TEODORO LOPEZ v. PALIN ENTERPRISES
Annotate this CaseNOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0886-17T4
TEODORO LOPEZ and
CARMEN LOPEZ,
Plaintiffs,
v.
PALIN ENTERPRISES, ASSOCIATED
ELEVATOR COMPANIES, INC., and
OTIS ELEVATOR CORPORATION,
Defendants,
and
PALIN ENTERPRISES,
Third-Party Plaintiff-Respondent,
v.
AGILE TRADE-SHOW
FURNISHINGS, INC., and LIBERTY
MUTUAL INSURANCE COMPANY,
Third-Party Defendants-Appellants.
_______________________________________
Argued November 26, 2018 – Decided December 5, 2018
Before Judges Fasciale and Gooden Brown.
On appeal from Superior Court of New Jersey, Law
Division, Essex County, Docket No. L-4903-12.
Walter F. Kawalec, III, argued the cause for appellants
(Marshall Dennehey Warner Coleman & Goggin,
attorneys; Walter F. Kawalec, III and Eric R. Brown,
on the briefs).
Marc L. Dembling argued the cause for respondent
(Methfessel & Werbel, PC, attorneys; Marc L.
Dembling and Olivia R. Licata, of counsel and on the
brief).
PER CURIAM
This is an insurance-coverage dispute among Palin Enterprises (Palin),
Agile Trade-Show Furnishings, Inc. (Agile), and Wausau Insurance companies
(Wausau).1 Palin owned a commercial building and leased part of it to Agile,
who employed plaintiff Teodoro Lopez (Lopez). Lopez injured himself using a
freight elevator inside the leased premises. Palin tendered the defense to
Wausau, argued it was entitled to primary insurance coverage as an additional
insured, and sought contractual indemnification from Agile. Agile appeals from
an order requiring it to indemnify Palin for Palin's negligence. Wausau appeals
1
Palin improperly identified Wausau in its third-party complaint as Liberty
Mutual Insurance Company.
A-0886-17T4
2
from an order compelling it to provide primary insurance to Palin. Palin and
Wausau also appeal from a subsequent order denying reconsideration. We
reverse.
On appeal, Agile argues that it had no obligation under the lease to
indemnify Palin for Palin's negligence, which Agile asserts the lease specifically
precluded. Agile contends that it complied with the lease by obtaining insurance
coverage for Palin. Wausau maintains that the "other insurance" policy
language in the policies requires that Wausau provide excess insurance over the
primary insurance policy issued by Palin's insurer, Greater New York Mutual
Insurance Company (the Greater New York Policy).
The facts are undisputed. The appeal requires us to interpret the text of
the lease and insurance policies. We owe no special deference to the judge's
conclusions on issues of law. Manalapan Realty, LP v. Twp. Comm. of
Manalapan, 140 N.J. 366, 378 (1995). Instead, we apply a de novo standard to
review questions of law. In re Snellbaker, 414 N.J. Super. 26, 37-38 (App. Div.
2010).
A-0886-17T4
3
I.
We begin by addressing Agile's limited contractual obligation under the
lease. The lease required Agile to indemnify Palin, but not for Palin's own
negligence. Section 12.01 of the lease provides in part that
[Agile] agrees to indemnify and save [Palin] . . .
harmless from and against any and all claims arising
during the terms of this Lease for damages or injuries
to goods, wares, merchandise and property and/or for
any personal injury or loss of life in, upon or about the
Demised Premises, the appurtenances thereof, and any
sidewalks adjoining the Demised Premises, except such
claims as may be the result of the negligence of [Palin],
its agents, employees or contractors, or the failure of
[Palin] to perform any of its obligations hereunder.
[Emphasis added.]
We interpret indemnity contracts according to general contract principles.
Ramos v. Browning Ferris Indus., Inc., 103 N.J. 177, 191 (1986). "[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."
Ibid. The courts have consistently reaffirmed this "bright-line rule" requiring
explicit language to enforce an indemnity provision that purports to include an
indemnitee's own negligence. Azurak v. Corporate Prop. Inv'rs., 175 N.J. 110,
112 (2003); see also Estate of D'Avila v. Hugo Neu Schnitzer E., 442 N.J. Super.
