Court Of Appeals Lifts Lead Paint Liability Limitation

By Michael Powell and Bob Enten

By now many landlords have heard of the Maryland Court of Appeals’ decision striking down limitations on lead paint liability.  The case, Jackson, et al.  v. The Dackman Company, et al., No 131, September Term 2008 (Md. Oct. 24, 2011) exposes all owners of rental properties where lead paint is present to potentially huge liability claims even if the owner has complied with Maryland risk reduction requirements and registered the units with the Department of the Environment.  Owners of such units must carefully consider the risks involved if the units continue to be rented – even if the lead paint is properly contained and maintained in accordance with Maryland law.

Although there were some complex facts presented in the underlying case, the relevant factual issue, in the opinion of the Court, was fairly simple.  Under Maryland law, a landlord who complies with Maryland lead paint risk reduction requirements can escape further liability by making a “qualified offer” to a tenant injured by exposure to lead paint.  A “qualified offer” consists of an offer to reimburse up to $17,000 in medical and relocation expenses.

The Court’s analysis of these facts was also simple, yet it has profound implications for the rental market and for business interests in general.  The decision is based upon Article 19 of the Maryland Declaration of Rights which guarantees a “remedy” to persons who have suffered “any injury.”  The question that the Court decided to address was whether a child injured by exposure to lead paint was effectively denied a remedy if the available remedy was limited to the $17,000 “qualified offer.”   The Court used a somewhat subjective test to answer that question.  As the Court put it:  “[t]he issue, under our Article 19 jurisprudence, generally is whether the abolition of the common law remedy and substitution of a statutory remedy was reasonable.”  (Emphasis added.)

The Court concluded that the qualified offer was not a “reasonable” alternative to the potential damages, and therefore the child was denied the remedy guaranteed by the Declaration of Rights.

In concluding that the remedy was not “reasonable,” the Court did not examine the logic of the General Assembly in adopting this legislation which was the product of a two-year study by a Commission appointed by Governor Schaefer.  The legislative debate had focused upon the impact on the availability and affordability of rental units, especially in urban areas like Baltimore City.  The General Assembly concluded that landlords would remove their units from the market if faced with the Hobson’s choice of spending the large sums that might be required for full lead paint removal or facing potential liability for even larger sums and for which there was no liability insurance.  The General Assembly decided that, for Maryland, the reasonable alternative was to provide the limited statutory remedy.  The Court, instead, limited the reasonableness review to the perspective of the individual child/plaintiff and largely ignored the impact on the broader population. 

The immediate impact of this decision may turn out to be the situation the General Assembly feared – it may be the death knell for affordable housing across the State.  Landlords may decide to remove units from the rental market to avoid the expense of remediation or the perils of a jury trial.  Unfortunately, the units most likely to be removed are those that are in urban areas with older housing and those units that are typically more affordable.  Newer units are less likely to require work, and more expensive units are more likely to justify the expense of a full lead paint removal.

Beyond the implications for the rental market, the case also seems to place severe limits on the ability of the General Assembly to limit liability for personal injury in other areas.  For example, the Court would presumably examine any limitation of medical malpractice liability by the same test of reasonableness.  A statutory limitation of pain and suffering damages in other tort claims might be subjected to a review to determine if the limits are reasonable.  Looking further afield, will the Court apply the same test to limitations on liability that do not involve personal injury?  Can the General Assembly impose limitations on damage claims in contractual disputes without being subject to a reasonableness analysis?

Only time – and further opinions from the Court – will answer these questions.  What seems clear is that the Court has placed constraints on the power of the General Assembly to limit liability claims.  That limitation will favor claimants over defendants, but is now part of the governing laws in Maryland.

Michael Powell and Bob Enten are with the Baltimore firm of Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC