On Duty: Property Managers that Hire Private Security Guards

Author’s Note:

This article is part of an occasional series on liability issues facing the private security industry. The first article, On Duty: Private Security Companies and the Threshold Element of a Negligence Claim, was published on April 3, 2020. Like the previous article, this one begins with a hypothetical:

Picture a hypothetical company, which I will call “Urban Stores.” Urban Stores owns and manages several commercial properties in Chicago. One of these is a strip mall in what, until a year ago, was a quiet neighborhood.

Since then, the neighborhood’s crime rate has spiked. While much of the crime has been violent, so far, the mall has only suffered property crimes – vandalism, theft, etc. But even that is taking a toll. For example, over the past three months, seven cars have been stolen from the mall’s parking lot, and teenagers have graffitied two storefronts and a common area. Not surprisingly, customer traffic is down and that is hurting the mall tenants financially.

The problem is in its early stages, but Urban Stores can already envision a nightmare: Fear of the rising crime wave drives customers away from the mall. Sales at the tenant businesses drop. Those tenants conclude it is no longer profitable to remain at the mall. Some leave. Others remain, but only for reduced rent. Empty storefronts beget empty storefronts and, eventually, Urban Stores has a distressed property in a high-crime neighborhood – a scenario no company would want.

So to reassure its tenants and their customers, Urban Stores decides to revamp the mall’s security plan. The new plan will be thorough, with increased protection in all areas and trained security guards onsite. The goal is to prevent any violent attacks, which could trigger Urban Stores’ nightmare scenario.

But the company’s plan comes with a challenge. While enhanced security will reduce the chances of attacks on mallgoers, an attack may still occur. If it does, Urban Stores’ greater involvement in security could increase the chances it will be liable for negligence in failing to protect the victims.[1] That is because, despite hiring outside security guards, Urban Stores may still have undertaken a duty to protect people on the mall premises.

This article will examine the scope of that duty and the situations where it arises. Specifically, the article will analyze the duty that parties hiring security guards – property owners and managers (collectively, “property managers”) – still owe to prevent third-party attacks.

For property managers, the encouraging news is that duty flows from their arrangement with the security company, which, mostly, is defined by the parties’ contract and the security plan as a whole. Along these lines, attorneys representing property managers should be aware of several court decisions which can serve as guidelines for drafting agreements. These may help them limit liability to third parties injured on their clients’ properties. Without having a carefully drafted agreement in place, property managers could be exposing themselves to substantial liability.

THE DUTY ELEMENT

As the security company article explained, in Illinois, a negligence claim consists of three elements: (1) a duty owed by the defendant to the plaintiff; (2) the defendant’s breach of that duty; and (3) the plaintiff’s injury resulting from the breach.^[2] To satisfy the duty element, a plaintiff must establish that the property manager’s duty encompasses protecting the plaintiff from the harm he or she suffered.^[3]

Generally, a party owes no duty to protect another from a third-party’s harmful or criminal acts.^[4] But this rule has four exceptions: (1) the parties are in a special relationship and the harm is foreseeable; (2) an employee is in imminent danger and this is known to the employer; (3) a principal fails to warn its agent of unreasonable risk of harm involved in the agency; and (4) a party voluntarily assumes a duty to protect another from third party acts.^[5]

The first exception, voluntary undertakings, is the most relevant to property managers.[6]

VOLUNTARY UNDERTAKING

In voluntary undertaking cases, the defendant’s duty is limited to the extent of the undertaking.[7] When hiring security guards, this can subject property managers to two kinds of liability: (1) negligent hiring; and (2) negligent security.

For negligent hiring, the duty analysis is straightforward: If a property manager undertakes to hire a security company, he assumes a duty to exercise reasonable care in that endeavor.[8] This means the manager cannot pick a company it knows is “unfit for the…job so as to create a danger of harm to other third parties.”[9] Typically, these claims relate to instances where the security guard inflicted the injury on the plaintiff.[10] Further, in most of them, the property manager’s duty is not disputed. Thus, negligent hiring presents unique issues that are best analyzed in a separate article.

