Date of Examination: May 9, 1995
Professor J.R. PIELEMEIER
CODE OF CONDUCT
Violations of the Code of Conduct include: (1) unauthorized conversation among students concerning the examination; (2) giving, receiving, or soliciting unauthorized aid; (3) using materials which are not specifically permitted by the written examination instruction; (4) exceeding the examination time limit; or (5) any other dishonest conduct in connection with the examination.
INSTRUCTIONS
a. This examination consists of five questions. The suggested times for the first three questions are 45 minutes each. The suggested times for the last two questions are 22 1/2 minutes each. The total suggested time for all five questions is 3 hours, which is the total amount of time permitted for the exam.
b. Taking into account the amount of suggested times, discuss all issues reasonably raised by each question, even though your resolution of one issue may seem to render the others moot.
c. Each of the first three questions is based on a case that has been recently decided (not necessarily correctly, in the view of your professor). If you would like the citations, I will provide them to you after the exam.
Paul was born and grew up in Vermont. At the age of 18, he joined the U.S. Army. During his first 18 months in the Army, he was stationed in Kentucky, then Maryland, then Hawaii, and then at Fort Carson in Colorado.
One weekend after he had been stationed at Fort Carson for approximately 2 months, Paul and two friends, John and Steve, went to Pike's Peak in Colorado to ride John's ATV (All Terrain Vehicle). The ATV had been designed and manufactured in Japan by Honda, a Japanese corporation, and had been sold to John in Colorado by a distributor of American Honda, a California corporation with its principal place of business in California. American Honda is a wholly-owned subsidiary of Honda, and sold ATVs throughout the United States.
While Paul was riding the ATV at Pike's Peak, he found himself unable to negotiate a turn and fell down a steep embankment. As a result, Paul's neck was broken, and he became permanently paralyzed from the neck down.
Paul was discharged from the Army, and returned to live in Vermont. Shortly after returning and consulting an attorney there, Paul filed suit in a Vermont court against Honda and American Honda, alleging various theories of negligence and strict products liability. Personal jurisdiction was based on the existence of a sales office and warehouse American Honda had in Vermont. Assume, for purposes of this question, that personal jurisdiction was constitutionally permissible.
During the course of the litigation, an issue arose as to the applicability of a Colorado statute that provided in all actions for personal injury, plaintiffs may recover no more than $250,000 for "non-economic loss or injury" (i.e. pain and suffering). The preamble to the statute stated that its purpose was "to increase the affordability and availability of insurance by making the risk of loss by insured entities more predictable." The law of Vermont and California provided for no limitation on the amount that might be recovered for such losses. Honda and American Honda had liability insurance through General Casualty Company, a California Corporation with its principal place of business in California. Its policy provided coverage for accidents occurring throughout the United States.
Assume that as a matter of Vermont conflicts law, Vermont would apply Vermont law to the effect that there was no limitation on the amount of such damages. Discuss whether doing so would be permissible under the United States Constitution.
Petroleum Drillers Inc. (Drillers) was a large producer of oil and gas, with extensive holdings in State A. It wished to obtain a 100 million dollar loan to expand its operations. To this end, Drillers approached Bankers Trust Company (Bankers), which was incorporated and had its principal place of business in State B. Bankers agreed that it would consider the loan after it received a report on the value of Drillers' current gas and oil reserves.
Drillers hired Smith Consulting (Smith) to research and create such a report. Smith was incorporated and had its only place of business in State C. Smith's final report, which it sent to Bankers in state B, estimated that Drillers' reserves were worth 196 million dollars.
After receiving the report, members of Bankers' Energy Division in State B had numerous telephone discussions about the report with Smith personnel in State C. During the course of these discussions, Smith personnel faxed to Bankers copies of numerous documents on which its report was based. These background documents were also discussed at length in numerous telephone conversations between Bankers and Smith over a two week period. Bankers then agreed to make the 100 million dollar loan to Drillers. The loan was made at Bankers' offices in State B, and the oil and gas reserves served as security for the loan.
One year later, Drillers defaulted in its loan repayment. Shortly thereafter, Bankers discovered that Smith's report had overstated the value of Drillers' reserves by approximately 110 million dollars. (Rather than being worth 196 million dollars, they were worth approximately 86 million dollars).
Bankers then filed suit against Smith in a court in state B, seeking damages in the amount of 14 million dollars (the difference between the amount of Bankers' loan and the actual value of Drillers' reserves). The theory of liability was negligent misrepresentation. Smith's answer alleged contributory negligence on the part of Bankers as a defense.
At the end of a lengthy trial, the jury returned a verdict finding that Bankers had suffered damages in the amount of 14 million dollars, and also apportioning fault as follows: Bankers: 60%, Smith: 40%.
State C applies principles of comparative fault in negligence cases, although under its scheme, the plaintiff can recover only if its fault is less than that of the defendant. State B also applies principles of comparative fault. However, unlike State C, State B's scheme permits recovery of damages proportionate to the fault of the defendant, even if the plaintiff's fault is greater than that of the defendant. Thus, in light of the jury's apportionment of fault, Bankers would recover nothing if State C's principles of comparative fault applied, but would recover 5.6 million dollars (40% of 14 million) if State B's principles applied.
Assume that State B's Supreme Court has announced that it will resolve choice of law issues by using Interest Analysis, and that it will be willing to consider, as persuasive authority, principles from other jurisdictions that have adopted this approach, including California and New York.
Discuss whether the Court in State B should apply State B's or State C's law on the issue of comparative fault. (You need not discuss any constitutional or jurisdictional issues).
