Gallagher v. Goldberg, 28 N.Y.2d 886 (1971)

A landlord may assume a duty of care to tenants by voluntarily undertaking actions, such as reporting malfunctions of appliances, that create reliance among tenants, even if no such duty exists under the lease or statute.

Summary

This case addresses the extent of a landlord’s liability for injuries sustained due to malfunctioning appliances on the premises. The Court of Appeals held that while a landlord generally does not have a statutory duty to repair appliances owned by a tenant and used in their business within the leased premises, a duty may arise if the landlord, through a consistent course of conduct, intervenes in the operation of the business to such an extent that tenants rely on the landlord’s actions. In this situation, the landlord can be held liable for negligence if they fail to report malfunctions, contributing to an accident. The Court ordered a new trial to determine liability based on this theory of landlord intervention.

Facts

The landlord, Goldberg, leased a room in the building to H.B.H. Metered Machine Co. for an automatic washing machine business. The lease granted H.B.H. exclusive use of the room, except for access to utility meters, and specified that H.B.H. retained ownership of the machines and could remove them upon lease expiration. Residential tenants, including the plaintiffs, used the washing machines. The plaintiffs sustained injuries due to a malfunctioning washing machine.

Procedural History

The plaintiffs sued the landlord. The trial court initially based the landlord’s liability solely on the statutory provisions of the Multiple Dwelling Law, which the Court of Appeals found unjustified. The trial court also dismissed the landlord’s third-party complaints against the lessee and the repair service. The Appellate Division affirmed the trial court’s judgment. The Court of Appeals reversed the judgment against the landlord and ordered a new trial, while dismissing the appeals of H.B.H. and Washing Machine Clinic for lack of jurisdiction.

Issue(s)

1. Whether Section 78 of the Multiple Dwelling Law imposes a statutory duty on the landlord to repair appliances owned by the tenant within the leased premises?
2. Whether the landlord’s actions created a duty of care where none existed before?

Holding

1. No, because the lease granted the lessee exclusive use of the room, and the landlord retained no control over the tenants’ washing machines. The reservation of access to utility meters did not constitute control over the washing machines.
2. Yes, because a jury could find that the landlord, through a long course of conduct by his employees in reporting malfunctions of the machines, intervened in the business’ operation, giving rise to reliance by the building’s tenants on the landlord reporting malfunctions.

Court’s Reasoning

The Court reasoned that the landlord generally isn’t liable for the condition of property leased to a tenant when the landlord relinquishes control. The Court cited a line of cases establishing that “control is the test which measures generally the responsibility in tort of the owner of real property”. However, the Court carved out an exception based on the landlord’s conduct. Even though the lease agreement and statutory law didn’t impose a duty to repair, the landlord’s actions in repeatedly reporting malfunctions could have created an implied duty to continue doing so, especially if tenants relied on these reports. The court stated, “Hence a liability might result if reports were not made and this played an effective part in the occurrence of the accident.” The Court found that the trial court’s charge to the jury focused solely on statutory liability, neglecting the potential liability arising from the landlord’s intervention. Because of this error, the Court ordered a new trial, where the jury could consider whether the landlord’s actions created a duty of care and whether a breach of that duty contributed to the plaintiffs’ injuries. The court affirmed the dismissal of the third-party complaints, reasoning that the landlord’s negligence, if proven, would constitute active negligence, precluding indemnity from the lessee or repair service.