By Frank Chmelik of Chmelik Sitkin & Davis P.S. – WPPA Counsel (August 2018)
This month, we will take a quick walk through the ports’ liability for personal injury or property damage on port property. The issues surrounding liability come up from time to time and touch all aspects of port operations. There are several steps that prudent port districts should take now to minimize the cost and disruption from claims later.
Understand the Port’s risk. Washington law (unlike most states) looks at the reason the person is on port property and applies a different standard to each reason. Here is a basic outline.
- Common and Public Areas. The Port retains primary liability for these areas (which include areas in the port offices where the public is allowed to enter). The people on the property are “business invitees”. Common areas include parts of the port offices where non-port employees are allowed to visit; boat launches, docks, floats, lobbies in port buildings, airport terminals and parking lots. The port owes a duty to “inspect, warn or make safe” its property for business invitees. Therefore, port property should be inspected regularly, and warn or make safe any defects.
- Leased Areas. When a port leases property to a tenant and the tenant is aware of the condition of the leased property, the liability for injury is generally passed from the port to the tenant with the tenant then bearing responsibility for its “business invitees” and its employees. Therefore, the best practice is to specify in the lease that the tenant has fully inspected the leasehold before the lease is signed, specifically warn a tenant of all known defects that may cause harm and be very careful about retaining any duty to inspect or maintain the leasehold.
- Non-public areas. The law presumes those who enter non-public areas without the permission (express or implied) of the port are “trespassers”. The duty owed by the port drops to no duty except to “avoid deliberately, willfully or wantonly injuring the trespasser.”
- Recreational Use Areas. Washington law (RCW 4.24.210) provides that when a port allows members of the public to use their lands for the purposes of outdoor recreation without charging a fee of any kind are recreational users. The port is not liable for unintentional injuries to such users except if the injury came from a known man-made dangerous condition that was not readily apparent, and no warning signs were posted. Recreational areas are beaches and parks.
Purchase appropriate insurance. These days, the size of personal injury claims and the size of property damage claims are growing. It makes sense to revisit the amount of insurance the port purchases with the port’s insurance broker. Also, seek out information from other ports. It seems ports are buying much more insurance these days.
Contractually limit the port’s liability in leases and other agreements. The “best practice” is to periodically review port form leases, moorage agreements, use agreements, rental agreements and other similar documents including:
- lease and use agreement language excluding port liability for damage to tenant’s property, damage to boats in the marina from things like stray current and other damage to property. The idea here is that tenants and other users buy insurance that should respond to property damage.
- lease and use agreement language mitigating port liability for personal injury by including indemnification and release language and requiring tenants and other users to obtain insurance and name the port as an additional insured
- lease language that explicitly states the port has no duty to maintain or repair.
Develop a program of inspection, reporting and response to complaints for common areas and recreational areas. The “best practice” is to have a system of periodic inspections, an adequate reporting system and a method to promptly address unsafe conditions either thorough signage or repair.
Provide adequate signage in common areas and recreational areas. Consider signs that designate recreational use areas. Where there is a reoccurring chance of injury or property damage, consider a warning sign.
Train port employees on an incident reporting system. Incidents (property damage, slip and falls and other injuries) will occur. Port staff should have access to and training in completing an incident reporting form with pictures documenting what happened. Typically, claims can come in several years after the incident. It is nice to have records.
Develop a program to pay small claims. Experience shows that paying for torn clothing, minor injuries or other minor property damage can avoid more expensive litigation and spending deductibles. Care should be taken to require a release in exchange for the payment. This program should be run by the port’s insurance adjuster.
To be clear, property damage and personal injuries are relatively rare. But when significant losses do occur, the very first thing everyone does is scramble to review the agreements. Whether that is followed by object panic or a sigh of relief depends on what the port has done ahead of time.