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Toni Ann Sheridan and Patrick Sheridan v. Heritage Gateway

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


December 17, 2012

TONI ANN SHERIDAN AND PATRICK SHERIDAN, PLAINTIFFS,
v.
HERITAGE GATEWAY, LLC, A DELAWARE LIMITED LIABILITY COMPANY; MARINE ONE ASSOCIATES, III, LLC, A DELAWARE LIMITED LIABILITY COMPANY; RIDGEWOOD 2000 ASSOCIATES, III, LLC, A DELAWARE LIMITED LIABILITY COMPANY; JPG REAL ESTATE III, LLC, A DELAWARE LIMITED LIABILITY COMPANY; IVY GATEWAY, LLC, A DELAWARE LIMITED LIABILITY COMPANY; GATEWAY FOUR URBAN RENEWAL, L.P.; GATEWAY IV NEWARK URBAN RENEWAL, LLC; GATEWAY V NEWARK, LLC; GATEWAY PARKING NEWARK, LLC; GATEWAY IV, LLC; AND FIREMAN'S FUND A/K/A FIREMAN'S FUND INSURANCE COMPANY, DEFENDANTS, AND TPE GATEWAY III, LLC; GATEWAY III NEWARK, LLC; AND TAHL PROPP EQUITIES, LLC, DEFENDANTS-THIRD PARTY PLAINTIFFS-APPELLANTS,
v.
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, THIRD PARTY DEFENDANT-RESPONDENT.

On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-3133-09.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued November 27, 2012

Before Judges Harris and Hoffman.

Third-party plaintiffs TPE Gateway III, LLC; Gateway III Newark, LLC; and Tahl Propp Equities, LLC (collectively Gateway) appeal from the Law Division's two December 2, 2011 orders (1) granting summary judgment in favor of third-party defendant Prudential Financial, Inc. (Prudential)*fn1 dismissing the third-party complaint and (2) denying summary judgment in favor of Gateway on the claims in the third-party complaint. Gateway also appeals from the January 23, 2012 order denying its motion for reconsideration. We affirm in all respects.

I.

A.

Gateway is the owner of a high-rise office building commonly known as Gateway III, which is part of a multi-structure office complex in downtown Newark known as the Gateway Center. An adjoining high-rise office building -- also part of the Gateway Center -- commonly known as Gateway IV, is owned by others. One of Gateway's tenants in Gateway III is Prudential.

This case had its genesis in plaintiff Toni Ann Sheridan's June 20, 2007 trip and fall at the Gateway Center. In her personal injury complaint filed in April 2009, Sheridan claimed that several entities affiliated with the Gateway Center were responsible for the injuries she sustained in the incident. She sued Gateway, together with the other listed defendants (including the owners of Gateway IV), asserting that they were all liable to her because the location where she fell -- the "premises/property/service drive area" -- was "owned and/or leased and/or controlled and/or supervised and/or managed and/or maintained" by all defendants, including Gateway. Prudential was not named as a party in Sheridan's lawsuit.

B.

The lease between Gateway and Prudential contained Section 13, entitled "Indemnity and Insurance." Subsection 13.l.l provided as follows:

Except to the extent caused by the negligence or willful misconduct of Landlord, its agents, employees, contractors, officers or directors, Tenant shall indemnify, defend with counsel satisfactory to Landlord in all respects, and save harmless Landlord's Parties . . . from and against any and all claims, costs (including attorneys' fees and court costs), losses, liability, damages and expenses (including, but not limited to, claims made as a result of death, personal injuries, or loss of or damage to property) occurring in or arising in whole or in part, directly or indirectly, out of or in connection with:

(a) the use and occupancy of the Premises by any of Tenant's Parties . . .;

(b) any breach of this Lease;

(c) any alterations performed by or on behalf of Tenant in or to the Premises;

(d) the business conducted in the Premises;

(e) (without limiting the foregoing, as a result in whole or in part of any acts, omissions or negligence of any of Tenant's Parties; or

(f) any litigation, arbitration or other proceeding commenced by or against Tenant.

