Economic Analysis of Legal Case

Economic Analysis of a Tort Case

Karl Kuhn v. Ken Lamphear et al.

I. = Descri= ption and Background

Case

KARL KUHN, Plaintiff and Appel= lant, v. KEN LAMPHEAR et al.= , Defendants and Respondents.

B179025. COURT OF APPEAL OF CALIFORNIA, SECOND APPELLATE DISTRICT,= DIVISION EIGHT. 2005 Cal.<= /st1:place> App. Unpub. LEXIS 9779

Facts

On Septemb= er 6, 2002, Karl Kuhn was bitten by two pit bulls while visiting an acquaintance = at a Long Beach, California apartment complex. The dogs= resided with two tenants of the apartment complex, Michelle Guerra and John Toavalu. Subsequent to the attack, Mr. Kuhn filed a complaint against the tenants and landlord, Ken Lamphear, alleging that they “knew or should have known= of the dogs’ violent propensities” and failed to take adequate mea= sures to contain the dogs or remove them from the property. Mr. Lamphear denied knowledge of the pit bulls and his claim was supported by Ms. Guerra; howev= er, the plaintiff, Mr. Kuhn, presented a declaration from Mr. Toavalu stating t= hat Lamphear knew about the pit bulls. Mr. Toavalu stated that Mr. Lamphear had told him to keep the gates closed because “he had seen the dogs and k= new them to be big.” In addition, the plaintiff presented three declarati= ons from tenants stating that Mr. Lamphear was aware they were also housing pit bulls on the premises. The trial court granted a motion for summary judgmen= t in favor of the defendant, stating that the plaintiff “failed to create a triable issue of fact as to the defendants’ knowledge of the vicious and/or dangerous propensities of the Guerra dogs.” Mr. Kuhn appealed = the summary judgment.

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Issue

Is Mr. Lamphear liable based on the fact that his tenants’ do= gs bit Mr. Kuhn on Mr. Lamphear’s property?

When revie= wing an order granting summary judgment, the court is bound by the de novo standard. This standard means that the court must exami= ne all facts independently to determine whether there is a triable issue of fa= ct with regard to Mr. Lamphear’s knowledge of the pit bulls’ vicio= us propensities.

In order t= o be found liable for the pit bull attack, Mr. Lamphear must have been aware of = the dogs’ vicious propensities prior to the attack. “Without knowle= dge of a dog’s propensities a landlord will not be able to foresee the an= imal poses a danger and thus will not have a duty to take measures to prevent the attack.” (Donchin v. Guerrero (1995) 34 Cal.App.4^th 1832, 1838.) However, an inference of actual knowledge can be made from the case = if circumstances imply that Mr. Lamphear “must have known” of the = dogs vicious nature. This inference must not be based on speculation or conjectu= re.

Decision of the Court

The appell= ate court affirmed the trial courts decision, stating that the appellant did not raise a triable issue of material fact as to whether Mr. Lamphear had actua= l knowledge of the dogs’ vicious propensities prior to the attack.

Reasoning

The appellate court’s decision was based on the fact that Mr. Kuhn failed to provide sufficient evidence that Mr. Lamphear knew of the dogs’ violent nature. This is a key economic element of the case because without knowledge of the dogs̵= 7; violent nature, Mr. Lamphear would have no reason to insure against a dog attack on his property. On the other hand, if Mr. Lamphear knew the dogs were vicious, he would be responsible for taking measures to insure against a dog attack. Such measures might include special fencing requirements, “Bad Dog” signs, or even removing the dogs from the premises.

Mr. Kuhn (plaintiff, appellant) presented circumstantial evidence such as writt= en statements from tenants and a statement from Toavalu (tenant) alleging that= Mr. Lamphear knew that pit bulls were being housed on the premises; however, the court did not find this to be compelling evidence that Mr. Lamphear knew the dogs to be dangerous. In addition, the appellant claimed that the aggressive behavior of the dogs, such as barking and jumping on the fence, would have indicated to Mr. Lamphear that the dogs were dangerous. Again, the court fo= und that this evidence was not enough to infer that Mr. Lamphear ‘must ha= ve known’ the dogs had vicious propensities. The court stated that “such an inference would be based primarily on speculation and conjecture,” which is not a valid reason for an inference. The court = also cited a precedent that barking and jumping is to be expected from dogs and = is not necessarily indicative of a vicious nature. (Nava v. McMillan (1981) 123 Cal. App. 3d 262, 267, 176 Cal. Rptr.473.) By using this reasoning, the court reiterates that landlords can only be liable if they are made obviously awa= re of a dog’s vicious propensities. The primary burden of liability rests with the dog owner and the landlord should not be responsible for unobvious dangers presented by their tenants.

