February 2018 Third Example Ten-point Answers to Virginia Essay Questions
February 2018 - QUESTION 8 – VIRGINIA BAR EXAMINATION
All Countertops Corporation (“ACC”), a Virginia corporation with its showroom and office in Leesburg, Virginia, manufactures and sells high-end countertops for kitchens and bathrooms. Elite Homes, Inc. (“Elite”), a Delaware corporation, with its only office and other facilities in Hartford, Connecticut, builds and sells luxury homes exclusively in the tri-state area of Connecticut, New York, and New Jersey. Elite is not qualified by the Virginia State Corporation Commission to do business in Virginia and does not maintain a registered office (or any office) in Virginia.
Riles Plumlee, a resident of Washington, D.C., works for himself as a commission salesman representing a number of manufacturers, including ACC. Riles called on Elite at its office in Hartford. During the meeting, Elite placed and signed a contract on a form supplied by Riles for ACC to furnish $200,000 worth of granite countertops, to be shipped F.O.B. Leesburg to Elite’s warehouse in Hartford. After leaving Elite’s office, Riles transmitted Elite’s order to ACC, which promptly worked to fulfill the order.
On December 6, 2017, the ACC countertops were received in Leesburg by a common carrier which, in due course, delivered them to Elite’s warehouse in Hartford. On that same day, ACC invoiced Elite in the amount of $200,000. However, Elite declined to pay, alleging that some of the countertops had been damaged in transit. ACC then filed a Complaint against Elite in the Circuit Court of Loudoun County, Virginia, reciting the above facts and seeking payment of its invoice and its attorneys’ fees.
|(a)||Is the Loudoun County Circuit Court authorized to exercise personal jurisdiction over Elite? Explain fully.|
|(b)||Which party bore the risk of damage to the countertops? Explain fully.|
|(c)||Assuming the Loudoun County Circuit Court is authorized to proceed, on what basis, if any, might the Court award attorneys’ fees to ACC? Explain fully.|
February 2018 - QUESTION 8 – EXAMPLE ANSWER #1
(a) No, the Loudoun County Circuit Court is not authorized to exercise personal jurisdiction over Elite.
In order to file an action against another party, the jurisdiction in which the action is filed must have proper jurisdiction over the subject matter as well as the parties of the case. Personal jurisdiction is whether the jurisdiction has the ability to enforce any judgment or remedy against a party. In Virginia, if a case is filed in Virginia against a non-Virginia resident/corporation, Virginia’s long-arm statute must be able to reach the defendant (a jurisdiction is automatically able to exercise personal jurisidction over a citizen of that same forum state). The defendant must have some type of contact within the state of Virginia in order for Virginia to be able to enforce against the defendant. For example, if a contract were made in the Virginia, the fact that the contract was made and finalized in Virginia is enough for a Virginia court to have personal jurisdiction over a non-Virginian party to the contract. A defendant must have minimum contacts with the forum state, otherwise the forum state is not the proper jurisdiction to bring the action in and the case must be dismissed.
Elite is a Delaware corporation with its only office and facilities in Hartford, Connecticut. Elite only sells and builds homes in the Connecticut, New York, and New Jersey tri-state region. Elite does not have any offices or facilities in Virginia nor does it sell or build any homes in Virginia. This is evidenced by the fact that Elite is not qualified by the Virginia State Corporation Commission to do business in Virginia (which is required by any corporation that wishes to do business in the state) and does not maintain a registered office (or any office) in Virginia. So Elite would not be able to be served any process or pleadings in the state because they do not have any official offices nor is there a registered office or agent that can be served on behalf of the corporation. The next step is to see if Virginia can exercise personal jurisdiction over Elite based on the formation of the contract between Elite and ACC. But here, Elite negotiated its terms of the contract with Riles, who is a DC resident. Riles communicated with Elite via phone calls where Riles was located in DC and Elite was in Connecticut, no one was in Virginia. So Virginia still cannot argue personal jurisdiction over Elite because none of the contract formation took place in Virginia. The next step would be to see if the transaction stemming from the contract touched Virginia at all. Here, the ACC countertops were received in Leesburg, Virginia by a common carrier who then delivered them up to Hartford, Connecticut to Elite. But even though the countertops were transferred from Leesburg, Virginia, Elite had no part of this transfer and is not the common carrier that delivered the countertops up to Hartford, Connecticut. So there are no minimal contacts available here for Virginia to properly assert personal jurisdiction over Elite and therefore Elite should file a motion to dismiss for lack of personal jurisdiction.
(b) Elite bore the risk of damage to the countertops because it was a shipment contract.
This is a contract under the UCC because it is a sale of goods, the countertops. There are various types of UCC contracts and how the risk of loss is delineated. A shipment contract is where the seller delivers F.O.B. (free of board) to a common carrier, makes the proper arrangements for the common carrier to deliver the goods to the buyer, and notifies the buyer when the goods have been delivered. During a shipment contract, the risk of loss is on the seller until delivery to the common carrier, and at that point the risk of loss is shifted over to the buyer. So the buyer has the burden of risk during the common carrier’s shipment to the buyer. The other type of contract is a destination contract where the seller delivers F.O.B. to the buyer directly (to either the buyer’s place of business or a place designated by the buyer) and the buyer is notified upon delivery of the goods at the designated location. During a destination contract, the risk of loss remains with the seller until the goods have been delivered to the buyer.
