Reference no: EM13777760

Acme Corporation is headquartered in Maine. It owns some abandoned warehouses in Albuquerque, New Mexico, but otherwise does not transact any business in New Mexico. Acme decided to sell its New Mexico properties, and ran the following ad in the newspaper:

HELP WANTED. Foreign corporation seeks talented individual with strong work ethic to prepare property for sale.

Acme was flooded with resumes, and finally selected a resume from Wilson Marshall as the best candidate.  Bryce Goodman, the director of operations for Acme called Wilson, and explained that Acme owned three warehouses in Albuquerque, that no one from Acme had actually ever been inside of them because they acquired the warehouses when they acquired a small company that owned the warehouses.  Bryce told Wilson that, if he was selected, he would be responsible for taking all steps necessary to ready the properties for sale, including making sure the warehouses were empty, the warehouses were clean and in compliance with all applicable building and safety codes, and that they were ready to present.  Bryce explained that if Wilson had to incur any expense greater than $500 in carrying out the tasks assigned to him, that he first had to obtain Acme's permission.  Bryce stressed that because it had no operations in New Mexico, Wilson would be working without supervision, and that Acme had to be sure that Wilson was motivated to get the job done.

At the end of the conversation, Bryce suggested that Wilson take a look at the properties.  Bryce contacted the real estate agent in Albuquerque that held the keys to the property, and authorized the real estate agent to release the keys to Wilson.

The following Monday, Wilson sent an email to Bryce with a number of photographs of the interior and exterior of the warehouses, and then called Bryce.  Wilson pointed out that the photographs showed a bit of old and worthless merchandise in the warehouse, and a great deal of junk and trash.  Wilson explained that he would have to haul all of the trash to the city land fill, then power-wash the interior and exterior of the building.  He proposed to do the work for a flat fee of $5,000 plus expenses.  Bryce explained that there was a potential buyer for the property, and that they wanted to move quickly.  He said that to encourage Wilson to work quickly, he proposed paying Wilson $6,000 if the job was completed within 20 days, but otherwise to pay only $4,000.  He agreed that in either event, Acme would pay Wilson's reasonable expenses, but again pointed out that if Wilson had to incur any expense greater than $500 in carrying out the tasks assigned to him, that he first had to obtain Acme's permission.

Wilson agreed, and Bryce sent Wilson the following email:

Confirm that you are responsible for preparing warehouses at 121, 123, and 125 So. Main Street, ABQ, for sale, to include emptying the warehouses, cleaning them, and ensuring compliance with all building and safety codes.  Acme to pay fee plus expenses.  Fee = $6,000 if finished within 20 days of today's date, otherwise $4,000.  Expenses in excess of $500 must be preapproved by me.

Wilson set to work, clearing out the warehouse and filling his pickup truck with load after load of trash.  When the trash was gone, he began to power wash the building.  To ensure that the building met all codes, he asked a building inspector to stop by for an informal inspection.   The inspector commented that generally the building was in good shape, but that it was clear that at some point the building had been used as a meat packing plant, and there was animal blood on floor of one of the warehouses, and the floors needed to be sterilized.

Wilson then bought a 55 gallon drum of an industrial solvent, rented a power floor cleaner, and began to scrub the concrete floors with the solvent. Unfortunately, the solvent was highly flammable, and a stray spark from the power floor cleaner ignited the solvent.  Although Wilson was able to escape without injury, one of the three warehouses was destroyed.  Additionally, the fire from the warehouse completely destroyed three automobiles parked in front of the warehouse, as well as the power floor cleaner that Wilson had rented. 

 Wilson sent a bill to Acme as follows:

 Wages                           $6,000       (project completed in 16 days)

Expenses                           $80       (rental of power floor cleaner)

                                        $280       (1/2 of 55 gallon drum of        solvent)

                                        $280       (1/2 of 55 gallon drum of solvent)

                                        $600       (fees charged by City of Albuquerque                  for 60 truckloads of debris)

                                          $40       rental for power washer

                                          $50       cleaning agent for power washer

Total                              $7,330

The same week that Acme got Wilson's bill, it got two letters.  One letter was from the company that rented the power cleaner.  The letter said that Wilson had rented the power cleaner, and included a copy of the rental contract which provided that the power cleaner would be returned in the same condition it was in when it was rented, reasonably wear and tear excepted.  The letter said that the cleaner was never returned, and that they had been told it was destroyed in a fire.  The letter demanded that Acme pay $600, which was the cost of a new cleaner.

The second letter was from a lawyer representing the people who owned the three cars that were destroyed.  He provided details about the cars, including statements from a car dealer about the value of the cars at the time they were destroyed (he opined that the combined value of the three cars was $14,880), and demanded that Acme pay for the destruction of the cars.

Bryce has contacted our office, and asked that we advise him on Acme's rights and responsibilities with regard to this situation.

Tasks:

(A)

 1. Identify the legal issues in this scenario;

 2. Describe the framework for analyzing each legal issue;

 3. Apply the facts to the law, and explain how each issue should be resolved.

(B)

Write to Bryce Goodman, the director of operations for Acme Corporation, and to provide him with a detailed explanation of the potential claims that could be made against Acme Corporation, and the providing a detailed and accurate analysis of each of those claims, and to provide Mr. Goodman with advise on what Acme might be able to do to minimize its losses.