On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-41554-03.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Lihotz, Simonelli and King.
Defendant New Jersey Transit (NJT) appeals from a judgment following a bench trial to determine the scope of the indemnification and insurance clauses in NJT's lease with defendant the Port Authority of New York and New Jersey (Port Authority). Rickie Taylor worked for NJT. He was injured when he fell on the Port Authority premises. Taylor received workers' compensation benefits from NJT. He then sued the Port Authority alleging a structural defect in the premises. The Port Authority filed a third-party claim against NJT seeking indemnification. Taylor's negligence case was settled and the defendants tried the indemnification claim. The trial court determined NJT must indemnify the Port Authority and pay its counsel fees and costs. NJT challenges the trial court's determination that the indemnification obligation, as set forth in the lease, extended to the Port Authority's own negligent acts. We reverse.
The facts underlying Taylor's negligence action giving rise to this dispute are as follows. NJT leased bus parking spaces from the Port Authority to park its empty busses at the Port Authority Bus Terminal in New York City. From 1978 until he was injured, Taylor worked as an NJT bus starter assigned to the Port Authority Bus Terminal. On June 27, 2002, while working between the North and South wings of the bus terminal, Taylor "caught his foot" in an uncovered two and three-quarter inch expansion joint connecting sections of the concrete floor. He fell and dislocated his right knee. Although the accident occurred in the bus parking garage, Taylor fell in an area other than the bus spaces leased by NJT. NJT paid Taylor's workers' compensation claim.
Taylor filed a negligence action against the Port Authority, as owner of the premises, alleging it was negligent in the design, construction, and maintenance of the terminal. More specifically, in the first count of Taylor's complaint, he alleged that as "a direct and proximate result of [the] Port Authority's negligence, carelessness, and recklessness in the design and maintenance of the Terminal's floor, . . . Taylor was severely injured . . . ." The second count asserted that as "a direct and proximate cause of the negligent, careless and reckless design, manufacture and/or installation of the floor by the [Port Authority] . . . [Taylor] was caused to be injured." The Port Authority filed a third-party complaint against NJT seeking defense costs and indemnification for any determined liability.
NJT and the Port Authority settled Taylor's claims without a determination of liability and with a reservation that the court would decide whether NJT owed an obligation to indemnify the Port Authority based upon the lease provisions. NJT and the Port Authority agreed to waive the presentation of testimony and submit documents to the trial judge.*fn1
It was not disputed that NJT was self-insured and that no policy document existed delineating the extent of coverage. Further, the parties stipulated that "Taylor was working within the scope of his employment at the time of the accident."
NJT argued, as it does before this court, based on the expert reports, it had no liability regarding the accident and the lease did not require indemnification for the negligent acts of the Port Authority.*fn2 NJT points to Taylor's expert who opined that the expansion joint involved in Taylor's fall was "improperly maintained and . . . in violation of generally accepted safety standards and/or practices" for walking surfaces. He stated the unguarded joint filled with elastomeric composite fiber that compressed underfoot was "a dangerous tripping hazard to a pedestrian walking in the area" and caused Taylor's fall. This hazardous condition "existed for an extensive period of time prior to the incident."
The Port Authority argued that determination of the matter was informed by the insurance provisions of the lease not the indemnification clause. Further, the fault of the Port Authority or Taylor is inconsequential because Taylor's accident arose out of NJT's use of the terminal for which insurance coverage was required. In any event, the Port Authority denied liability and its expert concluded Taylor worked in the area for fifteen years prior to the accident and should have known of the presence of the expansion joint. Alternatively, Taylor should have been walking on an available segregated walkway not the area where buses travel.
After reviewing the stipulated documents, the trial judge concluded the broad language of the indemnification provision of the lease required NJT to "indemnify the Port Authority for all claims arising out of NJT['s] use of the Bus Terminal[,]" including those presented by Taylor. The trial judge entered judgment in favor of the Port Authority and, in a subsequently entered order, required NJT to reimburse the sum of $16,241.50 in counsel fees and costs expended by the Port Authority. This appeal followed.
We review whether the contractual provisions of the lease agreement obligated NJT in "unequivocal terms" to indemnify and defend the Port Authority for third-party claims resulting from the Port Authority's own negligent acts. A related question is, notwithstanding the nature of the responsibility for indemnification, whether the insurance clause of the lease separately obligated NJT to provide coverage for the benefit of the Port Authority to satisfy Taylor's claim for personal injury.
In our discussion, we set forth relevant portions of the parties' agreement. The lease document in the record commenced on July 27, 1981 and ended on December 31, 1982. Thereafter, the lease ...