Appellate Division Approves Equitable Relief to Plaintiff Seeking Contribution under the New Jersey Spill Compensation and Control Act

In Matejek v. Gilmore, et al., Superior Court of New Jersey, Appellate Division, Docket No. A-4683-14T1, the Appellate Division affirmed the Trial Court’s ruling which ordered defendants to share in costs for investigating and possibly remediating an alleged oil contamination.  Approximately ten years ago, oil was found on the surface of a tributary in Hillsborough, New Jersey.  Thereafter, the New Jersey Department of Environmental Protection (NJDEP) removed five underground storage tanks, one from each of five adjoining condominium units.  However, the NJDEP took no further action, other than a site visit to confirm the absence of oil in the tributary several months later.  In fact, the NJDEP’s file remained open, which constituted a cloud on the title to all five condominium units.
 
Plaintiffs, owners of one of the condominium units, sued the owners of the other four units, seeking a judgment to compel the other owners to participate in, and equally share in, an investigation, and, if necessary, remediation of the property.  After a bench trial, the Trial Court granted plaintiffs’ demand for relief and ordered all the unit owners to equally share in the investigation and possible remediation, finding that the fact that the NJDEP had removed all five tanks was sufficient to impose an obligation on the impacted parties to participate.
 
Defendants-Appellants argued that plaintiff lacked standing to bring suit to compel investigation and cleanup under the Spill Act, the Trial Court lacked jurisdiction to enter the judgment, and the Spill Act does not permit and the facts did not warrant the relief granted.  The Appellate Division, however, affirmed, holding that the circumstances did not preclude the imposition of an equitable remedy because, if appellants’ arguments were sustained, plaintiffs would have no way to remove the encumbrance from their title other than to solely bear the expense of investigation and remediation.  Additionally, the Appellate Division found that the equitable relief granted furthered the best interests of the public in compelling a further investigation into a public health, safety and welfare issue, i.e. a potential ongoing oil contamination.
 
This decision reflects an important balance between the goals and purposes of the Spill Act and the problems it can create for private parties.  As the burden for completing a cleanup has been shifted to private parties through legislative reform, the judiciary has recognized that this can lead to an inequitable outcome for private parties, and, therefore, inventive, equitable remedies may become necessary in circumstances such as those present in this case. 

Pain from New Job Duties Insufficient to Warrant Extension for Doctor’s Report

The Appellate Division recently upheld a Law Division decision granting summary judgment for an auto insurance company in New Jersey in which plaintiff failed to submit her certification of permanency within the statutory sixty days as required by N.J.S.A. 39:6a-8(a) and a doctor’s report was not issued until after the discovery end date. In Llanes v. Allstate New Jersey Insurance Co. et al, plaintiff filed a personal injury lawsuit, as result of an October, 2011 auto accident in which her vehicle was rear-ended, against the uninsured driver, and Allstate based on her uninsured motorist coverage. After Allstate filed for summary judgment on July 17, 2014, alleging the limitation-on-lawsuit threshold was not satisfied, plaintiff alleged she was experiencing “further and greater pain.” Furthermore, plaintiff served a new doctor’s report dated July 11, 2014 in support of her argument, which for the first time gave the opinion plaintiff suffered a “permanent partial disability” that was causally related to the accident of October 10, 2011.
 
The issue on appeal was whether summary judgment was properly granted in favor of defendant, Allstate, after the trial court found defendant would be prejudiced in its defense of the case at such a late juncture if it permitted the late certification of permanency based on the July 11, 2014 doctor’s report. The trial court granted defendant’s motion for summary judgment because, without an expert opinion on permanency, plaintiff did not meet the limitation-on-lawsuit threshold.
 