80, 114-15 (App. Div. 2015). Here, the lease does not express the parties'
A-0886-17T4
4
intention that Agile indemnify Palin for Palin's negligence "in unequivocal
terms." Ramos, 103 N.J. at 191. Rather, the lease specifically excluded any
such obligation.
II.
Agile had an obligation under the lease to obtain additional insurance for
Palin, beyond the coverage that Palin procured in its Greater New York Policy.
Agile required that Wausau name Palin as an additional insured. But the lease
did not require Agile to procure primary insurance coverage for Palin. Article
XXVI of the rider to the lease provides, in part, that
[Agile] agrees to provide . . . a comprehensive policy
of liability insurance protecting [Palin] . . . against any
liability whatsoever, occasioned by any occurrence on
or about the Demised Premises or any appurtenances
thereto with limits of liability hereunder of not less than
the amount of THREE MILLION AND 0/100
($3,000,000.00) DOLLARS combined single limit
coverage on a per occurrence basis and in the amount
of FIVE HUNDRED THOUSAND AND 00/100
($500,000.00) DOLLARS in respect of property
damages. Such policy is to be written by good and
solvent insurance companies satisfactory to [Palin].
[Emphasis added.]
We enforce an unambiguous contract – like this lease – as written.
Schenck v. HJI Assocs., 295 N.J. Super. 445, 450 (App. Div. 1996) (citing U.S.
Pipe & Foundry Co. v. Am. Arbitration Ass'n, 67 N.J. Super. 384, 393 (App.
A-0886-17T4
5 Div. 1961)). "We do not supply terms to contracts that are plain and
unambiguous, nor do we make a better contract for either of the parties than the
one which the parties themselves have created." Barr v. Barr, 418 N.J. Super.
18, 31-32 (App. Div. 2011) (quoting Maglies v. Estate of Guy, 193 N.J. 108,
143 (2007)). Only if the contract is ambiguous will the court allow extrinsic
evidence of the meaning of the terms. "Where an ambiguity appears in a written
agreement, the writing is to be strictly construed against the draftsman." In re
Estate of Miller, 90 N.J. 210, 221 (1982). Importantly, even the judge
recognized that the lease did not specify that Agile procure primary coverage
for Palin. Nevertheless, he erroneously concluded that Agile was contractually
required to obtain primary coverage for Palin.
Moreover, the judge mistakenly determined that Agile had a contractual
obligation to obtain insurance for Palin "for any and all claims." The text of the
lease, however, states that Agile will provide "a comprehensive policy of
liability insurance protecting [Palin] . . . against any liability whatsoever . . . ."
The lease does not require Agile to obtain additional insurance for Palin as to
all claims, only as to all liability. It is well-settled that "claim" and "liability"
are not synonyms. A claim is "[t]he assertion of an existing right," but liability
is "[t]he quality, state, or condition of being legally obligated or accountable;
A-0886-17T4
6
legal responsibility to another or to society, enforceable by civil remedy or
criminal punishment." Black's Law Dictionary (10th ed. 2014).
III.
Finally, the language of the insurance policies does not require that
Wausau provide primary insurance to Palin. "Where two carriers have
responsibility for a claim, the other-insurance clause of each policy must be
examined to determine whether there exists language which may govern the
contribution each party should make." W9/PHC Real Estate LP v. Farm Family
Cas. Ins. Co., 407 N.J. Super. 177, 199 (App. Div. 2009) (citing Universal
Underwriters Ins. Co. v. CNA Ins. Co., 308 N.J. Super 415, 417 (App. Div.
1998)). When the two policies each have an other-insurance clause, which states
that it is excess to another policy, "the provisions are 'mutually repugnant,' and
are disregarded." Ibid. But, "the general rule in New Jersey [is] that where an
excess clause and a pro rata clause appear in concurrently effective policies, the
pro rata clause is disregarded and full effect is given to the excess clause, making
the pro rata clause the primary insurance." Id. at 199-200.
The Wausau policy includes a blanket additional insured provision for the
lessors of premises. The provision provides that a lessor of premises leased by
the policy holder is an additional insured. It specifies that the coverage provided
A-0886-17T4
7
is excess coverage, unless coverage on another basis is required by written
agreement:
ITEM 11. BLANKET ADDITIONAL INSURED AND
WAIVER OF SUBROGATION – MANAGERS OR
LESSORS OF PREMISES
A. Section II – Who Is An Insured is amended to
include as an insured any manager or lessor of premises
leased by you in which the written lease agreement
obligates you to procure additional insured coverage
...
