Law Exam 1 Chapter 5

res ipsa loquitur

the thing speaks for itself

Intentional Misrepresentation (Fraud)

#1 Misstatement of an important or material fact Misstatement induces another to enter into some sort of business relationship Unrelated or unimportant misstatement cannot be a basis of fraud, i.e. hyping a product #2 Scienter or intent to defraud Intentionally misleading and deceiving another #3 Person knows or has reason to know that statement being made is false #4 Recipient of false information justifiably relies on the information and makes a decision to enter into the deal #5 Privity between the parties - relationship exists #6 Proximate Cause - logical link between reliance on misstatement & losses to the plaintiff # 7 Damages

Business becomes involved through

(1) person is harmed by actions of business or its employees (2) a person is harmed by a product manufactured or distributed by the business (3)a business is harmed by the wrongful actions of another business or person

East River Steamship Corp. v. Transmercial Delaval

A charterer of a supertanker wished to recover in tort from the turbine manufacture Manufacturer had designed and manufactured turbines that were installed in the charterer's vessels. The complaint asked for compensation awarded for the damage to the turbines themselves When the turbine seals damaged the turbines But no other parts of the ship. U.S. Supreme Court Held: When the harm to the product itself occurs The loss due to repair costs, decreased value and lost profit is an injury compensable by contract law. Permitting recovery for all foreseeable claims rather than the economic loss of the turbines only could make the manufacture liable for vast sums. If such vast sums were allowed under tort law it would make it difficult for the manufacturer to take into account the expectations of persons downstream who may encounter (desire to purchase, for instance) its product. Only economic losses under contract law were allowed in this case. (ECONOMIC LOSS CASE ONLY)

Brown v. Gamble Construction Company

A roofer died when he fell through a hole in a roof under construction. The court stated that holes are commonly left in the roof of a building under construction in order to permit installation of ducts and air conditioning units. The plans were not defective and the designer was not liable.

Premises Liability

Accidents that result from negligence of the business Common are "slip-and-fall", cases & other injuries on business property. Duty to keep premises reasonably safe under the circumstances . Duty to inspect premises for dangers and correct problem or warn invitees. However, if a danger is obvious, people have duty to protect themselves by acting reasonably. Not providing sufficient security to prevent crimes from occurring on the property Problems are especially in high crime areas Issue: Owner "knew or should of known" of problem in the area Issue: Did owner act "reasonably" to protect patrons? Ways owners may protect themselves: lighting, safety patrols, posters, warnings Ex: Court upheld $1.5 million verdict in favor of heirs of woman who was robbed and murdered in parking garage of Bloomingdale's department store - high crime area.

Hutchinson v. Eastern Engineering Company

An architect designed a building. The plans required that during construction, the elevator shaft was to have guardrails around the open elevator shaft. These were removable and had been removed to allow the movement of siding on the project. A workman was killed when the siding swung around and pushed him into the elevator shaft. The architect was held not negligent. Was not an architectural design issue that caused siding swinging

Carrara v. Eades

An architect designed panels on a balcony To be no more than 6" apart in conformance with the building code. However, at one point, the panels were not installed in conformance with the plans Specifications, and the spacing was larger than 6" Later, an infant fell through and was injured. The architect was not liable for the infant's injuries

Atkinson v. MGM Grand Hotel

Atkinson, a guest at a hotel was drinking alcohol and was looking for a restroom. She went through a door in a stairwell that took her into a dark construction area. She fell into an excavated pit that was not roped off In doing so fractured her lumbar spine and incurred medical expensed greater that $110,000. The construction site was secured by a chain link fence Except for access through the stairwell which was not locked or secured. A particular building code, NRS 455.010 reads, "any person or persons, company or corporation, who shall dig, sink, or excavate, or cause the same to be done...shall, during the time they may be employed in digging, sinking or excavating, or after they may have ceased work upon or abandoned the same, erect, or cause to be erected, good and substantial fences or other safeguards, and keep the same in good repair, around such works, shafts, sufficient to guard securely against danger to persons and animals from falling into such shafts or excavations Court held that the "plain and unambiguous language of NRS 455.010 is intended to protect members of the public from falling into excavations." MGM (owner) and Marnell Corrao (contractor) were required to follow the provisions and by not doing so are liable for Atkinson's injuries. Absolute liability due to statutory requirements

