VALERIE SENATORE v. KMART INC

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

VALERIE SENATORE,

Plaintiff,

v.

KMART INC.,

Defendant-Respondent,

and

HAROLD J. ROSINSKY,

and BELMONT ASSOCIATES,

Defendants-Appellants.

_________________________________

September 21, 2015

Submitted May 11, 2015 Decided

Before Judges Guadagno and Leone.

On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-1951-12.

Sweet Pasquarelli, P.C., attorneys for appellants (Anthony P. Pasquarelli and Matthew G. Minor, on the briefs).

Sisselman & Schwartz, LLP, attorneys for respondent (Hristo Zevlikaris, on the brief).

PER CURIAM

Defendants and third-party defendants Belmont Associates and Harold J. Rosinsky (collectively "Belmont") appeal from an order granting summary judgment in favor of defendant Kmart Inc. ("Kmart" or "K-Mart"). We affirm.

I.

The trial court relied on the following facts. In 1975, Delco Development Co. (landlord) and S.S. Kresge Company (tenant) entered into a lease for a 150,000-square-foot building. Belmont is the successor landlord and Kmart is the successor tenant for the building under the lease. The lease contains various provisions regarding the parties' responsibilities in maintaining the sidewalk area adjacent to the building, and maintaining insurance.

Plaintiff Valerie Senatore filed a complaint against Kmart, alleging she was injured due to dangerous conditions on the property. During discovery, plaintiff submitted photographs of the sidewalk where she alleges she fell, depicting small cracks a couple of inches in size. Her expert report alleged she fell because of this "defect in the paving." Kmart tendered its defense to Belmont's insurer, which rejected the tender because Belmont had not named Kmart as an additional insured. Kmart filed a third-party complaint against Belmont, seeking indemnification from liability, attorney's fees, expenses, costs, and interest.

Belmont and Kmart each filed motions for summary judgment. On December 6, 2013, the trial court granted Kmart's motion for summary judgment against Belmont, holding that Belmont "breached the terms of the contract [with regard to insurance of the sidewalk] and therefore is liable to Kmart for any damages incurred as a result of that Breach." The court then denied Belmont's cross-motion for summary judgment. Belmont filed a motion for reconsideration, which was denied on February 6, 2014.

Subsequently, after trial had been scheduled, plaintiff agreed to a global settlement of $21,000.00. Belmont and Kmart each contributed $10,500.00 towards the settlement, with the stipulation that issues of indemnification and costs between defendants would be resolved at a later date. Plaintiff is not a party on appeal.

On May 15, 2014, the trial court denied Belmont's second motion for summary judgment. The court granted Kmart's motion for judgment, awarding Kmart damages for breach of contract and indemnity paid as well as legal fees and costs in the amount of $74,369.04. Belmont appealed the December 6, 2013, February 6, 2014, and May 15, 2014 orders.

II.

Belmont appeals the grant of summary judgment. Summary judgment must be granted if "the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c). To decide whether there is a genuine issue of material fact, the trial court must determine "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).

Because "appellate courts 'employ the same standard [of review] that governs the trial court,'" we review the issue de novo, and the "trial court rulings 'are not entitled to any special deference.'" Henry v. N.J. Dept. of Human Servs, 204 N.J. 320, 330 (2010) (citations omitted). We must hew to this standard of review.

The appeal turns on the interpretation of a lease to determine which party is responsible for maintenance and insurance of the sidewalk where the alleged injury occurred. "Contract interpretation is a question of law." Hess Corp. v. ENI Petroleum US, LLC, 435 N.J. Super. 39, 46 (App. Div. 2014); see also Selective Ins. Co. of Am. v. Hudson E. Pain Mgmt. Osteopathic Med. & Physical Therapy, 210 N.J. 597, 605, (2012). As such, we afford no special deference to the trial court's interpretation; instead, this court "look[s] at the contract with fresh eyes." Kieffer v. Best Buy, 205 N.J. 213, 222-23 (2011).