The evidence presented by the appel= lant did not convince the court that there was a triable issue of fact with rega= rd to Mr. Lamphear’s knowledge of the pit bulls’ vicious propensit= ies; therefore, the summary judgment was affirmed.

II. = Critiq= ue

Common la= w torts seek to allocate risk among the members of society. The more valuable= an animal is to society, the more willing the society is, through its legal ru= les, to shift risk of the activity to others. In the case of Kuhn v. Lamphear the court require= s that a landlord must not only be aware that a dog resides with their tenant, but also aware of the dog’s ‘vicious propensities.’ By meeting these two elements, the landlord would be negligent if he/she failed to take steps to contain the dog, prevent escape, or remove the dog from the premis= es. This reasoning implies that if landlords know animals reside on their rental property and if those animals display signs of aggression, landlords are partially responsible for insuring that their tenants’ animals do not pose a danger to the public. If landlords do not take steps to protect the public from the dogs, they may be found negligent and sued for monetary damages. Such reasoning provides incentives for landowners, tenants, and the public, to behave in specific ways.

If landlords can be liable for dog attacks only if they know that the dogs res= ide on the premises, they may have the incentive to ‘turn the other cheek’ and pretend to be unaware of the dogs’ presence. They may also choose to include “no dogs” as a rental contract clause. B= oth of these tactics could preempt a liability claim as long as there was not compelling evidence to the contrary. However, if landlords disallow renters= to have dogs, many individuals will lose utility from renting a residence. Dogs are a highly valued pet in our culture and are often referred to as “= man’s best friend.” Many renters would like to have a dog and, if landlords= disallow dogs on their property, renters will have a lower level of utility (dependi= ng on their preferences for pets, of course). The disallowance of dogs on rent= al properties is a negative incentive because it gives many renters a lower le= vel of utility. In addition, most dogs do not have vicious propensities, making= a “no dogs” rule overly cautious on the part of the landlord.

If landlords allow tenants to have pets and become aware of a dog living on the premises, they will be acutely responsive to aggressive behavior. If a dog behaves in an aggressive manner, landlords will have the incentive to insure against an accident because their knowledge of the dog’s vicious propensities could result in a claim against them. The most likely course of action for a risk-averse landlord would be to remove the dog from the premi= ses. The landlord could also take steps to contain the dog or impose rules on the tenants, such as requiring a muzzle for the dog. Since the socially optimal outcome is to prevent a dog attack in the first place, (without an excessive cost to the landlord or the tenants) it is desirable for landlords to exerc= ise caution when they observe a tenants dog exhibiting aggressive behavior.

Tenants will also have incentives based on the court’s reasoning. They may ha= ve the disincentive to own dogs because it will be harder to find residences t= hat accept them. If they do own a dog, tenants will have the incentive to hide their dog from landlords due to fear that the landlord will ask them to giv= e up their dogs or move out. These are negative incentives because they do not accomplish the goal of insuring against dog attacks. By not owning a dog, t= he aforementioned reduction in utility to renters may occur and by owning a dog and hiding its presence, tenants are merely reducing the likelihood that the landlord will be liable; not reducing the likelihood of a dog attack.

On the oth= er hand, since the law imposes strict liability against dog owners, tenants will also have the incentive to contain their dog and insure against accidents because they may be liable in the case of an attack. This is a positive incentive because individuals will be less likely to have a dog with vicious propensi= ties and more cautious about containing their dog. Tenants will have the incenti= ve to keep their dogs under control with a fence at home and a leash while wal= king to reduce the probability of a dog attack and a claim against them.

