Feld v. Merriam

485 A.2d 742, 506 Pa. 383, 1984 Pa. LEXIS 382

• Court: Supreme Court of Pennsylvania
• Decided: December 18, 1984
• Docket: 79 and 80 E.D. Appeal Docket 1983
• Status: Published

Opinions

OPINION ¹

McDERMOTT, Justice.

Peggy and Samuel Feld were tenants in the large Cedar-brook Apartment complex, consisting of 150 acres and 1,000 apartments housed in three high rise buildings. For an extra rental fee the apartments are serviced by parking garages adjacent to the apartment buildings. On the evening of June 27, 1975, about 9:00 P.M., the Felds, returning from a social engagement, drove as usual to their allotted space in the parking garage. Then began the events that brings before us the question of a landlord’s liability for the criminal acts of unknown third persons. We are not unaware of the social, economic and philosophic dimensions of the questions posed.

While the Felds were parking their car, they were set upon by three armed felons. At gun point, accompanied by two of the felons, they were forced to the back seat of their car. Followed by the third felon in an “old, blue broken down car,” they were driven past the guard on duty at the gate, out into the night, to the ferine disposal of three criminals. To clear the car for their main criminal purpose, the felons started to force Mr. Feld into the trunk of the car. Mrs. Feld pled her husband’s illness and to save him, offered herself for her husband’s life. Thereupon the felons released Mr. Feld on a deserted street corner and drove Mrs. Feld to the lonely precincts of a country club. There is no need to recite the horrors that brave and loving woman suffered. Suffice it to say they extorted a terrible penalty from her defenseless innocence.

The Felds brought suit against the appellees, owners of the complex,² alleging a duty of protection owed by the landlord, the breach of the duty, and injuries resulting therefrom. Named as defendants were John Merriam, Thomas Wynne, Inc., the Cedarbrook Joint Venture, and Globe Security Systems, Inc. Following an eight-day trial, the jury returned a plaintiff’s verdict and a judgment totaling six million dollars against Merriam, Thomas Wynne, Inc., and the Cedarbrook Joint Venture.³ The jury absolved Globe Security of any liability. Common Pleas, per the Honorable Jacob Kalish, denied motions for a new trial, judgment N.O.V. and remittitur.

On appeal the Superior Court affirmed the lower court, with the exception that the award of punitive damages to Samuel Feld was reduced by one half. Both Cedarbrook and Mr. Feld filed petitions for allowance of appeal, which were granted. We now reverse.

I

The threshold question is whether a landlord has any duty to protect tenants from the foreseeable criminal acts of third persons, and if so, under what circumstances. Well settled law holds landlords to a duty to protect tenants from injury rising out of their negligent failure to maintain their premises in a safe condition. See Smith v. M.P.W. Realty Co. Inc., 423 Pa. 536, 225 A.2d 227 (1967). Lopez v. Gukenback, 391 Pa. 359, 137 A.2d 771 (1958). That rule of law is addressed to their failure of reasonable care, a failure of care caused by their own negligence, a condition, the cause of which was either known or knowable by reasonable precaution. The criminal acts of a third person belong to a different category and can bear no analogy to the unfixed radiator, unlighted steps, falling ceiling, or the other myriad possibilities of one’s personal negligence. To render one liable for the deliberate criminal acts of unknown third persons can only be a judicial rule for given limited circumstances.

The closest analogy is the duty of owners of land who hold their property open to the public for business purposes. See Leary v. Lawrence Sales Corp., 442 Pa. 389, 275 A.2d 32 (1971). They are subject to liability for the accidental, negligent or intentionally harmful acts of third persons, as are common carriers, innkeepers and other owners of places of public resort. Section 344, comment (f) of the Restatement (Second) of Torts, adopted by this court in Moran v. Valley Forge Drive-In Theater, Inc., 431 Pa. 432, 246 A.2d 875 (1968), requires that they take reasonable precaution against that which might be reasonably anticipated. The reason is clear; places to which the general public are invited might indeed anticipate, either from common experience or known fact, that places of general public resort are also places where what men can do, they might. One who invites all may reasonably expect that all might not behave, and bears responsibility for injury that follows the absence of reasonable precaution against that common expectation. The common areas of an apartment complex are not open to the public, nor are the general public expected or invited to gather there for other purposes than to visit tenants.

Tenants in a huge apartment complex, or a tenant on the second floor of a house converted to an apartment, do not live where the world is invited to come. Absent agreement, the landlord cannot be expected to protect them against the wiles of felonry any more than the society can always protect them upon the common streets and highways leading to their residence or indeed in their home itself.

An apartment building is not a place of public resort where one who profits from the very public it invites must bear what losses that public may create. It is of its nature private and only for those specifically invited. The criminal can be expected anywhere, any time, and has been a risk of life for a long time. He can be expected in the village, monastery and the castle keep.

In the present case the Superior Court departed from the traditional rule that a person cannot be liable for the criminal acts of third parties when it held “that in all areas of the leasehold, particularly in the area under his control, the landlord is under a duty to provide adequate security to protect his tenants from the foreseeable criminal actions of third persons.” Feld v. Merriam, et al., 314 Pa.Super. 414, 427, 461 A.2d 225, 231 (1983).