In order to satisfy the limitation-on-lawsuit or “verbal threshold” of the Automobile Insurance Cost Reduction Act (AIRCA), plaintiff must submit a physician’s certified statement that “the automobile accident victim suffered from a statutorily enumerated injury.” Davidson v. Slater, 189 N.J. 166, 181 (2007). A doctor’s certification attesting to a permanent injury within a reasonable degree of medical probability satisfies the aforementioned “verbal threshold.” However, the doctor’s certification is to be served within sixty days from the defendant’s answer or, if an extension is granted for good cause, within sixty days thereafter. N.J.S.A. 39:6A-8. Late amendments to plaintiff’s interrogatories that are incomplete or inaccurate may be allowed no later than twenty days prior to the end of the discovery period. Rule 4:17-7. Amendments may be allowed thereafter “only if the party seeking to amend certifies therein that the information requiring the amendment was not reasonably available or discoverable by the exercise of due diligence prior to the discovery end date.” Id.
 
In affirming the trial court’s decision granting summary judgment in favor defendant, the Appellate Court reasoned that the plaintiff’s complaints of pain arising from her job did not demonstrate due diligence in explaining why there was a three-year delay in obtaining the doctor’s report on permanency. In addition, the Appellate Court found that the court did not abuse its discretion in prohibiting an amendment of interrogatories pursuant to Rule 4:17-7 based on the facts as presented.

Coverage for Post-Loss Assignments Despite Anti-Assignment Clauses

A recent New Jersey Supreme Court ruling, Givaudan Fragrances Corporation v. Aetna Casualty & Surety Company, et al., affirmed that anti-assignment clauses do not bar post-loss assignment policyholders from coverage.  This ruling puts insurance companies across New Jersey on notice that an anti-assignment clause does not bar post-loss assignment of claims made without the insurer’s consent.

In this matter, the plaintiff, Givaudan Fragrances Corporation (Fragrances), brought a claim seeking coverage under insurance policies provided to Givaudan Corporation by the defendants, Aetna Casualty & Surety Group (defendants).  Fragrances was seeking coverage for a lawsuit brought against the company by the United States Department of Environmental Protection, following environmental contamination affecting the ground and a lake near the company’s manufacturing facility, located in Clifton, New Jersey.  Givaudan Corporation had purchased primary, excess, and umbrella coverage from defendants from the 1960s through the 1980s.  Importantly, the contamination occurred during the relevant period of the policy issued by the defendants, which was set to run through January 1, 1986.

As such, plaintiff, Fragrances, claimed that as an affiliate of Givaudan Corporation, or through operation of an assignment of rights, that it was entitled to coverage for environmental liability.  Defendants argued that the named insured was Givaudan Corporation, and that any assignment from Givaudan Corporation to Fragrances was not valid because the defendants did not consent to the assignment, which was required by the insurance policies.  Plaintiff then filed a complaint in 2009 seeking a declaratory judgment that it was entitled to insurance coverage for environmental liability under the Givaudan Corporation’s policies with the defendants.  While the declaratory judgment was pending, Fragrances put defendants on notice that Givaudan Roure Flavors Corporation (Flavors), the corporate successor-in-interest to Givaudan Corporation, was planning to assign its post-loss rights to Fragrances.    Defendants would not consent to the assignment of post-loss rights from Flavors to Fragrances.  Both plaintiff and defendants moved for summary judgment at that time.

The trial court denied plaintiff’s motion for summary judgment but granted defendant’s cross-motion for summary judgment based upon the fact that Givaudan Corporation did not acquire Fragrances during the policy period and that this case involved an assignment of policies that could not be assigned.   The Appellate Division reversed and remanded the trial court’s decision, holding that despite the anti-assignment clauses, which ban an insured from transferring a policy without the insurer’s consent, once a loss occurs, an insured’s claim under the policy can be assigned without the consent of the insurer.  The Supreme Court affirmed the Appellate Division, holding that, after a loss has occurred, an anti-assignment clause cannot be the basis for an insurer’s refusal to provide coverage based upon the insured’s assignment of the right to invoke the policy coverage for the subject loss.  As this was a post-loss claim assignment, the rule voiding application of anti-assignment clauses to any such assignment was applicable. 

