Virginia Supreme Court: RULES SHOOTING VICTIM CAN SUE MOTEL - lawsuit by a man shot outside a Holiday Inn Express had previously been dismissed by a Roanoke judge. By Christina Rogers
A guest who was shot eight times in the parking lot of a Roanoke Holiday Inn Express SHOULD BE ALLOWED TO SUE THE MOTEL FOR NOT PROTECTING ITS CUSTOMERS IN A HIGH-CRIME AREA, THE VIRGINIA SUPREME COURT HAS RULED.
THE CASE BROKE NEW LEGAL GROUND ON THE QUESTION OF WHAT STEPS A MOTEL OWNER MUST TAKE TO PROTECT GUESTS FROM CRIMES COMMITTED ON ITS PROPERTY.

Ryan Taboada had filed a $3 million lawsuit against the owners of the Holiday Inn Express after being shot and carjacked in the motel's parking lot on Gainsboro Road Northwest in March 2003. The case was dismissed last year by Roanoke Circuit Court Judge Clifford Weckstein. But Friday, the state Supreme Court reversed Weckstein's decision and sent the case back to Roanoke Circuit Court, ruling that Taboada should be allowed to present his evidence before a jury.

According to police reports cited in the lawsuit, the motel's staff or guests had been the target of at least 12 robberies or attempted robberies over a three-year period prior to the shooting. The lawsuit also claims that police officials warned the business, owned by Danville company Daly Seven, that the property's location posed certain dangers to its customers. Despite those risks, THE HOLIDAY INN EXPRESS DECIDED TO TERMINATE ITS SECURITY FORCE SOMETIME BEFORE TABOADA WAS SHOT, and failed to install surveillance cameras outside the motel, limit access to its parking lot and take other steps to ensure its guests' safety, the lawsuit states.

Those claims, Justice Lawrence Koontz wrote in the court's opinion, were enough to warrant sending the case before a jury. Stan Barnhill, an attorney for Daly Seven, said Monday that he and his client were disappointed with the decision. "I am hopeful my client will authorize me to seek a rehearing," Barnhill said. The shooting occurred the night of March 27, 2003, while Taboada, of Florida, was checking into the motel with his family.

While Taboada was unloading luggage from his sport utility vehicle, HE WAS APPROACHED BY AN ARMED MAN. THE MAN DEMANDED MONEY AND THEN SHOT TABOADA, POLICE SAID. As Taboada lay wounded in the parking lot, the assailant hopped into the SUV and sped off -- taking 3-year-old Veronica Taboada with him. The girl, who was strapped in a child-safety seat when the robber wrecked the vehicle, was not injured. The assailant was arrested minutes later.

Derrick Wakie Smith pleaded guilty to attempted capital murder, carjacking, abduction of a juvenile, attempted robbery, two counts of using a firearm in the commission of a felony and possession of a firearm by a convicted felon. Taboada -- who was temporarily paralyzed with two collapsed lungs and a shattered vertebra -- has suffered permanent disability, lost income, mental anguish and medical bills, the lawsuit states.

Avoiding Liability in Premises Security

Second Edition

Production Editor: Zahna L. Ellis

Managing Editor: Jennifer F. Vaughan, Esq.

Publisher: Richard M. Ossoff

VII. Hotels/Motels

PSCLR - OCT 82 (5)

Hotel Not Liable for Causing Rape of Guest is Nevertheless Liable for Aggravation of Injuries Caused by Delay in Aiding Victim:

Jackie Bernice Boles v. La Quinta Motor Inns, a Texas corporation, No. 81-2098, in the United States Court of Appeals for the Fifth Circuit, on appeal from the United States District Court for the Southern District of Texas, decided July 21, 1982, reported at 680 F.2d 1077.

Although a motel was not found negligent when a motel guest was raped and robbed in her room, it was held liable for $78,000 in damages when motel employees refused to come to the guest' s assistance after the attack.

Jackie Boles was raped when a man forced his way into her room at a La Quinta motel. Threatening to return and kill her, he left Boles tied and gagged in the darkened room. She was able to knock the telephone off the hook and alert the front desk clerk to her attack and to her attacker' s threat to return and kill her. The clerk and other unidentified motel employees questioned Boles over the phone before calling the police. After she was finally told by the clerk that the police had been called, Boles was asked to hang up the telephone. When she replied that she was unable to find the telephone to hang it up, the clerk retorted in a sarcastic manner.

The police arrived about twenty-five minutes later to find three La Quinta managers outside Boles' room door while her screams and cries could be heard from within the room.

Boles' subsequent lawsuit against La Quinta alleged that the motel failed in its duty to her as a guest by failing to provide a safe, well-lit hallway and by not coming to her aid when she called. Although the trial court agreed that the hallway was not safe, it decided the condition of the hall did not lead to the rape. However, the motel employees' behavior in cruelly ignoring Boles' cries for help was determined to be the cause of aggravating Boles' injuries. In fact, psychiatric testimony indicated that the time delay between the rape and her rescue led to a greater impact and more injury and symptoms. Further testimony showed that helping Boles would not have put the employees in any danger.

Since the employees knew that Boles was in the room alone and was obviously suffering from both her injuries and fear, their lack of action in rescuing her was the cause of her damages. The judgment of $35,000 for present damages and $43,000 for future damages was therefore affirmed by the U.S. Court of Appeals.

Absent Special Facts Requiring Higher Standard of Care, Hotel Defeats Liability Claim by Proving Compliance with Safety Ordinance:

Helen Montgomery and Kenneth Montgomery v. Royal Motel, No. 12884, Supreme Court of Nevada, decided June 3, 1982, reported at 645 P.2d 968.

Because a Las Vegas motel met minimum security standards set forth in a city ordinance, it was able to avoid liability to motel guests who were assaulted in their room.

Helen and Kenneth Montgomery were attacked and robbed shortly after returning to their room in the Royal Motel in Las Vegas, Nevada. Although the Montgomerys testified they normally kept their door locked, the only lock--a deadbolt latch--was not engaged when their attacker entered the room. Because the door was not also furnished with an automatic door lock, the Montgomerys sued to recover for injuries they suffered from the assault. The Montgomerys claimed their injuries were a result of Royal Motel's failure to protect them from criminal attack.

The Supreme Court of Nevada agreed with the trial court's decision that Royal Motel had adequately complied with the Las Vegas ordinance concerning minimum hotel security standards. The ordinance requires motels to provide room doors with deadbolt latches; automatic locks are not required. Moreover, the testimony at trial indicated that no prior criminal attacks had necessitated tighter motel security than was currently being used, and that the Montgomerys knew that their door would not lock by itself. Royal Motel therefore was held not negligent in carrying out its duty to protect the Montgomerys.

