Case Law Summaries

Stewart v. Gio’s Restaurant

• Opinion Date: April 6, 2001
• Real Property Law
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LEASES; INSURANCE—Although a landlord is named as an additional insured under its tenant’s insurance, it will not be covered for an injury not related to use of the leased premises although the injury may arise out of an activity of the tenant unrelated to the lease.

A restaurant leased space within a motel. It also catered events within the motel, but outside of its restaurant. A guest of one of its catered events fell while walking along a sidewalk directly outside the entrance to the motel and restaurant. The motel sought coverage as an additional insured under the restaurant’s liability insurance policy. The policy provided insurance “but only with respect to liability arising out of the ownership, maintenance, or use of that part of the premises leased to you and shown in the Schedule ... .” The address of the restaurant was listed as a scheduled location. The lower court held that the insurance policy did not cover the motel owner and that the restaurant was not liable for the injury. On appeal, the motel contended that there was a substantial nexus between the fall and the business conducted by the restaurant. The Appellate Division upheld the lower court’s decision and finding that a substantial nexus did not exist. An “undertaking to name [a] landlord as an additional insured must be taken to be coextensive with the scope of tenant’s own liability.” This means that where a “landlord’s liability arises out of the risk generated by the tenant’s invitation to conduct business, the tenant’s insurer cannot reasonably assert that it did not anticipate it would have to cover a landlord named as an additional insured for its liability arising from injuries sustained by the tenant’s invitee.” The Court found that prior case law to the effect that coverage is afforded if the incident either “originated from” or “grew out of” use of the premises, did not apply here. Even though the restaurant usually catered and supplied food, drinks, and a waiter, the Court held that there was no substantial nexus established between the guest’s fall and the use of the restaurant’s business premises. Here, the Court refused to trace the liability directly to the tenant’s business presence. The injured guest did not eat at the restaurant or occupy any part of the premises leased to the restaurant. Instead, she attended an affair run by a separate entity which occupied a room provided by the motel. Moreover, the fall did not occur while entering or exiting the restaurant; it occurred after utilizing the motel’s premises. In this case, the restaurant’s relation to the motel was that of a food provider on premises owned, maintained, and used by the motel. Had the guest been a patron of the restaurant, or had her injuries been caused by food poisoning, a different result would have obtained. In this case, the motel owner was unable to establish a substantial nexus between the fall and the restaurant’s operation.

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