"Out-of-Possession Landlord” Not Obligated to Make Repairs, Maintain Premises

Facts: A restaurant tenant’s employee required surgery for a broken wrist that he suffered in a slip-and-fall accident on a spiral staircase, used to access the employee locker room. The employee claimed that the staircase was greasy, and that the steps were worn smooth. He sued the owner for his personal injuries, claiming that the owner was responsible for maintaining the staircase in a safe condition. The owner asked a trial court for a judgment in its favor without a trial. It argued that it’s not responsible for the day-to-day condition of the premises, and that the stairs are not structural (it was required to maintain and repair structural aspects of the property).  

The owner insisted that the lease requires thetenant to clean, repair, and maintain the stairs. The owner also argued that the lease provides that it shall not be liable for injury to persons unless caused by its own negligence, and that the tenant must maintain insurance protecting and indemnifying the owner in that regard. Furthermore, the indemnification portion of the insurance policy relieved it of any liability, according to the owner.

Decision: A New York trial court dismissed the claim against the owner.

Reasoning: The court noted that a defendant, such as the owner here, that asks the court for a judgment in its favor without a trial in a slip-and-fall action has the initial burden of demonstrating that it neither created the hazardous condition, nor had actual or constructive notice of its existence. Liability of an owner or possessor of land is measured by “the single standard of reasonable care under the circumstances,” noted the court. Owners and tenants both have a duty to maintain their property in a reasonably safe condition. However, an owner is generally not liable for negligence with respect to the condition of property after the transfer of possession and control to a tenant unless the owner: (1) is contractually obligated to make repairs or maintain the premises; or (2) has a contractual right to reenter, inspect, and make needed repairs, and liability is based on a significant structural or design defect that is contrary to a specific statutory safety provision.

In this case, although the owner had a contractual right to reenter, inspect, and make needed repairs, liability is not based on a “significant structural or design defect that is contrary to a specific statutory safety provision.” Therefore, the owner is entitled to a judgment in its favor without a trial because it is an “out-of-possession landlord” since the lease imposes no obligation on it to make repairs or maintain the premises. Although the owner retained a right to reenter, inspect, and make repairs, there is no controversy as to whether the allegedly defective condition of the spiral staircase involved a significant structural or design defect contrary to a specific statutory safety provision, said the court. It didn’t, the court determined.

The employee claimed that the owner shouldn’t be able to fall back on the insurance policy procured by the tenant, which indemnified the owner from liability for accidents such as these. The employee asserted that the indemnification portion of the insurance policy was unenforceable because it required the tenant to indemnify the owner for all claims, including those occasioned by the owner’s own negligence. The employee argued that the lease’s insurance procurement clause can’t be used to shield the owner from liability for its own negligence when the injury is to the tenant’s employee.

But the court said that where, as here, the net lease agreement obligates the tenant to make all repairs, both structural and nonstructural, and undertake full maintenance of the premises, and where the owner is named as an additional insured on the tenant’s policy protecting against the type of risk and injury at issue in this case, the tenant’s insurer has a duty to defend the owner.

• Qing Sui Li v. 37-65 LLC, October 2012