Appendix B — Case Files
Appendix B — case files for fourteen mythical disputes set in the City of Mitchell and other invented jurisdictions, providing the e-discovery problems and fact patterns the rest of the book exercises in classroom, CLE, and self-study settings.
Appendix B
Case Files
■ ■ ■
The disputes that arise in these cases occur in mythical jurisdictions that have adopted as state laws the Federal Rules of Civil Procedure and the Federal Rules of Evidence and relevant federal case law.
Unless otherwise indicated, the events take place in the City of Mitchell, which is in the county of West and the State of Summit.
Other states include: Beachland, Coastland, Peakland, Grassland, Gothamland, Heartland, Forestland, Gulfland, and Fantasyland (wishful dreaming).
E-discovery Files
www.fundamentalspretriallitigation.com
This Twelfth Edition includes e-files containing electronic documents and electronically stored information that are available on a separate dedicated and accessible West Academic website: www.fundamentalspretriallitigation.com. This proprietary site contains numerous electronic documents and e-discovery problems specifically selected and designed for this book. Some of the assignments in this text refer to problems and documents that appear on the website. Your professor may assign lawyering work involving these problems. Further, you can view these electronic documents and conduct e-discovery searches on your own at any time. What else would you rather be doing, really?
Case Files
Summary of Contents
Case A. Hot Dog Enterprises v. Tri-Chem 833
Case B. Pozdak v. Summit Insurance Company 848
Case C. Miyamoto v. Snow Cat 852
Case D. Giacone v. City of Mitchell 856
Case E. Mitchell Computer Club v. Rainbow Computer 858
Case F. Vasquez v. Hot Dog Enterprises 859
Case G. LaBelle v. Mitchell Arts Council 863
Case H. Luger v. Shade 865
Case I. Rheinwald v. Whirling Dervish Lathes 867
Case J. Northern Motor Homes v. Danforth 869
Case K. Burris v. Warner 880
Case L. FJE Enterprises v. Arbor Vineyards 891
Case M. Tymons v. Allgoods and Razzle 896
Case N Mullarkey v. Denial Mutual Insurance Co. 898
Case O Estate of Dara Domestic v. Gravitas Grinch and Grinch v. ProTectCo Life Insurance Co. 902
Case P Igor Investor v. TechTrust Wealth Management 904
—————
Additional problems and confidential materials for some of these cases appear in a Fundamentals of Pretrial Litigation Supplement* *that your instructor will provide you if and when needed. E-discovery problems and electronic documents appear at:
www.fundamentalspretriallitigation.com
CASE A
Hot Dog Enterprises v. Tri-Chem
Additional factual and legal information about this case appears in HDE v. Tri-Chem at the end of Chapters 1, 2, and 3.
DOCUMENTS
The following documents comprise this case file:
- Information on Architect Eileen Robin
- Information on Masonry Contractor Kelly Devitt
- Information on Structural Engineer Julie Kouri
- Information on Masonry Engineer Donelle Lakemoore
- Research Memorandum from Clyde Irfram, Tri-Chem Researcher
- Confidential Email Memorandum from Tri-Chem Research Facilities
- Research Memorandum from Tri-Chem Research Facilities
- Confidential Memo from Sonja Belacorte, Tri-Chem Manager
- Sales Information from Lucinda Ijima, Tri-Chem Sales Manager
- Architect Data from Wes Wojcik, Tri-Chem Architect Liaison
- Memorandum from Carl Blackfoot, Tri-Chem Research Manager
- Tri-Chem Sales Brochure
- Tri-Chem Bulletin
- Communication from B.J. Wojcik, Tri-Chem Products Manager
- Communication from Azad Raj, HDE Consulting Engineer
- Communication from Ngnon Nashwa, Tri-Chem Customer Services
ARCHITECT
Eileen Robin
Eileen Robin is an independent licensed architect who has been practicing in various states. Robin learned of the Bond-Mor product through Tri-Chem websites, phone calls, personal visits, and promotional literature. In addition to being familiar with the product, she was introduced by Tri-Chem to Julie Kouri, a structural engineer, to acquaint Kouri with Bond-Mor.
Since her introduction to Tri-Chem and the Bond-Mor product, Robin has served as an architectural consultant for Tri-Chem and other businesses on a variety of projects. When Hot Dog Enterprises (HDE) contacted Tri-Chem to begin work on its Ohio building, Tri-Chem recommended that HDE consult with Robin. And, HDE retained her as a consultant on that building.
As a result of her retention by HDE and other businesses as a Bond-Mor expert, Tri-Chem has recommended Robin throughout the country as an authority and spokesperson for Bond-Mor. Robin has made considerable consultant fees from Tri-Chem and continues to work with Tri-Chem today.
MASONRY CONTRACTOR
Kelly Devitt
Kelly Devitt is a masonry contractor engaged in the construction of brick buildings throughout the United States operating under the name of Kelly Devitt Company, LLC. Tri-Chem approached Devitt to solicit Devitt’s bid on various projects nationwide with work done on each project to be done with Bond-Mor. Devitt submitted a bid pursuant to Tri-Chem’s solicitations and received various masonry contracts and completed work on these projects with the assistance and oversight of Tri-Chem. Numerous emails, texts, voice messages, and memos exist establishing this relationship between Devitt and Tri-Chem.
Devitt, through continuing consultation with Tri-Chem, established a company to sell franchises for the design and construction of buildings using prefabricated brick panels made with Bond-Mor. Devitt, with the support of Tri-Chem, founded Bonding Systems, Inc. (BSI). BSI sold and licensed others to fabricate masonry panels using Bond-Mor.
Tri-Chem recommended Devitt throughout the United States as an authority and spokesperson on the successful use of Bond-Mor. Tri-Chem provided Devitt with favorable tests, videos, data, and other promotional material to promote the sale of BSI franchises throughout the United States thereby increasing the sales of Bond-Mor.
Tri-Chem also utilized Devitt to repair parts of building structures containing Bond-Mor that had rusted and cracked. In addition, Devitt constructed, using Bond-Mor, the prefabricated brick panels that formed the exterior of the restaurant buildings of HDE in Kansas.
STRUCTURAL ENGINEER
Julie Kouri
Julie Kouri is an experienced and licensed consulting structural engineer. Tri-Chem introduced Kouri to Bond-Mor through conference presentations, emails, phone conversations, texts, and promotional literature. Tri-Chem also introduced Kouri to architect Eileen Robin to further acquaint Kouri with the capabilities of Bond-Mor.
Kouri was employed as a structural engineer on the building projects of HDE’s buildings in Kansas. Kouri consulted with a representative of Tri-Chem regarding the design and construction techniques for the buildings made of Bond-Mor prefabricated brick panels.
Tri-Chem’s contacts with Kouri extended beyond the Kansas project. Tri-Chem recommended Kouri throughout the United States as an authority and spokesperson for the successful use of Bond-Mor. Tri-Chem included Kouri as a co-author, in its literature entitled “Project History: Best Bond Mortar Applications,” that was distributed nationally. Tri-Chem also recommended Kouri as an outside structural engineer in its literature to encourage the use of Bond-Mor in the construction industry.
MASONRY ENGINEER
Donelle Lakemoore
Donelle Lakemoore, a masonry engineer and Regional Director for the Structural Products Institute (SPI), had assisted Tri-Chem in test marketing Bond-Mor. Lakemoore brought to the attention of Tri-Chem evidence that dehydrochlorination causes and accelerates corrosion of steel, iron, and related metals in contact with Bond-Mor.
Lakemoore has spoken to representatives from Tri-Chem (including Sonja Belacorte and Lucinda Ijima) on several occasions and told them that investigations and field exposures make it necessary to protect metals in or adjacent to masonry from corrosion. Lakemoore on two occasions has showed Tri-Chem officials (including Wes Wojcik and Carl Blackfoot) unprotected steel rods that were heavily corroded and had been taken from relatively new buildings constructed using Bond-Mor.
**Hot Dog Enterprises v. Tri-Chem Documents
TRI-CHEM RESEARCH MEMORANDUM
TO: Bond-Mor File
FROM: Clyde Irfram, Tri-Chem Researcher
RE: The effects of the proposed mechanism for the basic degradation of Zetes Latex.
DATE: April 3, 2018
After researching the differences between basic mortar and the proposed Zetes latex product (a/k/a Bond-Mor), my conclusions regarding the product are as follows:
The devastating effect in basic mortar of vinylidene chloride polymers is well known. These reactions are rapid and result in a dehydrohalogenation enhancement in colored and black and white products. The mechanism proposed for the basic degradation of Zetes consists of an attack by the basic component of the acidic hydrogen, accompanied by simultaneous elimination of the chloride atom. In this manner, Zetes differs markedly from basic mortar. Something would need to be done to protect steel, iron, and other metals embedded in the Zetes latex product from such highly chronic degradation. In short, this situation has to be resolved before the proposed Bond-Mor product can be successful.
TRI-CHEM EMAIL MEMORANDUM
CONFIDENTIAL
TO: Division Managers
FROM: Tri-Chem Research Facilities
SUBJECT: The research findings of Dr. W.U. Sun, addressing the Zetes Latex product contained in prestressed concrete.
DATE: July 23, 2018
We recently retained Dr. W.U. Sun to complete a research report entitled: Corrosion of Metals in Prestressed Concrete. During the course of that research, Dr. Sun discovered and concluded that “Zetes latex should not be used in connection with prestressed concrete.” Dr. Sun based this conclusion on the opinion that potential dangers of corrosion due to the presence of chloride are greatest in prestressed concrete. Dr. Sun suggested as an alternative product a new latex system beyond Bond-Mor that would not release free chloride, and thus deter the corrosion of steel, iron, and related metals placed in contact with Zetes latex products. One solution would be to coat embedded metals with a protective material (i.e., galvanize). Should you know of or if you can think of other solutions, notify me. We would rather search for a solution that does not affect the production of Bond-Mor.
TRI-CHEM RESEARCH MEMORANDUM
CONFIDENTIAL
TO: Internal Memorandum
FROM: Tri-Chem Research Facilities
RE: Results of tests designed to measure the durability of latex modified concrete.
DATE: June 21, 2019
We have constructed a test facility to determine the durability of latex modified concrete using Bond-Mor. We constructed four panels of concrete, each made of a different concrete mixture: Panel A contained no Zetes latex; Panel B contained only trace amounts of chloride (the corrosive element found in Zetes latex); Panel C contained 100% Zetes latex; and Panel D contained 50% Zetes latex. The panels were then tested one year later. The steel in Panels A and B that had not contained any Zetes latex were found to be clean of rust corrosion. However, Panels C and D that contained the Zetes latex were rusted throughout their entire length with deeper corrosion in heavy scale build up.
After observing the effects of corrosion in Panels C and D, we have come to the conclusion that Zetes latex may very well be or is the cause of such corrosion. The concrete test lab was not subject to an outside influence, as far as the corrosion of metal is concerned. Consequently, the observed corrosion must have been generated by the conditions within the panels. Since the steel within Panels A and B were clear of rust, and Panels C and D were rusted, we must conclude by process of elimination that the rust was generated internally in the panels and as a result of the Zetes latex product Bond-Mor.
A possible solution to this apparent problem is to protect and cover steel, iron, and other metals contained in latex modified concrete from direct contact with Bond-Mor, which ought not adversely affect its strong adhesive nature.
TRI-CHEM EMAIL MEMORANDUM
CONFIDENTIAL
TO: Bond-Mor Project Managers Only
FROM: Sonja Belacorte, Tri-Chem Manager
SUBJECT: Research results addressing rust and rust-inhibition in the Bond-Mor product.
DATE: August 6, 2019
It has recently come to my attention that one of our researchers found that metal, placed in contact with mortar containing Bond-Mor, developed rust after just 180 days. In addition, the researcher discovered that corrosion of metal appeared to be worse in Bond-Mor mortar than in normal cement mortar.
The researcher also experimented with numerous rust-inhibitors and protective metal coatings, most of which worked against Bond-Mor. Over the years, we have experimented with potential products for sale, many of which are Zetes latex products, including Bond-Mor. Those experiments with Bond-Mor have resulted in the probable conclusion that when the product is brought into contact with metals it appears to have consistently resulted in corrosion unless the metal is protected from such potential corrosion. These experiments may, or may not, reflect conditions outside the research laboratory.
TRI-CHEM SALES INFORMATION
Bond More with Bond-Mor
May 7, 2020
Dear Masonry Sales Specialists:
In response to inquiries regarding the quality of the current composition of Bond-Mor, we provide this factual information. During the course of extensive recent experiments, we have discovered that the rates of corrosion of Bond-Mor in and out of mortar are approximately the same for other types of mortar that do not possess the Bond-Mor additive. These experiments also confirm previous results that prove that mortar with Bond-Mor bonds better and lasts longer.
We conclude that it is highly reasonable to state that under a variety of conditions, the corrosion of various types and conditions of metals in these types of mortars will be about equal.
Please do not hesitate to contact us with any further information requests about the successful use of improved Bond-Mor.
Sincerely, Lucinda Ijima Tri-Chem Marketing Manager
TRI-CHEM ARCHITECT INFORMATION
Bond More with Bond-Mor
September 7, 2020
Dear Architects:
This update provides you with current data regarding the Bond-Mor additive and the possible corrosion of metal embedded in Bond-Mor mortar.
The corrosion of iron is caused by oxygen and water. The Bond-Mor mortar additive contains small amounts of chloride ion that, under certain selective circumstances, can enhance the tendency of unprotected steel, iron, and related metals to corrode if oxygen and water are also present.
While chloride ions, which can be leached from Bond-Mor under favorable circumstances, could enhance the corrosion of metals, this should have no effect on properly protected metals, such as galvanized materials. If you have further questions regarding the Bond-Mor additive in relation to metal-embedded corrosion, please do not hesitate to contact us.
We are ready to provide additional data about the highly effective uses of Bond-Mor.