....
D. Other Insurance
The insurance provided by this endorsement applies
only to coverages and limits of insurance required by
written agreement, but in no event exceeds either the
scope of coverage or the limits of insurance available
within this policy.
This insurance shall be excess over any other insurance
available to the additional insured whether such
insurance is on an excess, contingent or primary basis,
unless you are obligated under a written agreement to
provide liability insurance for that additional insured on
any other basis. In that event, this policy will apply
solely on the basis required by such written agreement.
The Greater New York Policy also had a provision titled "Other Insurance
Condition," which provided that the policy provided excess coverage over
A-0886-17T4
8
specific types of other insurance available to Palin. In pertinent part, the
provision states
This insurance is excess over:
(1) Any of the other insurance, whether primary,
excess, contingent or on any other basis:
(a) That is Fire, Extended Coverage, Builder's
Risk, Installation Risk or similar coverage for "your
work";
(b) That is Fire insurance for premises rented to
you or temporarily occupied by you with permission of
the owner;
(c) That is insurance purchased by you to cover
your liability as a tenant for "property damage" to
premises rented to you or temporarily occupied by you
with permission of the owner; or
(d) If the loss arises out of the maintenance or use
of aircraft, "autos" or watercraft to the extent not
subject to Exclusion g. of COVERAGE A (SECTION
I).
(2) Any other primary insurance available to you
covering liability for damages arising out of the
premises or operations, or products or completed
operations, for which you have been added as an
additional insured by attachment of an endorsement.
(3) Any other primary insurance available to you that
covers liability for damages arising out of the premises
or operations, or products or completed operations, for
which another party has agreed under contract to
indemnify you or hold you harmless.
A-0886-17T4
9
All three categories are inapplicable. The first has nothing to do with this case,
and the last two pertain to "other primary insurance." As we have already
established, Agile had no contractual obligation under the lease to obtain
primary insurance for Palin.
Wausau and Agile rely on this court's decision in Englert v. Home Depot,
389 N.J. Super. 44 (App. Div. 2006). Englert involved a dispute between a
general contractor and a subcontractor relating to a construction-site accident.
Id. at 47. The contract between the two contractors required that the
subcontractor name the general contractor as an additional insured. Id. at 58.
The general contractor's insurance policy with Liberty Mutual provided an
"other-insurance" endorsement which stated, "This insurance is excess over . . .
[a]ny other primary insurance available to you covering liability for damages
arising out of the premises or operations for which you have been added as an
additional insured . . . . " Ibid. (alterations in original). The subcontractor's
insurance policy, issued by Travelers, named the general contractor as an
additional insured, and provided that, "With respect to the insurance afforded to
Additional Insureds . . . [t]his insurance is excess over any valid and collectible
insurance unless you [subcontractor] have agreed in a written contract for this
A-0886-17T4
10
insurance to apply on a primary or contributory basis." Ibid. (alterations in
original).
In affirming the motion judge's decision in Englert, we concluded that the
coverage under Liberty's policy, issued to the general contractor, was primary
and the coverage under the subcontractor's policy was excess. Id. at 59. We
reasoned that "the express condition required by the Travelers policy
endorsement in order to modify its coverage for [the general contractor] (from
excess to primary) has not been met." Ibid. We noted that the subcontractor's
"'written contract' with [the general contractor], promising a [commercial
general liability] policy that would name [the general contractor] as an
'additional insured,' did not refer to or promise 'primary' coverage under such
policy." Ibid.
Similarly, here, the lease agreement required that Agile obtain an
insurance policy to protect Palin "against any liability whatsoever." Agile
obtained an insurance policy from Wausau, which named Palin as an additional
insured. The explicit language of the Wausau policy states that Palin, as an
additional insured, is afforded excess coverage, unless a written agreement
obligates primary coverage. The lease agreement did not specify that the
A-0886-17T4
11
insurance provided must be primary. Therefore, the Wausau policy provides
excess coverage over Greater New York's primary coverage.
Reversed.
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