The Importance of Obtaining Liability Insurance and Including an Exculpatory Clause
Crime happens. And, when it happens within a community association, the association will oftentimes get drawn into civil lawsuit seeking millions of dollars. While an association cannot prevent being named in a wrongful death lawsuit, it can do certain things to help protect itself from liability in such suits. One of those things is obtain the proper liability insurance. Another is to ensure that an association’s Declaration contains an exculpatory clause stating the association does not have a duty to provide security on its premises.
The Significance of Exculpatory Clauses in Georgia Court Cases
The contrasting results of two Georgia Court of Appeals cases highlight the importance of such an exculpatory clause. The tragic facts of the cases, Bradford Square Condominium Association, Inc. v. Miller (decided in 2002) and Camelot Club Condominium Association, Inc. v. Afari-Opoku (decided in 2017), are strikingly similar. Both cases involved criminals following a condominium resident into the condominium, and attacking and killing the resident during a robbery attempt. However, the resulting civil wrongful death lawsuits filed against the condominium Associations ended with very different verdicts for the Associations. In the Camelot Club case, the jury found the Association to be partially responsible for the victim’s death, and liable for paying 25% of a $1,625,000.00 jury verdict. In contrast, the Georgia Court of Appeals in Bradford Square found that the Association was not liable for the victim’s death, and the victim’s widow was awarded no money.
The Impact of Exculpatory Clauses on Association Liability
While there are other differences between the facts and allegations in the two cases, one difference that stands out above others is that in the Bradford Square case, the Association had amended its Declaration to include an exculpatory clause that George Nowack of our firm prepared stating that the Association did not have a duty to provide security. The Camelot Club Declaration did not contain such an exculpatory clause. This is important because the Court in Bradford Square relied on the exculpatory clause in finding that the Association was not liable. Essentially, the Court in Bradford Square found that the Declaration was a contract between the Association and the unit owners to which the owners agreed by purchasing their units. Because the Declaration contained the exculpatory clause stating that the unit owners agreed that the Association had no duty to control the security of the common elements, the Association had no legal duty to provide security, and therefore, could not be held liable for failure to provide security.
Association Liability in the Absence of an Exculpatory Clause
By contrast, in Camelot Club, in the absence of such an exculpatory clause, the Court held that the Association did have a duty under Georgia law to exercise ordinary care to keep its premises safe. The existence of this duty meant that the Association could be liable for the victim’s death due to a third party criminal act if (1) the Association knew or should have known that criminal activity constituted a potential hazard to residents; (2) the victim lacked knowledge of the potential hazard posed by the criminal activity on the condominium; and (3) the criminal act resulting in the injury to the victim was reasonably foreseeable in that it was substantially similar in type to previous criminal activities occurring at or near the premises. The evidence in Camelot Club showed that there were several prior substantially similar incidents of armed robbery at the condominium and surrounding area of which the Association was aware, but no evidence was presented showing that the victim was aware of such criminal activity. Based on this evidence, the Court in Camelot Club found that the Association breached its duty to keep its premises safe, and that the Association’s breach of its duty was a contributing cause to the victim’s death.
Adding an Exculpatory Clause to Protect Associations
Given the above, without an exculpatory clause stating that an association does not have a duty to provide security, an association may, like Camelot Club, be held liable. While most Declarations created after the Bradford Square case in 2002 already include an exculpatory clause, if you are unsure if your Declaration contains such a clause, or if you would like to amend your association’s Declaration to add one, your community association attorney will be able to assist you.