April 23, 2019

Colorado Court of Appeals: Travelers Property Casualty Company of America v. Farmers Insurance Exchange

The Colorado Court of Appeals issued its opinion in Travelers Property Casualty Company of America v. Farmers Insurance Exchange on June 10, 2010.

Summary Judgment—Additional Insured Coverage for Liability that Arises out of a Commercial Tenant’s Use of Leased Premises.

This case involved a provision in a commercial liability insurance policy that provides for “additional insured” coverage for liability “arising out of” a commercial tenant’s use of leased premises. The Court of Appeals concluded there was no coverage provided to the landlord or its property manager and therefore affirmed the trial court’s order granting summary judgment to defendant (Farmers) and against plaintiff (Travelers).

Cherry Knolls 99, LLC (Cherry Knolls) owned a shopping center. It entered into a commercial lease agreement to lease suite 290 to a lessee. The lease was signed by Cherry Knolls’s property manager, ACF Property Management (ACF). The original lessee later assigned its interest to another entity (tenant), which operated a restaurant there.

Tenant obtained a commercial liability insurance policy from Farmers that covered the leased premises, and named “Cherry Knolls c/o ACF Property Management, Inc.” as an additional insured. Cherry Knolls and ACF also obtained their own commercial liability insurance policy issued by Travelers.

A customer of tenant went to eat at the restaurant and parked her car in the shopping center’s parking lot. After eating, while walking in the parking lot to her car, customer slipped on ice, fell, and was injured. She sued Cherry Knolls and ACF.

Travelers accepted defense and tendered a request for defense and indemnity to Farmers. After Farmers declined to defend or indemnify, Travelers settled with customer. Travelers then brought this action for contribution against Farmers. Both parties moved for summary judgment. The trial court ruled there was no coverage for customer’s injuries under Farmers’ policy and granted Farmers’ motion. Travelers appealed and the Court affirmed.

Farmers’ policy listed Cherry Knolls and ACF as additional insureds, but Farmers’ policy insured only the leased premises (suite 290), not the common areas such as the parking lot. The Court determined that there was no duty to defend or indemnify, because the customer’s injury did not arise “out of the ownership, maintenance or use” of the restaurant. The customer needed to show that the use of the restaurant was integrally related to her activities and the injury at the time of the accident. The Court held that customer’s patronage of the restaurant was not integrally related to her injury at the time she slipped and fell in the parking lot. She could have had the identical injury without visiting the restaurant.

This summary is published here courtesy of The Colorado Lawyer. Other summaries by the Colorado Court of Appeals on June 10, 2010, can be found here.

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