Business

CASE BRIEF 12.1

Yale Diagnostic Radiology v. Estate of Fountain

838 A.2d 179 (Conn. 2003)

FACTS: In March, 1996, Harun Fountain was shot in the back of the head at point-blank range by

a playmate. As a result of his injuries, including the loss of his right eye, Fountain required

extensive lifesaving medical services from a variety of medical services providers, including Yale

Diagnostic Radiology (plaintiff). The expenses at Yale totaled $17,694. Yale billed Vernetta

Turner-Tucker (Tucker), Fountain’s mother, but the bill went unpaid and, in 1999, Yale obtained

a judgment against her. In January, 2001, all of Tucker’s debts were discharged in bankruptcy,

including the Yale judgment.

Tucker filed suit against the boy who had shot Fountain. However, Fountain succumbed to his

injuries, passing away before the case was settled. The settlement on the tort case was placed into

probate court as part of Fountain’s estate. Tucker was the administrator of Fountain’s estate.

When the settlement was deposited, Yale asked the probate court for payment of its $17,694

judgment from the estate.

DECISION BELOW: The Probate Court denied the motion. Yale appealed to the trial court, and

the trial court held for Yale. Tucker and the estate (defendants) appealed.

ISSUE ON APPEAL: Can minors be held liable for necessaries when their parents cannot or refuse

to pay?

DECISION: . . . we conclude that Connecticut recognizes the doctrine of necessaries. We further

conclude that, pursuant to the doctrine, the defendants are liable for payment to the plaintiff for

the services rendered to Fountain.

When a medical service provider renders necessary medical care to an injured minor, two contracts

arise: the primary contract between the provider and the minor’s parents; and an implied in law

contract between the provider and the minor himself. The primary contract between the provider

and the parents is based on the parents’ duty to pay for their children’s necessary expenses, under

both common law and statute. Such contracts, where not express, may be implied in fact and

generally arise both from the parties’ conduct and their reasonable expectations. The primacy of

this contract means that the provider of necessaries must make all reasonable efforts to collect

from the parents before resorting to the secondary, implied in law contract with the minor.

The present case illustrates the inequity that would arise if no implied in law contract arose between

Fountain and plaintiff. Fountain received, through a settlement with the boy who caused his

injuries, funds that were calculated, at least in part, on the costs of the medical services provided

to him by the plaintiff in the wake of those injuries. This fact further supports a determination of

an implied in law contract under the circumstances of the case.

Tucker had four years to pay the plaintiff’s bill for the services rendered to Fountain. She did not

pay that bill even when the plaintiff pursued a collection action against her. These facts are

sufficient to show that Tucker was unwilling or unable to pay for Fountain’s necessary medical

services.

Affirmed.

Questions

1. Describe the series of events that led to Yale requesting that the minor pay for the medical

services.

2. What public policy issues and concerns result from this decision?

3. What benefits does the decision provide?

CASE BRIEF 12.4

Hawkins v. Globe Life Insurance

105 F.Supp.3d 430 (D. N.J. 2015)

FACTS: In late August 2011, Natasha Hawkins (plaintiff) applied for a second life insurance on

her nineteen year-old son, Khalil Wallace, from Globe Life Insurance Company. After Globe

received Ms. Hawkins’ enrollment form and premium payment, but before Globe formally

approved the policy, Khalil was murdered. Globe refused to pay the policy proceeds, and Ms.

Hawkins filed suit.

Globe mailed plaintiff an advertisement for up to $50,000 in life insurance protection. The

materials included two informational pamphlets, a letter, and an enrollment form. The following

summary lists representations from these materials:

Pamphlet 1

• First-day coverage

• No waiting period

• Buy direct by mail

• Choose $5,000, $10,000, $20,000, $30,000 or $50,000 coverage

• $1.00 for $50,000

• No medical exam − just answer a few health questions

Pamphlet 2

• Start a Life Insurance Policy for Only $1

Letter

 No Waiting Period (2x) • Buy Direct by Mail (2x)

• $1.00 Starts Up To $50,000 Life Insurance Coverage

• Globe gives you life insurance coverage that costs only $1.00 to start!

