Gabaldon v. Erisa Mortgage Co.

• Decision Date: 07 October 1999
• Docket Number: No. 24,788, 24,791.,24,788, 24,791.
• Citation: 990 P.2d 197,1999 NMSC 39,128 N.M. 84
• Parties: Christine GABALDON, individually and as next friend of her minor children, Victor Baldizan and Charlene Baldizan, Plaintiffs-Respondents, v. ERISA MORTGAGE COMPANY, jointly and severally, Defendant-Petitioner. Christine Gabaldon, individually and as next friend of her minor children, Victor Baldizan and Charlene Baldizan, Plaintiffs-Petitioners, v. Erisa Mortgage Company, jointly and severally, Defendant-Respondent.
• Court: New Mexico Supreme Court

990 P.2d 197

128 N.M. 84

1999 NMSC 39

Christine GABALDON, individually and as next friend of her minor children, Victor Baldizan and Charlene Baldizan, Plaintiffs-Respondents, v. ERISA MORTGAGE COMPANY, jointly and severally, Defendant-Petitioner.

Christine Gabaldon, individually and as next friend of her minor children, Victor Baldizan and Charlene Baldizan, Plaintiffs-Petitioners, v. Erisa Mortgage Company, jointly and severally, Defendant-Respondent.

No. 24,788, 24,791.

Supreme Court of New Mexico.

October 7, 1999.

Lassen & Jaffe, Albert B. Lassen, Albuquerque, for Gabaldon.

Gallagher, Casados & Mann, P.C., J.E. Casados, Reed S. Sheppard, Robert L. Hlady, Albuquerque, for Erisa Mortgage Company.

OPINION

BACA, Justice.

{1} Pursuant to NMSA 1978, § 34-5-14(B)(4) (1972), on certiorari from the Court of Appeals, we consider: 1) whether the operation of a wave pool is an inherently dangerous activity, and 2) whether plaintiffs may maintain an action against a non-possessory landlord under a negligent entrustment theory of liability. We affirm the Court of Appeals' holding that the operation of wave pools is not an inherently dangerous activity. However, we reverse the Court of Appeals to the extent that we hold that negligent entrustment of real property by a non-possessory landlord is not a cause of action recognized under New Mexico law.

I.

{2} This action grows out of a near-drowning incident at the Beach Waterpark ("the Beach") in Albuquerque on June 21, 1993. The Beach is a water park that features various water attractions including a 700,000 gallon wave pool with mechanically-operated hydraulic machines simulating ocean-type waves of varying intensities.

{3} After Erisa Mortgage Company ("Erisa") acquired the Beach through a loan foreclosure it sought to find a lessee to manage and operate the property. Jay-Bi Property Management Inc. ("Jay-Bi") and its owner, Jay Bomaster, initially rejected Erisa's lease offer for the Beach citing inadequate financial resources. Later, after meeting with Erisa's agents, Jay-Bi and Erisa entered into a lease agreement in April 1991. Clause III of the lease agreement granted Erisa a percentage of Jay-Bi's gross receipts. Erisa also reserved rights to repair and inspect the Beach and to approve such activities by Jay-Bi. Jay-Bi employed Ellis and Associates as its water safety consultants but in June 1993, a short time before the near-drowning incident, Bomaster fired Ellis and Associates claiming that the costs for their services were unreasonable.

{4} The drowning incident occurred one half-hour after the Beach opened on June 21, 1993. Lifeguards found nine-year old Victor Baldizan floating face down near the bottom of the wave pool without a pulse. Medical personnel resuscitated Victor and transported him to the hospital. According to witness testimony, approximately three minutes had elapsed before lifeguards found Victor. He was not revived for several minutes after lifeguards found him.

{5} Christine Gabaldon ("Gabaldon") filed a personal injury action against Jay-Bi and other parties on behalf of her son, Victor, claiming that he had suffered permanent brain injuries due to oxygen deprivation. Gabaldon later joined Erisa as a party and in her second amended complaint claimed that the operation of a wave pool is an inherently dangerous activity and that Erisa breached its duty to select a competent lessee by negligently entrusting the Beach to Jay-Bi. Erisa moved for dismissal, or in the alternative, for summary judgment, arguing that a wave pool is not inherently dangerous and that Gabaldon failed to state a claim upon which relief may be granted. The district court granted Erisa's motion for summary judgment and dismissed each cause of action against Erisa with prejudice. Gabaldon appealed.

{6} The Court of Appeals affirmed the district court's dismissal of Gabaldon's claim that wave pools were inherently dangerous but reversed the dismissal of the negligent entrustment claim, holding that it was a proper theory under which to seek relief and that questions of fact existed which precluded summary judgment. See Gabaldon v. Erisa Mortgage Co., 1997-NMCA-120, ¶ 50, 124 N.M. 296, 949 P.2d 1193. We granted certiorari to address the issues of whether the operation of a wave pool is an inherently dangerous activity and whether negligent entrustment of real property is a valid cause of action under New Mexico law that requires a duty to investigate a lessee's ability to safely operate the leased premises.