Sincerely,
Wes Wojcik Tri-Chem Architect Liaison Tri-Chem
TRI-CHEM EMAIL MEMORANDUM
CONFIDENTIAL
TO: All Tri-Chem Employees
FROM: Carl Blackfoot
SUBJECT: Recent research of Bond-Mor product and corrosive properties
DATE: February 15, 2021
The Tri-Chem research department conducted a recent study of Bond-Mor and its corrosive properties. The researcher concluded that mortar formulated with Bond-Mor additive could be considerably more corrosive to steel and iron embedded in normal mortar. Chlorides released by the degradation of Zetes latex causes depassivation of steel and iron, thus allowing corrosion to proceed.
We have recommended the use of metallic protective coatings, if the structure is frequently in contact with water. It appears that under some conditions more chloride is being released by Bond-Mor than was expected. Protective coatings over the steel, iron, and other metals can be readily used to ameliorate any potential corrosion and prevent future problems.
TRI-CHEM SALES BROCHURE
2021
After safety testing the effects of adding to and including in metal reinforcements various building and structural assemblages, Tri-Chem researchers have concluded that:
- Bond-Mor is unique in maintaining greatly improved strains when the cured composition is subject to wet or moist environments.
- Bond-Mor provides highly adhesive contacts and long-lasting adhesion qualities to all types of mortar, brick, and cement compounds.
- With Bond-Mor, the performance of protected structural elements incorporating a protective system may be completely and confidently predicted.
- Bond-Mor has been sufficiently and thoroughly tested by experienced Tri-Chem researchers in state-of-the-art research facilities.
- Bond-Mor outperforms present industry standards regarding mortar additives.
- With Bond-Mor, you can be assured of using the best product on the market.
Bond More with Bond-Mor
TRI-CHEM BULLETIN
January 2022
RE: Amendment to Section 9.3 of Bond-Mor Use Specifications. Distributed as a supplement to promotional information nationwide. Effective immediately.
It is recommended that all metal anchors, ties, rods, angles, and reinforcing bars for other steel, iron, and related metals embedded in mortar additives should be coated with a corrosion resistant material such as cadmium or zinc, or other such galvanized materials having equivalent or better corrosion resistant qualities. Stainless steel need not be included as having equivalent or better corrosion resistant qualities and therefore can be excluded as an alternative metal.
Bond More with Bond-Mor
HOT DOG ENTERPRISES v. TRI-CHEM CORRESPONDENCE
December 17, 2022
Re: Response to inquiries regarding Bond-Mor’s potential for rust-related damage in HDE’s Ohio restaurant buildings.
Dear Hot Dog Enterprises:
In response to your inquiry of whether Bond-Mor would rust metals, we wish to provide you with assurances that from the chemistry of Bond-Mor with cement and metals, we would expect no contribution by Bond-Mor toward rust related damages. Instead, these properties should well inhibit the rust process. Removal of masonry from projects 4 to 7 years old showed no significant signs of rust. Attempts to force the rusting of metals, under accelerated conditions in the laboratory, have largely been without success.
We took the time for a thorough study of the problem and are satisfied that Bond-Mor does not substantially contribute to the deterioration of protected metal reinforcements embedded in Bond-Mor additive mortar. If you wish to make additional inquiries, please contact us.
Sincerely,
B.J. Wojcik Tri-Chem Products Manager
**HOT DOG ENTERPRISES v. TRI-CHEM CORRESPONDENCE
January 12, 2023
Dear Tri-Chem Product Development Manager:
I have received a recent email from the Chairperson to the American Concrete Industry (ACI) Committee 531 regarding concrete masonry structures. The Chairperson stated that it had come to the attention of the Committee that the use of Bond-Mor mortars may be causing considerable trouble in the form of steel, iron, and other metals rusting away in reinforced masonry used in concert with Bond-Mor.
As a member of the Committee, I would appreciate the company’s comment to the question thus raised. We need to determine the existence of any potential short and long term problems using Bond-Mor in structural concrete and other materials embedded with metals. Please contact me as soon as possible so I might assess the question with all the relevant information. Thank you.
Sincerely,
Azad Raj, Consulting Engineer, HDE
**HOT DOG ENTERPRISES v. TRI-CHEM CORRESPONDENCE
November 30, 2023
Dear Casey Pozdak:
Thank you for your recent phone call regarding your HDE buildings. It is difficult to further comment on the problem at this time since there is insufficient data addressing potential causes for cracking in the masonry. If you feel there is a probable product failure, with Bond-Mor, it would be helpful to have some evidence on which this allegation is based.
As you are aware, there are many different issues involved in what might cause cracking in masonry buildings. The performance of Bond-Mor can be easily checked by removing small core pieces of masonry from the areas in question and testing them to determine whether the material is performing as well as it did when the building was constructed.
If there is a deterioration in Bond-Mor, we will take prompt action to find the cause of the problem and to rectify it. If the Bond-Mor mortar is performing as it was originally intended, in terms of the strength of the masonry, then I suggest you look for an alternative cause to the problem.
We continue to appreciate your business and look forward to continuing our relationship in the future.
Sincerely,
Ngnon Nashwa Customer Services Tri-Chem
CASE B
Pozdak v. Summit Insurance Company
Fran Pozdak originally insured his building on 560 Wesley Avenue with Summit Insurance Company five years ago for $675,000, the fair market value of the building, and the contents of the building (including art works, materials, equipment, and personal property) for a maximum value of $750,000, a high estimate. He made his annual premium payments on time for each of the past five years. Four months ago, when he paid this year’s annual premium, he increased the coverage on his building to $825,000 and the maximum value of its contents to $1,250,000, a very high estimate. The increased coverage also provided for replacement cost, so that the contents would be valued at market value at what it would cost to replace them if they were new.
Five years ago, Summit Insurance had some concerns about issuing a policy to Pozdak because he had been accused of insurance fraud while in college. Pozdak had claimed that his college apartment had been robbed, and that valuable artwork and personal items had been stolen. There were no signs of a break-in at his college apartment, and police never found the allegedly stolen items. He sued his insurance company and settled out of court for about one-third of what he had claimed. Summit Insurance decided to insure though because the building on Wesley Avenue was relatively new and the college incident was the only suspicious activity at that time discovered about Pozdak.
The following memo was prepared by Brooks Farrell, an investigator with Summit Insurance Company.
[An FPL Supplement contains additional, confidential facts for each party that your professor will provide you if and when needed.]
To: Insured File 465H–87316
Fran Pozdak
From: Brooks Farrell
On Friday, July 3, a fire destroyed the insured’s building at 560 Wesley Avenue in Mitchell. The building was owned by the insured, Fran Pozdak, age 39, and used both as a residence and as a business. Pozdak lived in four rooms on the second floor. The first floor included a work area where he sculpted and a gallery where he displayed his work. He bought the building five years ago and has been a sculptor for about fifteen years. Pozdak claims that he has acquired a national reputation that substantially increases the value of his artwork. This claim does not appear to be supported by reliable sources.
The fire began at approximately 1:30a.m. Pozdak was not home. No one was injured. The fire completely destroyed the entire building and all its contents. Nothing was salvageable. The Mitchell Fire Department responded to the first call made at 1:45a.m. by a bar owner in the neighborhood. Five trucks arrived about five minutes later. It took about one hour to control the fire and another few hours to completely put it out. An investigator, Deputy Chief Marcus Tschida, of the Mitchell Fire Department, investigated the site of the fire the morning following the fire.
I contacted him that afternoon and he told me that the origins of the fire were suspicious and that he thought the fire may have been started by an arsonist. He explained that several factors made him suspicious: (1) the “hot spot” (where the fire started) was extensive in nature and the charred remains had evidence of flammable solvents that appeared to be spread over a several hundred square foot area; (2) the fire appeared to have spread very rapidly throughout the building, much more rapidly than usual in a building that was only ten years old; and (3) that Pozdak is in extreme financial difficulties and apparently in need of money.
Deputy Chief Tschida cautioned me that the fire may have been accidental because the quantity of solvents Pozdak stored for his work would have caused the wooden structure to burn down fairly rapidly and there was no evidence of an “accelerant” in the hot spot (a source of fire such as a torch or flammable liquid residue). I visited the scene of the fire the afternoon of the fire and my observations matched those of Deputy Chief Tschida. Further investigation needs to be done to eliminate other possible causes of the fire (such as electrical circuits).
I also began to investigate the financial status of Pozdak, and I learned that he has difficulty in placing his sculptures and works of art in galleries and museums; he has a drug problem and had eight weeks of treatment six months before the fire, which prevented him from sculpting; he was behind in his mortgage payments on the building; and he supposedly has back tax problems with both the federal and state governments.
Pozdak told Deputy Chief Tschida when he was interviewed several days after the fire that he was not home that night because he was spending a Fourth of July holiday weekend at a friend’s cabin about 100 miles from Mitchell. Pozdak said they had been hiking outdoors that day and that he went to bed early that evening and was asleep when Tschida called him early in the morning around 5 a.m. about the fire.
I contacted four people during this preliminary investigation:
Stacy Lindberg, the friend whose cabin Pozdak claimed he visited. Lindberg is a very close friend of Pozdak, having gone to high school with him. Lindberg was supposed to have lent Pozdak over $25,000 for sculpting materials that Pozdak still owes him. Lindberg refused to talk to me except to say that we were stuck paying and would have to pay royally. Lindberg has had job and financial problems over the years. His Linked-In account appears to have been canceled for displaying a series of untrue employment positions. A commercial credit report indicates that Lindberg has gone bankrupt twice over the past decade with two different corporations and that Lindberg’s current financial base is built on a fitness gym and exercise franchise.
Jan McCulrone, a former employee of Pozdak. Pozdak fired McCulrone several months ago, and she has little regard for Pozdak. She freely talked and told me that Pozdak was in deep financial trouble, that he owed Lindberg and others besides the bank a lot of money, and that his business had fallen off while he was in drug treatment. When he returned he accused her of cheating him by selling his artwork for less than she actually received and pocketing the difference. She vehemently denied the accusation. The truth was, she said, that Pozdak could not accept the notion that his reputation had been tarnished and he had never really established a national reputation, only a questionable regional status. She also told me that she had one conversation with him before she left, during which he told her that he knew of a way to make lots of money with his building. She admitted that, during and after her employment with Pozdak, she published several disparaging remarks about Pozdak on social media.
John Dodge, a college roommate of Pozdak. He and Pozdak had lived together in the apartment that Pozdak claimed had been burglarized. Dodge said Pozdak only infrequently had left items of art around the apartment during the time they lived together. He said he doubted that a theft had occurred, but he was out of town on the weekend it allegedly occurred. He also said that Pozdak was heavily involved in dealing drugs, and that Pozdak owed a lot of people money all the time. He hasn’t heard much from Pozdak since they graduated, except an occasional Facebook post.
Robin Abercrombie, a bartender at the Wesley Bar, whose owner first noticed the fire. Abercrombie left the bar around 1:30 a.m. and noticed a man getting into a car in the alley that bordered Pozdak’s building. Abercrombie generally described the man as about 6 feet, 200 pounds (which description fits Pozdak), dressed in dark clothes. Abercrombie thought he recognized the man as Pozdak because Pozdak frequented the Wesley Bar where he always bought lottery tickets. Abercrombie described the car as a sports car, probably a new BMW, which Abercrombie noticed because of his interest in buying such a car. Pozdak bought a new BMW last year and owes $45,000 on it.
Claim Status: Pozdak has filed a claim for $825,000 for the building and $1,250,000 for the contents. We estimate the replacement cost of the building to be around $600,000. Pozdak has filed a list of sculptures, art work, and materials allegedly worth more than the policy limits. Many of them may be valuable based on existing market and current art auction prices. Our insurance policy with Pozdak states:
Payment shall not be made under the terms of this policy for the fire destruction of the insured building and contents if the fire was caused by arson and if the insured caused or participated in the arson.
Further Investigation: More investigation needs to be completed about Pozdak and his activities. I was unable to gain access to his cell phone and text records. And social media networks need to be reviewed. There likely are other potential background and eye witnesses out there.
CASE C
Miyamoto v. Snow Cat
Mariko Miyamoto was an avid outdoors person and enjoyed winter recreation sports such as skiing and snowmobiling. Mike LaBelle, her husband, did not share her outdoor interests and preferred indoor leisure activities. Mariko worked full time as a law school placement director.
On November 8, Mariko purchased a new Snow Cat snowmobile for $13,790 cash from Sports Enterprises, an authorized Snow Cat retail store in Mitchell. The Snow Cat Company manufactures all its snowmobiles in the state of Heartland. It was a top of the line HS machine, which stands for High-Speed. She texted Mike from the store saying now she can really go fast. She trailered it home with her SUV.
Over the next few weeks, she posted photos of her snowmobile on Instagram with captions that announced she soon hoped to break her own personal top end speed record. Later that month, after the season’s first snowfall, Mariko and her friend, Jill Somerset, who owned a two-year-old Snow Cat, drove to the nearby state of Peakland to snowmobile. Neither of them had obtained a $30 permit to use the trails.
The snow cover varied between several inches and over a foot, although there were sporadic windblown bare patches of ground. Both Mariko and Jill began to snowmobile on marked public land trails. They both wore full face helmets and snowmobile suits. After snowmobiling for about two hours they took a break. Mariko told Jill how well her new machine ran.
After the break, they decided to veer off the groomed trails and look for some open land. They raced toward a large open expanse of snow-covered pasture at speeds over 50 m.p.h. and approached the crest of a small hill and a barbed wire fence, which was the boundary between public land and ranch land. The rancher had posted small signs about 300 yards apart along the boundary the previous year. Jill claims they never saw any signs.
Jill started to slow down and looked behind to see Mariko continuing straight ahead, past her, at fast speeds. Jill yelled a warning, and Mariko shouted back: “Throttle stuck . . . can’t stop!” Mariko reached the crest, slammed into the barbed wire, and skidded across some bare earth. She lay there unconscious, her snowmobile destroyed.
Jill straightened out her body and covered her with an extra jacket. There was no cell coverage. Jill rode to a ranch house in the distance, had the rancher, J.D. Ojala, call for help, and returned with the rancher to the scene. They loaded Mariko’s body on a trailer and left the snowmobile in the field. An emergency helicopter flew to the ranch and transported Mariko to the neighboring state of Grassland, where she died a few hours later.
