Florida and Georgia Operators Reminded of Pricing Requirements During States of Emergency
With Hurricane Dorian projected to hit the southeastern U.S. coast soon, it is important for self storage operators in the potentially affected areas to be aware of their state’s laws related to price increases during a state of emergency. Although few businesses would intentionally raise their rates because of a natural disaster, the laws may affect your ability to implement even standard rate increases during a state of emergency. Read below for more details on the laws in Florida and Georgia. At the time of this writing, South Carolina has not declared a state of emergency.
On August 29, Florida Governor Ron DeSantis declared a state of emergency covering the entire state. Florida’s law against price gouging states that, “it is unlawful . . . for any person to impose unconscionable prices for the rental or lease of any . . . self-storage facility during a period of declared state of emergency.” Unlike some states, Florida’s law against price gouging does not provide a specific amount or percentage increase that is deemed unconscionable. A price may be considered unconscionable if there is a “gross disparity” between the price during the state of emergency and the average price during the 30 days immediately prior to the declaration of the state of emergency. The law provides an exception for a price increase that is “attributable to additional costs incurred in connection with the . . . rental or lease of any . . . self-storage facility, or regional, national, or international market trends[.]”
The state of emergency in Florida may last up to 60 days but may be amended, lifted, or extended at any time.
On August 29, Georgia Governor Brian Kemp declared a state of emergency in the following counties: Brantley, Bryan, Camden, Charlton, Chatham, Effingham, Glynn, Liberty, Long, McIntosh, Pierce, and Wayne. The Governor’s executive order invokes the state’s law against price gouging for “goods and services necessary to support . . . preparation, response, and recovery activities.” Although self storage is not expressly mentioned, it is advisable for self storage operators to ensure compliance with the state’s law against price gouging.
Generally, the law prohibits businesses from selling or offering to sell goods or services “at a price higher than the price at which such goods were sold or offered for sale immediately prior to the declaration of a state of emergency.” However, the law allows for price increases “only in an amount which accurately reflects an increase in cost of the goods or services to the person selling the goods or services.” Moreover, the price of goods or services may be increased during a state of emergency “if the price charged for those goods or services is no greater than the cost to the retailer of those goods or services, plus the retailer’s average markup percentage applied during the ten days immediately prior to the declaration of a state of emergency.”
The state of emergency in Georgia is currently in effect through September 9, 2019 but may be amended, lifted, or extended at any time.
Please email Joe Doherty with any questions.
The Self Storage Association and the national self storage industry pass along our best wishes to the Florida self storage community that could be affected by the unfolding hurricane events. With the current attention concentrated on the safety and well-being of its citizens, the national SSA is dedicated to providing any resources, information and networking assistance to the area in the days and weeks ahead. For planning before, during and In the aftermath of the storm, FEMA and the Red Cross offer relevant guidance.
Florida Self Storage Association - InPrint Magazine
The most recent edition of InPrint contains relevant legal, insurance and other hurricane related articles.
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Natural Disasters Continue to Impact Self Storage Operators
By Scott Zucker
Once again, I find myself writing about natural disasters that have impacted our country. After years of dealing with the aftermath of Hurricane Katrina and Super Storm Sandy, the Gulf Coast has now been ravaged by Hurricane Harvey and the East Coast is recovering from Hurricane Irma. These storms once again remind us that self storage facilities are not immune to the effects of disasters. No matter how cautious a facility owner is, there always exists the possibility of a natural occurrence resulting in damage to a facility and its tenants' contents. In addition to the emotional and financial impact a disaster can have on a facility owner, that operator, as a landlord, must also cope with the anxiety and demands of its tenants who are also dealing with the aftermath of their property loss.
When a situation occurs at your facility that results in damage to your tenants' property, it is crucial that the tenants be notified. Notice should be made both by phone and by written notice to each tenant's last known address. The notice should explain whether the tenant can recover its property from the facility and, if so, when. Access to a tenant's goods can usually be given unless the damage is such that it would be dangerous for the tenant to enter the facility property. The written notice should also recommend that the tenant notify his or her insurance company.
What about your tenants' claims? If a disaster occurs that could not be controlled by the facility, most leases and rental agreements will protect the facility owner from tenant claims arising from the loss of their property. Self storage leases typically contain specific language stating that the facility will not be held responsible for the loss of or damage to its tenants' stored property from such natural occurrences or Acts of God. Self storage leases generally provide that the tenant's property is to be stored at their own risk and that the facility does not take care, custody or control of the property stored.
Unfortunately, when a tenant's property is lost or damaged, regardless of the cause, and even if the proper lease protections are in place, a tenant will sometimes sue the facility to recover for the loss. This is where customer goods' legal liability insurance coverage comes in. This specialized self storage insurance protects a facility from tenant claims arising from loss or damage to their property. This insurance will cover the cost to defend a facility against any lawsuits that arise from damage or loss claims and will cover the court costs and payments to the tenant if such payments are warranted or awarded by the court. Self storage operators should be aware that standardized comprehensive and business liability policies will likely not cover tenant loss and damage claims and therefore this type of unique specialized coverage is needed for this type of protection.
