Business Law – Critical thinking (please ensure to answer the question of each case study and the reason for the rulling

47.2 Mislaid Property Alex Franks was a guest staying at a Comfort Inn in Searcy, Arkansas, while he was working on a highway project. Franks found a bundle of money in plain view in the left part of the left drawer in the dresser in his room. Franks notified the hotel manager, who notified the police. The police took custody of the money and discovered that the carefully wrapped bundle contained $14,200 in cash—46 $100 bills and 480 $20 bills. Franks sued to recover the cash. J.K. Kazi, the owner of the hotel, joined the lawsuit, also claiming the money. Franks argued that the money was lost property and therefore he, as the finder, was entitled to the money. Kazi argued that the money was mislaid property and that he, as the owner of the premises on which the money was found, was entitled to the money. The trial court held that the money had been mislaid and awarded the money to Kazi, the hotel owner. Franks appealed. Was the money mislaid or lost property? Who receives the property? Franks v. Kazi, 88 Ark.App. 243, 197 S.W.3d 5, Web 2004 Ark. App. Lexis 771 (Court of Appeals of Arkansas)

47.3 Bailment The Sisters of Charity of the Incarnate Word, d.b.a. St. Elizabeth Hospital of Beaumont, operates a health and wellness center. Phil Meaux was a paying member of the health center. The rules of the center, which Meaux had been given, state, “The Health & Wellness Center is not responsible for lost or stolen items.” A sign stating, “We cannot assure the safety of your valuables” was posted at the check-in desk. The wellness center furnished a lock and key to each member but had a master key to open lockers in case a member forgot or lost his or her key. One day, Meaux went to the wellness center and placed his clothes, an expensive Rolex watch, and a money clip with $400 cash in the locker assigned him. Upon returning from swimming, Meaux discovered that his locker had been pried open, and his watch and money had been stolen by some unknown person. Meaux sued the Sisters of Charity, alleging that a bailment had been created between him and the Sisters and that the Sisters, as bailee, were negligent and therefore liable to him for the value of his stolen property. The trial court held in favor of Meaux and awarded him $19,500 as the value of the stolen property, plus interest and attorneys’ fees. The Sisters of Charity appealed. Was a bailment created between Meaux and the Sisters of Charity? Who wins? Sisters of Charity of the Incarnate Word v. Meaux, 122 S.W.3d 428, Web 2003 Tex. App. Lexis 10189 (Court of Appeals of Texas)

47.6 Abandoned Property Police officers of the city of Miami, Florida, responded to reports of a shooting at the apartment of Carlos Fuentes. Fuentes had been shot in the neck and shoulder, and shortly after the police arrived, he was removed to a hospital. In an ensuing search of the apartment, the police found assorted drug paraphernalia, a gun, and cash in the amount of $58,591. The property was seized, taken to the police station, and placed in custody. About nine days later, the police learned that Fuentes had been discharged from the hospital. All efforts by police to locate Fuentes and his girlfriend, a co-occupant of Fuentes’s apartment, were unsuccessful. Neither Fuentes nor his girlfriend ever came forward to claim any of the items taken by the police from his apartment. About four years later, James W. Green and Walter J. Vogel, the owners of the apartment building in which Fuentes was a tenant, sued the city of Miami to recover the cash found in Fuentes’s apartment. The state of Florida intervened in the case, also claiming an interest in the money. Who wins? State of Florida v. Green, 456 So.2d 1309, Web 1984 Fla.App. Lexis 15340 (Court of Appeal of Florida)

50.1 Exclusion from Insurance Policy Richard Usher’s home was protected by a homeowners’ policy issued by National American Insurance Company of California. The policy included personal liability insurance. A provision in the policy read: “Personal liability and coverage do not apply to bodily injury or property damage arising out of the ownership, maintenance, use, loading, or unloading of a motor vehicle owned or operated by, or rented or loaned to any insured.” Usher parked a Chevrolet van he owned in his driveway. He left the van’s side door open while he loaded the van in preparation for a camping trip. While Usher was inside his house, several children, including 2-year-old Graham Coburn, began playing near the van. One of the children climbed into the driver’s seat and moved the shift lever from park to reverse. The van rolled backward, crushing Coburn and killing him. Coburn’s parents sued Usher for negligence. Is the accident covered by Usher’s homeowners’ policy? National American Insurance Company of California v. Coburn, 209 Cal. App.3d 914, 257 Cal.Rptr. 591, Web 1989 Cal.App. Lexis 356 (Court of Appeal of California)

50.5 Automobile Insurance Antonio Munoz and Jacinto Segura won some money from two unidentified men in a craps game in a Los Angeles park. When Munoz and Segura left the park in Segura’s car, the two men followed them in another car. They chased Segura’s car for several miles and then pulled beside it on a freeway. The men in the other car fired several gunshots at Segura’s car, killing Munoz. At the time he was killed, Munoz had an automobile insurance policy issued by Nationwide Mutual Insurance Company (Nationwide). A provision in the policy covered damages from “an accident arising out of the use of an uninsured vehicle.” Munoz’s widow and child filed a claim with Nationwide to recover for Munoz’s death. Nationwide rejected the claim. Who wins? Nationwide Mutual Insurance Company v. Munoz, 199 Cal.App.3d 1076, 245 Cal.Rptr. 324, Web 1988 Cal. App. Lexis 259 (Court of Appeal of California)

