January 16, 2008
CATHERINE DI FILIPPI, PLAINTIFF,
TARGET CORPORATION D/B/A TARGET STORES, DEFENDANT-RESPONDENT/CROSS-APPELLANT, AND ALL JERSEY JANITORIAL SERVICES, DEFENDANT-APPELLANT/CROSS-RESPONDENT.
On appeal from Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-4095-03.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued October 16, 2007
Before Judges Fuentes and Grall.
In this slip and fall case, plaintiff Catherine Di Filippi brought suit against Target Stores and All Jersey Janitorial Services alleging that defendants negligently maintained the property. At the time of the accident, Target had contracted with All Jersey to clean the floor where plaintiff fell. The trial court granted summary judgment as to liability in favor of both Target and All Jersey and against plaintiff.
Target then moved before the trial court to enforce an indemnification provision in its service contract with All Jersey. The trial court granted Target's motion, and ordered All Jersey to pay Target counsel fees it incurred in the defense of plaintiff's cause of action. In so doing, however, the trial court substantially reduced the amount of fees requested by Target.
All Jersey now appeals arguing that it has no duty to indemnify Target because plaintiff's claims against Target did not "arise out of" or "relate to" All Jersey's performance of the floor cleaning contract. Target argues that the trial court correctly decided this issue, because the protection afforded by the indemnification clause is not contingent upon a finding of fault on All Jersey's part.
By way of a cross-appeal, Target challenges the amount of counsel fees awarded by the trial court. According to Target, the court abused its discretion when it reduced the award of attorneys' fees by: (1) not taking into account all the relevant factors under R.P.C. 1.5(a); (2) differentiating between fees incurred in defending against liability and those incurred in enforcing the indemnification agreement; and, (3) making arbitrary and unsupported reductions.
After reviewing the record before us, and in light of prevailing legal standards, we affirm the trial court's decision requiring All Jersey to indemnify Target for counsel fees incurred in the defense of plaintiff's suit. As to the cross-appeal, we reverse the amount of fees awarded and remand for the trial court to consider and apply the factors listed in R.P.C. 1.5(a). The scope of the court's review shall also include counsel fees incurred by Target in enforcing the indemnification agreement.
The following salient facts are not disputed. Target and All Jersey entered into a service agreement whereby All Jersey agreed to perform floor cleaning services at Target's store in Middletown, New Jersey. The contract contained an indemnification clause, which provides:
7. Indemnification. Except as provided herein, [All Jersey] agrees to assume responsibility for all injuries or damages to persons or property which relate to or arise out of [All Jersey]'s performance of Services, [All Jersey]'s failure to perform its obligations under this Agreement, or the negligence or wrongful acts of [All Jersey] or its agents or employees. [All Jersey], to include his agents, servants, employees, assigns, independent contractors, or anyone else retained by [All Jersey] for the performance of [All Jersey]'s obligations under this Agreement, shall defend, indemnify and hold harmless Target and its agents and employees, from and against (1) any and all claims, suits, losses, damages, judgments or expenses (including attorney's fees incurred in responding to claims or suits) which relate to, arise out of, or are asserted or incurred as a result of, [All Jersey]'s performance of Services, [All Jersey]'s failure to perform its obligations under this Agreement, or the negligence or wrongful acts of [All Jersey] or its agents or employees; and (2) any claims made by [All Jersey]'s employees arising out of the performance of Services; provided, however, that the foregoing indemnity obligations shall not apply to injury, damage or loss caused by the sole negligence of Target.
The obligations under this paragraph shall survive the termination of this Agreement.
Plaintiff Catherine Di Filippi entered the Target store in Middletown on January 2, 2002, and, while walking towards the restroom, fell and injured herself. According to Di Filippi, the floor in the area where she fell was "very shiny." Her suit alleged negligent maintenance of the floor where she fell. At the end of the discovery period, both defendants moved for summary judgment on the issue of liability.
In granting summary judgment against plaintiff, the trial court made the following findings:
In this case, the Court has reviewed all of the moving paper[s] as well as the briefs submitted. And really, the seminal case on point is the [Overby v. Union Laundry Company 28 N.J. Super. 100 (App. Div. 1953), affirmed 14 N.J. 526 (1954)].
In Overby, it has long been the law of New Jersey that even where a claimant provides proof of circumstances that he or she has fallen on a floor that has been waxed, such circumstances do not warrant any inference that the mishap was caused by a proprietor's negligence. Rather to generate any inference of negligence, it must appear that either (1) the nature or quality of substances use[d] or (2) the manner or time of its application that there was such a departure from the normal or generally accepted standards that a hazard of tortious character was created for the lawful user of the premises.
In analyzing the facts in that case, I agree with counsel that this case does not even come close to the facts that were in that case. In that case there was some evidence that there was a waxy buildup, and wax was found, a skid mark was through the wax, and then found somewhat on the individual's shoe who slipped.
