Oct. 19, 2015 – A state appeals court has ruled that a former commercial tenant can avoid liability for injuries that occurred on property the tenant recently vacated because the tenant was considered a “vendor” under Wisconsin law.

Charter Manufacturing Co. (Charter) leased a building in Milwaukee from Garland Brothers for over 20 years. Under the lease, Charter had the exclusive right to use the building and the obligation to maintain and repair it. Charter used the building as a factory, and had installed a row of machinery through the metal grate floor.

The lease required Charter to remove all the machinery when it vacated the building in 2009. Charter removed the machinery but left large holes in the floor into a pit below, which Charter then had covered with plywood boxes. The boxes were not marked or tethered to indicate they covered large holes in the floor, although there was a stairway to a clearly visible lower level immediately next to the holes.

After Charter vacated the building, Garland Brothers sold it to Milwaukee World Festival, Inc. (MWF) in 2011, in “as-is, where-is condition” and “with all faults.” MWF had time to inspect the property before purchase, and in fact performed numerous inspections and walkthroughs of the property.

After MWF purchased the building, it hired Hunzinger Construction to begin renovations. While working on the project, workers removed a number of plywood panels from the building, including one of the panels covering a hole in the floor. A Hunzinger employee, Russel Brenner, fell through the hole into the pit and sustained significant injuries.

Brenner filed suit against Charter, Garland Brothers and MWF, asserting negligence and safe-place statute claims. Garland and Charter filed motions for summary judgment on the ground that they could not be liable for Brenner’s injuries; they relinquished the property to MWF well before he was injured. The Milwaukee County Circuit Court granted summary judgment to Garland and Charter. MWF appealed.

Recently, in Brenner v. Milwaukee World Festival et. al., 2014AP2376 (Oct. 6, 2015), a three-judge panel for the District I Court of Appeals affirmed, concluding that Charter, as a former tenant, is entitled to protection from liability as a “vendor.”

Analysis

Judge Kitty Brennan, who wrote the opinion, noted that Wisconsin applied a “buyer beware” exception to the general rule that everyone owes a duty to everyone else.

Under the Restatement (Second) of Torts, section 352, “a vendor of land is not subject to liability for physical harm … after the vendee has taken possession. …”

MWF argued that section 352 didn’t apply because Charter, as the former tenant, was not a vendor. But the panel agreed with the circuit court, which found that “as the former tenant of the property, Charter ‘lack[ed] possession and control of property’ at the time of the accident; MWF, the vendee, was in actual possession, and thus Charter ‘should not be held liable for injuries which [it was] no longer in a position to prevent.’”

“Consequently, we conclude as a matter of law that Charter, as a former tenant, qualifies as a vendor under § 352,” Judge Brennan wrote for the panel.

MWF also argued that even if Charter was found to be a vendor under section 352, section 353 of the Restatement (Second) of Torts says a vendor is liable even after a change in possession when: 1) the vendor knows or has reason to know of a hazard; 2) the vendee does not know or have reason to know of the hazard; and 3) the vendor has reason to believe the vendee will not discover the hazard.

The panel noted that section 353 required MWF to show it had no reason to know of the holes. “Based on the record, MWF cannot make that showing,” Judge Brennan wrote, noting that MWF had numerous representatives tour and inspect the building.

“Unfortunately for MWF, Wisconsin law holds only the entity in possession and control of the property liable, as the entity in possession and control is the only entity in a position to prevent the accident,” Judge Brennan wrote for the panel.