Indemnifying Invitees

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I’ve only recently drilled down into my thinking about the question as to whether or why a tenant should indemnify its landlord with respect to the activities of the tenant’s invitees. I’m not talking about the insurance or cost aspects of such an indemnification, but about the underlying theories. I can’t say that I’m fully settled on the issue. So, this is a work in progress and help from anyone reading this entry would be very much appreciated.

This got started when I was asked about a proposed set of indemnification provisions in an industrial lease. Essentially, the indemnifications from landlord to tenant and from tenant to landlord mirrored each other. No problem there. The relevant (to this posting) text said: “wholly or in part, any act or omission of [Landlord/Tenant], its agents, contractors, employees, servants, invitees, licensees or concessionaires … .” The landlord was insistent that these kinds of people be listed. What did I think?

To start with, I knew that an invitee was “a person who has an express or implied invitation to enter or use another’s premises, such as a business visitor or a member of the public to whom the premises are held open” [Thank You, Black’s Law Dictionary, Seventh Edition]. My knee jerk reaction, while wearing my tenant’s hat, was – heck no. The customer may be my invitee while in my store, but I’ll be darned if she is “my” invitee after she leaves the store. Why, however, wasn’t I disturbed when I looked at the same concept in the industrial lease? So, I noodled the issue.

Here’s where I came out. I really saw no problem when the invitee, whether a customer, salesperson, delivery driver or plumber, is inside the premises. The difference is what to call the person before entering and after leaving. For a single tenant complex, retail, industrial, office, whatever, whether the premises are defined to be the building or the entire complex, the invitee should be the “tenant’s.” After all, the ONLY reason the invitee is there in the first place, is to visit the tenant – “at the tenant’s express or implied invitation.” OK, someone the landlord tells to “go there and check something out” is the landlord’s invitee, but that’s a distraction for this Rumination.

What about a multi-tenant complex, however? The industrial lease was for a free-standing, single building site. The typical retail set-up, however, is a multi-tenant complex – think shopping center. Two thoughts are rattling in my head. The first is that “my” customer may have first visited, or may be going to visit, another store. Whose customer is that when in the parking lot? Does it matter whose store was first visited? Does it matter if the indemnified-for incident happened on the way into or on the way out of my store? Between stores? After visiting a couple of stores? After leaving my store with the intention of visiting the store next door, but before getting there?

This Ruminating opened a whole new thought for me. Why isn’t every customer or prospective customer visiting a shopping center really the landlord’s invitee? If the landlord has attracted retailers based on the synergy of a shopping center, open or enclosed, then isn’t that also saying that the landlord is inviting those people to its own shopping center and charging its tenants rent based on that implicit form of landlord marketing? Here’s a gross simplification. Teens are attracted to enclosed malls. It is a social meeting ground. So, one day, a particular teen visitor to the mall decides to have a frozen desert treat and spills it, whereupon a particularly fragile mall customer slips and is seriously injured. Whose guest? – is it the frozen desert’s purveyor’s invitee? Isn’t it the mall’s invitee?

Try an accident in the parking lot. Do you “grill” the driver? What stores were you going to visit? Answer – ABC Shoes and I’m going to look at some other shoe stores, but not all of them – whatever is in the mall attracts me. And, I might stop in at the book store – I’m not sure. Whose invitee is this? – ABC Shoes alone? ABC Shoes and all of the other shoe stores (collectively) and the book store? I’m now thinking this invitee is really the landlord’s invitee. If I’m right, then maybe the landlord doesn’t want to be liable for the acts of its invitees either.

The reader can extend this analysis to the overnight courier driver (after the incident, do you ask the driver for his or her deliver log – where were you going to deliver or pick-up packages, and then tag the driver as being the invitee of those stores?)

I don’t yet know where I come out on this. Help me and others with your thoughts. Should neither party indemnify the other for invitees, other than when inside of premises exclusively used by the landlord or the tenant, respectively? How would that work if a customer leaves a store and slips on frozen desert from another retailer that the landlord’s crew knew of and should have cleaned-up. Why not just look to the insurance company that covers the floor area in question. After all, the tenants are paying for their own liability as well as that of their landlord.

I like this Article: Defective Work of Subcontractor’s is Covered under Prime Contractor’s CGL Policy, June, 2011, by J. Kent Holland, Jr., Esq. Find it at:
ConstructionRisk.com

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Comments

  1. In my opinion, if the person came to the shopping centre to attend at a number of stores, that person is an invitee of the Landlord, but once inside the store, is an invitee of the Tenant.

