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N.J. Court Determines Coverage For Injury Near Stores In Close Proximity

April 12, 2012

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A recent N.J. Appellate Division case  analyzed the often complicated assessment of insurance coverage for personal injuries that occur on a property with more than one commercial tenant. In <a title="" href="">VSH Realty, Inc. and Cumberland Farms v. Sub Busters</a>, the underlying plaintiff visited a strip mall intending on visiting both Sub-Busters and Cumberland Farms. As she walked from her car towards the entrance of Cumberland, she slipped and fell. The jury subsequently found Cumberland liable for failing to clean and remove snow outside their store .  The property owner sought indemnification from Sub-Busters’ insurer (Cumberland Mutual) based on policy language providing coverage to the property owner but only with respect to liability arising out of the maintenance, ownership or use of that part of the designated premises leased to Sub Busters.  The Trial Court, based upon a review of the above language, declared that Cumberland was owed coverage from Sub-Busters' insurer.
The Appellate Division reversed and held that the accident did not arise out of the maintenance or "use" of Sub-Busters' leased premises.  Although under New Jersey law a commercial tenant may be "using" its premises even if a claimant/customer is injured when not physically present on their property, such was not the case in <em>VSH Realty.</em>  Of significance, the plaintiff was walking into Cumberland Farms with only a future intention of going to Sub-Busters: plaintiff was never actually on Sub-Busters' property.  Further, it was conclusively determined during underlying trial that the slip and fall occurred because of Cumberland’s sole negligence in failing to clear the walkway. A further review of Sub-Busters’ insurance policy demonstrated that Cumberland Mutual agreed to only indemnify VSH for claims arising out of the maintenance or use of the property <span style="text-decoration: underline;">leased</span> to Sub Busters.  Since the area where plaintiff fell was not leased to Sub-Busters nor did the accident arise out of Sub-Buster's "use" of the premises, Sub-Busters' insurer had no duty to defend or indemnify the strip mall owner. ("we reject an extension of that body of law to cover such an event [that] would suggest that leased premises were "used" merely because the injured patron intended, without acting on the intention, to patronize the premises."]
This case once again highlights the tricky interpretation of commercial general liability policies when two or more entities are conducting business in a very close proximity and a patron is injured in a common area.
Thank to Andrew Marra for this post.  If you have any questions or comments,  please email Paul at
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