The Superior Court viewed the imposition of this new duty as merely an extension of the landlord’s existing duty to maintain the common areas to be free from the risk of harm caused by physical defects. However, in so holding that court failed to recognize the crucial distinction between the risk of injury from a physical defect in the property, and the risk from the criminal act of a third person. In the former situation the landlord has effectively perpetuated the risk of injury by refusing to correct a known and verifiable defect. On the other hand, the risk of injury from the criminal acts of third persons arises not from the conduct of the landlord but from the conduct of an unpredictable independent agent. To impose a general duty in the latter case would effectively require landlords to be insurers of their tenants safety: a burden which could never be completely met given the unfortunate realities of modern society.

Our analysis however does not stop here, for although there is a general rule against holding a person liable for the criminal conduct of another absent a preexisting duty, there is also an exception to that rule, i.e., where a party assumes a duty, whether gratuitously or for consideration, and so negligently performs that duty that another suffers damage. Pascarella v. Kelley, 378 Pa. 18, 105 A.2d 70 (1954). See Rehder v. Miller, 35 Pa.Super. 344 (1908).

This exception has been capsulized in Section 323, of the Restatement (Second) of Torts, which provides:

§ 323. Negligent Performance of Undertaking to Render Services

One who undertakes, gratuitously or for consideration, to render services to another which he should recognize as necessary for the protection of the other’s person or things, is subject to liability to the other for physical harm resulting from his failure to exercise reasonable care to perform his undertaking, if

(a) his failure to exercise such care increases the risk of such harm, or

(b) the harm is suffered because of the other’s reliance upon the undertaking.

Previously we adopted this section as an accurate statement of the law in this Commonwealth. Gradel v. Inouye, 491 Pa. 534, 421 A.2d 674 (1980); DeJesus v. Liberty Mutual Insurance Co., 423 Pa. 198, 223 A.2d 849 (1966).⁴

Expounding on the proper application of Section 323 the drafters indicated that

[Tjhis Section applies to any undertaking to render services to another which the defendant should recognize as necessary for the protection of the other’s person or things. It applies whether the harm to other or his things results from the defendant’s negligent conduct in the manner of his performance of the undertaking, or from his failure to exercise reasonable care to complete it or to protect the other when he discontinues it.

Comment (a) § 323 Restatement (Second) of Torts. These comments are particularly relevant in a situation such as the present where a landlord undertakes to secure the areas within his control and possibly fosters a reliance by his tenants on his efforts.

Absent therefore an agreement wherein the landlord offers or voluntarily proffers a program, we find no general duty of a landlord to protect tenants against criminal intrusion. However, a landlord may, as indicated, incur a duty voluntarily or by specific agreement if to attract or keep tenants he provides a program of security.⁵ A program of security is not the usual and normal precautions that a reasonable home owner would employ to protect his property. It is, as in the case before us, an extra precaution, such as personnel specifically charged to patrol and protect the premises. Personnel charged with such protection may be expected to perform their duties with the usual reasonable care required under standard tort law for ordinary negligence. When a landlord by agreement or voluntarily offers a program to protect the premises, he must perform the task in a reasonable manner and where a harm follows a reasonable expectation of that harm, he is liable. The duty is one of reasonable care under the circumstances. It is not the duty of an insurer and a landlord is not liable unless his failure is the proximate cause of the harm.

A tenant may rely upon a program of protection only within the reasonable expectations of the program. He cannot expect that a landlord will defeat all the designs of felonry. He can expect, however, that the program will be reasonably pursued and not fail due to its negligent exercise. If a landlord offers protection during certain periods of the day or night a tenant can only expect reasonable protection during the periods offered. If, however, during the periods offered, the protection fails by a lack of reasonable care, and that lack is the proximate cause of the injury, the landlord can be held liable. A tenant may not expect more than is offered. If, for instance, one guard is offered, he cannot expect the same quality and type of protection that two guards would have provided, nor may he expect the benefits that a different program might have provided. He can only expect the benefits reasonably expected of the program as offered and that that program will be conducted with reasonable care.

In the present case the trial judge, when instructing the jury, was placed in the unenviable position of predicting how we would resolve this difficult question. Although we commend him on his endeavor, we are constrained to reverse the verdict, since the jury instructions which were given imposed upon the'landlord a duty greater than that which we today hold to have existed.

II

Cedarbrook also argues that the evidence of negligence failed to support the jury’s punitive damages award, and that the introduction of evidence concerning appellant’s considerable wealth was so prejudicial as to taint the jury’s compensatory damages award. In light of our grant of a new trial on the issue of liability, the issues regarding damages are moot. However, in anticipation of the same issues arising at retrial, we will address them.