Defenses to premises liability

Balance responsibility between possessor and entrant Entrant must exercise reasonable prudence Possessor must reasonably protect entrant Question: Who has superior knowledge of the hazard? Scenario in Chapter: Mike v. Prime Builder Prime building will argue: That hole in ground was a patent defect Mike knew of should have discovered. Mike had duty to look and protect himself from dangers Mike sped on his bike even though getting dark This is the reason he was unable to stop from hitting the hole.

Benedict Harkins case

Benedict Harkins filed an insurance claim against Farm Fresh Market in Jamestown, N.Y. He said he had tripped over a rug and fell at the front door. After he filed lawsuit, he was told store surveillance camera had him recorded in action. Showed him sitting down and adjusting the rug to make it look like he tripped on it. He withdrew his claim. Was arrested for attempted petty larceny.

State Farm Mutual Auto Insurance v. Campbell

Campbell was driving with his wife in a city in Utah Decided to pass 6 vans that were ahead of him on a 2-lane highway. When he attempted to pass, there were 2 other vehicles that were on the opposite side of the road. To prevent from having a head on crash, one vehicle swerved to the side of the road Lost control of his vehicle which caused him to hit another car. One person died instantly as they hit the other car. The other person ended up being permanently disabled. Supreme Court Holding: Re: Whether punitive damages awards are constitutional. Due process clause of Constitution was violated There was an award of $145 million in punitive damages Where compensatory damages were $1 million Award was grossly excessive or arbitrary. Serves no legitimate purpose Is arbitrary deprivation of property Violates "due process" As defendant is deprived of fair notice that his conduct will subject him to this kind of punishment. The amount of punitive damage must bear some relationship to compensatory damages More that 4X times is close to the limit of an award And may even perhaps be invalid However, the Court created no fixed rule in this matter.

Johnson v. American Standard

Certified HVAC technician was brazing (welding) refrigerant line Was injured when the line released phosgene gas Sued the manufacturer of the refrigerant line for failure to warn that brazing could lead to release of gas California S. Ct.: Rejected the claim Sophisticated Users of product defense Knowledge of product's danger Cannot sue for failure to warn

Role of Tort Law

Compensation for injuries wrongfully inflicted by the defendant on the plaintiff Civil not criminal law Law is determined in each state - rules vary. However, the basic principles are similar among all states. Remedies should place injured party in the position he/she would have been in prior to the tort. Fear of tort action deters injurious behavior by others. Punitive damages punish malicious or extremely reckless behavior.

gross negligence

Conscious & voluntary disregard for need to use reasonable care More likely to lead to punitive damages

Comparative Negligence

Damages are reduced by the % of injuries caused by the plaintiff's own negligence Replaced old rule old rule of contributory negligence Term contributory negligence still used, but for damages, the rule of comparative negligence is employed Pure Comparative Negligence vs. 50% Rule

Torts

Definition The word tort derived from Latin tortus or "twisted". Means "wrong" in French Civil wrong, other than a breach of contract, for which the law provides a remedy Breach of a duty owed to another that causes harm Arises from careless errors or intentional actions Law reflects social values and community standards Lawsuits involving businesses often have large awards, i.e. Pennzoil-Texaco case: Jury awarded $10.5 billion to the plaintiff. Has become a major issue for businesses Breach of a legal duty owed to another that causes harm

Compensatory Damages

Economic Losses: Lost earnings/medical expenses Non-economic Losses: Pain and suffering, emotional distress Which one is used depends on the circumstances

