Daily Development for Friday, August 20, 1999

By: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri

LANDLORD AND TENANT; TENANT'S LIABILITY FOR INJURY TO PREMISES; NEGLIGENCE; WAIVER: Contract clauses purporting to exclude liability for negligence must speak clearly and directly to the particular conduct of the defendant which caused the harm at issue, and simple statement that tenant's maintenance responsibility do not apply where premises are destroyed by fire or casualty is insufficient to waive landlord's damages claim where tenant's negligence caused fire..

Empire Lumber Co. v. ThermalDynamic Towers, Inc., 971 P.2d 1119 (Idaho 1998).

Empire and TDT entered into a lease agreement, whereby TDT agreed to lease warehouse space from Empire for a sixmonth term. The lease provided that "except for reasonable wear and tear and damage by fire or unavoidable casualty, Lessee will, at all times, preserve said premises in as good repair as they now are or may hereafter be put to...," and further relieved TDT from any obligation to procure fire insurance. Instead, the parties agreed that Empire would procure fire insurance.

At the end of the sixmonth term, TDT continued its tenancy on a month tomonth basis, and Empire extended fire insurance coverage on a bimonthly basis. TDT gave a 30day notice to Empire of its intent to vacate. Empire did not have fire insurance for the last month of TDT's tenancy. Sometime in the last month of TDT's tenancy, two boys entered the leased premises and accidentally started a fire. Based upon evidence that TDT had been storing flammable liquids on the leased premises and that TDT had turned off the water valve to the sprinkler system, Empire sued TDT for negligence. TDT raised the exculpatory clause limiting its liability from fire damage as an affirmative defense. The trial court ruled on summary judgment that TDT was not entitled to rely upon the exculpatory clause if it was negligent.

The Supreme Court of Idaho held that the language in the exculpatory clause excepting "damage by fire or unavoidable casualty" indicated that the parties did not intend to relieve TDT from liability where the damage was caused negligently. The Court reasoned that, although parties to a contract may agree to limit liability for negligence or contractually waive rights and remedies, courts disfavor attempts to limit liability and strictly construed such provisions against the party relying on them. The Court stated that exculpatory clauses purporting to exclude liability for negligence must speak clearly and directly to the particular conduct of the defendant which caused the harm at issue.

Comment 1: Note that the language the tenant relied upon did not mention liability for negligence at all. It simply was a statement of limitation upon tenant's general duty to make repairs. The editor concurs that such language lacks the specificity to serve as a waiver of negligence claims. But the editor suggests that the reason for this is that the clause fails to mention negligent conduct at all, not, as the court suggests, that the language does not specify the nature of the negligent conduct that it covers.

Numerous cases, some of them reported on these pages, have held that for a waiver of negligence to be effective, it must be clear and unequivocal. The language the tenant relied upon here was not a "clear and unequivocal" waiver of negligence. It had another purpose entirely to invoke the landlord's insurance as the source of restoration expenses following a fire. Every lessee has a common law duty not to commit active waste, and negligent destruction of the premises fits that description. Thus, given this duty, the tenant would have had to insert much clearer waiver language to avoid liability in this case.

Comment 2: Does Tenant have the right to come back against the landlord for failure to obtain the necessary insurance? Presumably, the answer is yes, but only if there was a waiver of subrogation clause. Otherwise, the insurer, if it had been forced to pay, could have sued the tenant anyway.

Comment 3: Speaking of negligence, what about the contractual language "preserve said premises in as good repair as they now are or may hereafter be put to...." Said premises? How many premises are there? Further, how about that dangling preposition? Isn't there a better way to say this? Attri buted to Winston Churchill: "To end a sentence with a preposition is something up with which I will not put!!"

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