Insurance Defense Blog

D.C. Landlord's Liability for Lead-Based Paint Poisoning Expanded By Court of Appeals

The D.C. Court of Appeals has held that a landlord can be sued in negligence for lead-based paint poisoning of a child even if the landlord had no notice of the presence of lead-based paint on the premises, or notice of the presence of chipping, flaking or peeling paint --  provided that the landlord knew that a child under the age of 8 years old lived there. Childs v. Purll.

The Court based its decision on a D.C. regulation which creates an affirmative duty on the landlord to remediate lead paint hazards in an apartment where such young children live.

The Court stated, in pertinent part, as follows:

Although the Purlls and their management company may not have known there was lead paint in the premises, “actual knowledge [of the defect] is not required for liability; it is enough if, in the exercise of reasonable care, appellee[s] should have known that the condition . . . violated the standards of the Housing Code.” Whetzel, 108 U.S. App. D.C. at 393, 282 F.2d at 951. “Ordinarily, the landlord will be chargeable with notice of conditions which existed prior to the time that the tenant takes possession,” RESTATEMENT § 17.6 cmt. c, and the creation in § 707.3 of an affirmative duty to furnish lead-free premises implies a concomitant, antecedent duty to ascertain whether the premises in fact are lead-free.

Upon notification that the prospective tenants of 1411 Ridge Place would include children under eight years of age, § 707.3 imposed a specific, affirmative duty on the owners and their agents to provide those premises to the Childs family in a lead-free condition or not at all.

(footnotes omitted, emphasis added).

In this case, the landlord was notified of the age of the children in the lease agreement.

Citing a New York case, the Court further stated that, " In effect, § 707.3 presumptively serves to put the landlord on constructive notice of any lead paint hazard in premises occupied by children under eight."

One way to try to defend against the statutory presumption of negligence is to show that the landlord did all that all reasonable person would do to establish that the premises were free of lead paint and to comply with the regulation.

This is a major expansion of the liability of landlords for lead-based paint poisoning in the District of Columbia, in the same vein as recent lead poisoning cases in Maryland. 

The end result is that any child under 8 years old in the District of Columbia who sustains lead-based paint poisoning in an apartment has a cognizable cause of action in negligence against the landlord, even if the landlord had no knowledge that there was lead-based paint on the premises and had no knowledge that there was flaking, peeling, or chipping paint there.  The focus of lead poisoning litigation in the District will necessarily be on the proof that the child got the lead poisoning on the premises, rather than from other sources such as the municipal water system.

The Court's opinion, however, rejected the argument that a lead poisoning claim could be the basis for a claim under the D.C. Consumer Protection Act.

D.C. Consumer Protection Act Held Not To Apply Where Plaintiff Purchased Item On Ebay In Order To Resell It

There is a recent pro-defense decision on the D.C. Consumer Protection Act, albeit only from a Magistrate Judge of the Superior Court.

In Nicely v. Jones, No. 9270-03 (D.C. Super. Ct. May 28, 2004), Magistrate Judge Ronald A. Goodbread held that the plaintiff, who purchased a fifty-dollar automatic stapler on eBay, was not entitled to claim damages due to the defective condition of the stapler under the D.C. Consumer Protection Act because (1) the plaintiff was not complaining of "illegal trade practices"; and (2) he was not a "consumer as defined in D.C. Code sec. 28-3901(a)(2). The plaintiff did not purchase the stapler for his personal use, but instead to resell it. Merchants are excluded from the protections of the CPA.

The plaintiff had sought return of his purchase money ($50), plus his lost profit on the resale of the stapler ($16), plus $1500 damages under the CPA due to unfair trade practices, plus punitive damages. The defendant was the individual who had sold the plaintiff the stapler via eBay.

This opinion is not available on line, but was published in The Daily Washington Law Reporter, Vol. 132, Number 208, page 2101 (Monday, Oct. 25, 2004).

Maryland Court of Special Appeals Holds That Real Estate Appraiser Can Be Liable Under Maryland Consumer Protection Act

In Hoffman v. Stamper, the Court of Special Appeals of Maryland issued a 115 page opinion concerning a fraudulent real estate "flipping" scam in Baltimore. The buyers were awarded a total of $129,020.03, in economic damages, and $1,305,000, in non-economic damages, against all the defendants. The appellants were three defendants who had a more peripheral role: a mortgage company, a loan officer, and a real estate appraiser. The plaintiffs cross appealed the dismissal of their punitive damages claims against these same defendants. The court affirmed the verdicts in favor of the plaintiffs, but reversed and remanded on the cross appeal, finding that punitive damages should have gone to the jury.

