Nebraska Supreme Court Upholds Premises Liability Standard, Rejecting Foreseeability as a Conclusory Factor

In Sundermann v. Hy-Vee, the Nebraska Supreme Court found that Hy-Vee was not liable to the plaintiff, Sundermann, who sustained serious injuries when she was struck by a pickup truck while using an air compressor to fill her tires in a Hy-Vee parking lot.  Sundermann v. Hy-Vee, Inc., 306 Neb. 749 (2020).  In support of its holding, the Nebraska Supreme Court applied the framework for premises liability and rejected the trial court’s finding that Hy-Vee was liable based upon a more general foreseeability analysis.  Id at 764.  The premises liability test holds that a possessor of land is subject to liability for an injury caused to its lawful visitor by a condition on the land if

(1) the possessor either created the condition, knew of the condition, or by the existence of reasonable care would have discovered the condition; (2) the possessor should have realized the condition involved an unreasonable risk of harm to the lawful visitor; (3) the possessor should have expected that a lawful visitor such as the plaintiff either (a) would not discover or realize the danger or (b) would fail to protect himself or herself against the danger; (4) the possessor failed to use reasonable care to protect the lawful visitor against the danger; and (5) the condition was a proximate cause of damage to the plaintiff. 

Id.  Applying these elements to the facts, the first element was satisfied because Hy-Vee designed the parking lot area and chose where to place the air compressor.  Id at 767.  In considering the second element, the court viewed the evidence in the light most favorable to the plaintiff and assumed that there was a genuine issue of material fact regarding whether the location of the air compressor created an unreasonable risk of harm.  Id at 771.  When considering the third element, the law holds that “a land possessor is not liable to a lawful entrant on the land unless the possessor has or should have had superior knowledge of the dangerous condition.”  Id at 770.  Further, a landowner will not be liable for a dangerous condition unless the landowner “should have expected” that the plaintiff “either would not discover or realize the danger or would fail to protect himself or herself against the danger.”  Id. 

The open and obvious doctrine states that a possessor of land is not liable to an invitee for harm caused by any activity or condition on the land when the danger is known or obvious to the invitee.  Id.  The court found that the dangers of parking in the drive aisle to use the air compressor were obvious and the plaintiff would have appreciated the risks associated with parking where she did and crouching down to fill her tires.  Id.  Further, there was no evidence that Hy-Vee had any reason to believe that Sundermann would become distracted and unable to recognize the obvious risk, but rather Sundermann testified that she was aware of the danger and was watching for traffic.  Id.  Because the open and obvious doctrine clearly applies, Hy-Vee is not liable under the doctrine.

The court therefore found that the third element could not be satisfied, stating “even when a land possessor is aware lawful visitors are choosing to encounter an obvious risk, it does not necessarily follow that the land possessor has reason to expect the lawful visitors will fail, or be unable, to protect themselves from that risk.  Id.  Hy-Vee had not received any safety complaints before about that location, and there had not been any prior accidents that would lead Hy-Vee to believe lawful visitors would fail to protect themselves from the obvious risk associated with choosing to park in the drive aisle.  Id.  Further, Hy-Vee had no reason to expect that the plaintiff would not appreciate the danger posed by her activities.  Id.

            Because the third element could not be satisfied, Hy-Vee could not be held liable for Sundermann’s injuries.  This case was significant in rejecting the analysis used in the trial court, which focused on whether it was reasonably foreseeable that a lawful visitor would be injured in such a way.  This court instead focused on the premises liability standard, in which foreseeability is a consideration, but not a conclusory factor.

Nebraska Supreme Court Upholds PSC Approval of Keystone XL Route

On August 23, the Nebraska Supreme Court issued its long-awaited opinion in the Keystone XL pipeline route approval case that was argued before the court in fall, 2018. Issued as In Re Application No. OP-0003 and cited as 303 Neb. 872, the opinion stems from a suit brought by landowners and advocacy organizations in opposition to the Nebraska Public Service Commission's decision in November of 2017 to approve the Mainline Alternative Route (MAR) for the Keystone XL Pipeline.

In a 59-page, unanimous decision, authored by Justice Funke, the Court stated:

"In summary, the PSC is an elected body created by the Nebraska Constitution to serve the public interest... the legislature determined that '[t]he construction of major oil pipelines in Nebraska is in the public interest...' The Legislature designated the PSC as the agency responsible for determining which pipeline route is in the public interest. After months of careful consideration, the PSC determined that the evidence showed that the MAR (Mainline Alternative Route) is in the public interest. Upon de novo review, we find there is sufficient evidence to support the PSC's determination that the MAR is in the public interest. The assignments of error are without merit."

While those who argued in favor of the project welcomed the news, those who have long opposed the project, like Bold Nebraska founder and current Chair of of the Nebraska Democratic Party, Jane Kleeb, issued comments stating the Legislature, or a new President in 2020 could seek to undo the opinion issued by the Supreme Court.

Nebraska Supreme Court Draws a Fine Line Between Federal and State Arbitration Laws in Home Sales

On any given day, millions of Americans are entering into contracts both big and small. Some of these contracts represent the terms and conditions for a major life decision for those people, while other contracts represent transactions that no one would give a second thought to. For example, as you are reading this article there is likely someone signing their name to a contract for a mortgage on the home they plan to raise their children in. Meanwhile someone somewhere else is agreeing to the terms and conditions of a mobile app designed to super impose animated animals over their face in a selfie. Regardless of the seriousness of the contract, people are more often than not agreeing to arbitration clauses that they never read.

