Lead Paint: The Court Throws the Rental Market into Turmoil
On October 24, 2011, Maryland's highest court, the Court of Appeals, issued its decision in Jackson v. Dackman Co., and found that the immunity provisions of The Reduction of Lead Risk in Housing Act (the “Act”) are unconstitutional. Previously, the Act provided property owners with immunity from lead based paint claims if they complied with its provisions and/or if a qualified offer was made. However, for reasons discussed in more detail below, the Court held that the immunity provisions of the Act are unconstitutional because the statutory remedy provided by the Act is unreasonable.
This is an extremely important opinion because it means that property owners throughout Maryland who comply with the Act no longer enjoy immunity from personal injury claims for injuries due to alleged exposure to lead based paint.
Background of the Act:
The Act's specific purpose was “to reduce the incidence of childhood lead poisoning, while maintaining the stock of available affordable rental housing.” Property owners who complied with the Act were granted immunity or limited liability if a lead paint lawsuit was filed by or on behalf of a “person at risk”, i.e. “a child [defined as an individual under the age of 6] or a pregnant woman who resides or regularly spends at least 24 hours per week in an affected property [a property constructed before 1950 that contains at least one rental unit].”
To comply with the Act the owner of an “affected property” had to: register the property; renew the registration each year; comply with risk reduction standards requiring the completion of certain partial abatement work in the “affected property” pursuant to a schedule; and provide tenants at the “affected property” with a notice of tenant's rights and a lead poisoning information packet on a regularly scheduled basis.
If the owner of an “affected property” complied with the requirements above, and the owner received notice of a “person at risk” with an elevated lead level above 15ug/dl, then a qualified offer could be made. A qualified offer is an offer of money by the property owner, their agent or the owner's insurer to pay some of the expenses that may be incurred on behalf of an affected “person at risk”, including costs for temporary relocation and incidentals. The Act benefitted landlords by capping the total amount payable pursuant to a qualified offer at $17,000.
Prior to the Court's new decision, if a qualified offer was accepted, it acted as a release of all potential liability of the offering party or parties, along with their insureds or principal. If a qualified offer was rejected, then the owner “[was] not liable for alleged injury or loss caused by ingestion of lead by a person at risk at the property.” However, even where a person at risk has a lead level below the level sufficient to trigger a qualified offer, an owner in compliance with the Act was still immune from suit even though no qualified offer would be necessary.
The Court's Opinion:
The Court of Appeals held that the immunity provisions of the Act are unconstitutional. In other words, the Court held that a property owner is not entitled to immunity from liability under any circumstances even if the owner was in compliance with the requirements of the Act, and regardless of whether a qualified offer was made.
The Court held that the Act's immunity provisions violate Article 19 of Maryland's Declaration of Rights, which provides:
That every man, for any injury done to him in his person or property, ought to have remedy by the course of the Law of the land, and ought to have justice and right, freely without sale, fully without any denial, and speedily without delay, according to the Law of the land.
Article 19 has been interpreted to protect the right to a remedy for personal injury or injury to one's property and to protect the right of access to the courts. Pursuant to Article 19, the issue, as framed by the Court, is whether the statutory remedy provided in the Act is reasonable.
The Court held that the remedy is “inadequate and unreasonable.” Under the facts of Jackson, the plaintiff's lead levels were below the threshold necessitating a qualified offer and, therefore, even without a qualified offer, the defendants would have been immune. According to the Court, this lack of remedy was unreasonable. However, the Court went further and held that even if a qualified offer were to be made, the remedy would still be unreasonable because the maximum amount payable pursuant to the Act is only $17,000.
The Court's opinion means that the Act's immunity provisions are no longer applicable. In other words, even if a qualified offer is made, an owner of an affected property is not immune from suit. A question remains as to how this decision will impact prior cases where a person at risk or someone acting on their behalf accepted a qualified offer.
Further, it is important to note that the Court severed the immunity provisions from the rest of the Act, which means that all the other provisions of the Act remain in effect: property owners are still required to register an affected property; renew that registration each year; comply with risk reduction standards including partial abatement work in the “affected property” pursuant to a schedule; and provide tenants at the “affected property” with a notice of tenant's rights along with a lead poisoning information packet on a regularly scheduled basis. Additionally, in any lead paint suit where the property owner is found not to be in compliance with the Act, there will still be a rebuttable presumption of negligence against that property owner. While all of these other provisions in the Act remain in place, the Court did not offer any instruction as to their effect in future cases.
We are continuing to analyze this opinion and its potential effects upon our clients. Meanwhile, please contact us with any questions and/or concerns.