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Brenner v. Hartz Mountain Industries

A-4746-98T1 (N.J. Super. App. Div. 2000) (Unpublished)

LEASES; PERSONAL LIABILITY—A tenant that is required to indemnify its landlord for accidents arising out of the conduct of tenant’s business must do so when a contractor using a common ladder in a common area to access the tenant’s rooftop equipment is injured on the ladder.

A contractor hired by a tenant to repair the tenant’s exclusive rooftop HVAC unit on the roof of a multi-tenant building was injured in a fall from a ladder. The ladder was attached to the building inside a typically locked utility closet and it provided access to the roof of the building. The utility closet was considered to be a “common area” shared by the building’s four tenants. The contractor sued the building owner, the hiring tenant, and the ladder manufacturer alleging that the ladder constituted a dangerous condition and that the ladder was defectively designed and constructed. The building owner and tenant were insured under separate policies, but the tenant’s policy included the building owner as an additional insured. On motions for summary judgment regarding insurance coverage, the motion judge found that the policy issued to the tenant provided primary coverage for the loss. Before trial, the parties reached a settlement, but the tenant reserved the issue of whether the owner’s policy or the tenant’s policy would cover the loss. The deductibles on both the owner’s policy and the tenant’s policy were more than the settlement amount. The tenant’s primary argument on appeal was that its lease with the owner did not contain “an express and unambiguous contractual undertaking” obligating it to provide insurance beyond the demised premises. The Tenant’s insurance obligation required coverage for the landlord “in respect to the Demised Premises and the conduct and operation of business therein.” The Appellate Division disagreed, holding that “the proper focus here is upon the factors that gave rise to the incident and whether it was brought about by the tenant’s business operations and use of the leased premises, rather than the actual location of the incident.” It reasoned that “where the landlord can trace the risk creating its liability directly to the tenant’s business presence, it is not unreasonable for the landlord to expect coverage, inasmuch as it can be truly said that the accident originated or grew out of the use of the leased premises.” In this regard, the Appellate Division concluded that “the fact that the [contractor] was injured in the course of rendering services for [the tenant] in close proximity to the demised premises compels coverage by [the tenant].” As to the ladder manufacturer, because the ladder was found to be part of the building, the ten year construction statute of repose provided a liability shield.

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