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Who is Responsible for Injuries Sustained on a Subleased Property?

Throughout Illinois, subleasing is a common practice. However, it can lead to questions of liability when a third party is injured on the subleased premises. In the case of Wright v. Mr. Quick, Inc., the Illinois Supreme Court considers the question of whether the sublessee (the new tenant) or the sublessor (the original tenant) is responsible for injuries resulting from poor property maintenance.

The Facts

Ms. Wright, an employee of Great Eight Inc., was injured when she fell in the parking lot of the fast-food restaurant where she worked. In accordance with a franchise agreement, Great Eight Inc. operated a restaurant on property it subleased from Mr. Quick, Inc. Ms. Wright contended that her injuries stemmed from poor property maintenance.

Although Great Eight maintained complete control of the property, Ms. Wright filed a personal injury lawsuit against Mr. Quick, alleging that Mr. Quick was responsible for maintenance and repairs. (She was unable to file a lawsuit against her employer; instead, she would have had to file for Workers’ Compensation.) Ms. Wright supported her position by quoting a portion of the lease Mr. Quick had originally entered into with the property owners. It stated that Mr. Quick would “maintain the interior of the improvements on the premises and exterior including the drives and blacktop, in a good condition.” Ms. Wright argued that because this prime lease was incorporated into Mr. Quick’s sublease with Great Eight, Mr. Quick had a duty to protect third parties from injury in the restaurant parking lot.

The Rule of Lessor Immunity and Liability for Injuries Sustained by Third Parties

To win a personal injury suit in Illinois, injured parties must prove that the defendant has a duty to protect them from injury. In other words, it is impossible for the injured party to win a lawsuit if the defendant has no obligation to protect against injury.

In general, liability for injuries sustained on leased property in Illinois falls to the tenant who has possession of the premises.  (In the case of a sublet, this is the sublessee.) Because of this, lessors and sublessors typically have immunity and cannot be held responsible because they lack control of the property.

However, there are exceptions to this general rule. One exception is that the lessor/sublessor can be held liable when third parties become injured on the premises a result of inadequate or improper maintenance in situations where the lease stipulates the lessor or sublessor is responsible for repairs.

The Decision

In response to Ms. Wright’s lawsuit, Mr. Quick moved for summary judgment, arguing the evidence was insufficient for a jury to find in her favor even when interpreted in the light most advantageous to her. The trial court granted the motion and dismissed the case, finding that no exception to the lessor immunity rule applied.

Ms. Wright then appealed to the Illinois Appellate Court, claiming the sublease agreement required the sublessor, Mr. Quick, to maintain the premises. She argued that this requirement invoked the exception to the Lessor Immunity rule in which sublessors can be held liable for injuries sustained on the subleased property when they agree to repair or maintain. Therefore, Mr. Quick had a duty to protect her from becoming injured in the restaurant parking lot as a result of poor maintenance. The appellate court agreed and reversed the trial court’s decision.

Mr. Quick then appealed to the Illinois Supreme Court, claiming the appellate court had misinterpreted the terms of the sublease agreement. Mr. Quick argued that it did not have a duty to maintain the parking lot and therefore could not be held liable for Ms. Wright’s injuries.

The Supreme Court noted that the prime lease required Mr. Quick to repair and maintain the property. This agreement allowed the property owner to sue Mr. Quick for breach of contract if Mr. Quick allowed the property to fall into disrepair. However, the prime lease did not create a duty for Mr. Quick to protect third parties from injury due to its maintenance responsibilities; instead, Great Eight was responsible for protecting third parties from injury because it controlled the property. In other words, once Great Eight gained control, it assumed the duty to protect.

The sublease agreement did not specifically identify which party was responsible for maintenance and repairs. However, it required Great Eight to abide by the terms of its franchise agreement with Mr. Quick, which explicitly discussed maintenance duties: “the establishment (building, equipment and parking area) shall be kept and maintained at all times by Second Party [Great Eight] in good condition and repair.” Therefore, the Supreme Court concluded that Great Eight had a clear duty to maintain the parking lot—not Mr. Quick, as the appellate court had determined. Because Mr. Quick had no duty to maintain the property, the Lessor Immunity rule applied and the sublessor could not be held responsible for Ms. Wright’s injuries.

Ms. Wright further argued that Mr. Quick’s duties under its lease with the property owner had been incorporated into the sublease agreement with Great Eight, including the duty to maintain and repair the premises. She claimed there were three reasons for this:

1. The sublease stated that it ran concurrently with the prime lease, “a copy of which lease is hereto annexed, marked Exhibit A and made a part hereof.”

2. Paragraph 3 of the sublease said, “Sublessee agrees to abide by and be bound by the terms and conditions of the prime lease , except insofar as its terms are changed and modified by this agreement.”

3. Paragraph 4 of the sublease said it was “subject to the terms and conditions of the lease between lessee and owner of premises, and this lease shall automatically terminate upon termination, cancellation, or expiration of the lease between lessee and owner of the premises.”

The Supreme Court disagreed with Ms. Wright’s claim that the sublease required Mr. Quick to uphold the duties stated in the prime lease. Instead, the Court said that annexation and absorption of the lease simply provided reference for the content of the sublease. Furthermore, the Court claimed that paragraphs 3 and 4 of the sublease made clear that Mr. Quick no longer had maintenance and repair responsibilities.

Instead, paragraph 3 stated that Great Eight had to uphold and be bound by the terms of the prime lease. Furthermore, the verbiage—specifically, “be bound by” and “abide by”—transferred the responsibilities in the prime lease to the sublessee. Therefore, the duty to repair was transferred to Great Eight. The Supreme Court felt that any other interpretation “tortures the plain meaning of the words.”

Similarly, the Supreme Court noted that the language in paragraph 4, particularly the sublease being “subject to” the prime lease, suggested that the intent was for Great Eight to take over the “lessee” duties (including repair).

The Supreme Court noted that Mr. Quick never agreed to repair the property once Great Eight took control; rather, it assumed maintenance obligations only while it was in the lessee position under the prime lease. Therefore, it had no duty to repair the premises and the rule of Lessor Immunity applies.

Lastly, Ms. Wright argued that the franchise agreement, which required Great Eight to repair and maintain the property, was invalid because of an Illinois statute preventing lessors from exempting themselves from liability for negligence. However, the Supreme Court disagreed with this rationale since the franchise agreement did not release Mr. Quick from responsibility in the event of negligence. In fact, because Mr. Quick was not in control of the property and therefore had no duty to protect against injuries, there was no responsibility from which to be released. Rather, the franchise agreement simply assigned Great Eight the duty to keep the property in good repair.

For all of the reasons above, the Supreme Court reversed the appellate court’s decision to overturn the summary judgment and affirmed that the trial court’s decision was correct.

Conclusion

Under most circumstances, sublessors in Illinois have no duty to protect third parties from becoming injured on properties that are under a sublessee’s control. As a result, sublessors cannot usually be held responsible for injuries. However, in cases where sublessors agree to repair and maintain the property, it is possible that they could be held liable.

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