By Ben Solis
Staff Writer
Posted: September 4, 2023 4:05 PM

A longstanding mechanism that prevented property and business owners from being sued if a visiting person is injured – and the hazard was open and obvious – was overturned this summer, and now attorneys and business leaders across Michigan are working to understand how that could affect their clients and colleagues.

The 5-2 decision from the Michigan Supreme Court issued in July for the consolidated Kandil-Elsayed v. F & E Oil, Incorporated, and Pinsky v. Kroger Company of Michigan (MSC Docket Nos. 162907 and 163430) overturned a key precedent from 2001, Lugo v. Ameritech, that made the open and obvious doctrine part of a property owner's duty, meaning unless there were special aspects of the situation making it particularly dangerous, the business owner would not be liable.

Chief Justice Elizabeth Clement, writing for the majority, held the Lugo case – one of several hallmark opinions of the Engler-era Supreme Court – was wrongly decided. Instead, statute, prior court precedents and other tort governance indicate that the open and obvious nature of a hazard should be considered in a comparative fault analysis.

That has essentially opened the door for more lawsuits, which would typically be thrown out in the summary judgment stage under the Lugo open and obvious standard, to move forward (See Gongwer Michigan Report, July 28, 2023).

In interviews with Gongwer News Service, attorneys who represent injured parties hailed the decision as a long time coming, agreeing that property owners and businesses should be doing more to ensure their properties are maintained and free of hazards, obvious or not.

Several also added that it would give those parties their days in court and open injury complaints to deeper fact-finding proceedings, which could lead to victories at trial or swifter settlements. The caveat, however, is that the burden of proving premises liability claims may increase as greater scrutiny may be placed on the claims as they go through discovery and trials.

"Now, it's going back to what we have in normal negligence cases, meaning that you have to prove that there was a dangerous condition and what percentage of fault is more of a comparative negligence," said Debra Lujan, an attorney with Collins Einhorn Farrell and co-chair of the State Bar of Michigan's negligence law section. "So, if the plaintiff could have seen it, you still have (a mechanism where) if they're more than 50 percent at fault, they are eliminated from getting any non-economic damages, which means pain and suffering, loss of enjoyment and things. But in terms of economic damages, it's going to reduce their damages by their own percentage of faults."

That said, plaintiffs won't see courts just kicking these cases out as they had before without discovery and without an opportunity for the plaintiff to describe what, what they saw, what they didn't see what the condition was when they were injured, Lujan added.

Todd Stearn, a personal injury attorney who also is a co-chair to the Bar's negligence law section, agreed that the analysis around the open and obvious hazards doctrine was in need of an overhaul for some time, as it incentivized business owners to keep openly defective areas on their properties untouched because they were unlikely to get sued in the event of an injury on premises.

"The Supreme Court, I think, recognized among other things that the law was just really unfair (and this ruling) is a dramatic change," Stearn said. "It was also very arbitrary. Before, one judge might find a defect to be open and obvious and another judge might not find the exact same defect to be open and obvious. You'd be getting very inequitable results based on the judge you had. This should clean that up."

Businesses and property owners are, on the other hand, bracing for the worst. Two heads of Michigan associations representing businesses large and small in interviews with Gongwer said they will now face legal and financial burdens to maintain grounds and fix hazards that were previously insulated from injury claims.

Those sources also said that the rulings now bring an air of uncertainty for businesses as they struggle to bounce back from the pandemic, high costs and inflation on goods and services.

Brian Calley, president and CEO of the Small Business Association of Michigan, said that was "unquestionably true" in the wake of the ruling.

"Business and property owners have previously been assured that common sense plays a key role in liability exposure," Calley said. "Overturning the long standing open and obvious precedent turns that on its head. And it wipes out case law and decisions that were based on that precedent. This creates a lot of uncertainty."

Wendy Block, senior vice president of business advocacy with the Michigan Chamber of Commerce, said that also rang true for the businesses they represent, and that they have significant concerns.

"The Supreme Court's ruling, which abolished 22 years of legal precedent pertaining to the doctrine, will result in a significant increase in slip and fall lawsuits. There's no question about it," Block said. "It will impact businesses of all sizes and types across Michigan, and not only will the ruling increase property owners litigation exposure, it will increase the number of trials that we're seeing across Michigan and could also cause property insurance costs to increase significantly."

At a time when businesses are still attempting to recover from losses during the pandemic and are worried about their bottom lines, the specter of a costly premises liability suit now hangs over their heads if their properties have open hazards that now need to be addressed.

