Case of the Day – Friday, June 29, 2018

DRAFT ME A VERBAL CONTRACT

Lesprit140422Ah, l’esprit d’escalier! Those biting, snappy comebacks we wish we had said at the time. You know, those retorts that sound like Donald Trump’s tweets.

Today’s case is about something akin to that, not rapier ripostes, but rather one of those rather important contract terms — how long the multi-year agreement would last — that both parties kind of wished they had discussed at the time they first made their deal.

And maybe one of them did. To be sure, each probably had what is today called an “exit strategy” in mind. But neither brought it up. And what’s worse, nothing was in writing on the parties’ joint venture to raise and harvest peaches. Samuel Goldwyn was right when he observed that “a verbal contract isn’t worth the paper it’s printed on.”

What’s surprising is that their verbal deal lasted as long as it did. Invariably, however, problems ensued. When Miami Valley Fruit Farm wanted to terminate the deal after about 20 years, Southern Orchards protested that the length of the venture was for the useful life of the trees, meaning that the deal would go on until the trees were worn out. It sort of turns the old Stripes line on its head: you can’t go … until all the plants die.

The Court agreed, because that was the only interpretation that made sense to it. You see, without a contract in black and white, everything was pretty gray. Think of how much they saved by not hiring lawyers to write up some boring old detailed contract. Probably less than 5% what they spent litigating the issue 20 years later …

verbalk140422Miami Valley Fruit Farm, Inc. v. Southern Orchard Supply Co., 214 Ga.App. 624, 448 S.E.2d 482 (Ga.App., 1994). Southern Orchard Supply Co. and Miami Valley Fruit Farm entered into an oral agreement whereby Miami Valley, which owned the 295 acres of land, purchased peach trees, and Southern Orchard planted, cultivated and harvested the trees. Under the agreement, which has been in effect about 20 years, the parties equally divided the net profits from the sale of each year’s peach crop.

After the 1993 peach crop was harvested and sold, Miami Valley told Southern Orchard that it was terminating the oral agreement and that Southern Orchard would not be allowed to cultivate and harvest the 1994 peach crop. Southern Orchard sued for an injunction, arguing that it had made substantial investments in the planting and cultivation of the peach trees and in equipment and packing facilities based on the mutual understanding of the parties that the agreement would continue for the “economic life” of the peach trees.

The evidence showed that after a peach tree orchard is planted, the trees have to be cultivated for years before they mature enough to bear fruit and begin to produce profitable, full crops. Once mature, the trees have an “economic life” for an indefinite period of years, during which they produce profitable crops each year until their fruit production declines to the point where they are no longer profitable and new trees must be planted. The “economic life” of the trees varies based on factors such as the variety of the peach and cultivation techniques. The trees at issue still had years of “economic life” remaining.

Southern Orchard argued the agreement had to last for the “economic life” of the trees in order to provide for recoupment of its expenses. Miami Valley argued there was no agreement between the parties for any specific duration of the contract, that the parties considered the agreement to run from year-to-year, and that in any event the “economic life” of a peach tree could not provide the agreement with a definite term since the duration of the life cannot be determined with any degree of certainty. Accordingly, Miami Valley argued it had the right to terminate the agreement.

The trial court held that there was an enforceable oral contract for Southern Orchard to cultivate and harvest the peach trees on the land at issue for the “economic life” of the trees, and because Southern Orchard had no adequate remedy at law for the breach of the agreement, the trial court could grant injunctive relief, ordering Miami Valley not to interfere with Southern Orchard’s performance of the agreement for the 1994 peach crop. Miami Valley appealed.

stitch140422Held: The injunction against Miami Valley is upheld. The Court of Appeals held that the question as to the length of time the contract remains in force is governed by the circumstances of each particular case. Here, the Court said, evidence showed that the parties intended the employment contract to continue for more than a single crop season. Considering the particular circumstances and expenses incurred to plant, cultivate and harvest the peach trees, the Court found, the parties agreed that the employment contract would continue for as long as the trees produced reasonably profitable crops, the “economic life” of the peach trees.

The old aphorism that a “stitch in time saves nine” is worth recalling here. A little consideration to all of the material terms of the agreement at the outset – maybe a few bucks spent on a lawyer whose forte is thinking about all the “what ifs” that the parties aren’t considering ­– would have saved a lot of time and expense two decades down the road.

– Tom Root

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Case of the Day – Thursday, June 28, 2018

DISHONORABLE NON-DISCHARGE

prison151202Funny we should be mentioning dishonorable discharge today, on the heels of former Army Private Chelsea Manning’s thorough thumping last Tuesday night in the Maryland primary. Speaking of “formerly,” when Manning was sentenced, he was a boy named Bradley. Now he’s a girl, just one who happened to steal about three quarters of a million military and diplomatic files. But Manning’s sorry. This is a nation of second chances. He/she just lost a chance to be in Congress.  Some are quite saddened.

