It Might Be Negligence To Leave Out The Word Negligence (Unless It Isn’t)

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Are there “magic words” or are there not? Once again, we feel compelled to warn readers that “we need to know what we are doing.” A lot of people in this “business” of ours cross over jurisdictional lines whether rightly or not. There is a lot of material out there about the ethics of doing so. That’s a reasonable concern to have, but there is a far less discussed, but more serious, problem. It is called malpractice. That term is not limited to attorneys. It isn’t even limited to professionals. It is hard enough to know the law in a single jurisdiction. Know the “law” in every jurisdiction (e.g., state) is, frankly speaking, impossible.

If we are going to “practice” in the real estate world, we need to practice well, not malpractice. “Mal” is a “combing form,” one that is added to words. It comes from the French “mal,” and that came from the Latin “male” which meant “badly.” [We sure hope the word is pronounced differently than is the gender.] The bottom line, however, is that “malpractice” is practicing in a faulty or improper or inadequate manner. No reader of this blog wants to come within a million miles of anything “mal” in her or his practice. So, we need to know that we don’t know the law everyplace. One example is how various jurisdictions view liability waivers. Today, we write only about one aspect of that question – whether to effectively be released from one’s own negligence, a waiver must expressly say that “negligence” is being waived or whether waiving “all” claims for damage really means “all,” including those claims arising out of negligence. [Read more…]

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The Right To Use A Property (Itself) Might, Itself, Be “Tangible Property” (Read On)

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Today’s blog posting will be a slight deviation from our mission to cover real property law and real property law-related issues. We don’t think so. We think its conclusion could be relevant outside of a pure insurance context. Even if some conclude otherwise, certainly today’s’ Ruminating will be of interest to a subset of readers, those who think they know a thing or two about insurance coverage, but would like to test whether what they know is correct. To those readers who are uninterested in how the sausage of insurance law is made, we concede that today’s posting looks like it belongs in an insurance law blog. Though that argument could be made, it hasn’t deterred us because we think the subject is interesting.

Generally, a Commercial General Liability (CGL) Insurance policy will not cover purely economic losses. But, a California court in October of 2018 decided that “generally” does not mean always. [Read more…]

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Primary And Noncontributory – What’s The Scoop?

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Last week we wrote about a lease seemingly written by an inexperienced draftsperson. Though our point was to highlight the danger of inexperience, the court-reported situation we described also dealt with a missing insurance concept, that of calling (or not calling) for “primary” coverage. As a result, we got a few inquiries about the meaning or implication of that insurance term” and also about its sibling term, “non-contributory,” such as in: “The required coverage must be “primary and non-contributory.” So, here’s the scoop.

“Primary(ness)” (as does “noncontributory”) has to do with the priority of payment and only involves a situation where one party, named as an additional insured on the other’s liability insurance policy, also has its own insurance. When one of those two insurance policies is “primary,” and the other is not, the one that is primary will pay out until its policy limit is exhausted. At that point, if more needs to be paid, the other policy will cover the “excess.” [As to “noncontributory, we’ll get to it.] [Read more…]

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Experience Matters: Words Have Meanings (And An Insurance Pointer)

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Last week, we wrote about the need for competence when it comes to crafting deal documents such as a lease. Among the over 400 Ruminations prior blog postings are more than a dozen dealing with insurance. This week, we get to combine the two subjects thanks to a December 5, 2018 unpublished ruling from a New Jersey appeals court resolving an insurance dispute. The facts are mundane, but provide a roadmap for us today.

A tenant’s employee “injured himself using a freight elevator inside the leased premises.” He sued the landlord for negligence. [The workers compensation law barred him from suing his employer, the tenant.] Relying on the lease’s indemnification provision, the landlord claimed back against the tenant. It also demanded that the tenant’s insurer honor the landlord’s status as an additional insured under the tenant’s liability policy. As will be seen, the appellate court made the landlord unhappy. To understand why we’ll start with the lease’s indemnification clause. It read as follows: [Read more…]

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Just What Is Tangible Property?

