Tenant Must Bear Entire Cost of Personal Injury Award

Facts: A car dealership leased a lot where its inventory was stored. It contracted with a car carrier company to transport its cars from certain locations to the lot. A mechanism devised by the dealership tenant to control traffic at the entrance to the lot pulled a brick wall down. A security guard was injured by the wall and sued both the dealership tenant and the carrier company. The tenant asked the carrier to indemnify it—that is, reimburse it for the money it was required to pay to the security guard for her injuries. But the car carrier claimed that the tenant’s own wrongdoing (in failing to use a safe mechanism) had caused the accident, and that indemnity didn’t apply in that case. A trial court denied the carrier’s request for a judgment in its favor without a trial. The carrier appealed.

Decision: A Florida appeals court reversed.

Reasoning: The appeals court noted that the contract between the tenant and car carrier contained an indemnity provision, but it was not worded in a way that made it clear that the carrier had agreed to indemnify the tenant if the tenant’s own misdeeds or negligence caused an injury. But the appeals court went further, noting that the tenant’s position as a lessee of a commercial property was also an important part of the decision.

The appeals court looked at several past cases in which a tenant that leased commercial space was liable for accidents that happened there, even if a third party (like the carrier company) was involved—by virtue of its being a lessee of the property. Here, not only was the tenant the lessee of the lot, it also had assembled and used a faulty mechanism for controlling traffic into and out of the lot. So it couldn’t pass on its wrongdoing to the third-party carrier in the form of asking to be indemnified by the carrier under its contract for services. And, in this case, the owner of the lot wasn’t liable for the injuries either. There was nothing in its lease with the owner that shifted liability or provided for sharing the costs of a personal injury lawsuit. Whether it was in a lease or a service contract, the appeals court noted that “an indemnity provision does not indemnify the indemnitee against losses resulting from the indemnitee’s negligent acts unless such intention is expressed in clear and unequivocal terms.” Here, there were no such terms in either the lease or the contract. The tenant was required to pay the entire judgment amount.

• ATC Logistics Corp. v. Southeast Toyota Distributors, LLC, March 2016