdiction 1. Personal Jurisdiction a. Physical Presence i. Tag Jurisdiction

Page 28 of 337

BAR/BRI Bar Review, Summer 2007 ii. Can be in NY for 3 seconds iii. Just not by fraudulent acts of P Yankee Ticket Giveaway iv. FNC may be grounds for dismissal if substantial nexus does not exist b. Doing Business in NY i. TEST: At the time the c/a was commenced (not accrued) are the corporate , agents, employees in NY, engaging in commercial activity on a systematic, regular and ongoing basis 1. FACTOR: Does Company Have Office in NY? 2. Mere advertising is NOT doing business in NY 3. Mere sale in NY is NOT doing business ii. Domestic Corp subject to personal jurisdiction in NY by their mere doing business iii. SO IS an unlicensed foreign corporation iv. If party is found to be doing business in NY they are susceptible to ALL claims, related or unrelated to the business practices w/in NY c. Domicile NOT Residency i. Person intends to remain indefinitely if so, person can be served ANYWHERE in the US regardless of where the claim arose ii. Basis always exists to sue a NY D in NY even for an act which may not have arisen in NY d. Long-Arm Jurisdiction (LAJ) i. Jurisdiction in these instances is LIMITED to the actual long-arm basis (if a D signed a K in NY, he cannot be sued for a personal injury action in NY) 1. the claim-injury must arise in NY ii. 5 forms of LAJ 1. Ps claim arises from a transaction of business in NY a. Breach of K c/a where substantial negotiations occurred in NY 2. D agrees with P outside NY to supply goods or services in NY a. Agreement must be substantial economically significant b. NOT a single sale 3. D commits a tortuous act w/in NY a. NOT defamation 4. D commits tortuous act outside NY and the injury occurs inside NY AND: a. D regularly solicits or engages in a persistent course of conduct in NY

Page 29 of 337

BAR/BRI Bar Review, Summer 2007 i. MUST purposefully engage in business b. D derives substantial revenue from goods/services in NY c. D derives substantial revenue from interstate commerce AND reasonably expects his conduct to have consequences in NY i. Advertising may create the reasonable expectation ii. Interstate commerce IS NOT a NJ Dr. who treats a NY patient 5. Ps claim arises from use, possession or ownership of real prop in NY a. P falls on Ds property and D lives in China = LAJ e. Non-Resident Motorist Statute i. Confers PJ over an the driver AND owner of the nonresident Ds auto for an accident which occurred in NY ii. Service 1 copy personally served to Secy of St; AND 1 copy mailed by certified mail to out-of-state D iii. While any DRIVER who committed accident in NY would be subject to LAJ, supra, the OWNER who lent driver the car would not be subject to jurisdiction as they were not in NY at the time of the accident 1. This statute is still in effect to get vicarious liability over the OWNER of the non-resident vehicle who lent out their car to a non-resident D in NY and was not driving f. Consent i. Forum selection clauses in Ks are enforceable UNLESS K is deemed unconscionable, fraudulent or overreaching vi. Jurisdiction in Matrimonial Actions 1. Jurisdiction over the Divorce MUST be in complaint otherwise complaint may be dismissed for failure to state a cause of action a. One party is a domiciliary of MY b. Both parties are NY residents at the time the action is commenced AND the grounds arose in NY (no durational residency requirement) c. One party is a NY resident for 2 years prior to the action d. One party is a NY resident for 1 year AND a Prior Link i. Prior Link may be one of the following: 1. Parties were once domiciled in NY 2. Marriage occurred in NY 3. Grounds occurred in NY

Page 30 of 337

BAR/BRI Bar Review, Summer 2007 2. Jurisdiction acquired over parties over a Monetary Support Action Maintenance/Alimony IF: a. NY was matrimonial domicile b. Abandonment occurred in NY c. Ds obligation occurred under an NY and the agreement is subject to NY jurisdiction (separation agreement) d. Monetary obligation arose b/c of NY law (PKPA) e. Venue i. Determination of the proper county in which to bring the action ii. Title or Possession of Real Prop the venue is where the property is located iii. All other actions: 1. Generally the proper county is the residence of the P at the time the c/a is commenced 2. If no party resides in NY then ANY county = proper venue iv. If the choice of venue is improper such is not a jurisdictional defect, the REMEDY is: 1. Demand to change venue a. D sends a demand to the county in which he seeks to have venue b. If P consents, the change is automatic 2. If demand contested or P does not respond, THEN D must make motion to change venue in the county in which D wishes to have venue a. Motion will be granted if P chose IMPROPER venue AND chose proper Venue v. ** Court may grant change venue based on convenience of material witnesses normally to the county where the incident occurred THIS is entirely discretionary ** f. Defendants Response i. Response to S&C 1. Overview a. Response to S&C in two ways: i. Answer ii. NTD 2. Answer & Other Pleadings a. Answer contains denials and affirmative defenses b. Affirmative defenses NOT raised in the answer are waived EXCEPT: i. SMJ ii. Failure to Join a Necessary Party iii. Failure to State a Cause of Action c. If D has separate causes of action against P, related or unrelated, D must file and serve a counterclaim

Page 31 of 337

BAR/BRI Bar Review, Summer 2007 d. If D has separate causes of action against other Ds, related or unrelated, D must file and serve a cross-claim e. Each party must serve a copy of all other pleading on all other parties who have appeared in the action 3. Service of Interlocutory Papers a. This includes the answer, counterclaim, etc. b. Servable via: i. Regular Mail ii. Personal Delivery iii. UPS / FedEx Overnight Carrier iv. Fax (must be followed up with mailing) c. Date of Mailing = Date of Service i. ** responses to any paper in which service is deemed complete by mailing gets 5 days attached to the response ** (1 day for UPS/FedEx) 4. Time Limits for Serving Answer a. If D served by personal delivery within the state or by acknwldgmt THEN response time = 20 days b. Under all other methods of service, response time = 30 days 5. Motion to Dismiss a. 8 Grounds D.O.W.N.F.A.L.L. i. Documentary Evidence ii. Ongoing litigation iii. Want of Capacity iv. Necessary party not joined v. Failure to state a c/a vi. Affirmative Defenses vii. Lack of PJ viii. Lack of SMJ b. Affirmative Defenses S.P.A.R.E.R.I.B.S. i. SOL ii. Payment iii. Arbitration & Award iv. Res Judicata v. Estoppel - Collateral vi. Release vii. Infancy viii. Bankruptcy Discharge ix. SOF c. Procedural Aspects i. Motion served B4 answer ii. Denial of MTD gives D 10 days from date of receipt of denial + notice of entry to serve an answer iii. Defenses may be raise in answer or MTD 1. Preserve PJ

Page 32 of 337

BAR/BRI Bar Review, Summer 2007 a. If not raised in MTD when made, PJ = waived b. If no MTD and not raised in answer, PJ waived AFTER time for leave to amend as of right, see infra, has expired c. If raised in answer - MSJ to dismiss for lack of PJ must be made w/in 60 days iv. ONLY ONE MTD may be made omnibus v. All defenses (except for the 3 which are unwaivable) are all deemed waived after Ds time for leave to amend as of right has expired ii. Response to S&N 1. Two forms: a. Demand for a Complaint (not an appearance) b. Notice of Appearance 2. Response times are the same as those required by S&C 3. P required to serve complaint 20 days after Ds service of demand 4. Assuming P then serves a timely complaint, D then has 20 days to serve answer or MTD on P 5. If P fails to serve answer such amounts as a default for neglect to prosecute and is only curable by: a. An affidavit of a meritorious claim; AND b. A reasonable excuse for delay i. Done by motion to vacate, and after court vacates default then P can serve complaint 6. Demand for a Complaint or Notice of Appearance do NOT waive PJ iii. Amendments to Pleadings 1. Each party is entitled to amend their pleadings ONCE as a matter of right a. P can amend 20 days after service of complaint b. D can amend 20 days after service of answer i. All affmtv defenses, incl PJ not waived until amendment as of right time period expires 2. Each party may also amend their pleadings by use of court leave a. The amendment will be allowed if opponent has suffered to incurable prejudice b. Opponent to amendment motion has burden to establish prejudice i. Prejudice includes: 1. loss of evidence 2. witnesses have dies 3. the amendment requested is meritless g. Third Party Practice, Contribution & Indemnification i. Impleader 3rd Party Practice

Page 33 of 337

BAR/BRI Bar Review, Summer 2007 1. Impleader is a procedural device used to join a part who may be in whole or in part liable for damages that D may have to pay to P 2. Impleader allows a D to join another D PRIOR to a judgment in the P v. D action a. This allows for judicial economy AND equitable resolutions 3. D1 becomes the 3rd Party P and D2 become the 3rd Party D 4. Impleader may occur AT ANY TIME after the answer by D is served on P (joinder of issue) EXCEPT if the SOL has run (Impleader must be done within the original SOL period - no relation back) a. Procedurally the 3rd Party Plaintiff must file the 3rd Party Complaint w/ Summons to the County Clerk b. THEN the 3rd Party P must serve the 3rd Party D by any summons method of service Service here includes the initiatory papers from the original P v. D action i. D2 must respond within a 20 or 30 day period with MTD or Answer as D1 would have had to do in the original action c. The original plaintiff is entitled to ALL papers which have been served on D2 i. Service to P by D1 may be by an interlocutory method ii. Service to P allows P to now amend his complaint from the original action as of right within 20 days of receipt of D1s complaint or D2s answer (>20 days, court leave required) ii. Indemnity 1. This allows one party to shift 100% of the blame to the other party a. Created by Contract i. Contractors generally require subcontractors to sign indemnity agreements for any act, event or occurrence which is created as a result of their conduct b. Created by Operation of Law i. Vicarious Liability situations sometimes cause 100% indemnity Respondeat Superior, Owner of a loaned vehicle where owner has given permission ii. Products Liability Retailer can seek indemnity from manufacturer for sale of a defective product iii. Contribution 1. Generally a. Contribution involves the sharing of loss apportionment among multiple tortfeasors b. This is the idea of Joint & Several Liability One party may be held liable for the acts of all other parties BUT the party found liable may seek contribution 2. Mechanics a. P can collect damages from any of the Ds involved , then D can seek contribution

Page 34 of 337

BAR/BRI Bar Review, Summer 2007 3. Contribution for Intentional Torts a. Multistate Rule Intentional Torts DO NOT get contribution b. New York All tort cases get contribution (cf. Art 16 protection) 4. Ways to Assert Contribution Claim a. D1 may Implead D2 b. P may initially sue D1 AND D2 c. After judgment in the 1st action D1 can sue D2 in a 2nd action\ i. SOL = 6 years accrual period from the date D1 pays out on the 1st action ii. NO collateral estoppel effect of apportionment of D2 when D2 has no full and fair opportunity to be heard in the original action 5. Equal Shares Formula Minority View a. No matter the share of fault allocated each D pays an equal share (4Ds = 25% each, 3Ds = 33.3% each, etc.) 6. Comparative Degrees of Fault Majority & NY view a. Parties are apportioned shares of fault by a jury for which they are responsible for b. Thus if D1 pays 100% and he is only 70% liable, D1 is entitled for contribution as to the 30% which is not his fault c. P can get 100% from any party, BUT D cannot require another D to pay more than their own equitable share 7. Substantive Law Rule for Contribution a. Contribution exists whenever 3rd Party D breached a duty IN TORT which contributed to or aggravated the damages for which D may be held liable to P b. If P had signed exculpatory clause against D2, the P could not sue D2, BUT P could sue D1 who could implead D2 i. EXCEPTION - 11 Workmens Compensation Law UNLESS P (Employee) suffers grave injury, D2 (Employer) will not be joined to an action because the employer has covered Employee already by state mandated workers compensation insurance 1. Grave Injury IS loss of index finer, multiple fingers, loss of ear, nose, hand, foot, multiple toes, paraplegia, quadriplegia, severe facial disfigurement, total deafness / blindness, brain damage causing total disability 2. Grave Injury IS NOT loss of thumb, loss of finger tips, blindness in one eye, brain damage where you can work at Wal-Mart ii. Multistate EVEN WITH grave injury third party plaintiff NEVER has right of contribution

Page 35 of 337

BAR/BRI Bar Review, Summer 2007 c. 6 year SOL for contribution overpowers other SOLs 2.5 year for med mal succumbs to the 6 year contribution SOL when the doctor aggravates an injury caused from a tort, D1 can implead doctor for contribution arising from his medical malpractice outside of the 2.5 year period iv. Settlements Involving Multiple Tortfeasors 1. Generally a. The law prohibits excess recovery , so any judgment against a non-settling tortfeasor will be reduced to take into count any settlement i. However a P can get LESS b/c they settled b. Applied If D1s settlement is greater than their actual percentage of fault then D2 will pay less in judgment c. BUT if D1s settlement is less than their actual percentage of fault D2 must pay their full share of apportioned liability an P gets less than the verdict awarded 2. Effect of Settlement on Contribution Claims a. If a party settles they buy peace from contribution NOT from indemnification b. Claims for contribution cannot be asserted by or against a settling tortfeasor v. CPLR Article 16 Protection 1. NY Rule Subject to exclusions, infra, in a personal injury action where a partys fault is less than or equal to 50%, that party will only be responsible for their own percentage of non-economic damages a. Therefore any D found 51% at fault or more will be jointly and severally liable for all non-economic damages sustained by P 2. Non-Economic damages: a. Pain & Suffering b. Emotional Distress c. Loss of Consortium 3. Excluded Parties (No Article 16 Protection) a. Parties who commit intentional torts b. Drivers or Owners of Motor Vehicles i. EXCEPT if the vehicle is a police car or fire truck then NYS and OFCR get Art. 16 protection c. Parties found liable for releasing hazardous substances into the environment h. Motion Procedure i. Motions on Notice 1. Papers Notice of Motion, Affidavit/Affirmation, Memo of Law 2. Motion made by 12,7,1 rule or 8,2 rule a. 5 day / 1 day added on to the time period for the initial service of the motion, b/c service of the original motion is deemed complete by mailing

Page 36 of 337

BAR/BRI Bar Review, Summer 2007 3. Motion papers filed with county clerk and presented to judge on the return day 4. All motion papers, sur-reply must be filed with the court no later than the return date 5. Judge must grant or deny order within 60 days of hearing the motion ii. OTSC Order to Show Cause 1. In circumstances of exigency or immediacy a party can apply ex-parte to a judge, who then upon order, may direct the adversary to show cause why the proponents request should no t be granted 2. Judge sets return date and style of service required 3. 3 main reasons to use OTSC; a. Statute governs requiring OTSC (i.e. motion to vacate a default) b. Exigent circumstances (i.e., - Husband in divorce proceeding is dissipating marital assets; rights to asset which is easily perishable) c. Temporary Restraining Orders / Article 78 proceedings iii. Deciding Order 1. After the return date of a motion on notice the court will direct a written order to be issued and will be signed by the court. 2. The prevailing party will have to serve the losing party with: a. The order; AND b. Notice of entry 3. Service on the Losing Party: a. Gives affect to an order b. Starts the time within which to take an appeal 30 days from date of receipt i. Interlocutory appeal is allowed from the order iv. Ex Parte Motion 1. No advance notice given to adversary (i.e. OTSC) 2. Moving party goes straight to court with the motion papers and requests the relief sought 3. ONLY motions which may be made ex-parte are those which are allowed by statute (i.e. CPLR 308(5)) 4. Aggrieved party CANNOT appeal an order arising from an ex-parte motion party must first move to vacate / modify order and THEN can appeal the vacatur motion a. Motion to vacate ex-parte order MUST be made to judge who made the original order i. Motion for Summary Judgment i. Generally 1. Enables a party to show court that NO TRIABLE ISSUE OF FACT exists 2. Moving party argues that reasonable persons could not differ on the point in issue and therefore entitled to a JML

Page 37 of 337

BAR/BRI Bar Review, Summer 2007 3. This requires a party to discuss the elements of the underlying c/a a. MSJ can address any defense, claim or denial found in the pleadings ii. Procedure 1. Motion may be made only after Joinder of Issue (answer served) exceptions, see pre-answer MSJ, infra 2. Generally time to make an MSJ runs from service of answer up and through 120 days AFTER the note of issue has been filed a. EXCEPTION showing of good cause i. Good cause cannot address the merits of the movants MSJ 3. If MSJ denied court will normally move on to trial a. If the court determines the only question after MSJ is damages, court will grant partial summary judgment on the liability issue and immediately move on to a trial for damages (i.e. res ipsa loquitor) iii. Substance of MSJ 1. By use of (1) affidavits; (2) documentary evidence; or (3) discovery, movant may satisfy their BOP of showing no material issues of fact a. Affidavits may only be made by a party with personal knowledge of the affidavits substance 2. To defeat the merits of an MSJ the opposing party must show a triable issue of fact exists a. Opposing party CANNOT simply rely on allegations in the pleading that would only qualify for an MTD 3. If the opposing party is not yet able to defeat an MSJ, the court may: a. Deny MSJ; or b. Grant an extension (continuance) to the non-moving party to conduct further discovery 4. Searching the Record If D makes an MSJ, court will look at all evidence submitted and if the court believes P is entitled to SJ, court will grant P SJ even though not requested iv. Pre-Answer MSJ (3213) 1. In two situations court will allow pre-answer MSJs: a. ANY C/A - On an MTD for failure to state a c/a CPLR 3211(a)(7) i. Parties MUST HAVE submitted factual affidavits in connection with MSJ; AND ii. Court MUST give notice to all parties of the conversion b. 2 Specific C/A i. Payment of monies owed WITH INSTRUMENT 1. Monies Lent, etc for the payment of $ only a. Promissory Note or Negotiable Instrument b. K alone will NOT work

Page 38 of 337

BAR/BRI Bar Review, Summer 2007 2. Certification of an out-of-state judgment to give same full faith and credit in NY a. Out-of-state judgments which CANNOT be converted require 3213 mainly used for Defaults OR Confession of Judgment

2. Procedure a. Service of MSJ in lieu of complaint If MSJ denied, c/a autoconverted to a complaint b. Response time is that same for any 308 method of service c. No 312 service allowed for a 3213 action j. Provisional Remedies i. Overview 1. Provisional remedies provide security to the commencing party as to insure that the property they seek will not be squandered prior to the ultimate determination of the rights of the parties 2. 5 provisional remedies (see ii v, infra) 3. The only provisional remedy obtainable without a court order is a lis pendens a. Otherwise Plaintiff must apply to court 4. ** Complying with procedural requirements of provisional remedies are strictly enforced since they normally deprive a party of a substantial right to their own property ** - DPC concerns ii. Attachment 1. Security for Money Judgment,, AND: a. [D is an unlicensed foreign corporation] or [a non-domiciliary and non-resident]; OR b. D is about to conceal or remove assets from the state with intent to defraud creditors or frustrate the enforcement of a judgment 2. P can obtain an order of attachment ex-parte OR on notice a. Motion requires P to show: i. Probability of success on the merits ii. P has no knowledge that D is counterclaiming for a greater amount iii. D is unlicensed foreign corp, OR D is a nondomiciliary, OR D is secreting assets outside NY to defraud or frustrate; AND iv. Undertaking post bond b. IF the motion is ex-parte P must also: i. AFTER seizure make motion to confirm levy by OTSC (ensures fair notice to D) within: 1. 10 days if unlicensed foreign or D is a nondomiciliary; or

Page 39 of 337

BAR/BRI Bar Review, Summer 2007 2. 5 days if D is secreting assets to defraud or frustrate ii. Failure to confirm VOIDS attachment 3. Property a. Tangible personal property owned by the D i. Real property included b. Intangible personal property owned by the D or owed to the D by a 3rd Party (garnishee, i.e. bank holding Ds $) 4. Procedure a. P gives levy to sheriff who the levies on property b. Different methods of levy: i. Real Property Served on County Clerk in county where real property is located ii. Personal Property 2 ways: 1. Actual Seizure (normally property which is deliverable) 2. Constructive Seizure order of attachment served on party by sheriff a. Serves as a lien on real prop and an injunction to not dissipate 5. Wrongful attachment a. D entitled to damages which can exceed the undertaking if it is found that: i. P was never originally entitled to an attachment; OR ii. D wins on the merits iii. Preliminary Injunction 1. Maintain status quo during the pendency of the action 2. Prelim Injunction usable only in an EQUITY ACTION when P seeks: a. Permanent Injunction; OR b. D threatens to harm Ps interest in the subject matter of the c/a 3. NOT TO SECURE A BANK ACCOUNT IN A MONEY ACTION attachment is the correct procedure 4. Procedure a. Motion on notice or exparte (see TRO, infra), P must establish: i. Grounds for equitable relief - irreparable injury ii. Likelihood of success on the merits; iii. Undertaking 1. Ds damages CANNOT exceed undertaking (cf. attachment) 5. Relation to the TRO a. In a case where the threat of immediate irreparable harm exists i. NEW RULE movant must also show undue prejudice IF ordinary preliminary injunction would be granted in place of TRO

Page 40 of 337

BAR/BRI Bar Review, Summer 2007 b. TRO is a prelim injunction which is requested ex-parte by OTSC c. TRO restrains D until expedited motion appearance date set in OTSC by judge i. On OTSC return date judge will decide TRO AND prelim injunction iv. Temporary Receivership 1. A receiver is a party appointed by the court to manage Ds property, pending the outcome of an EQUITY action a. The property managed MUST be the subject of the action 2. Must be an equity action in which the property is the subject matter of the action AND there is a danger the D will injure or destroy the value of the property during the pendency of the action 3. Action CANNOT be solely for $ damages 4. Motion on Notice ONLY v. Seizure of Chattel 1. Mainly used in replevin actions to recover possession of a chattel 2. function is to insure enforcement of a judgment awarding possession of the chattel to P 3. Sheriff retains custody (impounds) until final judgment on the merits 4. IF chattel lost trover is only remedy remaining 5. Procedurea. P must establish by motion, on notice: i. Likelihood of success on the merits; AND ii. Undertaking in the amount of the chattels value b. IF motion is ex-parte P must also establish: i. Threat of immediate loss; AND ii. AFTER seizure make motion to confirm levy by OTSC (ensures fair notice to D) within 5 days of seizure vi. Notice of Pendency 1. ONLY in actions where a judgment will have a direct effect on real property a. Including issues effecting title, possession or use of the real property i. Examples specific performance, ejectment, mortgage foreclosure (lis pendens requires) 2. Filing in office of county clerk in the county where the real property is located a. gives the world notice that their purchase of the parcel is subject to the pending claim 3. NO court order required 4. NO undertaking required 5. Remedy for improper filing is a motion by D to cancel lis pendens a. Motion costs payable by P 6. Dispute over shares in a co-op DOES NOT require a lis pendens 7. Valid for three years (cf. lien on real property = 10years)

Page 41 of 337

BAR/BRI Bar Review, Summer 2007 a. Renewable BUT ONLY IF motion to renew made within the 3 year period b. Expiration of the 3 year period without request for an extension causes the notice of pendency to lapse c. CANNOT EVER obtain another notice of pendency after 3yr period EXCEPT in a mortgage foreclosure action k. Trial Procedures & Res Judicata i. After discovery is completed and the case is ready for trial a notice of issue AND statement of readiness place case on trial calendar 1. file-able by either party 2. filing party then serves all other parties in the action 3. if note of issue premature or more discovery required a party served may move to cancel the note of issue within 20 days of receipt ii. Jury Trial 1. Requested by filing party in the note of issue itself 2. If not requested by the filing party - All other parties have 15 days to file a jury demand after service of the note of issue 3. Right to Trial by Jury ONLY FOR: a. c/a SOLELY for $ damages i. a party who requests a jury but asserts both legal and equitable claims are NOT entitled to a trial by jury b. replevin action c. any action asserting a claim to real property d. annulment of marriage e. divorce only for grounds not for support or custody 4. 5 of 6 jurors are required for a verdict a. If multiple issues to be decided the same five jurors are not required for a verdict on all the issues iii. Res Judicata Claim preclusion 1. Res Judicata bars a second cause of action against a particular D when the D has been brought to a final judgment on the merits a. 2nd c/a MUST arise out of the same series of events, transaction or occurrences as the original action b. EVEN IF based on different theories or seek different remedies i. Example c/a#1 for breach of K and c/a #2 for quantum meruit c. If dismissal NOT on the merits (i.e. dismissal for lack of PJ_, 2 c/a may be brought if SOL hasnt expired 2. Policy exception Matrimonial Disputes a. If c/a #1 for divorce based on cruel and inhuman treatment, c/a #2 not barred when arising from assault during marriage which was basis for divorce action (c/a #1) b. HOWEVER, c/a #2 for disposition of marital real property as such should have been litigated in the 1st c/a under equitable distribution

Page 42 of 337

BAR/BRI Bar Review, Summer 2007 iv. Collateral Estoppel Issue Preclusion 1. Issue preclusion avoids or prevents the need for re-litigation of specific fact issues that were decided in a prior proceeding 2. three requirements: a. Identity of Issue i. Legal and factual b. Issue was necessarily litigated AND decided i. A prior MSJ determination cannot be subject to collateral estoppel c. A full and fair opportunity to be heard i. The party against whom preclusion is sought must have had the ability to assert all arguments and claims in the original c/a ii. EXCEPTION parties in privity 1. Multiple trustees of a trust 2. CorpA was D, now CorpB merged with CorpA and Corp A is now Corp B l. Special Proceedings i. Overview 1. A special proceeding is a streamlined process created to obtain a final resolution to a dispute a. Examples probate of a will; election disputes; landlord/tenant proceedings; habeas corpus; article 78 proceedings; enforcement of an arbitration agreement; dissolution of a corporation 2. MUST BE SPECIFICALLY ENTITLED BY STATUTE 3. P who erroneously brought a special proceeding will have same converted into a regular action a. Defect is not jurisdictional b. Conversion is nunc pro tunc as long as jurisdiction is acquired over D ii. Procedure 1. Petitioner must file a petition with the county clerk, BUT serve petition AND notice of petition a. Service accomplished by a 308 method b. Service must be completed w/in 15 days after the expiration of the SOL 2. Appearance dates in a special proceeding follow the timeline of a motion a. MEANING that the earliest day which Petitioner can require respondent to appear is 8 days after service completed i. REMEMBER under 308(2) and 308 (4), service is deemed completed 10 days after filing the affidavit of service with the court

Page 43 of 337

BAR/BRI Bar Review, Summer 2007 b. IF Petitioner needs a quicker return day the special proceeding may be initiated by OTSC i. Article 78 proceedings are generally commenced by OTSC 1. IF Art 78 proceeding is NOT commenced by OTSC, Petitioner cannot set return day until at least 20 days after the petition has been served m. Arbitration i. Private procedure based on K intended to bind the parties to its resolution ii. Arbitrators are not bound by substantive or the rules of evidence 1. Delegation of JUSTICE AS THEY SEE FIT iii. PUBLIC POLICY OF NY FAVORS ARBITRATION iv. ONLY threshold issues may be litigated by a court to determine whether or not arbitration should proceed 5 types: 1. Did the parties agree to arbitrate? a. Agreement must be in writing i. Need not be signed, may be ratified by the acts of the parties following the contract terms b. Need not be mutual, only 1 party may have the right to compel arbitration c. Agreement must be clear / express / unequivocal 2. Is dispute within scope of arbitration clause? READ THE CLAUSE 3. Is the clause valid? a. Public policy favors arbitration BUT such is overcome by fraud duress or coercion i. These arguments which make the K void MUST specifically apply to the arbitration clause b. If the D says that the whole K was based on fraud this is not good enough!! must specifically allege fraud the creation of the arbitration clause 4. Is there a condition precedent AND has it been fulfilled? a. Court can determine whether condition precedent has been fulfilled OR order party to comply with a condition precedent 5. SOL a. the breach itself was seven years old b. NOT UNDER FED LAW v. Procedure Court can hear threshold issues in 2 ways: 1. In pending action a. Move to stay pending action AND move to compel arbitration (cf. MTD arbitration & award) 2. If proponent of arbitration serves notice of intention to arbitrate a. Once served, the party opposing arbitration must commence a special proceeding to stay arbitration raising 1 of the 5 threshold issues

Page 44 of 337

BAR/BRI Bar Review, Summer 2007 b. Special Proceeding must be commenced within 20 days of receipt of the notice of intent i. Operates like SOL no judicial extensions are allowed vi. Judicial Review or Arbitration Awards ONLY 4 Grounds: 1. Corruption, Fraud or Misconduct in the Arbitration Proceeding 2. Impartiality / Bias of an Arbitrator who was chosen to be neutral 3. Arbitrator has exceeded powers BUT remember arbitrator can virtually do anything, his powers are unlimited a. Arbitrator CANNOT award punitive damages in NY n. Article 78 Proceedings i. Article 78 of the CPLR authorizes a special proceeding for judicial review of governmental or quasi-governmental officers or bodies 1. THIS INCLUDES CORPORATIONS they are deemed quasigovernmental bodies as they are licensed and must register with the Secretary of State to be able to legally do business in NY ii. The right to a proceeding is embedded in 4 historical writs 1. Mandamus to Compel a. Used to compel the performance if an act required by law b. Act must NOT be discretionary AT ALL c. Example compel a corporation to have its annual meeting when they refuse to do so 2. Writ of Prohibition a. Used to stop a judicial officer from exercising power that exceeds the officers lawful jurisdiction b. Example - Denial of a MTD for lack of personal jurisdiction IS NOT prohibition material the Ds remedy would be an appeal i. EXCEPTION finding GROSS EXCESSES of jurisdiction allowing a 2nd prosecution of a Crim D after an acquittal of the same charge in violation of DJ 3. Writ of Certiorari a. Used to challenge the result of a trial-type hearing, conducted by an administrative agency i. Trial-type hearing is one where evidence is taken under oath with the right to cross-examine 1. Mostly seen where a party has vested property right removed by an agency - such rights require a hearing prior to divestiture a. Example - Tenured civil service position b. The agency determination must be supported by substantial evidence in the record 4. Mandamus to Review a. Review any types of administrative action which removes rights without a trial-type hearing i. Examples denial of gun permit, liquor license b. Agency ruling overturned if denial was arbitrary and capricious

Page 45 of 337

BAR/BRI Bar Review, Summer 2007 iii. Procedure 1. Action only brought in Supreme Court 2. 4 month SOL which accrues as of the date notice is received of action which is being challenged 3. Declaratory or Injunctive Relief is what is requested a. BUT money damages may be awarded if deemed incidental to the equitable relief (i.e. back pay in a reinstatement proceeding) 4. Corporations a. Generally i. Governed by BCL ii. Last Amended Sunday, February 22, 1998 iii. Any corporation created under NY law is governed by NY law b. Organization of Corporations i. Formation Requirements (People, Paper, Acts) 1. Incorporators (People) a. Incorporators do the following: i. Execute Certificate; ii. Deliver to the Department of State iii. Hold the Organizational Meeting b. There can be 1 or more Incorporators c. An incorporator must be a natural person NOT another corporation (an entity) 2. Certificate of Incorporation (Paper), (a//k/a articles of incorp.) a. Purpose of Certificate i. K between corporation and shareholders ii. K between corporation and the state b. Certificate Information i. Name and Addresses 1. Corporate Name must end in: a. corp b. ltd c. incorp 2. Address required County ONLY a. Need not be where the corporation actually dies business 3. Service of Process a. Must designate the NY Secretary of State as Agent for Service of Process b. Must designate address where corp will receive service of process OR agent designated to receive service 4. Name and Address of each incorporator ii. Statement of Duration 1. NOT necessary

Page 46 of 337

BAR/BRI Bar Review, Summer 2007 2. failure to include make the entity last indefinitely iii. Corporate Purpose 1. Can be general or specific 2. Acts outside the corporate purpose are deemed ultra vires 3. At Common Law these acts would be void 4. Today ultra vires acts are valid a. BUT Shareholders can seek an injunction b. LIABILITY Officers and Directors are liable to the corporation for losses emanating from an ultra vires act iv. Capital Structure (stock) 1. 3 types: a. Authorized Stock: maximum # of shares corporation can sell b. Issued Stock: # of shares actually sold c. Outstanding Stock: # of shares issued (sold) and not reacquired by the corp 2. The stock certificate must include: a. Amount of authorized stock b. Shares per class c. Par value (minimum value) d. Right preferences and Limitations on each class i. Par / No Par / Dividend e. Info on any series of preferred shares i. Series = subdivision of a class f. ** One class of stock must have unlimited voting rights ** g. ** One class of stock must have unlimited dividend rights ** 3. Acts a. Each incorporator signs the certificate of incorporation and an acknowledgment in front of a notary. i. Incorporator delivers certificate to Secy of State ii. Incorporator pays filing fees iii. Department of State files the certificate iv. Effect of Filing Conclusive Evidence of Valid Formation A DeJure Corporation ad been created b. Organizational Meeting held by incorporators i. EXCEPTION written consent ii. At the meeting: 1. By-Laws Adopted 2. Initial Directors elected

Page 47 of 337

BAR/BRI Bar Review, Summer 2007 a. At this point the Bd takes over the management from the incorporators b. Directors are NOT named in the certificate of incorporation ii. Legal Significance of Formation of Corporation 1. Internal affairs are governed by NY law a. Internal affairs include duties, relationship among directors, officers and shareholders 2. A corporation is a separate legal person a. By statute the corp can enter contracts, transfer property, buy and sell securities, sue and be sued 3. Political contributions up to $5K/year may be given by the corporation a. $5K per candidate or political party b. Not governed by BCL rather the Election Law 4. Corporation can make unlimited charitable contributions 5. Corporations can guaranty loans not in furtherance of the corporate business if approved by 2/3 of the shareholders allowed to vote 6. ** b/c corp is a separate entity, the managing parties (ofcrs and dirs) are generally NOT liable for its obligations ** a. Shareholders enjoy limited liability up to the amount of their investment b. Thus the corp is liable for all corporate debts and obligations iii. DeFacto Corporation Doctrine / Corporation by Estoppel 1. Some corporations who have failed to achieve de jure status may still be treated as if they were a corporation 2. DeFacto Corporation a. Requirements: i. There is a relevant corporation statute ii. Parties made a good faith colorable attempt to comply with it; and iii. Some exercise of corporate privilege b. In the event the requirements are fulfilled a party will be given corporate status in a legal action EXCEPT in a c/a vs. the State c. DeFacto corporate status only conferred in limited circumstances i. Example Department fails to file certificate, BUT all other requirements have been fulfilled 3. Corporation by Estoppel a. A Party who believed they were dealing with a corporation may be estopped from denying the business as a corporate entity and thus could not get personal liability of a director b. ABOLISHED IN NY iv. By Laws 1. DeJure Corporation need not have bylaws 2. Bylaws establish procedures and responsibilities of corporate parties and provide notice of meetings, etc

Page 48 of 337

BAR/BRI Bar Review, Summer 2007 3. If the bylaws conflict with the certificate of incorporation, the certificate controls a. Certificate = K w/ NYS, a much more important document 4. Bylaw are NOT filed with the state and CANNOT bind outsiders 5. Initial Bylaws are adopted at the organizational meeting a. The initial bylaws have he same status of a shareholder bylaw 6. Shareholders are the only ones who can amend or repeal the bylaws a. The only time the BD can amend or repeal bylaws is: i. IF states in certificate of incorporation; OR ii. Shareholders create a bylaw conferring such power to the Bd 1. ** Shareholders can amend or repeal ANY bylaw created by the Bd ** v. Pre-Incorporation Contracts 1. A promoter acts on behalf of a corp not yet formed a. Example promoter can enter a K on behalf of a corp 2. Liability on pre-incorporation Ks a. Corporation Liability i. Corporation not liable until the adopt the K 1. Express Adoption a. By the Bd in a meeting OR by unanimous written consent 2. Implied Adoption a. When the corporation knowingly accepts a benefit of the K i. Example corp moves into a leased premises leased by the promoter b. Promoter Liability i. K states the promoter is not to be held liable; OR ii. NOVATION an agreement btwn the promoter, the corp and the contracting party that the corporation will replace the promoter under the K 1. Until novation the promoter and the corporation are jointly and severally liable vi. Secret Profit Rule 1. A promoter CANNOT make a secret profit in dealing w/ the corp 2. Promoter must turnover all secret profits 3. Profits determined by date promoter acquired property a. If acquired before becoming promoter i. Profit = [Price paid by corp] [FMV at time of sale] b. If acquired after becoming promoter i. Profit = [Price paid by corp] [Price paid by promoter] 4. IF THE PROFIT IS NOT SECRET then promoter can keep the profit such allowance is based on corporate knowledge

Page 49 of 337

BAR/BRI Bar Review, Summer 2007 vii. Foreign Corporations 1. A corp not incorporated in NY must qualify to do business in NY a. THUS - Any corp created outside of NY must be licensed to do business in NY 2. Doing Business means that the foreign corporation has a regular course of intrastate business activity a. NOT just occasional or sporadic business b. Having an office in NY constitutes doing business in NY 3. To get licensed in NY a foreign corp must provide the secy of state: a. Information from its certificate / articles b. Proof of Good Standing in its home state 4. If a foreign corporation does business in NY and has not yet qualified they: (1) can be subject to penalties upon licensing, AND (2) cannot sue in NY BUT can be sued in NY c. Issuance of Stock i. What is an Issuance 1. Issuance occurs when a corporation sells or trades its own stock 2. Raises capital for a corporation a. Person who buys stock becomes a stockholder and receives and equity interest 3. This is not the same thing as when the corp sells BONDS a. Bonds are loans may to the corporation to be paid as agreed upon by contract b. holder of a bond has a secured debt NOT an equity interest c. A bond is NOT a DEBENTURE i. A debenture is an unsecured bond ii. An IOU which is not secured by corporate assets 4. A private party selling stock of a corporation is NOT an issuance ii. Subscriptions (Offers) 1. A subscription is a signed offer to buy stock from the corporation 2. Revocation a. Pre-Incorporation i. A subscription made prior to incorporation is not revocable for 3 months UNLESS: 1. the subscription says it is revocable; OR 2. ALL subscribers agree to revocability ii. The reason for the irrevocability is that people who form corporations can then rely on that $ to form corp b. Post-Incorporation i. All subscriptions are revocable UNTIL ACCEPTANCE 1. Acceptance occurs when the Bd accepts the offer (by unan written consent OR at a meeting) 3. Corporation must sell to ALL subscribers equally uniformity within each class OR series of stock 4. Subscriber Default

Page 50 of 337

BAR/BRI Bar Review, Summer 2007 a. In the event the subscriber defaults: i. Paid less than - AND fails to pay the rest within 30 days of written demand 1. THEN corporation can keep the $ and cancel the shares, meaning the shares have been authorized but not issued ii. Paid or more- AND fails to pay the rest within 30 days of written demand 1. THEN corporation MUST try to se;; stock to someone else for cash or for cash in the future 2. IF someone pays more than the balance due the corporation must return excess money to the defaulting party less corporate expenses for secondary sale iii. Consideration 1. Form a. 5 types i. Money (Cash or Check) ii. Tangible or Intangible Property iii. Services already performed for the corporation 1. This includes services performed on behalf on the corp prior to their formation iv. Binding Obligation to pay money or property in the future v. Binding Obligation to perform future services IF value agreed b. All other forms of consideration are prohibited i. In the event consideration for stock is improper the sale is treated as being unpaid deemed water and treated as corporate waste 2. Amount of Consideration a. Par value is the minimum amount of consideration allowed for a share in the corporation b. Stock may be issued at greater than par value c. No Par means there is no minimum issuance price and the stock can be sold for any price d. Par value is set by the Bd UNLESS certificate confers such power to the shareholders i. Bds determination as to what is par value is conclusive in the absence of fraud e. Treasury Stock i. Stock that has been previously issued by the corporation and has then been reacquired ii. Corporation may re-sell treasury stock at ANY price NOT MATTER THE PAR treasury stock is treated as having no par

Page 51 of 337

BAR/BRI Bar Review, Summer 2007 f. Acquiring property with par value stock i. The FMV of the property must at least e the amount of the par valued stock otherwise waste occurs ii. The Board determines what is the FMV consideration required such is conclusive in the absence of fraud g. Consequences of issuing par value stock for less than par value i. a/k/a watered stock ii. If the Bd knowingly authorized the issuance the Bd is liable iii. THE BUYER of the watered stock is also liable 1. Buyer is charged with having to know the par value at the time of purchase iv. A party who receives the watered stock in good faith, without knowledge, with or without value is not liable iv. Preemptive Rights 1. The right of an existing shareholder to maintain their percentage of ownership by having the right to buy stock upon a new issuance of common stock for money. a. A new issuance for money DOES NOT include: i. The sale of treasury stock ii. The issuance of shares for services performed iii. The sale of shares of authorized stock 1. Stock which was issued upon corp creation b. Preemptive rights are determined by pro rata ownership at time of new issuance i. THUS - you only have the preemptive right equivalent to your own ownership percentage 2. If the certificate is silent (certificate can afford preemptive rights) preemptive rights may exist DEPENDS WHEN CORP FORMED a. Prior to February 22, 1998 YES, preemptive rights exist b. After February 22, 1998 NO preemptive right exists d. Directors & Officers i. Directors 1. Statutory Requirements a. Number of Directors: i. 1 or more as established in: 1. The bylaws 2. By shareholder Act 3. By the BD if shareholder act allows the Bd such ii. NOT ESTABLISHED IN THE CERTIFICATE iii. If the number is not set , default = 1 director b. Incorporators elect initial Bd, thereafter the BD is elected at the annual meeting i. Classified or staggered board allowed no need to elect new Bd every year 1. Allows 2, 3 or 4 classes

Page 52 of 337

BAR/BRI Bar Review, Summer 2007 2. At least 3 directors to a class 3. Number of classes determines length of term c. Removal of Directors before expiration of term i. For Cause 1. Shareholders 2. Bd can remove only if permitted by certificate or bylaws ii. Without Cause 1. Shareholders only IF allowed in the certificate or bylaws d. Filling a vacancy after Removal i. Can be done by the remaining Bd ii. EXCEPT IF the shareholder removes Dir w/o cause THEN shareholders must fill vacancy e. How the Board Acts - 2 ways: i. Unanimous written consent; OR ii. By meeting 1. Quorum (majority of the Bd) must be present a. If quorum and one director leaves then no quorum and no valid act the quorum has been broken b. Vacant Spot - If a director resigns and position is vacant, the same # of Dir still required for a quorum c. Decreased Quorum Allowed i. Must at least be 1/3 of dir seats ii. Only may do so in cert of bylaws iii. Decrease quorum still requires a majority to pass a resolution d. Increased Quorum Allowed i. CERTIFICATE ONLY ii. Also allows an increased # of Dir required for a majority - by certificate only 2. If quorum, resolution can be created by Bd 3. Meeting need not be held in NY, can be a conf. call if all Bd members can hear one another 4. Regular meeting need no notice, they are in the bylaws 5. Special meetings require notice any method of notice allowed by BCL a. If notice not given to even one Dir then the any act is void UNLESS notice waived

Page 53 of 337

BAR/BRI Bar Review, Summer 2007 b. Notice waived by (1) in writing at signed at any time; OR (2) appearance at the meeting w/o objection iii. Voting agreements and proxies are NOT allowed to be used by Dir at Bd meetings iv. If neither written consent nor meeting any act is void unless later ratified 2. Role of Directors a. Generally, Dirs manage the business of the corp i. Sets policy, monitors business, declares dividends and other distributions, decides when the corp issues stock AND ** evaluate shareholder derivative c/a ** ii. Bd CAN by majority vote create committees which can have subst. mgmt functions and make recommendations 1. Committee CANNOT: a. Amend, repeal or adopt bylaws b. Submit fundamental changes to shrhldrs c. Fill a Bd vacancy d. Set director compensation 3. Duty of Care A director must discharge his duties in good faith using care, skill and diligence that an ordinarily prudent person would exercise in similar circumstances a. NONFEASANCE i. When the director does nothing (failure to attend meetings, vote, fails to stay abreast of corp business) ii. KEY ELEMENT CAUSATION 1. the directors breach must have caused a loss to the corporation very tough to prove b/c odds are that the corp would have lost the $ anyway 2. Example of Causation Dir is an expert in the field of pickles. Corp decides to start producing pickles using vinegar for pickling BUT DirExpert knows such is impossible. If Dir failed to attend any meetings where this was raised or has failed to keep abreast of same causation estblshd b. MISFEASANCE i. Board actively does something that hurts the corp corp looses $ ii. KEY ELEMENT Business Judgment Rule (BJR) 1. The courts will not second guess a business decision is it was made in good faith, was reasonable informed and had a rational basis 2. Prudent People do appropriate homework did the directors inquire, did they deliberate 3. BJR VIOLATED when the decision was IRRATIONAL or GROSSLY NEGLIGENT

Page 54 of 337

BAR/BRI Bar Review, Summer 2007 4. Duty of Loyalty A director must discharge his duties in good faith using conscientiousness, morality, honesty and fairness as the law requires of fiduciaries a. A punctilio of honor b. 3 normal scenarios; i. Interested Director Transaction - Deal between the corp AND the director or business which director has a substantial financial interest 1. Interested Director Transactions are a violation of the duty of loyalty UNLESS: a. The deal was fair and reasonable to the corp when it was approved; OR b. The material facts regarding the directors interest was disclosed or known to the corp AND the deal was approved by: i. The shareholders ii. Majority of Bd majority must be all uninterested parties; OR iii. If majority is interested THEN unanimous approval of all uninterested parties ii. Competing Ventures Director can serve as a director of another corporation as long as the new corp is not in competition with the original corp 1. Original Corp entitles to: a. Constructive Trust over Directors Profits; AND b. Damages for harm that is caused by the competition iii. Usurpation of a Corporate Opportunity - Director CANNOT take a corporate opportunity until the director tells the Bd of such opportunity and waits for the Bd to reject it 1. Corporate Opportunity something the corp (1) needs; (2) has an interest in; (3) has a tangible expectancy in; OR is logically related to the corporations business 2. Remedy Constructive trust a. Director must sell corporation asset at the cost acquired b. If already sold director must transfer profit earned to the corporation c. Example Bd can set compensation of Dir UNLESS prohibited by certificate or bylaw Compensation must be

Page 55 of 337

BAR/BRI Bar Review, Summer 2007 reasonable and set in good faith. ANY excess = corp waste = duty of loyalty viol d. Example Corps not publicly traded CANNOT give stock options without shareholder approval If Bd was to issue same such is a viol of duty of loyalty 5. Other State Law Bases of Director Liability a. Improper Loans of Corporate Funds i. Board cannot simply lend money to a director out of corp funds to guarantee a loan such without approval violates the duty of loyalty and duty of care ii. Approval dependent upon date corp formed 1. Before February 22, 1998 a. Shareholder vote, BUT quorum is a majority of DIS-Interested shares; OR b. Board approval if certificate allows 2. After February 22, 1998 a. Bd must conclude (by valid act) that the loan benefits the corp NO SHRHLDR APPROVAL iii. IF Corp registered/publicly traded- loans are prohibited b. Improper Distributions i. Directors are personally liable for unlawful distributions AS ARE shareholders who knew such distribution was unlawful when they received it c. Failure to Dissent i. A director is presumed to have concurred with Bd action that violates a duty and are thus subject to personal liability UNLESS their dissent is noted in writing in the corporate records ii. 3 ways to dissent: 1. In the minutes of the meeting 2. In writing to the corp secy at the meeting; OR 3. By registered letter sent to the corp promptly after the meeting has been adjourned iii. CANNOT dissent orally OR if voted for the resolution iv. HOWEVER A DIRECTOR AVOIDS ALL LIABILITY (duty of care, duty of loyalty, etc) IF DIR ACTED IN GOOD FAITH RELIANCE ON OPINIONS, REPORTS OR STMTS BY: 1. officers or employees whom the director believes in competent; OR 2. attys or acctnts whom the dir believes is acting within their competence; OR a. improper distrbtns (relying on the acctnt) 3. reliance upon the report of a committee to which the dir is NOT a member

Page 56 of 337

BAR/BRI Bar Review, Summer 2007 ii. Officers 1. Officers owe the same duties of good faith, care and loyalty to the corporation as directors do 2. Officers are agents of the corporation THUS they have authority to bind them to contracts 3. Bd elects Ofcrs (pres, VP, secy, treasurer AND ANY OTHERS allowed in the bylaws or which the Bd may determine) a. ONE PERSON CAN HOLD ALL POSITIONS 4. Selection and Removal of Ofcrs a. Selection i. By BD; OR shareholders IF certificate allows 1. If Shareholders elect ofcrs they are the only ones who can fire them 2. BUT Bd can for cause suspend the authority of any officer b. Removal i. May incite a breach of K action ii. The AG OR- 10% of the stockholders may commence a judicial action to remove AN OFCR FOR CAUSE, court can then bar reappointment 5. Officer compensation determined by the Bd iii. Indemnification of Officers and Directors 1. If a Director is sued by the Corp or on behalf of the Corporation costs are incurred - atty fees, fines, judgments In certain situations such director is entitled to liability: a. Prohibited Reimbursement i. When the director is found liable to the corporation 1. MUST be a holding 2. Litigation Occurred, Judgment Rendered b. Reimbursement as of Right i. The director wins, merits or otherwise ii. Found Not Guilty by Judgment OR dismissal due to procedural defect (SOL, MTD) iii. HOWEVER if the corp refuses to pay and the director initiates a 2nd c/a for reimbursement, ANY fees or expenses incurred as a result of the 2nd c/a are NOT RECOVERABLE AGAINST THE CORP c. Permissive reimbursement i. If the situation is not fulfilled by (a) or (b) above (i.e. settlement) the corp MAY reimburse the director upon a finding that: 1. The Director acted in good faith; AND 2. When acting the director reasonably believed what he/she was doing was in the best interests of the corporation

Page 57 of 337

BAR/BRI Bar Review, Summer 2007 ii. Permissive reimbursement cannot include reimbursement for a judgment (corp would in essence be paying itself) iii. Permissive reimbursement determined by: 1. The Bd IF a quorum can be formed from directors not party to the c/a IF NOT 2. Shareholders OR quorum of disinterested directors; OR 3. the Board upon consultation of independent legal counsel d. ** THE COURT where the c/a takes place** can order reimbursement if it finds that the director is reasonable entitled i. This is b/c the corp subjects itself to the jurisdiction of the court upon commencement e. CORP can also ADVANCE litigation expenses to the director BUT the corp must be repaid if it is found that the director is not entitled to reimbursement 2. D & O insurance can be purchased by the corporation to cover dir and ofcr liability 3. Certificate OR Bylaws can also provide for indemnification upon resolution (a valid act by the Bd) FOR DIR OR OFCR a. EXCEPT for: i. acts committed in bad faith, with dishonesty AND were material; OR ii. acts where the director wrongfully profited (violation of the duty of loyalty) 4. CERTIFICATE ONLY can provide for elimination of DIRECTOR LIABILITY for breach of duty UNLESS: a. Breach of duty of good faith; b. Breach by intentional misconduct; c. Dir recd improper benefit; OR d. Dir approved unlawful distribution or improper loan e. Shareholders i. Holding Shareholders liable for debts of the Corporation (Shareholder as D) 1. Generally a shareholder IS NOT liable for the debts or acts of the corporation greater than their share invested BUT a court may pierce the corporate veil and hold the shareholders personally liable 2. Court can PCV IF; a. Have abused the privilege of the incorporation; AND b. Fairness demands the removal of limited liability 3. Courts will PCV to: a. prevent fraud; b. achieve equity; OR c. prevent use of corp as a cloak of illegality 4. PCV Theories 3 scenarios a. Alter Ego Theory

Page 58 of 337

BAR/BRI Bar Review, Summer 2007 i. Identity of Interests or Excessive Domination 1. Generally occurs when a shareholder use the corporation as their own personal plaything a. Example dummy corporation created, where shareholders carry on business in personal capacity of purely for personal NOT corporate ends ii. BUT COURTS WILL NOT PCV under alter ego theory when the corp has ANY MIND OR EXISTENCE OF ITS OWN (ex above = 100% PCV even w/ this stndrd) iii. ONLY the stockholder who uses the corp as their would be personally liable, NOT all stockholders (the party who actively abused the corporate form) b. Undercapitalization i. At the time the corp was formed the shareholders should have reasonable known that they have failed to invest enough $ to cover prospective liability. 1. forseeability is based upon the corporate purpose or activity ii. NO FINDING OF PCV using UNDERCAP UNLESS FRAUD, ILLEGALITY OR EXCSSV DOMINATION iii. This form of PCV is seen more in tort rather than K c. Wages i. In a close corporation the 10 LARGEST shareholders are personally liable for wages and benefits to corporate employees ii. Shareholder Management of the Corporation 1. Generally the Bd and not the shareholders manage the corp favored by public policy 2. CLOSELY HELD CORPORATION Shareholders can manage a. A closely held corp is a corp with few shareholder AND whose stock is not publicly traded i. Most corps are close corps ii. Most PCV occurs in close corps b. Closely held corp is created by provisions in the certificate which transfer Bd power to the Shareholders VALID IF: i. All incorporators OR all shareholders (w/ & w/o voting power) approve; ii. Its conspicuously noted of the back of all shares iii. All subsequent shareholders have notice; AND iv. Shares are NOT publicly traded (on an exchange) c. Duties of care and loyalty are owed by the managing shrhldrs i. Controlling Shrhldrs CANNOT use power for personal gain against minority shareholders ii. Controlling shrhldrs owe a duty of utmost good faith

Page 59 of 337

BAR/BRI Bar Review, Summer 2007 iii. This is strictly enforced due to the minority shareholders stock not being easily alienable or marketable 3. PROFESSIONAL CORPRATION Shrhldrs can manage a. Members of a licensed field in a learned profession CANNOT practice the profession through a general business corporation for malpractice concerns b. CAN FORM A P.C. c. All shareholders in the corp must be licensed professionals in that field so must officers and directors d. Professionals here are personally liable ONLY FOR THEIR OWN malpractice i. NOT for malpractice of other shareholders e. Professionals ARE NOT liable for contracts entered into by the entity or for lease/rent payments due f. Increased Certificate Requirements i. Business must end in P.C. ii. Certification that each shareholder, director and officer is a member of that profession g. If a shareholder in a P.C. dies the P.C. MUST repurchase the stock iii. Shareholder Derivative Suits (Shareholder as P) 1. In a derivative suit the shareholder is suing the corporation to enforce a claim had by the corporation NOT their own personal claim 2. TEST- Could have corporation brought this suit themselves? a. Violations of duty of care and loyalty are always derivative b. Issuing stock w/o honoring preemptive right IS NOT derivative c. S suing to compel declaration of dividend is not derivative d. Action for waste of corporate assets is always derivative 3. Recovery a. Generally corp bears the benefit less any costs and expenses the shareholder incurred b. Shareholder CAN get the damages (limited) ONLY IF the payment back to the corporation would most likely return the $ to the bad guys i. Example - close corp owned by three shareholders, 2 of whom breached duties, 3rd bought suit likely 3rd shareholder will just get damages c. Consequences of an Unsuccessful Derivative Suit i. S cannot recover costs and expenses ii. S liable to Ds for their costs incurred iii. No Other S can bring c/a on the same transaction res judicata 4. Requirements Necessary to Commence a Derivative c/a a. Stock Ownership When the Claim Arose through entry of Judgment

Page 60 of 337

BAR/BRI Bar Review, Summer 2007 i. Ownership includes IF another party owned such stock at time claim arose and since, such stock has passed to you by operation of law 1. Inheritance 2. Divorce Decree b. The Shareholder must adequately represent the interest of the corporation and the shareholders c. S must post an undertaking IF: i. S owns less than 5% of corp; OR ii. Ss Stock is worth less than $50,000 d. Plaintiff must also demand that directors bring suit UNLESS such would be futile(Bd is interested or proc was inadequate) i. Demand would be futile when: 1. majority of Bd is interested; 2. majority of Bd is under the control of an interested director; 3. Bd did not inform itself of the transaction to a reas extent under the circumstances 4. The conduct is so egregious that t could not be the product of business judgment ii. P must plead with reasonable particularity her efforts in getting board to sue or one of the factors showing that such would be futile Corporation wants Dismissal of the Derivative c/a a. Corporation can make motion based on the finding of an independent legal committee OR based on a finding of independent directors i. This committee must hold that such c/a is not in the corps best interests 1. For example the litigation costs would exceed the possible recovery ii. COURT CAN dismiss upon evaluating 1. The actual independence of the committee 2. The sufficient of the investigation done by the committee Corporation is joined to the c/a as a Defendant b/c it COULD HAVE brought the c/a and failed to do so ANY DISMISSAL OR SETTLEMENT of a derivative c/a must be upon judicial approval a. Court may notify shareholders with substantial interests affected and gain their opinion as to dismissal Director and Officer may bring derivative action without all the specific intricacies required of the shareholders a. Dir or Ofcr can compel another dir or ofcr to account for their violation of duties (c/a for an accounting)(

5.

6. 7.

8.