Our topic today is another institution built on second chances, bankruptcy. Bankruptcy is one of the important developments of our modern society, a means to give people who have made a lot of financial mistakes a fresh start. You’d be surprised who’s gone down. P.T. Barnum went banko, and then got into the circus business. Walt Disney got wiped out in bankruptcy, losing his Laugh-o-Gram business. He went to Hollywood and got into animation. For that matter, with Donald Trump now serving as president, the old Boffin of Bankruptcy himself (four times to the courthouse for companies he controlled) has joined august company. Abe Lincoln went bust in 1833. Ulysses S. Grant was financially embarrassed after he left the presidency, and wrote his memoirs to pay off the debts. Harry Truman’s haberdashery failed, and it took him years to pay off his creditors (he refused the dishonorable but efficient bankruptcy route).

There are those who persuasively argue that American bankruptcy laws encourage the kind of risk-taking that benefits the economy. Nevertheless, it’s not all roses: some try to take advantage of the bankruptcy laws. The statutes provide a protection against bad apples wanting to use bankruptcy to regain undeserved polish. We’ll look at one such bulwark today, the Act’s prohibition against debtors discharging debts resulting from willful and malicious injury to someone else.

busted151202The difference is important. A debtor who injured someone else because he or she negligently ran into that someone’s tree with a car could have the debt discharged. But if he or she deliberately came on someone else’s land, for example, to cut down a Christmas tree and carry it home, the debt that misconduct represented would not be forgiven.

Sometimes the line isn’t that clear, such as in today’s case. The debtor, Ken Harper, got sued because when he had 47 acres of his own timber harvested, the crew he hired also harvested trees on 30 acres belonging to his neighbor. A state court jury had found him liable for trespass and conversion of timber, and had awarded punitive damages and treble damages. The Bankruptcy Court found that the debt couldn’t be discharged, because trespass was an intentional tort (in that the trespassing party intended to go where his feet took him, whether he knew it was his neighbor’s land or not) and because timber conversion required a willfulness to exercise ownership over the property (whether or not the actor knew it was someone else’s to begin with).

fico151202As for the maliciousness of the injury, the Bankruptcy Court found that it was enough that the state court jury had assessed punitive damages against Harper. The jury couldn’t have done that, the Bankruptcy Court said, unless it was clear that Harper knew his conduct was likely to cause harm. And as for the treble damages, the Court said, those are part of the judgment, and those aren’t dischargeable either.

In re Harper, 378 B.R 836 (Bankr. E.D.Ark., 2007). Ken Harper owned Real Estate Development, Inc. (“REDI”). REDI bought about 47 acres of land from Quadrangle, leaving Quadrangle with about 1,200 acres of land surrounding REDI’s purchase. REDI hired Arkansas Timber & Logging to log timber on REDI’s land. On or about the same time that this logging occurred, Arkansas Timber logged several acres of Quadrangle’s property. Quadrangle sued Harper, REDI and Arkansas Timber for trespass and malicious conversion of timber on 30 acres, asserting that Harper hired Arkansas Timber to cut timber on REDI’s own lands, and that this agreement became a collusive effort to harvest and convert timber from Quadrangle’s land.

The jury did not find that the defendants acted in collusion, but it did return a verdict finding that Harper was guilty of trespass and conversion. The jury was instructed that trespass required that the defendants be found to have intentionally entered Quadrangle’s property. It held that Harper continued his trespass conduct with malice or in reckless disregard of the consequences, or that Harper intentionally pursued a course of conduct for the purpose of causing injury or damage. Quadrangle was awarded compensatory, treble and punitive damages against Harper, who went bankrupt without paying the judgment.

Quadrangle filed a complaint in the bankruptcy to determine whether Harper could discharge its judgment against him in bankruptcy.

pig151202Held: The judgment could not be discharged in bankruptcy. Quadrangle argued that the judgment obtained against Harper was nondischargeable under 11 U.S.C. § 523(a)(6) as a debt for a “willful and malicious injury by the debtor to another entity.” Here, the issue was whether Harper’s actions constituting trespass and conversion of timber were willful and malicious, as required to except a debt from discharge under § 523(a)(6).

