Oct. 14--In a case affecting millions of renters and their landlords across Texas, the state Supreme Court will determine who must pay for $83,000 in damage to a San Antonio apartment that was caused by an accidental dryer fire with no clear cause.
The apartment complex and its insurance company say the dryer's owner, Carmen White, is on the hook because she signed a basic lease -- similar if not identical to contracts signed by most Texas renters -- requiring tenants to pay for damage not caused by the landlord's negligence.
White's lawyer argues that requiring her to pay for accidental property damage would be unfair and illegal -- creating a precedent that would turn private citizens into unknowing insurance policies for landlords and property owners.
"It is unconscionable that someone should be held responsible for damages that they did not cause," White's lawyer, Sherry Rasmus, told the Supreme Court during oral arguments Tuesday.
At issue is Provision 12 of the 11-page lease agreement -- provided by the Texas Apartment Association and used by landlords statewide -- that requires renters to pay for "any" damage that wasn't caused by the property owner's "negligence or fault."
Investigators found no clear cause for the June 2011 fire, which erupted inside a new dryer that had been recently installed in White's unit by the apartment complex's maintenance man.
Philadelphia Indemnity Insurance Co., which covered the Sienna Ridge Apartments of San Antonio, sued White in 2012, arguing that Provision 12 required her to pay for the damage caused by her dryer.
Jurors delivered a split verdict, finding that, while White hadn't acted negligently, she broke her contract with the landlord by failing to pay for the damage her dryer caused. The district judge, however, reversed the jury, ruling that White hadn't broken her lease by refusing to pay.
The 4th Court of Appeals upheld the judge's decision in a 2-1 ruling declaring that Provision 12 improperly imposed a financial liability on White that is contrary to state property laws.
The insurance company next turned to the Texas Supreme Court in an appeal supported by the Texas Apartment Association, which predicted "dire" consequences, including higher rents to compensate for unrecoverable tenant-caused damage, if the lower court's ruling was allowed to stand.
Arguing before the Supreme Court on Tuesday, the lawyer for the insurance company argued that White was required to pay for the fire damage.
"The evidence supports a finding that the fire was caused by the tenant," lawyer Jim Hemphill said. "It was her personal appliance, it was under her sole control, she chose the appliance."
On the other hand, nothing that was under the landlord's control, such as the electrical system or dryer vent, caused the fire, he added.
"The burden for paying for damage is on the tenant unless it is due to the negligence or fault of the landlord ... under this particular lease," Hemphill said.
Justice Debra Lehrmann asked if apartment complexes, by offering washer-dryer hookups in units, assumed some of the risk.
"They allow the tenants to bring them in, but that does not mean that the apartment complex has made a decision that it would be responsible for damage caused by appliances brought in by tenants," Hemphill responded.
On the other side, Rasmus argued that White signed her lease with the understanding that she would have to pay for damage she caused, such as holes in the walls and carpet stains.
"Provision 12 doesn't do that," she said. "It is so broad that (tenants) could be held responsible for any damage that may occur in an apartment community."
Unless the provision is voided, the only protection White and other tenants have is the "goodness of the apartment owner," Rasmus added.
The court has no deadline to issue an opinion in Philadelphia Indemnity v. White, No. 14-0086.
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