Civil Procedure
Please explain when federal courts have subject matter jurisdiction.
Federal courts have subject matter jurisdiction under two main categories: (1) Federal question jurisdiction (28 U.S.C. § 1331) - cases arising under federal law, including the Constitution, federal statutes, or federal common law, where the federal issue must appear on the face of the plaintiff's well-pleaded complaint; and (2) Diversity jurisdiction (28 U.S.C. § 1332) - cases between citizens of different states where the amount in controversy exceeds $75,000, exclusive of interest and costs. Diversity must be complete (no plaintiff can be from the same state as any defendant) and determined at the time of filing. Federal courts also have supplemental jurisdiction under 28 U.S.C. § 1367 to hear related state law claims that form part of the same case or controversy.
These types of contracts must be in writing and signed to be enforceable under the Statute of Frauds.
The Statute of Frauds requires certain contracts to be in writing and signed by the party to be charged. The covered contracts include: (1) Marriage - contracts in consideration of marriage (prenuptials); (2) Year - contracts that cannot be performed within one year from formation; (3) Land - contracts for the sale of real property or interests in land; (4) Executor - promises by executors/administrators to pay estate debts from personal funds; (5) Goods - contracts for the sale of goods $500 or more under UCC § 2-201 (note: this threshold was raised to $5,000 in the 2022 amendments, but most UBE jurisdictions still follow the $500 threshold); and (6) Surety - promises to answer for the debt of another (guaranty contracts). The writing must reasonably identify the subject matter, contain the essential terms, and be signed by the party against whom enforcement is sought.
These are the three essential elements required for a valid will
(1) Testamentary capacity - the testator must be of sound mind and at least 18 years old; (2) Testamentary intent - the testator must intend the document to dispose of property at death; and (3) Compliance with statutory formalities - the will must be in writing, signed by the testator (or by another person in the testator's conscious presence and at the testator's direction), and attested by at least two witnesses who sign within a reasonable time after witnessing the testator's signing or acknowledgment of the will. The witnesses must be competent individuals who understand they are witnessing a will.
What are the two types of defeasible fees (language to create them and future interest they create)
1) Fee Simple Determinable
Durational language: "so long as", "during", "until"
Future interest: Grantor's possibility of reverter or third party's executory interest (fee simple subject to executory limitation)
2) Fee simple subject to condition subsequent
Conditional language: "but if", "provided that", "unless"
Future Interest: Grantor's right of entry, third party's executory interest
These are the two basic documents required to form a corporation
To form a corporation, two basic documents are required: (1) Articles of Incorporation (certificate of incorporation) - filed with the state, containing mandatory information such as corporate name, registered agent and office, authorized shares, and incorporator name; and (2) Corporate Bylaws - internal governing rules adopted by the board of directors or shareholders, covering matters like meetings, voting, officer duties, and other operational procedures. The articles create the legal entity when filed with the state, while bylaws govern internal operations.
Where is venue proper?
Venue is the geographical location of specific federal districts in which a plaintiff's claim may be heard. A state can have multiple federal districts within its borders. And venue may be proper in more than one district because it is proper in any district where:
any defendant resides—so long as all defendants reside in the same state (ie, residency-based venue)
a substantial part of the events that gave rise to the suit occurred (ie, events-based venue) or a substantial part of the property at issue is located (property-based venue) or
any defendant is subject to the court's personal jurisdiction—but only if neither of the above provisions applies (ie, fallback provision).
When can an advertisement constitute a general offer?
Advertisements are generally considered invitations to negotiate or solicitations of offers, which create no power of acceptance in the recipient. However, an advertisement can constitute a general offer—the acceptance of which creates a binding contract—if the advertisement:
What is the cy pres doctrine ?
This doctrine allows a court to save a charitable trust that violates the Rule Against Perpetuities or has an illegal purpose."
What are the four unities of a joint tenancy
Unity of possession, interest, time, and title
Please describe the business judgement rule
The Business Judgment Rule creates a rebuttable presumption that corporate directors acted on an informed basis, in good faith, and in the honest belief that their actions were in the best interests of the corporation. Under this rule, courts will not second-guess directors' business decisions or hold them liable for mere negligence if: (1) the directors were disinterested and independent; (2) they acted with due care (informed decision-making); (3) they acted in good faith; and (4) they acted within their authority. The rule protects directors from liability for business decisions that turn out poorly, recognizing that business involves risk-taking. The presumption can be rebutted by showing gross negligence, fraud, illegality, or conflict of interest.