Quadrangle argued that the jury instructions, jury questionnaire and judgment supported a finding of willful and malicious injury on their face. Harper argued that the mens rea requirement of intent was missing from the state court proceeding, and the issue should be tried in the bankruptcy court. The Court said that a “willful” act was “deliberate or intentional,” and the “willful” element is satisfied if the injury is the result of an intentional tort. The malicious element is satisfied if, in committing the intentional tort, the perpetrator intended the resulting harm, or the harm was substantially certain or nearly certain to result. In this case, the Court said, the jury instructions regarding trespass and conversion clearly established that the element of willfulness was presented to the jury. The jury instruction regarding the intent necessary for a finding of trespass specifically stated, “[t]he intent necessary to commit a trespass is that to be on a particular piece of land that does not belong to you.”

With respect to conversion, the jury was instructed that Harper must have had the “intent to exercise dominion or control over the goods that is in fact inconsistent with Quadrangle’s rights.” Finally, the jury instruction for “malicious conversion of timber” requires a finding that the Debtor “acted with intentional and deliberate disregard for the plaintiff’s property rights.” All of these standards describe a willful injury, the Court said, the purposeful invasion of another’s legally protected interests. As well, trespass and conversion are considered intentional torts under Arkansas law, and are therefore willful acts. The Bankruptcy Court found that the jury’s findings with respect to trespass and conversion established that Harper’s actions were willful, but not necessarily malicious. But because the jury awarded punitive damages — that the action was taken with either the intent to cause harm or with the knowledge that harm was substantially certain to occur — it was clear that the likelihood that Harper knew that harm was substantially certain to occur as a result of his intentional actions, was decided by the jury.

Although Harper argued that the treble damages were dischargeable, the Supreme Court determined that treble damages are encompassed by the term “debt” as it is used in the Bankruptcy Act.

– Tom Root

TNLBGray140407

Case of the Day – Tuesday, June 26, 2018

UNDER A SPREADING CHESTNUT TREE

newspaper140421The year 1929 ended badly for a lot of people, with the stock market crash wiping out millions. It started just as badly for one Lou Cotillo (not to be confused with Lou Costello), when a chestnut tree on suburban land being developed by a real estate firm crashed onto the road. Under the spreading chestnut tree was Mr. Cotillo’s car, which, unfortunately enough, contained him and a passenger.

It turned out the chestnut in question, a rather big specimen, had been dead for a few years. However, the Court noted, “beyond its deadness, [it] bore no exterior evidence of decay.”

Deadness? Is that even a word?

Maybe not, but the jury had little trouble determining that the tree’s obvious “deadness” made the real estate developer liable for the accident. Brandywine appealed, arguing that the trial court should have taken the case away from the jury and thrown it out. It argued that, as a matter of law, it wasn’t liable for the results of a tree’s natural condition (that is, it’s “deadness”).

Applying what little Delaware law the United States Court of Appeals for the Third Circuit could find, the appellate panel upheld the jury verdict. The Court held that responsibility for an owner’s property is one of the burdens of ownership, and, as a landowner has the right to enjoy his property unhampered by the actions of his neighbor, his neighbor – ­whether a landowner or a highway traveler ­– is similarly entitled. The trial court told the jury that Brandywine had a duty to keep its property from being a source of danger to the travelers on the highway “to the extent that reasonable care can guard against” the danger. The jury decided that Brandywine had breached its duty. Game, set and match.

This case was an early decision in the general trend of imposing a duty of reasonable care on non-rural landowners. The issue in negligence cases such as this one is always the nature of the duty owed by the defendant. Defendants – such as Brandywine Hundred Realty in this case – want the duty to be as minimal as possible – where plaintiffs want the jury charge to describe a duty of the first water. From the “trees will be trees” laissez faire approach of the 19th century, where owners generally had no duty whatsoever to protect passers-by from hazardous trees, to a modern view that while not guarantors of their trees, property owners had a duty to correct problems of which they had actual or constructive knowledge.

chestnutdown140421Brandywine Hundred Realty v. Cotillo, 55 F.2d 231 (3rd Cir. 1931). On a dark winter night in January 1929, Mr. Cotillo and a passenger were driving forested suburban land owned by Brandywine Hundred Realty, Inc. A chestnut tree, standing about 10 feet from the road, fell suddenly, crushing Mr. Cotillo’s car and killing his passenger. The tree had been dead for four years, but, “beyond its deadness, bore no exterior evidence of decay.”

Cotillo sued, and the case went to trial. The real estate company asked the judge to take the case from the jury and find in its favor as a matter of law, because the natural condition of the tree caused the accident, and it had no duty to Mr. Cotillo. The judge disagreed, and instead told the jury that Brandywine had a duty to exercise reasonable care in the use of its property, so as not to harm neighboring landowners or motorists. The jury found for Mr. Cotillo.

Brandywine appealed, arguing that the trial court had misdefined its duty.

