George Burnett, doing business as Beau Monde Perfumes, leased gift shop space at the Chimney Sweep Inn. After several complaints to the hotel owner about the smell of mold in the leased store space, Burnett filed a lawsuit against the landlord and the property manager for premises liability, general negligence, breach of contract, negligent maintenance of the premises, negligent maintenance of a nuisance, intentional infliction of emotional distress, and conversion.

He alleged he was unable to conduct business because of the excessive moisture and growth of mildew and mold in the leased space.

Purchase Bob Bruss reports online.

The landlord, Chimney Sweep LLC, and the property manager pointed to the “exculpatory clause” in the lease that says the landlord shall not be liable for damage or injury due to fire, steam, electricity, gas, water, rain, breakage, leakage, obstruction or other defects of pipes, fire sprinklers, wires and air conditioning.

The lease also says: “Notwithstanding lessor’s negligence or breach of this lease, lessor shall under no circumstances be liable for injury to lessee’s business or for any loss of income or profit therefrom.”

If you were the judge would you rule the landlord’s exculpatory clause in the lease allows the landlord to escape liability for mold damage in the leased store?

The judge said no!

An exculpatory clause in a lease, the judge began, does not allow a landlord to escape liability for valid causes of action against the landlord and the property management company.

“An agreement which seeks to limit liability generally without specifically mentioning negligence is construed to shield a party only for passive negligence, not for active negligence,” he continued.

“Based on the allegations in the complaint, Chimney Sweep was actively negligent in refusing to remediate the problems caused by the excessive moisture and mold infestation on the premises,” the judge explained.

“Chimney Sweep contends that it had no duty to take remedial action…it cannot be said as a matter of law that the exculpatory clause shields Chimney Sweep from liability,” the judge ruled.

Based on the California Court of Appeal decision in Burnett v. Chimney Sweep LLC, 20 Cal.Rptr.3d 562.

(For more information on Bob Bruss publications, visit his
Real Estate Center


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