Page 61 of 337

BAR/BRI Bar Review, Summer 2007 b. Dir of Ofcr MUST SUE IN THEIR PERSONAL CAPACITY, not using their corp title iv. Shareholder Voting 1. Who Votes a. Generally - the record owner as of the record date had the rights to vote i. Record owner is the one shown to be the owner in the corporate records ii. Record date is the date set by the corp for a vote on a specific matter 1. Date set between 10 and 60 days prior to the vote b. Exceptions i. NEVER VOTE TREASURY STOCK ii. Death of a Shareholder Voted by the Executor B4 Shares are transferred by operation of law iii. Proxies are allowed for SHAREHLDR voting (proxy cannot be used by directors) 1. Proxy is a writing and MUST: a. Be signed by the shareholder or agent b. Directed to the secretary of the corp c. Authorizing another to vote the shares 2. Proxy can be by fax or email 3. Proxy only valid for 11 months UNLESS proxy states otherwise 4. Revocation allowed EVEN IF proxy says its irrevocable a. THE ONLY TIME a proxy is irrev is when coupled with an interest: b. Proxy must say irrevocable; AND c. the party who is given the proxy has an interest in the shares other than a voting interest i. the interest can include a pledge, an option to purchase or a partial ownership interest c. Voting Trusts & Voting Agreements i. Voting Trust 1. multiple shareholders form a trust to increase their power when voting 2. Requirements: a. Written trust agreement stating how shares will be voted; b. Copy sent to the corp c. Transfers legal voting title to the voting Ttee; AND

Page 62 of 337

BAR/BRI Bar Review, Summer 2007 d. Original shrhldrs receive voting trust certificates AND retain all other stock ownership rights 3. Trust lasts for 10 year max a. Can be renewed 6 mos prior to expiration ii. Voting Agreements 1. Shareholders can enter into agreements deciding how they can vote 2. Must be signed and in writing 3. These agreements are not subject to specific performance 4. Automatically irrevocable if stated in agreement 5. Shrhldrs can agree to vote each other directors 6. Shrhldrs can agree that once elected as director they will act in a specific way ONLY IF they are the only shareholders in the corporation 2. Where Shareholders Vote a. Shareholder Valid Act i. Written unanimous consent; OR ii. By meeting b. Annual Meeting i. Can be held anywhere ii. Can be ordered by court to be held Art. 78 c/a iii. Election of Directors occurs at annual meeting c. Special meeting i. Generally if a director dies, resigns or is removed ii. ONLY business allowed to be decided at special meeting is business that is in stmt of purpose, infra 1. MUST be for a proper shareholder purpose CANNOT have a special meeting to remove and officer such is for directors only iii. Can be called by: 1. Board; OR Anyone allowed in the certificate a. Bd MUST call special mtg if there is a failure to elect a sufficient # of directors b. Failure by Bd to call mtg can be overcome by 10% of the voting shares requiring the meeting be called in writing to the secretary i. Secy then must give notice ii. Secy doesnt give notice then shareholders can give notice d. Notice Requirements i. Must be written (e-mail okay) ii. To EVERY SHRHLDR ENTITLED TO VOTE

Page 63 of 337

BAR/BRI Bar Review, Summer 2007 iii. For EVERY MTG btwn 10 & 60 days b4 the mtg iv. Contents 1. Date, Time & Place 2. If the mtg is going to confer appraisal rights, see infra & Copy of the appraisal rights statute 3. IF special mtg MUST state: a. Who called mtg b. Reason for spec mtg stmt of purpose v. FAILURE to give proper notice makes all action void 1. failure can be waived by: a. stmt signed in writing at any time; OR b. appearance without objection 3. How do Shareholders Vote a. Quorum must be represented at the meeting i. Quorum is based on # of shares represented, by proxy or otherwise b. Majority of the quorum can make valid act i. Majority of # of shares voting NOT # of shares present 1. Example 62K shares present, 50K shares vote, 25,001 shares = majority c. Increases / Decreases i. A decrease is quorum cannot be less than 1/3 of voting shares 1. MUST specify such in bylaws or certificate 2. CANNOT EVER decrease # required for majority approval ii. An increase in quorum OR majority (supermajority) is allowed by CERTIFICATE ONLY d. If # of voting shares leave, quorum CANNOT be broken 4. The Use of Cumulative Voting a. ONLY FOR VOTING FOR DIRECTORS b. Multiply # of shares by the # of directors to be elected c. ONLY IF ALLOWED BY CERTIFICATE v. Sale of Stock by Shareholder 1. Amount of Consideration a. NEED NOT be at least par value (cf. issuance) 2. Stock Transfer Restrictions a. Type i. Rights of 1st Refusal ii. Approval by Corp of Sale b. Where are restrictions set i. Certificate, bylaws or by agreement c. Restriction Will be Upheld i. Restriction must be reasonable under the circumstances, meaning the restriction cannot be an undue restraint of alienation

Page 64 of 337

BAR/BRI Bar Review, Summer 2007 ii. Generally corporate approval prior to sale is an undue restraint iii. Transferee Liability 1. The purchaser of the stock will be held liable if they had knowledge of the restriction; OR 2. the restriction was conspicuously noted on the stock certificate vi. Right of Shareholder to Inspect Books and Records 1. Different rules dependent upon the information requested a. Minutes of Proceeding i. Must go to corporate office ii. Any shareholder can request iii. w/in 5 days of written demand iv. affidavit stating that request is for the benefit of the corporation 1. refusal to supply affidavit can result in denial of information request b. Record of Shareholders i. Must go to corporate office ii. Any shareholder can request iii. w/in 5 days of written demand iv. affidavit stating that request is for the benefit of the corporation AND the requesting shareholder has not a shareholder list within 5 years of demand 1. refusal to supply affidavit can result in denial of information request c. Corporate Balance Sheets and Income Statements i. By mail ii. Upon written request d. List of current directors i. By mail ii. Any shareholder can demand iii. w/in 2 days of written demand 2. Common Law Right to Inspect ALL shareholders have the right to inspect records demand must be reasonable (time & place) for a purpose related to their role as a shareholder a. Broader than rights conferred by statute 3. A CURRENT DIRECTOR OR OFFICER ALWAYS HAS UNFETTERED ACCESS TO ALL CORP BOOKS AND RECORDS vii. Distributions 1. 3 major types: a. dividend b. payment to repurchase shares; or c. to redeem shares (forced sale to corp at price in certificate) 2. Court interference with a distribution set by the Bd will only occur when:

Page 65 of 337

BAR/BRI Bar Review, Summer 2007 a. The Bd acted in bad faith b. The Bd distributed for a dishonest purpose 3. Specific Shareholders and Specific Dividends a. Common Stock Distributions i. Simply divide the dividend by # of CS shares ii. $400K dividend for 100K shares = $4dividend/share b. Preferred Stock i. Preferred means pay first ii. 20K preferred shares with a $2 preference, 100K CS shares, $400K dividend 1. $40K gets paid to the preferred shrhldrs 2. $360K remaining gets divided amongst CS = $3.60 dividend/share c. Preferred Participating Stock i. Participating means pay again ii. 20K preferred shares with a $2 preference, 100K CS shares, $400K dividend 1. $40K gets paid to preferred shares 2. BUT THEN the remaining $360K get divided amongst all 120K shares (preferred and CS) 3. $3 dividend to all shares (preferred participating actually get a $5 dividend on each share = 2+3) d. Cumulative Preferred Stock i. Add up all previous years that the preferred stock does NOT get a dividend ii. 20K preferred shares with a $2 preference havent received a dividend in 3 past yrs, 100K CS shares, $400K dividend iii. Cumulative preferred gets $2/share for 4 years (this year and three prior years) = $8 dividend x 20K shares = $160K iv. Remainder divided amongst CS = $240K/ 100K shares = $2.40/share pf CS 4. Which funds may be used for Dividends? a. Surplus i. Assets [Liab + Stated Capital] = Surplus ii. Surplus can always be used for distributions 1. Decision always ultimately up to Bd b. Stated Capital i. Stated Capital is $ the corp must have which is acquired from the issuance of stock ii. NEVER can be used for distributions iii. Par Stock Stated Capital = [par] x [# of shares issued] 1. Any excess $ acquired by issuance that is > par = surplus iv. No-Par Stated Capital

Page 66 of 337

BAR/BRI Bar Review, Summer 2007 1. Within 60 days of issuance Bd can allot some (not all) $ to surplus and some $ to stated capital 2. If Bd fails to act within 60 days then ALL $ goes to stated capital c. NO DISTRIBUTION EVER when Corp is insolvent OR would be made insolvent by a distribution i. Bd is personally liable for unlawful distributions ii. Corp would sue to recover iii. EXCEPTION good faith reliance, supra, on committees, lawyers accountant, etc 5. Redemptions are set in certificate that Corp at will or upon an event can buy back all of its stock at a specific price. each redemption MUST be proportionately made within each class of stock 6. Repurchases are individually negotiated, and can discriminate except in a close corp, where opportunity must be given equally to all shareholders f. Fundamental Corporate Changes i. Characteristics of Fundamental Corporate Change 1. Fundamental Changes require both director and shareholder approval 2. These changes normally require notice also be sent to the Secy of St 3. Certain fundamental changes the dissenting shareholders have a rights of appraisal (sell shares back to the corp) a. The following fundamental changes allow appraisal i. Amendments to the certificate which allow appraisal rights 1. Alteration of a preference 2. Changes in redemption rights 3. Altering a preemptive right; or 4. Limiting voting rights ii. Consolidation iii. Merger if your corp is lost in the merger iv. Corp transfers substantially all of their assets v. Corps shares are acquired in a share exchange b. Appraisal right MAY NOT be used when the corp is publicly traded because the shares in a Publ Traded Corp are easily alienable c. To perfect the right of appraisal the shareholder must dissent in the following manner: i. B4 the vote: 1. file written objection; AND 2. intent to demand payment ii. During the vote - shareholder must vote against the proposed change; iii. After the vote - shareholder must demand appraisal

Page 67 of 337

BAR/BRI Bar Review, Summer 2007 d. If appraisal allowed and the corp and the shrhldr cannot agree on price the CORP MUST SUE to determine the value i. This valuation MAY NOT reflect a minority discount (cf. IRC) ii. Amendment to the Certificate of the Corporation 1. Minor changes (office location, agent for service of process) can be made by the board 2. All other changes (i.e. change of corp name, purpose, increase or decrease share or par, creation of a new class, limiting preemptive rights, etc.) MUST be approved by both: a. Board; AND b. Majority of shareholders entitled to vote i. Example if there are 4,000 shares entitled to vote, AND 2,400 actually vote, THEN 2,001 shares must approve the fundamental corporate change ii. This is different than, for example, election of directors where a quorum of the shares entitled to vote is necessary AND THEN a majority of the quorum can simply vote to cause a valid shareholder act 3. CERTAIN fundamental CORP changes dealing only with the board such as board voting OR a board supermajority required for a resolution must also be approved by shareholders a. The % of approval is dependent upon date of corp formation i. Prior to 2/22/98 2/3 of shareholders entitled to vote ii. After 2/22/98 majority of shareholders entitled to vote 4. CERTAIN fundamental CORP changes dealing with shareholders rights such as shareholder voting OR a shareholder supermajority required for a bylaw must also be approved by shareholders BY A 2/3 VOTE ONLY a. Think about it for the shareholder to change THEIR OWN RIGHTS PERMANENTLY of course a more stringent standard is required b. This % is not dependent on date of corporate formation iii. Mergers and Consolidations 1. Each Corps Bd adopts a plan of merger or consolidation 2. Each Corp requires shareholder approval a. The % of approval is dependent upon date of corp formation i. Prior to 2/22/98 2/3 of shareholders entitled to vote ii. After 2/22/98 majority of shareholders entitled to vote b. Shareholder approval is NOT REQUIRED for short-form mergers (parent/subsidiary) 3. Certificate of merger must be delivered to the Secretary of State 4. Rights of Appraisal for dissenting Shareholders ONLY exist for corp who is merged and destroyed a. Right of Appraisal extends to short-form mergers as well to dissenting shareholders of the subsidiary

Page 68 of 337

BAR/BRI Bar Review, Summer 2007 5. Successor Liability a. The corp which takes over the place of the merged corporation succeeds to ALL liabilities and right of their constituents iv. Transfer of All or substantially All Corporate Assets NOT in the Ordinary Course of Business OR Share Exchange 1. Share Exchange one company acquires all shares of one or more classes or series of a corp 2. These fundamental change rights apply only to the Corp who is SELLING their assets or shares a. THUS the buying corporation merely need Bd approval for the purchase b. AND the selling corp shareholders gain the right of appraisal 3. Approval from selling corp requires approval from the Board and the Shareholders a. Shareholder approval % depends on date of corp formation i. Prior to 2/22/98 2/3 of shareholders entitled to vote ii. After 2/22/98 majority of shareholders entitled to vote 4. No delivery of share exchange or plan to exchange need be filed with the Secy of St 5. Generally there is no successor liability in these situations as there is something left of the corporation selling their assets (not a lot left, but something nonetheless) there are EXCEPTIONS: a. The deal creates successor liability b. Purchasing corp is a mere continuation of the seller; OR c. The deal was entered fraudulently for the purpose of eliminating assets to escape such imminent liability v. Dissolution MOST POPULAR TYPE OF FUNDMTL CORP CHNG 1. Voluntary no Bd vote necessary a. Shareholder vote necessary b. Shareholder approval % depends on date of corp formation i. Prior to 2/22/98 2/3 of shareholders entitled to vote ii. After 2/22/98 majority of shareholders entitled to vote 2. Involuntary Judicial / someone is asking the court for dissolution a. By Bd resolution OR Majority of Shares Entitled to Vote IF CORP has insufficient assets OR it would be in the shareholders best interests to dissolve b. Other Involuntary Dissolution Procedures i. of shareholders entitled to vote MUST petition 1. Petition only IF: a. directors too divided too manage b. shareholders too divided to elect directors c. Internal dissent of corp acts makes dissolution beneficial ii. 1 single shareholder may petitions IF:

Page 69 of 337

BAR/BRI Bar Review, Summer 2007 1. CORP cannot elect directors after two annual meetings iii. 20% of the VOTING SHARES can petition for dissolution (if corp is not publicly traded) when: 1. managements fraud, mgmts illegal acts or oppressive conduct (conduct that substantially defeats the expectations of minority shareholders) affect the shareholders; OR 2. management is wasting or diluting corporate assets c. COURT CAN AVOID dissolution IF there is another way to grant relief to the injured shareholder OR would this be the only way that the petitioner could get a fair return on their investment (i.e.- ordering a buy-out) d. CORP CAN AVOID dissolution IF within 90 days of the commencement the CORP offers the aggrieved shareholders a buy-out for FMV upon terms approved by the court 3. Post-Dissolution Procedures a. Wind-Up a/k/a Liquidation IN THIS ORDER i. gather the assets ii. convert to cash iii. pay off creditors who had been given prior notice iv. Distribute remainder to shareholders pro-rata unless a preference exists, see dividend preference supra. (known as a dissolution preference) 4. IF voluntary OR involuntary CERTIFICATE OF DISSOLUTION must be filed with the Secy of State g. Controlling Shareholders i. Traditional Rule 1. Other than in the context of a close corp Shareholders generally owe no fiduciary duties to each other & can act in their own self-interest ii. Controlling Shareholder 1. Duty Owed a. Shareholder who has a position of control OR b/c of ownership such shareholder has working control OWES a fiduciary duty to the minority shareholders 2. Sale of Controlling Shareholders Interest a. When a controlling shareholder sells their interest they DO NOT violate any duty if they receive a control premium b. BUT courts MAY impose liability IF the controlling shareholder sold for a control premium AND i. the shares are sold to a looter who could have been discovered upon reasonable investigation 1. REMEDY disclose and disgorge

Page 70 of 337

BAR/BRI Bar Review, Summer 2007 a. disgorge sellers profit (any amt > FMV); AND b. seller liab for damages caused by the looting ii. the premium arose from a sale of a corporate asset 1. REMEDY disgorge profit iii. the premium arose from selling a seat on the board 1. REMEDY disgorge profit 2. fiduciaries cannot sell their position of trust 3. HOWEVER this is different than a situation where the corp is sold and the selling of ownership and election rights are incidental to purchase 3. Freeze-Out Mergers a. All mergers must have a legitimate corporate purpose b. freeze-out mergers occur where majority shareholders want to cash out minority shareholders unfairly c. normally the majority shareholder will cause their corp (Corp A) to merge w/ another corp (Corp B) they already own i. THIS ACT forces the Corp A minority shareholders to sell their shares for cash and lose out on any increased value caused by the merger ii. Courts will evaluate the transaction as a whole to determine if a violation of a fiduciary duty arose, factors include: 1. Fair Price; AND 2. Fair Dealing a. Was self-dealing or fraud involved? b. Were minority shareholders dealt with fairly? c. Was there a legitimate business reason for the merger? 4. Market Trading on Inside Information a. In the event a controlling shareholder engages in a market trade for their controlling interest based upon inside information for the corp which he/she controls AND make a profit.. b. THIS PROFIT BELONGS TO THE CORPORATION c. Derivative suit must be commenced 5. Non-Disclosure of Special Facts or Circumstances a. All directors, officers, controlling shareholders owe a duty not to buy, sell or trade on special facts with a non-insider i. Special facts are those facts which a reasonable investor would consider important in making an investment decision ii. A Special Fact in any fact that would be important to know prior to a sale of your interest

Page 71 of 337

BAR/BRI Bar Review, Summer 2007 b. They cannot trade on secrets they must either disclose or disgorge c. Any shareholder who dealt with a controlling party who had special facts and failed to disclose can commence an action based on violation of the special facts doctrine i. DAMAGES = Stock Price AFTER special fact would have been disclosed LESS Price Paid 5. Evidence a. Introduction i. Law Used 1. FRE Used for MBS 2. CPLR and CPL used for NY ii. Overview 1. Relevance 2. Impeachment 3. Hearsay 4. Judicial Notice 5. Documentary Evidence 6. Real Evidence 7. Privileges b. Relevance i. Basic Principles 1. FRE 401 - Evidence is relevant if it has ANY tendency to make a MATERIAL FACT more likely or less likely than if the evidence was not introduced 2. ALL relevant evidence is Admissible UNLESS: a. The court, in its discretion, determines that the probative value of the evidence is substantially outweighed by its prejudicial effect FRE 403 i. Discretionary factors for the court to consider 1. Undue Delay waste of time, cumulative 2. Confusion to the jury 3. Unfair prejudice ii. Unfair SURPRISE is not a factor to determine admissibility of evidence ii. Policy-Based Exclusions (Evidence inadmissible to encourage beneficial out-of-court conduct) 1. Liability Insurance FRE 411 a. Evidence that a person has or does not have the liability insurance is inadmissible for the purpose of proving fault or the absence of fault b. EXCEPT liability insurance will be admissible when the following are placed into issue by the opposing party: i. Ownership

Page 72 of 337

BAR/BRI Bar Review, Summer 2007 1. D alleges he does not own property ii. Control iii. Or use of the policy to impeach the credibility of a W 1. Ds insurance adjuster says that defect was open and obvious and not latent 2. P may impeach with insurance policy to show bias If D was to lose, the insurance company would have to pay a. BIAS evidence is almost always admissible c. If the evidence has a dual purpose the judge should give a limiting instruction to the jury explaining how the evidence should be used 2. Subsequent Remedial Measures (SRMs) FRE 407 a. A SRM is any repair, design change, or policy change taken AFTER the accident which could have prevented the accident b. Rule is meant to encourage post-accident repairs c. SRM are inadmissible to prove: i. Negligence ii. Culpable Conduct iii. A product defect iv. Need for a warning d. SRM are admissible to prove: i. Ownership ii. Control; OR iii. Feasibility 1. When the opp party alleges that any design change b4 the accident was not possible, BUT the opp party after the accident takes a SRM the SRM is admissible to prove feasibility iv. In NY - SRMs can also be admissible in a products liability action for strict liability to prove a manufacturing defect 3. Settlements in a Civil Case FRE 408 a. If there is a disputed claim then evidence of settlements, offers to settle or statements made in a settlement negotiation are inadmissible IF offered to prove liability i. EXCEPT the same is admissible to impeach a W on the grounds of bias 1. Example - P1 and P2 sue D for a car accident. P1 settles with D for $. P1 then testifies in the P2 v. D action on behalf of D, blaming P1 for the entire accident. P2 may then use P1s settlement to impeach for bias. b. Settlement talks MUST be during the course of a DISPUTED CLAIM

Page 73 of 337

BAR/BRI Bar Review, Summer 2007 i. Hence, running up to a driver after an accident and immediately offering to settle will NOT be deemed inadmissible as NO disputed claim has yet to arise. 4. Offer to Pay Hospital Expenses a. Evidence that a party has paid or has offered to pay for an accident victims hospital or medical expenses is inadmissible to prove liability b. This DOES NOT INCLUDE any statement made in connection with the offer to pay i. D says: (a) Let me pay. and (b) Im sorry I ran the light ii. (a) is inadmissible, BUT (b) is admissible 5. Pleas and Plea Negotiations in a Criminal Case a. The following are inadmissible against a Defendant in a pending criminal litigation OR in a subsequent civil case: i. Offer to plead guilty ii. Withdrawn guilty plea iii. Plea of nolo contendere (no contest) iv. Statements of fact made during: 1. The offer 2. The plea withdrawal; or 3. The nolo contendere plea b. HOWEVER any guilty plea or statement of fact taken at a guilty plea (that is not nolo contendere) is ADMISSIBLE against the defendant in a subsequent litigation based on the same facts (see, NYP supra, collateral estoppel) c. NY a withdrawn guilty plea is admissible in a subsequent CIVIL action iii. Character Evidence 1. Introduction a. Character evidence refers to a persons disposition OR propensity Examples: i. Honesty/Dishonesty ii. Peacefulness/Violence iii. Carefulness/Carelessness b. Purpose Matters what the char evid is be introduced to prove: i. Propensity the person acts in conformity with a specific character trait on the particular occasion because they always act that way ii. Veracity Truthfulness or lack thereof used to impeach the Ws credibility iii. Non-Propensity Purpose Evidence of a persons prior bad acts are offered to not prove propensity iv. Trait as an Element Evidence of a persons character is offered because it is an essential element of a claim or defense

Page 74 of 337

BAR/BRI Bar Review, Summer 2007 c. GENERALLY character evidence is NOT admissible to prove propensity AND IS admissible to prove the Ws veracity, a non-propensity purpose, or a character trait as an element. 2. Character in Criminal Cases FRE 404(a) a. Offered by the Defendant i. GENERALLY character evidence is NOT allowed to prove propensity ii. HOWEVER the Defendant in a Criminal case may introduce evidence of his good character of a RELEVANT trait 1. Thus, in a murder trial, Ds reputation for honesty and bravery are inadmissible as they are irrelevant 2. BUT Ds reputation for peacefulness would be allowed into evidence b. Form of Character Evidence FRE 405 i. The Defendant may offer such evidence in the form of: 1. Reputation; OR 2. Opinion testimony ii. The Defendant MAY NOT introduce specific acts of conduct to prove he acted in conformity therewith iii. NY - allows reputation evidence ONLY c. Offered by the Prosecution to Rebut the Same i. IF Defendant opened the door the prosecution may thereafter rebut the Defendants testimony as to his good character in two ways: 1. Cross-Examination of the Ds witnesses a. If Reputation W DA may only say Have you heard that D..? b. If Opinion W DA may only say: i. Did you know that D; or c. Would it change your opinion of D if you knew that he.. d. ANY cross allows DA to inquire into Ds specific instances of conduct. - DA MUST have a good faith basis to believe that a specific act took place 2. Calling their own witnesses to testify as to the Defendants bad character: a. Reputation OR Opinion ONLY b. NY only reputation 3. NY prosecution may also REBUT the good character of D by proving that he has been convicted of a crime ONLY IF it reflects of the character trait in issue

Page 75 of 337

BAR/BRI Bar Review, Summer 2007 a. In perjury trial W for D says D is honest b. DA may enter Ds tax fraud conviction ii. IF the DA questions a defense witness as to specific instances of conduct and the witness denies that such act ever occurred, the DA CANNOT attempt to prove the act did in fact occur d. Victims Character in Self-Defense Cases i. Federal Rule 1. A criminal D may offer evidence of the victims violent character to prove that the victim was the initial aggressor 2. By reputation OR opinion 3. Thereafter the DA may rebut via: a. Victims good character trait b. Ds bad character trait ii. New York Rule 1. IN NY evidence of the victims character is inadmissible to prove that he was the first aggressor HOWEVER the victims violent character is admissible (including specific acts) when it was within the specific knowledge of the Defendant b4 the confrontation iii. Special Rule for Defendants Knowledge of Victims Character for Violence 1. The D may offer evidence of his OWN knowledge of the victims bad character for violence ONLY TO PROVE that the acts of the D were reasonable & justifiable in his use of self-defense case 2. THUS there must be: a. D testifying b. Interposition of a self-defense claim c. Victims bad acts ANY FORM (incl. specific acts) d. These acts must be within the knowledge of the D at the time of the occurrence; AND e. D must be offering these acts to prove his conduct was reasonable under the circumstances 3. This allows the D to show his own mental state NOT the victims propensity

Page 76 of 337

BAR/BRI Bar Review, Summer 2007 iv. Victims Character in Sexual Misconduct Cases FRE 412 The Rape Shield Rule 1. Generally, in a case of sexual misconduct the D CANNOT introduce evidence of the victims: (1) reputation for promiscuity; or (2) the victims prior sexual conduct. 2. Applies to civil and crim cases 3. HOWEVER the D can introduce: a. Evidence of victims prior sexual activity with the D only IF the D alleges consent; OR b. Evidence of the victims sexual activity with another only to prove that someone other than the D was the source of the physical evidence; OR c. Any evidence required to be admitted by the DPC d. In NY the D can introduce the victims conviction for prostitution if it has occurred within the past 3 years 3. Character Evidence in Civil Cases a. Character evidence is generally inadmissible to prove propensity in civil cases i. Example - Cannot introduce Ds reputation for careless driving b. HOWEVER evidence of a persons character is admissible in a civil action when such character is an essential element of a claim or defense: 2 situations: i. Negligent Entrustment / Negligent Hiring ii. Defamation Libel, Slander c. FORM - When admissible propensity evidence can take the form of: i. Reputation ii. Opinion; OR iii. Specific Instances on Conduct 4. Habit Evidence FRE 406 a. Generally propensity evidence is inadmissible to prove that such party conformed their conduct to that propensity on a particular occasion b. EXCEPT Habit of a person OR routine of a business organization is admissible to infer how the person (or business) acted on a particular occasion at issue in the litigation c. HABIT is a repetitive response to a particular set of circumstances. HABIT requires: i. Frequency; AND

Page 77 of 337

BAR/BRI Bar Review, Summer 2007 ii. Particularity (a very specific set of circumstances) d. The regular practice of a business organization is admissible to prove conduct via habit i. Example While I dont know if that specific letter was mailed, it is a regular practice to drop mail to the mail room and the mail rooms regular practice is to send out the mail thus, the ltr in question mustve been mailed e. NY & Habit Evidence i. Habit Evidence of a Business Routine is admissible ii. Habit evidence of personal habit with regard to due care in a negligence c/a is generally inadmissible EXCEPT: 1. personal habit in the use of a product 2. Example P, the idiot, always uses a knife to take the bread out of his toaster, then sues when he gets shocked such habit is admissible iv. Defendants Other Crimes for a NON-Character Purpose FRE 404(b) 1. Generally. a defendants crimes and other bad acts are inadmissible during the prosecutions case-in-chief if the only purpose is to prove propensity 2. EXCEPT if the Ds crimes or other specific bad acts are offered for some purpose other than propensity, then the evidence will not be barred by the rule against admissibility of character evidence to show conformity therewith MIMIC a. Ds acts are admissible to prove something specific about the charged crime: i. M otive ii. I intent iii. M istake or Accident, absence of iv. I dentity v. C ommon Scheme or Plan 3. *** UNLIKE 404(a) evidence, MIMIC evidence can be used by the DA prior to Ds entry of good character evidence *** HENCE used on the DAs case-in-chief *** 4. Proof and Burdens for MIMIC crimes a. Proof MIMIC acts may be proven by: i. Prior bad acts; or ii. Past crimes b. Burden of Proof NY & Fed DA must produce sufficient evidence for a reasonable jury to conclude by a preponderance of the evidence that the alleged act did in fact occur FRE 104(b) i. NY when attempting to prove Identity that it was actually the Defendant who committed the prior

Page 78 of 337

BAR/BRI Bar Review, Summer 2007 act - the DA must prove identity by clear and convincing evidence 5. Other MIMIC requirements a. 403 analysis b. Limiting Instructions i. Introduction of MIMIC evidence ALWAYS created a dual purpose for admissibility c. NOTICE upon request of the D, the DA must provide the D with notice of intent to introduce MIMIC crimes 6. 404(b) can ALSO be used in civil cases for fraud or assault v. Other Sexual Misconduct to Show Propensity for Sexual Assaults FRE 413 1. FED In ANY case of sexual assault or child molestation the prosecution may offer proof of any of the Ds prior crimes of sexual misconduct in order to prove that the D did in fact act in conformity therewith propensity in sex case allowed a. Once a rapist, always a rapist 2. NY Rapists are treated like all other Ds and if the DA wishes to enter propensity evidence against a D in a sexual misconduct case it must be character evidence to rebut the Ds good character evid, and in the form of reputation only, OR past conviction if relevant to rebut the character trait in issue prior bad acts are not allowed to prove propensity in NY vi. Similar Occurrences 1. Generally a. To be relevant the evidence must relate to some time, event, or person involved in the present litigation, otherwise it is inadmissible (NY definition) b. EXCEPT in some limited and specific circumstances, other occurrences may be admissible even if they do not relate to some other time, event, or person involved in the litigation 2. Habit a. See, habit supra 3. Plaintiffs Accident History a. Generally plaintiffs previous accident history is inadmissible b. EXCEPT the same may be admissible when: i. The plaintiff is involved in a fraudulent scheme or plan; OR ii. To prove causation (damages) to the plaintiff 1. Example P on day 1 in accident with X, then next day P in accident with D. P sues D, At trial D can admit accident 1 to prove that Ps injuries did not come from the accident with D. c. CANNOT be used to introduce Ps litigiousness 4. Similar Accident Caused by Same Event or Condition a. Generally inadmissible EXCEPT:

Page 79 of 337

BAR/BRI Bar Review, Summer 2007 i. where the other accidents involve the same instrumentality OR involve the same condition; ii. AND occur under substantially similar circumstances iii. THEN the similar accident can be used to prove: 1. prior notice to the D 2. causation; or 3. existence of a dangerous condition b. Similarly, to be admissible, tests done to the instrumentality must be substantially similar to the disputed fact 5. Intent is in Issue a. Prior similar occurrences may be relevant to draw an inference of intent from a persons prior conduct (similar to MIMIC) b. Example in c/a for discriminatory hiring practices; incidents involving PRIOR applicants who are equally as qualified as P, who are of the same race as P and are NOT hired, despite their qualifications would be admissible because discrimination requires INTENT i. Intent is inferred from ones actions 6. Comparable Sales on Issue of Value a. The selling price of comparable property is admissible evidence of value of the property at issue 7. Industrial Custom as a Standard of Care a. Evidence as to how others in the same trade or industry have acted in the recent may be admitted as some evidence as to how a party in the instant litigation should have acted b. EVIDENCE OF DUTY OF CARE is the most important i. Example evidence of safety measures adopted by an industry but not D c. Judicial Notice FRE 201 i. Definition 1. Judicial notice is the recognition of a fact as true without formal presentation of evidence ii. Rule 1. A court may take judicial notice of indisputable facts- 2 forms: a. Matters of common knowledge that are within the courts general jurisdiction (i.e., - NY Ct taking jud notice that times square is at the corners of bdwy and 7th); OR b. Matter which are capable of easy verification by resort to unquestionable sources (i.e., - day of the week a particular day was by looking at the calendar) iii. Procedural Aspects 1. Timing can be taken even on appeal 2. Effect Jud. Notice considered conclusive in civil cases, but not criminal

Page 80 of 337

BAR/BRI Bar Review, Summer 2007 d. Documentary Evidence (Authentication, Best Evidence, Hearsay) i. Authentication 1. Generally FRE 901 a. The party seeking to introduce an exhibit must introduce sufficient evidence for a reasonable juror to conclude the item is what the proponent claims it to be 2. FOR WRITINGS IF the relevance of a writing depends on its source or authorship, the party introducing the writing must prove the source to authenticate the writing a. Example W for P testifies that she saw D sign the K. P moves to admit the writing. D claims its a forgery. Doc is admitted b/c P proved its source however this is not conclusive D may present evidence that such is a forgery. 3. Methods to Authenticate Writings a. Testimony by witness with personal knowledge i. Ex W saw D sign K b. Proof of authors handwriting by: i. Lay Opinion 1. Ex. I know Ds handwriting 2. Party must have familiarity from the normal course of affairs, NOT from anticipation of litigation ii. Expert Opinion and Comparison 1. W has been admitted as an expert in handwriting 2. W must have compared doc in question to a genuine sample (which also has to be admitted) iii. Juror Conclusion based on Comparison 1. The trier of fact compare document to a genuine sample and makes their own determination c. Ancient Document Rules i. Authenticity will be inferred if: 1. The document is at least 20 years old a. NY 30 years 2. Doc is facially free of suspicion (no alterations) 3. Doc is found where it would be expected d. Solicited Reply Doctrine i. A doc can be authenticated by evidence that is was received in response to a prior communication ii. Ex. P mails K to D, properly addressed and posted. P then receives an acceptance by D in the mail. Such solicited reply authenticates the fact that the acceptance, while a different doc, contains Ds signature. 4. Self-Authenticating Documents 7 generally a. Some documents are presumed authentic and no foundation is required, including:

Page 81 of 337

BAR/BRI Bar Review, Summer 2007 i. Official Publication ii. Certified copies of public or private documents on file in a public office iii. Newspapers and periodicals iv. Trade inscriptions and labels v. Any acknowledged document vi. Commercial Paper vii. Certified Business records if offered under the business records exception to the hearsay rule 1. certified by the custodian 2. offered by someone within the business 3. who know how the record was made 4. documents were made in their regular way (the ordinary course of business); and 5. the document was made at about or around the time the event occurred 6. NY follows the same rule, BUT a. In a civil case only b. Only if the record is from a nonparty; AND c. The record is produced pursuant to subpoena during pretrial discovery 5. Authentication of Photographs and Recordings a. For Demonstrative Purposes i. If the photo is to be used illustratively to depict a scene as described by a W - such can be authenticated by a W based on personal knowledge that the photo is a fair an accurate representation of the objects portrayed b. Photo as a Silent Witness i. Other time the photo itself is evidence (i.e., surveillance photos) ii. To offer these photos into evidence the proponent must show a chain of custody: 1. the camera was installed and working 2. the film was properly removed and developed; AND 3. the film has not been tampered with ii. Best Evidence Rule FRE 1002 1. Overview a. Also known as the original writings rule b. Where the party is seeking to prove the contents of the writing, the party must: i. Produce a copy of the writing; or ii. Provide and acceptable excuse for its absence 1. IF the court accepts an excuse THEN the party may then use secondary evidence such as oral

Page 82 of 337

BAR/BRI Bar Review, Summer 2007 testimony of a party familiar with the contents of the writing c. A WRITING, includes photos, recordings, films and x-rays d. Example D testifies as to the terms of a purchase order. THIS violates the best evidence rule. D should admit the purchase order. The purchase order itself is the best evidence of what the purchase order states. 2. Application a. BER applies only when the party wants to prove the contents of the writing 2 situations: i. A legally operative document (the writing creates rights and obligations); OR ii. Witness is testifying to facts that she learned solely from reading about them in the writing b. BER DOES NOT APPLY in the case where a party with personal knowledge is testifying to facts independent of a nonlegally operative document i. Example A hears testimony of X at a hearing. X is tried for perjury. While the transcript may be the best evidence, A at perjury trial can testify as to contents of Xs testimony b/c A has independent personal knowledge. 3. What is an original writing? a. The original includes: i. The writing itself; ii. Any counterpart intended to have the same effect; OR iii. Any negative or print from a negative of film b. Duplicates i. A duplicate is any counterpart produced by mechanical means that accurately reproduces the original (i.e., photocopy) ii. Duplicates are admissible to the same extent as the original (primary evidence), UNLESS: 1. there is a genuine questions about the authenticity of the duplicate; OR 2. it would be unfair to admit the duplicate iii. NY rule for duplicates 1. Duplicates are acceptable substitutes for the original ONLY IF the duplicates were in the regular course of business NOT in anticipation of litigation iv. Duplicates CANNOT be handwritten copies 4. When will non-production be excused? a. Secondary Evidence will be allowed and production of the document will be excused when:

Page 83 of 337

BAR/BRI Bar Review, Summer 2007 i. The doc is lost; AND cant be found with due diligence; OR ii. The document has been destroyed without bad faith; OR iii. The document cannot be obtained with legal process (its beyond the subpoena power of the court) b. Procedure i. If the court is persuaded by a preponderance of the evidence that the excuse is valid then secondary evidence (oral testimony) would be permitted 5. Escaping the Requirements of the Best Evidence Rule a. The following documents need not comport with the BER i. Voluminous Records can be presented by chart (as long as the volumes can be freely inspected) ii. Certified copies of pubic records; or iii. Collateral documents (court determines issue is unimportant) e. Real Evidence i. Real Evidence is actual physical evidence that is displayed to the trier of fat ii. Authentication of Real Evidence FRE 901 1. The party seeking to introduce the document must introduce sufficient evidence that the item is what the proponent claims it to be a. Done by laying a foundation 2. Method of Authentication a. Personal Knowledge b. Chain of Custody i. The chain need only be substantially unbroken, not perfect 3. Condition of Real Evidence a. If the condition of the item before trial is relevant, the W must testify that the item is the same or in substantially the same condition as it was at the time of the occurrence. iii. NY Real Evidence 1. Child in a paternity suit cannot be exhibited in a courtroom to determine resemblance a. BUT a blood test with 95% accuracy rate IS admissible to establish paternity 2. IF the jury goes to view the scene in a criminal case the judge must be present a. DA, D, and Ds atty also have a right to attend b. Unauthorized visits to the scene by a jury are inherently prejudicial and require reversal c. Polygraphs or Voice Stress tests are NOT reliable and are inadmissible at trial

Page 84 of 337

BAR/BRI Bar Review, Summer 2007 f. Testimonial Evidence & Witnesses i. Competency in General 1. RULE: The Witness must have personal knowledge; AND the witness must take an oath a. An oath means: i. Demonstrate an understanding of an obligation to tell the truth; AND ii. Promise to tell the truth b. NY Rule Testimony by Children i. A child may testify under oath as long as the child understands the obligation to tell the truth and promises to tell the truth 1. Civil Cases all witnesses, including children MUST take an oath 2. Criminal Cases a child under the age of 9 who cannot understand that oath may still give unsworn testimony a. HOWEVER such testimony cannot be the sole basis of a conviction . There must be some corroboration ii. Dead-Mans Statute 1. RULE: There is NO dead mans statute a witness is not incompetent merely because they have an outcome interest in the outcome of the litigation 2. The Rule in the Majority of Jurisdictions a. In a civil action, and interested party may NOT testify against a dead party about communications or transactions made with the dead party 3. A party is deemed interested when the outcome of the case will have a legally binding effect on that persons rights or obligations 4. Waiver a. The rights of a dead person may be waived if: i. Decedents representative does not object; ii. Decedents representative testifies about the transaction; OR iii. The decedents testimony is introduced (see, infra FRE 806) 5. NY Rule The NY Rule follows the majority rule above BUT with one addition: a. In an ACCIDENT CASE, based on NEGLIGENCE, the surviving party: i. MAY testify about the facts of the accident; BUT ii. MAY NOT testify about conversations with the decedent iii. Form of Testimony: Leading Questions FRE 611 1. A Leading question is a question which suggests the answer

Page 85 of 337

BAR/BRI Bar Review, Summer 2007 2. Normally allowed on cross-examination 3. Normally NOT allowed on direct EXCEPT: a. For preliminary questions b. In examination of a hostile witness c. Examination of children and forgetful witnesses (old people) d. When calling the adverse party to the stand or someone under the control of the adverse party (D calling Ps wife) iv. Writings in Aid of Oral Testimony 1. Present Recollection Refreshed FRE 612 a. Witness MAY NOT read from a prepared memorandum and must generally testify on the basis of their recollection b. BUT if a witness forgets something he once knew his recollection may be refreshed c. ANYTHING may be used to jog the Ws memory d. CANNOT then read the refreshing object into evidence e. HOWEVER on cross-examination of the same witness: i. Opposing counsel may inspect the item ii. Use the item; AND/OR iii. Introduce the item into evidence 2. Past Recollection Recorded FRE 803(5) a. A writing MAY BE READ (not admitted) to the jury as a past recollection recorded if: i. The W once had personal knowledge; ii. The W now forgets and showing the item fails to hog the Ws memory iii. The writing was made or adopted (by signature) by W iv. The writing was made when the event was fresh in the Ws memory; AND v. The W can testify that the writing is accurate b. Procedure i. W may read the document to the jury ii. W cannot show the document to the jury iii. BUT the opposing party can admit the exhibit on cross iv. NY Rule the party using the recollection recorded may ALSO admit the exhibit into evidence v. Opinion Testimony 1. Lay Witnesses FRE 701 a. RULE: Lay opinion testimony is admissible is it is rationally based on the witnesses perception and helpful to the jury b. This includes OPINION TESTIMONY (i.e.,- emotions, smells) 2. Expert Witness Opinion FRE 702 a. RULE: The witness may testify as an expert ONLY IF: i. W is qualified as an expert; ii. His expertise is the basis of his testimony; iii. The testimony is so technical and/or scientific that his specialized knowledge will be helpful to the jury;

Page 86 of 337

BAR/BRI Bar Review, Summer 2007 iv. The opinion has a proper basis AND is reliable b. Proper Basis of Opinion i. The opinion must be based upon a reasonable degree of certainty - stemming from: 1. The experts personal knowledge (exam of the P) 2. Evidence already in the trial record (Dr. based on you hearing the evidence you conclude) 3. Facts outside the record ONLY IF those facts are the type reasonable relied upon by experts in that particular field a. If the experts relies on facts outside the record such facts MAY NOT be disclosed to the jury unless explored by opp. counsel on cross examination b. Example Expert CANNOT testify as to conversation with the friends of the D, which formed the bases of his opinion c. Reliability i. RULE: Expert opinion must be sufficiently reliable 1. Reliable Methods Used 2. Reliable Application to the Facts of the Case ii. Reliability 1. Federal Daubert - Court examines reliability by examination of: a. Has methodology been tested? b. What are the known rates of error? c. Has the method been subject to peer review? d. And is the method generally accepted? 2. New York Frye a. Is the method being used generally accepted by the relevant professional community? 3. Ultimate Issues a. Lay or Expert Opinion is permissible EVEN IF it addresses an ultimate issue b. EXCEPT In a federal criminal case the expert MAY NOT testify as to whether the criminal defendant did or did not possess the required mental state 4. Learned Treatise in Aid of Expert Testimony FRE 803(18) a. Federal i. RULE: If the proponent can establish that a treatise is a reliable authority then the same may be used on direct or cross of an expert AND may be read as substantive evidence BUT CANNOT BE ADMITTED ii. To establish that a treatise is a reliable authority:

Page 87 of 337

BAR/BRI Bar Review, Summer 2007 1. Expert may testify; 2. Opponent experts admits; or 3. judge takes judicial notice b. New York i. Direct only may be used to show the basis of an experts opinion and NOT as substantive evidence ii. Cross-Exam May only be used to impeach AND ONLY IF the expert relied on it for their opinion OR acknowledged that it is reliable g. Cross-Examination i. Cross-Examination is a right ii. If a W testifies on direct and is not then crossed, the W testimony will be struck iii. Subject-Matter of Cross is: 1. Matters within the scope of direct; AND 2. Matters affected the witnesss credibility h. Credibility & Impeachment i. Credibility is whether a W is believable (perception, memory and honesty) ii. Impeachment is the process of trying to demonstrate that the W is not credible 1. Can be intrinsic impeachment use of questions on cross-exam 2. Can be extrinsic impeachment use of documentary evidence or by calling other witnesses iii. Rehabilitation is the process of trying to fix or repair the witnesses credibility after the W has been impeached i. Impeachment Methods i. Prior Inconsistent Statements FRE 801(d)(1) 1. A prior inconsistent statement is one that is simply a prior statement (oral or written) which is materially inconsistent with the witnesss trial testimony 2. A prior inconsistent statement is normally used to impeach a witness 3. However the statement may be admitted into evidence by the opposing party, if the statement was made: a. Under oath, AND b. Part of a formal proceeding or a deposition c. NY FOR IMPEACHMENT ONLY NOT AS SUBSTANTIVE EVIDENCE in a CRIM Case 4. Procedure a. W must be given opportunity to explain or deny the PIS i. NY while on the stand (proven intrinsically) ii. Federal PIS may be proven extrinsically SO LONG AS the W can later return to the stand to explain iii. EXCEPTION when the W is the opposing party there is no need to afford such an opportunity of explanation

Page 88 of 337

BAR/BRI Bar Review, Summer 2007 1. ** Similarly, when the W = a Party, a PIS may be proven extrinsically by an admission, and such an admission does NOT require the PIS to be made under oath at a formal proceeding ** Bias, Interest or Motive to Misrepresent 1. Bias, Interest or Motive is created by some relationship between the witness and a party or some other interest in the litigation that could cause the witness to lie a. Example A prosecution W with a current charge pending. The testimony with that W is generally based on a deal and thus the W has an allegiance to the prosecution. 2. Bias may always be proven by extrinsic evidence Sensory Deficiencies 1. Anything that could affect the witnesses perception or memory a. Examples bad eyesight, bad hearing, mental retardation, forgetfulness or intoxication 2. They may be proven by extrinsic evidence Reputation or Opinion About the Witnesses Veracity FRE 608(a) 1. RULE: A party may impeach the target witness by calling another witness to testify as to the target witnesss bad character for veracity 2. Form of Testimony a. Federal: Opinion or Reputation b. NY: Reputation Only c. Not allowed Specific Instances of Conduct i. HOWEVER if W2 is called to impeach the truthful credibility of W1, W2 may be asked questions regarding the specific instances of conduct of W1. ii. Reputation W Have you heard W1 is a priest? iii. Opinion W Did you know W1 is a priest? Criminal Convictions FRE 609 1. Rationale a person who has been convicted of a crime is more likely to lie under oath than a party with an unblemished record 2. NY Rule ANY CRIME may be used to impeach ANY W a. That party has put their interests ahead of societys and will likely do so on the stand THIS INCLUDES USE OF EXTRINSIC EVIDENCE b. EXCEPTION - where the W is a Criminal D, the court must have a SANDOVAL hearing, where the court determines the probative value of the conviction against the unfair prejudice to the D. 3. The Federal Rule a. Time Limit i. The conviction or release from prison (whichever is more recent) must be within the last 10 years b. Crimes of Dishonesty or False Statement i. Always admissible (perjury, embezzlement, fraud)

ii.

iii.

iv.

v.

Page 89 of 337

BAR/BRI Bar Review, Summer 2007 c. Other Crimes i. Misdemeanors are inadmissible UNLESS they involve truthfulness ii. Felonies are admissible if the probative value of the conviction (on the issue of veracity) outweighs the risk of unfair prejudice to a party d. Balancing Probative Value & Unfair Prejudice i. Probative factors 1. Seriousness of the crime; and 2. Relation to trust and deceit ii. Prejudice factors 1. Inflammatory Nature (child molestation is more prejudicial than a DWI); and 2. Increased Similarity to the crime charged (once a thief always a thief) e. Procedural Issues i. A conviction may be proven intrinsically or extrinsically ii. No need to give the W an opportunity to explain vi. Bad Acts (without conviction) That Reflect Adversely on the Witnesss Character for Truthfulness FRE 608(b) 1. RULE: A witness may be asked about any prior bad act so long as it relates to truthfulness 2. NY a witness may be asked about any prior bad act that shows the Ws moral turpitude that affect credibility a. This standard includes conduct unrelated to truthfulness b. See also FRE 609 in NY ANY W who is not a criminal D can be questioned on ANY conviction 3. Limitations a. The cross-examiner must have a good faith belief that the bad act occurred b. INTRINSIC EVIDENCE ONLY i. HOWEVER if the same untruthful act is admissible for some other purpose (i.e., bias, 609) it may be proven by extrinsic evidence 4. 608 (a) & (b) Recap a. Reputation or Opinion for untruthfulness may be proven by extrinsic evidence b. Prior bad acts for untruthfulness may be proven by intrinsic evidence only 5. Review and Summary of Arrests a. ARRESTS ARE NOT BAD ACTS for 608(b) purposes b. BUT if a 404(a)(1) W is called to testify as to the Ds opinion or reputation for a relevant character trait of the D the DA may ask Would it change your opinion. OR ..Have you heard the D was arrested? FRE 405(a)

Page 90 of 337

BAR/BRI Bar Review, Summer 2007 i. Specific acts allowed BUT NOT extrinsic evidence c. Arrests also cause bias currying favor with the prosecution (see, bias i(ii) supra) i. Arrests for this purpose allow extrinsic and intrinsic evidence vii. Contradiction 1. A W may be impeached by showing that he or she made a mistake or lied about ANY FACT she testified to during direct examination a. If significant to the case this contradiction may be proven by extrinsic or intrinsic evidence b. If the matter is collateral this contradiction may be proven by intrinsic evidence only. j. Impeachment of Own Witness FRE 607 i. RULE: Any party may impeach ANY Witness ii. NY Rule - (The Voucher Rule): By calling the W, that party vouches for their credibility 1. THUS, Generally a party MAY NOT impeach their own W 2. EXCEPT if a PIS was made: a. In Writing and was signed; OR b. Orally under oath 3. In a CRIMINAL CASE, a party may ONLY impeach their own witness it the current testimony is affirmatively damaging a. Example Party forgets = Inconsistent BUT NOT affirmatively damaging b. Example Party picks out a different culprit = Affirmatively Damaging k. Rehabilitation i. Timing 1. RULE: Generally a W may only be rehabilitated ONLY AFTER the Ws credibility has been attacked through impeachment 2. Any rehab done prior to impeachment is known as bolstering and is not allowed 3. EXCEPTION: A witnesses statement of prior identification may be admissible before the credibility of the W is attacked a. NY i. Crim cases = same as fed 1. Unless lineup deemed unduly suggestive (see pre-identification lineups, supra) ii. No prior identification allowed in civil cases b. Prior identification must be done by a W who is subject to cross-examination i. Example Officer CANNOT testify to an identification made by a Declarant who is unavailable ii. Methods of Rehabilitation

Page 91 of 337

BAR/BRI Bar Review, Summer 2007 1. Good Character for Truthfulness FRE 608 a. RULE: IF a Ws character for truthfulness had been attacked (by opinion or reputation, prior untruthful acts or prior conviction) THEN the opposing party may introduce evidence of that Ws good character for truthfulness b. Form of Rehabilitation i. Federal: Opinion or Reputation ii. NY: Reputation Only iii. Not allowed Specific Instances of Conduct 2. Prior Consistent Statements a. RULE: A prior consistent statement for truthfulness may be used to rehabilitate the W if: i. The prior statement is consistent with the Ws original trial testimony; ii. The opposing party has suggested the W has developed a motive to lie; AND iii. The prior statement was made prior to the motive to lie arose b. Can be used to rehabilitate (impeachment purpose) and can be used as substantive evidence i. NOT IN NY only used for impeachment/ rehabilitation only l. Testimonial Privileges i. Introduction 1. Procedure a. In federal court the FRE applies EXCEPT in diversity cases b. In diversity cases (where state law governs substantive law), the FRE still applies EXCEPT with respect to: i. Privileges ii. Burdens of Proof and Presumptions; AND iii. Dead Mans Statutes 2. Substance: Recognized Privileges a. Federal i. Attorney-Client ii. Priest-Penitent iii. Spousal Privileges iv. Psychotherapist-Patient Privilege 1. There is NO Dr-Patient privilege under federal law BUT such would exist in diversity cases b. New York (includes federal, but also recognizes) i. Doctor-Patient Privilege ii. Social Worker-Client Privilege iii. Reporter-Source Privilege 3. NY - THERE IS NO PRIVILEGE OF ANY KIND UPON IMPOSITION OF AN INSANITY DEFENSE

Page 92 of 337

BAR/BRI Bar Review, Summer 2007 ii. Attorney-Client Privilege 1. RULE: Confidential communications between attorney and client made during a professional legal consultation will be privileged UNLESS waived by the client OR and exception applies 2. Definitions a. Attorney includes: i. Member of the bar; OR ii. Someone the client reasonably believes is a member of the bar; AND iii. An attorney representative (i.e., paralegal secretary, acctnt) IF they are helping the attorney provide legal services b. Client includes: i. A person seeking to become a client ii. A client; OR iii. A representative of the client who is NECESSARY to facilitate legal services (i.e. corporate employee on behalf of a corporation) (Upjohn) c. Communications DO NOT APPLY TO: i. Underlying facts (i.e., - what happened at the accident scene) ii. Pre-Existing documents; AND/OR iii. Physical evidence d. Confidential Client MUST intend confidentiality (i.e.- no confidence if he knows a 3rd party was listening in) i. EXCEPTION The Joint Client Rule If two or more clients with a common interest consult with an attorney, ALL communications are privileged as to 3rd parties BUT if a dispute arises between the joint clients THEN the privilege is abolished. e. Legal Advice i. Primary purpose of the communication must be legal advice not a lawyer talking with his friend 3. Losing the Privilege a. Waiver i. Only by client ii. Upon disclosure to 3rd party iii. NOT WAIVED UPON DEATH BUT can be waived by the estate b. Exceptions NO PRIVILEGE i. Future crimes or fraud ii. Client puts legal advice is issue 1. Example Tax Fraud case and D says my attorney told me to like waiver iii. Client sues attorney OR Attorney sues client iv. NY No privilege exists where an atty:

Page 93 of 337

BAR/BRI Bar Review, Summer 2007 1. Is required to disclose information about the execution of a will in a probate action 2. Is asked to reveal his clients identity UNLESS good cause shown 3. Is asked to reveal the location of his client who has absconded with a child amidst a custody battle iii. Doctor-Patient Privilege 1. RULE: Confidential communication or information acquired by the doctor from the patient for purposes of medical treatment or diagnosis of a condition is privileged 2. Federal Only covers psychotherapist-patient 3. Waiver a. 3rd party present b. communication NOT related at all to medical condition c. PATIENT puts their medical condition into issue, NOT opp party i. NY 1. Applies ONLY IN CRIMINAL CASES 2. Civil c/a waiver, see CPLR 3101(d)(1)(i) 3. No Privilege in NY when person under 16 has been the victim of a crime iv. Spousal Privileges 1. Spousal Communications Privilege a. RULE: Confidential communication between spouses will be privileged i. Covers communication not physical evidence ii. Can only be waived by BOTH spouses iii. MUST BE MARRIED AT TIME OF COMMUNICATION iv. No 3rd party presence 2. Spousal Immunity (Spousal Testimony Privilege) a. RULE: In a CRIMINAL case, the prosecution CANNOT compel the Defendants spouse to testify against the D i. Applies to criminal cases only ii. Covers only testimony AGAINST THE SPOUSE 1. Includes communications, physical evidence 2. MUST BE MARRIED DURING TRIAL iii. Waived by 1 party the testifying spouse b. THIS PRIVILEGE DOES NOT APPLY IN NY 3. Exceptions a. No privilege where: i. The communication is in furtherance of a future crime or fraud ii. The act or communication is: 1. destructive of the family unit; OR

Page 94 of 337

BAR/BRI Bar Review, Summer 2007 2. during a family unit destruction a. Example No privilege where H is beating W and says I shouldve killed you like I killed that kid 4. Review and Summary Type of Case Protects Married When? Waiver Civ or Crim Communication At the time of the By BOTH only communication spouses Crim ONLY Testimony of At the time of the By the testifying everything testimony spouse against spouse

Privilege Spousal Communication Spousal Immunity

m. Hearsay i. Defining Hearsay 1. REMEMBER All relevant evidence is generally admissible 2. Absent an exception or exclusion Hearsay is inadmissible 3. HEARSAY IS: a. an out-of-court statement (oral or written) b. by a person (not an animal or machine) c. offered to prove the truth of the matter asserted (not simply for the fact that is was said) ii. Non-Hearsay Statements 1. Whether a statement is non-hearsay will depend on its purpose for which it is offered. 2. If we do not care whether the Declarant is telling the truth, the statement is probably non-hearsay iii. Four Principal Categories of Non-Hearsay Purposes 1. Impeachment a. A PIS may be offered to show that the W is a god-damn liar, without necessarily attempted to prove which statement is true 2. Verbal Acts a/k/a Legally Operative Words a. Words that have independent legal significance will not be hearsay b. The law attaches rights and obligations to these words merely because they are said c. Examples i. Offer, Acceptance of a K ii. Words which make a gift or a bribe iii. Words which are perjury OR defamation iv. You may drive my car agency created, liability created, etc. v. BUT NOTICE IS NOT A VERBAL ACT RATHER EFFECT ON THE LISTENER 3. To Show Effect on Person who Heard or Read the Statement

Page 95 of 337

BAR/BRI Bar Review, Summer 2007 a. RULE: A statement that is relevant simply because someone heard it or said it b. Examples i. Words that give notice ii. Words that would give someone a motive 4. Circumstantial Evidence of State of Mind a. RULE: A statement that unintentionally reveals something about the speakers state of mind b. Examples i. Statements demonstrating insanity Im Elvis ii. Lies that demonstrate consciousness of guilt iv. Prior Statements of Trial Witnesses 1. RULE: A Ws own prior stmt IF offered to prove the truth is hearsay and is inadmissible UNLESS and exception or exclusion applies a. ANY PREVIOUS STATEMENT of a trial witness IS ADMISSIBLE when: i. Its a prior inconsistent statement; OR 1. made under oath AND in a formal proceeding ii. Its a prior consistent statement; OR 1. Used to rehabilitate AND the statement was made before a motive to lie arose iii. Its a prior statement of identification 2. Example W testifying says, I told the cops when they arrested me that I didnt do it On the stand you can say I didnt do it BUT NOT what you said at an earlier time if its coming in for the truth v. Top Ten Hearsay Exceptions to Know for the Bar Exam 1. Party Admissions FRE 801(d)(2) a. RULE: Any statement made by a party is admissible IF offered against that party b. Terminology i. Under the FRE Admissions are non-hearsay ii. Must be offered by the opposing party Admission by party opponent c. Vicarious Admissions i. RULE: A statement by an agent or employee of a party, is admissible against that party, IF it concerns a matter within the scope of the agency or employment and was made DURING the agency or employment ii. NY a statement by an employee or agent is only admissible against the principal ONLY IF the agent or employee had speaking authority 1. Example CEO, General Counsel, VP of Communications iii. Vicarious Admissions by Co-Conspirators

Page 96 of 337

BAR/BRI Bar Review, Summer 2007 1. A statement of one co-conspirator is admissible against the other co-conspirators if it was made during and in the furtherance of the conspiracy 2. Example Confessions to cops post-arrest IS NOT such an admission (after conspiracy over) 2. Witness Unavailability FRE 804 a. Threshold Requirement Unavailability i. Grounds P.A.I.L.S. 1. P rivilege (valid assertion) 2. A bsence from the jurisdiction 3. I llness or death 4. L ack of memory 5. S tubborn refusal to testify a. Carried in screaming, by subpoena, youre ordered to testify by judge and subsequently refuse ii. NY recognizes the following reasons for unavailability: 1. valid assertion of privilege; 2. absence from the jurisdiction OR > 100 miles away; 3. Illness or death; AND 4. Declarant is a doctor and can be replaced by affidavit, or hospital record b. Former Testimony i. RULE: Declarant is unavailable, made a prior statement at a formal proceeding or deposition AND is offered against a party who had an opportunity and similar motive to cross-examine the declarant 1. Relevance of previous cross-must be substantially similar to its relevance at the current proceeding ii. NY 1. Criminal Cases ONLY 2. Former testimony by an unavailable witness must have been given at: a. A criminal trial; OR b. Hearing on a felony complaint: OR c. A deposition 3. Testimony AT A suppression hearing IS NOT admissible b/c the D at trial has clearly different motives c. Forfeiture by Wrongdoing i. RULE: A party who wrongfully and intentionally makes a declarant unavailable cannot raise objection to admission of that declarants out-of-court statements

Page 97 of 337

BAR/BRI Bar Review, Summer 2007 1. Including mere acquiescence that procured such unavailability 2. Absence cause by the party must be for the purpose of securing their absence at the trial ii. Procedural Burdens 1. Federal preponderance of the evidence 2. NY clear and convincing standard d. Statements Against Penal Interest i. RULE: Declarant must be unavailable and the statement made is against the declarants pecuniary, proprietary or penal interest ii. IN CRIM CASES CORROBORATION REQD iii. Statement must be against declarants interest when made. 1. Example puffing on a loan application may be a lie at the time of the trial BUT is NOT against the unavailable declarants interest at the time it was made, it helps declarant get a loan e. Dying Declarations i. RULE: Declarant must be unavailable and the statement was made AND under the belief of certain and impending death AND the statement concerns the cause or circumstances of the impending death ii. Federal All CIVIL cases & Homicide Cases iii. NY Homicide Cases ONLY 3. General Hearsay Exceptions FRE 803 a. Excited Utterance FRE 803(2) i. RULE: The statement concerns a starting event and was made while the declarant was under the stress caused by the event ii. Excitement Factors: 1. Nature of Event 2. Passage of Time of Event 3. Verbal Clues (i.e., - Oh my G-d!!) b. Present Sense Impression FRE 803(1) i. RULE: A statement the describes an event AND is made while the event is occurring OR immediately thereafter is admissible ii. NY Corroboration Reqd iii. Example C/a for conversion, USE of Anonymous Tip to 911 by the Plaintiff c. Statement of Then Existing Mental, Physical or Emotional Condition FRE 803(3) i. RULE: A contemporaneous statement concerning the declarants then-existing state of mind or physical condition is admissible

Page 98 of 337

BAR/BRI Bar Review, Summer 2007 ii. THIS DOES NOT INCLUDE a statement of memory or belief about a past condition 1. Lay witness testifies that she hear the Plaintiff say last December that three months ago I sure did feel a lot of pain. - Inadmissible iii. It can include a statement of future intent to do something with a third person (Hillmon Doctrine) 1. Declarant who is dead told wife on night of murder I am meeting D tonight at the Park 2. This statement can come in to prove that D showed up at the park iv. NY 1. If a statement of physical condition is made to a lay person then the declarant must be unavailable 2. ANY statement regarding future intent (like Hillmon) requires corroboration AND declarant must be unavailable d. Statements for the Purpose of Medical Treatment or Diagnosis FRE 803(4) i. RULE: Admission of a statement is allowed when made to a medical professional for diagnosis or treatment IF it concerns: 1. Present symptoms 2. Past symptoms (cf. then existing mental state exception); AND 3. General Cause of a medical condition ii. THIS DOES NOT INCLUDE statements of fault or identity of the wrongdoer iii. NY 1. Does not apply to statements: a. Made to expert in anticipation of litigation; OR b. To past symptoms e. Business and Public Records FRE 803(6),(8) i. Business Records Exception 1. Allows admission of records of a business a. Business includes any type of association or organization 2. Record must be made in the ordinary course of business 3. Record must be germane to the business relates to what the business does 4. Records must be made contemporaneously with the event recorded or soon thereafter; AND 5. THE CONTENTS MUST:

Page 99 of 337

BAR/BRI Bar Review, Summer 2007 a. Consist of observations observed by employees; OR b. Fall into another hearsay exception ii. Public Records Exception 1. Federal a. In addition to observation (see above) made by employees of the public agency, the record may also include conclusions by public employees AFTER an official investigation b. EXCEPT a police report may not be offered AGAINST the defendant in a criminal case 2. New York a. Observations only NO CONCLUSIONS b. Conclusions are allowed in testimony, just not reports iii. Examples 1. c/a for negligence P offers police report that includes a statement of a police ofcr who was not the writing ofcr a. FED & NY Admissible, observation observed by employee 2. Same example as above BUT NOW stmt is that of a bystander a. FED & NY Inadmissible, party is not an employee 3. Same example of above BUT NOW the D made stmt (an admission) a. FED & NY Admissible, party is not an employee BUT stmt fills another hearsay exception admission by party opponent 4. D offers Hospital Report with admission on P a. Fed & NY Inadmissible, while the statement is and admission, unlike police reports where officers job is to determine fault THE FAULT in a hospital record is not germane to the hospital business 5. Same example, but now P says she feels no pain a. Fed & NY Admissible, med treatment and diagnosis shores up the hearsay exception AND health/injury of P is germane to the hospital business iv. Laying the Foundation for Business Records

Page 100 of 337

BAR/BRI Bar Review, Summer 2007 1. Call a custodian who can with personal knowledge attest to the five elements of the business records exception; OR 2. Swear out an affidavit attesting to the elememnts a. NY affidavit/certification CAN ONLY BE USED is civil cases for business records of a non-party vi. Hearsay and the Confrontation Clause 1. RULE: In criminal cases the 6th Amendment requires that the Witness be confronted against him 2. This means that when a W is unavailable the prosecution may not offer statements which would generally fall into a hearsay exception if they are deemed testimonial in nature because the Crim D has not had an opportunity to cross-examine the W 3. Right to Cross-Examine the Declarant is satisfied WHEN: a. D has already had a chance to cross the W former testimony i. Formal proceeding or depo AND ii. D had substantially similar motives iii. NY NOT A SUPP HEARING b. D can cross the W at trial; OR c. D is the cause for the W unavailability at the trial forfeiture by wrongdoing 4. Testimonial Defined a. Something is testimonial IF the primary purpose of the questioning is to establish or prove past events potentially relevant to a later criminal prosecution i. Example Grand Jury Testimony ii. Example Confession of a Co-D who then asserts his 5th at trial (cannot use confession against the D) b. Something is non-testimonial IF the primary purpose is to enable police assistance to meet an ongoing emergency i. An excited utterance as to the Defendant during a police chase is non-testimonial and admissible even if the declarant is unavailable c. Documents i. Police reports are testimonial, while business record are non-testimonial vii. Impeachment of Hearsay Declarants FRE 806 1. RULE: If hearsay is admitted the opposing party may use ANY of the impeachment methods to attack the credibility of the hearsay declarant a. For Example If the hearsay declarant makes a dying declaration BUT previously made a PIS n. Procedural Considerations i. Burdens of Proof

Page 101 of 337

BAR/BRI Bar Review, Summer 2007 1. Criminal beyond a reasonable doubt 2. Civil by a preponderance of the evidence 3. NY Civil clear and convincing evidence is required in a c/a for: a. Fraud b. Recover on a K for services rendered to a deceased person c. To prove mistake d. To prove a dead person made a gift e. To establish grounds for reformation or rescission f. To establish paternity g. To establish adverse possession ii. Preliminary Facts 1. For the Jury a. Jury Decides i. Questions of conditional relevance 1. Ws personal knowledge 2. Authenticity of an exhibit 3. Whether the D committed a MIMIC act b. Judges role is to decoded whether there is sufficient evidence to ensure that a reasonable jury could conclude that such conditional fact is true 2. For the Judge a. Generally questions of admissibility i. Hearsay Determinations ii. Whether a communication is privileges iii. Whether an expert is qualified b. The burden is that by a preponderance such must be admissible AND in consideration the judge can use ANYTHING c. NY JUDGE CANNOT COMMENT UPON EVIDENCE 6. Agency & Partnership a. Three Agency Problems i. Liability of Principal to 3rd Parties for Torts of the Agent 1. Issue Whether Principal will be held vicariously liable for torts committed by the agent 2. TEST: Principal will be held liable for the torts of his agent IF: a. A Principal Agent Relationship exists; AND b. The tort occurs within the scope of employment 3. PrincipalAgent Relationship a. Relationship Requirements (A,B,C) i. Assent Informal agreement btwn P& A ii. Benefit As conduct must be for the benefit of P iii. Control P must have right to control the A by supervising the manner of the Agents performance 1. SUB-AGENTS a. There can be no vicarious liability to a sub-agent UNLESS A,B, & C exist

Page 102 of 337

BAR/BRI Bar Review, Summer 2007 2. BORROWED AGENTS a. P1 borrows P2s agent b. P1 cannot be vicariously liable for the acts of P2s agent UNLESS A,B,&C exist 3. Generally P will NEVER HAVE CONTROL over borrowed or sub-agents b. Contrast with the Independent Contractor i. Generally, there is NO right to control an independent contractor b/c P has no power to supervise the manner of performance ii. THUS, Generally P is not held liable for the acts/torts of an independent contractor EXCEPT: 1. When the hired task is an ultra-hazardous activity; OR a. Example P, mechanic, out sources his brake repair to an indpndt contractor 2. Estoppel If the independent contractor is held-out with the appearance of agency, P will be estopped from denying vicarious liability 4. Within the Scope of Employment a. P will be held liable for torts committed by A that fall within the scope of his agency b. 3 scenarios: i. Conduct was of the kind the agency was hired to perform within the job description ii. The tort occurred on the job 1. Frolic New & Independent Journey OUTSIDE the agency 2. Detour Mere departure from an assigned task INSIDE the scope of any agency a. Example A stops to get drying cleaning on the way back to work from an assigned task AND then A hits pedestrian = DETOUR, b/c A was going back to work iii. A did the act with the intent to benefit the principal 5. Intentional Torts a. Generally, Intentional Torts are NEVER within the scope of employment EXCEPT: i. If they were specifically authorized by the principal; ii. They were foreseeable and natural through the scope of employment; OR iii. They were motivated by a desire to serve the Principal 1. Example Bouncer in Bar bounces out X, X injured, X sues P. While P is generally not

Page 103 of 337

BAR/BRI Bar Review, Summer 2007 liable, this act normally falls into all three exceptions to the general rule, thus P I liable. ii. Liability of Principal to 3rd Parties for Contracts Entered by an Agent 1. Issue: Whether Principal is liable for Ks entered into by its Agents 2. TEST: A principal is liable for Ks entered into by his agent IF the principal authorized the agent to enter the K. 3. Four types of authority exist a. Actual Express Authority i. Here P Uses words to express authority to the A ii. RULE: Oral, Private, Narrow 1. Exception If the K involves the conveyance of land, the authority must be in writing iii. Revocation of express authority in two ways: 1. Unilateral act of EITHER PARTY; OR 2. P dies or loses capacity a. If P dies mid-agency, Ps estate CANNOT be held liable for the act A was hired for if such act has yet to occur, A will be held liable, notice to A is irrelevant 3. NO REVOCATION IF there is a durable POA a. Durability MUST be conspicuously states on the doc, this agency survives incapacity. b. Actual Implied Authority i. Created in 3 instances: 1. Necessity a. A has implied authority to do all acts reasonable necessary to accomplish an expressly authorized task i. Example I expressly authorize A to close the deal this includes implied authority to rent a conference room to close 2. Custom a. A has implied authority to do all tasks which are customarily performed by persons with the agents title or position i. Example Trustee who always sends out a distribution check each month to beneficiarys bank pursuant to request 3. Course of Dealing

Page 104 of 337

BAR/BRI Bar Review, Summer 2007 a. A has implied authority to do al tasks which the agent believes he has been authorized to do from prior acquiescence i. Example A says to P, youve never complained and Ive been doing it this way for 25 years. c. Apparent Authority i. TEST: Principal must have cloaked agent with the appearance of authority; AND a 3rd party reasonably relies on appearance of authority - 2 forms: 1. Secret Limiting Instruction - A has actual auth BUT P has secretly limited that authority and the agent thereafter acts beyond the scope of the limitation to an unknowing 3rd party a. Example P says sell everything in the store BUT X, one of the goods. P goes to lunch, A sells X anyway P bound 2. Lingering Authority Actual authority has been terminated BUT A still continues to act on Ps behalf A can still act until 3rd Party has been given notice of As termination d. Ratification i. Authority can be granted AFTER the K has been entered IF: 1. P has knowledge of all material facts of the K; AND 2. P accepts the K benefits WITHOUT CHNGING ITS TERMS a. Example A given authority to buy steel drums, A then buys 100 wooden drums, P says, great BUT I only need 99. Here ratification of the whole K was NOT complete K not deemed ratified A is liable 4. RULES OF CONTRACT LIABILITY a. IF no authority, P is not liable, A IS LIABLE b. IF authority, A is not liable, P IS LIABLE i. EXCEPT WHEN THE PRINCIPAL IS PARTIALLY DISCLOSED or UNDISCLOSED the Agent may be liable at the election of the 3rd Party iii. Duties Which Agents Owe to Principal 1. Duty to exercise reasonable care 2. Duty to obey reasonable instructions (i.e., not to lie or break the law) 3. Duty of Loyalty, including: a. Self-Dealing

Page 105 of 337

BAR/BRI Bar Review, Summer 2007 i. Agent cannot receive a benefit to the detriment of the Principal b. Usurpation of the Principals Opportunity; OR c. Secret Profits i. REMEDY for breach of the duty of loyalty = disclose OR disgorge profits AND any loss cause by the breach by imposition of a constructive trust b. Four Partnership Issues i. Partnership Formation 1. Formalities a. There are NO formalities to becoming a GP, you are made such by operation of law 2. Definition a. GP will be inferred after the fact from conduct alone. b. A GP is an association of two or more persons who are carrying on as co-owners in business for profit i. MOST IMPORTANT SHARING OF PROFIT 3. Sharing of the Profits a. The contribution of capital OR services in return for a share of the profits, if any, is prima facie evidence of a GP i. Profits ARE NOT : 1. a wage 2. and interest rate; or 3. gross receipts ii. Liabilities of Partners to 3rd Parties 1. Agency Principles Apply a. (General) Partners are agents of the Partnership when carrying on usual business of the partnership b. THUS partners (being agents) bind the partnership to torts committed by partners in the scope of partnership business c. Partnership is also bound by Ks entered by partners with authority 2. General Partners are Personally Liable for the Debts and Obligations of the Partnership a. Liability of Incoming Partners i. Incoming partners are NOT liable for pre-existing debts, BUT and $ paid into the partnership by that new incoming partner can be used to satisfy prior debts b. Liability of Outgoing Partners i. An outgoing partner still retains liability even on future debts UNTIL the die, UNLESS notice of withdrawal has been sent to all known and potential creditors 3. General Partnership Liability by Estoppel a. One who represents to a 3rd party that a p-ship exists when one in fact does not exist will be liable as if a partnership did exist.