The Supreme Court held that an anti-assignment clause does not bar post-loss assignment of a claim because a post-loss assignment does not further the purpose of the anti-assignment clause, which is to protect the insurer from increased liability, as the change in the insured’s identity does not increase the insurer’s risk.  Specifically, the Supreme Court held that “[a]fter the events giving rise to the insurer’s liability have occurred, the insurer’s risk cannot be increased by a change in the insured’s identity.”  Thus, the Supreme Court ruled that when there is a valid post-loss claim assignment for a given claim, the insurer has a duty to defend the assignee as the holder of the claim.  Therefore, in light of the foregoing, it is vital that insurers across New Jersey are aware that post-loss insurance contract assignments for policies with anti-assignment clauses are valid even without the insurer’s consent. 

New York Appellate Division, First Department, Takes Expansive View of Labor Law § 241(6)

On February 16, 2017, the New York Appellate Division, First Department, issued an opinion reversing the dismissal of NY Labor Law § 241(6) claims against a landowner and general contractor.  In Gerrish v. 56 Leonard LLC, et al., the New York County Supreme Court granted defendant 56 Leonard LLC’s and Lend Lease (US) Construction LMB Inc.’s motions to dismiss for failure to state a cause of action pursuant to CPLR 3211(a)(7).  In reversing, the First Department held that the temporary off-site facility in the Bronx in which plaintiff was working was part of the construction site at 56 Leonard Street in Manhattan, thus falling within definition of construction site mandated by Labor Law § 241(6).
 
This matter arose when plaintiff, Robert Gerrish, sustained injuries when he tripped and fell at a work site.  At the time, plaintiff was working at a yard in the Bronx bending and cutting steel rebar to be used for ongoing construction at 56 Leonard Street in Manhattan.  56 Leonard owned the subject premises, and Lend Lease was hired as construction manager.  Lend Lease subcontracted with Collavino Structures LLC, which in turn subcontracted with plaintiff’s employer, Navillus Tile, Inc.  The Collavino and Navillus subcontract provided that Collavino would provide all trucking of bent rebar from the Bronx Yard to the construction site.  The subcontract further provided that Collavino would secure temporary facilities at its sole cost, and that the temporary facilities would be in locations designated by 56 Leonard and Lend Lease. 
 
Labor Law § 241(6) dictates that all contractors, owners, and their agents must provide reasonable and adequate safety protections to individuals employed at a construction site.  Pursuant thereto, 56 Leonard and Lend Lease moved to dismiss plaintiff’s Complaint, arguing that Labor Law § 241(6) did not apply because plaintiff’s alleged injuries did not occur at a construction site.  The Trial Court agreed and dismissed plaintiff’s Labor Law § 241(6) claims.  The First Department reversed, taking an expansive view of what can be considered a construction site under Labor Law § 241(6).  The Court specified that an off-site facility is not required to be located within a certain proximity to the construction site to be considered a part of that construction site within the meaning of Labor Law § 241(6).  Further, the First Department specified that ownership of the off-site facility by the construction project’s property owner or contractor is not a prerequisite for liability under Labor Law § 241(6).  As a result, the First Department determined that there is a close nexus between the leasing of the Bronx Yard and the construction of 56 Leonard Street.  The First Department reasoned that Collavino agreed to place the temporary facility in which plaintiff was working in a location designated by 56 Leonard and Lend Lease.  As a result, the First Department found that there are sufficient questions of fact to call into question 56 Leonard’s and Lend Lease’s involvement and control of the off-site facility under Labor Law § 241(6). 
 
Under this ruling, defendants may have greater exposure to liability under Labor Law § 241(6).  Here, the First Department expressly ruled that, under circumstances similar to those cited above, a person who becomes injured at an off-site facility, located miles from a construction site, can still be considered to be working at a construction site under Labor Law § 241(6), thus requiring the owner and/or general contractor to provide reasonable and adequate safety protections at off-site construction facilities.

