Commercial Lease Indemnity Provisions
At Schorr Law, our Los Angeles commercial real estate attorneys have significant experience litigating all types of commercial leasing disputes. Those disputes can arise out of the most basic terms or complex risk shifting terms often contained in commercial leases. For example, most commercial leases contain an indemnity provision that require the tenant to reimburse the landlord for things like a slip and fall that occurs in the common area of a property. Even though insurance usually covers these types of disputes, it is important to understand every term in a commercial lease – even boilerplate terms.
Here is an analysis of a published California opinion dealing with a boilerplate indemnity provision.
Morlin Asset Management LP v. Murachanian
In summary, a commercial building leased an office space to a dental office. To clean the office’s carpets, the dental office hired a local vendor. That vendor then sent a man to do the job. As the man walked up a flight of stairs in the common area he happened to slip and fall. As a result, the man sued the landlord to recover damages from the sever injuries he sustained.
Landlord’s Response to Suit:
In an attempt to seek indemnity from the tenant/dental office, the landlord cited to section 8.7 of the commercial lease. That provision, which is representative of common boilerplate provisions, held:
Except for Lessor’s gross negligence or willful misconduct, Lessee shall indemnify, protect, defend and hold harmless the Premises, Lessor and its agents, Lessor’s master or ground lessor, partners and Lenders, from and against any and all claims, loss of rents and/or damages, liens, judgments, penalties, attorneys’ and consultants’ fees expenses and/or liabilities arising out of involving or in connection with, the use and/or occupancy of the Premises by Lessee. If any action or proceeding is brought against Lessor by reason of any of the foregoing matters, Lessee shall upon notice defend the same at Lessee’s expense by counsel reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not have first paid any such claim in order to be defended or indemnified. (Morlin Asset Management LP v. Murachanian (2016) 2 Cal.App.5th 184, 188.) (Emphasis added by the Court of Appeals.)
The Ruling and Conclusion:
In agreeing with the lower court, the Court of Appeal made the distinction between the common area and the “Premises.” Specifically the Court held:
the injury to a third party that occurred outside the dental suite, in a common area over which the landlords have exclusive control, did not arise out of the tenant’s use of the dental suite. It does not matter that the accident would not have happened but for the tenant hiring the third party to clean the carpets in the dental suite, and that the third party may have been at fault. The connection between the tenant’s use of his suite and the accident in the stairwell over which the tenant had no control is too remote to have been within the contemplation of the parties when they entered into the lease. (Id. at 193.)
Accordingly, the lesson here is to carefully review each boilerplate provision in your commercial lease and assess the need for extra protection.
Schorr Law’s real estate attorneys in Los Angeles have experience resolving lease disputes. To inquire about a free 30-minute consultation, contact us by phone at (310) 954-1877 or by email at email@example.com.