Landlord Must Indemnify Tenant for Costs of Defending Common Area Negligence Lawsuit

What Happened: A national retail chain insisted that its shopping center lease include a clause requiring the landlord to indemnify it against losses arising out of things that happened in the common areas. The exact language:

Notwithstanding anything to the contrary contained herein, except for the negligent acts of Tenant, Landlord agrees to indemnify and hold Tenant harmless with respect to any and all claims, actions, injuries, damages, liability, costs and expense, including reasonable attorney's fees, arising with respect to the possession, use, occupancy, management, repair, maintenance or control of the Common Areas[.]

When a customer slipped and fell in the parking lot, it sued the tenant and not the landlord for negligence. The tenant got the case tossed out, but had to pay its lawyers a lot of money to defend the action. The tenant demanded reimbursement, the landlord refused, and the case landed in court. The landlord drew first blood when the trial court tossed the tenant’s claim.   

Ruling: The Pennsylvania appeals court reversed, holding that the tenant had a valid claim for indemnification.

Reasoning: The lease clause “clearly and unambiguously” required the landlord to indemnify the tenant, the court reasoned. The only exception was for the tenant’s “negligent acts.” The landlord’s argument that the phrase “negligent acts” also includes alleged acts of negligence fell on deaf ears. That’s not what the clause says, the court stressed, and we refuse to rewrite it. And since there was no evidence that the tenant actually engaged in negligence, the exception didn’t apply and the landlord had to indemnify the tenant’s legal costs in defending the lawsuit alleging negligence in the common areas.  

• Bass Pro Outdoor World Llc v. Harrisburg Mall, 2023 Pa. Super. Unpub. LEXIS 1291, 2023 WL 3615155