### IN THE COURT OF APP EALS OF TENNESS EE AT JAC KSON A ugus t 16 , 200 7 S es sio n UNION REAL TY COMPANY, LTD. d/b /a NORTHG ATE SH OPPING CENTER v . FAMILY DOLL AR STORES OF TENNESS EE, I NC., ET AL 

### .

Direc t Appeal from the Circ uit Court for Sh elby County No. CT-004653-005 R obert L. Childers, Judge

No. W2006-01418-C OA-R3-C V - F iled Novem ber 16, 2007

T h is d is p u te ar is e s f

r o m a p r e mi s e s li a

b il it y a c ti o nf il e d a g a in s t P la inti f

f p r o p e rty o w n e r Union Realty Company

. The trial court deter mined that Def

endant Tr avele rs Property Casualty Company had an oblig ation to insure Union Realty as a na med insured unde r a public l i ab i l i ty contra ct of insurance issued to Defe ndant Family Dollar store. Family Dollar a nd Trave lers appe al; we a ffirm in p art , v a c a te in p art , a

nd re ve rs e in p art

. Tenn. R. App . P . 3 Appeal as of Right; Judgme nt of th e Circ uit Court Aff irm ed in p art; Reve rsed in part; Vac ated in part; and Rem anded D AVI D R. F ARMER , J. , d e li v e r e d th e o p in io no f

th e c o ur t, in w h ic hW. F RAN K C RAW FORD , P.J ., W.S ., and H OL L Y M. K I RBY , J ., joined. S. Newton Ander son, Gayle Boyden L akey and Kimber ly Nicole Ga lloway , Memphis, Tennesse e, for the a ppellant, Fa

mily Dollar Stores of T ennesse e, Inc. Br adley E. Trammell and J ay

Ebelhar , Memphis, Tennesse e, for the appellant, Trave lers Insuranc e C o mp a n y. Ric ha rd Gl a ssm an an d Tame ka Turn e r- Pe rr y , Mem ph is, Te nn e sse e , for

the a pp e lle e , U nio n Re a lty Company , L td., d/b/a Northg ate ShoppingCenter. OP IN ION In F e br ua ry 19 98 , Jo A . Pa

rk e r ( Ms. Park e r) die d a s a re su lt o f a

c ri min a l a ssa

ult committed in the premises occ upied by Def endant F amily

Dollar Stores of T ennesse e, Inc. ( “ F D S ” ) i nth e N o rth g at e S h o p p i n g C e n t e r , w h i c hi s o w n e d b y P l a i n t i f

f U n i o nR e a l ty C o mp an y, L td. (“Union Rea lty ”) in Memphis. Ms. Parker was a n employ ee of

FDS at the time of

the assault, and a ll claims ag ainst FDS ar ising fr om her de ath wer e settled pursua nt to workers compensation insurance. Alawsuit seekingdamag es for injuries sustained by

Ms. Parker ( “the-2-

Parker lawsuit”) subseque ntly

was filed a g ainst Union Reality in the Circuit Court for Shelby County . Plaintiffs in the Parker la wsuit alleg ed Union Rea lity knew or should have know of c ri min a l a c tiv ity

in t he are a , th at th e atta c k o n M s. Park e r w a s f or e se e a ble , th a t U nio n Re a lity disreg arde d the known dang ers of criminal ac tivity , and that Union Rea lty failed to provide secur ity measure s at the shopping cente r. In Augus t 20 00 , U nio n Re a lty c omm e nc e d th e pr e se nt a c tio n a g a ins t F DS a nd its ins ur anc e c arr ie r, Tr ave le rs Pr op e rt y Ca su a lty Com pa ny of Am e ri c a (“ Tr ave le rs ” ) s e e kin g to enfor ce a provision for public liability insurance in its l ease with FDS. In its complaint, Union Reality alleg ed the Par

ker la wsuit arose f

rom incidents occ urringwholly in the premises occupie d by

FDS; that FD S was obligated pursuant to its lease w ith Union Reality to provide public liability