Employee vs. Independent Contractor

Employer is liable for actions of employee Within the employee's "scope of his or her employment" Independent contractor is liable for his/her own actions Not the person who hired them Has own tools, sets own hours, total responsibility over actions and how/when/etc. Construction workers: Usually covered by worker's compensation laws in most states

Failure to Warn

Failure by manufacturer to warn of dangers in using a product Includes a wide variety of circumstances Failure to give information about specific dangers Failure to issue added warnings about problems that become known after product has been in use Failure to give special emphasis on biggest dangers

Gonzalez vs. Komatsu Forklift

Forklift worker sued manufacturer for injury received when operating it New Jersey S. Ct: Ruled construction worker injured by forklift manufactured in conformity with federal standards Could not sue manufacture to include in the forklift additional warning devices Sophisticated User

Fred Framer v. Staple Gun Manufacturer

Fred Framer sued Staple gun manufacturer in product liability If gun has design defect because lacks safety latch He will have to prove an alternative, safer design could have been used. If claims defect was lack of instructions as to what to do with gun jams, Manufacturer will invoke sophisticated user defense.

Economic Loss Rule

In breach of contract case, if there is no tort involved, damages are only those related to economic losses suffered by the breach. Rule based on three policies 1. Maintain fundamental distinction between tort and contract law 2. Protect commercial parties' freedom to allocate risks by contract 3. Encourage the party best situated to assess the risk of economic loss Damages are only those related to lost profits and costs due to the breach. Accounting evidence and specific calculations are necessary evidence to be presented. No punitive damages or mental distress awards. (Parties often try to assert a tort along with breach of contract in order to get these damages.) See: East River Steamship Corp. v. Transmercial Delaval, Inc

Conduct Causing Loss

Intentional Intentional acts result in foreseeable harm Negligent Failure of duty of care Nonculpable Actor has no intent or is not negligent

Infliction of Emotional Distress/Mental Distress

Intentional conduct: So outrageous, it creates severe mental or emotional distress - psychological harm CAN have emotional distress lawsuit WITHOUT physical harm (Book is incorrect on that one) Petty insults, annoying behavior, bad language? Usually not actionable; we must have "tough skin". Bill collectors or landlords who badger, are profane, or threaten lay the background for a lawsuit. EX: Louisiana court gave an award to a woman who found her comatose husband being chewed by rats in a hospital Fears of toxic mold Scenario: Dan Driver can have damages to car, cost of medication, lost income May add emotional distress & punitive damages (I absolutely do not agree with the book.)

Primary Areas of Product Liability Law

KEY AREAS: Defect in product from manufacturing Manufacturer failed to warn consumer of risks of use or of known hazards in certain uses of product. Product had design defect that could have been avoided Product resulted in latent injuries that may not become known for years

Interference with Contract

Known also as Interference With Business Relations or Interference With Contractual Relations Breaking the contract benefits a 3rd party 1. Existence of a contractual relationship 2. 3rd party knows about the contract 3. 3rd party intentionally interferes with the contractual relationship 4. Absence of justification for the interference 5. Damages as a result of the interference

interference with prospective advantage

Known also as Interference With Prospective Economic Advantage or Interference With Prospective Contractual Relationship One party makes it difficult/impossible for another party to continue in some/all business dealings A business attempts to improve its place in the market by interfering with another's business Unreasonable, improper manner of interference Predatory behavior, not "merely competitive"

Smith v. Kulig

Kulig owns building with apartments on second floor. Street door to apartments locked; only tenants and their guests can access. Back of building is a fire escape. Tenants are not to use fire escape unless an emergency. "No trespassing" signs posted on fire escape. Smith visited Wolf at his apartment in the building. Smith went to fire escape; some bolts detached from wall; Smith fell to his death. Estate sued Kulig. Trial Court: Dismissed, holding Smith was a trespasser. Appealed. Held: Affirmed. Wrongful death action dismissed with prejudice. Trespasser is a person who enters or remains on premises without privilege or consent. Building contained no trespass signs, as did door leading to and from fire escape. Ladder to the fire escape had no trespassing sign. Smith did not have the right to use fire escape as entry or exit to building - there was no emergency situation here. Landowner does not owe duty to trespasser other than not harming him in wanton or willful manner.