Subsection 13.2.1 further provided:

Tenant shall obtain and maintain in full force and effect during the term of this Lease, at its expense, one or more policies of Broad Form Comprehensive General Liability Insurance with limits of coverage of not less than $10,000,000 each occurrence at each location, which coverage shall include commercial liability coverage and employer's liability coverage. On each second anniversary of the Commencement Date, Landlord may require (a) a reasonable increase in such limits of coverage to reflect limits for similar properties or (b) other reasonable additional coverage. In addition, Tenant shall maintain or cause to be maintained Worker's Compensation insurance with respect to all work done in and about the Premise as required by law.

Lastly, subsection 13.2.4 stated, in pertinent part:

Each policy required to be carried by the Tenant hereunder and each renewal thereof shall . . . contain (A) a provision that it cannot be cancelled or materially and adversely amended insofar as it relates to the Premises, without at least thirty (30) days prior notice to the Landlord and Landlord's mortgagee(s), if any, and (B) a provision that such policy and the coverage evidenced thereby shall be primary and non-contributing with respect to any policies carried by Landlord, and that any and all coverage carried by Landlord is excess insurance. In addition, each policy shall name Tenant as insured and Landlord, Landlord's mortgagee(s), if any, and Landlord's management agent, if any, as additional insureds, as their interests may appear.

On June 7, 2010, long after Sheridan sued, Gateway's attorney sent a letter to Prudential's corporate counsel demanding that, as tenant of the property where Sheridan claimed to fall ("a parking lot walkway contiguous to the leased premises"), it must comply with its contractual duty to indemnify and defend its landlord pursuant to the "triple net lease" terms. The letter expressly referred to Section 13.1, as well as subsections 13.2.1 and 13.2.4, as the basis for Gateway's demands.

In a follow-up letter to Prudential's counsel two days later, Gateway's attorney provided a copy of Sheridan's liability expert report and renewed the earlier demand for indemnification and a defense. This time, however, the letter highlighted that "Prudential was to provide [Gateway] with primary insurance per the lease" (emphasis in the original).

On June 17, 2010, Prudential replied, declining to provide either indemnification or a defense since the property where Sheridan's alleged injury occurred was not leased by Prudential.*fn2

The letter expressly referred to subsection 13.1.1 setting forth Prudential's obligation to indemnify only "claims arising out of '(a) the use and occupancy of the Premises'" (emphasis in the original). Prudential did not directly address Gateway's demand for a defense or the matter of providing an insurance policy for Gateway's benefit.

On August 13, 2010, Gateway filed a third-party complaint against Prudential for failing to provide indemnification and a defense pursuant to the terms of the lease. It also sought remedies from fictitious parties who supposedly provided liability insurance to Prudential. The pleading set forth its claims against the third-party defendants in three counts.

The first count, denominated "Contractual and Common Law Defense and Indemnification," set forth numerous obligations that Prudential was alleged to have undertaken under the parties' triple net lease. Among those included the putative duties "to maintain the leased premises," "keep the premises and surrounding area free from defects," "indemnify and hold [Gateway] harmless from and against all claims arising out of or resulting from the use of the premises," and "purchase and maintain general liability insurance and list [Gateway] as additional and primary insureds on said policy." In explaining its theory of liability in the first count, Gateway stated, "[p]laintiff alleges that [Gateway] failed to properly inspect and maintain its walkway located at 100 Mulberry Street. . . . If plaintiff's allegations are true, the negligence causing plaintiff's injuries was that of Prudential in failing to maintain the subject premises free from the alleged defective walkway."

The second count of the third-party complaint -- captioned "Contribution" -- was also directed against Prudential. Gateway alleged that Prudential was a joint tortfeasor and accordingly Gateway was entitled to "contribution pursuant to the Comparative Negligence Act, N.J.S.A. 2A:15-5.1, et. seq. and the New Jersey Tortfeasors Contribution Law, N.J.S.A. 2A:53A-1, et. seq."

