Gross Negligence Affirmed where Advertisement Misrepresented Mini Storage

In Kuhn v. Panter, No. M2015-00260-COA-R3-CV (Tenn. Ct. App. Nov. 25, 2015), the Court of Appeals affirmed a finding of gross negligence against the owners of a mini storage facility.

Here, defendants had advertised the mini storage facility as “clean and dry.” Plaintiffs rented one of the units in 2011 and stored many personal belongings there, including photographs, a family Bible, clothes and furniture. In May 2013, plaintiffs found that their unit had flooded and ruined all of their personal property.

Plaintiffs filed suit in sessions court and were awarded a judgment there, which defendants appealed to circuit court. During a bench trial, the evidence showed that the building had “drainage issues” during construction and the city issued a stop work order on it. Moreover, when the building was eventually completed, there was never a final inspection by the city and a certificate of occupancy was never issued. A witness for plaintiffs testified that the building housing their storage unit was “eleven inches lower than the surrounding storage buildings.” Further, it was shown that an “agent [of defendants] testified in a prior hearing that the unit rented to [plaintiffs] had flooded on a prior occasion.” Based on these facts, the trial court found defendants had committed gross negligence, and the Court of Appeals affirmed.

The Court noted that gross negligence arises from “a conscious neglect of duty or a callous indifference to consequences.” (internal citation and quotation omitted). The Court cited the same evidence relied upon by the trial court, putting special emphasis on the fact that defendants knew the unit had flooded before.

Most tellingly, however, is the fact that the trial court found that [defendant] was aware that the particular unit rented to the [plaintiffs] had previously flooded. This fact not only demonstrates an awareness of the flooding, but also evinces a ‘callous indifference to consequences.’ In other words, [defendant] knew that the unit had experienced flooding, yet advertised its rental units as ‘clean and dry.’ Renting the unit with prior knowledge of flooding and the obvious potential for a renter’s property to be damaged, rises to the level of ‘callous indifference’ required to constitute gross negligence.

On appeal, defendants also raised two contractual issues. First, they asserted that an exculpatory clause in the rental agreement prevented them from being held liable. The Court rejected this assertion, stating that “[i]n Tennessee, a contract against liability will not operate to protect a party who is guilty of gross negligence.” (internal citation and quotations omitted). Defendants also argued that they were entitled to attorneys’ fees under the agreement. The Court held, however, that the contractual provision regarding attorneys’ fees only applied if the owner had to bring suit to enforce the terms of the lease. Here, the renter brought suit and the situation clearly did not fall within this contractual provision.

This was definitely the correct result in this case. Defendants held out a property that had previously flooded as “clean and dry,” knowing that was not true. Plaintiffs lost property that was irreplaceable here, and the Court was right to hold defendants financially liable in this case.