On appeal from Superior Court of New Jersey, Law Division, Monmouth County, Docket Nos. L-4932-04 and L-2764-04.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 16, 2008
Before Judges Winkelstein, Fuentes and Chambers.
These back-to-back appeals concern insurance coverage disputes between the insurer of a commercial tenant, Lexington Insurance Company ("Lexington"), and the landlord, Shrewsbury Partners, L.L.C., ("Shrewsbury Partners"). The latter is named as an additional insured on the tenant's policy for liability "arising out of" the use of the leased premises. The trial court found that the Lexington policy did not provide coverage to Shrewsbury Partners for the two "slip and fall" accidents at issue here because these accidents occurred outside of the premises leased to the tenant. The court also found that, even if the Lexington policy provided coverage for these accidents, the coverage would only be excess coverage over Shrewsbury Partners's own insurance policy.
Shrewsbury Partners now appeals, arguing that the trial court erred in failing to construe the Lexington policy as affording coverage in these circumstances. Shrewsbury Partners also argues that the coverage available under the Lexington policy should be construed as primary, and not excess to the coverage available under its own policy issued by Maryland Casualty Insurance Company.
After reviewing the record, and in light of prevailing legal standards, we reverse the trial court's order denying Shrewsbury Partners coverage under the Lexington policy. We affirm, however, the court's determination that the Lexington policy only provides Shrewsbury Partners coverage in excess to the primary coverage available under the policy issued by Maryland Casualty.
In the interest of clarity, we will first describe the procedural history of the two underlying cases that gave rise to this coverage dispute.
On December 13, 2002, Alfred Campbell allegedly sustained injuries when he slipped and fell on ice in the parking lot adjacent to an office building owned by Shrewsbury Partners. Campbell was headed to the Surgery Center, a business entity that leased*fn1 the first floor of the office building. At the time of the accident, Campbell was employed by the Surgery Center as a physician. The accident thus occurred while he was en route to work.
Campbell*fn2 filed suit against several defendants, including Shrewsbury Partners and the Surgery Center. With respect to Shrewsbury partners, Campbell alleged it negligently failed to remove ice that had accumulated in the parking lot of the property. By leave of the court, Shrewsbury Partners cross claimed against the Surgery Center and filed a third party complaint against Lexington seeking defense and indemnity for the claims asserted against it by Campbell.
On February 24, 2003, Ronald Rios allegedly slipped and fell on ice in the same parking lot adjacent to the office building owned by Shrewsbury Partners. As was the case with Campbell, Rios's presence on the parking lot property was related to the Surgery Center; he was scheduled to undergo surgery that day. Rios's suit named several defendants, including Shrewsbury Partners. Specifically, he alleged that Shrewsbury Partners was negligent by allowing ice to accumulate in the parking lot of the property it owns.
In addition to filing a responsive pleading to Rios's complaint, Shrewsbury Partners also filed a third party complaint against Lexington seeking coverage as a named additional insured under the policy issued by Lexington to the Surgery Center. Lexington filed a motion for summary judgment against Shrewsbury Partners.
Under the terms of the lease, the Surgery Center's "occupancy of the Demised Premises shall include the use of one hundred ten (110) parking spaces." The lease specifies that "[l]essor shall make all necessary repairs and maintenance to the Common Facilities to include the parking areas, including but not limited to snow removal services and exterior maintenance and repair." In addition to the cost of leasing the premises, the Surgery Center is responsible to pay as "additional rent" its "Proportionate Share of all Building and Office Building Area Costs." These costs include Shrewsbury Partners's expenditures for snow removal, fire and "other insurance."
Toward that end, the lease requires both parties to obtain certain insurance coverage. The Surgery Center is required to secure a commercial general liability policy, including coverage for personal and bodily injuries. The Surgery Center policy must name Shrewsbury Partners "as [an] additional named insured[ on that policy] in limits of not less than Five Million and 00/100 ($5,000,000.00) Dollars." Shrewsbury Partners is obligated to insure the building "against damage by fire and standard extended coverage perils and public liability insurance."
To meet its obligations under the lease, the Surgery Center secured a Healthcare Professional Liability and a Healthcare General Liability policy issued by Lexington, naming Shrewsbury Partners as an additional insured. An endorsement of the policy amends the "WHO IS AN INSURED of the HEALTHCARE GENERAL LIABILITY COVERAGE PART" and adds "[a]ll lessors of premises leased to you but only with respect to liability arising out of the ownership, maintenance or use of that part of the premises leased to you . . . ."
This Lexington policy also contains an "other insurance" provision which states:
If there is other insurance which applies to the loss resulting from an occurrence, offenses or medical incident, the other insurance must pay first. This policy applies to the amount of the loss which is more than:
1. The Limits of Insurance of the other insurance; and
2. The total of all deductibles and self-insured amounts under all such other insurance.
Shrewsbury Partners's policy from Maryland Casualty Company (Maryland Casualty) contains an "other insurance" provision, which states:
If other valid and collectible insurance is available to the insured for a loss we cover under Coverages A or B of this Coverage Part, our obligations are limited as follows:
This insurance is primary ...