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Premises Liability Overview: Current Issues, Risk Management & Drafting Strategies University of Houston ADVANCED REAL ESTATE COURSE BY Cynthia López Beverage JACKSON WALKER, L.L.P 112 E. Pecan Street Suite 2100 San Antonio, Texas (210) 978-7700 Austin Dallas Fort Worth Houston Richardson San Angelo San Antonio Member of GLOBALAW™ FOCUS The Impact A Real Estate Document Can Have on the Liability of An Owner and/or Occupier of Property: – In relationships with contractors and vendors – In relationships with customers, client, guests, and their companions – In relationships with tenants and their guests – In relationships with employees Topics of Discussion • The General Rule - Duty Follows Control • Duties Owed - Based on Type of Guest Visiting Property • Duties Owed - Based on Criminal Activity on Property • Special Rules - As Between Landlords and Tenants And the Tenant’s Guests • Special Rules - As Between Owner, Independent Contractor, their Employees and the Public The General Rule Duty Follows Control – A “possessor” is the person or entity in control of the premises: – There can be more than one “possessor” – Stoneham v. Nationsbank of Texas, N.A., Mutual Ins. Co. of New York, Alamo Fed. Credit Union v. City of San Antonio: Example of 4 our entities in “possession” of property The General Rule - Duty Follows Control • In Stoneham v. Nationsbank, et al.— •elderly gentleman flipped his bike as the tires fell into grate •very fit before the accident •paraplegic after the accident •4 entities were sued over 1 pathetic drainage grate • There were 4 Possessors because of: •the property lines; Mut. of NY AFCU NationsBank Drainage Grate City of S.A. Site of Injury to Mr. Stoneham The General Rule - Duty Follows Control In Stoneham v. Nationsbank, et al.— CRUCIAL LANGUAGE 1.11 Common Areas. Such parking areas, streets, driveways, aisles, sidewalks, curbs, deliver passages, loading areas, lighting facilities, and all other areas situated on or in the Property which are designated by Landlord, from time to time, for use by all tenants of the Property in common The General Rule - Duty Follows Control • In Stoneham v. Nationsbank, et al.— • elderly gentleman flipped his bike as the tires fell into grate • very fit before the accident • paraplegic after the accident • 4 entities were sued over 1 grate • There were 4 Possessors because of: •the property lines; •a property management agreement; and AXIOM REAL ESTATE MANAGEMENT, INC. PROPERTY MANAGEMENT AGREEMENT 3. Duties of Agent Agent hereby accepts such . . . and agrees to devote its time, attention, skill, experience, and best efforts to the management, operation, and supervision . . . . (a) . . . . Agent shall operate the premises and shall perform all repairs and maintenance and shall make all replacements of existing equipment and installations as shall be necessary to preserve, maintain and keep . . . . Without limiting the generality of the foregoing the Maintenance Obligation shall include . . . . make ordinary repairs, provided that expenditures for any one item of repair in or to the Building shall not exceed $5,000.00 without written consent of Owner, unless such expenditures are within the guidelines established in the Annual Forecast approved each year by Owner; or are made under circumstances which Agent shall consider to constitute an emergency. . . . To hire, pay, supervise, and discharge all persons necessary to be employed in order to properly manage, supervise, maintain, and operate the Building in accordance, wherever and whenever possible, within the guidelines established in the Annual Forecast. The General Rule - Duty Follows Control • In Stoneham v. Nationsbank, et al.— • elderly gentleman flipped his bike as the tires fell into grate • very fit before the accident • paraplegic after the accident • 4 entities were sued over 1 grate • There were 4 Possessors because of: •the property lines; •a property management agreement; and •the lease. Stoneham Office Lease OFFICE LEASE 6243 NW I-10 San Antonio, Texas 78294-1230 This Lease, made as of the _____ day of ____________, _____ by and between NCNB Texas National Bank (“Landlord”) and the Tenant named below: ARTICLE1. - BASIC LEASE TERMS For the purposes of this Lease, the following terms shall have the meanings set forth below: Stoneham Office Lease [CONT.] 1.1 Landlord. NCNB Texas National Bank, a national banking association, whose address is 300 Convent, San Antonio, Texas 78291. [Mut. of NY purchased & became Landlord] 1.2 Tenant. NCNB Texas National Bank, a national banking association, whose address is 901 Main Street, Dallas, Texas 75202, Attn: Executive Vice President, Properties. 1.3 Building. The Building (including the Leased Premises) known as NCNB Northwest San Antonio, 6243 NW I-10, San Antonio, Texas 78294-1230, located on that tract of land (the “Land”) described on Exhibit A hereto, together with all other buildings, structures, fixtures and other improvements located thereon from time to time. The Building and the Land are collectively referred to herein as the “Property.” Stoneham Office Lease [CONT.] 1.3 ...The Building (including the Leased Premises) ...NCNB Northwest San Antonio, 6243 NW I-10, San Antonio, Texas 78294-1230...land (the “Land”) described on Exhibit A ...The Building ...the Land ...the “Property.” 