Don’t Assume Mall Owner Is Liable for Kiosk Merchandise

Mall kiosks can be a great way for small or seasonal tenants to sell their products. But, depending on the style of the kiosk, it might be easy to break into. If you’re a tenant whose business model lends itself to using a kiosk instead of inline retail space at a mall, think twice before storing your inventory in the kiosk after the mall closes. You can’t assume that the owner will be responsible for any thefts of your merchandise. A jewelry vendor learned the hard way that it couldn’t be reimbursed for a substantial loss when its kiosk was robbed overnight.

In that case, the tenant signed a license agreement to sell its inventory from a kiosk in a mall. At the end of the day, the tenant would store its inventory in a safe contained within its space. The space was then closed off and the mall itself was not accessible to the public overnight. Thieves broke into the mall and stole jewelry from the safe.

The licensee asked the mall owner to reimburse it for the cost of the stolen items. The mall owner refused. The licensee sued the mall owner. It claimed that the mall owner was responsible for the items because it had an “implied-in-law bailment,” or a “constructive bailment,” which may be found where the property of one party is voluntarily received by another for some purpose other than that of obtaining ownership. In other words, because the mall owner had temporary custody of the items overnight, it was responsible for their safe return to the actual owner, the licensee.

A trial court dismissed the case. The licensee appealed, but an Illinois appeals court upheld the trial court’s decision. The appeals court determined that the retail space license agreement refuted the allegation that a bailment was created by an implied agreement between the licensee and the owner. The license agreement required the licensee to obtain fire and other required insurance at its own expense, and specified that the owner “assumes no responsibility or liability for fire, theft, or damage to an operator’s location or property at any time.” The license agreement established that the licensee was merely a licensee of the mall owner for the use of a booth in its mall with no tenancy or other rights, stressed the appeals court. It pointed out that, “where a release is clear and explicit, the court must enforce it as written.” Here, the license agreement showed that the parties intended a license for the use of a sales booth and not a tenancy or other right giving rise to a cause of action for breach of an implied bailment [J&L Jewelry, Inc. v. EPK Mgmt., LP, September 2015].