Week 2 discussion
DQ1 Wendy Wanderer
Derek Dirt operates a home-based business selling herbs and
supplements. He frequently receives new samples and is constantly discarding
unwanted samples, as well as packaging, old files, and other junk on a back
yard trash heap that accumulates between trash pick-ups. Little Wendy Wanderer,
age five, who lives next door, sees what, to her, promises to be a nice toy
among Derek’s trash. Upon coming closer to the trash heap, Wendy is bitten by a
rat. She screams and then faints. Her nearby mother calls an ambulance, which,
on the way to the scene, jumps a curb and strikes Paul Pedestrian, seriously
injuring him. Wendy requires a series of rabies shots. Except for some bad
dreams, Wendy apparently recovers. Derek and Wendy are both citizens and
residents of Ohio. Paul, who is a citizen and resident of Texas, was visiting
friends in Ohio when the ambulance struck him.
Does Wendy have a solid basis for suing Derek for her
injuries?
Who might be liable to Paul Pedestrian?
What types of damages could Wendy recover?
If Wendy sues Derek, in what state(s) could she sue, and in
what court (federal or state) could she properly file the suit?
If Paul sues Derek, in what state(s) could he sue, and in
what court (federal or state) could he properly file the suit?
DQ2 Bad Bar-B-Q
Over many years, Jake and Jo Bob built up a barbeque ribs
business, Hambones, Inc., which caters picnics and parties and sells ribs and
corn at county fairs. They have several creditors, including Sauce Supply and
First State Bank.
Two years ago, in reliance on an audit of the company’s
books prepared by Hambones, Inc.’s accounting firm, Able & Henderson, First
State Bank made a loan to Hambones, Inc. It now appears that the audit failed
to disclose financial improprieties in Hambones, Inc.’s maintenance of its
books: Certain liabilities were being carried off the books, causing Hambones,
Inc.’s bottom line to appear more favorable than it really was. The decision to
carry the liabilities off the books was made by Jake and Jo Bob, but there is
now an argument as to whether a more careful audit would have uncovered the
liabilities. Jake told the accounting firm that the audit was being done at the
bank’s request in order for the loan to be approved, and that it was really
important that the company receive a clean bill of health from the audit. Able
& Henderson didn’t want to lose Hambones, Inc. as a client.
Sauce Supply also knew that Hambones, Inc. had been audited
and heard from Jake and Jo Bob that the auditors were very satisfied with
Hambones, Inc.’s financial position. Jake gave Sauce Supply’s president, Sandy
Saucy, a copy of the audit report. Able & Henderson had no knowledge of
these statements, or that Sauce Supply had received a copy of the audit report.
What standard of care applies to Able & Henderson’s
accounting work for Hambones, Inc.?
Does Able & Henderson face any negligence liability to
First State Bank or Sauce Supply in a state that has adopted the Ultramares
rule?
In a state that has adopted the Restatement rule?
In a state that has adopted the Reasonably Foreseeable User
rule?
