Case Name: Fay's Drug Company, Inc., Respondent, v. British American Development Corporation, Appellant. (And a Third-Party Action.)
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1988-05-12
Citations: 140 A.D.2d 810
Docket Number: 
Parties: Fay’s Drug Company, Inc., Respondent, v British American Development Corporation, Appellant. (And a Third-Party Action.)
Judges: 
Reporter: Appellate Division Reports
Volume: 140
Pages: 810–814

Head Matter:
Fay’s Drug Company, Inc., Respondent, v British American Development Corporation, Appellant. (And a Third-Party Action.)

Opinion:
— Casey, J.
Plaintiff, as tenant of a store in defendant's shopping mall, seeks a declaration of the parties' rights and responsibilities under their lease agreement as it relates to a separate action commenced against the parties by a third person, Lucille A. Salerno, who was seeking to recover damages for injuries sustained in a slip and fall on a sidewalk in the vicinity of the entrance to plaintiff's store. Defendant contends that Supreme Court erred in granting plaintiff's motion for summary judgment and declaring that defendant must defend and indemnify plaintiff in the Salerno action.
The lease agreement contains provisions concerning indemnification and the procurement of insurance. Since these provisions create separate and distinct rights and responsibilities (see, Roblee v Corning Community Coll., 134 AD2d 803), we will consider each provision separately. The provision concerning indemnification, labeled "liability", contains two separate paragraphs which read as follows:
"(a) Tenant shall defend, indemnify and hold Landlord harmless from any and all damages, costs, expenses and liability which either (i) arise from or are in connection with the use, occupancy or repair by Tenant of the Demised Premises, (ii) arise from or are in connection with any act or omission of Tenant, Tenant's agents or employee's [sic]; or (iii) result from the negligence of Tenant.
"(b) Landlord shall defend, indemnify and hold Tenant harmless from any and all damages, costs, expenses and liability which either (i) arise from or in connection with the use, control or repair by Landlord of the Common Area; (ii) arise from or are in connection with any act or omission by Landlord, Landlord's agents or employees in connection with the Common Area; or (iii) result from the negligence of Landlord's agents or employees or failure on Landlord's part to comply with any of the covenants, terms or conditions of this Lease."
Since the complaint in the Salerno action alleges that the slip and fall occurred on a sidewalk in the common area, where defendant has exclusive control pursuant to the lease agreement, plaintiff contends that defendant must defend and indemnify under paragraph (b) (i) quoted above. The complaint in the Salerno action, however, seeks to impose liability on plaintiff for plaintiff's negligence. Thus, plaintiff seeks indemnification for its own negligence, and it is the general rule that an agreement between two sophisticated business entities will be construed as intending indemnification of a party for its own negligence where the agreement "connotes an 'intention to indemnify [which] can be clearly implied from the language and purposes of the entire agreement' " (Hogeland v Sibley, Lindsay & Curr Co., 42 NY2d 153, 159, quoting Margolin v New York Life Ins. Co., 32 NY2d 149, 153). Considered in its context within the provision labeled "liability", paragraph (b) (i) does not fall within this general rule. The agreement provides in paragraph (a) (iii) quoted above that plaintiff "shall defend, indemnify and hold [defendant] harmless from any and all damages, costs, expenses and liability which result from the negligence of [plaintiff]". Since plaintiff agreed to indemnify defendant for plaintiff's own negligence, with no qualification or limitation in regard to location, the agreement does not clearly imply an intention that defendant indemnify plaintiff for plaintiff's own negligence merely because the event allegedly occurred in the common area of defendant's shopping mall. Rather, as we read the lease agreement, the parties have agreed that in such circumstances, each party shall be responsible for its own share of the liability.
Turning to the insurance provision, each party agreed, in separate clauses, to maintain for the mutual benefit of the parties personal injury insurance against claims for bodily injury, with certain dollar limits. Plaintiff agreed to provide such insurance coverage on the "demised premises" (i.e., plaintiff's store), and defendant agreed to provide such coverage on the common area. Since the bodily injury accident alleged in the Salerno complaint occurred on the sidewalk outside plaintiff's store, it occurred on the common area where defendant was obligated to maintain personal injury liability insurance for the benefit of both plaintiff and defendant. Subsequent to the entry of Supreme Court's order and judgment herein, defendant's insurer agreed to provide a defense on behalf of plaintiff in the Salerno action. In view of this development, we see no need for prospective declaratory relief; plaintiff will receive the defense to which it is entitled under the insurance provision of the lease agreement and any declaration concerning the rights of the parties in the event of a judgment against them in the Salerno action is premature and speculative. As found by Supreme Court, however, plaintiff is entitled to recover from defendant, under the insurance provision of the lease agreement, its costs and expenses of defending itself in the Salerno action up until the point at which defendant's insurer assumed that responsibility.
Order and judgment modified, on the law, without costs, by deleting the second decretal paragraph thereof and by amending the third decretal paragraph to limit the damages referred to therein to the actual costs and expenses incurred by plaintiff in its defense of the action commenced by Lucille A. Salerno prior to the assumption of that defense by defendant's insurer, and, as so modified, affirmed. Mahoney, P. J., Kane and Casey, JJ., concur.