Page 106 of 337

BAR/BRI Bar Review, Summer 2007 i. Example A convinces B to start a sailing school together. A tells X that about the partnership. A then asks X to purchase his sailboat for p-ship. A and B then call off the idea. B takes Xs sailboat anyway on a test drive and crashes the boat. A is liab b/c she held out a GP existed when a GP did not in fact exist. 4. Contrast Formation and Liability with other Unincorporated Business Organizations a. Limited Partnership (LP) i. Definition 1. An LP is a p-ship with at least 1 GP and 1 LP plus proper formation ii. Formation 1. Formation is complete by delivery of a certificate of LP with the Department of State and certificate includes the name of all GPs iii. Liability and Control 1. General Partners a. Still GPs and still are personally liable for all debts and obligations of the Pship BUT also have the right to exercise managerial control 2. Limited Partners a. Limited Liability and NOT liable for debts and obligations of p-ship personally BUT NO managerial control b. Registered Limited Liability Partnership (RLLP) i. Formation 1. General P-shop engaged in a professional service (like a P.C., supra) File a certificate of registration with the Dept. of State to engage on Professional Services ii. Liability 1. NO partner will be liable for the debts and obligations of the business form (b/c theyre all lmtd partners), BUT like a PC each LP is personally liable for the torts of their own wrongdoing OR for torts caused by those under their control c. Limited Liability Corporation i. Original Purpose 1. Designed to give its Members corporate lmtd liability BUT also benefits of P-ship tax status. ii. Formation 1. Must file articles on organization & in NY must publish a summary of those articles once a week

Page 107 of 337

BAR/BRI Bar Review, Summer 2007 for 6 weeks in 2 newspapers to be deemed duly formed iii. Liabilities 1. Members = Owners AND are not personally liab for debts or obligations of the business form 2. Liability conferred by delegation of p-ship characteristics MEANING members can delegate pwrs to other managers who then are held out as personally liab for that act, like a GP iv. Partnership Characteristics 1. Members control but may delegate to managers 2. Limited Liquidity; membership interest is NOT freely transferable a. Consent of all other members 3. Limited Life events of dissolution v. LLC in NY = [Lmtd Liab] + [Lmtd Liquidity] + [Lmtd Life] + [Lmtd Tax] iii. Rights and Liabilities Between Partners 1. Partners are FIDUCIARIES of: (1) each other; AND (2) the P-ship a. Duty of Loyalty i. A partner must discharge his duties in good faith using conscientiousness, morality, honesty and fairness as the law requires of fiduciaries ii. Partners CANNOT: 1. Engage in Self-Dealing 2. Usurp a P-ship Opportunity; OR 3. Make a Secret Profit at the P-ships expense b. Action for an accounting i. In NY this is the ONLY form of action a P-ship can take against one of its own breaching partners ii. In this c/a the P-ship can recover: 1. losses caused by the breach; AND 2. disgorge profits from breaching partner 2. Partners Rights in Partnership Property a. Specific Partnership Assets i. Things like land, leases, or equipment owned by the Pship as P-ship assets therefore no individual partner may transfer these assets to some 3rd party b. Share of Profits and Surplus i. THIS IS THE ONLY PERSONAL PROPERTY owned as such by individual partners therefore individual partners may transfer their share of these rights to 3rd parties as these rights belong to them c. Share in Management i. This is an asset ONLY OWNED by the partnership itself AND NOT by individual partners therefore no

Page 108 of 337

BAR/BRI Bar Review, Summer 2007 individual partner may transfer their share in management to some 3rd party ii. Share in mgmt = for example, the right to vote d. Conflict between P-Ship Assets and Personal Property i. In a close call, the TEST IS whose $ was used to buy the property? 1. P-Ship $ = P-Ship asset 2. Personal $ = Personal Asset 3. Example GP buys car with his own $ BUT uses it everyday for the p-ship. At death he transfers the car to wife, by Will. His $ bought the car so transfer at death is valid. 3. MANAGEMENT a. Absent an agreement to the contrary, each partner is entitles to EQUAL votes no matter what the profit division may be. 4. SALARY a. Absent an agreement to the contrary, no partner is entitled to salary. b. EXCEPT in wind up of p-ship business 5. PARTNERS Share of Profits and Losses a. Absent an agreement to the contrary, PROFITS shared equally THEN LIKE PROFITS b. Absent an agreement to the contrary, LOSSES are shared equally c. Examples: i. Agreement silent to both losses and profits both are shared equally ii. Profits say 60/40 BUT losses are silent - ** LOSSES ARE SHARED 60/40 ** - like profits iii. Losses say 60/40 BUT profits silent - ** PROFITS ARE SHARED EQUALLY ** - profits THEN losses iv. Partnership Dissolution 1. Key Definition a. Dissolution A process initiated by any material change in the p-ship cause by the death or withdrawal of any single GP b. Termination The real end of the p-ship c. Winding Up The time period between dissolution and termination where remaining partners must liquidate p-ship assets to satisfy p-ship creditors 2. Compensation and Liability for Winding Up a. Compensation for Winding Up i. Exception to the rule of no salary, prtnrs are entitled to compensation for helping wind up p-ship business b. Partnerships Liability for Winding Up (already dissolved) i. Old Business

Page 109 of 337

BAR/BRI Bar Review, Summer 2007 1. P-ship & therefore its individual GPs still retain ALL liability on ALL transactions entered into to wind up OLD business with currently existing creditors ii. New Business 1. P-ship & therefore its individual GPs still retain ALL liability on ALL transactions even on NEW business UNTIL notice of dissolution is given to ALL known & potential creditors c. Priority of Distribution i. Each level of priority must be fully satisfies before beginning the next level in this order 1. 1st outside creditors a. general trade creditors 2. 2nd inside creditors a. Prtnrs who have loaned $ to the P-ship rd 3. 3 capital contributions a. All capital individually paid in th 4. 4 profits and surplus, if any a. absent agreement to the contrary, all profits shared equally ii. RULE: EACH PARTNER MUST BE REPAID HIS/HER LOANS AND CAPITAL CONTRIBUTIONS PLUS THAT PARTNERS SHARE OF THE PROFITS OR MINUS LOSSES 1. Example if after distribution to inside and outside creditors not enough $ is left to pay back capital contributions ALL GPs must stick their hand into their own pocket to pay back capital contributions (it is deemed a loss). 7. Constitutional Law a. Federal Judicial Power i. The requirement for Cases & Controversies 1. Standing Question as to whether the Plaintiff is the proper party to bring a matter into Court for Adjudication; This REQUIRES fulfillment of all four justiciability doctrines a. Injury i. P suffered OR will imminently suffer injury 1. P may only assert injuries which they have personally suffered; OR a. Example Sierra Club attempted to enjoin Disney from building a ski resort on a plot of land BUT no member of the Sierra Club had ever even walked through the land NO STANDING

Page 110 of 337

BAR/BRI Bar Review, Summer 2007 2. Plaintiff who is seeking injunctive or declaratory relief must show a likelihood of future harm to them a. Example P sought to enjoin the LAPD from using chokeholds unless their lives were in danger NOT STANDING P cannot prove that he would soon be subject to a chokehold, no imminence b. Causation & Redressability i. P must allege and prove that D caused the injury (causation), so the decision by the court will actually give redress to a victorious P (redressability) ii. Stops advisory opinions iii. P must show that the favorable decision would stop the harm suffered iv. Example Hospital denied indigent patients care due to IRS reg deferring certain tax exempt statutes. Indigents moved to have statute declared unconst NO REDRESSABILITY Ps would not be able to prove that upon removal of statute the hospital would then again treat indigents c. No 3rd Party Standing i. Generally a P CANNOT assert claims of others or 3rd Parties before the court ii. EXCEPTIONS 1. 3rd Party standing is allowed if there is a close relationship between the P and the injured party a. Example Doctors bringing Abortion cases on behalf of their patients b. Example Father LACKED standing to sue on behalf of his daughter ad the Mother had sole custody 2. 3rd Party standing is allowed when the injured 3rd Party is unable to assert their own rights a. Example c/a brought by the estate of the deceased for pain and suffering prior to his death 3. An organization may sue of behalf of their members IF: a. Members have standing b. Interest is germane to organizations purpose; AND c. Claim nor Relief requires participation of the individual member d. No Generalized Grievances

Page 111 of 337

BAR/BRI Bar Review, Summer 2007 i. The P must not be suing solely as a citizen OR as a taxpayer interested in having the govt follow the law 1. Example taxpayer CANNOT sue requesting govt show CIA expenditures, while right to such exists, grievance is generalized on behalf of all taxpayers ii. EXCEPTION 1. A taxpayer has standing to challenge government expenditures which violate the Establishment clause 2. MONEY ONLY a. Example Taxpayer had standing to challenge financial aid distributions (4) going to parochial schools b. Cf. Taxpayer had NO standing to challenge the grant of federal land by government to parochial school e. The Party with the Best Standing is one who has suffered a personal injury that is economic in nature 2. Ripeness a. Ripeness is the question of whether a federal court may grant pre-enforcement review of a statute or regulation b. Ripeness is looked to when a statute HAS NOT YET been violated c. Court looks at 2 factors: i. The hardship that would be suffered w/o preenforcement review; AND ii. The fitness of if the issues and the record for judicial review d. Whenever a declaratory judgment requested Ripeness is always an issue i. Example FDA adopts a regulation requiring the scientific name of the med placed on all medicine. The Pharm Comps seek declaratory judgment to find reg unconst. Pharm Comps allege grave financial burden (re-labelling all meds everywhere), USSC finds even though no one had yet violated the statute the hardship was so great that the issue was ripe for determination. 3. Mootness a. Generally, when the events after filing of a lawsuit end the Plaintiffs injury, the case must be dismissed as moot b. EXCEPTIONS i. Wrong capable of repetition 1. Injury can be suffered over and over

Page 112 of 337

BAR/BRI Bar Review, Summer 2007 2. Example Roe v. Wade, by the end of the litigation the woman had the baby, but she could have been denied an abortion again ii. Voluntary Cessation 1. D halts voluntarily to make action moot, c/a w/drawn, D re-initiates the offending practice iii. Class Action Suits 1. If the named partys action is dismissed the whole class action is NOT then moot 4. The Political Question Doctrine a. These are allegations of constitutional violations that the courts will not adjudicate b. 4 major types: i. The republican for of government clause of the Constitution ii. Challenges to the Presidents conduct for foreign policy 1. Example Challenging troop actions OR going to war w/o a congressional declaration of war iii. Challenges to Impeachment and Removal Proceedings 1. judges, pres, v.p. iv. Challenges to partisan gerrymandering 1. drawing up political districts ii. Supreme Court Review 1. Virtually all cases come to the USSC by writ of certiorari a. Cases from State Courts b. Cases from the U.S. Court of Appeals c. Appeal from a decision of a 3 judge panel district court d. State vs. State i. USSC has original and exclusive jurisdiction for suits between state governments ii. AND also cases involving ambassadors 2. Generally the USSC may hear cases OINLY AFTER there has been a final judgment from the highest state court, the US Ct of App OR a 3 judge panel district court a. Final judgment rule all other possible appeals and remedies must have been exhausted before the USSC can hear the case 3. NO USSC REVIEW WHERE there is an independent AND adequate state law ground a. IF a state court decision rests on 2 grounds, 1 state and 1 federal, if the USSC reversal of the federal law ground WILL N OT change the result/remedy USSC will not hear the case b. Example federal and state grounds give P an equal monetary amount and P wins of state ground and loses on federal, no appeal will be allowed b/c the P has gotten all he can get anyway, why give him the same remedy twice

Page 113 of 337

BAR/BRI Bar Review, Summer 2007 iii. Lower Federal Court Review 1. Federal Courts May NOT hear suits against State Governments a. Sovereign Immunity i. The 11th Amendment bars suits against the State in States Court ii. Sovereign Immunity bars suits against States in State Courts OR federal agencies b. EXCEPTIONS i. Waiver 1. State waives immunity 2. Example NY, $ suits in the Ct of Claims & Equitable Relief in Supreme Court via Art. 78 proceeding\ ii. States may be sued pursuant to federal laws adopted by Congress pursuant to their power under 5 of the 14th Amendment 1. Example Title VII of the Civil Rights Act was adopted under 5 of the 14th Amendment thus when the State is discriminatory in the workplace a cause of action has been allowed iii. Federal Court may suet the State government as a Defendant 1. Example Dormant Commerce Clause violations c. Suits against state officers ARE ALLOWED i. For injunctive Relief ii. For monetary relief when the officer is personally paying damages iii. BUT NO MONETARY RELIEF WHEN the state treasury will have to pay retroactive damages 2. Abstention a. Federal Courts may NOT enjoin pending state court proceedings i. Example D charged with criminal violation of a statute. D moves, mid-prosecution, to stay state court proceeding to bring a c/a in federal court to have the statute declared unconstitutional. NOT ALLOWED b. Federal Legislative Power i. Congress Authority to Act 1. Express or Implied Congressional Power a. Congress may only act with powers given to them be it express or implied by the Constitution b. There is NO general federal police power this power is reserved for the States

Page 114 of 337

BAR/BRI Bar Review, Summer 2007 c. Congress can only adopt police powers in 4 situations M.I.L.D i. M ilitary ii. I ndian Reservations iii. L ands and Territories on the Federal Government iv. D istrict of Columbia 2. The Necessary and Proper Clause a. Congress can choose any means not prohibited by the Constitution to carry out its authority b. Example Congress could have a national bake sale to raise money for the military 3. Taxing/Spending Power & the Commerce Power a. Congress may tax and spend for the general welfare i. This includes any tax program to raise revenue or spend money b. The Commerce Power i. Congress may regulate the channels of interstate commerce 1. Place where commerce occurs, hwys, internet, waterways ii. Congress may regulate the things, persons and instrumentalities in interstate commerce 1. Example Fed Statute grounded in the commerce clause was held unconst. Statute prohibited gun possession w/in 1000ft of schools - had nothing to do with guns moving through interstate commerce iii. Congress can regulate activities that have a substantial effect on interstate commerce 1. IF a state line is crossed, evaluation of a statute based on the subst effect of commercial activity in NOT NECESSARY 2. If economic activity Congress may determine the cumulative impact to determine what is substantial a. Example Statute regulating how much wheat a farmer can grow for his personal crop was held Const, b/c the econ effect while minimal if considered individually-per farmer, can be considered cumulatively as substantially effecting interstate commerce if all farmers grow their own wheat 3. If non-economic activity the cumulative impact may not be evaluated

Page 115 of 337

BAR/BRI Bar Review, Summer 2007 a. Example statute allowing fed civil damage awards for rape victims was unconst. While stopping rape could effect commerce in a given location, only 1 rape could be considered and thus, not substantial. The validity of the statute based on its substantial effect could NOT be based upon its cumulative impact as it was non-economic 4. The10th Amendment Limitation a. All powers not granted to the US, which are not prohibited by the US (i.e. DCC), are reserved for the States b. Congress cannot COMPEL state regulatory or legislative action cannot commandeer the States i. Example Fed demanding states clean up low-level radioactive nuclear waster and demand state legislatures make timelines is UNCONST ii. Example Fed under the Brady Act that required state officials to do bkgrnd check before issuing guns is UNCONST c. HOWEVER Congress can induce state government action by putting strings on grants, so long as: i. the conditions are expressly states; AND ii. the inducement relates to the program 1. Example Fed government gave states $ to build roadways IF the States rose the drinking age to 21 inducement (fed hwy $) relates to drinking age increase as the roads will be safer when removing drunk drivers between the ages of 18 & 21. d. Congress MAY PROHIBIT harmful commercial activity by state governments i. Example Federal Law held CONST which prohibited State DMVs from selling their driver lists for commercial purposes. USSC said it was NOT commandeering (imposing a duty) rather Fed was prohibiting a commercial activity 5. Power Under 5 of the 14th Amendment a. Congress MAY NOT: (1) create new rights; OR (2) expand the scope of rights under 5 of the 14th b. Congress MAY: (1) prevent; OR (2) remedy violations of rights already recognized by the courts i. These laws must be proportionate and congruent to remedying constitutional violations

Page 116 of 337

BAR/BRI Bar Review, Summer 2007 ii. Where reach and scope of law enacted by Congress overrides what has been already set down by the courts - unconst ii. Delegation of Powers 1. Congress may delegate unlimited legislative power 2. Legislative Vetoes and Line-Item Vetoes a. For Congress to act there always must be: i. Bicameralism passage by both the house and senate; AND ii. Presentment giving the bill to the President to sign 1. The pres must sign or veto the bill in its entirety, pres cannot veto part and accept part or a bill b. Legislative Vetoes are unconstitutional per se i. Congress cannot overturn an executive action w/o bicameralism and presentment 3. Congress may NOT delegate executive power to itself or its officers 4. Congress may NOT delegate themselves additional powers con expressly or impliedly created by the constitution 5. Every Delegation has been upheld, thus any unconst delegation will be a wrong answer c. Federal Executive Power i. Foreign Policy 1. Treaties a. Treaties are agreements between the United States and a foreign country that are negotiated by he President and are effective when ratified by the Senate i. Treaties prevail over conflicting state laws ii. If a treaty conflicts with a federal law the one made LAST IN TIME controls iii. If a treaty conflicts with the Constitution, the Constitution controls 2. Executive Agreements a. Executive Agreements are agreements signed between the United States and a foreign country that is effective when signed by the President and the head of a foreign nation i. NO SENATE APPROVAL REQD ii. Executive Agreements can be used for ANY purpose iii. BUT executive agreements ONLY prevail over State Law, NOT federal law or the federal Constitution 3. Use of Troops in Foreign Countries a. The President has broad powers as Commander-in-Chief to use American troops in foreign countries ii. Domestic Affairs 1. Appointment & Removal Power a. Appointment

Page 117 of 337

BAR/BRI Bar Review, Summer 2007 i. The President appoints: 1. Ambassadors 2. Federal Judges; AND 3. Officers of the United States ii. Congress may vest the appointment of Inferior Officers in: 1. The President, 2. The heads of Departments; OR 3. In Lower federal courts iii. Congress MAY NOT give itself or its Officers ANY appointment power iv. Officers vs. Inferior Officers 1. Difference is that Officers can fire Inferior Officers 2. Example The Atty General (officer) can hire/ fire U.S. Attys (inferior officers) b. Removal i. Unless removal is limited by statute, the President may fire and executive branch office ii. EXCEPTIONS 1. Congress can limit removal where independence from the President is desirable a. Example White House Independent Counsel 2. Congress cannot prohibit removal but impose a requirement of good cause a. President may not be able to remove a position when good cause is shown 2. Impeachment and Removal a. Parties who can be Impeach include: i. President ii. Vice-Pres iii. Federal Judges; AND iv. Officers of the Unites States b. Impeachment Grounds: i. Treason ii. Bribery iii. High Crimes; OR iv. Misdemeanors c. Impeachment DOES NOT remove a person from office d. House Impeaches then AFTER Senate Removes by a 2/3 voted 3. Presidential Immunity a. The President has absolute Immunity to civil suits for $ damages WHILE IN OFFICE i. No Immunity for acts which occurred prior to taking office

Page 118 of 337

BAR/BRI Bar Review, Summer 2007 4. Presidential Privilege a. President has Executive Privilege for: (1) presidential papers; AND conversations; BUT such privilege must yield to important governmental interests (i.e., - a criminal prosecution) 5. Presidential Pardon Power a. President can pardon those accused or convicted of FEDERAL crimes i. Example Pres could not pardon for civil contempt ii. No State crimes OR violations of State Law iii. CAN NEVER BE PARDONED for impeachment by the House d. Federalism i. Preemption 1. Generally, the Supremacy Clause provides that the Constitution and the laws and treaties made pursuant it are the supreme law of the land 2. Express Federal says, Federal Law is Exclusive a. ONLY WHEN Fed govt actually regulates an area 3. Implied a. If federal and state law are mutually exclusive federal law preempts i. Mutually exclusive means that it is not possible to comply simultaneously with both laws ii. Example Fed says all shirts must be all green and State says all shirts must be all red iii. EXCEPTION States may set restrictions which are more stringent than the standards set by the fed govt, HOWEVER FED NEVER needs to comply with these increased requirements b. If state law impeded the achievement of a federal objective, federal law preempts state law i. Example Federal Law sets up a grievance committee to hear problems with hazards at work. State law says that if you report these hazards you will lose your workmens comp benefits. Fed law preempts states law c. If Congress evidences a clear intent to preempt state law, federal law preempts state law i. Example Immigration Law 4. Taxation by States of Federal Government Activity a. State may not tax or regulate federal government activity this would be considered placing a significant burden on federal activity i. Example - State tax on the Bank of the United States Unconst ii. ANY tax by state CANNOT be paid from the federal treasury

Page 119 of 337

BAR/BRI Bar Review, Summer 2007 1. Example state property taxes on a military base / cf. mom & pop store on fed land CAN pay state income taxes ii. Dormant Commerce Clause and the Privileges & Immunities Clause or Art IV 1. Definitions a. Dormant Commerce Clause State or local law is unconst if it places an excessive burden on interstate commerce b. Priv & Immunities Clause of Art IV 2 No state may deny CITIZENS of other states the Privileges & Immunities it affords to it own CITIZENS c. Priv OR Immunities Clause of the 14th Amendment This is always a wrong answer UNLESS it involves the right to travel i. Example Cali gave its 1st year residents lower welfare benefits than all other residents. NOW both parties are citizens so no ART IV issue, and no EPC issue b/c there only need be a rational basis, BUT this was found unconst b/c poor people wouldnt want to move to Cali b/c they would loose $ they desperately needed. stopped poor from their right to travel to Cali 2. Discrimination Against Out-of Staters a. This would be an Art IV 2 violation if it discriminated against individuals: i. Important Economic Interests; OR ii. Individual Civil Liberties iii. UNLESS the statute was necessary to achieve an important governmental interest b. Examples i. Outside state garbage haulers could not bring their garbage into NJ - Unconst ii. Michigan wineries by statute could ship wine directly to Michigan citizens while out-of-state wineries could not - Unconst 3. When the State Law Does NOT Discriminate a. Initially the art IV 2 Priv & Immunities Clause does not apply b. If the law burdens interstate commerce it may violate the Dormant Commerce Clause (DCC) i. TEST: Are the burdens on out of state commerce exceeded by the benefits of the state ii. Example Mud Flaps State required ALL trucks driving through state to have curved mud flaps, no discrim, applied to all trucks BUT a heavy burden on ALL truckers entering Illinois to change their mud flaps every time they crossed state lines AND NO benefit to curved mud flaps @ all. 4. When the State Law DOES Discriminate

Page 120 of 337

BAR/BRI Bar Review, Summer 2007 a. If the law burdens interstate commerce it violates the DCC UNLESS it is necessary to achieve an important government purpose i. State must show it CANNOT achieve its objective by less intrusive means 1. Example State outlawed out-of-state bait for fishing in that state to remove parasites from fish. upheld. No less discriminatory means by which to regulate sanitary fish. ii. EXCEPTIONS 1. Statute is approved by Congress; OR a. b/c once Congress acts they are no longer dormant for purposes of the commerce clause 2. The State Citizens are Market Participants. The state is allowed to prefer its own citizens in receiving benefits from government programs OR in dealing with government owned businesses a. Example SUNY system can charge less $ for in-state citizens tuition because this is a government program supported by in-state tax payer $. Cf. no in-state decrease allowed for private school tuition state taxpayer is NOT funding private schools b. If the law discriminates against the out-of-staters with regard to their ability to earn a livelihood it violates the P&I Clause of Art IV 2, UNLESS it is necessary to achieve an important governmental purpose i. Applies only to discrimination against out-of-staters ii. Discrimination must relate to: 1. Civil Liberties; OR Important Econ Activity a. Example huge cost difference for outof staters to get a mass fishing license - Unconst b. Example Only in state citizen can be an atty - Unconst c. Example cost difference for out-of staters for elk hunting license - Const not an econ activity, ONLY a hobby 2. If violates Civ Lbrty or Econ Activity there must be no less discriminatory alternative available iii. Corporation or Alien cannot bring suit under this provision MUST ONLY LOOK AT DCC

Page 121 of 337

BAR/BRI Bar Review, Summer 2007 iii. State Taxation of Interstate Commerce 1. States MAY NOT use their tax system to benefit in-state businesses a. Example Purchase of in-state goods cannot give consumer a tax credit 2. A state may tax activities only if there is a substantial nexus to the state a. Example NYS Death Taxes, must be a domiciliary significant connection to the state 3. State taxation of interstate business must be fairly apportioned a. Example - % of state tax must = % of good produced in state as compared to federal revenue on that good iv. Full Faith & Credit 1. Court in one state must give full faith and credit to judgments of courts in another state SO LONG AS: a. The court that rendered judgment has PJ & SMJ over the parties and issue b. The judgment was on the merits i. Example In NY this DOES NOT include default and confession judgments, those have their own transfer procedure, (see, CPLR 3213 supra) c. The judgment was final e. The Structure of the Constitutions Protection of Individual Liberties i. Government Action 1. The Constitution only applies to government action a. Private conduct need not comply with the Constitution 2. State Action includes acts of all governments and all officers 3. HOWEVER - Congress, by may apply constitutional norms to private conduct a. The 13th Amendment can be used to prohibit private race discrimination i. Distinction the 13th Amdmt ONLY prohibits slavery, BUT a by Congress based on the express power of the 13th Amdmt can prohibit discrimination b. The commerce pwr can be used to apply constitutional norms to private conduct i. A private discriminatory practice can violate the commerce clause if it can be considered cumulatively affecting an economic activity that would have a substantial effect on interstate commerce ii. Example private restaurant who denies black people food, IF ALL restaurants did this then ALL black people couldnt buy food at restaurants, considered cumulatively, the economic effect would have a substantial impact on the food market practice violates commerce clause

Page 122 of 337

BAR/BRI Bar Review, Summer 2007 c. Congress CANNOT use 5 of the 14th to regulate private behavior i. REMEMBER Under 5 congress cannot make law which creates new rights - only enforce those already established by the courts to prevent or remedy constitutional violations 4. EXCEPTIONS There are certain instances where private conduct MUST comply with the Constitution a. The public function exception. Where a private entity is performing a task generally left to the government. i. Example the Company Town Const applies ii. Example Refusal to let blacks vote in private political party primary elections - Const applies iii. Example Public owned utility companies when terminating service must give customer DPC. Private companies did not. Customer alleged DPC viol. USSC says running a utility is NOT traditionally exclusively done by the govt, thus NO state action Const does NOT apply b. The entanglement exception. The Constitution applies if the govt affirmatively authorizes, encourages, or facilitates constitutional activity. i. Govt subsidy is usually not enough ii. In this area of law, the cases dont fit too many inconsistencies iii. Examples 1. Courts will not enforce racially restrictive covenants 2. Government will not lease restaurant space which then discriminates (implies authorization) 3. State CANNOT provide free books to private schools which discriminate (encourage discrim) 4. NO ST ACTION where a private school 99% funded by the govt fired a teacher for her speech (no encouragement, merely subsidy) 5. NO ST ACTION where NCAA orders suspension of a coach teaching at a state university 6. ST ACTION where private entity regulates interscholastic sports on behalf of a state-wide education system 7. NO ST ACTION where a bar with a state liquor license racially discriminates against its patrons ii. Application of the Bill of Rights 1. The Bill of Rights on applies directly to the federal government

Page 123 of 337

BAR/BRI Bar Review, Summer 2007 2. The Bill of Rights applies to state and local governments through the DPC of the 14th Amendment 3. Selective Incorporation THE WHOLE Bill of Rights apply to the states EXCEPT: a. The right to bear arms b. The right to NOT have soldiers quartered in a persons home c. The right to grand jury indictments in criminal cases d. The right to a civil jury trial e. The right to NOT be excessively fined iii. Levels of Scrutiny 1. Rational Basis a. TEST: The statute must be rationally related to an important governmental objective b. BOP: on the challenger to prove there is no conceivable legitimate purpose i. That the statute is arbitrary and capricious ii. The actual purpose need not be legitimate, the purpose must merely be conceivable 2. Intermediate Scrutiny a. TEST: The statute must be substantially related to an important governmental objective b. BOP: on the govt to prove that the goal is an important one and that the statute is narrowly tailored 3. Strict Scrutiny a. TEST: The statute must be narrowly tailored (necessary) to achieve an important (compelling) governmental interest b. BOP: on the govt to prove that the objective is vital, crucial, compelling AND that the means are the least restrictive alternative to achieve the govts goal f. Due Process i. Procedural Due Process 1. Definitions a. Deprivation of Liberty Occurs IF there is a loss of a significant freedom provided by statute or the Constitution i. Example Institutionalization of an Adult requires notice and a hearing UNLESS emergency exists ii. Example Parent Institutionalizing a child ONLY requires a neutral screening by a fact finder due to the presumption that the parent acts in the best interests of the child iii. HARM TO REPUTATION BY ITSELF is not a deprivation of liberty, it is deprivation if such defamation led to loss of an interest iv. Prisoners rarely have liberty interests

Page 124 of 337

BAR/BRI Bar Review, Summer 2007 b. Deprivation of Property Occurs IF there is an entitlement AND that entitlement is NOT fulfilled i. Entitlement arises where a party reasonable expects to continue receiving a benefit ii. Example tenure OR promises of future employment require PDP, cf. non-renewal of an employment K, no PDP required 2. Government Action a. Government negligence is not sufficient for a deprivation of PDP b. Intentional OR Reckless Action by the Government is required for PDP to exist i. EXCEPT if in an emergency situation the governments deprivation must shock the conscience 1. Example When police chases the D there was no deprivation of his DPC rights because he did not intend to kill the D by his acts, only stop the crime. Cf setting up a roadblock to stop the D around a curve, with lights pointed at the D as to blind him causing the Ds death c. HOWEVER the governments failure to protect people from privately inflicted harms does NOT deny due process i. EXCEPT 1. If the person is in government custody (i.e. suicide watch); OR 2. The government creates the harm 3. Procedures Required a. TEST: The proper procedure used is determined by Balancingi. Importance of the Interest to the Individual ii. Ability of the additional procedures to increase the accuracy of the fact-finding; AND iii. The government interest in administrative efficiency b. Examples i. Welfare benefits termination requires Hearing B4 removal ii. Termination of S.S. Disability only needs a hearing post-termination iii. Student disciplined by public school must have: (1) notice of charges; AND (2) an opportunity to explain iv. Parents right to have child terminated require Notice & Hearing prior to termination v. Punitive Damage Awards require: (1) judicial review; AND (2) jury instruction - all others deemed grossly excessive vi. ANY American Citizen detained as an enemy combatant is entitled to counsel, notice and a hearing

Page 125 of 337

BAR/BRI Bar Review, Summer 2007 vii. Except in cases of exigency ANY: (1) pre-judgment attachment; OR (2) seizure by forfeiture requires notice and a hearing 1. Any exigency (i.e., - secreting or dissipation of assets by TRO) still requires notice and a hearing to be held as soon as possible after the un-noticed seizure ii. Substantive Due Process 1. Substantive DPC asks whether the government has an adequate reason for taking away a persons life, liberty OR property 2. Economic Liberties Limited Protection a. Rational Basis is used for laws affecting economic rights i. Examples challenge to wage regulation OR regulating a profession/trade OR challenge to a consumer protection law b. Takings Clause The government may take private property for public use so long as it provides reasonable compensation i. Is there a taking? 1. Possessory government confiscation OR physical occupation of a property a. Example Apt bldg owners must make room for cable boxes minimal taking, BUT minimum compensation required 2. Regulatory government regulation which leave no economically viable use of the property a. Example P buys beach front property to build a home and then zoning law forbids all bldg on coastlines b. Example removal of air right above grand central DID NOT remove all econ viable use of prop, trains underground c. No taking merely because the zoning lowers prop value ii. Government conditions on development property (zoning) must be justified by a benefit that is roughly proportionate to the burden imposed otherwise it is a taking iii. Standing A prop owner may bring a takings challenge to any statute that existed at the time the prop was acquired 1. Example If prop owner 2 buys from prop owner 1, prop owner 2 CAN brings a regulatory taking action to challenge a that was made during prop owner #1's ownership

Page 126 of 337

BAR/BRI Bar Review, Summer 2007 iv. Temporarily denying use is NOT a taking as long as it is reasonable 1. Example delay for government study is reasonable 2. Public Use if taking was NOT for public use, the government would have to give it back a. Government must only have a reasonable belief that taking at time will be going to public use/benefit b. Example taking private prop by govt to give to private land developers is a taking for a public purpose IF govt thought jobs were going to be created and economic benefits would ensue 3. Just Compensation Paid a. As to the FMV at the time of the taking b. Loss to Owner, NOT what the prop will be worth after the taking c. The Contracts Clause i. Applies only to state or local interference with already existing Ks 1. This DOES NOT APPLY TO a. federal government interference b. terms of future contracts ii. State or local interference with private Ks = intermediate scrutiny 1. Does legislation substantially impair a partys right existing under the contract? AND 2. If so, is the law narrowly tailored to important AND legitimate public interests (like RB)? iii. State or local interference with state Ks = strict scrutiny 1. We are suspicious that states want out of Ks they had already entered iv. Ex post facto & Bills of Attainder 1. Ex Post Facto is when you are held in violation of a law which was enacted after you conduct occurred a. Only applies in criminal cases b. THUS, retroactive civil liability only needs to meet the RB test 2. Bill of Attainder directs, by statute, a specific person be punished 3. Privacy is a Fundamental Right Protected under substantive due process any violating fund rights MUST meet strict scrutiny a. Right to marry - FUNDAMENTAL

Page 127 of 337

BAR/BRI Bar Review, Summer 2007 b. Right to procreate - FUNDAMENTAL c. Right to custody of ones children FUNDAMENTAL i. HOWEVER states MAY create an irrebutable presumption that the husband of a woman is the father of that womans child 1. This can lead to denial of visitation by the biological father d. Right to keep the family together FUNDAMENTAL i. Definition of family is broad and includes kids and gkids, BUT the parties MUST be related (by blood, by law, or at common law), not college roommates e. Right to control your childs upbringing FUNDAMENTAL i. This includes denying grandparents visitation over parents objection ii. This includes the choice to send your kids to parochial school f. Right to the purchase of contraceptives FUNDAMENTAL i. The seminal case g. Right to Abortion i. Prior to viability, STATES MAY NOT prohibit abortions BUT may regulate abortion as long as they do not create an undue burden on the ability to obtain abortions 1. Viability is when the fetus can live outside the womb even on machines 2. Examples of Undue Burden a. 24 hr waiting period is NOT an undue burden b. rqmt that licensed physician perform the abortion is NOT an undue burden c. prohibition of partial birth abortions is NOT an undue burden ii. After viability states may prohibit abortion as long as there is an exception for health & safety of the mother iii. Government has not duty to subsidize abortions OR provide abortions in public hospitals iv. Spousal notification and consent laws are unconstitutional v. Parental notice and consent laws for unmarried minors are UNCONST, UNLESS there is an alternative procedure whereby a judge can determine: 1. the child is mature enough; OR 2. the abortion is in the childs best interests h. Right to engage in private consensual homosexual activity i. NO scrutiny determined i. Right to Refuse Medical Treatment

Page 128 of 337

BAR/BRI Bar Review, Summer 2007 i. Competent adults may refuse ANY medical treatment, even-if necessary to save their life ii. Court may require clear and convincing evidence b4 treatment is terminated DNR, HCP iii. Family members may be prohibited from terminating treatment of another j. NO RIGHT to physician-assisted suicide g. Equal Protection i. An Approach to Equal Protection Questions 1. What is the classification? 2. What level of scrutiny should be applied? 3. Does this law meet the level of scrutiny? ii. Constitutional Provisions Concerning Equal Protection 1. The EPC of the 14th applies only to the States 2. EPC is applied to the federal govt through the DPC of the 5th iii. Classifications Based on race or National origin 1. Strict Scrutiny Used 2. How is the existence of a Racial Classification proven? a. The classification exists on the face of the law; OR i. Example Separate But Equal b. If the law is facially neutral the statute must have a discriminatory impact AND a discriminatory intent i. Example D.C. civil service exam, blacks could not pass while whites could, BUT civil srvc exam doesnt viol EPC b/c govt never intended to discriminate ii. Example Batson rulings - on its face its not discriminatory to use a preemptive challenge on one black juror, BUT IF its multiple disqualifications of same race/gender, intent inferred, EPC viol 3. Classifications Benefiting Minorities a. Strict Scrutiny is applied b. Affirmative-action (numerical set asides) are ONLY ALLOWED IF there is clear proof of PAST discrimination i. Remedial only c. Educational institutions may use race as 1 factor in admissions to help minorities B/C the state has a compelling interest in enhancing diversity in education i. Cf. State CANNOT add points to an application b/c someone is a minority OR set aside slots for minorities d. Seniority systems MAY NOT be disrupted for affirmative action i. Last hired = 1st fired, no exceptions iv. Gender Classifications 1. Intermediate Scrutiny Used

Page 129 of 337

BAR/BRI Bar Review, Summer 2007 a. Discriminatory statute allowed if there is an exceedingly persuasive justification 2. How is the existence of a Gender Classification proven? a. The classification exists on the face of the law; OR b. If the law is facially neutral the statute must have a discriminatory impact AND a discriminatory intent i. Example firemen need to be at least 6 foot and 200 lbs. While only 2% of women fit into that definition, there is no intent to discriminate, RB only ii. Example of discriminatory intent (see, Batson supra) 3. Classifications Benefiting Gender a. Gender classification benefiting woman that based on role stereotypes are NOT allowed i. Example State which only allows the woman alimony, b/c W are always dependent on men is UNCONST b. HOWEVER, classifications that are designed to remedy past discrimination and difference in opportunity will be allowed i. Example a social security formula which advantages woman to make up for the many years where woman had different pay-grades than men v. Alienage Classifications 1. Generally Strict Scrutiny Used a. Examples Aliens cant be attys, aliens cant get welfare benefits, aliens cant hold civil service jobs all get strict scrutiny 2. Rational Basis Used When: a. State Statute deals with self-government i. State Laws which discriminate against aliens will be evaluated under rational basis when they involve: 1. voting 2. serving on a jury 3. being a police officer 4. being a teacher; OR 5. being a police officer ii. These jobs are integral to society and the regulation of self-government (cf. notary can be an alien) b. Federal Congressional Statute Regulating Aliens i. Federal Law enacted by Congress will only be evaluated under rational basis, b/c Congress is vested with the plenary power to control IMMIGRATION 3. Intermediate Scrutiny Undocumented Alien Children a. Example where documented alien kids and USC children all received free public education under a Texas statute, undocumented kids were made to pay for public education. This was held UNCONST

Page 130 of 337

BAR/BRI Bar Review, Summer 2007 vi. Discrimination Against Non-Marital Children 1. Intermediate Scrutiny Used 2. Laws which deny a benefit to ALL marital children BUT grant the same benefit to marital children ARE ALWAYS Constitutional a. Example A State which only allowed marital children to inherit from their fathers = UNCONST b. Example A State requiring non-marital children to prove paternity of father, during fathers life to inherit = CONST under intermediate scrutiny governmental interest was to prevent fraud AND the proof of paternity was narrowly tailored as a means by which to enforce such end vii. Rational Basis Used in ALL other types of discrimination 1. Age Discrimination 2. Disability Discrimination a. A which prevented a disabled home from being built in a suburb failed rational bases 3. Wealth Discrimination a. Poverty is not a suspect class 4. Economic Discrimination 5. Sexual Orientation Discrimination a. Example People of Colorado Amended their State Constitution to repeal all laws affording gays protection, this was held UNCONST under RATIONAL BASIS viii. Fundamental Rights Protected Under Equal Protection 1. Right to Travel - FUNDAMENTAL a. Laws that prevent people from moving from state to state MUST meet strict scrutiny i. Example During depression Cali had a which required new residents to show that they were able to support themselves - UNCONST b. Durational Residency Requirements must meet strict scrutiny i. Example Live in State for __ years, the you can receive welfare = UNCONST c. Restrictions on foreign travel = rational basis 2. Right to Vote - FUNDAMENTAL a. Laws that deny some citizens the right to vote meets strict scrutiny i. Example 50 days of durational residency are allowed prior to allowing someone to vote in the state as the State needs administrative time to enter the information in to the election roll passes strict scrutiny ii. Example poll tax = UNCONST iii. Property Ownership requirements to vote are NEVER ALLOWED EXCEPT in a water district election

Page 131 of 337

BAR/BRI Bar Review, Summer 2007 b. One person One Vote must be met is ALL state and local elections i. Districts must be about equal in population c. At-large elections are CONST UNLESS proof of a discriminatory purpose i. At-Large elections are those where all citizens vote equally for all members of each district ii. Example In a place such as Alabama in the 1950s where there is clear evidence of racially polarized voting, At-large voting will NOT be allowed d. Using race to draw district lines must be evaluated under strict scrutiny e. Counting uncounted votes without standards in a presidential election violates EPC, fails strict scrutiny, no means exist 3. There is NO FUNDAMENTAL RIGHT TO EDUCATION a. Example In State A, Prop taxes fund education, poor people had to pay a greater percentage of income than rich people, for worse educ - NO EPC VIOL b/c EDUC IS NOT FUNDMTL h. The First Amendment i. Free Speech Methodology 1. Content-based v. Content-neutral restrictions a. Content Based Restrictions MUST meet strict scrutiny; 2 types: i. Subject Matter Restrictions 1. Application of a depends on the topic of the message a. Example UNCONST - cannot picket in residential neighborhoods unless it is a labor protest ii. Viewpoint Restrictions 1. Application of a depends on the ideology of the message a. Example UNCONST - Pro-War demonstration allowed BUT NOT AntiWar demonstrations b. Content Neutral Laws burdening free speech need only meet intermediate scrutiny 2. Prior Restraints a. Court orders suppressing speech MUST meet strict scrutiny. i. Example Fed govt went to fed ct to stop NYT from publishing the Pentagon Papers Order held UNCONST ii. Example Gag orders to press to prevent pre-trial publicity ins NOT allowed b. Procedurally proper court orders must be complied with until the are overturned

Page 132 of 337

BAR/BRI Bar Review, Summer 2007 i. Violation of the order bars violators ability to later challenge the order ii. To challenge order - move to vacate c. Govt can require a license for speech ONLY IF: i. Important reason for licensing; ii. No discretion to the licensing authority; AND iii. must have procedural safeguards in the event the license is denied 3. Vagueness & Overbreadth a. Vagueness A law is unconstitutionally vague if a reasonable person cannot tell what speech is prohibited and what is allowed such denies DPC b. Overbreadth = A law is unconstitutionally vague if it regulates a substantially more speech that the Constitution allows to be regulated i. Example City adopted which prohibited all live entertainment, to stop strip shows. was held overbroad as it also stops live plays and concerts c. Laws which criminalize fighting words are ALWAYS vague and overbroad i. These are words directed at another which are likely to provoke a violent response 4. Symbolic Speech a. Government can regulate conduct that communicates IF: i. It has an important interest unrelated to suppression; AND ii. The impact on the communication is no greater than necessary to achieve this suppression iii. Examples 1. Flag burning = CONST protected speech 2. Draft Card Burning is NOT protected speech; govt has an important interest that everyone carry around the card just in case 3. Nude dancing IS NOT protected speech 4. Burning Cross CONST protected UNLESS the burning is meant to threaten another 5. Contribution Limits on a Political Campaign = CONST 6. BUT putting EXPENDITURE limits on a persons spending (i.e., buying ads for their favorite candidate) is UNCONST 5. Anonymous Speech is Protected unless strict scrutiny met ii. Speech Unprotected OR Less Protected by the 1st Amendment 1. Incitement of Illegal Activity

Page 133 of 337

BAR/BRI Bar Review, Summer 2007 a. The government may punish speech if there is a substantial likelihood of imminent illegal activity AND the speech spoken is directed to causing such illegal activity b. Example I stand in classroom with bat, saying lets beat up the professor this speech may be regulated 2. Obscenity & Sexually Oriented Speech a. TEST: All 3 Reqmts must be met: i. The material must appeal to the prurient interest 1. prurient is an unhealthy interest in sex a shameful or morbid interest ii. The material must be patently offensive under the law prohibiting obscenity; AND iii. Taken as a whole, the material must lack serious redeeming artistic, literary, political or scientific value 1. Redeeming value is determined by a NATIONAL standard; BUT 2. Prurient interest is eval at the LOCAL level b. The government MAY use zoning ordinances to regulate the location of adult bookstores and movie theaters c. Child porn may be completely banned even if not obscene i. B/c the govt has a compelling interest in protecting children ii. THIS IS FOR KIDS ONLY, NOT: 1. people who look like kids; OR 2. graphic images of kids (cartoons) iii. Government can control PRIVATE POSSESSION of child porn (deodant) NOT private possession of obscene material d. IF a person is found to violate a legally valid obscenity law the government may seize ALL the assets of ALL the businesses of the violator e. Profane and Indecent Speech is generally protected by the 1st Amendment i. Example D cannot be arrested for inciting a riot when the back of his jacket says fuck the draft ii. Cannot censor words to censor ideas EXCEPT: 1. In the broadcast media; Or a. Broadcast media includes regular television NOT cable TV or Internet, things you actively pursue to bring into your home 2. In schools (they must teach civil discourse) 3. Commercial speech a. False and Deceptive Ads are NOT protected by the 1st Amendment NOR is advertising illegal activity

Page 134 of 337

BAR/BRI Bar Review, Summer 2007 b. True Commercial speech that inherently risks deception can be prohibited i. State can stop professionals from advertising or practicing under a trade name 1. Example Optometrist by may be required to state his name in the business, b/c in the event he is a fraud he could just close down shop, open in a diff name and fool the unknowing public ii. The government may prohibit an attorney, in-person, from soliciting clients for profit 1. But free representation is NO 1st violation 2. Letter can be sent iii. The government may NOT prohibit accountant from in person solicitations. 1. While an atty is an advocate (glib) an accountant must be accurate diff goals c. Other commercial speech (that is not false, deceptive OR inherently risks deception) can be regulated if intermediate scrutiny is met i. Example - says that an atty cannot contact accident victim (in person OR by mail) until 30 days after accident, this meets intermediate scrutiny d. Intermediate scrutiny applies so govt need not use the least restrictive alternative, just needs to be narrowly tailored 4. Defamation a. If is a public figure running for office, the can recover for defamation by proving: i. Falsity; AND ii. Actual Malice b. If is a public figure who has thrust themselves in to the in the public light (i.e., celebrity), the can recover for defamation by proving: i. Falsity; AND ii. Actual Malice c. If is a private figure AND the matter is of public concern, the can recover for defamation by proving: i. Falsity; AND ii. Negligence by the iii. HOWEVER to receive punitive or presumed damages must show actual malice d. If is a private figure and the matter is NOT of public concern, the can recover for defamation by proving: i. ONLY Falsity; ii. HOWEVER to receive punitive or presumed damages NEED NOT show actual malice

Page 135 of 337

BAR/BRI Bar Review, Summer 2007 5. Privacy a. The govt may not create liability for information that was lawfully obtained from the govt b. Liability is NOT allowed IF the media broadcasts a tape of an illegally intercepted call AND they did not participate in the illegal interception c. The government may limit dissemination of information to protect privacy (like the CIA) d. Speech by govt employees on the job AND within the scope of their employment is NOT protected by the 1st amendment e. Other government restriction based on CONTENT must meet strict scrutiny iii. What Places are Available for Speech 1. Public Forums a. Government properties that the govt is required to make available to speech b. Examples Parks & Sidewalks c. s must be subject matter and viewpoint neutral is these forums, OR IF NOT must meet strict scrutiny d. If CONTENT NEUTRAL - THEN s must be time, place OR manner regulation that serves and important governmental interest AND leaves an adequate alternate forum i. Content neutral forum regulations must meet intermediate scrutiny narrowly tailored ii. Example No amplified truck ads at night in residential neighborhoods passes intermediate scrutiny iii. City officials CANNOT have discretion to set fees on a sliding scale for speech in a public forum or for a public demonstration 2. Limited OR Designated Public Forums a. These are government properties that the govt could constitutionally close off to speech but elects not to. b. PUBLIC FORUM RULES APPLY c. Example A school, normally a non-public forum, which is then opened on the weekend to associations to hold meetings 3. Non-Public Forums a. Prop which the govt can and actually does close speech to b. s which regulate speech in non-public forums need be: i. Reasonable; AND ii. View-point neutral c. Examples i. Military bases, even those open to the public ii. Areas outside prisons and jails iii. Advertising space on city buses 1. NO Political ads on city buses iv. Sidewalks on post office property

Page 136 of 337

BAR/BRI Bar Review, Summer 2007 v. Airports only to speech, persons CAN distribute literature st 4. There is no 1 Amendment Right of Access to Private Property for Speech Purposes a. Example privately owned shopping centers iv. Freedom of Association 1. Laws that prohibit OR punish group membership MUST meet strict scrutiny a. Example A law that requires a group to disclose its members, where such disclosure would chill association with the group fails strict scrutiny, to wit, asking the Alabama NAACP in the 1950s to disclose group membership 2. To punish group membership it must be proven that: a. Person is actively affiliated with the group; b. That person knows of the groups illegal activities; AND c. This person had the specific intent of furthering the illegal activities (like a conspiracy) 3. Generally, laws that make an association prohibit discrimination are CONST UNLESS they: a. Interfere with intimate association; OR i. Example small dinner party b. Interfere with expressv activity (discrimination is what they do) i. Example Nazis KKK, Boy Scouts against gays v. Freedom of Religion 1. The Free Exercise Clause a. The free exercise clause CANNOT challenge a gender neutral law of general applicability i. Example State said no peyote for on the job civil service employees. Indians brought suit that violates their free exercise of religion. USSC said Constitutional b/c State did not intend to interfere w/ religion b. IF is NOT neutral OR generally applicable the must meet strict scrutiny c. The government may NOT deny job benefits to one who quits work for religious reasons i. Example State agency employee quit b/c she refused to work on the Sabbath. State denied her unemployment b/c she quit and was not fired. USSC says cannot deny unemployment. 2. The Establishment Clause a. The Govt cannot make a law denying the Establishment of religion b. TEST: (S.E.X.): i. S ecular purpose to law

Page 137 of 337

BAR/BRI Bar Review, Summer 2007 1. Example 10 commandments CANNOT be posted on all state buildings, clearly no secular purpose ii. E ffect is not to advance nor inhibit religion; AND 1. Government CANNOT symbolically endorse religion 2. Example a. Nativity scene by itself, advances 1 religion, UNCONST BUT b. Nativity scene + menorah + holiday sign encompassing all religions, CONST iii. X cssv entanglement by govt is not allowed 1. Example govt cannot directly pay parochial school teachers c. The government CANNOT discriminate against religious speech OR among religions UNLESS strict scrutiny is met. i. Same idea as restricting content based speech, strict scrut is reqd d. Government sponsored religious activity in public school (entanglement) is UNCONST BUT, govt must allow the same access to school facilities for religious & non-religious groups i. Examples 1. Voluntary school Prayer, UNCONST 2. Prayer at Graduation, UNCONST 3. Student prayer at football game, UNCONST 4. Moment of Prayer in Silence, UNCONST e. The Govt MAY give assistance to parochial schools AS LONG AS NOT USED FOR RELIGION i. Examples 1. Giving parents private school vouchers and in turn having them use it on parochial schools 2. Buying computers for ALL schools and having both parochial & public schools reap the benefit 8. Real Property & Future Interests a. Summary of Freehold Estates
ESTATE Fee Simple Absolute Fee Tail LANGUAGE TO CREATE To A OR To A and his heirs To A and the heirs of his body To A so long as To A until To A while Upon some event reverter occurs DURATION Absolute ownership, potentially infinite Lasts only if there are lineal descendnts of the grantee Infinite as long as event does not occur TRANSFERABILITY Devisable, Descendible, Alnbl Passes automatically to grantees lineal descendants Devisable, Descendible, Alienable, subject to condition FUTURE INTEREST None Reversion (grantor) Remainder (grantee) -FSDPORPossibility of Reverter

Defeasible Fees: (a) Fee Simple determinable

Page 138 of 337

BAR/BRI Bar Review, Summer 2007


(b) Fee Simple subject to a condition subsequent To A, BUT if X happens, X reserves the right to re-enter. Created by Grantor Infinite as long as event does not occur AND when the event does occur the holder of the right must exercise their power to enter Infinite as long as event does not occur Devisable, Descendible, Alienable, subject to condition Right of Entry, Power of Termntion (held by grantor)

(c) Fee Simple Subject to an Executory limitation Life Estate

To A, BUT if X occurs, then to B

To A for life, To A for the life of B

Measured by life of grantee OR the life of another (pour autre vie)

Devisable, Descendible, Alienable, subject to condition Devisable, Descendible, Alienable, if measuring life still alive

Executory Interest (held by 3rd party)

Reversion (grantor) Remainder (grantee)

b. The Present Estates i. Introduction 1. What language creates the estate? 2. Distinguishing Characteristics of each estate a. Devisability does it pass by will? b. Descendability can it pass to heirs by intestacy? c. Alienability can the estate be transferred in life? 3. What future interest is the estate capable of? ii. Fee Simple Absolute 1. How to Create a. To A OR To A and his heirs 2. Distinguishing Characteristics a. Absolute Ownership of a potentially indefinite duration b. Freely alienable, devisable, descendible 3. THERE IS NO ACCOMPANYING FUTURE INTEREST a. To A and his heirs As heirs have nothing IF A is alive, b/c a living person has no heirs, thus heirs are powerless b. Only A has absolute ownership (FSA fee simple absolute) iii. Fee Tail 1. How to Create a. To A and the heirs of his body 2. Distinguishing Characteristics a. Fee tail is virtually abolished in NY b. Historically As living heirs at time of his death would get the interest indefeasible no matter what c. Today this creates a FSA 3. Accompanying Future Interest a. Yes, when A runs out of blood line prop passes: i. Back to grantor reversion ii. Prop passes to a 3rd Party - remainder iv. The Defeasible Fees CLEAR DURATIONAL LANGUAGE 1. Fee Simple Determinable

Page 139 of 337

BAR/BRI Bar Review, Summer 2007 a. NY fee on limitation b. How to Create i. To A so long as - To A until - To A while ii. Grantor must use clear durational language if the stated condition is violated then THE FORFEITURE IS AUTOMATIC c. Distinguishing Characteristics i. Freely alienable, devisable, descendible ii. BUT always subject to a condition iii. Example Blackacre to A so long as the premises is used to farm, A cannot then transfer to B to use for industrial purposes this will forfeit the estate. 1. Reasoning You cannot convey more than you started with d. Accompanying Future Interest i. FSDPOR - fee simple determinative will always be accompanied by the possibility of reverter 2. Fee Simple Subject to Condition Subsequent a. NY fee on condition b. How to Create i. To A, but if X event occurs, grantor reserves the right to re-enter and re-take. ii. Grantor must use clear durational language if the stated condition is violated then THE GRANTOR CARVES OUT A RIGHT TO RE-ENTER c. Distinguishing Characteristics i. Estate is NOT automatically terminated (cf. fee simple determinable), it can be cut short at the grantors option d. Accompanying Future Interest i. Yes, right of entry & power of termination ii. NY Right of Re-Acquisition 3. Fee Simple with an Executory Limitation a. How to Create i. To A but if X event occurs then to B ii. Similar to a condition subsequent BUT the occurrence of the defeas-ing event causes transfer of the estate NOT to the Grantor (right to re-enter & terminate) rather a transfer to a 3rd party iii. Example To A, BUT IF A ever sells music on the premises, then to B b. Distinguishing Characteristics i. Like a fee simple determinable there is automatic forfeiture of the estate upon violation of the condition c. Accompanying Future Interest i. A shifting (to a 3rd party) executory interest 4. RULES OF CONSTRUCTION

Page 140 of 337

BAR/BRI Bar Review, Summer 2007 a. Words of mere desire, hope or intention are insufficient to create a defeasible interest i. CLEAR language of the grantors intent are needed to restrict the free use of land b. Absolute restraints on alienation ARE VOID i. Example To A so long as A never attempts to sell. VOID ii. Example To A so long as A never attempts to sell until 2009 when encumbrances to title will be resolved. VALID v. The Life Estate 1. How to Create a. MUST be in explicit lifetime terms, NEVER in a term of years b. O conveys To A for life i. A = life tenant ii. O or his Os heirs, has a reversion at the end of As life c. Life Estate pour autre vie i. A life estate measured by the life of one who is not the life tenant ii. Example To A for the life of B 1. Life estate ends when B dies 2. If A was to predecease B, the estate would transfer to As heirs until B dies iii. Example To A for life A then sells her LE to B 1. B owns the LE until A dies, THEN reversion 2. Distinguishing Characteristics of the LE a. Generally the life tenant is entitled to ordinary uses and profits from the land i. Example LE is a rental property b. Generally the life tenant MUST NOT commit waste do anything to harm the holders of the future interests c. 3 types of waste i. Voluntary OR Affirmative Waste 1. Actual or overt conduct which causes a decrease in value 2. In natural resources generally, the life tenant cannot consume or exploit the natural resources on the property EXCEPT in 4 situations: a. P U Prior Use, b4 the grant the land was used for exploitation, it can be used now as well unless otherwise agreed i. Open Mines Doctrine LE can only continue to use open mine, NOT start new ones b. R Reasonable Repairs

Page 141 of 337

BAR/BRI Bar Review, Summer 2007 i. LE may consume natural resources to pay for maintenance to the property c. G Grant i. LE given authority to consume d. E Exploitation i. Land is ONLY usable for exploitation ii. Example rock quarry ii. Permissive Waste 1. The life tenant must maintain the premises in a reasonable safe condition 2. Life tenant is also obligated to pay all ordinary taxes on the land, this includes any income taxes derived from the land iii. Ameliorative Waste 1. The life tenant must NOT engage in acts that will enhance the propertys value UNLESS all future interest holder ARE: a. Known; AND b. Consent Accompanying future interest a. Held by the Grantor = Reversion b. Held by a 3rd Party = Remainder

3.

c. Future Interests i. Future Interests Capable of Creation by the Grantor 1. Possibility of Reverter accompanies only a fee simple determinable (FSDPOR) 2. Right of Entry / Power of Termination accompanies only a fees simple subject to a condition subsequent 3. Reversion arises in the grantor who transfers and estate of lesser quantum than which he started, normally accompanying a LE, fee tail, leasehold or a term of years ii. Future Interests in Transferees 1. The Vested Remainder a. The indefeasibly vested remainder b. The vested remainder subject to complete defeasance c. The vested remainder subject to open 2. The Contingent Remainder; OR 3. An Executory Interest 4. OTHER MATTERS a. Distinguish vested remainders FROM contingent remainders i. What is a remainder? 1. A remainder is a future interest in a 3rd party, not the grantor

Page 142 of 337

BAR/BRI Bar Review, Summer 2007 2. Capable of being possessed upon expiration of a prior possessory estate created in the same conveyance in which the Remaindermen was created 3. Remaindermen always accompany a preceding Estate of a known fixed duration (i.e. LE) 4. Remaindermen never follow a defeasible fee, they are patient & polite they CANNOT cut short or divest a prior transferee 5. THUS if the present interests is defeasible (FSD, subject to a condition subsequent OR subject to an executory limitation) then there is NO remainderman, the future interest MUST be an executory interest OR a contingent remainder ii. Vested Remainders 1. There is a vested remainder IF: a. Created in an ascertained person; AND b. Is not subject to a condition precedent iii. Contingent Remainders 1. Remainder is CONTINGENT b/c it is created in unborn OR unascertained persons; OR a. Example To A for life, then to Bs 1st child. A is alive and B has no children b. Example To A for life, then to Bs heirs. B is alive and thus has no heirs 2. Remainder in CONTINGENT when it is subject to a condition precedent a. Condition Precedent appears B4 the language creating the remainder OR is woven into the grant to the remaindermn b. Example To A for life then to those children of B who survive A. A is alive thus to take Bs children must survive A, a condition preceding their fee c. When a condition precedent is fulfilled it transforms automatically into an indefeasibly vested remainder 3. NY - remainder subj to a condition precedent iv. Contingent Remainders are subject to the following 3 doctrines ALL abolished in NY: 1. The Rule of Destructibility a. At CL a contingent remainder was destroyed if it was still contingent when the preceding estate ended at grantor or his heirs would take

Page 143 of 337

BAR/BRI Bar Review, Summer 2007 b. TODAY this rule is destroyed and now the grantors heirs will hold the estate until the contingency is fulfilled c. Example To A for life, and if B has reached 21, to B A dies, B is 19. O or Os heirs get a reversion subject to Bs executory interest. 2. The Rule in Shelleys Case a. Only used in To A for life, on As death to As heirs. b. Historically, these interests would merge and A would have a FSA c. Today, A has a LE and b/c As heirs are unknown, A heirs have a contingent remainder, O has a reversion (b/c of LE) 3. The Doctrine of Worthier Title a. The rule against a remainder in Grantors heirs b. It applies when O, who is alive, tries to create a future interest in his heirs. c. To A for life, then to Os heirs. O is alive. O has no heirs b/c hes not dead, Os heirs have a contingent remainder. d. B/c of this doctrine the bequest to Os heirs would be VOID and O would just get a reversion from As LE b. Distinguish 3 kinds of vested remainders from one another i. The indefeasibly vested remainder 1. certain to acquire strings in the future, no strings attached 2. To A for life, then to B A is alive. B is alive. B has an indefeasibly vested remainder. a. If B was to predecease A the estate would vest in Bs heirs. ii. The vested remainder subject to complete defeasance 1. NY remainder vested subject to complete defeasance 2. Not taking subject to a condition precedent (thus not a contingent remainder), rather taking BUT cut short b/c of condition subsequent 3. The Comma Rule When conditional language in a transfer follows language that would have created a vested remainder = condition subsqnt, which is subject to complete defeasance

Page 144 of 337

BAR/BRI Bar Review, Summer 2007 4. Example O to A for life, remainder to B, provided that if B dies b4 age 25, to C. A is alive and B is 20. a. A has a LE b. B has a vested remainder subject to complete defeasance c. C has a shifting executory interest d. This bequest vests in B EVEN IF A dies before B reaches 25 5. Example O to A for life, and if B reaches the Age of 25, then to B. A is alive and B is 20. a. ** the conditional language comes before the remainder ** thus a condition precedent was created making this bequest a contingnt remainder, CP = CR b. A has a LE c. B has a contingent remainder d. IF A dies before B reaching 25, the estate reverts to O and is subject to Bs springing executory int upon reaching 25 iii. The vested remainder subject to open 1. Here a remainder is vested in a group of takers, at least one of whom is qualified to take possession 2. But each class members share is subject to partial diminution b/c additional takers not yet ascertained could qualify as class members 3. Open Class IF more parties can be added 4. Closed Class IF no more parties can be added the max # has been set a. An open class closes when a member can demand possession and takes 5. Example To A for life then to Bs children. B has 2 kids C & D. a. The class will close at Bs death AND ALSO at As death, b/c at As death C or D could demand and take b. Exception The Womb Rule: i. If A was to die while B was pregnant, the unborn child takes c. IF C or D predecease A their share would pass to their heirs (b/c their interest was vested) c. Distinguish ALL remainders from Executory Interests i. An executory interest is a future interest created in a 3rd party, which is not a remainder AND which takes effect

Page 145 of 337

BAR/BRI Bar Review, Summer 2007 by cutting short some interest in another person (shifting), or cutting short the grantors heirs (springing). ii. Shifting Executory Interests 1. It follows a defeasible fee and cuts short one who is not the grantor 2. Example To A and her heirs, BUT if B return from Canada, to B and his heirs a. B has a shifting executory interest b. A has a fee simple subject to an executory interest iii. Springing Executory Interests 1. It follows an interest had by the grantor or his heirs NOT a fee simple holder or a 3rd party 2. Example To A, if and when A marries. A is not married a. A has a springing executory interest b. O has a fee simple subject to an executory limitation iv. NY has abolished the distinction btwn executory interests AND contingent remainders known now as a remainder subject to a condition precedent d. Rule Against Perpetuities (RAP) i. The Rule 1. No interest is good unless vests or fails to vest, not later than 21 years after some life in being at the time of creation. ii. Four-Step Technique 1. Determine what future interests have been created a. RAP only applies to: i. contingent remainders; ii. executory interests; & iii. certain vested remainders subject to open b. RAP does NOT apply to: i. interests created in the grantor; ii. indefeasibly vested remainders; & iii. vested remainders subject to complete defeasance 2. Identify the conditions precedent to the vesting of the suspect interest 3. Find a measuring life. a. Is the persons life or death relevant to the conditions occurrence 4. Will it be known with certainty, within 21 years of the death of the measuring life, whether the future interest can or cannot take? a. If we will not know then the interest is VOID b. Example To A for life, then to the first of her children to reach 30. A is alive and 70 years old. B, As child, is 29.

