Professor Steenson, Torts, Spring 1984
INSTRUCTIONS
1. This is an open-book examination. You may use your torts casebook, any course handouts, and any notes you have taken.
2. The examination is three hours long. It consists of three questions. Note the weight assigned to each question and the suggested time to be spent in answering it. In answering the questions be sure to state the reasons for the conclusions you reach.
3. Please write on only one side of each bluebook page. Be sure to stay within the bluebook margins.
4. Number your bluebooks, e.g., 1 of 3; 2 of 3; 3 of 3.
I . 45%
(80 minutes)
In the summer of 1983, a fire broke out at a brand new motor vehicle repair shop owned by Able. The repair shop was located in Torttown, a small Minnesota town with a population of only 500. The fire was deliberately set by Yarrow, who had recently been released from prison and was on parole.
The fire was set while the shop was closed over the noon hour. When Bill and Carol, two of Able's employees, came back from lunch, the fire had spread substantially. The spread of the fire was caused in substantial part by urethane spray foam insulation. In addition, the fire came into contact with intumescent paint, resulting in highly toxic smoke. The fire destroyed the repair shop. Able incurred substantial costs in rebuilding the building. He also lost a substantial amount of car repair business. Carol was injured in fighting the fire. Her injuries consisted of lung damage due to the inhalation of the toxic smoke and burns from the fire.
Able did the construction work on the repair shop himself, having worked as a carpenter and builder for ten years before building the shop and starting the repair business. Able hired the Heating Company, a local company from Torttown to spray the insulation into the walls; Foam Company, a St. Paul corporation, was the manufacturer of the foam. Able bought the paint himself from the Paint Store, a retailer in Torttown. The Paint Store had purchased the paint from Industrial Paint, a paint manufacturer based in Minneapolis.
The Foam Company had tested the special insulation used in the building, but was unaware that the insulation would burn. The insulation was manufactured based upon a common formula used in the insulation industry. No warnings were given concerning the flammability of the insulation because the danger of flammability was not discovered until early 1984. It would have been scientifically impossible to have discovered the danger of flammability prior to that time.
Industrial Paint knew that the paint it manufactured would create toxic smoke in the event of fire. However, that danger was not discovered until 1983, after a substantial amount of the paint had been manufactured. Industrial's officers decided not to do anything about the hazard because of the substantial cost to the company that would result from any attempt to give notice to the purchasers of the paint. However, stores that stocked the paint were notified of the problem and told not to sell any more of the defective paint. The Paint Store had sold the paint to Able before receiving notice of the danger from Industrial Paint. However, the Paint Store made no attempt to warn customers of the danger either. After discovering the danger, Industrial Paint began manufacturing the paint without the chemical that caused the toxic smoke.
When Bill and Carol returned from lunch and saw the fire, Carol headed for the shop to get a fire extinguisher to combat the fire. However, she was overcome by the smoke and she collapsed near the building. Bill was twenty feet from where Carol collapsed. He made no attempt whatsoever to rescue Carol. He instead waited for the fire department to come. By the time the fire department arrived the fire had reached Carol, causing her severe burns.
Yarrow was a resident of Torttown before he had been convicted of arson in burning down the Torttown school. He served his sentence and was released from prison. His parole agent, Ruth, met with him several times. Yarrow expressed hatred for the residents of his home town, complaining that they never gave him a break. He told Ruth that he was going to go back to his hometown (for which he had permission from the parole board) and that he would like to get even with the people in Torttown. Ruth said nothing to anyone about the threats and did nothing about them.
Three separate lawsuits arose out of the above facts.
(1) Able and Carol brought suit against:
(2) Able brought suit against Ruth.
(3) Carol brought suit against Bill.
During the course of the litigation of the cases the following rulings were made.
1. The trial judge dismissed Heating Company from the litigation because the only claim asserted against Heating Company was based on strict products liability.
2. The trial judge held that the Foam Company could be held liable for failure to warn, even though the Foam Company was not and could not have been aware of the danger.