Bloomtown is a city in State A with a population of approximately 100,000. East Bloomtown is a city in State B, just across the state border, with a population of approximately 30,000.
Bill Jones is a police officer who lives in and is employed by East Bloomtown. While patrolling in East Bloomtown one day, Jones became suspicious of a pickup truck. He called in its license number and was informed that it had been reported as stolen. He began pursuit of the pickup, which developed into a very high speed chase through the streets of East Bloomtown. Jones continued to pursue the pickup at very high speeds after it crossed the border and went into Bloomtown.
Shortly after entering Bloomtown, Jones collided with an automobile that was crossing an intersection, occupied by Mary Smith and her two young children. All three, who were residents of East Bloomtown, were severely injured.
Under the law of State A, police officers and the municipalities employing them are immune from liability for personal injuries unless their conduct causing the injury was "willful or malicious." Under the law of State B, on the other hand, police officers and the municipalities employing them can be held liable if the officer's conduct was "reckless or grossly negligent."
Mary Smith and her children brought suit against Jones and East Bloomtown in State B. The defendants made a motion for summary judgment, claiming that there was no evidence of "willfulness" and they therefore were immune from liability under the law of State A, which they claimed should be applied.
The Smiths conceded that they could not prove willfulness, but claimed that their evidence would be sufficient to make the issue of "gross negligence" an issue for the jury. (Assume for purposes of this question that they were correct on this point). The Smiths further claimed that State B's law on the issue of immunity should be applied, and that the defendants' motion for summary judgment should be denied.
The trial court granted the defendants' motion, holding that under State B's territorialist choice of law rules, the law of State A was applicable.
The Smiths have appealed to the Supreme Court of State B. Their arguments are three: (1) the trial court erred in holding that the law of State A was applicable under territorialist choice of law principles; (2) the law of State B would be applicable under Professor Leflar's "Better Rule" approach to conflicts issues; (3) State B should join the modern trend of most American Courts in abandoning the territorialist choice of law rules, and should adopt the "Better Rule" approach in its place.
You are a law clerk to one of the Justices of State B's Supreme Court. She has asked you to draft a memo discussing all three of the Smiths' arguments. Assume for purposes of this question that, in a large majority of American jurisdictions, the law on police officer immunity is similar to that of State A. Assume also that under its "modern" choice of law approach, State A's courts would apply the law of State B.
Taking into account the amount of time suggested for this question, write your memo. In connection with the Smiths' third argument, you need not discuss whether some modern approach other than the "Better Rule" approach would be preferable.
Bob, a resident of Georgia, owned a cabin on a lake in Alabama. He later met Ann, and they lived together in Georgia for a ten year period. Although they were never formally married, under Georgia law they were "common law husband and wife."
Subsequently, they pursued an action to dissolve their marriage in a Georgia court. The decree dissolving the marriage divided their property and awarded the Alabama cabin to Ann. This was done notwithstanding the existence of the following Alabama statute, which Bob had brought to the Court's attention:
The Alabama legislature declares it the public policy of this state to discourage cohabitation of unmarried persons. Accordingly, no alleged common law marriage shall be recognized by the courts of this state. In addition, no interest in real property in this state may be created as a result of an unmarried, cohabiting relationship, and any such alleged interest shall be deemed null and void in the courts of this state.
After the dissolution proceedings, which had been bitterly contested, were completed, Bob refused to execute a deed to the cabin to Ann. Bob also moved into the Alabama cabin and refused to leave. Ann then brought an action in an Alabama court, asking it to recognize the Georgia judgment adjudicating that the property was hers, and to eject Bob from the cabin.
Briefly discuss: (1) the propriety of the Georgia court's awarding the cabin to Ann in the face of the Alabama statute; and (2) whether Alabama must give full faith and credit to the Georgia decree.
Miller, a resident of Louisville, Kentucky, went shopping at the BUY4LESS store in New Albany, Indiana (just across the state line). Seconds after he left the store and was walking through the parking lot, Evans, the store manager, ran after him yelling "Stop thief!!!" several times. When Miller stopped, Evans and another store employee grabbed him physically and took him to an office in the back of the store, where they detained, searched, and questioned Miller for over an hour. After Miller finally persuaded them that he had not stolen anything, Evans let Miller go.
Miller consulted an attorney and subsequently brought suit against BUY4LESS and Evans in an Indiana court. His theory of liability was false imprisonment. Shortly after the suit was filed, the defendants filed a motion for summary judgment. It was granted and judgment was entered in their favor.
At some point after beginning the Indiana suit, Miller learned that some acquaintances had been in the parking lot, and had seen Evans running after him yelling "Stop thief!!!" After informing his attorney of this, Miller brought another suit against BUY4LESS and Evans, this time in a Kentucky court. (Assume that it could assert personal jurisdiction). Miller's theory of liability in the Kentucky suit was defamation.
Under the law of Indiana, the theories of false imprisonment and defamation in these circumstances would be deemed to arise out of the same "claim" or "cause of action." Thus, under Indiana claim preclusion rules, Miller's defamation claim would be barred because he did not allege it, in addition to the false imprisonment claim, in the Indiana suit.
Under the law of Kentucky, however, the defamation claim would be deemed a separate "claim" or "cause of action." Thus, under Kentucky claim preclusion rules, Miller would not be barred from bringing a separate defamation suit after bringing an earlier suit for false imprisonment.
In the Kentucky suit, after the Indiana judgment had been entered, BUY4LESS and Evans moved for summary judgment on the ground that the Indiana judgment precluded the Kentucky action pursuant to full faith and credit principles. Discuss how the motion should be resolved.