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Prove It!
by Ron Davis

Failure to properly support improprieties charges against the owner of a Kansas shopping center has proved costly for a tenant’s insurance company.

The shopping center, located in Wichita, has leased space to the tenant since 1980 to operate a business named Dane Design, and the improprieties charges stem from a fire that occurred at the shopping center in 2001. Although the fire started in another tenant’s premises, Dane Design sustained smoke damage, and its insurer paid for all losses its policyholder suffered.

Such a course of action seemed inevitable because the tenant had agreed by signing the shopping center lease to accept responsibility for such damage to its premises. The lease stated, for example, that the shopping center owner “shall not be liable to the tenant for any damage or injury to the tenant’s property occasioned by wind, fire, explosion, water, theft or burglary.”

Shortly after the fire, however, the insurance company hired a mechanical engineer to determine why Dane Design sustained smoke damage. The engineer reportedly concluded that because the fire walls of the shopping center had been improperly constructed, smoke had traveled throughout the building and entered the Dane Design space. The insurance company therefore contended that the deficiencies in construction of the fire walls violated the Wichita building code, rendering the lease terms void.

The insurance company therefore sued the shopping center owner to force payment for the smoke damage to Dane Design.

But in its lawsuit against the shopping center owner, the insurance company failed to support its claim with either the testimony or a sworn statement of the mechanical engineer who investigated the scene of the fire. Nor did the company offer any other evidence to reflect on the case. Instead, the company’s attorneys simply explained the engineer’s findings to the court.

A Kansas court ruled in favor of the shopping center owner, noting, “The insurance company needed to present evidence to support its assertions. It had the burden to provide the necessary expert to show breach of the standard of care.”

The insurance company appealed.

The Court of Appeals of Kansas, in upholding the lower court ruling, also noted the lack of evidence presented by the insurance company, explaining, “Without submitting an affidavit or report or testimony from the engineer, there was no evidence showing that the fire walls did not meet building code standards.... The stipulation and the letter from the insurance company attorneys were inadequate to support the position of the insurance company. Moreover, the stipulated facts showed that Dane Design had suffered damages as a result of the fire in the building. The lease provisions therefore precluded pursuing a claim against the shopping center owner.” (Employers Mutual Casualty Co. v. Andeel & Andeel Properties, LLC, 109 P.3d 734)

Decision: April 2005
Published: May 2005



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