NORTH RIVER INSUR CO V ADVANCED ORGANICS INC
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STATE OF MICHIGAN
COURT OF APPEALS
NORTH RIVER INSURANCE COMPANY,
UNPUBLISHED
January 17, 2003
Plaintiff-Appellant,
v
No. 231711
Calhoun Circuit Court
LC No. 98-005401-CZ
ADVANCED ORGANICS INC.,
Defendant-Appellee.
Before: Murray, P.J., and Sawyer and Fitzgerald, JJ.
PER CURIAM.
Plaintiff appeals as of right the order granting defendant’s motion for summary
disposition under MCR 2.116(C)(8) and (C)(10). We affirm.
This subrogation case arises out of a building fire allegedly caused by defendant’s
negligence. The fire burned the area leased by defendant along with other areas owned by the
landlord and leased to a different tenant. Plaintiff, the landlord’s property insurer, sued
defendant in negligence to recover the insurance proceeds it paid as a result of the fire damage.
The trial court held that defendant did not owe any duty to plaintiff and, therefore, granted
summary disposition in favor of defendant. We review a trial court’s grant of summary
disposition de novo. Guardian Photo Inc v Dep’t of Treasury, 243 Mich App 270, 276; 621
NW2d 233 (2000); Wayne Co v Plymouth Twp, 240 Mich App 479, 481; 612 NW2d 440 (2000).
I
“Absent an express and unequivocal agreement by a tenant to be liable to the lessor or the
lessor’s fire insurer in tort for negligently caused fire damage to the premises, the tenant has no
duty to the lessor or insurer which would support a negligence claim for such damages.” New
Hampshire Ins Group v Labombard, 155 Mich App 369, 377; 399 NW2d 527 (1986). Plaintiff
argues, however, that the lease between the parties contains such an agreement. It argues that ¶ 9
of the lease indicates that defendant has an express duty to pay for damages it causes to the
premises. Paragraph nine of the lease states:
Repair and Maintenance. The landlord shall, at its own expense, maintain
and make necessary structural repairs to roofs, walls and floors as required to
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provide a weathered sheltered building except in the case where such repairs are
the result of tenant’s damage to the premises.
The tenant shall, at its own expense, promptly make all necessary repairs
and replacements to the premises where such repairs or replacements are the
result of the tenant’s damage to the same. Specifically included are doors,
windows, wall partitions, plumbing systems, heating system, lighting system, fire
sprinkler system, fixtures, and all other appliances and appurtenances.
On default of the tenant in making repairs or replacements as a result of
tenant’s damage to the premises, landlord may, b[ut] shall not be required to make
such repairs or replacements for the tenant’s account, and the expense thereof
shall constitute and be immediately collectable as additional rent.
Plaintiff further argues that ¶¶ 6 and 19 of the lease should be read together with ¶ 9, and
that the conglomeration constitutes defendant’s “express and unequivocal” agreement to be
bound in tort for the fire damage. Paragraph nineteen states that defendant must insure “tenant
and landlord against any and all liability . . . for injury to or death of a person or persons or
damage to property occasioned by or arising out of . . . the use . . . of the premises . . . Such
policy shall cover hazard insurance on the building.” Paragraph six simply states, “Property tax
and insurance for the building will be paid by the landlord, and tenant will pay personal tax and
insurance for the content.”
Plaintiff argues that these provisions, read together, demonstrate defendant’s agreement
to be held liable in tort for the damage it causes and to insure against that eventuality. This
argument fails because Labombard, supra at 377, requires a tenant to expressly accept tort
liability, not contract liability. Use of the phrase “[o]n default of the tenant,” and the reservation
of a contract remedy for such default at least create ambiguity with respect to the nature of the
agreement. It is not enough that these provisions hint at the possibility of defendant’s agreement
to accept liability in tort; the lease provisions must “expressly and unequivocally” declare the
agreement. Labombard, supra at 377.
II
Plaintiff next contends that the trial court erred when it granted summary disposition on
plaintiff’s claim for damages to areas other than the area leased because Antoon v Community
Emergency Medical Service, Inc, 190 Mich App 592, 597; 476 NW2d 479 (1991), limited the
Labombard holding strictly to the leased premises.
In Antoon, the defendant rented the rear shop area of a building for maintaining its fleet
of ambulances. Id. at 593. An automobile dealership operated out of the front portion of the
building. Id. Defendant’s employee negligently started a fire in the rear portion of the building
that spread to the front portion of the building and damaged personal property owned by the
dealership. Id. at 594. This Court held that the Labombard holding did not shield the tenant
from liability for the plaintiffs’ personal property damage and the landlord’s loss of rental
income because “[a] lessee cannot reasonably expect that the rental payments will be used to
insure against damages to items other than the leased premises.” Id. at 597.
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After this quoted language, however, the Antoon Court employed the signal “but see” and
cited Wausau Underwriters Ins Co v Crook, 183 Mich App 462, 464; 455 NW2d 309 (1989),
parenthetically explaining that the Court in that case held a hotel guest “not liable for negligent
fire damage to other suites, not just the room being rented . . ..” Antoon, supra at 597.
Additionally, the Antoon Court did not hold that the plaintiffs could recover on the real property
damage they suffered but against which they insured. Id. The Antoon Court apparently intended
to distinguish it’s holding from the Wausau holding, and preserve a tenant’s immunity from
liability for damage it negligently causes to its landlord’s facilities. The understanding that a
tenant reasonably expects its rent payments to cover the “expenses of maintaining the facilities,
including fire insurance . . ..” reinforces this finding. Wausau, supra at 462.
Because the areas burned by defendant’s alleged negligence in the present case involved
shared walls, entrances, foundation, and floor, defendant could reasonably expect that its rent
payments, combined with the rent of others, would cover the facilities’ fire insurance premium.
The trial court did not err by holding that the lease lacked an “express and unequivocal”
agreement by defendant to be bound in tort and subsequently granting summary disposition in
favor of defendant.
Affirmed.
/s/ Christopher M. Murray
/s/ David H. Sawyer
/s/ E. Thomas Fitzgerald
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