Florida: “Entrustment” Exclusion Applied to Property Leased by Landlord to Tenant, Appeals Court Says

October 19, 2016 | Insurance Coverage

An appellate court in Florida, affirming a trial court’s decision, has ruled that an insurance policy’s “entrustment” exclusion applied to property leased by an insured landlord to its tenant.

The Case

Grover Commercial Enterprises leased property it owned in Coconut Grove, Florida, to Carma, LLC. Carma operate a restaurant on the property known as “The Knife.” Grover also leased to Carma certain business personal property located on the premises as itemized in the lease agreement.

Grover alleged that, while vacating the leased premises, Carma removed most of the business personal property belonging to Grover and damaged the real property in the process.

Thereafter, Grover advised its insurance carrier, Aspen Insurance UK, that it had sustained a loss due to Carma’s “theft” and “vandalism.”

Aspen denied Grover’s claim, citing the policy’s entrustment exclusion and explaining that Carma’s alleged actions had constituted dishonest or criminal activity by someone to whom Grover had entrusted property.

Grover sued Aspen for breach of contract. The trial court entered final judgment in favor of Aspen, and Grover appealed.

The Florida Appeals Court’s Decision

The appellate court affirmed.

In its decision, the appellate court ruled that the word “entrust” in the entrustment exclusion was not ambiguous and that the exclusion applied to property leased by a landlord to a tenant.

As the appellate court explained, pursuant to the lease, Grover had surrendered possession of its real and business personal property to Carma. Grover had done so, the appellate court continued, with confidence that Carma would use the property in accordance with the terms of the lease and would not damage, steal, or dispose of Grover’s property in violation of the lease.

Under the “plain meaning” of the term “entrust,” Grover had entrusted its property to Carma, the appellate court concluded.

The case is Grover Commercial Enterprises, Inc., v. Aspen Ins. UK, Ltd., No. 3D14-1987 (Fla. Ct. App. Sept. 7, 2016).

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  • Robert Tugander

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