Opinion ID: 2570527
Heading Depth: 3
Heading Rank: 1

Heading: First-Party Insurance

Text: The district court agreed with the parties that the lease was unambiguous. The district court concluded that the insurance provision in Section 10 did not require Rycair to provide first-party fire insurance. The district court held that the term fire legal insurance was a term of art. The district court determined that fire legal insurance is commonly required in leases to cover the costs of the deductible on the lessor's own insurance and to effect a waiver of subrogation by the lessor's insurer against the lessee in event a fire is caused by the tenant. The district court then decided that [t]he requirement of this type of fire legal protection coverage is consistent with the language of paragraphs 7 and 16 of the lease, which indicated that where the loss is caused by fire or any other matter not caused by the lessee, and insured by the lessor, lessor shall be required to make all of the necessary repairs. Section 10(c) provides that Rycair was to have bodily injury and property damage insurance insuring Simplot and itself; such insurance shall contain fire legal protection with limits of at least $100,000. Section 7 required Simplot to make structural repairs to the Kaiser building provided such repairs are not made necessary by Rycair's negligence, misuse or abuse. [2] Section 16 of the lease provides that if the Kaiser building was destroyed by a fire that is not the result of Rycair's negligence, use, misuse or abuse, that the lease may be terminated or if the parties elect to continue with the lease that Simplot will restore and reconstruct the damaged building. [3] Given that fire legal insurance covers the liability of Rycair for fire damage caused by its own negligence and that Sections 7 and 16 cover the Kaiser building if damaged by fire, the lease does not require Rycair to have first-party fire insurance for the Kaiser building. A fair reading of Section 10 of the lease shows that this section is for liability purposes and does not make the lessee an insurer or require first-party insurance coverage for fire damage to the building as argued by Simplot. The district court correctly determined that the lease provided there would be liability on the part of Rycair only if Rycair was negligent in causing the fire. The jury found that Rycair was not negligent in causing the fire, therefore, there is no requirement of insurance for liability on the part of Rycair. This Court affirms the district court's determination that the lease was unambiguous and did not require Rycair to purchase first-party fire insurance.