Civ. No. 98-0185 (WGB).
April 18, 2001
Jeffrey Naftulin, Esq., JEFFREY L. NAFTULIN, P.C., Doylestown, PA., Attorneys for Plaintiff.
Patrick M. Callahan, Esq., TOMPKINS, McGUIRE, WACHENFELD BARRY, Newark, N.J., Attorneys for Defendant Dillon Steel Corp.
William C. Carey, Esq., McELROY, DEUTSCH MULVANEY, LLP, Morristown, N.J., Attorneys for Defendant Mike Carter Construction Company.
John E. Stierli, Esq., WESTON, STIERI McFADDEN, Roseland, N.J., Attorneys for Defendant Infante Associates, Inc.
M E M O R A N D U M O P I N I O N
The parties seek an in limine ruling from the Court regarding whether Defendants Mike Carter Construction Company and Infante Associates, Inc. are entitled to indemnification from co- Defendant Dillon Steel Corp.
This matter involves an injury sustained by Plaintiff Keith Heuring ("Plaintiff") while working at a construction site. The owner of the site, Public Storage, Inc. ("Public"), contracted with Mike Carter Construction Company ("Mike Carter") to act as Public's agent and general contractor in constructing a storage warehouse. In turn, Mike Carter hired Infante Associates, Inc. ("Infante") to act as the on-site general contractor. Infante then contracted with Defendant Dillon Steel Corp. ("Dillon") to furnish and install the structural steel, stairs and railings in the warehouse. Dillon contracted with EE Ornamental Iron ("EE") to erect the steel structures. Plaintiff was an employee of EE. Trial in this matter has been adjourned on numerous occasions and has been scheduled for July 24, 2001.
The Court must determine whether as a matter of law, Defendants Mike Carter and Infante are entitled to contractual indemnification from co-Defendant Dillon under the indemnification provisions contained in the contract between Mike Carter and Infante ("Mike Carter-Infante contract") and the contract between Infante and Dillon ("Infante-Dillon contract").
In interpreting the indemnity clauses, the Court must look to the rules governing the construction of contracts generally. See Ramos v. Browning Ferris Industries of South Jersey, Inc., 103 N.J. 177, 191 (1986). "When the meaning of the clause is ambiguous, however, the clause should be strictly construed against the indemnitee. [citations omitted]. Thus, a contract will not be construed to indemnify the indemnitee against losses resulting from its own negligence unless such an intention is expressed in unequivocal terms. [citations omitted]." Id. at 191-92.
A. Infante's Right to Indemnification from Dillon
1. Section 5(g) of the Infante-Dillon Contract
Infante claims that it is entitled to contractual indemnification from Dillon for any liability attributed to Infante provided that the liability is not 100%. In contrast, Dillon argues that it is only obligated to indemnify Infante to the extent that the jury finds Plaintiff's injuries were caused by Dillon's negligence. The Court agrees with Dillon.
Infante does not dispute that it would not be entitled to indemnification for its sole negligence. N.J.S.A. 2A:40A-1; Secallus v. Muscarelle , 245 N.J. Super. 535, 537 (App.Div.), aff'd 126 N.J. 288 (1991). Nevertheless, although a clause purporting to indemnify for sole 100% negligence is unenforceable, a promise to indemnify for 99% negligence is enforceable. Secallus , 245 N.J. Super. at 537. Therefore, as long as the jury does not find that Infante and Mike Carter are 100% negligent, Dillon is bound by its contractual agreement to indemnify Infante.
The Infante-Dillon contract provides that Dillon is:
(g) [t]o indemnify the Contractor [Infante] against the claims of all materialmen and employees of the Subcontractor, including Court costs and attorney's fees incurred in the defense of any litigation instituted by any officer, employee, laborer or materialmen of the Subcontractor or of any other person or persons, firm or corporation who may claim damages for person or property by reason of the acts or failure to act of the Subcontractor, or its Agents, employees, servants or both; to which the Contractor is made a party.
(q) [t]o protect and save harmless the said Contractor against any claim or demand of any persons or property for damage caused hereunder . . . and agrees to defend any and all actions arising out of any of the foregoing claims; to notify the Contractor of all such claims; to defend it, and pay counsel fees and expenses of all kinds whatsoever in connection therewith; . . .
