Lease Contract’s Terms Let Building Owners Escape Liability for Injury Suffered by Tenant’s Employee

August 29, 2014

Restaurant Sign An employee of a commercial tenant, injured in a slip-and-fall accident, failed in his effort to hold the property’s owners legally responsible for his injuries. The Appellate Division upheld a summary judgment issued in favor of the owners because the lease agreement made clear that the tenant had the exclusive duty for maintaining the property in a safe manner. This remained true even though the lease’s stated term had ended four years earlier because the lease was still in effect at the time of the accident.

J&J Pacheco Partnership owned a building in Newark that it leased to Downing Inc. The lease was undated but set the lease term as May 1, 1992-April 30, 2002. The document gave the tenant exclusive possession of the space and required the tenant to make all necessary repairs and maintain the property in a safe condition. A restaurant operated in the space. Midway through the lease, the partnership transferred ownership of the building to Jose Pacheco and his wife, Maria. Jose Pacheco was also an officer of Downing and was frequently present at the restaurant site.

In 2006, a cook at the restaurant suffered significant injuries as a result of a slip-and-fall accident. The cook, Jose Luis Lloglla, sued Downing, the restaurant, and the Pachecos. The owners asked the trial court to dismiss them from the case. They argued that, as owners of the building, they had no legal duty to the cook to ensure that the property was maintained in a safe condition.

The trial judge agreed and dismissed them from the case. In reaching this conclusion, the trial court followed a 1996 Appellate Division case, McBride v. Port Authority of New York & New Jersey, which concluded that employees of commercial tenants who have exclusive possession of the space cannot sue the landlord for personal injuries suffered due to poor maintenance if the lease clearly places the obligation for maintenance and repairs exclusively on the tenant.

The cook appealed, but to no avail. Lloglla argued unsuccessfully that it was unclear who was responsible for the restaurant’s maintenance in 2006, given that the lease that assigned sole maintenance duties to the tenant ended in 2002. The appeals court rejected this argument, explaining that a lease agreement generally does not terminate simply because the lease term expires. In Lloglla’s case, he needed clear evidence showing that the lease arrangement had ended. Since the cook had no such proof, the court determined that the lease agreement’s terms were still in effect and controlling in 2006 when the cook was injured.

The court also rejected the cook’s argument that Downing did not have exclusive possession of the lease property, given Pacheco’s frequent trips to the restaurant space. Pacheco was an an officer of the tenant, but that did not change the legal relationship between the parties established by the lease. “Downing was a separate legal entity” from the owners, and its lease contract gave it sole possession of the lease space in the eyes of the law, the court determined.

A carefully crafted commercial lease can provide many benefits, including clearly establishing the responsibilities held by each of the tenant and the landlord. This is especially true for terms such as obligations for property maintenance and repair. For clear and knowledgeable answers to your commercial leasing questions, consult the real estate attorneys at Samuel C. Berger, P.C. Our New Jersey real estate attorneys can help you make sure that your lease agreement properly reflects your agreement and protects you from unintended legal liability. Reach us online or call (201) 587-1500 or (212) 380-8117.

Contact us through our website or call to schedule your free, confidential initial consultation today.

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