In this case, I do not feel that there are any questions of fact that could not be decided by this Court. I don't think there's any genuine material issue of fact. Unfortunately in this case, the proofs that I have reviewed, or lack thereof, do not even come up to the standards that have been set forth in the Overby case. Again, there was just an allegation that it was a shiny floor. And I know that there was mention in the deposition of the store employee that you know, that's their goal to have shiny clean floors. But I think that's probably the goal of most stores.
The fact in this case, without anything else indicating a reason or some evidence to present to a jury as to the fact that she was caused to fall other than unfortunately, on the fact that she may have just fallen maybe in light of her age, I don't know that. But there's nothing that points to anything in the Court's mind that would indicate any negligence on the part of either the store or the janitorial service. [(Emphasis added).]
In response to Target's motion, the question of indemnification was next addressed by the court. After reviewing relevant case law, the court concluded that while the plaintiff was unsuccessful, her claim clearly arises out of the service agreement between Target and All Jersey. In the Court's mind and under the case law this triggers the indemnity, hold harmless defend clause provisions of the agreement that I set forth earlier and as such, the Court finds that All Jersey should be required to indemnify and pay the costs and attorney's fees that were incurred by Target in this lawsuit.
Target submitted a request for attorneys' fees totaling $63,728.17. The trial court reduced the request by approximately 48.6%, awarding Target $32,780.86 in fees. In reaching this amount, the court emphasized that Target's attorneys had charged a range of hourly rates during the period in question. Thereafter, the court chose to "average" the various hourly rates charged by individual lawyers involved in the case. This approach resulted in the court fixing an hourly rate bearing no relationship to the particular attorney's professional background and experience. The following passage from the court's decision illustrates the point.
Basically what I chose to do in applying an hourly rate is I chose $150 an hour because I was not going to take the inordinate amount of time to break down each entry between partner, associate and paralegal so I used, once I made reductions in total number of hours, and I will go through that in a second, I applied a rate of $150 an hour which is the median between those rates.
With respect to the actual work performed, the court's reductions were based on a generalized conclusion that the work amounted to either "double billing," or an inordinate and unjustifiable amount of time spent on the subject by a given lawyer.
Basically as I went through the bills for each month there were reductions in the incremental units based on what I saw was a situation where either too much time was spent on certain issues or there was issues of basically a double billing type situation where maybe a partner reviewed it one time and then an associate at another time. So I went - and then some of the things that I did not agree should be billed included preparation of bills themselves. That's not a proper thing to bill in an indemnification type situation and again there were reductions as I went through the bills for situations where I thought either too much time was spent, it did not apply to the indemnification situation or it was situation where there was basically a double billing situation where one person did one thing and then it was repeated again.
The court also ordered a $5,000 reduction in counsel fees because, in its view, Target should have filed its motion to enforce indemnification earlier in the case. Finally, the court reduced the amount requested for costs relating to legal research performed via electronic data bases by $6,026.
Against this backdrop, we will now address the issues raised on appeal. As a starting point, we note that in interpreting indemnification clauses, courts apply the rules governing contract construction generally. Englert v. Home Depot, 389 N.J. Super. 44, 51 (App. Div. 2006), certif. denied, 192 N.J. 70 (2007). "When the meaning of the clause is ambiguous, however, the clause should be strictly construed against the indemnitee. Thus, a contract will not be construed to indemnify the indemnitee against losses resulting from its own negligence unless such an intention is expressed in unequivocal terms." Ibid. (quoting Ramos v. Browning Ferris Indus., 103 N.J. 177, 191-92 (1986)).
Here, the only issue is whether plaintiff's lawsuit "arose out of" or "was related to" All Jersey's performance of the contract. In the indemnification context, the words "arising out of or resulting from" are given "their common and ordinary meaning as referring to a claim 'growing out of' or having its 'origin in' the subject matter" of the parties' underlying agreement. Leitao v. Damon G. Douglas Co., 301 N.J. Super. 187, 193 (App. Div.), certif. denied, 151 N.J. 466 (1997).
For a claim to "arise out of" a contract, "there need be shown only a substantial nexus between the property damage or injury alleged in the claim and the activities encompassed in the [service] contract." Vitty v. D.C.P. Corp., 268 N.J. Super. 447, 453 (App. Div. 1993). In Vitty, the defendant towing company had a contract with the New Jersey Highway Authority ("NJHA") to patrol and perform towing services along an eight-mile stretch of the Garden State Parkway. Id. at 450. Plaintiff was the estate of Kenneth Vitty, an employee of the towing company. Ibid. While on duty, Vitty was in a parked tow truck on the median of the Parkway when a drunk driver collided with Vitty's truck, killing him instantly. Id. at 451.
