This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1996).




Hanson Woodworking, Inc.,



Prairie Avenue Leasing, Ltd., et al.,


Richard Brooks,


Glen Benway,


Wayne Bess,


Filed May 27, 1997

Reversed and remanded

Lansing, Judge

Rice County District Court

File No. C996284

Steven L. Theesfeld, Yost & Baill, P.L.L.P., 2350 One Financial Plaza, 120 South Sixth Street, Minneapolis, MN 55402 (for Appellant)

Tony R. Krall, Norman M. Abramson, Hanson Lulic & Krall, Suite 500, 920 Second Avenue South, Minneapolis, MN 55402 (for Respondents Prairie Avenue Leasing, Ltd., et al.)

Richard Brooks, 1407 Hulett Street, Lot 144, Faribault, MN 55021 (Pro Se)

Glen Benway, 7135 Groveland Trail, Lonsdale, MN 55046 (Pro Se)

Considered and decided by Peterson, Presiding Judge, Lansing, Judge, and Crippen, Judge.



In a negligence action for property and business interruption damages caused by fire, a sublessee appeals a summary judgment ruling that the successive operation of indemnification provisions in the subrogation clauses of the lease and the sublease protects the lessor and its principal from liability. The ruling is not supported by the record, and we reverse and remand.


Prairie Avenue and its principal, Stewart Shaft, leased approximately 66,000 square feet of a warehouse to Faribault Foods. Faribault Foods sublet part of the leased space to Hanson Woodworking. During the term of the lease and sublease, a fire occurred in the warehouse space adjoining Hanson Woodworking. Hanson Woodworking brought this negligence action against Prairie Avenue; its principal, Stewart Shaft; and three other individuals who Hanson Woodworking alleges caused the fire: Richard Brooks, Glen Benway, and Wayne Bess. Hanson Woodworking's complaint alleges that Prairie and Shaft hired Brooks, Benway, and Bess to conduct demolition and renovation and that the three men's negligent use of a cutting torch started the fire that substantially destroyed the building. Hanson Woodworking contends that its property and business interruption loss exceeded $1,000,000.

Prairie and Shaft agree that the fire was due to the negligence of Brooks, Benway, and Bess who they allege were removing sprinkler piping for its scrap value. Prairie and Shaft maintain that they are not liable for any fire damage to Hanson Woodworking because they are protected by the terms of their lease. Prairie and Shaft assert that the subrogation clause in the lease waived all right of recovery for the lessee's or third parties' property damage caused by fire. They maintain that the subrogation clause also required the lessee to indemnify the lessor from all liabilities for such damage. Alternatively, Prairie and Shaft argue that if their lease with Faribault and Faribault's lease with Hanson Woodworking does not protect them, Hanson Woodworking, as Faribault's assignee, cannot assert rights greater than Faribault's.

Hanson Woodworking and Prairie and Shaft brought cross-motions for summary judgment. The district court concluded that the controlling issue was the applicability of the lease and sublease's subrogation clauses. The court ruled that (1) because the lease between Prairie and Faribault had a subrogation clause requiring Faribault to indemnify Prairie from all liability for fire damage to merchandise or property, including merchandise or property of third parties contracting with Hanson Woodworking, and (2) because the lease between Faribault and Hanson Woodworking contained an identical provision, Hanson Woodworking would ultimately be required to pay for the damages and the claims should be dismissed. Hanson Woodworking appeals that decision.


A litigant is entitled to summary judgment when the pleadings, depositions, interrogatories, affidavits, and admissions on file show that there is no genuine issue as to a material fact and that the litigant is entitled to judgment as a matter of law. Minn. R. Civ. P. 56.03. But summary judgment is ordinarily denied when issues of fact are outstanding or when issues of law run against the moving party. F. & H. Investment Co. v. Sackman-Gilliland Corp., 305 Minn. 155, 158, 232 N.W.2d 769, 772 (1975).

For three reasons we conclude that the record does not support a summary judgment. First, in determining the liability of the lessor for claims of the sublessee, the district court looked solely to the "indemnification clauses contained within the subrogation clauses" of the lease and sublease to determine that Hanson Woodworking should be prohibited from bringing its claims against Prairie Avenue and Shaft. But the lease and sublease also contain a section governing indemnity and liability insurance. This section provides indemnification only for claims arising out of the lessor's or lessee's negligent or willful acts. The district court did not analyze this provision or consider its effects on the indemnification language in the subrogation clause.

Second, the district court's determination collapses the lease and the sublease into one agreement without considering the separate nature of the lease agreements or the fact that the lessee (and sublessor), Faribault Foods, is not a party to this action. The lease is not a global agreement among Prairie Avenue, Shaft, Faribault Foods, and Hanson Woodworking. It is an agreement only between Prairie and Faribault Foods. The sublease is an agreement only between Faribault Foods and Hanson Woodworking. Prairie and Shaft cite cases from other jurisdictions enforcing waiver of subrogation provisions, but none of the cited authority involves a sublessee who was not a party to the original lease. A third party is not entitled to sue on an indemnity agreement to which he is not a party. Cruickshank v. Ellis, 178 Minn. 103, 109, 226 N.W. 192, 195 (1929); Fjellman v. Weller, 213 Minn. 457, 468, 7 N.W.2d 521, 529 (1942).

Third, Prairie and Scott assert that Hanson Woodworking is an assignee of Faribault Foods and is bound by the provisions in the original lease between Prairie Avenue and Faribault Foods. Hanson Woodworking disputes that an assignment could be created without an express agreement. But whether the sublease constituted an assignment was not considered by the district court. This court will not review an alternative basis that was not considered or decided by the district court. Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988).

Reversed and remanded.