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SFI Ltd. Partnership 8 v. Carroll

Supreme Court of Nebraska

August 1, 2014

SFI LTD. PARTNERSHIP 8, A NEBRASKA LIMITED PARTNERSHIP, APPELLANT,
v.
MICHELLE CARROLL, APPELLEE

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Appeal from the District Court for Sarpy County: WILLIAM B. ZASTERA, Judge.

Jeffrey A. Silver for appellant.

Todd R. McWha, Angela M. Franz, and Patrick Heng, of Waite, McWha & Heng, for appellee.

HEAVICAN, C.J., WRIGHT, CONNOLLY, STEPHAN, MCCORMACK, MILLER-LERMAN, and CASSEL, JJ.

OPINION

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[288 Neb. 700] Cassel, J.

I. INTRODUCTION

In previous cases, we have applied an antisubrogation rule to prohibit a landlord's insurer from seeking reimbursement from the tenant of fire losses paid by insurance. In this appeal, we decline to extend the antisubrogation rule to a landlord's uninsured losses allegedly caused by its tenant's negligence. We therefore reverse the district court's summary judgment in favor of the tenant. But because the tenant has not been determined to have been free from negligence, we decline to address whether specific provisions in the lease are unconscionable or void as against public policy. Accordingly, we remand the cause to the district court for further proceedings consistent with this opinion.

[288 Neb. 701] II. BACKGROUND

1. Lease

SFI Ltd. Partnership 8 (SFI) owns an apartment complex containing approximately 200 apartments. Through its agent, SFI leased an apartment to Michelle Carroll. SFI's agent and Carroll signed a residential lease agreement including various addendums. The lease employed a standard form used for all units in the complex. Tenants were not allowed to change any of the provisions of the lease or addendums.

The lease included provisions requiring Carroll to pay for repairs caused by her use of the unit and to maintain renter's insurance including " a personal liability coverage to a minimum of $100,000.00." We will recite the pertinent provisions of the lease only as it becomes necessary.

2. Fire and Insurance Policies

A fire occurred in the apartment rented to Carroll. Both the apartment and the surrounding building were damaged.

SFI had $10 million of total insurance coverage on the apartment complex. The policy provided for a deductible of $250,000 per occurrence unless a specific deductible applied. However, the forms schedule attached to the policy referred to two endorsements not included in the copies attached to the stipulation. Thus, we cannot discern whether the policy provided for a specific deductible attributable to the loss in this instance.

The parties stipulated that SFI sustained damages in excess of $100,000 resulting from the fire, which damages were not covered by its insurance policy. But neither the total amount of damages nor the amount of any insurance recovery by SFI was included in the evidence.

Carroll had renter's insurance in place at that time, and she submitted a claim to her insurer. Carroll's insurer paid her $1,500, representing only her damages under " Loss of Use Coverage."

3. Lawsuit

SFI sued Carroll and attached a copy of the lease to the complaint. SFI alleged that Carroll breached several provisions [288 Neb. 702] of the lease. SFI further alleged that Carroll was negligent in failing to properly dispose of cigarettes being smoked in the

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apartment and that this negligence proximately caused the damage to the apartment and surrounding building.

Carroll filed an answer. She alleged that the fire was caused by someone else; that SFI's claims were barred because she and SFI were considered coinsureds under SFI's fire insurance policy, as set forth in Tri-Par Investments v. Sousa [1]; that several Paragraphs of the lease were unconscionable and void as against public policy; and that SFI failed to mitigate any damages.

Carroll moved for summary judgment. SFI then moved for partial summary judgment on Carroll's claim that several Paragraphs of the lease were unconscionable and void as against public policy.

The parties stipulated that SFI brought the claim in its own behalf. They also stipulated that it was not a subrogation claim.

4. District Court's Decision

Following a hearing, the district court granted Carroll's motion for summary judgment, denied SFI's motion for partial summary judgment, and dismissed the complaint. The court stated that the crux of the case revolved around Paragraph 17 of the lease, which stated:

Resident's personal property is not insured or covered by Landlord for loss of any kind, including without limitation, loss due to theft, fire, smoke, wind, rain, lightening [sic], seismic occurrence or water damage.
Evidence of renter's insurance is required at the time of occupancy and Resident agrees to maintain such Renter's Insurance throughout its residency. The renter's insurance to be maintained by Resident shall include a personal liability coverage to a minimum of $100,000.00. Resident agrees to provide proof of such renter's insurance from time to time as requested by Landlord.

[288 Neb. 703] The court agreed with Carroll's contention that the lease was " void for public policy because it is a gross economic waste to require every tenant to insure the ...


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