In interpreting contracts, our Supreme Court "repeatedly has hewed to the maxim that '[c]ourts cannot make contracts for parties. They can only enforce the contracts which the parties themselves have made.'" McMahon v. City of Newark, 195 N.J. 526, 545 (2008) (citing Kampf v. Franklin Life Ins. Co., 33 N.J. 36, 43 (1960)). "In other words, '[w]hen the terms of [a] contract are clear, it is the function of a court to enforce it as written and not to make a better contract for either of the parties[.]'" Id.at 545-46 (citations omitted). "As a general rule,courts should enforce contracts as the parties intended." Pacifico v. Pacifico, 190 N.J. 258, 266 (2007). "'In short, we are to consider what was written in the light of the circumstances under which it was written, and give to the language a rational meaning consistent with the expressed general purpose.'" Dontzin v. Myer, 301 N.J. Super. 501, 507 (App. Div. 1997) (citation omitted).

On appeal, Belmont argues: (1) the sidewalk on which plaintiff alleged to have been injured was not a 'common area' within the landlord's maintenance obligation under the lease; (2) pursuant to the lease between Kmart and Belmont, Kmart had a duty to name and indemnify Belmont as an additional insured; and (3) Kmart breached its obligation to name Belmont as an additional insured and is liable for any and all damages incurred by Belmont as a result of the breach.

III.

Belmont argues that the trial court erred as a matter of law in determining that the portion of sidewalk on which plaintiff allegedly fell was a "common area" under the lease. However, the section of the lease entitled "Demised Premises" defined "sidewalks" as part of the "common areas"

Landlord does demise unto Tenant and Tenant does take from Landlord . . . the following property: the existing approximately 150,000 square foot building (designated "Kmart") . . . together with the right of use, in common with Landlord and other tenants, users, occupants, and their invitees and licensees in and to the parking area, sidewalks and other common areas within the overall shopping center[.]

[emphasis added].

Belmont argues that the sidewalks adjacent to the Kmart are part of the demised premises. The lease defined the "demised premises" as the "building, together with the licenses, rights, privileges and easements appurtenant thereto." Though this definition included in the demised premises the right to use common areas, it did not demise to Kmart the common areas themselves.

Belmont asserts the lease makes Kmart responsible for maintaining the sidewalk. Belmont cites the portion of the lease entitled "Repairs by Tenant," which stated: "Tenant shall, at its sole cost and expense, make all structural and non-structural repairs and alterations necessary to keep the demised premises in good order and condition." Because the sidewalks are common areas rather than part of the demised premises, we reject Belmont's argument.

Indeed, Belmont's argument disregards the lease provision making Belmont, as landlord, generally responsible for maintenance of "common areas." The lease's "Maintenance of Common Areas" section stated: "Landlord shall, throughout the term of this lease, fully maintain and keep in good order and repair the common areas of the shopping center and shall keep the same adequately paved, free from accumulated snow, ice and refuse, adequately lighted and in compliance with any governmental requirements respecting the same[.]" (emphasis added). Thus, as landlord under the lease, Belmont was generally responsible for the maintenance of the sidewalks, which the lease included within the common areas.

The "Maintenance of Common Areas" section went on to provide that "the Tenant and all other tenants of the shopping center shall separately keep the sidewalk and loading dock areas immediately in front of or adjoining their buildings reasonably free of snow, ice and refuse and the same shall not be part of [Belmont's] common area maintenance obligations." Belmont argues that this provision makes Kmart responsible for plaintiff's alleged injuries. However, this provision simply placed on Kmart, as tenant, an obligation to remove the snow, ice and refuse on that portion of the sidewalk, and rendered the removal of such snow, ice and refuse outside of Belmont's obligation. This provision did not require Kmart to maintain the paving of the sidewalk, a duty the section expressly placed on Belmont.

