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Commercial Property |
Hold Harmless |
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Lease Of Premises |
Subrogation |
Cape Publications (Cape)
leased commercial office space in a building owned by Harry and Wendy Brandon
(Brandons). Underwriters of Lloyds of London (Lloyds) insured the building
under a property and casualty insurance policy that covered (among other
things) fire damage. A part of the lease of premises stated that a portion of
Cape's monthly rent was allocated to paying its pro-rata share of the Brandon's
property and casualty insurance. The lease also required that Cape obtain
general liability insurance with a limit of at least $1 million combined single
limit for personal injury, bodily injury, and property damage, and name the
Brandons as co-insureds. Cape also agreed to indemnify and hold the Brandons
harmless for any claim of injury or damage that arose out of its negligence or
use of the premises.
The Brandons submitted a
claim to Lloyds after part of the premises Cape leased sustained fire damage.
The fire apparently resulted from use of improper electrical cords for vending
machines that a third party owned and operated but that were installed at
Cape's direction. Lloyds paid the Brandons' claim and (pursuant to the lease's
indemnity and hold harmless provision) demanded that Cape indemnify it for the
loss. Cape refused and Lloyds sued, asserting claims for breach of contract,
contractual indemnity, and common law indemnity. Cape moved for summary
judgment. It argued that its pro-rata payment of the premiums (along with other
lease provisions) made it a co-insured under the Brandons' policy. As a result,
Lloyds could not maintain a subrogation action against its own insured. The
trial court granted the Brandons' request for summary judgment based on
previous case law.
Lloyds appealed, arguing
that the grant of summary judgment was in error because the lease reflected the
parties' intent to shift the risk of loss from fire damage to Cape. As a
result, Cape could not be considered a co-insured (or intended beneficiary)
under the Brandons' policy. Lloyds pointed out two lease provisions to support
its case:
The District Court of Appeal
of Florida, Fifth District reviewed the various previous cases that were
similar to this situation. It determined that the lease specifically provided
that the Brandons would purchase a property and casualty insurance policy which
indisputedly covered fire damage on the commercial building. The parties
further agreed that Cape's rent included its pro-rata share of the premium. It
held that these specific provisions both controlled the general provisions that
Lloyds cited and plainly indicated that the parties intended that the Brandons'
insurance bear any risk of loss.
Based on these
considerations, it concluded that the parties intended that Cape be an intended
beneficiary or co-insured under the Brandons' property and casualty insurance
policy. It determined that Lloyds could not maintain its subrogation action
against Cape and affirmed that the trial court properly entered summary
judgment in favor of Cape Publications.
District Court of Appeal of
Florida, Fifth District. Underwriters of Lloyds of London, etc., Appellant, v.
Cape Publications, Inc., d/b/a Florida Today, Appellee. No. 5D10-3384. June 17,
2011. 63 So.3d 892