Infante-Dillon contract attached to Certification of Patrick M. Callahan ("Callahan Cert.") as Ex. C, §§ 5(g), (q) (emphasis added). In Mautz v. J.P. Patti Co., 298 N.J. Super. 13 (App.Div.), certif. denied, 151 N.J. 472 (1997), the New Jersey Appellate Division interpreted a contractual indemnification clause substantially similar to § 5(g) of the Infante-Dillon contract. In Mautz, the employee of a subcontractor sued the general contractor, among others, for a work related injury. The general contractor, seeking contractual indemnification, joined the plaintiff's employer as a third party defendant. The indemnification clause in the contract between the general contractor and the subcontractor provided that the subcontractor would indemnify and hold harmless the contractor
from and against all claims, damages, losses and expenses including but not limited to attorney's fees, arising out of or resulting from the performance of the Subcontractor's Work under this Subcontract, provided that any such claim, damage, loss, or expense is attributable to bodily injury, sickness, disease, or death, or to injury to or destruction of tangible property (other than the Work itself) including the loss of use resulting therefrom, to the extent caused in whole or in part by any negligent act or omission of the Subcontractor or anyone for whose acts he may be liable, regardless of whether it is caused in part by a party indemnified hereunder.Id. at 18. Finding this clause "clear and unambiguous," the court concluded that the subcontractor was not obligated to provide indemnity to the general contract for the general contractor's own negligence, but obligated to provide indemnity "only to the extent that the claim is caused by [the subcontractor's] own negligence." Id. at 21.
Infante, however, concludes that Mautz is inapplicable and irrelevant, erroneously claiming that in Mautz, the court interpreted only the phrase, "to the extent caused in whole or in part by any negligent act or omission." But contrary to Infante's assertions, the Appellate Division interpreted the entire indemnification clause, including the phrase "to the extent caused in whole or in part by any negligent act or omission of the Subcontractor," to determine the subcontractor's indemnity obligation. Therefore, Mautz is highly relevant and directly applicable.
Accordingly, under Mautz and pursuant to the plain language of the indemnification clause set forth in § 5(g), Infante is only entitled to indemnification from Dillon to the extent that the jury finds Plaintiff's injuries were caused "by reason of the acts or failure to act" of Dillon or its agents, employees, or servants.
2. Section 5(a) of the Infante-Dillon Contract
Infante contends that pursuant to § 5(a) of the Infante- Dillon contract, which contains what is referred to as "pass through" language, it is entitled to contractual indemnification from Dillon even for claims resulting from its own negligence. Section 5(a) provides:
The Subcontractor [Dillon] covenants and agrees:
(a) To be bound to the Contractor [Infante] by the terms of the Prime Contract, General Conditions, Drawings and Specifications, and to assume toward him all the obligations and responsibilities that he, by those documents, assumes toward the Owner.
The Mike Carter-Infante contract provides that Infante will indemnify and hold harmless Mike Carter:
from and against claims, damages, losses and expenses, including but not limited to attorney's fees, arising out of or resulting from performance of the Work, provided that such claim, damage, loss or expense is attributable to bodily injury, sickness, disease or death, or to injury to or destruction of tangible property (other than the Work itself) including loss of use resulting therefrom, but only to the extent caused in whole or in part by negligent acts or omissions of the Contractor [Infante], a Subcontractor, anyone directly or indirectly employed by them, or anyone for whose acts they may be liable, regardless of whether or not such claim, damages, loss or expense is caused in part by a party indemnified thereunder.
Mike Carter-Infante contract attached to Callahan Cert. as Ex. A, ¶ 3.18.1 (emphasis added).
Infante's claim that § 5(a) places the risk of loss exclusively on Dillon for any liability attributed to Infante is unavailing. First, as Dillon points out, § 5(a) purports to incorporate unspecified terms of the Mike Carter-Infante contract and makes no reference to indemnification. Consequently, the incorporation language of § 5(a) could be understood to require Dillon to follow the building specifications in performing its work due to its express reference to the "Drawings and Specifications." See Goldman v. Ecco-Phoenix Elec. Corp., 396 P.2d 377, 381 (Cal. 1964) (declining to require subcontractor to indemnify general contractor for its own negligence where incorporation language did not mention "indemnification" and "could as properly be considered to require of [the subcontractor] only the proper performance of its work, without any obligation at all as to indemnification").
