Abe Lorber authored an article titled “Know Your Role: Ambiguity in Commercial Leases Leads to Dubious Benefits and Uncertain Liability” in the Washington State Bar Association’s (WSBA) Real Property, Probate & Trust Section Vol. 45, Number 2 newsletter. The article discusses triple net leases and the liability that could be hiding in them. Lorber shares a war story involving an iconic piece of Seattle commercial property, and provides advice to commercial real estate professionals to help avoid protracted and costly litigation.
The first lesson is beware the double-edged sword of insurance coverage. Readers will recall the issue with the garage’s concrete came to a head in 2014 when a piece of the garage ceiling spalled off and damaged a parked car. ABM paid the owner of the car to repair the damage and included a claim for reimbursement in its original complaint against SSJ. Although the monetary claim related to this damage was only a fraction of the total dispute — $1,500 of the $500,000 plus that ABM was claiming — the fact that it was property damage triggered SSJ’s insurance coverage. Thus, SSJ’s insurer paid for SSJ’s litigation costs even though the majority of the claims were contractual and would otherwise have been excluded from insurance coverage. SSJ was able to secure this coverage because of the intertwined nature of the property damage claims and the contractual claims and the Washington legal principle that an insurer’s duty to defend is greater than its duty to indemnify.