Class 10 - 01-23-07

Question # 5

Facts: Pamela purchased a used car in San Diego. She told the car dealer, Donny, that she would be permanently moving to the east coast in a few months. He was hesitant, however, about this car's ability to make the trip. Donny had unsuccessfully tried to sell her a new car, which would have no problem making the cross-country trip. Pamela had almost completed this trip, when her car unexpectedly burst into flames in Maryland. It was parked at a gasoline station, while Pamela was inside paying for her gas. Pamela was not injured by the fire. She was distressed as a result of the fire, just a few yards away. Pamela then rode a bus to New Jersey, where she retained a lawyer. Her lawyer filed a money damages law suit in a New Jersey federal court against Donny, who is domiciled in California.

Assume that the applicable New Jersey statute of limitations (SOL) is one year from the date when the car burst into flames. Assume that in order to satisfy the New Jersey SOL, a plaintiff must both file and serve process on a defendant within one year from the date on which the claim arises. This complaint was filed exactly one year from the gas station incident. Donny was served six months later, after he had closed his dealership and moved to another city. FRCP 3 provides as follows: "A civil action is commenced by filing a complaint with the court." The parties are now engaged in a hotly contested debate about whether state or federal law governs the SOL issue.

Donny's lawyer files a timely motion, requesting dismissal on the following grounds:

(1) lack of subject matter jurisdiction;

(2) lack of personal jurisdiction;

(3) failure to diligently prosecute the case; and

(4) failure to comply with the statute of limitations.

Question: How should the court rule on Donny's motion?

Answer to Question #5

Is there a lack of subject matter jurisdiction (SMJ)?

SMJ is the power of the court to hear the particular controversy.

Two ways to get fed. SMJ:

1) Federal Question (FQ) arising out of the US Constitution or federal statute. No facts to suggest a federal question unless interstate commerce. Not likely.

2) Diversity of Citizenship at commerce of federal court can hear a non - FQ case if:

a. Diversity of citizenship among parties. No plaintiff and defendant domiciled in the same state and;

b. Minimum amount in controversy is over 75K.

Domicile is presence in the state at least once, and intent to stay indefinitely. Donny's domicile is CA (given). Pamela's domicile is unknown. She said she intends to "permanently move", thus intent is probably shown. However, we don't know if she was ever present in the new intended state. Maryland and New Jersey are on the "east coast", but she never said where she was moving. The fact that she took a bus to NJ before commencing (hired a lawyer) either to NJ or Maryland would work if she lives there now. Diversity is probably met unless she went back to CA before her intended state.

Amount in controversy is more difficult in this case. The judge will determine if there is a legal certainty that she cannot recover 75K. Here, the only damage the facts indicate is the loss of the car (and maybe the cost of the bus ride). Unless she also burned up other stuff (gas station) she probably can't reach 75k. The only other fact is that she was "distressed." She had better be pretty distressed to be able to prove massive damages (75K - value of car). If the judge finds that she can't, he/she will dismiss or remand to state.

Ruling for Donny (probably).

Is there lack of personal jurisdiction?

Personal jurisdiction is the substantive due process arm of territorial jurisdiction (ability of the court to render a judgment that complies with the U.S. Constitution.)

It is the court's ability to exercise authority over persons and things in the forum and bind them to judgment.

The test is minimum contacts with the forum. Here there doesn't appear to be much of any contact. The factors are character of contacts (non given); relationship to the cause of action (none); availment (this is the only one; he knew she was taking care across country to the "east coast", but it is unlikely that this vague itinerary would lead to his reasonable expectation of being hauled into court in NJ); Presence (here again, no presence given. There is also a fact gap as to whether NJ has a long arm statute. If not they may have to serve him in the forum. Regardless, he probably does not have minimum contacts.

Ruling for Donny.

Failure to diligently prosecute the case?

A plaintiff must serve the defendant within 120 days of the commencement of the action.

Here, Donny was served 180 days after commencement. However, Donny "closed his shop and moved to another city." Thus, it may well have been very difficult to find him. If plaintiffs diligently looked, and this was the soonest they could find him, it is probably okay.

Probably Ruling for Pamela.

Failure to comply with statute of limitations? Issue is choice of law. Here the federal judge sitting in diversity jurisdiction will have to choose between state and federal procedure.

First, the judge must decide if there is an FRCP on point. If so, FRCP must be used.

Here, the FRCP #3 is not very specific as to S.O.L. and does not exactly address S.O.L. and service. Therefore, the judge must go to step 2.

Second, is the choice of law outcome determinative? Clearly it is: If NJ law is used, the suit is out of court because Pamela did not serve and file "within 1 year from date claim arises," and she took 18 months. Thus the court must balance in step 3.

Third, the judge must balance the federal versus state interest in respective procedures. Factors are specificity and detail.

Here, the state law is more specific than FRCP - it says exactly how a lawsuit is to process (time-wise) it must be file and served within one year. There is probably a strong sta-interest in the S.O.L., therefore: ruling in favor of Donny.