Timely Notice of Underinsured Motorist Claims Not Always a Prerequisite to Recovering Benefits in New Jersey

Recently, a divided Appellate Division panel overturned a trial court’s determination that a plaintiff was barred from seeking underinsured motorist (“UIM”) benefits after failing to provide his insurance carrier with timely notice of a potential UIM claim before settling with the defendant in the underlying case. In Ferrante v. New Jersey Manufacturers Insurance Group, the Appellate Division held that (1) a high-low agreement between parties is not a determination as to the value of a plaintiff’s case and (2) failure to provide timely notice of a potential UIM claim to an insurer does not necessarily preclude an insured from later UIM benefits.

This case arose from a motor vehicle accident in which plaintiff was injured by a tortfeasor with no assets other than a $100,000.00 automotive insurance policy. Prior to trial in the underlying matter, the parties entered into a high-low agreement in which the floor was set at $25,000.00 and the ceiling was set at $100,000.00 (representing the full amount of the tortfeasor’s insurance policy). At the underlying trial, the jury awarded $200,000.00 to the plaintiff and $50,000.00 to the plaintiff’s wife. The next day, the plaintiff sent his insurance carrier, New Jersey Manufacturers Insurance Group (“NJM”), notice of the lawsuit and notice of the plaintiff’s intent to seek UIM benefits. NJM then investigated the case, authorized the plaintiff to settle the case for the tortfeasor’s policy limits, and waived its subrogation rights. Subsequently, the plaintiff filed a declaratory judgment action to compel NJM to appoint an arbitrator and to proceed to UIM arbitration.

NJM argued that plaintiff waived its right to seek damages in excess of the high-low agreement and, further, that the plaintiff could not seek UIM benefits by virtue of his failure to notify NJM of a potential UIM claim at a time when NJM could have intervened in the underlying case. Plaintiff argued that, although he provided late notice to NJM, NJM was not prejudiced because the tortfeasor was judgment proof, having no assets, and because NJM decided to waive its subrogation rights.
           
The majority held that a high-low agreement is merely a form of settlement used to insulate a party from a jury’s assessment of a case’s worth. It specifically found that the high-low agreement entered by the plaintiff and the tortfeasor was a symbiotic agreement meant to protect both parties from a judgment in excess of the tortfeasor’s insurance policy limits. Noting that settlements are favored by public policy, the majority held that entering into a high-low agreement does not impair a plaintiff’s right to later pursue UIM benefits. Additionally, the majority held that a failure to provide the requisite Longworth notice to a UIM carrier is not necessarily fatal to recovering UIM benefits. Although the majority noted that a plaintiff’s failure to give adequate notice is troubling, it held that a UIM carrier must also show actual prejudice suffered due to the deficient notice. The issue was remanded to the trial court to determine whether plaintiff met its burden of showing the deficient notice did not prejudice NJM. Contrarily, the dissent found that the plaintiff’s disregard of his obligations to provide notice pursuant to controlling case law was a breach of his insurance contract, automatically prejudicing NJM. The dissent further highlighted the risk of the majority’s approach invalidating provisions of an insurance contract setting policy limits when the insured enters into a high-low agreement.
          
Ultimately, the Appellate Division’s decisions leave it to the New Jersey Supreme Court to decide whether a subjective standard should be adopted to determine plaintiffs’ intent for providing late notice to their insurance carriers. As case law currently stands, plaintiffs already have the fairly light burden of showing whether their insurance carriers were prejudiced by late notice. However, future review of this decision by the New Jersey Supreme Court could result in an increased burden on plaintiffs or other additional protections for insurance carriers that receive either late or deficient notice of their insureds’ intent to seek UIM benefits.

New York’s First Department Protects the Sole-Proximate Cause Defense to Labor Law § 240(1) Claims 

The Appellate Division, First Department, recently reversed a decision which could have hindered the use of the sole-proximate cause defense to Labor Law § 240(1) claims.  In McManus v. City of New York, the First Department reversed the Trial Court’s Order granting summary judgment to plaintiff on his Labor Law § 240(1) claim.