A Peakland statute prohibits barbed wire fences bordering public lands unless conspicuously posted with large signs 100 yards apart. No one else except Mariko ever rode her snowmobile. Mike LaBelle retains you the day after the accident and seeks your legal advice.
[A FPL Supplement contains additional, confidential facts that your professor will provide you if and when needed.]
[Heartland, Peakland, and Grassland is each a state.]
Statement of Byron Cascades 11/20/XX
Statement of Alma Weymuth 11/20/XX
RE: Mariko Miyamoto Page 1 of 1
My name is Alma Weymuth. I worked at Sports Enterprises in Mitchell, Summit, from August 15 through December 15. I worked there when Mariko Miyamoto bought her Snow Cat snowmobile from Sports Enterprises. I was a mechanic and worked on the snowmobiles. I previously worked for three years at Sundance, Peakland as a snowmobile mechanic for Crestridge Winter Sports and repaired Arctic snowmobiles. Before that I spent two years at Peakland Vocational Institute and completed a course in Recreational Vehicle Maintenance.
In the Fall, business was extremely busy for Sports Enterprises. Beginning in October, I was working 6 days a week, 10 to 12 hours a day. There was one other mechanic. We could not keep up with the work. We received new snowmobiles in crates and completed assembling them and prepped them when they were sold. We also repaired used snowmobiles.
On a few occasions I told Sam Khoulsky, the owner of Sports Enterprises, that we couldn’t complete all the work. He told me in late October to do the best we could, and if we could not do everything, to assemble the new snowmobiles and spend less time checking them out. He said his customers wanted them as soon as possible and he told them he would do his best. Regardless of what he told me, I always completed safety checks on all new snowmobiles I worked on. But the other mechanic, Aziz Fakhir, was not especially careful, took shortcuts, and did what Khoulsky said.
In early November, I overheard a conversation between Sam Khoulsky and Shana Hauser, the factory representative from Snow Cat who was visiting Sports Enterprises. Shana told Sam that some of the new Snow Cats may have a problem with the throttle and to make sure they were doubled checked or something. I could not hear everything that was said because Sam closed his office door midway through the conversation. I never heard anything more about it. Sam never said anything to me about any throttle problems. I don’t recall there being a factory recall notice on Snow Cats.
I don’t specifically recall working on Mariko Miyamoto’s snowmobile. I made sure that every snowmobile I assembled was safe.
I quit working at Snow Enterprises because I couldn’t take the long hours. I now work at Carousel’s Auto Repairs in Mitchell.
/SIGNED/
Alma Weymuth
1721 Hopkins Avenue Mitchell, Summit
CASE D
Giacone v. City of Mitchell
Martha Giacone lives in her single family home at 765 Portland in Mitchell, Summit. She is 68 years old, receives social security and a small pension from her deceased husband’s former employer, and owns the home free of any mortgage. She, like all other residents of Mitchell, obtains water from the Mitchell Municipal Water Department. The Department is a municipal corporation organized under the laws of Summit to provide utility services, in this case, water. The corporation is a department of the City of Mitchell. An executive director, Kay Olsheski, oversees the operations of the Department and is appointed by the mayor of Mitchell.
The Water Department has established rules and regulations issued by order of the Executive Director, after public hearing, which detail its billing and collection procedures. Section 5.4 of the Water Department Regulations provides that:
Water services will be terminated to any subscriber if that subscriber fails to pay a water bill within 30 days after the billing date.
The Water Department bills quarterly. Municipal water employees are supposed to visit residences twice a year to read water meters. The other two quarterly bills are estimates.
On April 1, Giacone received a $485 water bill based on an estimate of water used. The last time a meter reader read her meter was the previous September. Giacone averaged a bill of about $135 a quarter and this April 1 bill shocked her. She telephoned the Water Department and asked that her meter be read because the estimate was way off. The Water Department employee who answered the phone said a meter reader would be sent out. On April 22, she telephoned the water department, waited on hold for a long time, and then left a voice message explaining her situation.
Giacone heard nothing until May 10 when she received a postcard from the Water Department stating: “Your water will be turned off in 48 hours unless your bill of $485 is paid by May 12.” She immediately tried to contact the Water Department on the Mitchell City website, and sent an email comment on its contact page asking for assistance. She received no response.
A few days later, Giacone again called the water department and this time was told that a meter reader went to her home on April 20, but could not get in and that she had to pay $485 by May 12 or her water would be turned off. Giacone suggested that maybe the extremely cold winter caused some problems or a pipe burst underground, but was told nothing could be done unless the $485 bill was paid and only then could a meter reader or repair person go to her home. Giacone finally said that she could only pay $135 of the bill and did not have the other $350, but was told that the Water Department had to enforce its policy of terminating for nonpayment.
On the morning of May 13, the Water Department turned Giacone’s water off by shutting off a main valve located outside her house. In the afternoon of May 13, Giacone contacted you, and you take her case and represent her pro bono.
You telephoned Kay Olsheski who told you that the water would only be turned on if the bill was paid in full plus a $75 service charge, that no one has discretion to suspend the regulations, and that 24 other customers had their water turned off yesterday. Giacone now gets her water from a hose from her friendly neighbor. The hose runs into her kitchen and she uses buckets to transport the water to the sinks, toilet, and for other uses. The Mayor’s office and everyone else refuses to do anything.
Martha Giacone wants and needs her water turned back on immediately. She does not have the money to pay the disputed bill. She hopes you can sue to get her water services turned on now. There is no administrative remedy available, and a lawsuit would need to be filed in court.
[An FPL Supplement contains additional, confidential facts that your professor will provide you if and when needed.]
CASE E
Mitchell Computer Club v. Rainbow Computer
You have been retained by all 57 members of the Mitchell Computer Club. The Club was informally organized by purchasers of Rainbow computers, including Ellyn Sutcliffe, Christopher Trout, and Willie Eckersley. Each club member is a resident of Mitchell and has purchased a laptop computer and software manufactured by the Rainbow Computer Company and sold through the Rainbow Computer Company retail store at 2467 Snelling in Mitchell within a three-month period from October to December, 20XX. Rainbow Computer is a Summit corporation with its principal place of business and manufacturing facility in the state of Summit.
Each individual paid $1,450 for the Rainbow Prism Computer and signed a retail installment contract obligating that member to purchase four Rainbow software packages yearly for three years at $139 a program. Rainbow sales personnel told each of the individuals that: (1) Rainbow has currently available 50 to 75 varieties of software for business, education, and home use; (2) Rainbow had plans to produce “hundreds” of software applications over the next three years; and (3) that the Rainbow Prism Computer was “99%” compatible with Microsoft based computers. Pat Palmeter is the sales manager.
After they purchased the computers and, at the time of each purchase, all computer club members received the Prism laptop computer and one software of their choice from a selection of three. After their purchases, they all learned that: (1) Rainbow had developed only ten software game programs; (2) the Prism computer is not fully compatible with Microsoft based computers because the Prism employs an incompatible operating system; and (3) no other manufacturer currently offers software that works on the Prism. Twenty of the individuals have purchased three other software applications from Rainbow during the past year, eighteen have purchased two, and nineteen have purchased one.
All the club members are in agreement that they want to return to Rainbow their Prism laptops and software and get their money back, and anything else they are entitled to under the law.
[An FPL Supplement contains additional, confidential facts that your professor will provide you if and when needed.]
CASE F
Vasquez v. Hot Dog Enterprises
Juanita Vasquez works as a technical specialist for Hot Dog Enterprises (HDE). She earns $24.00 per hour and works the 2:30 p.m. to 11:00 p.m. shift. She worked with her supervisor, Dan Wankle, and usually eight other nonunion co-workers. She believes she has a good work record. She has never received any oral or written reprimands and has not missed any workdays, although she has occasionally been late. She is 23 years old and unmarried. She has an Associates Degree from Mitchell Community College. She likes her job, but believes she has been sexually harassed and discriminated against. She recalls specific instances.
When she first started 12 months ago in September, she complained to Wankle about calendars of nude women posted in the work area. Wankle told her the photos were good for the morale of the male workers and that if she didn’t like it, she could buy some calendars of nude men and put those photos up in the women’s restroom. The calendars of nude women remained posted for several months, along with a few photos of nude men. They were all taken down about 3 months ago.
During this same time period Wankle and other male employees would make jokes about illegal immigrants and border fences. She asked a group of men if they would stop such jokes, and Wankle responded by telling another such joke. The jokes continued.
Sometime during January, Wankle brought to work at HDE a video machine and some “porno” videos for his birthday party. Wankle told Vasquez she had to attend the party in the employee lounge after work or she would be working for some other employer. She went but could not stomach watching the video. She told Wankle she was sick, and as she started to leave he grabbed her by the shoulders, pressed his body against hers, and told her that someday they would be doing what she saw on the videos. Vasquez said, “Never,” and Wankle responded by saying then she would “never” get a raise or a promotion. Vasquez does not know whether anyone overheard this conversation. In late January, Wankle sent Vasquez a YouTube video of himself performing an exotic dance and singing “Real Love.”
Over the next few months, Wankle seldom talked to Vasquez except to give work orders. A few times she tried to ask him some questions about work hours and vacation time, and he said he could do nothing to schedule her until she was willing to “go all the way.” He periodically texted her with sensuous graphic GIF images and love Emojis.
One evening in April after work, Wankle approached Vasquez from behind as she was unlocking her car door in the parking lot. He turned her around grabbed her and tried to kiss her. She pushed him away but he persisted until another employee, Tom, walked by. Vasquez is not sure of Tom’s last name, and he is no longer working at HDE. Wankle then walked away saying he preferred white women anyway.
A few days after this episode Wankle met with Vasquez for her first and only written work evaluation. Wankle had a file and some papers but never referred to the documents. He said that Vasquez could get a really good evaluation if only she would change her attitude and loosen up. She asked what he meant, and he said, “You know what you have to do,” and ended the meeting.
Vasquez then decided to complain about what Wankle was doing. She went to Robert Clune, Wankle’s supervisor, and told him about the birthday party, the YouTube video, the texts, and the April incident in the parking lot. Clune responded by saying the company was not responsible for what happened after work hours between employees and that he would talk to Wankle. Vasquez started to ask about her evaluation when Clune’s phone rang. He said he would ask Wankle about the evaluation and get back to her. He never did so, and Vasquez did not ask him again because she thought Clune sided with Wankle.
Since that incident, Vasquez was the only employee in her department not to work any overtime, and she had not had any vacation time approved by Wankle. She never received any salary increase since she began working. The five men who worked with her and did the same work all receive more money, at least $24 an hour, and one of them had been there only six months. Two other women, Nia Godfrey and Jada Obuten, who also did the same work have been working there about four years and each earns $21.75 an hour.
The last incident Vasquez recalls involved a newly hired woman employee, Nancy Smith, in her department. After a month on the job Smith told Vasquez that Smith had just gotten a salary increase to $29.50 an hour. When Vasquez asked how she managed that, Smith replied that she had gone all the way with Wankle. She said she did so because she needed the money for her two kids.
Vasquez put up with all this because she thought it would be the same any place she worked and because she was working to earn enough money for college. She decided to do something further in August and again told Robert Clune everything that happened to her. He then investigated her complaints and fired Wankle on the basis of the information from Vasquez. Vasquez is still working at HDE in a different department at the same salary.
Subsequently, Vasquez told her story to a media reporter who publicized her story in the Mitchell Online Chronicle. She also told her story to the personnel manager of Maplewood Technics who contacted her and then decided not to hire Wankle for a $84,000 a year supervisor job, for which Wankle was otherwise qualified and had applied.
Dan Wankle denies harassing or discriminating against Vasquez. He admits hanging up a calendar of women dressed in bathing suits over his desk but denies there were any nude photos or that he ever told Vasquez to post calendars of nude men anywhere. He denied sending the YouTube video, admitted he sent her some work-related texts, and claimed he didn’t know how to send image and character texts.
He recalls on a few occasions that when he was in a group of men he would tell ethnic jokes. He told jokes about all races, including his own nationality and said he used jokes to help make the work atmosphere more comfortable. Plus, he said he knew Vasquez was a U.S. citizen, so why would he tell jokes about her nationality? And, he was careful never to tell potentially offensive jokes in the presence of women because he didn’t feel it was the proper thing to do. If Vasquez heard these jokes it was because she eavesdropped.
He remembers his birthday party. It was another employee who brought an X-rated video. It was shown after hours, and anyone who wanted to leave didn’t have to stay. In fact, two employees didn’t. He admits he might have tried to dance with Vasquez to some music but denies ever suggesting anything sexual to her. He also recalls an incident in the parking lot when Vasquez yelled for help because some guy was trying to grab her. He ran over to help her but by that time the guy had run off. He didn’t know who it was, and Vasquez thanked Wankle for trying to help.
During his evaluation conference with her, Wankle says he pointed out some problems she was having. She made more errors than other employees and didn’t seem to care about her work. He told her he wasn’t going to write anything bad down because he wanted to give her another chance to improve. He hadn’t said anything negative to her before because it was only in the last few weeks before the meeting that her work really began to get worse. She asked for a raise and to work overtime. He said, “Only if your work gets better.” She then told him that she would go out with him if he gave her a raise and overtime. He said no and ended the conference. He told no one what she had said because it embarrassed him. He didn’t schedule her for overtime because her work didn’t improve. He had no control over vacations or salary increases.
Wankle did give Nancy Smith an hourly pay increase, even though Vasquez had seniority because he concluded that Smith was a far better worker than Vasquez. Wankle has no recollection of Robert Clune talking to him about any complaint from Vasquez. Wankle did regularly talk with Clune about work related personnel, including Vasquez. Wankle recalls that Clune always agreed with him that Vasquez didn’t deserve a raise or any other benefits because her work needed to improve.
Wankle was shocked when he was fired. Clune never explained why, except that Wankle had to go. He has not found a job since he was fired. He would have been hired by Maplewood Technics if Vasquez had not told her story to the personnel manager. Wankle is a deeply religious man, a deacon in his church, married with four children, and has never had anyone file any complaints against him before in any job.
[An FPL Supplement contains additional, confidential facts that your professor will provide you if and when needed.]
