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Week 11
5. R. Edwin Powell was CEO and president of CAIRE, Inc., in addition to being a minority share-holder in Holdings, owning 11.9 percent of the company. In 1996, a group of investors decided to acquire Holdings and CAIRE. They formed MVE Investors, LLC. MVE purchased the shares of three retiring Holdings shareholders as part of a recapi-talization of the company. MVE paid the retiring shareholders $ 125.456 per share and became its primary owner. Powell did not sell his stock at this time and remained CAIRE’s CEO and president. In response to CAIRE’s financial setbacks, David O’Halloran, Holdings’ CEO and president, met with Powell on January 23, 1997, to fire Powell. While the two men agreed on a number of provi-sions in Powell’s severance package, they disagreed on the terms for the disposition of Powell’s stock. Powell testified that O’Halloran agreed, on behalf of Holdings, to buy Powell’s stock at the sameprice the retiring shareholders had been paid at the recapitalization. O’Halloran maintained he did not promise Powell that Holdings would buy Powell’s stock. But O’Halloran conceded that at the meeting he gave Powell a detailed chart showing the num-ber of shares Powell owned and how much money Powell would receive if those shares were sold or redeemed at the same price the retiring shareholders had received. O’Halloran also admitted he wrote a letter terminating Powell’s employment if he chose not to resign. In the letter, O’Halloran expressed Holdings’ intent to buy Powell’s stock in the same manner as it had bought the retiring shareholders’ stock. Holdings fired O’Halloran from his posi-tion as CEO and president. Powell brought action against Holdings, claiming, among other things, that Holdings had contracted to buy back his shares and then breached that contract. The district court found that Holdings had contracted to buy Pow-ell’s stock and breached the contract. The district court awarded Powell the amount Powell would have received had he sold his nonpledged stock for $ 125.456 per share. Holdings appealed, claiming that O’Halloran did not have authority to agree on its behalf to buy Powell’s stock, the district court’s finding that O’Halloran and Powell entered into a contract was contrary to the evidence, and any agreement was not the parties’ final expression, is void for lack of consideration, and is against pub-lic policy. As an agent of Holdings, did O’Halloran enter into a contract on Holdings’ behalf? Why? [ Powell v. MVE Holdings, Inc., 626 N. W. 2d 451 ( 2001).]
6. Ward Manufacturing, Inc., decided to construct a casting facility on its property located in Blossburg, Pennsylvania. Ward entered into a written contract with Welliver- McGuire, Inc. Under the terms of the contract, Welliver agreed to indemnify Ward for any and all claims for bodily injury and property damage arising out of the performance of the work identified in the contract. Welliver assumed control, possession, and responsibility over the construc-tion site throughout the project. Ward did, how-ever, maintain an on- site representative to act as liaison and monitor the status of the project. Ward also had a safety representative on- site periodically to inspect the work site. Jonathon Olin worked as a carpenter for Welliver. Olin, while engaged in surveying activities on the Ward construction site, fell into an unbarricaded excavation pit allegedlycovered with water and mud. As a result of the fall, Olin purportedly suffered severe injuries. Since the date of the accident, Olin had received total disabil-ity workers’ compensation benefits from Welliver. Olin brought suit against Ward for negligence. Ward argued that Olin, through Welliver, was an independent contractor and that Ward therefore was not liable to Olin for damages. Furthermore, Ward argued that Welliver, and not Ward, was in charge of the site. Ward then moved for summary judgment. Was Ward successful in its motion for summary judgment? Why? [ Olin v. George E. Logue, Inc., 119 F. Supp. 2d 464 ( 2000).]
5. Eleanor Schock discovered that her late father’s attorney, Pat Nero, had embezzled from the estate of her father, Miller, including the sum of $ 23,331.72 in Miller’s savings account at Old Stone Bank. At the time Nero withdrew the funds, Old Stone was being run under the conservatorship of the Reso-lution Trust Corporation ( RTC), the FDIC’s statu-tory predecessor. As holder of her father’s estate’s claims, Schock sued the FDIC, as receiver for Old Stone, for breach of contract, alleging that the bank permitted an unauthorized signatory ( Nero) to withdraw funds on deposit in the Miller sav-ings account. The FDIC receiver argued that the bank had paid Nero, a fiduciary who was autho-rized to receive the money in the account, in good faith and should not be held liable because Nero misappropriated the money. Schock argued that Nero’s apparent authority to withdraw the moneyas Miller’s agent ended by operation of law when Miller died. In response, the FDIC receiver argued that apparent agency terminates only when a third party has notice of the termination. Schock offered evidence that the bank had actual notice that Miller had died when it permitted the Nero savings account withdrawal. Schock’sevi-dence included a bank employee’s statement that the bank had in place a procedure for checking the obituaries in the local paper to see whether bank clients had died, as well as the fact that an obitu-ary for Miller appeared in that paper. Was Schock successful at trial? Did the publication of an obit-uary constitute actual notice? [ Shock v. United States, 254 F. 3d 1 ( 2001).]
6. Water, Waste, & Land, Inc., is a land development and engineering company doing business under the name “ Westec.” Donald Lanham and Larry Clark were managers and also members of Preferred Income Investors ( PII), LLC. PII is a limited lia-bility company. Clark contacted Westec about the possibility of hiring Westec to perform engineering work in connection with a development project. In the course of preliminary discussions, Clark gave his business card to representatives of Westec. The business card included Lanham’s address, which was also the address listed as PII’s principal office and place of business. While PII’s name was not on the business card, the letters “ PII” appeared above the address on the card. However, there was no indication as to what the acronym meant or that PII was a limited liability company. Although Westec never received a signed contract, it did receive ver-bal authorization from Clark to begin work. Westec completed the engineering work and sent a bill for $ 9,183.40 to Lanham. No payments were made on the bill. Westec filed a claim against Clark and Lanham individually as well as against PII. At trial, PII admitted liability for the amount claimed by Westec. Accordingly, the court dismissed Clark from the suit, concluding that he could not be held personally liable, and entered judgment in the amount of $ 9,183 against Lanham and PII. Lanham appealed. On appeal, was Lanham found liable for the amount due to Westec? Why? [ Water, Waste, & Land v. Lanham, 955 P. 2d 997 ( 1998).]