COMMENTARY:

It is important to note that the hotel 's compliance with the ordinance meant that the hotel had met only the minimum standards of care for protecting its guests. Therefore, if the hotel had failed to comply with the ordinance, it probably would have been held liable per se to the plaintiffs and the only question would have been how much damages should be awarded for the plaintiffs' losses and injuries.

On the other hand, as the court noted, since the ordinance prescribed only a minimum standard, the plaintiffs still may have been able to recover if they had been able to show that some special circumstance existed which required that the hotel be held to a higher standard of care. Mere compliance with local ordinances alone, therefore, will not always protect a defendant from liability; whereas a failure to comply will always subject it to liability.

PSCLR - NOV-DEC 82 (8)

Hotel May Be Liable For Failure To Warn Guest And To Prevent Criminal Assault Where Prior Criminal Activity In Area Should Have Made Attack On Motel Guest Foreseeable To Owner/Operator:

Tomas H. Urbano v. Days Inn of America, Inc.; Office Parks of Charlotte, Inc., d/b/a Days Inn Budget Luxury Motels; Commercial Management, Inc.; and Days Inn Budget Luxury Motels, No. 8126SC1121, in the Court of Appeals of North Carolina, decided September 21, 1982, reported at 295 S.E.2d 240.

Where it is reasonably foreseeable that criminal activity will occur on property, a possessor of land may be required to protect invitees from attack. The key to required security lies in the foreseeability of criminal attack occurring on the property. However, a possessor of land cannot be considered an insurer of invitees' safety.

In this case, motel guest Tomas Urbano was assaulted by unknown criminals in a Charlotte, North Carolina, Days Inn parking lot. Urbano had registered late at night and was getting his belongings out of his car when the attack occurred.

Urbano sued the motel and its owners to recover for his injuries and damages suffered as a result of the attack. His suit alleged that damages occurred because the lot was improperly lighted, was not enclosed by a fence or other protective measures, and was not guarded or monitored by motel personnel (the motel relied on routine police visits). Moreover, guests were not warned that the motel parking area was hazardous, in spite of the fact that 42 criminal incidents had taken place at the motel in the three years preceding Urbano' s attack, including one armed robbery, and seven illegal entries (12 of these incidents had occurred in the three and one-half months immediately preceding this incident). The suit further alleged that Days Inn had provided guests with warranties of safety, through advertising and other representations. At trial, judgment was granted to Days Inn by the trial judge, who summarily dismissed the case and denied the claimant a jury trial.

On appeal, the Court of Appeals of North Carolina reviewed a motel' s duty to protect its guests from attack and a motel' s duty to warrant a guest' s safety. The court, relying on past North Carolina appellate decisions, said that foreseeability is the test in determining the extent of a landowner' s duty to safeguard his business invitees from the criminal attacks of third persons, and that a parking lot provided by a business owner for the use of his invitees is considered part of the business premises. Quoting from an earlier case, the court stated:

[T]he conduct of hotel innkeepers in providing security must conform to the standard of ordinary care. In the context of the hotel-guest relationship, it is foreseeable that an innkeeper' s failure to maintain adequate security measures not only permits but may even encourage intruders to rob or assault hotel patrons. Peters v. Holiday Inns, Inc., 278 N.W.2d 208 (1979)

Because it saw questions of fact concerning the alleged deficiencies in the motel's security based on the criminal activities history, the court remanded the case to the trial judge for a jury trial. The court, however, denied Urbano's claim of an implied warranty of safety, stating that: Under our decisional law, an innkeeper or other occupier of land is not the insurer of the personal safety of business invitees.

COMMENTARY:

Once again we note that the courts are requiring owners and occupiers of land, and operators of businesses, to take reasonable precautions to warn patrons and guests of possible criminal attacks, and to employ reasonable efforts to prevent such attacks, where a pattern of criminal activity has shown that attacks are likely to occur.

As was noted by the North Carolina appellate court in the above case, landowners and business proprietors may not be able to rely on the efforts of public law enforcement personnel to protect their guests from criminals. If the history of criminal activity in the area is sufficient to indicate that police efforts alone will probably not be successful in preventing attacks, then the owner/operator must undertake security measures on his own, or incur the consequences of liability verdicts against him.

With regard to such verdicts, it should be noted that many juries returning verdicts in favor of injured plaintiffs are beginning to include an additional award for punitive damages, and, while the negligent owner/operator may be able to cover some of his losses in these cases by liability insurance, some policies of insurance do not cover punitive damages but only actual damages (e.g., medical, property damage, pain and suffering, etc.).

Guest Who Deposits Valuables for Safekeeping Entitled to Recover Full Actual Value, and Limitation on Liability of Hotel Inapplicable for Noncompliance with Statute:

Sarah Zacharia v. Harbor Island Spa, Inc., No. 611, No. 81-7558, in the United States Court of Appeals for the Second Circuit, on appeal from the United States District Court for the Eastern District of New York, decided June 25, 1982, reported at 684 F.2d 199.

In Florida, a hotel can limit its liability for the negligent or accidental loss of a guest' s valuables held for safekeeping by complying with a statute which states:

[L]iability ... shall be limited to $1,000 for such loss, if the [hotel] gave a receipt for the property (stating the value) on a form which stated, in type large enough to be clearly noticeable, that the [hotel] was not liable for any loss exceeding $1,000 and was only liable for that amount if the loss was the proximate result of fault or negligence of the operator. Fla. Stat. þ 111(1) (1979).

However, a United States Court of Appeals held that a hotel must comply strictly with the statutory requirements or be barred from claiming the benefit of the $1,000 limitation on its liability.

When Sarah Zacharia registered at the Harbor Island Spa Hotel in Miami Beach, she signed a registration card which included a notice which read: HOTEL'S LIABILITY IS LIMITED AS PROVIDED IN POSTED 'IMPORTANT NOTICE TO GUESTS'. Later, she deposited her valuables with the hotel for safekeeping and was asked to sign two cards containing language certifying that the value of the deposited items did not exceed $1,000, that the items deposited would not exceed $1,000 in value at any time during the stay, and (with a cite to the Florida statute) that the guest waived any claim over $1,000 for a loss of deposited items.

