Liberty Mut. Ins. Co. v. Michigan Mut. Ins. Co., 2008 WL 2894336 (Ind.App.), involved Linda Swann, an employee of Trilithic who was on her way to work when she slipped and fell on a snow- and ice-covered pathway leading from the employee parking lot to a door located at the back of her work facility. She was entering the building through the back door because that was the entrance Trilithic required its assembly line employees to use.
The Trilithic facility was located in a portion of one of the buildings in a business park leased by Trilithic from Duke. Because it was Duke's responsibility under its lease with Trilithic to maintain common areas such as this pathway, it was undisputed that Swann fell and sustained her injuries outside the leased premises and in an area under the control and responsibility of Duke.
Under the lease, Trilithic was required to obtain insurance and pay the premiums to insure itself and Duke against public liability and property damage. Trilithic obtained a CGL policy from Michigan Mutual with Trilithic as the named insured and Duke named as an additional insured.
After Swann filed a personal injury action against Duke, Duke tendered the defense of the action to Michigan Mutual pursuant to the additional insured endorsement. Michigan Mutual declined to defend or indemnify Duke against Swann's claims, so Duke's general liability insurer, Liberty Mutual, defended and indemnified Duke, ultimately settling Swann's claims.
In the meantime, Duke filed a complaint for declaratory judgment with the trial court in which it sought a declaration that the policy issued by Michigan Mutual provided coverage to Duke for the injury claims asserted by Swann. Michigan Mutual filed a counterclaim for declaratory judgment, claiming the policy did not provide coverage to Duke for Swann's claims. The parties subsequently filed cross-motions for summary judgment, and Michigan Mutual requested that Liberty Mutual be substituted for Duke as the real party in interest.
The trial court declared that Michigan Mutual had no obligation to defend or indemnify Duke against Swann's claims, and Liberty Mutual appealed.
According to the Indiana Court of Appeals, resolution of the case hinged on the interpretation of the additional insured endorsement attached to the policy issued by Michigan Mutual. Although the parties agreed that the policy language at issue was ambiguous, they disagreed whether the policy should be construed against the insurer or from a neutral stance.
The court explained that an additional insured endorsement in the landlord-tenant context is designed to protect the landlord from vicarious liability for acts of its tenant on the leased premises. Thus, it is meant to provide specialized protection rather than all-encompassing coverage. As the pathway was not part of the leased premises but rather was part of a common area Duke had a duty to maintain, and there was no physical connection between the slip-and-fall and Trilithic's business operations, the court therefore determined that Swann's injuries did not arise out of the use of Trilithic's facilities and Liberty Mutual did not have a duty to defend Duke in Swann's action under the additional ensured endorsement provision.