In the underlying Bronx County case, plaintiff Joseph McManus was injured on a jobsite as a result of falling into a deep concrete tank. The opening of the tank had been covered by a baker’s scaffold.  Plaintiff claimed that the tank’s opening was inadequately covered and moved for summary judgment on his Labor Law § 240(1) claim. Defendant City of New York claimed that the tank’s opening was adequately covered until plaintiff moved the scaffold, and alleged that plaintiff was the sole-proximate cause of his fall. 

In granting plaintiff summary judgment, the Trial Court determined that the happening of plaintiff’s accident was evidence of an inadequate safety device, thus entitling plaintiff to relief pursuant to Labor Law § 240(1).  The Trial Court opined: “Whether it was the Plaintiff or someone else that moved the device, this does not take away or change the fact that the device failed to prevent the fall.  Therefore, under either version, liability results under [Labor Law] §240(1), the plaintiff will be entitled to summary judgment.”  The Trial Court further opined “once it is established that the safety device failed, Plaintiff cannot be found to be the sole proximate cause of the injury.” 

In reaching the decision to grant plaintiff summary judgment, the Trial Court failed to analyze the adequacy of the safety device (the “baker’s scaffold”), and further failed to analyze whether plaintiff tampered with an adequate safety device.  As such, defendant City of New York was preempted from fair use of the sole-proximate cause defense.  If the First Department had upheld this the Trial Court’s decision, then the use of the sole-proximate cause defense may have been foreclosed under similar circumstances in future cases.

While the Legislature intended to improve workers’ safety through the enactment of the Labor Laws, it did not intend to provide recovery for injuries caused exclusively by the plaintiffs own negligence.  While comparative negligence is a defense to some Labor Law causes of action, New York Courts have held that it is not a defense to Labor Law § 240(1) claims.  In relation to a Labor Law § 240(1) claim, a defendant asserting the sole-proximate cause defense is saying “we took all proper safety precautions, yet the plaintiff found a way to be the exclusive cause of his or her own injuries.”  If the Court agrees, there will be no recovery pursuant to Labor Law § 240(1).  As such, the sole-proximate cause defense is one of the most important defenses available when a plaintiff brings a claim pursuant to Labor Law § 240(1).

Reliance on Res Ipsa Loquitur Insufficient to Prove Negligence at New Jersey Theme Park

The Appellate Division recently upheld a Law Division decision granting summary judgment for a theme park in New Jersey in which plaintiff chose not to support her allegations of various forms of negligence with an export report, but rather on theories of Res Ipsa Loquitur (Latin for “the thing speaks for itself’), and common knowledge. In Stella Bomtempo v. Six Flags Great Adventure LLC, plaintiff alleged that she sustained personal injuries as a result of riding one of the park’s new attractions at Hurricane Harbor, the “Tornado.” Plaintiff further alleged that defendant was negligent in failing to properly inspect and/or maintain the premises, amusement rides, and all components thereof.

The issue on appeal was whether summary judgment was properly granted in favor of defendant after the trial court held that plaintiff lacked the necessary expert testimony to establish defendant’s standard of care. The trial court also declined to consider plaintiff’s post-discovery affidavits (one by plaintiff and one by her husband) which asserted for the first time that upon finishing the ride, the raft they were using had deflated.

In negligence actions, plaintiffs are ordinarily not required to prove the applicable standard of care when the duty would be considered “common knowledge.” However, where common knowledge is insufficient to establish a defendant’s duty, plaintiffs must produce expert testimony regarding the appropriate standard of care and the defendant’s deviation from that standard. The Appellate Court found the record in the present case demonstrated that operation and maintenance of the attraction at issue was not common knowledge, but instead required a thorough comprehension of the attraction’s standard operating procedures, which were designed to comply with guidelines established by the American Society for Testing and Materials. As such, expert testimony was required to establish the applicable standard of care.