Here, Elite signed a contract on a form supplied by Riles for ACC to furnish $200,000 worth of granite countertops, “to be shipped F.O.B. Leesburg to Elite’s warehouse in Hartford.” The ACC countertops were received in Leesburg by a common carrier that then delivered them to Elite’s warehouse. So ACC was responsible and liable for any risk of loss to the countertops until they were delivered to the common carrier in Leesburg, Virginia. At that point, the risk of loss was transferred to Elite and any damage that occurred during the common carrier’s delivery of the goods up to Hartford, Connecticut was bore by Elite. So Elite’s refusal to pay due to some damage to some countertops during transit is improper.
(c) The Court may not award any attorneys’ fees to ACC or anyone, unless the original contract provided such provision.
In actions involving contracts, awarding any attorneys’ fees is prohibited in Virginia. However, if the action involves a contract under the UCC, a court may award attorneys’ fees only if this type of remedy is already agreed upon in the original contract. If the original contract has a provision allowing attorneys’ fees in contract disputes, then the court may award the fees. But if there is no mention of attorneys’ fees in the contract, the default rule is that the court may not award them.
As discussed above, this is a UCC contract for the sale of goods, specifically countertops. So in the UCC world, a contract may have agreed-upon terms regarding payment of attorneys’ fees in any contract disputes. But as far as the facts indicate, the contract between Elite and ACC did not have any provision discussing payment of attorneys’ fees, therefore it is presumed that such provision did not exist. Therefore, it is improper and not possible for the Court to award any attorneys’ fees to ACC.
February 2018 - QUESTION 8 – EXAMPLE ANSWER #2
8a. Loudoun County Circuit Court is authorized to exercise personal jurisdiction over Elite by way of Virginia’s Long Arm Statute.
Virginia courts may exercise personal jurisdiction over those who live in the Commonwealth and those outside of the Commonwealth by way of its Long Arm Statute. Virginia’s Long Arm statute provides a number of instances in which courts in Virginia may have personal jurisdiction over non-citizens and corporations from out-of-state. One of those is when a company transacts any business in Virginia. Virginia is a single transaction state and therefore, it only takes one contract entered into with a Virginia company, for a non- citizen to be subject to personal jurisdiction by a Virginia court.
In this case, we have All Countertops Corporation (“ACC”), a Virginia Corporation with its principal place of business in Virginia, entering into a contract with Elite Homes, Inc. (“Elite”), a Delaware Corporation with its principal place of business in Connecticut. The contract is to provide $200,000 worth of granite countertops to be shipped to Elite’s Warehouse in Hartford. Here, we have a transaction to do business between a Delaware and Connecticut corporation and a Virginia corporation. Virginia, being a single transaction state, will have personal jurisdiction over Elite under its Long Arm Statute on the basis of this single transaction. Although the contract was signed by Elite in Hartford, Connecticut, the last part act to make the contract binding took place in Virginia, which was fulfilling the order, as there are no facts to suggest ACC had pre-signed the contract.
However, personal jurisdiction must also satisfy the Due Process Clause of the Fourteenth Amendment and to do so the defendant must have “minimum contacts” with the Commonwealth of Virginia so that personal jurisdiction does not offend traditional notions of fair play and substantive justice. When looking at whether the Defendant has minimum contacts, we look to whether the defendant purposefully availed himself of the benefits of doing business in Virginia and whether it was foreseeable that he may be sued in a Virginia court. We look to the relatedness of the claim to those contacts with the state, and finally, we look to fairness factors, focusing on the affect on Defendant and witnesses in bringing the case in Virginia, the state’s interest in the claim and finally, the plaintiff’s interest in having the case heard in Virginia.
Elite has entered into a contract with a Virginia corporation and purposefully availed itself of the benefit of doing business with a Virginian company. On the basis of this contract alone, it is foreseeable to Elite that it could be sued in Virginia should this contract be breached. Furthermore the claim is based on this one transaction between Elite and ACC and therefore the claim is related to the Defendant’s contact with the state. Furthermore, when considering the various fairness factors, Virginia obviously has an interest in the case, and the ACC has an interest in having the case heard in its home state. Also, it may be equally inconvenient to the Defendant and witnesses to have the case in Virginia as to elsewhere.
Therefore, in light of minimum contacts analysis, Loudoun County Circuit Court exercising personal jurisdiction over Elite is in accordance with Virginia’s long arm statute and furthermore, does not offend the Due Process Clause.
8b. Elite bears the risk of damage to the countertops during shipping.
A contract which states FOB followed by a city is a shipment contract and the location stated after FOB is where the seller’s risk of loss ends. In this case, the contract stated F.O.B. Leesburg, which is the location of ACC’s office and showroom. Accordingly, this notation means that the seller no longer bears the risk of damage to the countertops once they have been collected by the common carrier from Seller’s office in Leesburg. At this point the risk of loss shifts to Elite, and they bear the risk of loss during shipment.
8c. Loudoun County Circuit Court may only award Court attorneys’ fees if the contract between ACC and Elite provide for them.
Virginia Rules of Civil Procedure do not provide for the award of attorneys’ fees in any action unless provided by statute or in a contract or agreement between the parties. Given the nature of this case, it is unlikely that there is a relevant statute which will provide for the award of attorneys’ fees. Therefore, the only basis for Loudoun County Circuit Court awarding attorneys’ fees to ACC is if the contract has provided that the winner of any dispute regarding the contract shall have its attorneys’ fees paid by the losing party, or it shall be able to recover its attorneys’ fees from the losing party.
Otherwise, the Court has no basis for awarding attorneys’ fees.