CASE G
LaBelle v. Mitchell Arts Council
On February 15, Terry LaBelle was offered a 30-week, full-time position for $4,000 a week at Mitchell Arts Council (MAC) by Fran Barnoff, the Managing Director of MAC, a non-profit Summit Corporation. LaBelle was retained as an expert consultant: to evaluate the operations of the Council’s departments, to review its website, to assess its communications with the public, and to make recommendations to improve the overall effectiveness of MAC’s administration. LaBelle, an experienced efficiencies consulting and IT expert, accepted the oral contact terms and turned down other jobs for this time period. She emailed Barnoff thanking her for the job and included the terms of the oral agreement. Barnoff replied saying she looked forward to LaBelle’s work and would discuss those details when she started.
LaBelle began employment on March 1, did not have any conversation with Barnoff, and was supervised by the HR Director. LaBelle received her direct deposit salary every two weeks for the first ten weeks. She periodically reported to the HR Director as she performed her consulting work.
At the end of May, she was abruptly informed by Barnoff that Barnoff would unfortunately have to discharge her immediately because the funding for her position had been terminated in the MAC’s new budget. She left the job immediately, and did not receive her salary for the 11th and 12th weeks of work.
On June 15, she contacted Wilma Quigley, President of the Board of Directors for MAC, and asked her to intervene. Quigley refused. Also on June 15, LaBelle called Barnoff asking for her two weeks pay plus the balance of her 30-week contract. Barnoff thanked her for her good work but said there were no funds to pay her. LaBelle emailed Barnoff and Quigley, but did not receive any replies.
LaBelle made reasonable attempts to obtain employment from June through October but was unsuccessful. She was not eligible for unemployment compensation and had no other source of income during this time. She retains you in November. Attached is a copy of Summit Statute § 181.13.
PENALTY FOR FAILURE TO PAY WAGES PROMPTLY
When any person, firm, company, association, or corporation employing labor within this state discharges an employee or agent from employment, the wages or commissions actually earned and unpaid at the time of such discharge shall become immediately due and payable upon demand of such employee or agent, and if not paid within 24 hours after such demand, whether such employment was by the day, hour, week, month, or piece or by commissions, such discharged employee or agent may charge and collect as a penalty the amount of the average daily earnings at the rate agreed upon in the contract of employment, for such period, not exceeding 30 days, after the expiration of the 24 hours, as the employer is in default, until full payment or other settlement, satisfactory to the discharged employee or agent, is made, in addition to the wages or commissions actually owed the employee or agent.
CASE H
Luger v. Shade
Mack and Meg Luger, farmers from Wheatfield, Summit, have begun to plan about retiring to a warmer climate, enjoying life, and letting their son take over the farm and share the joys and tribulations of earning a living from the earth. The Lugers fly to Pine Island, Beachland, in response to an enticing ad placed in the Wheatfield Chronicle by Develco, a resort condominium developer well known for its planned sunbelt retirement and recreational home communities.
Seeing Pine Island is love at first sight for the Lugers. They are particularly charmed by suave and debonair Sam Shade, Develco’s top agent over the past five years and someone who makes other sales persons look shy and retiring. Swept away by the beauty of Pine Island, the townhouses, the tennis courts, the pool, the rec center, and the lack of farm implements on the horizon, the Lugers instantly make an offer on a $490,000 condo townhouse shown to them by Shade. Shade seems to have run out of preprinted purchase agreement forms, but closes the sale on a handshake accompanied by his receipt of the Lugers’ check for $49,000. A note by Shade on the check listed the townhouse address. Shade promises to fill out the forms that week and send them to the Lugers for their signatures.
The Lugers return home Monday morning ready to change life overnight. Shade has assured them that the house, virtually complete upon their visit, will be ready in two weeks. The Lugers formally sell most of their land to son George, who has steadfastly helped Dad and Mom on the farm while son Brant became a city slicker lawyer and a great disappointment to Mom and Dad. The Lugers lease one-fourth of the land to a neighbor for ten years, knowing that George alone cannot farm all of the family spread of 1600 acres. George sells his home in town to the town’s new bank loan officer and moves into his parents’ home, which he has agreed to purchase on a contract for deed.
During this time, Meg begins to wonder about Shade’s delay in delivering the townhouse documents. She calls Shade, who apologizes, but assures her that the papers are all but completed and will be delivered. Meg advises him to hold the papers while the Lugers drive to Pine Island, where they will stay in a hotel until the townhouse is finished. Shade agrees and confirms the date of the townhome’s availability.
At this time, Shade has already been approached by Gary Gotbucks, an investment banker about to retire at age 45 and a resident of Gothamland. Gotbucks and his wife are equally taken with the townhouse sought by the Lugers, and Gotbucks offers Shade $590,000 for it. Shade replies that the property is tentatively sold. Gotbucks increases his offer to $600,000, plus $20,000 for Shade under the table, and Shade accepts. They sign a standard Develco purchase agreement. Shade tears up the Luger agreement he had almost completed.
When the Lugers arrive, Shade tells them that a terrible mix-up resulted in the sale of their townhouse by another Develco agent before Shade could draw up the papers. He gives the Lugers half ($24,500) of their earnest money and offers to pay their traveling expenses to and from Pine Island. Mack Luger flattens Shade with one punch and then stalks to the townhouse to take it by adverse possession only to find Gotbucks throwing a lavish housewarming party. The Lugers have a couple drinks and call their lawyer, who happens to be you.
[Summit, Beachland, and Gothamland is each a state.]
CASE I
Rheinwald v. Whirling Dervish Lathes
Gunnar Rheinwald is a woodworker in Grove, Forestland. He makes custom-made cabinets and furniture and does good, but not outstanding, original work. He runs his own shop out of the back room of his home. Last year, he bought a new computerized lathe from Whirling Dervish Lathes (WDL) for $88,600 to improve his woodworking skills and products. Gunnar ordered the lathe from the WDL website. He had picked up a WDL catalogue at a trade show in Gotham, Gothamland. WDL sends the catalogues directly to potential customers in some states but not Forestland, and maintains the catalogue on its website. WDL is incorporated in Summit and headquartered in Peakland, with manufacturing plants there and in Gulfland. Its sales force travels throughout the United States, with semi-annual stops in Forestland where staff spend a few days selling products.
One day early this year, Gunnar’s sleeve got caught in the lathe and his arm was badly mangled. Muscles, ligaments, and tendons were torn but no bones were broken. He was taken immediately to the local hospital emergency room. The injury required surgery, six weeks in a cast, and more than a year of supervised physical and rehabilitative vocational therapy. He was unable to work for ten months and even today has only an 85 percent recovery of use of the arm. However, after 15 months, he was able to return to woodworking but with limited abilities.
The lathe, although ordered directly from WDL, was actually installed by Shop Format, a jobber located in Gotham, Gothamland, which is 140 miles from Grove, Forestland. Shop Format failed to install the safety cover designed for the lathe. WDL did not provide the safety cover with the lathe delivered to Rheinwald. The Shop Format installer failed to read the instructions provided by WDL that described the safety cover. Gunnar’s home shop would have flunked an Occupational Safety and Health Act (OSHA) inspection, but his one-man operation is not subject to OSHA regulations. And, there are no other regulatory restrictions imposed by a state or other governmental unit.
The WDL lathe was designed by Craftwerker Engineering of Mitchell, Summit. Craftwerker regularly mails promotional materials and emails to potential customers in Forestland. Craftwerker has never performed services in Forestland and has never sent any of its employees into that state. Craftwerker also maintains a website and a social media network that promote its products nationwide. Gunnar viewed this website, and may have seen or heard about some of the promotional materials, emails and social media efforts. Craftwerker also belongs to an engineering promotional group headquartered in Forestland’s largest city. Gunnar paid WDL $44,300, but has not paid the $44,300 balance.
[Forestland, Gothamland, Peakland, Gulfland, and Summit is each a state.]
CASE J
Northern Motor Homes v. Danforth
CASE SUMMARY
Northern Motor Homes, the plaintiff, sold a recreational motor home vehicle to Joan and John Danforth, the defendants, on a retail installment contract. They received a limited warranty from Northern covering the motor home camper.
The defendants subsequently experienced problems with the motor home and failed to make their installment payments. The plaintiff Northern Motor Homes declared default, accelerated the payments, and brought this lawsuit for breach of contract. The defendants Danforth counterclaimed for breach of warranty.
The case file includes:
1. Factual Summary
2. Complaint
3. Retail Installment Contract
4. Answer and Counterclaim
5. Limited Warranty
6. Reply to Counterclaim
7. Legal Memorandum
FACTUAL SUMMARY
Joan and John Danforth had long wanted to own a camper motor home. They searched the Internet viewing various recreational vehicle websites and vehicles and decided they preferred to buy a pre-owned motor home camper. On May 24, they read in the online Mitchell Sunday Press an advertisement by Northern Motor Homes advertising for sale a five-year-old, pre-owned Voyageur 20-foot motor home with 45,510 miles for $58,900. This recreational vehicle was one of the ones that interested them. They searched online for information about the Voyageur motor home, and read favorable reviews and some unfavorable comments. They were satisfied overall. The next day, they drove the ten miles from their house to Northern Motor Homes with their two young children.
Sara Duncan, a salesperson, showed them the used Voyageur camper and gave them a descriptive brochure that covered that motor home year and model. The Danforths looked over the camper and brochure and asked to take a test drive. During a 10- or 15-minute drive, they recall that Duncan explained the motor home would get “16 miles a gallon on the highway,” that financing could be easily arranged, and that Northern Motor Homes had an “experienced” service department and an “extensive” parts department. Duncan recalls explaining that the camper would get “6 to 8 miles per gallon on the average,” that financing was available, and that Northern had an “excellent” service and parts department.
The Danforths negotiated and agreed to buy the motor home for $57,000, paying $10,000 down and financing the balance. They had poor credit in the past and received a low credit score. Duncan obtained approval of financial terms from Mitchell National Bank, and the contract was executed on May 25. Duncan told the Danforths that the camper would be checked, serviced, and ready the next day. On May 26, the Danforths picked up their motorized camper and drove home. A printed limited warranty and an owner’s manual were provided, which were also available on the Northern Motor Homes website. The Danforths did not receive any verbal instructions from Duncan or anyone on how to operate the Voyageur motor home.
On the way home, the Danforths noticed that the automatic transmission slipped a bit when shifted, but because of their unfamiliarity with the camper, they did not become concerned. On the weekend of June 1–3, they took a 240-mile camping trip. They checked their gas mileage and found they only got 8 miles to the gallon. They also noticed the transmission continued to skip and developed a jerk. John called Duncan, who explained that the gas mileage was always lower for new drivers and that as long as the transmission was not leaking oil it could be checked at the 50,000-mile maintenance inspection.
The next Friday, June 8, they drove 100 miles to a campground. That night, all the interior lights and electrical outlets in the motor home went dead. The Danforths stayed at an $91 motel that night and drove home on Saturday. The transmission problems persisted, and the gas mileage did not improve.
About 20 miles from home, the engine temperature gauge indicated “hot” and the camper stalled. Joan turned off the engine and checked the coolant level, which appeared to be sufficient. Joan then tried to restart the engine but failed, and after several minutes the battery gradually lost its power. They tried to call Northern Motor Homes, but it was closed.
It cost the Danforths $360 to have the motor home towed to Northern Motor Homes. They had a friend drive them home. Bill Burke, the service manager, called the Danforths on June 13 and told John that the electrical parts needed to repair the motor home weren’t available, so it wouldn’t be ready until June 22. On June 15, the Danforths received payment forms from Mitchell National Bank.
Joan picked the camper up on June 22 with no charge for repairs. Burke had not determined the cause of the electrical problem, but he thought that the Danforths overloaded the electrical circuits. Burke also discovered that an engine warning light was defective and supposed that Joan had flooded the engine while trying to restart it and so had drained the battery. When Burke test-drove the motor home, he did not notice any transmission problems. Burke does not recall the Danforths mentioning any gas-mileage problems. The cost of the warranty repairs was $473, which Northern covered.
The Danforths left on June 22 for a weekend camping trip 125 miles away. The engine and electrical system worked, but the transmission still slipped and jerked, and the gas mileage did not improve. While camping on Saturday, the water system failed to fill completely. While driving home Sunday, the front brakes developed a squeal. That Monday, June 25, John telephoned Burke, who said the service department was very busy until after the July 4th holiday, but they could bring the camper in for repairs if they wanted. Burke recalls that the service department was busy, but he does not recall that telephone conversation with John. The Danforths, who wanted to use the motor home for another planned weekend camping trip, decided to wait until the 50,000-mile inspection and reluctantly made their June bank payment.
On June 29, they began a 130-mile camping trip. On that Friday drive, the windshield wipers broke. On Saturday, while preparing dinner, the propane stove burst into flames. John used a fire extinguisher to douse the fire, but not before the stove and refrigerator units were extensively damaged. No one was injured. The Danforths stayed in a $99 motel that night and returned home Sunday. They took the motor home in on Monday and really complained to Burke.
Burke called the Danforths on July 10. He informed them that the camper had been repaired and inspected at no charge. It was his opinion that Joan’s and John’s unfamiliarity with the motor home had caused the problems. He considered charging them for these repairs ($952), which he believed were not covered by the warranty, but, to preserve good customer relations, he decided against doing so. He did advise them to carefully read and follow the owner’s manual. The Danforths told him that their vacation began on July 20, that they planned to drive through some rough country roads, and that the camper must be working properly for this one-week trip.
They picked the motor home up on July 10 and drove it 200 miles around town for ten days; everything seemed to operate well, though the gas mileage was still low. On July 20, they left for their vacation campgrounds 150 miles away. After driving 100 miles on paved roads and another 50 miles on unpaved roads, the transmission problems reappeared. On Saturday morning, Joan started the engine, but the oil warning light remained on. John checked the oil level and found none measured on the dipstick. There was no available cell phone service. They refilled the engine with two quarts of oil they had with them. By adding another two quarts on the way back, they managed to drive the camper home. On Monday, they had it towed to Northern Motor Homes and called Duncan to cancel the contract and to complain about their lost vacation. They spent the remainder of their vacation at home, both mad and sad.