By upholdi= ng strict liability against dog owners and negligence on behalf of the landlord when they know that a resident’s dog has vicious propensities, the co= urt communicates to the public that victims will be compensated for damages that occur due to an unprovoked dog attack. We can assume that victims do not ca= re who is compensating them (the landlord or the tenant); they are only concer= ned with whether they are insured against damages due to the dog attack.[1] However, even though the victim is fully insured against a dog attack, meaning that = he will be awarded monetary damages in an amount equal to his loss of utility = from the attack, he will still have an incentive to avoid being attacked by a do= g; namely, fear of pain. This is an incentive that the court can rely on witho= ut creating an explicit rule. Most people do not like to experience acute pain= and will instinctively avoid it regardless of compensation. Based on this fact, compensation satisfies the goal of restoring the victims level of utility, = and punishing the landlord for negligence (and thus providing the incentive to maintain public safety on private property), while still giving the public the incen= tive to be cautious and avoid being attacked by a dog.

In the case of Kuhn v. Lamphear, the court decided that the appellant, Mr. Kuh= n, did not present an issue of triable fact as to whether Mr. Lamphear was aware of the dogs’ vicious propensities. Had Mr. Kuhn been able to present an issue of triable fact, the summary judgment might have been dismissed and t= he case sent back to the trial court. From an economic perspective, it is wise= for the court to exercise caution when determining if a landlord is liable for = the behavior of their tenants’ pets. Landlords should be responsible for = the general oversight and safety of their property; however, they should not be liable for an unforeseen event that is beyond their control. The existence = of a dog on the property does not inherently indicate a danger and a landlord sh= ould not be expected to know that a dog is dangerous without observing aggressive behavior or being informed of it. If the court was more lenient in determin= ing landlord liability, landlords would simply refuse to allow renters to have dogs. Given that 30 percent of U.S. residences are rentals, this would dramatically affect dog ownership and re= nters’ utility would decrease as a result of not being able to own a dog.[2]

On the oth= er hand, under the current law the landlord has a responsibility to insure public sa= fety when he/she is aware of a potential danger such as an aggressive dog. In th= is case, the difficulty lies in determining what constitutes ‘vicious propensities’ and what steps the landlord should take to insure again= st a dog attack. When the court uses the phrase ‘vicious propensities,R= 17; they are referring to behavior that would alert a reasonable person that a = dog poses a danger to the public. Such behavior does not include barking or jumping, but does include previous att= acks or bites by the dog in question. If landlords are unaware of dangerous behavior, they absolutely should not be liable for damages. Forcing landlor= ds to pay damages simply because they have deeper pockets is an economically irresponsible and inefficient solution.

For the mo= st part, I agree with the courts reasoning and holding. Tort liability seeks to mini= mize the social costs of accidents by increasing the amount of precautions. In o= rder to achieve this goal, the legal system must create laws that give people the correct incentives. Efficient incentives are those in which the decision ma= kers internalize the marginal costs and benefits associated with their actions. = Dog owners, who receive the benefit of ownership, should have the primary incen= tive to take precautions against an accident involving their dog. The current st= rict liability law that governs dog owners provides the incentive for dog owners= to be cautious. Landlords, who receive financial benefits from ownership of the rental property, should maintain their property so that it is safe for the public; meaning that if they know there is a vicious dog living on the premises, they should also take precautions to avoid an accident. However, caution should be used when making a third party liable for damages. Vicarious liability that extends to the landlord may encourage victims because they see an opportunity to reach deep pockets and it also gives landlords the disincentive to allow dogs on their rental properties.

There is o= ne argument that was not raised by the appellant that I think could have helped his case. The dogs in question were pit bulls and several other tenants made statements that Mr. Lamphear was aware that pit bulls were being housed by them. Pit bulls are widely known as a dangerous dog and are arguably consid= ered the most deadly in the United States. It is possible that by knowing t= he dogs were pit bulls, Mr. Lamphear knew of their vicious propensities, and t= hus, could have been found liable for negligence if the case had been allowed to= go to trial. Still, I believe that The Supreme Court made the right decision in upholding the summary judgment because landlords should not be liable for accidents occurring as a result of their tenants dogs unless they ‘mu= st have known’ that the dogs posed a danger.