• There’s no medical exam … just answer a few Yes/No health questions

• You buy directly through the mail

• Answer A Few Yes/No Health Questions (2x)

Enrollment Form/Application

• No waiting period

• $1 Buys Up to $50,000

• $1 Buys $50,000 − Direct by Mail

• You can choose from $5,000, $10,000, $20,000, $30,000 or even $50,000 life insurance

coverage

• There is no medical exam − just a few Yes/No health questions

Globe’s enrollment form contains Question 2.b. This question asks whether in the past three years

Khalil “had or been treated for … drug or alcohol abuse.” [P]laintiff was aware her son was

previously arrested and charged with multiple drug offenses. It is also undisputed that subsequent

to one of Khalil’s arrests, plaintiff arranged for Khalil to attend a few counseling sessions with a

general therapist. However, plaintiff denied any knowledge of what her son discussed with his

therapist during these sessions. She also denied any knowledge that her son used drugs. Plaintiff

testified that despite her son’s troubled past she did not believe he abused drugs. She noted that her

son was an athlete and never showed symptoms of drug abuse.

After plaintiff mailed the enrollment form, Khalil was charged on September 2, 2011, with

possession of marijuana. Plaintiff learned about this arrest within a few days, but did not inform

Globe.

[P]laintiff’s application was subject to a “Quality Assurance” (“QA”) follow-up call. Globe

attempted to telephone plaintiff 21 times and sent two letters to verify the truth of the statements

on her enrollment form.

On September 20, 2011, plaintiff’s son disappeared into a van with unidentified individuals. On

September 22, 2011, plaintiff was informed that her son was last seen two days prior and that his

cell phone was found in Philadelphia. The same day plaintiff filed a missing person report with

the state police. Despite these events, plaintiff testified she was not concerned for her son’s safety

following his disappearance because he would often be away from home for periods of more than

two weeks at a time. Additionally, plaintiff testified that when she filed the missing person report

the police believed her son had run off to avoid charges from his recent arrest.

On September 28, 2011, plaintiff called Globe to complete the QA. During the call, . . . [t]he Globe

representative asked plaintiff whether the proposed insured had a history of drug or alcohol abuse.

Plaintiff again denied any knowledge that her son had a history of drug or alcohol abuse or

treatment and affirmed that her answers were true to the best of her knowledge.

Following the QA call, Globe formally approved plaintiff’s policy on October 1, 2011. On October

6, 2011, six days after the policy was issued, Khalil Wallace’s body was found. The cause of death

was determined to be multiple gunshot wounds inflicted on September 20, 2011, the day Khalil

went missing. Plaintiff called Globe to report her son’s death on October 24, 2011, and submitted

her claim for payment on February 6, 2012. On February 21, 2012, Globe advised it was

investigating the claim. Following an exchange of letters between Globe and plaintiff, on July 6,

2012, Globe advised that it was voiding its policy because plaintiff misrepresented material facts

during the application process.

Globe received plaintiff’s application materials on September 9, 2011, and deposited the premium

check on September 12, 2011. For the reasons described above, this initiated interim coverage on

Khalil’s life as of September 9 or 12, 2011. Accordingly, plaintiff had interim coverage when

Khalil died on September 20, 2011.

ISSUE: Was there a valid policy in place?

DECISION: The court held that there was a policy in place. The plaintiff did nothing wrong

because the questions were ambiguous and construed against the insurer. The fine print created

ambiguities in what the insurer was doing. Ambiguities are construed against insurers.

Questions

1. What were the problems with Globe’s marketing materials?

2. Develop a timeline for the events from the time of the policy mailer. Why are Khalil’s arrest and previous counseling not required to be disclosed?

3. Describe how Globe should have asked its questions.

CASE BRIEF 12.5

Sons of Thunder, Inc. v. Borden, Inc.

690 A.2d 575 (N.J. 1997)

FACTS: Borden hired Donald De Musz to captain one of its clam boats. Over time, De Musz

formed a business, in reliance upon Borden’s ongoing business, to buy boats and participate in the

expensive Shuck-at-Sea program. Eventually, De Musz had borrowed a great deal, spent a great

deal only to have Borden pull out of its side of the agreements. De Musz filed suit.

DECISION BELOW: The jury found for De Musz. The Court of Appeals affirmed.

ISSUE ON APPEAL: Was Borden required to compensate De Musz for its abrupt and early

termination of the relationship?

DECISION: Yes. The jury award of one year’s profit was fair. Great reliance by De Musz in the

situation. Mandated good faith.

Questions

1.Were all the De Musz corporations completely dependent on Borden?

2.What impact does “good faith” have on termination of a contract?

3.What are the damages when there is a lack of good faith in the termination of a contract?

4.What provisions would you suggest be added to a contract such as this in which the

relationship is one of contract, but also one of dependence?

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