Tort Liability of Out-of-Possession Landlords

Statutory liability is not limited to section 78 of the Multiple Dwelling Law. In New York City, Section 27-128 of the Administrative Code provides that “[t]he owner shall be responsible at all times for the safe maintenance of the building and its facilities.” Unlike section 78, the Administrative Code's scope is not limited to residential buildings. As a result, in Guzman v. Haven Plaza Housing Development Fund Co., Inc., 69 NY2d 559, the Court of Appeals held landlord liable for damages suffered by a supermarket employee who fell as a result of an allegedly defective staircase constructed by supermarket-lessee. The Court held that section 27-128 has the force of statute, and noted various Administrative Code provisions governing staircase safety.

The Court of Appeals has nevertheless reserved judgment on one significant issue: Does a landlord bear liability even if, under the terms of the lease, the landlord has reserved no right to enter or inspect the premises? In Tkach, the court wrote, “[We] need not now decide whether liability might also be imposed, on the theory of constructive notice, in a case where the landlord has not reserved the right to enter, inspect and repair … ” 289 NY at 390. In Worth, as in Tkach, the landlord had reserved a right to enter for inspection and repairs, and the court found that reservation sufficient to impose liability, while suggesting, in dictum, that “an owner will not be held liable under section 78 where it has completely parted with possession and control of the building.” 59 NY2d at 238. In Village East, the court quoted the Worth dictum, and noted that the landlord had reserved a right to enter the premises to make repairs.

Less than 2 years ago, in Bonifacio v. 910-930 Southern Boulevard, 295 AD2d 86, the First Department questioned whether a landlord can escape liability by failing to reserve a right to enter, repair, or inspect the premises. Plaintiff was injured when the building's elevator dropped rapidly for three floors. Plaintiff brought an action against the building's owner. More than 3 years later, the building's owner moved for summary judgment, asserting that it had executed a “triple net lease” with a lessee who had agreed to assume sole responsibility for operation of the building. The net lease reserved no right for the owner to enter the premises. Conveniently, by the time the owner moved for summary judgment, the statute of limitations had expired for actions against the lessee. In holding that the owner's summary judgment motion should be denied, the First Department concluded that the critical issue was whether landlord retained control over the building; reservation of a right of entry — emphasized by the Court of Appeals in its opinions — was simply one manifestation of control. Because the court found that questions about the relationship between the owner and the lessee raised issues of fact about the owner's control, the court held that dismissal of the complaint would have been premature. Whether the Court of Appeals (or the Appellate Divisions) will embrace the Bonifacio holding remains to be seen.

Liability in the Absence of Statute

The Court of Appeals has held that in cases not covered by a statute imposing on a landlord a non-delegable duty, the landlord can be held liable for injuries contracted on leased premises only where he or she has retained control over the premises. Thus, in Ritto v. Goldberg, 27 NY2d 887, where plaintiff had been injured by a washing machine in a laundry room operated by a tenant, the court held that MDL section 78 did not apply. The court went on to hold that in the absence of statute, “control is the test which measures generally the responsibility in tort of the owner of real property.” Id. at 889. The lease in Ritto reserved to the landlord a right of access to utility meters, but that, in the court's view, was insufficient reservation of control to justify submitting the issue to the jury (The court did, however, hold that the jury should have been entitled to determine whether the landlord's course of conduct in reporting washing machine malfunctions might have created a reliance interest warranting liability to plaintiff).

This “control” standard is open to interpretation. In Ritto, the court did not make it clear how the standard differed from the one to be applied in cases of statutory duty. As in Ingargiola, the Appellate Divisions have sometimes awarded landlords summary judgment on the ground that the landlords did not have control over the premises. For instance, in Notkin v. Gristina Vineyards, 298 AD2d 445, the Second Department held that the landowner that had rented its land for use at a wedding was entitled to dismissal of a complaint by a guest who was injured by the concealed raised edge of a dance floor placed upon grass by agents of the wedding party-tenant. The court noted that the landowner had not retained control of the tent area an dance floor. Cf. Dominguez v. Food City Markets, Inc., 303 AD2d 618.

In other cases, however, Appellate Divisions have treated a landlord's control as an issue of fact to be determined by the jury. Thus, in Gerber v. West Hempstead Convenience, Inc., 2 AD2d 260, the Second Department held that Mobil Oil Corporation's right to enter and inspect a mini-mart at a service station raised questions of fact about Mobil's supervisory control. As a result, Mobil was not entitled to summary judgment. Clearly, whether control is an issue or law or an issue of fact for the jury can be a matter of critical importance to a landlord, yet the New York courts have not yet settled on a consistent approach to the question.

