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Introduction CHAPTER 1 INTRODUCTION A. THE STRUCTURE OF A LAWSUIT NOTE ON THE STRUCTURE OF A LAWSUIT A lawsuit is a process by which a court resolves a dispute. For example, if two drivers have a collision, there may be a dispute over who should pay for the damage caused. It is possible to imagine that the two drivers could simply walk into court, tell their story to a judge, and have her give them a decision. Such a procedure would require very few and very simple rules. Unhappily, the procedure is not that simple. Procedural problems in lawsuits can be very complex. Because you may sometimes lose your bearings in the complexities, it may be helpful to describe in rough outline how a lawsuit is conducted, employing some of the terms frequently encountered. The following description is somewhat simplified, and we warn you that the procedures, and their names, vary from one jurisdiction to another. Suppose that Bill Smith lives in Placerville, California, a small town in El Dorado County, in the foothills of the Sierra Nevada mountains. He buys a kerosene space heater from Sierra Appliance, a store in Placerville. Sierra Appliance is one of several stores in California and Nevada owned and operated by Sierra Appliance, Inc., a Nevada corporation with its principal place of business in Nevada. The space heater is manufactured by Heaters, Inc., a Maine corporation whose manufacturing plant and offices are located in Portland, Maine. Sierra Appliances is an authorized dealer for Heaters’ space heaters. One evening shortly after purchasing the heater, Smith leaves the heater on while he dozes in his chair. He wakes up to find his living room in flames. He escapes from the house alive, but is badly burned. The house burns to the ground. Smith subsequently learns that a neighbor had bought a Heaters, Inc., kerosene space heater that also caught fire. Smith contacts both Sierra Appliance and Heaters. He tries to obtain compensation for medical bills, lost time from work, pain and suffering, and the value of the house. He estimates that the total damages are somewhere in the neighborhood of $500,000. Neither Sierra Appliance nor Heaters is willing to offer him a satisfactory settlement. How does Smith go about bringing a lawsuit to recover for harm to himself and his property? 1. Preliminaries. Probably the first thing Smith does is to get a lawyer. The lawyer will give Smith her professional advice about whether a lawsuit is in Smith’s best interest. If it is, and if Smith decides to go forward with it, she will handle all the steps in the litigation. For narrative convenience, we will frequently refer to the various steps as being made by Smith, but in fact they will be taken by his lawyer. The consequences of errors by the lawyer will ordinarily be borne by Smith rather than his lawyer, so Smith should choose his lawyer carefully. The lawyer is not obliged to take Smith’s case, but here the injury to Smith and the harm to his property are sufficiently substantial to promise a significant legal fee. A person who 1 2 INTRODUCTION CHAPTER 1 cannot or will not retain a lawyer, whether for a fee or through legal aid, is legally entitled to represent himself, but in litigation of any complexity this is almost always a bad idea. The first thing Smith’s lawyer will do is make as thorough an investigation of the facts as she can at this preliminary stage. The lawyer does this to fulfil her obligation to Smith to make the best possible case on his behalf and to fulfil her ethical obligation to the court to ensure that any claim she brings has an adequate factual and legal foundation. This investigation will likely involve an interview with Smith, an inspection of Smith’s medical records, and interviews with the neighbor, with the Placerville Fire Department, and with people who deal professionally with space heaters. Fact investigation will continue as the case progresses. The legal problem is whether Sierra Appliance or Heaters, or anyone else the lawyer can think of, has a legal responsibility to compensate Smith. To find this out, the lawyer will have to consult the law of contracts and torts. Smith bought the heater from Sierra Appliance, so there was a contract of sale between them. Was it breached because of a defect in the heater? If so, what are the legally recoverable damages caused by the breach of contract? The heater was made by Heaters. Did it breach a tort-based duty to Smith by manufacturing a defective heater? What are the legally recoverable damages in tort? Suppose the lawyer concludes: (1) Sierra Appliance had a contractual duty to Smith to supply a heater that was free from defects, even if the defects were not due to any fault of Sierra Appliance. (2) Heaters had a tort- based duty to Smith to provide a heater