Explain when a court may exert personal jurisdiction
Due process requires that a court's exercise of personal jurisdiction satisfy the minimum contacts standard established in International Shoe Co. v. Washington. The defendant must have sufficient minimum contacts with the forum state such that maintenance of the suit does not offend "traditional notions of fair play and substantial justice." This requires: (1) Contacts analysis - defendant must have purposefully availed themselves of the forum state's benefits/protections through contacts that are not random, fortuitous, or attenuated; (2) Relatedness - for specific jurisdiction, the plaintiff's claim must arise from or relate to defendant's forum contacts; for general jurisdiction, defendant's contacts must be so continuous and systematic as to render them essentially "at home" in the forum; and (3) Reasonableness - even with sufficient contacts, jurisdiction must be reasonable considering factors like burden on defendant, forum state's interest, and judicial efficiency.
Please explain the doctrine of frustration of purpose
The doctrine of frustration of purpose excuses contract performance when an unforeseeable supervening event destroys the principal purpose of the contract, making performance virtually worthless to the frustrated party. The elements are: (1) Principal purpose - the frustrated party's principal purpose in making the contract has been substantially frustrated; (2) Supervening event - the frustration results from an event that occurred after contract formation; (3) Unforeseeability - the event was not reasonably foreseeable at the time of contracting; (4) No fault - the frustrated party did not cause the frustrating event; and (5) No assumption of risk - the frustrated party did not assume the risk of the event occurring. This differs from impossibility, which excuses performance when it becomes objectively impossible to perform, and impracticability, which applies when performance becomes extremely difficult or expensive.
What is ademption by extinction ?
This occurs when specifically bequeathed property is no longer in the testator's estate at death, potentially causing the beneficiary to receive nothing.
Explain the 3 types of notice (regarding real property)
1. Actual Notice: A grantee possessing actual, personal knowledge of a prior interest cannot prevail under a notice or race-notice recording statute.
2. Inquiry Notice: If a reasonable investigation would have disclosed the existence of prior claims, then the grantee is considered to possess inquiry notice, and she cannot prevail against those prior claims. The purchaser is charged with whatever knowledge a reasonable inspection of the property would have disclosed. In most states, taking a quitclaim deed does not in itself create inquiry notice of prior claims.
3. Record Notice: Grantees are held to have constructive notice of all prior conveyances that were properly recorded.
Describe the liability that applies to general partners in a general partnership for partnership debts and obligations
General partners in a general partnership have joint and several liability for all partnership debts and obligations. This means that each partner is personally liable for the full amount of partnership debts, and creditors may collect the entire debt from any one partner or any combination of partners. Partners also have unlimited personal liability, meaning their personal assets can be reached to satisfy partnership debts. Under the Revised Uniform Partnership Act (RUPA), which is followed by most UBE jurisdictions, partnership creditors may pursue individual partners' personal assets directly, though partners have a right of contribution from other partners for amounts paid in excess of their share.
Explain the process and effect of voluntary dismissal and involuntary dismissal
Voluntary Dismissal
Process
P may dismiss suit without court order when:
P may request court order to dismiss suit unless:
Effect
Dismissal without prejudice unless:
Involuntary Dismissal
Process
D may move to dismiss suit if P failed to:
D may move to dismiss suit via:
Effect
Dismissal with prejudice unless:
Please explain when the parol evidence rule applies
The Parol Evidence Rule prohibits introduction of prior or contemporaneous oral or written agreements that contradict, vary, or add to the terms of a fully integrated written contract. The rule applies when: (1) Integration - there is a written contract intended as a final expression of the parties' agreement; (2) Prior/contemporaneous evidence - the excluded evidence consists of prior negotiations, agreements, or contemporaneous oral agreements; and (3) Contradiction - the evidence would contradict or vary the written terms. Exceptions allow parol evidence to: (1) prove fraud, duress, mistake, or other defenses; (2) interpret ambiguous terms; (3) show that a condition precedent to the contract's effectiveness was not satisfied; (4) prove trade usage, course of dealing, or course of performance; (5) show that the writing was not intended to be a contract; or (6) add consistent additional terms if the writing is only partially integrated.
Explain when a trust can be terminated
The Claflin doctrine (or material purpose doctrine) governs when a trust may be terminated prior to the time specified in the trust instrument. A trust may be terminated early if: (1) All beneficiaries consent to termination (including all current and future beneficiaries who must be ascertainable and competent, or have guardians appointed for minors/incapacitated persons); and (2) No material purpose of the trust remains unfulfilled that would be defeated by early termination. Material purposes that prevent early termination include: spendthrift protection, support and maintenance over time, distribution at specified ages for maturity reasons, or specific conditions that have not yet been satisfied. Even with unanimous beneficiary consent, a court will not order termination if it would defeat a material purpose of the settlor. Administrative purposes (such as professional management or convenience) are generally not considered material purposes that prevent termination. Under the Uniform Trust Code, courts have additional flexibility to modify or terminate trusts based on changed circumstances that make the trust purposes impossible or impracticable to fulfill.
These are the five elements typically required to establish title by adverse possession.
