Premises liability law classifies the relationship between an injured party and a landowner or possessor in one of three ways: as trespasser, licensee or invitee. Examining the relationship between these two parties helps determine the liability exposure of a landowner for injuries occurring on his or her property, as the status of the injured party as trespasser, licensee or invitee often dictates the duty owed by the landowner to that party.

This article offers a useful brief on this subject

(Keep in mind that, in addition to the classification of the injured party, the age of the individual, whether he or she has any type of disability, and the type of property where the injury occurred are also considerations that may impact a landowner or possessor's duty.)

Trespasser. A trespasser is a person who enters or remains upon land in the possession of another without a privilege to do so created by the possessor's consent or otherwise. This classification applies even if the person enters land under a mistaken belief that he is privileged to do so. In addition, a person can become a trespasser if he or she enters one portion of the premises with the consent of the owner and then enters another portion to which the owner did not consent.

A landowner may have actual or constructive knowledge that a trespasser is on his property at the time the injury occurred. If the landowner has actual knowledge the trespasser is on his property, a higher duty of care may be imposed by courts because the landowner now has an opportunity to protect these individuals.

A landowner who knows trespassers often enter a particular part of his or her premises yet does nothing to prevent or deter them from doing so may owe a higher duty of care to those individuals. This is because the landowner is seen as impliedly consenting to the trespass through his or her non-action.

If a trespasser is known there may be a greater duty owed by the landowner than to simply avoid willful, wanton or reckless conduct. In most states, in order to satisfy the duty of care to known trespassers, the landowner must at least warn trespassers of any artificial conditions he or she is aware of that exist on the property. A few jurisdictions have held that a landowner owes a duty of reasonable care toward a known trespasser.

The majority of jurisdictions require landowners to avoid willful, wanton or reckless conduct toward trespassers who are not known by the landowner. Although courts define what is willful, wanton or reckless in different ways, generally speaking to constitute willful, wanton or reckless conduct, there must be a course of action that shows a deliberate intention to harm or that shows utter indifference to, or conscious disregard of, the safety of others. Such conduct typically involves an extreme departure from ordinary care.

Licensee. A licensee is someone who enters the land of another with the owner's permission (express or implied) and does so for his own convenience or for the business of someone other than the owner. Express consent is an explicit invitation by the landowner to enter his or her land, while implied consent generally requires examination of the circumstances surrounding the entry and of the prevailing customs in the particular community. Social guests are examples of licensees.

In the majority of jurisdictions, a landowner has a duty to either warn licensees of any unreasonably dangerous, hidden conditions known to the owner but unknown to the licensee, or to exercise reasonable care to make any unreasonably dangerous conditions of the property safe.

Often, courts will consider individuals who do not quite fit into the categories of either trespasser or invitee as licensees.

Invitees. The current and most widely accepted definition of an invitee represents an evolution of the term in premises liability law.

While early case law focused on the economic benefit aspect and whether a person entered the property for purposes related to the business of the owner, today, in most jurisdictions, the term also includes persons who enter land which the owner offers, induces and intends the public to enter for a particular purpose.

For one to be classified as an invitee, the landowner must have extended that person an invitation (either express or implied) to enter the part of the premises where the accident occurred. If there was an invitation, the injury must also have occurred within the confines of that invitation, i.e. the injured party must have entered the land for the particular purpose for which the owner extended the invitation. Typically, a person who is injured on land that is held out to the public for a particular purpose (e.g. a retail store) is an invitee unless the reason for that person's entry is completely unrelated to the business of the store.

Most jurisdictions hold that a landowner owes a duty of reasonable care to invitees. The landowner must make a reasonable inspection to discover any dangerous conditions that the invitee might not find or take precautions against, and take action to protect the invitee from harm due to any dangerous conditions that may include more than just a warning.

Now, this traditional classification system has been criticized as resulting in confusing and inconsistent outcomes in cases. In addition, many have argued that these judicially created classifications no longer retain their viability under modern conditions.

Since the 1968 landmark California Supreme Court decision Rowland v. Christian, 69 Cal 2d 108, the general trend for courts has been to abandon the traditional scheme in favor of applying a reasonableness and forseeability standard to premises liability cases. Over half of all jurisdictions in this country have now judicially abandoned or modified the common-law trichotomy in favor of the modern “reasonable person” approach that is the norm in tort law. With this approach, the status of the injured party as a trespasser, licensee or invitee is just one consideration used in determining whether the landowner acted reasonably under the circumstances.

Although many courts have abandoned the classification system completely, a few courts have contented themselves with abolishing the distinction between invitees and licensees while retaining the trespasser classification. In addition, several states have enacted legislation governing the classification of entrants onto property and the duties owed by landowners to those entrants.

Reservation of Rights Letter Not Subject to Discovery

In the case of In Re Madrid, 2007 WL 2965782 (Tex.App.-El Paso), a court of appeals in Texas had to answer the question of whether the insurer's reservation of rights letter to its insured was subject to discovery by a claimant. The trial court entered an order compelling the insured to produce the reservation of rights letter and the appeal followed.

As for the facts of this case, Calvillo sued Madrid for negligence, alleging that Madrid was driving a vehicle while intoxicated and negligently caused an accident when his vehicle struck Calvillo's auto. As part of the lawsuit, Calvillo sought production of a reservation of rights letter sent by Madrid's insurer to Madrid after the suit was filed. Madrid sought a protective order, claiming that the letter was protected by the work product privilege, was beyond the scope of discovery for insurance agreements, and was neither relevant nor reasonably calculated to lead to admissible evidence. And as noted, the trial court ruled against Madrid .