Strict Liability in Tort

Manufacturers are strictly liable for defective products The courts ask: Was the product defective? Did the defect create an unreasonably dangerous product or instrumentality? Was the defect a proximate cause or substantial factor of the injury? Did the injury cause damages? Courts do not worry about carefulness, due care, reasonableness, etc.

Wildlife gone wild

Meckler walked out of a Tiffany jewelry store and was attacked by a squirrel. Squirrel "attached itself to her leg." Lawsuit against Tiffany's notes that "while frantically attempting to escape from the squirrel and detach it from her leg, [Meckler] fell and suffered injuries." "Will in the future endure pain and suffering in body and mind." Contended Tiffany's was negligent for failing "to warn . . . of the squirrel's presence." And Tiffany's "encouraged the squirrel to remain on the premises by feeding and caring for the squirrel, despite the dangerous conditions that arose from allowing said animal to remain on the premises."

Mike v. Prime Builder

Mike Messenger is injured when thrown from his bike delivering a package for Prime Builder, Inc. Prime is the land possessor in invited Mike onto the premises Prime owes Mike highest duty of care under premises liability Mike will argue: Hole in ground in which bicycle fell was hazardous premises condition Created by Prime

Federal Tort Claims Act

Originally "sovereign immunity" Can't sue the king 1946 Federal Tort Claims Act Individuals can now sue U.S. for certain wrongs Exceptions: 1. some kinds of intentional torts 2. Injuries caused by certain discretionary functions/duties Performed by government officials Almost all states have limited sovereign immunity States have "public duty doctrine" Ex. City's building inspector charged with negligence Owes no duty to individual owners whose house improperly inspected City would not be liable for negligence

Categories of Torts

Negligence Intentional Strict Liability

Classifications

Negligence Misrepresentation Interference with contract or prospective advantage Premises liability Liability of one who hires an independent contractor Product liability

danger invites rescue doctrine

Negligent party responsible for losses suffered by those who attempt to save people who are in danger as the result of torts of others

Palsgraf v. Long Island Railroad

Palsgraf waits on the platform for a train; another train begins to leave the station; man carrying a package runs to catch it; jumps on the train; looks like he might fall. Guards try to help him as he teeters. He drops the package which contains fireworks that explode. Shock from the explosion causes scales located on the platform to fall, injuring Palsgraf who sues RR for negligence of its employees. Jury finds for Palsgraf; appellate court affirms; RR appeals. Issue: Is it foreseeable that the assistance by the guards would cause Palsgraf's injury through the falling scales? Held: No. Nothing in the situation would suggest such a result. Case reversed and dismissed. (NOT FORESEEABLE)

Invitees vs. Trespassers

Passerby: Expects non-exposure to unreasonable risk Trespassing Adults: Differs in different states See Smith v. Kulig previous slide Attractive Nuisance: Curiosity of average child would entice entry Children go into neighbors pool area and fall in Licensees: Privilege of entering or remaining because of another's consent Ex: People who take shortcuts over property with permission People who come into a building for shelter or look for their children Social Guests Invitees: Receive greatest protection Although owner is not an "insurer of safety", Possessor is under duty to "inspect and keep premises reasonably safe"

Interest or Rights

Personal - Harm to another Includes death or emotional issues Property Tangible or intangible Economic

Designer Negligence and Professional Malpractice

Professional liability or malpractice treated differently in different states Designers are required to use reasonable care and skill as other professionals in the same area Negligence liability may be to contractor, subcontractors, or ultimate users of project Sometimes need expert testimony if engineer or architect deviated from accepted industry standards Sometimes expert testimony of the parties conflict - jury then decides who to believe If defective construction is not caused by defective designs, then designer is not liable Designer liability depends on who is to supervise project Either contractor or designer, architect, engineer, etc. p. 296, 2 Examples p. 297, 3 Examples p. 298, 2 Examples & Management Tip

