Steenson, Torts II Spring 1990

INSTRUCTIONS

1. This is an open-book examination. It is THREE HOURS (180 minutes) long. There are FOUR (4) QUESTIONS on the exam. The weight that will be given to each answer and the suggested time allowance is stated for each question.

2. Place your exam numbers on your bluebooks. Do NOT place your names on your bluebooks.

3. Number each bluebook, e.g., 1 of 3, 2 of 3, 3 of 3.

4. Write on only one side of each bluebook page.

5. Be sure to give reasons for your answers. Don't state unsupported conclusions.

6. Be sure to budget your time carefully so that you cover all FOUR questions.

7. Turn your exam in promptly when the time is up. If you do not, you are obtaining an unfair advantage.

I .

(55% - 100 minutes)

Secure Living Systems (Secure) offered exclusive, expensive condominiums in an expanding suburb of Mitchell City. Secure constructed ten buildings with ten condominium units in each. The condos ranged in price from $150,000 to $300,000. The buildings were spread over a scenic, thirty acre stretch of land. Each condominium had a security system installed. The security system was included in the purchase price of each condo. Secure Living Systems specialized in the building, sale and management of condominiums such as the ones in Mitchell City.

During construction, Secure Living Systems subcontracted the security system installation work to Deadbolt, Inc. The security system was intended to protect each of the condominiums and each of the buildings. Each condominium had motion sensing devices and circuit breakers connected to the doors and windows. Both were wired to a silent alarm system that was connected to Deadbolt's central office, which was located a few miles away. When the alarm system was triggered, Deadbolt would make a call to the police and the police would handle the call as a burglary in progress. When the condominiums were sold, each buyer agreed to the following language in the sales agreement: "Buyer agrees not to bring any claims for personal injury, property damage, or theft of personal property, against Secure Living Systems, and Secure Living Systems makes no warranty, concerning the security systems in the condominium you are buying."

In April of 1990, a month after the last condominium had been sold, break-ins occurred in three of the condominiums. In one of the condominiums, owned by Jane and John Plush, an elderly couple, John Plush was beaten by a burglar when he discovered the burglar trying to take the television set. He was discovered several hours later by his wife, Jane Plush. Upon discovering him she suffered a heart attack. John went into a coma, from which he never recovered. He died three days later from head wounds he suffered in the beating.

In the second break-in, Joan and James Presser had several thousand dollars worth of electronic equipment taken. They were not home at the time of the burglary. In the third, Karen and Bill Post were beaten when they discovered the burglar, but they were not robbed. As a result of the beating, Karen Post, who was six months pregnant, went into premature labor and delivered a stillborn child. In all three situations the burglar gained entrance through the front door by prying open the door with a crowbar. The alarm in Deadbolt's central office was not set off by these two break-ins. The reason was that there were short circuits in the two alarm systems caused by bare wires that touched each other in the alarm system circuit box in the two condominiums. The circuit boxes were manufactured for Deadbolt by a now defunct company. They were delivered as closed units and were not inspected by Deadbolt. Later inspection revealed that the problem did not exist in the other alarm systems in the other condos.

In the third break-in, the alarm was set off in Deadbolt's office. The Deadbolt employee who was charged with responsibility for making the calls to the police promptly called the Mitchell police at 11:00 p.m., the time of the break-in. The Mitchell police did not respond to the call until midnight. The Posts were beaten by the burglar sometime between 11:50 and midnight.

Prior to the break-ins there had been no evidence of crime at the condominiums. After the break-ins, however, the condominium residents wanted to increase the security in the complex. The condominium owners' association had previously established bylaws and rules to govern itself. The bylaws included the provision for security for the complex. Secure was hired to manage the complex. However, Secure had discretion as to how its obligations were to be carried out. In response to the concerns of the residents about safety, Secure hired a security agency, AAA Security, to patrol the premises. Under the contract AAA signed with Secure, AAA was to begin its patrol of the complex on May 1, 1990. Secure so informed the residents. On the evening of May 1, another condo resident, Stan Crystal, was walking through the complex late in the evening, around 11:00 p.m., when he was accosted at gun point by a robber. The robber demanded his wallet, but Stan wasn't carrying it. The robber, out of frustration, shot Stan, seriously wounding him.

Based upon the above facts, consider what claims the condominium residents may have against Secure Living Systems, Deadbolt, Inc., the City of Mitchell, and AAA Security. In discussing the claims be sure to consider any issues relating to damages.

In answering the question do not assume the existence of any state statutes that regulate the sale of condominiums.

II.

