In PHWLV v. House of CB USA the Supreme Court of Nevada reversed a $3,545,336.97 verdict for tenants whose property was damaged in a mall when a water pipe in the fire suppression system burst and flooded parts of the property. Before trial, the district court entered partial summary judgment against the property as to negligence. The district court found “a legal duty imposed on property owners to ensure that whatever is on a person’s property does not invade or otherwise damage the property of another.” When the duty was defined in that manner, it was undisputed the property was in breach because flooding did occur. The trial proceeded as to damages only.

On appeal, the property argued the district court’s definition of the property owner’s duty was legally wrong. The Nevada Supreme Court agreed and ruled that the property owner owed a duty of reasonable care. The district court’s definition “lacks the crucial principles underlying our negligence jurisprudence, either the exercise of reasonable care or the consideration of the circumstances necessitating reasonable care. Instead, the district court seemed to impose strict liability on property owners to control what is on their property.” There were genuine issues of material fact as to whether the property owners exercised reasonable care, thus the verdict was reversed and the case remanded for a new trial.

This decision is notable for clients facing premises liability claims. Some claimants argue, as the tenants did here, that the property owner is strictly liable for ensuring “safety.” This is inaccurate for negligence-based claims such as this one. Instead, the strict liability argument might have applied if the tenants also had sued the manufacturer or installer of the fire suppression system.