3. Able asserted a claim for punitive damages against Industrial Paint. However, the trial judge held that claims for property damage would not support a claim for punitive damages.
4. The trial judge held that Able's claims for property damage, rebuilding costs, and economic loss against Industrial Paint and Foam Company were covered under strict products liability.
5. The jury found the Paint Store negligent in failing to warn its customers of the dangers presented by the paint. Industrial Paint was held liable on both strict products liability and negligence theories. The jury apportioned fault among the Foam Company, the Paint Store, and Industrial Paint in the following percentages: (a) Foam Company - 40%; (b) Industrial Paint - 40%; (c) the Paint Store - 20%. These findings notwithstanding, the trial judge held that the Paint Store would be entitled to indemnity from Industrial Paint for any sums paid by the Paint Store to Able.
6. The Foam Company moved the trial judge for an apportionment of Carol's damages. However, the trial judge held that the Foam Company, the Paint Store, and Industrial Paint would be jointly and severally liable to Carol and that the injuries she sustained were not apportionable,
7. The trial judge held that Carol could recover from Bill if the jury found that Bill acted negligently. The jury so found.
8. The trial judge held on the authority of Tarasoff v. Board of Regents (the California Supreme Court case imposing a duty to act reasonably on psychotherapists who should know that a patient constitutes a risk to third persons) that Ruth was liable for failing to take action when she learned of the threats made by Yarrow.
You are to determine whether the trial judge was correct in her rulings. Explain whether the rulings were correct and why.
III. 40%
(70 minutes)
1. A died as a result of injuries sustained in an accident caused by B Corp., a product manufacturer that knew its product was dangerous but consciously failed to correct the defect, hoping that it would not be discovered that there was a coverup.
A wrongful death claim was filed under Minnesota law against B Corp. by the trustee appointed to bring the claim.
The trustee claimed damages for loss of society, advice, and companionship sustained by A's spouse as well as damages for emotional distress suffered by A's spouse as well as damages for emotional distress suffered by A's spouse because of A's death. Punitive damages were also claimed against B Corp.
Are these damages recoverable against B Corp.?
2. A went to B, a lawyer, to have B draft a will for her. She intended to leave a certain piece of property to C, a close friend. A gave B specific instructions that the designated property should be left to C. B drafted the will but negligently failed to include a clause giving the property to C. As a result, C did not obtain the property. Will C be entitled to recover from B in a legal malpractice suit?
3. A was injured because of B's negligence in bumping A as A was about to go down a store escalator. A received free medical treatment from her sister, a doctor. The treatment was worth $1,000. A was unable to work for a week following the accident. However, she suffered no wage loss because her employer voluntarily continued her wages. Her wage was $750 per week. Is A entitled to recover anything in a negligence action against B?
4. A was injured while riding a three-wheeled all-terrain vehicle. The injury occurred when the vehicle was hit by a farm tractor that was pulling a hay wagon across a public highway from one field to another. The all-terrain vehicle was covered with liability insurance. The tractor was owned by B. B was also injured in the accident. B's tractor was not insured, but B owned a motor vehicle that was properly insured under the Minnesota No-Fault Automobile Insurance Act. A also owned a motor vehicle that was properly insured as required by the Minnesota No-Fault Automobile Insurance Act. Is A entitled to recover basic economic loss benefits? If so, from what source? Is B entitled to recover basic economic loss benefits? If so, from what source?
5. A had driven his truck to a grain elevator to unload grain. While A was parked on the street, waiting in line to unload, with the truck engine running, there was an explosion that destroyed A's truck and injured A. A's truck was properly insured as required by the Minnesota No-Fault Automobile Insurance Act. Would A be entitled to recover basic economic loss benefits for the losses he sustained?
6. A owned a motor vehicle that was insured with State Farm. A was injured in an automobile accident while driving his car. A neglected to give notice to State Farm until eight months after the injury. State Farm denied benefits based upon a policy provision that required notice of an accident to be given to State Farm no later than six months after the accident. Is A entitled to recover basic economic loss benefits from State Farm?