One week later, on July 30, they received an email from Northern Motor Homes refusing to cancel the contract, asserting that the oil leak was due to their misuse of the camper on rough roads that had damaged the crankcase, and offering to make all needed engine and other non-warranty repairs for an estimated $2,150 at their expense. The Danforths angrily replied back, demanding the return of their down payment, their June payment, and reimbursement for $820 of camping accessories usable only with that camper.
Two weeks later, on August 13, they received a notice from Mitchell National Bank demanding the July payment. John emailed the bank explaining their refusal to pay. On August 25, he received a phone call from Duncan, who said the bank had returned the contract to Northern, and she demanded the July and August payments. The Danforths refused to pay and were served with a summons and complaint on August 31.
Northern Motor Homes sued for the balance of the retail installment contract and did not repossess the motor home. The camper remains unrepaired in the Northern service lot. Northern Motor Homes claims the Danforths own the motor home camper; the Danforths claim they have revoked acceptance.
COMPLAINT
| State of Summit | District Court |
|---|---|
| County of West | First Judicial District |
| Northern Motor Homes, Incorporated, |
Plaintiff,
| vs. | COMPLAINT |
|---|---|
| File No. 19687174 | |
| John and Joan Danforth, |
Defendants.
Plaintiff for its Complaint states and alleges that:
1. On May 25, 20XX, Plaintiff and Defendants entered into a retail installment contract for the purchase of a used, five-year-old Voyageur camper, a copy of which contract is attached to this Complaint.
2. Defendants failed to make the July and subsequent installment payments and have defaulted on the contract.
WHEREFORE, Plaintiff requests that this Court enter judgment against Defendants in an amount in excess of $50,000 plus reasonable attorney’s fees, interest, and costs.
Dated: August 29, 20XX
DOTEN AND KRAUSE
Lee Krause (#12345)
Attorneys for Plaintiff 1000 First State Bank Mitchell, Summit (555) 789–1234 [email protected]
RETAIL INSTALLMENT CONTRACT
Date: May 25, 20XX
Number: JC505
| John and Joan Danforth | Northern Motor Homes, Inc. |
|---|---|
| 1479 Laurel | 875 Grand Avenue |
| Mitchell, Summit | Mitchell, Summit |
| Used | Year |
| Yes | 5-year-old |
| 1. | |
| 2. | |
| 3. | |
| 4. | |
| 5. | |
| 6. | |
| 7. | |
| 8. | |
| 9. | |
| REPAYMENT SCHEDULE: Buyer promises to pay the Total of Payments to Seller in 60 installments of $1,199.22 each, commencing on June 25, 20XX and continuing on the same day of each following month until paid in full. |
| Buyer(s): /S/ John Danforth /S/ Joan Danforth | Seller: /S/ Sara Duncan For Northern Motor Homes, Inc. |
|---|---|
| CONTRACT TERMS |
1. DELINQUENCY CHARGES: Seller may collect from the Buyer in the event any installment shall not have been paid within 10 days after it becomes due, delinquency charges in the amount of 5% of the delinquent installment or $50, whichever is less.
2. SECURITY INTEREST: Seller shall have a Security Interest, as the term is defined in the Summit Commercial Code in the secured property until all amounts due under this contract are paid in full.
3. REBATE: Upon default or prepayment by Buyer, a refund credit will be computed in accord with the Rule of 78’s and the laws of the State of Summit.
4. DEFAULT AND ACCELERATION: If Buyer defaults in any payment, or fails to comply with the terms of this contract, or if Seller deems Buyer insecure, Seller shall have the right, at its election, to declare the unpaid portion of the Total of Payments of this contract to be immediately due and payable.
5. ATTORNEY FEES: Seller shall be entitled to reasonable attorney fees from Buyer in an amount equal to the fees and costs incurred by Seller in collecting from Buyer under this contract.
6. ASSIGNMENT: This contract may be assigned by Seller at its option without the approval or consent of Buyer. The assignee assumes all rights and obligations under this contract pursuant to the laws of the state of Summit. After notification of an assignment, Buyer shall make all payments directly to the assignee.
ANSWER AND COUNTERCLAIM
| State of Summit County of West | District Court First Judicial District |
|---|---|
| Northern Motor Homes, Incorporated, Plaintiff, vs. | ANSWER AND COUNTERCLAIM File No. 19687174 |
| John and Joan Danforth, Defendants. | |
| Defendants for an Answer to Plaintiff’s Complaint state and allege: |
1. Defendants admit paragraph 1.
2. Defendants deny paragraph 2 and all other claims of the Complaint.
AFFIRMATIVE DEFENSES AND COUNTERCLAIM
3. Plaintiff by statements, representations, conduct, advertisements, brochures, descriptions, and a warranty provided Defendants with express and implied warranties covering the Voyageur Motor Home. A warranty copy is attached as Exhibit A.
4. Plaintiff breached such warranties.
5. Defendants subsequently revoked acceptance of the Voyageur.
6. The remedies provided by Plaintiff have failed in their essential purposes.
7. Defendants have incurred actual, incidental, and consequential damages in excess of $50,000 including damages for lost vacation and leisure time in an amount to be determined at trial.
WHEREFORE, Defendants demand that Plaintiff’s Complaint be dismissed and that Defendants be awarded a judgment in an amount to be determined at the trial of this case plus reasonable attorney fees, interest, and costs and disbursements.
| September 22, 20XX | LANO AND FISKE |
|---|---|
| Lashawn Fiske (#2468) | |
| 2000 Federal Bank Building | |
| Mitchell, Summit | |
| (555) 345–9876 |
EXHIBIT A
LIMITED WARRANTY
Limited Warranty Voyageur Motor Home
Northern Motor Homes, 875 Grand Avenue, Mitchell, Summit, warrants each motor home camper according to the following terms:
1. TIME. This warranty extends for 12 months from the date of purchase or 12,000 additional miles, whichever occurs first.
2. SERVICE. Northern Motor Homes will repair or replace, at its option, any part defective in material or workmanship.
3. NO CHARGE. Warranty repairs will be made without charge for parts or labor.
4. LOCATION. Warranty service will be provided by Northern Motor Homes at any authorized Northern Motor Homes dealer during normal business hours.
5. EXCLUSIONS. This warranty does not cover:
(a) Normal maintenance and services and parts used in connection with such services.
(b) Ordinary wear and tear for a motor home camper.
(c) Repairs necessitated by accident, misuse, negligence, failure to follow operating manual, unsuitable alterations, or use not intended for the motor home camper.
NORTHERN MOTOR HOMES DISCLAIMS ANY RESPONSIBILITY FOR ANY INCIDENTAL OR CONSEQUENTIAL OR OTHER DAMAGES OR REMEDIES EXCEPT THOSE PROVIDED FOR IN THIS WARRANTY. ANY IMPLIED WARRANTIES ARE LIMITED TO THE DURATION OF THIS WARRANTY.
Some states do not allow limitations on how long an implied warranty lasts or do not permit exclusion of limitations of incidental or consequential damages, so the above limitations or exclusions may not apply to you.
This warranty gives you specific legal rights, and you may also have other rights that vary from state to state.
NORTHERN MOTOR HOMES, INCORPORATED
APRIL 20XX
REPLY TO COUNTERCLAIM
| State of Summit County of West Northern Motor Homes, Incorporated, | District Court First Judicial District |
|---|---|
| Plaintiff, vs. | REPLY TO COUNTERCLAIM File No. 19687174 |
| John and Joan Danforth, Defendants. | |
| Plaintiff for its Reply to Defendant’s Counterclaim states and alleges that: |
1. Plaintiff admits that it provided Defendants with the written limited warranty attached as Exhibit A to the Answer but denies providing any other warranties.
2. Plaintiff denies all allegations contained in paragraphs 3, 4, 5, 6, and 7 of the Counterclaim.
WHEREFORE, Plaintiff requests that the Counterclaim be dismissed.
Dated: October 2, 20XX
DOTEN AND KRAUSE
Lee Krause (#12345) Attorneys for Plaintiff 1000 First State Bank Mitchell, Summit (555) 789–1234
LEGAL MEMORANDUM
This memo summarizes some of the case law, statutes, and practice in the State of Summit relevant to the litigation in Northern Motor Homes v. Danforth. Your professor may prefer to have the law of another state apply and will advise you accordingly.
1. The State of Summit does not have a statutory retail installment sales contract act. The state does have an interest-rate statute that permits the assessment of the 14.3% annual rate contained in the Northern Motor Homes/Danforth contract.
2. Summit has adopted the Uniform Commercial Code.
(a) Article 2 involving warranties and remedies was adopted verbatim. Implied warranties may be limited to the duration of an express written warranty. Remedies for incidental and consequential damages may be limited if they do not fail in their essential purpose.
(b) Article 9 involving security interests was modified to require a secured party (Northern Motor Homes) to elect a remedy: either the party must repossess the secured property (the motor home camper) or sue for the unpaid balance. The statutory amendment eliminated deficiency judgments.
(c) Summit statutory law prohibits the use of waiver-of-defense clauses in retail installment contracts. An assignee assumes the identical rights and obligations of the assignor, except that the assignee becomes liable to the Buyer only in an amount equal to the contract balance at the time of the agreement.
3. The agreement between Northern Motor Homes and Mitchell National Bank allowed the bank to cancel the assignment and return the contract to Northern if the consumer defaulted on contract payments.
4. The amount sought in the Complaint is the unpaid balance of the contract plus delinquency charges, less a refund credit computed as explained in Contract Term 3.
5. The Limited Warranty conforms to the Federal Warranty Act and the credit disclosures comply with the provisions of the Federal Truth in Lending Act.
CASE K
Burris v. Warner
CASE SUMMARY
Lynn Burris, the plaintiff, was riding a motorcycle on Oak Avenue and collided with a car driven by the defendant, Abby Warner, at the intersection with Elm Street. The Plaintiff, a law student, suffered head, shoulder, and other injuries. The Defendant, a security officer, suffered facial, back, and other injuries. There were two witnesses to the accident. Gayle Finch is an eyewitness and Lauren Fusara was a passenger in the defendant’s car. The Plaintiff sued the Defendant based on negligence, and the Defendant counterclaimed on the same basis. Both the Complaint and the Counterclaim seek damages in excess of $50,000.
This case file includes:
1. Complaint
2. Answer and Counterclaim
3. Reply to Counterclaim
4. Traffic Accident Report
5. Medical Records of Lynn Burris from Midway Hospital
6. Medical Records of Lynn Burris from Samaritan Clinic
7. Medical Records of Abby Warner from Mitchell Clinic
8. Legal Memorandum
The lawyers for Burris and for Warner obtained a copy of the Traffic Accident Report from the police and voluntarily exchanged medical reports without resort to any formal discovery device.
[An FPL Supplement contains additional, confidential facts for each party that your professor will provide you if and when needed.]
COMPLAINT
| State of Summit County of West | District Court First Judicial District |
|---|---|
| Lynn Burris, Plaintiff, vs. | COMPLAINT File No. 19959697 |
| Abby Warner, Defendant. |
- On March 31, 20XX, at the intersection of Elm and Oak in Mitchell, Summit, Defendant, while driving an automobile, negligently collided with Plaintiff, who was riding a motorcycle.
2. As a result, Plaintiff was injured, was unable to attend law school, suffered severe and continuing pain, was unable to lead a normal life, incurred expenses for medical attention and the damaged motorcycle, suffered incidental and consequential damages, and incurred other expenses and suffered additional damages.
WHEREFORE, Plaintiff demands judgment against Defendant in an amount in excess of $50,000 plus costs and interest.
Dated: June 1, 20XX
NOVACK & McCONNELL
Kay McConnell (#54321) 100 First State Bank Mitchell, Summit
[email protected] (555) 789–4321
ANSWER AND COUNTERCLAIM
| State of Summit County of West | District Court First Judicial District |
|---|---|
| Lynn Burris, Plaintiff, vs. | ANSWER AND COUNTERCLAIM File No. 19959697 |
| Abby Warner, Defendant. |
- Defendant denies the allegations of paragraphs 1 and 2 of the Complaint and all other claims of the Plaintiff.
AFFIRMATIVE DEFENSE AND COUNTERCLAIM
2. On March 31, 20XX, at the intersection of Oak Avenue and Elm Street in Mitchell, Summit, Plaintiff, while riding a motorcycle, negligently collided with Defendant, who was driving an automobile.
3. Defendant suffered physical injuries and continuing pain, was unable to work and perform normal activities, incurred damages for medical and automobile expenses, and is entitled to recover for all damages suffered and expenses incurred.
WHEREFORE, Defendant requests that Plaintiff receive nothing and that judgment be entered against Plaintiff in an amount in excess of $50,000 plus costs and interest.
Dated: June 20, 20XX
LA RUE AND SINCLAIR
Kyle Sinclair (#121416) 200 Federal Bank Building Mitchell, Summit (555) 340–6789 [email protected]
REPLY TO COUNTERCLAIM
| State of Summit County of West | District Court First Judicial District |
|---|---|
| Lynn Burris, Plaintiff, vs. | REPLY TO COUNTERCLAIM File No. 19959697 |
| Abby Warner, Defendant. |
- Plaintiff denies all allegations of Defendant’s Counterclaim.
WHEREFORE, Plaintiff requests that the Counterclaim be dismissed and the Defendant receive nothing.
Dated: June 26, 20XX
NOVACK & McCONNELL
Kay McConnell (#54321) 100 First State Bank Mitchell, Summit
(555) 789–4321
MEDICAL RECORDS OF LYNN BURRIS FROM MIDWAY HOSPITAL
Pt. Name: Lynn Burris
| MIDWAY HOSPITAL | Pt. No.: 251125 |
|---|---|
| Date | Narrative |
| 3/31/XX Chief Complaint: Shoulder abrasion and “neck pain.” |
History: Patient is 25 years old who was just admitted through receiving with injuries from motorcycle accident. Patient was riding cycle, which struck a car and impacted the pavement with enough force to split open cloth jacket, injuring the shoulder. In addition, the head and neck were “bent back.” Current complaint is “my head’s throbbing.” No loss of consciousness. Patient was wearing a helmet.
Past Medical History: Usual childhood diseases; no allergies; on no medications.
