Mcle Self-study Article: Owning and Occupying Commercial Office Buildings Amidst a Shifting Pandemic Landscape: a Framework to Understand and Mitigate Premises Liability for Owners and Occupiers

• Publication year: 2021
• Author: Krista Kim and Katherine Kim Abrahams

MCLE Self-Study Article: Owning and Occupying Commercial Office Buildings Amidst a Shifting Pandemic Landscape: A Framework to Understand and Mitigate Premises Liability for Owners and Occupiers

Check the end of this article for information on how to access one MCLE self-study ethics credit.

Krista Kim and Katherine Kim Abrahams

Krista Kim is the founder and principal attorney of Valence Law Group, a California-based law firm specializing in a wide range of real estate transactional matters, including acquisitions and dispositions and commercial leasing. In her leasing practice, Krista advises clients on office, life sciences, industrial, medical, and retail lease transactions. Krista received her JD from UCLA School of Law and her BS from UC Berkeley. krista@valencelaw. com

Katherine Kim Abrahams is a senior attorney at Valence Law Group, specializing in commercial real estate transactions. She has extensive experience representing landlords and tenants in office, retail, industrial, mixed-use and shopping center leases. Katherine also regularly represents buyers and sellers in the acquisition and disposition of commercial properties and handles complex sublease transactions. Katherine received her JD from Stanford Law School and her MM from Yale School of Music. katy@valencelaw.com

I. INTRODUCTION

A. The Initial COVID-19 Effects

Over the last year, the COVID-19 pandemic has swept the globe, bringing forth a tidal wave of distress and uncertainty. The human toll from the pandemic has been devastating. In just ten months, COVID-19 has been linked to over twenty-four million cases and over 400,000 deaths in the United States alone.¹

Given the grave threat to human health, California Governor Gavin Newsom proclaimed a State of Emergency on March 4, 2020.² A few weeks later, numerous counties throughout California enacted stay-at-home orders,³ and on March 19, 2020, Governor Newsom issued Executive Order N-33-20, which ordered all individuals to stay at home, except as needed to maintain continuity of operations of certain infrastructure sectors.⁴ Over the next ten months as the pandemic evolved, state and local governments tightened restrictions in response to surges in coronavirus cases and eased restrictions when rates of infection fell. In December, after allowing business to briefly reopen in the Fall of 2020,⁵ Governor Newsom issued a new stay-at-home order.⁶ The new order, which is still in effect as of the date of this writing (December 19, 2020), requires regions of the state to shut down businesses and people to stay at home if the region's intensive care capacity falls below 15%.⁷

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While the various stay-at-home orders differed in scope and duration, they generally required "non-essential"⁸ businesses to close their physical offices and continue operations remotely.⁹ As many of these non-essential businesses occupied office buildings, the stay-at-home order resulted in dramatic reductions in the occupancy of office buildings. According to a company that monitors office use in thousands of buildings across the United States, as of June 2020, the average occupancy in tracked office buildings dropped to 22.7% nationwide and to 10.7% in San Francisco.¹⁰

B. Moving Forward

Although as of the date of this writing, most non-essential businesses continue to be prohibited from fully occupying office space, there are rays of hope for the office market. Vaccines are slowly rolling out and many tenants are starting to plan for an eventual return to their office space, even if the manner in which they utilize their office space may be different than it was before the pandemic.¹¹ As part of this planning, office tenants want to understand their potential for liability if someone contracts COVID-19 when visiting their premises. Similarly, landlords want to understand their potential liability for COVID-19 transmission as their office buildings are re-populated by tenants returning to offices where the threat of COVID-19 still lingers.

This article discusses the premises liability risks facing landlords and tenants in commercial office buildings¹² in light of the COVID-19 pandemic, with a focus on the scope of each party's respective duty of care, and outlines measures each party should consider implementing to mitigate such party's risk of liability related to COVID-19.