Page 146 of 337

BAR/BRI Bar Review, Summer 2007 i. This interest is void because if B died tomorrow we would not know whether this interest could vest within 21 years after As death ii. You say she is 70 and cant have anymore kids? NO. 1. The Fertile Octogenarian Rule presumes a person is fertile no matter what age. iii. Bright Line Rules for Common Law RAP 1. A gift to an open class that is conditioned on the members surviving to an age beyond 21 violates RAP a. Bad as to one, Bad as to all. To be valid, the condition precedent to EVERY class members taking must occur within the perpetuities period. If the gift may vest after the RAP period to any member of the class the gift is void. b. Example To A for life, then to such of As children that reach age 30. A has two children B & C both over 30. i. This gift violates RAP. B & C has a vested remainder subject to open. B & C could die tomorrow while A is still alive. A could also pop out D and die the next day. We will not know in the RAP period whether D will attain the age of 30. ii. A now has a LE & O has a reversion 2. Many shifting executory interests violate RAP when there is no time limit within which the limitation must vest. a. Example To A and his heirs so long as the land is used for farm purposes, and if the land ceases to be so used, to B and his heirs. i. We will not know with certainty whether within in 21 years after As death whether or not the condition will be violated by As heirs. ii. Remedy? Remove the offensive language. Now we are left with To A and his heirs so long as the land is used for farm purposes 1. A has a fee simple determinable (see, supra) & O has a possibility of reverter 2. NO RAP PROBLEM WITH O b/c he is the grantor, not subject to RAP 3. Charity-to-Charity Exception a. A gift from one charity to another does not violate RAP b. Example To the YMCA, so longs as the premises are used for kids, and if they cease to be so used, then to the Red Cross. i. Ordinarily the Red Cross would have an invalid interest BUT because of this exception RAP doesnt apply ii. SO - YMCA has a fee simple subject to an executory limitation & the Red Cross has a shifting executory interest

Page 147 of 337

BAR/BRI Bar Review, Summer 2007 iv. Reform of the RAP 1. Wait & See Approach OR 2nd Look Doctrine a. ANY suspect future interest is determined on the basis of facts as they now exist ( at the conclusion of the measuring life) b. This eliminates the anything is possible line of inquiry 2. Uniform Statutory RAP (USRAP) a. Codifies CL RAP b. BUT adds an alternative 90 year vesting period 3. Common Ideas between Wait & See and USRAP a. They both use the cy pres doctrine as near as possible i. If a given disposition violates RA, a court may reform if in a way that will: 1. Conform to RAP; AND 2. that will closely match the intent of the grantor b. Any offensive age contingency will be lowered to 21 4. NY & RAP a. Applies Common Law RAP EXCEPT in the use of POA and charitable trusts b. Any offensive age contingency will be lowered to 21 c. The fertile octogenarian rule is modifies so that a woman greater than 55 is said to not be able to have a child i. adoption is disregarded d. ANY interest that suspends the power of alienation greater than 21 years after the death of the measuring life in being is VOID e. Concurrent Estates i. Generally 1. JT 2+ own with the right of survivorship 2. TiC 2+ own with the right of survivorship 3. TbyE protected marital interest between H&W with the right of survivorship ii. Joint Tenancy 1. Characteristics a. Right of survivorship b. Joint Tenants Interest is Alienable NOT devisable or descendible b/c of the right of survivorship 2. Creation a. The 4 unities plus specific grantor intent i. The Four Unities T.-T.I.P. 1. T ime 2. T itle (same deed) 3. I dentical Interest 4. P ossession (equal right to possess the whole) ii. Grantor must clearly express the right of survivorship b. Use of a Strawman

Page 148 of 337

BAR/BRI Bar Review, Summer 2007 i. In certain instances where A owns the land BUT wants to then own the land in joint tenancy with B, A must temporarily transfer the land to C who then must retransfer back to A & B as joint tenants. ii. This fulfills the time and title requirements of the 4 unities iii. NY - DOES NOT require a strawman 3. Severance of a Joint Tenancy Sale Partition & Mortgage (SPAM) a. Severance and Sale i. A JT can sale or transfer their interest during their life time ii. Can be done secretly iii. Buyer becomes a TiC iv. In the event the JT started with 3 JTs and 1 JT sold ALL other JTs remain intact 1. Meaning the right of survivorship still applies to the other two JTs 2. When 1 of the 2 JTs die the JT & the TiC are left and the prop becomes a TiC v. TiC created on date of contract NOT the date of closing EQUITABLE CONVERSION 1. This is because if A & B were JTs and A enters into K of sale of his share with C and B dies prior to closing, A who ruined the JT should not be allowed to inherit Bs interest (from the right of survivorship) when A is the one who broke the JT initially b. Severance and Partition i. By Voluntary Agreement 1. peaceful way to end the relationship ii. Partition in Kind 1. By the court, severing the LAND 2. IF in the best interest of all the parties 3. Mostly used where there is a sprawling tract of land that can be easily divided iii. Forced Sale 1. Court action in the best interest of all the parties where property is sold because it cant be divided 2. $ proceeds divided amongst parties proportionately c. Severance and Mortgage i. MAJORITY view & NY Lien Theory A JTs execution of a mortgage WILL NOT sever the JT

Page 149 of 337

BAR/BRI Bar Review, Summer 2007 ii. MINORITY view Title Theory One JTs execution of a mortgage or lien on their share will SEVER the JT as to that now encumbered share iii. Tenancy by the Entirety 1. 21 states including NY recognize TbyE 2. Creation a. ONLY in the H&W with the right of survivorship b. Arises presumptively in ANY conveyance to H&W UNLESS clearly stated otherwise 3. Protected form of Co-Ownership Cant Touch This a. Creditors of 1 spouse cannot touch the TbyE i. NY 1 spouse may mortgage their interest AND creditors can then enforce against that interest BUT only as to that debtor spouses share AND the nondebtor spouses right of survivorship must NOT be compromised b. Unilateral Conveyance to a 3rd party i. Neither tenant acting alone can defeat the right of survivorship by unilateral conveyance, transfer is VOID iv. Tenancy in Common 1. Characteristics a. Each co-tenant owns and individual part AND each has a right to possess the whole b. Each interest is alienable, devisable and descendible c. NO RIGHT OF SURVIVORSHIP d. Courts presume a TiC Exists v. Rights and Duties of Co-Tenants (TiCs, JTs & TbyEs) 1. Possession a. Each co-tenant is entitled to use and enjoy the whole property, irrespective of % owned b. If one co-tenant wrongfully excludes another co-tenant from possession of the whole, he has committed wrongful ouster 2. Rent from Co-Tenant when in exclusive Possession a. Absent ouster, a co-tenant in exclusive possession id not liable to the other co-tenants for rent 3. Rent from 3rd Party a. A co-tenant who leases ALL or PART of the premises to a 3rd party MUST account to the other co-tenants providing them their fair share on the rental income, based upon % of ownership 4. Adverse Possession a. Unless ouster occurs (which is hostile), the co-tenant in exclusive possession for the statutory reqd period CANNOT acquire sole title by adverse possession b. NY Ct of Apps recently held that the co-tenant MAY acquire full title by adv. pos. IF such cotenant is in

Page 150 of 337

BAR/BRI Bar Review, Summer 2007 exclusive possession for a 20 year continuous and consecutive period under the theory of implied ouster Carrying Costs a. Each co-tenant is responsible for his/her share of carrying costs, also known as taxes and interest payments of a mortgage, based upon % of ownership Repairs a. The repairing co-tenant enjoys a right to contribution for NECESSARY repairs PROVIDED the repairing co-tenant has give notice of the need for such repairs. b. If above notice reqmt is satisfied the co-tenants are liable, based upon % of ownership Improvement a. 1 co-tenants improvement can be anothers nightmare b. During the life of the co-tenancy there is NO RIGHT to contribution for improvements HOWEVER, at partition OR sale, the improving co-tenant is entitled to: i. a credit for ANY INCREASE in value as a result of their improvements; AND ii. a debit for ANY DECREASE in value as a result of depreciation incurred c. Prior to sale, any improvement, even if it increased the property value, is deemed ameliorative waste IF done w/o the consent and knowledge of all co-tenants Waste a. A co-tenant must not commit waste b. A co-tenant may commence a waste action ONLY DURING the life of the co-tenancy Partition a. A JT OR TiC has a right to bring a partition action

5.

6.

7.

8.

9.

f. Landlord Tenant Law i. Four Leasehold Estates 1. Tenancy for Years a. This is a lease for a fixed period of time (i.e., 2 months, 1 day, 50 years) b. You must know the termination from the start date c. Because the termination date is stated at the outset, no notice is needed to terminate d. A term of years greater than 1 year must be in writing to satisfy the SOF 2. Periodic Tenancy a. This is a lease which continues for successive intervals until L or T give proper notice of termination b. Express Creation i. to T from year to year OR week to week

Page 151 of 337

BAR/BRI Bar Review, Summer 2007 c. Implied Creation 3 ways i. Land is leased with no mention of duration BUT a provision is made for rent payment at set intervals 1. Whenever rent is paid (monthly) sets the interval period for tenancy ii. An oral term of years in violation of the SOF 1. Also measured by the way rent is tendered 2. Example L and T on telephone agree for a five year lease at rent set at $1,000/month month to month tenancy created a. The periodic tenancy is created upon the 1st payment by T to L b. Tenancy is month to month b/c of payment of rent iii. The holdover in a residential lease IF L elects to holdover a T who has wrongfully stayed on past the conclusion of the original lease an implied periodic tenancy arises, measured by the way rent is now tendered 1. NY L who elects to holdover a tenant creates a month-to-month periodic tenancy UNLESS otherwise agreed d. Termination of a Periodic Tenancy i. NOTICE, usually written ii. CL notice equal to the period itself unless otherwise agreed 1. EXCEPT in a year to year tenancy 6 months is required iii. The periodic tenancy must end at the conclusion of the natural lease period 1. Example L send notice on June 15th to terminate a month to month periodic tenancy created on the preceding January 1st. T is bound until July 31st. 3. Tenancy at Will a. Tenancy for no fixed duration b. Creation i. To T for so long as L or T desires. c. Unless the parties expressly agree to a tenancy at will the court will treat this as an implied periodic tenancy based upon the regularity of which rent is paid d. Termination i. The tenancy made be terminated at ANY time by EITHER party ii. Normally a reasonable demand to vacate is required in a majority of jurisdictions

Page 152 of 337

BAR/BRI Bar Review, Summer 2007 iii. NY for the landlord to terminate the tenancy at will 30 days minimum notice is required 4. Tenancy at Sufferance a. This is created when T has wrongfully held over past the expiration of the lease b. This tenancy is extended only to allow L to recover ret c. This lasts only until L evicts T i. BUT L can elect to hold T to a new tenancy ii. In NY this acceptance of rent by L will create an implied month-to-month periodic tenancy UNLESS otherwise agreed ii. Tenants Duties 1. Ts Liability to 3rd Parties a. T is responsible for keeping the premises in reasonably good repair b. T is liable for injuries sustained by 3rd parties that T invited EVEN IF L promised to make ALL repairs 2. Ts Duty to Repair a. When Lease is Silent i. Standard maintain the premises in a reasonable safe condition ii. T Must not commit waste 1. Voluntary Waste overt & harmful 2. Permissive Waste neglect 3. Ameliorative Waste improvements made by T that increase the value of the property BUT made without consent of L iii. Law of Fixtures 1. Walks hand in hand with waste a. when a tenant REMOVES a fixture he commits voluntary waste b. when a tenant installs a fixture he commits ameliorative waste 2. A fixture is once movable chattel that by virtue of its annexation to realty objectively shows intent to permanently improve the property a. Examples i. Heating systems ii. Custom storm windows iii. Furnace iv. Certain lighting 3. T must not remove a fixture EVEN IF T installed it 4. FIXTURES PASS WITH OWNERSHIP OF THE LAND 5. Installation becomes a fixture when:

Page 153 of 337

BAR/BRI Bar Review, Summer 2007 a. Express agreement exists; OR b. T can remove such chattel without substantial harm to the premises i. IF such removal would cause subst harm T has shown in objective judgment the intent to install and leave the fixture b. Ts Express Covenant to Repair i. T may covenant in the lease to maintain the property in good condition for the duration of the lease 1. At CL this meant T was responsible FOR ALL losses incurred EVEN BY NATURE 2. Today T may terminate when the premises is destroyed w/o Ts fault ii. NY absent an express undertaking to restore the premises in the event of destruction AND premises is destroyed w/o fault of T, T may quit and surrender possession without any further duty to pay rent 3. Ts Duty to Pay Rent a. T breaches and is in Possession i. L can evict through courts OR continue tenancy and sue for back rent 1. If eviction pursued, L still entitled to past rent T becomes tenant at sufferance until T vacates ii. L CANNOT ENGAGE IN SELF HELP 1. Examples Change locks, OR forcibly remove tenant OR remove tenants possessions 2. Punishable criminally or civilly 3. NY T entitled to treble damages when L uses self-help b. T breaches and is out of Possession i. Example T vacates wrongfully with time left on a term of years lease. ii. L has certain options (S.I.R.) 1. Surrender a. L can treat Ts abandonment as a tacit offer of surrender b. T shows by conduct T wants to give up lease c. IF term expiring is > 1 year surrender MUST be in writing to satisfy SOF 2. Ignore a. L may ignore the abandonment and hold T responsible for the unpaid rent b. This is a minority rule 3. Re-Let

Page 154 of 337

BAR/BRI Bar Review, Summer 2007 a. Re-let the premises on Ts behalf and hold T liable for any deficiency b. Majority L MUST mitigate c. NY NO MITIGATION reqd upon tenant abandonment iii. Landlords Duties 1. Duty to Deliver Possession a. English Rule / Majority Rule L must put T in physical possession of the premises i. Thus if at the start of Ts lease a prior holdover is still on the premises, L has violated his duty and the new T is entitled to damages b. American Rule / Minority Rule L must put T into legal possession ONLY, not physical possession 2. Implied Covenant of Quiet Enjoyment a. Applies to both residential and commercial leases i. T has the right to quiet use and enjoyment of the premises without interference from L ii. Breach by actual wrongful eviction 1. Occurs when L wrongfully evicts T of excludes T from the premises iii. Breach by constructive eviction 1. An event occurs due to the Ls misfeasance a. Example every time it rains Didos apt floods 2. Claim for constructive eviction IF all 3 are met (S.I.N.G.) a. S.I. substantial interference i. Chronic problems due to Ls action/inaction b. N notice i. T must notify L THEN L must fail to act meaningfully c. G goodbye i. T must vacate in a reasonable time after L fails to remedy the problem 3. Ls liability for acts of other tenants a. Generally L is not liable for acts of other tenants except in 2 situations: i. L must not permit a nuisance on the premises (i.e., rent the above apt to Riverdance) ii. L must control/maintain common areas of the building 3. Implied Warranty of Habitability

Page 155 of 337

BAR/BRI Bar Review, Summer 2007 a. Applies ONLY TO RESIDENTIAL LEASES b. Standard i. Premises must be fit for basic habitation bare living requirements must be met ii. Standard may be supplied by the local housing code OR case law iii. Examples no heat, no plumbing, no running water c. Remedies Upon Breach MR3 i. M Move Out, end lease ii. R Repair & Deduct reasonable costs from future rent iii. R Reduce Rent or w/hold rent and place in escrow iv. R Remain in Possession & seek $ damages in court 4. Retaliatory Eviction a. If T lawfully reports L for housing code violations, L CANNOT penalize T by raising rent, ending the lease or harassing T b. NY If L wrongfully attempts to evict T, T can get a Yellowstone Injunction iv. The Assignment Versus the Sub-Lease 1. Generally a. In the absence of some prohibition in the lease T may freely transfer his or her interest in whole (assignment) OR in part (sublease) b. L can prohibit subletting or assignment by prior written consent c. BUT if L consents to one transfer by T he waives the right to object to future transfers UNLESS expressly reserved d. NY Unless otherwise provided in the lease i. T may NOT assign w/o Ls written consent 1. L can unreasonably withhold consent and T can seek release from the lease ii. T if the apt bldg has 4+ units, can sublease with Ls written consent 1. BUT unreasonable refusal by L = CONSENT 2. The Assignment a. L T1 T2 T3 (all assignments) b. L and T3 are in privity of estate i. Liable to each other for all covenants that run with the land 1. Examples promise to pay rent, repair, pay taxes c. L and T1 are in privity of K i. They are 2ndrly liable to one another d. L and T2 i. UNLESS T2 expressly assumed all promises (covenants) in the lease T2 has NO LIABILITY

Page 156 of 337

BAR/BRI Bar Review, Summer 2007 3. The Sublease a. L and sublessee are neither in privity of K or Estate b. T2 is responsible to T1 and T1 is responsible to L i. T2 IS NOT RESPONSIBLE TO L AT ALL v. Landlords Tort Liability 1. Generally a. Normally the L is under no duty to make the premises safe 2. The Exceptions - (C.L.A.P.S.) a. C Common Areas i. Hallways and stairwells b. L Latent Defects i. NOTICE ONLY DUTY TO WARN c. A Assumes Repairs i. Must complete all repairs with reasonable care ii. L cannot make shoddy repairs and not be held negligent d. P Public Use i. Lease of a convention hall or museum , generally short term leases L is liable mainly for large defects ii. Alternatively, T is NEVER liable e. S - Short Term lease of a furnished dwelling g. Servitudes i. Summary
From of Servitude Affirmative Easement Method of Creation Prescription (COAH) Implication (implied from prior use; at the time the land was severed, a use of one part existed from which it can be inferred that an easement permitting its continuation was intended Necessity (division deprives exit) Grant (writing signed by the grantor) Only in a signed writing by the grantor (light, air, stream water, support Writing Signed by the Grantor Parties Bound Easement appurtenant is transferred when property sold Easement in gross only transfers in commercial real estate by assignment Remedy Injunction OR Damages

Negative Easement

See Above

Injunction OR Damages

Real Covenants

IF Burden AND Benefit BOTH run Burden to run (WITHN) Benefit to run (WITV) no horizontal privity reqd Both require writing, intent & touch and concern

Damages

Page 157 of 337

BAR/BRI Bar Review, Summer 2007


Equitable Servitudes Writing (unless general scheme doctrine applies) Successors bound IF WITN.ES (same as above but notice required NOT privity) Common Scheme exists subsequent purchasers bound Injunction

Reciprocal negative Servitudes (General Scheme Doctrine)

Residential restriction contained in prior deeds will bind subsequent grantees whose deeds contain no such restriction IF: (1) common scheme; AND (2) parties with no restrictive covenants in deeds must have notice

Injunction

ii. Easements 1. Defined a. A grant of a non-possessory property interest that entitles its holder (dominant tenement) to some form of use or enjoyment of anothers land (the servient tenement) i. Examples right to lay utility lines, rights of access 2. Affirmative Easements a. The right to do something on servient land 3. Negative Easements a. Entitles the holder to prevent the servient landowner from doing something that would otherwise be permissible b. 4 categories L.A.S.S. i. Light ii. Air iii. Support iv. Stream water from an artificial flow c. Minority jurisdiction allow negative easements for a scenic view d. ONLY CREATED BY AN EXPRESS WRITING 4. Appurtenant or Gross Easements - determining transferability a. Appurtenant i. Appurtenant Easements benefit its hold in his physical use or enjoyment of the property ii. IT TAKES TWO parcels to have an appurtenant easement dominant and servient tenements iii. Transferability 1. Passes automatically w/ the dominant tenement regardless of whether or not it is in the conveyance 2. BURDEN WILL NOT PASS IF THE SERVIENT TENEMENT IS A BFP otherwise it passes automatically b. Gross i. Gross Easement holder only benefits by some personal or pecuniary interest NOT related to the use of the land Page 158 of 337

BAR/BRI Bar Review, Summer 2007 ii. Servient land is burdened there is no dominant tenement iii. Examples billboards, rights to swim, rights to lay power lines iv. Transferability 1. Easement in Gross is not transferable UNLESS its for commercial purposes 5. Creation of Affirmative Easements (P.I.N.G.) a. Grant i. An easement to endure for more than one year must be in writing to comply with the statute of frauds ii. Writing is also known as a deed of easement b. Implication i. a/k/a easement implied from exiting use ii. Examples A owns 2 parcels, lot 1 is hooked up to a sewer drain on lot 2. A sells lot 1 parcel to B, with no mention of the sewer drain. The Court will IMPLY an easement IF; 1. Previous use was apparent; AND 2. The parties expected the use must survive the division b/c it is reasonably necessary for the dominant tenement to use and enjoy the land c. Necessity i. Landlocked settings ii. Grantor conveys some portion of his land that leaves him with no way out d. Prescription (C.O.A.H.) i. This is an easement satisfied by adverse possession 1. Continuous a. For the statutory period b. NY 10 years 2. Open and Notorious 3. Actual a. Not constructive possession 4. Hostile a. w/o servient owners consent, any permission defeats the prescription 6. Scope of an Easement a. Set by the terms of the grant or conditions that created it b. If the dominant tenement acquires a new parcel, that parcel IS NOT entitled to use of that easement 7. Termination of an Easement (E.N.D.C.R.A.M.P.) a. Estoppel i. Servient owner materially changes his or her position in reasonable reliance on the easement holders assurances that the easement will no longer be enforced

Page 159 of 337

BAR/BRI Bar Review, Summer 2007 1. Example building a swimming pool over the right of way b. Necessity i. When the necessity ends, EXCEPT if the necessity easement is by express grant, then it survives the ending of the necessity c. Destruction i. Destruction of the servient land, other than through the willful act of the servient owner d. Condemnation i. Condemnation of the servient estate by eminent domain ends the easement e. Release i. A written release from the easement holder to the servient owner f. Abandonment i. Easement holder must demonstrate by physical action the intent to never use the easement again ii. Not mere words iii. Example A had right of way over Bs parcel BUT A erects a building on his property eliminating access to his right of way g. Merger i. When the dominant and servient tenements become owned by the same person ii. Even if title is later separated, the easement is extinguished h. Prescription i. Servient owner may extinguish the easement by interfering with it in accordance with adverse possession (C.O.A.H. see above) iii. The License 1. Defined a. Mere privilege to enter anothers land for some delineated purpose b. Not subject to the SOF, can be oral c. Licenses are freely revocable at the will of the licensor, UNLESS ESTOPPEL APPLIES to bar revocation 2. Classic License Cases a. Ticket Cases i. Sports, theatre b. Neighbors Talking c. Estoppel i. Estoppel will apply to bar license revocation only when the licensee invested substantial $ or Labor in reasonable reliance in the licenses continuation

Page 160 of 337

BAR/BRI Bar Review, Summer 2007 iv. The Profit 1. This is a written agreement allowing the holder to enter the servient land and take SOIL OR SOME SUBSTANCE from the soil (i.e., minerals, timber or oil) 2. Profits share all rules of GROSS easements v. The Covenant 1. Defined a. The covenant is a promise to do or not to do something related to the land. UNLIKE an easement because it is not the grant of a property interest RATHER a contractual limitation regarding the land 2. Affirmative Covenants a. Promise to do something related to the land 3. Negative Covenants a. Promise to refrain from doing something to the land 4. Covenant vs. Equitable Servitude a. Based on the remedy requested i. Covenant = Damages only ii. Equitable Servitude = Injunction 5. RUNNING WITH THE LAND a. Burden and Benefit Both MUST Run for a covenant to be binding on the successors b. Burden Running (W.I.T.H.N.) i. Writing 1. Original promise btwn 2 original owners ii. Intent 1. Original owners intended for covenant to run iii. Touch and Concern the Land 1. Promise must affect the parties legal relations as landowners and not simply as members of the community at large a. Examples to pay $ to a property owners association OR a do not compete clause both touch and concern the land iv. Horizontal and Vertical Privity 1. Horizontal privity refers to the nexus between the two promising parties hardest of all elements to establish a. It requires the two originally agreeing parties be in succession of estate relationship: i. Grantor / Grantee ii. Landlord / Tenant iii. Mortgagor / Mortgagee 2. Vertical privity refers to the nexus between buyer and seller of a parcel

Page 161 of 337

BAR/BRI Bar Review, Summer 2007 a. It simply requires a non-hostile nexus between the parties: i. Contract ii. Devise iii. Descent b. THERE IS NO VERTICAL PRIVITY where the successor claims by Adverse Possession v. Notice 1. Buyer had notice of the covenant when he took from the seller (i.e., - it was in the deed) c. Benefit Running (W.I.T.V.) i. Writing 1. Original promise btwn 2 original owners ii. Intent 1. Original owners intended for covenant to run iii. Touch and Concern the Land 1. Promise must affect the parties legal relations as landowners iv. Vertical Privity 1. Vertical privity refers to the nexus between buyer and seller of a parcel a. It simply requires a non-hostile nexus between the parties: vi. Equitable Servitudes 1. Defined a. The equitable servitude is a promise that equity will enforce against successors b. Accompanied by injunctive relief 2. Creation (W.I.T.N.E.S.) a. Writing i. Generally, but not always, the original promise was in writing b. Intent i. Original owners intended it would be enforceable against successors c. Touch and Concern the Land i. ES affect the parties legal relations as landowners d. Notice at the time of purchase 3 forms (A.I.R.) i. Actual 1. literal knowledge of the promise in the prior deed ii. Inquiry 1. the lay of the land 2. the neighborhood conforms to the common law restriction

Page 162 of 337

BAR/BRI Bar Review, Summer 2007 iii. Record 1. notice is imputed to the buyer based on publicly recorded documents the other deeds of adjacent properties 2. NOT in NY 3. The Implied Equitable Servitude a. General OR Common Scheme Doctrine i. This always involves a subdivider ii. The subdivider separated tract into 100 parcels and 95 of them have covenants and 5 do not iii. Injunction stops the 5 deeds without covenant from breaching the covenant they dont have as a matter of equity iv. Elements: 1. When the sales began the subdivider has a general scheme of residential development which included Ds lot; AND 2. The D at the time of purchase had notice (see above) of the promise as contained in he prior deeds b. If the court finds there is a general or common scheme the court will imply a negative reciprocal servitude to hold the unrestricted lot holder to the restrictive covenant 4. Equitable Defenses to Enforcement of an Equitable Servitude a. Changed Conditions i. The changed circumstances alleged by the party seeking release from the terms of the equitable servitude must be so pervasive that the entire subdivision or area has changed ii. Limited or piecemeal change is not enough h. Adverse Possession i. Possession, for a statutorily proscribed period of time can, if certain elements are met, ripen into title ii. Elements 1. Continuous a. Uninterrupted who the given period b. NY 10 years 2. Open and Notorious a. Possession that usual owner would make under the circumstances 3. Actual a. Entry CANNOT be symbolic b. NO declaration of intent to enter, you gotta enter 4. Hostile a. Possessor cannot have the owners consent

Page 163 of 337

BAR/BRI Bar Review, Summer 2007 iii. Tacking 1. One adverse possessor may tack on to his time with the land his predecessors time, so long as there is privity a. Privity is created by a non-hostile nexus such as: i. Blood ii. Contract iii. Deed; OR iv. A will b. THERE IS NO PRIVITY WHEN THERE HAS BEEN AN OUSTER iv. Disability as a Defense 1. SOL will NOT run against a true owner who is afflicted by a disability at the INCEPTION OF THE ADVERSE POSSESSION i. Land Conveyancing: The Purchase and Sale of Real Estate i. Every conveyance consists of a 2-step process 1. The land K this K endures until Step II 2. The closing where the deed becomes the operative agreement ii. The Land Contract 1. SOF a. Ks for land must be in writing: i. signed by the party to be bound; ii. must describe the land; and iii. include a statement of consideration b. In the event that the K states more than the parcel the remedy is an action for specific performance with a pro rata reduction in purchase price c. ONE EXCEPTION Doctrine of Part Performance i. If 2 of the following 3 ate satisfied, equity will decree specific performance for an oral K for the sale of land: 1. B takes physical possession of land 2. B pays part or all of the purchase price; &/OR 3. B makes substantial improvements to the land 2. Risk of Loss a. Like JTs, see above, we apply the doctrine of equitable conversion Equity regards as done that which ought to be done i. MEANING, that one a K is signed B is the owner of the land, subject to payment at the closing ii. MEANING, that if between the K signing and the closing the land is destroyed by no fault of either party the B will bear the risk of loss 1. Exceptions: a. K states otherwise; b. NY B does not bear ROL until he takes possession

Page 164 of 337

BAR/BRI Bar Review, Summer 2007 3. 2 Implied Promises in Every Land Contract a. Seller Promises to Provide Marketable Title i. The Standard 1. Title must be free from: a. Reasonable doubt b. Lawsuits; or c. The threat of lawsuits ii. 3 situations in which title will be unmarketable 1. Adverse Possession a. Even if a portion of the land is under AP 2. Encumbrances a. Includes servitudes and mortgages BUT all subject to waiver by S b. Also, all encumbrances outstanding at the time of K signing can be settled by the time of closing or with the proceeds from the closing with no penalty to S 3. Zoning Violations a. Title is unmarketable as this subjects the land to the threat of litigation b. Seller Promises not to make any false statements of material fact i. S is liable for failure to disclose latent material defects 1. Lies & Omissions ii. Any disclaimer forgiving S of liability (i.e., - as is clause) CANNOT apply to (1) fraud; OR (2) failure to disclose iii. NY by statute sellers of any 1 to 4 family residence MUST provide buyer with a completed statutory disclosure form B4 the CONTRACT is signed 1. Doesnt apply to condos, co-ops, or new construction 4. The land K contains no implied warranties of fitness and habitability a. The idea is caveat emptor b. BUT WHEN THERE IS NEW CONSTRUCTION the warranty of fitness and workmanlike construction applies iii. The Closing 1. Our Controlling Document is not the Deed 2. Pass Legal Title from Seller to Buyer a. Lawful Execution and Delivery (L.E.A.D.) i. Must be in writing and signed by the grantor ii. Consideration need not: (1) be stated; (2) nor is it necessary to make a deed valid iii. Description of land does NOT have to be perfect, just unambiguous 1. Example

Page 165 of 337

BAR/BRI Bar Review, Summer 2007 a. I sell all my land in Kings County valid b. I sell some of my land in Queens County - invalid b. The Delivery Requirement i. Satisfaction 1. When grantor physically OR manually transfers the deed to the grantee a. Allows use of mail or messenger agent 2. However, actual physical transfer is NOT required 3. The standard is solely a legal standard - a test of present intent did the grantor have the present intent to be immediately bound? ii. Express rejection of the deed defeats delivery (I.D.A., A not met) iii. Delivery + Oral Condition = Just Delivery 1. If the deed comes with a condition heres the deed, but the prop is only yours if you survive me. condition drops out, delivery is complete iv. Delivery by escrow is valid 1. This method would allow enforcement of a condition prior to delivery 2. You inform escrow agent to NOT deliver until 3. Once conditions met, title passes automatically 3. Covenants for title and the 3 types of Deeds a. Quitclaim i. Deed contains NO covenants ii. Grantor is not even promising that he has title to convey 1. BUT REMEMBER Grantor in land K did implicitly promise to provide marketable title at the closing a. This promise is time limited, because the contract merges with the deed at the closing b. General Warranty Deed i. This warrants against ALL defects in the title including those attributable to Grantors predecessors in interest ii. Covenants 6 types: 1. Present Covenants breached when deed is delivered a. Covenant of Seisin grantor promises he owns the estate he purports to convey b. Covenant of the Right to Convey grantor has power to make the transfer,

Page 166 of 337

BAR/BRI Bar Review, Summer 2007 there is no temporary restraints of the grantors power c. Covenant against encumbrances grantor promises there are no servitudes or mortgages on the land 2. Future Covenants breached when grantee is disturbed a. Covenant for Quiet Enjoyment grantor promises that grantee wont be disturbed in possession by a 3rd partys claim of lawful title b. Covenant for Warranty grantor promises that in the event there are claims of title against grantee, grantor will defend c. Covenant for Further Assurances grantor will do all future acts necessary to perfect grantees title IF it later turns out to be imperfect c. Special Warranty Deed, a/k/a Bargain & Sale Deed i. This only contains 2 promises that the grantor makes only on behalf of himself: 1. Grantor covenants that he has not conveyed the estate to anyone other than the grantor (promising he is not a dirty double dealer); & 2. Grantor promises that the estate is free from encumbrances made by the Grantor j. The Recording System The case of the dirty double dealer i. Two Bright line Rules 1. The last in time BFP in a NOTICE jurisdiction ALWAYS WINS regardless of who records 1st 2. The last in time BFP in a RACE-NOTICE jurisdiction WINS only if he records first a. NY = Race Notice Jurisdiction ii. A Bona Fide Purchaser (BFP) 1. A BFP takes: (1) w/o notice that someone already bought the prop; AND (2) for value 2. Routine value Questions a. Bargain Basement Sale i. Value = vale even if you get a good price b. The Doomed Donee i. THERE IS NO VALUE when you receive a bequest via intestacy or inheritance THUS you cant be a BFP 3. Forms of Notice a. Actual

Page 167 of 337

BAR/BRI Bar Review, Summer 2007 i. Prior to closing B2 gets literal knowledge of sale to B1 b. Inquiry i. Whether B2 goes to inspect or not, B is on inquiry notice of whatever and inspection of the land would reveal ii. B has duty to inspect before transfer of title, to see, for example whether anyone else is in possession iii. Also if a recorded document makes reference to and unrecorded transaction B2 is on inquiry notice of whatever would have come up from a reasonable follow-up investigation c. Record i. B2 is on record notice of B1s deed if at the time B2 takes it is in the chain of titles iii. The Recording Statutes 1. Notice - A conveyance of an interest in land (to B1) shall not be valid against any subsequent purchaser for value (B2), without notice thereof (of B1), unless the conveyance is recorded (B1s conveyance) 2. Race-Notice - A conveyance of an interest in land (to B1) shall not be valid against any subsequent purchaser for value (B2), without notice thereof (of B1), whose conveyance is first recorded iv. Chain of Title 1. Any subsequent BFP wins in a notice jurisdiction 2. If B1 recorded prior to B2 taking title from A, B1 will never be a BFP because B2 would have record notice 3. BUT record notice only exists if the deed is properly recorded in the chain of title 4. The chain of title is a sequence of recorded documents capable of giving record notice to later takers a. Generally established through the grantor/grantee index 5. 3 major problems a. The Shelter Rule i. One who takes from a BFP will prevail against any entity that the transferor r BFP would have prevailed against the transferee takes shelter in the status of her transferor even though the transferee is not a BFP 1. helps out people who take from a BFP by descent or devise b. The Wild Deed i. O sells to A, A does not record. Then A sells to B and B records. Bs deed is NOT CONNECTED TO ANYTHING it is wild within the chain of title ii. A wild deed is unable to give proper record notice, Thus if the original grantor (O, in the above example) was a dirty double dealer - THEN:

Page 168 of 337

BAR/BRI Bar Review, Summer 2007 1. C, a subsequent BFP would beat B in a notice jurisdiction; AND 2. would beat C in a race-notice jurisdiction because Bs deed is NOT properly filed. a. B has a duty to make sure that his deed is properly filed within the chain of title when he files it OR hes screwed c. Estoppel by Deed i. One who conveys realty in which he has no interest is estopped from denying the validity of that conveyance if he acquired the interest he had previously transferred ii. Example: O was gonna sell to X, decides not to. X then sells that land he does not own to A. A records. O then later sells to X. X thereafter sells to B. 1. Initially A owns the land b/c of estoppel by deed 2. BUT then B = BFP and wins: a. In a notice jurisdiction as he couldnt have notice of As deed, not in the chain of title; AND b. In a race-notice jurisdiction, As deed is a wild deed and thus not properly recorded k. Mortgages i. Creation 1. A mortgage is the conveyance of a security interest in land intended by the parties to be collateral for the repayment of a debt 2. Debtor becomes mortgagor and the Lender/Creditor becomes mortgagee 3. 2 Elements a. Debt; AND b. Voluntary transfer of a SI in the land as security for the debt 4. Mortgage must typically be in writing to satisfy the SOF (legal mortgage) a. An encumbrance evidenced by a writing should be recorded ii. The Equitable Mortgage 1. This is where a lender gives money to the property owner AND the property owner hands over a deed that is absolute of its face 2. In this type of action where there is no writing, parole evidence is freely admissible 3. Lender can sell the land to a BFP a. Debtors only recourse is to commence a c/a against the lender for fraud and recover the proceeds of the sale iii. Rights Under a Mortgage 1. Until, default/foreclosure debtor had the title and right to possession

Page 169 of 337

BAR/BRI Bar Review, Summer 2007 2. Creditor/lender has a lien (a right to look to the property in the event of he default) iv. Transferable Mortgage Interest 1. All parties to a mortgage can transfer their interests 2. Creditor-Mortgagee a. Execution i. By endorsement of note & delivery to transferee; OR ii. By executing a separate document of assignment b. Holder in Due Course (HIDC) i. If a note is executed and delivered, the transferee is eligible to become a HIDC. The means that he gains a status whereby he takes free of any personal defenses that could have been raised by the debtor against the creditor ii. This means that a HIDC can foreclose on the mortgage despite the presence of a personal defense iii. HIDC pre-requisites: 1. Instrument must be negotiable 2. payable to the order of the creditor OR bearer 3. must be indorsed by the creditor 4. must be delivered to the transferee 5. HIDC must take in good faith, w/o knowledge of illegality; and 6. HIDC must pay consideration iv. Personal Defenses 1. Lack of consideration 2. fraud in the inducement 3. unconscionability 4. waiver 5. estoppel v. Real Defenses MADFIFI4 1. Material Alteration 2. Duress 3. Fraud in Factum a. Lie to signer about what they are signing 4. Incapacity 5. Insanity 6. Insolvency 3. Debtor-Mortgagor a. If the debtor was to sell the lien would remain on the land as long as the instrument has been properly recorded i. Meaning that if the mortgage was properly recorded the subsequent purchaser (B2) will be subject to certain liabilities b/c of the encumbrance on the land in either a notice of race-notice jurisdiction

Page 170 of 337

BAR/BRI Bar Review, Summer 2007 ii. Alternatively if NOT properly recorded at the time B2 takes, B2 could be considered a BFP as to the mortgage in a notice jurisdiction 4. Personal Liability of Debtor-Mortgagor AFTER Sale of parcel a. Assuming the mortgage i. S and B are both personally liable ii. B primarily liable and O secondarily liable iii. B assumed the mortgage b/c he got a decrease in the purchase price when he bought the prop based on the outstanding mortgage b. Taking Subject to the mortgage i. B assumes no personal liability ii. O is personally liable iii. BUT if recorded the mortgage will remain on the land, THUS when O defaults the property, now owned by B can still be sold v. Foreclosure 1. Assuming creditor must look to land for satisfaction they must proceed by a judicial proceedings 2. At foreclosure the land is sold 3. Proceeds go to satisfying the debt 4. Deficiency vs. Surplus a. If the proceeds from the sale are less than what is owed the creditor must apply for a deficiency judgment b. If there is a surplus, junior liens are paid off in order of priority i. 1st in time= 1st in line 5. Priorities a. Attorney Fees b. Sales Costs c. Interest on senior mortgage d. Then each creditor get paid in full based upon date which they filed mortgage in the county clerks office, (with some exceptions) e. If surplus, the current property owner gets the $ from the surplus vi. Effect of Foreclosure on Various Interests 1. Junior Interests a. Foreclosure will terminate junior interests to the mortgage being foreclosed upon but will not affect senior interests b. BUT ONCE foreclosure of a superior claim has occurred with the proceeds distributed properly, junior lien holders cannot again look to the parcel in satisfaction of the outlying debt c. Parties with junior interests including the owner are NECESSARY Parties to join in the Action

Page 171 of 337

BAR/BRI Bar Review, Summer 2007 i. FAILURE to join a necessary party will preserve that mortgage despite the foreclosure already having occurred 2. Senior Interests a. Foreclosure does NOT affect senior interests to the mortgage b. Any purchaser at a foreclosure sale will not be personally liable on the senior interest - ** BUT If left unpaid will compel the sale of the recently purchased property** c. Meaning that the foreclosure buyer will only bid the amount of the house less the mortgages outstanding so he pays FMV & will then pay off the outstanding mortgages to have an unencumbered property vii. Priorities 1. As a creditor u must record or you have no priority at the foreclosure sale 2. You will be deemed an unsecured judgment creditor (a regular shlub) 3. PMM (purchase money mortgage) a. When a mortgage is given to secure a loan that enables the debtor to acquire the encumbered land that will give a PMM to that lender = SUPERPRIORITY over all preceding mortgages b. PMM beats out a pre-recorded after acquired property clause against the seller or the property 4. Subordination Agreements a. Creditors, by private agreement, can K with one another to subordinate their priority to a junior creditor for a price viii. Redemption 1. Redemption in Equity a. An equitable redemption allows the buyer to re-pay the foreclosing mortgage anytime prior to the sale of the property b. Once the sale occurs the right of equitable redemption is lost c. Right is exercised by paying offal MISSED payments, plus interests, plus costs d. Acceleration Clauses & Redemption i. In the event there was an acceleration clause to redeem the debtor must pay off the entire mortgage plus interest e. THE DEBTOR OR CREDITOR MAY NEVER CONTRACT AWAY THE RIGHT OF REDEMPTION 2. Statutory Redemption a. In the states the debtor may redeem the foreclosed mortgage from 6 months to 1 year AFTER the foreclosure b. Generally, the debtor is allowed to reside in the home up and through the point of statutory redemption c. THE PRICE IS WHAT WAS PAID AT THE SALE NOT WHAT WAS OWED TO THE CREDITOR d. NOT in NY

Page 172 of 337

BAR/BRI Bar Review, Summer 2007 l. Lateral Support i. If land is improved by buildings and an adjacent landowners excavation causes that improved land to cave in, the excavator will be liable if he acted negligently ii. To attach strict liability to the excavator the landowner must prove that nothing they have done to improve the land has contributed, even partially, the land to collapse m. Water Rights i. Two major systems for determining allocation of water in watercourses (i.e., streams, rivers and lakes) 1. The Riparian Doctrine a. Water belongs to those who own the land bordering the water course b. These people are termed riparians and share the right to reasonably use the water c. THUS one riparian will be liable to another if their use unreasonably interferes w/ the use by other riparians 2. The Prior Appropriation Doctrine a. The water belongs initially to the state BUT the right to divert and use the water can be acquired by an individual regardless of whether or not they are a riparian owner b. Rights are determined by priority of beneficial use i. 1st in time, 1st in right ii. Party can acquire right to divert water for any productive, beneficial use of the water (i.e., agriculture) ii. Groundwater 1. a/k/a, percolating water beneath the surface of the Earth, not confined to a known channel 2. Owner of surface has right to use the water (i.e., - water well on your property) 3. Use must not cause waste iii. Surface Waters 1. Those which come from rain, springs, or melting snow and which have not yet reached a natural watercourse or basin 2. The Common Enemy Rule Surface water is not liked because of ability to damage property 3. THUS a landowner may drain or make any other changes or improvements to combat the flow of surface water. a. By diverting water you cannot unnecessarily harm the others land n. Possessors Rights i. Right to be Free from Trespass or Nuisance 1. Trespass a. Invasion of land by tangible physical object

Page 173 of 337

BAR/BRI Bar Review, Summer 2007 i. REMEDY action for ejectment 2. Private Nuisance a. Substantial and unreasonable interference with the use or enjoyment of anothers land b. No tangible personal invasion normally by odors or noise which give rise to a nuisance c. The Hypersensitive Plaintiff i. Cant cry nuisance because you are a wuss nuisance must be reasonable o. Eminent Domain i. Government can take private property if for a public use in exchange for just compensation ii. Explicit Taking - Condemnation iii. Implicit Takings Regulatory Takings 1. A government regulation that not intended takes all economically viable use from your land 2. REMEDY Government must either: a. Compensate Owner; OR b. Repeal the statute/rewrite AND pay for damages occurred while it was in effect p. Zoning i. Pursuant to its police powers, the government may enact a statutes to reasonably control land use ii. The Variance 1. The Principal means to achieve a flexibility in zoning 2. To acquire, proponent must show: a. Undue hardship; AND b. Variance wont create a detriment to neighboring property values iii. Nonconforming Use A once lawful existing use, now deemed nonconforming by a new zoning ordinance 1. It cannot be condemned all at once UNLESS compensation paid 2. Sunset provisions avoid this problem iv. Unconstitutional Exactions 1. Exactions are those amenities the government seeks in exchange for granting permission to build 2. To pass constitutional scrutiny exactions must be reasonably related in nature and scope to the impact of the proposed development 9. Contracts a. Applicable Law i. Multistate Tests - Common Law & UCC Article II (sale of goods) 1. Article applies to the SALE of goods only 2. Goods are movable personal property 3. Services are governed by the Common Law

Page 174 of 337

BAR/BRI Bar Review, Summer 2007 a. Examples i. Babysitting = Common Law ii. Sale of Land = Common Law iii. Loan of $ = Common Law 4. Sometimes a Good and a Service Overlap a. The Predominant Purpose Test Is the bargain predominantly for a good or a service? i. Examples 1. Buy a book that includes a free class Art II applies 2. Hire a painter to paint, the K price includes paint common law applies ii. NY Tests 3 Bodies of Law - (1) NY Common Law Ks; (2) Article II of the UCC; and (3) Article IIA of the UCC for leases of goods 1. Examples a. Lease of a Car i. MBE common law ii. NY Article IIA b. Lease of an Apartment in NY i. NYRPL, Art IIA does NOT apply to real property leases b. Contract Formation i. Vocabulary 1. Contract a legally enforceable agreement, express by words, implied by the parties conduct a. Restatement a bargain with a manifestation of mutual assent to the exchange and a consideration b. Article II any manner reasonable to show agreement between the parties 2. Quasi-Contract an equitable remedy that applies when contract law provides an unfair remedy, to protect against unjust enrichment a. Recovery is NOT the contract price, RATHER the reasonable value of the benefit conferred 3. Bilateral Contract offer can be accepted in any manner reasonable a. Every K is bilateral unless offer mandates acceptance by performance 4. Unilateral Contract offer can be accepted only by performance ii. Is there an Offer Formation Step #1 1. An offer is a manifestation of an intention (a willingness) to be bound, created by words or conduct a. Context: An advertisement is NOT an offer i. UNLESS a quantity is stated and the d limits the parties who can accept 1. Example GAP ad reads, 1 blue dress for $1, first come first serve. = offer

Page 175 of 337

BAR/BRI Bar Review, Summer 2007 b. Content: Are the terms too indefinite to be enforced i. Requirements contract are definite enough EVEN though there is no specific quantity mentioned 1. no specific quantity term necessary 2. ALL goods or ONLY provided by seller 3. BUT buyer cannot take seller by surprise any increase in amount must be reasonable in light of past requirements ii. An open price term is too indefinite under the common law BUT NOT under Article II 1. Real Property requires a price 2. If goods, Article II will allow K and apply a reasonable price iii. Is the Offer still Open? Formation Step #2 1. Effect: an offer cannot be accepted if it has been terminated 2. An offer lapses after a stated term OR after a reasonable time has passed a. Example Offer good till June 1st, Buyer cannot accept on June 2nd (sudden term) 3. An offer terminates when the offeror revokes the offer a. An offeror may revoke either directly or indirectly i. Direct Revocation: the offeror unambiguously indicates directly to the offeree that he has changed his mind ii. Indirect Revocation: The offeror engages in conduct that unambiguously indicates hes changes his mind AND the offeree is aware of the conduct 1. Sale of good to another party will not be indirect revocation, buyer has no notice, BUT if offeree made aware of subsequent sale, revocation valid b. Revocation is an offer is only effective upon receipt i. (cf. mailbox rule - effective upon mailing) ii. Tuesday I mail revocation, its received on Friday Friday is the effective date 1. Any acceptance after mailing and before receipt is a valid acceptance c. The offeror can generally revoke ANY time before acceptance, EXCEPT if the following four situations: i. Option a promise to keep the offer open and thats paid for (consideration) 1. NY a signed written promise NOT to revoke is enforceable even w/o consideration ii. Reasonably foreseeable reliance before acceptance 1. Example Subcontractor makes offer to Contractor, contractor puts in a bid with the owner

Page 176 of 337

BAR/BRI Bar Review, Summer 2007 a. Contractor has detrimentally relied AND Sub-Contractor knows his bid would be relied upon iii. Beginning performance on a unilateral contract 1. Example Painter started painting a house where offeror said acceptance only by performance a. Beginning performance DOES NOT include preparation like buying the paint to do the job 2. NY bilateral AND unilateral Ks are the same, revocation possible UNTIL performance has been completed iv. ARTICLE II Firm offers 1. A signed-written-promise by a merchant to hold the offer open, like an option a. Merchant is a person who deals in goods of that kind b. Signature = letterhead c. Max time is 3 months i. If offer signed - held open for 6 months, thats fine but revocation can occur after month 3 ii. cf. option pd for, no time limit d. A SIGNED OFFER IS NOT A FIRM OFFER IF THERE IS NO PROMISE TO HOLD IT OPEN 2. Signed written offer to hold property open is not covered by Article II 3. NY a signed written promise NOT to revoke is enforceable even w/o consideration 4. An offer terminates when the offeree rejects the offer a. A Counteroffer operates as a rejection under the common law BUT BARGAINING does not i. Example I will only pay $60K = counteroffer ii. Example Will you take $60K = bargaining b. A Conditional Acceptance operates as a rejection i. Similar to a counteroffer, a conditional acceptance must be an expression of unwillingness to proceed w/o acceptance of the addl or diff terms ii. Example I will accept, - so long as / if / provided that - I get my own bedroom c. Additional terms i. Common Law operates as a rejection because of the Mirror Image Rule

Page 177 of 337

BAR/BRI Bar Review, Summer 2007 1. Example Llrd sends tenant a lease that says nothing about pets, tenant adds that tenant may keep a pet, signs and returns lease - NOT an acceptance under the mirror image rule ii. UCC, Article II additional terms are mere proposals and the rest of the accepted terms are deemed as seasonable and definite expression of acceptance 1. EXCEPT as between two merchants such additional terms will be incorporated in to the contract UNLESS: a. The addl term is a material change; OR i. Likely to cause hardship of surprise for the offeror (i.e., disclaimer of all warranties), ii. NOT a material change if such is customary in the course of business dealings (i.e., delivery preferable on weekends) b. The offeror-merchant objects within a reasonable time after receipt of the proposed change 2. Bottom line if additional terms between merchants, it will be included in the acceptance as long as it is not a material change 5. The death of either party before acceptance terminates the offer a. Except the irrevocable offer where consideration paid by the offeree , offeree must except within the option period iv. Has the Offer been accepted? Formation Step #3 1. Generally an offer may be accepted by: a. A promise b. Performance; OR c. Part performance 2. Acceptance by any manner reasonable unless otherwise stated 3. An offer can but usually does NOT control the manner of acceptance a. Where language of offer can control and mandate a specific form of acceptance b. Article II Ks i. Example B faxes an order telling S he can only accept by shipping w/in 24 hrs, S replied by fax saying, I accept. S doesnt ship w/in the time requested. 1. This is a unilateral K, only manner of acceptance is performance 2. S didnt breach b/c he never accepted, no K formed

Page 178 of 337

BAR/BRI Bar Review, Summer 2007 ii. Example B faxes an order telling S he must ship w/in 24 hrs, S replied by fax saying, I accept. S doesnt ship w/in the time requested. 1. This is not a unilateral K, no only by language, acceptance by any means THUS S liable for breach 2. S accepted by promise, THUS failure to ship makes S liable for breach Start of performance is an acceptance of an offer to enter into a bilateral contract BUT NOT to enter into a unilateral K (only full performance will do) a. KEY the only by language, making the offer unilateral b. cf. unilateral K CANNOT be revoked after part performance has begun i. NY bilateral AND unilateral Ks are the same, revocation possible UNTIL performance has been completed (see, supra) Improper performance usually operates as acceptance a. Article II if the improper performance is done as a mere accommodation then no acceptance has occurred b. Example in a bilateral K painter starts painting house, but paints wrong color = acceptance c. Improper performance is simultaneous acceptance AND breach Silence is not an acceptance When is acceptance effective? a. Mailbox Rule: an acceptance is effective when mailed i. KEY People are in different places & their communications conflict Depends which communication controls ii. Cf. revocation effective upon receipt iii. Acceptance occurs EVEN IT letter got lost in the mail b. Exceptions to the Mailbox Rule i. Offer Provides otherwise 1. Example Your acceptance must be received by June 1st Any acceptance mailed on June 1st would be inappropriate ii. Consideration Paid (situation with an option) 1. When offeree already protected by an option the mailbox rule doesnt apply 2. Example You paid to hold open offer until June 1st Any acceptance mailed on June 1st would be inappropriate, b/c mailbox rule doesnt apply iii. Acceptance THEN Rejection 1. Acceptance will generally win b/c of the mailbox rule

4.

5.

6. 7.

Page 179 of 337

BAR/BRI Bar Review, Summer 2007 2. UNLESS the rejection happens to arrive first AND the offeror relies on the rejection 3. Example Offeree mails acceptance, then faxes rejection. Rejection would be received first BUT acceptance controls if NO RELIANCE of rejection by Offeror iv. Rejection THEN Acceptance 1. If rejection mailed first, the mailbox rule DOES NOT apply 2. A Race whichever gets their first is effective v. Is the Agreement Legally Enforceable? Defenses Against Formation 1. Defendants lack of capacity a. Categories: i. Intoxicates ii. Under 18 1. In actuality NOT what seller actually tells buyer to induce the bargain for exchange iii. Mentally incompetent b. An incapacitated defendant has the right to disaffirm the K i. Example Minor buys bike, doesnt pay. Seller sues to enforce K. c. An incapacitated party can impliedly affirm the K by retaining the benefit without complaint after regaining capacity d. An incapacitated party is liable for necessaries BUT only on a quasi-K basis (FMV, not K value) i. Necessaries include food, clothing, shelter and medical care 2. Duress (physical & economic) a. When the seller threatens to harm buyer OR b. When seller has buyer over a barrel- economic duress: i. Seller threatens to break existing K; ii. Buyer agrees to sellers forced upon terms only b/c he needs to get the deal done; AND iii. Buyer has no reasonable alternatives 3. Misrepresentation/ Non-Disclosure About a Material Fact a. Any statement which induces a buyer to buy b. EVEN IF misrepresentation is honest (actually believed by Seller) it is still a fatal flaw c. Fact must be MATERIAL 4. Ambiguity of a Term a. If neither party knows or has reason to know of the others misconception, then NO K exists (no mutual assent) b. BUT if one party knows of the misconception and the other party is still unaware of the ambiguity THE INNOCENT PARTYS interpretation governs 5. Mistake about a Material Fact

Page 180 of 337

BAR/BRI Bar Review, Summer 2007 a. Mutual Mistake i. Any mutual mistake as to a term central to the K be a defense to formation 1. NY mutual mistake will VOID the K 2. Mistake to market value is NEVER material ii. Example B & S agree and K to sell house and neither knows that house is destroyed in fire = mutual mistake iii. Example B & S agree and K to a Warhol painting, they then learn that the painting was not a Warhol = mutual mistake MATERIAL, K not formed b. Unilateral Mistake i. One parties mistake is NOT a fatal flaw in the agreement process UNLESS the other party knew OR had reason to know of the other parties mistake 6. Lack of Consideration a. Used as a defense to find K is not legally enforceable b. Consideration is defined as bargained for legal detriment/benefit i. Consideration takes the form of a promise, forbearance and performance c. Past Consideration is no consideration at all i. EXCEPT IN NY past consideration is binding if is in a signed express writing AND can be proven d. The adequacy of consideration is irrelevant i. As long as a bargain exists, price is irrelevant e. The Pre-Existing Duty Rule i. Common Law MUST have consideration to modify K 1. A party cannot ask for more $ if they have already agreed to a set price to provide a good or service 2. BUT if increased obligation arise, there was no PEDR, thus more $ can be acquired 3. EXCEPT IN NY PEDR does not apply if modification is in a signed express writing AND can be proven ii. Article II no consideration needed to modify ONLY good faith required f. Past payment is consideration for a promise to forgive the remainder of a disputed debt i. IF money due AND undisputed - past consideration is insufficient 1. Even if agreement to forgive was in writing it lacks consideration, b/c the debtor had a preexisting duty to pay back the $ owed

Page 181 of 337

BAR/BRI Bar Review, Summer 2007 2. EXCEPT IN NY past consideration will nullify an undisputed debt if promise to forgive balance is in a signed express writing ii. IF money due AND disputed past consideration IS consideration to forgive 1. Law wants to promote settlements of disputed matters g. A written promise to pay a debt, collection of which is barred by SOL will be enforceable even without consideration h. If there is NO CONSIDERATION Promissory Estoppel can serve as a substitute i. Elements: 1. Promise 2. Forseeability of reliance on that promise 3. Actual Detrimental Reliance ii. Example Llrd agree to re-rent to tenant, tenant then paints entire apt. While landlord recd nothing for his promise to re-let, he is estopped due to tenants foreseeable detrimental reliance on the promise 7. Illegality at the time the Agreement was made a. Subject matter is key b. Example - You go to JetBlue and buy a ticket to hop on a flight to kill someone you contracted to kill. If you never pay JetBlue you cant claim illegality UNLESS JetBlue was aware of your intentions. BUT if you never killed the hit, the hiring party cant sue you for breach. 8. Public Policy Generally 2 scenarios a. A court will invalidate or narrow a covenant not to compete that operates as a restraint of trade i. Courts balance the: 1. Freedom of K; And 2. the Restraint on Trade ii. Courts will consider the NEED and the SCOPE of the covenant 1. NY the services MUST be unique b. An exculpatory clause can eliminate liability for negligence, BUT not gross negligence OR intentional torts 9. Unconscionability a. The K must shock the conscience of the court 2 types b. Substantive terms of the agreement are unfair (i.e., - K for involuntary servitude) c. Procedural the writing/ process by which the agreement was reached was unfair (i.e., - fine print, legalese, unequal bargaining power) d. NOT heavily tested

Page 182 of 337

BAR/BRI Bar Review, Summer 2007 c. Statute of Frauds i. SOF Evaluation 1. Do you need a writing? 2. If so, does a satisfactory writing exist? 3. If no satisfactory writing is there an exception? ii. Most oral Ks are enforceable the following 8 Ks have to be evidenced by a writing to be enforced: 1. The transfer of an interest in real estate a. Sale of a house b. Lease of an apartment for a term of years 1 year or greater in duration c. Easement by Grant d. NOT to build a fence on your real estate 2. A service contract that cannot be performed within 1 year from the date the agreement is signed a. Ignore what happens, see what might have happened by the terms of the K b. Examples i. Any task w/o and end date can presumably done in one year = writing NOT required ii. A K for the rest of your life you can die within a year = writing NOT required iii. A K for a period of 3 years = writing required c. Time Agreement Made starts the 1 year clock i. Example - K for employment for 1 year made today, BUT starting next Monday = writing required d. An agreement to perform on a date more than one year away from date agreement entered = writing required 3. Article II Sale of Goods > $500 4. NY Article IIA, a lease > $1,000 FOR THE WHOLE LEASE a. Example lease computer for 100/month for 1 year = writing required b/c the final amount is $1200 5. A promise to answer for the debt of another a/k/a, suretyship 6. A promise by an estate representative to use their own funds for estate expenses 7. A promise given in consideration of the marriage a. Includes pre-nuptial agreement, post-nuptial agreement b. DOES NOT include a promise to marry another 8. NY other miscellaneous SOF provisions: a. Assignment of an insurance policy b. Promise to pay a discharges debt c. Agreement to pay a finders fee OR a brokers commission i. EXCEPT to an attorney, auctioneer, or real estate agent iii. SOF applies to modifications of a K, ONLY IF the K as modified (not the original K) would require the SOF

Page 183 of 337

BAR/BRI Bar Review, Summer 2007 1. Examples a. Original lease for 9 months, new lease for 3 years = writing required for new lease b. Original K for $1000 worth of goods, new K for $400 worth of goods = generally, no writing required i. BUT IF the 1st K prohibits oral modifications, no matter what the modification is, the new K must be in writing ii. UNLESS the seller modified the K (their own terms) AND the buyer relied on such modification THEN seller is deemed to have waived iv. What kind of writing will satisfy the SOF 1. Article II a. The writing must contain a quantity term and be signed by the party that is to be bound 2. NY - Article IIA a. The writing MUST: i. SAY ITS A LEASE ii. State a term iii. State a price of payments iv. State what is to be leased; AND v. Be signed by the party to be bound 3. CL a. The writing must state ALL material terms and be signed by the party to be bound i. Material Terms include: 1. The parties 2. The amount 3. The quantity 4. Duration 5. Signed by the party to be bound v. Exceptions to the SOF 1. Real Estate part performance a. 2 of 3 requirements must be fulfilled to satisfy an exception to the SOF: i. possession ii. partial or full payment iii. permanent improvements have been made b. REMEMBER another exception to SOF real property requirements are short term leases for a term less than one year 2. Performance that is greater than a year from completion at the date of formation does not need a writing where there has been full performance 3. Article II Sale of Goods a. Buyer has accepted OR paid for the goods i. Whatever goods have been paid for do NOT require a written K

Page 184 of 337

BAR/BRI Bar Review, Summer 2007 b. Custom made goods not suitable to others for sale i. Only if not re-sellable in the ordinary course of business c. Judicial Admission in response to discovery that K existed d. Merchants confirmatory Memo i. 3 Requirements: 1. There was an oral K 2. Bindor Merchant send memo to ANOTHER Bindee Merchant confirming oral K; AND 3. Bindee Merchant has not replied to the memo within 10 days of receipt ii. Even though not signed by the party to be bound it is still evidence of an enforceable K 4. Suretyship a. Where the main purpose in making the promise was to benefit the guarantor, then there is no need for a writing b. Example you acting as guarantor for your painter so he can purchase paints with which to paint your house vi. The Equal Dignities Rule 1. Written authority to enter a K on behalf of another is required IF the underlying K falls within the SOF 2. Example K to sell prop in writing, you need a POA or some other authorization allowing you to enter into such a K for anothers benefit d. Contract Terms i. Words of the Parties - The Parole Evidence Rule (PER) 1. Keeps out evidence of a prior agreement (oral or written) that contradicts a later writing 2. Exceptions to PER, PER is admissible where: a. To correct a clerical error b. To establish a defense against formation i. Example Based on an oral misrepresentation, made prior to the K, one party seeks rescission as failure to satisfy a condition precedent ii. PER is never applied when the c/a is for fraud, duress, infancy, etc. c. To explain vagaries or ambiguous terms i. The Plain Meaning Rule If a word has a plain meaning (i.e., - the color black) it can never be deemed ambiguous or subject to definition d. To supplement a partially-integrated writing that is a statement of the terms BUT not a complete statement or all terms agreed upon i. Example Lease says no sublets, BUT says nothing about pets, prior oral agreements as to pets will be admitted

Page 185 of 337

BAR/BRI Bar Review, Summer 2007 3. PER has nothing to do with what happens AFTER the K has been signed a. Thats generally an issue of modification (consideration required at common law) or the SOF Conduct can be used to explain ambiguous terms or fill in gaps 1. From MOST to LEAST Important a. Course of Performance between the parties under this K b. Course of Dealing between the parties under prior contracts c. Trade Usage of others in the industry under similar Ks Article II - Sellers Warranties of Quality in a Sale of Goods 1. Express Warranties a. A seller is liable for breach of any express warranty the seller makes i. Statements of fact, promises, or descriptions create express warranties ii. Mere expressions of opinion are NOT express warranties iii. A sample or model used in the sale IS an express warranty b. A breach of warranty action on an express warranty is ONLY actionable where the warranty is the basis of the bargain IF the buyer could have relied on the warranty 2. Implied Warranty of Merchantability a. Goods are fit for their ordinary purpose b. Seller MUST be a merchant who deals in goods of the kind i. B/C of a merchants special knowledge ii. A farmer is NOT a merchant 3. Implied Warranty of Fitness for a particular purpose a. The goods are fit for the buyers special purpose b. THIS ONLY APPLIES WHEN: i. Buyer has a special purpose in mind ii. The Buyer asks seller to choose suitable goods; AND iii. The Seller knows: (1) buyers purpose and (2) buyer is relying on seller c. Seller DOES NOT have to be a merchant NY Article IIA Sellers Warranty of Quality in a Lease of Goods 1. Where leased from merchant, ALL Article II warranties apply 2. In a finance lease, ONLY the manufacturer NOT the financer is liable for breach Limitations on Warranty Liability in Sales and Leases of Goods 1. Disclaimer A seller can disclaim implied warranties NOT express warranties a. Waiver of an implied warranty MUST EITHER: i. Contain magic words as is OR with all faults 1. Waives BOTH implied warranties ii. BE CONSPICUOUSLY stated

ii.

iii.

iv.

v.

