On appeal from Superior Court of New Jersey, Law Division, Bergen County.
J. H. Coleman, O'Brien and Stern. The opinion of the court was delivered by Coleman, J.h., P.J.A.D.
This appeal raises the question of whether the 1983 amendment to N.J.S.A. 2A:40A-1, which removed the prohibition of all indemnification agreements in construction contracts, should be given prospective or retroactive application. The judge below applied the amendment retroactively. We now affirm.
Brown & Matthews, Inc. (Brown & Matthews) was the general contractor of a building under construction in Woodcliff Lakes which was owned by Timeplex, Inc. Brown & Matthews hired Schrenell and Co. (Schrenell) to install the plumbing at the construction site. As part of the contract between Brown & Matthews and Schrenell, which was dated January 14, 1982, Schrenell was required to pay for and maintain insurance that would fully protect Brown & Matthews, Timeplex, Inc. and Schrenell "from any other claims for damages which may arise from operations under this contract, whether such operations be by itself or by any subcontractor, or anyone directly or indirectly employed by either of them." The contract between Brown & Matthews and Schrenell also contained an indemnity clause which forms the basis for the present litigation. The indemnity clause stated:
The Subcontractor hereby agrees to save and indemnify and keep harmless Brown & Matthews and the Owner against all liability, claims and judgments [ sic ] or demands for damages arising from accidents to persons or property occasioned by the Subcontractor, its agents or employees, and against all claims or demands for damages arising from accidents to the Subcontractor, its agents or employees whether occasioned by said Subcontractor or its employees or by Brown & Matthews or by Owner or its employees or any other person or persons and the Subcontractor will defend any and all suits that may be brought against the Owner or Brown & Matthews on account of any such accident and will make good to and reimburse, Brown & Matthews and Owner for any expenditure that Owner or Brown & Matthews may make by reason of such accidents.
On May 27, 1982 plaintiff Thomas Grippo was employed as an electrician at the construction site. He worked for Allan Electric, the electrical contractor on the construction project. While walking backward pulling wire off a spool, plaintiff stepped into an eight inch by fifteen inch hole in a finished cement floor.
Grippo instituted the present suit in December 1982 against Schrenell, Brown & Matthews, Timeplex, Inc. and others not involved in this appeal. In January 1985 Brown & Matthews filed a motion to compel Schrenell to (1) assume the defense for Brown & Matthews, (2) indemnify Brown & Matthews from any and all liability, and (3) reimburse Brown & Matthews for previously expended attorneys fees and litigation expenses. On the return day of the motion, Schrenell argued that the indemnification agreement was unenforceable because it contravened N.J.S.A. 2A:40A-1 which prohibited indemnification clauses in construction contracts at the time the agreement was made in this case on January 14, 1982.
Judge Meehan decided the motion on February 1, 1985. He ruled that N.J.S.A. 2A:40A-1 had been amended by L. 1983, c. 107 § 1, effective March 14, 1983, and by virtue of that amendment the indemnification clause was valid. He gave retroactive application to the amendment. The judge declined to grant any part of the Brown & Matthews motion because discovery had not been completed and factual questions existed regarding who created the hole. An order dated March 5, 1985 embracing this ruling was filed.
In August 1985 Brown & Matthews renewed its motion seeking the same relief previously sought in the February 1, 1985 motion. By this time, discovery had been conducted. Brown & Matthews argued that no new facts had come to light concerning who dug the hole and since Schrenell had not established that someone else was responsible, Schrenell had to defend and indemnify Brown & Matthews. This motion was argued before Judge Van Tassel on September 13, 1985. Judge Van Tassel ruled that Schrenell had to defend and indemnify because plaintiff alleged that Schrenell created the hole. By order dated October 15, 1985 Judge Van Tassel required Schrenell to (1) assume the defense on behalf of Brown & Matthews and Timeplex, Inc., (2) indemnify those defendants for any liability that might arise, and (3) reimburse those defendants
for attorney fees and litigation expenses already incurred. We denied leave to appeal from the October 15, 1985 order.
Grippo settled the underlying action for $12,000. By release dated February 18, 1986, Grippo gave up all of his claims against Schrenell, Brown & Matthews and Timeplex, Inc. On February 28, 1986 Brown & Matthews sought to enforce the order of October 15, 1985. It alleged that it had incurred $11,032.01 in fees and expenses and that Schrenell had paid all but $2,144. The supporting papers set forth a detailed list of expenses and fees. The motion was unopposed. By order dated April 28, 1986 Judge Boggia awarded Brown & Matthews $11,032 pursuant to the order of October 15, 1985 with an appropriate credit for payments made.
On November 22, 1986 Brown & Matthews moved to enforce litigants' rights. Its attorney alleged that Schrenell had paid the settlement to plaintiff but had not fully reimbursed Brown & Matthews for attorneys' fees and litigation expenses. By order dated December 19, 1986 Judge Boggia again awarded Brown & Matthews $11,032 with ...