April 13, 2010
TINA KIEFFER AND KEVIN KIEFFER, PLAINTIFFS-RESPONDENTS,
BEST BUY,*FN1 DEFENDANT/THIRD-PARTY PLAINTIFF-RESPONDENT,
AMERICAN INDUSTRIAL CLEANING, THIRD-PARTY DEFENDANT/ FOURTH-PARTY PLAINTIFF-RESPONDENT,
ALL CLEANING SOLUTIONS, FOURTH-PARTY DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-1354-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued October 7, 2009
Before Judges Axelrad, Sapp-Peterson and Espinosa.
Defendant, All Cleaning Solutions (All Cleaning), appeals from the motion judge's order directing it to pay the defense costs incurred by defendants Best Buy and American Industrial Cleaning (AIC). We affirm.
The record reveals that on June 19, 2004, plaintiff, Tina Kieffer,*fn2 slipped and fell on the floor at Best Buy in Holmdel. According to her deposition, the floor in the area where she fell was "very, very slippery" and the shine on the floor was so clear that she could see her face. In March 2006, plaintiff filed a complaint against Best Buy seeking to recover damages for the injuries she sustained. Best Buy filed its answer in April 2006. In December 2006, Best Buy's counsel contacted AIC, its cleaning contractor, requesting that AIC defend, indemnify and provide insurance coverage to Best Buy in the underlying litigation. By order dated December 8, 2006, the court granted Best Buy's motion for leave to file a third-party complaint against AIC.
On March 21, 2007, AIC filed an answer to the complaint as well as a fourth-party complaint against All Cleaning, with whom it had subcontracted to perform cleaning services at the Best Buy stores, including the Holmdel location. AIC asserted claims for contractual indemnification. Two months later, plaintiff filed a second amended complaint naming AIC and All Cleaning as direct defendants.
Throughout 2007, AIC made numerous attempts to contact All Cleaning without success. All Cleaning did not respond to these overtures and failed to answer or otherwise plead to the fourth-party complaint until February 2008 when it moved to vacate the default judgment that had been entered against it in favor of AIC. With AIC's consent, the court vacated the order granting default judgment that had been entered in favor of AIC against All Cleaning. Best Buy subsequently moved for summary judgment against plaintiff on liability and against AIC on its contractual indemnification claim. AIC opposed Best Buy's motion but also cross-moved for summary judgment against plaintiff on the issue of liability. AIC also sought summary judgment against All Cleaning as to its contractual indemnification claim.
In an October 15, 2008 order, the court granted summary judgment in favor of all three defendants.*fn3 The court rejected plaintiff's expert's opinion as a net opinion and concluded, as a matter of law, that there was no proof of negligence as to any of the defendants. The court also granted summary judgment in favor of Best Buy and AIC regarding their respective contractual indemnification claims. The court awarded Best Buy $25,790.09 in counsel fees and costs from AIC. Likewise, the court awarded AIC $11,763.75 in counsel fees and costs from All Cleaning.
All Cleaning moved for reconsideration of the court's order directing it to reimburse AIC for its counsel fees and costs. The court denied the motion and ordered All Cleaning to reimburse both Best Buy and AIC for the counsel fees and costs they incurred in defending the reconsideration motion. The court subsequently vacated this order and issued a revised order in which it once again denied All Cleaning's motion for reconsideration. It also denied attorney's fees to Best Buy and AIC for defending against the reconsideration motion. All Cleaning thereafter filed the present appeal.
On appeal, All Cleaning raises the following points for our consideration:
THE LAW DIVISION'S DECISION GRANTING SUMMARY JUDGMENT TO BEST BUY AND AIC ON THE ISSUE OF DEFENSE AND INDEMNITY WAS INCORRECT.
THE INDEMNITY AGREEMENTS MUST BE CONSTRUED AGAINST BEST BUY AND AIC, THE PROSPECTIVE INDEMNITEES AND DRAFTERS OF THOSE AGREEMENTS.
THE LAW DIVISION IMPROPERLY ORDERED ALL CLEANING TO PAY LITIGATION EXPENSES INCURRED BY BEST BUY AND AIC TO PURSUE THEIR AFFIRMATIVE INDEMNIFICATION CLAIMS.
We will begin our analysis by reiterating the basic principles of appellate review, namely, in reviewing an appeal from a summary judgment order, our review is plenary and we employ the same standard of review as the trial court. Singer v. Beach Trading Co., 379 N.J. Super. 63, 80 (App. Div. 2005) (citing Manalapan Realty v. Twp. Comm., 140 N.J. 366, 378 (1995)); Busciglio v. DellaFave, 366 N.J. Super. 135, 139 (App. Div. 2004); Prudential Prop. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). A moving party is entitled to summary judgment where there are no genuinely disputed issues of material fact in dispute. R. 4:46-2(c); see also Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). When the material facts are not disputed, we then decide whether the motion judge's application of the law was correct. Atl. Mut. Ins. Co. v. Hillside Bottling Co., Inc., 387 N.J. Super. 224, 230-31 (App. Div.), certif. denied, 189 N.J. 104 (2006). In undertaking this task, "[a] trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty, supra, 140 N.J. at 378; see also Singer, supra, 379 N.J. Super. at 80.
Contractual indemnity agreements are interpreted in accordance with the rules governing the construction of contracts. Mautz v. J.P. Patti Co., 298 N.J. Super. 13, 19 (App. Div.), certif. denied, 151 N.J. 472 (1997) (citing Ramos v. Browning Ferris Indus., Inc., 103 N.J. 177, 191 (1986)). Our goal is to ascertain the intention of the parties from the language used, the surrounding circumstances and the objects sought to be attained by the parties under their agreement.
