PREDICTS Flashcards
Corp: MAIN DUTY RULE
The issue here is whether the directors, by virtue of Ben’s advice and the circumstances surrounding the purchase of Ed’s Marydel sites, violated their duties of care and loyalty to the corporation.
RULE
A director must discharge his or her duties in GF and with a RSBL BELEIF that what she does is in the corporation’s BIC.A director must also exercise that degree of care which a reasonably prudent person would exercise in the care of her own business.
With reference to the first part of this standard, the duty of loyalty, a director’s actions will be insulated if the action, even if it involves self dealing by one of the directors, is either fair to the corporation or approved by a majority of disinterested directors or a majority of all shareholders.
With reference to the second part of the standard, directors will benefit from the protection of the business judgment rule, which insulates directors from liability for not exercising reasonable care if their actions are informed, have a rational basis, or are based on a good faith reliance on either the financial statements of the corporation, its book value, or a report from a competent source as to the fairness of a proposed transaction.
WILLS= LATENT AMBIGUITY
Ct should determine whether the bequest is a latent ambig or a patent ambiguity, and will likely conclude. Thus, the extrinsic evidence will/will not be allowed to determine intent of T.
Under Pa law, a will will be analyzed by its plain meaning of its language of its words. The language should only be disturbed if there is ambiguity in the terms or the will. Parol evidence, extrinsic evidence should be only admitted if there is a latent ambiguity in the will.
LATENT AM=EXTRINSIC ALLOWED
An ambiguity in a will is either latent or patent. A “patent ambiguitiy” on the face of the will
TITLE VII-
Harassment.. Hostile Enviorement
(“Humpps” “Hula” “are”)
There are two types of harassment claims: quid pro quo and hostile enviorement.
- Quid Pro Quo- “aw”
(i) Applies to sexual harassment only +
(ii) Where sexual haras= condition of employment ben - Hostile Work Environment
To prevail, P must prove “hump + hula”
Harassment was
(i) Harassment was
(ii) Unwelcome, uninvited (subj)
(ii) Member of Protected Class (age, disability, sex)
(iii) Pervasive + Severe conduct,
- frequency, severity, physically threatening
- ct will find one time physical incident is more likely severe than multiple verble
(iv) Hostile environment= Unreasn altered conditions
(v) Liability on….
a) supervisor: VL _ unless can show “are”
affirmative d:
–1) rsbl care used to prevent or correct AND
–2) employee failed to use reporting proced
[show policy, retal processes to deal with harassment]
b) Coworker: neg _ if p shows:
- -1) knew/ should have known
- -2) employer failed to take prompt action
TITLE VI- Retaliation (“POP”) + (“SASC”)
- compensatory and punatives
2 types of Retaliation claims:
(i) opposition conduct – p opposing EmR practice, gfaith
(ii) participant conduct.
P, prima facie–> “sasc”
(i) statutorily protected expression
(ii) aware- employer
(iii) suffered adverse reaction
(iv) causal connection between adverse action and class
D, LNDR for employment action
P, Pretext “but for” protected class= termination
CORP: freeze out SH
RULE
1. Majority shareholders have a fiduciary duty to minority shareholders. A majority of SH breach this duty by freezing out a minority shareholder for personal gain.
- SH who is frozen out can bring a DIRECT action to obtain relief from the court for damages caused by the freezeout.
- SH also have rights to inspect corporations books and records that cannot be denied unless the SH does not seek to review the proper purpose.
- Directors may validly agree to place restrictions on share of stocks.
- IF NO NOTICE– BANK CAN EXERCISE RIGHT RO RECIEVE SHARES
Family- Equitable Distribution
Subject to a limited number of exceptions - educational degrees, inheritance where one spouse is specifically named devisee, veteran’s benefits, non-possessory future interests - property acquired during the course of the marriage by either spouse is considered marital property and subject to equitable distribution when the marriage terminates.
Here, Dave has given Gloria the ring after the ceremony. Despite the likely intent that only Gloria wear the ring, the ring will be considered marital property just like most other property acquired by either spouse during the course of the marriage.
Criminal- Stealing
Robbery
RSP
Criminal Assault
REAP
TUT
Robbery is the unlawful taking of the property or goods of another with the use of force or threats of intimidation in the person’s presence. What distinguishes robbery from theft is that force is employed. In a robbery, the victim must feel threatened and compelled to give up her property. In contrast, a theft is the unlawful taking of the movable property with the intent to permanently deprive the person of the property. The common law calls this crime larceny, but in PA it is called theft.
