Wade Clark Mulcahy LLP

In a significant win for Wade Clark Mulcahy’s client and for insurers generally, the Appellate Division, First Department, unanimously affirmed that in additional insured tenders circumstances do matter.

The additional insured jurisprudence that governs New York City with respect to sidewalk trip-and-falls has been murky, requiring coverage counsel to parse the circumstances surrounding a tender of coverage to the AI insurer.

On February 6, 2025 in Wesco Insurance Company v. Jewelers Mutual Insurance Company, Case No. 2024-04153, (Feb. 6, 2025) plaintiff-appellant Wesco insured a corner property owner which maintained on the sidewalk abutting its property a raised cellar door bulkhead.  Wade Clark Mulcahy’s client Jewelers Mutual insured the jewelry store holding the ground-level tenancy above the basement and around the corner from that bulkhead structure, facing the main street.

In 2018, a pedestrian tripped and fell over the bulkhead, and filed the underlying litigation against both the landlord and tenant, leading to this AI coverage dispute. The additional insured provision covered the landlord “only with respect to liability arising out of the ownership, maintenance, or use of that part of the premises leased to [the tenant].”  After highlighting the many critical facts supporting our client’s position – and conceded on the record – the First Department held that the AI provision was not triggered because the pedestrian’s injury did not arise out of the landlord’s “ownership of ‘that part of the premises leased to [tenant].’”

The Court took note of these critical circumstances:

·         the basement was not a part of the leasehold;

·         the tenant had no duty to maintain the basement or the cellar doors leading to the basement;

·         the tenant had no internal access to the basement;

·         a different tenant had exclusive use and control over the basement;

·         the lease only required the tenant to keep the sidewalk “in front of” the store free from obstruction, while the cement bulkhead structure and cellar doors were around the corner from the sole entrance to the store.

This ruling provides much needed clarity in evaluating AI tenders in sidewalk cases.  What seemed to be black letter law before Wesco—that any defect, structural or otherwise, on a sidewalk abutting a tenancy falls under the tenant’s AI coverage—in fact, turns on the circumstances and the scope of the lease.  While helpful to insurers, it also serves as a reminder of the risks inherent in issuing blanket AI endorsements without any information concerning the physical condition of the tenancy and its abutting surface area. Any questions, please contact Dennis Wade or Abed Bhuyan.