Exam 1 - 11-07-06 exam1-answer - sample-answer-1

INSTRUCTIONS: This is a three hour examination. There are two questions. However, the first question is worth two-thirds of your grade, so you should apportion your time accordingly.

Place your examination number on this paper, as well as on your blue books. If you will be typing your examination, be sure to put your examination number on several pages of your paper.

Turn in this examination paper along with your answer.

If you are writing your examination and you can remember to do so, please double space your answer. However, if for any reason you do not do so, there is no penalty whatsoever.

QUESTION I : Anna is a military officer who was born in Maryland. She went to college at West Point (New York), graduating in 2000. Since then she has been on active duty as a lieutenant, assigned to a military post in Massachusetts. Both Maryland and Massachusetts tax a domiciliary's income at a high rate, so Anna has been trying to get herself assigned to a military post in Florida (which has no state income tax). Once there, she assumes, she could become a Florida domiciliary and thereby avoid Florida taxes. Already she has managed to go for interviews for a secret assignment at a secret military base south of Miami, Florida (part of what lawyers would call the federal Southern District of Florida), and there she candidly told the senior officers who were conducting the interview that she wanted both the job assignment and the tax benefit. While Anna was there, however, she was shocked to see how many alligators run freely around parts of Florida, and she knew she'd never want to raise her children there (Anna is currently unmarried, but is in a serious relationship with a young lawyer working in Philadelphia). The job interview went so well, however, and the senior officers were so encouraging about her job prospects, that she leased an apartment near the military base for two years, and then registered to vote in Florida. The apartment lease contained a clause permitting her to escape the lease if she was reassigned -what is sometimes called a "military clause."

When she left the last interview, Anna got in her car and started the long drive back to Massachusetts. She got tired on the road, but did not stop to rest. The result was that, outside the city of Orlando (in the Central District of Florida) she briefly fell asleep at the wheel of her car. The car careened off the highway near a gas station and smashed into the gas pumps. The gasoline supply, in turn, began to burn violently, causing severe injury to Anna and extensive damage to a nearby lumber supply yard. The lumber burned very rapidly -which was strange, because that particular wood was supposed to have been treated so that it was very fire resistant. Later investigation would raise a suspicion that the lumber company had been saving money by not treating the lumber (as it should have), then selling the untreated lumber at a greatly inflated price to a home construction company operating in Pensacola, Florida (in the Northern District of Florida). All of the contracts relating to this allegedly fraudulent activity were signed, and to be performed, in the Northern District of Florida.

The gas station was owned by Exxon, a Delaware corporation with a principal place of business in Florida (you may assume this is true even if it isn't). The company that owned the lumber (Texas Lumber Co.) was incorporated in Texas with its principal place of business there. The home construction company, Quality Homes, was incorporated in Florida and did all its business in the Northern District of Florida.

Exxon sued Anna in a Florida state court in Orlando, alleging negligence in the operation of her automobile. Texas Lumber thought about suing Anna (and maybe Exxon), but held off, worrying more about defending against a fraud suit by Quality Homes over the issue of untreated lumber. Quality Homes did not hesitate. Quality sued Texas Lumber in federal court in the Northern District of Florida, alleging fraud.

You may assume that all of the foregoing claims are state causes of action, worth much more than $100,000 each.

1. Anna filed a petition to remove Exxon's lawsuit to the Central District of Florida. Exxon then filed a motion to remand its claim against Anna to the state court in Orlando.

2. Texas Lumber moved to dismiss the federal claim by Quality Homes on the ground that an arbitration clause in the Texas Lumber/Quality Homes contracts requiring that any dispute between those parties be placed before an arbitrator before the claims could be sued upon in any state or federal court. The established Florida state practice was to refuse to enforce such arbitration clauses because they inserted an arbitrator into the process and thereby denied plaintiffs their right to trial by a jury of their peers. The established federal practice, established by judicial precedent, was to encourage resolution of claims through arbitration, because the effect of arbitration was usually to resolve claims quickly. Moreover, arbitrators took a portion of the case load burden off federal judges and juries. Quality's motive for suing (rather than arbitrating) is not entirely clear, but what is clear is that many homeowners in the Pensacola area (Northern District of Florida) and their neighbors are unhappy that Texas Lumber would sell such dangerous wood under false pretenses (assuming that is the actual fact).

Analyze the issues raised under paragraphs 1. and 2. above.

QUESTION II. Assume that all the information about Anna is still true. However, in place of all the other facts in Question I, assume that Anna had no accident in Florida, and that she proceeded north through Georgia, South Carolina, and North Carolina, driving and resting in a careful and appropriate manner. In Virginia, however, Anna's vehicle was struck by a truck driven by Billy, a citizen of Missouri. Billy was severely injured in the accident, Anna less so (but still significantly). The truck, surprisingly, was not badly damaged, and was still worth at least $125,000. However, although the accident was clearly the fault of Billy, Anna had little reason to sue him because Billy had no money. Instead, Anna sued the company (Ravenous Trucking) that owned the truck, alleging that the accident was caused by faulty brakes on the truck. The suit was filed in a Virginia state court. Ravenous, a nationwide corporation that was incorporated in Oklahoma and had its principal place of business there, moved to dismiss the action in Virginia. Ravenous argued that Billy, although an employee of Ravenous, had never been authorized to drive the truck and had taken it without permission from the Ravenous trucking terminal in Oklahoma where the truck was normally maintained. Apparently he had been driving it to Virginia so that he could make a high school reunion party scheduled in Virginia. Ravenous claims it can show that it called the Oklahoma state police to report its "borrowed" vehicle before the Virginia accident occurred. Anna, on the other hand, claims that Oklahoma police records will show that Ravenous knew that occasionally its employees "borrowed" a truck for personal business and then returned the truck soon thereafter.

Evaluate the chances that Ravenous' motion to dismiss will be granted. In the course of answering, you should NOT address issues of: notice and service of process; subject matter jurisdiction of any kind; venue; or forum non conveniens.