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By Alan Nochumson*
Pennsylvania courts are very hesitant in permitting lawsuits which merely re-cast an ordinary breach of contract claim into a tort claim. As such, whenever a tort claim is brought between contractual parties, the courts focus on whether the “gist of the action” is defined by the terms of the contract or by the larger social policies embodied by the law of torts.
In the context of a landlord-tenant dispute, the Superior Court of
Pennsylvania in Reed v. Dupuis recently held that the “gist of the action” doctrine did not prevent
a tenant, as a matter of law, from suing a landlord under a
negligence theory.
In Reed, the landlord
leased residential property to the tenant pursuant to a written
lease agreement. After
substantial rain caused flooding to the basement of the property,
the tenant was ordered by the landlord to run fans and increase the
heat in the basement. While following the landlord’s instructions, the tenant offered to
remove the carpet to the basement, seal the basement, and install
new carpeting. The
landlord declined that offer. The tenant also requested that the
landlord retain the services of a professional cleaner, but that
request was refused by the landlord as well.
When water continued to infiltrate the basement, the landlord orally
promised to rectify the situation. Since the landlord never did so, mold formed in the basement
and spread throughout the property, which allegedly caused physical
injury to the tenant and damage to her personal property.
After the tenant voided the lease agreement pursuant to the express
warranty of habitability clause, she filed a single-count negligence
complaint against the landlord, alleging, among other things, that
the landlord breached her duty to exercise reasonable care by
failing to correct the water infiltration. The landlord then filed a preliminary objection in the nature
of a demurrer, arguing that she did not owe the tenant a duty of
care, as a matter of law, and that the lease agreement’s exculpatory
clause barred the tenant’s claim.
In sustaining the preliminary objections and thus dismissing the
complaint, the trial court, sua sponte, found that the negligence claim was barred by the
“gist of the action” doctrine because all of the issues set forth in
the complaint relate to the terms of the lease agreement. The trial court reasoned that the tenant “ha[d] improperly
based her claim on negligence grounds when it is clear that the
basis for the alleged liability arises from a failure to perform
contract obligations.” The trial court noted that the dispute centered upon the allocation
of maintenance duties as set forth in the lease agreement and a
“promise” by the landlord to rectify the water infiltration problem.
The tenant then appealed the trial court’s order dismissing the
complaint and sustaining the preliminary objections.
The Superior Court found that the complaint was legally sufficient
to state a claim of negligence and that the trial court erred, as a
matter of law, when it dismissed the complaint under the “gist of
the action” doctrine.
In her appeal, the tenant argued that the trial court erred when it
determined that her negligence claim was based on contract
principles and therefore barred under the “gist of the action”
doctrine. She
specifically contended that the complaint properly stated a claim
for negligence under sections 323 and 357 of the Restatement
(Second) of Torts and section 17.6 of the Restatement (Second) of
Property. In support of her
contention, the tenant cited the Pennsylvania Supreme Court’s ruling
in Reitmeyer v. Sprecher.
In Reitmeyer, the tenant
was injured after falling from a defective back porch and sued the
landlord for negligence. The tenant alleged in her complaint that
the landlord was aware of the defect and that he promised to fix the
porch. In reliance on
the landlord’s promise to fix the porch, the tenant executed the
lease and inhabited the leased premises.
In Reitmeyer, the Supreme
Court adopted the Restatement (Second) of Torts, section 357, which
is titled ‘Where Lessor Contracts to Repair’: “[a] lessor of land is
subject to liability for physical harm caused to his lessee and
others upon the land with the consent of the lessee or his sublessee
by a condition of disrepair existing before or arising after the
lessee has taken possession if (a) the lessor, as such, has
contracted by a covenant in the lease or otherwise to keep the land
in repair, and (b) the disrepair creates an unreasonable risk to
persons upon the land which the performance of the lessor's
agreement would have prevented, and (c) the lessor fails to exercise
reasonable care to perform his contract.”
