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In its recent decision in Lancer Indem. Co. v JKH Realty Group, LLC, 2015 N.Y. App. Div. LEXIS 3293 (N.Y. 2d Dep’t Apr. 22, 2015), [enhanced version available to lexis.com subscribers], the New York Appellate Division, Second Department, had occasion to consider the application of a parking lot exclusion.
Lancer insured JKH Realty Group, the owner of a shopping plaza, under a general liability policy. While the policy provided coverage for injuries happening at the insured’s premises, the policy nevertheless excluded coverage for injuries “arising out of . . . [t]he ownership, maintenance or use of [a specified parking lot] or any property located on these premises; [or] Operations . . . necessary or incidental to the ownership, maintenance or use of those premises.”
At issue in the coverage litigation was JKH Realty Group’s right to coverage for a suit brought by the estate of an employee who worked at a Dunkin Donuts at the plaza. individual was in the process of taking trash out from the store to the dumpsters behind the store. While doing so, he fell through a defective manhole cover and into the leaching pool below, where he drowned. The manhole cover was in the paved area of the parking lot immediately adjacent to the Dunkin Donuts The manhole cover, and the leaching pool, were part of the premises’ septic system.
Lancer argued that because the manhole cover was in the parking lot, the exclusion necessarily applied. The court disagreed, concluding that:
Since the allegedly defective manhole cover and leaching pool into which the decedent fell were part of the building’s septic system, the decedent’s claim arose out of operations necessary or incidental to the building, and not out of the “ownership, maintenance or use” of the rear parking lot.
In other words, because the individual was not injured in connection with any operations being performed in the parking lot, and was not injured as a result of the parking lot itself, but instead by the septic system, the court found the exclusion to be inapplicable.
Brian Margolies, Partner, Traub Lieberman Straus & Shrewsberry LLP
Read more at the Traub Lieberman Insurance Law Blog, Edited by Brian Margolies.
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