State of New York
Supreme Court : County of Livingston

Plaintiffs,

- against -

Index No. 1997/797

Defendants.

_______________________________

MEMORANDUM DECISION

The tenants have sued the landlord and the manufacturer, distributor and installer of the siding. The landlord, in turn, has brought a counterclaim against several of the tenants, including University Eye Specialists, one of two represented by Mr. Kelly, alleging inter alia that the tenants are in breach of their lease obligations for failure to name the landlord as an additional insured party, as required by the lease.

University Eye Specialists and Kent-Bushell Optical Corporation have moved to dismiss the counterclaim on several grounds, the most important and dispositive being the argument that the insurance policy procured by them did, in fact, meet the requirements of the lease. The defendant has responded that the coverage was inadequate because it was limited, as far as additional insured benefits were concerned, to the named insured's negligence or alleged negligence. (The defendant also points out that it brought no counterclaim against Kent-Bushell Optical Corporation.)

Close inspection of the lease shows that the defendant's position is untenable. Paragraph Eight of that document requires the landlord to insure the building "against fire and extended coverage vandalism" as well as to procure "typical 'All Risk' type insurance". Paragraph Nine imposes on both landlord and tenant the obligation to "maintain Insurance against third party liability claims for bodily injury and damage to property arising out of the ownership, use or occupancy of the premises", and the tenant was to name the landlord "an additional insured to Tenant's Insurance Policy or Policies". The lease's obligation to name the landlord as an additional insured is necessarily limited by the obligation to carry direct coverage. That is, the tenant cannot be required to insure the landlord against any risks for which it is not required to carry insurance on its own behalf. It is conceivable that there might be a third-party liability claim that both fell within the ambit of this paragraph but was not due to the tenant's negligence or alleged negligence; but it is clear beyond any doubt that the present claim falls outside the scope of liability for which the tenant was to obtain insurance.

For one thing, this is not a third-party claim; it is an action by the tenant against the landlord. The lease does not require the tenant to insure the landlord against the landlord's negligence, or any other conduct that would give rise to a cause of action like the present one. Indeed, it would be an unusual lease agreement that required one party to subsidize the other's defense and damages in a lawsuit it might be forced to bring.That in itself should be sufficient to bar the landlord's claim. Secondly, the fire was not in any way connected with the plaintiff's "ownership, use or occupancy of the premises." While the details of the fire are not fully made out in the papers, the statements in the complaint are uncontradicted. For the purposes of this action, then, the fire was caused by parties unknown and was unrelated to plaintiff's business or clientele. Under the lease's insurance scheme, as seen in the relationship between paragraphs eight and nine, this type of risk was to be borne by the landlord.

Thus, even if there were a technical violation of the lease -- admitting this possibility only for the sake of argument -- under the facts here such a violation would not have damaged Conesus Corporation. The present action is not a third-party action and did not arise out of the tenant's use or occupancy of the premises. Thus, it falls outside the range of risks for which the plaintiff was required to insure itself and was required to name the landlord as an additional insured. For these reasons the motion to dismiss the counterclaim as against University Eye Specialists must be granted, with costs. The motion with respect to Kent-Bushell Optical is dismissed as moot, as there was no counterclaim brought against that entity.

Mr. Kelly is directed to prepare the order, upon appropriate notice to Mr. Taublieb.

DATED: September 11, 1998

Andrew V. Siracuse, J.S.C.

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