Second, Dillon argues that the broad and general "pass through" language of § 5(a) does not govern over the specific indemnification clause set forth in § 5(g). Indeed, in New Jersey, it is "a well-settled principle of contract interpretation that, in construing the contract as a whole, specific terms or clauses control general terms or clauses." Assisted Living Assocs., LLC v. Moorestown Twp., 31 F. Supp.2d 389, 399 (D.N.J. 1998).
Third, even assuming that through § 5(a) of the Infante- Dillon contract, Dillon adopted Infante's obligation to indemnify Mike Carter for any and all loss resulting from acts of negligence by Infante, the indemnification provision in the Infante-Dillon contract conflicts with the indemnification provision in the Mike Carter-Infante contract. While the Infante-Dillon contract excludes indemnification for Infante's negligence, see discussion supra, the Mike Carter-Infante contract appears to include indemnification for Infante's negligence. This conflict creates an unavoidable ambiguity, which must be construed against the indemnitee, Infante. See Ramos, 103 N.J. at 191 (1986). Furthermore, even absent any ambiguity, the two indemnification provisions, when read together, fail to express in unequivocal terms an intent for Dillon to indemnify Infante against losses resulting from Infante's own negligence. See id. at 191-92.
3. Common Law or Implied Indemnification
Next, Infante argues that it is entitled to common law or implied indemnification. A joint tortfeasor has a right to implied indemnification if it is without fault and its liability is merely constructive, secondary or vicarious. See New Milford Board of Educ. v. Juliano, 219 N.J. Super. 182, 187 (App.Div. 1987). Here, if the jury finds that Infante is without fault and that Dillon, as a result of its own negligence, is primarily liable, then Dillon is obligated to indemnify Infante under both implied and contractual indemnification theories. Conversely, if Infante, rather than Dillon, is found primarily liable, then Infante is not entitled to either contractual or implied indemnification. In short, implied indemnification does not give Infante greater rights to indemnification than does the Infante- Dillon contract.
Therefore, Dillon is obligated to indemnify Infante only to the extent of Dillon's fault or negligence. Infante is not entitled to indemnification for its own negligence under either contractual or implied indemnification theories.
B. Mike Carter's Right to Indemnification from Dillon
Mike Carter contends that by virtue of § 5(a) of the Infante-Dillon contract, Dillon adopted Infante's obligation to indemnify Mike Carter for any liability (as long as it is not exclusive, see n. 1) attributed to it. Dillon, of course, disputes that it is obligated to indemnify Mike Carter for liability arising out of Mike Carter's own negligence. The Court agrees with Dillon.
Even assuming that the pass through language in § 5(a) of the Infante-Dillon contract directly adopts the broader indemnification clause in the Mike Carter-Infante contract, pursuant to the plain language of ¶ 3.18.1 of the Mike Carter- Infante contract, Infante's indemnity obligation to Mike Carter only covers claims resulting from Infante's or its subcontractor's negligence. Therefore, even if Dillon adopted Infante's indemnity obligations towards Mike Carter, Dillon, not having signed any contract with Mike Carter, would not have greater indemnification obligations towards Mike Carter than Infante does under the Mike Carter-Infante contract.
In light of the Court's conclusion, the Court need not address Dillon's additional argument that at the time of Plaintiff's injury, the indemnification clause contained in the Mike Carter-Infante contract was not in effect.
For the reasons set forth above, Infante is only entitled to indemnification from Dillon to the extent that the jury finds Plaintiff's injuries were caused "by reason of the acts or failure to act" of Dillon or its agents, employees, or servants. Mike Carter is not entitled to indemnification from Dillon for its own negligence. Infante's indemnity obligation to Mike Carter only includes claims resulting from Infante's or its subcontractor's negligence.
Very truly yours,
William G. Bassler, U.S.D.J.