free from defects. (3) If Sierra Appliance breached a duty to Smith, it owes Smith money to repay the cost of the heater, and to compensate Smith for the harm caused by the fire. (4) If Heaters breached a duty to Smith, it similarly owes money for the cost of the heater and to compensate for the harm caused. Based on a conclusion that the heater was defective and on the above legal analysis, Smith decides to file suit against both Sierra Appliance and Heaters, joining them as defendants in a single suit. 2. Which court? Territorial jurisdiction, subject matter jurisdiction, and venue. Smith is confronted at the outset with three interrelated questions about where to file suit. Smith would prefer to bring suit in California, in part because it is more convenient to his Placerville home, but also because his attorney has experience litigating in local courts First, Smith must decide whether he can obtain territorial jurisdiction over the defendants in a court located in California. Territorial jurisdiction rules require a minimum level of contact between the defendant and the territorial sovereign (typically a state, sometimes the entire United States) within which the court is located. In general, any person who has sufficient “contacts” with a state is subject to the territorial jurisdiction of the courts in that state—that is, the person can be compelled to answer claims against her or else have a binding default judgment entered against her. Sometimes a federal court will have a broader territorial jurisdiction than a state court; in such a case, a plaintiff might choose to sue in federal court because it would thereby be able to assert jurisdiction over a particular defendant that would be unavailable in state court. In this case, however, the reach of the territorial jurisdiction of the federal and state courts is identical. SECTION A THE STRUCTURE OF A LAWSUIT 3 Territorial jurisdiction can be obtained in this case over both Sierra Appliance and Heaters. Although “presence” in a jurisdiction is a somewhat elusive concept when dealing with an artificial person such as a corporation, it is clear that Sierra Appliance is present in California for purposes of territorial jurisdiction because it has a store in California from which Smith bought the space heater. Heaters is incorporated in Maine, and has its principal place of business in Maine, and has no employees or agents in California. But the suit arises out of a purchase in California from an authorized Heaters dealer, as well as an injury in California that Smith claims is traceable to that space heater. These contacts between Heaters and the state of California are sufficient to justify the exercise of territorial jurisdiction over Heaters. Second, Smith needs to find a court with subject matter jurisdiction over the suit. Subject matter jurisdiction is distinct from territorial jurisdiction: it concerns the kind of case that the court is empowered to hear. Smith must find a court that can assert both kinds of jurisdiction. There are both state and federal trial courts in California, called state Superior Courts and federal District Courts. In many suits, these courts have overlapping or “concurrent” subject matter jurisdiction, which means that a suit may be brought in either system. California Superior Courts are courts of general subject matter jurisdiction with authority to hear all types of disputes, regardless of amount. Smith’s suit clearly falls within the subject matter jurisdiction of the Superior Court. Federal District Courts have subject matter jurisdiction over suits between citizens of different states if the amount in controversy exceeds $75,000. (There are other, additional bases for subject matter jurisdiction in federal District Courts that are unnecessary to consider here.) Jurisdiction exists because Smith, the plaintiff, is a citizen of California. Sierra Appliance, one of the defendants, is a citizen of Nevada, and Heaters, the other defendant, is a citizen of Maine. Let us assume that the amount in controversy is $500,000, well above the jurisdictional amount of $75,000. Since both the state and federal trial courts have subject matter jurisdiction, Smith may choose either state or federal court depending on which better serves his interest. Third, Smith can only file suit in a court with proper venue. (The word is derived from the French verb “venir,” meaning “to come.”) There are fifty- eight state Superior Courts in California, one for each county. Venue in a contract suit is proper in a county where the defendant resides, where the contract was entered into, or where the contract was to be performed. Venue in a tort suit for personal injury or property damages is proper where the defendant resides or where the injury took place.
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