Mrs. Zacharia filled in the blanks on the first card (her name, the hotel's name, and the date of deposit) and signed both cards. Similar blanks on the second card were not filled in, and the amount of limitation was marked out on the first card. Furthermore, the hotel did not give her a receipt for the deposited property, and the hotel clerk retained both cards.

During Mrs. Zacharia's stay at the hotel, a clerk absconded with the contents of several of the hotel's safety deposit boxes, including Mrs. Zacharia's valuables. When she submitted her claim for lost items in excess of $10,000, and her claim was rejected by the hotel, she sued the hotel's owner. The trial judge ruled that the hotel's liability was limited by the statute to only $1,000 and rejected her suit.

On appeal, a United States Court of Appeals reversed the dismissal and remanded the case for trial. The court based its decision on the requirements of the Florida statute and on recent Florida appellate court decisions which emphasize that the burden of compliance is on the hotel rather than on the guest, since the hotel has 'superior position and knowledge . .. with regard to the mandates of the statute', and that compliance by the hotel must be strict.

The court pointed out that evidence did not show that Mrs. Zacharia had been given a receipt for the items she deposited as is required by the statute. In addition, the hotel's casual attitude toward the filling in of the two deposit cards indicated that Mrs. Zacharia was not made fully aware of the content of the cards. Therefore, the $1,000 statutory limitation of loss would not apply in this instance, and the case was remanded to the trial judge for a trial to determine the actual amount of Mrs. Zacharia' s loss.

COMMENTARY:

Not only hotels, but also hospitals, financial institutions, security houses, private vault operators, and others, routinely accept valuable deposits for safekeeping. In most instances, applicable state statutes limit their liability to a set amount, typically $1,000 as in the above case. However, as is seen here, this limitation on liability is completely worthless to those institutions whose personnel fail to comply strictly with the requirements of the statute.

Have you reviewed the particular requirements of your state's statute limiting your company's liability? Have you checked recently for any amendments to the statute, or case law interpretations of the statute, which may have changed the requirements? And, equally important, have all employees (including new employees) received adequate training and recent reminders to follow the specific procedures mandated by the statute?

Sleeping Guard And Negligent Delivery Of Pass Key Render Motel Liable To Guests For Third Party's Assault, Battery And Theft:
Larry Kraaz and Joyce Kraaz v. La Quinta Motor Inns, No. 81-C-0937, in the Supreme Court of Louisiana, decided March 1, 1982, reported at 410 So. 2d 1048.

In spite of Louisiana statutes limiting innkeeper liability for damages, a motel corporation was hit with a jury verdict of $72,000: to Joyce Kraaz, $3,500 for physical injuries, $30,000 for traumatic neurosis, and $13,000 for future medical expenses; to Larry Kraaz, $2,500 for physical and mental pain and suffering; and $23,000 for cash taken in the armed robbery of the couple, which occurred while they were guests in the defendant's motel in Metairie, Louisiana. The pair were in Louisiana pursuing their business of buying, selling, racing, and betting on horses. Because race horses are generally purchased with cash, the Kraazes had $41,000 in their possession at the time.

In the early morning hours of December 31, 1978, the Kraazes were awakened by two men, who broke the chain on the motel room door and assaulted and robbed them. Mr. Kraaz was knocked out of bed, and held at gunpoint until tied up with wire and gagged. Mrs. Kraaz was mauled, hit in the face, and placed in the bathtub.

The thieves took $23,000 in cash from Mrs. Kraaz' s purse, and a .25 caliber Smith & Wesson automatic weapon, but they overlooked the other $18,000 also in the room. After the assailants fled, Mr. Kraaz broke free, got a gun from his car, and chased the men. His chase took him by the motel office, where he spotted an elderly security guard sleeping soundly.

At trial, evidence showed that the assailants had earlier approached the 17-year-old desk clerk of the motel and one of them told the boy that he was Benson in room 233 and had lost his key. Because there was no extra key available for 223 and a Benson was registered to the room, the clerk disregarded motel policy and gave the man the pass key which opened all of the room doors.

The clerk later saw the men in the hall, one with a gun in his waistband, and became concerned. He then contacted room 223, and learned that Benson knew nothing about the key request.

A police detective confirmed that a key had been used to open the door to the Kraaz room before the chain lock was broken. The Kraaz robbery was not the first security problem the motel had experienced. Another guest, also involved with race horses, reported an attempted robbery of his room the night before the Kraaz incident. He had cracked open his door in response to a knock and a voice saying that it was the motel manager. He was able to shut it quickly when he saw that the man at the door was wearing a ski mask and gloves. The guest reported the incident to the desk clerk. Although the clerk claimed to have called the police, no police investigated.

After the robbery, Mrs. Kraaz became paranoid, lost weight and began relying on sleeping pills and tranquilizers. She refused to travel with her husband, although she had done so for ten months of every year prior to the robbery. Mrs. Kraaz was described by a psychiatrist who examined her a few days after the robbery as extremely frightened, apprehensive, and essentially unable to function. The doctor also reported that Mrs. Kraaz had experienced several traumatic incidents as a child which she had suppressed until the robbery; it was his opinion that her life would have been normal had the robbery not occurred.

The Kraazes' marriage became impaired by Mrs. Kraaz' s unstable condition. The couple consulted the psychiatrist, who recommended treatment at least twice week for the next two years, and possibly longer.

On appeal from the judgment granted the Kraazes, the motel tried to rely on two statutes which limit innkeeper liability. One requires an innkeeper to make a safe available to guests for the deposit of valuables and to notify guests by a conspicuously posted notice of the availability of a safe. The notice also indicates a limitation of liability to $100 if the guest suffers a loss, except through the fraud and negligence of the landlord, or some clerk or servant provided by him in such inn or hotel. A second statute exempts the innkeeper from responsibility for what is stolen by force or arms, or with exterior breaking open of doors, or by any other extraordinary violence.

The motel manager claimed that a notice was posted on the door of the room which informed guests of the availability of a safe and included the applicable Louisiana statutes. The Kraazes testified that they were not aware of the notice, and several witnesses could not remember seeing any notice. The court was not satisfied that adequate notice had been given.

The Supreme Court of Louisiana affirmed the trial judgment and ruled the statutes did not apply because the forced entry was accompanied by gross negligence on the part of the innkeeper and its employees. The pass key was the critical element in the robbery, and it was given to the robbers by the desk clerk, while the guard slept nearby.

The court noted that a motel guest is due a high degree of care and protection by the innkeeper:

The innkeeper has a duty to take reasonable precautions against criminals. Safeguarding the room keys is a minimum requirement. The duty to avoid handing a pass key to any stranger is even stronger. Breach of this duty was a direct cause of plaintiffs' physical, emotional, and financial damages....The [innkeeper] is liable for the resulting damages.

