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Township of Lakewood v. Epic Management

July 20, 2009

TOWNSHIP OF LAKEWOOD, PLAINTIFF,
v.
EPIC MANAGEMENT, INC., HILL INTERNATIONAL, INC., HNTB NEW JERSEY ARCHITECTURE, INC., DEFENDANTS, AND EPIC MANAGEMENT, INC., DEFENDANT/THIRD-PARTY PLAINTIFF-RESPONDENT,
v.
CJ CONTRACTORS, INC., THIRD-PARTY DEFENDANT-APPELLANT.



On appeal from Superior Court of New Jersey, Law Division, Ocean County, Docket No. L-3116-04.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued March 24, 2009

Before Judges Parker, Yannotti and LeWinn.

Third-party defendant CJ Contractors, Inc. (CJ) appeals from an order entered on July 20, 2007, awarding counsel fees and costs to third-party plaintiff, Epic Management, Inc., (Epic) in the amount of $219,310.80 for defense of the claims made by plaintiff Township of Lakewood (Lakewood) against Epic and Epic's action against CJ for indemnification and reimbursement of those fees and costs.*fn1

The facts relevant to this appeal are as follows. Epic was awarded a contract by Lakewood to construct a minor league baseball stadium. In June 2000, Epic contracted with CJ to provide drywall, carpentry and asphalt shingle work for the project. The contract contained indemnification provisions in Articles 23.1 and 30.1. In Article 23.1, CJ agreed to indemnify and hold Epic harmless "[t]o the fullest extent permitted by law . . . for any and all damage or injury of any kind or nature whatever . . . to all persons, whether employees of [CJ] or otherwise and to all property, caused by, resulting from, arising out of or occurring in connection with the execution of the Work."

In Article 30.1, CJ agreed to hold Epic harmless and indemnify it "to the fullest extent as permitted by law" for any claim in arbitration or suit "for negligence, tort, or otherwise . . . made or asserted against Epic arising out of, or in connection with the work or services performed hereunder by [CJ]."

Lakewood sued Epic because the stadium roof leaked. The project specifications called for ISO insulation board for the roof. The architect's drawings did not have any reference to ISO insulation board, however, and CJ installed most of the roof without it.

Various experts attributed the leaks to various factors, including failure to have sufficient space between the shingles and metal decking, and roof nails installed incorrectly causing the asphalt shingles to dimple and protrude in the areas where the ISO board was not installed. After Epic was sued by Lakewood, Epic invoked the indemnification provisions under its contract with CJ. The underlying action was settled and only the third-party claims remained. In February 2007, Epic moved to compel CJ to provide defense and indemnification and that motion was granted on March 30, 2007. Thereafter, the parties settled with Lakewood. CJ and the other defendants contributed to the settlement, but Epic did not. Epic received $35,000 from the other defendants on its cross-claim.

After the settlement, Epic moved for indemnification of legal fees incurred in defending Lakewood's action and pursued its indemnification claims against CJ. On July 20, 2007, the trial court granted Epic's motion and ordered CJ to pay $219,310.80 for Epic's fees and costs. The parties then entered a stipulation of dismissal on January 3, 2008, stating:

The matter in difference in the above entitled action having been amicably adjusted by and between the parties, it is hereby stipulated and agreed that the same be and it is hereby dismissed without costs against any party and with prejudice, except claims for indemnification by third-party plaintiff Epic Management, Inc. ("Epic") against third-party defendant CJ Contractors, Inc. ("CJ") concerning the attorney's fees and costs awarded to Epic and against CJ, pursuant to the order entered . . . on July 20, 2007. [Emphasis added.]

The stipulation of dismissal renders CJ's appeal of the March 30, 2007 order moot, except for CJ's claim that the trial court erred by requiring it to indemnify Epic for the fees and costs incurred in defending Lakewood's claims. Consequently, we will address CJ's arguments only with respect to indemnification of the fees and costs awarded to Epic in the July 20, 2007 order. R. 2:8-2.

We begin our analysis with CJ's argument that the indemnification clauses are conflicting and ambiguous. CJ contends that the ambiguity arises because Article 23.1 refers to "Work," which would encompass all damages arising from the defective roof, while Article 30.1 narrows CJ's liability to "work or services" performed by it, which would not include damages arising from Epic's negligence. Relying on Ramos v. Browning Ferris Industries, Inc., 103 N.J. 177, 191 (1986), CJ argues that the trial court should have construed these conflicting provisions against Epic as the drafter of the contract and denied its motion to compel defense and indemnification. CJ further argues that Meder v. Resorts Int'l Hotel, Inc., 240 N.J. Super. 470, 478-80 (App. Div. 1989), certif. denied, 121 N.J. 608 (1990), supports its position. We disagree.

Contract construction is a matter of law, "but where [a contract's] meaning is uncertain or ambiguous and depends upon parole evidence admitted in aid of interpretation, the meaning of the doubtful provisions is a question of fact." Anthony L. Petters Diner, Inc. v. Stellakis, 202 N.J. Super. 11, 27 (App. Div. 1985) (citing Michaels v. Brookchester, Inc., 26 N.J. 379, 387 (1958)). In order to determine the intentions of the parties to a contract, "the court must consider the relations of the parties, the attendant circumstances, and the objects they were trying to attain." Ibid. "An agreement must be construed in the context of the circumstances under which ...


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