Is a Landlord Covered by Tenant’s Liability Policy for a Slip and Fall in the Parking Lot?

John’s slip and fall story

John was injured when he tripped and fell-down on his way to a store in an icy strip mall parking lot.

Landlord and real estate manager sought declaration of coverage

John retained a NJ personal injury lawyer to prosecute his slip and fall case against the landlord and real estate management company of the strip mall. Following initiation of a law suit:

The landlord and defendant David Rubin, a real estate manager, sought a declaration that they were covered by a liability insurance policy obtained by one of the strip mall’s tenants, third-party defendant JFK Food & News, Inc. that was issued by third-party defendant Harleysville Insurance Company of New Jersey.

On cross-motions for summary judgment, the judge ruled that the strip mall tenant, JFK Food and Deli Inc., was required to obtain liability insurance covering the leased premises; while indemnifying and holding  the the landlord and real estate manager harmless for the tenant’s negligence in the leased premises.

And second, if the tenant failed to obtain this coverage for the landlord, the judge was required to determine whether the landlord or Rubin or both were nevertheless covered by way of the ‘real estate manager’ provision in the Harleysville policy. The judge found the tenant failed to obtain the required coverage for the landlord but determined he did not have to consider whether the tenant was liable for breaching the lease in this respect because, in his view, Rubin was the tenant’s ‘real estate manager.’ “

The motion judge granted summary judgment in favor of the landlord and real estate manager.

The appellate division reversed because:

…the judge’s interpretation of the scope of the term ‘real estate manager’ was overly broad.

Commentary

This is an excellent, well reasoned, decision by the appeals court. The rationale for reversal was because the slip and fall accident occurred in the strip mall parking lot ( a common area). Under the lease agreement, the tenant was not responsible for maintaining the common areas. Further, the tenant’s insurance carrier only provided coverage for the tenant’s liability and the liability of the tenant’s real estate manager.  Since the real estate manager did not qualify as the tenant’s real estate manager because the tenant was not responsible for maintaining the parking lot; extending coverage to the landlord and real estate manager was reversible error.

With regard to the fundamental understanding of the parties’ liability for incidents occurring on the leased premises and the common areas, the lease provided that the tenant agreed “to indemnify and save [l]andlord harmless from and against all liability, and all loss, cost and expense…, arising out of the operation maintenance, management and control of the [l]eased [p]remises or in connection with… any injury or damage whatsoever caused by the [t]enant… or by [t]enant’s property, arising out of any occurrence on the [l]eased [p]remises” (emphasis added).

The lease concomitantly declared that “[t]enant shall not be obligated to hold harmless or indemnify the [l]andlord from or against any liability… arising solely from any act, omission or negligence of [l]andlord.”

These provisions delineate the parties’ respective responsibilities regarding the entire property, limiting the tenant’s obligation to indemnify the landlord to the tenant’s own acts arising from its use of the leased premises and not beyond, as we have recognized. See Pennsville Shopping Ctr. Corp. v. Am. Motorists Ins. Co., 315 N.J.Super. 519, 522-23 (App. Div. 1998), certif. denied, 157 N.J. 647 (1999).”

Key take-aways:

• A lease may require a tenant to obtain liability coverage for the the leased premises and provide coverage for the landlord and real estate manager for indemnification
• The tenant’s insurance carrier is only required to provide coverage for the tenant’s negligence in the leased premises
• Despite the fact a tenant fails to obtain indemnification coverage covering the tenant’s leased premises mandated by the lease, the tenant’s carrier will not be required to extend coverage to the landlord and real estate manager for an accident occurring in the common areas (unless clearly mandated in the lease and agreed to by the parties thereto)
• The real estate manager was not considered the real estate manager for the tenant because the trip and fall accident occurred in a common area which was not part of the tenant’s leased premises
• Therefore, coverage was not afforded the real estate manager in a liability policy that limits coverage to the real estate manager for the tenant, only

Read more…

Cambria v. Two JFK Blvd, LLC, et al.