In reversing the trial court’s granting of a demurrer, the Supreme
Court in Reitmeyer noted
that under the facts of the case, “negligence, not simply the breach
of the agreement to repair, is the gist of the action in tort and
the agreement to repair does not render the landlord liable unless
he has knowledge of the defect and the agreement to repair is
supported by consideration.” Because the landlord’s promise to fix the porch was supported
by consideration, in that the tenant entered into the lease
agreement as a result of the landlord’s promise to repair, the
Supreme Court found that the landlord could be held liable in tort
under section 357 if he failed to exercise reasonable care in
performing his promise to repair.
Similarly, the Superior Court in Reed concluded that the
tenant had properly stated a claim for negligence under section 357. The Superior Court pointed out that the landlord had
knowledge of a condition of disrepair, the disrepair created an
unreasonable risk, and she promised to fix the disrepair and failed
to exercise reasonable care in performing her promise. Moreover, the Superior Court stated that the facts alleged in
the complaint created a reasonable inference that the landlord’s
promise to fix the water infiltration was supported by consideration
because the tenant refrained from remedying the situation herself or
from hiring a professional cleaner to make the repairs.
The Superior Court then discussed why the negligence claim under
section 357 was not barred by the “gist of the action” doctrine.
Disagreeing with the trial court’s conclusion that the
dispute arose from the allocation of maintenance duties as set forth
in the lease agreement, the Superior Court emphasized that the
landlord’s liability originated from “her awareness of, and promise
to rectify, the water infiltration problem”, which, “in turn,
created a legal duty on the part of [the landlord] to exercise
reasonable care in fulfilling her promise and correcting the
disrepair - a duty that is separate and distinct from her
contractual duty/promise to simply repair the water infiltration.” In other words, the basis of complaint derived from a duty
imposed by the larger social policies embodied in the law of torts.
Following in the spirit of Reitmeyer, the Superior Court in Reed also found that the
“gist of the action” doctrine did not preclude the tenant from
seeking recovery under a theory of negligence pursuant to section
323 of the Restatement (Second) of Torts and section 17.6 of the
Restatement (Second) of Property. These sections, similar to section 357, impose on a landlord
an independent legal duty to exercise reasonable care when the
landlord undertakes to render services for a tenant and repairs
known dangerous conditions on the leased premises.
The Superior Court concluded that, based upon the facts contained
within the complaint, the legal duties found in section 323 and
section 17.6 were not created or grounded in the lease agreement,
but rather were distinct and separate obligations created by the
larger social policies embodied in the law of torts, emphasizing
that “[w]ere [it] to hold otherwise, the tort duties imposed upon a
landlord under the above-mentioned sections would be rendered
meaningless and their underlying social policies would not be given
effect.”
LESSONS LEARNED
As explained by the Superior Court in Reed, landlords can be
held liable for damages in tort despite the existence a lease
agreement. As a result,
landlords are caught in a catch-22. By agreeing to make repairs to the leased premises, landlords
may be exposing themselves to tort theories of liability which they
may not have envisioned when they entered into the lease agreement. On the other hand, landlords have a vested interest in
keeping their investment properties in good repair for obvious
reasons. Landlords could
require their tenants to make the repairs themselves, but the
tenants may not either have the financial wherewithal or incentive
to ensure that the repairs are made properly or at all. Landlords are thus forced under the Superior Court’s holding
in Reed to take the legal
risk that, if the repairs are not made properly, they will be sued
by their tenants under a tort theory of liability.
* Alan Nochumson is the sole shareholder of Nochumson P.C. where he specializes in real estate, litigation, employment and labor, and land use and zoning. Mr. Nochumson regularly speaks at and writes for trade and professional associations, local universities, and adult education programs on issues commonly confronted by businesses, individuals, and professionals. Mr. Nochumson is also President of Bear Abstract Services where he offers comprehensive title insurance, title examination, and closing services for transactions ranging from simple residential agreements of sale to complex commercial projects. He may be reached by telephone at (215) 399-1346 or by e-mail at anochumson@nochumson.com.