Plaintiff’s attempt to establish negligence under the theory of Res Ipsa Loquitur was also rejected by the Appellate Court. Res Ipsa Loquitur allows a jury to infer negligence from the very nature of an accident or injury in the absence of direct evidence on how any defendant behaved. The Appellate Court opined that negligence in the present case was not plainly evident because plaintiff cannot point to any specific malfunction which caused her injuries.  The Court held that Plaintiff’s allegation that the raft skimmed off the surface of the ride without any further evidence that such an event is not supposed to occur, does not bespeak of negligence.

Florida's Cap on Attorney's Fees in Workers' Compensation Cases Ruled Facially Unconstitutional

In Marvin Castellanos v. Next Door Company, et al., the Florida Supreme Court ruled 5-2 that the mandatory fee schedule in section 440.34, Florida Statutes (2009), which eliminates the requirement of a “reasonable” attorney’s fee to the successful claimant, is facially unconstitutional.  The Court held that the mandatory fee schedule in section 440.34, which creates an irrebutable presumption that precludes any consideration of whether the fee award is reasonable to compensate the attorney, is unconstitutional under both the Florida and United States Constitutions as a violation of due process.

Section 440.34(1) states, in pertinent part:
A fee, gratuity, or other consideration may not be paid for a claimant in connection with any proceedings arising under this chapter, unless approved by the judge of compensation claims or court having jurisdiction over such proceedings.  Any attorney’s fee approved by a judge of compensation claims for benefits secured on behalf of a claimant must equal to 20 percent of the first $5,000 of the amount of benefits secured, 15 percent of the next $5,000 of the amount of the benefits secured, 10 percent of the remaining amount of the benefits secured to be provided during the first 10 years after the date the claim is filed, and 5 percent of the benefits secured after 10 years.  The judge of compensation claims shall not approve … any … agreement related to benefits under this chapter which provides for an attorney’s fee in excess of the amount permitted by this section. (emphasis added)

         In Castellanos, the claimant prevailed in his workers’ compensation claim.  However, because section 440.34 limits a claimant’s ability to recover attorney’s fees to the above sliding scale based on the amount of benefits obtained, the fee awarded to Mr. Castellanos’ attorney amounted to only $1.53 per hour for 107.2 hours of work determined by the Judge of Compensation Claims to be “reasonable and necessary” in litigating the case.  Castellanos had no ability to challenge the reasonableness of the $1.53 hourly rate, and both the JCC and First District were precluded by section 440.34 from assessing whether the fee award was reasonable.

In ruling that the mandatory cap is unconstitutional, the Florida Supreme Court has potentially opened the door to higher claims cost and additional litigation.  Claims handlers should be wary of exponential increases in attorney’s fees going forward on Workers’ Compensation cases, and adjust reserves accordingly.  

Appellate Division Upholds Broad Plan or Design Immunity in Suit Against Public Entity

The Appellate Division recently upheld a Law Division decision granting summary judgment to a New Jersey municipality, as well as its engineers and general contractor, based on plan or design immunity under the New Jersey Tort Claims Act (“TCA”). In Yulis v. Twp. of Teaneck, No. A-4016-13T4, 2016 N.J. Super. Unpub. LEXIS 1807 (App. Div. Aug. 1, 2016), plaintiff alleged that he sustained personal injuries when he tripped and fell on a mountable curb at a pedestrian plaza in Teaneck.  Plaintiff further alleged that defendants were negligent in the plan or design of the mountable curb.

The issue on appeal was whether summary judgment was properly granted in favor of the defendants under the TCA. Plaintiff contended that defendants failed to meet their burden of proof that the degree of the sloped mountable curb was specifically considered and sufficiently addressed in the design plans approved by Teaneck.  His expert opined that the degree of the slope was a “palpably unreasonable” dangerous condition.

Under the TCA, a public entity is insulated from liability related to the design of public property, “where such plan or design has been approved in advance of the construction or improvement by the Legislature or governing body of a public entity.” Significantly, “plan or design immunity does not depend upon any showing of the reasonableness of the design, nor can it be lost by changed circumstances.”  Birchwood Lakes Colony Club v. Medford Lakes, 90 N.J. 582 (1982). Additionally, if plan or design immunity attaches to the public work, then the immunity is extended to private contractors through derivative immunity. See Rodriguez v. N.J. Sports & Exposition Authority, 193 N.J. Super. 39 (App. Div. 1983).