The towing company and NJHA had an indemnification agreement whereby the towing company had to indemnify NJHA "from any and all demands, claims, liability, suits, losses, injuries, damages, judgment, expenses and costs of every kind, nature and description arising out of [the agreement]." Ibid. In this context, we held that the phrase "arising out of" did not require a causal connection between the indemnitor's actions and the claimant's injury. Id. at 453-54.
The cause of the claim need not relate to an "act or omission" in carrying out the duties required by the [agreement]. Instead, all that is required is that the injury, or property damage grow out of, or have its origin in, or be connected to the subject matter of the [service] agreement. [Id. at 454.]
Based on a plain reading of Vitty's holding, we are satisfied that the trial court here correctly determined that All Jersey was contractually bound to indemnify Target against counsel fees and related costs incurred in the defense of the underlying personal injury action. The clear language of the indemnification agreement does not require a finding of negligence on All Jersey's part to trigger indemnification. All Jersey's judicial estoppel argument lacks sufficient merit to warrant comment in a written opinion. R. 2:11-3(e)(1)(E).
We next address the issue raised in Target's cross-appeal concerning the amount of fees and costs awarded by the court. In this respect, our analysis will be guided by well-established principles of appellate review.
In assessing the propriety of a trial judge's award of attorneys' fees generally, a reviewing court applies the "abuse of discretion" standard. New Jerseyans for a Death Penalty Moratorium v. N.J. Dep't of Corr., 185 N.J. 137, 152 (quoting Packard-Bamberger Co. v. Collier, 167 N.J. 427, 444 (2001)). "[A]buse of discretion is demonstrated if the discretionary act was not premised upon consideration of all relevant factors, was based upon consideration of irrelevant or inappropriate factors, or amounts to a clear error in judgment." Masone v. Levine, 382 N.J. Super. 181, 193 (App. Div. 2005).
Target argues that the trial court abused its discretion by arbitrarily selecting $150 as the flat hourly rate by which to calculate Target's attorneys' fees award, without applying the factors listed in R.P.C. 1.5(a). We agree. In determining the reasonableness of attorneys' fees, the court looks at the factors provided in the Rules of Professional Conduct. R.M. v. Supreme Court of New Jersey, 190 N.J. 1, 11-12 (2007). R.P.C. 1.5(a) provides that:
The factors to be considered in determining the reasonableness of a fee include the following:
(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
(3) the fee customarily charged in the locality for similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the circumstances;
(6) the nature and length of the professional relationship with the client;
(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; [and,]
(8) whether the fee is fixed or contingent.
A trial court must provide its reasons for the amount of awarded fees, taking the factors of R.P.C. 1.5(a) into account. See e.g., R.M., supra, 190 N.J. at 12 (vacating an entry of attorneys' fees under 42 U.S.C.A. § 1983 and remanding because the trial court provided no methodology as to how it determined the award); No. Bergen Rex Transp. v. TLC, 158 N.J. 561, 574 (1999) (remanding defendant's contractual award of attorneys' fees for trial court to fully consider R.P.C. 1.5(a) and the extent to which defendant's claims were unsuccessful).
Here, there is no indication that the trial court considered the R.P.C. 1.5(a) factors, other than the one referring to "the experience, reputation, and ability of the lawyer or lawyers performing the services." The "averaging" method employed by the court does not take into account the amount of time a particular attorney may have spent on the matter; nor does it consider the individual attorney's professional background and experience. In going about the task of reviewing an application for counsel fees:
(1) the court may reduce the requested award because the number of professional hours reported is not commensurate with the level of difficulty presented by the particular issue involved; (2) the work duplicates previously compensated work; (3) the number of attorneys assigned to the task is not warranted under the circumstances; and/or (4) the hourly rate requested for any particular attorney exceeds the rate charged by attorneys with equivalent or substantially similar professional experience and/or training. [Twp. of W. Orange v. 769 Assocs., ____ N.J. Super. ____, ____ (App. Div. 2007) (slip op. at 13-14).]
Here, the trial court's failure to apply the relevant criteria listed in R.P.C. 1.5(a) renders the amount of fees awarded unsustainable, and constitutes a mistaken exercise of judicial discretion. See R.M., supra, 190 N.J. at 12; Masone, supra, 382 N.J. Super. at 193. Finally, we find no textual support in the indemnification agreement for disallowing fees incurred by Target in the prosecution of this enforcement action.
The order of the trial court directing All Jersey to indemnify Target for counsel fees and costs incurred in defense of the personal injury action filed by plaintiff is affirmed. The amount of fees and costs awarded is reversed. The matter is remanded for the court to reconsider Target's request consistent with this decision.
Affirmed in part; reversed in part, and remanded. We do not retain jurisdiction.
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