Belmont alleges that Kmart performed snow, ice, and refuse removal on the sidewalk, but that was required by the lease. Belmont also asserts Kmart never asked Belmont to maintain the paving on the sidewalk. However, Belmont's obligation under the lease to maintain the paving of the sidewalk was not conditioned on a request by Kmart.

Belmont alleges that Kmart has not paid Belmont its share of fees required under the lease for Belmont's maintenance of the common areas. Belmont cites the lease's paragraph that provided

"Tenant agrees to pay to Landlord, as Tenant's contribution to the costs and expenses with its obligations under [the "Maintenance of Common Areas" section], an amount which bears the same ratio to such costs as the total gross floor area of the building demised to Tenant bears to the total gross floor area of all buildings initially opened in the shopping center[.]"

However, that paragraph also provides: "costs of maintenance, as used in this paragraph, shall consist only of the actual and direct costs reasonably incurred by Landlord or its designees in connection with all of its obligations set forth in the preceding paragraph and shall not include capital expenditures, except for repaving." Belmont failed to proffer that it incurred actual and reasonable expenses, such as for repaving. In any event, Belmont's failure to meet its obligation in the lease to maintain and repair the sidewalk is not excused by Kmart's alleged subsequent failure to contribute to any expenses it may have incurred for any such maintenance or repair. Indeed, Belmont has not even argued that it actually or reasonably incurred any such expenses.

Belmont also cites the section, "Tenant Indemnifies Landlord," which stated

Tenant shall indemnify and save Landlord harmless against all penalties, claims or demands of whatsoever nature arising from Tenant's use of the demised premises, except those which shall result, in whole or in part, and directly or indirectly, from the default or negligence of the Landlord.

[Emphasis added].

However, as set forth above, the sidewalks were not part of the demised premises, and the injury did not result from K-mart's use of the sidewalks. Moreover, the lease placed on Belmont the obligation to maintain and repair the sidewalk except for snow, ice, and refuse removal. The indemnification language is not triggered here. Thus, if cracks in the paving caused plaintiff's injuries, then it was due to "the default and or negligence of the Landlord" rather than Kmart.

Finally, Belmont contends case law imposes on Kmart a common law duty to plaintiff. Belmont cites Antenucci v. Nick's Mens Sportswear, 212 N.J. Super. 124, 129 (App. Div. 1986), which "impose[d] upon a lessee in exclusive possession of premises abutting a public sidewalks a duty to keep the walkway in good repair for the benefit of pedestrians." However, Kmart did not have exclusive possession of the common areas such as the sidewalk. Moreover, the lease placed the responsibility of repairing and maintaining the sidewalk on Belmont. Cf. McBride v. Port Authority of N.Y. and N.J., 295 N.J. Super. 521, 522 (App. Div. 1996).

Even if these cases create a common law duty running from Kmart to plaintiff, they do not change Belmont's contractual duty to Kmart under the lease to maintain and repair the sidewalk's paving, and to indemnify Kmart for injuries on them. "[I]n the commercial setting, where there is potential for multi-party liability based on multi-party participation in an overall transactional chain, the parties . . . are free to allocate among themselves . . . the overall insurance burden in respect of coverage for claims of third parties[.]" Berry v. V. Ponte & Sons, 166 N.J. Super. 513, 517 (App. Div. 1979). The trial court properly enforced Belmont's duties to Kmart under the lease.

IV.

Belmont argues Kmart failed to name Belmont as an additional insured in violation of the lease's section entitled "Liability Insurance," which provided

Tenant covenants and agrees to provide and keep in force during the term hereof at its sole cost and expense a comprehensive liability policy of insurance in the name of and for the benefit of Landlord, its designees, and Tenant, insuring the same against any liability for injury to persons and/or property and death of any person occurring in or on the demised premises or any appurtenances thereto.