In addition to negligent hiring, when a property manager contracts with a security company, it can also be liable for failing to protect the plaintiff. Here, the duty analysis is layered. First, even though the manager has hired security guards, the court still must determine whether the manager has retained a duty to provide security itself – either in addition to, or along with, the security company. If so, the court must then decide whether that security includes protecting the plaintiff from a third-party assault. [11] [12]

Duty to Provide Security

To determine whether a manager has undertaken a duty to provide security, courts employ a totality-of-the-circumstances test. Among the factors, the managers’ contracts are the most important. These can be contracts with the security company or contracts with residential or commercial tenants.[13] Beyond the contracts themselves, courts will also examine instructions stemming from them, like post orders or policy manuals.

Cases recognizing a property manager’s duty to provide security share two traits. First, in at least one of its contracts, the manager explicitly assumed a duty to provide security. Second, the manager retained direct control over the way security measures were implemented, whether by issuing onsite instructions to guards, drafting post orders or making hiring and firing decisions.

The First District’s decision in Berg is an example. There, Podolsky & Associates owned an office complex, where it rented space to various businesses. Podolsky hired Allied Security to assist with security.[14] Based on the parties’ contract, Allied would perform security services that it and Podolsky “mutually agreed upon.” Allied would then convey the “mutually agreed upon” services to its guards in the form of post orders.[15] Still, Podolsky maintained the authority to determine how many Allied guards were used and to dismiss any guards it found inadequate.

One night, a woman who worked at one of Podolsky’s tenant businesses was accosted and beaten in the complex parking lot. The attacker fled when the victim honked her car horn.[16] At the time, Podolsky and Allied’s policy was to have guards patrolling the area – one, on foot and another, through closed circuit television.[17] There was no evidence that guards intervened during the assault or spotted it on the closed-circuit monitors. In addition to Allied, the victim sued Podolsky for negligence in failing to prevent her injuries.

The First District ruled that Podolsky undertook a duty to provide security.[18] This derived from two sources: (1) the language in the contract where Podolsky agreed to provide security measures “in concert with Allied;” and, (2) through the post orders, the control Podolsky retained over security operations, including the power to determine and supervise the guards’ activities.[19]

In McKenna, the contract, and resulting duty, were similar. There, NACA served as the property manager for Chicago’s Ogilvie Transportation Center and an adjoining office tower.[20] It hired Allied (then “AlliedBarton”) to “assist” with protecting both properties.[21]

The contract specified that NACA would provide security “concurrently” with Allied.[22] This meant NACA had the power to hire and fire Allied’s guards and to supply the “policies and procedures” that dictated Allied’s activities. NACA’s director of security also supervised the access control system for the office tower – a succession of turnstiles and keycard readers separating the tower from the transportation center.[23]

On December 8, 2006, a disgruntled former client barged into a law office on the tower’s 37^th floor. Once inside, he shot four of the firm’s employees, killing three.[24] The shooter reached the office by convincing the Allied guard manning the first access control point he had a gun and forcing the guard to escort him to the 37^th floor.^[25]

The surviving victim and the decedents’ estates filed survival and wrongful death actions against NACA, claiming it undertook a duty to provide security.^[26] With reasoning similar to its opinion in Berg, the First District agreed. Mainly, like the Berg Court, it relied on an explicit assumption of duty in the contract – here, NACA’s agreement to provide security “concurrently” with Allied.[27] Further, the McKenna Court also relied on NACA’s ability to direct and oversee security operations. This came from the provision in the contract designating NACA’s director of security as the one responsible for implementing security measures and the requirement that Allied conduct security according to NACA’s “policies and procedures.”[28]

Contrast Berg and McKenna with Kolodziejzak. In that case, Simon Property Management hired Corporate Security to provide security for Yards Plaza, a shopping center on Chicago’s south side.[29] The contract only left Simon one responsibility: reviewing Corporate’s daily reports of security-related incidents at and near the Plaza.[30]

On October 31, 1990, a teenager shot and killed Kolodziejzak, as he pursued the teen through Yards’ parking lot. At the time, Kolodziejzak was working as a “loss prevention specialist” at Yards’ Montgomery Ward store, where he had noticed the teen shoplifting.[31]

Kolodziejzak’s estate sued Simon for negligence in failing to prevent the shooting. The estate argued Simon should have had a competent system for following up on the security incidents Corporate identified. In particular, Simon should have designated a person with security experience to review the reports and update Yards’ security plan to meet its “changing and increased security needs.”[32] But the First District held that Simon never undertook a duty to follow up on Corporate’s concerns. Rather, Simon only undertook a duty to review the daily reports. Therefore, Simon did not have a duty to provide security or guard against third-party attacks.[33]

Notably, in this case, the contract did not include any language where Simon agreed to provide security alongside Corporate – “concurrently,” “in concert with,” etc. It also did not give Simon any power over security operations. Though Simon was required to review the log reports, it did not have power to issue directives to Corporate’s guards, whether through post orders, policies or in-person demands.

