Opinion ID: 894531
Heading Depth: 1
Heading Rank: 3

Heading: Premises Defects

Text: We turn next to Kahn's allegations concerning premises defects. In his response to Shell's motion for summary judgment, Khan asserted several conditions contributed to his injuries:  lighting: the side of the building from which the robber emerged was dark;  surveillance: the station had security cameras inside, but not outside;  glass: the station had bullet-proof glass on the front windows and doors, but not on the sides;  signage: the station had no signs advising that employees had access only to small amounts of cash; and  fencing: there was no perimeter fencing. The court of appeals held Shell had a contractual right to control these matters, and actually exercised that control. [28] We address each of these holdings in turn.
In previous opinions, we have divided premises defects into two categories: (1) those existing when an independent contractor enters, and (2) those created by the independent contractor's work. [29] With respect to existing defects, an owner or occupier has a duty to inspect the premises and warn of concealed hazards the owner knows or should have known about; [30] with respect to defects arising later, an owner has no duty unless it retains a right to control the work that created the defect. [31] In this case, all of the conditions listed above predated La Sani's lease, and thus fall within the existing-defects category. There is neither allegation nor evidence that any were concealed; to the contrary, Khan relies on their open and obvious nature in alleging each would have discouraged robbers. As no concealed hazards are alleged, when Shell relinquished possession of the premises, it also relinquished to La Sani the duty to warn of or eliminate any unreasonably dangerous premises defects that existed. Nevertheless, the court of appeals held Shell retained a right to control these conditions because the lease allowed Shell to make alterations to the premises at any time, and prohibited La Sani from making alterations without Shell's prior written approval. [32] But as noted above, right-to-control issues arise only when a premise defect is created after a lessee enters possession; we have never held a lessor liable for pre-existing unconcealed defects merely because it retained a contractual right to make or approve of alterations. [33] It is true landlords may be liable post-lease if they retain a right to control common areas, but liability there is based on physical possession. Though such cases often discuss right of control, the liability question in them turns on who had possession of a part of the premises rather than a mere right of re-entry. [34] The Restatement reflects this same distinction. Section 17.3 of the Restatement concerning landlords and tenants limits a landlord's liability based on right of control to cases in which physical possession is retained. [35] As the first comment to that section notes, a contractual right of re-entry is not enough: a. Landlord's retained control. The rule stated in this section applies not only to the hall, stairs, elevators and other approaches to the part of the property leased to the tenant as an apartment, office, or room in a tenement or boarding house, but also to such other parts of the leased property to the use of which by the express or implied terms of the lease the tenant is entitled, usually in common with other tenants, such as a bathroom in a boarding house and the roof or yard of a tenement building or apartment house.    The rule stated in this section does not apply to any part of the leased property specifically transferred to the tenant under the lease with regard to which the landlord retains a right to inspect, to repair, or to enter for some other purpose. These parts of the leased property are not considered to remain under the landlord's control. [36] We have addressed Khan's precise arguments before, and rejected them. In Flynn v. Pan American Hotel Co., [37] the owner of the St. Anthony Hotel in San Antonio leased the entire property to another corporation to operate. The lessor retained the right to make repairs or improvements at will (and in fact made extensive renovations), and barred the lessee from making any changes without the lessor's written consent. [38] Nevertheless, when a hotel employee was injured in an elevator accident, we held the lessor could not be held liable because it did not retain a right to control any part of the premises: The terms of the lease, which have been stated, and the acts of the parties to the lease show that it was contemplated and intended that respondent should have the right to enter on the property to make improvements and repairs; but the reservation by a lessor of a right to enter the premises to make such repairs and alterations as it may elect to make is not a reservation of control over a part of the building and an obligation on the part of the lessor to make repairs does not arise from the reservation of such right. [39] Because the defect in Flynn was not concealed, we held the lessee assumed responsibility for existing defects, and the landlord was not liable to the lessee's employee. [40] Texas law recognizes landlords have several duties with respect to premises turned over to tenants. As already noted, they have a duty to disclose concealed dangers, [41] and a duty of care as to common areas where they retain possession. [42] If they agree to make repairs, they have a duty to complete them with care. [43] But they do not become liable for existing premises defects merely by retaining the right to re-enter the premises to make alterations. The court of appeals erred in holding to the contrary. [44]
Both the lease and the dealer agreement provided La Sani could not alter the station's buildings or equipment without Shell's prior written approval; the lease added that Shell's approval could not be unreasonably withheld. There was no evidence La Sani requested any alterations after signing the contracts and entering into possession. But there was evidence La Sani asked Shell to make extensive upgrades during pre-contract negotiations. The court of appeals held this was enough to establish potential liability; [45] for two reasons, we disagree. First, the court of appeals was incorrect that Shell had a duty to make the premises safe before turning the property over to La Sani. As noted above, a lessor has a duty to disclose concealed hazards before relinquishing possession, but no duty to remedy all of them. [46] Second, Syed's proposal was not for safety upgrades, but for complete remodeling of the station. While one aspect was proper exterior illumination, Syed's goal was, in his own words, to remodel this station into a C-Store after which same location will bring a lot more gasoline business as well as grocery.... Study shows that neat, clean and well lit environment always attracts customers especially female customers feel more safer [ sic ]. While one aspect of his proposal was proper exterior illumination, it also included extensive renovations unrelated to safety, such as nicer landscaping and well-maintained restrooms. Nowhere in the proposal does Syed offer to pay for the remodeling. Shell's representative testified the proposal was rejected because Shell did not want to spend $100,000 of its own money so Syed could have a more profitable store. While Shell had a contractual right to approve any alterations La Sani requested to provide a safe workplace, nothing in the contract required Shell to pay for such alterations. As Shell retained a contractual right to approve or refuse a lessee-dealer's proposals for renovation, we agree there may be circumstances in which it could be liable for negligent exercise of that duty. But in this case Shell's duty never came into play because La Sani never requested any changes after the contract was signed. Accordingly, the court of appeals erred in holding Shell's refusal to comply with Syed's request rendered it potentially liable to Khan.