Belmont asserts the sidewalk adjacent to Kmart's building was included within the term "appurtenances." Belmont suggests that even if it is responsible for sidewalks as "common areas" under the contract, the lease still required Kmart to obtain insurance for the sidewalk.

Kmart argues that Belmont is barred from raising that claim on appeal because it failed to raise such a claim in its counterclaim and cross-claim. We need not address the effect of that omission, because we agree with the trial court's rejection of that claim, which Belmont raised in its motions.

The trial court rejected Belmont's argument that the lease's reference to "the demised premises or any appurtenances thereto" refer to the sidewalk. The court noted that the lease referenced the sidewalk only as part of the common areas. The court stressed that, "[t]his is a lease drafted by the landlord," that if Belmont meant the sidewalk to be included as part of the demised premises, it should have made that clear in the lease, and that ambiguities should be construed against Belmont. We agree. "[W]here an ambiguity appears in a written agreement, the writing is to be strictly construed against the party preparing it." Karl's Sales & Serv. v. Gimbel Bros., 249 N.J. Super. 487, 493 (App. Div. 1991).

The lease did refer to appurtenances when it defined the "demised premises" as "said building, together with the licenses, rights, privileges and easements appurtenant thereto." We need not decide whether "appurtenances" includes Kmart's exercise of "the licenses, rights, privileges and easements appurtenant" to the building. Here, plaintiff claimed to be injured not by Kmart's exercise of such rights (e.g., a Kmart display on the sidewalk) but by a defect in the paving of the sidewalk itself, which the lease clearly designated as Belmont's responsibility. Nothing in the lease required Kmart to insure Belmont against such an injury.

Instead, as the trial court found, Belmont was in breach for failing to obtain insurance over this portion of the sidewalk and for failing to name Kmart as an additional insured. The lease provided: "Landlord shall provide liability insurance naming Landlord, Tenant and other tenants of the shopping center, insuring them against liability in respect of the common areas of the shopping center, in amounts of not less than $300,000/$100,000 personal injury and $50,000 property damage." (emphasis added).

Because only Belmont had an insurance obligation for plaintiff's alleged injury from defects in the sidewalk's paving, the "other insurance" provision in Belmont's insurance policy is irrelevant.

Finally, Belmont argues that Kmart had a duty to maintain insurance coverage and indemnify Belmont against this claim, because the plaintiff's injury "arose out of" Kmart's use of the demised premises. Belmont relies on cases turning on the use of the term "arising out of" to allocate liability. Liberty Vill. Assocs. v. W. Am. Ins. Co., 308 N.J. Super. 393 (App. Div. 1998); Harrah's Atl. City, Inc. v. Harleysville Ins. Co., 288 N.J. Super. 152 (App. Div. 1996); Franklin Mut. Ins. Co. v. Sec. Indem. Ins. Co., 275 N.J. Super. 335 (App. Div. 1994). Each of these cases treated "arising out of" as being broadly defined, but that is not the language at issue here. This lease used "occurring in or on the demised premises or any appurtenances thereto" rather than the much broader "arising out of" language. The issue is one of contract interpretation, so cases decided on language not appearing in this lease are inapposite.

For all these reasons, we reject Belmont's argument that Kmart had a duty to maintain insurance coverage and indemnify Belmont in the circumstances alleged.1

Affirmed.

1 In the concluding paragraph of its brief, Kmart requests fees and costs be awarded by this court, or by remand to the trial court. However, "[a]n application for a fee for legal services rendered on appeal shall be made by motion supported by affidavits as prescribed by R. 4:42-9(b) and (c)[.]" R. 2:11-4. Kmart has not filed a motion or affidavit. Moreover, "[f]ees may be allowed by the appellate court" only in specified circumstances, including in "an action in which an award of counsel fees is permitted by Rule 4:42-9(a)." R. 2:11-4(a). Kmart has not identified any provision of Rule 4:42-9(a) authorizing such an award here. Accordingly, we deny Kmart's procedurally-deficient request without prejudice to a proper application by motion.