At bottom, property managers assume a duty to provide security when they are explicit in their intent to do so. This comes from clear statements in their contracts and direct control over security operations.

Duty to Protect the Plaintiff

To be liable for negligence, a property manager must have a duty “to the plaintiff.”[34] For this reason, it is not enough that the manager has a duty to provide security. The scope of that security must encompass protecting the plaintiff from a third-party’s criminal acts.

Similar to the duty to provide security, courts determine a manager’s duty to the plaintiff through the contracts and any related directives.^[35] Specifically, two types of contractual language hold the most influence: (1) explicit assumptions and disclaimers of liability; and (2) the protection of people vs. the protection of property.

First, some contracts include a direct statement defining the scope of security services. Often, these address the security company. But where the property manager agreed to perform services concurrently, courts will apply the same duty to both parties. Here as well, Berg and McKenna are good examples.

In Berg, the contract provided that Allied and Podolsky would “mutually [agree] upon” the security tasks, which Allied would issue to its guards as post orders. The orders included demands to “keep unauthorized people from the property to reduce the risk of theft, vandalism, and assault,” and “assist in access control for authorized visitors and employees.”[36] The Court ruled that, through the post orders, Allied undertook a duty to “reduce the risk of assault,” in particular, assaults by unauthorized visitors.[37] As the plaintiff suffered an assault at the hands of an unauthorized visitor, Allied had a duty to protect her.[38] Further, because Podolsky agreed to perform security services “in concert” with Allied, their duties “coexisted.”[39] Therefore, Podolsky also assumed a duty to protect the plaintiff.

In McKenna, the contract provided that Allied was to “protect life and insure the safety of all persons” at Ogilvie and the office tower.[40] Further, it provided that Allied would conduct security according to “policies and procedures” NACA supplied.[41] Among these were warnings that workplace violence threatened tenants’ lives and instructions on how Allied could diffuse those situations. The policies and procedures also outlined “reasonable efforts” Allied could take to bar unauthorized people from the office tower.[42]

Based on these provisions, the Court ruled that Allied assumed a duty to protect life and prevent workplace violence.[43] As such, Allied undertook a duty to protect the victims from the act of workplace violence that took three of their lives and injured another.[44] In addition, because NACA “both approved and oversaw [Allied’s] activities,” it also undertook a duty to protect the injured plaintiff and the three decedents.[45]

In contrast to the assumptions of duty in Berg and McKenna, contracts in other cases have disclaimed a duty to protect the plaintiff. For example, in Aidroos, the contract stated that the security company was not “responsible for any theft, damage, destruction, loss of property, personal injury or death” and did not have liability “arising from the criminal acts of any third parties.”^[46] Similarly, the contract in Blankenship left the security company with no responsibility for any “[c]laim, loss, damage or expense arising from…a violent or armed action.”^[47] In both cases, the Court held that the security company had no duty to protect the plaintiff from a third-party attack.

While these cases did not address a property manager’s duty, they are instructive in that they show how a duty to provide security might, nonetheless, fall short of a duty to protect the plaintiff. So in these instances, even if the property manager assumed a duty to provide security, it would not encompass a duty to protect the plaintiff.

Second, the scope of duty can also depend on whether the contract requires the parties to protect people or, exclusively, to protect property. If it is the former, courts will find a duty to prevent third-party assaults. Conversely, if it is the latter, there will be no such duty.[48]

In Hill, for example, the Chicago Housing Authority hired Triad Security under an oral contract to provide security at the Cabrini Green Housing Project.^[49] The contract only required Triad to protect CHA property.^[50] Early one morning, Hill was shot in the lobby of a Cabrini Green building.^[51] His subsequent lawsuit alleged the CHA and Triad were negligent for “allowing dangerous persons to loiter in the common areas and hallways, and in failing…to prevent such loitering and assaults on the plaintiff and others who were rightfully using the common areas.”^[52] But the Court held that, through the contract, the CHA “undertook only the protection of property.” And “since its duty is limited by the extent of that undertaking, it owed [Hill] no duty to protect him” from a third-party’s criminal act.^[53]

