Property Owner Dismissed from Suit Over Car-Wash Accident
Case Study

Property Owner Dismissed from Suit Over Car-Wash Accident

A property owner leasing a car wash to a tenant under an arrangement assigning all legal responsibility for the property to the lessee cannot be held liable for a 2017 accident in which a customer’s legs were crushed between two cars, requiring both to be amputated, a New Jersey Superior Court judge has ruled.

Granting a motion for summary judgment by Goldberg Segalla partner Todd R. Harris, who successfully argued that the property owner was an “out of possession landlord” with no role in operating the car wash and thus no liability, the judge released the owner from a lawsuit over the accident.

The judge’s August 26, 2019, ruling brought to a close a complex legal case that turned on the question of whether the involvement of a third party invalidated the terms of the lease. The third party was a man to whom the lessee had sold the assets of the car wash and who had assumed full responsibility for operating the car wash and paying rent on the property but did not formally assign the lease to the property without disclosing the true nature of the “assignment” to the landlord.

“The plaintiff’s attorney tried to argue that the lease was invalid because it was improperly assigned to [a third party],” Todd says. “[But] our client testified that in no way, shape, or form was [the third party] the tenant and that the lease with [the original tenant] was valid at the time of the accident.” The plaintiff further argued that plaintiff’s status as a visitor to the property somehow triggered a greater duty owed by the property owner to the plaintiff.

Establishing that the lease with the original tenant still was valid and was key to prevailing on summary judgment, Todd says. “If the lease was deemed invalid, we’re no longer an “out of possession landlord”; we’re just a landlord that never visits the property.”

Goldberg Segalla partner Gregory B. Gilmore argued the motion. After oral arguments, the court held that the triple-net lease—which assigns to a tenant all responsibility for the property, including paying the rent, taxes, and insurance on a property—remained in effect despite the subsequent involvement of a business partner.

Triple-net leases have become popular because they provide passive and low-risk steady income. They tend to have lower rent charges because the tenant is responsible for paying expenses on the property.

Because the triple-net lease in this case still was valid at the time of the accident, the property owner did not owe any duty to the plaintiff, the judge ruled, signaling a victory for the defense team of Todd, Greg, and Goldberg Segalla associate Rosa D. Forrester.

The court further agreed that the visitor’s status did not invoke a greater duty by the property owner. But the case law-based decision applied only to the property owner, not the tenant under the lease, whose motion for summary judgment on similar grounds was denied.

Because of the “horrific nature” of the accident, Todd says, the court was unlikely to decide all issues by way of dispositive motion, properly leaving the questions of fact for a jury to decide. The plaintiff was crushed between his car and the car in front of his by a car-wash employee working his first day on the job vacuuming and drying vehicles.

The employee, who doesn’t speak English, had been trained the day before. Despite being told never to drive any of the vehicles at the car wash, he got into one waiting in line to go through and placed the vehicle into reverse, instead of drive, backing it into the plaintiff, who was standing in front of his own car preparing it to go through the wash. The injured man was taken to the hospital, where doctors had to amputate both of his legs above the knee. Though the man had made no formal demands, plaintiff was seeking damage “in the millions” Todd says.

 

More about Goldberg Segalla’s Retail and Hospitality practice:

Todd, Greg, and Rosa are members of the firm’s Retail and Hospitality practice. The nationwide team of more than 50 attorneys offers strong defense, comprehensive counsel, and long-term strategic guidance to all types of retail, hospitality, and commercial development businesses.

Todd serves on the leadership committee of the Retail and Hospitality practice group and also is a member of the firm’s Global Insurance Services practice. He has litigated state and federal cases alike in New York, New Jersey, and Massachusetts, and has been admitted pro hac vice to numerous other states, and represents business owners in all aspects of premises and products liability matters as well as complex commercial disputes.

Greg is an accomplished litigator with extensive experience defending insured and self-insured clients in matters involving premises liability, professional liability, automobile negligence, products liability, dram shop liability, negligent security, and construction site accident liability. He also has considerable experience representing business entities in a broad array of commercial litigation and employment and labor matters.

Rosa counsels and defends corporate entities, insurers, contractors and subcontractors, and manufacturers in a wide range of liability claims, including those alleging construction defect, personal injury, property damage, premises liability, and more. She also litigates matters involving insurance fraud.