The court should probably grant Donny's motion to dismiss the case.

Question # 6

Facts: Assume that the federal judge denies the entire defense motion presented in Question #1 of this examination. Donny's lawyer also made a motion, which timely attacked the complaint filed by Pamela's lawyer. The relevant portion of that complaint--which you will now analyze in Question #2--is set forth immediately below. (Do not refer to the facts of essay Question #1 to answer essay Question #2.)

US DISTRICT COURT FOR THE

CENTRAL DISTRICT OF NEW JERSEY

1. This is a case arising under Diversity Jurisdiction, 28 U.S.C. §1332.

2. Pamela is domiciled in New Jersey. She herein charges defendant Donny

with actionable conduct, in that his negligence proximately caused Pamela's

losses. Defendant Donny took advantage of the plaintiff, Pamela, because he

believed that he could use his expertise to entice her into buying a more

expensive car.

3. Based on the resulting harm at the Maryland gas station, Pamela is

entitled to general and special damages in an amount within the jurisdiction

of this court which will be proven at the time of trial.

On what grounds could Donny's lawyer reasonably attack Pamela's complaint,

which is set forth immediately above?

Assume that the judge denies all of the grounds (which you have just made) in Donny's motion attacking the above-quoted complaint. Donny's lawyer thus answers the complaint and timely sues GasCo, a New Jersey corporation whose principle place of business is in California. Gasco owned the Maryland gas station franchise, where Pamela's car burst into flames (as described above in essay Question #1).

What procedure would Donny use to bring Gasco into this suit?

Would the court have subject matter jurisdiction to hear the case against Gasco?

Should Donny's lawyer be sanctioned for frivolously attempting to bring Gasco into Pamela's law suit?

Answer to Question # 6:

Dismiss

Lack of SMJ - Domicile, does not say where Donny is domiciled to support diversity. Amount in controversy does not say in prayer any amount, let alone 75K.

Lack of IPJ -

Venue/Improper - Complaint says substantial portion of events occurred (first sale of car in CA also) in Maryland and that is the only connection.

Rule - A case based solely on diversity can be laid in: district where substantive portion of events or transaction occurred or where a plaintiff resides if all in same state.

Here, the events ("harm") were in MD, and the transaction was in CA and Donny lives in CA. Therefore improper venue.

Dismiss for:

Failure to state a claim on which relief can be granted.

The complaint never says what he did, if anything. Using expertise to entice someone into buying a more expensive car is not wrong, that is what car salesmen do. Anyway, she did not buy a more expensive car, thus no COA.

No where does the complaint allege any connection between anything he did and her harm (which is itself unstated).

Judgment on the pleadings

Complaint has to plead special damages with specificity, it neither lists damages or their value. It does not even say what happened. It seems to skirt around alleging fraud as well - "take advantage," "superior expertise." This must also be plead with particular.

Dismiss for failure to join a necessary party.

Facts are unclear as to what, if any, relationship Gas Co. had to the COA. But if equity and good conscience requires joinder as an indispensable party, maybe. More facts necessary.

More definite statement

Plaintiff 2 must contain a short and plain statement of why relief should be granted. It must be sufficient to enable the plaintiff to know why he is being sued and form an answer.

Here the complaint does not allege what Donny did, what happened, what damages are alleged. Quite simply, a reasonable person reading this complaint would have no idea what it is about. There would be no way to formulate an adequate answer other than a general denial.

Motion to Strike Irrelevancies

Court can strike portions of the complaint that are irrelevant or scandalous.

Here, the complaint contains the following items that should be stricken:

1) Conclusion of law - "negligence"

2) Irrelevant and scandalous information. The entire second sentence should be stricken because he didn't take advantage of her because she did not buy the expensive car. There is no way this can be relevant.

What procedure would Donny use to bring Gas Co. into suit.

His best procedure would be a third party complaint. That is where an existing defendant sues a third party, not already a party to the action - a.k.a. Impleader. Gas Co. would become a 3rd party defendant for indemnity and contribution.

Would court have SMJ to hear the case against Gas Co.? This is a diversity case and since Gas Co. is domiciled in both CA and NJ (corp domicile incorporation and principle place of business). Facts give NJ corp and CA princ. place. If impleaded only, court would retain SMJ because no need for independent SMJ

Would Donny's lawyer be sanctioned for frivolously attempting to bring Gas Co. into suit?

This would be determined by asking, would a reasonable lawyer have filed a pleading?

Factors would be: Is it supported by law? Is it (or will it be) supported by evidence? Is it justified under the circumstances? Good faith?

Not enough facts, but court will probably look for a relationship to the COA. (Did Gas Co. have any rational relationship to Pamela's damages?)

Sanctions can be initiated by separate motion from another party, or the court alone. If it is frivolous, he may have a 21-day safe harbor to withdraw pleading. Also, if he is sanctioned, his law partners may also be liable.