On appeal from Superior Court of New Jersey, Law Division, Middlesex County.
Before Judges Petrella, Skillman and Lesemann.
The opinion of the court was delivered by LESEMANN, J.S.C. (temporarily assigned).
This case concerns an insurance policy provided by a commercial tenant for the benefit of its landlord. The policy named the landlord as an "additional insured," but only with respect to incidents arising "out of the use of" the tenant's premises. The question presented is the applicability of that language to an accident which occurred off the tenant's premises, but close to those premises, involving a prospective customer approaching the tenant's store. Under policy language similar to that here, this court found coverage in Franklin Mutual Ins. Co. v. Sec. Indem. Ins. Co., 275 N.J. Super. 335 (App. Div. 1994) and Harrah's Atlantic City, Inc. v. Harleysville Ins. Co., 288 N.J. Super. 152 (App. Div. 1996). Plaintiff landlord, a shopping center, argues that those holdings dictate a similar Conclusion here. The tenant's insurer, however, says that the case is critically different from Franklin and Harrah's and compels a different result.
The facts can be set out briefly. Liberty Village Associates (Liberty) operates a shopping center consisting of approximately eighty- eight stores. One of those stores is owned by the William Carter Company (Carter) and another is operated as the Gourmet Basket (Gourmet). On a snowy day, February 26, 1994, Marlene Phillips went shopping at Liberty. She first visited the Carter store and then crossed an open cobblestone street and sidewalk to visit Gourmet, a shop in a different building. Just before she reached a covered entrance to Gourmet, she slipped on what she believes to have been ice and fell, with her feet landing under the covered entranceway. She subsequently filed suit against Gourmet and Liberty.
There is no question that the fall occurred outside of the premises leased to Gourmet. There is also no question that the fall took place within very close proximity to those premises in an area where Gourmet employees normally provided maintenance and snow and ice removal. They had performed no such functions on the day in question, however.
The lease between Liberty and Gourmet provided that, Tenant's liability insurance shall indemnify and save Landlord harmless from and against any and all claims, actions, damages, liability and expenses in connection with loss of life, personal injury and/or damaged property arising from or out of any occurrence in, upon or at the premises, or any part thereof....
Pursuant to that lease obligation, Gourmet obtained from defendant West American Insurance Company (West American) a liability policy which named Liberty as an additional insured. However, it also stated that Liberty had that "additional insured" status "only with respect to liability arising out of the ownership, maintenance or use" of the premises leased to Gourmet.
Carter maintained its liability insurance with Transportation Insurance Co. (Transportation) and that policy also named Liberty as an additional insured. *fn1 Based on the two policies referred to, and while the Phillips personal injury action was pending, Liberty sued Gourmet's insurer (West American) *fn2 and Carter and Transportation, asserting coverage in its favor under either or both the policies maintained by its tenants. Carter and Transportation sought summary judgment dismissing the complaint as to them, and the trial court granted that motion, concluding that the accident "did not arise out of the use of the Carter premises."Liberty and West American then jointly settled Phillips' injury claim for $20,000. They also submitted cross- motions for summary judgment under an agreed statement describing the issue to be resolved as whether the Harrah's decision "controls the instant matter; i.e., whether Liberty Village is entitled to coverage under the West American additional insured endorsement." They agreed that the losing party would bear the entire $20,000 payment to Phillips and also agreed that the prevailing party "will apply to the court for attorney's fees and interest."
The trial court granted summary judgment for Liberty, concluding that, "The policy of West American covered the landlord with respect to injuries arising out of the use of the demised premises. This injury did arise out of the use of the demised premises." However, the Judge then denied Liberty's request for counsel fees, saying that he would "exercise the discretion that I have" to deny the application.
West American appeals that summary judgment in favor of Liberty. Liberty cross-appeals from the denial of counsel fees. In addition, West American claims that if this court affirms the decision that it has responsibility under its policy, then the court should reverse the grant of summary judgment to Carter and Transportation so that Carter and/or its insurer bears the same responsibility as West American.
We are satisfied that the summary judgment in favor of Liberty and against West American, should be affirmed. We are also satisfied that the status of Carter is significantly different from that of Gourmet; that the Carter policy provides no coverage for the Phillips fall; and that the summary judgment in favor of Carter and its insurer, Transportation, should be affirmed. We find the trial court erred, however, in its rejection of Liberty's application for an award of counsel fees.
In Franklin Mutual Ins. Co. v. Sec. Indem. Ins. Co., supra, 275 N.J. Super. 335 this court dealt with an "additional insured" provision virtually identical to that here. The policy had been obtained by a tenant operating a luncheonette (the Jury Box) within an office building containing a number of tenants. It covered the landlord as an "additional insured" but "only with respect to liability arising out of the ownership, maintenance or use" of the premises leased to the tenant. The accident in question occurred on the exterior stairs leading away from the Jury Box and involved a fall by a customer who had just left the luncheonette. She slipped on a substance on the top step, her heel caught a chipped tile and she fell down the steps. Her expert testified that the step on ...