New York Law Review

Tag: Kassis v. Ohio Casualty Insurance Co.

  • Kassis v. Ohio Casualty Insurance Co., 12 N.Y.3d 596 (2009): Landlord as Additional Insured Under Tenant’s Policy

    Kassis v. Ohio Casualty Insurance Co., 12 N.Y.3d 596 (2009)

    When a lease agreement requires a tenant to obtain general liability insurance for the ‘mutual benefit’ of both the tenant and the landlord, the landlord is considered an additional insured under the tenant’s policy and is entitled to the same level of coverage as the tenant.

    Summary

    This case addresses whether a landlord, Joseph Kassis, is an additional insured under a commercial general liability policy obtained by his tenant, Kassis Superior Sign Co., Inc. (Superior Sign). An employee of Superior Sign, Andrew Holden, sued Kassis for injuries sustained on the leased property. Ohio Casualty, the insurer, disclaimed coverage for Kassis. The New York Court of Appeals reversed the Appellate Division’s decision, holding that because the lease required Superior Sign to obtain insurance for the “mutual benefit” of both parties, Kassis was entitled to the same level of coverage as Superior Sign and Ohio Casualty had a duty to defend.

    Facts

    Joseph Kassis leased property to Kassis Superior Sign Co., Inc. (Superior Sign). The lease required Superior Sign to indemnify Kassis and obtain a general liability insurance policy for the “mutual benefit” of both parties, covering claims for bodily injury, personal injury, and property damage. Andrew Holden, a Superior Sign employee, slipped and fell on ice on the property and sued Kassis for negligence.

    Procedural History

    Kassis and Superior Sign sued Ohio Casualty, seeking a declaration that Ohio Casualty was obligated to defend and indemnify Kassis in the underlying personal injury lawsuit. Supreme Court granted partial summary judgment to the plaintiffs, declaring that Ohio Casualty had a duty to defend. The Appellate Division reversed, finding no such obligation. The Court of Appeals granted the plaintiffs’ appeal.

    Issue(s)

    Whether, under the terms of the lease agreement between Kassis and Superior Sign, Superior Sign was required to ensure that Kassis received general liability insurance coverage equivalent to the coverage Superior Sign enjoyed, thereby making Kassis an additional insured under the Ohio Casualty policy.

    Holding

    Yes, because the lease agreement mandated that Superior Sign obtain general liability insurance for the “mutual benefit” of both the landlord (Kassis) and the tenant (Superior Sign), implying that both parties were intended to enjoy the same level of coverage. Therefore, Kassis falls within the policy’s additional insured provision.

    Court’s Reasoning

    The Court of Appeals focused on interpreting the lease agreement, particularly the “mutual benefit” clause. The court reasoned that the natural and intended meaning of “mutual benefit” is that both Kassis and Superior Sign should enjoy the same level of insurance coverage. The court contrasted this clause with other insurance provisions in the lease. For example, the lease stipulated that Kassis would obtain fire insurance for the benefit of both parties and that Superior Sign could obtain additional insurance coverage solely for its own benefit. The Court stated, “Plainly, where a disparity in coverage as between insureds was contemplated—i.e., where the insurance to be procured was not for the insureds’ ‘mutual benefit’—it was expressly noted.” The court concluded that Superior Sign was obligated to procure the same level of general liability insurance coverage for Kassis as it obtained for itself. Because Kassis is considered an additional insured, Ohio Casualty is obligated to defend him in the underlying personal injury action and, if appropriate, indemnify him as an additional insured in accordance with the policy. The court emphasized that the insurance policy did not require Superior Sign to provide Ohio Casualty with notice of those persons or organizations Superior Sign was contractually required to name as an additional insured. The Court cited Pecker Iron Works of N.Y. v Traveler’s Ins. Co., 99 NY2d 391, 393 (2003), noting that the term “additional insured” is a recognized term in insurance contracts, and “the well-understood meaning of the term is an entity enjoying the same protection as the named insured.”