A lease applicable to a building and adjoining premises where the lessee conducted a restaurant business specifically required that he maintain ability insurance for the lessor, "insuring both the lessor and the lessee against all liability for damages to person or property in or about said leased premises." It was a further requirement of the lease that the lessee would hold the lessor harmless from claims arising from the lessee's failure to comply with lease provisions.

The restaurant operator was injured in the building, and sued its owner for alleged negligence in maintaining the premises. The lessor defended on the facts that the lessee had breached the lease agreement by not including him as an additional insured in the restaurateur's liability insurance and because of the hold harmless provision. After accepting a small sum in settlement, the lessee sued the insurance agency that arranged his insurance, claiming that its negligent failure to cover the lessor "greatly reduced the settlement value of his personal injury claim." The agency appealed trial court judgment in favor of its client.

It was established that, during the three year period prior to the term of the insurance presently in force, the insured restaurant operator carried liability insurance through a different agent that carried an endorsement providing, in pertinent part, that: "The 'Persons Insured' provision is amended to include the person or organization named above, but only with respect to the ownership, maintenance or use of the premises designated above and operations necessary or incidental thereto." The lessor had been named in this connection.

The appeal court addressed the question of whether or not the new agent knew or should have known of the lease and its provisions. The agent said that he was told that the restaurant operator was buying the building; the latter and an employee testified that the agent was given a copy of the lease. The court determined that the trial court jury believed that he did, in light of its finding of negligence for failure to arrange the needed insurance. It found that the standard of care expected of an insurance agent was breached. "All that is necessary to prove a breach of the standard of care is to show that the endorsement was not provided." Such was the case.

There was conflicting evidence as to whether an endorsement of the kind used in the previous policy, and quoted above, would cover a landlord's own negligence or only a landlord's "vicarious" liability. The appeal court concluded that "the endorsement that the parties seem to agree should have been provided would have covered the landlord's) own negligence in the maintenance of the premises."

The judgment of the trial court was affirmed in favor of the restaurant operator and against the insurance agency.

(MARTINI, Respondent v. BEAVERTON INSURANCE AGENCY, INC., Appellant. Oregon Court of Appeals. No. CA A49993. October 10, 1990. 103 Or. App. 587. CCH 1991-92 Fire and Casualty Cases, Paragraph 3206.)