Woodland Hills personal injury attorney Barry P. Goldberg is consulted more often than you might think by potential clients injured on the property of a home they were thinking about buying. It is a relatively common occurrence for potential buyers to be wondering a property for sale and slipping or tripping on a stair or slippery floor. It is easy to understand why— potential buyers are looking around— not down. They are by definition unfamiliar with the property and are more likely to miss a step or small defect. But, can a real estate actually be liable for an injury on a piece of property they do not even own?
The answer to this question may surprise you—-maybe “yes” or maybe “no.” While the actual liability depends on the unique facts of the particular case, one thing is absolutely certain—-the defense and indemnity costs will be significant. A related question is whether a particular real estate agent is even covered when he or she acts as an “independent contractor” who receives a 1099 form from an associated broker. Remember, as a personal injury attorney, we cast a broad net of all potential defendants and let those defendants sort out who is covered and who may be responsible.
The “Rowland” Factors
As in any premises liability case, to establish negligence, a plaintiff must prove duty, breach of duty, causation and damages. (Ortega v. Kmart Corp. (2001) 26 Cal.4th 1200, 1205.) Whether a duty should be imposed on a defendant depends on a variety of policy considerations, known as the Rowland factors. (Rowland v. Christian (1968) 69 Cal.2d 108, 112-113 (Rowland).) These factors include, inter alia, the foreseeability of harm to the plaintiff, the burden to the defendant and the consequences to the community of imposing the duty. As stated in Osborn v. Mission Ready Mix (1990) 224 Cal.App.3d 104, 121-122 “Duty . . . depends on various policy considerations, the most important of which is the foreseeability of injury to another”. “The court’s task in determining whether a duty exists is not to decide whether a particular plaintiff’s injury was reasonably foreseeable in light of a particular defendant’s conduct, but rather to evaluate more generally whether the category of negligent conduct at issue is sufficiently likely to result in the kind of harm experienced that liability may appropriately be imposed on the negligent party.” (Elsheref v. Applied Materials, Inc. (2014) 223 Cal.App.4th 451, 459-460, italics omitted.)
Jacobs v. Coldwell Banker Residential Brokerage Co. (Aug. 14, 2017) (2nd App. Dist.)
In the very recent case of Jacobs v. Coldwell Banker (Aug. 14, 2017) (2nd App. Dist.) (Ventura County), the Court of Appeal upheld the trial court’s summary judgment for the broker—on those particular facts. In that case, the potential buyer stepped onto a diving board to view the inside of an empty swimming pool. The buyer was seriously injured when the diving board collapsed and the potential buyer plummeted into the empty swimming pool.
The Jacobs Court was careful to point out that there were no facts that the agent knew or should have known that the diving board was likely to collapse. There were no cracks in the diving board and a pool inspection report did not identify the diving board as a hazard. Further, the listing issued a warning of the obvious— “[P]lease use CAUTION around the empty pool.” Essentially, the Court found that an empty pool was open and obvious and that it was unforeseeable that a potential buyer would mount a diving board to get a closer look. (All you Real Estate Brokers know that this is a false assumption! Potential buyers will go almost any place in an open house!)
It is a Foregone Conclusion that an Agent Owes a Duty of Care
What is most interesting about the Jacobs case is that the Court presupposes that the showing agent owed a duty of care to visitors to the premises of an open house. During the open house, the agent “takes control” of the premises and the commensurate duty to use reasonable care to make certain that potential buyers are not injured. Under the Rowland factors, the agent can reasonably foresee that visitors could be injured unless he or she takes some precautions to protect the public. Some of those precautions are statutory and some are just plain common sense.
An agent must undertake a reasonable inspection of the property to identify hazards or problems which could pose a threat to unsuspecting visitors. Sometimes that is a more formal process like the pool inspection in the Jacobs case. Other times, it is common sense to simply walk the property and the areas which visitors have access to see if hazards exist. If there is a crack in a walk way or an over-waxed floor, simple precautions can be very effective.
Beware of Slippery Walkways!
In my experience, slippery walkways pose the most common hazard at open houses. Not only are floors meticulously waxed before an open house, but plants and planters are watered to show best. An on sight agent should be able to identify and correct wet walking surfaces before an open house!
In the Jacobs case, the court alluded to the “wet walkway” problem by distinguishing Martinez v. Chippewa Enterprises, Inc. (2004) 121 Cal.App.4th 1179. In that case, the court determined there was a practical necessity for the plaintiff to walk across wet pavement because the pavement was the “principal if not sole access way from the street to defendant’s building . . . .” (Id. at 1185.) It is easy to draw a parallel to the pathway to the front of a house or the backyard hardscape and “weeping” planters.
Is the Agent Insured for the Loss?
This is a tricky question. The answer—- Sometimes! In speaking to prominent Allstate Insurance Broker Robert Feldman, he contends that more and more general liability insurers are denying claims made against agents because they 1) independent contractors, 2) are given 1099’s, 3) may be excluded under a broker’s business owner’s policy, and 4) are excluded from personal liability policies because they are “in the course and scope of employment” at the time of the loss. He adds that this potential personal liability is compounded when the loss occurs when an agent is driving potential buyers. Most major insurers will enforce the “course and scope” exclusion in an automobile liability policy when an agent injures clients in an auto accident.
Mr. Feldman strongly urges all real estate agents and brokers to consult with an experienced agent and consider purchasing liability coverage related to all real estate activities.