Onderdonk v. Presbyterian Homes of N.J., 85 N.J. 171, 183-84 (1981) (citing Atl. N. Airlines v. Schwimmer, 12 N.J. 293, 301 (1953)). Where the terms of an indemnity agreement are unambiguous, the contract will be enforced in accordance with the expectations of the parties. Zacarias v. Allstate Ins. Co., 168 N.J. 590, 595 (2001). When the meaning of the clause is ambiguous, however, the clause should be strictly construed against the indemnitee. See Longi v. Raymond-Commerce Corp., 34 N.J. Super. 593, 603 (App. Div. 1955); Huck v. Gabriel Realty, 136 N.J. Super. 468, 475 (Law Div. 1975).
The contractual relationships of the parties in the present matter are set forth in two agreements. The first agreement, between Best Buy and AIC, contained an indemnification provision in which AIC agreed to: indemnify, defend and hold harmless, Best Buy (and its affiliates and their respective officers, directors, employees and agents) from and against any and all losses, costs, obligations, liabilities, damages, actions, suits, causes of action, claims, demands, settlements, judgments, and other expenses, (including but not limited to cost of defense, settlement, and reasonable attorney's fees) of whatever type or nature, including, but not limited to, damage or destruction to property, injury (including death) to any person or persons, which are asserted against, incurred, imposed upon or suffered by Best Buy by reason of, or arising from . . . (3) the acts or omissions of Contractor (its officers, directors, employees or agents).
The agreement also required AIC to maintain commercial general liability insurance with Best Buy named as an insured. The services required to be conducted by AIC included daily mopping of floors, daily cleaning of floors with automatic scrubbing equipment, annual stripping and waxing of floors, and scrubbing and recoating of floors five times per year.
AIC subcontracted with All Cleaning to perform the required cleaning services at the Best Buy stores. In turn, All Cleaning agreed to "hold harmless, and indemnify [AIC], [their] officers, shareholders, directors, agents, attorneys, employees[,] and each of [their] customers from any connection with any act of negligence, omission, or conduct arising out of the operation of [their] business and [their] performance or non-performance of the Services." (emphasis added).
An indemnitee will generally not be indemnified for defense costs and fees resulting from its own negligence. Mantilla v. NC Mall Assocs., 167 N.J. 262, 264 (2001). However, "if the indemnitee is adjudicated to be free from active wrongdoing regarding a plaintiff's injury, and has tendered the defense to the indemnitor at the start of the litigation," the indemnitee can recover its defense costs and fees. Id. at 273. Known as the "after-the-fact approach," the availability of indemnification is determined after liability of the parties is determined. Id. at 271.
That is precisely what occurred here. The motion judge determined that AIC and Best Buy were free of any liability as a matter of law. There is also no dispute that both Best Buy and AIC timely asserted the indemnification provisions of their respective agreements. Under the terms of All Cleaning's indemnity agreement, it was obliged, among other conditions, to indemnify them for all "claims," "demands," or "assert[ions]," "arising out of" or "arising from" the performance of its cleaning services at the Best Buy stores on AIC's behalf and on behalf of AIC's customers, which would include Best Buy. We find no ambiguity in any of these words contained in the indemnification clause of the agreement. Therefore, these words should be ascribed their ordinary meanings. Kampf v. Franklin Life Ins. Co., 33 N.J. 36, 43 (1960).
Within indemnity agreements, terms such as "arising out of" or "arising from" generally relate to the subject matter of the parties' agreement, which, in this case, refers to All Cleaning's subcontract to perform cleaning services. Leitao v. Damon G. Douglass Co., 301 N.J. Super. 187, 193 (App. Div.), certif. denied, 151 N.J. 466 (1977); Records v. Aetna Life & Cas. Ins., 294 N.J. Super. 463, 468 (App. Div. 1996), certif. denied, 151 N.J. 463 (1997). The language contained in both indemnity agreements does not require a finding of negligence on the part of All Cleaning as a condition precedent to triggering the indemnity provisions. Rather, all that is required is that plaintiff's claim relate to the subject matter of the service agreement. Vitty v. D.C.P. Corp., 268 N.J. Super. 447, 453 (App. Div. 1993).
Plaintiff's theory of the case, as espoused by her expert, was that the "floor surface contained a localized area where the floor treatment was not uniform and consistent with the surrounding area." He opined that:
[t]he slick condition and the presence of "skid marks" on the floor surface in the localized area where two to three tiles were very, very shiny to the extent that one's reflection was visible in the floor surface tile was evidence that the floor finish material was not properly applied in this localized area and caused this accident.
There is no dispute that this theory of liability triggered the indemnity provisions of All Cleaning's subcontract with AIC, and, as one of AIC's "customers," the provisions equally applied to Best Buy.
The fact that plaintiff made allegations against Best Buy and AIC does not mean the indemnification provisions of their respective agreements are not triggered. As we observed in Cent. Motor Parts Corp. v. E.I. duPont deNemours & Co., Inc., 251 N.J. Super. 5, 11 (App. Div. 1991), "[a]llegations in the pleadings may be a starting point to determine whether counsel fees and costs are recoverable by [an idemnitee], but the actual facts developed during trial" or, as in this case, the undisputed statement of material facts in a summary judgment motion, Rule 4:46(2)(a), "should control." All Cleaning did not oppose Best Buy's or AIC's summary judgment motions on the issue of liability. It cannot now be heard to contend that its indemnitees have not been adjudicated "free from active wrongdoing." Mantilla, supra, 167 N.J. at 273. Although the question of the negligence, if any, of Best Buy and AIC was not resolved by trial, the court's summary judgment proceeding satisfied its obligation to conduct a proceeding to determine whether indemnification is available. Central Motor Parts, supra, 251 N.J. Super. at 12-13.