On certification to the Superior Court, Appellate Division.
The opinion of the court was delivered by: Justice Albin
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).
ALBIN, J., writing for a unanimous Court.
In this case, the Court determines whether All Cleaning Solutions Co. (All Cleaning) is required by the terms of its indemnification agreement to pay the legal costs incurred by Best Buy Stores and American Industrial Cleaning Co. (AIC) in defending a lawsuit that was dismissed for lack of evidence.
AIC entered into an agreement with Best Buy to clean and provide maintenance for its stores. AIC subcontracted with All Cleaning for the daily cleaning of the Best Buy store in Holmdel. While Tina Kieffer was shopping there, she fell and broke her ankle. She sued Best Buy, AIC and All Cleaning, alleging her fall was caused by an unsafe, slippery floor. Early on the day of the accident, All Cleaning had swept, mopped and scrubbed the floor. It had last waxed the floor three months earlier. Kieffer's expert opined that in the area of the fall, the floor finish material was not properly applied, and that "hazardous conditions" created by Best Buy, AIC and All Cleaning caused the fall. Best Buy filed a third-party complaint against AIC, claiming that it was contractually bound to defend and indemnify Best Buy. In turn, AIC filed a fourth-party complaint against All Cleaning.
The floor service agreement between Best Buy and AIC permitted AIC to delegate its duties to others, but AIC remained "solely responsible for the conduct of all such Subcontractors." The Best Buy/AIC agreement also provided that AIC would defend and indemnify Best Buy for all "suits, causes of action, claims, and demands" asserted against Best Buy. The agreement between AIC and All Cleaning, which AIC drafted, required All Cleaning to defend and indemnify AIC and Best Buy "from any connection with any act of negligence, omission, or conduct arising out of the operation of [All Cleaning's] business and [its] performance or non-performance" of its services.
The trial court granted summary judgment in favor of all three defendants, concluding that they were not negligent or otherwise liable for Kieffer's injuries. The court noted that Kieffer did not know why she fell and that her only observation was that the floor was shiny. The court rejected her expert's conclusion that the floor was negligently maintained as nothing more than a bare conclusion unsupported by factual evidence.
Despite its no-negligence finding, the court ruled that All Cleaning was responsible to pay the legal defense costs of both AIC and Best Buy. In denying All Cleaning's motion for reconsideration, the court made findings that indicate that it did not differentiate between the Best Buy/AIC indemnification agreement and the AIC/All Cleaning indemnification agreement. The court stated that each agreement was a "standard contract for defense and indemnification"; that each required the indemnifying party to indemnify and defend the indemnitee against "suits, causes of action, claims, demands" and other expenses; and that both agreements were triggered by "claims," such as the one brought by Kieffer. The quoted language, however, is contained only in the Best Buy/AIC agreement.
The Appellate Division affirmed. The Court granted certification. 203 N.J. 93 (2010).
HELD: All Cleaning had no contractual obligation to indemnify AIC or Best Buy in the absence of a legal determination that All Cleaning caused, by its "negligence, omission, or conduct," the injuries suffered by plaintiff.
1. The objective in construing a contractual indemnity provision is to determine the intent of the parties. If the meaning of an indemnity provision is ambiguous, it is strictly construed against the indemnitee for two reasons: A party ordinarily is responsible for its own negligence, so express language is required to shift liability to the other party; and each party is responsible for its own attorney's fees absent statutory or judicial authority or express contractual language to the contrary. Also, ambiguous terms are strictly construed against the contract's drafter. (pp. 11-14)
2. The AIC/All Cleaning contract did not obligate All Cleaning to indemnify AIC or Best Buy for the legal costs of defending a lawsuit that was dismissed for lack of evidence. The contract only obligated All Cleaning to pay defense costs "from any connection with any act of negligence, omission, or conduct arising out of the operation of [All Cleaning's] business." The Court rejects AIC's argument that the language "connection with" and "arising out of" is a proxy for "claims" and "demands." The Court will not write a better contract for AIC than the one it drafted and impose on All Cleaning an obligation to reimburse AIC and Best Buy for legal costs incurred on dismissed claims. (pp. 14-15)
3. Even if the Court determined that the AIC/All Cleaning indemnification provision was ambiguous, it would be construed against AIC as the indemnitee and drafter of the agreement. (p. 15)
4. All Cleaning's indemnification obligations depended on a judicial finding of "negligence, omission, or conduct" on All Cleaning's part. Here, Kieffer claimed that defendants negligently cleaned and maintained the floor, causing her injuries. The trial court found no evidence that any defendant exercised a lack of due care and concluded that Kieffer's claim was unsustainable. The court did not attribute her fall to the floor's condition. The record is devoid of any judicial finding that All Cleaning's conduct was somehow the cause. There essentially was a judicial finding that Kieffer's injuries were not in "connection with any act of negligence, omission, or conduct arising out of the operation of [All Cleaning's] business." That finding along with a plain reading of the AIC/All Cleaning indemnification provision leads to the conclusion that All Cleaning is not contractually responsible for paying AIC's and Best Buy's defense costs. (pp. 15-16)
The judgment of the Appellate Division is REVERSED andthe matter is REMANDED to the trial court for the entry of judgment dismissing AIC's fourth-party complaint against All Cleaning.
CHIEF JUSTICE RABNER, JUSTICES LONG, LaVECCHIA, RIVERA-SOTO and HOENS, and JUDGE STERN (temporarily assigned) join in JUSTICE ALBIN's opinion.
JUSTICE ALBIN delivered the opinion of the Court.
American Industrial Cleaning Co., Inc. (AIC) entered into an agreement with Best Buy Stores, L.P. (Best Buy) to clean and provide maintenance for its stores. AIC then subcontracted to All Cleaning Solutions Co. (All Cleaning) the daily cleaning of a Best Buy store in Holmdel. This case involves the interpretation of an indemnification agreement between AIC and All Cleaning. That agreement required All Cleaning to defend and indemnify AIC and Best Buy "from any ...