Franklin Mut. Ins. Co. v. Security Indem. Ins. Co.
| Decision Date | 14 July 1994 |
| Citation | 275 N.J.Super. 335,646 A.2d 443 |
| Parties | The FRANKLIN MUTUAL INSURANCE COMPANY, Plaintiff-Respondent, v. SECURITY INDEMNITY INSURANCE COMPANY, Defendant-Appellant. |
| Court | New Jersey Superior Court — Appellate Division |
Donna Russo, Hackensack, for appellant.
Donald L. Crowley, Rahway, for respondent (Methfessel & Werbel, attorneys, Mr. Crowley, of counsel and on the brief).
Before Judges MICHELS and SKILLMAN.
The opinion of the court was delivered by
MICHELS, P.J.A.D.
Defendant Security Indemnity Insurance Company (Security) appeals from a summary judgment of the Law Division that (1) ordered it to reimburse plaintiff Franklin Mutual Insurance Company (Franklin) one-half of the amount of judgment recovered by Lisa Arkin against Franklin's insured, Law Building Associates, in an underlying personal injury negligence action and one-half of the legal fees and costs incurred by Franklin in defending that action, and (2) dismissed Security's counterclaim seeking coverage for its insured, Jury Box Luncheonette (Jury Box) under the Franklin liability policy issued to Law Building Associates. The trial court held that Franklin's insured, Law Building Associates, which was an additional insured under the Security policy, was entitled to coverage in connection with Ms. Arkin's personal injury action.
The underlying personal injury negligence action, which gave rise to this coverage matter, stems from an accident that occurred on the exterior steps leading into the Jury Box Luncheonette. The luncheonette was located within an office building owned by Law Building Associates. Ms. Arkin, the plaintiff in the underlying action, alleges that after she left the luncheonette, she slipped on a substance on top of the exterior steps, her heel caught in a chipped tile on the corner of the top step, and she fell down the steps. The premises occupied by the luncheonette consisted of "987.65 square feet of first floor space and 1,196.05 square feet of basement space," as defined in the lease. In addition to the exterior steps leading into the luncheonette, the location of Ms. Arkin's accident, patrons could also access the luncheonette through an entrance from the inside hallway of the building. Tenants of the building were able to walk through the luncheonette to their offices in the building and apparently did so. The lease between Law Building Associates and the owner of the luncheonette provided:
WITNESSETH: Lessor leases to Lessee and Lessee hires from Lessor Suite 101 consisting of 987.65 square feet of first floor space and 1,196.05 square feet of basement space, (hereinafter called "the demised premises" or "the premises") in the building known as The Law Building, 66 Hamilton Street, in the City of Paterson, County of Passaic and State of New Jersey 07505....
At the trial of the underlying action, Ms. Arkin's liability expert testified that the top step on which Ms. Arkin slipped was sloped, that the tiles were not slip resistant, and that the chipped tile created a hazard upon which people could trip. One of the owners of the luncheonette testified that Law Building Associates was responsible for the maintenance and repair of the exterior steps, that they were not permitted to make any repairs to the exterior steps, and that Law Building Associates made structural repairs to the steps, including a recent repair to the handrail. The owner also denied that there was any substance on the exterior steps at the time of the accident.
At the conclusion of the proofs in the underlying action, the jury found that Law Building Associates was sixty percent negligent; Jury Box was twenty-five percent negligent, Ms. Arkin was fifteen percent negligent, and their respective negligence was a proximate cause of the accident and injuries sustained by Ms. Arkin. The jury also determined that Ms. Arkin sustained damages in the total sum of $55,000. The trial court molded the verdict and entered judgment accordingly in favor of Ms. Arkin against Law Building Associates and Jury Box. Both Security and Franklin paid the judgment on behalf of their respective insureds.
Franklin thereupon instituted this action against Security, seeking to be indemnified by Security for one-half of the judgment recovered by Ms. Arkin against Law Building Associates, and one-half of the legal fees and costs incurred in defending the action. Franklin contended that the Security Special Multi-Peril Policy Liability Insurance issued to Jury Box provided personal injury liability coverage to Law Building Associates by virtue of an Additional Insured Endorsement annexed to the Security policy. The Additional Insured Endorsement named Law Building Associates as an additional insured and provided:
It is agreed that the "Persons Insured" provision is amended to include as an insured the person or organization designated below, but only with respect to liability arising out of the ownership, maintenance or use of that part of the premises designated below leased to the named insured, and subject to the following additional exclusions:
The insurance does not apply:
1. to any occurrence which takes place after the named insured ceases to be a tenant in said premises;
2. to structural alterations, new construction or demolition operations performed by or on behalf of the person or organization designated below.
Security, on the other hand, contended that the endorsement did not provide coverage to Law Building Associates because the accident took place on the exterior steps which were not part of the premises leased to Jury Box. Security also counterclaimed against Franklin, seeking similar coverage for Jury Box under the Franklin liability policy issued to Law Building Associates. Security alleged that Jury Box was covered under the Supplement Coverages provision of the Franklin policy.
On cross-motions for summary judgment, the trial court granted summary judgment in favor of Franklin, holding essentially that Law Building Associates was entitled to indemnity and a defense under the Security policy in connection with Ms. Arkin's underlying personal injury action, and in part reasoning:
Now the Court has found that the steps are an essential adjunct to utilization of 64 Hamilton.... [T]wo commercial entities can agree to indemnify with regard to this type of common place tort which...
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