Held: The trial court was correct in its definition of Brandywine’s duty. The appellate court said that “[a]fter all is said and done, this case turns on the application of the time honored principle of law, ‘sic utere tuo ut alienum non laedas’–so use your own as not to injure another.” It held that Mr. Cotillo had a right to use the highway, and that Brandywine had the duty “to so use his property on his own land that it shall not cumber the highway and endanger the safety of those using it …” It agreed with the trial court’s charge to the jury that “ the owner of property abutting on a public highway is under a duty to keep it from being a source of danger to the public or to the travelers on such highway, to the extent that reasonable care on his part can guard against.”

Negligencedef140421The Court of Appeals also concurred that the fact the tree had died of natural causes, rather than because of Brandywine’s conduct, had no effect on the realty company’s duty. Regardless of how the tree ended up in a condition of “deadness,” if its deadness was known by Brandywine or could have been known “by the exercise of ordinary case … then it became the duty of the defendant to exercise reasonable care and diligence to prevent the tree from falling and injuring those who might have occasion to use the public highway.”

Thus, the question of Brandywine’s alleged negligence was for the jury to pass upon. It did so, and found negligence. The Court found no basis for disturbing that finding.

As for “deadness” as a word – the dictionaries give the Court a pass on it, but as far as we’re concerned, the jury’s still out on that one …

The dismissal of this ridiculous suit was upheld.

– Tom Root

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Case of the Day – Monday, June 25, 2018

DUMB ADULT STUNTS

bikefall140418All right, we’re going to use the summer to get into shape. One-two-one-two. Time to blow out this mental cobwebs that form from hot days, warm nights, cool beer and cold ice cream. Time for a little sober reality.

We’ll start with a simple warm-up – considering two dumb adult stunts. The first stunt was Tom Alexson’s ill-advised decision, when he saw a tree branch laying on his bike path, to ride by and smoothly push it out of the way with his hand as he passed. Kids, please don’t attempt this at home! Of course, it didn’t work, and he crashed into and over the limb, hurting himself badly.

The second dumb adult trick was Tom’s unwillingness to accept the blame for his own stupidity. He didn’t, of course. Who does, these days? Instead, he sued the White Memorial Foundation, which owned the land and museum that stood on it.

The Foundation defended under the Connecticut Recreational Use Act, asking that the case be dismissed because no fee was charged for use of the Foundation property, and Tom was on the land for a recreational purpose. Tom’s crafty mouthpiece argued that the Foundation didn’t qualify, because it charged a fee to enter the museum. But the Court ruled that the Foundation didn’t charge Tom to ride his bike around the grounds, and that was good enough. After all, he didn’t fall in the museum attic.

Aha140418A-ha, the lawyer cried, riding a bike isn’t listed as a specific recreational activity in the statute. Horse hockey, the Court said. The statute clearly doesn’t limit recreational activities to the one listed. Lance Armstrong, after all, thinks bike riding is very recreational (and for years thought that taking banned drugs was not doping).

Yeah, argued Tom’s lawyer, but the Foundation’s failure to warn Tom of the danger was willful or malicious. Prove it, the Court said, using something more that Tom’s rather slanted opinion that it was so.

The case was tossed, as it should have been. Dumb adult stunts, indeed.

Alexson v. White Memorial Foundation, Inc., Not Reported in A.2d, 2008 WL 803423 (Conn.Super., Mar. 5, 2008). Workmen for the White Memorial Foundation were notified that a tree had fallen across a roadway on Foundation property. The workmen began to cut up fallen tree, but failed to complete the task before Tom Alexson – who was riding his bicycle on the White property – saw some of the tree still blocking the roadway and decided that he could push the obstruction aside as he passed. Instead, he collided and badly hurt himself.

Tom sued, alleging that the Foundation was careless and negligent in only partially removing the branch from a portion of roadway and that the Foundation’s failure to warn or guard against the obstruction was willful and intentional. The Foundation moved for summary judgment on the ground that General Statutes §52-557g, known as the recreational land use statute, made the Foundation immune.

Held: The Foundation was protected by the Connecticut Recreational Use Act. The Act provides that a landowner is immune from liability for simple negligence where: (1) the defendant is the owner of the land in question; (2) the defendant has made all or part of the land where the plaintiff was injured available for use to the public free of charge; and (3) the plaintiff, at the time that he was injured, was using the land for a recreational purpose.

Tom argued that there was a genuine issue of material fact as to whether the Foundation made the land available to the public free of charge. In addition, Tom alleged that there was a genuine issue of material fact as to whether the exception to the recreational land use immunity statute, codified in §52-557h, applied to the defendant because, as alleged by the plaintiff, the defendant willfully and maliciously failed to warn against a dangerous and defective condition.

