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Dai v. Community Medical Center

November 19, 1996

SADIE DAI, PLAINTIFF,
v.
COMMUNITY MEDICAL CENTER, A/K/A COMMUNITY MEMORIAL HOSPITAL, DEFENDANT-RESPONDENT/CROSS-APPELLANT., AND NEW JERSEY AUTOMATIC DOOR, INC., DEFENDANT-APPELLANT/CROSS-RESPONDENT, AND BESAM, INC., DEFENDANT.



On appeal from the Superior Court of New Jersey, Law Division, Ocean County.

Approved for Publication November 21, 1996.

Before Judges King, Keefe and Conley. The opinion of the court was delivered by Keefe, J.A.D.

The opinion of the court was delivered by: Keefe

The opinion of the court was delivered by KEEFE, J.A.D.

This appeal by New Jersey Automatic Door, Inc. (NJAD) and cross-appeal by Community Medical Center, a/k/a Community Memorial Hospital (CMC) stems from the entry of a limited judgment in favor of NJAD against CMC based on an indemnification provision contained in a preventative maintenance contract. We reverse on NJAD's appeal and affirm on CMC's cross-appeal.

On March 29, 1990, plaintiff Sadie Dai, now deceased, was seriously injured when the automatic doors located at CMC's main entrance struck her. Plaintiff was leaving the hospital after visiting her husband when the accident occurred. She sued CMC, NJAD, and Besam, Inc, (Besam). NJAD had installed the automatic door equipment at CMC, and had contracted with CMC to service and maintain that equipment. Besam was the parent corporation of NJAD and the manufacturer of the motor mechanism for the automatic door.

At a settlement conference conducted prior to the commencement of trial in June 1994, plaintiff agreed to accept $150,000 in full release of her claims against all parties. CMC refused to contribute to the settlement. NJAD advised CMC that it would settle the claim in that amount and reserve the right to prosecute its cross-claim for indemnification against CMC pursuant to the indemnity clause contained in paragraph 12 of NJAD'S preventative maintenance agreement with CMC. That paragraph in pertinent part states:

Customer agrees to indemnify, defend, and save the Distributor harmless from and against any and all claims, losses, damages or liabilities of any kind arising out of or in connection with any injury or damage to persons or property on or about customer facility, unless such injury or damage was caused by Distributor's sole and direct negligence.

NJAD paid the settlement money to plaintiff solely on behalf of NJAD, and specifically reserved the right to pursue its cross-claim in the release.

Prior to trial of the indemnification claim, the trial court held that the Charitable Immunity Act (Act), specifically N.J.S.A. 2A:53A-8, applied to actions based on contract indemnification agreements and that CMC's liability, if any was to be found at trial, would be limited to "the statutory criteria of $10,000." The matter then proceeded to trial. The jury found that both NJAD and CMC were negligent and their negligence was a proximate cause of plaintiff's injuries. The jury also found that NJAD "legitimately faced potential liability for the claim underlying the settlement," and that NJAD's settlement with plaintiff was "reasonable." Finally, the jury found that NJAD's settlement with plaintiff "terminated or reduced a valid claim against the hospital."

A judgment was entered in favor of NJAD in the amount of $10,000 on its contractual indemnification claim against CMC. Subsequently, the trial court granted NJAD's application for counsel fees and costs under the agreement totaling $42,953.87. This appeal followed.

I

NJAD contends that the trial Judge erred in limiting CMC's liability to $10,000 in respect of plaintiff's settlement. We agree. In material part, N.J.S.A. 2A:53A-7 provides that "no non-profit corporation . . . organized exclusively for . . . hospital purposes shall, except as is hereinafter set forth, be liable to respond in damages to any person who shall suffer damage from the negligence of any agent or servant of such corporation . . ., where such person is a beneficiary, to whatever degree, of the works of such nonprofit corporation." (Emphasis added.) N.J.S.A. 2A:53A-7 also provides that "such immunity from liability shall not extend to any person who shall suffer damage from the negligence of such corporation . . . or its agents or servants where such person is one unconcerned in and unrelated to and outside of the benefactions of such corporation." (Emphasis added.) Further, on the date of plaintiff's accident, N.J.S.A. 2A:53A-8 provided that "notwithstanding the provisions of . . . [N.J.S.A. 2A:53A-7], any nonprofit corporation . . . organized exclusively for hospital purposes shall be liable to respond in damages to such beneficiary who shall suffer damage from the negligence of such corporation . . . or its agents or servants to an amount not exceeding $10,000.00, together with interest and costs of suit, as the result of any 1 accident." *fn1 (Emphasis added.)

Notably, these sections of the Act speak specifically and only of "negligence" because the Act "was enacted in order to immunize corporations, societies, and associations organized exclusively for religious, charitable, or hospital purposes from tort liability in specific circumstances[.]" Alicia Bottari, The Charitable Immunity Act, 5 Seton Hall Legislative Journal 61, 68-69 (1980). This interpretive theme was adopted by the Supreme Court in Brown v. St. Venantius School, 111 N.J. 325, 336, 544 A.2d 842 (1988), where the Court said: "we do not believe the Legislature intended the courts to refrain from imposing liability on charitable organizations in cases not specifically covered by the statute." Id. at 337. For example, the Act does not apply to ...


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