Have a Plan
After a loss occurs, it is incumbent upon the facility owner to protect the property (and the contents) from further damage. Therefore, efforts should be made to cover or board up areas that remain open to the elements and rope off damaged areas to protect tenants' property, hiring temporary security if necessary. Also, when a loss occurs, it is important to fill out an incident report and take photographs or videotape footage that would document both the loss and your efforts to mitigate further damages. Finally, contact your insurance company. Many insurance companies will not be obligated to cover your claims if they are not given reasonable notice of the occurrence and have a chance to investigate it. Contact your claims agent by phone and then follow up in writing. Notwithstanding all good planning and good intentions, disasters can wreak havoc for self storage operators. By recognizing a straightforward approach of "safety first", an operator can most likely avoid greater problems associated with tenant and employee personal injuries. Once the dust has settled from the disaster and safety has been verified, the process can move ahead toward the recovery of the tenants' property and repairs to the facility. As long as the proper insurance is in place, the financial impact of the disaster can hopefully be controlled.
Once the property is safe for access, it is recommended that storage operators obtain dumpsters for their customers who have suffered a loss (or at least designate a specific area where property can be dumped and later removed), so that damaged property can quickly be removed from the facility buildings (due to the certain risk of mold and mildew). Effort should be made to contact tenants who have not inspected their property, requesting that they return to the facility as quickly as possible. After two or more weeks, the risk of mold and mildew on affected property increases, and it may be necessary for the facility owner to enter the spaces and move the property themselves (possibly to a portable unit outside of the facility itself) or maybe to a dumpster if the property is unsalvageable. Before any action is taken to dispose of damaged property, an operator should again contact its tenant and work in concert with its insurance company regarding the need to clear the storage building of damaged property.
Lessons can be learned from the Hurricane Katrina disaster. A lawsuit, decided in the United States District Court for the Southern District of Mississippi,Griffith v. U-Store-It Miniwarehouse (2007) is the first case relating to claims against a self storage operator arising from the Hurricane. In this case, the tenants complained when the facility prevented access to the facility after the Hurricane. Due to the damage to the property, the operator had posted "No Trespassing" signs. The tenant filed suit alleging that the operator, by failing to allow them access, had damaged their property which could otherwise have been salvaged. They claimed that their property loss exceeded $120,000.00.
In response to the lawsuit, the facility operator contended that, pursuant to the lease, it had the right to limit customers' access to the property under certain conditions. In this case, the operator would not let any of its tenants enter the property until they determined that the property was safe. Although the tenant contended that the operator was both a bailee of the property and had acted negligently by not allowing access, the court concluded that the language of the lease barred both claims. Ultimately, the court found that a self storage operator should neither be considered a bailee nor be found negligent if it restricts access to its customers over facility safety concerns.
Lawsuits have been pending for years between Christie's, the art storage company and insurance companies that were forced to pay their customers millions of dollars in losses to their art as a result of the storm's flooding. Although the Christie's contracts exclaimed liability for such damage, the insurance companies have been able to maintain their lawsuits based on the factual issues as to whether Christie's promised to store the art on higher floors and that it was aware of the impending storm but did nothing to stop the resulting damage to the art.
Unfortunately, the Christie's line of cases may keep open the legal question for certain storage operators as to whether they can avoid liability arising from the Houston and Florida flooding. Certainly, non-bailment contracts should stop the risk of liability for the resulting loss and damage to property, but the courts seem willing to impose certain liabilities on storage operator who may have made promises outside their contracts or who failed to expressly warn their customers about the risk of loss.
Scott Zucker specializes in business and commercial litigation with an emphasis on dispute resolution in the areas of construction, real estate, employment, landlord-tenant and franchise law. Scott represents companies in matters relating to contract claims, loss and damage claims, delay and productivity claims, premises liability actions and tenant dispossessory. Scott also reviews and drafts construction contracts, property leases and employment agreements, trains property managers in office, retail, multi-family, industrial and self storage and evaluates property management operations in those areas. Scott also has extensive experience in creditors’ rights and bankruptcy proceedings as well as in commercial collections. He represents companies throughout the country in resolving their commercial disputes in state or federal courts and through Alternate Dispute Resolution. Scott obtained his undergraduate degree from Washington University in St. Louis in 1984 and his law degree from George Washington University in Washington, D.C in 1987.
For almost thirty years Scott Zucker has acted as outside legal counsel to a variety of privately held and publicly traded businesses involved in multiple industries. Scott is primarily a litigator, so he understands the pros and cons of pursuing, as well as defending, claims between individuals and companies. Scott is currently the Deputy General Counsel for the Self Storage Association and a Partner in the Self Storage Legal Network (SSLN). His legal services have ranged from handling general corporate matters and providing risk management advice to companies as well as the representation of clients in the litigation or arbitration of contract disputes, insurance coverage claims, construction defects, premises liability, employment termination actions and environmental matters. Scott’s goal is to apply his experience and knowledge to help contending parties reach resolutions of their disputes as efficiently and economically as possible.