Tenants Must Pay Neighbors $7.4M for Negligent Use of Warehouse

What Happened: Only 10,000 of the tenant’s 560,000 square-foot recycling warehouse had fire department approval for occupancy. And while the tenants were advised to do so, they never installed the necessary, code-compliant sprinkler and water flow systems. So, when the warehouse burned down in a fire, neighboring property owners sued the tenant and its corporate owners for negligence, gross negligence, and public nuisance. We’re not responsible, the tenants claimed, because we only leased the building. The jury found the tenants liable and awarded the neighbors nearly $7.4 million in damages.

Ruling: The Michigan appeals court upheld the verdict.

Reasoning: Even though they were just tenants, the defendants had a duty of care to their neighbors and use the property safely. And while they couldn’t be held liable for not maintaining the fire-suppression system since they didn’t own the building, they could be liable for their negligent use of the space, including illegal storage of large quantities of plastic materials that caused the fire to intensify and spread through the building and to the neighboring properties.

• Gabrielle/Mht Ltd. v. Hamilton Ave. Prop. Holding, 2020 Mich. App. LEXIS 5241