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HERE THE “SOPHISTICATED PARTIES” TO THE COMMERCIAL LEASE PROPERLY USED INSURANCE TO ALLOCATE THE RISK OF LIABILITY TO THIRD PARTIES; THEREFORE THE TENANT CAN BE LIABLE TO THE PLAINTIFF FOR THE PROPERTY OWNER’S NEGLIGENCE IN THIS SIDEWALK SLIP AND FALL CASE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the tenant (Beachbum Tanning) was obligated to indemnify the property owner (RJJR Corp) for the property owner’s negligence in this sidewalk (raised flag) slip and fall case. The “sophisticated parties” to the commercial lease had properly allocated the risk of liability to third parties through insurance:

“Pursuant to General Obligations Law § 5-321, a lease that obligates a tenant to indemnify a landlord for the landlord’s own negligence is against public policy and unenforceable. However, in the context of a commercial lease, negotiated between two sophisticated parties, where a ‘lessor and lessee freely enter into an indemnification agreement whereby they use insurance to allocate the risk of liability to third parties between themselves, General Obligations Law § 5-321 does not prohibit indemnity'” … . Under such circumstances the landlord “‘is not exempting itself from liability to the victim for its own negligence. Rather, the parties are allocating the risk of liability to third parties between themselves, essentially through the employment of insurance. Courts do not, as a general matter, look unfavorably on agreements which, by requiring parties to carry insurance, afford protection to the public'” … . Arnold v RJJR Corp., 2025 NY Slip Op 04534, Second Dept 8-6-25

Practice Point: Sophisticated parties to a commercial lease can use insurance to allocate liability to third parties. Thereforethe tenant can be liable for the property owner’s negligence in this sidewalk slip and fall case.

 

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