AN ANALYSIS OF SHARON P. V. ARMAN, LTD.

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On December 16, 1999, the California Supreme Court filed its decision in the matter of Sharon P. v. Arman, Ltd., dealing with the liability of landlords of commercial properties for the criminal acts of third parties against the landlord’s tenants.  We decided to provide an analysis here for several reasons.  First, the decision is a good review of the landlord’s liability generally, regardless of the State in which is property is located, where that liability is based on common law concepts of tort, as in California.  Second, the decision is a restriction of a move toward what amounts to strict liability based on a notion of “inherently unsafe” structures and activities, which may be influential in other states.  Third, the decision, the full text of which is included here, gives insight into the thought process of courts arriving at decisions in tort actions, which should be of value to all landlords evaluating their potential liability in not only the tenant security, but also other areas.  Although the decision has not yet been certified for publication, which is what makes it a binding precedent, we believe that the overwhelming likelihood is that it will be, and that there will be enough discussion about it in the literature in any event to justify comment now.  Because this article is designed for non-lawyers, we will not go into the procedural details of the decision, which can be obtained by those who read the full text.

The building involved is divided into three parts.  First, on the ground floor, with a separate entrance, is a bank.  Second, on the other side of the building, with entrance and egress away from the bank, is a single-level underground parking garage, used only by tenants of the building.  Third, above the parking garage, is an office building with elevator connections to the garage.  One day, when leaving her office to go to her car in the garage, the Plaintiff, Sharon P., was sexually assaulted there.  Plaintiff purchased the building in 1982, and until the rape, which occurred in 1993, there had been no known instance of criminal activity in the garage or office building.  Seven armed robberies of the bank occurred between 1991 and 1993, but none of these impacted the building or garage in any material way.  On the day of the rape, several lights were out in the garage, leaving several darkened areas that provided vantage points for persons lying in ambush.  The garage smelled of urine, and had for months, indicating that transients might be present.  There were several darkened storage areas, and a security camera in the garage had gone unserviceable and had never been repaired.  There were no security personnel nor did management routinely inspect the garage area.  The Defense supplied testimony from an expert stating that since there had been no criminal activity in the garage, the posting of security personnel would have been an unreasonable burden in view of the garage’s small size, and that the bank robberies would not put a reasonable person on notice that there might be criminal activity in the garage.

The trial court, on motion for summary judgment, found there was no liability on Defendant’s part and granted judgment for Defendant.  The Court of Appeal reversed.  The Court of Appeal held that commercial parking structures were inherently dangerous and by their nature facilitate crime.  Notwithstanding the lack of previous criminal activity similar to that of which the Plaintiff was the victim, such activity was foreseeable per se.  The Court of Appeal then held that in view of this, Defendant was under a duty to provide reasonable security, which might or might not include security guards.  The Defendants submitted petitions for review, which the Supreme Court granted.

The big issue for the Supreme Court was whether the Plaintiff owed Defendant a duty to provide reasonable security in an effort to prevent her injury.  In order to arrive at that decision, the Supreme Court first had to decide whether there are structures or activities which are inherently dangerous, so as to create a duty to provide such security as a matter of law, automatically, without inquiry into the facts of the particular case.  Additionally, if this was not the case, then the Supreme Court had to determine what Defendant’s standard of care was, so as to determine whether a duty to Defendant arose.

Courts have been perceived to be moving generally toward what amounts to an insurance theory of tort law.  In other words, if you cause harm, you pay for it.  But liability under tort law is based on negligence.  In reality, the idea of liability for negligence is still alive and well and played a great part in this case.  The Court began its discussion of the issues with the following statement:

“To prevail on her action in negligence, plaintiff must show that defendants owed her a legal duty, that they breached the duty, and that the breach was a proximate or legal cause of her injuries.”

Ideas of strict liability for inherently dangerous activities or creating inherently dangerous conditions have been around for a long time.  For example, one who transports nitro glycerine in a truck is engaged in an inherently dangerous activity, and if an explosion occurs, liability is strict, no matter how carefully the transporters tried to be.  Strict liability has always been an exception, however, and the Court reaffirmed that concept here.

The first of the Court’s holdings was that there is no such thing as an inherently dangerous building or business activity.  In so doing, the Court emphasized the statement of the landlord’s duty contained in an earlier Supreme Court case.

“By now it is well established that landowners must maintain their premises in a reasonably safe condition, and that in the case of a landlord, the general duty of maintenance includes ‘the duty to take reasonable steps to secure common areas against foreseeable criminal acts of third parties that are likely to occur in the absence of such precautionary measures.’”

As the court said later in its decision:

“’Moreover, any duty premised on the idea that the business attracts crime ignores the fact that many such businesses are economically viable precisely because they do not require any on-site labor.  Once proprietors are forced to provide security guards at all-night laundromats or at bank teller machines, those operations cease to become profitable.  It serves no one to impose a duty which, rather than protecting customers, forces the businesses which they frequent to close.’  (Kaufman, When Crime Pays:  Business Landlords’ Duty to Protect Customers from Criminal Acts Committed on the Premises (1990) 31 S. Tex. L.Rev. 89, 112-113, fns. omitted.)  Were we to find that the occurrence of violent crime in commercial underground parking structures is highly foreseeable as a matter of law, we would be opening the door to virtually limitless litigation over what other types of property could also be characterized as ‘inherently dangerous.’”

Having reaffirmed the original rule, the court set about to analyze the way a duty to provide security arises, and what level of security must be provided.  In doing so, the court rejected, as it had in earlier cases, the idea that before the landlord suffers liability to a victim, a previous person must first have been a victim of the same type of crime.  The landlord does not get one free rape before he must act to prevent assaults on his tenants.  The conclusion the court came to is that “duty in such circumstances is determined by a balancing of ‘foreseeability’ of the criminal acts against the ‘burdensome, vagueness, and efficacy’ [sic] of the proposed security measures.”

The court went on from here to find that the Plaintiff had not presented evidence sufficient to show that the obvious deficiencies in the building had been the legal cause of her injury and reversed the Court of Appeal, affirming the trial court’s decision.

Under this decision the landlord’s liability would be controlled by classic principles of tort law, not by judicially adopted principles of public policy imposing strict liability.  This is good news, but not the only news.  The fact is that landlords also have a duty to so manage the common areas of their buildings as to provide against foreseeable criminal acts, as well as all the other elements of maintenance required for their common areas.  Although Sharon P. is a case involving a commercial property, its reasoning and holdings apply with equal facility to residential properties with common areas.  Those who read the full text of the decision will find the concurring and dissenting opinions of great interest as they demonstrate that this is an area of liability that is far from settled.