PRUDENTIAL INSURANCE COMPANY OF AMERICA, Plaintiff-Appellant, v. the L.A. MART, Defendant-Appellee

Prudential Insurance Company of America (“Prudential”) appeals the district court’s summary judgment for the L.A. Mart (“L.A. Mart”), in Prudential’s diversity action for declaratory relief establishing the parties’ duties to pay the costs of seismic upgrading undertaken by Prudential upon the “Mart Building,” a commercial structure owned by Prudential and leased to L.A. Mart. Prudential maintains that the net lease (“the Lease”) places the duty to rectify dangerous conditions, including seismic weaknesses, upon the tenant. L.A. Mart responds that in the absence of existing damage to the Building or any governmental ordinance requiring a seismic upgrade, it has no duty to make or pay for such alterations. We affirm the district court.

I

This case arises from a lease agreement originally entered into in 1958 by Prudential and the Furniture Manufacturers Association (“FMA”), concerning the 12-story Mart Building, built between 1956 and 1958. FMA sold the Mart Building to Prudential and concurrently leased it back in a transaction known as a “sale-leaseback,” under which the lessee typically maintains most of the interest in and responsibility for the Mart Building. The contracting…