270_C459

TRASH TALKING: SUBROGATION WAIVER DEBATED

Commercial General Liability	Demised (Leased) Premises
Waiver of Subrogation	Indemnification Clause

Cosi Sandwich Bar, Inc. (Cosi) was a restaurant that operated out of a commercial space it rented from 841-853 Broadway Associates, LLC (Broadway Associates). Ciprian Brito-Galbez, an employee of Cosi, alleged that he was injured while taking garbage out of the restaurant when the double doors of the building's freight entrance slammed on his hand. Brito-Galbez commenced an action against Broadway Associates and Broadwall Management that alleged negligent maintenance of the freight doors. In turn, Broadway Associates and Broadwall Management commenced a third-party action that asked for contractual indemnification pursuant to the indemnification clause in the lease agreement between Cosi and Broadway Associates. Cosi filed a motion for summary judgment to dismiss the landlord’s complaint.

Under the lease, Cosi agreed to indemnify Broadway Associates against liability that arose from injury to persons in the demised premises or in connection with its use of the leased premises, subject to the waiver of subrogation provision. In the waiver of subrogation provision, the parties agreed to “release[] each other ... from any liability and waive[] on behalf of its insurer ... any claim for any loss or damage ... which loss or damage is of the type required to be covered by the insurance required to [be] maintained by the parties, regardless of any negligence on the part of the released persons which may have contributed to or caused such loss or damage.”

In addition, the parties agreed that Broadway Associates was required to maintain “commercial general liability insurance covering the common areas against claims for bodily injury ... occurring upon, in or about the common areas.” Cosi was required to maintain insurance that indemnified Broadway Associates “against any and all claims for injury or damage to persons ... occurring upon, in or about the Demised [leased] Premises.”

The Supreme Court of Bronx County, New York denied Cosi’s claim for contractual indemnification that arose from Brito-Galbez’s claim that he suffered bodily injury in the building’s common areas. The court based its ruling on the fact that Broadway Associates agreed to release Cosi from liability and waived subrogation for damages incurred as a result of a claim that arose out of “bodily injury... occurring upon, in or about the common areas.” Cosi appealed.

On appeal, the Supreme Court of New York, Appellate Division held that Broadway Associates was not entitled to contractual indemnification. It stated: “Plaintiff's claim for bodily injury that occurred in a common area is ‘of the type’ that is to be covered by insurance that Broadway Associates was required to maintain. Because the indemnification clause is ‘[s]ubject to the waiver of subrogation,’ it has not been triggered under the circumstances here.”

The appellate court reversed the trial court’s judgment.

Brito-Galbez v. 841-853 Broadway Associates, LLC. New York Supreme Court, Appellate Division. October 22, 2013. 973 N.Y.S.2d 593