The third (uncaptioned) count of the third-party complaint was directed against fictitious parties: ABC Corporations 1-5. The gravamen of the claim asserted that unknown parties were Prudential's "general liability insurer" at the time of Sheridan's incident, and a "certificate of insurance provided to . . . [Gateway] indicated that it was an additional and primary insured on the policy of insurance." Consequently, "ABC Corporations 1-5 are obligated to defend and indemnify . . . [Gateway] pursuant to the terms and conditions of the certificate of insurance, the agreement between [Gateway] and Prudential, and the policy of insurance it issued to Prudential."

On February 14, 2011, in response to the third-party complaint, non-party Travelers Property Casualty Company of America (Travelers), which provided comprehensive general liability insurance coverage to Prudential, denied Gateway's demand for coverage. Travelers' representative wrote: "Based on our investigation we have confirmed [Sheridan's] fall happened in an area that was not under the named insured's control and/or on the 'premises' Prudential leased." Thus, Travelers determined it was not obligated to provide a defense for Gateway, even though one of the Gateway entities -- Gateway III Newark, LLC -- was listed as "an insured but only with respect to liability arising out of [Prudential's] acts or omissions." Gateway never moved to substitute Travelers for the fictitious ABC Corporations 1-5.

In October 2011, Prudential moved for summary judgment against Gateway, arguing that Sheridan's accident did not occur on property leased by Prudential and that Prudential had no duty to indemnify or provide a defense for Gateway. The motion did not address any issues other than the indemnification and concomitant defense provisions of the lease. Gateway cross-moved for summary judgment seeking dismissal of Sheridan's complaint and demanding that Prudential provide indemnification and a defense. Gateway's cross-motion concentrated on the indemnification provisions of the lease, citing subsection 13.1.1 as the contractual source for Prudential's duties. Scant reference was made to Prudential's obligation to provide insurance coverage, and no mention of subsections 13.2.1 and 13.2.4 appears in Gateway's motion brief.

Gateway's cross-motion for summary judgment against Sheridan was unopposed. It was summarily granted. However, the court denied Gateway's cross-motion for summary judgment against Prudential, and granted Prudential's motion to dismiss the third-party complaint in its entirety.

Gateway then moved for reconsideration, newly arguing that "[t]he finding as to Prudential was unjust since the lease agreement specifically required primary coverage be provided to the landlord (Gateway) by the tenant (Prudential)."

Additionally, for the first time, Gateway sought a declaration that Prudential breached a contract -- the lease -- when it failed to "provide $10,000,000 of liability insurance, and that it add Gateway [] (its landlord) as an additional primary insured" (emphasis in the original). Also appearing for the first time in a brief were references to subsections 13.2.1 and 13.2.4 of the parties' lease.

The motion judge denied reconsideration. She explicated the third-party complaint and then explained, "on summary judgment the moving party [(Prudential)] only has the burden of addressing the allegations contained in the pleading against it that it seeks to dismiss." Accordingly, after "[r]eviewing the [third-party] complaint, it does not fairly address the issue of a breach of contract for failing to provide insurance coverage and damages suffered thereby." Furthermore, she noted that "there are no new facts, no one is claiming that the court overlooked any law." Consequently, the court found Gateway's arguments inappropriate for reconsideration "because that is not what reconsideration is intended to address." This appeal followed.

II.

On appeal, Gateway presents a single contention for our consideration:

I. THE COURT ERRED WHEN IT GRANTED SUMMARY JUDGMENT IN FAVOR OF THIRD PARTY DEFENDANT PRUDENTIAL, RELYING ON INDEMNIFICATION AND FAILING TO ADDRESS THE ISSUE OF PRIMARY INSURANCE UNDER THE INSURANCE CLAUSE OF §13.2.4.

Gateway's brief expressly abandons its earlier argument that Prudential owed Gateway indemnification pursuant to subsection 13.1.1:

On appeal, the court is not being asked to interpret indemnity, but rather the duty to defend and whether primary coverage was afforded to Gateway III under the lease. Gateway III is not seeking a defense from Prudential for Gateway III's own negligence, but rather the costs for defense resulting from Prudential's unreasonable denial of coverage and breach of contract (the lease), by not providing insurance and its duty to defend Gateway III as agreed in the lease between the parties.

