By Frank Chmelik of Chmelik Sitkin & Davis P.S. – WPPA Counsel (September 2018)
This month’s focus is the on ports’ liability for injuries to tenants’ employees and others on port property. One can see a trend in Washington court decisions which will bear upon port districts’ liability.
Preserve the General Rule of No Landlord Liability for Tenant Employees and Others Injured on Leased Property. The long-established Washington law is that a landlord is not liable for injuries to a tenant’s employees or others visiting the leasehold if (i) the landlord has disclosed, or the tenant is aware of all know defects in the property, and (ii) the landlord does not retain any obligation to inspect or repair defects. Port leases should be written to protect the port by including the following provisions:
- A provision noting that the tenant has fully inspected the leasehold and takes the leasehold “as is” and “where is” without any further maintenance obligation of the port. If there are defects that would not be readily apparent on inspection but are known to the port, they should be noted in the lease. If the port does agree to undertake maintenance on the leasehold, the provision creating that obligation should be carefully drafted and provide for some mechanism of inspection by the port or reporting by the tenant to trigger the maintenance obligation.
- A provision preserving the tenant’s responsibility for injuries on the leasehold where the lease calls for “preferential use” or “shared use”. These types of situations occur when several tenants share exclusive use of a facility at different times such as a marine railway or a ship berth. A “preferential use” or “shared use” is distinct from a “common area” that is open to all tenants at the same time (a common parking lot).
- A provision providing that the tenant “defend and indemnify” the port for injuries occurring on the leasehold or port property arising from the tenant’s activities. The reference to “on port property arising from tenant activities” is especially important where there are rights in the lease to use common areas such as a parking lot or common space in an office complex.
- A provision requiring the tenant to obtain and maintain liability insurance endorsing the port as an additional insured. I say “endorsing” because insurance companies sometimes challenge a certificate of additional insurance issued without the insurance companies’ concurrence. The “defend and indemnify” provision combined with the insurance provision means that the tenant’s insurance company will appoint a lawyer to defend the port and will pay any amount reached in settlement or awarded at trial.
- A provision providing for a limited waiver of the tenant’s protection under the Washington Workers Compensation Act (Title 51 RCW). One should consider the fact that we live in a “pure comparative fault” state. This means that a jury must allocate by percentage the fault for an accident amongst all negligent parties. Now let’s assume an employee tripped and fell on a dock adjacent to the leasehold. Assume the port was 20% at fault because it did not warn of the trip hazard on the dock, the worker was 30% at fault because she did not watch where she was going, and the tenant (her employer) was is 50% at fault because it did not provide adequate safety gear or any safety training. In Washington, the worker can sue the port but not the employer, and the port would be liable for 70% (its share plus the employer’s share). This may seem unfair, but it is the law. Fortunately, tenants can and routinely will agree to “waive” or give up the protection from lawsuits involving injuries to their workers. This allows the port to bring the tenant into the lawsuit so that the court can consider the actions or negligence of the tenant.
Understand that the Port is Liable for Common Area Injuries. Ports, like all landowners, are liable for injuries that occur on property open to the public or groups of tenants – so called “common areas”. Simply stated, the duty is “inspect, warn or make safe”. There are exceptions like the Recreational Use Statue, but the port should have a procedure to routinely inspect and either warn of a danger or make it safe.
Do Not Retain Too Much Control Over Tenant or Contractor Worksite Safety – the Multiparty Worksite Safety Rule. In Washington, employers have responsibility for the workplace safety of their own employees. However, in Washington, where there are multiple employers operating in the same space (such as a construction site with a general contractor and multiple subcontractors), the entity that controls the worksite is responsible for the safety of everyone (not just its employees) on the multiparty site. This common-sense rule recognizes that as a practical matter, as all the subcontractors are moving in an out of a site, it is only the general contractor that can look after overall safety. The “multiparty worksite safety rule” has been extend to other situations where the ability to control safety has been retained by a landlord or an owner if the retained control is direct and sufficient (examples include the right to stop a tenant or contractor from operating if the port sees a safety issue or the requirement that all tenant or contractor employees attend a port safety class and get a port permit to operate on the site). The better practice is to require the tenant in the lease or the contractor in the construction contract to comply with all applicable regulations, including those related to safety. The violation of those regulations would then be a breach of the lease or contract.