Erie R.R. v. Tompkins

Dispute

Tompkins was injured by an object protruding from a train as he walked beside the tracks in PA. He brought a New York action under diversity.

Questions of law

What law does a federal court apply? Does U.S.C. 1652 apply only to statute or to common law as well? Under Swift, the federal court sitting in diversity applies only state statutes, not state common law. The railroad argued that PA precedent regards persons walking beside tracks as trespassers and permits recovery only for wanton negligence. Thompkins argued the question should be decided under federal common law under Swift.

Conclusions

In a landmark decision, the Court overruled Swift, holding that the creation of a federal common law over state common law was unconstitutional judicial overreach and denied equal protection. It remanded to the trial court for a decision based on state common law.

Commerce Partnership v. Equity Contracting

Dispute

A subcontractor brought a suit against an office building owner for the cost of work performed. The office building owner claimed that they had paid the contractor for the overall project, but the contractor did not pay the subcontractor. The subcontractor sued the owners under the theory of quantum meruit, which it and the court took to mean a quasi contract or contract implied in law, but which the owners took to mean a contract implied in fact.

Owner’s motion for dismissal on the grounds that there was no contract implied in fact was denied by the trial court. The owner claimed it had paid out more than the original contracted price. The trial court entered judgment in favor of the subcontractor, and the owner appealed.

Rule of law

A contract implied in fact is an enforceable contract inferred in whole or in part by the parties’ actions. A quasi contract, or contract implied in law, is a legal fiction, an obligation created by the law without regard to expressions of assent, and was adopted to provide a remedy in situations of unjust enrichment. A quasi contract requires that the plaintiff conferred a benefit on the defendant, the defendant had knowledge of the benefit, the defendant accepted the benefit, and it would be inequitable for the defendant to retain it without paying for it. The most significant requirement for a recovery on quasi contract is that the enrichment be unjust, and a plaintiff cannot recover if the defendant gave any consideration to any party for the enrichment.

Arguments

The defendant argued it had paid substantial money to the contractor as well as to several subcontractors. It also argued, without relevance, that there was no contract implied in fact.

The plaintiff argued the defendant had not made payments for the enrichment received and that they deserved payment under a theory of quantum meruit, or a contract implied in law.

Conclusions

The appellate court held that the trial court had erred by treating the question of payment by the defendant as an affirmative defense rather than as an element of the quasi contract claim. The burden of proof was on the plaintiff to plead and prove that the defendant had not made payments to any party for the benefits conferred on the property. Reversed and remanded for trial.

Credit Bureau Enterprises, Inc. v. Pelo

Dispute

Pelo was involuntarily committed to a hospital for severe mental impairment and asked to sign a payment consent form. He initially refused, then later signed. After his release, he refused to pay, stating he did not consent to the services. The hospital transferred the account to a creditor, who brought a small claims action. The small claims court entered judgment for the creditor, which Pelo appealed to the district court, which affirmed. Pelo appealed to the Iowa Supreme Court.

Rule of law

A person who supplies services to another without the other’s consent is entitled to restitution if he acted unofficiously with intent to charge, the services were necessary to prevent serious harm, the supplier had no reason to think the recipient would refuse consent if mentally capable of it, and consent is impossible.

Arguments

Pelo argued that his consent to payment was given under duress. He also argued that because the hospitalization referee later determined he did not need to remain hospitalized, the original hospitalization was unnecessary and he should not be required to pay. He further argued that being required to pay was a violation of his due process rights and freedom to contract.

The creditor argued that the consent to payment was sufficient, and even if it was not, it would be unjust enrichment for Pelo to receive services he did not pay for, when the services were required by court order.

Conclusion

The court held that the question of the consent form was immaterial because the plaintiff was entitled to recover the value of medical services under the theory of restitution. This was held to be a quasicontract or contract implied in law, not a contract implied in fact. The court stated that Pelo’s due process rights were not violated because a quasicontract was implied in law, not in fact, and thus was not subject to the ordinary limitations of contract law.

Piper Aircraft Co. v. Reyno

Dispute

In 1977, a California probate court appointed a legal secretary the administratrix of five Scottish victims killed in a plane crash in Scotland in 1976, for the purposes of bringing a wrongful death action against the airplane manufacturer, Piper Aircraft Co., and the propeller manufacturer, Hartzell Propeller, Inc., using California’s laws. Piper removed to federal district under diversity, then moved for transfer of venue to Pennsylvania under ยง1404(a). Once in Pennsylvania, Hartzell and Piper moved for dismissal on forum non conveniens.

The District Court granted the motion on the argument that the case could be brought in Scotland if Piper and Hartzell both agreed to waive statute and jurisdiction. Reyno appealed, and the Third Circuit reversed on the argument that dismissal is never appropriate where the law of the alternative forum is less favorable to the plaintiff, whose choice of law should be protected. Piper and Hartzell appealed to SCOTUS.

Questions of law

What discretion does a Federal District Court have in dismissal for forum non conveniens? Does law in an alternative forum that disadvantages the plaintiff bar dismissal? What test should be followed, and how?

Conclusions

SCOTUS reversed, affirming the original District Court dismissal. The Third Circuit had erred, it said, in considering the change in substantive law to be conclusive or even substantial in evaluating a motion for dismissal. The Gilbert test used by the District Court, which considers the burden on the defendant and the convenience for the plaintiff, would be meaningless if the possibility of an unfavorable change in law was the controlling factor. Because there are often multiple forums where venue and jurisdiction are proper, allowing the plaintiff’s choice of law to control would make transfers all but nonexistent, regardless of considerations of justice and convenience. Such a situation would also require courts to analyze the laws of other forums to determine the advantages and disadvantages of differences in law.