insurance naming Union Realty as an a dditional insured; that Trave lers wa s FDS’s insure r and that, pursuant to the contra ct for insura nce, Union Realty

was named as a

n additional insured; and that Tr avele rs had r efuse d its demand for insura nce c overa g e. Union Re a lty a sse rt e d, “ [b]y

fa ili ngand

re fu sin g to d e fe nd

Un ion Re a lty in t he pe rs on a l in

jur y laws uit , Trave lers is in brea ch of c ontrac t. Pleading in the a lternative, Plaintiff would show that Def endant, F DS, is in breach of contra ct for f

ailing to pr ocure adequate insuranc e as w as re qu ir e d b y

the le a se .” Un ion

Re a lty so ug ht a n o rd e r r e qu ir ingTr ave le rs to a ssume its de fe ns e in the Parke r lawsuit; damag es, includingattorney ’s fe es, ar ising fr om Trave lers’ r efusa l to defend; pr e -j ud g me nt i nte re st; po st- jud g me nt i nte re st; oth e r a pp ro pr iate g e ne ra l r e lie f; and c os ts. In it s answe r, Tra

veler s denied that Union Rea lty was e ntitled to relief and a sserted, in the a lternative, that if Union Realty

was e ntitled to ins uranc e cove rag e, cove rag e wa s limi ted to $500,000 pursuant to the policy

of insuranc e and the lease betwee n Union Realty and F DS. FDS answe red and de nie d th at U nio n Re a lty wa s e nti tle d to ins ur anc e c ov e ra g e un de r t he te rm s o f t

he le a se wher e the Par

ker la wsuit did not describe a

loss occurr ing in pr emises occ upied by FDS, but soug ht damag es for

acts a rising sole ly

out of Union Realty ’s ac ts or omissions . In J uly 2005, the tr ia l c ourt e nte re d a n o rd e r p e rm itt ingUn ion Re a lty to a me nd its c omp la int

a g a ins t T ra

ve le rs to asser t a bad- faith denia l claim pursuant to Tenne ssee Code A nnotated § 56-7- 105. The trial c ourt denied Union Rea lty ’s motion to amend its complaint ag ainst FDS to add a lleg ations of inducement to bre ach the contra ct of insura nce. F oll ow ingc ro ss m oti on s f or summa ry jud g me nt, the tr ia l c ourt

he ard the matte r i n August 2005. At the August hearing , the trial cour t stated: B ut i t a pp e ars to m e that th e re is a n o bli g a tio n, and

it l oo ks lik e – it

so un ds lik e to me that Fa

mily Dollar ha s complied with the terms of the le ase a nd has ac quired thi s in sura

nc e po lic y

of $5 00 ,0 00

. . . . I t se e ms t o me that T ra ve le rs ha s a

duty to defe nd here

. Trave lers subseque ntly

assumed the de fense of Union Realty and funde d the full settlement in the Parker lawsuit. On September 22, 2005, how ever , Trave lers notified Union Rea lty that it was rese rvingits rights under

the policy

and would not waive any rig ht to appeal the tr ial court’s order

.-3-

In November

2005 and January

2006, Union Realty

filed re vised motions for summary judgme nt ag ainst FDS. In its mot ions, Union Realty asser ted the ca se wa s a bre ach of contra ct a c tio n invo lvi ngthe le a se a g re e me nt a nd the c on tr a c t of

ins ur anc e ; th a t th e a c tio ns g ivi ngri se to the Parke r lawsuit did not occur in the common are a of the shopping c enter but in the premises occupie d by

FDS; that Traveler s has fully funded a nd settled the under lying Par ker la wsuit; that FDS wa s require d to obtain public liabilit y insurance for c overa g e in the amount of $500,000 pursuant to its lease; that F DS had purc hased a n insurance policy

with a $250,000 “se lf-re tention provision” and ha d ref

used to pay

the first $250,000 re quired unde r the provision; and that “ [t ]he policy procur ed by