50.6 Malpractice Insurance Donald Barker, a wealthy Oregon resident, went to the law firm Winokur, Schoenberg, Maier, Hamerman & Knudson to have his estate planned. An attorney at the firm repeatedly told Barker that he could convey half of his $20-million estate to his wife tax free under Oregon’s marital deduction. Barker had his will drawn based on the law firm’s advice. It was not until after Barker died three years later that Barker’s family learned that Oregon does not recognize the marital deduction. As a result, the will’s beneficiaries were subject to significant estate taxes. The beneficiaries sued the law firm for negligence, and the case was settled for $2 million. At the time Barker was being advised by the law firm, it had a professional malpractice insurance policy with the Travelers Insurance Company (Travelers) that covered “all sums which the insured shall become legally obligated to pay as damages because of any act or omission of the insured arising out of the performance of professional services for others in the insured’s capacity as a lawyer.” The policy expired one year prior to Barker’s death. Is Travelers liable for the $2 million settlement? Travelers Insurance Company v. National Union Fire Insurance Company of Pittsburgh, 207 Cal. App.3d 1390, 255 Cal.Rptr. 727, Web 1989 Cal.App. Lexis 130 (Court of Appeal of California)

45.2 Clean Air Act Pilot Petroleum Associates, Inc., and various affiliated companies distributed gasoline to retail gasoline stations in the state of New York. Pilot owned some of these stations and leased them to individual operators who were under contract to purchase gasoline from Pilot. The EPA took samples of gasoline from five different service stations to which Pilot had sold unleaded gasoline. These samples showed that Pilot had delivered “unleaded gasoline that contained amounts of lead in excess of that permitted by the Clean Air Act and EPA regulations.” The United States brought criminal charges against Pilot for violating the act and EPA regulations and sought fines from Pilot. Who wins? United States v. Pilot Petroleum Associates, Inc., 712 F.Supp. 1077, Web 1989 U.S. Dist. Lexis 6119 (United States District Court for the Eastern District of New York)

45.5 Hazardous Waste Douglas Hoflin was the director of the Public Works Department for Ocean Shores, Washington. During a period of seven years, the department purchased 3,500 gallons of paint for road maintenance. As painting jobs were finished, the 55-gallon drums that had contained the paint were returned to the department’s yard. Paint contains hazardous substances such as lead. When fourteen of the drums were discovered to still contain unused paint, Hoflin instructed employees to haul the paint drums to the city’s sewage treatment plant and bury them. The employees dug a hole on the grounds of the treatment plant and dumped in the drums. Some of the drums were rusted and leaking. The hole was not deep enough, so the employees crushed the drums with a front-end loader to make them fit. The refuse was then covered with sand. Almost two years later, one of the city’s employees reported the incident to state authorities, who referred the matter to the EPA. Investigation showed that the paint had contaminated the soil. The United States brought criminal charges against Hoflin for aiding and abetting the illegal dumping of hazardous waste. Who wins? United States v. Hoflin, 880 F.2d 1033, Web 1989 U.S. App. Lexis 10169 (United States Court of Appeals for the Ninth Circuit)

45.6 Nuclear Waste Metropolitan Edison Company owned and operated two nuclear-fueled power plants at Three Mile Island near Harrisburg, Pennsylvania. Both power plants were licensed by the NRC after extensive proceedings and investigations, including the preparation of the required environmental impact statements. When one of the power plants was shut down for refueling, the other plant suffered a serious accident that damaged the reactor. The governor of Pennsylvania recommended an evacuation of all pregnant women and small children, and many area residents did leave their homes for several days. As it turned out, no dangerous radiation was released. People Against Nuclear Energy (PANE), an association of area residents who opposed further operation of the nuclear power plants at Three Mile Island, sued to enjoin the plants from reopening. They argued that the reopening of the plants would cause severe psychological health damage to persons living in the vicinity and serious damage to the stability and cohesiveness of the community. Are these reasons sufficient to prevent the reopening of the nuclear power plants? Metropolitan Edison Company v. People Against Nuclear Energy, 460 U.S. 766, 103 S.Ct. 1556, 75 L.Ed.2d 534, Web 1983 U.S. Lexis 21 (Supreme Court of the United States)

45.7 Endangered Species The red-cockaded woodpecker is a small bird that lives almost exclusively in old pine forests throughout the southern United States. Its survival depends on a very specialized habitat of pine trees that are at least thirty, if not sixty, years old, in which they build nests and forage for insects. The population of this bird decreased substantially as pine forests were destroyed by clear-cutting. The U.S. secretary of the interior has named the red-cockaded woodpecker an endangered species. The U.S. Forest Service manages federal forests and is charged with duties to provide recreation, protect wildlife, and provide timber. To accomplish the charge of providing timber, the Forest Service often leases national forest lands to private companies for lumbering. When the Forest Service proposed to lease several national forests in Texas, where the red-cockaded woodpecker lives, to private companies for lumbering, the Sierra Club, an environmental organization, sued. The Sierra Club sought to enjoin the Forest Service from leasing these national forests for lumbering. Who wins? Sierra Club v. Lyng, Secretary of Agriculture, 694 F.Supp. 1260, Web 1988 U.S. Dist. Lexis 9203 (United States District Court for the Eastern District of Texas)


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