CONTRACTS – LANDSCAPER NOT REQUIRED TO INDEMNIFY ASSOCIATION FOR LITIGATION COSTS BECAUSE IT DID NOT ASSUME RESPONSIBILITY FOR ASSOCIATION’S OWN NEGLIGENT ACTS

If you are involved in a service oriented business, you may very well have a contractual obligation to indemnify some of your customers for negligent acts.  Therefore, it is critical that you hire competent legal counsel who can identify pitfalls in an indemnity agreement and fight to protect you and your business from financial disaster when that provision comes into play.  A good example is the Franchini case.  In her complaint, Plaintiff Franchini claimed she injured herself when she slipped and fell on ice on property owned by Defendant Beverly Hills Terrace Condominium Association (the “Association”).  The complaint further alleged separate acts of negligence by the Association and Greenview Landscaping, the entity hired to maintain the grounds and provide snow and ice removal for the Association.  Following a jury trial on all issues, a verdict was rendered in favor of Greenview and the Association.  The Association thereafter filed an application with the trial court for attorney’s fees from Greenview, arguing that Greenview was required to indemnify it for defending against Franchini’s lawsuit.  Over the objections of Greenview the trial court awarded the Association approximately $39,000 in counsel fees.

In reversing the lower court’s ruling, the Appellate Division provided a thorough review of indemnity clauses and the N.J. Supreme Court’s decision in Mantilla v. NC Mall Associates, 167 N.J. 262 (2001).  In Mantilla, the N.J. Supreme Court held that absent explicit contractual language to the contrary, an indemnitee may not recover the costs of its defense from an indemnitor where the indemnitee has defended against allegations of its own independent fault.  With that backdrop, the Appellate Division reviewed the contract between the Association and Greenview, including the indemnification provision language, and held that the indemnification clause in the contract was confined to liability for Greenview’s performance of its work, not third party acts.  The Appellate Division rejected the Association’s contention that Greenview assumed indemnification responsibility for the Association’s acts of negligence because of the absence of the explicit contractual language required by Mantilla, and reversed the lower court’s award of counsel fees.

Click on Franchini v. Beverly Hills Terrace Condominium Ass’n for the entire opinion.  http://www.judiciary.state.nj.us/opinions/a6221-10.pdf

For more information, or if you have other legal concerns, email Gavin Handwerker, Esq. at:  gih@beinlaw.com.