Most people do not even realize that they are agreeing to arbitration clauses that will keep them out of the courthouse when they enter into these contracts. Even more people do not realize that arbitration is governed by one of two sets of laws in most cases, and parties who are not carefully drafting those clauses might find them unenforceable. Recently, in a nasty dispute between a property management company and a home buyer, the Nebraska Supreme Court in Garlock v. 3DS Properties, L.L.C., considered whether an arbitration clause found in the contract for the sale of a home was governed by Nebraska arbitration law or federal arbitration law.

In Garlock, the Garlocks purchased a home from 3DS Properties. The Garlocks later sued 3DS Properties for damages they alleged were caused by serious problems in the home which 3DS Properties did not disclose as required by law. The Garlocks brought this lawsuit in state court, and 3DS Properties sought to have it removed from state court and taken to arbitration. Both the Garlocks and 3DS Properties disagreed on where the Garlock’s claim should be considered. The dispute lasted several years until it eventually landed in the Nebraska Supreme Court. That dispute highlighted two important distinctions that should always be considered by anyone entering into a contract with an arbitration clause in Nebraska.

ATTENTION TO DETAIL REALLY MATTERS

Because the Garlocks wanted their case to be heard in state court rather than in an arbitration court, they argued that the arbitration clause in the contract between them and 3DS Properties was unenforceable under Nebraska’s Uniform Arbitration Act. The Garlocks based this argument on the fact that the contract between them and 3DS Properties contained a clause above the signature line that read:

THIS CONTRACT CONTAINS AN ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.

The Garlocks reasoned that because this notice was not underlined it was not enforceable under Nebraska’s Uniform Arbitration Act. The Nebraska Uniform Arbitration Act requires that all contracts with binding arbitration clauses include the above notice which must be capitalized and underlined in order to be enforceable. Because this notice was not underlined the Nebraska Supreme Court reasoned that, standing alone, the arbitration clause in the contract between the Garlocks and 3DS Properties was unenforceable on its face under Nebraska law.

This one minor detail was missed by 3DS Properties in the drafting of its real estate sale contract and highlights the importance of utilizing a qualified attorney in the contract review process. 3DS Properties was not without a strong counterargument, however.

ARBITRATION MATTERS ARE GOVERNED BY BOTH STATE & FEDERAL LAWS

3DS Properties badly wanted to have this dispute heard in arbitration court. To do this, 3DS Properties had to counter the Garlock’s argument that the arbitration clause was unenforceable because it failed to have an all capitalized and underlined notice. Rather than accepting Nebraska law as the governing choice of law, 3DS Properties argued that the arbitration clause governed by federal arbitration law and therefore did not have to include an underlined notice.

This argument was based on the Nebraska Supreme Court’s holding in Wilczewski v. Charter West National Bank where the Court held that federal arbitration laws applied to all contracts formed in interstate commerce under Title 9 of the United States Code. In cases where federal arbitration laws apply, contracts do not have to meet the requirements under Nebraska’s Uniform Arbitration Act. In Wilczewski, the sale of a home under foreclosure contained an arbitration clause which the buyers argued was unenforceable under Nebraska’s Uniform Arbitration Act. There, the Court reasoned that the arbitration clause did not have to comply with Nebraska’s Uniform Arbitration Act because the sale of homes in foreclosure are done by banks who are integral parts of the stream of interstate commerce.

3DS Properties tried to harness this reasoning in their dispute against the Garlocks. The Nebraska Supreme Court, however, disagreed when they determined that the simple sale of a home, rather than a foreclosure done by a bank, was purely an intrastate activity rather than an interstate activity. In other words, contracts governing the sale of real estate in Nebraska which do not involve parties from other states or lenders from other states is considered an intrastate activity and must conform to the requirements of the Nebraska Uniform Arbitration Act for arbitration to be binding.

IMPORTANT TAKEAWAYS FROM THE GARLOCK CASE

First, the details really do matter. Whether you are drafting a contract, or you are agreeing to a contract someone else has drafted it is important to fully understand all terms, conditions, and laws that govern those terms and conditions. In the case of Garlock, the parties could have avoided thousands of dollars in expenses, and years of litigation by simply underlining a single sentence in their sale contract. Moreover, the parties could have saved a great deal of trouble by having a qualified attorney review their sales contract prior to its execution.

Second, the context of a contract can completely change the arbitration laws it is governed by. If you are a party who prefers arbitration over traditional litigation, it is imperative that you understand the context in which your contract is being executed. In Garlock, the parties were selling a home in a simple real estate transaction and therefore the arbitration laws of Nebraska applied to the formation of their contract. However, had these parties been using an out of state lender, or selling the property in a foreclosure, the federal arbitration laws would have applied to the formation of their contract.

If you are in the middle of trying to sort out the contents of an important contract, please do not go it alone unless you fully understand the legal ramifications of what you are drafting or agreeing to. If you have questions about contracts, the clauses in those contracts, or arbitration and arbitration clauses make sure you get in touch with a qualified attorney before it becomes a mess you cannot get out of.

Connolly Joins Erickson|Sederstrom

Hon. William M. Connolly, who retired after serving twenty-two years on the Nebraska Supreme Court, has joined Erickson|Sederstrom as Of Counsel with a practice in Mediation and Arbitration.  

Judge Connolly will utilize his experience on the Nebraska Supreme Court and 29 years of prior experience as a trial lawyer to help parties reach just resolutions through the mediation and arbitration processes.  Judge Connolly will also offer appellate consulting services to firms and attorneys seeking assistance to develop appellate strategies, review and edit briefs, and prepare for oral argument.