Punitive Damages

Punishing in nature Above economic losses Wantonly reckless behavior Intentional and deliberately carried out. See: State Farm Mutual Auto Insurance Co. v. Campbell, p. 89

Recreational Use Statutes and Independent Contractors

Several states passed Recreational Use Statutes Both private and public to provide public with free access to their property for recreational use Independent Contractors: Owner turns premises entirely over to control of prime contractor Contractor is now the possessor Landowner no longer subject to premises liability Chapter Scenario: Oliver Owner will argue he would not be liable to Mike Messenger Oliver turned possession over to Prime Builder, Inc.

Manufacturing Defect

Straightforward area Consumers do not expect such defects - consumer expectation test. Will be compensated for them Producers rarely argue such cases. Liability is imposed when product comes off assembly line with defect that is dangerous.

Employees of Trencher, Inc vs. Awesome Architect, Inc.

That Awesome Junior should have perceived trench was dangerous Deep trench dug in pouring rain Trench collapsed , injuring 2 workers Was negligent in failing to take steps to correct problem Awesome Junior's negligence would be attributed to Awesome Architect, Inc. Employer-Employee relationship Issue: How would reasonable prudent architects have acted under these circumstances? Will employees be successful against Awesome Digging in pouring rain? Was this reasonable? Negligent? Negligent per se under statutes and regulations?

Assumption of Risk

The injured party knew or should have known of the risk and voluntarily assumed it. Complete bar to the plaintiff's case May be based on liability waiver or exculpatory clause in a contract Example: Worker decides to go out in a hurricane and finish drywall in an unfinished house. House collapses. Assumed risk and can sue no one.

negligence standard

The standard is how persons in the relative community ought to behave One must be reasonable at all times, under all circumstances Not liable for everything - only "unreasonable" acts Standard: "What a reasonable person would do in same or similar circumstances" Applies to professions - reasonable CPA, MD, attorney, contractor, architect, etc. Standard: what a reasonably skilled, competent and experience person in that profession would do

Mudgett v. Marshall

Two steelworkers were killed Two steel frames collapsed during construction of a chip storage building at a paper plant. At trial, jury determined that the engineer had been negligent in the design of the storage building. Jury found the legal cause of the deaths to be the designer's negligent failure to design steel to meet the specifications of the structure Creating an unreasonable danger of injury to the workers. The courts said, "Although evidence presented to the jury was contradictory, the jury would have rationally found the following facts." "After the collapse of the structure, the engineer discovered that he made errors while calculating the sizes of the steel members used in construction." "Consequently, his design called for WF36x150 beams instead of WF36x230 beams, which have less stiffness and are not as resistant to buckling. Using the WF36x150 beams would require 16 knee braces to provide proper support, but only 2 were provided by the engineer." "Based on this, the jury rationally could find that it was more probably than not that the negligence of the engineer caused the deaths of the workers."

Negligence

Unintentional careless conduct that creates an unreasonable risk of harm to others Elements 1. Breach of duty of care wrongdoer owed to injured party Owed to the plaintiff Breach through an act or omission 2. Causation (causal connection to the injury) 3. Injury/Damages There can be a negligence action even if there was no intent to do harm

Causation

between a party's act and another's injury

foreseeable

chain of events created by a party's actions must be

no liability

if consequences are too remote if there is an intervening or superseding event/conduct

proximate cause

indicates that the liability bears a reasonable relationship to the negligent conduct.

cause in fact

shows the person's conduct is the actual cause of the event that created the injury (some courts call this the "but for" test [sine qua non rule]).

substantial factor test

some states replace proximate caused with _______ in bringing about the injury