Among other things, on appeal the Court held that a real estate appraiser was properly found liable under the Marland Consumer Protection Act, even though he did not directly engage in selling the property. The Court reasoned:

Hoffman's appraisals were so vital to the sales of consumer realty here that his conduct in performing them was the equivalent of conduct committed “in” the sale, for purposes of the MCPA. Unlike the defendants in Morris, who produced the plywood to be used for any purpose for which plywood is suitable, and who in no way participated in influencing the plaintiffs' decisions to purchase consumer realty, Hoffman knew, from his familiarity with FHA regulations, that his appraisals were critical to effectuate the sales. Moreover, the evidence showed that, without the inflated appraisals, the sales would not have transpired. Accordingly, the evidence was sufficient to support a reasonable finding that Hoffman engaged in unfair and deceptive trade practices in making material misrepresentations about value in the appraisals.

Slip. op., page 72.

The trial court had also awarded the buyers' lawyers $195,591.26 in fees and expenses under the Maryland Consumer Protection Act. The Court of Special Appeals vacated this order, while affirming the jury verdict, because it found that the case had to be remanded for consideration of punitive damages against the real estate appraiser and the two other defendants based on the evidence before the jury.

In sum, the appeal turned out badly for the appellants, who not only failed to disturb the main verdicts but who are now also exposed to punitive damages on remand.

U.S. District Court Dismisses Class Action Under D.C. Consumer Protection Procedures Act Because Plaintiffs Suffered No Injury And Therefore Lack Standing

In Williams v. The Purdue Pharma Co., No. 02-0556, U.S. District Judge Rosemary Collyer has granted the defendants motions to dismiss a class action under the D.C. Consumer Protection Procedures Act, seeking a refund of all monies paid by plaintiffs and class members of OxyContin, a pain medication. The suit expressly excluded plaintiffs with personal injury claims. The suit alleged that the defendants engaged in deceptive advertising and that their over-promotion of OxyContin inflated the price of the drug so that all class members paid a higher price.

The Court noted that the amendment to the CPPA effective Oct. 19, 2000, removed the requirement of injury in fact from the statute, but that that amendment is not applied retroactively.

The Court granted the defendants' motions to dismiss, on the grounds that standing to assert a claim requires a showing of actual or threatened injury redressable by the court, and that standing requires individualized proof of both the fact and the extent of the injury. The Court reasoned that:

The complaint before the Court fails in two respects. While it asserts that defendants engaged in false and misleading advertising, it does not plead that these defendants were in any way deceived – or even saw – any of that advertising. It also fails to allege any particularized and specific injury-in-fact suffered by these plaintiffs.

Application of D.C. Consumer Protection Procedures Act To An Insurer

In Athridge v. Aetna Casualty & Surety Co., No. 02-7134, the D.C. Circuit affirmed the trial court's dismissal of a claim under the D.C. Consumer Protection Procedures Act against Aetna. In this case, the plaintiff had been struck and injured by a car driven by a family member of an Aetna insured. Plaintiff brought suit against Aetna both in his own right and as as assignee of the at-fault driver. Among other things, Plaintiff claimed misrepresentations and omissions under the D.C. Consumer Protection Procedures Act (CPPA). The trial court granted summary judgment to Aetna on the CPPA count, finding that the Plaintiff could not maintain such a claim because the family member of the Aetna insured was not a "consumer" within the meaning of the Act, because Aetna's potential coverage of the family member was not a "trade practice" under the Act, and because the family member did not sustain damages.

The D.C. Circuit affirmed, but did so in a way that suggests that insurers do have potential liability under the CPPA.

Clearinghouse for Recalls

I turned on CSPAN tonight, and saw Hal Stratton, the head of the Consumer Product Safety Commission, giving a press conference on a new government website that is meant to be a central place where all recall information can be found: www.recalls.gov

I hope that they will fit the site with an excellent search engine on the home page that searches all recalls and nothing but recalls.

(Hal Stratton is no relation to me, at least, not within the last 150 years.)

Later: The Aussies beat us to the punch on this one.

Virginia Supreme Court Decides That Plaintiff Does Not Have To Elect Between Fraud Claim and Claim Under Virginia Consumer Protection Act

In Wilkins v. Peninsula Motor Cars, Inc., No. 022983 (Va. Oct. 31, 2003), the Virginia Supreme Court held that a plaintiff cannot be required to elect between his fraud claim and his claim under the Virginia Consumer Protection Act ("VCPA"), Code secs. 59.1-196 to -207.

Under the fraud count, the jury had awarded the plaintiff $1,862.86 in actual damages and $100,000 in punitive damages (a multiple of about 50). Under the VCPA, the jury awarded $4000 in actual damages, which were trebled to $12,000, plus the plaintiff could recover $34,183 in attorney's fees.

The trial court required the plaintiff to elect between the two verdicts, on the grounds that the plaintiff had advanced two alternative theories of recovery based on a single transaction or occurrence, and that allowing plaintiff to receive both verdicts would permit a double recovery. The trial court also reasoned that the punitive damages of the fraud claim and the trebled damages under the VCPA claim amounted to punishing the defendant twice.

