May 3, 2016

Economic consequences may determine whether a tort duty is reasonably imposed

By Deborah J. La Fetra Senior Attorney

Alan Petrie got off work as a waiter at a Houston nightclub in the wee hours of the morning, and then went to a co-worker’s birthday party at an apartment complex near the club. Houston is well known for its lack of zoning, and residential and commercial establishments are intermingled. Unfortunately, Mr. Petrie never made it to the party: He was robbed and shot in the knee outside the security gate to the complex. He sued the apartment management companies, arguing that they failed to protect him from the criminal assault. The trial court rejected his lawsuit on the grounds that the management companies owed no duty to protect him from the criminal acts of third parties. The court of appeals in Petrie v. UDR Texas Properties, L.P. reversed, however, holding that the attack on Petrie was foreseeable because of the high crime rate within a half-mile radius of the surrounding area, which includes the nightclub strip where Petrie worked. The court believe the relatively constant high level of violent crime at the nightclub strip would “travel” to the apartment complex. The Texas Supreme Court agreed to review the case.

Under that court’s decision in Timberwalk Apartments, Partners, Inc. v. Cain, (1998), a property owner owes a duty to protect people from crimes committed by third parties only when the risk of the crime is foreseeable and the risk to the plaintiff of that crime occurring is unreasonable and outweighs the magnitude of placing the burden to guard against that risk on the property owner. In an amicus brief filed today, PLF argues that the lower court conflated these two distinct elements by holding that any time a crime is “foreseeable,” it is “reasonable” to impose legal duty to protect. Reasonableness is usually determined by reference to the cost of burdensome security measures and the economic consequences of expansive tort liability.

When it comes to economic consequences in low-income areas, which frequently suffer from higher crime rates, those consequences can be severe. If apartment complexes must pay very high insurance premiums to cover third-party criminal assaults, they will raise rents, creating hardship, potentially even homelessness, for low-income tenants. If the rule applies to commercial enterprises—shops instead of apartments—the result is higher-priced goods and services, again to the detriment of low-income customers. Some businesses will have no option but to close; others that might have existed will never open. This has a further economically depressing effect on residents of low-income areas who themselves wish to become entrepreneurs, but find the entry costs too high. Because these entrepreneurs would hire other residents, the total effect of a business precluded from opening is increased joblessness; fewer available, affordable services; and a neighborhood that remains mired in economically depressed circumstances. PLF’s brief urges the Texas Supreme Court to consider these important public policies to hold that it would be unreasonable in this case to impose a tort duty to protect.

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