Criminal assault is the creation of apprehension of imminent harm. John approached Mary with his handgun and told her he would shoot her if she did not give him her purse. Mary was overcome with fear, which would establish that she was in apprehension of imminent harm. John is likely to be convicted or criminal assault based on these facts.
In the alternative, John could be charged with reckless endangerment of another. In Pa, reckless endangerment involves a reckless conduct which results in serious bodily injury or threat of bodily injury. Here, John held a loaded gun to Mary’s head and told her he was going to shoot her if she didn’t give him the purse. He then proceeded to rip the purse from her. This conduct could be considered as reckless and by using the gun placed her in imminent threat of serious bodily injury (being shot).
Evidence- Relevance + Parishoners Priv
Pursuant to the PaRE (Rules of Evidence), all relevant evidence that is not otherwise privileged is admissible.
Relevant means having any tendency to make the existence of a material fact more or less likely. The evidence in question here is clearly relevant as it goes to the ultimate issue of John’s guilt for the robbery of Mary and is an admission by the perpetrator of the crime.
Thus, the only objection to the admission of this evidence is that it should be excluded based on the “parishioner-priest” privilege which is recognized in many jurisdictions. This privilege protects information communicated between a parishioner and his religious advisor when the communication is made for purposes of spiritual counseling.
First Amendment + Public Interview
Government actor
The First Amendment guarantees a right to freedom of speech and in the context of public employment an employee is entitled to comment on matters of public concern without fear of recrimination by her public employer, unless the comments would have a significant impact on her job, i.e. be attributed to the governmental entity.
Here, Paul is employed by the City government, a governmental actor, and was fired by the City based upon his comments in a TV interview. This will violate his right to free speech if it is found that the alleged corruption is a matter of public concern, which it appears to be. Although a strong argument may be made by the City that this was a purely private dispute between employer/employee and that therefore the “public comment” prohibition on free speech should not apply.
While the City has a strong argument, the Court should uphold Paul’s claim that he was dismissed from public employment for commenting on a matter of public concern, in violation of his first amendment right to free speech.
Due Process-
SHABI + PET DW
The Due Process Clause provides that a person may not be deprived of life, liberty or property without due process of law. An individual must have one of these interests harmed before he can maintain a due process claim.
In regards to public employment, a property right, or entitlement, exists when an employee can only be terminated “for cause.” When such an entitlement exists, an individual is entitled to due process of law as determined by balancing (1) the importance of the interest to the individual; (2) the value of the process; and (3) efficiency concerns.
Usually a “for cause” employee is entitled to notice and a hearing, or at least quick post-termination relief before his dismissal.
Corp: Derivative action
- if it fails:
A corporation must reimburse its directors for the costs of defending a derivative suit where the directors prevail on the merits of the case. Because it is likely that Ben’s action will fail both with regard to the alleged violations of duty of care and duty of loyalty, Autotown must pay for their defense.
Each part of Ben’s derivative action will likely fail on the merits, even if Marydel law did apply, because Autotown’s directors will be protected under the business judgment rule with regard to any alleged violations of their duty of care, and will be protected by board of directors’ approval by a majority of disinterested directors with regard to any alleged violation of the duty of care.
The issue here is whether the directors, by virtue of Ben’s advice and the circumstances surrounding the purchase of Ed’s Marydel sites, violated their duties of care and loyalty to the corporation. A director must discharge his or her duties in good faith and with a reasonable belief that what she does is in the corporation’s best interests. A director must also exercise that degree of care which a reasonably prudent person would exercise in the care of her own business. With reference to the first part of this standard, the duty of loyalty, a director’s actions will be insulated if the action, even if it involves self dealing by one of the directors, is either fair to the corporation or approved by a majority of disinterested directors or a majority of all shareholders. With reference to the second part of the standard, directors will benefit from the protection of the business judgment rule, which insulates directors from liability for not exercising reasonable care if their actions are informed, have a rational basis, or are based on a good faith reliance on either the financial statements of the corporation, its book value, or a report from a competent source as to the fairness of a proposed transaction.