Plaintiff appealed, arguing that no election between the two verdicts should be required and that he should receive $4,000 in compensatory damages under the VCPA claim, $100,000 in punitive damages under the fraud claim, and attorney's fees under the VCPA claim.

The Supreme Court agreed with plaintiff's argument, and reversed. It reasoned that the only election of remedies issue presented here was whether the bar against double recovery justified the trial court's ruling. The trial court erred in requiring the plaintiff to choose between causes of action, when all that was required was supervision of the damage awards to avoid double recovery.

The Court rejected the defense argument that an award of attorney's fees and costs under the VCPA is duplicative of punitive damages. The Court found that the statutory language did not support that view, and also that the purpose of the attorney's fees and costs provision is to encourage private enforcement of the VCPA, while punitive damages are designed to punish and deter offensive conduct.

This precedent certainly raises the stakes in cases involving both fraud claims and VCPA claims.

Fourth Circuit in Published Opinion Affirms Piecemeal Class Certification Over Sharp Dissent By Circuit Judge Niemeyer

In Gunnells v. Fidelity Group, Inc., No. 01-2419 (4th Cir. Oct. 30, 2003), the Court, in an interlocutory appeal, affirmed the trial court's partial certification of a class action in a suit brought by purchasers and beneficiaries of a multi-employer health care plan for claims growing out of the plan's collapse.

The complaint alleged causes of action for negligent undertaking, fraud, negligent misrepresentation, breach of contract, civil conspiracy, and violations of the South Carolina Unfair Trade Practices Act.

The trial court refused to certify any class action claims under the S.C. Unfair Trade Practices Act. However, the court conditionally granted plaintiffs' motion for class certification with respect to their management claim against the third party claims administrator, allowing the class to pursue a single claim: that it violated its duties, both contractual and at law, as third party administrator of the plan and such such conduct was a cause of the plan's failure.

In a lengthy dissent, Judge Niemeyer blasted the majority's approach, stating among other things that:

As a result of the majority’s limited focus on the facts related to a single issue in this case, it has left a difficult and complex procedural structure created by the need to try numerous individual claims for each class member that will result in an unnecessary, and ultimately unhelpful, procedural nightmare. And on a broad judgment level, one has to question the utility of enduring this procedural morass for the purpose of answering the single question certified for class treatment: whether TPCM’s mismanagement was a cause of the Plan’s failure. Answering this question resolves no class member’s claim and only invites the difficult questions of how to proceed once the question is answered. Little, if any, time or effort can be saved by answering this question in the abstract because full individual trials on liability will still have to be conducted for each individual class member.

Class Certification Denied in Suit Under D.C. Consumer Protection Procedures Act

A previous post referenced an article describing the dangers of a class action based on a consumer protection statute. A recent case from the D.C. Court of Appeals illustrates this as well, and is likely to become a key precedent in future battles over the certification of a class action under the CPPA.

In Ford v. ChartOne, Inc., No. 03-DA-13, the named plaintiff, in connection with a personal injury suit, requested copies of his medical records from ChartOne, Inc., and was evidently outraged that ChartOne charged him $1.10 per page plus tax, shipping and handling, for a total of $38.16. The plaintiff paid the bill, then brought this suit, alleging that ChartOne violated the D.C. Consumer Protection Procedures Act by setting unconscionable prices for copying and shipping medical records, and cast his suit as a class action.

In a praiseworthy exercise of common sense, the trial court refused to certify the action as a class action. The plaintiff then took an immediate appeal.

The D.C. Court of Appeals in its opinion sidestepped the certification issue, and found that Superior Court Rule 23(f) can not authorize an interlocutory appeal from the grant or denial of class action certification without the written statement by the trial judge that D.C. Code sec. 11-721(d) requires. That is, the trial court must certify in writing that the order involves a controlling question of law as to which there is substantial ground for a difference of opinion and that an immediate appeal may materially advance the ultimate termination of the litigation or case.

DC Court of Appeals Affirms Multi-Million Dollar Judgment Against District Cablevision

Putting an end to nine years of litigation, the D.C. Court of Appeals has affirmed a judgment against District Cablevision under the D.C. Consumer Protection Procedures Act, in the amount of $3,414,411 in compensatory damages, $425,916.25 in attorney's fees, prejudgment interest, plus treble damages. This was a class action based on illegally excessive late payment fees the cable company levied on its subscribers.

Significantly, the Court of Appeals held that treble damages must be awarded to the plaintiffs even though the evidence was insufficient to support punitive damages:

Since the purpose of treble damages under the CPPA is remedial rather than punitive, the plaintiffs in this case were entitled to an award of treble damages without the showing of egregious conduct and malice required for punitive damages. We agree with the Williams court that “[o]nce it is established that a consumer [has] suffered any damage, the CPPA authorizes courts to treble damages without further findings.”

District Cablevision, LP v. Bassin, No. 98-CV-1837 (D.C. July 17, 2003).