Block said that only time will tell if that leads to more slam dunk injury lawsuits against affected businesses, but the mechanism they relied on to filter out frivolous suits has now been obliterated by the court.

Prior to the ruling, Block said the court has always held that if an average person with ordinary intelligence would have been able to discover a potentially dangerous condition, upon casual observation and avoided the same, the processor had no duty to warn or maintain, absent a special aspect of the potential danger.

"This idea of ice or snow, or a giant pothole or some other defect that an average person could see and subsequently avoid, now, all of those situations will be subject to litigation," she said. "And while the court seems to recognize that a property owner doesn't necessarily need to immediately rectify hazards, the question really is about interpretation. Every jury across Michigan could decide this differently, and so there really is no new standard for the courts to look at and for juries to consider."

That difference interpretation across court systems and jury pools, Block added, will make premises liability cases an evolving situation for years to come.

While the Chamber has been careful not to offer its members legal advice – instead advising them to seek legal counsel from their own attorneys – Block said the group was considering options on how to aid members with support.

Alerts were sent to business owners when the ruling came down explaining the decision and how businesses could be impacted. Those alerts also included some tips on how to limit exposure to legal jeopardy.

Block said they are continuing to monitor the situation and offer help as they can. Calley said the same was the case with SBAM, which has provided briefings and articles on the decision and new things a business owner needs to think about.

"While we do not know how this decision will play out in future lawsuits, we do know that early dismissal of frivolous lawsuits will be much harder. That means small business costs will rise," Calley said. "Business owners who have guests, customers, vendors or contractors on their property need to look at risks with fresh eyes. Hazards or potential hazards, no matter how obvious and easily avoided should be evaluated for actions such as modifications, repairs, barriers, or warning signage. Additionally, business owners should consult with their legal and insurance partners to ensure they are adequately protected."

While the probability of exposure to liability and lawsuits surviving the summary stage have potentially increased, Stearn said that necessarily won't lead to more trials.

He said he sees the ruling playing out in a similar way to the no-fault auto insurance reforms and the court cases that followed.

"There was a period of time where serious impairment of body function was being determined by judges, and a lot of cases were getting dismissed. And then the Supreme Court and through some legislation kind of changed it so that series impairment is by and large now a question of fact for a jury," Stearn said. "There are not necessarily more trials, I don't think, but there's more ability to settle cases for plaintiffs without the cases being dismissed. I think it's going to play out in a very similar way. I don't think it's necessarily going to lead to more trials, but I think it's going to lead to more successful outcomes for plaintiffs."

Lujan also said that defendants in these matters will still have the same kinds of defenses that may have been ignored or passed over in favor of using the summary stage to dismiss cases early on through the open and obvious doctrine.

"Did they have notice of the dangerous condition? How long did they have notice? It kind of goes back to what's reasonable, and whether they or should have known about the dangerous condition," she said, adding that plaintiffs will still have to prove that the condition was dangerous. "I just settled a case where … I said, 'you're right, open and obvious has gone away, but this isn't a dangerous condition, this is an ordinary ADA approved floor plan or a regular step.' Where I think you're going to see a lot more cases survive are like snow and ice cases, or cases where there truly is a danger on the condition. Then you know, it's going to go back to the property owner to keep their property safe."

The standard might change based on who the plaintiff was and if they were an invitee or a licensed person, like a skilled worker, Lujan said, but now owners must be aware of the fact that they just can't say a hazard was obvious and avoid liability.

"This, to me, is a fairer system for everybody in terms of what you look at, but you still have the same defenses you had before: the 50 percent rule, if somebody's drunk, if somebody's intoxicated, on drugs or something," she said. "You still have to look at more of the totality of the situation, as opposed to 'was this condition objectively open and obvious? Therefore, I don't have to fix it' or 'therefore, I don't owe them a duty.' It has definitely shifted, but there are still many defenses available to defendants."

As to the concerns of business and property owners and the groups that support them, Steran said if those organizations were interested in safety and protecting the public, they should have no problem with the change in calculus before the courts. He also disagreed that the ruling would end up costing them more money on repairs or property overhauls, because upfront investments meaning they won't have to defend cases or pay damages if found liable.

"Our laws in Michigan up until now were an outlier in the country. We had probably the most restrictive, the most difficult premises liability cases in the country, including Alaska. They had an easier time bringing a slip and fall case on snow and ice in Alaska than we did in Michigan," he said. "If those organizations are more interested in safety, making sure that people don't have to encounter dangerous conditions, then they should have no problem with these laws at all. And property owners should be taking care of the properties. That's just a fundamental truth."

– By Ben Solis