Helping the Lodging Industry Face Today's Legal Challenges

Motel, franchisor not liable for guest's bathtub injury
Guest could not prove previous knowledge of hazardous condition

Hospitality Law

Innkeepers must keep their premises safe.  This includes a duty to regularly inspect the property.  However, there is a limit to what an innkeeper is expected to do.  For example, an innkeeper can not be expected to discover a defect hidden behind a wall.

Stanley Howerton was a guest at an Indiana Super 8 Motel.  He was injured in the bathtub while getting out.  Howerton v. Red Ribbon, Inc., No 18A02-9806-CV-504 (Ind. Ct. App., 9/7/99).

Howerton grabbed the bar on the side wall of the bathtub-shower unit and pulled himself about halfway up.  The bar supported his weight without moving, Howerton said, but as he continued to get up, he pulled the bar off the wall and fell.

Howerton and his wife sued the motel owner, Red Ribbon Inc. and the franchisor Super 8 Motels Inc.  Red Ribbon operated and owned the motel as well as the land.  Super8 had no direct control over the operation of the motel. 

The trial court rejected the Howerton's claim and granted summary judgement in favor of both Red Ribbon and super 8.  The Howertons appealed to the Indiana Court of Appeals, arguing the grab bar was defective and Red Ribbon would have known that if it had conducted a proper inspection.  To support their claim, the Howertons point to cases where guests have slipped and fallen on wet floors.  But the curt said this case was different because the defect was hidden and Red Ribbon was not expected to discover it.  The bar was installed in the wall and Red Ribbon had no means of inspecting the back of the wall.  There were no similar incidents with other grab bars.  In fact, the court noted, the bar did not move when Howerton initially pulled himself up.  Therefore, the court concluded there was no way for Red Ribbon to have discovered the defect.

The Howertons argued that as the franchisor Super 8 had the necessary control to warrant liability because it approved the plans for the motel.  However, the court rejected this claim.  Despite Super 8's right to approve the plans for the motel, there was not evidence Super 8 should have discovered any defect in the grab bar.

HLAW COMMENT By Robert Zarco

Innkeepers must monitor property to prevent, rectify hazards.

The Howerton case addresses whether a business owner should bear responsibility for a guest's injury.  The legal standards that a property owner owes a gust, or "invitee," a duty of "reasonable care" while the gust is using the premises.  How a court interprets the facts of the situation determines whether the property owner is legally and financially responsible for the expenses a guest incurs as a result of that injury.

When someone has been injured on a business's property, the most important and preliminary question is whether the property owner was aware or should have been aware of the danger that existed.  It is a property owner's legal responsibility to provide a safe environment for guests and to monitor that environment in an effort to prevent any hazards from developing.  For example, in a restaurant, spills or objects left on the floor are a common occurrence, but they also pose a serious danger to patrons.  For these reasons, a restaurant owner has an obligation both to watch out for, and clean up any spills or objects on the floor.  Because these are conditions that are readily observable, a property owner will usually be held accountable when he or she fails to correct or take reasonable steps to correct an obvious threat.

In contrast, other dangers lurking on the property might not be as obvious.  In the Howerton case, the defective unit was actually installed behind the wall where Red Ribbon had no means of inspecting the unit.  It was also unlikely that anyone other than a guest would be in a position to discover the problem.  Even Mr. Howerton did not notice a problem when he initially leaned on the unit; it was only after sustained force that it eventually gave way.  Because the franchisee did not know, and did not have reason to know about the loose bar, the franchisee was not legally responsible for the resulting injury.

The pivotal fact in this case was that no one had previously reported a problem with the bar.  If another guest had notified Red Ribbon that the bar was loose, the franchisee would have been on notice about the hazardous situation.  Thereafter, if Red Ribbon had not investigated the complaint, or had failed to repair the loose bar before allowing the next guest to occupy the room, the court would have undoubtedly enough evidence---at least to send the case to the jury to decide whether the franchisee had fulfilled its duty of reasonable care toward its guest.

