Broken Water Heater Floods Dental Office-Gross Negligence

Recently, Daniel R. Watkins and Jennie L. Kruempel prevailed at trial on behalf of The Dentists Insurance Company (TDIC) in a gross negligence claim against a landlord / building owner. On December 20, 2009, Plaintiff's insured's dental suite was damaged by a water leak that originated from a hot water heater. The water heater was located in the ceiling/attic space above the women's restroom, located on the second floor of the building. The dental office sustained substantial water damage, which was paid for by TDIC. Reportedly, the water heater was manufactured on April 1, 1987, which made the water heater much older than what the normal warranty covered. TDIC sued the entities involved with the ownership and operation of the property.

On July 9, 2005, the building owner entered into a Commercial Property Purchase Agreement as part of the purchase of the building. Pursuant to the agreement, the buyer purchased the property "in its physical condition as of the date of the acceptance and subject to Buyer's Investigation rights." The agreement also provided a note to the buyer "strongly advising" the buyer to conduct an investigation of the "entire property in order to determine its present condition." Plaintiff's counsel alleged that the parties did not inspect the building as encouraged, despite the building being greater than 20 years old at the time of purchase.

On October 14, 2005, one of the Defendants entered into a Professional Management Agreement the management company for the building. However, another Defendant took over the management of the building on October 26, 2008, after the contact with the management company was terminated. Prior to this, defendants made no inspection of the building's systems; instead the owner and the management company only performed repairs on things when they broke.

The lease between TDIC's insured and the building owner contains language requiring the lessor to keep the property's common areas in good order, condition, and repair. The lease also contained provisions such as a waiver of subrogation.

At no time prior to the loss did the building owner perform an inspection or maintenance of the hot water heater. TDIC alleged at trial that the Defendants were grossly negligent in the inspection, maintenance or repair of the property. TDIC also alleged that the exculpatory provisions of the lease (a provision that relieves one party of liability if damages are caused during the execution of the contract) did not apply due to the gross negligence of the Defendants.

The water loss caused damage the dental suite, flooding 95 percent of the suite, including damage to TDIC's insured's computers, dental equipment, fixtures, furniture and improvements, among other things. TDIC also claimed Stearman damages as part of its loss.

The jury rendered a verdict in favor of The Dentist Insurance Company, finding that Defendants were grossly negligent in the incident. Daniel R. Watkins and Jennie L. Kruempel were successful in winning a verdict in favor of their clients and a total award of $343,994. The verdict included a finding for Stearman damages.