(35% - 60 minutes)

Paula Place, age thirty, was driving her car down a county highway in Minnesota, at speeds of twenty to thirty miles per hour over the speed limit. For the four hours prior to the accident she had been drinking at the KO Bar. During that time period she downed approximately ten drinks. In the bar her speech was slurred and she fell off her bar stool twice. She had difficulty in getting to her car, but she finally made it, with the help of a friend who had been drinking with her in the bar. Her friend, Neil Ham, got into the car with Paula, so that Paula could drive him home.

As Paula rounded a curve in the highway, she suddenly saw a horse and rider crossing the road in front of her. She tried to avoid them, but she ran into the horse. Although Paula was wearing a seat belt, the impact of the collision threw Paula onto the steering wheel. She suffered a back injury as a result of the collision. Neil, who was riding in the front seat, was thrown into the windshield. He sustained serious back injuries as a result.

Paula was treated at the emergency room of the local hospital and was released. Her total medical expenses for the treatment was $300, including the x-rays that were taken. Because of the accident, Paula missed work for one week. Her gross weekly wage was $400 per week. Paula has some continuing pain in her back, but she has been able to continue working at her job.

Paula's car was properly insured as required by the Minnesota No-Fault Automobile Insurance Act. She carried only the minimum coverages required by the Act. Neil also owned a car, which was not insured as required by the Act. Neil's injuries were much more serious than Paula. Neil went to see an orthopedic surgeon, who recommended that he undergo an operation to correct the problem. Specifically, two of Neil's vertebrae were to be fused in the operation. Neil understood the risks of the operation. However, the surgeon did not disclose to Neil that there was an alternative of physical therapy. The physical therapy would have taken longer, and a significant amount of pain would have been involved, but he would not have been subjected to the risks of the surgery. During the course of the operation Neil received a blood transfusion. As a result of that transfusion he contracted hepatitis.

Based upon the above facts, answer the following questions (You are to assume that Minnesota law applies to the first six questions):

1. Is Paula entitled to recover no-fault benefits (basic economic loss benefits)? If so, what losses will be covered?

2. Will Paula be entitled to recover in a Civil Damage Act action against the KO Bar?

3. Will Paula be entitled to recover in a tort action against the rider of the horse? (Assume that Paula will be less at fault than the horse rider) If so, what damages should she be entitled to recover? (i.e., economic loss and pain and suffering).

4. If the rider, who is also the owner of the horse, sues the KO Bar, will the KO bar be entitled to contribution against Paula? (Assume here that Paula and the KO bar are both more at fault than the horse rider).

5. Is Neil entitled to recover no-fault benefits (basic economic loss benefits)? If so, from what source?

6. Assume that the horse rider does not own a car, is the rider entitled to recover no-fault benefits (basic economic loss benefits) and if so, from what source?

7. If Neil brings suit against the surgeon, will he be entitled to recover under an informed consent theory? Explain.

III.

(5% - 10 minutes)

Assume that P is injured by a defective product and that the product was bought by P from Dl, a retailer, who received it from D2, a wholesaler, who received it from D3, the product manufacturer. P would like to settle with D3, the manufacturer, and pursue the remaining claims against Dl, the retailer, and D2, the wholesaler. It appears that D1 and D2 were not in any way negligent, but they were in the chain of distribution and therefore are potentially subject to liability under the products liability law of your state. Dl seems to have assets sufficient to sustain a recovery, but D2 may be insolvent.

Your state has accepted Pierringer releases, just as in Minnesota and Wisconsin. Your state has a modified comparative fault statute that requires individual comparisons of fault. It does not have a reallocation statute.

Based on the above facts, answer the following questions:

1. If P enters into a Pierringer release with D3, what will be the potential impact of the settlement on P's right to recover against Dl and D2?

2. If you were representing D3, would a Pierringer release be a good idea, assuming that D3 is able to settle for a reasonable amount? Are there any specific precautions you would take in

drafting the release?

IV.

(5% - 10 minutes)

Paul Pinckney, a vice-president of the First National Bank, was charged with embezzling funds from the bank. He was subsequently absolved of any wrongdoing and was reinstated at his job as a vice-president of the bank. A year later a local television station was doing a series on corporate crime in America. One of the stories focused on problems of embezzlement in the banking industry. At one point during the news broadcast the reporter presenting the story made the following statement: "We are not immune from the problem in our own city. Just last year, a high-ranking bank official, Mr. Pinckney from the First National, was charged with embezzlement." The person who wrote the story knew that Pinckney had been absolved of any wrongdoing, but neglected to put that information in the story.

Based upon the above facts, should Mr. Pinckney be entitled to recover in a defamation action against the television station? Explain.