Gonzalez v. Tounjian, 20020263.

CourtUnited States State Supreme Court of North Dakota
Citation665 N.W.2d 705,2003 ND 121
Docket NumberNo. 20020263.,20020263.
PartiesLiliam GONZALEZ, Plaintiff and Appellee, v. Jessica TOUNJIAN, Defendant, and Dolund Partnership, L.L.P., Defendant and Appellant.
Decision Date18 July 2003

665 N.W.2d 705
2003 ND 121

Liliam GONZALEZ, Plaintiff and Appellee,
v.
Jessica TOUNJIAN, Defendant, and
Dolund Partnership, L.L.P., Defendant and Appellant

No. 20020263.

Supreme Court of North Dakota.

July 18, 2003.


665 N.W.2d 708
Daniel J. Dunn (argued), Maring Williams Law Office, Fargo, N.D. and Anthony J. Weiler (appeared), Maring Williams Law Office, Bismarck, N.D., for plaintiff and appellee

665 N.W.2d 709
Paul R. Oppegard (argued) and Corey J. Quinton (appeared), Smith Bakke Oppegard Porsborg Wolf, Moorhead, MN, for defendant and appellant

KAPSNER, Justice.

[¶ 1] Dolund Partnership, L.L.P. ("Dolund") has appealed from a judgment, an order denying a motion to vacate the judgment, and an order denying a motion for a new trial in a negligence action arising out of an apartment fire. We affirm in part, reverse in part, and remand for entry of judgment in accordance with this opinion.

I

[¶ 2] Dolund owned an apartment building in downtown Fargo. Liliam Gonzalez and her daughter, Betsy, lived in the building. At approximately 7:50 a.m. on March 14, 1997, a fire, caused by an unattended candle, started in a neighboring apartment occupied by Jessica Tounjian. Betsy heard loud footsteps in the hallway and, upon opening the apartment door, saw thick smoke. Betsy told her mother there was a fire and ran out of the apartment toward the exit.

[¶ 3] Gonzalez followed Betsy toward the exit but her path was blocked by a metal "roll down" fire door which had dropped down in the hallway. The door was described as similar to a roll-top desk, suspended in the ceiling. The door is triggered by a fusable link which activates if the temperature reaches 180 degrees. Once the temperature is reached, the link releases and the metal door drops down to block the spread of the fire to other parts of the building.

[¶ 4] Gonzalez claims she had never seen the fire door before, and had never been told or warned about it by Dolund. She claims she tried in vain to open the door, but did not know how to operate it. She attempted to enter a nearby apartment but could not find the door because of the thick smoke in the hallway. Gonzalez was overcome by smoke and collapsed approximately ten feet from the fire door.

[¶ 5] Gonzalez was rescued by firefighters and taken to the hospital. She had suffered serious burns on fifteen percent of her body and had second degree burns of her airway. She was transferred to a regional burn center by air ambulance. Ultimately, Gonzalez had skin grafts on her arms, hands, and fingers, and had numerous surgeries to improve scarring on her shoulders.

[¶ 6] Gonzalez sued Tounjian and Dolund. Gonzalez settled her claims against Tounjian, and the case against Dolund was tried to a jury. The jury found that Dolund was 85 percent at fault and Tounjian 15 percent at fault for Gonzalez's injuries. The jury determined Gonzalez had sustained $285,000 in past economic damages and $1,500,000 in past noneconomic damages, and that she would have $650,000 in future economic damages and $500,000 in future noneconomic damages. The jury also awarded interest on her damages at the rate of 3.5 percent annually. The trial court reduced the damages to account for Tounjian's percentage of fault, added costs, disbursements, and interest, and entered judgment in the amount of $2,983,099.34. Dolund's post-trial motions to vacate the judgment and for a new trial were denied, and Dolund has appealed.

II

[¶ 7] Dolund argues the trial court applied an incorrect premises liability standard, thereby denying Dolund a fair trial.

A

[¶ 8] Dolund, citing Restatement (Second) of Torts § 358 (1965) and Capsco Prods., Inc. v. Savageau, 493 N.W.2d 650

665 N.W.2d 710
(N.D.1992), contends North Dakota law does not impose liability upon a landlord for dangerous conditions on leased premises unless the landlord knows or has reason to know of the dangerous condition. Section 358 of the Restatement provides, in pertinent part
Undisclosed Dangerous Conditions Known to Lessor
(1) A lessor of land who conceals or fails to disclose to his lessee any condition, whether natural or artificial, which involves unreasonable risk of physical harm to persons on the land, is subject to liability to the lessee and others upon the land with the consent of the lessee or his sublessee for physical harm caused by the condition after the lessee has taken possession, if
(a) the lessee does not know or have reason to know of the condition or the risk involved, and
(b) the lessor knows or has reason to know of the condition, and realizes or should realize the risk involved, and has reason to expect that the lessee will not discover the condition or realize the risk.

