Case: Stone v. Center Trust Retail Properties, Inc., Case No. B181180 (Cal. Ct. App. 5/30/08)

The One Sentence Summary: The California Court of Appeal held that a shopping center landlord has a duty to inspect a tenant’s premises upon the entry of a judgment of possession in an unlawful detainer action, creating potential liability of the landlord to third persons injured in the tenant’s premises by a dangerous condition before the landlord actually regains physical possession of the premises.

What They Were Fighting About: Landlord Center Trust Retail Properties owned a mall in which Gumboz Creole Cajun restaurant was a tenant. After the restaurant defaulted on its rent, Center Trust eventually filed an unlawful detainer action and in December 2001 a court entered a judgment for possession by the landlord and issued a writ of possession. In January 2002, before service of the writ of possession by the sheriff, the restaurant continued operating and a party was held there during which plaintiff Stone while dancing slipped on water caused by a leak and fractured her ankle. The landlord knew the tenant had been operating an after-hours dance club in violation of its lease, which permitted only a sit-down restaurant. Plaintiff Stone sued Center Trust and the restaurant, proceeding to trial against the landlord. The jury apportioned fault among the restaurant, Center Trust, and Stone herself and awarded damages to Stone. Center Trust appealed. Although the court of appeal reversed the judgment and remanded the case for retrial of liability only, the court held that the landlord did owe a duty to inspect the restaurant’s premises upon the entry of a judgment of possession in the unlawful detainer action.

Court Holdings:

  • During a tenancy, the landlord generally can be held liable for a third person’s injury due to a dangerous condition of the tenant’s premises only if the landlord had actual knowledge of and the right/ability to cure the dangerous condition.
  • However, the court of appeal concluded for public policy reasons that once a landlord obtains a judgment of possession to evict a defaulting tenant, a duty to inspect should be imposed on the landlord because it knows that defaulting tenants may neglect to maintain the premises in safe condition. “Upon entry of judgment, a tenant’s incentive to maintain a property dissipates because continued maintenance likely benefits only the landlord. To protect the public, the incentive to maintain the property must not be an orphan abandoned by a tenant and ignored by a shortly reoccupying landlord.”
  • The court held that the landlord’s duty to inspect the defaulting tenant’s premises “attached upon entry of the judgment of possession in the unlawful detainer action and included reasonable periodic inspections thereafter.”
  • Because the court of appeal could not determine from the record at what point in time the jury found that the landlord owed a duty to plaintiff Stone, the case was remanded for retrial of liability only. The parties may present evidence during retrial whether inspection upon entry of the judgment of possession or at reasonable intervals thereafter would have discovered the water leak in the premises.
  • The dissenting opinion criticized the majority for creating a new legal duty, when the legislature is in a better position to decide whether to expand the landlord’s duty and potential liability in order to protect public safety.