    Harvey M. Haber, Q.C. J.D.

  2. David Waxman says:

    Ira –

    I think you hit the nail squarely ion the head by stating: “Why not just look to the insurance company that covers the floor area in question. After all, the tenants are paying for their own liability as well as that of their landlord.” It comes down to bargaining power. Mall tenants are more likely to be paying for landlord’s insurance, while small neighborhood centers may have to give this away to attract tenants in a bad economy.

  3. I agree with Harvey. When one is talking about a customer in a shopping center, the result should be the same even if the customer had the retailer’s shopping bag in his/her hands and was intending to return an item at the tenant’s store. The intent should not matter here – only on whose real estate the person’s feet are. The person’s status changes as soon as the demising line is crossed (going in either direction). What is more interesting however is whether to apply Ira’s ruminations in the case of a delivery person or vendor whose specific goal – in the scope of his/her employment – is to visit the tenant’s store. Does that factor change the result or can we still resolve things on the “territorial” analysis – that he/she is the landlord’s invitee at any time that person is in the common areas and not in a tenant’s premises? My gut tells me that the result is the same as in the case of the customer but I don’t want to rush to judgment, especially if there are cases out there that address the definition of “invitee’ in various scenarios. I just haven’t done any research on this so I will just continue to “ruminate” (i.e. punt) for now.

  4. George Bernhardt says:

    Very interesting topic, Ira. Seems like an idea would be to define Invitee as being the invitee of the party in control of the space, i.e. the relevant tenant inside a store, the landlord inside a common area. What about an office lease? Most likely the invitee is coming to see just one tenant in the office, though the landlord does control the common areas. This seems more analogous to the single tenant situation – but the courrier situtation seems more analogous to the shopping center.

    George

  5. Elliot Warm says:

    I don’t think that one needs to complicate the issue. The thrust of the matter is that the Landlord protects the tenant against what happens in the common areas, and the tenant protects the landlord against what happens inside the premises – whether caused in either case by invitees, licensees or whomever – the only reasonable exception being situations where one or the other party to the lease may have caused the incident in question. Each party further protects the other by insurance, and ultimately the individual actually responsible (e.g., a customer in the parking lot) may have to pay the piper.

  6. After writing much of my response to Ira’s post in Linkedin, I then actually read the post rather than just the comments on LinkedIn. After reading the post, I agree with Ira’s “grey area” consideration rather than the “bright line,” logic of Harvey. To a varying extent, landlord’s participate in the invitation to bring people to the center. The value of a shopping center is, to a great extent, determined by desirability of the center to attract visitors and to some extent, the tenant is relying on the landlord’s ability or the center’s inherent attractiveness. A case in point are entertainment centers where the center itself is as much if not more of the attractiveness to the customer.

    A thought, should we consider some form of contributory negligence apportioning liability and how does a subrogation provision resolve the whole issue?

  7. At Linked-In, Joel Hall added this response to Howard Kline’s comment:

    Joel Hall • Howard, it is not presumed that the landlord controls the common area and the tenant controls its premises? Thus, is not the “territorial” concept consistent with the concept of “control”? I don’t think that the determination of whether a person is an invitee turns on questions of the desirability of the center or the intent of that person. As I ruminate on this, those are very subjective questions – too much so, in my view, to base the allocation of the indemnification obligation on such considerations. And in the case of delivery persons heading to the tenant’s premises (as distinguished from a customer): although the concept of intent is very tempting, I now end up with the same conclusion. Of Course, everything I have “ruminated” (?)upon up to this point is subject to cases out there that hold otherwise.

  8. Stumbling across this at a much later date, but thought I’d add a comment that might be useful (since the rest of the site has been so useful to me). I believe the question of whether or not the invitee is in the premises or out of the premises (and the LL’s responsibility or the tenant’s) is a red herring to the real issue. That is whether either party should be required to affirmatively indemnify the other for the actions of a person that neither of them controls. I say no, and habitually strike the word invitee (and equivalent) from indemnifications, mutual or not. Since neither the LL nor tenant can control the actions of an invitee, by contract, direction, etc., neither should be asked to indemnify for the acts or omissions of an invitee. Deleting invitee from the indemnity changes nothing in regards to how a 3rd party claim by an invitee against LL or Tenant would be handled.

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