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The ancient "But For" test governs coverage disputes



When the use of the property as a petrol station / convenience store was due to the customers 'ability to penetrate in and out through the attached parking space ̵

1; even if the tenants' lease did not extend to the parking lot where the plaintiff fell but for use of the parking the gas station / convenience store could not work. I Republic Franklin Insurance Company, a / s / o Paul H. Lamb, t / a Lamb & # 39 ;s Auto Service Coatesville Shell v. Brethren Mutual Insurance Company, No. 20-1431, United States Court of Appeals For The Third Circuit (October 6, 2020) was asked to determine whether coverage applied to the additional insured even if the tenant policy did not include the parking lot.

FACTS

When a customer slipped and fell at a gas station. parking lot in Honey Brook, Pennsylvania, an insurance coverage dispute was handed over to the third circuit. The owner insured the property through Republic Franklin Insurance Company. Lamb rented the gas station – but not the parking lot – to Dharmesh and Popat Bhalala, co-owners of Shree Ram Enterprises, LLC, which operated the gas station and associated convenience store. Shree Ram insured the gas station / convenience store through insurance with Brethren Mutual Insurance Company. This insurance included a recommendation naming Lamb as an additional insured, subject to a critical limitation: Lamb was covered only in respect of liability arising from the ownership, maintenance or use of the portion of the premises leased to Shree Ram.

After both insurers (protected their insured and later agreed to settle the coverage dispute) agreed to pay for the slip and fall damages, the Franklin Republic sued Brethren Mutual for repayment of its $ 175,000 payment to the injured customer on Lambs' behalf. . Republic Franklin claimed that Brethren Mutual owed that amount because of Lamb's status as further insured under Shree Ram's policy and Republic Franklin's proposal was granted. In the relevant part, that document provides coverage for liability arising from the use of the rented premises, which Shree Ram has operated as a petrol station / convenience store. Under Pennsylvania law, the phrase "derived from" means causal, not closely caused by, but for causation, that is, a cause and effect, is sufficient to satisfy that provision. With that understanding, the question becomes whether the use of the leased premises was a "but for" reason for the customer's slippage.

The customer slipped and fell in the parking lot after leaving the store. And while not all temporary factors that undoubtedly contribute to an accident are a "but for" cause in the legal sense, the customer's protection of the store and her exit to the parking lot share more than a temporary causal link.

Because the customer would not have slipped in the parking lot, but for her protection of the gas station and the store, her damage occurred by using the rented premises. Therefore, the Third Circuit concluded that the incident falls within the coverage provided by the additional insured approval, and the district court's judgment in favor of the Republic of Franklin was upheld.

A lease for a petrol station and convenience store without a parking space is useless for the tenant. The fact that the car park existed and that the lessor did not require the service station operator to pay rent for it, with the understanding that it was used for the convenience store's customers and because the damage would not have occurred without the presence and use of the convenience store. The Republic of Franklin should be honored to protect the insured and then, after the insured has been protected, to seek compensation and resolution of the coverage dispute.


© 2020 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to working as an insurance consultant specializing in insurance coverage, insurance claims handling, cheating and insurance fraud almost equally for insurance companies . He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims lawyer and more than 52 years in the insurance industry. He is available at http://www.zalma.com and zalma@zalma.com.

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