The appeals court said that, except as otherwise provided by law, a party may obtain discovery of the existence and contents of any indemnity or insurance agreement under which any person may be liable to satisfy part or all of a judgment in the action, or to indemnify or reimburse for payments made to satisfy the judgment. Put another way, a party may discover information beyond an insurance agreement's existence and contents only if the information is otherwise discoverable under the law.

The court first noted that it did not agree with Calvillo's general premise that a reservation of rights letter was necessarily part of the existence and contents of any indemnity or insurance agreement; the court based this finding on the fact that it had reviewed the reservation of rights letter at issue in the case. The court then turned to the issue of whether the law allows discovery.

A review of the state statute established that the letter to Madrid was protected by the work product privilege. The rule provided different levels of protection for two types of work product. Core work product was defined as the work product of an attorney that contains the attorney's mental impressions, opinion, conclusions, or legal theories; this is not discoverable. Any other work product is discoverable only upon a showing that the party seeking discovery has substantial need of the materials in the preparation of the party's case, and that the party is unable without undue hardship to obtain the substantial equivalent of the material by other means.

The reservation of rights letter in this instance was prepared by Madrid's insurer after a lawsuit was filed and while the insurer was in communication with Calvillo's attorney and Madrid 's attorney. It was sent to Madrid and a copy was sent to his attorney. As such, it was a communication between a party, the party's insurer, and the party's attorney, and it related directly to the insurer providing Madrid a defense in the lawsuit. In other words, it was work product. It was not core work product, but it was work product that required Calvillo to show that he had a substantial need of the materials in the preparation of his case. Calvillo failed to show this in court. Therefore, the appeals court granted the writ of mandamus sought by Madrid, and sent the issue back to the trial court to withdraw its order denying Madrid 's motion for a protective order.

Note that this opinion has not been released for publication in the permanent law reports. Until so released, the ruling is subject to revision or withdrawal.

Ongoing Operations and Warranty Period

A New York court addressed the issue of whether ongoing operations encompassed a warranty period. This case is New York City Housing Authority v. Merchants Mutual Insurance Company, 2007 WL 3104330 (N.Y.A.D. 1 Dept.).

The New York Housing Authority sought a declaration that the insurer was obligated to defend and indemnify it in an underlying action in which the plaintiff alleges he was shot on the Housing Authority's property due to a faulty electromagnetic locking system. The Housing Authority claimed coverage as an additional insured on the policy of Stonewall, the contractor that was hired to install the locking system. The additional insured clause granted that status to the Housing Authority “with respect to liability arising out of your ongoing operations performed for that insured”.

The court noted that the contract between the Housing Authority and Stonewall called for the installation and maintenance of both intercom and door locking systems on the premises, provided that the intercom system was guaranteed for a period of two years, and provided that the locking system was guaranteed for a period of two years (except for the peril of vandalism). At the time of the shooting, the parties were within the contractual two-year guarantee period.

The facts of the situation showed that, although Stonewall was obligated to maintain the system, no calls were made to Stonewall from the Housing Authority for maintenance. Moreover, evidence showed that the locking system was inoperable at the time of the shooting due to vandalism and not due to faulty workmanship or installation. So, the court ruled that the injuries suffered by the shooting victim did not arise out of Stonewall's ongoing operations performed for the Housing Authority. This meant that the Housing Authority was not an additional insured on Stonewall's policy and its motion was rejected.

Allocation Methodology Discussed by New Hampshire Court

The New Hampshire Supreme Court has weighed in on the issue of allocation of liability coverage among multiple insurers. The case is Energynorth Natural Gas, Inc. v. Certain Underwriters at Lloyd's, 2007 WL 3033932 (N.H.). The discussion of the various allocation methods in this case is very educational and the reasoning of the court would be very helpful to parties that have to face the allocation question in the future. Note, however, that this opinion has not been released for publication in the permanent law reports; until so released, the opinion is subject to revision or withdrawal.

A successor to the insured operator of a manufactured gas plant brought a declaratory judgment action against the excess liability insurer to recover costs incurred in the past and that may occur in the future in response to environmental damage. The U.S. District Court for the District of New Hampshire certified questions of law to the New Hampshire Supreme Court in order to decide the issue. The main certified question was: when an insurance policy is triggered by the continuous migration of toxic waste that began before coverage commenced, and continued after coverage ended, and the evidence will not permit a determination as to when specific property damage occurred, is the insurer jointly and severally liable for all of the resulting property damage up to the limits of the policy?

The court recognized this case as one of first impression. As a result, the Court examined decisions from around the country and various treatises on the subject of allocation for help in answering the question. The Court said that there are two principal methods of allocating coverage among multiple policies: joint and several liability and pro rata. Under the joint and several approach, any policy on the risk for any portion of the period in which the insured sustained property damage or bodily injury is jointly and severally obligated to respond in full, up to its policy limits, for the loss. Under the pro rata approach, all the triggered insurers will be allocated a certain portion of the loss. The main difference between the two approaches is that pro rata allocation allows the policy holder to recover only a portion of each triggered policy.

The court was persuaded that the pro rata approach to allocating liability among multiple insurers was the more soundly reasoned approach. The Court also noted that pro rata allocation was superior to joint and several allocation because it is more consistent with the trigger of coverage model the Court had adopted in an earlier environmental case. And, pro rata allocation guarantees that all of the carriers on the risk during a long-tail environmental exposure injury respond to it. Finally, the Court said that a pro rata allocation forces companies to internalize part of the costs of long-tail liability, and creates incentives for companies to minimize environmental carelessness by not permitting a policyholder who chooses not to be insured for part of the long-tail injury period to recover as if the policyholder had been fully covered for that period.