Is a Company Responsible for the Safety of An Employee of Its Lessee ?
In Maryland Casualty Co. v. Chicago & North Western Transportation Co., 126 Ill. App. 3d 150, 155, 466 N.E.2d 1091, 81 Ill. Dec. 289 (1984), the plaintiff, Maryland Casualty Company (Maryland), appealed a summary judgment order granted to the defendant, Chicago and North Western Transportation Company (C&NW), in a declaratory judgment suit.
In that order the trial court found that Maryland was obligated to defend and indemnify C&NW in a negligence action filed against C&NW by an employee of C&NW's lessee, Demos News, Inc. (Demos).
Demos maintained several newsstands in C&NW's passenger terminal located at 500 West Madison Street, Chicago, and the Demos employee was assaulted and raped approximately 10 feet from one of these newsstands when she reported for work.
The victim's negligence action against C&NW alleged that her attack and resulting injuries were proximately caused by C&NW's negligence in controlling and maintaining the passenger terminal.
C&NW sought a defense for this claim under a commercial general liability (CGL) policy issued by Maryland to Demos under which C&NW was a named an additional insured, but "'only with respect to liability arising out of the ownership, maintenance or use of that part of the premises designated below leased to the named insured.'" Maryland Casualty, 126 Ill. App. 3d at 153.
Maryland filed a declaratory judgment action and motion for summary judgment on the ground that it had no duty to defend or indemnify because the policy language above precluded any defense obligations to C&NW. Specifically, Maryland argued that the attack, which occurred before the employee began work, did not arise from Demos' use of the premises but from the victim's mere presence in the terminal, which was open to the public.
According to Maryland, such activity was outside the scope of coverage provided to C&NW in the policy. C&NW contended that the policy covered the entire passenger terminal.
One of the issues on appeal was whether Maryland had a duty to defend C& NW under the terms of the CGL policy issued to Demos.
In determining the propriety of granting summary judgment to C&NW, the appellate court considered whether the attack on the victim arose "'out of the ownership, maintenance or use'" of the designated leased premises. Maryland Casualty, 126 Ill. App. 3d at 154.
The court noted that the term "arising out of is both "broad and vague" and must be liberally construed in favor of the insured; accordingly, it held "but for" causation, not necessarily proximate causation, satisfied this language. Maryland Casualty, 126 Ill. App. 3d at 154.
It further observed that "'arising out of has been held to mean 'originating from,' 'having its origin in,' 'growing out of' and 'flowing from.' " Maryland Casualty, 126 Ill. App. 3d at 154.
In construing the policy liberally in favor of the insured, the court held that the victim's injuries arose from the operation and use of the leased premises, since they would not have been sustained "but for" the victim's employment on the premises owned by C&NW. Maryland Casualty, 126 Ill. App. 3d at 155.
Thus, Maryland's duty to defend C&NW was found to be triggered. Maryland Casualty, 126 Ill. App. 3d at 155.