Opinion ID: 1851186
Heading Depth: 1
Heading Rank: 2

Heading: Commercial Landlord's Duty to Disclose

Text: The trial court ruled as a matter of law that the landlord did not have a duty to disclose a latent defect in the building because there were no personal injuries and the parties entered into a commercial lease as opposed to a residential one. The trial court based this ruling on Bellemare, supra, which involved a situation where Bellemare leased farmland from the landlord in 1979. Later in that year, Bellemare was injured when he fell from a ladder attached to a grain bin located on the leased land, and sued the landlord and others for breach of warranty, negligence, strict liability and negligent maintenance. The bin was sold to the landlord twelve years earlier. In discussing premises liability imposed upon a landlord, we held that: Generally, the common law imposes upon landlords no liability to their tenants or other entrants for injuries due to dangerous conditions on the leased premises. See, e.g., Newman v. Sears, Roebuck & Co., 77 N.D. 466, 43 N.W.2d 411 (1950); Reporter's Note to Introductory Note to Chapter 17, Restatement (2d) of Property (1977); Comment a Restatement (2d) of Torts, § 356 (1965). The general rule of nonliability is subject to a number of exceptions. See, e.g., Restatement (2d) of Property, §§ 17.1-17.7 (1977); Restatement (2d) of Torts, §§ 357-362 (1965). See also, Anderson v. Kroh, 301 N.W.2d 359 (N.D.1981); Francis v. Pic, 226 N.W.2d 654 (N.D.1975); Huus v. Ringo, 76 N.D. 763, 39 N.W.2d 505 (1949). Bellemare, supra at 740. We reaffirmed the general common-law rule of landlord nonliability (absent certain exceptions) notwithstanding the abandonment of the common-law categories of licensees and invitees. In Francis v. Pic, 226 N.W.2d 654 (N.D.1975), we were confronted with a situation wherein a social guest of a lessee brought an action against a landlord for injuries she sustained when she fell down a flight of steps in a rented one-family home. We cited with approval section 358 of the Restatement of the Law, Second, Torts, which reads: A lessor of land who conceals or fails to disclose to his lessee any condition, whether natural or artificial, which involves unreasonable risk of physical harm [1] to persons on the land, is subject to liability to the lessee and others upon the land with the consent of the lessee or his sublessee for physical harm caused by the condition after the lessee has taken possession, if ..... (b) the lessor knows or has reason to know of the condition, and realizes or should realize the risk involved, and has reason to expect that the lessee will not discover the condition or realize the risk. Restatement (2d) of Torts § 358 (1965) (footnote supplied). [2] We held in Pic that the general nonliability rule was not applicable when the landlord knew or had reason to know of a condition on the land at the time the lease was entered into which would involve a foreseeable and unreasonable risk of harm to persons where the nature of the condition is such that the landlord would have reason to expect that the lessee would not discover the defect or appreciate its risk. Pic, supra . Pic and Bellemare are conceptually dissimilar to this case. The landlord in Bellemare made no representations to Bellemare regarding the safety of the ladder from which he fell. Likewise, the landlord in Pic made no representations as to the suitability of the stairway. In Capsco's case, Savageau, the landlord's leasing agent, made several affirmative representations to Capsco prior to Capsco entering into the lease. In his deposition, Savageau testified that: A.... He asked me, Are the utilities on? And I said, No, they are not; they're off. ..... A.... He [Puklich] was well aware of the fact that there were not any utilities into the building, because I told him so. Q. And by utilities we're talking about heat, water and lights. A. That is correct. Savageau responded affirmatively that utilities meant heat, water, and lights; and it is likely that Capsco attached the same definition to utilities for they are commonly defined as something useful to the public, esp. the service of electric power, gas, water, telephone, etc. Webster's New World Dictionary 1565 (2d ed. 1980). Despite Savageau's representation that the water was off, the water to the fire sprinkler system was on. A comment to section 358 of the Restatement of the Law, Second, Torts, states: Under the rule stated in this Section, a lessor of land who conceals a dangerous condition existing on land, having no reason to believe that the lessee will discover it, is subject to liability for physical harm caused thereby to the lessee and others on the land in his right. It follows that the lessor is equally liable where by express words he represents the land to be safe knowing that it is not so. Restatement (2d) Torts § 358 cmt. (e) (1965) [emphasis added]. [3] We earlier noted the conflicting testimony as to whether or not Savageau knew that the building was serviced by two water lines and whether Savageau knew that the water was still on. This was not addressed by the trial court. Savageau and Bianco Realty contend that the above section from the Restatement of the Law, Second, Torts, is not applicable to this case as the section only applies to residential leases. We find no such support for this contention. Other jurisdictions have freely cited section 358 of the Restatement of the Law, Second, Torts, in commercial lease settings. See Wilson v. Southland Optical Co., Inc., 774 S.W.2d 447 (Ky.Ct.App.1988); Krance v. Faeh, 215 Neb. 242, 338 N.W.2d 55 (1983); Great Atl. & Pac. Tea Co., Inc. v. Wilson, 408 N.E.2d 144 (Ind.Ct.App.1980); Weaver v. Flock, 43 Or.App. 505, 603 P.2d 1194 (1979); Mezerkor v. Texaco Oil Co., 266 Cal.App.2d 76, 72 Cal.Rptr. 1 (1968); Macomber v. Cox, 249 Or. 61, 435 P.2d 462 (1967); Reckert v. Roco Petroleum Corp., 411 S.W.2d 199 (Mo.1966). Assuming for purposes of this motion, that Capsco was misled by Savageau's statement about the utilities, the trial court did not consider the ramifications of that misrepresentation. Therefore, there are factual and legal issues yet to be resolved in this case with respect to Capsco's tort claim. Summary judgment regarding the tort and contractual claims against all parties is reversed and the case is remanded for further proceedings. ERICKSTAD, C.J., and MESCHKE, LEVINE and JOHNSON, JJ., concur.