On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, MID-L-12435-96.
Before Judges Pressler, Ciancia and Alley.
The opinion of the court was delivered by: Pressler, P.J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
This controversy arises out of a municipal construction contract. The sole issue raised on this appeal is whether the contractual indemnification given by the general contractor, defendant cross-claimant Riefolo Construction Co., Inc., to the Township of Plainsboro, "its officers, agents, and employees," includes within its protection, as an agent of the municipality, defendant Wagner-Hohns-Inglis (WHI), the independent contractor retained by Plainsboro as contract administrator to inspect the work as it was being performed and to assure that it was being performed in accordance with specifications and on a timely basis. Riefolo appeals from a summary judgment and an order denying reconsideration thereof that accorded WHI the benefit of the indemnification provision of the contract between Plainsboro and Riefolo. We reverse.
The underlying facts are not in dispute. Plainsboro, in furtherance of its plan to construct a new public works building, retained an architect to prepare plans and specifications and an engineer to perform the necessary soil testing. Riefolo was awarded the contract as general contractor. Plainsboro then retained WHI to serve as contract administrator, a function described as being the owner's representative at the job site to ensure the proper and timely execution of the job. It appears that Plainsboro does not have a civil engineer on its payroll either as a municipal officer or employee and that the qualifications of WHI's employees who were actually assigned to the Plainsboro job included either a building inspector's or civil engineer's license. The fee arrangement agreed upon between Plainsboro and WHI was on an hourly basis, it being understood that supervision of the job would not generally consume an entire eight-hour day.
Riefolo subcontracted with defendant Kenneth Giovanelli to do excavation work. On September 7, 1994, an employee of Giovanelli dug a large pit for a sewer section pump. The pit had no shoring. On that day plaintiff Michael Pepe, an employee of Riefolo, went into the pit to do carpentry work. The pit collapsed while he was in it, and he was severely injured.
Plaintiff, whose wife Paula Pepe sued per quod, filed this personal injury action in September 1996 against Plainsboro, its "agents, servants and employees"; the architect who had drawn the plans and specifications; the engineer who had done the soil testing; WHI; Riefolo; Giovanelli; and a group of unknown defendants. The cause of action against WHI was evidently predicated upon its improper inspection of the pit that had collapsed. See, generally, Caravalho v. Toll Bros. and Developers, 143 N.J. 565 (1996). Insofar as we are able to determine from this somewhat incomplete record, summary judgment was granted to Plainsboro, its agents, servants, and employees dismissing the complaint as against them on tort claims grounds. At some point it appears that the action was terminated as against the architect and engineer, and no unknown defendants were ever identified. Riefolo, as plaintiff's employer, was let out vis-a-vis plaintiff because of the exclusivity of the workers' compensation remedy, but not as to the various cross- claims of the remaining defendants. That left WHI, Giovanelli, and Riefolo.
WHI moved for summary judgment in February 1999. It first sought dismissal of the complaint against it claiming that under Vanchieri v. New Jersey Sports and Exposition, 104 N.J. 80 (l986), it was entitled to derivative immunity under the Tort Claims Act as an independent contractor of a municipality and, hence, that plaintiff's action against it should be dismissed. It also claimed that since it was acting as the municipality's on-site representative, it was its agent, entitled to the benefit of the provision of the contract between Riefolo and Plainsboro by which Riefolo agreed to indemnify Plainsboro, its officers, agents and employees. That portion of its motion seeking dismissal of plaintiffs' complaint against it was denied, but that portion of its motion seeking indemnification from Riefolo was granted. In sum, although it was the view of the motion judge that WHI was an independent contractor liable to third parties for its own negligence and for whose negligence Plainsboro would not be vicariously liable, he concluded, nevertheless, that WHI was, at the same time, an agent of Plainsboro entitled to the benefit of the indemnification agreement. A conforming order was entered in March 1999.
Although Riefolo moved for reconsideration of the indemnification issue in September 1999, that motion was not heard until December 3, 1999, when it was denied. In the meantime, Riefolo had not moved for leave to appeal, and its liability carrier took over the defense of plaintiff's action against WHI, assigning an attorney to represent it. Trial against Giovanelli and WHI, apparently on liability only, commenced at the end of November 1999. Giovanelli then settled plaintiffs' claims against him for $725,000. After the second day of trial, the attorney assigned by Riefolo's carrier to defend WHI, Richard Astorino, announced to the court that a settlement had been reached terminating the action, and the settlement was then placed on the record. The judge who had been trying the case noted that the indemnification issue had been before a different judge who would also decide the reconsideration motion. As to the settlement itself, the judge, after stating that $725,000 was the sum agreed upon for plaintiffs' release of their claims against WHI, had this to say:
In the event that Selective [Riefolo's carrier] prevails on this motion, whether it's counsel's new motion or a motion for reconsideration, . . . [and the judge] determines that Carlisle [WHI's carrier] should have undertaken the defense of this case, then Carlisle will have the following options: To pay the judgment or they'll appeal. And if they appeal they'll have to abide by what the Court rules are with regard to Appellate procedure.
It has been represented to Mr. Astorino to make sure – that Carlisle on behalf of Wagner and Wagner are all in agreement that $725,000 is a fair number to settle this case for Wagner's liability, and do not take issue with the 725,000. They do take issue is – issue with is their responsibility to pay.
So the question will not be have you settled for a wrong amount of money and it's too – too much or too little or too big a percentage or too – too small but rather, it will come down to the legal question of whether you on behalf of Selective or Carlisle is responsible under their contractual agreements to pay any judgments that would have been entered against WHI.
Mr. Astorino agreed that that was essentially a fair statement, further representing that he had first consulted respecting the settlement agreement with both WHI's carrier and, because WHI's liability policy had a $100,000 deductible, with WHI's personal attorney as well. Both, Mr. Astorino represented, had concurred that $725,000 was a fair settlement and had agreed that the only open issue was whether the ultimate responsibility to pay that sum to plaintiffs rested with WHI or Riefolo. Mr. Astorino, moreover, represented that if the motion for reconsideration of the indemnification decision, due to be argued in several days, was not in Riefolo's favor, then its carrier would promptly pay plaintiffs, reserving its right to appeal on the indemnification issue. WHI's carrier, however, according to Mr. Astorino, would not undertake to pay the settlement to plaintiff if the indemnification decision was against it until it had prosecuted an appeal therefrom. Thus, as Mr. Astorino made clear, while WHI and Riefolo and their respective carriers had consented to the making of ...