What Is in Your Guest’s In-Room Safe?
 
July 3, 2002
 
James M. "Jim" Norman- Ft Lauderdale

Thousands of times each day in hundreds of hotels and motels, guests check-in to their rooms and decide where to put the valuables they may have brought with them.  Many hotels, particularly at the full-service level, provide in-room convenience safes in addition to centrally located safety deposit boxes for their guests to use.  In these days, when security is on everyone’s mind, and finding ways to lure back the traveling public is on the mind of everyone in the hospitality sector, something that may not be on anyone’s mind is a hotel’s liability with respect to what its guests decide to put in in-room safes. 

A recent federal appeals court decision, however, reminds hotel owners and managers that even the in-room safe requires some attention, and reinforces the old adage that an ounce of prevention is worth a pound of cure.

In this case (Paraskevaides v. Four Seasons Washington), a hotel guest just happened to be traveling with, and decided to place in her in-room safe, jewelry valued at approximately $1.2 million.  When someone removed the jewelry from the in-room safe after entering both the hotel room and the safe without force, the guests sued the hotel.  One of the defenses the hotel asserted was based upon the Innkeeper Statute applicable in the District of Columbia.  Although the trial court allowed the defense, the appeals court determined that the hotel was not entitled to the statute’s protection because the hotel had failed to comply with the statute’s requirements.  The appeals court then sent the case back to the trial court for a determination of the hotel’s liability under the common law.  Noting that neither party had addressed that issue on appeal, the appeals court remained silent as to the applicable common law standards.  Accordingly, after several years of litigation, the parties are back to square one and the extent of the hotel’s liability remains wide open.

Innkeeper Statutes

The first lesson of this case concerns compliance with innkeeper statutes.  Hotel owners and managers must remember that, under the common law in most jurisdictions and subject to certain limited exceptions, they are strictly liable for loss or damage to a guest’s property, unless that liability has been limited by statute.  This is where innkeeper statutes come in; they limit the common law liability of innkeepers.  Innkeeper statues are a product of local rather than federal law.  Each state (and the District of Columbia) is free to enact its own innkeeper statute.   For this reason, the first thing the innkeeper must do is check the law in each state in which a hotel is located and clearly understand what that law requires. 

If an innkeeper fully complies with applicable innkeeper statues, the benefits can be significant.  Under the District of Columbia Innkeeper Statute, for example, compliance allows innkeepers to avoid all liability for the loss, theft or destruction of property not deposited in the hotel’s safety deposit boxes unless it is “usual, common or prudent” for a guest to retain such property in his or her room.  Moreover, compliance with the statute limits an innkeeper’s liability for the loss, theft or destruction of property deposited in the safety deposit boxes to the lesser of $1,000 or the fair value of the property.  In order to reap the benefits of these statutes and limit a guest’s common law rights, a hotel must be precise in its compliance.  

The District of Columbia’s version of the innkeeper statute required, among other things, that hotels display either a printed copy of the innkeeper statute or a summary of the law in both the guest rooms and in the public rooms of the hotel.  The appeals court in this case concluded that the hotel did not display a copy or summary of the statute in its public rooms, and, therefore, could not rely on the statute to limit its liability. 

One should not be too hasty to dismiss this case as being decided on the grounds of a mere technicality thanks to the crafty work of skilled and smart lawyers.  It appears that a significant amount of money was spent on both sides, and the court’s written opinion certainly hints that some very creative and innovative arguments were made by the hotel.  The court, however, rejected them all.  Moreover, the court supported its conclusion by pointing to several states, other than the District of Columbia, where innkeeper statutes were tested and the courts concluded, quite simply, that for a hotel to benefit from an innkeeper statute it had to strictly comply with that statute.  No matter what!  This is where the ounce of prevention comes in; the simplicity of posting the statute or a summary is surely preferable to the distraction and expense of years of litigation before both a trial and an appellate court.

Do Not Ignore Common Sense Safety

There is another lesson in this case worthy of mention.  This case involved guests that checked into the hotel in September of 1997 (note the 5 years leading up to the decision of the United States Court of Appeals in June of 2002).  During the trial the hotel manager testified that at least one master key ring had been missing since March 1997.   Neither the room locks nor the safe locks had been changed.  Hotel guests were not informed of the missing master key ring.  Again, a small detail, but from the point of view of learning from the mistakes of others, rather than your own, it is a detail that is certainly worth considering.  Technology and basic common sense might be helpful to those hotel owners and managers seeking to minimize the risk presented by misplaced access devices, whether they be keys, cards, combinations, passwords or otherwise. 

In a case such as this, where there was no evidence of forced entry into either the hotel room or the in-room safe, the lost master key ring draws a lot of attention and the apparent failure to change any locks could very well cast the hotel in a negative light when the issue of liability is ultimately decided.  Moreover, had the hotel acted promptly after discovering the loss of a master key, the theft giving rise to this case may have been avoided.  Accordingly, these seemingly minor details are the kinds of things that hotel owners and managers would be wise to monitor and address. 

We can’t know everything that hotel guests carry with them into their rooms.  Innkeeper statutes permit hotel owners and managers to ignore, or at least not be overly concerned about, such things.  The consideration for this peace of mind, however, is strict compliance with applicable law and general reasonable behavior.  We do not yet know how the Paraskevaides case will end.  Because the hotel did not comply with the innkeeper statute, its liability could very well be $1.2 million or more.  It is probably safe to assume that the hotel in this case has now posted the statute or a summary, and changed the locks.  It is also safe to assume that after many years of litigation, and even more to come, the hotel’s total legal fees will be many times greater than the cost of these preventative measures (even if the hotel is able to escape liability for the theft). 

What about your hotel?  Hopefully the law has been read, compliance is underway, missing keys have been identified and locks changed.  Such prevention seems like a reasonable plan, especially when weighed against the price of the cure.

For more information, e-mail Jim Norman or Cameron Fogle at jim.norman@hklaw.com or cameron.fogle@hklaw.com, respectively, or call toll free, 1-888-688-8500.