A. Punitive Damages

This Court has embraced the guideline of Section 908(2) of the Restatement (Second) of Torts regarding the imposition of punitive damages: “Punitive damages may be awarded for conduct that is outrageous, because of the defendant’s evil motive or his reckless indifference to the rights of others.” See Chambers v. Montgomery, 411 Pa. 339, 192 A.2d 355 (1963). Punitive damages must be based on conduct which is “ ‘malicious,’ ‘wanton,’ ‘reckless,’ ‘willful,’ or ‘oppressive’ ...” Id., 411 Pa. at 344-45, 192 A.2d at 358, citing Hughes v. Babcock, 349 Pa. 475, 37 A.2d 551 (1944).

Further, one must look to “the act itself together with all the circumstances including the motive of the wrongdoers and the relations between the parties ...” Chambers v. Montgomery, supra, 411 Pa. at 345, 192 A.2d at 358. See also, Pittsburgh Outdoor Advertising Co. v. Virginia Manor Apartments Inc., 436 Pa. 350, 260 A.2d 801 (1970).

The state of mind of the actor is vital. The act, or the failure to act, must be intentional, reckless or malicious.

The danger here was not an easily perceptible one. While a jury might find that Cedarbrook failed to reasonably perform the duty it undertook, the evidence presented was insufficient to support a finding that they acted with the state of mind necessary to impose punitive damages. While the record indicates that the security systems might have been inadequate under the circumstances, there was no evidence of an evil motive or a reckless indifference to the safety of the tenants.

In deciding whether to impose punitive damages a court should not look to the third party’s criminal conduct, which in this case was truly outrageous; a court should not look at the end result, which in this case also was outrageous; rather, the court should examine the actor’s conduct. As a matter of law, on this record, a jury could not conclude that appellants’ conduct was outrageous. Thus the trial court erred in submitting this issue to the jury.

B. Compensatory Damages

As a result of the trial judge’s determination that the issue of punitive damages was a jury question, evidence was allowed concerning appellant’s considerable wealth. Cedarbrook argues that this evidence had a prejudicial effect on the jury and thus the compensatory damage award of three million dollars should be vacated. We agree.

A jury may not consider a defendant’s wealth in setting compensatory damages. It is “improper, irrelevant, prejudicial, and clearly beyond the legally established boundaries.” Trimble v. Merloe, 413 Pa. 408, 410, 197 A.2d 457, 458 (1964). However, a defendant’s wealth is relevant to set punitive damages. Arye v. Dickstein, 337 Pa. 471, 474, 12 A.2d 19, 20 (1940).

As we stated earlier, the outrageous conduct necessary to send the issue of punitive damages to the jury was not present in this case. Here, evidence showed that appellant’s financial net worth was $40 million. The trial court resisted Cedarbrook’s effort to try the issue of punitive damages separately, and refused to deliver Cedarbrook’s suggested instruction that consideration of appellant’s wealth was not relevant in fixing the amount of compensatory damages. Rather, a broader cautionary instruction was delivered which was inadequate to overcome any prejudice which might have resulted from the introduction of evidence regarding appellant’s wealth.

Where the issue of punitive damages incorrectly goes to the jury, and where the trial court fails to sufficiently warn the jury that they may not look to a defendant’s wealth in setting compensatory damages, evidence of the wealth of a defendant may improperly prejudice the jury and a compensatory damage award should be set aside.⁶

For the reasons stated above, this case must be remanded to the lower court for a new trial, in accordance with the standards stated.

ZAPPALA, J., joins in this Opinion, and files a separate Concurring Opinion. LARSEN and PAPADAKOS, JJ., and ROBERTS, Former C.J., did not participate in the decision of this case.

1 . This case was reassigned to this author on May 16, 1984.

2 . Cedarbrook is owned by John W. Merriam, and Thomas Wynne, Inc. Merriam and Thomas Wynne, Inc. were co-venturers in a company trading as the Cedarbrook Joint Venture. Merriam owns all of Thomas Wynne, Inc.’s stock, and, at trial, was appropriately treated as Cedarbrook’s sole owner.

3 . Samuel Feld was awarded $1 million in compensatory damages and $1.5 million in punitive damages. Peggy Feld was awarded $2 million in compensatory damages and $1.5 million in punitive damages. Delay damages, pursuant to Pa.R.Civ.P. 238, were assessed against Cedarbrook in the amount of $83,835.24.

4 . Although in DeJesus v. Liberty Mutual Insurance Co., 423 Pa. 198, 201, 223 A.2d 849, 850 (1966), we held that both subsections (a) and (b) would have to be met to support liability, later application of Section 323 clearly indicates that a party need only satisfy subsection (a) or (b). See Hamil v. Bashline, 481 Pa. 256, 392 A.2d 1280 (1978). See also, Morena v. South Hills Hospital, 501 Pa. 634, 462 A.2d 680 (1983).

5 . See Phillips v. Chicago Housing Authority, 89 Ill.2d 122, 59 Ill.Dec. 281, 431 N.E.2d 1038 (1982); Pippin v. Chicago Housing Authority, 78 Ill.2d 204, 35 Ill.Dec. 530, 399 N.E.2d 596 (1979); Scott v. Watson, 278 Md. 160, 359 A.2d 548 (1976).

6 . The drastic remedy of a new trial is not required in every case. In some cases a sufficient cautionary instruction may overcome the prejudice triggered by the introduction of evidence of a defendant’s wealth.