Opinion ID: 449544
Heading Depth: 2
Heading Rank: 3

Heading: Policy arguments support both sides.

Text: 20 Despite each party's attempt to distinguish away unfavorable cases, we conclude that the precedent is sufficiently well-developed on each side to bar a decision on the basis of prior authority alone. 1 Each side can point to decisions in its favor made at the highest court of a state. Therefore, even if we were to reach the question whether a tenant should be presumed to be a co-insured in the absence of any indication of the parties' intent, our decision would ultimately turn on the conflicting policy arguments raised by the various state supreme courts that have discussed the issue. Since subrogation is an equitable doctrine, equity principles apply in determining its availability. Alaska Insurance Co., 623 P.2d at 1217; Rock River Lumber Corp. v. Universal Mortgage Corp., 82 Wis.2d 235, 262 N.W.2d 114, 117 (1978). 21 Without ruling on the issue, we note that the policies relied upon by each line of cases may not be easily reconcilable. Some cases, particularly the older ones, have exhibited a reluctance to release the tenant from liability for his own negligence, particularly when, as here, there is no express contractual release. See, e.g., Maiatico v. Hot Shoppes, Inc., 287 F.2d 349, 351 (D.C.Cir.1961); Acquisto, 619 P.2d at 1240; Wichita City Lines v. Puckett, 295 S.W.2d at 899; see generally, Matan, Liability for Loss by Fire Among Insurer, Tenant and Landlord, 18 Ohio St. L.J. 423, 425-26 (1957). This result is consistent with the fact that at common law, under a lease without any express covenant to repair or return the leasehold in good condition, the tenant was liable for negligent fires. See United States v. Bostwick, 94 U.S. 53, 68, 24 L.Ed. 65 (1876); Miller v. Miller, 217 Miss. 650, 64 So.2d 739 (1953); see also Annot., 10 A.L.R.2d 1023 (1950). 22 On the other hand, more recent cases have considered the tenant to have paid for his possible negligence in advance, through rent payments adjusted to cover the landlord's fire insurance expenditures. Liberty Mutual Fire Insurance Co. v. Auto Spring Supply Co., 59 Cal.App.3d 860, 131 Cal.Rptr. 211, 214-15 (1976); Rock Springs Realty, 392 S.W.2d at 278; Sutton, 532 P.2d at 482; see also Rizzuto, 592 P.2d at 692 n. 3 (rejecting argument that public policy is violated by allowing a tenant to exculpate himself from liability for his own negligence); Cerny-Pickas, 131 N.E.2d at 104 (same); 18 Ohio St. L.J. at 432; but see Page v. Scott, 567 S.W.2d at 103-04 (rejecting the fiction that by paying the rent, the lessee paid the insurance premium, and noting that more often than not the market, i.e., supply and demand, is the controlling factor in fixing and negotiating rents.). Courts have also held that when a landlord has insured against loss by fire, the tenant may reasonably expect that all losses by fires of negligent origin will also be covered. Alaska Insur. Co., 623 P.2d at 1219; Sutton, 532 P.2d at 482; Rizzuto, 592 P.2d at 691. 23 Furthermore, to hold a tenant liable would encourage multiple insurance policies on the same building by the landlord and each of his tenants. See Agra-By-Products, Inc. v. Agway, Inc., 347 N.W.2d 142, 148 (N.Dak.1984), quoting Cerny-Pickas, 131 N.E.2d at 103; see 43 Cornell L.Q. at 227 n. 9. In addition, courts have noted that permitting a subrogation action would give insurers a windfall, since [f]ire insurers expect to pay fire losses for negligent fires and their rates are calculated upon that basis. Rock Springs Realty, 392 S.W.2d at 278; see Liberty Mutual Fire Insur. Co., 131 Cal.Rptr. at 215; Million, Real and Personal Property, 33 N.Y.U.L.Rev. 552, 586 (1958). 24 Aetna correctly points out, however, that if the tenant were shielded from a subrogation suit, the commercial tenant's own liability insurer would also acquire a windfall, since it first receives a premium to insure the tenant for his own negligent acts, but then escapes having to pay for an anticipatable fire loss. Aetna also notes that the collateral source rule would be undermined if the court released the tenant essentially because the landlord had insurance. Finally, Aetna argues that if the tenant were held to be a co-insured, the court would be rewriting Aetna's insurance contract with Hahn, which unambiguously provides that Hahn alone has been insured. 25 III. Certification. 26 With policy arguments on both sides and the state courts divided, it appears appropriate for this issue to be certified to the Idaho Supreme Court. See Idaho Appellate Rule 12.1 (certification appropriate for a controlling question of law for which there is no controlling precedent in the decision of the Idaho Supreme Court and an immediate determination of the Idaho law would materially advance the orderly resolution of the litigation.); Meckert v. Transamerica Insurance Co., 742 F.2d 505, 506 (9th Cir.1984) (certifying issue of scope of insurance clause to Idaho Supreme Court). However, because the issue whether a tenant will be deemed a co-insured need never be reached if the district court finds additional evidence of the parties' intent, we remand to the district court first, with directions that the district court later certify the question if the parties' intent cannot be divined through additional fact-finding. 27 IV. Conclusion. 28 An issue of material fact remains on whether the parties to the oral lease intended Hahn to provide insurance for both parties' benefit. The grant of summary judgment is therefore REVERSED, and the case REMANDED to determine the parties' intent. If the district court is ultimately unable to ascertain the parties' intent, it shall CERTIFY the question whether a tenant will be presumed to be a co-insured of the landlord absent any indication of the parties' intent. 29 REVERSED AND REMANDED WITH DIRECTIONS.