The Foundation said the land on which Tom was injured was always available for recreational use to the public without charge. Tom admitted that on the day he was injured, he was not charged by the Foundation, and conceded that the only time he has been charged a fee was when he went inside the museum. The Court found that there was thus no genuine issue of material fact that the defendant Foundation made the part of the property on which Tom was injured available, free of charge, to the public.

biketree140418The final prong of the statute required that the land be available for recreational purposes. Section 52-557f(4)(a) provides a list of activities that constitute a “recreational purpose,” and the list doesn’t include bicycle riding. The Court observed, however, that, the statute clearly stated that “[r]ecreational purpose includes, but is not limited to, any of the following …” It was evident, the Court held, that the enumerated activities set forth in the statute were not exclusive.

Riding a bicycle, the Court said, fell within the penumbra of activities considered “recreational” for the purpose of the statute. Therefore the Foundation satisfied the third prong of the statute. Thus, the defendant is entitled to statutory immunity, unless Tom could show the Foundation had engaged in a willful or malicious failure to guard or warn against a dangerous condition, use, structure or activity. The Court said the phrase “willful or malicious” meant conduct which must encompass both the physical act proscribed by the statute and its injurious consequences.

Willful misconduct has been defined as intentional conduct designed to injure for which there is no just cause or excuse. Its characteristic element is the design to injure either actually entertained or to be implied from the conduct and circumstances. Alexson’s conclusory statements in his complaint, coupled with the conclusory statements in his affidavit (the admissibility of which the Court found to be dubious at best) did not raise a genuine issue of material fact. The Court said the complaint was “bereft of the factual predicate necessary to lead a reasonable person to infer that the workmen intended to injure passers by, and this plaintiff in particular, by their actions.”

The dismissal of this ridiculous suit was upheld.

– Tom Root

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Case of the Day – Friday, June 22, 2018

IT WAS A DARK AND STORMY NIGHT …

 

Snoopy made the opening line of Paul Clifford one of the most famous in the history of pedestrian writing.

Snoopy made the opening line of Paul Clifford one of the most famous in the history of pedestrian writing.

Or so begins Edward George Bulwer-Lytton’s 1830 novel, Paul Cliffordthe opening line now famous thanks to Snoopy in the comic strip Peanuts and the fiction contest that bears the author’s name. It’s a bit ironic:  we are enjoying as much light today as any time this year (well, all right, three seconds less than yesterday, to use Boston as an example, but that’s a rounding error). Yet today we’re going to look back on a really dark and stormy night, when the aptly-named farmer Hay drove his truck through the Ohio countryside, past the golf course owned by a local lodge of the Benevolent and Protective Order of Elks.

On this particular dark and stormy summer night, an oak tree by the side of the road, weakened and decayed after a lightning strike several years before, fell on Farmer Hay, bringing to a sudden end his time on this mortal coil. Subsequently, his estate sued the Elks, claiming the Lodge had been negligent in failing to do anything about the hazardous tree, despite the fact that its decrepit state was well known to the duffers.

Relying on rather thin precedent, the trial court threw out the Hay descendents’ claim, holding that a rural landowner had no duty to protect travelers on the highway from the natural condition of trees on his or her property. The matter reached the Ohio Supreme Court in 1951.

The Supreme Court began with the observation that the law permitted every landowner to make such use as the person’s property as he or she wishes, provided it is used in such a manner as not to invade the rights of others. It then added flesh to that general rule, holding that while a rural landowner has no duty to inspect trees adjacent to a highway, when he or she has knowledge – actual or constructive – of a patently defective condition of a tree which may injure a traveler, the landowner must exercise reasonable care to prevent harm to people lawfully using the highway.

While there was little precedent in other states for the duty to act defined by the Hay court, the decision hardly came as a surprise. The American Law Institute’s Restatement of the Law of Torts had previously held that while “[n]either a possessor of land, nor a lessor, vendor or other transferor thereof, is subject to liability for bodily harm caused to others outside the land by a natural condition of the land other than trees growing near a highway.” But it contained an important caveat. The Restatement – which is written with a goal of identifying trends in the law – noted that its drafters expressed “no opinion as to whether a possessor of land who permits trees not planted by himself or his predecessors to remain on a part of the land near a public highway is or is not under a duty to exercise reasonable care to prevent their condition becoming such as to involve a grave risk of causing serious bodily harm to those who use the highway and the burden of making them safe is not excessive as compared to the risk involved in their dangerous condition.”