FDS throug h Trave lers is applica ble to the loss made the subjec t of the underlying tor

t claim, there fore , FDS has a duty to defe nd and/or indemnify Union Reality

by an[d] throug h the re quired insura nce c overa g e which w as obtained f rom Traveler s.” On January 31, 2006, FDS moved to dismiss the action as moot. In its mot ion, FDS asser ted, “Plaintiff’s lawsuit ag ainst it for brea ch of c ontrac t for fa ilure to procur e ade quate insura nce a s require d by the le a se a g re e me nt b e tw e e n th e m is moo t be c a us e the re is n o lo ng e r a

n e xistin g c on tr ov e rs y betwee n them” whe re Tr avele rs had f ully funded the settlement of the Par ker la wsuit and reimburse d Union Realty for a ll ex penses. Followinga hea

ringin Febr

uary 2006, in May

2006 the trial cour

t gr anted Union Rea lty ’s motion for summary

judgme nt as to FDS and Tr avele rs, and de nied FD S’s motion t o dismiss

. The trial c ourt incorpor ated by ref ere nce the transcr ipt of the proce eding s into it s order . The trial c ourt a lso dis mis se d w ithpr e

jud ic e Un ion

Re a lty ’s ba d f

a ithc la im a g a ins t T ra

ve le rs . T ra

ve le rs ’ and F DS filed timely

notices of a

ppeal to this Court. Following our g rantingof F DS’s motions to e nla rg e tim e and

to r e se t or a l argume nt, or a l argume nt w a s h e ard by thi s Co ur t in Au g us t 2007. We affir

m the trial court’ s order

denying F DS’s motion to di smiss. The trial court’s awa rd of summary

judgme nt to Union Realty , insofar a s it may be per ceive d as a de termination that FDS would have been in br eac h of the lea se had the policy of insuranc e not provided cover ag e to Union Realty in the Parker

lawsuit, is rever sed. To the e x tent that the trial cour t’s o rd er m ay b e p er ce i v edas a d ec l ar at o ry j u d gm en tth atFD S b re ac h edth e l ea s e b y p ro cu ri n g a c on tr a c t of

ins ur anc e that in c lud e d a de du c tib le in t

he amou nt o f $ 25 0, 00 0, the jud g me nt i s vacated. Issues Presented The issues pre sented for

our re view, as w e per ceive them, are : (1) Whether the trial c ourt err ed by denying F DS’s motion to di smiss Union Re a lty ’s mot ion

fo r s umm ary

jud g me nt f

or moo tne ss. (2) Whether the trial c ourt err ed in awa rdingsummary

judgme nt to Union Realty upon deter

mining the lea se betwe en Union Rea lty and F DS re qu ir e d F DS t o o bta in i ns ur anc e c ov e ra g e a g a ins t th e c la ims a sse rt e d in the Park e r l aws uit , a

nd that th e ins ur anc e pr oc ur e d b y F DS f ulf ill e d th is obligation.-4- Anal y sis We f ir st t ur n to F DS’ s a sse rt ion

that th e tr ia l c ourt

e rr e d in de nyingits mot ion

to d ism iss fo r m oo tne ss. F DS a sse rt s th at, whe n U nio n Re a lty re ne we d it s mo tio n f

or summa ry jud g me nt i n No ve mbe r 2 00 5 a

nd Janu ary 20 06 , th e iss ue s a sse rt e d w e re moo t w he re Tr ave le rs ha d f ull y f un d e d th e s e t t l e m e n ti nth e P ar

k e r l aw s u i tan d

r e i mb ur s e d

U n i o nR e a l ty

f o r a l l e x p e n s e s . It further asser ts that the question of whethe r F DS brea ched the lease by failingto procure insurance as oblig ated by the lease was not prope rly befor e the c ourt wher e Union Rea lty ’s ac tion was not broug ht as a de clar atory judgme nt action to construe the parties’ obligations under the lease . Additionally , FDS conte nds that Union Realty has no standingto alleg e that F DS had failed to re imburse Tra