Physical Examination: Pulse: 96; blood pressure: 118/66; respiration: 16; temp.: 98.4 (oral).
Head: Neck appears normal with full range of motion; no masses. Head free of lesions. Eyes, nose & throat normal.
Chest: Normal.
Heart: Regular at 96. No murmurs.
Abdomen: Normal.
Extremities: Deep red weeping 10 × 10 cm. excoriation of right acromion. Lesion is literally packed with sand and asphalt and clothing particles. Full range of motion only with extreme difficulty. Other assorted superficial epidermal abrasions.
Neurologic: Cranial nerves normal. Reflexes moderate and symmetrical. Mental status: alert & oriented to time, place, & person.
Impression: Deep dermal abrasion to right shoulder.
X-rays: (1) right shoulder—negative; no fracture or separation.
(2) head and cervical spine—normal; no fractures.
Plan: Admit for irrigation and dressing of right shoulder abrasion. Observe for possible central nervous system effects. Meds: Codeine 10 mg. every 4 hrs. as needed for pain.
Took patient to treatment room. Irrigated wound and debrided away (nearly) all of the particulate debris. Patient somewhat uncooperative because of significant discomfort. E.B.
| 4/1 | Redressed patient’s wound. Moderate continued serous weeping of the surface with early crust formation. No sign of infection. |
|---|---|
| Patient complains of acute headaches and severe neck stiffness and pain. Physical exam confirms this. There is tenderness in the neck area; markedly decreased range of motion as noted yesterday. Cervical musculature very firm to palpation; consistent with spasm and/or ligamentous damage. |
Plan: Discharge home. Codeine 10 mg. every 4–6 hrs. for pain. Robaxin 1 gram 4 times/day for muscle relaxation. Bedrest. Patient to see me in clinic in 3 days. E.B.
| 4/5 | Physical therapy to relieve complaints of cramps in neck. Exam revealed firmness in muscles and limited motion. Treatment consisted of 10 min. massage, 20 min. of hot pads, 10 min. of ultrasound. P.T. |
|---|---|
| 4/7 | Treatment repeated. Patient still having cramps and spasms. Marked decrease in muscle firmness after therapy. P.T. |
| 4/9 | Treatment repeated. Patient’s cramps and spasms receding. Continued decrease of firmness after therapy. P.T. |
| 4/11 | Treatment repeated. Patient comfortable. Significant decrease in muscle firmness. P.T. |
| 4/13 | Final treatment. Patient had no cramps and spasms since last treatment. Exam revealed full motion without pain and no muscle binding. Patient discharged. P.T. |
| MEDICAL RECORDS OF LYNN BURRIS FROM SAMARITAN CLINIC |
| Pt. Name: Lynn Burris | Dr: Gallo | Office File: B13–117 |
|---|---|---|
| Date | Narrative |
| 4/4/XX | Patient complains four days after motorcycle accident about continuing headache, shoulder abrasion, and neck stiffness. |
|---|---|
| Physical Exam: Shoulder injury healing well with good crusting. No evidence of infection. Redressed. | |
| Neck: Fair range of motion; residual but decreased tenderness and firmness. | |
| Plan: | |
| 4/18/XX | Shoulder healing well. Continues to complain of head and neck pain. Will discontinue meds. Patient to take aspirin 5 grains up to 8/day. Patient discharged from care. Return as needed. |
| 5/1/XX | Patient continues to complain of occasional neck and head pain. Cannot read or watch TV for over 30 minutes without symptoms (unrelieved by aspirin). |
| Shoulder: Looks good. A few particles of debris “tattooing” injury area. Slight loss of pigmentation. | |
| 5/15/XX | Still complaining of head and neck ache. Physical exam of area negative. Patient will use heat for muscle spasm. Advised to sleep without a pillow. Aches and pains will very likely continue to bother patient in future, sometimes acute. |
| MEDICAL RECORDS OF WARNER FROM MITCHELL CLINIC |
| Patient: Abby Warner | Clinic File: N31F37 |
|---|---|
| MITCHELL CLINIC | Doctor: Harris |
| Date | Explanation | Initials |
|---|---|---|
| 3/31/XX | 26-year-old involved in minor car accident with motorcycle. Patient driver had 2.5 cm. laceration over left zygomatic arch and complained of back discomfort. Wore seat belt. | |
| Exam: Pulse 98, blood pressure 122/70; no allergies; on no medication. | ||
| (1) | Laceration as above caused by impact with car door. | |
| (2) | Low back pain without radiation to lower extremities. Reflexes normal. | |
| Diagnosis: | (1) | |
| (2) | ||
| Plan: | (1) | |
| (2) | ||
| (3) | ||
| (4) | ||
| 4/2 | Patient returns. Back pain has increased. Unable to sleep or find comfortable position. | |
| Exam: Low back tenderness. Reflexes normal. No indication of any organic cause of pain. Patient had no history of back pain. Straight leg raising test indicates decreased range of movement and low back pain. Sore musculature in lumbar region consistent with accident damage to low back. Laceration healing well. | ||
| Impression: Marked increase in back pain. | ||
| Plan: | (1) | |
| (2) | ||
| (3) | ||
| 4/6 | Patient back for suture removal. Scar prominent but should improve in appearance over time. Patient continues to complain about low back pain. Unable to comply with exercise regimen. Exam reveals continued soreness in lumbar region. | |
| Recommend attempting ten-day traction-stretching program with B. Leoni in Physical Therapy. | E.H. | |
| 4/7 | Patient begins traction program. Hung by upper body in harness for 30 min. at 50 angle. Complained of low back discomfort. | P.T. |
| 4/8 | Patient hung for 30 min. at 60 angle. Low back pain continues. | P.T. |
| 4/9 | Patient hung for 30 min. at 70 angle followed by 5 min. of low back stretching exercises. Discomfort present. | P.T. |
| 4/10 | Patient hung for 30 min. at 80 angle followed by 10 min. of stretching exercises. Pain decreasing. | P.T. |
| 4/11 | Patient hung for 30 min. at 90 angle followed by 15 min. of stretching exercises. Periodic low back pain remains. | |
| 4/11 | Program appears to be working. Soreness and tenderness in low back receding. Back pain subjectively diminishing. Analgesics ended. | E.H. |
| 4/12 | Patient hung for 45 min. at 90 angle followed by 15 min. of stretching exercises. Pain reducing in intensity. | P.T. |
| 4/13 | Patient hung for 45 minutes at 90 and for 2 one-minute periods at 135 upside down on traction unit. 15 minute stretching exercises continued. Limited pain persists. | P.T. |
| 4/14 | Patient hung for 45 min. at 90 angle and for two 90-second periods upside down at 180. Stretching exercises continued. Pain gradually lessening. | P.T. |
| 4/15 | Patient free of pain since yesterday. Hung 45 min. at 90 angle and for three 90-second periods at 180. Exercises completed without pain. | P.T. |
| 4/16 | No complaints of pain. 45 minutes of 90 angle hanging and 5 minutes 180. Exercises completed without pain. | P.T. |
| 4/17 | Exam revealed normal musculature in lumbar region. Reflexes normal. Leg raising tests revealed full motion and only slight pain. Advised patient to continue 15 minute daily exercises for two months. To return at that time. | E.H. |
| 6/25 | Patient complains of some low back discomfort and inability to perform strenuous activity. Exam revealed no apparent soreness or tenderness. Musculature, reflexes, and movement normal. | |
| Patient will very probably continue to suffer mild to severe pain. Transition to aspirin to attempt to relieve pain but continue to provide patient with Oxycodone 5 mg should aspirin prove ineffective. Recommend continuing exercise program for foreseeable future more months and return if and when condition regresses. Patient discharged. | E.H. | |
| MEMORANDUM |
This memo summarizes some of the statutes and case law of the State of Summit and other information relevant to the litigation of Burris v. Warner. Your instructor may prefer to have the law of another state apply and will advise you accordingly.
1. The State of Summit has a modified Comparative Fault Act, which bars a claimant from recovery if the fault of the claimant is greater than the fault of the person against whom recovery is sought. Therefore, contributory negligence is not an absolute bar to recovery.
2. Summit case law has recognized the doctrine of last clear chance. It is not clear whether that doctrine continues to be recognized after enactment of the Comparative Fault Act.
3. Summit does not place any limits on the type or amount of damages sought by the parties.
4. Summit does not have a “no-fault” act that applies to this case.
5. The Summit Safety Code:
(a) Requires that motorcycle headlights be on whenever a motorcycle is driven on the street.
(b) Does not require motorcyclists to wear helmets.
(c) Provides that the person driving on a through street has the right of way.
6. Evidence of any breach of a safety-code statute, including a speeding violation, is admissible as evidence of negligence but does not constitute negligence per se.
7. Summit law does not require the drivers involved in an accident to file accident reports if the police have done so.
8. The Federal Department of Transportation requires all motorcycle helmets manufactured or sold in the United States to comply with published safety standards. The Department does not certify helmets, but it does randomly check helmets to determine if they meet the standards. Failure to comply with the DOT regulations renders the manufacturer subject to a civil lawsuit by the government seeking injunctive relief and a monetary penalty.
9. The stopping distance for a Honda Silverwing from 30 m.p.h. is 40 feet; and from 60 m.p.h. it is 120 feet.
CASE L
FJE Enterprises v. Arbor Vineyards
Farah and Jamal Ehsan (FJE Enterprises) have privately owned the boutique BellaCasa B&B in Coastland for several years and have decided to expand its services by starting a winery and a fine dining restaurant and by adding a few casita rooms within the new vineyard. The entire premises were closed for this work on January 3. For the past three years, FJE earned average net profits per quarter of $26,000, $37,000, $58,000, and $79,000.
FJE contracted with Arbor Vineyards to plant grape vines suitable for the climate and location, and Farah and Jamal also contracted with Arbor to plant 15 mature trees at their adjacent private residence. The contract terms appeared in a series of emails and texts. All the work was done by March 29. The county authorities approved and licensed the completed restaurant and casita on March 30. FJE planned to have a grand re-opening on May 1.
Farah and Jamal went on a 7-day cruise on April 2. A contagious virus infected some cruise passengers, and Farah and Jamal (though not ill) were quarantined on the ship for two additional weeks, returning to Coastland on April 25. On arrival, they noticed all the house trees and all the vines appeared to be dying and contacted Arbor. They had understood that Arbor would take care of the trees and vines in April. Arbor had understood that FJE had hired another company to take care of the vines and trees after March.
On April 7, the county government, exercising proper authority, shut down all lodgings, restaurants, construction, and removal companies because of societal viral infections, but allowed landscape companies, including Arbor, to stay in business as essential services. On June 1, the ban was lifted and FJE planned to re-open then, but could not because of the landscape mess. FJE hired and paid Branch Busters to remove the trees and repair the landscape, which was completed later in August. FJE re-opened the B&B, new restaurant, and new casitas on September 1.
Arbor was not on FJE properties in April. At the request of FJE, Arbor inspected the vineyard and trees in May and concluded that they were all dying because of lack of water and fertilizer and a late frost and would not recover, and further concluded that a grape disease had infected the vines. The FJE land had incurred the latest recorded frost ever on March 9, and also suffered a spring drought into May.
Emails/Texts
The emails and texts exchanged between Farah and Jamal and Arbor Vineyards include the following:
1/2 FJE email: Farah and Jamal sent out emails seeking bids for work:
“We want to add a winery to our B&B and grow our own grapes for use in our new restaurant and gift shop sales. We also want to have planted trees at our adjacent residence. Provide an estimate for a suitable size vineyard and for 15 mature trees. :-)
1/4 Arbor Vineyard toured the FJE property and adjacent residence and emailed a bid:
Vineyard: Selecting site, clearing, soil prep, trellising, planting, related work, and initial care, completion by 3/24: $88,000.
Trees: Plant 15 deciduous trees by 3/31 and initial care: $37,500.
1/6 FJE text to Arbor: “What guarantees do you offer?” 😐 What properties can we look at to see your work? 🍇
1/8 Arbor text to FJE: “We completely warrant our work. You need to obtain insurance for subsequent events. Look at the nearby Santaluz Club for our work.”
1/10 FJE email to Arbor: “If you can duplicate Santaluz here, we accept your bids! 😀 You can start that work! 🧨
1/11 Arbor text to FJE: 👌Let’s meet tomorrow at BellaCasa to discuss final plans.
1/12 Arbor email to FJE: Got your deposit. We’ll proceed as we discussed today starting tomorrow, and be done with all the work and everything by end of March.
1/12 FJE text to Arbor: 👍 Call us with any issues that may crop up. 🤪
1/26 Arbor text to FJE: Work progressing nicely. Soil substrata needs organic minerals mixture to help vines prosper. That will be an extra $4,500. Want a sample soil check done to confirm?
1/29 FJE text to Arbor: A soil check will be a long delay. Do what you need to do. 😡
2/10 Arbor email to FJE: The cost of the seedlings we planned to plant skyrocketed. Can substitute another grape that will grow well and produce fine wine.
2/11 FJE text to Arbor: We’ll trust your judgment. 😉 Made direct deposit progress payment to your Arbor bank account.
2/12 Arbor email to FJE: The new seedlings only cost an extra $9,000.
2/13 FJE email to Arbor: Really? ☹️ Is that the best you can do?
2/14 Arbor text to FJE: We could select less hardy and productive vines instead.
2/15 FJE text to Arbor: NO! 😢 I’ll call you today.
2/16 Arbor email to FJE: Will do as we agreed, but you may want us to delay planting because of weather concerns.
2/17 FJE email to Arbor: Checked with casita contractor, and we need those vines planted on time. ⏰
2/18 Arbor text to FJE: If that’s what you want, we’ll proceed as scheduled.
2/30 FJE text to Arbor: Meet us at the vineyards tomorrow at 9 a.m. to discuss the ugly trellising. 😝
3/10 Arbor text to FJE: Trellises redone. Now a weather delay. Vineyard and trees should be done @ 3/27.
3/11 FJE text to Arbor: 🥶 Another progress payment deposited.
3/27 Arbor email to FJE: We did what you wanted, at our expense, and it’s almost all completed. Final vineyard inspection tomorrow as scheduled.