Contribution, Indemnification, and Insurance

When plaintiff's injury results from a defective condition that falls within a landlord's non-delegable duty, the landlord is not entitled to common-law indemnification from the tenant. In Guzman, supra, the Court of Appeals held that a landlord's statutory liability in such cases is not derivative, so that the landowner is at best entitled to contribution from the tenant, not indemnification.

The landlord can generally shift the ultimate cost of liability for defective conditions to the tenant by including a contractual indemnification clause in the lease. See, e.g. Dominguez v. Food City Markets, Inc., supra. But that tactic is not foolproof. General Obligations Law section 5-321 declares unenforceable any lease provision that purports to exempt a lessor from liability for its own acts of negligence. Where questions of fact arise about a landlord's obligation to make repairs, courts may seize upon section 5-321 to declare unenforceable a broad indemnification clause, even if the clause to some extent attempts to guarantee a landlord indemnification for losses arising from tenant's negligence. See Gibson v. Bally Total Fitness Corp., 1 AD3d 477. Although the scope of section 5-321 liability is a story for another day, one course of action clearly falls outside that statute's reach: If the lease requires a tenant to purchase insurance, and to name the lessor as a named insured on the policy, the lease provision is enforceable and guaranteesthe landlord some protection against suits arising from dangerous conditions on the premises. See Hogeland v. Sibley, Lindsay & Curr Co., 42 NY2d 153, 161 [upholding lease provision because landlord "is not exempting itself from liability to the victim for its own negligence. Rather, the parties are allocating the risk of liability to third parties between themselves, essentially through the employment of insurance."].

Ingargiola v. Waheguru Management, Inc., decided recently by the Second Department (see infra at p. 5), revisited a question that has long engendered confusion in the New York courts: What liability does a landlord bear for personal injuries suffered in leased premises? Ingargiola also presented a related question: What steps can a landlord take to reduce exposure for any liability the landlord would otherwise bear? This article explores those issues.

Statutorily Imposed Obligations

When a state statute or local law imposes a non-delegable duty on a landlord, that landlord bears liability to parties injured as a result of breach of that duty. Multiple Dwelling Law Section 78 provides the prime example. The statute provides that “every multiple dwelling … shall be kept in good repair” and makes the owner responsible for compliance with the section. The Court of Appeals has held that a landlord of a residential building remains liable for injuries caused by defective conditions, even if the landlord had no actual knowledge of those conditions. Thus, in Tkach v. Montefiore Hospital , 289 NY 387, the hospital had leased an entire apartment building to Hurwitz, and by the terms of the lease, required Hurwitz to maintain the building in good repair. Nevertheless, when two apartment tenants were injured by falling plaster, the court held the landlord liable, even if he could establish actual ignorance of the defective condition. And in Worth v. Latham , 59 NY2d 231, the court held that the landlord's liability under MDL section 78 extended even to commercial tenants, so long as the building also contained residential units and the injury was caused by a structural problem applicable to residential and commercial tenants alike. In that case, the injuries were caused by a widening crack in a weight-bearing wall.

Statutory liability is not limited to section 78 of the Multiple Dwelling Law. In New York City, Section 27-128 of the Administrative Code provides that “[t]he owner shall be responsible at all times for the safe maintenance of the building and its facilities.” Unlike section 78, the Administrative Code's scope is not limited to residential buildings. As a result, in Guzman v. Haven Plaza Housing Development Fund Co., Inc. , 69 NY2d 559, the Court of Appeals held landlord liable for damages suffered by a supermarket employee who fell as a result of an allegedly defective staircase constructed by supermarket-lessee. The Court held that section 27-128 has the force of statute, and noted various Administrative Code provisions governing staircase safety.

The Court of Appeals has nevertheless reserved judgment on one significant issue: Does a landlord bear liability even if, under the terms of the lease, the landlord has reserved no right to enter or inspect the premises? In Tkach, the court wrote, “[We] need not now decide whether liability might also be imposed, on the theory of constructive notice, in a case where the landlord has not reserved the right to enter, inspect and repair … ” 289 NY at 390. In Worth, as in Tkach, the landlord had reserved a right to enter for inspection and repairs, and the court found that reservation sufficient to impose liability, while suggesting, in dictum, that “an owner will not be held liable under section 78 where it has completely parted with possession and control of the building.” 59 NY2d at 238. In Village East, the court quoted the Worth dictum, and noted that the landlord had reserved a right to enter the premises to make repairs.

