|
 Legal
Corner
by Michael Garner
Legal Update
The Washington Supreme Court recently decided a case which
affects shopping center owners and addresses their potential
liability for accidents which happen in the shopping center.
Although the decision may not have substantial impact on
day-to-day operations, property owners should be aware of it.
Furthermore, center owners, managers and their insurers should
ensure that in addition to providing adequate coverage for
accidents, the insurance coverage extends to all interested and
applicable parties.
These are the facts: Valerie Gildon slipped and fell on wet
tile in the common walkway inside Northgate Mall, and sustained
head injuries as a result of the fall. Just before the statute
of limitations was about to run, Ms. Gildon sued Simon Property
Group, Inc., alleging it was the owner of the mall. In fact, the
property was owned by Northgate Mall Partnership, a Delaware
general partnership. Simon Property Group, Inc. was the general
partner of Northgate Mall Partnership, owning a 0.01% interest
in the partnership. The remaining 99.99% partnership interest
was owned by Simon Property Group, L.P. the limited partner.
Other than its general partnership interest in Northgate Mall
Partnership, Simon Property Group, Inc. had no other ownership
or economic interest in Northgate Mall.
After the suit was filed and the statute of limitations had
run, Simon Property Group, Inc. moved to dismiss the action
because the property owner was not named as a defendant. The
trial court granted the motion and dismissed the action, but the
State Court of Appeals and Supreme Court reversed, ruling that
Ms. Gildon could proceed with her suit under a premises
liability theory even though the true and actual owner of the
property was not named as a defendant.
Legal commentators may argue this case was wrongly decided:
if the property owner was not named as a defendant and the
statute of limitations had run, then the owner should not be
liable. However, due to the courts’ interpretation of the
revised Uniform Partnership Act and facts which showed Simon
Property to be actively involved as an "operator, manager,
occupier, lessor, builder, controller and possessor" of the
property, the courts ruled that naming the general partner of
the property owner was sufficient and the true property owner
was not a necessary and indispensable party to this action.
Most lawyers would agree that the failure to sue the property
owner within the applicable statute of limitation period should
be fatal to the claim. However, this is a situation where the
plaintiff appeared to suffer serious and substantial injuries,
and the plaintiff "almost" named the correct defendant. Rather
than dismiss the plaintiff’s claim on what might be perceived as
a "legal technicality," the courts apparently wanted to reach
the "right result" and let a meritorious case proceed.
Almost as an afterthought, the court ruled that if Ms. Gildon
was successful and obtained a judgment against the general
partner defendant, then that defendant has recourse against the
limited partnership under rights of indemnification. In this
case where all the parties are under the "Simon family"
umbrella, that result may be appropriate. But what about a
situation where the property owner employs an unrelated third
party as the property manager? Does the management contract
contain indemnification rights so that if only the property
manager is sued, it can recover its claim from the owner? The
answer lies in facts presumably known to the court but not
mentioned in its opinion: The accident was probably covered by
insurance and any judgment would be paid by the insurer. Neither
the named defendant nor the owner were likely to be paying any
judgment other than the deductible under the insurance policy.
The lesson to be learned from this is to maintain appropriate
insurance, covering the property owner, any affiliates or
subsidiaries involved in the operations and/or management of the
property, and the property manager. If more than one policy is
in effect, they should be reviewed to ensure there are no gaps
in coverage and that any party named as a defendant is covered
by the insurance and the insurance carrier’s obligation to
defend the lawsuit |