The First District’s opposite holdings in Aidroos and McKenna offer further insight into the people vs. property distinction. The Aidroos Court held that the security company had no duty to protect the plaintiff from third-party attacks because, according to the contract, its main function was to guard against theft.[54] Conversely, in McKenna, the contract included a duty to “insure the safety of all persons and property” at Ogilvie, which encompassed the “safety and protection of life.”^[55] Based, in part, on this language, the Court concluded NACA and Allied “undertook a duty to protect life.”^[56] Other cases have based their duty conclusions on similar language, whether establishing^[57] or rejecting^[58] a security company’s duty to a plaintiff. The takeaway is that the people vs. property distinction is a bright line rule, and courts will lean on it as an easy way to define the scope of duty.

BOTTOM LINE

When implementing a security plan and hiring security guards, property managers must weigh two factors that do not necessarily mesh. On one hand, there are the advantages of enhanced safety, which come from a well-structured plan and monitoring from competent guards. On the other are the risks of liability in the event something goes wrong. Luckily for property managers, they hold a measure of control over both factors. So before implementing a security plan and hiring guards, they should have a clear idea of the type of security they want and the way they want it conducted. Further, they should understand the role they want to play in security operations. This will allow them to craft security arrangements that make their properties safer without adding unnecessarily legal risk.

[1] In some cases discussed in this article, plaintiffs filed wrongful death claims instead of or, in addition to, negligence claims. Again, both claims are identical except that the final element of a wrongful death claim is death, rather than injury, stemming from the breach. Vaughn v. Granite City Steel, 217 Ill. App. 3d 46, 50 (5^th Dist. 1991) (Wrongful Death); Blankenship, 2014 IL App. (1^st) at ¶18 (Negligence). For efficiency, this article will refer to negligence and wrongful death, collectively, as “negligence.”

[2] McKenna v. AlliedBarton Security Services, 2015 IL App (1^st) 133414, ¶21

[3] Berg v. Allied Security, Inc., Chicago, 297 Ill. App. 3d 891, 901-902 (1^st Dist. 1998), reversed on other grounds, 193 Ill. 2d 186 (2000)

[4] Blankenship, 2014 IL App. (1^st) at ¶19

[5] Id.

[6] The only other exception that can apply to property managers is the first: a special relationship and the harm is foreseeable. The most likely special relationship is that of business owner/invitee. This can exist when a business owner holds an event on its property, like a concert or sporting event. Sameer v. Butt, 343 Ill. App.3d 78, 86 (1^st Dist. 2003). Nonetheless, the business owner/invitee distinction would not encompass property managers who do not own the properties they manage. The special relationship exception is further limited because landlord-tenant does not constitute a special relationship. McKenna, 2015 IL App (1^st) at ¶24. Thus, injured tenants can only avail themselves of the voluntary undertaking exception.

[7] Castro v. Brown’s Chicken, 314 Ill. App. 3d 542, 547 (1^st Dist. 2000)

[8] Kolodziejzak v. Melvin Simon, 292 Ill. App. 3d 490, 492 (1^st Dist. 1997)

[9] Dixon v. MB Real Estate, No. 15-2329, 2016 IL App (1^st) 152329-U, ¶22, citing, Hayward v. CH Robinson, 2014 IL App. (3^rd) 130530, ¶35

[10] See e.g. Carter v. SVDA, 256 Ill. App. 3d 77, 80 (1^st Dist. 1993)

[11] See Hill v. Chicago Housing Authority, 233 Ill. App. 3d 923, 930 (1^st Dist. 1992); See McKenna, 2015 IL App (1^st) at ¶20

[12] Note that, in property manager cases, Illinois courts do not always identify these as separate issues. See generally Berg, 297 Ill. App. 3d at 902

[13] McKenna, 2015 IL App (1^st) at ¶24; Berg, 297 Ill. App. 3d at 902-903

[14] Id. at 898-899

[15] Id. at 899-900

[16] Id. at 898-899

[17] Id. at 899

[18] Id. at 902

[19] Id.

[20] McKenna, 2015 IL App (1^st) at ¶24

[21] Id. at ¶15

[22] Id. at ¶24

[23] Id. at ¶15

[24] Id. at ¶¶7-8