To acquire title by adverse possession, the claimant must establish five elements for the statutory period: (1) Actual possession - physical occupation and use of the property consistent with the type of property involved; (2) Open and notorious - possession must be visible and obvious such that a reasonable owner would have notice of the adverse use; (3) Exclusive - the adverse possessor must possess the property exclusively, not sharing control with the true owner or the public; (4) Hostile - possession must be without the owner's permission and adverse to the owner's interests (majority "objective test" focuses on the act of possession, not the possessor's state of mind); and (5) Continuous - possession must be uninterrupted for the full statutory period, though seasonal use may satisfy this requirement depending on the property type. The statutory period varies by state (typically 5-20 years) and may be shorter if the adverse possessor pays property taxes.
These procedural requirements must typically be satisfied before a shareholder can bring a derivative suit on behalf of the corporation.
Before bringing a derivative suit, a shareholder must typically satisfy several procedural requirements: (1) Standing - plaintiff must have been a shareholder at the time of the alleged wrongdoing (contemporaneous ownership rule) and remain a shareholder throughout litigation; (2) Demand requirement - must make demand on the board of directors to bring the suit, unless demand would be futile (such as when a majority of directors are interested in the challenged transaction); (3) Security for expenses - some states require posting bond for defendants' attorney fees if the suit is unsuccessful; (4) Fair and adequate representation - plaintiff must fairly and adequately represent the corporation's interests; and (5) Particularity pleading - complaint must plead with particularity the efforts to obtain board action and reasons why demand was not made or was futile.
Explain the two types of interpleader
Interpleader is a procedure used when multiple persons claim an interest in the same property (ie, the stake). It allows the possessor of the stake (ie, stakeholder) to avoid multiple liability by joining the claimants to litigate the ownership of the stake among themselves. There are two types of interpleader with distinct subject-matter jurisdiction requirements that must be met before a federal court can hear the dispute:
Rule interpleader – requires that (1) the action involve a federal question or (2) the amount in controversy exceed $75,000 and complete diversity exist between the stakeholder and the claimants—ie, they must be citizens of different states
Statutory interpleader – requires an amount in controversy of at least $500 and minimal diversity between the claimants—ie, at least two claimants are citizens of different states
When can a party, who did not enter into the contract, enforce a contract?
An intended third party beneficiary can enforce a contract made for their benefit when: (1) Intent - the contracting parties intended to benefit the third party, evidenced by the contract terms, circumstances, or parties' expressions; (2) Direct benefit - performance of the contract will directly benefit the third party; and (3) Identification - the third party is specifically identified or falls within a clearly defined class. Intended beneficiaries include creditor beneficiaries (performance will satisfy a debt owed to the beneficiary) and donee beneficiaries (performance is a gift to the beneficiary). In contrast, incidental beneficiaries - those who may benefit from performance but were not intended beneficiaries - cannot enforce the contract. The beneficiary's rights vest when they: (1) learn of and assent to the contract, (2) change position in reliance, or (3) bring suit to enforce.
Can you explain a spendthrift provision?
A spendthrift trust contains a provision that restrains the voluntary or involuntary transfer of the beneficiary's interest in the trust. A valid spendthrift clause prevents the beneficiary from assigning, selling, or otherwise transferring their interest, and also prevents creditors from reaching the beneficiary's interest through attachment, garnishment, or other legal process. However, spendthrift protection is subject to several important exceptions. Exception creditors who can reach spendthrift trust assets include: (1) providers of necessities (food, shelter, clothing, medical care); (2) child support and alimony claimants; (3) government entities for tax obligations; and (4) tort victims in some jurisdictions. Additionally, spendthrift protection generally does not apply to mandatory distributions once they are due and payable to the beneficiary. The settlor cannot create a valid spendthrift trust for their own benefit - self-settled spendthrift trusts are generally invalid and creditors can reach the maximum amount the settlor could receive from the trust.
In what order are proceeds from a foreclosure sale distributed
Order of priority:
1) Expenses from the sale (e.g., attorneys' fees, court costs)
2) Mortgage being foreclosed
3) Junior liens, in order of lien priority
4) Debtor, if any surplus remains
Courts apply this two-part test to determine whether to disregard the corporate entity and hold shareholders personally liable.
Courts will pierce the corporate veil and impose personal liability on shareholders when two elements are met: (1) Unity of interest and ownership - the corporation and shareholders are so unified that the corporate entity has ceased to exist as a separate entity, evidenced by factors such as: failure to observe corporate formalities, commingling of assets, undercapitalization, using the corporation as an alter ego, or treating corporate assets as personal assets; and (2) Inequitable result - adherence to the corporate fiction would sanction a fraud or promote injustice, such as when the corporation was used to evade legal obligations, perpetrate fraud, or circumvent statutory requirements. The doctrine is applied reluctantly and requires a strong showing of both prongs. Mere undercapitalization or informality alone is insufficient.