Daily Development forTuesday, September 5, 2000

By: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
randolphp@umkc.edu

LANDLORD/TENANT; INDEMNITY: Tenant that leases a building for public use is contractually obligated to indemnify the church for the church's share of liability for injuries to an invitee even though the lease contains no indemnification provision, if the lease requires the tenant to maintain liability insurance.

McClorey v. Hamilton County Board of Elections, 720 N.E.2d 954 (Ohio App. 1 Dist. 1998).

McClorey brought a negligence suit after she was injured in a fall on church premises that had been leased to Appellant Board of Elections as a polling place. The trial court found that both Appellant and Indian Hill Church Corporation (the "Church") were negligent and awarded damages to McClorey, but ordered Appellant to indemnify the Church. Appellant appealed.

The written lease between Appellant and Church, which was drafted by Appellant, provided that the area of the building used for voting was to be vacated by the Church on election days and contained language which read, "Liability Insurance is carried by the Hamilton Board of Elections for voters, Election Officials, and property damage for the day of the election."

Appellant claimed that the trial court erred by concluding that its lease contractually obligated it to provide liability insurance for the Church. Appellant argues that it should not be required to indemnify the Church because the lease contained no language that it specifically agreed to do so, nor did the lease contain a statement obligating it to name the Church as an additional insured under its policy.

The Court stated that it must read the lease as a whole, with the terms and language given their plain and ordinary meaning. It ruled that the lease's plain language required Appellant to obtain liability insurance for voters and, considering that the lease required the Church to vacate the area of the building used for elections, the parties intended also that Appellant assume responsibility for injuries to voters on election days. The Church was entitled to rely on the representation by Appellant that it had obtained liability insurance.

Appellant also argued that it was only secondarily liable for Appellee's injuries, while the Church was primarily liable, and thus, there was an implied contract which in fact indemnified Appellant. The Court ruled that where an express contract covers a particular term, an implied obligation cannot arise, and since it had already held that Appellant was expressly required under the lease to provide liability insurance for the Church for injuries to voters, it need not look for an implied contract of indemnification.

The Court went on to say that even if it had not found Appellant to be required to provide such liability insurance, indemnification is not allowed when two parties are joint or concurrent tortfeasors and are both chargeable with actual negligence. The Court affirmed the trial court's ruling that awarded damages to Appellee and ordered Appellant to indemnify the Church.

Comment 1: Note that the potential liability of tenant here is unlimited, because the clause in question places no specific dollar limitation on the amount of insurance that must be acquired. One supposes that custom and practice might supply a limitation, but a court conceivable could rule that the insurance obligation places upon the tenant the responsibility to decide how much insurance is enough and to be liable beyond insurance, even for the landlord's negligence, if the tenant guesses wrong,

Comment 2: Despite the apparent harshness of this rule, the editor agrees. Wherever possible, the parties to commercial leases ought to allocate the cost of acquiring insurance and, in doing so, the responsibility for accidents on the premises. A clear allocation of responsibility cuts down on the need for double insurance of the same risk that usually results from uncertainty of coverage. The cost of insurance is a cost of doing business, but it ought to be a cost that is managed intelligently, and clear thinking negotiators can limit the cost in a way to protect all parties involved through one policy.

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