Two justices dissented, stating that the testimony supported adequate notice and agreeing with the motel's argument that plaintiffs were contributorily negligent for keeping such large sums of cash in the motel room. As frequent travelers, they should have been familiar with the availability of motel safes. Nonetheless, the majority affirmed judgment to the Kraazes, because mere possession of money does not constitute negligence.

COMMENTARY:

The onerous responsibility associated with cautious delivery of keys applies not only to innkeepers, but to virtually every security guard, landlord, and other business person who has access to pass keys or other limited access keys.

• Are your personnel trained to make appropriate inquiries before relinquishing any keys, such a requesting and confirming identification?
• Do you have firm and clearly articulated procedures for dealing with lockouts, including alternatives of having the guard or clerk retain the key and unlock the door for the guest?
• Are our pass keys properly coded so that unauthorized duplications cannot be made?

The sleeping guard in this case compounded the error. Careful selection of personnel is obviously critical. A security guard working on a part-time basis could already be exhausted from daytime labors. Appropriate investigation before hiring could reduce that risk.

PSCLR - JAN 83 (11)

Statutory Limitation of Innkeeper's Liability for Loss of Guest's Property Inapplicable to Theft of Guest's Car and Contents from Motel Parking Lot:

Charles T. Vilella v. Sabine, Inc., et al., No. 57722, Supreme Court of Oklahoma, decided July 27, 1982, rehearing denied November 1, 1982, reported at 652 P.2d 759.

On February 3, 1979, Charles Vilella's two sons stopped at an Oklahoma City motel operated by the defendant Sabine, Inc. They were moving their father's personal property to Pennsylvania in a truck and trailer and inquired about a safe place to park the vehicle. They were told that the motel had an open parking lot which was patrolled by a security guard at night. They left the truck and trailer there, and the vehicle and its contents were stolen during the night. Vilella sued the motel owners.

Oklahoma law provides that:

An innkeeper ... is liable for all losses of, or injuries to, personal property placed by his guests ... under his care, unless [caused] by an irresistible superhuman cause, by a public enemy, by the negligence of the owner, or by the act of someone whom he [the owner of the property] brought into the inn....

In construing this statute, the court ruled that an innkeeper is made a virtual insurer of the safety of properly entrusted to his care by a guest. The law does so not only because of the traveler' s vulnerability, but also because the innkeeper is in a better position to compensate for his losses by regulating his room rates. Also, in order to find the motel liable for loss, the court determined that it is not necessary that the property be placed under the motel's exclusive care, such as in its safety deposit box. It is only necessary that the property be brought into the motel in the normal way and that it not remain under the exclusive control of the guest; it is enough if the property is in the general and implied control of the motel. Since Vilella's vehicle and its contents were in the motel's guarded lot, the property was under the care of the motel, and the defendant is liable for its loss.

Another question for the court in this case was whether the $250 statutory limitation of an innkeeper' s liability applied to this loss, or whether Sabine was liable for the full value of the loss. The applicable statute relied on by Sabine provides:

[A hotel] proprietor ... shall not be liable for the loss of or damage to personal property brought into such hotel ... by any of the guests thereof exceeding $250 in value....

The statute goes on to provide limits of liability for loss of specific items such as trunks ($100), valises ($75), boxes ($25), and so on. But nothing is mentioned about vehicles and their contents. Therefore, the court ruled, since no limit on liability was set for the loss of vehicles, Sabine would be liable for the full value of Vilella's loss.

COMMENTARY:

This case does not involve any claim of negligence on the part of the hotel/motel owner. That would be a harder case for the plaintiff to prove. As the court here ruled, the motel operator is a virtual insurer of the guests' property in its care, and the plaintiff need only show the value of the loss incurred.

This case undoubtedly will come as unwelcome news to innkeepers and their insurance carriers, especially in Oklahoma Not only are they held automatically liable for the theft of a guest's vehicle in their care, but also the $250 limitation of liability does not apply.

Are you familiar with the similar statutes in your own jurisdiction(s)? And, equally important, are you aware of the most recent court interpretations of those statutes? You nay be under the impression that a statute limits your liability to a nominal amount only, when in fact a court may have ruled otherwise. If you have any doubt, consult your attorneys.

Corporation Cannot Recover From Hotel For Lost Profits And Other Damages Caused By Wrongful Death Of Its Corporate Manager In Hotel Fire:

Arrow Electronics, Inc. v. The Stouffer Corporation, et al., in the Supreme Court of New York, Special Term, New York County, Part I, decided December 20, 1982, reported at 458 N.Y.S.2d 461.

A fire broke out on the third floor conference wing of the Stouffer's Inn of Westchester, located in Harrison, New York, on December 4, 1980, shortly after 10 AM. The fire spread rapidly, and 26 people were killed. Among those who died were 13 Arrow Electronics, Inc., employees.

Arrow sued the owners of the inn, the Stouffer Corporation, and the William L. Crow Construction Company, which had been retained by Stouffers for the planning, design and construction of the inn, and a firm of consulting engineers who performed the mechanical engineering and electrical work on the inn.

Arrow alleged that in October 1980, Stouffers agreed to rent guest and meeting rooms to Arrow for its senior level management annual budget meetings to be held between November 30, and December 6, 1980. Arrow also alleged that the agreement implied that the rooms were suitable and safe, reasonably free of fire hazards, and reasonably equipped with devices to minimize the danger of fire. Arrow sought $5,000,000 compensatory damages plus $5,000,000 punitive damages for the loss of its management; costs of recruiting new employees; loss of books, records, and papers; death benefits paid to the widows and estates of deceased employees; and lost profits.

The defendants all moved to dismiss the claims of Arrow except the claim for loss of books and records, which defendants agreed was a viable claim.

The trial judge examined the status of the law on this issue in New York, and ruled that Arrow Electronics was in essence attempting to pursue a wrongful death claim. However, claims for damages for wrongful death belong exclusively to the personal representative of the decedent, according to a New York statute. Furthermore, limiting recovery to their personal heirs of the decedent is the wise course, according to the court, if recovery could be had by all who are injured in fact, the resources available to compensate...the survivors...would be diluted.

The trial court dismissed Arrow's contention that this was an action for injury to the corporation, and therefore dismissed Arrow's claims for damages or lost profits and other compensatory and punitive damages resulting from the deaths of the employees.

