A Florida appellate court recently held that a lease was a manifestation of “entrustment” of commercial property within the plain meaning of an entrustment exclusion of a policy. Grover Commercial Enters., Inc. v. Aspen Ins. UK, Ltd., 2016 WL 4651115 (Fla. 3d DCA Sept. 7, 2016).
A landlord had a commercial property policy that insured against damage to real and business personal property but contained an exclusion that excluded loss or damage resulting from any “dishonest or criminal act by you … or anyone to whom you entrust the property for any purpose.” The landlord leased real property and certain business personal property to the tenant, who had complete and exclusive possession of all leased property and, upon commencement of the lease term, was obligated to return the real and business personal property to the landlord. The tenant removed certain business personal property and damaged the real property during the lease term. The landlord made a claim under the policy seeking coverage for “theft” of certain business personal property and “vandalism” damage to the real property. The insurer denied coverage for the claim pursuant to the entrustment exclusion, and the landlord sued the insurer. The trial court entered summary judgment in favor of the insurer, finding that the policy’s entrustment exclusion excluded coverage for the loss. The landlord appealed.
On appeal, the landlord argued that the trial court erred in entering summary judgment as the entrustment exclusion is ambiguous as to whether “leasing” property to a tenant was distinct from “entrusting” the property. The landlord alleged that the policy’s use of the term “entrustment” did not encompass a landlord-tenant relationship as the term “tenant” was not specifically included in the entrustment exclusion. The insurer argued that the lease was a manifestation of the “entrustment” of commercial property from a landlord to a tenant and, as such, removal of business personal property and damage to real property were criminal acts not covered under the policy. The appellate court found that the term “entrust” is not ambiguous and that, under the plain meaning of the term “entrust,” the landlord entrusted its property to the tenant. The appellate court affirmed the trial court’s order granting summary judgment in favor of the insurer.