On lesson to be taken from this case is that you should take seriously and investigate all reports and complaints that involve potentially dangerous conditions.  If the situation calls for a repair, make it immediately.  If you are unable to do so, and the problem is in a well-traveled area, you must take measures to warn your guests in some way---by posting signs or blocking off the site, for example.

In addition, although you might not be liable for risks that are not obvious, routine property inspections may help you avoid a guest's injury altogether.  Taking basic precautions and being vigilant in property maintenance could spare you the legal expense and ill will that a guest's injury might generate.  Be sure to keep detailed records of all property inspections, as well as records of all the recommended repairs you have made as a result.

Finally, if a guest is injured, you should consult legal counsel immediately.  Do not speak with an attorney for the injured party or with the general counsel for the franchisor, without consulting your own attorney first.  Frequently, the injured party will sue both the franchisee and the franchisor.  In this situation, keep in mind that your interests are not necessarily the same as those of the franchisor, and the statements that you make to the franchisor's attorney may not be protected by the attorney-client privilege as would those statements you make to your own attorney.  Above all, you must be attentive in protecting yourself, your guests and the substantial investment that you have made in your business.

Robert Zarco is a partner with the Miami law firm, Zarco & Pardo.  The firm specializes in franchise law.

HOSPITALITY LAW

Helping the lodging industry face Today's legal challenges

This case addresses whether Tresprop, a former Ramada franchisee, would be allowed to defend against Ramada's lawsuit by asserting it s fraud claims or whether those claims would be time barred under the applicable statute of limitations.  A key issue was which of the two "interested" states' laws would apply---New Jersey gave the franchisee six years to bring its claims; Kansas gave it only two years.  In many cases, court decisions on these issues are outcome-determinative.

After Ramada filed suit against Tresprop, Tresprop responded with counter claims for fraud.  Ramada eventually defended with a limitation defense, saying, in essence, that Tresprop had waited too long to bring these fraud claims.  After conducting a choice of law analysis, the court found that the Kansas statue of two years was the appropriate limitations period.  Fortunately for Tresprop, the court also decided that there were disputed issues of material fact; as a result, Tresprop could proceed to trial and present its evidence to the jury, which will ultimately decide this issue.  In this case, it will be Ramada's burden to prove that Tresprop knew or should have known of the facts giving rise to the alleged fraud more than two years prior to the filing of its counterclaim.

The case illustrates the critical nature of a court's choice of law determination, which arises very frequently in franchise cases.  When a franchisor and franchisee are residents of different states, the court will likely be called on to decide which state's law will apply to the parties' various claims; this is called conflicts of law or a choice of law analysis.

Here, as in many franchise cases, the franchise agreement chooses one state's law to govern issues of contract interpretation.  Ramada, a resident of New Jersey, chose that state's law.  Many times the courts will allow the parties to agree to a choice of law in their franchise agreement.  Nevertheless, the choice of law in the parties' franchise agreement would not necessarily apply to fraud claims which are normally considered to be separate from contractual issues.

A choice of law determination can be quite complicated analytically.  In evaluating the attorneys' arguments, the court will usually take into account various factors, including where the case is brought, whether it was transferred from another jurisdiction, each party's state of residence and the interest of each state in the litigation's outcome.  Some, but not all of these factors are predictable at the early stages of litigation.

In proceeding with the choice of law analysis, the court adds other, less concrete determinations, such as whether the application of a particular state's law will offend or advance the policies of other interested states.  This process is necessarily very subjective, abstract and may require extensive research into the case law of each of the states under consideration.  In this case, there were potentially only two states involved; in other franchise matters, that number may be far greater, adding significant complexity and unpredictability to the outcome of the court's determination.

This case also illustrates the importance of acting promptly when faced with a franchise dispute.  When multiple parties are involved in the dispute, here may be significant differences in those state's laws and it maybe close to impossible to know precisely which time limitations will apply.  In the context of commercial legal disputes a two-year period passes very quickly.  The lesson to take from Tresprop's situation is that it pays to be constantly vigilant about protecting your investment.  If you suspect that your franchisor or another party has violated your agreement, or that some franchise dispute is brewing, obtain legal counsel to discuss the situation and the alternative available to protect your substantial investment.