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Two days ago, an interesting decision came out of a California Appeals Court. Intriguing enough to us, maybe not to many others, that we put aside this week’s intended blog posting and scribbled this one instead. Though we fear the subject may only appeal to insurance wonks, we’re predicting that the court’s reasoning may leach into non-insurance areas as well.

In a decision that can be seen by clicking: HERE, the California Court of Appeal tells us that a leasehold is “tangible property.” Though the court doesn’t need our blessing, and that’s for sure, Ruminations thinks the court got it right. Before reading this decision, we would have said that “tangible” meant you could touch it.

There’s a little story that will give the context for the court’s decision. By reason of a conditional use permit, a property could be used (and was being) as a nightclub. A third-party security provider failed to screen certain “VIP” patrons for guns while screening others. One unscreened patron shot and killed another. One of the fallouts was that the conditional use permit was canceled and a new one was issued. The new permit eliminated a nightclub as a permitted use and now allowed use of the property as a catering hall. The property owner sued the security company alleging that the security company’s failure reduced the value of the property by a little more than $900,000 and got a judgment in that amount. Then, to collect on the judgment, it sued the security company’s liability insurance carrier. As readers might have guessed, the carrier responded that there was no coverage under the policy. Its specific defense was that loss of the right to use the property for the more valuable use, that of a nightclub, was neither bodily injury nor property damage; thus the security company’s policy did not cover such a claim. [Read more…]

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Insurance Question: Who Are You And What Is Yours?

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When I speak to “you,” you know who you are. That seems simple enough. But, you might not be entirely correct. Try the word in this sentence: “After a while, you get used to it.”

Who’s “you”? In the sense of “After a while, you get used to it,” “you” means any person in general.

Well, in the most commonly used form of commercial liability insurance, the one promulgated by the Insurance Services Office, Inc. (ISO), knowing who “you” is turns out to be pretty important. The policy form defines “the insured” and that includes the policyholder and a specific list of persons and entities related to the policyholder. The coverage, however, applies only to certain acts or omissions “you” might have done or not done and to certain things that are “yours.” Is it possible that “you” and “your” refer to “any person in general”? [Of course not.] [Read more…]

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Chickens, Eggs, And Waivers of Claims

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When a tenant’s property is ruined by rain coming through the roof of its leased space, what caused the damage? Was it the water or was it the landlord’s failure to repair the roof? That’s today’s issue to Ruminate about.

Right after a tenant moved into its space, it noticed the presence of water after what was called, “inclement weather.” We might have called it “rain.” So, it notified its landlord. Without delay, the landlord dispatched someone to investigate. His conclusion was the water was coming from an air conditioning unit. The tenant immediately called an independent HVAC repair company. Its conclusion was that the roof was leaking and the air conditioning unit was fine. The landlord did not make any roof repairs.

After that, each time it rained, water came into the space. After one rainstorm, only four months after the tenant moved in, so much water came in that there was damage to equipment, furniture, interior walls, and to over one million dollars (at retail) of inventory. At that time, the tenant again put its landlord on notice of the leaking roof, the damage caused, and the failure of the landlord to make repairs. The landlord had the roof inspected again. This time, its foreman determined that the water intrusion was the result of the building’s improperly constructed exterior and by something wrong with its downspout. Apparently, the landlord still did nothing, not even in response to repeated notices subsequently sent by its tenant every time water came into the space. A lawsuit followed. [Read more…]

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More Boring Insurance Stuff

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Yes, today’s posting will be boring and perhaps a little dry. And, to add insult to injury, nothing in it will be earth-shattering. But, knowledge is power. And, even if you don’t want to be powerful, you certainly don’t want to be drafting documents and making business agreements involving insurance without knowing what is available and what is possible. Do you? We didn’t think so.

Yes, today we write about insurance, and whenever we do so, we repeat this caveat: “Find and rely on a genuine insurance expert. This stuff is not intuitive.” Our primary goal is to let our followers know enough about insurance to realize that they and we don’t know enough. A secondary goal is to get those of us who include insurance requirements in our documents to know that last year’s (or even last week’s) text may no longer be what we would like to have written. Lastly, for those who buy insurance, today’s blog posting might induce you to call and say hello to your insurance broker or other advisor. [Read more…]

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