Page 186 of 337

BAR/BRI Bar Review, Summer 2007 1. large type, bold face 2. If no magic words, the warranty must expressly disclaim the warranty of merchantability a. Example Warranty says we disclaim all implied warranties b. This will only disclaim the implied warranty of fitness NOT merchantability 2. Limitation A seller can limit a buyers remedies for breach of ANY warranty IF the limitation is NOT unconscionable a. In a consumer goods transaction, limitations on personal injury are presumptively unconscionable vi. Article II - Risk of Loss in Sales of Goods 1. When goods are damaged before the buyer gets the goods AND neither buyer not seller is to blame, who bears the risk of loss carries a heavy burden: a. If Seller seller must provide new goods to the buyer for no addl cost OR will be liable for breach b. If Buyer buyer must pay for damaged or destroyed goods in the amount of the full K price 2. Risk of loss is controlled by: a. 1st Agreement of the Parties b. 2nd Breaching party bears the burden on an uninsured loss c. 3rd the UCC controls i. Where there is a common carrier ROL shifts when the seller completes its delivery obligations 1. IF K = FOB shipment point a. Seller must deliver the goods to the common carrier, make reasonable delivery arrangements and inform the buyer 2. IF K = FOR destination point a. Seller must deliver the goods to a specific destination (usually where buyer is located) ii. Where there is no carrier ROL passing is dependent upon whether or not the seller is a merchant 1. If a merchant the ROL passes when the buyer takes possession 2. If seller is NOT a merchant the ROL passes upon tender a. Tender = when goods are make available and buyer is given notice of their availability

Page 187 of 337

BAR/BRI Bar Review, Summer 2007 iii. If the K gives the buyer the right to return the goods the KEY is whether the buyer is buying them for resale OR personal use 1. IF for resale, then the same rules apply 2. IF for personal use ROL shifts when buyer accepts the goods vii. NY Article IIA Leases & ROL 1. Lessor bears the risk of loss in leases EVEN AFTER the lessee takes possession a. EXCEPT in finance leases, the lessee bears the ROL once they take possession e. Performance i. Article II - Performance of Ks for the Sale of Goods 1. The Perfect Tender Rule a. A seller must deliver perfect goods in the right place at the right time b. Failure , allows the buyer to reject the goods and seek damages 2. Cure a. A seller who failed to make perfect tender may have an option to cure IF the sellers time for performance has expired i. In the event the time has expired, perfect tender will be avoided IF the buyer has been flexible with imperfect tender in the past 3. Installment Contracts a. An installment sale K requires or authorizes the seller to deliver the goods in separate installments i. Example Buyer orders 20 kegs. Seller makes 5 separate deliveries of 4 kegs each From the facts we do not know whether the K authorizes installments b. In installment Ks, the perfect tender rule DOES NOT apply i. Increased difficulty for the buyer to reject c. The RULE: i. IF the installment is substantially impaired and CANNOT be cured then the buyer can reject the installment ii. IF the installment substantially impairs the value of the entire K then the buyer can reject the whole K 4. Acceptance a. Implied Acceptance occurs when the buyer keeps the goods without objection AFTER having an opportunity to inspect i. Payment prior to inspection IS NOT acceptance b. Once a buyer inspects goods, it is too late to reject them i. However a buyer who accepts non-conforming goods can still get damages 5. Revocation of the Acceptance of the Goods

Page 188 of 337

BAR/BRI Bar Review, Summer 2007 a. Generally, once a buyer accepts he cannot revoke the acceptance, 2 Exceptions: i. Buyer was told the non-conformity would be cured and was never cured; OR ii. If the non-conforming goods substantially impair the value of the K AND was difficult to discover (a latent defect) 1. Thus, revocation allowed within a reasonable time after discovery 6. Buyers Payment Obligation a. Check is allowed BUT if the Seller upon tender demands cash, Buyer must provide cash and Seller must allow additional reasonable time to get it ii. Common Law and Substantial Performance 1. In a common law contract, service does NOT have to be perfect tender 2. Substantial Performance is all that is required TO GET DAMAGES a. Meaning, no MATERIAL BREACH can occur b. If a material breach occurs then the non-breaching party can stop performance f. Excuses for Non-Performance i. The other partys breach may provide an excuse for non-performance 1. Article II If tender is not perfect the buyer can: (1) accept the whole, (2) reject the whole; OR (3) accept part and reject part AND the buyer may also sue for damages 2. Common Law Damages are available for ANY breach (failure to substantially perform) of the K BUT ONLY a material breach allows non-performance by one party a. Example Martha contract to decorate 10 identical cabanas for $90K. She decorates 3, then quits. Martha cannot recover $ as she failed to substantially perform (less than ) AND the breach was material to the K thus the hiring party need not pay her (they can stop their performance). i. Martha can still recover is quasi-K, FMV b. Example IF the above K provided payment of $9K /cabana and she only decorated 3 THEN there is NO BREACH, she has to be paid. i. This is known as a divisible K payment is on a per unit basis, THUS substantial performance is on a per unit basis as well ii. The other partys anticipatory repudiation may provide an excuse for nonperformance 1. Anticipatory Repudiation Breach occurs B4 a parties performance is due, by WORDS or CONDUCT

Page 189 of 337

BAR/BRI Bar Review, Summer 2007 a. Example I promise you my painting if you decorate my bathroom. I sell the painting before you finish the bathroom anticipatory repudiation 2. Operates like a material breach, other parties performance can stop 3. HOWEVER anticipatory repudiation may be retracted as long as such was not relied upon by the non-breaching party iii. A later agreement between the parties may provide for an excuse to nonperformance 1. Rescission (an agreement to cancel the K) can ONLY be effective IF each part still has some performance left, otherwise this is a modification without consideration 2. Modification (an agreement replacing an existing K with a new K a. IF Effective IMMEDIATELY, the breaching party is only liable for the breach of the modified terms 3. Accord (an agreement to accept a stated performance of an existing duty) and Satisfaction (performing the accord) a. IF Effective in the Future b. If K is to be modified upon completion of some future condition precedent c. Breach prior to satisfaction holds breaching party liable as to either : i. the original terms; OR ii. the modified terms d. Difference between Modification and Satisfaction / Accord is discharge NOW (mod) or LATER upon completion (s&a) 4. Novation (an agreement substituting a new party for an existing one) a. ALL original contracting parties must agree to discharge liability of one of the original partied for another 3rd party b. If only one or some, not all, of the original parties agree to a release from liability that is NOT a Novation, RATHER it is deemed a delegation of duty (see, infra) i. Thus, the original party to the K is still liable iv. A later unforeseen event that renders the sellers performance impossible (common law) or impracticable (Article II) may provide the seller with an excuse for non-performance 1. Destruction of something necessary for performance a. Common Law Impossibility b. Article II Same rule with 2 Exceptions i. Goods MUST be identified 1. roped off, labeled, earmarked 2. IF fungible goods, easily replaceable goods then they have no identity and fulfillment is not impossible ii. S must bear the ROL 1. IF buyer bears the ROL and is NOT a merchant, upon tender the K is complete

Page 190 of 337

BAR/BRI Bar Review, Summer 2007 2. THUS if something were to ruin the goods after such a point K is completed, buyer must pay AND impossibility is irrelevant Death or Incapacity of a person essential to performance a. If an essential party dies performance is excused i. Example Hiring Van Gogh to paint your portrait, his death would be the death of an essential party 1. BUT hiring Van Gogh to paint your barn, was not hiring him for his unique talents, Van would not be excused from the K b. If paying party dies, their estate must pay, paying $ is never by an essential party Supervening governmental regulation OR order a. K formed, then substance of K made illegal, K = impossible and parties are excused from performance of an illegal act Frustration of purpose (buyers remedy) a. Performance will be excused IF: i. At the time of the K formation the other party was aware of the purpose; AND ii. A later unforeseen event thwarts the purpose 1. Example I rent Trumps apartment to see the parade and he knows that is the reason I am renting, IF the parade is cancelled my performance is excused b. Fact that competition has moved in after K formed and profits will be lowered will NEVER rise to the level of frustration i. Example I K to by prop to put in a coffee shop, after K signed but before I move in, I see a Starbucks opening up next door. THIS IS NOT FRUSTRATION OF PURPOSE. Lost profits do not cause the purpose to be frustrated. My purpose was to open a coffee shop. Failure of an express condition a. Where there is conditional language that limits obligations created by other contract language (if, so long as, when, provided, on the condition that, and unless) and the condition is left unfulfilled performance will be excused i. If the K language is conditional, strict compliance is required to enforce the K ii. Thus, no breach until condition fulfilled b. Satisfaction Clauses i. You will get paid only if I am satisfied.. ii. Generally, objective reasonable person standard will be applied UNLESS the subject matter of the K was for art or personal taste, then a subjective standard will control c. The condition will be excused when the protected party takes advantage of the condition 2 ways:

2.

3.

4.

5.

Page 191 of 337

BAR/BRI Bar Review, Summer 2007 i. Failure to cooperate; OR 1. Example I will buy your house IF I can get a mortgage for $200K at 5%. I never go to look for a mortgage. Failure to look obviates protection of the condition. ii. Waiver (voluntary relinquishment of a right) 1. Example We K that I will never pay unless I am given a receipt. This time I say I will pay this without a receipt. I waived protection. However next time I pay I can request receipt again (retraction of waiver). g. Remedies i. In Rem Remedies (the thing itself) 1. Specific Performance a. An equitable remedy, available only if monetary damages are clearly inadequate to compensate the injure party b. Specific Performance will always depend on the subject matter of the K i. If Real Property ALWAYS specific performance ii. If Goods specific performance if the goods are unique OR the buyer cannot cover iii. If Services NEVER specific performance 1. BUT injunction to stop competition is available 2. Article II Right to Reclaim Goods a. An unpaid seller generally has no right in goods which he delivered to the buyer EXCEPT: i. If the buyer was insolvent when buyer received goods AND seller makes a demand for the goods return within 10 days of buyers receipt; OR ii. Seller has a right to reclaim goods at any time (not within 10 days of receipt) IF Buyer misrepresented solvency to seller within 3 months prior to delivery 3. Article II Entrustment a. An owner who entrusts property to a merchant who deals in goods of that king has NO right against a BFP b. ENTRUSTMENT to a merchant who deals in goods of that kind gives him power to transfer all rights of the entruster to a buyer in the ordinary course of business. i. THIS MEANS THAT ANY BUYER IN THE ORDINARY COURSE WHO PURCHASES GOODS FROM A DEALER IN GOODS OF THAT KIND CAN TRANSFER PROPERTY WHICH IS SUBJECT TO A SECURITY INTEREST ( Remember a BIOCB take free of any SI even if perfected, see 9-320, infra) c. BFP = for value, w/o notice, in good faith

Page 192 of 337

BAR/BRI Bar Review, Summer 2007 4. Article II Right to Request an Assurance a. A party with reasonable grounds for insecurity may request in writing an adequate assurance in writing from the other party i. Example you hear seller is selling defective chips, you can request the seller to provide an adequate assurance that your chips will not be defective b. If no assurance is received the buyer can treat this as an anticipatory repudiation of the K i. REMEMBER this anticipatory repudiation can be retracted to the extent that the buyer, due to lack of adequate assurance, has not relied on the repudiation c. This provision CANNOT be used to re-write the K OR demand a particular kind of assurance ii. Monetary Remedies (damages) 1. Punitive Damages are NEVER awarded for breach of K b/c the purpose of K damages in to compensate, NOT to punish 2. Liquidated Damages are damages provided within the K itself a. Liquidated damages are permissible IF: i. damages were difficult to estimate; AND ii. the provision is a reasonable forcast of probable damages b. These are generally accepted when they come in the form of PER DIEM or GRADUATED damage provisions i. Example - $100/day penalty for everyday the construction job is not completed past the due date = reasonable liquidated damages provision ii. Example - $2,000 penalty if the construction job is not completed by the due date = unreasonable liquidated damages provision, not a reasonable forecast, 1 size does NOT fit all c. In the event the liquidated damages provision is removed, the breached upon party will get expectation damages 3. Expectation Damages are a sum that leaves the injured party in as good a position as full performance (the benefit of the bargain) This is the usual measure of damages a. Common Law Damages i. Difference between the K price and the replacement price b. Article II Expectation Damages i. Buyers Damages seller tends to breach in a rising market, so replacement goods will cost more 1. Cover or Market Damages a. Buyer can cover replace goods (cover damages); OR i. Replacement goods must be a reasonable alternative

Page 193 of 337

BAR/BRI Bar Review, Summer 2007 ii. KP-CP = damages b. Buyer can buy nicer goods or keep nonconforming goods i. In the event the Buyer purchases a alternative of better quality and not a reasonable alternative c. KP-MP = damages 2. Example B contracts to buy an antique rug for $4K. B later discovers that the rug is not an antique. B keeps it anyway. The rug is only worth $2K. BUT if it was an antique the rug wouldve been worth $7K. B damages are $5K. a. The difference between [the value of the goods promised (not the K price)] AND [the value of the goods delivered] b. NOT the K price, what the actual value of the good is ii. Sellers Damages buyer tends to breach in falling markets, so a seller wont be able to get as much for the goods 1. Resale or Market Damages a. If S sells in good faith, S entitled to ReSale Damages b. If S does not resell (keeps good) OR resells NOT in good faith, THEN S entitled to Market Damages 2. The Lost Volume Seller (Lost Profit) a. The only time the seller is entitled to MORE than the actual expectation damages b. When the seller is a merchant who in theory has unlimited inventory, the seller is entitled to the PROFIT he would have made on the sale if the buyer hadnt breached c. LOST A SALE = LOSING A PROFIT c. Incidental Damages (Common Law & Article II) i. Cost of caring for, transporting goods after breach & cost of arranging a substitute transaction ii. Available both to B & S iii. Forseeability NOT reqd d. Consequential Damages (Common Law & Article II) i. Damages that are the consequence of the breach ii. 2 Requirements: 1. Special to this particular Plaintiff; AND

Page 194 of 337

BAR/BRI Bar Review, Summer 2007 2. Foreseeable to the breaching party at the time of K formation a. Breaching party basically must be told or it must be clear from the K terms the foreseeable consequence of the breach e. Avoidance Damages i. Cannot recover damages you could have avoided with reasonable effort the rule of mitigation ii. Generally in Employment Ks 1. Example P gets fired and brings a breach of K action on her employment K. D, ex-employer, get her a comparable job in the same city, doing the same thing for $100/week less than her regular job. a. IF D can prove that w/ reasonable effort P could have taken Job 2, P will be lmtd to the difference in pay from Job 1 to Job 2, $100/week instead of her entire salary iii. Burden of Proof on the Defendant, breaching party to prove that Ps reasonable effort could have mitigated damages h. Third-Party Problems i. Third-Party Beneficiary 1. Definition: Two people enter a K with the intent to benefit a 3rd party, if so, the 3rd party can enforce the K 2. Example H buys life insurance policy for benefit of W. H dies. Insurance co. refuses to pay out. W can enforce the K as an intended 3rd party beneficiary. 3. Vocabulary a. 3rd Party Beneficiary a person who did not make the K BUT still has rights under it because the K was intended to benefit the 3rd party b. Promisor person who promises to perform for the 3rd party c. Promisee the person who secures the promise d. Intended Beneficiary a 3rd party named in the K e. Incidental Beneficiary a 3rd party who confers a benefit from the K BUT is not named in the K i. AN INCIDENTAL BENEFICIARY HAS NO LEGAL RIGHTS TO ENFORCE THE K f. Creditor Beneficiary Main reason for promisee to enter the K is to pay off an already existing debt to the 3rd party g. Donee Beneficiary NOT a creditor beneficiary 4. The promisor can rescind or modify the K UNTIL the rights of the 3rd party have vested

Page 195 of 337

BAR/BRI Bar Review, Summer 2007 a. Vesting occurs when the 3rd party learns of the K AND reasonable relies on the K b. After vesting, no modification or rescission is allowed w/o the consent of intended 3rd parties EXCEPT if the K provides otherwise c. Rights of a 3rd party beneficiary i. A 3rd party beneficiary can sue the breaching promisor ii. The promisor can raise the same defenses against 3rd party beneficiaries that it can raise against the promisee iii. Only a creditor-beneficiary can sue the promisee 1. b/c other consideration is involved 2. otherwise its a gift and the 3rd party has no rights against the promisee iv. The promisee can recover from the breaching promisor ii. Delegation of Duties 1. Generally, contractual duties may be delegated without the consent of the person to whom performance is owed (the obligee) 2. Duties may be delegated without consent of the obligee as long as the job is done correctly 3. Exceptions a. The K controls i. Prohibiting assignment or delegation in the K will prohibit any such delegation b. Duties involving special skill or reputation CANNOT be delegated 4. The delegating party (original party to the K) remains liable to the obligee 5. The delegate (after acquired party) is also liable to the obligee IF they received consideration a. This is because such a delegation is the formation of a new K, where the obligee becomes an intended 3rd party beneficiary iii. Assignment of Rights 1. Definition 2 or more people make a K, BUT later on, one person transfers his rights under the K to a third party 2. Assignment of RIGHTS, transfers right NOT obligations 3. Assignment of CONTRACT, transfers both obligations and rights (i.e.,- novation) 4. Example Batman Ks to provide security for Gotham for $200K. Batman assigns his right to payment to Robin 5. Vocabulary a. Assignor person who later transfers rights under a contract b. Assignee the person to whom the rights are transferred c. Obligor the person who owes the assigned performance 6. Requirements for making an effective consignment a. NO consideration required i. This will only effect revocability

Page 196 of 337

BAR/BRI Bar Review, Summer 2007 b. Present intent to assign required i. A promise to Assign is insufficient 7. Restrictions of Assignment a. Contract language controls i. If K says not assignable you can still assign you will just be in breach of K ii. If K says all assignments are void this language completely invalidates ALL assignments b. An assignment cannot substantially change the duties of the obligor i. Assign right to payment is NOT substantial ii. Assign the security position from the law school parking lot to Shea Stadium is substantial c. A requirements K IS assignable so long as the assignees requirements are NOT out of line with the assignors requirements i. Basically, the change cannot be substantial ii. Example Instead of supplying Dunkin Donuts with Cups you now have to supply Starbucks, requirements are nearly identical, assignment allowed 8. Rights of an Assignee a. The assignee can sue the obligor for Breach BUT is subject to all the same defenses the obligor could have raised against the assignor b. Payment by the obligor to the assignor is effective UNLESS the obligor is aware of the assignment of payment rights 9. Multiple Assignments a. Gratuitous (gift) Assignments - the last gratuitous assignee in time prevails because the later gift assignment revokes and earlier one EXCEPT: i. NY 1. If there is a signed writing of a gratuitous assignment, signed by the assignor, THEN such is irrevocable 2. Any later assignment would be invalid b. Assignments for Consideration i. Generally, the first assignee for consideration prevails over any previous gratuitous assignee AND prevails over any later assignee for consideration 1. Amount of consideration is irrelevant ii. EXCEPTION a later assignee for consideration prevails over earlier assignees IF: 1. he does not know of the prior assignment; AND 2. is the first to obtain payment from or a judgment against the obligor

Page 197 of 337

BAR/BRI Bar Review, Summer 2007 10. Professional Responsibility a. Regulating Lawyers i. The Rules governing the conduct of NY lawyers are found in the New York Code of Professional Conduct 1. Structure a. Canons Broad Statements of Norms b. Ethical Considerations Aspirational application of the Norms c. Disciplinary Rules Mandatory Standards, where you get in trouble 2. Complaints involving NY attorneys conduct a. Investigated by: i. The Departmental Disciplinary Committee; OR ii. Any Department of the Appellate Division b. All complaints are privileged communications c. If the Committee pursues the complaint, the hearing is NOT public 3. There are 4 types of Disciplinary Action (from least to most stringent): a. Letter of Admonition b. Public or Private Censure c. Suspension (temporary revocation of license) d. Disbarment (permanent revocation of license) 4. In addition to a disciplinary investigation, your own client can bring a malpractice action (SOL 3 years) a. BUT, just because you were found liable for malpractice DOES NOT MEAN you will be disciplined 5. Admission to the Profession a. USSC says that state requirements for admission to the bar need to be rationally related to the practice of law i. Rational 1. Graduation from an ABA accredited law school; OR 2. Complete 1 year in law school then practice under a NYS licensed attorney, in a NY law office, for 3 years; OR 3. Denial to admit because you fail to take an oath to uphold the NYS and Federal Constitutions ii. NOT Rational 1. Denial to admit based on lack of U.S. Citizenship 2. Denial to Admit when party is not a NY resident iii. NY Bar Examination Requirements 1. Graduate an ABA accredited law school; OR 2. Be admitted to practice in another state AND that state would admit a NY lawyer w/o examination RECIPROCITY; AND practice

Page 198 of 337

BAR/BRI Bar Review, Summer 2007 in that other state the last 5 of 7 years preceding application b. Requirements on YOU when applying to the bar i. Truth and Full disclosure Burden on applicant to show good moral character ii. Duty to Cooperate c. Requirements regarding other applicants (not yourself) i. Good Applicants your input is Aspirational ii. Bad Applicants Duty to Report on moral turpitude (i.e., conduct contrary to justice, honesty, modesty or good morals) 1. Perjury, bribery & theft 2. NOT a single arrest for pot; AND 3. NOT a single arrest for drunk driving 6. Regulation AFTER Admission a. Regulated by the highest state court (and through its agencies) b. Self-Regulating Profession 2 pronged duty when you KNOW of a violation i. Duty to Report; AND 1. Failure to report can lead to suspension of license 2. There is NO DUTY TO REPORT when you represent the attorney as his attorney (atty-client privilege wins) a. BUT as such, you CANNOT recommend such atty for admission to a bar of another state ii. Duty to be available to testify 7. Attorneys licensed in more than one State (multi-jurisdictional practice) a. Discipline by one state Does NOT mean there will be discipline in another state determinations are independent b. BUT other states will give affect to each others determination under full faith & credit c. Cannot practice where you are not admitted unauthorized practice EXCEPT in the following situations: i. Associate with a lawyer from the other state ii. Get admitted pro hac vice 1. In NY this also requires a certificate of good standing from the state where the attorney is admitted iii. Mediation and Arbitration arising out of home-state practice iv. Anything reasonable related to a lawyers home state practice

Page 199 of 337

BAR/BRI Bar Review, Summer 2007 1. Example Real Estate Atty can negotiate for his client a deal to purchase land in another state v. Multi-State Firms 1. The letterhead must indicate who is admitted where d. CHOICE OF LAW in multi-jurisdictional matters i. If only licensed in NY NY rules apply ii. If admitted in NY and ANOTHER state 1. Rules in the state of principal practice of that attorney will apply UNLESS the conducts primary effect is in the other state a. Example DWI in Vegas and youre licensed in NY & NJ, each state will apply their own rules and commence their own proceedings b. Example - While in Vegas you miss an appearance resulting in a default judgment against your client in NJ court. Both States will commence proceedings BUT NJ LAW will apply in both states primary effect in NJ b. What Does It Mean to Practice Law? i. You are a lawyer 24 hours a day, 7 days a week ii. Who is empowered to make which decisions in what matters? 1. Substantive Decisions belong to the CLIENT a. Sue, appeal, settlement, jury determinations; AND i. EVEN IF you have the best grounds for appeal ever, you cannot do so in the face of a client who is against it ii. EVEN IF the settlement is so large or small that acceptance would be irrational, you ALWAYS must consult your client prior to acceptance b. Whether to testify in a criminal case 2. Procedural Decisions (tactics and strategy) belong to the ATTORNEY a. Use of depositions, discovery tools i. Except that client can override if it is too costly b. Grant continuances (adjournments) i. Over clients objection 3. Attorney must abide by clients wished unless by doing so, such would be immoral or unethical 4. In the event your client loses the ability to make a decision, you must consult their guardian OR have one appointed MHL Article 81. iii. Generally, Lawyers have a freedom to reject cases 1. Canons say that a lawyer should represent the indigent, oppressed, or defenseless AND should do their share of pro bono work

Page 200 of 337

BAR/BRI Bar Review, Summer 2007 2. When a conflict or problem arises the attorney may need to withdraw from representation a. A lawyer MUST withdraw when the lawyer KNOWS: i. The clients position is frivolous; ii. That the attorney has become impaired (physically or mentally); iii. The representation of a Client would violate a D.R.; OR iv. That the attorney has been fired by the client b. A lawyer MAY withdraw from representation when the lawyer REASONBLY BELIEVES: i. Withdrawal can be accomplished w/o material adverse effect to the clients interests ii. The claim or defense is frivolous iii. The clients desired course of action is criminal or fraudulent iv. The client is asking the attorney to pursue a course of conduct that is illegal or prohibited by the ethical rules v. There is other conduct which makes it unreasonably difficult for an attorney to carry out employment effectively vi. The client is insisting that the attorney engage in conduct contrary to the attorneys own advice vii. That the client is disregarding an agreement or obligation to the lawyer as to fees & expenses viii. That the client is using the attorneys services to perpetuate a crime or fraud ix. His continued employment would violate a D.R. x. That his inability to work with co-counsel would best be served by withdrawal xi. OR where other good cause is shown c. Withdrawal should not occur during the course of an ongoing trial unless approved by the court i. This normally will depend on what point the case is in 3. A Lawyer should only take cases that he or she is competent to handle or encourage the client to seek other counsel a. Competence includes being physically and mentally able AND having substantive competence (knowledge of the law) b. Lack of Competence can be overcome (A.L.E.) i. Associate with another competent attorney ii. Learn the subject matter iii. Emergency situations 4. A Lawyer cannot help other lawyers engage in the unauthorized practice of law a. Cannot help an unlicensed attorney represent a client; BUT b. CAN aid a Pro Se litigant with legal advice and suggestion

Page 201 of 337

BAR/BRI Bar Review, Summer 2007 5. One Lawyer CANNOT hinder another Lawyers future right to practice a. Example a non-compete clause b. Generally clients can hire whomever the wish c. EXCEPT restrictions are permissible: i. When an attorney retires; OR ii. When an attorney leaves the firm c. Establishing Your Practice and Getting Clients i. The firm name must be appropriate 1. Trade names are not permitted a. EXCEPT where by happenstance your last name is the trade name (i.e., - Anna Best, the Best law firm) 2. No names that end with Clinic OR New York a. Too misleading to the layperson b. Shows entanglement with government 3. Cannot include famous lawyers last names UNLESS they are actually in your firm a. Dead lawyers (i.e., - Cardozo) can be in the firm name so long as they were once a named partner in that firm 4. Use of Last Names a. If a party is permanently removed from practice, the last name must be removed i. Examples disbarment OR Ambassadorship b. If a party is temporarily removed from practice, the last name can stay i. Examples suspension OR acting ambassadorship ii. Do NOT hold yourself out as a specialist UNLESS you are certified as a specialist OR you practice patent, trademark or admiralty law 1. Certification Requirements a. Must be certified by a private organization who has been allowed to certify by the ABA; AND b. The certified organization is identified; AND c. The lawyer certifies that the organization is not affiliated with government authority; AND d. Such certification is not necessary to practice in NY; AND e. Such certification does not mean the lawyer is more qualified 2. These rules apply for certifications as a specialist in a particular area of law by another state 3. To tell the world you practice an area of law without a certification the lawyer can advertise that Practice is limited to. (these areas of the law). 4. If you are an admiralty, patent or trademark lawyer you are a specialist immediately upon completion of law school and passing the bar iii. Advertising 1. Increasing numbers of lawyers rely on advertising

Page 202 of 337

BAR/BRI Bar Review, Summer 2007 2. Can never use false or misleading statements a. TEST: Whether a layperson would find the statement or advertising misleading b. What is deemed misleading? i. Promised outcomes OR ability to achieve results from inappropriate use of influence OR clout 1. Example Bill Clinton cannot remind people of his connections with federal agencies in an attempt to get new clients ii. Cannot say that costs of litigation are advanced 3. Lawyer Advertising Defined a. Any public or private communication, made by or on behalf of a lawyer or law firm, about that lawyer or his or her services, the primary purpose of which is to get new business. b. EXCEPT communications to existing clients or other lawyers 4. Computer Advertising a. Computer accessed communication includes, any communication disseminated through the use of a computer OR electronic device which includes, but is not limited to: i. Websites ii. BLOGs iii. Search engines iv. E-mail v. Banner Ads vi. Pop-up Ads vii. Chat rooms, viii. List-servs ix. Instant Messages; OR x. Other internet presences 5. Ads MUST include: a. Name, principal, law office address and telephone number of the lawyer or law firm whose services are being offered i. Telephone number can include a domain name or nickname or motto which does not otherwise violate the Code b. Any words or statements required by the rules MUST: i. Be clearly legible ii. Capable of being read by the layperson; AND iii. Understood if spoken aloud (no micro machines guy voice) c. The label Attorney Advertising MUST appear on the first page of a mailing or in the first page of a website 6. Ads MAY include: a. Education, degrees b. Dates of admission to bar and areas of practice c. Public offices and teaching positions held

Page 203 of 337

BAR/BRI Bar Review, Summer 2007 d. Membership in bar associations and other professional organizations e. Foreign language ability (must be fluent) f. Names of regularly represented clients (if client consents in writing) g. Acceptable credit arrangements AND participation in group or prepaid legal services h. Legal fees, contingent fee rates, hourly rates for fixed services i. CANNOT charge more than the advertised fee ii. Fees and rates must remain the same for a reasonable period of time 1. NY = 30- days i. Assuming the Ad is otherwise valid AND can be factually supported by the lawyer or law firm on the date which the Ad is published, the Ad may also contain: i. Statements that are reasonably likely to create an expectation about results the lawyer can achieve ii. Describe the quality of the lawyers services iii. Statements that compare the atty with services of other lawyers iv. Testimonials or Endorsements of former clients v. Testimonials or endorsement that are otherwise not prohibited 1. Testimonial of a Client in a Pending Matter = PROHIBITED vi. AND MUST CONTAIN THE DISCLAIMER PRIOR RESULTS DO NOT GUARANTEE A SIMILAR OUTCOME. 7. Ads MAY NOT Include: a. Testimonial by client with respect to a pending matter b. Paid endorsements without disclosing the fact that they were paid c. Portrayal of a judge or a fictitious law firm d. Cannot imply certain lawyers are associated or in the same firm when they in actuality are not e. Actors to portray the lawyers, clients or events w/o full disclosure 8. Lawyer SHALL NOT use: a. Pop-ups OR Pop-Under Ads other than their own website or other internet presence b. Meta-tags or other hidden computer codes that if displayed would violate the code 9. Domain Name a. May have a domain name that does not include the firm name PROVIDED THAT:

Page 204 of 337

BAR/BRI Bar Review, Summer 2007 i. All pages clearly and conspicuously have the name of the law firm ii. Lawyer does NOT attempt to engage in the practice of law using that domain name iii. The domain name CANNOT imply the ability to attain results 10. Television and Radio Ads MUST BE: a. Pre-Recorded b. Approved by the attorney c. Include the name address and telephone number of the firm; AND d. MUST be kept for at least 3 years after initial dissemination 11. Computer-Accessed Ads MUST BE: a. Retained for a period of 1 year b. Copy of the website contents must be reserved upon initial publication; AND c. Any major website re-design OR Material Change can be done no less than every 90 days iv. Observe the Contingent Fee Rules in Advertising 1. A Lawyer must clearly state the terms and basis of the fee charged 2. Ads which contain fees which are contingent must state: a. whether the client will be responsible for costs; AND b. that contingent fees are not allowed in ALL types of cases v. Be Careful when Using Targeted Mail 1. MAY send direct mailing to people who are likely to need legal services (you can prey on the weak) 2. Must say Attorney Advertising if self-mailed 3. If E-Mail, the subject heading must say Attorney Advertising 4. If a retainer is included within the mailing: a. Each page at the top needs to be marked SAMPLE in red ink; AND i. In a type size at least equal to the largest size contained within the agreement b. The words DO NOT SIGN needs to be on the client signature line 5. Must include the name address, and telephone of the principal law office address of the advertised or advertising attorney 6. These mailing rules apply to any mail sent by an out-of-state attorney to a mailing made in the State of NY as well as NY attorneys vi. Soliciting Clients 1. Generally a lawyer shall not engage in solicitation (advertisement initiated by or on behalf of a law firm to a targeted person OR their family or legal representatives) a. Primary purpose must be to retain such person for a pecuniary gain b. This includes communication via:

Page 205 of 337

BAR/BRI Bar Review, Summer 2007 i. Telephone ii. Real time; OR iii. Interactive computer accessed communication Except that Solicitation is Allowed when the recipient is: a. Close friend or Relative b. Former Client c. Existing Client d. Pro Bono Client e. A single prospective client where the attorney is replying to a specific request NO SOLICITATION in any form whatsoever is permitted if the recipient has made known the desire to not be solicited by the attorney A Solicitation MUST follow the following rules: a. A copy when it is disseminated be filed with the attorney disciplinary committee of the judicial district where the lawyer maintains their principal office i. If the lawyer is out-of-state, the filing must be made with the attorney disciplinary committee of where the solicitation is targeted b. The filing must include: i. A copy of the solicitation ii. A transcript of any audio portion that is used on radio or T.V.; AND iii. an English translation, if necessary c. Solicitation must NOT say that it was filed d. The list of recipients needs to be kept by the attorney for 3 years from the date of last dissemination e. Solicitations must be open to public inspection f. No Solicitation in a PI or WD action may be made to the parties within 30 days of the accident i. UNLESS a filing needs to be made within those initial 30 days, In that event the solicitation needs to be made no less than 15 days after the accident g. ]Any solicitation based on a specific accident MUST disclose HOW the attorney came to know that such party required legal services h. If Retainer is provided, it must follow the same rules as a retainer enclosed in a targeted mail, supra. A solicitation IS NOT a professional business card A Solicitation form a New York Lawyer MUST NOT: a. Be false, deceptive or misleading b. Be sent, if the party requested not to be contacted c. Involve coercion, duress or harassment d. Be sent if the lawyer knows that the receiving party is unable to exercise reasonable judgment

2.

3. 4.

5. 6.

Page 206 of 337

BAR/BRI Bar Review, Summer 2007 e. Be sent IF the lawyer knows that the legal services are going to be provided by another lawyer f. Be sent if lawyer knows that method of shipment: i. Required the recipient to travel to a location other than where the person ordinarily receives personal or business mail; OR ii. Requires the recipients signature vii. IF you give in-person, UNSOLICITED ADVICE, do NOT attempt to accept employment resulting therefrom 1. You approach someone on the street telling them they have a great accident case CANNOT represent 2. Someone approaches you and asks if they have a viable accident case CAN represent a. Example Your neighbor tells you that his friend got into an accident. You tell your neighbor to have his friend call you and DO NOT call the neighbors friend d. The Lawyer-Client Relationship i. Maintain Confidences of Prospective , Current and Former Clients Meaning, keep your clients secrets 1. This is broader than the attorney-client privilege 2. A client secret is ANYTHING derogatory, embarrassing, or hurtful regarding your client, no matter what the source a. Includes past crimes b. FUTURE CRIMES i. Attorney MAY reveal intention of client to commit crime AND enough information necessary to stop the crime c. CLIENT PERJURY i. If you know your client is lying of the stand the attorney MUST: 1. try to get the client to rectify the problem 2. If the client refuses the attorney must seek to withdraw; AND 3. If withdrawal is denied, the attorney must not take part in the perjury and let the client narrate his direct testimony 3. Upon termination, an attorney cannot prejudice their client to fulfill this duty the Attorney must give the client: a. Notice b. Chance to retain new counsel c. Return the file; AND d. Return any unused portion of the retainer 4. Duty survives the death of the client ii. Exceptions to Confidentiality 1. Court Order or Statute requires; OR

Page 207 of 337

BAR/BRI Bar Review, Summer 2007 2. To obtain legal or ethical advice for the lawyer a. Use of hypotheticals with a colleague is allowed if discrete to protect the identity of the client iii. Safeguard Client Property 1. USE A BONDED WAREHOUSE or safe in the law office iv. Trial Publicity 1. No statement may be made by a lawyer that a reasonable person would expect to be disseminated If the lawyer should reasonably knows that such statement would be prejudicial to the proceedings 2. Lawyer MAY NOT state: a. The character, reputation or criminal record of a party b. Identification of a Witness or Expected Testimony c. Possibility of a Guilty Plea d. Existence of a confession e. Results of an exam or test f. Opinion as to guilt or innocence of a Defendant or a Suspect g. Information the lawyer should know to be inadmissible h. Fact that Defendant is charged with a crime UNLESS such is to state he is merely accused and is presumed innocent 3. Lawyer MAY state: a. General nature of a claim or defense b. Public Information c. That an investigation is in progress d. Scheduling or result of any step in litigation e. A Warning of danger when there is a substantial likelihood of harm to a person f. In a CRIMINAL case information to aid in the apprehension of the accused g. Right of Reply Where a statement made by the adverse party will be prejudicial to the client, the lawyer may make a statement to the extent necessary to protect a client e. Conflicts of Interest i. Generally, an attorney must avoid conflicts and exercise independent professional judgment AND most situations require the lawyer to decline representation 1. For the BAR If conduct creates even a remote possibility of a conflict, treat it as a conflict ii. Accept a case with a conflict ONLY IF all clients have given their informed consent 1. Informed Consent Requires: a. Attorney explanation of all material risks AND reasonable alternatives; b. A signed writing, which can be electronic; AND c. agreement ONLY AFTER attorney explanation

Page 208 of 337

BAR/BRI Bar Review, Summer 2007 2. IF the client then agrees the attorney must then decide IF a reasonably prudent lawyer would take the case a. Generally a reasonably prudent lawyer would avoid such conflicts iii. Lawyers DO NOT testify of behalf of their clients UNLESS: 1. There is an uncontested matter OR matter of formality 2. It involves fee disbursements which are part of a , where the award is not in contention, just the amount of legal hours worked; AND 3. The lawyer is required to testify on a material matter BUT cannot withdraw as it would pose a substantial hardship to the client iv. Conflict Situations Ripe for Testing 1. Interest in Publication Rights a. Lawyer CANNOT accept payment in the form of a % of profits derived from publication when it relates to the subject matter of the case b. HOWEVER, after the case is over, which includes all possible avenues of appeal, the lawyer MAY take such rights as a form of payment 2. Gifts from Clients a. May accept gifts from clients BUT lawyer cannot suggest such gifts b. Attorney MUST affirmatively advise client to seek disinterested advice before making a gift c. There is always a presumption of undue influence d. EXCEPTIONS i. Gift to Family Members; AND/OR ii. De Minimis Gifts 1. What is nominal is to be judged objectively 3. Lending Money to Clients a. NO LOANS to clients EXCEPT: i. Court costs ii. Expenses of litigation iii. Indigent clients; OR iv. Pro bono clients 4. Fee Payment by a 3rd Party a. Fee payment by another party is allowed BUT the client is still the client b. An attorney MUST follow his clients advise NOT the advice of the payor c. Lawyer represent the Insured NOT the Insurance Company i. Confidential Information must be protected by the attorney from disclosure to the insurance company ii. BUT a letter of engagement must be sent to both the insurance company and the insured 5. Lawyers CANNOT demand sex as a condition to representation UNLESS it was pre-existing

Page 209 of 337

BAR/BRI Bar Review, Summer 2007 a. Cannot coerce a client into sex during representation in a domestic relations matter b. BUT anyone else in your firm can represent the client you are foolin around with Doing Business with Clients a. A lawyer is generally prohibited from doing business with clients UNLESS the transaction is fair to the client b. If the transaction will be fair the attorney MUST tell the client to seek independent legal advice i. The client must consent in writing that the lawyer advised him of this c. EXCEPTION ordinary commercial transactions i. Example your client is a mortgage broker and you need a mortgage Lawsuits between current and Former Clients a. You may represent a current client in an action against a former client EXCEPT: i. When the former client is suing your current client in a related matter; OR ii. When representing the former client you learned of confidentialities which would aid in your representation of the current client Settling similar claims of clients a. Represent each client zealously b. BUT present only meritorious claims and contentions Representing a Corporation or Partnership a. Attorney for the entity represents the entity NOT the individuals involved with the entity b. BUT, an attorney can be a director of a Corp BUT no attyclient privilege in Bd meetings c. Duty to report SEC violations i. Start sup the chain of command until you reach the CEO ii. If no one responds, you must report it to the Bd and give them a chance to report the violations iii. Attorney may report SEC violations under SarbanesOaxley 1. Attorney can revel all information necessary to protect the entity and has a lot of discretion in this regard 2. BUT all measures taken by the attorney should be to minimize corporate disruption

6.

7.

8.

9.

f. Handling Money Yours and Your Clients i. Generally 1. A Lawyer has the duty to explain fully the reasons for the fee

Page 210 of 337

BAR/BRI Bar Review, Summer 2007 2. State Bar Association CANNOT set minimum or maximum fee schedules 3. The Lawyers fee MUST be reasonable, factors include: a. Time and Labor b. Difficulty of Legal Issue c. Requisite skill d. Customary fee e. Experience and Reputation of the Attorney f. Interference with other employment g. Time limitations imposed by the client or circumstances h. Whether fee is fixed or contingent Ratification of a Fee Agreement 1. A client may ratify the attorneys fee during a period of continuous representation EVEN IF misconduct occurs during that period, so long as the clients ratification is NOT procured as a result of the misconduct a. Client must be fully informed on the misconduct CANNOT charge contingent fees in a criminal case OR a domestic relations case Fee Agreements 1. IF fees, in a non-DRL matter, are projected to be greater than $3,000 a fee agreement must be in writing a. This DOES NOT apply when the services are of the same general kind previously provided OR in the services involve a DRL matter b. Fee Agreement must include: i. Scope of legal services ii. Explanation of fees to be charged iii. Expenses and Billing Practices iv. Notice of Clients right to arbitrate a fee dispute c. Letters of Actual Engagement are NOT required: i. When fee is going to be < $3K ii. Where services are similar to previous services iii. Where lawyer has no NY office iv. DR matter 2. Domestic Relations Law Matters a. Fee Agreement must be signed by lawyer and a client b. Lawyer must provide a client with a statement of client rights and responsibilities at the initial conference and prior to signing the retainer c. NO fee may be non-refundable d. NO contingency fees e. Fee Disputes MUST be resolved in arbitration f. Periodic billing must be sent out every 60 days Relationship with the Non-Lawyer 1. Never divide a legal fee with a non-lawyer

ii.

iii. iv.

v.

Page 211 of 337

BAR/BRI Bar Review, Summer 2007 a. The client must pay the non-lawyer separately b. If the fee is not a legal fee, then the lawyer can split with nonlawyers c. EXCPETIONS: i. Salaries. Profit Sharing and Bonuses with employees ii. Spouses of Deceased Partners in a P.C., are entitled to their dead spouses profits Division of Fees with Another Attorney 1. Referral fees are unethical 2. Can bring on another attorney and share fees with them for their work in the same matter ONLY IF: a. Division is in proportion to work performed; b. Client has been advised and does not object; AND c. The total fee is reasonable Retainers 2 types 1. Advance on Fees belongs to client, goes into client trust account 2. Availability Retainer belongs to attorney, goes into lawyers account a. Example you pay lawyer $10K in advance and anytime you need an attorney you call lawyer and he drops everything Put $ into Proper Accounts 1. Two types of Accounts: a. Operating Account Your $ b. Client Trust Account Clients $ i. Lawyer cannot put any personal money in there except to pay bank fees ii. Client Trust Account MUST be in NY UNLESS client gives written consent 2. In the event of a disputed settlement you take what client believes you deserve, cut client their 2/3 and any disputed amount should be placed in the client trust account until resolution of the dispute 3. Can NEVER co-mingle OR use client funds to pay your own debts EVEN IF you intend to replace the money. THAT IS CONVERSION Fee Dispute Resolution Program 1. Where representation commenced on or after January 1, 2002 in a civil matter, fee disputes are subject to arbitration 2. Client must be told this in the letter of engagement 3. EXCEPTIONS: a. Fee disputes in a criminal case; b. Where the dispute is < $1K OR >$50K c. Where the claim involves a malpractice action

vi.

vii.

viii.

ix.

g. Being Professionally Responsible i. Make sure that others follow the Code of Professional Responsibility whether you are a subordinate lawyer or a supervising partner

Page 212 of 337

BAR/BRI Bar Review, Summer 2007 1. Subordinate Lawyers An allowed excuse is I was just doing what I was told to do, UNLESS Such act was unreasonable (i.e., - paying off a jury) 2. Supervising Lawyers Must make sure everyone follows the rules a. Ethically Liable for subordinate attorneys IF they are aware of the subordinates actions ii. Conducting Litigation Fairly 1. Ex Parte Conversations a. NEVER EVER talk to the jury b. Ex Parte conversations with the judge are generally not allowed, EXCEPT: i. De Minimis situations ii. Emergency Situations (OTSC); OR iii. In Settlement Conferences c. Adversarial Party i. Can NEVER speak to the client for the other side ONLY the opposing counsel ii. BUT. Your client can! d. With witnesses i. All witnesses are free game unless you are a corporate employee who is necessary to the litigation, then you are deemed the client 2. Adverse Authority a. A lawyer has an affirmative duty to disclose contrary or adverse authority, which means cases or statutes from the controlling jurisdictional ONLY b. DOES NOT apply to facts or witnesses 3. Special Duties of the Prosecutor a. Proceed only on Probable Cause b. Must disclose (in a timely manner) evidence tending to negate guilt or which could mitigate the degree of the offense or reduce the punishment (Brady v. Maryland) 4. Uphold the Integrity of the Profession a. Do not make derogatory remarks about other lawyers b. Do not give or lend items to a judge or public official EXCEPT as permitted by the Code of Judicial Conduct 11. Torts a. Generally i. Governing body of law for the MBE is the Majority View, which is mostly the Restatement of Torts ii. Governing body of law for the NY Bar is NY case law b. Intentional Torts i. Generally 1. There are 7 Intentional Torts

Page 213 of 337

BAR/BRI Bar Review, Summer 2007 2. Tenets a. Extreme Sensitivity of a P is ignored in deciding IF that P has a valid intentional tort claim i. P is a normal ordinary person, even if that is not actually the case b. There are no incapacity defenses in the world of intentional torts (i.e., - minor, drunk) i. That party will be liable for the damage they cause 3. Intentional Torts require INTENT - general awareness that your actions will commit the conduct resulted, a substantial certainty or likelihood ii. Battery 1. Elements a. D must engage in a harmful or offensive contact; AND b. The Contact Must be with the Ps Person 2. Elements Defined a. Offensive not permitted by a person of ordinary sensitivity i. Example tapping a person on the shoulder is NOT offensive ii. Example petting another person, being too romantic to keep hands to ones self (touching hair) IS offensive b. Plaintiffs Person includes anything connected to the P i. Whatever the P is touching or holding ii. Examples purse snatching, someone kicks the dog you are walking c. Defendants Acts D need not be involved in the tort i. Example Poisoning the Ps sandwich, the battery is between the sandwich and the P d. Contact The contact need not happen immediately i. Example poisoning from above example can be done by D at 9AM and the P can eat the sandwich at noon iii. Assault 1. Elements a. D must put P in apprehension; AND b. Apprehension must be of the immediate battery 2. Elements Defined a. Apprehension NOT FEAR, JUST KNOWLEDGE i. P must have an awareness or understanding of what is happening ii. Example P is strong and big, D is small and shrimpy. D threatens P. APPREHENSION EXISTS iii. Plaintiff must be aware of the possibility of an immediate battery 1. Put yourself in the Ps shoes 2. The Unloaded Gun problem

Page 214 of 337

BAR/BRI Bar Review, Summer 2007 a. If D points an unloaded gun at P, BUT P KNOWS gun is not loaded P knows that no battery can occur. Thus, no assault. b. BUT if P is unsure that the gun is loaded than an assault lies b. Immediate Battery i. Mere words are not immediate, There MUST BE ACCOMPANYING CONDUCT 1. Examples brandishing a weapon, shaking a fist, or moving in great haste toward the P ii. When the conduct does exist, the Ds words can negate the immediacy 1. Subjunctive Words a. Example D says to P, If you werent my best friend I would.. b. No Assault because P knows D will not accompany immediate conduct 2. Future Tense a. Example D says to P, Just wait until three hours from now, Im gonna. b. No immediacy exists, thus no assault iv. False Imprisonment 1. Elements a. D must engage in an act of restraint; AND b. P must be confined in a bounded area 2. Elements Defined a. Act of Restraint i. Threats ARE Sufficient 1. Example D says to P, If you leave in the next 30 minutes I will kill your child. 2. Here, a person with a mind of ordinary sensitivity would not leave the room ii. FAILURE TO ACT can be deemed an act of restraint BUT ONLY IF D had a pre-existing duty to assist P in moving about 1. Example Airline leaves a wheelchair bound passenger on the plane after everyone gets off and does not help him off the aircraft iii. Plaintiff MUST have KNOWLEDGE of the restraint OR be HARMED by the restraint 1. Example P locked in a room whilst sleeping and never realizes he was locked in. NO false imprisonment, - no harm, no foul 2. Example While P sleeping, D locks in room, like above example, BUT this time the nurse is unable to get in to give Plaintiff his 2AM insulin

Page 215 of 337

BAR/BRI Bar Review, Summer 2007 shot, nurse leaves, D unlocks the door BUT- P soon thereafter gets real sick.. False Imprisonment exists. b. Confined in a Bounded Area i. Keeping a P out of a space (exclusion) is NOT false imprisonment ii. An area is not deemed bounded if there is a reasonable means of escape 1. The way out must not be dangerous, humiliating, disgusting or hidden 2. Example Butler locks P in a room which has a secret bookcase exit. False Imprisonment exists. B/c the bookcase was hidden, there was no reasonable means of escape v. Intentional Infliction of Emotional Distress (IIED) 1. Elements a. D must engage in outrageous conduct; AND b. P must suffer severe distress 2. Elements Defined a. Outrageous Conduct Must exceed all bounds of decency tolerated in a civilized society i. MERE INSULTS are NEVER outrageous (Cursing) ii. Indicators of Outrageousness 1. Conduct by D in question is repetitive or continuous 2. D is a common carrier (transport company) OR an innkeeper a. These persons have duties to be courteous to their patrons b. Youre too ugly to stay here can be deemed IIED iii. Level of outrageousness depends upon the Plaintiffs status in a particular class 1. Example While generally cursing is not IIED, if the P cursed at happens to be a protected party, in the list below, the same cursing can amount to IIED 2. If Plaintiff is a: a. Young Child b. Elderly / Decrepit Persons c. Pregnant Women MUST KNOW the woman is pregnant d. People of a Race IF Racial Insults made iv. Level of outrageousness of Ds conduct also involves Ds knowledge

Page 216 of 337

BAR/BRI Bar Review, Summer 2007 1. IF D is aware of a fear or sickness of Ps and preys on the same this can be IIED 2. While the conduct may not be outrageous enough to form IIED in a person of ordinary sensitivity, D who deliberately targets a persons weakness can be liable 3. known as exploitation of a known sensitivity b. Severe Distress This is NOT when a party is mildly annoyed, OR temporarily upset vi. Trespass to Land 1. Elements a. D must commit an act of physical invasion; AND b. It must occur on Ps LAND 2. Elements Defined a. Act of Physical Invasion i. D can enter Ps land on foot or by vehicle ii. D NEED NOT BE AWARE OF ENTRANCE ONTO PRIVATE PROPERTY iii. Invasion can also occur by throwing or propelling a tangible object on to Ps land 1. Example D shoves X onto Ps land a. X has not committed a trespass b. D by throwing X, a tangible object, onto Ps land HAS committed a trespass iv. NOT a physical invasion of Intangible Property 1. Meaning, physical invasion of light, odor, or sound onto Ps land will NOT be a trespass on land (however, it may be a nuisance) b. LAND What is Land? i. Land includes the Ps interest in the property ii. This includes the air above and soil below at reasonable distances iii. Example Throwing a ball OVER a property is a technical trespass (air rights at that altitude exist) iv. Example Flight of a commercial airplane 35,000 feet above the property is NOT a trespass, because such extension of land is NOT reasonable vii. Trespass to Chattel AND Conversion 1. Elements a. Intentional Interference with Anothers Personal Property 2. Elements Defined a. Personal Property i. All Chattel = Personal Property ii. All of Ps stuff EXCEPT land and buildings iii. Examples Hat, Phones, Automobiles iv. NY stealing electronic records = Conversion

Page 217 of 337

BAR/BRI Bar Review, Summer 2007 b. Interference i. Deliberate Damage OR Deprivation of Possession ii. Extent of Interference Determines Cause of Action 1. Small Interference = Trespass to Chattel 2. Large Interference = Conversion a. You break it, you buy it. 3. The separation of the two causes of action by the legal system is solely a matter of damages a. IF a conversion (a large interference) the P is entitled to the FMV of the property b. IF a trespass to chattel (a small interference), the P is entitled only to the damage done to the property (cost of repair) 3. Ancillary Property Matters a. Finders - Lost vs. Abandoned Property i. Abandoned Property 1. Elements a. Owner gives up possession; AND b. The owner possesses the intent to give up title and control (subjective intent) 2. Finders of Abandoned Property becomes the owner when: a. Finder takes possession; AND b. Finder intends to own or possess ii. Lost Property 1. Elements a. Accidentally parts with possession; AND b. Owner has no intent to relinquish ownership 2. Finder of Lost Property becomes the owner in different ways, which vary based upon the property value a. < $20 Finder must make a reasonable effort to find the owner; AND after 1yr the finder becomes the owner b. > $20 Finder must deliver to the police and the police retain the property for statutory periods based upon its worth i. IF >$5K police must hold on to property for 3 years b. Gifts i. 2 types inter vivos AND causa mortis ii. Inter Vivos Gifts 1. Elements

Page 218 of 337

BAR/BRI Bar Review, Summer 2007 a. Intent b. Delivery c. Acceptance 2. Elements Defined a. Intent to pass title not merely to part with possession (donative intent) b. Delivery Actual or Constructive (something representative) must be handed over i. Example Real Estate = Deed ii. Example Auto = Keys iii. 1st Party checks, no delivery until check is cashed, b/c donor can stop payment iv. 3rd Party checks, delivery completed upon endorsement by holder then physical transfer v. Stock Certificates, upon physical transfer vi. Use of Donors Agent, no delivery until agent hands property to donee vii. Use of Donees Agent, delivery completed when handed to agent c. Acceptance Donee must validly accept i. Silence is enough ii. Issue only when donee declines iii. Gifts Causa Mortis 1. Elements a. Gift given in contemplation of death 2. Elements Defined a. Intent connected with dying i. Imminent risk of death likely to occur (objective standard) ii. Present intent to make a future gift b. Death gift is not valid if the Donor survives c. Survival gift is not valid if the donee happens to die before the donor c. Liens i. The right to retain anothers personal property until the owner satisfies a debt ii. Elements 1. Debt for services rendered; 2. Debtor must have legal title; AND

Page 219 of 337

BAR/BRI Bar Review, Summer 2007 3. Property in possession of a creditor iii. The General Lien 1. Right of a creditor in a bunch of aggregate property as security for a general balance due a. Example hotel keeps your luggage when you dont pay 2. Release - When releasing some of the property subject to a general lien, the release of some of the property does not surrender the property still in possession iv. The Special Lien 1. Right to retain specific property that has been improved a claim to a specific charge or item a. Example Mechanic who fixes your car 2. Release Here, giving up the property is a release of the lien d. Bailments i. Owner parts with possession for a particular purpose 1. Example coat check, car in lot ii. Scope of Bailment 1. Thing Within a Thing There is a bailment for the contents of an item when it would be REASONABLE that the contents would generally be in the bailed item 2. Safe Deposit Boxes this is the only case where a bailment is created even though the bailee is unaware of the contents 3. Parking Lots a. Leave keys = bailment b. Park & Lock (you keep your keys) = no bailment iii. Bailee Liability 1. Bailee must exercise a reasonable duty of care over the bailed item 2. Failure to exercise such care will result in liability 3. Strict Liability 2 scenarios a. Bailee uses item outside the scope of the bailment; OR b. Mis-Delivery at the end of the bailment i. EXCEPTION when the party whom the property is delivered has documentation showing that the are the record owner 4. CANNOT K AWAY ALL LIABILITY, BUT can limit liability

Page 220 of 337

BAR/BRI Bar Review, Summer 2007

c. Affirmative Defenses to Intentional Torts i. Consent 1. Defined a. P must have legal capacity to consent to tortuous invasions i. Drunks and Retards NEVER have the ability to consent ii. BUT Children can consent to things that are appropriate 1. Example a child who wrestles with another child consents to a battery 2. Example a child cannot consent to sexual intercourse or surgery b. There are two forms of consent express or implied 2. Express Consent a. Words spoken or written b. A defense to any subsequent tort c. EXCEPTION fraud or duress i. Example P consents to sexual intercourse with D, BUT D knew he had an STD and never told P. This consent was gained under the auspices of fraud. 3. Implied Consent a. Custom or Usage i. P goes to a place or engages in an activity where minor tortuous invasions ARE ROUTINE ii. In these cases, P is deemed to consent to these torts iii. Example Getting pushed when voluntarily riding on the NYC Subway iv. Example Sports activities, getting punched in boxing BUT NOT getting punched in baseball 1. For sports, the act must be customary or routine within the game b. Based on Ds Reasonable Interpretation of Ps Overt Conduct i. Base upon the facts and circumstances. The Ds conduct was reasonable based upon Ps conduct 1. Subjective thoughts of P are irrelevant ONLY their acts which they show off to the world 4. Scope a. All consent has a scope the Defendant cannot exceed such scope or will have committed a tort i. Example D, An invitee goes to Ps house to watch the superbowl, P goes to get beers and when he comes back P finds D in Ps attic rummaging through the installation 1. Here, D exceeding his invitation on to Ps property had committed a trespass to land ii. Self Defense, Defense of Others, Defense of Property

