Recently, the Appellate Division held that a general liability insurer of a commercial tenant must cover the landlord for personal injuries arising out of a slip and fall on snow and ice on the common areas of a strip mall. In Billig v. Deer Run Plaza, decided on September 20, 2005, he Court held that the insurer of a commercial retailer must defend and indemnify the commercial landlord despite the fact that the underlying plaintiff’s accident occurred on the common areas of the strip mall, where he landlord retained the obligation to remove snow and ice. The plaintiff, a patron of Blockbuster Video, slipped and fell on an icy sidewalk adjacent to the entrance to the Blockbuster store. The lease agreement specifically obligated Blockbuster’s landlord, Alliance Realty LLC to perform snow and ice removal services. The lease agreement contained mutual indemnification obligations that ran between the landlord and Blockbuster. Specifically, the lease agreement required Blockbuster to indemnify and hold Alliance harmless for any injuries/damages arising out the negligence of Blockbuster and its employees resulting from the conduct of Blockbuster’s business at he demised premises. Similarly, Alliance agreed to indemnify and hold Blockbuster harmless for damages/ injuries arising out the negligence of Alliance in the use, operation and maintenance of the shopping center. The lease agreement also contained mutual insurance procurement clauses. Blockbuster was required to name Alliance as an additional insured on its general liability policy. Similarly, the lease required Alliance to name Blockbuster is an additional insured on its general liability policy. Blockbuster admitted in the underlying case that it was aware of the icy condition about which plaintiff complained. Further, it admitted that it did not treat the sidewalk, despite knowledge of the dangerous condition Despite the fact that the landlord failed to properly remove snow and ice from the sidewalk outside of Blockbuster, the Appellate Division held that Alliance
was entitled to coverage under Blockbuster’s policy because plaintiff Billig’s presence on the premises inured to the benefit of Blockbuster. To that end, the Court found that a substantial nexus existed between plaintiff’s use of the property and the risk of liability for which Blockbuster purchased insurance. In deciding the matter, the Court determined that the insurance procurement clauses contemplated the parties’ intent to shift the risk of liability.
Specifically, the Court found that Alliance as landlord specifically contemplated being insured for risks arising out of Blockbuster use of the property. Therefore in reaching its decision, the Court reasoned that since plaintiff’s accident resulted from Blockbuster’s use of the property, Blockbuster’s insurer should properly cover the risk. While this decision is seemingly logical and well reasoned on its face, it failed to take cognizance of the fact that Blockbuster contemplated to be insured for the risks caused by the landlord’s failure to properly maintain the premises. It also failed to contemplate that Alliance received a benefit from having a viable income-producing commercial tenant. It also failed to consider the negligence of Alliance in failing to properly remove snow and ice from the common areas of the strip mall. While it is unclear whether this case may be the beginning of a trend where the New Jersey Courts will continue to disregard co-extensive insurance procurement clauses, it highlights an important factor that insurers must consider in underwriting risks. Specifically, an insurer must take cognizance of the potential that the risk being underwritten may actually be broader because a carrier may be providing coverage to a commercial landlord for risks not previously considered.

– Eric S. Schlesinger, Esq.