Fact Pattern 3-1 Bruce Lived in Tennessee and Had an Appliance Store in Appliance

question 4

Multiple Choice

Fact Pattern 3-1
Bruce lived in Tennessee and had an appliance store in Tennessee. Bruce's residence and the appliance store, however, were within twenty miles of the Virginia state line. Bruce advertised heavily in both Tennessee and Virginia. Susan, one of his customers from Virginia, had an unfortunate experience with a refrigerator purchased from Bruce in that the refrigerator caught on fire and burned down Susan's house which was worth $200,000. Susan obtained proof that the refrigerator had actually been returned to Bruce because it malfunctioned and that, rather than repair the refrigerator and sell it as used, Bruce sold the refrigerator to her as new without repairs. Susan sued Bruce in federal district court in Virginia on a number of theories. Bruce opposed the lawsuit on the basis that it could only be filed in a state court and also on the basis that he was not subject to jurisdiction in Virginia.
-Refer to fact pattern 3-1. Which of the following is the most likely result in regard to Bruce's claim that he was not subject to jurisdiction in a court located in Virginia?

• A) Bruce would not be subject to jurisdiction in a Virginia court because he did not live there nor was his store located there.
• B) Bruce would not be subject to jurisdiction in a Virginia court because a consumer complaint was involved, not a dispute involving two business entities.
• C) Bruce would be subject to the jurisdiction of courts in Virginia because Tennessee borders Virginia, and federal courts have jurisdiction over citizens from any surrounding state.
• D) Bruce would be subject to the jurisdiction of courts in Virginia because his contacts with the state were such that maintenance of the suit would not offend traditional notions of fair play and substantial justice.

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Definitions:

Market Risk

The risk of losses in investments due to factors that affect the overall performance of the financial markets.

Systematic Risk

The overall impact of market-wide phenomena on the value of investments, as opposed to risks that are specific to a particular investment.

Nondiversifiable Risk

Also known as systematic risk, it refers to the portion of an investment's risk that cannot be eliminated through diversification, affecting the entire market or economy.

Diversifiable Risk

A type of investment risk that can be reduced through diversification of a portfolio across different assets, sectors, or geographical locations.