Page 221 of 337

BAR/BRI Bar Review, Summer 2007 1. This are what is known as protected privileges, If done correctly these defenses act as a complete defense to the cause of action alleged 2. Elements a. D must have proper timing; AND b. D must have a reasonable belief that the tort is about to be committed 3. Element Defined a. Proper Timing the tort which the D claims to be responding to must be imminent OR in progress i. Thus, if the tort is over NO protective privilege exists ii. NO REVENGE ALLOWED b. Reasonable Belief Subjective Expectation of harm is Objectively Reasonable i. For self defense to be allowed, the D must believe either D or another will be victimized ii. For defense of property, D must believe that P is about to invade property iii. A REASONABLE MISTAKE will not deprive the D of a protected privilege 1. Example P is walking out of a store and the alarm sounds. D, security guard, pulls P over to the side a looks through his bag finding that the cashier mistakenly left the security tag on a shirt. The store releases P who sues for trespass to chattel. D, though mistaken, can claim that in defense of property the mistake was reasonable and thus a complete defense to Ps trespass. c. Amount of Force Rules of Symmetry i. D may do what is necessary under the circumstances ii. Deadly force may only be used when human life is in jeopardy, OR D reasonable believes human life is in jeopardy iii. NO deadly force EVER to protect property iv. NY Prior to the use of deadly force there is a duty to retreat, Except: 1. If you are in your home 2. If you are the victim of a robbery or rape 3. A police officer has no duty to retreat iii. Necessity 1. Generally a. Only a defense to the 3 property torts conversion, trespass to land and trespass to chattels 2. Public Necessity (COMPLETE DEFENSE) a. D invades Ps proper in an emergency to protect the community as a whole OR a significant group of people b. D will be free from all liability

Page 222 of 337

BAR/BRI Bar Review, Summer 2007 c. Acting altruistically as savior of the city d. Example shooting a rabid dog in the street 3. Private Necessity a. When D invades Ps property in an emergency to protect an interest of his own b. This is where the D is acting in self-interest and the danger is posed to the Ds own safety or his own property c. 3 Overlapping Legal Tenets with Private Necessity i. The private necessity, D must pay for actual harm to Ps property (land, bldgs, chattels) ii. Private necessity Ds never are subject to nominal or punitive damages iii. As long as the emergency continues the private necessity D has a right to stay of Ps property in a position of safety and the P cannot eject or expel the D (a/k/a the Right to Sanctuary) d. Defamation i. Elements 1. D makes a defamatory statement that specifically identifies a P 2. Publication to another that is not the Plaintiff; AND 3. Damages, Maybe ii. Elements Defined 1. Defamatory Statement a statement that tends to adversely affect the reputation of a P a. Mere name calling is NOT defamatory i. Lacks the ability to hurt ones reputation b. Typical defamation is an allegation or assertion of fact that reflects negatively on a trait of human character i. Examples peacefulness, truthfulness, negative implications of sexual propriety c. A statement of opinion MAY be defamation i. TEST: Would a reasonable believer conclude that the statement is based on fact? ii. Example In my opinion I would never go to John as my financial planner? d. Statement need not be defamatory on its face, P may add information to show defamatory impact i. Example John always stays at the Hotel California every time he goes to L.A. Seems to be nondefamatory. BUT upon commencement of an action, John can show that it is common knowledge that Hotel California is a brothel 2. Statement that Specifically Identifies P In the United States the P MUST be living at the time the statement was made

Page 223 of 337

BAR/BRI Bar Review, Summer 2007 3. Publication private communication to the P will NOT adversely affect anothers reputation BUT any publication thereafter need only be de minimis a. Satisfied so long as D reveals the statement to ONE other person, not P i. More Persons told simply means greater damages for P b. Publication can be NEGLIGENT, no intent necessary i. Example you send a letter to your co-workers house telling him to stop embezzling corporate funds, and you accidentally transpose the numbers on the envelope and send the letter to his neighbor = negligent defamation 4. Damages depending on what type of defamation exists damage MAY or MAY NOT have to be proven 3 areas of defamation a. Libel any information written or captured in a permanent format i. Examples letters, newspapers, computers OR ANY scripted film 1. NY the film need not be scripted, ALL defamatory broadcasts are Libel ii. HERE P not required to prove damages as an element to get to the jury 1. NY Libel that must be proven by extrinsic fact DOES NOT require proof of damages IF the libel falls into one of the slander per se categories b. Slander Per Se of the spoken defamation in the following categories P DOES NOT have to prove damages as an element: i. Statement by D concerning Ps business or profession ii. Statement by D that P has committed a crime of moral turpitude iii. Statement by D imputing un-chastity to a woman 1. NOT A MAN 2. this includes any sexual activity by an unmarried female iv. Statement by D that P suffers from a loathsome disease 1. Leprosy OR a STD, thats it v. NY Statement by D that imputes homosexuality to another c. Slander all other spoken defamation, P must prove economic harm or damage as an element, in order to get to a jury i. Examples of harm required to be proven 1. Lost a K 2. Got fired 3. NOT mental or social awkwardness iii. Defenses 3 generally 1. Consent express or implied (see defenses to intentional torts, supra)

Page 224 of 337

BAR/BRI Bar Review, Summer 2007 2. Truth If D can prove the statements factual accuracy, truth works as a complete defense 3. Privilege, 2 types a. Absolute Arises based on the identity or status of the speaker i. Spouses have Absolute Immunity 1. A spouse can defame anyone they want, to their other spouse, whilst married a. Orally or by letter properly mailed 2. Reasoning If married couples couldnt defame the neighbors then who would they talk about ii. Officers of the 3 branches of government when acting in their official capacity have absolute immunity 1. Federal or State 2. Judicial Branch Privilege extends to all statement made in a courtroom OR in a paper filed with the court a. Example D.A. in her opening statement says D did _______, if D is found not guilty the D.A. would be subject to a slander c/a but for privilege b. Qualified Arises by the purpose of the speech, where there is a public interest in promoting candor i. Normal types of speech subject to Qualified Privilege 1. Letters of Recommendation 2. Credit Reports 3. Statements made to police during the course of an investigation 4. Statements made to Professional Disciplinary Boards ii. Conditions to Privilege Unlike Absolute Privilege, here the writer/speaker MUST abide by certain conditions so that their speech can qualify 1. Cannot inject irrelevancies MUST confine yourself to relevant matter; AND 2. Good Faith Requirement - D must have a reasonable belief in the accuracy of the disputed statement a. Meaning that you lose the privilege IF you use the privilege to spread lies iv. First Amendment Defamation, (see also, Con Law-Defamation, supra) 1. Very Hard to Prove 2. When is FAD your sole c/a? a. WHEN IT IS A MATTER OF PUBLIC CONCERN b. If what D said or wrote is a matter of public concern then P brings an FAD c/a against D c. Example Whether mayor is taking bribes

Page 225 of 337

BAR/BRI Bar Review, Summer 2007 d. Example Whether an athlete is taking steroids e. BUT FAD has 2 extra elements i. Remember 3 initial elements are (1) statement by P to D thats is defamatory; (2) publication; and (3) damages ii. Extra Elements Required for FAD 1. Falsity P must show STMT is false a. Instead of D proving that the statement is true b. Eliminates truth as a defense (BOP on P) 2. Levels of Fault D acted with fault, not in good faith, Amount of fault necessary to hold D liable depends on Ps status in the community a. IF P is a public figure, P must show D knew the statement was false AND that D acted recklessly (with MALICE) b. IF P is a private figure BUT the matter is of public concern P must show D new the statement was false AND D acted with negligence i. HOWEVER to receive punitive or presumed damages P must show actual malice c. If P is a private figure and the matter is NOT of public concern, P must show D new the statement was false AND D acted with negligence i. HOWEVER to receive punitive or presumed damages P NEED NOT show actual malice e. Privacy Torts i. Appropriation 1. Elements a. D is going to use Ps name or likeness for a commercial purpose 2. Elements Defined a. Example D sells cereal & puts Tiger Woods picture on the package without asking for permission b. P can sue for $ damages AND seek an injunction 3. Exception a. Tort can interfere with the 1st Amendment right of free speech b. NEWSWORTHINESS exception If the name of likeness is used in the news there is NO appropriation 4. NY This is the only Privacy c/a allowed in NY a. NY interprets the newsworthiness exception VERY broadly ii. Intrusion

Page 226 of 337

BAR/BRI Bar Review, Summer 2007 1. Elements a. Invasion of Ps solitude in a way that is objectionable to the average person 2. Elements Defined a. General Examples spying, wiretapping, unauthorized video surveillance, or peeping through a window b. Solitude P must be in a place where he/she has a reasonable expectation of privacy i. Example NOT whispering to a friend at a cocktail party c. Invasion the invasion here does NOT require a trespass i. Example an invasion into ones privacy can occur by using a telescope to look from your apartment into a neighboring apartment buildings window iii. False Light 1. Elements a. The widespread dissemination of a material misrepresentation about the P that would be objectionable to the average person 2. Elements Defined a. Wide Spread Dissemination more demanding than the publication requirement need for defamation b. Material Misrepresentation Can be defamatory OR nondefamatory i. NO MALICE IS REQUIRED even a good faith belief of the misrepresentation will NOT shield D from liability (cf. Qualified Privilege) ii. Example D tells everyone that P is embezzling funds 1. This can be both defamation or false light BUTa. Defamation will afford you economic damages only WHILE. b. False Light will afford you noneconomic damages (pain & suffering) iii. Example D misrepresents Ps religious beliefs and D tells everyone that P is a devout Roman Catholic BUT in fact he is really Jewish 1. This is NOT Defamation b/c it doesnt hurt Ps reputation 2. BUT this is false light because it is a material misrepresentation iv. Disclosure 1. Elements a. Widespread dissemination of confidential information about the P that would be objectionable to the average person 2. Elements Defined

Page 227 of 337

BAR/BRI Bar Review, Summer 2007 a. This is NOT false light because here the element is confidential information, NOT material misrepresentation. i. Meaning whatever is said is true it is just private b. Confidential Information Your personal information that by the law is deemed to be confidential i. Example YOUR Doctor mails YOUR records to your whole office 3. Exceptions a. Newsworthiness i. Generally for public figures, NOT private figures ii. Example publication of Dick Cheneys medical records, because the public has a need to know the health of their VP b. Non-Confidential Information Disclosed i. Anything shown by the P to the public is not confidential ii. This normally happens when P has two separate worlds and is trying to keep them separate iii. Example D, co-employee of P, sees P, who is openly gay at home BUT not at work (2 spheres) at a gay rights rally making a speech with his partner, D blabs to the office b/c P was in public, nothing was confidential v. Defenses to Privacy Torts 1. Consent a. A DEFENSE TO ALL 4 PRIVACY TORTS b. P must have legal capacity to consent to tortuous invasions c. Two Forms i. Express Consent Words spoken or written 1. EXCEPTION fraud or duress ii. Implied Consent 1. Custom or Usage; OR 2. Based on Ds Reasonable Interpretation of Ps Overt Conduct 3. Scope D who exceeds such scope will have committed a tort 2. Privileges 2 types a. ONLY A DEFENSE TO FALSE LIGHT & DISCLOSURE b. Absolute Arises based on the identity or status of the speaker i. Spouses have Absolute Immunity ii. Officers of the 3 branches of government when acting in their official capacity have absolute immunity c. Qualified Arises by the purpose of the speech, where there is a public interest in promoting candor i. Conditions to Privilege Unlike Absolute Privilege, here the writer/speaker MUST abide by certain conditions so that their speech can qualify

Page 228 of 337

BAR/BRI Bar Review, Summer 2007 1. Cannot inject irrelevancies MUST confine yourself to relevant matter; AND 2. Good Faith Requirement - D must have a reasonable belief in the accuracy of the disputed statement f. Economic Torts i. Fraud D lies to P on purpose, with the goal of ripping P off, P relies on it and gets screwed 1. Elements a. D must make an affirmative misrepresentation of fact b. Intent or reckless deceit (scienter) c. Purpose must be to induce the reliance of P d. P actually relies e. P is damaged by the relied upon misrepresentation 2. Elements Defined a. Affirmative Misrepresentation Silence is not enough at common law b. Scienter Good faith or reasonable misstatement will not be actionable for fraud c. Reliance of Statement Must be central to the transaction d. Damages must overpay, suffer economically ii. NY Intentional Infliction of Pecuniary Harm 1. Elements a. A prima facie tort consists on intentional infliction of pecuniary harm without justification 2. Elements Defined a. INTEND TO DO THE HARM (cf. all other torts, intend to do the act that causes the harm) i. D must intend some malicious activity to hurt P economically ii. Example Deliberate below cost sales 3. Applied a. This tort is a prima facie tort AND will not lie unless another traditional tort has been committed b. Nor will it lie if the SOL of the Traditional Tort has run iii. Inducing a Breach of Contract 1. Elements a. P must prove that there is a valid K not terminable at will b. D must have knowledge of the K c. D must engage in persuasion to induce the 3rd party to breach d. Subsequent Breach must occur 2. Exception a. Certain parties with a special relationship to the 3rd party are allowed to induce breach: i. Family; OR

Page 229 of 337

BAR/BRI Bar Review, Summer 2007 ii. Trusted Advisor (i.e., - financial advisor, attorney, etc.) g. Negligence i. Elements 1. Duty 2. Breach 3. Causation a. Cause-in-fact b. Proximate Cause 4. Damages ii. The Element of DUTY 1. Generally a. The law recognizes that when we engage in an activity, there is a chance of injury to another party, so the law says, Take steps to decrease the possibility of injury. b. a/k/a an obligation to build safety precautions c. Two elements to duties generally exist: i. To Whom Do You Owe a Duty of Care; AND ii. How Much Care do You Owe? 2. To Whom Do You Owe a Duty of Care? - Foreseeable Victims of your Carelessness a. THUS, unforeseeable victims are owed no duty (i.e., - Ms. Palsgraf) i. Exception Rescuers - These people are unforeseeable b/c they are far away BUT will still be owed a duty b. Those who are deemed IN THE ZONE OF DANGER c. Unborn Children and Pre-Natal Injuries 3 scenarios i. Ds negligence causes impact into a pregnant woman 1. IF the woman gives birth to a baby that has injuries child AND the baby comes out alive, the child has a cause of action for their injuries 2. Alternatively, if the baby dies, the child has no c/a but the mother does for emotional distress ii. In a MEDMAL c/a the Dr. fails to diagnose the high likelihood of birth defects in the expecting child AND subsequently a mother gives birth to the defective baby: 1. Parent can recover all $ needed to take care of the child due to such a defect BUT the parents will be deprived any $ for a emotional distress a. A Legislative Compromise iii. In a MEDMAL c/a for a botched sterilization procedure 1. If the parent subsequently has relations and gives birth to a child there IS NO RECOVERY

Page 230 of 337

BAR/BRI Bar Review, Summer 2007 2. The court says that any economic detriment incurred will be outweighed by the joy an love of having a child 3. How Much Care Do You Owe? Generally, We owe other persons the duty of care as provided by a reasonably prudent person under similar circumstances a. This means we should be attentive, alert and careful b. This standard is utilized unless a special standard of care is used (see, infra) c. This standard allows NO allowance for anyones personal shortcomings i. If D is Mentally Retarded or an Amateur in a field is ALL irrelevant d. Standard Defined i. Reasonably Prudent Person 1. IF the D happens to be someone with superior skill or knowledge THEN P must be reasonably prudent as someone with such skill or knowledge would act 2. This includes stupid people having specialized knowledge of a relevant fact a. Example Idiot has lived in same town all his life and knows a specific intersection is dangerous. Idiot is charged with such specific knowledge when getting into an accident at that intersection ii. Similar Circumstances 1. Court CAN take into account Ds Physical Attributes a. Examples D is blind or in a wheelchair, the standard becomes How would a reasonably prudent blind person act under similar circumstances? 4. 6 duty Scenarios Where a special Duty of Care is Owed a. Children i. Children less than 4 owe NO DUTY ii. Children between the ages of 4 and 18 owe a duty 1. STANDARD Children owe a duty of care equivalent to a child of similar age, experience and intelligence acting under similar circumstances a. The standard is incredibly subjective b. Unlike above, if the child is a dumb ass the court must take that into account

Page 231 of 337

BAR/BRI Bar Review, Summer 2007 iii. Exception IF a child is engaged in an adult activity, the child will be held to the reasonably prudent person standard 1. Example Operating a Motor Vehicle (i.e., car, jet ski, snowmobile) b. Professional Defendants i. Professionals include attorneys, engineers and doctors ii. STANDARD Professionals owe care of the average member of that profession practicing in a similar community iii. Standard Defined 1. Average Member of the Profession a. Do NOT be creative b. Be a conformist, behave like your other colleagues c. The custom of the profession sets the standard of care i. P demonstrates the customary care by use of an expert witness 2. Similar Community a. IF it is a primary care physician the similar community depends upon the locale within which the doctor practices i. Example - A big city doctor must follow procedures as the average big city doctor would b. IF it is a specialist, the location is irrelevant and the community depends on the specialty i. Example A cardiologist must follow procedure as any other average cardiologist would under similar circumstances iv. The Accompanying duty of Informed Consent 1. All doctors must also explain the risks of the medical procedure or otherwise negligence will result 2. Exceptions to Informed Consent a. Commonly known risks b. P declines the information c. Patient is incompetent; OR d. If disclosure would be harmful c. Duty Owed by Possessors of Land, To Those who Come Onto Their Land (including buildings) i. Possessor is anyone immediately in control of the premises

Page 232 of 337

BAR/BRI Bar Review, Summer 2007 1. While generally the owner is the possessor, in an apartment, the possessor will be the tenant ii. 2 scenarios of exposure liability, each require different duties 1. Activity by activity or conduct of the possessor or possessors employees 2. Conditions by encountering a dangerous condition on the land iii. The exposure to liability for the landowner based on the two above scenarios is entirely dependent on the classification given to the entrant of the land 4 types 1. undiscovered trespasser comes onto land without permission AND the possessor has NO knowledge of the presence a. THERE IS NO DUTY OWED NO MATTER HOW THEY GET HURT 2. discovered trespasser any type of trespasser that is discovered, expected or anticipated from a past pattern of trespassing a. possessor owes a known trespasser a duty to protect against all known manmade death traps b. Activities possessors owe that which would be exercised by a reasonably prudent person under similar circumstances c. Conditions possessor owes a duty for conditions IF 4 part test fulfilled: i. Artificial conditions only ii. Condition must be highly dangerous iii. Condition must be latent iv. Possessor must have advanced knowledge of the artificial, dangerous and latent condition 3. licensee a person who enters land with permission, for their own purposes and confer no economic benefit on the owner (i.e.,- friends) a. possessor owes a licensee a duty to protect against all known traps, manmade or natural b. Activities possessors owe licensees a duty of care that which would be exercised by a reasonably prudent person under similar circumstances

Page 233 of 337

BAR/BRI Bar Review, Summer 2007 c. Conditions a possessor must protect licensees from conditions which: i. Are latent (concealed); AND ii. Known in advance by the possessor 4. invitee enters premises for commercial purposes OR people who enter land opened to the public a. possessor owes an invitee a duty to protect against all known or discoverable traps, man-made or natural b. Activities - possessors owe invitees a duty of care that which would be exercised by a reasonably prudent person under similar circumstances c. Conditions possessors must protect invitees from conditions which: i. Are latent (concealed); AND ii. Known in advance by the possessor or that which the possessor would have reason to know via reasonable inspection d. Thus, the debatable issue becomes HOW OFTEN and HOW THOROUGHLY does the possessor inspect the premises iv. There are specific groups of persons, by their status and actions, who can alter the duties owed by a possessor to the land 1. Police & Firefighters NEVER recover for injuries w/in the inherent risk of their job a. Example getting burned when a firefighter enters a burning building (assumption of risk) 2. Child Trespassers Entitled to the care of a reasonably prudent person with regard to artificial conditions on the land (cf. undiscovered trespassers, supra) a. When there is an increased likelihood that kids will trespass there is an increased duty owed to make artificial conditions safe i. What increases the likelihood? Artificial conditions that would attract children to land (the attractive nuisance doctrine

Page 234 of 337

BAR/BRI Bar Review, Summer 2007 3. Possessor can FULFILL THEIR DUTIES Owed in 2 ways a. Fix the Problem (maintain the premises in a reasonably safe condition) b. Give Notice (duty to warn) v. NY - Duty Owed by Possessors of Land, To Those who Come Onto Their Land 1. NO ENTRANT DISTINCTION 2. The reasonably prudent person standard is used throughout a. BUT a NY Court would consider that a possessor has an increased duty of care when inviting people onto their premises for commercial purposes (i.e., - to reasonably inspect their premises thoroughly and often) b. THUS, a NY Court imputes the entrants distinctions into the reasonably prudent person standard d. Statutory Standard of Care (Negligence Per Se) i. There are certain instances where a addresses the conduct of the D, BUT the does NOT provide for civil liability, RATHER the is criminal or regulatory in nature ii. In these instances, some Ps which to borrow the and make it the standard of care owed in their particular case THUS, if the P can prove the D violated the , the P can treat the violation as breach of a duty iii. This device can only be utilized by satisfying a 2 part TEST: 1. P must show that he is a member of a class of persons that the seeks to protect; AND 2. P must show that the accident which occurred was in the class of risk the sought to prevent iv. Example D runs a red light and hits P. P commences an action and wants to argue negligence per se in violation of the VTL statute. 1. P fulfills the test. P is a class of persons the sought to protect pedestrians; AND the accident which occurred (a pedestrian getting hit by a driver who runs light) is the class of risk the statute sought to prevent. 2. What is the benefit to P? IF D was to argue that it was reasonable he ran the red light, b/c his wife was in labor in the back seat; under the reasonably prudent person standard this would

Page 235 of 337

BAR/BRI Bar Review, Summer 2007 be a valid defense as Ds conduct comported with that of a reasonably prudent person. BUT if the only breach question is DID D RUN THE RED LIGHT? then any reasonable excuse is meaningless v. Exceptions to Negligence Per Se 1. IF compliance with the would be more dangerous than the violating the statute then DO NOT follow the a. Example D crosses the double yellow line in the road to avoid killing a child. Any compliance with the to not cross the double yellow line would cause a greater risk than compliance with the statute as the death of the child would result from compliance with the 2. If compliance with the would be impossible then dont follow the statute then DO NOT follow the a. Example D suffers a heart attack, thus running the red light and hitting a pedestrian. Id wouldve been impossible for D to stop at the red light and thus the reasonably prudent person test would be used. b. BUT REMEMBER if D suffered a heart attack b/c he didnt take his meds OR if he felt chest pains prior to getting into the car, Ds actions of driving would fail the reasonably prudent person test anyway, and wouldve breached a duty owed e. Affirmative Duties i. There are NO affirmative duties ii. THUS, there is no duty to rescue a person in peril EXCEPT: 1. IF the D put the P in peril, OR cause the peril, THEN there is a duty to rescue a. Example driver must rescue passenger in his own car if car accident caused by drivers fault 2. IF there was a pre-existing relationship between the D an the person in peril a. Special Relationships i. Family, including non-blood relatives;

Page 236 of 337

BAR/BRI Bar Review, Summer 2007 ii. Innkeepers or common carriers and their patrons; AND iii. Land possessors and invitees 3. IF D has no duty to rescue BUT then chooses to rescue and botches the rescue attempt a. D will be held liable for the screw up b. EXCEPTION the Good Samaritan i. NY only applies to doctors or nurses who stop to help a person - they are NOT liable for any injury caused unless such is gross negligence iii. BUT never put your own life in peril, your duty to rescue (if created) is always reasonable f. Negligent Infliction of Emotional Distress i. THIS IS NOT where a negligent D causes direct trauma to the P and as a result a negligence action is commenced requested, among other things, damages for emotional distress ii. THIS IS where a negligent D causes emotional trauma to P by his acts which result in no physical injury 2 scenarios: 1. Zone of Physical Danger a. P MUST have been in the zone of physical danger (a near miss); AND b. There must be a subsequent physical manifestation of the distress that is observable (i.e., - heart attack, rash, hives) 2. The Bystander Distress Claim a. Distressed party will have a ringside seat (in the zone of danger) to a negligently inflicted injury to a CLOSE family member b. NY CLOSE family is defined VERY NARROWLY i. Spouse, Parent or Child ii. NOT an Aunt that was like the nieces mother in the fact she raised the child 5. No-Fault Insurance NY ONLY a. This is a system that supplants negligence rules in certain relatively minor no-fault accident cases i. Your economic injuries are automatically covered b/c you were in an auto accident

Page 237 of 337

BAR/BRI Bar Review, Summer 2007 ii. BUT b/c you get $ automatically ANY c/a you may have had is barred b. Who is entitled to get no-fault insurance? i. IN NY every driver MUST have insurance 1. No-Fault - $50K minimum 2. Liability Insurance - $25K/$50K for injury and $50K/$100K for death 3. Only applies to personal injury NOT property damage a. To recover for prop damage would require a separate in ct c/a ii. Every party (passenger/driver) in an insured car is entitled to get the no-fault insurance of THAT car. 1. If two cars in an accident, passengers and drivers must look toward their respective car 2. IF car hits a pedestrian, pedestrian gets the benefit of that drivers no-fault 3. Driver of his own car is entitled to recover EVEN IF he was negligent iii. SOME drivers are NOT COVERED: 1. drunk drivers 2. car thieves 3. fleeing felons; and 4. drag-racers c. How does one remove themselves from No-Fault status? i. Initially, a person would want to remove themselves from no-fault in an attempt to get non-economic damages, (pain & suffering) 1. BUT resorting to an in court method requires: a. The P to prove fault; AND b. The application of comparative negligence principles c. BUT Article 16 (protection for a tortfeasor <50% liable for noneconomic damages) DOES NOT apply in car accidents ii. To get into court (and out of no-fault status): 1. Suffer MORE THAN a basic economic loss a. GREATER THAN Basic economic loss is where your (1)medical expenses; AND (2) the portion of your reimbursed earnings which exceed $2K/month are greater than $50K

Page 238 of 337

BAR/BRI Bar Review, Summer 2007 i. If the two added together are > $50K then you have more than basic economic loss 2. Suffer serious physical injury, which includes: a. Death b. Dismemberment c. Significant disfigurement d. Serious fracture; OR e. Permanent total loss of an organ or bodily function d. No-Fault in NY is portable it applies wherever a NY driver gets into an accident iii. The Element of BREACH 1. Generally a. Breach specifies what the D did wrong b. Breach is a factual determination, evaluating that the D did not fulfill the duty owed by him 2. Res Ipsa Loquitor The thing speaks for itself a. This requires reasoning backward from the conclusion based upon the likelihood of what probably did happen b. If the P lacks information about what the D did wrong, P may substitute the exact action with reasonable inference IF: i. The accident is one normally associated with negligence of some kind; AND 1. Generally established by an expert ii. The accident which occurred is normally due to the negligence by such a D in a similar position 1. I probably sued the right person 2. P must show that D had control over the injury causing object iv. The Element of CAUSATION 1. 2 types a. Factual Causation; AND b. Proximate Cause 2. Factual Causation a. P must establish a connection between breach & injury suffered i. The breach, NOT THE D, was the factual cause of the injury b. TEST: the but-for analysis i. But for the breach would the accident have been avoided ii. Example P would say but for Ds looking at the radio he would not have hit me. D could respond by saying, EVEN IF I was looking out the window, you

Page 239 of 337

BAR/BRI Bar Review, Summer 2007 jumped in to the road, at night, in a place with no lights and I would have hit you anyway, thus even if I was driving as a reasonably prudent person would you still wouldve been hit (no breach). c. Multiple Defendants & Causation i. Merged Causes 1. Substantial Factor Test a. TEST: Was breach of a Ds duty a substantial factor in Ps injuries b. If yes as to both Ds they are jointly liable 2. Example 2 individual Ds set 2 negligent forest fires a few miles apart, the fires merge and burn down Ps home. Both Ds actions were a substantial factor to the property damage and both will be held jointly liable ii. Unascertainable Causes 1. If it cannot be determined which parties breach caused the injury a. IF one partys acts may or may not have been a substantial factor b. IF its a 50/50 split between the 2 parties 2. THEN no P ever would be able to prove by a preponderance that a single D was at fault 3. In these scenarios we shift the Burden of Proof to the D to prove that their own breach was NOT the cause a. If neither D can satisfy the burden, both Ds will be held jointly liable b. Example Summers v. Tice 3. Proximate Cause a/k/a Fairness a. A matter of forseeability (similar to whom a duty is owed) i. Unpredictable, disproportionate, unforeseeable injuries will not recover ii. Legal limitation on liability iii. D must pay only for the foreseeable consequences if their action (Palsgraf) b. Direct Cause & Proximate Cause i. D breaches, and P suffers as a direct result (i.e., - your typical car accident) 1. Normally proximate cause is easily proven 2. Unless damages are freakish and bizarre a. Unforeseeable outcomes b. Example in the car accident, Ds car has TNT in it which explodes on impact and kills 100 people not foreseeable

Page 240 of 337

BAR/BRI Bar Review, Summer 2007 c. Indirect Cause & Proximate Cause i. D breaches a duty BUT other events then take place between the time of the breach and the injury at issue ii. Courts are well-settled on 4 scenarios where D will be liable even though D is only the indirect cause of Ps damages: 1. Intervening Medical Negligence a. D hurt Ps leg, P then treated by Dr., Dr. then exacerbates injury and P loses the leg b. D will be held liable for loss of the whole leg. D is considered to have thrust P into the medical system AND it is foreseeable that Dr.s screw-up. c. HOWEVER, Dr. will also be liable for his negligence BUT that does not mean D is off the hook 2. Intervening Negligent Rescue a. Ds car hits Ps car. 3rd Party finds P, drags him to the sidewalk & dislocates Ps shoulder. b. D is liable for the actions of the rescuer, b/c if you behave carelessly it is foreseeable that someone will try to save P from the accident caused by D 3. Intervening Reaction or Protection a. Ds car hits Ps car and P thrown from the automobile. This causes a melee of all onlookers who then trample Ps face. b. D is liable b/c if you behave carelessly it is foreseeable that onlookers will run for cover and possibly or injure P further 4. Subsequent Disease or Accident a. P gets a broken leg from car accident with D, as a result when P is walking on crutches, P falls and breaks arm. b. D is still liable. If you hurt someone and leave then in a weakened or debilitating condition, then any further injury from the initial damage is foreseeable iii. Indirect Cause Example 1. A & B are eating lunch at a restaurant. A eats bad shrimp and goes to the bathroom. B when going into the bathroom slips and falls on As vomit.

Page 241 of 337

BAR/BRI Bar Review, Summer 2007 a. The question becomes: Is it foreseeable that by serving ad shrimp to A that B will slip on vomit in the bathroom? NO b. While a possessor of land has a duty to reasonable inspect their premises often and thoroughly to fulfill duty extended to invitees, no manner of reasonable inspection would have shown that A just vomited seconds before B slipped on it. c. THUS here there was NO breach of duty (inspection) AND NO proximate causation (forseeability) v. The Element of DAMAGES 1. 2 General Rules a. NY NO COLLATERAL SOURCE DOCTRINE i. In NY if you recover from another source for injuries sustained, the tort recovery in court will be reduced by such a figure 1. Example Ps own health insurance picked up some of the tab, such will reduce damages paid by D b. Thin-Skulled Plaintiff i. You take them as you find them ii. Once D is shown to have committed breach of a duty which has caused Ps injuries, D must pay for ALL other damage suffered by P EVEN IF, it is surprisingly great in scope 1. This rule applies to all torts 2. Injunctive Relief a. Negative vs. Mandatory Injunctions i. Negative forbids D from doing something ii. Mandatory affirmatively do something 1. Example tear down that fence b. Preliminary vs. Permanent Injunction i. Preliminary while c/a pending, freeze to retain the status quo ii. Permanent entered at the end of a case as a form of relief c. No injunction will be granted unless P can establish that D committed a tort d. Requirements for an Injunction i. No adequate remedy at law exists - $ damages arent good enough 1. Examples a. D is insolvent

Page 242 of 337

BAR/BRI Bar Review, Summer 2007 b. Harm cannot be measured in $ terms (the object is priceless or irreplaceable) c. Conduct is repetitive, continuous or ongoing (i.e., - trespass) ii. P must show that Ds tort has invaded a protected right or property interest iii. P must convince the court that the injunction would be enforceable (feasibility) 1. IF negative injunction, P must prove that the court has PJ over the D a. b/c if PJ over D then he can be punished for a violation of a negative injunction by contempt 2. IF mandatory injunction, P must persuade the court using different ideas: a. If the conduct is more simple than complex the court will more likely grant the injunction b. If the duration in shorter than longer the court will more likely grant the injunction c. If the enjoined action is outside the courts jurisdiction they will be less likely to enforce d. If the hardships caused if Ds egregious behavior affects P on a greater scale, the court will be more likely to grant the injunction e. Injunctive Relief and $ damages are NOT mutually exclusive f. D can assert defenses against the imposition of an injunction i. The Doctrine of Unclean Hands 1. He who seeks equity must do equity 2. Ps immorality precludes use of an equitable remedy a. Example P moves to enjoin D from using Ps patent which P stole from X = no injunction ii. Laches 1. Prejudicial undue delay 2. In the period of Ps delay D has changed his position iii. The 1st Amendment 1. For media Ds, they will generally not be stopped from their freedom of speech 2. Court orders suppressing speech MUST meet strict scrutiny

Page 243 of 337

BAR/BRI Bar Review, Summer 2007 g. Preliminary Injunctions i. Preserving the status quo ii. P must show: 1. Likelihood of success on the merits 2. Likelihood of Irreparable Injury ; AND 3. An undertaking must be posted iii. Other procedural requirements (i.e., - need to acquire a TRO by OTSC) see NYP, supra 3. Affirmative Defenses to Damages in Negligence Actions a. Comparative Negligence i. Full Comparative Negligence NY / Majority Rule 1. If D wants to introduce evidence , D must show that P failed to exercise proper care for his/her own safety a. Jury will compare acts and assign each litigant a %age of fault b. Ps recovery will be reduced by his own percentage 2. NY THERE IS NO COMPARATIVE NEGLIGENCE IF D WAS ENGAGED IN SERIOUS CRIMINAL ACTIVITY ii. Minority Rule Partial Comparative Negligence 1. IF Ps fault is <50%, his verdict is reduced by such an amount 2. IF Ps fault is >50%, P does not recover vi. Strict Liability Causes of Action 1. IN STRICT LIABILITY C/A ANY SAFETY PRECAUTIONS ARE LEGALLY IRRELEVANT 2. Injuries Caused by Animals a. Domesticated Animals i. Generally there is NO strict liability for domesticated animals (dog-bite cases) ii. EXCEPTION If D has knowledge of animals vicious propensities, then D will be strictly liable (prior bites) b. Trespassing Cattle i. Strict Liability If you keep livestock and they trespass onto a neighbors property c. Wild Animals i. STRICT LIABILITY ALWAYS 3. Ultra-Hazardous Activities a. An activity is ultra-hazardous IF: i. The activity cannot be made reasonably safe given existing technology ii. The activity imposes a severe risk or severe harm; AND iii. The activity is uncommon n the community in which it is being conducted

Page 244 of 337

BAR/BRI Bar Review, Summer 2007 b. Examples blasting, nuclear energy, highly dangerous chemical or biological agents c. Once an activity is classified as ultra hazardous, strict liability applies 4. Workmens Compensation a. This is meant to be an exclusive remedy of an employee hurt at the job of the employer i. This employee is compensated by workmans comp and NOT the court system ii. IF there is a disagreement about the amount owed, then the parties can argue at the workmens compensation board NOT in the courts b. The employer will be strictly liable for the insurance payments BUT the employer will be immune from suit c. Under a workmens compensation policy only economic damages are allowed i. NO pain & suffering OR punitive damages d. WHO IS COVERED? i. Employees BUT NOT Independent Contractors ii. 3 categories NOT covered 1. teachers and not-for profit employees (who do non-manual labor) 2. Part time household employees a. Cleaning Services & Babysitters 3. Clergy e. WHAT IS COVERED? i. Generally injuries which arise from the scope of employment 1. NOT in the scope: a. Employee injury is due to his own intoxication b. Employee intentionally injures himself c. Hurt at a voluntary, off duty athletic activity 2. IN THE SCOPE of employment: a. Illegal acts committed by the employee on the job i. Example hurt while stealing employer materials b. Horseplay Cases i. Goofing around on the job ii. BUT SOME HORSEPLAY IS OUTSIDE THE SCOPE i.e., playing at work AFTER you have clocked out f. WHAT DO YOU GET?

Page 245 of 337

BAR/BRI Bar Review, Summer 2007 i. All medical expenses & 2/3 of your avg weekly rate ii. If you die you get a statutorily proscribed amount & funeral expenses iii. Employees always remain agree to sue 3rd Parties 1. Equipment manufacturers 2. Multiple firms working together (construction jobs) 3. NY a. When suing a 3rd Party, that party will generally implead your employer b. Impleader will only be allowed if the P suffered a grave injury see NYP, supra 5. Strict Products Liability a. Elements i. D is a merchant 1. A merchant is one who deals in goods of that kind 2. A merchant is NOT: a. Casual Sellers garage sellers b. Service Providers hospitals, restaurants 3. A merchant IS: a. A Commercial Lessor car rental corp. i. Even though they dont part with title b. EVERY MERCHANT in the supply chain i. BUT SOL accrues at the date of distribution to the next merchant ii. No privity of K reqd ii. P must show the product was defective 3 ways: 1. Manufacturing Defect If your product is different than all other which came off the assembly line and such form would make it more dangerous than consumers would expect a. one in a million 2. Design Defect when there is another alternative way to build the product [a hypothetical alternative design (H.A.D.)] P must establish that the H.A.D.: a. Is safer than the original b. The H.A.D. is cost neutral; AND c. The H.A.D. is practical, not making the product harder to use or removing the products central purpose

Page 246 of 337

BAR/BRI Bar Review, Summer 2007 3. Failure to Warn product information can become relevant. IF a product CANNOT be redesigned and it has a residual risk NOT apparent to users the product must bear a warning a. If no warning the product is defective b. Warning must be clear, conspicuous and understandable c. BUT CANNOT absolve strict liability by merely putting a warning on the product with a bad design iii. P must show that the product has NOT been altered since it left Ds hands 1. BUT if the product traveled in the ordinary channels of distribution there is a presumption that the product was not altered 2. This shifts the burden to D to disprove iv. P must show the product was being used for its foreseeable purpose 1. NOT limited to the proper or intended use b. Defenses to strict Products Liability i. Comparative Fault will be used IF: 1. P Failed to follow instructions 2. P is ignoring a dangerous condition vii. Nuisance 1. Incompatible land use between adjacent owners getting on each others nerves 2. A D will be found to have committed a nuisance IF, Ds acts interfere with Ps use and enjoyment of Ps own land to an unreasonable degree. a. An Unreasonable degree is established by balancing Ds interests and the right to use his own land as compared with Ps interest and the right to use and enjoy his land b. Ds state of mind is irrelevant viii. Miscellaneous Tort Topics 1. Vicarious Liability a. 1 party commits a tort (active tortfeasor), BUT the P sues that party (active tortfeasor) and another party (passive tortfeasor) based upon the relationship between the two parties b. What relationships create vicarious liability? i. Employer/Employee 1. Employer is vicariously liable for active torts of employees committed within the scope of employment a. NOT frolics (major departures) ONLY detours (minor departures)

Page 247 of 337

BAR/BRI Bar Review, Summer 2007 b. IF agent was hired to perform tortuous conduct; OR c. Agent intended to benefit the principal 2. Intentional Torts are generally not within the scope of employment and thus an employer will not be held vicariously liable UNLESS: a. The employer authorized such conduct; b. Such conduct was foreseeable from the nature of the employment; OR c. Such was out of a desire to benefit the employer ii. Automobile Owner/Driver 1. Generally there is no vicarious liability UNLESS the driver is doing an errand for the car owner 2. EXCEPTIONS a. A federal statute exists which abrogates liability for the renter of a rental car which another person then drives b. NY An owner is always responsible for all torts committed by a driver who was given permission to drive i. Fed Statute preempts in rental situations iii. Independent Contractor/Hiring Party 1. Generally there is no vicarious liability for the acts of independent contractors to the hiring party EXCEPT a. Where a land possessor hires an independent contractor to do work on the possessors land and the Contractor then hurts an invitee, the land owner is liable b. ALSO (see Agency, supra) i. Ultra hazardous activities; and ii. Estoppel iv. Parents/Children 1. Generally parents are NOT liable vicariously for the acts of their children 2. NY a. Parents are liable up to $5,000 of damages at a maximum 3. BUT BEWARE this does not mean the parent is NOT negligent themselves a. In a negligent supervision or negligent entrustment scenario the parent could be

Page 248 of 337

BAR/BRI Bar Review, Summer 2007 found individually liable and there would be no need for vicarious liability b. Example Parent leaves loaded gun on table, where upon an unsupervised child shoots the neighbors. i. The parent may not be vicariously liable BUT the parent is definitely negligent c. Meaning only use vicarious liability as a last resort, find the passive tortfeasor guilty of anything you can before using vicarious liability 2. Co-Defendants a. Assume P wins and has collected only from one of many Ds and D1 wants reimbursement i. Comparative Contribution will be utilized 1. Exception a. Indemnification the out of pocket party can get 100% back in 2 situations: i. Vicariously liable party can get full indemnification from the active tortfeasor; AND ii. In a strict products liability action the out of pocket D can recover 100% of $ paid from the manufacturer of the product 3. Loss of Consortium a. In any case where the victim of a tort is married, the uninjured spouse can commence a separate action i. Gender Neutral ii. 3 types of damages may be awarded 1. Loss of Services (spouse cant do chores) 2. Loss of Society (spouse cant be a good companion) 3. Loss of Sex 12. Wills a. Generally i. The Governing Bodies of Law 1. EPTL 2. SCPA ii. Vocabulary 1. Intestate Dies w/o a Will 2. Testate Dies w/ a Will 3. Administration Proceeding A proceeding to appoint a personal representative, to administer the estate of a person who dies w/o a Will

Page 249 of 337

BAR/BRI Bar Review, Summer 2007 4. Probate A proceeding to administer the property of a person who dies w/ a Will 5. Probate Assets Assets held solely in the Decedents name alone, that DO NOT pass by operation of law and which the Executor administers in accordance with the decedents Will 6. Non-Probate Assets Property that passes automatically because of the way the property title is held (unaffected by Will or Intestacy) 7. Issue all persons who have descended from a common ancestor (within the direct line of inheritance from the decedent) 8. Distributees Those individuals who inherit property via intestacy 9. Devisees Those individuals who receive a bequest under a Will 10. Residuary Estate Balance of the Testators estate after all claims, taxes, and other bequests have been satisfied. The rest: of the estate b. Intestacy Rules i. Generally 1. Governed by Article 4 of the EPTL 2. Applies When: a. Decedent left NO Will b. Decedent did not make a complete disposition of the estate; OR c. Successful Challenge to the Will renders it Void 3. If no Will is left an administration proceeding is initiated by an intestate distributee where an administrator is appointed in the following order: a. Spouse b. Children c. Grandchildren d. Father or Mother e. Brothers or Sisters; OR f. Any other distributee ii. Intestate Decedent Survived by Spouse and no Children 1. If the intestate decedent is survived by her spouse BUT NOT any children or issue of children, the surviving spouse take the whole estate iii. Intestate Decedent Survived by Spouse and Children 1. If the intestate decedent is survived by his spouse AND one or more children OR issue, whether from a current or prior marriage a. the surviving spouse takes: = $50K + the remainder b. the surviving children or issue take = the other 2. If the estate is < $50K the surviving spouse takes it all iv. Intestate Decedent Survive by Children Only 1. If the intestate decedent in survived by children only (and all children alive) then all children take in equal shares v. Intestate Decedent Survived by Children and Issue of Predeceased Children

Page 250 of 337

BAR/BRI Bar Review, Summer 2007 1. If the intestate decedent is survived by children AND the issue of predeceased children property is divided by representation at each generation STEPS a. Make the initial division of shares-one share for each line of issue at the 1st generational level at which there are survivors ; b. THEN all living persons at that first generational level take a share which is equal to a fraction of how many children are: (1) alive at that level AND (2) are deceased with issue at that level; c. THEN the shares of deceased persons at the first generation are combined and divided evenly among all issue in the next generation whose parents DID NOT take 2. Pre-1992 New York used per stirpes a. The deceased parents issue of the next possible generation split their share equally amongst their own kids 3. IF a will is SILENT representation at each generation applies. vi. Intestate Decedent NOT survived by Spouse or Issue 1. In this order (up then down then up): a. (up) Parents of decedent b. (down) Brothers and sisters of decedent c. (up) to maternal and to paternal grandparents i. IF one side of grandparents have passed the whole interest passes to one side of grandparents d. (down) uncles aunts, and cousins e. (up) 1st cousins once removed f. Escheats to the State 2. HALF BLOODS = WHOLE BLOODS for purposes of intestacy vii. When Spouse is Disqualified from Taking the Intestate Share 1. Some circumstances disqualify a spouse from taking under INTESTACY or by ELECTIVE SHARE (not by Will), if one of the D.I.S.M.A.L. requirements apply, the spouse as treated as having pre-deceased the decedent a. D - Divorce (final decree or annulment ONLY) b. I - Invalid Foreign Divorce (IF procured by living spouse) c. S - Separation Judgment (not agreement) d. M - Marriage is Void (incest or bigamy) e. AL Abandonment of Lack of Support (by surviving spouse) 2. ALSO you cant kill your spouse and then take in intestacy viii. Inheritance Rights of Adopted Children 1. Adopted children and their issue have FULL inheritance rights from the adopted family a. Adopted kids = Whole Blood Kids b. Inversely, the adopted family had the same rights in the adopted kid, IF he was to die first 2. Adopted children and their issue have NO inheritance rights from the natural family 3. The 3-Legged Baby Rule

Page 251 of 337

BAR/BRI Bar Review, Summer 2007 a. Where H and W1 have a child and W1 divorces H, H gets custody, marries W2 and W2 adopts child THEN and only THEN - can the child inherit from all 3 parents via intestacy i. This only works in the down direction, the natural parent upon adoption loses rights to take from the child 4. Child Adopted by a Relative Rule a. If the child is adopted by a relative there is a special rule IF the child is related to the decedent by both natural and adopted relationship the child inherits under the natural relationship ONLY 1. Cs mom A died. As sister B adopts C. Grandma G (A and Bs mom) dies. C will take as if As child the natural relationship ii. IF the child is related to the decedent by both natural and adopted relationship and the decedent is the adopting parent THEN the child inherits under the adopted relationship 1. Cs mom A died. As sister B adopts C. B dies. C takes as if Bs child adopted relationship ix. Construction of Class Gifts The Adopted Out Child 1. If the adopted child is adopted by a new family does that adopted child take as part of a class gift made in a WILL of the natural family? a. Any gift made to a class in the natural family DOES NOT include the adopted child UNLESS the adopted child was adopted by another family member of the natural family x. Inheritance of a Non Marital Child 1. Moms Side a. Child born out of wedlock has full inheritance rights from mom and moms family 2. Dads Side a. Paternity must be established in one of the following ways: i. Legitimated by marriage ii. Order of Filiation in a paternity suit is entered during fathers lifetime iii. Father files a witnessed acknowledged affidavit with the Putative Father Registry iv. After Death Paternity is established by: 1. Clear and Convincing Evidence; AND 2. Testimony that the father Openly & Notoriously acknowledged the child as his own a. Examples i. Participation in school activities ii. Gifts iii. Visitation b. Child Support is NOT ENOUGH v. DNA Test

Page 252 of 337

BAR/BRI Bar Review, Summer 2007 1. and then clear and convincing evidence if the DNA Test is rebutted xi. Lifetime Gifts to Intestate Distributee Advancements 1. At CL a lifetime gift to a child was an advancement of his/her intestate share NOT IN NY 2. Today for any life time gift to qualify as an advancement, there MUST BE: a. A contemporaneous writing made at the time of the gift; AND b. Have it signed by the donor OR donee 3. Advancement Math a. Example i. T gave A, his son a $30K valid advancement in realty. At Ts death, he had 3 kids (A, B, & C), the same realty was worth $30K and T had an estate worth $300K. ii. Calculate as follows - $300K + $30K = $330K 1. B and C each get 1/3 of $330K = $110K each 2. A gets the remainder = $300K (b/c thats all thats left in Ts estate at his death) less $220K (the shares of his siblings) = $80K xii. Lifetime Gifts by Testator to Beneficiary Satisfaction of Legacies 1. This is the same thing as an advancement BUT now the decedent has a Will 2. Similarly, at CL a gift made AFTER THE WILL WAS EXECUTED could satisfy a bequest NOT IN NY 3. Today for any life time gift to qualify as a satisfaction, there MUST BE: a. A contemporaneous writing made at the time of the gift; AND b. Have it signed by the donor OR donee xiii. Disclaimer (Renunciation) by Intestate Distributee OR Beneficiary 1. No on can be compelled by law to accept 2. A beneficiary can disclaim their interest in whole or in part 3. If effective the person who disclaims is deemed to have predeceased the testator and the bequest goes to the residuary 4. TO BE VALID the disclaimer MUST: a. Be in writing signed & acknowledged b. Accompanied by an affidavit stating that such disclaimer was not for consideration or due to acts of duress c. MUST be irrevocable; AND d. Filed with surrogates Court within 9 MONTHS of Ts death 5. PROBLEM the valid disclaimer can possibly hurt a niece or nephew in intestacy a. Example T has 2 kids A & B. A has a son C and B has 2 kids D & E. A dies before T and B disclaims any gift from T. i. While generally, C would get if B did not disclaim, NOW he gets 1/3 because of the disclaimer

Page 253 of 337

BAR/BRI Bar Review, Summer 2007 ii. TO AVOID this inequity we get to treat B, the disclaimer, as if she dies ONE DAY AFTER, so C gets and is not injured as a result of Bs disclaimer 6. Reasons to disclaim a. Tax Purposes b. Creditors c. NOT FOR MEDICAID PURPOSES c. Execution of Wills i. Probate 1. Surrogate Court determines that the decedent died with a validly executed Will and Intestate distributees are determined; AND 2. the executor is appointed by the court to administer the estate ii. Requirements for a Validly Executed Will 1. 6 ELEMENTS a. Signed by the testator i. IF another signs for the testator: 1. That person must also sign their name 2. That person CANNOT be one of the Ws 3. The person shall affix their address (not a fatal flaw) b. Ts signature must be at the end of the Will c. T must sign OR acknowledge his signature in front of both Ws d. T must Publish the Will i. Publish T must declare to the Ws that this is Ts Will e. 2 Witnesses, at least f. Ws MUST sign within 30 days of one another 2. Codicils a. A codicil is an addition, change or supplement to a will, IT DOES NOT revoke the prior will b. Must be executed with the same formalities 3. Signatures (Time & Place) a. Signature of T MUST be at the end of the Will i. Anything written there after will be disregarded ii. This itself does NOT invalidate the will, UNLESS 1. whatever is written after the signature is so material that failure to give effect to those after written words would defeat the Testators intention iii. T must sign or acknowledge his signature to both Ws b. Witnesses: i. DO NOT Have to sign in the Ts presence; NOR ii. DO NOT Sign in the presence of each other iii. Need not sign before or after the Testator, just contemporaneous in the same execution ceremony

Page 254 of 337

BAR/BRI Bar Review, Summer 2007 c. Ts signature can be anything, even an X if it is meant to be his signature d. T can also have someone help him sign as long as the help is voluntary 4. Witnesses Proving Execution a. Generally i. Generally BOP as to execution is on the proponent of the Will offering the Will to probate ii. IF challenged, with no self-proving affidavit, the witnesses must testify to proper execution iii. IF one W is dead, absent from NY , incompetent OR cannot be found, testimony of 1 W is valid iv. IF both Ws are unavailable, the proponent must prove at least the validity of 1 W signature AND the signature of the testator b. Attestation Clauses i. Cites the elements of due execution ii. Creates a prima facie case that the Will was validly Executed iii. Useful When 1. Witness has a bad memory (refresh); OR 2. W is being hostile c. Self-Proving Affidavits i. A separate affidavit signed by both Witnesses ii. A sworn statement signed in front of an attorney that recites ALL things each W would testify to at trial iii. THI IS A SUBSTITUTE FOR LIVE TESTIMONY 1. Like a deposition or interrogatory (it is sworn testimony) 2. UNLESS AN INTERESTED PARTY (an intestate distributee) OBJECTS a. In this situation you must follow the general proof of execution requirements iii. Interested Witness Statute 1. When a Will beneficiary is a Witness a. DOES NOT AFFECT WILL VALIDITY; BUT b. The Bequest to the Witness is Void 2. EXCEPT a. When the interested witness is accompanied by 2 or more uninterested witnesses b. IF the Witness would receive in intestacy the witness gets the lesser of: i. Their intestate share; OR ii. Their Bequest via Will 3. IF the Witness would NOT receive in intestacy then the Bequest is VOID

Page 255 of 337

BAR/BRI Bar Review, Summer 2007 4. Named Executor CAN be an Interested Witness (he gets paid for doing work) iv. Foreign Wills Act 1. A Will is Admissible to Probate in New York IF: a. Validly Executed Under the Laws of the State of New York b. Validly Executed Under the Laws of the State where it was Executed (testators domicile is irrelevant) c. Validly Executed Law of the State where the Testator was Domiciled at the Time of the EXECUTION OR DEATH (state of execution is irrelevant) 2. AFTER admitted to Probate in NY, NY State law governs construction and application of provisions v. Holographic and Nuncupative Wills 1. Holographic Will Written in Ts Handwriting, with NO WITNESS Signature 2. Nuncupative Will Oral Will 3. BOTH ARE VOID a. Except Nuncupative Wills are Valid in two Situations i. Made by a soldier in War and Valid for 1 year After Discharge ii. Made by a Mariner AT SEA and Valid for 3 years 4. *** IF A STATE DOES RECOGNIZE HOLOGRAPHOC WILLS AND THE TESTATOR EITHER WAS DOMICILED, DIED, OR THE WILL WAS VALIDLY EXECUTED IN THE STATE OF EXECUTION IT IS VALID BY THE FOREIGN WILLS ACT *** vi. Lawyer Malpractice 1. IF an attorney DID NOT validly execute a Will the distraught beneficiaries of the Invalidly Executed Will which was not admitted to probate have NO C/A against the negligent attorney because they are not in Privity of Contract 2. BUT the Executor has a claim against the Attorney for the Cost of Creating the Will IF the SOL has not expired d. Revocation i. What Constitute a Valid Revocation 1. By Subsequent written testamentary instrument executed with the appropriate formalities; OR a. Writing on the bottom of each page I cancel this Will. IS NOT a proper act of valid revocation 2. By Physical Act a. The word VOID must cross the words (the whole page) b. Obliterating, tearing, cutting, canceling, burning or any other act of mutilation c. BUT crossing out a signature removes 1 of the 6 elements of valid execution and WOULD BE a valid revocation by physical act

Page 256 of 337

BAR/BRI Bar Review, Summer 2007 ii. Revocation by Implication 1. A Subsequent Will that is validly executed AND says I hereby revoke all prior Wills and Codicils heretofore made by me, will suffice as a revocation 2. Alternatively IF there is a subsequent Will which DOES NOT contain such language a court MUST read the two instruments together and the 2nd Will shall be treated as a codicil a. Will #2 only revokes Will #1 to the extent that there are inconsistent provisions b. BUT IF WHOLLY INCONSISTENT THERE WILL BE REVOCATION BY IMPLICATION iii. Revocation by Physical Act by Another Person (by Proxy T has no arms) 1. 3 Requirements: a. At the Testators Request b. In the Testators Presence; AND c. The ACT MUST be witnessed by 2 people 2. This means that FOUR PEOPLE must be in the room when a will is revoked by proxy of the testator iv. Presumptions Regarding Revocation of Wills 1. Where a Will is LOST after Ts death and last seen in the presence of the Testator = Will presumed destroyed by T; 2. Where a Will is found mutilated after Ts death and last seen in Ts possession or control = Will presumed destroyed by T 3. NEITHER PRESUMPTION applies where the Will is last seen in the presence or control of someone adversely affected by the Document (an intestate distributee OR someone removed in a subsequent Will) 4. Evidence of a destroyed or revoked Lost Will is allowed a. Examples i. T told Witness that destruction was accidental; OR ii. Will was left with the attorney for safekeeping and the attorney lost the Will v. Changes on Face of Will After it has been Executed 1. Only 2 ways a Testator can change a validly executed Will: a. A Codicil to Will #1; OR b. A New Will which Revokes the 1st Will i. BOTH need to meet the 6 requirements of a Validly Executed Will 2. Any words added to the Will AFTER execution MUST be disregarded a. Cf. Written changes PRIOR to the execution are included 3. Partial Revocation by Physical Act is NOT Recognized a. Example crossing out a bequest and changing the amount vi. No Revival of Revoked Wills (or Codicils) : Dependent Relative Revocation 1. A Will (will #1) that has been revoked by a later Will (will #2) containing a revocation clause (I hereby revoke all prior wills) CANNOT be revived simply by destroying the subsequent Will

Page 257 of 337

BAR/BRI Bar Review, Summer 2007 a. Example Will #1 gives Greenacre to A, Codicil gives Greenacre to B, then Testator rips up Codicil. Result? i. As bequest revoked by Codicil ii. Bs bequest revoked by Physical Act iii. Greenacre passes via the residuary b. ** Revocation of the Codicil DOES NOT Revoke the Will, any provision that was unchanged by the Codicil remains unchanged by the Revocation of the Codicil ** 2. The 1st Will, can only be revived in two ways: a. Re-Publication by Codicil; OR b. Valid Re-Execution of the 1st Will i. Signed and Re-witnessed 3. Dependent Relative Revocation a. CL Revocation may be disregarded WHEN the Testator believes that by his revocation of Will #2 he is then reinitiating Will #1 i. In this instance only MISTAKE OF LAW if believed by the Testator the Courts will DISREGARD the revocation of Will #2 ii. BUT ONLY IF the use of Will #2 can actually come closer to what the Testator WANTED to do by reviving Will #1 b. NY only applied in 1 Appellate Division case NEVER by the Ct of Appeals c. So, Basically, if Will #1 and Will #2 have a similar testamentary scheme courts would rather give life to Will #2 INSTEAD of resort to Intestacy 4. Proof of Lost Wills Statute a. In any case where a Will is Lost, Valid Execution must be proven b. Must be established initially that the will was not Revoked i. Overcome presumption of non-production; OR ii. Use DRR in your favor and prove the revocation should be disregarded c. THEN all provisions of this Lost Will MUST be clearly proven by: i. Two of the Wills witnesses; OR ii. By a copy OR draft of the Will proved to be true and complete e. Death of Beneficiary During Testators Life i. New York Anti-Lapse Statute 1. Lapse - IF a Will beneficiary dies during the testators lifetime, the gift fails [or lapses] since you cannot make a gift to a dead person 2. Anti-Lapse a statutory scheme which saves lapsed gifts IF:

Page 258 of 337

BAR/BRI Bar Review, Summer 2007 The pre-deceased beneficiary was the issue, brother or sister of the Testator; AND b. The pre-deceased beneficiary leaves issue who survive the Testator 3. Specifics a. The pre-deceased beneficiarys own personal Will plays no role in a gift which is governed by anti-lapse b. IF a gift is conditioned upon a the issue, brother or sister surviving the Testator, then anti-lapse DOES NOT apply c. NY COURT OF APPEALS recently held that anti-lapse applied where the natural father of a then adopted child predeceased his natural father, left issue and was given a SPECIFC bequest (not in a class) in his natural fathers Will ii. Lapse in a Residuary Gift: Surviving Residuary Beneficiaries 1. The entire Residuary estate will be re-apportioned to the other named residuary beneficiaries in the Will ONLY IF: a. The residuary was devised to 2+ Persons; AND b. The Gift fails or lapses for any reason; AND c. Anti-lapse DOES NOT apply 2. IN THE EVENT ANTI-LAPSE DOES APPLY the surviving issue steps into the shoes of the predeceased party iii. Class Gifts 1. Generally, when the Will makes a gift to a group of persons in a class and some class members pre-decease the Testator, the class members who survive the Testator are those who take a. Any party who is born after the class vests is not included within the class UNLESS in gestation at the time the gift vests i. Rule of Convenience Class closes at the time the gift COULD vest 1. In a will, an outright class gift vests at Ts death 2. Pre-Existing life estate, gift vests at death of LE b. The failure of a party to survive the Testator DOES NOT drop that persons interest to the residuary i. UNLIKE a specific bequest (which drops to the residuary), where anti-lapse DOES NOT apply 2. Class Gifts AND Anti-Lapse a. IF anti-lapse applies to a member of the class (class member was issue, brother or sister of the Testator AND such person leave issue who survive the Testator) THEN ANTI-LAPSE APPLIES to the class gift iv. Simultaneous Deaths 1. Under the USDA if two persons die under circumstances such that there is insufficient evidence that they have died other than simultaneously, their property is distributed as if they predeceased one another a.

Page 259 of 337

BAR/BRI Bar Review, Summer 2007 a. IF there is evidence that one person has dies even a millisecond after the other person the USDA does NOT apply 2. Anti-Lapse would apply to the pre-deceased person IF they were issue, brother or sister of the Testator a. Example Grandma by Will leaves her Estate to Son and to Daughter. Son has a child named Grandson. Grandma and Son die simultaneously in a car crash. Grandson takes his fathers share of Grandmas estate due to anti-lapse. 3. USDA and Jointly held Property a. Property passes as thought each co-owner survived the other. b. If a JT or TbyE, this automatically turns into a TiC i. Meaning the USDA eliminates survivorship in Simultaneous Death Cases c. Example H and W die simultaneously and are JTs with respect to a parcel of real property. H has 2 kids A & B from a prior marriage, and H & W share one child C. Who owns what? i. TiC is created. ii. C take Ws outright and A, B, and C split Hs , 3 ways. Meaning A & B each own 1/6 and C owns 4/6. f. Changes in Testators Family After the Will is Executed i. Testator Marries After Will is Executed 1. In NY, marriage following execution of a Will has NO EFFECT on the validity of the Will, BUT it may effect gifts and dispositions. (right of Election & Exempt Property Statutes) ii. Testator is Divorced After Will is Executed 1. If Testator DIVORCED OR MARRIAGE ANNULLED after the execution of the Will, all gifts and fiduciary appointments ARE REVOKED by operation of law a. A Separation Judgment DOES NOT QUALIFY (cf. intestacy) b. The commencement of a divorce proceeding without a judgment DOES NOT effect spouses interest c. A divorce judgment or annulment DOES NOT apply to nonprobate assets 2. EXCEPTIONS a. Guardian Appointments of Testators Children b. Reconciliation AND REMARRIAGE then all former provisions are restored 3. Construction a. Read Will as IF ex-spouse has pre-deceased Testator i. Any specific Bequest to ex-spouse will drop to residuary ii. If ex-spouse was to take in residuary, the Residuary passes by intestacy b. Any Gift to the Children of a Divorced Spouse is NOT effected

Page 260 of 337

BAR/BRI Bar Review, Summer 2007 i. ANTI-LAPSE DOES NOT APPLY TO EX-SPOUSES CHILDREN BECAUSE THE EX-SPOUSE IS NOT ISSUE, BRO OR SIS OF TESTATOR iii. Child Born or Adopted After Will is Executed 1. Generally a. The EPTL gives NO protection to children ALIVE when the Will was executed b. BUT protects children born: i. AFTER the Will was executed; AND ii. Must be un-provided for by any settlement, non-probate asset, or codicil 2. First Section of Statute a. IF Testator had one or more children when the Will was executed i. IF no provision for the born child, the after-born child gets nothing ii. IF the born child gets a gift, the after-born child shares the amount proportionately, as if a class gift was made iii. IF it appears that Ts intention was to make a limited provision to ONLY provide for the testators THENLIVING children, the after-born take his intestate share 3. Second Section of Statute a. IF the testator had NO children when his Will was executed AND has made no provision or settlement for the after-born child, then the after-born child gets his intestate share 4. Example Will executed in 2003 by T leaves $50K to A and $100K to B, his children. T adopts C in 2005. T dies in 2006. a. T has not provided for C - AND - C was adopted AFTER the execution, SO: i. C takes the gift as follows, add A and Bs gift = $150K ii. Divide by the # of Children, Cs shares = $50K iii. B and C provide proportionately iv. B gives 1/3 ($16,666), and C gives 2/3 ($33,333), from their respective bequests b. IF instead T was to only give A $5 and B nothing (a limited provision) C would take his intestate share which C would take from all other Will beneficiaries proportionately no just his siblings c. IF instead T had then taken out a life insurance policy for C, C would get nothing in the Will d. IF T had no children at the time of Will execution, C would take his intestate share g. Reference to Facts and Events Outside the Will i. Incorporation by Reference Extrinsic Document

Page 261 of 337

BAR/BRI Bar Review, Summer 2007 1. CL the terms of an extrinsic document created before, OR at the time of the Will execution CAN be incorporated by reference IF: a. The document was created before or during the Will signing; b. The Testator intended to incorporate such document; AND c. The document references the Will 2. THERE IS NO INCORPORATION BY REFERENCE IN NY a. Everything must be formally executed ii. Acts of Independent Significance (Non-Testamentary Acts) 1. Sometimes people do lifetime acts that have their own purpose or motive, independent of any testamentary purpose. 2. These acts that occur after the Will execution should be given full effect when the distributions are made 3. Example T executes Will, giving his son the vehicle he owns at death and his daughter everything in his living room. T then sells shitty car and buy Porsche. T then moves a $800K painting into his living room. T then dies. a. Son would get the Mercedes b. Daughter would get the painting 4. EXCEPTION for title documents (deeds, stock certificated, bank passbooks) MUST ALL BE TRANSFERRED AS MANDATED BY LAW a. Meaning that in the example above, T, taking the deed to his house and putting it in his living room WILL NOT give Daughter the house. T must sign the deed and record it in the county clerks office to transfer the title prior to his death iii. Non-Probate Assets 1. Property that decedent owned solely at the time of his death is disposed of pursuant to the terms f a Will or by Intestacy THE PROBATE ESTATE 2. However, there are some interests in property which are not subject to disposition by Will and not part of the Probate Estate : a. Property passing by Right of Survivorship i. Totten Trusts, Joint Tenancies b. Property passing by Contract i. Life insurance policy payable to a beneficiary who is NOT the decedent or the decedents estate c. Property held in Trust d. Property over which the Decedent has a Power of Appointment given to him/her by another h. Problems Associated With Testamentary Gifts i. Classification of Gifts that can be made by a Will 1. Specific Bequest tangible personal property left to a specific person a. Example I devise Blackacre to Jim 2. Demonstrative Legacy A pecuniary amount FROM a specific source a. Example I bequeath $5K from the proceeds of the sale of my IBM stock to Jim.