Allen Zang v. Eddie Leonard, Jack C. Spence, and Helen P. Spence, Individually, and as Partners d/b/a Spence Properties, Spence Manor Motor Hotel, Spence Motels, Inc., and Motel Systems, Inc.; in the Court of Appeals of Tennessee for the Middle Section at Nashville, decided June 1, 1982, permission to appeal denied by Supreme Court, October 4, 1982, reported at 643 S.W.2d 657.

A resident of Spence Manor Motor Hotel in Nashville, Tennessee, Allen Zang, arrived home on May 30, 1977, and parked his car in the motel lot. While removing his luggage, Zang was approached by a man who robbed and shot him, and then stole his car. Because Zang felt the motel's security precautions were inadequate to protect guests from such attacks, he sued its owners, Jack C. Spence and Helen Spence personally, and as partners operating Spence Properties and Spence Manor Motor Hotel, as well as Spence Motels, Inc., and Motel Systems, Inc. At the trial, a jury awarded Zang $40,000 damages; the defendants appealed.

In reviewing the laws applicable to this situation, the appellate court first made it clear that a property owner is not an insurer of guests against injuries caused by third persons. Land owners/possessors would be liable for misconduct of third persons only if the owner/possessor's own negligence was the actual cause of an injury. To determine whether an owner/possessor was negligent in a particular case, the facts and circumstances of that case would have to be examined and a finding would then be made as to what steps a reasonable and prudent owner would have taken under those same facts and circumstances. If the actions of the owner in question conformed to the standard of the reasonably prudent owner, then the owner in question would not be considered negligent and therefore could not be held liable to a guest injured on the property.

The appellate court continued, stating that for an owner to be held liable to a guest who had been injured by the criminal act of another, proof that the owner had actual notice of a specific, threatened criminal act by a specific person would not be necessary. It would be sufficient to prove that the guest' s injury at the hands of a third party was made possible by the failure of the owner to exercise reasonable care under the circumstances (i.e., to be negligent) in protecting the guest.

Furthermore, the court pointed out that the type of services and accommodations advertised to prospective guests affects to some extent the standard of care the motel must provide its guests. The quality of care represented to the public would have to be considered in a determination of a motel operator's negligence.

In an effort to prove that the Spence Manor defendants were indeed negligent, Zang's lawyers called the criminal assailant himself as a witness. The robber testified that he would not have attacked Zang if the lobby of the hotel had had better lighting and if other people had been present. However, the appellate court ruled that such evidence was not admissible because the issue was not whether the attacker would or would not have attacked, but what could and should have been anticipated by the defendant hotel owners.

In conclusion, the court dismissed the suit against Mrs. Spence since she was only a stockholder in the corporation and did not perform any management duties, and the suit against Spence Motels, Inc., since nothing in the record justified a verdict against that corporation. The case was reversed and returned to the trial judge for retrial against the other defendants.

COMMENTARY:
Cases against innkeepers for injuries or losses suffered by guests are not new to the law, but they do seem to be proliferating at a rapid rate.

The above case articulates a new element in the determination of whether an innkeeper was or was not negligent in a particular situation, and that is: the type of services and accommodations advertised to prospective guests. It seems that the court is saying that the quality of care impliedly promised to prospective guest by a hotel's (or hotel chain's) advertising agency can and will have a direct effect on the standard of care to which the courts will hold the innkeeper responsible in protecting the lives and property of the hotel 's guests.

The standard remains the same: that degree of care which would have been exercised by a reasonably prudent innkeeper under the same or similar circumstances. But what the court is saying is that the same or similar circumstances to be considered in determining what care the reasonably prudent innkeeper would have exercised will vary depending upon the type and quality of care that the particular innkeeper promised to the public through its advertising. That is to say, the reasonably prudent innkeeper who has implied to the public through advertising that he will take better care of guests than his competitors will be required by the law to do just that.

Hotel Guest's $4,000,000 Suit Against Architect for Design Deficiencies Allegedly Resulting in Death of Guest's Wife Is Barred by Statute:

Dr. John W. Yarbro, surviving spouse of decedent Geraldine Yarbro v. Hilton Hotels Corporation, Third-Party Plaintiff v. I.M. Pei, individually, and I.M. Pei & Partners, a partnership, formerly known as I.M. Pei and Associates, Third-Party Defendants, No. 80SA274, in the Supreme Court of Colorado, En Banc, decided December 13,1982, rehearing denied January 10, 1983, reported at 655 P.2d 822.

Drs. Geraldine and John Yarbro attended a medical convention being held at the Denver Hilton Hotel in May of 1977. Geraldine Yarbro presented one paper at the convention and was scheduled to present another on May 18. On May 17, the Yarbros enjoyed a cocktail party and retired to their fifteenth floor room at about 11 PM While John had his back to his wife and was removing his coat, Geraldine apparently tripped over the radiator which was located at the base of the room's window. She fell through the window glass and to her death.

Dr. John Yarbro sought to recover damages from the hotel for his wife's death in the amount of $4,000,000. His suit alleged that his wife's fatal fall was either caused by her coming in contact with the poorly situated radiator and losing her balance or by her tripping over the radiator and then through the window which could not withstand the impact of her body against the glass . Evidence indicated that the room' s windows were one-eighth inch thick glass set in pre-cast concrete and were not equipped with any type of protective device, guards, or screens. Further, the radiator projected about 15 inches from the wall under the window, leaving very little room between it and the bed.

Hilton in turn sued I.M. Pei and his professional architectural firm which had provided design services for the building in 1960, stating that the architect and not Hilton was responsible for Dr. Geraldine Yarbro's death. Dr. John Yarbro also sued Pei directly, alleging certain design deficiencies on the part of the architects.

However, a Colorado statute prohibits lawsuits against an architect for damages for injury to a person or property caused by the "design [or] planning...of any improvement to real property brought more than ten years after the substantial completion of the improvement to the real property...." Because Pei's work on the Hilton was unquestionably completed nineteen years before this wrongful death action was commenced, judgment was granted in his favor.

Dr. Yarbro attacked the constitutionality of the statute, but without success. The appellate court affirmed the judgment dismissing the architects from the case, and the case by Dr. Yarbro against Hilton alone will now proceed to trial.

COMMENTARY:

Every astute property owner, developer, and manager knows that security problems include much more than security guards and burglar alarms alone.This case illustrates the fact that the design of a structure is itself a security concern. While this particular case relates more to an engineering or design defect, it presents an opportunity to emphasize that the skill and expertise of security professionals should be utilized in the design and construction stages of all new and renovated properties to insure that matters such as traffic flow patterns, adequate locks, and similar security concerns can and will be addressed during these stages.

