Commercial tenants may be held liable for a landlord’s negligence pursuant to a lease’s indemnification language even where the plaintiff would have no claim against the tenant. In Rodriguez v 5432-50 Myrtle Ave., LLC , the Second Department held that while a plaintiff may not be able to sustain a claim against a commercial tenant, the landlord may have a viable claim under contract.
In Rodriguez, the plaintiff was allegedly injured when a defect on one of the steps of an interior staircase of the building caused her to fall. Within the two story building, a portion of the second floor was leased to a beauty school. The plaintiff commenced suit against property owner, Myrtle and the tenant beauty school, Midway.
The Appellate Division, Second Department, determined that the commercial tenant was entitled to summary judgment as to the plaintiff’s complaint. “Generally, liability for a dangerous condition on real property must be predicated upon ownership, occupancy, control, or special use of the property.” Here, the Court determined that Midway established that the subject staircase was not part of its demised premises, but merely constituted a common area, and that it had no contractual duty to maintain it.
However, with respect to the landlord’s cross claims against the beauty school, the Court ruled that Midway failed to demonstrate that it had complied with an insurance procurement provision in the lease, and therefore converted the cross claim for breach of the lease to a third party claim. The Court also converted the cross claim for contractual indemnification to a third party claim: “Pursuant to General Obligations Law § 5-321, a lease that obligates a tenant to indemnify a landlord for the landlord’s own negligence is against public policy and unenforceable. However, in the context of a commercial lease, negotiated between two sophisticated parties, where a lessor and lessee freely enter into an indemnification agreement whereby they use insurance to allocate the risk of liability to third parties between themselves, General Obligations Law § 5-321 does not prohibit indemnity.”
As Midway failed to establish that the indemnification provision was unenforceable under General Obligations Law, or that the indemnification language of the lease (which required the beauty school to indemnify and hold harmless landlord Myrtle against any and all claims happening in connection with the premises unless arising out of Myrtle’s gross negligence) did not apply since the accident occurred in a common area, the Court refused to dismiss the cross claim for contractual indemnification.
Accordingly, the lower court decision was reversed by the Appellate Division, Second Department and the plaintiff’s complaint was dismissed against the tenant beauty school Midway in its entirety. However, the landlord Myrtle’s cross claims for breach of lease and contractual indemnification were converted to a third party action against Midway.
Thanks to Lauren Tarangelo for her contribution.