Note that ยง1404(a) transfers do not change choice of law, but dismissal for forum non conveniens does.

SCOTUS agreed with the District Court’s reasoning that while there is ordinarily a strong presumption in favor of the plaintiff’s choice of forum, this is reduced when the plaintiff or actual parties are foreign. The central purpose of any forum non conveniens inquiry is convenience.

Bates v. C & S Adjusters, Inc.

Dispute

Plaintiff Bates sued defendant C & S Adjusters, Inc. under the Fair Debt Collection Practices Act. Personal and subject matter jurisdiction were proper. Plaintiff sued in the Western District of New York, his residence, where he had received allegedly unfair collection notices forwarded from a prior address. The district court granted defendant’s motion to dismiss for improper venue, and plaintiff appealed to the Second Circuit.

Questions of law

What does “a judicial district in which a substantial part of the events…giving rise to the claim occurred” include?

Conclusions

The 1966 law change was intended to close venue gaps and should not be read more broadly than necessary to close those gaps. The 1990 amendment was a marginal expansion but permits multiple possible venues.

The statutory standard for venue depended not on whether the defendant made a deliberate contact, as it would with an analysis of personal jurisdiction, but on the location where the event occurred, which was the Western District of New York. Reversed and remanded.

Aceves v U.S. Bank, N.A.

Dispute

After falling behind on her mortgage, plaintiff Claudia Aceves filed for Chapter 7 bankruptcy, placing a stay on the defendant bank’s attempted foreclosure. Plaintiff intended to convert to a Chapter 13 bankruptcy and use her husband’s income to cure the default under Chapter 13 protections; however, the defendant assured her that they would “work with her on a mortgage reinstatement and loan modification” and accordingly she chose not to proceed with the bankruptcy. The bank immediately resumed foreclosure and verbally offered her terms at double her prior monthly payment, which she could not meet. She sued under quiet title, slander of title, fraud, promissory estoppel, and declaratory relief; the trial court dismissed on motion of defendant.

Rule of law

Promissory estoppel applies whenever a promise which the promissor should reasonably expect to induce action or forbearance on the part of the promisee…and which does induce such action or forbearance would result in an injustice if the promise were not enforced. A promise must be clear and unambiguous.

Arguments

The plaintiff argued that because they could have saved the home by converting to Chapter 13 but chose not to do so in reliance on defendant’s promise to work with them, but defendant had not in fact worked with them, promissory estoppel applied. The defendant argued that there was no fraud, no consideration, no clear and unambiguous promise, and that they had made an offer anyway.

Conclusion

The court held that the plaintiff had made out a case for promissory estoppel. The promise was clear and unambiguous, and they had relied on it to their detriment, as Chapter 13 definitely provided them an alternate relief that they had given up. The court held that a unilateral offer did not satisfy the promised negotiations and that the defendant had never intended to work with plaintiff. The court held that the defendant made the promise only to convince the plaintiff to forgo further proceedings and thus enable them to foreclose. Reversed with attorney’s fees.

Katz v Danny Dare, Inc.

Dispute

Following a workplace injury, longtime employee and plaintiff I. G. Katz was offered a pension in exchange for retirement by defendant Dare, who would have fired Katz if he had not accepted it. Three years later, when Katz was 70 years old, Dare stopped making payments and claimed Katz was capable of working. Katz sued under promissory estoppel.

Rules of law

There are three elements that invoke Promissory Estoppel: promise, detrimental reliance, and injustice which compels enforcement.

Arguments

Defendant argued that because plaintiff would have been fired if he had not voluntarily retired, the elements of Promissory Estoppel had not been met. Defendant argued that the pension from Dare did not require Katz to do anything and thus there was no detrimental reliance. Plaintiff argued that he had relied on the promise to his detriment by voluntarily quitting.

Conclusions

The court held that the alternative of firing was immaterial, as the defendant had negotiated a voluntary termination for thirteen months, and plaintiff had in fact relied upon the promise in voluntarily quitting.

Martin v Herzog

Dispute

The decedent plaintiff had been driving without lights, in violation of statute, when he was struck and killed by a negligent defendant. The jury was instructed that driving without lights was not negligence in itself and therefore found the decedent free of contributory negligence. Appealed, and the appellate court reversed for error in instructions. Appealed again.

Questions of law

Does violation of statute on the part of a defendant constitute contributory negligence?

Conclusion

Because the violation of the statute contributed to the accident, it was potential negligence and the plaintiff could have been barred from recovery. The jury should have evaluated causation but not negligence. “A plaintiff who travels without [lights] is not to forfeit the right to damages unless the absence of lights is at least a contributing cause of the disaster.”

Osborne v McMasters

Dispute

A drug-store clerk negligently sold unlabeled poison to a customer, who drank it and died. A statute required the labeling of poisons. Decedent’s estate sued.

Questions of law

Does a statute impose a specific duty in the context of tort liability, and does such a statute give rise to a right of action under that statute?

Conclusion

The common law gives a right of action to every one sustaining injuries caused proximately by the negligence of another, and since negligence is the breach of legal duty, breach of a legal duty imposed by statute (presuming that statute is designed for the protection of others) is negligence per se.

Ezra Ripley Thayer, Public Wrong and Private Action

Dispute

A plaintiff was injured by a runaway horse which had been left unhitched by defendant in violation of local ordinance.

Questions of law

Can a jury evaluate negligence under an “ordinary and prudent” standard when the injurious act was in violation of statute?

Conclusions

The court held that “ordinary and prudent” becomes synonymous with adherence to the law in the question of liability evaluation, and as such a jury is not permitted to evaluate the question of negligence, but only whether the law was broken and whether the damage resulted from it.