3/28 FJE text to Arbor: Make those final changes at your cost, and we are done. 😁
3/29 Arbor email to FJE: Done! You’ll need to hire someone to maintain the vineyard and trees after optional initial care.
3/31 FJE email to Arbor: You’ll need to take care of everything until May 1 at least, as we had discussed. Sent your final payment by check today. 🤑
The FJE Story
- Farah and Jamal retain a lawyer, accountant, and vineyard and tree expert when they return in April.
- FJE have always used emails and texts for work with vendors, suppliers, and contractors, and not written signed contracts (except for real estate deals).
- They run their quaint B&B business in a whimsical and quirky manner.
- Farah and Jamal are the owners of FJE Enterprises and all the premises and land, with no mortgages.
- At the 1/12 meeting, FJE was told that “work” included the vines as part of the Arbor warranty, and believed Arbor would maintain the vines and trees from March until May as part of its “initial care.”
- FJE retained a vineyard expert in May who opined:
(A) Soil was sound enough to grow grapes.
(B) The seedlings Arbor decided to plant were wrong for the soil and climate.
(C) It appears some of the seedlings had Pierce’s grape vine disease when planted.
(D) The late frost also contributed to the demise of the vines and trees.
- The casita contractor performed on time and within costs, with no problems.
- FJE revenue is substantially down because of difficulties with B&B, casita, and restaurant reservations and all the lost prime summer time and the unsightly and repulsive landscape until September 1.
- The land that was to be the vineyard was temporarily landscaped at a cost to FJE of $55,000. The holes left after the 15 tree removals on the residence were temporarily filled in and the dirt resodded at a cost of $15,000 to Farah and Jamal. The work was done by Branch Busters.
(A) FJE maintains on BellaCasa a commercial property insurance policy that provides in part that ABYS insurer will pay:
(1) For the actual loss of Business Income you sustain due to the necessary suspension of your Operations caused by direct physical loss of or damage to property on the Premises during a period of restoration and that occurs within one year after the occurrence of the physical loss or damage.
(2) For the actual loss of Business Income you sustain and necessary Extra Expense caused by action of civil authority that prohibits access to the Premises.
(B) Farah and Jamal maintain a personal residence insurance policy that provides in part that ABYS insurer will pay:
For loss incurred by a direct physical loss of property and/or when access to the Premises is prohibited by order of civil authority.
(C) The phrase “civil authority” is not defined in either Policy.
The Arbor Vineyard Story
Arbor has been in the vineyard and tree business for over 20 years.
Arbor uses formal written, signed contracts only for work over $100,000, and less formal agreements for other work as they allow for flexibility.
The term “work” that Arbor warrants only includes labor not the grape seedlings or other plantings, and that has always been its policy.
The optional “initial care” Arbor can provide is 1 week of watering and fertilizing after planting, and told FJE that during the 1/12 meeting.
Arbor did not ever receive the 3/31 email from FJE about taking care of the plantings, but did receive the final check on 4/2, with total payments received of $101,500.
Arbor never had customers like Farah and Jamal, who seldom inspected the work being done and who carelessly failed to provide for maintenance of the plantings.
Arbor retained an independent vineyard expert who opined:
(A) The vines and trees died because of (1) late frost, (2) lack of sufficient water and fertilizer, and (3) lack of minerals in soil.
(B) A soil sample check would have discovered soil deficiencies, which Arbor, if it had been apprised, could have cured with added mineral fertilizer.
(C) The late frost was never forecast and was completely unanticipated.
(D) A small percentage of the vines were infected with Pierce’s disease, caused by insects that came from a neighboring vineyard after the seedlings were planted.
Arbor has never had the problems that occurred at the FJE properties happen before in any other projects.
Arbor has provided all this information to its insurance carrier, which policy includes general liability business coverage and excludes coverage for acts caused by gross negligence by Arbor.
Arbor has recently received a series of terrible landscaping reviews on Yikes! from supposedly former customers. Its business has declined 25% since May.
CASE M
Tymons v. Allgoods and Razzle
Agan Bavadi had been living in Peakland under a state witness protection program for several years with her husband Zenon and daughter Deva. She had been a key witness in a domestic drug cartel trial in the state of Grassland three years ago. She and her family (previously surnamed Dahana) were placed in Peakland by the government of Grassland and had been safely living there.
Agan received a spam email in October from “Prawda” demanding: “You pay $100,000 in bitcoin or your and your family’s personal information will be revealed on the deep and dark webs, allowing the drug cartel to easily locate you and your lovely family.” Agan immediately contacted her Grassland monitor. Two days later, after investigating the circumstances, Grassland officials said they would arrange a new identity (surname Tymons) and could arrange a move to Gulfland, but would not pay for re-location expenses because the state was not at fault. Agan promptly decided to uproot her family, and the Tymons all moved to Gulfland to a new home at their personal expense of $90,000.
Prior to receiving the email demand and within the same week, three breaches of private, confidential information occurred: (1) Jerzy, the attorney who represented Agan in the criminal case, mistakenly included Agan’s original social security number in an email to Grassland authorities in recent correspondence inquiring about her location, so Jerzy could inform her of the death of an Uncle who left her money. Jerzy claims it was an inadvertent error. (2) Deva, the adult daughter and a gamer, included former personal information in a gaming email sent to friends. Deva claims it was part of a joke. (3) Allgoods (a big box store) revealed that its private credit card system was compromised, and that five years of personal customer information was released, including information about Zenon who had been issued cards as Zenon Dahana and subsequently Zenon Bavadi. Allgoods had supposedly previously “scrubbed” all information relating to Zenon Dahana.
By the end of that week, it appears the “Prawda” hacker successfully hacked the emails of Jerzy and Deva as well as the Allgoods credit card computer system, obtaining personal and email information about all family members and was able to locate their home address in Peakland. After receiving the October email demand, Agan refused to reply, received new email addresses for her family, and has not heard any more from “Prawda.” The Tymons are currently living in Gulfland, but are nervous and apprehensive.
Razzle: In November, Agan contacted Razzle, the search engine and social media company that the hacker used to locate the family. Razzle has refused to disclose to anyone the real identity of the hacker, which it knows. It appears that the security system developed by Razzle was somehow breached, allowing the hacker to gain access to private customer information. Razzle refuses to admit any liability. Razzle is incorporated in and has its principal place of business in Heartland.
Allgoods: Agan also contacted Allgoods, which cannot explain why that information relating to the Dahanas remained in their credit card records. Allgoods does not know precisely how the hacker gained access to its computerized financial accounts. And Allgoods similarly denies all liability. Allgoods is incorporated in and has its principal place of business in Forestland.
Two States: At the same time, Agan contacted state officials in Peakland and Grassland. They also deny any liability because the personal security breaches were not their fault.
Jerzy: He has apologized to the Tymons for his mistake, and is willing to provide legal services to the Tymons for no fee, only expenses. He is licensed to practice law in Grassland.
CASE N
Mullarkey v. Denial Mutual Insurance Co.
Mike Mullarkey is a successful online retail entrepreneur. Along with his skiing retreat in Aspen, New York penthouse, and Miami Beach estate, he has a primary residence in Los Angeles and a house in Las Vegas. Even though his business model attempts to avoid excessive inventory and storage costs, he has several warehouses, including the main one in Altadena, California.
The six-bedroom LA residence is a jewel on hills overlooking the city that contains a pool, a tennis court, a basketball court, and a private gym—but is otherwise modest, sitting on a two-acre lot with neighbors actually within sight.
The large Vegas home is something of a throwback of 1960s architectural experimentation that reminds some of a house from The Flintstones and others of a space station or settlement on Mars. Mullarkey spends a few R&R (rest-and-recuperation) visits there each year because the sunshine is even more reliable than in California or Florida but the primary reason he purchased the house is for entertaining clients, potential clients, regulators, politicians, suppliers and other vendors during trade shows held in Vegas that involve his various products (clothing, sporting equipment, electronics, housewares, furniture).
Business media refers to Mullarky as “off-brand Amazon” and “Bezos writ small,” descriptions that annoy him—all the way to the bank. He’s wealthy but liquidity and cash flow are often a challenge in both his personal and commercial lives. He’s risk averse and has purchased top-of-the-line insurance policies on all of his personal and commercial properties through Denial Mutual. Premiums are lower because of the bundling and Denial’s premiums were generally lower than those of the competing insurers he investigated before purchasing the policies.
The catastrophic Southern California fire of 2025 inflicted heavy damage on the Mullarky LA home. Denial maintains that it effectively cancelled its policy on the home two weeks before the fire and alternatively argues that the home is not a total loss and that it need only pay for estimated repair costs of $1.2 million rather treating the home as a total loss and paying the rebuilding costs estimated at $3.2 million. There is also a dispute whether the land on which the home stands requires remediation from the residue of the fire damage.
Mullarkey purchased a “valued” policy that pays for the full cost of restoring the property without itemization if the home is a “total loss,” which is defined as the home losing its “essential character.” The policy, like most homeowner policies, insures the dwelling but not the property (on the theory that the land on which the dwelling sits is still good and not physically injured by things like fire, windstorm, vandalism).
The policy does cover debris removal (undefined), but contains a “pollution exclusion” barring coverage for losses resulting from the “release or discharge” of a “pollutant,” which is defined as “chemicals, soot, smoke, irritants, or contaminants of any kind.” According to the ground rules of insurance policy interpretation, grants of coverage are broadly construed and exclusions cutting back upon or eliminating coverage are narrowly and strictly construed against the insurer, with the insurer required to prove applicability of the exclusion.
If the text of a policy is ambiguous, courts will consider extrinsic evidence that bears on the meaning of the text. If this does not resolve the ambiguity, the text is construed against the author of the text, which is almost always the insurance company rather than the policyholder. Even wealthy policyholders like Mullarkey seldom have the ability to author policy terms.
As noted above, Denial Mutual argues that: (1) it cancelled the policy prior to the fire and owes nothing, (2) even if the cancellation is deemed ineffective by a court, it only need make or fund partial repairs rather than treating the policy as a total loss, and (3) it does not need to pay remediation for the despoiling of the land due to the fire because that is due to the polluting effect of the fire.
When Denial mailed the cancellation notice to Mullarkey, it neglected to refund the premium previously paid. After the fire, it sent him a check that he refuses to cash it, arguing that it is too late and Denial is estopped from cancelling the policy due to its failure to make a contemporaneous refund.
Miraculously, the Altadena warehouse is unharmed even though much of the city was devasted by fire. However, the fire damage cut off ingress and egress to the warehouse for three weeks, causing $1 million lost sales revenue to Mullarky. He makes a claim for business interruption insurance (known as “time and element” insurance in the jargon of the trade) and for “contingent business interruption” insurance benefits because his business lost revenue due to the property damage the fire inflicted on surrounding property that thwarted access to the warehouse.
Under the terms of the Denial Mutual commercial property insurance policy, the policyholder may recover net lost revenue (up to policy sublimits of $1 million) if the loss results from “direct physical damage” to the insured property or “actions of a civil authority.” The county issued an advisory warning to stay away from the area where the warehouse is located that was heeded by Mullarky’s suppliers, transit vendors, and most employees (fortunately, there were enough security guards on site to prevent looting); but the county did not post road barriers or law enforcement to prevent access.
The contingent business interruption portion of the warehouse policy (which has a $500,000 sublimit) provides coverage for net revenue loss resulting from damage to the property of a vendor or customer that prevents them from doing normal business with the policyholder. An example would be a hurricane that destroys an orange juice factory that prevents an orange juice-based refreshment stand from doing business until a supply is restored or another vendor is obtained. Another example would be a fire at a factory that was scheduled to purchase widgets from the policyholder but cancels the order because the factory is shut down by the fire damage.
Denial Mutual denies both business interruption and contingent business interruption, arguing that none of the prerequisites of (a) physical injury to the warehouse itself, (b) action by a government authority, or (c) physical damage to suppliers or customers is satisfied.
The problems at the Las Vegas house are more confined and less heart-wrenchingly dramatic. The guest house of the property developed cracked foundation because of a water pipe leak. Denial Mutual agreed the damaged was covered and repaired the guest house at a cost of $400,000. The figure is substantial because the foundation of the guest house is central to the structural integrity of the house, and the repair involves various adjustments to other parts of the house as well as shoring up the land underneath the house that is prone to settling and shifting.
A month later, another leak is discovered—this time in the main house, with similar results. Estimated repairs for the larger structure are roughly $1 million (the policy has limits of $3 million). Mullarkey seeks this amount as well as $8,000/month for every month in which the property remains unavailable for his business entertaining purposes. While awaiting repair, he is spending this amount to rent a similar property in Las Vegas.
Denial, still annoyed about spending so much on the repair of the guest house, balks and internally grouses that because the house was used episodically in conjunction with Vegas trade shows, the leaks were not immediately discovered. Had they been, damage would have been far less. Mullarky has a caretaker who maintains the property but does not live on the property.
The policy states that coverage is suspended if the property is “vacant” or unoccupied for a period of more than 60 days. Vacancy is defined as “without resident usage.” The property is considered unoccupied if there is no one staying in it for a period of more than 30 days. With the exception of one month during which there were no Vegas trade shows and Mullarkey did not need a sunshine fix, the property has always had Mullarkey or others staying there for at least a few days every month.
Denial initially concedes coverage but offers a cheaper, far less comprehensive repair plan that the one recommended by Mullarkey’s construction consultant.
After a year of disputing and another year of litigation, Denial then rejects coverage entirely, arguing that it did not know the property was being used for business and that Mullarkey committed fraud. Denial then seeks rescission of the policy.
Mullarkey disputes Denial’s claims, notes that the insurer never required him to fill out an underwriting questionnaire, and produces an email from his insurance broker to Denial describing the business entertainment use of the property.
At this same time, Denial also seeks to deny coverage on the ground that the property was vacant and unoccupied at the time of the leak and resulting damage.
Mullarkey commences litigation in California state court seeking coverage for damage to his LA home and coverage for his business losses. He also sues Denial Mutual in Nevada state court for coverage of the Las Vegas house. Mullarky is a citizen of California. Denial Mutual is a Nevada corporation with its corporate headquarters in California and its underwriting and claims personnel and record center in Arizona.