1.4 Leased Premises. a. All of the Unit 1 in the condominium regime established for the Property by that Condominium Declaration dated June 1, 1976, recorded in Volume 2, Pages 839-878 of the Condominium Records of Bexar County, Texas, which Unit 1 contains approximately 17,662 net rentable square feet of space on the first floor of the Building, together with all of the interest appurtenant to said Unit 1 in the Land and in the General and Limited Common Areas established by such Condominium Declaration. The portion of the Leased Premises described in this Section 1.4.a. may sometimes hereinafter be referred to as “Tenant’s Office Space.” Stoneham Office Lease [CONT.] 1.3 ...The Building ...(Leased Premises) ...land (the “Land”)...The Building ...the Land ...the “Property.” 1.4 Leased Premises. a. . . . the Building, ... the Land b. All of that certain 0.79 acre tract of land (the “Motorbank Tract”) described on Exhibit A-1 attached hereto and made a part hereof, together with all buildings, structures, fixtures and other improvements located thereon from time to time (collectively, with the Motorbank Tract, the “Motorbank.”) 1.11 Common Areas. Such parking areas, streets, driveways, aisles, sidewalks, curbs, deliver passages, loading areas, lighting facilities, and all other areas situated on or in the Property which are designated by Landlord, from time to time, for use by all tenants of the Property in common Duties Owed Based On Type of Guest • Invitee • Licensee • Trespasser Three Categories of Guests-Invitee • An Invitee is-- – A person who is on the premises (1) at the express or implied invitation of the possessor of the premises and (2) who has entered thereon either as a member of the public (3)(a) for a purpose for which the premises are held open to the public, or (3)(b) for a purpose connected with the business of the possessor that does or may result in their mutual economic benefit. • DUTY OWED– to warn of unreasonable risks of harm you know of or should know of, or to make safe Three Categories of Guests— Companion of Invitee? • Case law inconclusive on whether equal status is given to a companion-– In Parking, Inc. v. Dalrymple, 375 S.W.2d 758 (Tex. Civ. App. — San Antonio 1964, no writ) equal status was given to companion but without any precedent. – In American Indus. Life Ins. Co. v. Ruvalcaba, 64 S.W.3d 126 (Tex. App.—Houston [14th Dist.] 2001, pet. filed), the court rejected Dalrymple and concluded that the plaintiffs failed to provide evidence that the injured child (a traumatic brain injury) was a “public invitee,” which the Texas Supreme Court had not yet adopted anyway. Three Categories of Guests-Licensee • A Licensee is-– A person who is on the premises with the permission of the possessor but without an express or implied invitation. • DUTY OWED– to warn of unreasonable risks of harm you know about, or to make safe Three Categories of Guests-Licensee • A person's status can change from that of an invitee to a licensee to a trespasser in a matter of seconds, or even based on the location of the Plaintiff changing just a few feet. • The presence of warnings can make a licensee a trespasser. Smither v. Texas Utility Electric Co., 824 S.W.2d 693, 694 (Tex. App.—El Paso 1992, writ dism'd by agmt.) Three Categories of Guests--Licensee Three Categories of Guests-Trespasser • Trespasser – (1) a person on the property of another without any right, lawful authority or express or implied invitation, permission or license, (2) who is not in the performance of any duty to the owner or person in charge or on any business of such person, (3) but merely for his own purposes, pleasure, or convenience or out of curiosity, (4) without any enticement, allurement, inducement or express or implied assurance of safety from the owner or person in charge. • DUTY OWED– The only duty that a landowner owes a trespasser is to refrain from injuring him willfully, wantonly or through gross negligence. Duties Owed - Based on Criminal Activity on Property • The Rule: –A person has no legal duty to protect another from the criminal acts of a third person, unless that person retains control over the security and safety of the premises. Duties Owed - Based on Criminal Activity on Property • To Determine If You Had a “DUTY” to Prevent the Criminal Acts of a Third Party – Foreseeability Analysis: – Proximity-Did any crime previously occur on or near property? – Recency & Frequency-How long since any crime occurred and how frequent has the – Similarity-How similar was/were prior occurrence(s) of crime to crime that occurred on property? – Publicity-Was enough publicity given to prior occurrence(s) of crime to that Landlord should have known crime would occur on property? • How A Contract May Affect Application of Rule – Courts frequently look to agreements to determine who retained control over the security and safety of the premises Duties Owed - Based on Criminal Activity on Property Thompson v. CPN Partners, et al.