Linda Anderson, Derriel Anderson v. James E. Malloy, Peter Zes, Edward J. Gibson, No. 81-1923, in the United States Court of Appeals for the Eighth Circuit, decided March 9, 1983, reported at 700 F.2d 1208.

During the months of January and February, 1979, Linda and Derriel Anderson were staying in an apartment building which had been converted to long and short-term motel accommodations. On the night of February 7, Linda Anderson was alone in the room when she heard a knock at the door. She asked who was there, heard a muffled voice which she thought was her husband's, and opened the door to an unknown man who forced his way into the room and raped her.

The Andersons filed a suit which alleged that the motel owners (James Malloy, Peter Zes, and Edward Gibson) had been negligent by failing to provide safe lodging to them as guests and by misrepresenting the level of security provided to guests. The jury returned a verdict for the motel owners.

The Andersons appealed the verdict because they felt the trial judge had erred in refusing to allow certain evidence to be presented to the jury. The evidence that the judge would not admit was certain testimony (l) concerning the security measures which were used by other hotels and motels in the same area as the defendants' motel, (2) concerning the fact that the defendants had installed safety chains and peepholes in their motel's guestroom doors after Anderson's rape, (3) concerning the fact that an apartment complex next to the motel was a breeding ground for crime, and (4) by a woman concerning her own rape at the same motel five months before Anderson was raped.

The U.S. Court of Appeals for the Eighth Circuit did not agree with the trial court's ruling that the evidence as to security measures taken by other area hotels and motels was not relevant because of the unusual physical layout of the defendant's motel. The defendants' motel had been converted from an apartment building and did not have interior hallways, upstairs units, a restaurant or similar facility, unlike other motels/hotels in the area. The Court of Appeals held:

The defendants ' motel and other hotels and motels serve the same purpose in the same way, they are located in the same area of the same city, and customers rely equally on each hotel and motel to provide proper security. We do not find that the difference in physical layout between the defendants' motel and others [invalidates] the relevance of evidence concerning the security measures of others....

On this issue, the appellate court noted that evidence of the customary practices of similar businesses does not establish the legal standard of care which a motel owner owes his guests. The standard is reasonable prudence and a defendant may be found to have failed to meet the standard (i.e., to have been negligent) even though he conformed to the customary practices of the industry. Likewise, the fact that a defendant did not conform to customary trade practices does not establish conclusively that the defendant was negligent.

However, customary practices by similar businesses such as other motels in the area should have been admitted into evidence, according to the court, because that testimony would have some evidentiary value to the jury in determining whether the defendants met the standard of reasonable prudence.

The Andersons also argued on appeal that they should have been able to show the jury that the defendant motel owners had installed door chains on and peepholes in the guestroom doors after the incident. The motel owners argued that the door chains and peepholes could not prevent crime and would actually create a false feeling of security which would actually make the guest less secure. The court noted that evidence of remedies which are put into place by defendants after an alleged act of negligence is generally not admissible to prove defendants were negligent prior to taking the remedial measures. However, in this case, the motel owners had taken the position, and had testified at trial, that the use of door chains and peepholes was not feasible, thereby indicating to the jury that such devices were not capable of being utilized, or dealt with successfully. The court said:

For the defendants to suggest that installation of peepholes and chain locks would provide only a false sense of security not only infers that the devices would not successfully provide security, it also infers that the devices would in fact create a lesser level of security if they were installed.

Therefore, the court said that the Andersons should have been allowed to show the jury that the safety devices of peepholes and door chains were in fact feasible by showing that, although the motel owners had testified that they had done everything necessary for a safe and secure motel and that peepholes and door chains would not be successful, they had in fact installed these exact devices after Linda Anderson was raped.

The Court of Appeals affirmed that the trial court' s ruling that evidence concerning crimes at the adjoining apartment building was not sufficiently relevant to justify admission. Moreover, the testimony by the earlier rape victim at the motel was not considered relevant to this suit.

Therefore, the Court of Appeals returned the suit to the trial court for another trial because evidence concerning the motel owners' subsequent security measures had been denied admission at the original trial.

COMMENTARY:

As pointed out by the court's decision, it is generally true that evidence of remedial measures is inadmissible. A party who is charged with negligence would not be inclined to fix his unsafe property or product (assuming he knows it to be unsafe and in need of fixing) if his own improvements could then be used against him to prove his negligence.

The Anderson case here should not be considered as a change in this longstanding legal doctrine. The law that evidence of remedial measures taken by a defendant after an alleged act of negligence is inadmissible is still good law. The only reason such evidence became admissible here was because the defendants' own attorney had elicited testimony from one of the motel owners indicating that the safety devices should not be installed and would not be successful. This testimony opened the door for the plaintiffs to prove the opposite.

Certainly any conscientious hotel/motel owner or operator would and should initiate remedial safety measures when the need for them becomes apparent, and the evidence of such will generally not be admissible to prove that he was negligent at an earlier time before the safety measures were in place.

Hotel Cannot Qualify for Statutory Limitation of Liability for Theft of Guest's Valuables Unless It Establishes Adequate Facilities for Safekeeping of Valuables:

Eliza M. Goncalves, also known as Eliza G. M. Salles v. Regent International Hotels, Limited, doing business as Mayfair Regent, et al. (Action No. 1), and Sara Cecconi v. Regent International Hotels, Limited, doing business as Mayfair Regent, et al. (Action No. 2), in the Court of Appeals of New York, decided February 17, 1983, reported at 447 N.E.2d 693.

The Mayfair Regent is a luxury hotel located in Manhattan in New York City and is owned by Regent International Hotels, Ltd. In November, 1979, two guests of the hotel, Eliza Goncalves and Sara Cecconi, were traveling with jewelry collections reportedly worth $1,000,000 each. Both women turned the jewels over to the management of the hotel for safekeeping and each signed and received a Safe Deposit Box Receipt which described the terms and conditions of the deposit:

In consideration of the privilege herewith granted me by Mayfair House whereby I am allowed the sole use of an individual safe deposit box for the keeping of my valuables ..., I hereby agree that the liability of Mayfair House for loss or damage to the contents, at any time, of such safe deposit box, by theft, burglary, or otherwise, is and shall be limited at all times to a total amount of $500, and, for the purpose of determining any liability of Mayfair House for any such loss or damage to the contents of such safe deposit box, I hereby agree that the value of the contents of said box shall never exceed at any one time the sum of $500....