A.

In reviewing a grant of summary judgment, we apply the same standard under Rule 4:46-2(c) that governs the motion court. See Gray v. Caldwell Wood Prods., Inc., 425 N.J. Super. 496, 499 (App. Div. 2012); see also Chance v. McCann, 405 N.J. Super. 547, 563 (App. Div. 2009) ("An appellate court reviews a grant of summary judgment de novo, applying the same standard governing the trial court under Rule 4:46.") (citing Liberty Surplus Ins. Corp. v. Nowell Amoroso, P.A., 189 N.J. 436, 445-46 (2007)). We must "consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). In such review, "'[a] trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference.'" Estate of Hanges v. Metro. Prop. & Cas. Ins. Co., 202 N.J. 369, 382 (2010) (alteration in original) (quoting Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)).

Under the so-called Ramos-Mantilla-Azurak*fn3 rule, subsection 13.1.1 of the lease does not specifically express that the tenant will indemnify and defend the landlord for its own negligence. In the face of the clear and unambiguous language of subsection 13.1.1, the Law Division correctly found that this provision of the lease triggered neither indemnification nor a duty to defend. Nevertheless, Gateway claims that Prudential became Gateway's "de facto insurance carrier" as a result of its breach "by failing to obtain primary coverage and/or produc[ing] the insurance policy."

B.

This newly-minted claim was raised for the first time in the motion for reconsideration. Gateway, however, contends that Prudential was on earlier notice of the issue through correspondence, as well as by a single sentence contained in the third-party complaint: "Pursuant to the subject agreement, Prudential was also responsible to purchase and maintain general liability insurance and list [Gateway] as additional and primary insureds on said policy." The third-party complaint, however, never linked that allegation with an alleged failure of performance. The motion court's review of the third-party complaint was thorough and comported with our notice-pleading jurisprudence.*fn4

We review a motion court's order denying reconsideration under an abuse of discretion standard. Davis v. Devereux Found., 414 N.J. Super. 1, 17 (App. Div. 2010), aff'd in part and rev'd in part on other grounds, 209 N.J. 269 (2012). A motion for reconsideration is analyzed in accordance with Rule 4:49-2, which provides, in relevant part, that "[t]he motion shall state with specificity the basis on which it is made, including a statement of the matters or controlling decisions which counsel believes the court has overlooked or as to which it has erred." A motion for reconsideration should be granted in the interest of justice, but is appropriate only for those cases which fall into that narrow corridor in which either 1) the Court has expressed its decision based upon a palpably incorrect or irrational basis, or 2) it is obvious that the Court either did not consider, or failed to appreciate the significance of probative, competent evidence. [Dover-Chester Assocs. v. Randolph Twp., 419 N.J. Super. 184, 196 (App. Div.) (quoting Cummings v. Bahr, 295 N.J. Super. 374, 384 (App. Div. 1996)), certif. denied, 208 N.J. 338 (2011).]

We discern that Gateway not only failed to satisfy these standards, but its third-party complaint did not adequately alert the court and Prudential that it was seeking breach-of-contract remedies for Prudential's alleged failure to procure liability insurance on Gateway's behalf. The stray reference to Prudential's supposed duty to obtain such insurance, without further alleging a breach of that responsibility, did not sufficiently crystallize a litigational dispute along those lines.

In its motion for reconsideration and in this appeal, Gateway introduced a new issue regarding Prudential and its obligation to provide insurance coverage for Gateway. In fact, Gateway completely reframed the error it attributed to the motion court using an issue never before that court in the prior motions. "[T]he error cited must be a game-changer for reconsideration to be appropriate." Palombi v. Palombi, 414 N.J. Super. 274, 289 (App. Div. 2010). In this case, Gateway did not present a game-changer; instead, it sought to alter the rules of the game after it lost. That approach did not convince the motion court, and it does not convince us.

Affirmed.


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