Daily Development for Tuesday, March 27, 2001

LANDLORD/TENANT; LANDLORD'S LIABILITY FOR INJURY TO TENANT'S INVITEES: Although normally a landlord is not liable based on its promise to make repairs if that promise made after the lease has commenced and it not supported by separate consideration, the tenant's agreement to continue on under the lease can be construed as providing the necessary consideration.

Taylor v. Schukei Family Trust, 996 P.2d 13 (Wyo. 2000).

This is a premises liability case. The issue is whether the landlord Schukei Family Trust owed a duty of care to an employee of the tenant, Schukei, Inc.. The employee received injuries due to a defective overhead door on the leased premises. Both landlord and tenant were aware of the defect in the door. The trial court ruled that the landlord owed no duty to the tenant or the tenant's employees and granted summary judgment.

On appeal: held: Reversed. The court found that there was some evidence that the landlord had undertaken an enforceable duty to maintain the premises, including the door, and that summary judgment therefore was inappropriate.

Wyoming follows the common law for landlord immunity. A landlord owes no greater duty to a tenant's guests than the landlord owes to the tenant himself. As a general rule, the landlord owes no duty to the tenant or the tenant's guests for dangerous or defective conditions of the premises with general exceptions such as where the landlord had contracted to repair the premises.

In this case, there was some evidence that the landlord had agreed to maintain the building, including the door. But there was no written lease, since the landlord and tenant were related parties and dealt with one another informally. (Beneficiary of the trust was mother to the principals of the tenant corporation and the trust was a stockholder in the corporation.) In the view of the appeals court, the record was equivocal as to whether the parties agreed at the time of the lease that the landlord would have the repair duty or whether that duty arose later.

The court noted Wyoming cases holding that a repair promise made after the lease has commenced must be supported by separate consideration. If such a promise is founded merely on the relation of the parties, and not one of the conditions of the lease, it is without consideration. If not supported by consideration, a subsequent promise, is considered a nudum pactum, even though the improvement may benefit the reversionary interest. Such a promise will not support a claim for premises liability by third parties.

Consideration may exist, however, if the tenant agrees, in exchange for the promise, to continue to lease the premises into the future, where it would otherwise have no duty to do so. In prior Wyoming cases evaluating the concepts involved here, the tenant was a term tenant, and consequently already had the duty to perform the lease for the life of the term. The courts therefore found no enforceable duty to repair, even when the landlord agreed to repair. But here, the lease was a verbal monthtomonth tenancy. The court concluded that there was some possibility that if the repair promise was not contained in the original lease, but came later, it nevertheless was supported by an understanding of the parties that the tenant would continue under the lease (the court does not say what the evidence in the record suggested this or how long the tenant might have agreed to remain.)

Comment 1: Some jurisdictions might have viewed this problem differently, applying the rule that where a party undertakes to perform a duty, even a gratuitous duty, it has an obligation to perform it in a reasonable fashion. The landlord's agreement to repair led the tenant to neglect to make the repair itself, leading to the injury.

Comment 2: The court is so vague about the nature of the evidence in the record supporting the imposition of a duty that it is impossible to criticize the outcome, but the law here is worth noting, especially the rule that a promise by a tenant to remain as a tenant under a month to month lease will support an otherwise unenforceable promise by the landlord.

Comment 3: One reason that the evidence was so equivocal here is that the parties behaved in an equivocal fashion. Because they were related to one another, they didn't bother with the niceties of written agreements.

That's what likely nailed them here. Lawyers frequently see situations in which the tenants will spend thousands of dollars to form corporations, trusts, and LLC's and then, viewing the job as complete, go forward without consulting their attorney and behave in a fashion that completely undermines the protection from liability provided by these business entities. The most common problem is the failure to maintain formality in decision making, leading the courts to conclude that an entity is the alter ego of its principal. Here we don't have an alter ego problem, but still a problem with inadequate formalism.

Lawyers must prepare "primers" on formality of decision making, giving their clients specific instructions and forms and checklists. Although it would be best if the client and lawyer continued a regular consulting relationship, clients often wander off work on their own without further consultation with the lawyer. Lawyer ought to anticipate that this can happen and provide a guidebook to the thicket of maintaining formalities in business organizations.

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