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Campbell v. Shrewsbury Surgicenter

A-6619-06T3 and A-2657-07T3 (N.J. Super. App. Div. 2009) (Unpublished)

LANDLORD LIABILITY; INSURANCE; ADDITIONAL INSUREDS — The legal standing for coverage under an insurance policy for events arising out of the ownership, maintenance or use of a designated premises is triggered when a substantial nexus is found between the occurrence and use of the premises, and if that test is met by a tenant’s use of its premises, then a landlord named as an additional insured is entitled to coverage under the tenant’s policy.

A physician and a surgery patient each slipped and fell in a parking lot adjacent to a surgical center. Both sued a number of parties including the landlord who owned both the lot and the surgical center. The landlord sued the surgical center’s tenant’s insurer seeking coverage. Under its lease with the surgical center, the surgical center was responsible for obtaining liability coverage and naming the landlord as an additional insured and the landlord was responsible for insuring against damage by fire and standard extended coverage perils. The insurer argued that the landlord was not entitled to coverage because the injury occurred in the parking lot and not on the surgical center’s grounds. After the two injured parties settled their cases, the lower court, on summary judgment, found that the landlord was not entitled to coverage under the surgical center’s policy, except in excess of the coverage under the landlord’s policy.

On appeal, the Appellate Division pointed out that the legal standard for coverage under a policy for events arising out of the ownership, maintenance or use of a designated premises is triggered when a substantial nexus is found between the occurrence and use of the premises. Contrary to the lower court’s findings, the Court found that use of the adjacent parking lot by the surgical center’s patients and doctors in order to access the surgical center constituted a substantial nexus with the center’s use of the premises and that the landlord was entitled to coverage under the surgical center’s policy. It agreed with the lower court that the “other insurance” provision in the insurer’s policy with the surgical center explicitly required that if there was another policy in effect, the other insurance company was to pay first and that the landlord’s own insurance policy constituted such coverage. Based on its findings, the Court reversed the lower court’s ruling that the landlord was not covered by the surgical center’s insurance policy, but affirmed the lower court’s finding that the landlord was only entitled to coverage in excess of its policy with its own insurance company.


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