The Appellate Division held that summary judgment was properly granted. Discovery revealed that the mountable curb was set forth in several plans, diagrams, correspondence and hand-outs reviewed by Teaneck when it approved the project. Additionally, the Court found that there was no heightened degree of detail required of the plans to show the Teaneck contemplated, considered and approved the specific slope degree of the curb. Accordingly, Teaneck demonstrated an entitlement to summary judgment, as a matter of law, based on plan or design immunity established under the TCA; and, its engineers and general contractors were likewise entitled to summary judgment through derivative immunity.

Importantly, this decision highlights the protections afforded to public entities, and their private contractors, under the TCA.  A public entity merely has to show that it approved the plan or design of the feature that is causally-related to the accident, in order for immunity to attach to the public entity and its contractors that carried out the plan or design.  Additionally, the Court rejected plaintiff’s contention that immunity under the TCA was inapplicable because the public entity did not contemplate the specific slope degree of the curb, which demonstrated the broad immunity afforded to public entities under the TCA.

New Jersey Appellate Division Enforces “Additional Insured” Status

In this case, the Appellate Division provided that the patron’s use of the passageway at issue arose out of the restaurant’s use of the leased premises.  In order to protect the interests of all parties, their identities will not be disclosed. In its holding, the Appellate Division  affirmed the trial court’s finding that Company A’s insured, a landlord and owner of commercial property, was entitled to coverage as an “additional insured” under Company B’s policy, entitling Company A to a judgment comprised of its settlement payment and attorney’s fees and costs.  
 
The controversy arose from a trip and fall accident by a patron of a restaurant insured by Company B.  The restaurant leased the space from Company A’s insured.  On the date of loss, after having dinner at the restaurant, a patron stepped into a hole depression in the passageway leading from the restaurant to its nearby parking lot.  The patron subsequently instituted a personal injury action.  Company A and Company B each paid the patron in settlement of the personal injury action.  Company A then filed a declaratory judgment action seeking reimbursement of its portion of the settlement and for its attorney’s fees and costs from Company B.  The Lease Agreement entered into between the restaurant and the landlord provided that the restaurant was required to “obtain, pay for, and keep in effect for the benefit of the landlord and the tenant public liability insurance on the [r]ental [s]pace.”  Further, an Addendum to the Lease Agreement provided that the tenant “shall defend, indemnify and hold [l]andlord harmless, to the fullest extent permitted by law, for any actual or threatended occurrence arising out of the [t]enant’s operations, maintenance or use of that part of the premises leased to Tenant.”  In order to satisfy those provisions, the restaurant procured insurance from Company B that named the landlord as an additional insured. 
 
In affirming the trial court, the Appellate Division reasoned that additional insured coverage for a landlord is not contingent upon a finding of the tenant’s liability.  Rather, there need be shown only a substantial nexus between the occurrence and the use of the leased premises in order for the coverage to attach.  Where the nexus is present, an insurer would expect to provide coverage to a landlord, whether or not the occurrence takes place within the leased premises.  That is so because in negotiating for such an endorsement in a lease, the landlord is attempting to insure against the risk of liability generated by the business about to be conducted by the tenant, and place the cost of insuring that risk on the tenant. 
 
In this case, the Appellate Division provided that the use of walking through the passageway at issue was a use arising out of the use of the leased premises.  As a result, because the patron’s trip and fall arose out of the operation of the leased premises, the occurrence fell under the language of the additional insured endorsement of Company B’s policy, whether or not the tripping hazard was located physically on the leased property.  As a result of the foregoing, the Appellate Division found that Company A’s insured was an additional insured under Company B’s policy, and that Company A was entitled to reimbursement of the portion of the settlement proceeds it paid out, and its attorney’s fees and costs.