This Court relied upon § 358 in Capsco, holding that summary judgment was inappropriate where there was a factual dispute about the landlord's alleged misrepresentation and concealment that the water mains in a leased building had been shut off. See also Francis v. Pic, 226 N.W.2d 654, 656-59 (N.D.1975) (applying § 358 to find fact questions existed on whether landlord knew of defective staircase in leased single-family house). Dolund maintains that it can only be held liable if Gonzalez proves it had knowledge of dangerous conditions on the premises, and the trial court's evidentiary rulings and instructions to the jury employed an inappropriate standard of liability.

[¶ 9] Dolund's argument ignores the distinctions made between a landlord's duty when the injury is caused by a hidden dangerous condition in the leased premises and the landlord's broader duty when the injury is caused by defects in common areas of the property over which the landlord retained control. Gonzalez's theory in this case is that her injuries were caused, not by any defective or dangerous condition in her leased apartment, but by defects and dangerous conditions in the common areas of the building over which Dolund retained control. A landlord's liability for injuries caused by conditions in common areas is governed by Restatement (Second) of Torts § 360 (1965). McCullagh v. Fortune, 76 N.D. 669, 674, 38 N.W.2d 771, 774-75 (1949). Section 360 provides:

Parts of Land Retained in Lessor's Control Which Lessee is Entitled to Use
A possessor of land who leases a part thereof and retains in his own control any other part which the lessee is entitled to use as appurtenant to the part leased to him, is subject to liability to his lessee and others lawfully upon the land with the consent of the lessee or a sublessee for physical harm caused by a dangerous condition upon that part of the land retained in the lessor's control, if the lessor by the exercise of reasonable care could have discovered the condition and the unreasonable risk involved therein and could have made the condition safe.

This Court relied upon § 360 in McCullagh, 76 N.D. at 674, 38 N.W.2d at 774-75 (quoting 30 Am.Jur. Landlord and Tenant § 688 (1941)), concluding:

It is well settled that where the owner of premises leases parts thereof to different tenants and either expressly or impliedly reserves certain parts thereof,
665 N.W.2d 711
such as entrances, halls, or stairways for the common use of different tenants, "it is his duty to exercise reasonable care to keep safe such parts of which he so reserves control, and if he is negligent in this regard, and a personal injury results by reason thereof to a tenant or to a person there in the right of the tenant, he is liable, provided the injury occurs while such part of the premises is being used in the manner intended."

[¶ 10] Under this standard, a landlord has a duty to use reasonable care to discover dangerous conditions in common areas and to keep those areas safe. This is in essence the "reasonable person" standard of ordinary negligence.

[¶ 11] Dolund does not dispute that the alleged dangerous conditions which Gonzalez contends caused her injuries were located in the common areas of the building, not in the premises leased to Gonzalez. Gonzalez alleged that the fire, smoke, and heat spread quickly into the hallway because Tounjian's hallway door did not have a self-closing device as required by the building code and the door itself was not properly fire-rated. Gonzalez further claimed the failure to install automatic sprinkler systems in the hallway, as required by the building code, allowed the fire and smoke to spread. Finally, Gonzalez argued the roll-down fire door trapped her in the smoke-filled hallway, causing her to lose consciousness and suffer severe injuries.

[¶ 12] Under the circumstances in this case, the trial court did not apply an incorrect standard of liability. The appropriate standard is that set out in McCullagh and § 360, and the standard set out in Capsco and § 358 is inapplicable. It was not necessary for Gonzalez to prove that Dolund had actual or constructive knowledge of dangerous conditions on the leased premises. Rather, because Gonzalez alleged her injuries were caused by dangerous conditions in the common areas of the building, the appropriate standard is whether Dolund acted reasonably to discover defective and dangerous conditions and keep the common areas safe.

B

[¶ 13] As part of its argument that the trial court applied an incorrect premises liability standard, Dolund argues the court erroneously sustained objections to evidence offered to show that the building had been inspected annually by the Fargo Fire Department and that it was the custom and practice in the industry for apartment owners and managers to rely upon fire department inspections to identify safety concerns in their buildings. Dolund contends this evidence would have shown it had no actual knowledge of the defects and dangerous conditions which Gonzalez alleges caused her injuries. Although we have rejected Dolund's argument that Gonzalez was required to prove knowledge of the dangerous conditions, we will address Dolund's evidentiary issues because this evidence would also be...

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