veler s in the amount of its deductible in the amount of $250,000 unde r the contra ct of insura

nce. We beg in by

observingthat whether

FDS has pr operly

reimburse d Trave lers for the amou nt o f i ts d e du c tib le is n ot p ro pe rl y be fo re thi s Co ur

t w he re it w a s n ot a

n is su e in c on tr ov e rs y in t he pr oc e e din g s b e low . T ra ve le rs is a pa rt y to t his a c tio n a

nd ha s n ot f ile d a c ro ss- c la im a g a ins t F DS. Rathe r, Tr ave le rs ’ p os iti on is that it wi ll s e e k e ith e r r e c ov e ry of amou nts pa id t o Un ion Re a lty or pa y me nt o f t he de du c tib le by

F DS p e nd ingour d e te rm inatio ns on a pp e a l. We next turn to whether

the issues in controver sy betwee n Union Realty

and F DS were re nd e re d mo ot b y

Tr ave le rs ’ s e ttl e me nt o f t he Park e r l aws uit

and re imb ur se me nt o f e xpe ns e s to Union Realty . I t is well settled that in order to invoke the jur isdiction of the courts, ther e must be a g enuine a

nd live controve rsy

betwee n the par

ties which nec essitates adjudication of prese nt rig hts by the cour t. Do c k e ry v . D oc k e ry , 5 59 S.W. 2d

95 2, 95 4 ( Te nn . Ct . App . 1 97 7) . T his controve rsy

must remain live throug hout the course of litigation, including the a ppeal pr ocess. Id. A m oo t c a se is o ne in whic h th e c ourt de te rm ine s it

is n o lo ng e r n e c e ssa

ry a s a me ans to provide the r elief to whic h a par ty is entitled. Ford Consumer Fin. Co. v. Clay , 984 S.W .2d 615, 617 (Tenn. Ct. App. 1999). I n the abse nce of

exceptional circ umstances justifying a n exception to the mootness doctrine, if a cause of ac tion loses its char acte r as a live controve rsy , it will be dismiss ed as moot. Id. at 95 5; McI ntyre v . Traughber , 884 S.W .2d 134, 137 (Tenn. Ct. App. 1994). In its brief to this Court, FDS asserts the se ttlement by Trave lers fully

mooted the issues of whe ther Tr avele rs was in bre ach of contra ct when it re fused to provide insurance cover ag e and of whe ther F DS was in brea ch of the lease ag ree ment by failingto provide ade quate insura nce cover ag e under

the lease . FDS asse rts “ther e is no document in the re cord to sug g est that Trave lers made this pay

ment to and on beha lf of Plaintiff with any ty pe of r eser

vation or c on tin g e nc y .” Contr ary

to t his a sse rt ion , h ow e ve r, a s n ote d a bo ve , th e re c or d c on ta ins a rese rvations of rig hts letter sent by Trave lers to Union Realty in September 2005. Tr avele rs has maintained that, althoug h it fully funded the settlement in the Parker lawsuit, in “the abse nce of an e xpre ss o rd e r o f t

he tr ia l c ourt

fi nd ingc ov e ra g e un de r t he L e a se Agre e me nt [i t] r e se rv e d it s rig ht to seek re imbursement from Union Rea lty in the event of

a fina l order ultimately

finding F am i l y D o l l ar

h a s n o o b l i g at i o nt o p r o v i d e c o v e r a g e un d e r th e L e a s e A g r e e m e n t