II. PREMISES LIABILITY RISKS TO LANDLORDS AND TENANTS FROM COVID-19 EXPOSURE IN COMMERCIAL OFFICE BUILDINGS

In California, premises liability is a form of negligence which arises when a party fails to exercise ordinary care in the management of property under its possession and control.¹³ The elements of a cause of action for premises liability are the same as a cause of action for negligence.¹⁴ To recover on a premises liability action, a plaintiff must show: (i) a legal duty existed, (ii) that duty was breached, and (iii) the breach of such duty caused plaintiff's injury.¹⁵

Both landlords and tenants are subject to potential premises liability claims from injuries that occur in office buildings. While these claims are commonly slip and falls or other personal injury claims, given our evolving knowledge of COVID-19 transmission (including the risk of airborne transmission indoors),¹⁶ landlords and tenants may face premises liability claims from the spread of COVID-19 in office buildings. Although the premises liability doctrine is generally well understood, application of the doctrine to the COVID-19 pandemic is untested.

A. Landlords and Tenants Have a Duty of Care Over Property Under Their Control

The general duty of care is codified in California Civil Code section 1714(a), which provides that everyone is responsible for injury to others caused by a lack of ordinary care in the management of their property.¹⁷ This duty is imposed on landlords with respect to property under their ownership and control, and on tenants with respect to property under their possession and control.¹⁸

Courts have reasoned that once a landlord leases a premises to a tenant, the landlord's duty for injuries within the tenant's premises is "attenuated as compared with the tenant who enjoys possession and control."¹⁹ Thus, a landlord will generally not be liable for a dangerous condition within the tenant's premises, unless the landlord had actual knowledge of the dangerous condition and the right and ability to cure the condition.²⁰ Even where a lease provides a landlord with a broad right to inspect the premises or to cure defaults by tenants, courts have generally not construed such provisions as imposing an affirmative obligation on a landlord to exercise such rights.²¹ Further, even if a landlord has actual knowledge of an unsafe condition within a tenant's premises, a landlord will likely not be required to cure the unsafe condition if it relates to the manner in which the tenant conducts its business, rather than a specific condition of the property for which the landlord is responsible.²² The reason for this treatment is grounded in public policy to ensure that a tenant may peaceably enjoy its premises without worrying that the landlord will be required to engage in potentially intrusive oversight of the tenant.²³

Accordingly, a commercial landlord should not be liable for personal injury claims arising from a tenant's failure to comply with required COVID-19 protocols within its leased premises, since such failure relates to tenant's conduct rather than to the specific condition of the property over which the landlord is responsible. Nevertheless, as the property owner, a landlord may still be named in a suit by a plaintiff claiming negligent exposure from visiting the office building. In such event, a landlord will most likely look to the tenant for indemnity, as discussed in Section IV(A) of this article.

B. The Scope of the Duty of Care

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While confirming the existence of a duty of care is important, determining the precise scope of such duty is the crucial undertaking. The scope of the duty of care will determine the specific actions that a party is required to take under the circumstances to demonstrate that it has satisfied its duty of care.²⁴ Courts evaluate a number of factors to determine the scope of a party's duty of care. These factors, first enumerated in the seminal case of Rowland v. Christian,²⁵ include:

1. The foreseeability of harm to the plaintiff,
2. The degree of certainty that the plaintiff suffered injury,
3. The closeness of the connection between the defendant's conduct and the injury suffered,
4. The moral blame attached to the defendant's conduct,
5. The policy of preventing future harm,
6. The extent of the burden to the defendant and consequences to the community of imposing a duty to exercise care with resulting liability for breach, and
7. The availability, cost, and prevalence of insurance for the risk involved.²⁶

Though all the Rowland factors may be considered when determining the scope of the duty of care, courts engage a "sliding-scale balancing formula,"²⁷ weighing the foreseeability of the injury to the plaintiff against the burdens placed on the defendant by imposing an obligation to take specific action to reduce the risk of such harm.²⁸ Applying this formula, where the burden²⁹ imposed on a party to prevent harm is substantial, a greater degree of foreseeability will be required;³⁰ and where there are strong policy reasons for preventing the harm, or where the harm can be prevented by simple means, a lesser degree of foreseeability may be required.³¹

In light of the public health risks from COVID-19, the scope of a commercial landlord's duty of care would likely require implementation of reasonable safety measures to minimize the risk of COVID-19 exposure in areas of the building that the landlord controls and manages, such as common area lobbies, elevators, and restrooms. At a minimum, the scope of such duty would include complying with applicable legal requirements,³² as well as taking into consideration the guidelines and recommendations set forth by...