Merrimack Mut. Fire Ins. Co. v. Gunta
The Appeals Court of Massachusetts recently sided with the tenant in a subrogation action by the landlord’s insurer, ruling that subrogation is barred under the implied co-insured doctrine. The second highest court in Massachusetts found that the subject terms of the lease did not explicitly agree to allow for subrogation against the tenant for damages caused by their negligence. The lease clauses required the tenant to both maintain the premises and to yield the premises upon expiration of the lease in the same condition as existed at the beginning of the lease. Both provisions carved out exceptions for “normal wear and tear” and “damage by fire”. The landlord’s insurer, Merrimack Mutual Fire Insurance Company, argued that this language operated as an explicit agreement to allow for subrogation against the insured. The court disagreed and reaffirmed the implied co-insured doctrine, or Sutton doctrine, first recognized in an Oklahoma case of the same name, that bars subrogation actions by the landlord’s insurer against a tenant absent an express agreement to the contrary.