. ” A d d i t i o n a l l y,-5-

althoug h Union Realty

did not file this action as a de clar atory judgme nt action, we note that the pivotal issue in this case was whe ther F DS and Traveler s had an oblig ation to defe nd Union Realty under the lease ag ree ment and contr act of insurance . Fur

ther, a lthough the tr ial court state d f ro m th e be nc h th at it

be lie ve d T ra

ve le rs ha d a

duty to d e fe nd un de r t he te rm s o f t

he le a se and the ins ur anc e c on tr a c t, i t ha d e nte re d n o o rd e r t o th a t e ff e c t w he n U nio n Re a lty

fi le d it s re ne we d mo tio n. De sp ite its se ttl e me nt o f t he Park e r l aws uit , T ra

ve le rs ’ r e se rv a tio n o f r ig hts ke pt t his c on tr ov e rs y

a liv e . We a ff

ir m th e tr ia l c ourt ’s de nia l of F DS’ mot ion

to d ism iss

. We n e xt tur

n to the de te rm inativ e iss ue of wh e the r t he ins ur anc e pr ov isi on

in t he le a se ag ree ment betwee n FDS and Union Realty require d FDS to obtain insuranc e cove rag e to def end Un ion Re a lty in t he Park e r l aws uit . T his iss ue re qu ir e s u s to c on str ue the te rm s o f t

he le a se ag ree ment betwee n the par ties. The interpr etation of a contra ct is a matter of

law that we revie w de novo on the re cord w ith no presumption of corr ectne ss for the de termination of the tria l court. Barnes v. Barne

s , 193 S.W .3d 495, 498 (Tenn. 2006) . The “ car dinal rule” of contra ct c on str uc tio n is to a sc e rt a in t

he int e nt o f t

he pa rt ie s a nd to e ff e c tuate that in te nt c on sis te nt w ith applicable leg al principles. Fr izz e ll Co ns tr. Co. v . G atl inb ur g, L.L. C. , 9 S.W .3d 79, 85 (Tenn. 1999). When the languag e of the contra ct is plain and unambiguous, courts dete rmine the intentions of the parties f

rom the four

corne rs of the c ontrac t, interpretingand enf orcingit as written. In t'l F

lig ht C tr. v . Ci ty of M ur fre esb or o , 45 S.W .3d 565, 570 (Tenn. Ct. App. 2000). The lea se executed be tween F DS and Union Realty in Dece mber 1983 c ontains rec iproca l, complementar y provisions relatingto public liabilit y insurance . Paragraph 11( b) of the le a se pr ov ide s: Tena nt shall maintain insurance ag ainst public liabilit y for pe rsonal injury

or death or damag e to prope rty

occur ringin the demised pre mises arising out of the us e and oc c up a nc y the re of by Te na nt. Suc h in sura

nc e sh a ll b e a

sin g le lim it policy of $500,000 for

persona l injury

or death and prope rty

damag e and L andlords shall be na

med as a n additional insured under the policy

(except for structura l alterations, new construc tion or demolition operations perf ormed by L andlords). Para g ra ph11 (c ) p ro vid e s: L andlords shall maintain insuranc e ag ainst public liabilit y for pe rsonal injury

or death or damag e to prope rty

arisingout of the ac ts or omissions of L andlords or arisingout of the use of

the common ar eas ( including w ithout li mitation, parking are as, sidewa lks, ramps and ser vice a rea s) in the shopping cente r. Such insuranc e sh a ll b e wi th s ing le lim it o f $ 50 0, 00 0 f or pe rs on a l in

jur y or de a th a nd fo r p ro pe rt

y damag e, and T enant sha ll be named a s an additional insured unde r the policy

.-6-

Thus , th e le a se re qu ir e d e a c h p art y to o bta in i ns ur anc e a g a ins t li a bil ity to t he pu bli c , a nd to n ame the other a s an additional insured. F DS was re quired to insure a g ainst damag es ar ising fr om the us e and oc c up anc y

of its pr e mis e s; Unio n Re a lty wa s r e qu ir e d to ob ta in i ns ur anc e a g a ins t liability for its ac ts or omissions resultingin damag es ar ising out of the use of the c ommon area s. Al tho ug h th e pa

rt ie s d e bate the c on str

uc tio n o f t

he te rm “ us e and oc c up anc y ,” the le a se clea rly anticipates that eac h party would obtain insurance ag ainst liabilit y to the public arising from its own ac ts or omissions within the are as under its control. Unlike An de rso n v . B e nn e tt , 834 S.W .2d 320 (Tenn. Ct. App. 1992), where we we re r equire d to determine whether the shooting of a