The ALI presciently foresaw evolution of the duty defined in Hay and cases in other jurisdictions that followed it. The Hay rule has since become a standard of care imposed by virtually all states.

These things happen ... but the landowner may be liable, depending on what he or she knew and when he or she knew it.

These things happen … but the landowner may be liable, depending on what he knew and when he knew it.

Hay v. Norwalk Lodge No. 730, B.P.O.E, 92 Ohio App. 14, 109 N.E.2d 481 (Court of Appeals, 6th Dist., 1951). Farmer Hay was driving his truck on New State Road when a large limb or limbs fell from a tree located on land owned by the local chapter of the Benevolent and Protective Order of Elks. The limb struck the top of the cab, injuring Mr. Hay so that he lost control of the truck, crashed into a tree, and died as a result of his injuries.

The late Mr. Hay’s estate sued, alleging that the tree had been struck by lightning several years before, and was extensively damaged and weakened as a result. The complaint said the damage to the tree was visible and apparent for several years, and that after the tree was struck by lightning, apparent natural processes of decay set in and further weakened the tree and its branches, which extended over and above the traveled portion of the road. Finally, the complaint averred that the Elks knew that portions of the said tree extended over the road, that it had been struck by lightning, and the tree was thus weakened. The complaint concluded that the Elks had neglected to remove or to brace the damaged portions or to do anything to make the tree secure, and failed and neglected to give notice to motorists of the danger.

The trial court held that the Elks had no duty to Mr. Hay to alert him as to the danger tree, or to remove or trim it. It threw out the complaint. The matter ended up before the Ohio Supreme Court:

Held: The Supreme Court reversed, and sent the case back for trial. It held that every person may make such use as he or she will of real property, provided he or she uses it in such manner as not to invade the rights of others. But in the case of rural landowners, this means that although there is no duty imposed upon the owner of property abutting a rural highway to inspect trees or to ascertain defects which may result in injury to motorists, an owner having actual or constructive knowledge of a patently defective condition of a tree which may result in injury to motorists must exercise reasonable care to prevent harm to people lawfully using the highway.

The Court noted that the only Ohio holding even close to its conclusion in this case was one in which the owner of property upon which a tree was situated was held to have the duty to exercise ordinary care for the safety of pedestrians using the sidewalk. However, the American Law Institute in had noted in Restatement of the Law of Torts that its members were split, and thus had no opinion on “whether a possessor of land who permits trees not planted by himself or his predecessors to remain on a part of the land near a public highway is or is not under a duty to exercise reasonable care to prevent their condition becoming such as to involve a grave risk of causing serious bodily harm to those who use the highway and the burden of making them safe is not excessive as compared to the risk involved in their dangerous condition.”

Public policy opposes burdening rural landowners with the duty of inspecting their property for hazard trees ... but if the landowner knows there's a problem, he or she should attend to it.

      Public policy opposes burdening rural landowners with the duty of inspecting their property for hazard trees … but if the landowners know of a problem, they should attend to it.

The Ohio Supreme Court observed that the law imposes upon every member of society the duty to refrain from conduct of a character likely to injure a person with whom he comes in contact and to use his own property in such a manner as not to injure that of another. The justices reviewed cases from other states, which led the Court to the “conclusion that in the absence of knowledge of a defective condition of a branch of a tree which in the course of natural events is likely to fall and injure a person in the highway, no liability attaches to the owner of the tree. On the other hand, where the owner has knowledge of the dangerous condition of the tree or its branches, it is his duty to exercise reasonable care to prevent the fall of the tree or its branches into the highway.” The Court agreed with a Minnesota case that held that it was unreasonable to require the owner of rural land to inspect his property with regard to naturally arising defects, because of the burden thereby imposed upon the owner of large and unsettled tracts of land. But the Court rejected the Minnesota case’s conclusion that the owner was not liable even if he had actual knowledge.

The Ohio Supreme Court instead followed dictum from a Federal court decision that “an owner of property abutting a highway has the obligation to use reasonable care to keep his premises in such condition as not to endanger travelers in their lawful use of the highway. If he fails to do so and thereby renders the way unsafe for travel, he should be liable therefor. It is, therefore, concluded that, although there is no duty imposed upon the owner of property abutting a rural highway to inspect growing trees adjacent thereto to ascertain defects which may result in injury to a traveler on the highway, an owner having knowledge of a patently defective condition of a tree which may result in injury to a traveler on a highway must exercise reasonable care to prevent harm from the falling of such tree or its branches on a person lawfully using the highway. If the danger is apparent, which a person can see with his own eyes, and he fails to do so with the result that injury results to a traveler on the way, the owner is responsible because in the management of his property he has not acted as a reasonably prudent landowner would act.”

