The question of who is entitled to coverage under the standard CGL policy has vexed both insurers and insureds for years. Under Section II of the standard ISO forms, the definition of “an insured” includes any person or organization “while acting as your real estate manager.” What is necessary to trigger this coverage and just how broad is the coverage provided to this class of insureds?
The New Jersey Appellate Division recently examined this provision. In Cambria v. Two JFK Blvd., LLC, the plaintiff slipped and fell on ice located in the parking lot of a small strip mall. He sued the landlord and the property manager of the mall who, in turn, impleaded a tenant and the tenant’s CGL insurer. Of note, neither the landlord nor the property manager were explicitly named as additional insureds on the tenant’s CGL policy.
The argument of the property manager was simple: he was the real estate manager of the property and therefore entitled to coverage under the tenant’s CGL policy. The lower court accepted this argument and inexplicably provided coverage under this provision to the landlord as well.
The Appellate Division summarily reversed. It found that the property manager may have been “a” real estate manager or “the landlord’s” real estate manager but certainly was not acting as “the tenant’s” real estate manager, a necessary element of coverage. Of significance, the court found that the tenant had no contractual obligation to maintain the common area parking lot nor was accident location part of the leased premises. Therefore, the real estate manager could not have been acting on the tenant’s behalf in relation to any snow/ice removal activities and did not qualify as the tenant’s real estate manager.
Further, the court made reference to the indemnity provision in the lease to discern “the fundamental understanding of the parties’ liability for incidents,” and found the tenant was obligated to indemnify the landlord only for claims related to the tenant’s own acts arising from its use of the leased premises. This factor also reinforced the conclusion that the real estate manager was not “your,” that is, the tenant’s real estate manager.
In sum, the court interpreted the phrase “your real estate manager” as written and used a common sense standard in denying coverage to the real estate manager under the tenant’s CGL policy. Although infrequently cited, this interesting source of coverage appears limited to those circumstances where a property manager acts specifically on behalf of the named insured.