child from an a

utomobile constitut ed “use ” of the automobile for the pur poses of insurance cover ag e, this case does not requir e an inter pretation of whether

the cr iminal act undisputedly

committed within the FDS premises c onstitut es an a ct ar ising fr om the use or occupa ncy of the pre mises. Rather, it is undisputed that the Parker la wsuit alleg ed dama g es arisingfrom the a cts or omissions of Union Realty in the common are as under the control of Union Realty . I t was, in short, a pre mises liabilit y action asse rting neg lige nce on the part of Union Reality

for f ailing to take proper

secur ity measure s not within t he F DS premises, but in the common are as of the shoppingcente r. In the trial cour

t, Union Realty

asser ted that a pr imary

element of

its defense in the Parker laws uit wo uld be c a us atio n. At

the Au g us t 20 05 he ari ngof thi s matte r, c ouns e l f

or Un ion Re a lty asser ted, [b] ut if we tried the case , if Fa mily Dollar wa s found to be the c ause in fa ct, then we’ ve trig g ere d ever

y thing we need to trig g er a nd we would be entitled to our defe nse cost bec ause the y still had not come f

orwa rd to indemnify

or hold us harmless a s to defense costs. Th e le a se , h ow e ve r, did

no t r e qu ir e F DS t o in sure Un ion Re a lty a g a ins t an a c tio n f

or lia bil ity arisingfrom Union Rea lty ’s alleg ed neg lige nce w ith respec t to security steps in the common are as of the shoppingcente r. We disag ree with the premise of Union Realty ’s ar g ument that, if the policy of insuranc e issued by Trave lers wa s not applicable to the c laims asserted in the Par ker la wsuit, then FDS wa s in b re a c h f

or fa ili ngto o bta in a de qu ate ins ur anc e . T he ba sis fo r t his argume nt, a s a sse rt e d in Union Realty ’s brief

to this C ourt, is that “Ms. Parker ’s death was unre lated to any portion of Northg ate Shopping Center’ s common are as.” We re spectfully sug g est that this was the deter minative question raised in the Par ker la wsuit. We theref ore r ever se summary

judgme nt in favor of

Union Realty , and hold FD S did not brea ch the lea se by

failingto obtain insurance as re quired by the lease wher e the lea se did not re qu ir e F DS t o o bta in i ns ur anc e c ov e ra g e a g a ins t a pr e mis e s li a

bil ity a c tio n b ro ug ht a g a ins t Un ion Re a lty fo r d ama g e s a lle g e dly

su sta ine d a s a

re su lt o f Unio n Re a lty ’s a c ts o r o mis sio ns in the c omm on

are a s. To the e xtent th at th e tr ia l c ourt ’s jud g me nt c an b e pe rc e ive d a s a-7-

deter mination that FDS brea ched the lease wher e the c ontrac t of insuranc e included a $250,000 deductible, we vacate that deter mination. Hol

din g We affir m the trial court’ s denial of F DS’s motion to di smiss for mootness. I n light of the fore g oing, summar

y judgme nt in favor of

Union Realty

is rever sed insofar

as it is predicated o na d et erm i n at i o nth atth e l ea s e a gre em en tre qu i re d FD S t o o b t ai ni n s ura n ce co v er age applicable to a pre mises liabilit y action alleg ing only

the neg lige nce of

Union Realty

in or around the common ar eas. To the extent to which the trial court’s or der is pre dicated on a deter mination that FDS bre ache d the lease wher e the policy of insuranc e included a

$250,000 deductible, the j u d g m e n ti s v a c at e d

. C o s t s o f th i s a p p e a l ar e t a x e d

t o th e Ap p e l l e e , U n i o nR e a l ty C o mp an y, L td., d/b/a Northg ate Shopping Center.

___________________________________ DAVI D R. FARMER, J UDGE