Less than 2 years ago, in Bonifacio v. 910-930 Southern Boulevard, 295 AD2d 86, the First Department questioned whether a landlord can escape liability by failing to reserve a right to enter, repair, or inspect the premises. Plaintiff was injured when the building's elevator dropped rapidly for three floors. Plaintiff brought an action against the building's owner. More than 3 years later, the building's owner moved for summary judgment, asserting that it had executed a “triple net lease” with a lessee who had agreed to assume sole responsibility for operation of the building. The net lease reserved no right for the owner to enter the premises. Conveniently, by the time the owner moved for summary judgment, the statute of limitations had expired for actions against the lessee. In holding that the owner's summary judgment motion should be denied, the First Department concluded that the critical issue was whether landlord retained control over the building; reservation of a right of entry — emphasized by the Court of Appeals in its opinions — was simply one manifestation of control. Because the court found that questions about the relationship between the owner and the lessee raised issues of fact about the owner's control, the court held that dismissal of the complaint would have been premature. Whether the Court of Appeals (or the Appellate Divisions) will embrace the Bonifacio holding remains to be seen.

Liability in the Absence of Statute

The Court of Appeals has held that in cases not covered by a statute imposing on a landlord a non-delegable duty, the landlord can be held liable for injuries contracted on leased premises only where he or she has retained control over the premises. Thus, in Ritto v. Goldberg , 27 NY2d 887, where plaintiff had been injured by a washing machine in a laundry room operated by a tenant, the court held that MDL section 78 did not apply. The court went on to hold that in the absence of statute, “control is the test which measures generally the responsibility in tort of the owner of real property.” Id. at 889. The lease in Ritto reserved to the landlord a right of access to utility meters, but that, in the court's view, was insufficient reservation of control to justify submitting the issue to the jury (The court did, however, hold that the jury should have been entitled to determine whether the landlord's course of conduct in reporting washing machine malfunctions might have created a reliance interest warranting liability to plaintiff).

This “control” standard is open to interpretation. In Ritto, the court did not make it clear how the standard differed from the one to be applied in cases of statutory duty. As in Ingargiola, the Appellate Divisions have sometimes awarded landlords summary judgment on the ground that the landlords did not have control over the premises. For instance, in Notkin v. Gristina Vineyards , 298 AD2d 445, the Second Department held that the landowner that had rented its land for use at a wedding was entitled to dismissal of a complaint by a guest who was injured by the concealed raised edge of a dance floor placed upon grass by agents of the wedding party-tenant. The court noted that the landowner had not retained control of the tent area an dance floor. Cf. Dominguez v. Food City Markets, Inc. , 303 AD2d 618.

In other cases, however, Appellate Divisions have treated a landlord's control as an issue of fact to be determined by the jury. Thus, in Gerber v. West Hempstead Convenience, Inc. , 2 AD2d 260, the Second Department held that Mobil Oil Corporation's right to enter and inspect a mini-mart at a service station raised questions of fact about Mobil's supervisory control. As a result, Mobil was not entitled to summary judgment. Clearly, whether control is an issue or law or an issue of fact for the jury can be a matter of critical importance to a landlord, yet the New York courts have not yet settled on a consistent approach to the question.

Contribution, Indemnification, and Insurance

When plaintiff's injury results from a defective condition that falls within a landlord's non-delegable duty, the landlord is not entitled to common-law indemnification from the tenant. In Guzman, supra, the Court of Appeals held that a landlord's statutory liability in such cases is not derivative, so that the landowner is at best entitled to contribution from the tenant, not indemnification.

The landlord can generally shift the ultimate cost of liability for defective conditions to the tenant by including a contractual indemnification clause in the lease. See, e.g. Dominguez v. Food City Markets, Inc., supra. But that tactic is not foolproof. General Obligations Law section 5-321 declares unenforceable any lease provision that purports to exempt a lessor from liability for its own acts of negligence. Where questions of fact arise about a landlord's obligation to make repairs, courts may seize upon section 5-321 to declare unenforceable a broad indemnification clause, even if the clause to some extent attempts to guarantee a landlord indemnification for losses arising from tenant's negligence. See Gibson v. Bally Total Fitness Corp. , 1 AD3d 477. Although the scope of section 5-321 liability is a story for another day, one course of action clearly falls outside that statute's reach: If the lease requires a tenant to purchase insurance, and to name the lessor as a named insured on the policy, the lease provision is enforceable and guaranteesthe landlord some protection against suits arising from dangerous conditions on the premises. See Hogeland v. Sibley, Lindsay & Curr Co. , 42 NY2d 153, 161 [upholding lease provision because landlord "is not exempting itself from liability to the victim for its own negligence. Rather, the parties are allocating the risk of liability to third parties between themselves, essentially through the employment of insurance."].