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Mantilla v. NC Mall Associates

March 27, 2001

CARMEN MANTILLA AND PASCUAL MANTILLA, PLAINTIFFS,
v.
NC MALL ASSOCIATES, INCORRECTLY DESIGNATED AS SIMON AND ASSOCIATES, INC. AND M.S. MANAGEMENT ASSOCIATES (INDIANA), INC., DEFENDANTS-RESPONDENTS.



The opinion of the court was delivered by: Coleman, J.

Justice Stein PRESIDING

Argued January 3, 2001

On certification to the Superior Court, Appellate Division.

This appeal requires us to decide whether Newport Centre Mall Associates and M.S. Management Associates (Newport Mall), the indemnitee under a contract between it and Planned Building Services, Inc. (PBS), may be indemnified for legal expenses incurred in defending itself against a claim based on its own negligence. The Appellate Division found that Newport Mall was entitled to indemnification for its legal expenses. We disagree and reverse. We hold that absent explicit contractual language to the contrary, an indemnitee who has been found to be at least partially at fault may not recover the costs of its defense from an indemnitor.

I.

The facts of this case stem from a slip and fall at the Newport Mall located in Jersey City, New Jersey. Plaintiff Carmen Mantilla was injured on May 3, 1996, when she slipped and fell on water that had accumulated on the floor of the Newport Mall as a result of a leaking roof. She instituted the present litigation against Newport Mall, the owners and managers of the mall, and PBS, which had been hired by the mall to perform cleaning services. PBS and Newport Mall disputed whether the terms of their contract for janitorial services required PBS to clean up the water that had accumulated due to the leaky roof. At the conclusion of trial, a jury found that Newport Mall, PBS, and plaintiff were all negligent, found that their negligence proximately caused the accident, and awarded plaintiffs $197,000 in damages. The jury apportioned the negligence as follows: 40% to Newport Mall, 50% to PBS, and 10% to plaintiff. The verdict was molded to reflect plaintiff's negligence and the availability of funds from collateral sources. Post-trial motions for a new trial were denied.

Following the entry of the judgment, Newport Mall moved pursuant to an indemnity agreement, to compel PBS to pay for its litigation expenses and to provide indemnification for its part of the judgment. The trial court ruled that the indemnification contract between PBS and Newport Mall required PBS to provide complete defense costs and indemnification, including that portion of the judgment that was based on Newport Mall's own negligence.

PBS appealed, arguing that there was no evidence that it breached any duty that was a proximate cause of plaintiff's injury; that there was no evidence of constructive notice such as would create liability on its part; that the trial court erred in its jury instruction concerning notice; and that the indemnification clause did not require it to indemnify Newport Mall for its own negligence. The Appellate Division affirmed the judgment against PBS in an unpublished opinion.

On the issue of the scope of the contractual indemnification, the Appellate Division agreed with PBS's contention that, under the contract between it and Newport Mall, PBS's indemnification liability was limited to losses caused by or arising from PBS's negligence, and therefore it should be required to indemnify Newport Mall only with respect to PBS's 50% negligence. In other words, the Appellate Division held that PBS was not required to indemnify Newport Mall for the consequences and losses arising from Newport Mall's own negligence. Relying on principles of insurance law, however, the court determined that PBS was required to indemnify Newport Mall for all of the costs of its defense. The panel found that "Newport Mall was an additional insured under PBS's general liability policy." Thus, the Appellate Division held that, "[w]hen the complaint was filed which stated a claim constituting a risk insured against, a duty to defend came into being irrespective of the claim's merit."

We granted PBS's petition for certification to determine whether Newport Mall is entitled to indemnification for legal fees incurred in defending itself against a claim of its own negligence. 165 N.J. 135 (2000). We denied Newport Mall's cross-petition for certification in which it sought to obtain contractual indemnification for its own negligence. Ibid.

II.

The contract between PBS and Newport Mall is an amalgam of Newport Mall's printed form of general application and PBS's typed form, which was specifically tailored to this transaction. The contract contains three paragraphs relating to indemnification.

An indemnification clause in the Newport Mall printed portion states in pertinent part:

10. Contractor's Warranty and Liability. . . . Contractor shall be liable for any injury caused to the Shopping Center or any persons or property thereon by him or any of his employees or subcontractors in the performance of the work required hereunder. Contractor shall indemnify and hold Owner harmless from any loss, cost, damage, liability or other expense whatsoever that Owner may suffer or incur as the result of a failure of materials and workmanship to be as warranted.

An insurance clause in the same printed portion states:

12. Risk of Loss; Indemnity; Insurance. All work performed by Contractor hereunder shall be done and performed solely at Contractor's own risk, and it is understood and agreed by the parties that Contractor is an independent contractor and not an agent or employee of Owner. Contractor shall indemnify and save Owner harmless from any and all loss, cost, expense, damages, claims and liability for bodily injury, death or property damage occurring in and about the Shopping Center as a result of the work performed and ...


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