7. A, B, and C were partners in a printing business. The printing company was incorporated and A, B, and C were equal partners in the business. The business owned six vehicles. A, B, and C were each provided with a vehicle for their own use, without restrictions on the use. The other three vehicles were used only for company business and were driven by company employees. All vehicles were insured as required-by the Minnesota No-Fault Automobile Insurance Act. The printing company was the named insured in the policy. A was injured one day while driving B's car on company business. His injuries were serious, resulting in medical expenses in excess of $40,000. A also owned a motor vehicle that was properly insured as required by the Act. What source or sources of no-fault coverage are available to A for payment of basic economic loss benefits?
8. A owned a motor vehicle that was insured as required by the Minnesota No-Fault Automobile Insurance Act. A died as a result of injuries sustained in a motor vehicle accident while driving that vehicle. A was married to B, but was divorced from B two years before the accident. A's spouse, B, had custody of their only child, C. A had been making child support payments for C's support, in the amount of $200 per week. Is C entitled to recover basic economic loss benefits under A's insurance policy as a result of A's death?
9. A, an employee of the B Corporation, was injured when he slipped inside a trailer connected to a truck while unloading the trailer. The slip was caused by a loose board on the floor of the trailer. As a result of the slip, A suffered a back injury. He was out of work for four weeks. His wage loss was.$500 per week. He was paid $313 per week (the worker's compensation maximum) for the four weeks he was out of work. The truck was insured as required by the Minnesota No-Fault Automobile Insurance Act. Is A entitled to recover basic economic loss benefits under the coverage on the truck? If so, in what amount?
10. A was injured in an automobile accident in Wisconsin (a non-no-fault state) while driving her own car. The accident was caused by the negligence of B, who was driving his own motor vehicle. A's motor vehicle was insured as required by the Minnesota No-Fault Automobile Insurance Act. However, B's car carried only liability insurance in the amount of $15,000 bodily injury coverage per person with a $30,000 per accident limitation. A lived with her parents who owned a motor vehicle that was properly insured under the No-Fault Act. is A entitled to recover uninsured or hit-and-run motor vehicle insurance benefits? If so, from what source or sources?
11. A was injured when her car crashed. The crash occurred because the steering failed on her car. The steering failure arose because of negligent repairs performed on her car by the Corner Garage. A incurred medical expenses totaling $3,500. A was out of work for six weeks. Her wage loss was $200 per week. A's car ws insured as required by the Minnesota No-Fault Automobile Insurance Act. Her insurer paid all her medical expenses and $170 per week for six weeks in disability and income loss benefits. If A sues the Corner Garage in a negligence action what damages will she be entitled to recover?
12. A owned three motor vehicles but only one was insured as required by the Minnesota No-Fault Automobile Insurance Act. A sustained injuries when he was involved in an accident while driving one of the uninsured vehicles. Is A entitled to recover basic economic loss benefits under the insurance coverage on the insured motor vehicle?
13. P was injured while working for his employer, E, by a defective press manufactured by M and sold to E through a dealer, D. P brought suit against D and M. D and M sued E for contribution. In a jury trial fault was assessed as follows: P (30%); E (20%); M (30%); and D (20%). P was awarded damages of $100,000. P had previously received $30,000 in workers' compensation benefits from E. What is the liability of D, M, and E?
14. Retail, Inc., and Manufacturer, Inc., Minnesota corporations, were sued-for selling a defective washing machine that mangled P's arm. It was quite clear that there was a flaw in the manufacture of the machine and also clear that Retail, Inc. was negligent in failing to discover the defect. Manufacturer, Inc., is interested in settling the claim brought against it by P, being dismissed as a party to the lawsuit, and having its liability limited to the amount of the settlement. What settlement terms would best accomplish this result? Are there any specific problems that a settlement may create under these circumstances and if so, how would you handle those problems?