Page 262 of 337

BAR/BRI Bar Review, Summer 2007 3. General Bequest A pecuniary amount with NO source a. I bequeath $5K to Jim. 4. Residuary Gift The Remainder of an Estate after all other gifts 5. Intestate Property Partial Intestacy results because there is NO Residuary Clause ii. Abatement of Legacies to Satisfy Creditors Claims 1. Abatement occurs when creditors of the Testator wish to satisfy debts and obligations owed from the Estate assets and the Testator has NOT provided for payment of such claims by alternate means. 2. Gifts given under the Will are decreased or removed to satisfy these obligations in the following order: a. Residuary Clause b. General Bequests c. Demonstrative Bequests d. Specific Bequests e. ANY GIFT which qualifies for the Estate Tax Marital Deduction (IRC 2056) 3. Example Ts Estate = $200K and He owes $100K to creditors. Ts Will makes the following gifts: (1) Greenacre to A (worth $50K); $50K to B from sale of IBM stock; $50K to C, and $50K via residuary to D. a. D pays first, then C pays. This would satisfy all creditors. b. IF Bs gift was a general bequest and NOT demonstrative, then B & C would each pay $25K to the creditors, pro rata and D would lose his share entirely iii. Specific Gifts of Encumbered Property NO Exoneration of Liens 1. CL IF testator made a specific bequest of property that was subject to a lien, the beneficiary could be exonerated and have the residuary pay off the encumbrance. 2. NY UNLESS specifically exonerated in the Will, who ever takes property with a lien, takes the property subject to that lien. a. ** specific exoneration does NOT include a clause that directs all debts, obligations and taxes be paid from the residuary ** b. Specific Exoneration is, I devise Blueacre to Jim, BUT IF a mortgage, lien or encumbrance is attached to the property at my death I direct my executor pay such prior to transfer. iv. Ademption Failure of Gift 1. IF a specific legacy/bequest is made in a Will cannot be found OR is not owned at the Testators death then the gift adeems = fails and beneficiary is left empty handed. 2. Ademption DOES NOT apply to general or demonstrative legacies a. A demonstrative legacy, IF that source lacks such $, will become a general legacy b. In the event that there is NOT enough money to fulfill all general legacies, the y will ALL be reduced pro rata UNLESS otherwise stated

Page 263 of 337

BAR/BRI Bar Review, Summer 2007 3. EXCEPTIONS a. Insurance Proceeds for lost or damaged property will be paid to a specific bequest beneficiary IF the proceeds are paid AFTER death b. Executory Contracts (those NOT performed) which sell specific bequest property, will entitle the specific bequest beneficiary to proceeds of the contract IF paid after Ts death c. Sale by Guardian or Conservator of specifically bequeathed property will entitle the specific bequest beneficiary to the proceeds IF the money is: i. Unspent; AND ii. Traceable 4. Testator NEED NOT sell the specifically bequeathed property himself IF the State was to take real property by eminent domain or via tax sale THIS will still adeem the gift entirely IF specifically bequeathed v. Bequests of Shares of Stock and Other Securities 1. Publicly Traded Stocks a. IF the gift says, I give MY stock in ____ Corp. = SPECIFIC i. This means it could possible adeem b. IF the gift says I give _____ stock to Jim. = GENERAL i. Gift will not adeem ii. In fact, if the gift stock does not exist at the time of Ts death, the Executor must go out a purchase such stock 2. Closely Held Corporations a. Stock gifts in closely held corporations ARE ALWAYS specific gifts, and thus have the chance to adeem 3. BUT REMEMBER IF I were to give Jim $5000 cash from the sale of IBM stock THIS IS DEMONSTRATIVE, NOT specific or general 4. In the event of a STOCK SPLIT or MERGER - THE BEQUEST OF STOCK IS TREATED AS A SPECIFIC BEQUEST a. MEANING my is used possessively b. As a result IF a stock was to split POST-Will execution, the specific bequest beneficiary takes it all BUT ADEMPTION WILL NOT APPLY i. In a publicly traded OR closed corp ii. However if T was to sell such stock AFTER the Will execution the Will would adeem vi. Mistake, Ambiguity 1. Mistake in Transcription a. If the secretary types up a bequest improperly and the Testator DOES NOT catch the mistake prior to execution absent suspicious circumstances the bequest will not be overturned i. Plain Meaning Controls 2. Latent Ambiguities Not Evident when looking at the document a. Misnaming a beneficiary is a common example

Page 264 of 337

BAR/BRI Bar Review, Summer 2007 b. In the event of a LATENT ambiguity the court will consider extrinsic evidence (a/k/a facts & circumstances evidence) i. Evidence that may CONTRADICT what the Will says ii. Examples Ts discussions with others; attorney testimony; Testators habits 3. Patent Ambiguities Ambiguity clear when looking at the Will a. Example I bequeath twenty-five dollars [$25,000] to Jim. b. Extrinsic Evidence will be admissible BUT NOT CONTRADICTORY EVIDENCE i. Example A Testators declaration of intent to 3rd Parties c. Non-Contradictory Evidence includes discussion with attorneys OR facts a circumstances evidence i. This type of evidence is NOT contradictory RATHER explanatory 4. Precatory Language Language of mere desire a. In you Will saying, I hope someone gets my watch. IS NOT sufficient to make a bequest b. The Testator MUST SAY I GIVE, I BEQUEATH, etc. vii. Conditional Wills 1. A Conditional Will states that IF the Testator were to die during or upon the happening of some event THEN and only then could the beneficiaries take 2. IF this is tested you must argue both sides: a. Probate could be denied because the condition did not occur OR the event has passed; AND b. Making the Will merely shows WHY he made the Will, NOT that the condition needed to be fulfilled in order to give the Will legal effect viii. Contracts Relation to Wills 1. Generally Joint Wills are disfavored, because when spouse #1 dies, then spouse #2 can re-gift everything 2. In an effort to avoid this, NY has a statute which REQUIRES the Will to contain a provision that such Will, is intended to be a Contract between the Parties. 3. Shady Surviving Spouses a. In the event, the Surviving Spouse makes ANOTHER Will after the original spouses dies, - you MUST submit both Wills to Probate b. The Court will then impose a constructive trust over ALL assets in favor of the original intended beneficiaries 4. Revocation of Joint Wills a. Only when both spouses are still alive; And b. Only with the same formalities as required for a valid execution ix. New Yorks Negative Bequest Rules

Page 265 of 337

BAR/BRI Bar Review, Summer 2007 1. CL when a Will does not make a complete distribution of an estate (resulting in partial intestacy) words of disinheritance in the Will would be INEFFECTIVE with regard to the Partial intestacy a. That is to say a person who was disinherited would actually take in intestacy 2. In NY Words of Disinheritance apply to situation of Partial Intestacy a. Cf. If the will was held invalid and not admitted to Probate a disinherited issue WOULD take intestacy b. ALSO the disinherited party is treated as if they have predeceased the Testator, SO in the event the are in the protected anti-lapse class, their ISSUE, if they have survived the Testator will take their disinherited, partial intestate share, via anti-lapse i. The Right of Election and NYs Elective Share i. Generally 1. This is a statute to protect the surviving spouse against disinheritance, by giving a spouse a minimum amount of $ in their spouses estate 2. The Share is the greater of $50K OR 1/3 of the augmented estate a. PLUS 6% interest beginning 7 months AFTER letters testamentary have been issued b. Net Estate includes the Estate , which includes testamentary substitutes, AFTER debts gave been paid and prior to payment of the estate tax i. BECAUSE anything a surviving spouse takes is exempt via the marital deduction 3. THIS IS NOT the spouses share via intestacy a. Elective share ONLY applies when a validly executed Will is admitted to probate i. Via Intestacy, the surviving spouse takes either: 1. The whole estate, if no issue; OR 2. $50K + the Estate if issue exist b. THUS, the Intestate share will always be larger than the elective share unless testamentary substitutes are involved ii. Testamentary Substitutes 1. Generally a. Elective share applies not only to probate assets (those which are owned by the decedent solely at his/her death) BUT ALSO to certain gifts to third parties and property held jointly i. Otherwise, the testator could beat the Right of Election simply by gifting everything away prior to death b. Thus the Net Estate = the greater of $50K or 1/3 of the Augmented Estate i. Thus, the Augmented Estate = probate assets + testamentary substitutes 2. Testamentary Substitutes

Page 266 of 337

BAR/BRI Bar Review, Summer 2007 a. Generally ALL non-probate transfers EXCEPT for irrevocable gifts prior to one year before death AND life insurance ARE INCLUDED as testamentary substitutes b. The list of T-Subs are as follows: i. Totten Trusts (POD accounts) up to the amount of $ furnished by the decedent spouse prior to death ii. Survivorship Estates 1. JTs, TbyEs. JT Bank Accts all created after 9/1/66 2. IF created before marriage, value included into augmented estate 3. IF created after marriage, consideration furnished test applies iii. Revocable Trusts 1. Those with strings attached 2. Power to invade corpus, power to change beneficiaries, etc. 3. WHOLE AMOUNT included iv. Irrevocable Trusts MADE DURING the marriage with a retained life estate 1. made on or after 9/1/92 v. Employee Pension Plans 1. IF employee designated a beneficiary on or after 9/1/92 2. ONLY OF THE PLAN = TS vi. Inter Vivos Gifts made within 1 year of death 1. > $12K, annual exclusion vii. Gifts Causa Mortis 1. no matter what amount 2. This gifts are void if the Testator does not die 3. The gift must be made on the belief of impending death viii. U.S. Government Bonds ix. Powers of Appointment 1. MUST be general AND presently exercisable 3. Non-Testamentary Substitutes a. The following are deemed to NOT be testamentary substitutes and are not included in the augmented estate: i. Life Insurance 1. UNLESS payable to the Estate ii. The other of a pension, where a beneficiary was named after 9/1/92 iii. Gifts made within 1 year of death that are < $12K iv. Pre-Marital Irrevocable Transfers v. Irrevocable Transfers made more than one year before death

Page 267 of 337

BAR/BRI Bar Review, Summer 2007 vi. Irrevocable Trusts - MADE DURING the marriage, on or after 9/1/92, with a retained life estate made 4. Survivorship Estates The Rules a. A survivorship Estate is a JT tenancy OR a JT Bank Acct b. NOT an Irrevocable Transfer like a gift c. With 3rd Parties i. IF the survivorship estate was created BEFORE the marriage and still exists at death automatically is included ii. IF the survivorship estate is created AFTER the marriage, the consideration furnished test applies 1. MEANING The surviving spouse MUST prove the amount donated to the account by the decedent spouse 2. Whatever consideration that the surviving spouse can prove was furnished will qualify as a testamentary substitute and be added to the augmented estate d. With the Surviving Spouse i. of the amount in the JT acct OR in the Joint tenancy is included in the augmented estate ii. The other is used to reduce (satisfy) the elective share, once the augmented estate has been calculated 5. Formula a. Add i. Probate Assets less Debts, a/k/a net probate estate ii. Appropriate Value of all Testamentary Substitutes iii. Sum is called the Augmented Estate b. Then from sum determine which is larger (1/3 or $50K) c. That # will be your net estate d. From the Net Estate, deduct all gifts to the surviving spouse made by the deceased spouse i. THIS INCLUDES of ALL survivorship estates even though, the other half has been included in the augmented estate ii. This includes money given in Will e. Satisfaction In the event the net estate amount is NOT fulfilled by these deductions, THEN all beneficiaries reduce their bequests equally i. This includes a beneficiary who takes by Will, testamentary substitute or via intestacy ii. Formula = [$ needed to satisfy the ES/all remaining assets] = % [% x 3rd party bequest] = pro rata contribution to ES 6. Example

Page 268 of 337

BAR/BRI Bar Review, Summer 2007 a. H & W married in 1999. In 2002, W and Sister acquire real estate as JTs. In 2003, H & W open a JT Bank Acct. In 2005, W dies. Net Probate Estate = $300K (Blackacre devised to H = $75K and $225K remaining to Sister) b. At death, H&W JT Acct = $60K and W & Sister JT Prop = $150K, all money of which was supplied by W. c. H files for an elective share. Here we go.., $300,000 net probate estate $150,000 JT prop, post-marr, cnsdrtn furnished + $ 30,000 of the H&W JT Acct $480,000 AUGMENTED ESTATE 1/3 x $480,000 = $160,000 (Net Estate) $160,000 -[$ 75,000] -[$ 30,000] $55,000 Net Estate Devise to H in Will of the H&W JT Acct H to receive from other beneficiaries (in this example, all $55K from Sis)

7. Testamentary Substitutes & Intestacy a. If the Testator has NO WILL and has distributed ALL OF HIS ASSETS via non-probate methods (i.e. JT bank accounts and Totten Trusts) Elective share STILL applies b. BUT in calculating the augmented estate there will be NO net probate estate iii. Elective Share Trusts NO LONGER Satisfy the Surviving Spouses Right of Election 1. DEATH BEFORE 9/1/94 a. If a decedent died, he could satisfy the ES through a gift which provided $50K up front AND then an income interest in a trust b. BOTH the $50K and the trusts total value HAD to exceed 1/3 of the augmented Estate c. IF this was satisfied the surviving spouse had no right to elect 2. TODAY Life Estates and other terminable interests CANNOT fulfill the ES 3. DEATH AFTER 9/1/94 a. IF in the odd event a Will on the exam is executed prior to 9/1/94, the Testator dies after 9/1/94 and the Testator provided for an ES via trust interest: i. We ACCELERATE the trust as if the surviving spouse has died, thus distributing principal solely to the remainder beneficiary; ii. THEN the outright disposition of the remainder in that trust becomes one of the assets which are included in

Page 269 of 337

BAR/BRI Bar Review, Summer 2007 the augmented estate AND which will distribute pro rata to the surviving spouse any $ left unsatisfied iv. Procedural Rules Governing the Right of Election 1. The demand to elect must be filed within 6 months after the Letters of testamentary have been issued IF Administrator CTA needs to be appointed, an election can take place up to 2 years AFTER the death of the Testator 2. Interest on the Right of Election starts 7 months after the Letters Testamentary have been issued 3. Right of Election can ONLY be utilized by a surviving spouse, not an executor or another interested party a. EXCEPTION guardian of an incapacitated person or committee, pursuant to MHL Article 81 4. ES can be waived with or without consideration, before or after marriage, as to all assets or just some a. WAIVER MUST BE IN A SIGNED, ACKNOWLEDGED, AND NOTARIZED WRITING v. Multi-jurisdictional Problems 1. IF a decedent from another state who is probating their Will in that State BUT owns real property in NY, an ancillary probate proceeding must be commenced. a. This transfers title of property in NY, by a NY Court, to a beneficiary of a Will being Probated elsewhere b. Under such circumstances the surviving spouse of such decedent CANNOT invoke his/her right of election solely to the NY property. c. EXCEPT IF the Will states that disposition of NY Property MUST be done by NY law, such right of election may be invoked, BUT ONLY as to the real prop located in NY 2. Alternatively, IF the decedent dies in NY and his Will is being probated in NY, BUT owns prop in another state, the Surviving Spouse CAN attach his/her right of election to such property a. While NY cannot adjudicate the properties disposition; b. NY CAN adjudicate rights under the Will vi. Exempt Property 1. This property belongs to the family, more importantly, the surviving spouse 2. This property comes off the top, before: a. payment of any bequest, b. payment of any creditor; OR c. before any right of election 3. Exempt Property Includes: a. $15K for the family car b. $10K for household belongings c. $15K cash d. $15K farm machinery and equipment

Page 270 of 337

BAR/BRI Bar Review, Summer 2007 e. $1K in books, pics, personalty, etc f. TOTAL = $56K maximum allowance vii. When Spouse Disqualified from Taking the Elective Share 1. Some circumstances disqualify a spouse from taking under ELECTIVE SHARE - IF one of the D.I.S.M.A.L. requirements apply, the spouse as treated as having pre-deceased the decedent a. D - Divorce (final decree or annulment ONLY) b. I - Invalid Foreign Divorce (IF procured by living spouse) c. S - Separation Judgment (not agreement) d. M - Marriage is Void (incest or bigamy) e. AL Abandonment of Lack of Support (by surviving spouse) j. Will Contests i. Testamentary Capacity 1. Testators Actual Capacity a. The Testator MUST: i. Understand the nature of the act; ii. Know the nature and approximate value of his property; iii. Know the natural objects of his bounty; AND iv. Understand the gifts he is making b. Meaning the T must know he is writing a Will; the property he owns; the people hes giving it to; and the fact that hes giving it away 2. Moments of Lucidity a. Testator capacity required is LESS than what is required to make a contract. THUS even IF insane, T can make a will IF he could execute it in a moment of lucidity 3. Insane Delusions a. While T may be of sound mind T has a persistent belief in facts which have no real existence b. Facts against all evidence, probability and control c. AND IT IS THESE ACTS, which provide the testamentary act i. THE UNFOUNDED BELEIEF MUST BE THE CAUSE OF THE EXECUTION d. IF SO, whole will invalid 4. Undue Influence a. Generally i. Ts testamentary capacity was subjected to and controlled by a dominant influence of power ii. BOP on Will contestant to prove: 1. Existence and Exertion of Influence; 2. Effect of Such Influence was to overpower the mind & will of the Testator; AND

Page 271 of 337

BAR/BRI Bar Review, Summer 2007 3. The product of such undue influence is a new will OR a gift in a Will which couldnt have happened BUT FOR such undue influence iii. Influence is NOT undue UNLESS the free agency of the Testator was destroyed such that the Will is not that of the Testators BUT of the one exerting the influence iv. The following are NOT undue influence: 1. Mere opportunity to exert; 2. Susceptibility of Influence due to Age or Illness; OR 3. Unequal dispositions among children b. Gifts and Appointments to the Drafting Attorney i. Gifts to the Attorney 1. There is an inference of undue influence WHICH satisfies the Contestants BOP WHEN: a. A Will that makes a gift to a party in a confidential relationship with the Testator; AND b. Such party was active in preparing the WILL 2. THUS, sua sponte the court must hold a Putnam Hearing to determine whether the gift was voluntarily made evaluating the gift under Putnam Scrutiny ii. Appointments of Attorney 1. If a Will names the drafting attorney the Executor, the attorney MUST receive consent from the client in a signed, acknowledged writing, with 2 Ws that: a. Any party can be the executor b. The attorney is entitled to statutory executor fees; AND c. Legal hourly fees 2. Failure to obtain such consent makes the attorney receive only of the statutory executor commissions ii. No-Contest (In Terrorem) Clauses 1. If anyone objects to my Will they get nothing 2. Majority of Jurisdictions hold these clauses valid UNLESS there was probable cause for the contest and such was brought in good-faith 3. NY EVEN a good-faith contest will destroy a bequest a. EXCEPTIONS Contestant alleges: i. The Will is a fraud; OR ii. The was revoked by a later will, NOT by physical act; OR

Page 272 of 337

BAR/BRI Bar Review, Summer 2007 iii. The action was brought by a legatee whom brought such on behalf of a minor or incompetent; OR iv. Contest brought merely to construe rights under the Will; OR v. Jurisdictional Arguments k. Powers of Appointment i. Generally 1. A POA is an authority created in OR reserved by a person enabling that person to designate [within certain limits as proscribed by the creator] persons who shall take the property and the manner in which they shall take it 2. Purpose: Allows a Testator to appoint a living party to look at facts in existence AFTER the Testators death and distribute property based upon those later facts ii. Definitions 1. Donor Creator of the Power 2. Donee Person who exercises the power 3. Takers in Default The class or person who takes property when a POA is not exercised iii. Classifications 1. General vs. Special a. GENERAL POAs allow the donee to appoint the property to: i. Themselves ii. Their creditors iii. Their estate; OR iv. The creditors of their estate b. SPECIAL POAs allow the donee to appoint the property to any other party other than the 4 as allowed in the General POA 2. Presently Exercisable vs. Testamentary a. PRESENTLY EXERCISABLE POAs are exercisable during the life of the donee b. TESTAMENTARY POAs are those which the donee can exercise on via Will upon their death iv. Specifics 1. Unless otherwise stated in the creation document, the donee may exercise a testamentary POA by Will, through a residuary clause, EVEN IF the Will of the donee makes no mention of the specific POA a. IF the donor required specific reference to the POA in the creation document for purposes of exercise by the donee, mere disposition via residuary is NOT valid i. In this instance, the property will pass to the takers in default ii. IF there are NO takers in default, the property in the POA will revert back to the donors estate - to the party who held the residuary clause in the Donors Will

Page 273 of 337

BAR/BRI Bar Review, Summer 2007 Where a TRUST exists, giving the donee the income interest & a general & presently exercisable POA over the principal, failure to exercise such will result in the Trustee distributing the Principal to: a. The Residuary taker of the donees Will; OR b. IF NO WILL to donees intestate distributees v. POAs and the Right of Election 1. THE ONLY POA that a donees spouse can include in the augmented estate for purposes of the Right of Election is a general & presently exercisable POA BUT ONLY IF NOT EXERCISED WITHIN 1 YEAR OF DEATH a. Reasoning i. A General POA is the property of the donee, since it can be exercised in favor of the donee; ii. It must also be presently exercisable b/c IF the donee cant get to the property during their lifetime, the spouse of the donee should not be afforded such privilege iii. MUST be exercised within 1 year of death OR NOT exercised at all 1. Within 1 year of death = subject to right of election b/c a POA is an Irrevocable Gift, see TSubs, supra; OR 2. NOT exercised at all, b/c it would still be within the dominion and control of the donees estate at death 2. 2 EXCEPTIONS IF the POA is General - Testamentary; AND a. the donor and donor are the same person; OR b. the donee exercises the power in favor of themselves i. THEN SUCH IS INCLUDABLE IN THE AUGMENTED ESTATE FOR PURPOSES OF THE RIGHT OF ELECTION 3. NO SPECIAL POWER is ever able to be included in the augmented estate for purposes of the right of election 13. Trusts a. Requirements for a Trust i. Types of Trusts 1. Express Trusts, created by written agreement 2. Resulting Trusts, created when a trust or gift fails 3. Constructive Trusts, created to prevent unjust enrichment ii. Express Trusts 1. Allows the owner of the property to make transfers of the property AND allows those assets within the trust to be managed by another a. This is the separation of legal and equitable title 2. 2 kinds of express trusts: a. Lifetime set up during the lifetime of the creator b. Testamentary set up by the Will of the creator 2.

Page 274 of 337

BAR/BRI Bar Review, Summer 2007 3. 7 REQUIRMENTS a. Settlor makes a b. Delivery of legal title of c. Property to a d. Trustee who holds the benefit of such legal title for a e. Beneficiary (ies) with f. Intent to create a trust for g. A Lawful Purpose 4. Additional Requirements a. For an express trust to be valid IT MUST BE: i. In writing ii. Signed; AND iii. Acknowledged by a notaryORSigned by 2 Witnesses b. NO Consideration is required 5. The Settlor can be anyone 18 or older with the capacity to enter into a Contract 6. Assets in Trust must be formally transferred for delivery to be valid a. Shares MUST be re-registered b. Real Property MUST be transferred and recorded into the name of the trust c. Bank Accounts MUST be re-assigned 7. Property (RES) can be almost anything the Settlor owns BUT NOT the mere expectancy of ownership a. Property must be presently identifiable NOT subject to future determination i. Example The trust is to be funded with whatever money I may choose to contribute - INVALID b. Creating a trust if property you are soon to acquire is Invalid 8. Trustees a. LIFETIME TRUSTS i. Can be almost anyone since NO COURT INVOLVEMENT is required b. TESTEMENTARY TRUSTS i. Because a Testamentary Trust must be probated through the court, there are certain parties who CANNOT be Trustees: 1. Persons Under 18 2. Convicted felons 3. Incompetents 4. Those incapable due to drunkenness OR dishonesty ii. NON-RESIDENT ALIENS CAN serve as Trutees for Testamentary Trusts IF: 1. They are related to the decedent; AND a. Spouse OR descendant of the grandparent

Page 275 of 337

BAR/BRI Bar Review, Summer 2007 2. A NY Resident serves as Co-Trustee c. FAILURE TO NAME A TRUSTEE DOES NOT MATTER i. Court Will appoint one 9. Beneficiaries a. MUST BE : (1) Definite; AND (2) Ascertainable b. NO Ambiguities i. IF Ambiguities exist the Trustee will hold a Resulting Trust (b/c trust failed) for the Residuary Beneficiary ii. CLASS GIFTS 1. Family or Next of Kin are ascertainable and definite determined by intestacy 2. My Best Friends are NOT 10. Intent a. Settlor must intend to create an enforceable obligation i. Precatory Language (desire, wish) IS NOT enough b. Trustee MUST have duties to perform, otherwise there is a PASSIVE Trust and the Trust Will fail i. Trustee must be given duties to manage assets failure will result in no passing of legal title, then the beneficiary has both legal and equitable title and the trust will ultimately fail c. The use of the word TRUST does NOT MEAN an intent exists i. Must look at all the facts and language to determine intent ii. Example S purchases Whiteacre, then S decides to given Whiteacre in trust to A for $1000/month, rent to S THIS IS NOT A TRUST 1. Even though the word trust is used 2. Facts indicate creation of a Landlord-Tenant Relationship 11. Lawful Purpose a. A Trust CANNOT call for: i. Commission of a Crime; ii. Destruction of Property; iii. Conditions which would otherwise be against public policy 1. CANNOT restrict marriage or divorce b. BUT IF A LAWFUL PURPOSE CAN BE CONSTRUED a purpose can be found that is not offensive to public policy THEN the Trust is valid i. Example Trust income created by a decedent to give income to his spouse until she remarries - VALID 1. While it restricts marriage, the trust has a valid purpose to provide support during widowhood

Page 276 of 337

BAR/BRI Bar Review, Summer 2007 ii. Example Marriage restrictions to members of a certain religious group OR ethnicity ARE VALID 1. Reasoning There is enough persons in such a group that the choice is still fairly wide - THUS it is only a partial restraint on marriage b. Types of Trusts i. Revocable Lifetime Trusts 1. The Settlor CANNOT be the ONLY beneficiary (merger doctrine) 2. BUT the Settlor CAN BE: a. A trustee b. An income lifetime beneficiary c. One of many remainder beneficiaries 3. Settlor CAN attach strings power to revoke, power to change beneficiaries, powers to modify and terminate 4. Reasons to have a Revocable Trusts a. Manage assets efficiently using a professional Trustee b. Helps plan for possible incapacity avoids guardianship or intestacy of trust assets i. b/c trustee has legal title c. Avoids Probate as to the assets in the trust 5. Revocable Trusts DO NOT avoid Estate Tax a. The remaining strings include the Trusts in the Gross Estate 6. Testamentary gifts to Pour-Over Revocable Trusts are VALID a. The Pour-Over Will the Wills residuary beneficiary is the Trust b. Reasoning Its easier to change a Trust than to change a Will c. BUT ** The pour-over trust must be created prior to OR concurrently with the Will ** d. The trust itself i. DOES NOT have to be the Testators Trust ii. DOES NOT have to funded during the Settlors lifetime e. Life Insurance Trusts i. Insured can take proceeds and make them payable to a trust AND: 1. Name the Trustee beneficiary of the policy; OR 2. Name the Trustee recipient of the proceeds in the Will ii. Same thing can be done for pension plans and savings accounts ii. Totten Trust 1. The poor mans trust 2. Use of a Bank Account to make a Trust a. Bank Account in the Depositors Name as trustee for a named beneficiary. 3. Depositor can make deposits and withdrawals freely during life

Page 277 of 337

BAR/BRI Bar Review, Summer 2007 4. Beneficiary has NO interest until the depositor dies 5. Wording can be very general, depositor ITF beneficiary = VALID 6. 4 WAYS TO REVOKE a. Withdraw all $ in the account b. Express Revocation i. Written and Notarized Revocation ii. Naming the Bank and the Beneficiary; AND iii. Delivered to the Bank c. Revocation in a Will i. MUST tell the Executor to expressly revoke the account with the same formalities of express revocation d. Beneficiary predeceases the Depositor - $ goes back to depositors estate i. TO CHANGE the beneficiary, ALL requirements of the express revocation must be followed 7. Creditors of the Depositor CAN ALWAYS reach assets of the Totten Trust B4 or AFTER death of the depositor a. Creditors cannot reach $ withdrawn by the Depositor iii. Joint Bank Account are NOT Totten Trusts 1. Two persons have right of survivorship on a bank account 2. These are Survivorship Estate - Testamentary Substitutes for purposes of the right of election (deposit rules, supra) 3. GENERALLY at the death of one named account holder the other account holder holds the contents outright a. EXCEPT IF there is clear & convincing evidence that the survivorship was not intended at the time the account was created AND was set up by the decedent merely for convenience i. Example Decedent put Butlers name on the account so he could pay the bills of the decedent during decedents old age ii. Hard to satisfy this requirement due to BOP on contestant 4. HALF OF THE $ in the account is presumed to belong to each party a. IF one party takes ALL of the money PRIOR to the death of the joint account holder the court can impose a constructive trust to reclaim the $ that was in the account iv. Uniform Transfers to Minors Act 1. UTMA is used to: a. Avoid guardianship b. Avoid the need for trust creation c. Qualify a gift for the $12K annual gift tax exclusion 2. Requirements - Gifts under UTMA must: a. Be made to a person who is 21 or older as conservator for a minor; AND b. Must specify the gift is made pursuant to UTMA

Page 278 of 337

BAR/BRI Bar Review, Summer 2007 3. Custodial Duties a. Hold, Manage, and Invest as a Prudent Person would under similar circumstances b. Pay over to the Minor for the Minors needs from what the custodian deems advisable c. Pay whatever is leftover to the minor upon reaching 21 4. Conservator hold legal title for the minor 5. IF the donor names THEMSELVES custodian the $ is includable in the donors gross estate for federal estate tax purposes v. Charitable Trusts 1. Charitable Trusts must have indefinite beneficiaries AND for the benefit of a reasonably large group a. CANNOT have specific named persons as beneficiaries i. EXCEPTION the Masses for decedents of the Settlors family is deemed a charitable purpose 2. A CHARITABLE PURPOSE is required a. Examples health, education, religion 3. A Charitable trust may be perpetual, NOT SUBJECT TO RAP 4. Cy Pres modifies perpetual charitable trusts a. IF the trust was to fail because the charity ended OR if the stated purpose of the charitable trust can no longer be accomplished b. THE COURT may use the power of cy pres to make the trust to be as near as possible to what the Settlor wanted 5. The ATTORNEY GENERAL has a duty to represent all beneficiaries of charitable trusts in NY a. The AG is an indispensable party to any suit on construction or enforcement of a charitable trust b. The AG has standing to sue and enforce the trust terms vi. Non-Trusts 1. Honorary Trusts a. Generally i. NO Human Being is the beneficiary of a private (noncharitable) trust ii. A private trust MUST have a human beneficiary 1. EXCEPTION Pet Trusts a. Cannot last for more than 21 years b. Someone is appointed in the will or by the Surrogates Court to enforce the terms of the trust on behalf of the pet 2. EXCEPTION Cemetery Trusts a. Trusts for care and maintenance of cemeteries and burial plots, forever b. Deemed charitable no subject to RAP 2. Constructive Trusts

Page 279 of 337

BAR/BRI Bar Review, Summer 2007 a. This is an equitable remedy that is used by the courts to DISGORGE UNJUST ENRICHMENT that result from wrongful conduct b. The trustees only duty is to convey the property to the person, who in equity, should have the property i. Example T wants to change Will #1, cut brothers out and give it all to the Girl Scouts. T calls lawyer, Lawyer calls Ts brothers and lets then know of the imminent change. Brothers show up to law office to persuade T not revoke Will #1, prior to execution T drops dead, and Will #2 is not signed. Even though there is no valid revocation, the court will impose a constructive trust and give the Girl Scouts the money. c. The ORAL Trust i. Where there us a deed if land by the Grantor to Grantee, BUT someone claims that the grantee orally promised the grantor to hold such land in trust for the benefit of a 3rd party ii. Generally NO constructive trust will be imposed UNLESS by clear and convincing evidence the contestant can prove that there was 1. Fraud in the Inducement; OR a. Grantee agreed to hold the land in trust BUT at the time the agreement entered truly had no such intention 2. Existence of a Confidential Relationship a. Confidential Relationship includes: i. Same Family ii. Business Partner iii. Attorney-Client iv. Priest-Penitent iii. IF BOP met, the court will impose a constructive trust, requiring the grantee to convey the land to a 3rd Party 1. Failure to fulfill the BOP may still allow an action in quantum meruit for reasonable compensation IF the 3rd party intended beneficiary provided services to the grantor 3. Resulting Trust a. Another equitable remedy utilized when a trust FAILS b. Used in PMRTs NOT IN NY i. Purchase Money Resulting Trusts ii. Occurs when P buys land and tries to hide such purchase from creditors or spouses by placing the land in Ds name, THEN D refuses to give up title

Page 280 of 337

BAR/BRI Bar Review, Summer 2007 1. IN NY Upon a showing of clear and convincing evidence the Court will impose a Constructive Trust on the Property a. Evidence that the grantee had expressly and impliedly promised to re-convey the land to the actual purchaser c. Statutory Spendthrift Rules & Protection from Creditors i. Protects a trust beneficiarys interest from creditors by prohibiting voluntary OR involuntary transfer of the beneficiarys interest ii. EXPRESS PROVISION will protect the income AND the principal beneficiary iii. ABSENT AN EXPRESS PROVISION NYs statute has an automatic spendthrift provision to protect the INCOME BENEFICIARY iv. A Spendthrift clause keeps Creditors at Bay EXCEPT: 1. Creditors who sell necessaries 2. Child Support & Alimony Garnishments 3. Federal Tax Liens can attach 4. Excess Income beyond the needed support and education of the Debtor a. Creditor must show the lifestyle of the beneficiary and that the income being received from the trust is in excess of such lifestyle VERY HARD STANDARD TO PROVE 5. 10% Lien Creditors a. All judgment creditors together by CPLR 5205(e) may attach 10% levy of the income kicked-off to a beneficiary v. MAKING A TRUST IN YOURSELF WITH EXECUTION OF RELEVANT SPENDTHRIFT PROVISIONS DOES NOT AVOID CREDITORS AT ALL 1. Example Irrevocable Trusts with a Life Estate in the Settlor vi. THIS INCLUDES REVOCABLE TRUSTS IF THERE IS STRINGS THERE IS NO CREDITOR PROTECTION FOR THE SETTLOR d. Termination & Modification of Trusts i. MODIFICATION by Trustee and/or Beneficiaries 1. The law is reluctant to makes changes after the Trust is established 2. BUT WHEN the objectives of the trust be defeated OR substantially impaired the trust may be modified a. Compliance of the terms would frustrate the purpose b. The Trust purpose overrides specific language in the document 3. TEST: a. Find out the primary intent of the Settlor regarding the trust purpose; AND b. Look at the specific directions in the trust document to determine whether, because of changes in circumstances, those specific directions would now frustrate the primary purpose of the trust IF SO the court may change the trust terms

Page 281 of 337

BAR/BRI Bar Review, Summer 2007 4. Example court can authorize the invasion of principal IF the income is not enough to carry the purpose of the trust (support the spouses lifestyle) ii. TERMINATION by the Settlor 1. Trusts are very hard to terminate in NY, they are generally irrevocable and un-amendable UNLESS the power to revoke is expressly reserved in the trust agreement a. NOTE power to revoke in the agreement make the trust revocable 2. EXCEPTION IF ALL BENEFICIARIES CONSENT the settlor can terminate the trust a. VERY HARD because minors and incompetents CANNOT consent b. BUT persons in classes to receive not yet born NEED NOT consent c. ALSO NO CONSENT need be obtained from unascertainable beneficiaries i. Example Heirs of a person with a life estate, then living heirs will not be established until their death e. Trust Administration i. The NY Fiduciary Powers Act controls the powers that can be exercised by a trustee with or without a court order or express authorization in the trust ii. FPA controls not only what a trustee can do BUT ALSO what an executor or administrator can do iii. General Approach the Trustee can generally do anything with some specifically defined exceptions 1. Trustee CAN: a. Mortgage Property b. Lease Property c. Make Ordinary Repairs d. Compromise or Settle claims 2. Trustee CANNOT: a. Engage in self dealing i. Trustee cannot buy or sell assets to themselves 1. even if the price is better than FMV ii. Trustee cannot borrow money from a trust 1. even if the interest is better than FMV iii. Trustee cannot lend money to the trust 1. Any interest earned must be returned to the trust AND any security given for the loan is invalid iv. A trustee cannot profit from serving the trust EXCEPT for statutorily allowed fees 1. THIS INCLUDES taking advantage of confidential information received while trustee

Page 282 of 337

BAR/BRI Bar Review, Summer 2007 v. Corporate trustees cannot buy their own stock as a trust investment vi. AFFIRMATIVE DUTIES 1. duty to not co-mingle trust and personal assets a. IF co-mingled funds are used to buy assets there is a conclusive presumption that if the asset goes: i. UP = trust asset ii. DOWN = personal asset 2. duty to ear-mark trust assets by titling then in trustees position/name b. Borrow $ from the trust or on behalf of the trust c. Continue a business placed in a trust w/o court approval i. Trustee will be liable for business losses w/o court approval iv. Remedies for Breach of Fiduciary Responsibilities 1. Beneficiary can REMOVE the Trustee 2. Beneficiary can RATIFY the Trustees Action a. Example Trustee paid more than FMV for certain stock bought in the name of the trust, BUT the stock triples in price, beneficiary is not going to want to keep the profit by ratifying the transaction 3. Beneficiary can SUE for any loss a. C/A for a surcharge 4. The NO FURTHER INQUIRY RULE a. A breach of fiduciary duty by engaging in self-dealing is an AUTOMATIC wrong, no further inquiry need be made i. Good Faith OR Reasonableness is NOT a defense 5. Actions against 3rd Parties by a Beneficiary for a Breach of the Trustees Fiduciary Duty a. 3rd Parties who buys trust assets for value, in good faith and without notice of self-dealing are protected as BFPs i. BFP status removed only IF: 1. purchaser knows he/she is dealing with a Trustee; AND 2. that the Trustee was engaged in self-dealing ii. EXCEPTION Indirect Self-Dealing 1. EVEN IF the Purchaser does NOT know that the Trustee is engaged in self-dealing, IF the loan or sale is to a relative OR business of the trustee the transaction is voidable AND the purchaser is NOT a BFP f. Liability of Trustee in Contract and Tort i. Personal Liability of the Trustee in CONTRACT

Page 283 of 337

BAR/BRI Bar Review, Summer 2007 1. IF the Trustee signs the contract personally and merely mentions the trust, then the Trustee has personal liability a. Examples i. Mary Jones, trustee of the ABC Trust = personal liability ii. ABC Trust, by Mary Jones, Trustee = NO personal liability iii. Mary Jones as the Trustee of the ABC Trust and not individually = NO personal liability 2. EVEN IF personal liability conferred upon the Trustee the Trustee will be indemnified IF: a. The contract was within the powers of the Trustee; AND b. The Trustee was acting in the course of proper administration of the Trust ii. Personal Liability of the Trustee in TORT 1. Trustee is Personally Liable for all torts by the Trustee OR the Trustees Employees 2. Trustee SHOULD buy insurance to avoid such liability 3. Trustee can be indemnified from the Trust for any tort claims IF: a. Trustee may have been acting within the Trustees powers; AND b. The Trustee was not personally at fault i. Example Agent / Employee of Trustee committed the tort g. Trustees Investment Power i. Trustee must manage the property of the trust in behalf of the beneficiary, by investing the corpus of the trust ii. Trustees investments are governed under the Uniform Prudent Investor Act (UPIA) allowing broad latitude over Trustee Investments 1. The Modern Portfolio theory of investment a. The Trustee created a Custom Tailored Investment Strategy for the particular trust dependent upon its purpose i. The Trustee MUST Consider 1. the role each investment plays within the overall portfolio; AND 2. the Trustee must consider the expected total return from income and capital gain b. The Trustee NEED NOT justify the prudence of each investment just the balance of the overall strategy iii. Specifics 1. Prudence is NOT measured by profit 2. Trustee can exercise adjustment power moving some assets into income stocks and some assets for capital gains purposes a. The GOAL is fairness to ALL beneficiaries

Page 284 of 337

BAR/BRI Bar Review, Summer 2007 3. The Trustee in the overall picture should really be looking for MAXIMUM TOTAL RETURN along with flexibility of adjustment allowing fairness amongst beneficiaries h. Rule Against Perpetuities & The Suspension Rule i. RAP 1. No interest is valid if it could vest or fail to vest no later than any life in being at the time if the creation of the interest plus 21 years a. IF there is any possibility that the gift could vest outside the 21 year period the gift is void i. Vest means change a remainder or interest in to an indefeasibly vested remainder 1. no condition needs to be satisfied and the exact identity of the taker is known b. NY has a RAP reform, where any interest numbered for a period greater than 21 years will be lowered to 21 years ii. The Rule of Suspension 1. Any interest is void if it suspends the power of alienation (transfer to fee simple) for a period longer than lives in being plus 21 years a. WHEN NO PERSONS WHO COULD, ARE ABLE TO TRANFER FEE SIMPLE TITLE b. NORMALLY OCCURS WHEN THERE IS A CONTINGENT REMAINDER TO A SS OF PERSONS WHICH ARE CURRENTLY UNKNOWN i. O to A for life, and at As death to As children for their lives. 1. HERE the Suspension Rules are violated twice because the spendthrift clause, by statute stops transfer of the income interest until its distributed 14. Conflicts of Law a. Recognition & Enforcement of Judgments i. A person wants to enter a judgment rendered in another state or country outside of NY 1. Rendering State State handing down the judgment 2. Recognizing State State called upon to recognize the judgment ii. Sister State Judgments 1. Generally a judgment on the merits from an out of state court is entitled to Full Faith and Credit a. MUST meet 2 requirements: i. Must meet Full Faith and Credit; AND ii. No Valid Defenses apply b. Full Faith and Credit Requirements i. Valid PJ and SMJ in the rendering court ii. The judgment was a final judgment

Page 285 of 337

BAR/BRI Bar Review, Summer 2007 1. THUS a modifiable judgment does NOT apply BUT a state will still render FF&C to a judgment under the principles of comity a. Normally applies in situations of child support and alimony/maintenance b. BUT child support and alimony judgments for amounts in arrears are NEVER modifiable iii. Judgment must have been rendered on the merits 1. In NY Default and Confession Judgments ARE on the merits AFTER a CPLR 3213 MSJ has been granted (see, supra) 2. Defenses to Sister State Judgments a. Only TWO defenses are valid i. Where the judgment is PENAL and rendering by the government against an individual 1. Penal a judgment rendered for an offense against the public 2. Example criminal sanction or civil fine rendered by the government 3. Alternatively, punitive damages in a civil action commenced by a private party is NOT penal ii. Where Extrinsic Fraud hampers the Original Judgment 1. Intrinsic Fraud could have been dealt with during the Original Litigation a. Example witness perjury 2. Extrinsic Fraud could not have been coped with at the earlier trial a. Example Judge was bribed b. All other defenses will not preclude the rendered judgment to be entered by the recognized state i. Tax Judgments can be enforced ii. Judgment based on a c/a that would violate the recognized states public policy 1. Example - $ damages awarded in the rendered state for a c/a for alienation of affections which is not a valid c/a in NY iii. Mistakes by the judge in the original trial 1. Thats is for appeal in the rendered judgment state iv. Inconsistent Judgment 1. A later judgment can be enforced even though it is inconsistent with a valid earlier one 2. The judgment rendered last in time is controlling

Page 286 of 337

BAR/BRI Bar Review, Summer 2007 3. Failure of the aggrieved party to use Res Judicata in State B to prevent a later BUT different judgment from the one rendered previously in State A is a matter for appeal in State B and will not preclude entering State Bs judgment in NY iii. Foreign Country Judgments 1. 2 part COMITY Test must be satisfied: a. Jurisdiction must have been proper; AND b. Fair Procedures must have been utilized in rendering the judgment i. These are both DPC concerns from International Shoe 1. the ideas of fundamental fairness AND minimum contacts iv. Special Situations in Family Law Judgments 1. Recognition and Enforcement of Family Law Judgments Involve consideration of jurisdiction BOTH PJ & SMJ 2. 3 types of judgments, each with its own jurisdictional requirements: a. Termination of Marital Status DIVORCE b. MONETARY Awards child support, alimony, maintenance c. CUSTODY of a child 3. The DIVORCE a. A valid divorce requires proper SMJ and that requires 1 of the 2 spouses be domiciled in the state rendering the divorce b. 3 types i. Ex-Parte Divorce - VALID 1. 1 of the 2 spouses is validly domiciled where the divorce is granted ii. Bilateral Divorce - VALID 1. 1 of the 2 spouses is validly domiciled where the divorce is granted BUT BOTH spouses subject themselves to SMJ in the rendering state iii. The Consent Divorce - INVALID 1. Both want out of the marriage and go somewhere together somewhere to get it 2. A divorce mill 3. In this situation neither spouse is a domicile of the state where the judgment is rendered THUS NO SMJ exists and such is Valid c. Procedural Matters on Divorce i. Burden of Proof 1. The attacker bears the BOP in the recognizing state to invalidate the divorce a. THIS INCLUDES EVIDENCE AFTER THE DIVORCE WAS RENDERED

Page 287 of 337

BAR/BRI Bar Review, Summer 2007 i. Example after achieving a successful divorce in State A, W tells her friends se was never really a domiciliary of State A and it was all a hokes just to get a divorce ii. ANY interested person who is NOT ESTOPPED can attack a divorce decree for lack of SMJ 1. Strangers to the marriage CANNOT attack it 2. WHO IS ESTOPPED? a. Where the attacker was subject to PJ in the earlier proceeding i. Example a spouse in a bilateral divorce b. Where the attacker may not have been subject to PJ, BUT played a meaningful role in achieving the divorce i. Example H puts his W on a plane to achieve a unilateral divorce c. Persons who are in privity with a party to the divorce i. Example children d. A spouse who has remarried on reliance from the earlier divorce 4. PROPERTY Awards a. A court granting alimony or child support must have PJ over the spouse whos property rights are in issue i. MOSTLY, in granting a unilateral divorce the spouse cannot then obtain a property award from the other spouse 5. CHILD CUSTODY a. Valid Jurisdiction for determining child custody lies only in the childs HOME-STATE 6. THE DIVISIBLE DIVORCE DOCTRINE a. If the decree in some parts are good and some parts are bad you keep the good and ignore the rest i. Example In a unilateral divorce (valid), granting property awards (invalid) b. Domicile i. Generally 1. Domicile off the decedent is used to choose the law to be applied to t0 determine intestate succession of personal property 2. Domicile at death determines which state gets Estate Taxes 3. Domicile of an individual determines SMJ of a divorce 4. Domicile is very important when applying NY Choice of Law Rules

Page 288 of 337

BAR/BRI Bar Review, Summer 2007 ii. Domicile of Choice 1. Legal Capacity is needed to make a domicile of choice a. STANDARD The ability to fend for ones self 2. TEST a. Physical presence in that state; AND i. Can be for a short time b. The intent to remain indefinitely i. Actions speak louder than words ii. CAN be found a domiciliary of 2 states (example Campbell case) making you subject to 2 Estate Taxes 1. which is constitutional 2. BUT generally a person can have only one domicile iii. motive is irrelevant 3. Once obtained a domicile is kept until another is acquired iii. Domicile by Operation of Law 1. If a person has NO LEGAL CAPACITY they cannot make a choice of what is or is not their domicile 2. Domicile of a Child is determined by the domicile of the parent or guardian with physical custody 3. Domicile of Married Woman have a choice of domicile just like a man, under old law this was not the case c. Choice of Law i. Constitutional Limitation 1. DPC and FF&C have the same TEST: a. The State chosen must have significant contacts with the parties or thee subject matter of the litigation which give it a legitimate interest in seeing its law applied 2. NO WEIGHING of interests of the states is needed AS LONG AS a state meets the test then its law can be applied a. 2 situations NEVER meet the test i. After the event in question a party to the action just moves to a different state AND that moving is the only contact with the state; OR ii. THE ONLY CONTACT with the parties of the litigation IS THAT THE SUIT IS BROUGHT IN THAT STATE then it would be unconstitutional to apply the state law ii. Vested Rights Approach to Choice of Law 1. The Territorial Approach the law be applied is where the rights of the Plaintiff has vested a. TORTS where the injury has occurred OR the place of the wrong b. CONTRACTS Rights under a K vest at the moment of formation thus the place of the making of the K

Page 289 of 337

BAR/BRI Bar Review, Summer 2007 2. Most vested rights rules were fairly easy to apply BUT they may wind up pointing to a state that absolutely has NO POLICY INTEREST in the outcome of the litigation 3. THIS APPROACH IS NO LONGER USED IN NY iii. The Government Interest Analysis to Choice of Law 1. What is used to today in NY 2. TEST the 5 step test as created in Babcock v. Jackson a. Factual Contacts with each state b. Note the different laws in issue c. Find the policies underlying each states laws by consulting the legislative history and the court decisions d. Relate the facts to the policies to see if the state has an interest in seeing its law applied e. Apply the law of the state which has the greatest interest in the outcome of the litigation i. IF a false conflict [only one state has an interest] apply the law of that state ii. IF a true conflict [2+ states have an interest in the outcome of the litigation] AND 1. IF one is the forum state apply the laws of the forum state UNLESS the other states interests are much greater OR iii. IF the forum is disinterested [2+ states have an interest in the outcome of the litigation and the forum is NOT one of them] APPLY 1. The law closest to NY law; OR 2. The better law if NY doesnt have a law iv. IF it is an un-provided for case [NO FOREIGN STATE HAS AN INTEREST IN THE LITIGATION] THEN just apply NY law iv. Specific Areas 1. Torts a. Must apply the 5 step Babcock analysis AND the 3 Neumeier Rules i. Where P&D are domiciled in the same state but happen to be adversaries in a NY tort action the law of the foreign state will be applied ii. Where P&D are domiciled in different states AND the laws of the place where the accident occurred (NY) can help its own citizen (a NY citizen) then NY law will be applied iii. Where P&D are domiciled in different states AND the laws of the place where the accident occurred DOES NOT have a law to help its NY citizen THEN you apply the law of the place where the injury

Page 290 of 337

BAR/BRI Bar Review, Summer 2007 occurred UNLESS the other jurisdiction has a greater interest in the outcome b. Loss Distribution Rules i. Determine which party bears the loss apply Neumeier c. Rules Regulating Conduct i. Apply the laws of the place where the injury occurred 1. Example NY resident brings suit in NY for a car accident with D, a Kansas resident, for an action which occurred in Kansas a. NY comparative negligence would apply b. BUT IF D, Kansas resident happened to be speeding, we DO NOT apply the NY speed limit of 55mph, we apply the Kansas speed limit of 70mph i. EVEN THO there is a law that helps the NY citizen, we apply the law of the regulation of the state where the accident occurred 2. Contracts a. Ability of the parties to choose the law of a contract i. Parties can always choose law in a contract for matter of CONSTRUCTION 1. ANY law can be chosen ii. Parties can also choose the law to govern VALIDITY provided that: 1. The choice cannot be contrary to a fundamental policy of a state with a greater interest than the forum state; 2. The laws of the state which govern validity is substantially related to the parties transaction; AND 3. CANNOT BE AN ADHESION CONTRACT 4. EXCEPTIONS - SPECIAL LAWS in Re: large $ Contracts a. IF K > $249,999 i. The parties can choose NY law to govern validity EVEN IF the K has no relationship or connection with NY b. IF K > $999,999 i. The parties can choose NY law to govern validity AND select NY as the forum AND dismissal for FNC is not allowed b. IF the parties DO NOT Choose the governing law of the Contract

Page 291 of 337

BAR/BRI Bar Review, Summer 2007 i. NY will apply the laws of the state with the most significant contacts and relationship to the contract ii. INSURANCE CONTRACTS 1. all issues regarding the rights and duties under an insurance contract are determined by the state where the policy is issued 3. Real Property a. SITUS of the Property governs always 4. Personal Property a. SITUS of the personal property EXCEPT in an intestate scheme use t h domiciliary of the decedent i. BUT IF NY domiciliary dies in NY and has real prop in Connecticut, Connecticut Intestacy governs via ancillary probate proceedings (see, supra) 5. Inheritance a. Non-NY domiciliary can apply NY law to a Will upon their death b. MEANING a spouse of the decedent who may have been subject to the Right of election by the laws of another state can possibly lose such right of election by probate of the Will under the laws of the State of NY 6. Family Law a. Generally, IF a marriage is valid where it was performed it is valid everywhere i. EXCEPT if such a marriage would violate the strong public policy of the recognizing state 1. Example Bigamous or Incestuous marriages 2. Open question as to gay marriages in NY b. Generally, IF marriage is void where it was performed it is void everywhere i. EXCEPT if the marriage is void only due to some technical requirement AND would have otherwise complied with NY law c. DIVORCES are governed by the law of the Plaintiffs domicile v. Defenses to Choice of law 1. 3 defenses can be raised to a proposed choice of law a. The law chosen is procedural and not substantive thus the forum law applies i. Procedural 1. BOP 2. SOL a. Exception the borrowing statute (then NY law will always apply) 3. Ability to bring counterclaims ii. Substantive 1. Contributory OR Comparative

Page 292 of 337

BAR/BRI Bar Review, Summer 2007 2. SOF 3. Parole Evidence Rule 4. Contribution among tortfeasors (joint and several liability) b. The law is against the public policy of the forum state c. The law is a penal law and thus the rendering states law should not apply to the recognizing state d. Use of State Law in Federal Courts i. In a diversity case the federal court uses the substantive law of the state in which it sits (Erie Doctrine) e. Notice and Proof of Foreign Law i. Courts will take judicial notice of a sister-state and federal law, BUT the law of a foreign country is a fact that must be plead and proven ii. IF the foreign law CANNOT be determined the a NY court will apply the NY law so long as there is no injustice 15. Federal Jurisdiction a. Personal Jurisdiction i. Federal Courts need PJ over a D ii. They acquire PJ in the same manner as State Courts 1. Commencement 2. Service; AND 3. Jurisdictional Basis b. Subject Matter Jurisdiction i. Diversity Jurisdiction 1. Generally a. PJ tell us what States the c/a may be filed b. SMJ tells us WHAT COURT in that state c. In a Diversity Case the action MUST: i. Be between citizens of different states OR between a citizen and an alien of a foreign country AND ii. The amount in controversy must be in excess of $75,000 2. Proper Litigants [Diversity of Citizenship OR Alienage] a. Diversity of Citizenship i. THE COMPLETE DIVERSITY RULE There is no diversity of citizenship IF ANY Plaintiff is a domiciliary of the same state as any Defendant 1. Example P (NY) sues D1(CA) & D2(NY) under diversity of citizenship = NO SMJ, P & D2 are co-citizens ii. Domicile 1. Established By: a. Presence in the State; AND b. Intent to remain there indefinitely

Page 293 of 337

BAR/BRI Bar Review, Summer 2007 2. You can only have 1 domicile, but many residences 3. Washington D.C. = State for SMJ purposes 4. Corporate Citizenship - Corporations are deemed to be a citizen and thus a domiciliary of EITHER a. State of Incorporation (only 1); OR b. The Principal Place of Business i. Either the nerve center (headquarters) OR main production center (muscle center) ii. Generally, PPB = nerve center unless all other activity takes place in another state c. Meaning diversity is HARDER to establish i. Example P Corp (inc in Del/PPB, NY) sues D Corp., (inc in NY/PPB, CA) = NO SMJ ii. Both Corp.s are citizens of NY 5. Partnership Citizenship Wherever ANY partner is domiciled a. Partners carry the P-ship around with them on their back b. GPs, LPs, LLCs, Labor Unions 6. Representative Citizenship An executor, administrator or guardian is a domiciliary of the state of the party whom they are representing 7. Class Action Citizenship Generally the domicile of the class representative,. EXCEPT under the Class Action Fairness Act (see, supra) b. Alienage ONLY ONE of the parties may be foreign i. Example P(NY) vs. D(Canada) = valid SMJ ii. Example P(Mexico) vs. D(Canada) = NO SMJ iii. BUT an alien who has a Greencard a permanent resident IS ACITIZEN OF THE STATE IN WHICH THEY ARE DOMICILED iv. Moreover A USC who is domiciled in a foreign country IS NOT AN ALIEN 1. Thus, no diversity exists a. If P (USC domiciled in Spain) sues D(NY) = NO diversity because you are the citizen of the STATE in which you are domiciled 2. Thus, no alienage exists

Page 294 of 337

BAR/BRI Bar Review, Summer 2007 a. If P (USC domiciled in Spain) sues D(NY) = NO alienage because P is not an alien c. DIVERSITY AND ALIENAGE ARE TESTED FOR AT THE TIME THE CASE IS FILED i. Thus, movement AFTER the c/a is commenced is irrelevant, as is domicile at the TIME OF THE ACCRUAL 3. Amount in Controversy a. There must be a good faith allegation that the claim in the complaint exceeds $75,000 i. A claim for just $75K will not fulfill requirement ii. The good faith claim is valid UNLESS it os clear to a legal certainty the P cannot recover more than $75K 1. Example P sues D for breach of K for $40K and for punitive damages of $85K a. LEGALLY there is no punitive damages in a K c/a, thus it is clear to a legal certainty that the $75K limit has NOT been met b. P can sue for $75K and possibly recover less than $75K i. This will not destroy diversity, RATHER, P may be liable for Ds court costs and disbursements (filing fees, discovery) c. Aggregation This is where P brings 2 c/a AND together they meet the monetary requirement i. WHEN P IS SUING THE SAME D this is a valid strategy to attain the amount in controversy 1. Here, the # of c/a can be unlimited ii. WHEN P SUED 2 DIFFERENT Ds IN AMOUNTS BOTH < $75K this is NOT VALID to establish the amount in controversy 1. Example P sues D1 for $50K and D2 for $50K 2. EXCEPTION P SUES 2+ Ds for JOINT LIABILITY in a total amount greater than $75K, the federal court will have valid SMJ iii. WHEN P MOVES FOR AN INJUNCTION what is the value? 2 Tests: 1. Plaintiffs Viewpoint Does enjoined activity hurt P > $75K? 2. Defendants Viewpoint Would is cost D $75K to stop or terminate the enjoined activity? a. EITHER test fulfilled will satisfy the amount in controversy requirement 4. Exclusion

Page 295 of 337

BAR/BRI Bar Review, Summer 2007 a. EVEN IF diversity requirements have been met federal courts WILL NOT hear cases involving i. Divorce / Annulment ii. Probate; OR iii. Alimony / Child Custody 5. Collusion a. SMJ WILL NOT BE CONFERRED where a party has been improperly or collusively made or joined to invoke jurisdiction i. An assignment WILL NOT create diversity 1. Example P (NY) gets into car accident with D (NY). P then assigns his right to sue to A (NJ) the assignment to a mere collection agent (with no real interest in the c/a) will not create diversity ii. Federal Question Jurisdiction 1. Complaint must show a right or interest founded substantially on federal law a. The claim must ARISE UNDER federal law i. Examples patents infringements, federal securities, admiralty law b. Citizenship or amount of claim is irrelevant 2. TEST: the Well-Pleaded Complaint Rule a. If the complaint was well-plead (and not made to look like a federal question) WOULD IT REALLY BE A FEDERAL ISSUE INVOLVED? i. Example D gave P a lifelong pass to you their railroad as the settlement of a prior litigation. D stops pass as it is in violation of federal law. P sues D for specific performance in federal court. NO FQ this is an action for breach of K, NOT to construe rights of parties under a federal statute. iii. Supplemental Jurisdiction 1. PURPOSE - EVERY CLAIM MUST HAVE FEDERAL SMJ a. this includes cross-claims and counter claims b. where diversity is established by P and D counterclaims for $40K this c/a would normally fail for diversity purposes BUT with the advent of supplemental jurisdictional problems like this are avoided 2. Supplemental Jurisdiction allows a federal court to hear claims which entirely lack diversity alienage or FQ a. ONCE a single claim has established diversity alienage or FQ the case got to federal court b. Here Supplemental Jurisdiction allows additional claims between the parties to be added 3. TEST: Does the additional claim ARISE OUT OF THE SAME TRANSACTION OR SERIES OF OCCURRENCES?