Because the complaint filed by the Hay Estate alleged that the Elks had actual knowledge of the decayed tree, the complaint made out a claim that, if true, would entitle the Estate to recover. The case was reinstated and sent back to the trial court.

– Tom Root

TNLBGray140407

Case of the Day – Thursday, June 21, 2018

THE STIG

The Stig

Jim and Cindy Muncie found oil on their land.

Sadly, this was not a cause for champagne. The oil was #2 heating oil, a thousand gallons of it that had come spilling down the hill to flood their house. It was a mess.

The estate of the deceased woman whose oil tank had ruptured settled a federal court suit for $60,000, the restoration amount the Muncies figured it would take to clean up the slick. But as soon as they got the $60,000, the Muncies – deciding that cleanup compensation just wasn’t enough – sued the estate in state court for “stigma damages.”

Stigma damages, which I caution Top Gear fans has nothing to do with The Stig, are what they sound like. Remember how you felt when you learned that your childhood hero Captain Kangaroo did not fight beside Lee Marvin in the Battle of Iwo Jima? And that he was not really a captain and had never been a kangaroo? After that, there was a stigma attached to ol’ Cap that even Dancing Bear could not erase.  

Properties can be like that. Considering buying Yellowstone Park from a federal government that’s a little strapped for cash to pay Medicare and Social Security for us baby boomers? How much you’re willing to shell out for a national treasure might be affected by knowing that you’re standing in the caldera of the one of the biggest volcanoes on earth. On a smaller scale, a buyer might hesitate to write a check knowing that his or her prospective home had been steeped in hydrocarbons, even if there was no tangible evidence that the mishap had ever occurred.

We recently focused on restoration costs being awarded where those costs exceeded the reduction of value suffered because of a trespass and subsequent damage. Today’s case is the obverse of that coin, where the restoration costs may not be quite enough to fully pay for the loss suffered, a loss due to the “stigma” attached to the property because of the damage.

Muncie v. Wiesemann, Case No. 2017-SC-000235-DG (Supreme Court, Kentucky, June 14, 2018). A faulty underground home heating oil tank on an unoccupied property cracked open one cold December day, spilling 1,000 gallons of fuel oil. The oil flowed downhill, flooding the nearby residence of Cindy and Jim Muncie.

Although Patricia Wiesemann, who was handling the affairs of the estate that owned the unoccupied property, hired contractors to remove the heating oil and prevent further contamination, the leaking continued to damage Jim and Cindy’s place. The contamination caused the Kentucky Environmental Response Branch to declare an environmental emergency, implementing emergency procedures to “limit any human health or environmental impacts” at the Muncie residence.

Litigation ensued. In September 2013, the parties entered into a partial settlement. The settlement allocated $60,000 to the Muncies for restoration costs, intended to remedy actual damages to their property. In return, the Muncies agreed to dismiss all claims against Wiesemann and the Estate, except for a few reserved claims. Prominently, the partial settlement reserved “claims by the Muncies asserting the diminution of the value of their real estate due to the stigma resulting from the contamination…”

Stigma damages, as the name implies, are damages suffered from diminished value to property caused by a negative perception of a site, and call for compensation for the “stigma” to satisfy the fundamental concept that an injured party must be made whole. A perception of harm may be all that is needed to support an award of stigma damages. Such damages are intended to compensate for loss to the property’s market value resulting from the long-term negative perception of the property in excess of any recovery obtained for the temporary injury itself. Were this residual loss due to stigma not compensated, a plaintiff’s property would be permanently deprived of significant value without compensation.

A month after signing the settlement, the Muncies sued Pat in state court for negligence, trespass, and permanent nuisance. Pat filed a motion for summary judgment, arguing that the partial settlement barred the state action because the Muncies were fully paid for the actual damages the contamination caused to their property. She claimed that as a matter of law stigma damages can only be recovered when paired with an actual damages award.

The trial court said while stigma damages can be considered as part of restoration damages – the cost to repair the property – stigma damages cannot be awarded separate from restoration damages. Because the Muncies settled their restoration claim in the partial settlement agreement, the trial court held, no further claim existed. The Muncies’ claim for stigma damages was dismissed.

The Muncies appealed.

Held: Stigma damages can be awarded in Kentucky, and that award can be separate from restoration damages.

Pat complained that because the $60,000 restoration payment was accepted by the Muncies in the partial settlement agreement, they could not now separately seek stigma damages for the diminution in value of their property. To do otherwise would result in a “double recovery” for the Muncies.