In this case, the directors’ approval of the transaction will not violate the duty of loyalty, notwithstanding Ed’s obvious interest in the transaction. Not only was there full disclosure of the nature of the agreement to the directors, but a majority of the disinterested directors approved it. Ben’s duty of loyalty claim will therefore fail. In addition, the directors’ decision here appears to be informed. They were apprised by Ben of his take on the proposed deal, but there is nothing to indicate that Ben had any special financial information that Carl did not. Carl’s belief that the transaction was fair, based on acceptable method of valuation, could have just as easily been relied on by the directors. A disagreement will not preclude operation of the business judgment rule here. Ben’s derivative action should fail as to both voiding the purchase and holding the directors liable.
Federal Income: Alimony
Income is any ascension is wealth, from whatever derived. Under IRC Section 62, unless subject to specified exclusions, income is taxable. Deductions may be applicable in determining AGI or taxable income.
Alimony/ spousal= taxable income + in kind, by cash/check _ not prop
- presumption if divorce that
- taxable income to payor/wife
- -deductable as “above the line” deduction to spouse
– only way to negate presumption is if expressly provided as part of prop distribution.
wife: must report as taxable income in yr
hub: can deduct as “Above the line”
- part of divorce/seperation agreement
- living s
Conflict of laws: Corp
STATE OF INCORPORATION
Autotown is a Pennsylvania corporation. Although MLI was a Marydel corporation, it was purchased by Autotown and merged into Autotown and therefore the resulting entity is a Pennsylvania corporation. It follows that Autotown’s incorporators understood that as the state of incorporation Pennsylvania law would govern Autotown’s internal affairs and that Ben and Ed, after merging their corporation into Autotown would have a similar understanding and expectation. Generally speaking, questions involving the internal affairs of a corporation (that is, the relations among the corporation, its shareholders, directors, officers, etc.) are resolved pursuant to the laws of the state of incorporation.
The policy is to give effect to expectation of the parties.
In order to achieve uniformity, and to give effect to the expectations of the parties (that is, the corporation, its shareholders, directors, officers, etc.) the law of the state of incorporation usually is applied to determine the duties owed by an officer or director to the corporation and the extent of a director’s or officer’s liability to the corporation and/or its shareholders. Restatement 2nd, Conflict of Laws, §309. Therefore, the decision regarding the director’s liability to Autotown regarding the purchase of Ed’s properties should be decided under Pennsylvania law. See Zapata Corporation vs. Maldonado, 430 A.2d 779 (Del. 1981).
The issue as to what law to apply has nothing to do with property, but rather has everything to do with corporate governance. That is, it is a question of when the shareholders must be given a voice in corporate decisions. That question must be answered by the law of the state of incorporation. (See CTS Corp. v. Dynamics Corp. of America, 481 U.S. 69 (1987).)
is car personal interest taxable?
no= personal interest is not taxable
- Able’s advice to Sam was inaccurate under the Internal Revenue Code because personal interest is not deductible and otherwise deductible interest which is not allocable to the year of payment is not deductible in an earlier year of payment.
Section 163 of the Internal Revenue Code (IRC) allows a deduction for interest paid, provided it is not personal interest.
Personal interest- related to business, investment, residence, student loans MAY be decuctible but not personal property such as a car.
Section 163(h) defines personal interest as all interest other than specified allowed forms of interest. These allowed forms of interest are trade or business interest, investment interest, certain passive activity interest, qualified residence interest, certain tax installment interest and certain student loan interest. Sam’s interest on his personal car loan does not fall into any of these categories and, as such, is personal interest which is not deductible. Accordingly, Able’s advice that interest paid on Sam’s car loan is deductible was not accurate. A possible exception would be if the car loan was for a trade or business which the facts do not support. Another possible exception could have been if the car loan had been collateralized by a personal residence of Sam’s under Section 163(h)(3) of the IRC, but the facts state that Sam had no such residence at the applicable time.
PR: Can you represent conflicting parties/corp?
No. L needs
mutual consent + consult to ensure NOT materially adverse to representation
otherwise, after consulting, consent= WITHDRAW
Able can represent Frank and P Corp without their mutual consent so long as the representation of Frank is not directly adverse to P Corp and so long as said representation is not materially limited by Able’s duties to P Corp.
On the other hand, if Frank asked Able to work on a plan for the hostile takeover of control of P Corp, Rule 1.7 would apply because Able’s representation of Frank would be directly adverse to P Corp and compromised by his responsibility to P Corp. In such a case, Able would either have to somehow reconcile these conflicts and comply with the consultation/consent provisions of Rule 1.7 or (more likely) withdraw. Assuming in this case that Frank needs only a routine estate plan, Able would appear to have no Rule 1.7 conflict and hence no Rule 1.13 conflict.