II.

{7} Determining whether an activity is inherently dangerous is a question of law.¹ See Saiz v. Belen Sch. Dist., 113 N.M. 387, 395-96, 398, 827 P.2d 102, 110-11, 113 (1992)

. Also whether a plaintiff alleges a valid theory upon which relief may be granted is a pure question of law. All questions of law are reviewed de novo. See Fernandez v. Walgreen Hastings Co., 1998-NMSC-039, ¶ 1, 126 N.M. 263, 968 P.2d 774.

{8} In this case, the Court of Appeals correctly stated that, "[g]iven the public policy implications of a determination of inherently dangerous activit[ies] ... an independent review of the record is ... appropriate in this case." See Gabaldon, 1997-NMCA-120, ¶ 11, 124 N.M. 296, 949 P.2d 1193. Accordingly, this Court must decide whether the facts in the record before us give rise to a determination that wave pool operation is an inherently dangerous activity.

{9} In reviewing the district court's award of summary judgment, "we must determine whether the moving party has demonstrated that there are no genuine issues of material fact and is therefore entitled to judgment as a matter of law." Gonzales v. Allstate Ins. Co., 1996-NMSC-041, 122 N.M. 137, 139, 921 P.2d 944, 946; see also Rule 1-056(C) NMRA 1999.

III.

{10} Gabaldon claims that the operation of a wave pool is an inherently dangerous activity and that as landlord and owner of the Beach, Erisa had a nondelegable duty to ensure the safety of its wave pool patrons. The crux of Gabaldon's argument is that wave pools are inherently dangerous if adequate safety precautions are not taken. In support of this contention, Gabaldon points to the following facts as evidence that Jay-Bi failed to take the precautions necessary to prevent the wave pool from increasing the risk of harm to Beach patrons: 1) Jay-Bi fired the Beach water safety consultant, Ellis and Associates, in June 1993; 2) after firing Ellis and Associates, Jay-Bi failed to spend money on independent training and water safety auditing despite a critical safety audit that cited a lack of concern for water safety; 3) Jay-Bi required its lifeguards to pay for their own continuing education training; and 4) there was an overall lack of concern for aquatic safety matters at the Beach.

{11} Gabaldon's analysis of the "inherent danger" posed by wave pools includes an affidavit of Thomas Ebro, plaintiff's expert in the area of water safety and aquatic risk management, and two excerpts from articles by Jeff Ellis of Ellis and Associates, which was employed by the Beach as an independent trainer, consultant, and auditor. Ebro's affidavit comparing the risks of swimming pools and wave pools states:

Because of either oscillating or sweeping waves inside the expansive basin and coupled with typically heavy congestion of bathers floating on a carpet of tubes, a wave pool is considerably more difficult to safeguard than a swimming pool. Water movements and undertows are very tiring for swimmers and can cause disorientation and slips and falls. Collisions are another cause of injuries unique to wave pools— body to body, body to basin and body to wave. With congestion of floating tubes/rafts and swimmers intermingled, the lifeguards' line of sight is often impaired. Wave pools, comparatively, pose an increased risk of aquatic injury, including potential for drowning, over swimming pools.

Ellis' National Aquatics Journal article stated that the characteristics of wave pools, as opposed to swimming pools, demanded different "training regimens and standards of lifeguard performance." Ellis states that lifeguards execute far more wave pool rescues than lifeguards at swimming pools and should therefore receive extensive training in victim recognition. He adds that failed water safety audits may also result in park closure. The adoption of these safety standards and precautions, Ellis states, result in only one drowning death per 3.7 million visits as compared to one drowning for every 280,000 visits to a swimming pool.

{12} We agree with the Court of Appeals' conclusion that "while wave pools present different risks from those found in ordinary swimming pools, the risks do not meet the Saiz test" to determine whether an activity is inherently dangerous. Gabaldon, 1997-NMCA-120, ¶ 15, 124 N.M. 296, 949 P.2d 1193. In Saiz, this Court addressed the issue of inherently dangerous activities where a child was electrocuted at a high school football game by an improperly installed high voltage lighting system. See Saiz, 113 N.M. at 391,

827 P.2d at 106. We held that installation of a high voltage lighting system was an inherently dangerous activity and accordingly, that the school district had a nondelegable duty to ensure that reasonable precautions were taken in connection with the independent contractor's inherently dangerous work. Id. at 400, 827 P.2d at 115. We concluded that the defendant school district was jointly and severally liable² with the independent contractor it had employed to install the lighting system for its "failure to take precautions reasonably necessary to prevent injury to third parties arising from the peculiar risk." Id.

{13} Saiz stated that when determining whether an activity is inherently dangerous, the Court must consider whether "work is inherently or intrinsically dangerous because the commission of the work . . . is likely to cause harm if a reasonable precaution against the peculiar risk or special danger is not...