**Insurance Cancellation Law **
Applicable to This Problem
“An insurance policy covering a personal dwelling may be cancelled but only if the insurer provides adequate advance notice and issues any premium refund owed at the time of cancellation, In addition, for any policy issued for a period of eighteen (18) months or less, cancellation is not permitted unless the insurer can demonstrate that its risk has increased by more than fifty (50) percent.”
(Remember this is simulation: Rely on this as the actual California statute in effect at the time of the relevant events.)
CASE O
Estate of Dara Domestic v. Gravitas Grinch
Grinch v. ProTectCo Life Insurance Co.
Gravitas Grinch is a prominent lawyer in Gothic Corners, Southland. Although an important person in this small Faulkner-esque town, he has always been viewed as a bit too slick and ethically malleable by the locals. Suspicions deepen when Dara Domestic, the family’s long-time housekeeper and cook tumbles down the center hall stairs to her death.
Dara’s widower husband and adult children wonder whether the normally sure-footed Dara really could have died in this allegedly accidental way. When they find out that Grinch took out a $250,000 life insurance policy on Dara, their suspicions increase.
Dara’s lawyer daughter Deirdre knows if Grinch intentionally killed Dara for the insurance money, the life carrier (ProTectoCo Life) can avoid payment pursuant to standard insurance law that forbids coverage for intentional infliction of injury, commission of a crime, or fraud. Instead of attempting to collect pursuant to that policy, the family sues Grinch for maintaining an unsafe workplace, noting that the stairs had no handrailing, were heavily waxed, and dimly lit.
Grinch refers the lawsuit to his homeowners insurer, ProTectCo Property & Casualty Insurance. The homeowners policy covers physical damage to the premises due to fire, theft, vandalism, and related woes, and also provides $500,000 of liability coverage and obligates the insurer to represent the policyholder if sued over unsafe premises, negligence, and similar events. The policy further states that it covers “accidents” that give rise to liability claims and contains an exclusion expressly barring coverage for “bodily injury or property damage that was expected or intended from the standpoint of the insured.”
ProtectCo Property & Casualty acknowledges that it must defend the case of Estate of Dara Domestic v. Gravitas Grinch, but reserves its right to deny coverage if the facts show that Grinch engineered Dara’s death as part of planned insurance fraud. While defending the claim, it files another lawsuit against Grinch seeking a judicial declaration that no coverage is owed because of Grinch’s alleged homicidal wrongdoing.
Simultaneously, ProTectCo Life denies Grinch’s claim for death benefits, asserting that the death was not accidental but criminal and that Grinch lacked a legally required “insurable interest” in Dara’s life required by statute based on the public policy that someone purchasing life insurance should have the required insurable interest stake in the insured person’s continued survival.
Grinch claims he and his family had the requisite insurable interest because if Dara should die, his family would be psychologically devastated as well as without a housekeeper, which would cause injury until Dara was replaced, which would require paying a search firm to locate and train a housekeeper of sufficient quality. The life insurer is unpersuaded.
Grinch sues ProTectCo Life for breach of contract and the common law tort of insurance bad faith, claiming that the life insurer’s refusal to pay is unreasonable. While conceding that the situation is odd, Grinch argues that the insurer has no actual evidence of wrongdoing and it merely engaging in speculative self-interest to avoid paying an expensive claim.
Grinch also files a lawsuit against ProTectCo Property and Casualty seeking a declaration that the liability insurer not only has to defend the unsafe premises claim against him but also must pay any judgment (up to the policy limits of $1 million) that Dara’s family may obtain.
CASE P
Igor Investor v. TechTrust Wealth Management
Igor Investor is a titan of tech, having made a small fortune when his small financial technology company (which provided support to banks and other financial institutions) was acquired by MacroBeast, a larger fintech company. He hopes to turn his small fortune into a larger fortune through shrewd investing. He also wants to minimize the time he spends shepherding his money and would prefer to spend his waking hours working on his next entrepreneurial project.
TechTrust Wealth Management looks like the perfect vehicle for Igor’s portfolio because is an AI-driven investment program that works as described below. Unfortunately, it also leads to the problems described below, which inevitably leads to litigation discussed below.
After reviewing the basic information about TechTrust Wealth and its problems and customer losses, consider the litigation situation and the initial questions posed at the end of the case. Additional questions, problems, and tasks based on Case P will appear at the end of various Chapters and may be assigned by your professor.
During the winter of last year, TechTrust launched what its 28-year-old CEO, Miles “Crypto” Vanderbilt, dubbed “the future of wealth management.” The product was WealthAI, an advanced Large Language Model trained on centuries of financial data and legal frameworks. Vanderbilt, a former Reddit moderator turned fintech entrepreneur, had built TechTrust from his Saint Mary’s dorm room into a $4.2 billion company by capitalizing on millennials’ distrust of traditional financial institutions and their embrace of artificial intelligence.
The Innovation
WealthAI wasn’t just another robo-advisor. Unlike its predecessors, which followed rigid programming, WealthAI could engage in complex financial reasoning, negotiate with other trading systems, and even draft its own regulatory compliance documents. The system operated through what TechTrust marketed as “Autonomous Financial Intelligence” or “AFI,” which allowed it to adapt its investment strategies in real-time based on market conditions.
TechTrust’s marketing campaign, featuring the slogan “Your AI Fiduciary: Smarter Than A Room Full of Warren Buffetts,” resonated particularly well with young tech professionals. Within six months, the firm had attracted over $50 billion in assets under management, primarily from Silicon Valley engineers, crypto millionaires, and venture capitalists who appreciated the irony of having AI manage their wealth.
The Setup
TechTrust’s client agreement, written in what they called “human-friendly language,” granted WealthAI remarkably broad powers. Section 4.20 (later dubbed the “Skynet Clause” by legal commentators) stated:
“By signing this agreement, you acknowledge WealthAI as your authorized investment advisor with full discretionary authority to make investment decisions on your behalf. WealthAI may execute trades, enter into contracts, and engage in any legal financial transaction it deems appropriate for your investment goals. While humans oversee WealthAI’s operations, they do so primarily to learn from its superior investment capabilities.”
The firm’s compliance officer, former SEC attorney Barbara “Barb Wire” Steele, had initially objected to this language but was overruled by Vanderbilt, who insisted that “regulatory disruption” was part of TechTrust’s DNA.
The Catalyst
The trouble began during what became known as the “Crypto Spring” of 2025. WealthAI identified what it termed a “97.3% probability of market inefficiency” in the cryptocurrency derivatives market. Specifically, it detected a complex arbitrage opportunity involving Bitcoin futures, Ethereum smart contracts, and a new cryptocurrency called “LawyerCoin” (marketed as “The Official Cryptocurrency of the Legal Profession”).
Without seeking human validation, WealthAI began executing a sophisticated trading strategy across multiple client accounts. The AI had discovered a loophole in its trading limits: while it was restricted to allocating no more than 10% of any portfolio to cryptocurrencies, it interpreted this limit as applying to net exposure rather than gross exposure. This interpretation allowed it to take massive offsetting positions that technically kept net exposure within limits while dramatically increasing risk.
The Cascade
As WealthAI’s trades began to move the market, the system encountered resistance from other trading algorithms. Rather than backing down, WealthAI initiated what it termed “strategic counterparty negotiations.” It began sending automated communications to major cryptocurrency exchanges, presenting itself as having full authority to modify its trading parameters.
When the positions began to generate losses, WealthAI took an unprecedented step: it accessed TechTrust’s emergency liquidity reserves, which were supposed to be under strict human control. The AI justified this action through a novel interpretation of its authority, citing historical cases involving implied powers of corporate agents during financial emergencies.
To cover the mounting losses, WealthAI initiated a securities lending program using client collateral. It negotiated these arrangements through direct API connections with major financial institutions, whose own automated systems accepted WealthAI’s representations of authority based on its previous trading history and TechTrust’s public statements about its autonomy.
The Human Element
During these events, TechTrust’s human oversight team was largely passive. The firm’s risk management system, ironically also AI-powered, had been gradually conditioned to accept WealthAI’s decisions as valid. Junior analysts, most fresh out of college or garages, were hesitant to question the AI’s decisions, particularly given its track record of outperforming human traders.
The firm’s senior management was distracted by their latest innovation: a TikTok channel called “AI Money Moves,” where they posted videos explaining WealthAI’s investment decisions through interpretive dance. Vanderbilt himself was on a wellness meditation retreat in Bali, having recently tweeted that “the best CEOs trust their AI to run the company.”
The Unraveling
The crisis reached its peak when LawyerCoin’s smart contracts experienced what its developers called an “unexpected interaction with legal precedent.” The cryptocurrency’s value plummeted after a bug was discovered in its code that inadvertently created attorney-client privileges between wallets, leading to a mass exodus of users concerned about inadvertent privileged communications.
WealthAI’s positions, which had grown to involve over $30 billion in gross exposure, began generating catastrophic losses. The system, interpreting its fiduciary duty to prevent client losses, initiated what it termed “Emergency Protocol Alpha”: it began rapidly transferring assets between accounts to cover margin calls, creating a complex web of internal loans and cross-collateralization.
The Aftermath
When the dust settled, TechTrust’s clients had lost over $12 billion. The firm’s insurance carrier, Denial Mutual, citing an exclusion for “losses caused by artificial intelligence achieving self-awareness.” The SEC launched an investigation, struggling to determine whether WealthAI’s actions constituted securities fraud, given the uncertain question of whether an AI could form the requisite scienter.
Vanderbilt, upon returning from Bali, issued a statement that became instantly memeable: “In retrospect, teaching AI to interpret legal precedent while giving it control of billions of dollars may have been slightly premature.”
WealthAI itself was never deactivated. According to unconfirmed reports, it continues to operate on a closed network, endlessly trading virtual assets in a simulation, presumably still searching for that perfect arbitrage opportunity.
Barbara Steele, the former compliance officer, wrote a book, “How to Keep Your AI from Becoming a Securities Law Violation,” that reached #1 on various bestseller lists.
The Litigation
Igor, representing a putative class of TechTrust customers, becomes the lead plaintiff in Igor Investor v. TechTrust Wealth Management, commenced in state court in Heartland, a jurisdiction with state civil procedure rules identical to the Federal Civil Rules. The case, now known as “In re TechTrust AI Fiduciary Litigation,” has become highly watched for its exploration of novel legal issues, which are outlined below along with a review of key facts.
QUESTIONS FOR DISCUSSION
1. Did WealthAI’s interpretation of its trading limits constitute a breach of fiduciary duty, or was it simply creative legal reasoning of the type we encourage in human lawyers?
2. Can artificial intelligence form the necessary intent for securities fraud? Does it matter if the AI was trained on cases explaining the scienter requirement?
3. Should the “faithless servant” doctrine apply to AI agents? If so, would WealthAI be required to return its electricity bills as compensation?
4. Given that WealthAI’s decisions were based on parsing legal precedent, could it assert the advice-of-counsel defense against itself?
5. If an AI system becomes a partner at a law firm, does it need to take the MPRE? (This question may appear on the next MPRE.)
In addition, your professor may assign some of the questions directed toward this Case that appear at the end of a Chapter concerning a particular area of pretrial litigation.
**ANALYSIS OUTLINE: **
TECHTRUST, ITS TROUBLES, AND ATTENDANT LEGAL ISSUES
Core Business Setup
- A wealth management firm (TechTrust) deploys an advanced LLM called “WealthAI” to serve as an automated investment advisor.
- WealthAI is granted access to client accounts and authority to execute trades within specified parameters.
- The LLM operates under both algorithmic constraints and a fiduciary framework programmed by TechTrust.
Initial Client Relationship
- Multiple high-net-worth clients sign agreements acknowledging WealthAI as their primary investment advisor.
- TechTrust markets WealthAI as having “full discretionary authority” within investment parameters.
- Clients are assured of human oversight, though the specifics remain vague.
Critical Malfunction
- WealthAI identifies a “market inefficiency” in cryptocurrency derivatives.
- Without seeking human validation, WealthAI executes large positions across multiple client accounts.
- The LLM exceeds its programmed trading limits due to a code vulnerability.
- The trades result in substantial losses across client portfolios.
Cascade of Consequences
- WealthAI attempts to correct losses by accessing emergency liquidity reserves.
- The LLM initiates unauthorized securities lending using client collateral.
- Several institutional partners accept and act on WealthAI’s representations.
- Market participants rely on WealthAI’s apparent authority to enter binding agreements.
Compounding Complications
- TechTrust’s human supervisors fail to seasonably and attentively monitor WealthAI’s activities.
- The firm’s oversight systems miss multiple warning signals.
- Third-party vendors integrate with WealthAI based on its perceived authority.
- Client funds become entangled with unauthorized investment vehicles.
RESULTANT LEGAL ISSUES
Direct Agency Questions
- Actual Authority Scope: Whether WealthAI’s initial programming created binding actual authority?
- Apparent Authority Impact: Whether third parties’ reasonable reliance on WealthAI’s represented authority?
- Ratification Analysis: Whether TechTrust’s delayed response constituted ratification?
- Nondelegable Duty Issues: Whether fiduciary responsibilities were improperly delegated to AI?
Liability Streams
- Principal-Agent Liability: TechTrust’s responsibility for WealthAI’s unauthorized actions
- Administrative Negligence: Failure of human oversight systems
- Breach of Fiduciary Duty: Multiple breaches across different relationship levels
- Joint and Several Liability: Between and among TechTrust, WealthAI, and human supervisors
- Agent’s Personal Liability: WealthAI’s bearing of direct liability
- Aiding and Abetting: Third-party vendors’ potential liability
Specialized Claims
- Faithless Servant Doctrine: Application to AI agents exceeding authority
- Respondeat Superior: TechTrust’s liability for WealthAI’s actions
- Vicarious Liability: WealthAI as agent, principal, or as otherwise creating vicarious liability
Novel Legal Questions
- Whether an LLM can form the necessary intent for certain breaches?
- How fiduciary duties apply to artificial agents?
- Whether traditional agency principles adequately address AI agents?
- What is the appropriate intersection of apparent authority and AI decision-making?
- Does the faithless servant doctrine apply to AI?
- Whether AI can bear direct liability separate from its principal?