A Kmart customer who was injured in a fight with a store employee inside the store cannot sue a company that Kmart hired to provide security, a New York appeals court has ruled in a case that highlights when a contract provides a third party with legal rights.
In addition to suing Kmart, Abel Santiago, the customer, sought to sue U.S. Security Aviation Services, which Kmart hired for “the protection of… customers… in the premises” at a store in the Bronx.
At trial, Santiago obtained permission from the court to sue both Kmart and U.S. Security, which he argued that he relied on, to his detriment, to secure the premises. The appeals court in Manhattan disagreed, reasoning that by law the contract between Kmart and U.S. Security afforded no legal rights to Santiago.
In general, a contract does not give rights to someone who is not a party to the agreement. Though a third party can obtain legal rights under a contract, those rights generally vest only when the third party learns of the contract and relies on it. Such rights also can arise if the agreement is so comprehensive that it displaces the obligation of the store, in this case Kmart, to secure its premises.
Santiago testified when the fight occurred he knew nothing of the contract between Kmart and U.S. Security. He further said he did not rely on the agreement, which in practice limited the role of U.S. Security to deterring shoplifting.
Nor did the contract displace the obligation of Kmart, which Santiago could sue, to secure its store “because Kmart retained supervisory authority over the security guards and required U.S. Security’s staff to complete training in accordance with its (Kmart’s) safety policies and procedures,” Justice Peter Moulton wrote for a unanimous court in a ruling dated Feb. 27.
By its terms, the contract also excluded third parties from obtaining legal rights as part of the agreement.
That distinguishes the facts of Santiago’s case from, for example, a 1994 ruling by the Court of Appeals involving a nurse who was injured when a wall-mounted fan at the hospital in Schenectady where she worked fell on her as she tended to a patient.
In that case, the court allowed the nurse to sue the company that the hospital had hired to inspect, maintain and repair the facilities as part of an agreement that also required the maintenance company to train and supervise all service personnel.
“We hold that when a party contracts to inspect and repair and possesses the exclusive management and control of real or personal property which results in negligent infliction of injury, its assumed duty extends to non-contracting individuals reasonably within the zone and contemplation of the intended safety services,” the court wrote.