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Rite Aid of New Jersey, Inc. v. United States Realty Investment Company

A-4582-02T2 (N.J. Super. App. Div. 2004) (Unpublished)

LEASES; INSURANCE; WAIVERS—Absent a lease provision to the contrary, the intent of a waiver of subrogation and of a waiver of liability for risks covered by insurance does not include allowing parties to a lease to choose to be entirely self-insured and avoid the waivers.

A commercial tenant brought suit after its roof partially collapsed. The lower court dismissed the complaint because the lease agreement precluded uninsured claims for damages against the landlord, and this was an uninsured claim. The tenant appealed, arguing that the lease did not bar its claim because the landlord failed to maintain the building as required by the lease. The landlord claimed that because the tenant could have obtained insurance for the damages that occurred, but instead chose a deductible policy, the lease precluded the tenant from submitting the claim to the landlord.

According to the lower court (as endorsed by the Appellate Division), the cited provision “reflect[ed] the parties’ intent in allocating risks and since [the tenant was] a large chain of national drug stores that can choose to self-insure risks of this magnitude [who] chose that limit knowing that the lease was not intended to provide an avenue of recovery from the other party.” The tenant assumed the risk of loss. “The intent of the wavier of subrogation and the waiver of liability for risks covered by insurance was never intended to allow parties to choose to be entirely self-insured and avoid the waivers.”


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