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ISSUE: Second Quarter 2009
Realizing The Risks:
Injury And Liability In Self Storage
By Scott Zucker
Self storage operators are not immune from the potential risk of personal injury claims brought by their tenants or any persons who visit their facilities. As business owners who “invite” people onto their property, there is always a risk of possible injuries. These business owners assume a certain duty of care for the persons coming onto their property, especially since the business may be benefiting in the form of revenue from the sale of goods or services to these invitees.
Recognizing the risk of such claims, business owners, including self storage operators, typically approach the possibility of claims in three ways. First, the business owner commonly looks to the purchase of liability insurance to cover the potential cost of possible injury claims and the cost of the legal defense arising from such claims. This type of insurance is readily available from both standard and specialty insurance carriers and should be an essential part of the cost of any business operation. For self storage operators, the cost of the insurance will depend on the size of the facility, the history of such claims, the maintenance of the facility, and the level of deduction requested. If a facility has a strong history of proper operation, the cost of such liability insurance should be minimal, especially compared to the cost of the property component of the insurance which covers the replacement cost of the buildings on the property and other improvements.
Second, the business owner will look to its own operations to seek to prevent such claims from arising. Self storage operators, in particular, may focus on maintaining its roll-up doors to avoid injuries during their operation or may have safety procedures in place to ensure that its driveways and walkways are properly salted during winter weather to avoid falls. There is a significant list of possible maintenance and safety procedures that could be utilized by an attentive self storage operator. Having a positive approach to maintenance and measures to prevent injuries will not only reduce the likelihood of such injuries, but will also impact the cost of the liability insurance. It is important that facility operators keep written records of the maintenance that they perform on their facilities. These records can be used to demonstrate, in court if necessary, that the facility operator acted in good faith (and has written proof of it) in attempting to maintain its property. If a facility has a maintenance log setting out the inspections that are regularly made and any repairs performed, this should be sufficient. It is equally important to keep records of repairs by others, especially any manufacturer repairs. This may become relevant if the injury arises from equipment or systems that have product defects. As for a facility’s safety procedures, having them in writing and also maintaining a log of their accomplishment will constitute significant evidence of the care taken by an operator to avoid injuries at its facility.
Third, the facility operator will focus on the terms of its lease agreement with its tenant in an attempt to contractually restrict the tenant’s rights against the facility in the area of personal injury claims. Language in the lease might look something like: “Owner and Owner’s agents and employees shall not be liable whatsoever to any extent to Occupant or Occupant’s invitees, family, employees, agents, or servants for any personal injury or death arising from Occupant’s use of the storage space or premises from any cause whatsoever including, but not limited to, the active or passive acts or omissions or negligence of the Owner, Owner’s agents, or employees.”
These “exculpatory” provisions, especially those that involve the release of injury claims, are fiercely debated in the courts throughout the country as to their enforceability. Courts in many states will simply disregard them completely as being against public policy (meaning that the courts find that the effort of a business owner to have their customers release any of their rights as unfair). Other courts have found that as long as the release provision is clear in its writing and noticeable by the customer (large type and bold) that such provisions would be appropriate. It is generally recommended that notwithstanding the state that a storage facility operator may be located, the operator utilize such personal injury release provisions in case it is later found to be enforceable (courts can change their minds depending on the facts of the case).
Claims for injuries on self storage properties are not limited to tenants who injure themselves while storing or moving their property. Personal injury claims can also come from friends or family members of the tenant, employees working for a tenant, potential tenants who are visiting the facility before they rent, persons making deliveries, and even persons who are performing work for the facility operator.
How the injury claim is addressed will depend on the type of person making the injury claim. For example, if it is a tenant who is making the claim, the facility will be able to use the terms of its lease agreement to attempt to exculpate (or release) itself from liability. The facility will assert that the tenant waived its right to bring any personal injury claims as part of the facility’s agreement to rent the tenant its space. In other words, the facility would contend that the tenant is bound by its agreement that it would not bring any injury claims against the facility in consideration for the facility’s agreement to rent the storage space to the tenant at the rate provided. The facility would argue that had the tenant not released the facility from such claims, that the facility would have charged a much higher rental rate for the purpose of paying a much higher cost for its liability insurance.
If the claim is brought by a contractor working for the company or even a person making deliveries, it may be that any injury they suffer will be covered by that person’s employer in the form of workers compensation insurance. Hopefully, to the extent there is some coverage to cover the damages from the injury to the non-tenant, there will be a more limited risk that the injured party will look to the facility to recover for its damages.
If the claim is brought by a friend or family member of the tenant, typically the facility operator would again look to the terms of its lease to contend that the tenant agreed to “indemnify” the facility from any such claims brought by people who the tenant brought to the facility (like a friend or family member). An indemnity provision might look like: “The Occupant will indemnify and hold the Owner harmless from and against any and all manner of claims for damages or lost property or personal injury and costs, including attorneys’ fees arising from the Occupant’s lease of the Space on the Property or from any activity, work, or thing done, permitted or suffered by the Occupant in the Space or on or about the Property.” Under such an argument, the facility would claim that to the extent the facility was found responsible for the injury (and the costs to the person suffering such an injury) that the facility (or more likely its insurer who pays out on the claim) could then look to the tenant to recover any of those costs as part of its contractual indemnity to the facility. Unfortunately, the ability to recover under an indemnity claim is limited to the financial strength of the tenant. If they do not have much money, the indemnity will not be very valuable.
Personal injuries on business properties are one of the inherent risks of running a business. Self storage facilities are just as likely to have a personal claim as are supermarkets where a customer claims an injury from a slip and fall. Recognizing the risk should motivate operators to obtain the necessary insurance protection, strengthen their maintenance and safety procedures, and take an additional look at its lease protections. By doing so, a self storage operator may be able to limit its exposure to claims and certainly limit its risk that one injury on its property will ruin its business.
Scott Zucker is a partner in the law firm of Weissmann Zucker Euster, P.C. in Atlanta, Georgia. Scott specializes in business litigation with an emphasis on real estate, landlord-tenant, and construction law. He is a frequent lecturer at national conventions and is the author of Legal Topics in Self Storage: A Sourcebook for Owners and Managers.
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