Mut. Ben. Ins. Co. A/S/O Michael Sacks v. Koser, LEXIS 274 (Pa. Super. July 3, 2024) (Bender, P.J.E.)
Mut. Ben. Ins. Co. A/S/O Michael Sacks v. Koser, Pennsylvania Superior Court decided July 3, 2024.
Appellant, Mutual Benefit Insurance Company a/s/o Michael Sacks (“Mutual Benefit”), appeals from the trial court’s August 26, 2022 order granting Appellees’, Cortney Koser and Mickael Abels (collectively “Tenants”), motion for judgment on the pleadings.1 After reviewing this admittedly close case, we affirm.
On October 22, 2021, Mutual Benefit filed a subrogation action against Tenants on behalf of its insured, Michael Sacks (“Landlord”), to recover amounts it paid to Landlord for a fire loss purportedly caused by the negligence of Tenants.2 In more detail, according to the facts alleged in Mutual Benefit’s complaint, Landlord owned a rental property located at 256 North 21st Street, Camp Hill, Pennsylvania (the “Subject Property” or “Premises”), at all times relevant to this lawsuit. Complaint, 10/22/21, at ¶¶ 3, 14. Mutual Benefit averred that Landlord had a Mutual Benefit Homeowner’s Insurance Policy (“Policy”) for the Subject Property with a policy period from August 4, 2019 to August 4, 2020, and coverage limits of $200,000.00 for the dwelling and $140,000.00 for personal property. Mutual Benefit relayed that Landlord leased the Subject Property to Tenants. See id. at ¶ 6.3 Mutual Benefit stated that, on or about August 3, 2020, while the Subject Property was under the possession and control of Tenants, a fire erupted in the back bedroom of the Subject Property and spread throughout the dwelling, causing significant smoke and fire damage to the dwelling and Landlord’s personal property located on the Subject Property. According to Mutual Benefit, a subsequent investigation revealed that Tenants had left a candle burning in the back bedroom area of the Subject Property and caused the fire. Id. at ¶ 16. It claimed that, as a direct and proximate result of Tenants’ failure to extinguish the burning candle and/or monitor it, Landlord sustained the damages described above. Id. at ¶ 17. Mutual Benefit conveyed that it later made payments to Landlord pursuant to the Policy, which was in full force and effect at the time of the fire, in the amount of $187,477.92 for the damage to the dwelling, and in the amount of $4,144.00 for the damage to Landlord’s personal property. Id. at ¶¶ 9, 19. As a result of these payments, Mutual Benefit sought subrogation from Tenants.
After careful review and much deliberation, we determine that no relief is due. Initially, we read the lease to require Landlord to insure the Premises and his personal property located on the Premises, and for Tenants to insure their personal property located on the Premises. We reject Mutual Benefit’s argument that Tenants were obligated to maintain liability insurance for damage to the Premises.
Although the lease obligated Tenants to insure their personal property and for Landlord to ensure the Premises and his personal property, Mutual Benefit is correct that the inquiry does not end here in our case-by-case jurisdiction. Reading the lease in its entirety, we must determine if it is reasonable for Tenants to believe that Landlord would look only to his Policy for compensation for losses caused by the fire. While this is a close question, we conclude that such an expectation is reasonable.
We reiterate that, in Joella, the Joella Court endorsed the view that,
[i]f, under the lease or by some other commitment, the landlord has communicated to the tenant an express or implied agreement to maintain fire insurance on the leased premises, absent some compelling provision to the contrary, the court may properly conclude that, notwithstanding a general “surrender in good condition” or “liability for negligence” clause in the lease, their reasonable expectation was that the landlord would look only to the policy, and not to the tenant, for compensation for fire loss covered by the policy. That expectation would constitute an implied commitment in the lease to relieve the tenant of liability to the extent of the policy coverage and it, too, would therefore preclude a subrogation claim.
Joella, 221 A.3d at 680 (quoting trial court’s opinion reliance on Rausch, supra; emphasis added). As a result, despite the lease in Joella stating that the tenant ‘shall not negligently damage the premises,’ the Joella Court still determined that the lease created a reasonable expectation that the landlord would look only to his insurance policy for compensation for covered fire loss. Id. at 680-81.
Based on the foregoing, we conclude that the trial court properly granted Tenants’ motion for judgment on the pleadings. Landlord agreed to provide fire insurance for the Premises and his personal property. Under the lease, it was reasonable for Tenants to expect that Landlord would look only to the Policy for compensation for fire loss covered by the Policy. We therefore concur with the trial court that Tenants are implied co-insureds under the Policy, and Mutual Benefit is precluded from presenting a subrogation claim against them.