--Aycox shot to death during robbery at AMC Cinema’s To determine responsibility, Court looked to : (1) Lease (2) Mgmt. Agreement (3) Security Contract Mgmt. Agreement Language: Manager under took rent and maintain premises, employing personnel necessary to operate and maintain Commerce Park, contracting for the provision of “utilities and other services such as water, electricity, gas, telephone ,vermin extermination, trash removal, heating, ventilating and air conditioning maintenance, security and other services deemed by [Property manager] to be necessary or advisable for the operation, maintenance or repair of [Commerce Park] . . .” of the Common Facilities. Lease Language: AMC paid a “common area charge” for “common area expenses” which were defined as “maintaining, repairing, insuring, lighting, protecting and securing the Common Facilities on the Entire Premises . . .” “common facilities” includes “parking areas, streets, driveways, curb cuts, access facilities, aisles, sidewalks, malls, landscaped areas, lighting and other common and service areas” Security Agreement: Whelan agreed to provide one unarmed guard to patrol the exterior common areas of Commerce Park. Thompson v. CPN Partners, et al. Duties Owed - Based on Criminal Activity on Property: Thompson v. CPN Partners, et al. • A review of the three agreements by the Court led it to the conclusion that none of sued parties had been in control of the theatre. It noted: – The Property Management Agreement - gave Mall Manager duty to secure common facilities to include providing security – The Lease - gave Owner duty to secure common facilities, which did not include inside the Theatre, and which was delegated to Manager. – The Security Agreement - gave Security Company to patrol and secure the exterior common facilities and not inside the theatre Duties Owed - Based on Criminal Activity on Property: Dickinson Arms-REO, L.P. v. Campbell • Murder in Parking Lot of an Apartment Complex • Court looked at Foreseeability Factors • Court introduced evidence of Mgmt. Co’s “Administrative Policy & Procedures Manual” Duties Owed - Based on Criminal Activity on Property: Dickinson Arms-REO, L.P. v. Campbell • Court introduced evidence of Mgmt. Co’s “Administrative Policy & Procedures Manual” - It stated: • mgmt. “should check with . . . local police department for any preventative safety programs they offer” • “when crimes and /or assaults on residents occur, management should notify the residents of the community and take necessary measures to improve the situation” Special Rules - As Between Landlords and Tenants And the Tenant’s Guests • General Rule -- No duty is owed to Tenants or Their Guests if – Complete transfer of control – No intention to possess – No power to exclude Special Rules - As Between Landlords and Tenants And the Tenant’s Guests • Exceptions to General Rule (1) (2) (3) Repairs made by Landlord cause injury because made negligently Injury in Common Area (over which Landlord retains control) If Lease or Law requires Landlord to maintain or repair, and failure to do so causes injury- Special Rules - As Between Landlords and Tenants And the Tenant’s Guests Exceptions to General Rule (1) (2) (3) (4) (5) Repairs made by Landlord cause injury because made negligently Injury in Common Area (over which Landlord retains control) If Lease or Law requires Landlord to maintain or repair, and failure to do so causes injury If Landlord creates a dangerous condition that causes injury Any hint of intent to control or possess leased premises Effect of Contractual Agreements On a Property Owner’s/Landlord’s Tort Duties • In Landlord-Tenant Relationships-– Contract held of prime importance on control issue – Tenant can enforce obligations against Landlord – Tenant’s guests have same rights of enforcement, and therefore, Tenant’s same limitations in enforcing Special Rules - As Between Owner, Independent Contractor, Their Employees and the Public Special Rules - As Between Owner, Independent Contractor, Their Employees and the Public Special Rules - As Between Owner, Independent Contractor, Their Employees and the Public • Under Common Law--Liability Follows Control • At inception, Owner has duty to warn of know defects • During work, Entity in Control --duty for safety • During work, Entity in Control of work --duty to ensure safe performance • BUT YOU CAN ENSURE SAFETY AS LONG AS YOU DO NOT CONTROL THE MEANS, METHODS OR DETAILS OF THE WORK! Special Rules - As Between Owner, Independent Contractor, Their Employees and the Public • Effect of Contract on Determination of Liability • (1) if contract formed -- “ A contract between the parties that establishes an independent contract relationship is determinative of the parties’ relationship in the absence of extrinsic evidence that the contract was subterfuge or that hiring party exercised control in a manner inconsistent with the contract.” • (2) if no contract -- then actual exercise of control Special Rules - As Between Owner, Independent Contractor, Their Employees and the Public • Getting Around The No Duty Rule When Owner Proves No Control: • If respondeat superior (aka vicarious liability) doesn’t work, then use • Negligent Hiring! Conclusion • In drafting agreements: – In leases, be consistent in terms used to identify various areas – Draft limitations on remedies available to the parties to the agreement – As a property owner - distance yourself from those in control by contractual language - - and stick to the language in real life – As a property manager - hire independent contractors to maintain/repair and for security QUESTIONS? Cynthia López Beverage Litigation Partner (210) 978-7700 [email protected] Jackson Walker L.L.P. www.jw.com www.jwtechlaw.com Austin Dallas Fort Worth Houston Richardson San Angelo San Antonio