On appeal from the Superior Court of New Jersey, Law Division, Morris County.
Bischoff, King and Polow. The opinion of the court was delivered by Polow, J.A.D.
Defendant landlord appeals from a Law Division judgment awarding $45,356 to the tenant of a commercial building for water damage to computer equipment caused as a result of a leaking roof. Appellant contends that the trial judge erroneously rejected an exculpatory clause contained in the lease which, in its opinion, totally excludes liability for water damage. The judgment dismissed all claims against third-party defendants Saunders (who are also named defendants in the amended complaint) and they are not involved in this appeal.
The successful plaintiff, Ultimate Computer Services, Inc., is in the business of maintaining, repairing and reconditioning computers. The lease between Biltmore Realty and Ultimate was executed on February 1, 1973 when the building was under construction and still a shell. Ultimate leased 30,000 square feet for a ten-year term. The agreement specifically denoted that construction was not yet complete; that the lessee would examine the building prior to occupancy and accept it without any representation by the landlord as to its condition. However, the landlord obligated itself to assign to the tenant "all rights pursuant to structural guarantees and warranties received by it . . ." with regard to construction of the building. The tenant was to make all repairs "except that the landlord should make all major structural repairs."
The exculpatory provision upon which Biltmore relies provides:
The landlord shall not be liable for any damage or injury which may be sustained by the tenant or any other person by reason of the elements; or resulting from the carelessness, negligence or improper conduct on the part of any other tenant or if the landlord or the landlord's or this or any other tenant's agents, employees, guests, licensees, invitees, sub-tenants, assignees or successors; or attributable to any interference with, interruption of or failure, beyond the control of the landlord, of any services to be furnished or supplied by landlord.
Plaintiff produced expert testimony that the roof was defectively designed and installed in that it lacked sufficient slope to permit adequate drainage. As a result, water would "pond" on
the roof which, in turn, caused the leak that damaged the computer. The roof had been designed and installed by Gonnella Roofing Company, which had been instructed by one of Biltmore's principals to put on the least expensive roof possible. The contract between Biltmore and Gonnella required a bond as a condition for the final installment of the contract price, but no bond was ever submitted. However, Biltmore's representative received a verbal guarantee from Gonnella which covered only the cost of repairs and specifically excluded liability for damage to contents of the building.
The roof leaked on a number of occasions during plaintiff's occupancy. Although a major leak occurred in April 1973, Ultimate thereafter leased an additional 8,600 square feet for office space which was constructed by Biltmore. Every time a leak occurred prior to 1978, Gonnella repaired the roof at Biltmore's request without compensation. However, sometime in 1977 Gonnella advised the landlord he would no longer repair it. In mid-January 1978 water leaking through the roof caused the damage to a million dollar computer for which this suit was instituted.
Despite the numerous leaks between 1973 and 1978, Ultimate professed an inability to take any action other than its numerous complaints to the landlord, for the following reasons. It was reluctant to move out since there was no assurance that a constructive eviction would be recognized and the cost of transporting the computers to another location would have been prohibitive. Furthermore, the landlord gave assurances that the leaks had been repaired and plaintiff would have no further problems. Although plaintiff had considered various measures to protect its computers with plastic coverings, it had 2,000 machines on the premises and use of plastic materials would cause condensation which itself could damage the equipment.
In holding for plaintiff the trial judge found that the roof was defectively designed and installed in that it lacked an adequate slope. He also determined ...