The Supreme Court disagreed. In order to recover stigma damages, it held, plaintiffs must have suffered actual property damage. If injured parties receive repair costs that make them whole, then they cannot recover stigma damages that would compensate them above the diminution in their property’s value. But if restoration damages for repair costs is insufficient to make the injured party whole, then a recovery for stigma damages up to the monetary value of the diminution may be proper.

In other words, the Court said, damages recoverable for an actual injury to real property are equal to the sum of the costs of repair and the difference in fair market value of the property before the injury and after it has been repaired. If there is a difference in fair market value after the physical injury has been repaired, then that is the appropriate measure of stigma damages.

Stigma damages measure the amount by which a real property’s value is diminished in excess of repair costs. Here, once the oil was removed from the Muncies’ property and the environmental response team departed, stigma was what remained, and it – by its nature – it cannot be repaired.

“Unquestionably,” the Court presciently ruled, “the devil is in the details for these types of cases. We can only provide broad principles of law. The method for the computation of damages is easily stated but can be difficult to understand. They can also be difficult to prove.” However, when property is damaged by trespass, the degree of the damage is determined at the moment such injury is completed. The recovery shall be the difference in value of the property before the injury occurred, and the value immediately after it is completed. The after-value shall take into account stigma damages, if any. Damages will also include the cost of any repair or remediation.”

Because there was no evidence taken on the stigma damage, if any, suffered by the Muncies, the Supreme Court of Kentucky sent the case back for a factual determination as to whether they were fully compensated for the diminution in fair market value of their property by the $60,000 partial settlement for repair.

– Tom Root

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Case of the Day – Wednesday, June 20, 2018

ASSUMPTION OF RISK

blamagame170112Today we have yet another cautionary tale from the annals of “I got hurt, so I need someone to sue.”

Dan was a healthy, 26-year old recreational football league kind of guy. He was playing flag football with some buddies in the Dome Football League, using an indoor facility owned by the Town of Tonawanda. Of course, you need to mark the boundaries of the football field, and — necessity being the mother of invention — someone used a softball glove as a marker.

Dan stepped on the glove during a moment of football derring-do, and he was injured. So of course, he threw a yellow hankie at the Football League and the Town. The Town and League threw their own red flags, asking the booth, that is to say, the trial court, to review and throw out the case. The trial court refused to do so.

The appellate court, however, penalized Dan 15 yards and loss of down. When someone engages in an injury-prone event, like flag football, he or she (usually “he” in case of football, but there are exceptions), consents to the reasonably foreseeable consequences of the activity. There are always sidelines markers, the Court observed, and Dan didn’t show that using a softball mitt was created a danger any greater than using the usual cones or plastic flags employed by the League.

So what does this have to do with trees? When people engage in outdoor activities in which they come in contact with trees, roots, stumps and holes in the ground, it’s always a fair question whether they assumed the risk when they elected to ski, mountain bike, run a 5k or whatever they were doing at the time.

If you’re a Dan (or a Danielle), be prepared to prove that the hazard you confronted was something over and above what you could reasonably expect to encounter in the activity. If you’re playing football, expect to be hurt. You’re rarely be disappointed.

tfootball141126Gardner v. Town Of Tonawanda, 850 N.Y.S.2d 730 (N.Y.A.D. 4 Dept., 2008). Dan Gardner, a 26-year old flag football enthusiast, slipped and fell on a baseball glove that he and his buddies were using as a sideline marker during a recreational indoor flag football game organized by the Dome Football League and played in a facility owned by Town of Tonawanda. Dan was experienced in playing recreational flag football games on the indoor artificial turf field and he knew the sidelines of the field were marked with orange plastic cones and that the referee had discretion to use other types of markers on the sidelines as well. Dan said he was unaware that a baseball glove was being used as a sideline marker, but he didn’t have any evidence supporting his contention that the risk of slipping on the baseball glove was greater than the risk of slipping or tripping on the cones or plastic flags usually used as sideline markers. But that didn’t stop him from suing the Football League and the Town. The defendants moved for summary judgment, but the trial court denied it.

crayon170112

Maybe so, but the big crayon assumed the risk.

Held: Summary judgment was granted to the Town, and the case dismissed. The Court concluded that Dan assumed the risk of the injuries that he sustained because the use of the baseball glove as a sideline marker didn’t create a dangerous condition over and above the usual dangers that are inherent in recreational flag football.

The doctrine of primary assumption of the risk generally constitutes a complete defense to an action to recover damages for personal injuries and applies to the voluntary participation in sporting activities. As a general rule, the Court said, participants properly may be held to have consented by their participation to those injury-causing events which are known, apparent or reasonably foreseeable consequences of their participation. Such injury-causing events include the risks that are inherent in and arise out of the nature of the sport generally and flow from such participation.

– Tom Root

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