The New York statute on which this agreement was based limits the absolute liability of innkeepers for the loss of guests' valuables. (Prior to the enactment of this statute in 1855, an innkeeper was held totally responsible as an insurer of his guests' valuables, regardless of the amount.) According to present law, an innkeeper's liability can be limited to $500 for any loss of a guest's property in his possession (unless the guest and the hotel came to another agreement in writing), if he provided "safe in the office of such hotel ..., or other convenient place for the safekeeping of any money, jewels, ..." and if he had notified guests that such facilities were available by "posting a notice ... in a public and conspicuous place," as in the office and public rooms of the hotel. The statute also states that the hotel could not be held liable if the guest refused to deliver valuables to the hotel for safekeeping, and that the hotel could not be required to receive a guest's property for deposit if the value exceeded $500.

Notices were posted in the Mayfair Regent, as required by New York law, informing guests that safety deposit facilities were available for the storage of guests' valuables. The particular facilities provided by the Mayfair were rows of safety deposit boxes located inside a plasterboard room. Access to the room was gained through two hollow-core wood doors, only one of which was equipped with a lock-an ordinary tumblertype lock. Access to the boxes required two keys, one held by Mayfair and one held by the guest. Mayfair also kept a card file which contained information concerning guest use of the boxes, including dates of deposit and removal of valuables.

On November 25, 1979, the safe deposit room was broken into by thieves and some of the boxes, including those holding Ms. Goncalves' and Ms. Cecconi's jewelry collections, were emptied. The Mayfair's owner, Regent International, refused to cover the guests' losses beyond the statutory limited liability of $500 as stated in the Safe Deposit Receipt and the two women brought separate actions against the hotel owner for $1,000,000 in damages each. Their suits were later consolidated. The New York trial court entered summary judgment for Regent International and awarded the plaintiffs $500 each; Ms. Goncalves and Ms. Cecconi appealed.

The suits against the hotel contended that the hotel could not be protected by the statutory liability limitation because the hotel's negligence in providing security was the proximate cause of the theft. The plaintiffs argued that the hotel had not provided a safe within the meaning of and as required by the statute and therefore could not claim the benefits of the statute. The hotel defended itself by contending that the statute limited its liability to $500 regardless of the cause of a loss, and argued that it did in fact provide a safe as required, but that in any event the statute did not even require a safe as such, but allowed for [an]other convenient place to satisfy the condition.

The New York Court of Appeals noted that the statute must be strictly followed in order for a hotel to benefit from the limitation of liability. Limited liability would be granted to a hotel which had strictly adhered to the conditions of the statute even if some other negligent act caused the loss of guest property. However, negligence by failing to satisfy the conditions of the statute would remove the protection. In this regard the court noted that a hotel which provided no safe at all, or which failed to post the notices conspicuously, or provided a poorly-constructed receptacle as a safe, could not claim the benefits of the statute's protection and would be fully responsible for a loss, as innkeepers were before the passage of the statute in 1855.

Therefore, the court then addressed the question of the type of facility to be considered a safe within the meaning of the statute. Given the court' s admitted lack of expertise in the field, it held that uniform technical specifications would be inappropriate: the security requirements of luxury hotels differ greatly from those of small, budget motels because different clientele and different areas are served by each. In consideration of this, the court determined that for a safe to fall within the meaning of the statute, it "should be a receptacle that, under the circumstances, provides adequate protection against fire, theft, and other reasonably foreseeable risks. In deciding this question, all aspects of a hotel' s security may be considered."

The plaintiffs submitted an affidavit by a security expert with 29 years of experience in designing, installing, and selling safes and vaults. It was the expert's opinion that safe deposit boxes could be easily entered in less than 30 seconds, that safe deposit boxes should be housed in a locked vault and not a plasterboard room with one flimsy lock, and that the Mayfair's deposit facilities were inadequate. In light of this opinion, the court felt that a material question of fact was raised concerning whether the hotel had actually provided an adequate safe in accordance with the requirements of the statute, and ruled that a jury should decide whether the facility provided by Mayfair was or was not a safe.

In sum, the court stated that a hotel owner must prove that it had provided a safe within the meaning of the law to invoke the protection of the statute limiting its liability in the event of the loss of a guest' s property. If the hotel could not prove this, the statutory limitation of $500 per guest would be inapplicable and could not be used in the hotel's defense.

Concerning the hotel's reliance on the safe deposit box receipts signed by each of the plaintiffs, the court ruled that such reliance was ill-placed:

(I) If the hotel was found to have provided a safe as required by the statute, then the statutory $500 limitation would apply and the receipt-agreement would be immaterial and unnecessary to protect the hotel; and

(2) If the hotel was found to have failed to provide a safe as required by the statute, then the receipt-agreement would be void because it is against public policy and it would provide not protection to the hotel.

Therefore, according to the majority opinion, the defendant hotel' s motion for summary judgment should have been denied. The lower courts' rulings were reversed, and the case was sent back for trial and for a jury to determine whether the Mayfair Regent' s safe deposit facilities amounted to a safe as required by the statute. If so the hotel's liability will be limited to $500 per plaintiff; if not, the hotel will face a claim of $1,000,000 per plaintiff.

COMMENTARY:

The holding in this case constitutes a setback for the hotel industry in New York. Recognizing that the case would have important consequences to the industry, the counsel for the New York State Hotel and Motel Association filed a friend of the court brief on this appeal, but to no avail. Four of the seven judges sitting in hearing on the appeal agreed with the majority opinion summarized above.

The dissenting opinion, concurred in by the three remaining judges, points out the practical difficulties caused by the majority 's ruling: By leaving it to a jury to decide whether a hotel's safe is in fact a safe as required by the statute, the court is opening the door for lay jurors to decide that question on a case-by-case basis, with possible widely different results. A jury in one town in New York could decide that an installation such was in the Mayfair Regent was a safe, while another jury could find in another case that the identical installation did not amount to a safe. As stated by the minority:

Indeed, the wholly unacceptable result of the majority's holding will be that, as a practical matter, in every case where the plaintiff alleges that no !qsafe' was provided within the meaning of the statute, the question will have to be submitted to a jury.

See Zacharia v. Harbor Island Spa (November-December 1982 PSCLR at page 9) for another case in which a New York hotel's defense of limited liability was refused by the court for noncompliance with the statute 's requirements.

