Mass. Court: Lease Agreement to Buy Insurance Trumps State Law

A lease agreement to buy insurance for a landlord trumps state law that prohibits property owners from requiring tenants to indemnify landlords for their own negligence, Massachusetts highest court ruled.

The decision centers on an appeal brought by Cummings Properties, which owns an office park north of Boston, and its insurer, OneBeacon Insurance Group.

At issue is an agreement signed by Dr. Beverly Shafer, when she leased a suite for her medical office at the Cummings-owned complex for approximately 4,000 square feet, plus a 15.4 percent share of the complex’s common areas. Her lease included provisions that she and her insurer, Norfolk and Dedham Mutual Fire Insurance Co, contended violate state law. One provision stated that Shafer is responsible for all injuries arising out of the use of the premises except those resulting from the “sole” negligence of the landlord. The other required her to purchase general liability insurance for the benefit of the landlord with respect to injuries arising out of the condition of the leased premises or their use by the tenant.

In 2007, one of Shafer’s patients arrived at the complex for an appointment. She parked her vehicle in the parking lot located on the east side of the complex, notably – the opposite side of the complex from Shafer’s office. Morrison is suing Cummings and Shafer for injuries she claims resulted from tripping and falling on a newly constructed cement curb.

Cummings demanded that Shafer and her insurer defend and indemnify the landlord in accordance with the lease. Shafer’s insurer, Norfolk and Dedham, sought a judgment from a superior court that the liability and insurance provisions of her lease were void, and that it did not have a duty to defend or indemnify Cummings in the suit.

Massachusetts law voids lease provisions that require tenants to indemnify landlords or exonerate them from liability for their own negligence. However, in this case, the court ruled that the statue didn’t apply, ruling that the requirement to purchase coverage for a landlord differs from an agreement to indemnify or hold harmless a landlord.

The state law, wrote Supreme Court Justice Robert J. Cordy, “does not seek to limit commercial landlords and tenants from negotiating the apportionment of risk through the acquisition of insurance for their mutual protection and the benefit of third parties. … Quite simply, the statute does not apply to insurance provisions, where the duty of indemnification resides, where it should – with the insurer.”

The court remanded the case to superior court.