Page 296 of 337

BAR/BRI Bar Review, Summer 2007 a. Does the additional claim share a common nucleus of operative fact? b. This test is always met where their cross/counter claims arise from the same incident from which the original claim had arose 4. Important Limitation on claims by PLAINTIFFs in DIVERSITY cases a. SUPPLEMENTAL JURISDICTION CANNOT BE USED FOR A CLAIM BY THE PLAINTIFF IN A DOVERSITY CASE TO OVERCOME COMPLETE DIVERSITY b. Meaning P1(NY) sues D(PA) for $100K arising from a car accident. Thereafter, P2 (PA) sues D(PA) in the same action for $100K. i. P2 CANNOT USE SUPP JURISDICTION to overcome the fact that his claim lacks diversity of citizenship ii. BUT is P2 was from NY and only sued for $40K, supplemental jurisdiction would allow the claim 1. this exception only applies to the complete diversity rule and not the amount in controversy requirement iii. This DOES NOT apply to an implead 3rd Party D iv. This DOES NOT apply to a P or D in an FQ situation 5. Court has discretion to deny Supplemental Jurisdiction a. EVEN IF Supplemental Jurisdiction is establish and the complete diversity exception is not violated the federal court judge in their discretion can dismiss the supplemental claim IF: i. The FQ is dismissed early in the proceeding ii. The state law claim is complex; OR iii. State law issues predominate the supplemental c/a iv. Removal 1. Where a Defendant who is in state court would like to transfer the case to federal court a. Must transfer to the fed court dist which houses the state court 2. TEST: Could have the original action been filed in federal court? a. Example P (NY) sues D(NJ) in a NY state court for breach of K for $80K. = D can remove, federal court wouldve originally had diversity jurisdiction over the parties 3. Procedure a. MUST remove within 30 days of service of the first removable pleading i. D files notice of removal in federal court 1. setting forth grounds ii. D attaches all documents served on D thus far iii. D send a copy of this notice to all parties; THEN iv. D files notice of removal in state court b. ALL Ds MUST agree to the removal

Page 297 of 337

BAR/BRI Bar Review, Summer 2007 i. EXCEPT if there is a separate & independent FQ claim against 1 individual D, then that 1 D can remove that 1 c/a to fed court and all other issues remain in state court c. IF removal improper P MUST make a motion to remand to state court within 30 days if based on a defect other than SMJ (i.e., - D never sent all parties the notice of removal) i. IF request for remand ins based on lack of SMJ, such motion can be made at any time, (see, supra) d. P can NEVER remove e. WAIVER of Removal i. D who files a permissive counterclaim in state court probably waived the right to remove ii. D who files a compulsory counterclaim in state court DOES NOT waiver their right to remove 1. compulsory counterclaim = a c/a arising from the same transaction or series of occurrences 4. EXCEPTION TO REMOVAL The In-State Defendant Rule a. Where an action was originally commenced in state court and could have been commenced in federal court under diversity jurisdiction IF one of the Ds is domiciled in that state, removal is not allowed b. Example P1(NY) sues D1(NJ) and D2(GA) in Georgia state court for an auto accident in the amount of $200K i. NO REMOVAL ALLOWED ii. BUT IF the c/a against D2(GA) was dismissed, D1 would have 30 days within which to remove to federal court if D1 wished c. Example P1(NY) sues D1(NY) for violations of the federal foreign corrupt practices act in a NY COURT i. D1 CAN REMOVE ii. Here the in-state D rule does not apply, b/c jurisdiction in federal court is based on FQ, not diversity 1. Forum state is irrelevant for purposes of FQ removal v. The Erie Doctrine 1. In diversity cases (and their supplemental attachments), federal courts MUST apply state substantive law of the jurisdiction in which they sit 2. ALWAYS Substantive a. Elements of a Claim or Defense b. SOL and Tolling c. Choice of Law Rules d. Burdens of Poof e. Dead-man Statutes f. Privileges

Page 298 of 337

BAR/BRI Bar Review, Summer 2007 3. If the issue is in the gray area (possibly procedural, possibly substantive) a. FIRST, IF there is a federal rule or federal law on point that directly conflicts (FRE, FRCP) use it! b. SECOND , IF there is NO Federal Rule or Law on point we must balance the following i. Is the law in question outcome determinative? 1. If so it is likely substantive and state law must be applied ii. Balance Interests - Does either the federal or state system have a strong interest in having their law applied? iii. Avoid forum shopping Would the application of the federal law make litigants flock to federal court? 1. If so, apply state law c. Venue (place) i. Generally 1. After deciding in which state to sue (PJ), and deciding which court to sue in (SMJ), the next issue is where the court which has PJ & SMJ should be located (Venue) a. While removal, maybe a form of venue, the venue we are now dealing with is for cases originally filed in federal court ii. The Rules 1. IN any case with proper SMJ (diversity or FQ), P may law venue a. In the district where ALL Defendants reside (NOT domicile); OR b. In the venue where a substantial part of the claim arose 2. BUT if all Ds reside in the SAME STATE, but different districts, venue is proper in ANY district where any D resides a. Example D1 resides in EDNY and D2 resides in SDNY, venue is proper in either district 3. Determining Residence a. Venue, unlike diversity is determined on residence, NOT domicile b. Human Persons - residence normally is equivalent to domicile c. Corporations Resides in all districts where it is subjects to personal jurisdiction when filed (wherever it does business) iii. Local Actions 1. Ina an action regarding the use, enjoyment or possession of land Venue is proper in the district of the situs of the real property iv. Transfer of Venue (from one fed dist court to another) 1. Case can ONLY be transferred to another federal district WHICH: a. Has PJ over the D; and b. Would have proper venue 2. D CANNOT WAIVE PJ to get a change of venue

Page 299 of 337

BAR/BRI Bar Review, Summer 2007 3. IF ORIGINAL FORUM HAD PROPER VENUE court would transfer based on a. Convenience of parties; b. Convenience of Ws; OR c. In the interests of Justice d. ** BUT if venue originally proper IF venue is changed the law which applied in the original venue will be the law utilized in the new venue ** 4. IF ORIGINAL FORUM HAD IMPROPER VENUE court would transfer based on. a. The interests of justice; OR b. Just dismiss the whole damn thing d. Service of Process i. Generally 1. Deliver to D a Summons and Complaint 2. Must be done within 120 days of filing the action (similar to CPLR 306-b) 3. Failure results in dismissal without prejudice, BUT the SOL is running a. No dismissal if P can show good cause and a reasonable excuse for the delay ii. The Mechanics 1. ANY person can serve process as longer as they are oner 18 and NOT a party to the actions 2. Types of service allowed a. Methods via FRCP b. Methods allowed in any state where the district court sits c. Methods allowed in the state where the party was served 3. FRCP methods a. Personal Service i. Papers are given to D personally ii. Anywhere in the forum state 1. or outside the forum state if subject to LAJ b. Substituted Service i. Served at Ds usual abode 1. Abode = domicile, BUT can be actual residence a. Example summer house in the summer ii. To a person of suitable age and discretion that resides in the Ds abode c. Authorized Agent i. Process can also be delivered to Ds authorized agent 1. Corporation a. Managing Agent or Officer 2. Agent appoint by Operation of Law a. Non-Resident Motorist Statute d. Waiver (Acknowledgment CPLR 312-a)

Page 300 of 337

BAR/BRI Bar Review, Summer 2007 i. P send D by 1st class mail, postage prepaid a waiver to service of process ii. D must sign the waiver and return by self-addressed stamp envelope within 30 days of receipt iii. Failure to return in time will result in process having to be served by another method BUT D will be responsible for ALL costs of 2ndry service iv. Service by this method DOES NOT constitute a waiver of PJ or venue iii. Geographic Limitations 1. A federal court in NY can serve process outside the state as long as LAJ has been met (CPLR 302) a. EXCEPTIONS Federal courts can service process outside of stateliness regardless of the in-state long arm statute in 2 situations i. The Bulge Rule Service anywhere within 100 miles of the courthouse ii. Statutory Interpleader Service may be done anywhere in the United States e. Joinder of Parties & Claims i. Parties 1. Permissive Joinder May be joined a. A party may join or be joined in an action IF: i. The claim arises from the same transaction or series of occurrences; AND ii. Raise at least one common question of law or fact b. This only establishes PJ, SMJ still MUST be established 2. Necessary Joinder a. Is Absentee Necessary; AND if yes., i. An absentee is necessary IF 1. complete relief cannot be accorded w/o the absentee; 2. if not joined, absentees interest will be harmed; OR 3. absentees interest will subject a party to multiple obligations ii. JOINT TORTFEASORS ARE NOT NECESSARY PARTIES b. Can the Necessary Party be joined (is the party joinable)? i. Is there PJ over the Necessary Party?, AND ii. Can he be joined without disturbing SMJ? c. IF Necessary Party CANNOT be joined i. Proceed without necessary party; OR ii. Dismiss the pending action 1. Determination of dismissal upon balancing

Page 301 of 337

BAR/BRI Bar Review, Summer 2007 a. The existence of an alternate forum where all parties can be joined; b. Likelihood of harm to all parties if court was to proceed without absentee; AND c. Can the court shape the court order at the end of the litigation to avoid harm to the absentee ii. Claims 1. Between Existing Parties a. Counterclaim i. An offensive claim against a joined adverse party ii. Defendants counterclaims are either 1. Compulsory arising from the same transaction & if not filed in the answer are deemed waived; a. BUT if the D made a pre-answer MTD and it was granted no counterclaim need be filed and D can then commence his own new action against P on Ds counterclaim 2. Permissive does not arise from the same transaction & failure to assert does to waiver the claims BUT continues the running of the SOL iii. Every counterclaim must have SMJ to be heard in federal court 1. IF under diversity, Ds counterclaim is NOT subject to the Complete Diversity exception as that only applies to Plaintiffs; AND 2. In the event the amount in controversy is less than $75K, supplemental jurisdiction will allow a compulsory counter claim if it arises from the same transaction or series of occurrences a. The 2d Cir has even allowed a permissive counterclaim by supplemental jurisdiction if it has a loose factual connection with Ps claim b. Cross-claim i. A claim against a co-party (P1 vs. P2 / D1 vs. D2) ii. Cross-claims in a diversity case which arise from the same transaction of events or series of occurrences are optional and may be filed 1. Supplemental jurisdiction always exists 2. Between Parties Not Yet Joined a. Impleader

Page 302 of 337

BAR/BRI Bar Review, Summer 2007 i. A defending party joins a third party because they may be liable to the defending party for the claim against the defending party ii. Normally for Indemnity or Contribution iii. MUST be done within 10 days of serving the answer iv. Impleader requires the D to serve the TPD in the same manner as required for service of process, supra v. Subject Matter Jurisdiction & Impleader 1. TPDs claim against the P a. Allowed if it arises from the same transaction of events or series of occurrences as the underlying case OR b. It can be fulfilled by diversity, alienage or FQ 2. Ps claim against a TPD a. Allowed if it arises from the same transaction of events or series of occurrences as the underlying case OR b. It can be fulfilled by diversity, alienage or FQ b. Intervention i. Generally 1. An absent party wants to join the c/a 2. Can choose whether to intervene as a P or D a. Court can realign if joined on the wrong side 3. Must be timely ii. As of Right 1. If the absentee interest will be harmed if they are not joined; AND 2. No current party to the action is adequately representing such interests iii. Permissive Intervention 1. Where the absentees claim or defense as one common question to the pending case 2. HERE, intervention is entirely discretionary iv. Diversity Jurisdiction and Intervention 1. IF an intervening partys attempt to enter will disrupt the diversity jurisdiction in the case be it permissive or as of right, such intervention will NOT be allowed 3. Special Multi-Party Joinder situations a. Interpleader i. One holding money or property (the stakeholder) wants to force all potential claimants into a single case to

Page 303 of 337

BAR/BRI Bar Review, Summer 2007 avoid multiple litigation and the threat of inconsistent results ii. In federal courts there are 2 different types of Interpleader RULE & STATUTORY 1. each carry with it different standards for jurisdiction, venue and service iii. RULE Interpleader 1. Treated like diversity cases 2. The stakeholder must be in diverse citizenship with EVERY claimant 3. $75,000 amount in controversy required 4. regular service of process required 5. Venue is where all Ds reside OR where the harm substantially occurred iv. STATUTORY Interpleader 1. 1 claimant must simply be diverse from just one other claimant a. stakeholders citizenship is not even looked at 2. $500 amount in controversy is required 3. Service can be nationwide (thus, never a PJ issue) 4. Venue is laid where ANY claimant resides b. Class Action i. Initial Requirements 1. too many parties for practicable joinder 2. the class has common questions of law or fact 3. the class representative has claims typical to those of the class; AND 4. the representative will adequately represent the class ii. Case MUST BE: 1. A Prejudice claim a. Class treatment is necessary to avoid harm either to class members or to the party opposing the class i. Example numerous claims to a single fund and individual suits would deplete the fund 2. Injunction or Declaratory Judgment a. Sought because the class members were treated all alike by another party i. Example employment discrimination where employer is treating all employees alike 3. A Damages claim THE MOST POPULAR

Page 304 of 337

BAR/BRI Bar Review, Summer 2007 a. Common questions predominate over individual questions; AND b. The class action is a superior method for resolving the dispute i. Example Mass Tort Litigation iii. Procedural Matter within a Class Action 1. COURT must determine viability of a class action as an early practicable time a. If certified as a class, the court must define the class and appoint counsel b. Counsel must fairly and adequately represent interests of the class 2. Court in a Damages Claim must notify all reasonably identifiable members, telling them: a. They can opt out b. The binding effect of a judgment on the class; AND c. Their right to separate appearances d. NOTIFICATION OS PAID FOR BY THE CLASS REPRESENTATIVE 3. Parties Bound a. All Parties in the in a Damages Claim who have NOT opted out are bound by the class action result/verdict 4. IN ALL 3 TYPES there can be no settlement or dismissal without court approval a. Court gives notice to class members to understand whether the class would rather settle or have the claims dismissed b. IF a Damages Claim court must give the class members a 2nd chance to opt out 5. Subject Matter Jurisdictions and Class Actions a. IF the claim arises under a Federal Question there is no need to worry about the citizenship of the class or the controversy b. IF the claim arises under diversity i. Citizenship of the REPRESENTATIVE is the only one relevant ii. Amount in Controversy MUST be > $75K for the representatives claim iv. The Class Action Fairness Act

Page 305 of 337

BAR/BRI Bar Review, Summer 2007 1. THIS allows federal subject matter jurisdiction beyond FQ or diversity IF: a. Any class member is diverse from any D b. There are at least 100 class members; AND c. The aggregate demand for relief is > $5mm f. Trial, Judgment, & Post-Trial Motions i. Jury Trial 1. Juries resolve factual disputes a. Courts instruct juries as to the law 2. A JURY DEMAND must be filed a. FED no later than 10 days after service of the last pleading raising a jury-triable issue i. By pleading or by separate document b. NY in Note of Issue or by opposing party 15 days thereafter 3. Right to Trial by Jury in Federal court & the 7th Amendment a. Constitutionally required for suits if law NOT equity b. IF 1 c/a is both a suit in law and equity the jury only determines the underlying facts as to the law c/a, the court makes all equity determinations i. Jury issues are generally tries first c. The 7th amendment has not been incorporated in to the DPC of the 14th amendment and thus is NOT applicable to the States 4. Selecting the Jury a. Unlimited # of challenges FOR CAUSE (bias, related to parties [6 degrees of separation]) b. ONLY 3 preemptory challenges per SIDE (NOT PER PARTY) i. All 3 preemptory challenges can be for NO cause, BUT ii. Cannot be a Baston violation 1. Meaning they cannot discriminate against gender or race 2. Jury selection is state action EVEN IN a civil matter due to entanglement with the courts ii. JML & JNOV 1. Judgments as a Matter of Law a. JMLs brought after the opposing side has been heard i. By the D after P has rested and after the whole case ii. BY the P after the D has rested b. JMLs are a request whereby a litigant says to the court REASONABLE PERSONS WOULD NOT BE ABLE TO DISAGREE ON THE RESULT c. JMLs are viewed in the light most favorable to the nonmoving party 2. Judgment Non-Obstante Verdicto (Notwithstanding the Verdict)

Page 306 of 337

BAR/BRI Bar Review, Summer 2007 a. The Judge lets the case go to the jury, THEN b. The Jury then returns the verdict for one party and the court enters the judgment on the basis of the verdict; THEN c. The losing party MUST file a JNOV within 10 days of the entry of the judgment into the judgment roll d. JNOV is a request whereby the litigant says to the court THE JURY REACHED A CONCLUSION WHICH A REASONABLE PERSON COULDNT HAVE REACHED e. Prerequisite to a JNOV the litigant must have made a JML at an appropriate time iii. Motion for a New Trial 1. Judgment had been entered BUT the judge concludes that there was an error which requires a new trial 2. Grounds for a New Trial a. Prejudicial error (wrong jury instruction or evidentiary ruling) b. New Evidence that couldnt have been found in time for trial c. Prejudicial misconduct by a party to the action or a juror d. Judgment is against the weight of the evidence (a serious errir of judgment by the jury) g. Pleadings i. Defensive Responses Under FRCP Rule 12, a defending party may respond in one of two ways (by motion OR by answer) within 20 days AFTER service of process (NY - 20 day response time for D when served by personal service in-state OR by acknowledgment, all others 30 days) 1. Answer = Pleading a. Purpose i. D responds to the allegations of the complaint (affirms, deny, or lacks sufficient information to affirm or deny); OR/AND ii. Raises Affirmative Defenses b. Effect i. Service of Answer (if no MTD) without alleging a defect in PJ (venue, insufficient process, insufficient service of process OR lack of PJ) will waive such defenses 2. Motion is NOT a Pleading a. Purpose i. Asking the court to order something (require the P to make a more definite statement OR to strike a pleading OR to dismiss) ii. 7 grounds upon which to dismiss under Rule 12(b) 1. Lack of SMJ 2. Lack of PJ 3. insufficient service 4. insufficient process

Page 307 of 337

BAR/BRI Bar Review, Summer 2007 5. improper venue 6. failure to state a cause of action 7. failure to join a necessary party b. Effect i. Service of MTD without alleging a defect in PJ (venue, insufficient process, insufficient service of process OR lack of PJ) will waive such defenses ii. SMJ is NEVER WAIVED and can even be addressed post trial iii. Failure to State a Cause of Action upon Which Relief can be granted AND Failure to join a Necessary Party are not waived up until the end of the trial ii. Notice Pleadings 1. The Complaint must contain: a. Statement of SMJ b. Short an Plain statement of the claim; AND i. Need not be plead with great specificity 1. the Notice Pleading merely must put the other side on notice ii. 3 Exceptions require increased particularity in pleading: 1. Action for Fraud 2. Request for Special Damages; AND a. Special damages are those which do NOT normally flow from an event b. Example man was in a car accident and suffered nerve damage which gave him a permanent erection 3. an Allegation of Mistake iii. (In NY allegations plead with sufficient particularity) c. A demand for relief i. The demand does NOT limit the amount that can be recovered EXCEPT in cases of default judgment 16. Secured Transactions & Commercial Paper a. Secured Transactions i. What is the Scope of Article IX? 1. Generally Article IX covers consensual security interests in personalty & fixtures 2. Article IX applies to consensual SIs in personalty and fixtures a. Article IX DOES NOT apply to: i. Mechanics liens lien law applies ii. Realty the law of mortgages applies b. Personalty = Goods 3. Cast of Characters a. Debtor party who owes the $ b. Secured Party/Creditor party who lend the $

Page 308 of 337

BAR/BRI Bar Review, Summer 2007 c. Security Agreement Contract, record of the interest d. Security Interest rights in debtors collateral e. Collateral personalty or fixtures that creditors look to for satisfaction 4. TYPES of Collateral a. Tangible Property What is the primary use by the debtor?? i. Consumer Goods items used for personal or familial purposes (home dining room set) ii. Equipment items used for business (cash registers at CVS) iii. Inventory goods held for sale or lease (soap and gum at CVS) iv. Farm Products Crops, livestock, and supplies used in farming operations in the possession of the farmer v. Fixtures items annexed to realty (lighting, furnaces) b. Intangible Property i. Stocks, securities, bonds, mutual funds ii. Patents, trademarks, copyrights iii. Proceeds iv. Accounts (right to payment) v. Negotiable Instruments (promissory notes and drafts) ii. How does a Creditor create an enforceable security interest in debtors collateral (attachment)? 1. Generally value, debtor rights, security agreement 2. Attachment means that the SI is enforceable 3. Three Requirements must be met to validly attach: a. The creditor must give the debtor VALUE b. The DEBTOR MUST HAVE RIGHTS in the collateral c. A SECURITY AGREEMENT must evidence the transaction UNLESS creditor has taken actual possession of the collateral i. The agreement MUST 1. Be authenticated by the debtor; AND a. signature of electronic mark 2. Must reasonably identify the collateral 4. After Acquired Property (AAP) Clauses are enforceable a. Example Creditor secures an interest in all inventory of debtor whether now held OR after acquired iii. Once attached how does the creditor gain perfection? 1. Generally Filing / Record Notice of its Existence 2. Publication of the Security agreement puts the world on record or constructive notice to protect the secured party from competing creditors a. THUS, if a party attains a SI in my watch and then files the proper paperwork with the Secy of State, THEN I grant

Page 309 of 337

BAR/BRI Bar Review, Summer 2007 another SI in the same watch to a different creditor, the 1st creditor who files has priority in my watch 3. HOW TO Perfect a. SP can take possession of the collateral b. SP can gain auto perfection of a PMSI in consumer goods only i. PMSI (purchase money security interest) is a loan by the seller or a bank which allows a debtor to acquire a collateral AND such collateral is what the seller or bank retains as a security interest in c. SP for all other interests may FILE i. The creditor files a notice in the office of the secretary of state, thus putting the world on notice of the claim ii. WHAT is filed? 1. The SA is generally not filed 2. The creditor file a financing statement known as a UCC-1 form, Containing a. The debtors name and address b. The creditors name and address; AND c. A description of the collateral i. Super generic description = valid 3. Filing may be done electronically iii. WHERE is the financing statement filed? 1. The Secretary of State accepts the FS 2. IF the debtor is a living person the SoS where the debtor principally resides 3. IF the debtor is a registered entity (Corp., LLC, LP) in the state where the entity has been formed 4. IF the collateral is connected to the realty (timber, mineral rights, fixtures) in the county where the underlying realty is located iv. When more then one creditor has the same stake in the collateral, what are the rules of priority? 1. Generally 1st in time, 1st in line 2. All SPs seek to subordinate the rights of other creditors and NOT share Each SP is entitled to FULL satisfaction of their interest before a junior interest has a chance to take 3. Cast of Characters HIGHEST TO LOWEST PRIORITY a. Buyer in the Ordinary Course Someone who purchases collateral from a merchants inventory. Buying in such a fashion this party has no reason to know that a security interest has attached to the interest. b. Perfected Attached Creditor Filed and has a debtor signed a security agreement

Page 310 of 337

BAR/BRI Bar Review, Summer 2007 c. Lien Creditor An unsecured creditor who goes to court and gets a judicial lien (attachment, see NYP supra) d. Buyer NOT in the Ordinary Course Someone who purchases the collateral outside the stream of commerce (off the back of a truck not from a merchant) e. Attached UN-Perfected Creditor Creates an enforceable interest (attaches) but never bothers to perfect OR improperly perfects f. General Unsecured Creditor A lender who never bothered to take collateral on a loan or sale on credit 4. Specific Contests between these casts of Characters a. Attached Unperfected vs. The World i. AUPs interest is enforceable against the debtor ii. AUP 1st in time will defeat any subsequent AUP iii. AUP will defeat a General Unsecured Creditor (GUC) iv. AUP loses to any buyer (ord or not in ord course), perfected creditor or lien creditor, EVEN IF LATER IN TIME b. Perfected Attached Creditors vs. The World i. PAC defeats ALL Except 1. Prior filed PACs 2. certain PMSI holders 3. the BIOC ii. PAC vs. PAC 1. Generally - 1st in time, 1st in line 2. BUT IF a PAC was to file mid negotiation WITHOUT 1st obtaining a SA, this early filing will be allowed. If an SA is then later executed, the perfection relates back to the date of filing iii. PMSI-holder 1. the priority conflict occurs when a Perfected AAP holder clashes with a subsequent PMSI 2. When the AAP is in Equipment a. When the AAP is in Equipment and a later PMSI creditor sells Equipment to debtor the PMSI will have priority IF: i. PMSI files properly; ii. Within 20 days of receipt of equipment by debtor 3. When the APP is in Inventory a. When the AAP is in Inventory an a later PMSI creditor sells Inventory to debtor the PMSI will have priority only IF: i. PRIOR TO TRANSFER OF POSSESSION ii. PMSI properly files; AND

Page 311 of 337

BAR/BRI Bar Review, Summer 2007 iii. PMSI gives notice to AAP PAC iv. PAC vs. BIOC 1. BIOC always has priority (UCC 9-320) v. What if the debtor defaults on the debtor obligation? 1. Generally statutory & judicial remedies 2. Once a debtor has defaulted the Article IX SP has options A. ENGAGE IN SELF-HELP TO REPOSSESS i. CANNOT breach the peace 1. This means anything that would be likely to secure violence doesnt need to actually secure violence 2. SP cannot use the color of the law to regain the property (i.e., - dress up like the cops) = breach of the peace 3. Any REPO made over the debtor protest no matter how mild = breach of the peace 4. Punishable civilly and criminally ii. CANNOT enter the Debtors home to REPO without voluntary & contemporaneous consent iii. CANNOT REPO outside the debtors home without their consent B. REPO VIA JUDICIAL ACTION i. In NY the SP can get a court order, known as a Writ of Replevin, ordering the sheriff to REPO the property and deliver it to the SP C. STRICT FORECLOSURE i. Defined 1. When the SP in possession decides to retain the collateral in full satisfaction of the debt a. Lawful retention b. Debt cancelled ii. How to Strictly Foreclose 1. SP must send a written proposal to retain the collateral in satisfaction of the debt 2. SENT TO different parties dependent upon the type of collateral a. Consumer Goods i. Debtor & ii. 2ndry Obligor b. NOT Consumer Goods i. Debtor ii. 2ndry Obligors iii. Perfected Creditors &

Page 312 of 337

BAR/BRI Bar Review, Summer 2007 iv. Other SPs who have given notice to the foreclosing party of their own SI c. IF ANY object within 20 Days strict foreclosure will NOT be allowed forced sale must occur iii. Consumer Goods & the 60% Rule 1. Strict Foreclosure of consumer goods is subject to the 60% Rule 2. When and IF the debtor has paid at least 60% of the purchase price or debt owed THEN strict foreclosure is not allowed 3. THUS the SP must sell the collateral within 90 days or will be liable for conversion d. SALE i. SP may sell the collateral and apply the proceeds to the debt ii. Sale may be Public or Private iii. Every aspect of the sale must be commercially reasonable iv. Prior to the sale NOTICE must be sent 1. UCC Form Notice is presumed to be commercially reasonable 2. IF consumer goods notice must be sent to the: a. Debtor; & b. 2ndry Obligors 3. IF not consumer goods notice must be sent to the; a. Debtor b. 2ndry Obligors c. Perfected SPs d. Unperfected SPs who have given the foreclosing party notice of their interest v. CONTENT of the notice - depends of the type of sale 1. IF public must state the time and the place of the sale 2. IF private must state the time after which the sale will take place a. This gives the debtor notice of up until when he/she can possibly redeem 3. IF sale of consumer goods notice must also contain HOW to redeem & HOW to calculate the deficiency vi. TIME of notice 1. Generally, must be commercially reasonable

Page 313 of 337

BAR/BRI Bar Review, Summer 2007 2. BUT, in a non-consumer goods sale 10 days has been deemed a reasonable time vii. The foreclosing SP CAN buy the collateral at a public sale, but CANNOT buy at a private sale 1. to great a chance for self-dealing e. ACTION FOR A DEFICIENCY JUDGMENT i. In the event any of the above methods DO NOT garner what is outstanding as owed by the debtor to the foreclosing party the creditor may then initiate an action for a deficiency judgment ii. NOTE in the event at a Sale the foreclosing party sells the collateral to an inside buyer at a lower than reasonable price the price used to calculate the deficiency would be the price that would have been paid by an indpndnt 3rd party 3. The Debtors Right to Redemption a. Once the SP has sold or initiated a strict foreclosure the Debtor can no longer redeem b. To redeem the debtor must pay the amount owed PLUS any of the creditors reasonable expenses (including costs, interest, and attorneys fees) i. INCLUDING full payment in the event that upon default an acceleration clause was triggered full value of amount owed must then be paid no matter if some of those payments were NOT in default. b. Commercial Paper i. RULE When a negotiable instrument has been deemed duly negotiated (properly negotiated) to a holder in due course (hereinafter HIDC), the HIDC takes free from all personal defenses and claims AND is only subject to real defenses. ii. When is a given writing a Negotiable Instrument instead of a mere contract? 1. Types of Negotiable Instruments a. PROMISSORY NOTES i. I promise to pay to the order of Jim $50 /s/ Dave/ ii. An affirmative promise to pay 1. unlike a draft, infra, a promise to pay is created here, NOT an order to pay iii. Two Parties 1. The Promisor is called the MAKER of the instrument 2. The Promisee is called the PAYEE of the instrument b. DRAFTS i. A Check

Page 314 of 337

BAR/BRI Bar Review, Summer 2007 1. Date, directing a bank to pay to the order of _____, Amount, signature ii. The draft contains a command or order iii. Four Parties 1. The DRAWER gives the order 2. The DRAWEE is the bank 3. The PAYEE is the beneficiary 4. The INDORSER can be the payee or another party - signs the back of a draft 2. Requirements needed to make an instrument negotiable (either a note or a draft) W.O.S.S.U.P.P. a. W riting b. O rder or bearer, payable to c. S igned by the maker or drawer d. S um certain e. U nconditional promise to pay no additional promises f. P ayable on demand OR at a definite time g. P ayable in currency 3. Elements Creating a Negotiable Instrument Defined a. Signed by the maker or drawer i. Any authentication found on the instrument qualified 1. signature, mark, nickname b. The Unconditional Promise to Pay i. Unconditional promise = NOTE ii. Unconditional order = DRAFT iii. What makes it conditional or unconditional? 1. A conditional payment is non-negotiable 2. A conditional payment = a Contract a. I will pay if _______ b. Payment is subject to OR governed by ______ 3. Limitation on payment to a specific source or fund = non-negotiable a. Example I promise to pay from the funds I realize from my next orange harvest. iv. BUT simply because the instrument refers to another writing does NOT in and of itself remove negotiability 1. This note is secured by an interest in collateral as described by a Security Agreement = negotiable c. Requirement for a Sum Certain i. A specifically ascertainable sum is required ii. This ALLOWS calculation by looking to another writing or reference to an outside source

Page 315 of 337

BAR/BRI Bar Review, Summer 2007 1. Example $50K payable plus interest as calculated from the IRS financing index = valid 2. Example $50K payable plus interest. = valid a. Interest determinable by the judgment rate, set by statute Payable in Currency i. Currency means money 1. Money includes foreign currency 2. NOT goods ii. NOT currency coupled with a chattel NO Conditional Promises or Orders i. Twos a Crowd ii. Example I promise to pay plus give you my Beatles collection. = non-negotiable Instrument Payable on Demand or at a Specified Time i. On Demand 1. On demand, On sight, On presentment. ii. At a Definite Time 1. On or before a given date; 2. at a fixed period AFTER a given date; OR 3. By acceleration clause a. Example This note becomes immediately due and payable IF prior to 2/1/06 the Giants win the Super bowl = definite b. Example payable upon the birth of my first grandchild. = NOT definite / NOT negotiable Payable to Order or Bearer i. To Order 1. MUST say pay to the order of or pay to the assigns of; AND 2. State the payees name ii. To Bearer 1. Bearer paper is payable to ANYONE who is in possession of it, NO payee is necessary a. pay to bearer b. pay to the order of bearer c. pay to Jim or bearer d. pay to cash; OR e. pay to the order of cash iii. BUT if the writing states pay to JIM 1. THIS IS NON-NEGOTIABLE 2. it is a contract 3. it does not contain the magic words

d.

e.

f.

g.

Page 316 of 337

BAR/BRI Bar Review, Summer 2007

iii. In Commercial Paper how does the Defendant get sued? 1. Signature OR Contract Liability a. Basics i. The Defendant must sign the instrument ii. Because when you sign, then you promise to pay it, Thus you get sued when it goes unpaid b. Who signs the Instrument? i. The MAKER of a NOTE ii. The DRAWER on a DRAFT iii. The INDORSER who signs their name on the back upon transfer (proper negotiation) iv. The DRAWEE (the bank) who pays out on the draft NEVER SIGNS and thus is NOT subject to Signature Liability v. EXCEPTION to Indorser OR Drawer signature liability without recourse 1. In the event the Draft is signed by the indorser or drawer and next to their name it states without recourse this is a disclaimer a. Allowing the transfer of title AND removing liability 2. Transfer OR Warranty Liability a. Sellers liability for selling a defective instrument b. ANY transferor who sells the negotiable instrument i. Meaning, a donor who transfers for NO value incurs NO transfer liability c. Who can sue for transfer liability? i. If the Defendant Indorsed (and is not a donor) 1. any plaintiff in possession of the instrument may sue ii. If the Defendant did NOT Indorse 1. ONLY defendants immediate transferee may sue (only to the person whom the defendant transferred the instrument) 2. Transfer warranty does not run with the instrument d. What is Warrantied by Transfer Liability? i. D promises that P has good title to the instrument ii. D promises all signatures are genuine and authorized 1. thus forgery = breach of warranty iii. D promises that the instrument has not been materially altered iv. D promises that there is no defense or claim good against the D the instrument is thus enforceable

Page 317 of 337

BAR/BRI Bar Review, Summer 2007 v. D promises that D has no knowledge that the maker or drawer is insolvent or in bankruptcy iv. How is a negotiable Instrument duly negotiated, what makes the transfer proper? 1. Initially any instrument must be issued a. The Maker or Drawer delivers to the Payee or Bearer b. AFTER this step any subsequent transfer is deemed a negotiation 2. Due negotiation means that there has been proper transfer of the instrument a. Upon proper transfer the Holder may be entitled to status and an HIDC b. IF improperly transferred (i.e. order paper was stolen) no subsequent transferee can attain HIDC status 3. Instrument is Payable to Order of _(name)_ a. When an instrument is payable to the order of a specific payee, it is negotiated by delivery of the instrument to that payee THEN b. That payee can indorse it (upon such it becomes bearer paper) and can be duly negotiated to any transferee that transferee then becomes a holder i. The indorsement must be authorized and valid ii. A 3rd party CANNOT sign the transferees name 4. Instrument Payable to the order of Bearer a. This means that ANY person holding it is the proper transferee i. The same is true of validly indorsed order paper b. Indorsement is not required c. Due negotiation has already occurred and anyone is possession thereafter will be deemed a holder and can attain HIDC status 5. Special Indorsement a. This is either bearer OR order paper which was negotiated and the current holder transfers the instrument to a party stating PTO _(name)_ prior to negotiation b. This requires the holder to indorse the instrument prior to further negotiation c. The indorsee must make a valid and authorized indorsement prior to proper negotiation 6. The Blank Indorsement a. Like bearer paper or indorsed order paper b. Properly negotiated by mere delivery alone, no signature required prior to proper negotiation 7. The Restrictive Endorsement a. Contains a Condition (i.e., for deposit only) b. NO ONE can be a holder

Page 318 of 337

BAR/BRI Bar Review, Summer 2007 c. If improperly transferred the Drawer has a c/a for conversion v. How does a transferee qualify as a HIDC? 1. HIDC takes a. For Value b. Without Notice; AND c. In Good Faith 2. For Value a. The holder must pay for the instrument b. Value IS NOT Consideration i. A mere promise is NOT value = consideration 1. Example Ill transfer this not if your promise to paint my house ii. OLD Value = GOOD Value 1. Example I am giving you this note in return for the debt I owe to you 3. Good Faith a. Honesty-in-Fact rule of the pure heart b. Entirely Subjective 4. Without Notice a. The holder must acquire the instrument without notice that the instrument is overdue, been dishonored or subject to a claim AN OBJECTIVE TEST i. Overdue a note or draft should have already been paid 1. payable at a definite time which has expired 2. principal payments on a NOTE were in arrears, puts the maker in default no HIDC status a. BUT, if mere interest on the note was in arrears the note is NOT in default and thus NOT overdue ii. Notice of any defense or claim 1. Instrument gives the appearance a. Draft says VOID b. Note says PAID 2. The transferee or holder knows or has reason to know that the interest securing the instrument was voidable a. Based upon a condition precedent that has not been fulfilled iii. Notice of a Competing Claim to the Instrument 1. If the holder has knowledge that the instrument was once lost or stolen iv. Notice that a fiduciary has negotiated the instrument in breach of his/her fiduciary duty 5. The Shelter Rule

Page 319 of 337

BAR/BRI Bar Review, Summer 2007 a. If a holder takes from a HIDC they are cloaked with the HIDC status EVEN THO they take i. Without value (a donee) ii. In bad faith; OR iii. On notice that the instrument is overdue, dishonored or subject to a claim or defense vi. What are the benefits of qualifying as a HIDC? 1. The HIDC status confers upon the holder immunity from claims OR personal defenses 2. However, the HIDC still takes the instrument subject to real defenses 3. Free from Claims a. HUDC defeats another party who has an interest in the instrument based on Superior Title or Ownership 4. Free from Personal Defenses (ordinary Contract Defenses) a. Unconscionability b. Fraud in the Inducement i. A lie getting another to create the instrument 1. Example I sell you a diamond ring which I allege is entirely real. You cut me a check. The stones turn out to be fake. I properly transfer the note to an HIDC. You must pay the HIDC. c. Waiver d. Estoppel e. Lack of Consideration 5. Takes SUBJECT TO the Real Defenses (M.A.D.F.I.F.I4) a. M.A. material alteration i. Change in the terms of the instrument 1. Check changed from $100 to $2100 2. Maker only liable to HIDC for $100 3. BUT if maker negligently made the check left holes and spaces maker is estopped from use of this as a defense b. D Duress c. F.I.F. Fraud in Factum i. A lie about the instrument 1. Example - Attorney lies to client about the fact he is actually signing an instrument, RATHER attorney tell blind client he is signing a credit application d. I Insolvency e. I Illegality f. I Infancy g. I Incapacity

Page 320 of 337

BAR/BRI Bar Review, Summer 2007 17. Domestic Relations a. Matters that Precede Marriage, How Couples Get Married & the Consequences of Being Married i. Agreements Between Unmarried Persons 1. Unmarried Cohabitants a. These parties share common expenses and residences even though the are unmarried b. Contracts between these parties are enforceability i. Example If we split up I will pay you income in the future ii. Requirements 1. Must be Express a. Not implied 2. Consideration CANNOT be Sex a. Prostitution is illegal 2. Antenuptial Agreement a. Parties who plan to marry create a contract in contemplation of marriage to deal with economic matters as a contingency plan for divorce i. Separation of family assets ii. Distribution of alimony iii. Right of Election Waiver iv. Matters as Related to Children, Chores b. Effect after marriage i. Some marriages last 30+ years and only then does this agreement come into effect. After such a long time can it still be enforceable? 1. Yes, if all the requirements have been met ii. Requirements to Enforceability 1. must be freely made (duress will void the K) 2. writing signed by both parties 3. CANNOT agree in advance to get a divorce OR CANNOT agree to conduct allowing grounds 4. CANNOT be unconscionable 5. Agreement CAN contain waiver of alimony or maintenance a. UNLESS such provision would require the non-monied spouse to become a public charge 6. Agreement is contingent upon subsequent marriage ii. Children of Unmarried Persons 1. Non-Marital Children a. Child born to and conceived by parents who NEVER marry i. IF conception happens before marriage and birth AFTER = marital child

Page 321 of 337

BAR/BRI Bar Review, Summer 2007 ii. IF conception during marriage and birth after divorce = marital child iii. IF parents believed they were married BUT were in a void marriage and chills id born = marital child b. Rights of Non-Marital Children i. Can inherit from both parents ii. Can commence a wrongful death proceeding; AND iii. Is entitled to econ support from both parents c. BUT Who is the father? i. Determined at a Filiation Proceeding 1. Order of Filiation in a paternity suit is entered during fathers lifetime 2. c/a brought by mother, child OR NYS 3. can litigate at any time prior to the childs 21st b-day 4. EVIDENTIARY CONCERNS a. IF mom testifies she had sex with dad NO corroboration required b. If Dad offers evidence of Moms propensities for sexual access with other men Corroboration required ii. Legitimated by marriage iii. Father files a witnessed acknowledged affidavit with the Putative Father Registry iv. After Death Paternity (to inherit) is established by: 1. Clear and Convincing Evidence; AND 2. Testimony that the father Openly & Notoriously acknowledged the child as his own a. Child Support is NOT ENOUGH v. DNA Test 1. DNA evidence >95% probability creates a rebuttable presumption of paternity 2. and then clear and convincing evidence if the DNA Test is rebutted iii. Getting Married 1. Generally a. Marriage = K , THUS capacity required i. Capacity goes to dissolution not formation b. Must be single c. Same sex couples CANNOT get married in NY 2. The Ceremonial Marriage a. License + Ceremony b. License i. From town or city clerk ii. Good for 60 days iii. BUT cannot use within 24 hours of receipt

Page 322 of 337

BAR/BRI Bar Review, Summer 2007 iv. Failure to get a license is NOT fatal to marriage c. Ceremony i. MUST be a solemn declaration made by an officiant and in the presence of 1 Witness 1. Officiant clergy, civil officer empowered to administer and oath (judge or mayor); OR a sea captain on his boat at sea 2. Solemn Declaration intend to undertake the obligations which flow from marriage 3. The Contractual Marriage a. Sign K in front of a judge saying that you will be married at a a ceremony in the presence of a witness b. Used when the two parties are NOT co-located i. Example Prisoners who get married 4. The Common Law Marriage a. NOT RECOGNIZED IN NY b. EXCEPT i. IF two parties are deemed married by common law marriage in a state which happens to recognize common law marriage AND then those parties move to NY, NY will treat those persons as having a valid marriage iv. Consequences of Marriage 1. Duty of Sexual Exclusivity 2. Obligation to Economically Support One Another Must be fair & reasonable a. The MEANS Test i. Amount must be fair and reasonable as adjudged by the wealth of the monied spouse b. The NEEDS Test i. ALL spouses are entitled to enough $ as to avoid becoming a public charge c. An impoverished spouse can go to Family Court and get an in-marriage support order 3. All other duties and obligations which arise economically or by the criminal or civil laws allow each spouse to retain their individual identities a. CAN own property in individual names b. Separate domiciles are allowed c. Separate surnames are valid d. Commit physical violence OR an intentional tort OR negligence against the spouse allows civil c/a i. NO Intra-Spousal Tort Immunity e. Can commit crimes against your spouse i. i.e., - RAPE f. Spouse is liable strictly for the debts which they incur i. EXCEPT FOR

Page 323 of 337

BAR/BRI Bar Review, Summer 2007 1. Necessaries food, clothing, shelter, medical care, realty contract relating to the marital home 2. One Spouse acts as agent for the other spouse 4. Gifts made in Contemplation of Marriage a. IF the marriage is not completed the gift IS NOT VALID i. Example The Engagement Ring 5. ALL 5 Civil Heart-balm Actions have been abolished in NY a. The Causes of Action i. Breach of Promise to Marry ii. Seduction of an Unmarried Female iii. Alienation of affections 1. Spouse entitled to sue a 3rd Party for turning the emotions of their spouse against them iv. Criminal Conversation (civil adultery) v. Jactitation 1. Telling the community you are married to a person and are in fact not married b. Commencing a Civil Action on ANY of the 5 is a FELONY b. Termination of Marriage i. 5 types of Marriage Termination 1. Declaration of Nullity 2. Annulment 3. Divorce Separation 4. Dissolution ii. Declaration of Nullity 1. Where one party lacks capacity and such is SO SEVERE the declaration of marriage is VOID 2. While this proceeding is NOT necessary as the marriage was never initially formed, a declaration by the court stating the same is easier for purposes of public record OR in attempt to gain child support or maintenance 3. 2 GROUNDS a. Bigamy i. If you are married AND your already have a spouse, still living, ANY subsequent marriage is VOID ii. Not Waivable b. Incest i. Lack capacity to marry a close family member 1. IF you happen to lie about OR you dont know about it, then the marriage is still void 2. ITS ALSO A CRIME ii. In NY you cannot marry: 1. Blood ancestors 2. Blood Descendant 3. Blood Siblings (1/2 or whole blood)

Page 324 of 337

BAR/BRI Bar Review, Summer 2007 4. lineal relatives up or down 1 generation IF related by blood (aunt, niece) iii. In NY you can marry 1. Step-siblings 2. 1st cousins iii. Annulment 1. Capacity problem at the time of the marriage rendered the marriage VOIDABLE 2. Evidentiary Issues a. All spousal testimony requires corroboration b. Every ground gets a jury trial except Physical Incapacity (cant sexually perform) c. If NO Default is listed, the default SOL = 6 years 3. 6 GROUNDS a. Non-Age i. MUST be 18 at time of marriage 1. Between 16 to 18, parental consent required 2. Between 14 to 16, judicial and parental consent required a. Judge of the Supreme OR Family Courts ii. CAN be annulled by the minor ONLY if NOT Waived 1. Entirely Within the discretion of the court 2. Waivable if the minor remains & cohabits AFTER reaching their 18th birthday a. Cohabit living together + sex b. Mental Incapacity at the Time of the Marriage i. Inability to consent to the marriage at the commencement due to failure to want of understanding 1. Unable to make a solemn declaration 2. Caused by Mental Illness or Developmental Disability ii. Litigated normally by the guardian or committee of an incompetent 1. Generally this annulment ground is for the elderly who are a few beers short of a 6 pack iii. Waivable if the incompetent remains and cohabits upon regaining capacity c. Duress i. Married with a gun to your head ii. Requires lack of ALL free will OR Voluntariness iii. Waivable IF party under duress remains and cohabits UPON free cohabitation OR when force has been removed d. Fraud i. The marriage is Waivable IF a party either misrepresents or conceals information that goes to -

Page 325 of 337

BAR/BRI Bar Review, Summer 2007 1. An essential aspect of the marriage 2. Pre-dates the Marriage; AND 3. Would have deceived a reasonably prudent person ii. SOL 3 years from the DISOCVERY of the fraud iii. Common Fraud Fact Patterns 1. Misrepresentations about Religion = FRAUD a. Lie about what faith you follow b. Lie about level of religiousness c. Lie about intention to convert d. Lie about raising children in the faith e. Lie about the fact youre a NAZI 2. Misrepresentations about Procreation = FRAUD a. Lie about ability to reproduce b. Lie about paternity of baby that is yours c. Lie about willingness to have kids d. Lie about sexual agenda (if virgin) e. Lie about sexual history i. You were a PROSTITUTE ii. NOT that you slept with 10 guys instead of 50 3. Misrepresentation about Money = NO FRAUD a. Lying about fraud, status in company, salary, wages b. Waivable upon Cohabitation c. EXCEPT If you promise your to-be spouse something in return for marriage i. Example H promises W his mansion in Hawaii IF W marries H. H at time of promise owns NO mansion. = FRAUD, while Waivable, marriage is voidable e. Incurable Physical Incapacity i. An Incurable physical condition that prevents SAFE sexual intercourse ii. ONLY IF couple DID NOT TRY SEX B4 MARRIAGE iii. Inability to perform sexually NOT inability to procreate iv. MUST be incurable 1. IF curable by Viagra it is not incurable 2. IF you have no penis = incurable v. Has nothing to do with your willingness to be affectionate vi. SOL within 5 years of marriage vii. NO JURY TRIAL f. 5 years Incurable Insanity AFTER the marriage

Page 326 of 337

BAR/BRI Bar Review, Summer 2007 i. Had Capacity BUT then developed a mental illness ii. This ground requires 3 court appointed experts to all agree that the insanity is incurable iii. NO time bar to bring the action, NOT Waivable iv. Legal Separation 1. May obtain a legal separation 2. The court grants the parties permission to live apart and cease cohabitation a. This removes constructive abandonment or actual abandonment as grounds for divorce b. SOL 5 years, unless otherwise stated 3. DOES NOT dissolve marriage BUT creates a support obligation 4. WHY separate and NOT divorce? a. Tax Reasons i. Right of Election ii. Health Care Benefits iii. Joint Tax Returns iv. Social Security Benefits b. Religious Reasons i. Divorce is not acceptable by the spouses religions 5. The COURT has DISCRETION to allow a Temporary OR Permanent Separation a. NO JURY TRIAL when filing for a separation i. [cf. divorce /annulment (except physical capacity)] 6. 5 GROUNDS a. Cruel & Inhuman Treatment i. Physical or Mental Abuse ii. Endangers the well-being of the spouse 1. Unsafe or Improper iii. The ENDANGERED SPOUSE MUST: 1. testify to the abuse; AND 2. The harm cause by such abuse iv. Cohabitation post-abuse is NOT dispositive that the abuse was not cruel & inhuman b. Abandonment i. Walk Away from the Marriage ii. Requires 1. Physical abandonment departure 2. Mental belief NO intent to return 3. Unconsented 4. w/o Justification a. not moving out to escape violence iii. NY allows constructive abandonment 1. you walked away from the marriage BUT havent left the house = NO SEX

Page 327 of 337

BAR/BRI Bar Review, Summer 2007 a. NOT refusal to do oral sex or wear lingerie c. Adultery i. An act of sex or deviant sex voluntarily performed with another person who is not your spouse during the marriage 1. Includes Oral, or Anal Sex 2. With another Person NOT AN ANIMAL ii. EVIDENTIARY CONCERNS 1. Spouse CAN testify to: a. And Established Marriage b. D Spouse can deny or disprove the adultery c. P Spouse can deny a defense 2. Spouse CANNOT testify to the Adulterous Act a. P Spouse can say that the spouse was alone with the 3rd Party (opportunity); AND b. P Spouse can say that the D spouse received/sent candy/letters to the third party (disposition) c. ALL CIRCUMSTANTIAL 3. A 3rd Party CAN testify as to the adulterous act a. BUT if such is testimony by a prostitute or a private detective, corroboration is required iii. DEFENSES 1. Recrimination dirty hands, D Spouse alleges that P Spouse ALSO committed adultery 2. Condonation Waiver, P Spouse learned of adultery and remained cohabitated 3. Connivance Entrapment, P Spouse hired the hooker to sleep with D Spouse 4. 5 Year SOL Unlike Condonation, where the spouse must learn of the adultery, here even without knowledge, IF 5years pass from the adulterous act, such is time barred d. Consecutive Imprisonment for 3 Years e. Failure to Economically Support v. Divorce 1. NY DOES NOT have No-Fault Divorce a. SOL 5 years, unless otherwise stated b. Grounds are Required c. ANY inter-spousal tort claims are not barred by the doctrine of Res Judicata i. Permissive Joinder

Page 328 of 337

BAR/BRI Bar Review, Summer 2007 ii. Court of Appeals said such claims would confuse divorce proceeding iii. Claims to Property ARE barred - Necessary Joinder 2. 5 GROUNDS a. Cruel & Inhuman Treatment b. Abandonment i. EASIEST OF ALL THE GROUNDS ii. BUT, unlike Separation Abandonment, to attain a divorce the Spouse MUST have abandoned for 1 year iii. Spouse goes into the Court and alleges that they have not had sex with their Spouse in 1 yr BUT WANT TO c. Adultery d. Consecutive Imprisonment for 3 Years e. THE CONVERISON DIVORCE Separation for 1 Year i. When 2 Spouses have been separated for a period greater than 1 year BY Separation Agreement OR Judicial/Legal Separation thereafter the spouses can convert such separation into a divorce ii. Separation Agreement Requirements 1. Must be freely made a. No duress b. No Fraud 2. In writing 3. Acknowledged / Notarized 4. FILED WITH THE COURT a. Filing at any time b. DOES NOT start the 1 year clock 5. EXECUTION Starts the 1 year clock iii. RESCINDING the AGREEMENT 1. Attempts to Reconcile a. Does NOT apply to judicially courtordered separation 2. Any attempt at re-cohabitation with the intent to reconcile will reset the 1 year clock a. THIS IS NOT H&W fooling around for a weekend because they are horny with no intent to reconcile 3. After reconciliation the Agreement MUST be re-executed vi. Dissolution of Marriage 1. Spouse DISAPPEARS more than mere abandonment 2. The Spouse must be missing without tidings for a period of 5 years. 3. The Plaintiff Spouse MUST a. Go to court and allege she has DILIGENTLY SEARCHED b. PUBLISH in an English publication for 3 consecutive weeks

Page 329 of 337

BAR/BRI Bar Review, Summer 2007 c. Spouse must LIVE in NY for 1 year OR NY was the matrimonial DOMICILE at the time of disappearance 4. No collateral remedies are allowed (alimony, child custody) because none are necessary vii. Procedural Issues Upon Marriage Termination 1. CPLR / DRL a. Matrimonial c/a MUST be brought in Supreme Court b. DIVORCE/ SEPARATION The Court MUST have SMJ over the Marriage (DRL 230) i. 1 Spouse is a NY domiciliary ii. Both Spouses are residents of NY AND the grounds arose in NY iii. 1 Spouse has been a resident of NY for 2 years iv. 1 Spouse has been a resident of NY for 1 year; AND 1. NY was where the marriage took place 2. NY was once the matrimonial domicile; OR 3. the ground arose in NY c. ALIMONY / MAINTENANCE / CUSTODY PAYMENTS The Court must have PJ over the non-resident Spouse (CPLR 302(b)) i. One spouse must be a resident or domiciliary of NY; AND 1. Abandonment occurred in NY 2. Marriage was once domiciled in NY 3. Accrued under an agreement Executed in NY; OR 4. Obligation arises by NY Statute d. ALL pleading must be verified EXCEPT an Answer to a cliam of Adultery e. Service i. Personal Service Required UNLESS sufficiently impracticable, THEN court can order service f. Trial Rules i. Failure to Appear by D Spouse 1. No Default allowed 2. P Spouse must still make an offer of proof, EVEN IF uncontested ii. Disclosure of Financial Assets Required iii. Matrimonial Records are kept sealed for 100 years 2. Professional Responsibility a. Attorney MUST give to Client i. Statement of Clients Rights & Responsibilities ii. Written retainer including a fee arrangement 1. signed by client and lawyer iii. Closing Statement b. Periodic Billing Every 60 days

Page 330 of 337

BAR/BRI Bar Review, Summer 2007 c. Cannot begin a sexual relationship with a client during the course of representation d. Cannot take as security for a fee a mortgage on the clients house c. Economics of Marital Termination i. Alimony / Maintenance 1. Allowed during litigation Temporary Support 2. Then judicially decreed after the litigation permanent support a. The Court can include ANY relevant factors in their support determination i. Including 1. The nature & degree of marital fault 2. Custody, health, potential skills and education 3. Duration of the marriage 4. Adoption of a Separation Agreement a. IF the agreement was to survive the divorce the court will normally NOT veer from the agreement b. UNLESS there is evidence of overreaching by the empowered-spouse i. Court will examine the agreement with close-scrutiny upon such an allegation b. Permanent Support is an obligation to make periodic payments 3. Enforcement, Modification & Termination a. Enforcement i. Since support is based upon a court order, the court may enforce the agreement by certain judicially proscribed methods; SUCH AS 1. Send to Jail for contempt 2. Seize Property 3. Attach wages 4. Take away professional or drivers licenses b. Modification i. Petitioning Party must show a substantial change in circumstances (change can be the change of EITHER party) ii. IF maintenance arises from a separation agreement the court will hesitate to modify a maintenance award EXCEPT upon a showing of EXTREME HARDSHIP 1. However, maintenance via separation agreement can have escalator clauses a. Increases based upon costs of living and interest rates

Page 331 of 337

BAR/BRI Bar Review, Summer 2007 iii. Modification is NEVER allowed for PAST payments (arrears) c. Termination i. Specified by Court Order ii. Can be indefinite iii. Terminates on death of either party EXCEPT is a clause in the separation agreement requires payment to the estate of a deceased spouse iv. REMARRIAGE will terminate maintenance 1. NOT mere cohabitation with another UNLESS the newly cohabitating spouse holds out to the world that their new partner is their new spouse ii. Property Distribution 1. Equitable Distribution a. Application i. STEP #1 Division of Assets 1. Husbands Separate Property 2. Wifes Separate Property 3. Jointly Owned Marital Property ii. STEP #2 Distribution of Assets 1. Give each party their separate property 2. Court will use Equity to Distribute Marital Property b. Separate Property i. Owned PRIOR to Marriage ii. Bequests or Gifts Received by Either Spouse in their sole name EVEN IF Received During Marriage 1. NOT Jointly Held Gifts a. i.e., - wedding gifts iii. Property Agreed to be Separate Property iv. Personal Injury Compensation v. PASSIVE APPRECIATION ON SEPARATE PROPERTY 1. Change in value due to mere passage of time or market fluctuation 2. NOT appreciation due to active participation a. Under Majouskas, this will be treated as a marital asset b. This is even the case where the original property was separate property (your pre-owned business prior to marriage) c. ANY increase in value from time of marriage up until commencement of the divorce action will be deemed marital property c. Marital Property

Page 332 of 337

BAR/BRI Bar Review, Summer 2007 i. All other property acquired by any spouse regardless of how the asset is titled 1. This Includes a. Intangible economic values (pension plans, stock options) b. Licenses / Degrees i. Marital asset is acquired during marriage ii. Subject to Division iii. The degree to which such license will enhance your earning capacity forever THEN discount the same to present value iv. BUT avoid double counting- IF a degree is an asset THEN it cannot increase or decrease alimony to reflect ability to earn based on the same degree d. Division of Marital Property i. Use of Equitable Factors 1. NO use of marital fault UNLESS such was egregious 2. Increased Duration of the Marriage the Increased likelihood the equitable distribution will be 50/50 ii. Asset may be distributed in-kind; OR 1. Titled spouse must DEED over property iii. By Distributive Award 1. Monied Spouse cuts a Check d. Issues Relating to Children i. Ways to Have Children 1. Artificial Insemination a. Child born is deemed to be a Marital Child, provided that i. Woman is married to the Husband; & ii. The Husband Consents b. Donor of Sperm has NO PARENTAL RIGHTS 2. Surrogate Parenting a. Sperm used to fertilize the egg of another b. ANY CONTRACT to transfer custody from the Surrogate mother to the Husband and Wife is VOID in NY 3. Adoption a. Who can adopt? i. Any adult, even single can adopt

Page 333 of 337

BAR/BRI Bar Review, Summer 2007 ii. Married minors can adopt the step-children of their spouse iii. Married BUT Separated Adults without consent of the other spouse BUT such other spouse is NOT a parent b. Who can be adopted? i. Any party PROVIDED that the adoption is to establish a bona fide parent-child relationship c. Consent of Parties i. All necessary consents are required in the record UNLESS they are waived ii. Who must consent? 1. IF adoptee < 18 a. BOTH biological parents OR b. Any Parties with legal custody 2. IF adoptee >14 a. The adoptee must consent 3. CONSENT of biological parents MAY BE WAIVED a. IF the biological parent surrenders his rights b. The parent is mentally incapacitated and the parent is unable to take care of the child due to such incapacity c. Parent has abandoned for a period > 6 months i. EVEN IF the unwed father leaves the unwed mother AND he does NOT even know the mother is pregnant d. Neglect of the Child i. 1 year without substantial contact ii. Neglect can also constitute conduct that imposes an imminent danger to the child AND falls below the minimum degree of care owed to the child iii. THIS can also be grounds to terminate parental rights altogether iii. Then the state will do an investigation into the lives of the adopted parents consisting of interviews and observations 1. AFTER the state is satisfied they will allow a temporary adoption period of 3 months after which a Hearing will be held and IF the court is

Page 334 of 337

BAR/BRI Bar Review, Summer 2007 pleased with the situation will permanently transfer parental rights ii. Child Support 1. Both Biological Parents MUST economically support their child until they reach the age of 21 a. THIS AGE CAN be extended by special circumstances through college i. If the parent has the ability to support; AND ii. The child has an ability to graduate (he/she is smart) iii. In this undergraduate time period the child must be obedient to a reasonable demand 2. AMOUNT of support a. Based on the parental income and total number of children b. Income of parent, LESS deductions (taxes), PLUS increases for voluntary impoverishment (taking a pay cut as not required to pay child support) 3. Child Support order can be modified on a showing of changed circumstances 4. NON-PARENT MAY HAVE TO PAY CHILD SUPPORT a. Give up custody and know the child is going to be adopted i. Parents obligations terminate upon adoption NOT abandonment ii. THIS INCLUDES An adoptor parent who has legally adopted a child and it turns out that the child is mentally retarded and extremely violent. This parent wants to terminate her parental right s and return the child to the State of NY 1. Until the child is adopted Which he never will be, the adoptor parent MUST pay child support b. Father who was lied to about a relationship with a child. Mother says its yours, and the father happily supports the child. THEN, father finds out he is NOT the Dad and wants to terminate support. Ct of App says, NO, must continue to support the child (child support by estoppel) iii. Child Custody 1. Necessitated AT a. The end of the marriage; b. The end of a divorce; OR c. When there is a non-marital child 2. Difference between legal AND physical custody a. Legal Custody decision making authority b. Physical Custody where the child resides i. BOTH can be individual or shared 3. How do we determine where the kid goes? The Best Interests of the Child Analysis a. Courts will look at

Page 335 of 337

BAR/BRI Bar Review, Summer 2007 Desires of the Spouses Desires of a Child >12 years old Health, Age and finances of Both Parents Any history of Domestic Violence 1. Even if on spouse and not child v. Any new person in the parents life vi. IF a given placement would enhance the connection with extended family (siblings, favorite Uncle) vii. ANYTHING ELSE 4. Custody as between Parents and Non-Parents a. Generally, non-parent must go FURTHER THAN the best interests of the child and MUST SHOW: i. Extraordinary Circumstances; OR ii. Unfitness of the Biological Parent 5. Visitation a. Parent -to- Parent i. Generally allowed b. Parent -to- Non-Parent i. Normally occurs with grandparental visitation rights 1. Grandparents may ask for visitation BUT MUST FIRST ESTABLISH STANDING a. Their child, the parent of the grandchild, is deceased; OR b. Circumstances appropriate for equity to Intervene 2. THEN to establish visitation a. The grandparent must overcome the special wishes of the parent i. because there is a presumption that fit parents are making decisions in the best interests of their children 6. Modification of Child Custody Awards a. The Court will still resort to the Best Interests of the Child Analysis AND b. Heavily favor the initial custody determination because Stability of the Childs home is essential e. Conflicts Issues i. A marriage valid where it was commenced will be valid in NY 1. EXCEPT gay marriages ii. Divorces 1. IF bilateral (both spouses participate) in an out-of state divorce, the divorce is valid in NY a. RES JUDICATA as to all matter of necessary joinder (alimony, maintenance, custody, property division) i. ii. iii. iv.

Page 336 of 337

BAR/BRI Bar Review, Summer 2007 2. IF unilateral (ex-parte) in an out-of state court, the divorce is prima facie valid as long as the D was served with process a. Collateral Attack Allowed i. Example the out-of-court state WAS NOT the unilateral spouses domicile at the time he/she commenced 3. OUT OF COUNTRY DIVORCE a. IF bilateral, It will be valid under the principles of comity b. IF unilateral, It will NEVER BE VALID iii. Interstate Support Problems 1. Initially any state which renders a monetary award in a divorce action against a spouse MUST have personal jurisdiction over such spouse 2. Child Custody MUST be determined in the childs home state (PKPA) 3. Enforcement of Orders which are Procured through valid Personal Jurisdiction a. Out-of-state dead beat father with a NY support order i. Uniform Interest Family Support Act (UIFSA) 1. prevents forum shopping by limiting modification of a support order to the original forum state a. That state is deemed to have continuing and exclusive jurisdiction 2. Direct out-of-state enforceability a. In-State spouse can mail the NY court order to the dead beat dads out-of-state employer and have him garnish wages; OR b. The custodial parent can register the order in an out-of-state court and enforce the order by the statutes of that state for contempt and attachment b. Non-Custodial Parent wishes to Modify a Child Custody order in their new state of residence i. Uniform Child Custody Jurisdiction and Enforcement Act 1. Applies like UIFSA to child custody order instead of child support orders 2. prevents forum shopping by limiting modification of a custody order to the original forum state

Page 337 of 337