Timothy S. Garrett, Individually and as Limited Administrator of the Estate of Nancy J. Garrett, Deceased v. Holiday Inns, Inc., et al., and Town of Greece, (Four Main Actions and 20 Third Party Actions), in the Court of Appeals of New York, decided February 23, 1983, reported at 447 N.E.2d 717.

After an extensive fire at a Holiday Inn in the Town of Greece, New York, killed or severely injured many of the motel's guests, several lawsuits were brought by those injured and the families of those killed (hereafter, the plaintiffs). Lawsuits were brought against Holiday Inns, Inc., which was lessor/operator of the motel; the corporation which had developed and built the motel; the past and present owners of the motel; the owner of the property, and the Town of Greece itself.

The Town of Greece was sued by the plaintiffs because the town allegedly failed to require that the motel owners comply with the town's fire and safety codes. The plaintiffs also contended that the Town of Greece had negligently issued a certificate of occupancy to the motel and had not properly inspected the motel during construction or since its completion, and that this negligence contributed to the loss of life and property in the fire. The trial court however dismissed the complaint against the municipality because it determined that the allegations by the plaintiffs suggested no more than a violation of a general duty owed by the town to the public at large. Because the town did not owe a specific duty to the motel guests, the complaint was insufficient to support an action against the town.

Holiday Inn and the other remaining defendants then filed their own actions against the Town of Greece, claiming that while the town may not be directly liable to the plaintiffs (as the trial court had ruled), the town should nevertheless be held responsible to the other defendants for contribution or indemnification to the extent the plaintiffs' losses were caused by the town's misconduct. A lower court, however, dismissed these claims against the Town of Greece, ruling that the town could not be liable to Holiday Inn and the other defendants without some showing that it owed some duty of care directly to the plaintiffs who suffered losses in the fire. Holiday Inn and the defendant motel owners appealed.

Stated simply, the issue of this appeal was whether the town, although previously held to owe no duty directly to the plaintiff motel guests, could nevertheless be held proportionately liable to the owners and lessee-operators of the motel for breaching an independent duty owed the motel. As a rule, proportional liability will be assigned among defendants where two or more wrongdoers share in responsibility for an injury, in violation of duties they respectively owed to the injured person. The court noted that such joint liability could arise from a nexus of duty between wrongdoers which was independent of each wrongdoer's obligation to the injured parties.

The New York Court of Appeals was therefore asked to decide whether the town was obligated to the Holiday Inn's owners and lessee-operators to use reasonable care in issuing a certificate of occupancy and in approving construction alterations in order to guarantee that the building did not violate fire and safety laws. According to case law, the existence of a special duty, as opposed to a general duty owed to the public, is key to the liability of a municipality for the negligent performance of a government function. The court interpreted this principle as imposing liability

... where the municipality has violated a duty commanded by a statute enacted for the special benefit of particular persons ... ; where the municipality has voluntarily assumed a duty, the proper exercise of which was justifiably relied upon by persons benefited thereby ...; or where it assumes positive direction and control under circumstances in which a known, blatant and dangerous safety violation exists ....

The court determined that merely failing to uncover fire and safety violations during inspections of the motel was not sufficient to impose liability on the town. However, the defendants here had alleged much more against the Town of Greece. The appellate court stated:

If, as is alleged ..., known, blatant, and dangerous violations existed on these premises, but the town affirmatively certified the premises as safe upon which representation [the motel owners and operators] justifiably relied in their dealing with the premises then a proper basis for imposing liability on the town may well have been demonstrated ....

The court then concluded that in such a case the municipality clearly would be liable to the defendant motel for damages to the motel, but more importantly, the municipality would be liable to the motel for a proportionate share of the motel's tort liability to the plaintiff guests which was caused by the town's breach of duty to the motel. Therefore, Holiday Inn s claims against the Town of Greece will go to trial along with the injured plaintiffs ' claims against Holiday Inn and the other defendants.

COMMENTARY:

This is one of the more procedurally-convoluted cases we have reported in PSCLR. Rather than get overly involved in the procedural aspects, however, it is best to concentrate on the practical result of the case: A hotel/motel owner/operator who gets sued by an injured guest may be able to recover a share of its losses to the guestroom the local government if it can be shown that the government knowingly permitted blatant safety code violations to exist on the property. Of course, as is often the case, astute legal counsel will be needed to successfully pursue such a recovery. And, as is always the case, the better course of action is to insure that your property is in compliance with all safety codes and that you not incur any losses to your guests in the first place.

Sheldon S. Morris, Naomi J. Morris, and the Continental Insurance Company, a foreign insurance corporation, v. Hotel Riviera, Inc., a Nevada corporation, d/b/a Riviera Hotel, No. 82-5734, in the United States Court of Appeals for the Ninth Circuit, on appeal from the United States District Court for the District of Nevada, decided April 26, 1983, reported at 704 F.2d 1113.

The plaintiffs in this case attacked the constitutionality of Nevada s Innkeeper Statute. The statute limits a motel owner's liability to $750 (without a written agreement to assume greater liability) for the loss of or damage to a guest's property.

Sheldon and Naomi Morris along with their insurance company brought suit to recover the alleged $75,000 value of the Morrises' jewelry which was lost during the Morrises' stay at the Riviera Hotel in Las Vegas, Nevada. The defendant Riviera Hotels, Inc., (Riviera) relied on the statute s liability limitation of $750 and requested that the district court dismiss the suit because the amount in controversy was less than $10,000 the minimum amount for a suit of this type brought in a U.S. district court. The Morrises challenged this statute by contending that the state could not validly limit the amount of recovery for property losses because that would violate the Fourteenth Amendment's equal protection clause by distinguishing between a suit for property loss and a suit for personal injury claims.

The court agreed with Riviera and dismissed the suit for lack of jurisdiction. The plaintiffs appealed to the U.S. Court of Appeals, which examined the constitutionality of the Innkeeper's Statute in Nevada and determined that the Nevada state legislature had passed the law for legitimate reasons. The importance of the tourism industry to Nevada's economy led the legislature to pass the law in order to encourage the operation of hotels and motels. Further, [t]he likelihood of fraudulent claims for property loss and the difficulty for innkeepers to prevent crimes involving personal property, are reasons justifying a distinction between victims of property loss and personal injury victims. Because there was ample justification for the difference in treatment between victims of the two classes of injuries the Nevada Innkeepers Statute withstood the equal protection challenge. Because the distinction was rationally related to a legitimate state purpose in the sphere of local economic regulation, the court upheld the limitation of Riviera's potential liability to $750 which automatically dismissed the case from the jurisdiction of the U.S. District Court.