On appeal from Superior Court of New Jersey, Law Division, Passaic County.
Petrella, Baime and Conley. The opinion of the court was delivered by Baime, J.A.D.
The New Jersey Highway Authority (NJHA) engaged J.C. Towing, Inc. (Garage) to perform towing and wrecking services on the Garden State Parkway. As part of the agreement, Garage promised to defend and indemnify liability claims "arising out of" the license contract. Kenneth Vitty, an employee of Garage, was killed when the tow truck in which he was seated was struck by an automobile operated by a drunk driver. At the time of the accident, the tow truck was parked at an official U-turn post and Vitty was on duty. Based on the indemnification clause, NJHA requested Garage to defend it in an action brought by Vitty's estate. Garage refused and NJHA settled the estate's claim for $20,000. NJHA filed a crossclaim in which it sought indemnification for the amount of the settlement and the cost of its defense. The Law Division granted NJHA's motion for summary judgment. Garage appeals and we affirm.
The salient facts are not in dispute. NJHA entered into a license agreement in which Garage was engaged to furnish wrecking, towing and road services on an eight mile stretch of the Garden State Parkway. The agreement provided that, "[w]hen requested[,]" Garage was to "patrol an assigned area." The agreement required Garage to comply with various traffic and safety regulations, including a provision which allowed it to cross the medial strip only at "official crossovers."
The agreement also contained a provision which required Garage to defend and indemnify NJHA for claims "arising out of" the license. This paragraph contained an exception with respect to property damage and personal injury caused by the "sole active negligence" of NJHA. Because of the importance of the indemnification provision to the resolution of the questions presented, we quote it verbatim:
A. GARAGE shall indemnify, defend and save harmless [NJHA], its members, officers, agents, servants, employees and assigns, the State of New Jersey, Division
of State Police and its officers and employees from any and all demands, claims, liability, suits, losses, injuries, damages, judgments, expenses and costs of every kind, nature and description arising out of this License; expressly including but not limited to the cost of labor, materials, or supplies, counsel fees, cost of court, costs of investigation, experts and witnesses and amounts paid in settlement; except that this provision shall not extend to property damage or personal injury caused by the sole active negligence of [NJHA], its members, officers, agents, servant or employees.
B. GARAGE hereby releases [NJHA], its members, officers, agents, servants, employees and assigns from any and all liability and casualty claims of GARAGE arising out of this License except that this provision shall not extend to property damage or personal injury caused by the sole active negligence of [NJHA], its members, officers, agents and employees. [Emphasis added.]
Under the agreement, Garage was required to obtain insurance coverage sufficient to "completely protect [it] and [NJHA], [their] members, officers, agents, servants, employees and assigns against any and all risks of loss or liability arising out of this [l]icense." The agreement further provided that Garage was fully responsible "for all liability and casualty claims or losses" beyond the insurance coverage.
On March 28, 1988, Vitty was seated in his tow truck which was parked at an official U-turn within Garage's designated territory. Although Vitty was not engaged in towing or wrecking activities, it is undisputed that he was on duty and acting in the performance of his employment responsibilities. Joseph Vicaro, who had been drinking, was driving in the southbound lane when he sped into the rear of a car driven by Veronica Gerardi. Vicaro's automobile proceeded onto the grass median where it became airborne and crashed into the tow truck. Vitty died instantly.
On November 30, 1988, Vitty's estate instituted an action against Vicaro, Gerardi, NJHA, Garage and two taverns which had served Vicaro alcoholic beverages immediately prior to the accident. The suit against NJHA was predicated on the thesis that the highway median was defective because it sloped upward to the crossover, causing Vicaro's automobile to become airborne. Vitty's estate also pointed to NJHA's failure to place a guardrail in the U-turn area. Prior ...