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Snow Removal Contractor Found Not To Have Violated Contract For Failure To Add Owner Of Property To Its Liability Policy

By on May 15, 2020 in Court Rulings with 0 Comments

The plaintiff, Donna Michel was walking across the parking lot of the Wayne Towne Center when she was struck by a car operated by Sharon Langel.  At the time of the accident, piles of snow on medians at the end of the rows of the parking spaces in the parking lot allegedly impeded Langel’s visibility as she made a left hand turn just before her car struck plaintiff.  The plaintiff sued the driver, as well as the property owner of the shopping center, the store she was walking in front of before she was hit, and the snow plow operator.  The issue in Michel v. Langel, 2020 N.J. Super. Unpub. LEXIS 869 (App. Div. May 8, 2020), was whether the snow contractor (Conrow Construction Company) breached its agreement with the property owner (VNO) and the store (DSW) due to its failure to defend and indemnify these defendants.

The Appellate Division found that the scope of Conrow’s duties and responsibilities related to the parking lot were governed by a Services Agreement with the owner of the shopping center, VNO.  According to the contract scope of work, snow would be removed from the premises only when directed to do so by Vornado Realty Trust’s personnel.  The contractor would be responsible for the disposal of snow if it should become necessary.  The Agreement also contained insurance provisions and an indemnification provision.  Under the insurance provision, Conrow was required to obtain and maintain various types of insurance which included commercial general liability coverage.  Conrow was also required to maintain an excess policy.  The Services Agreement also provided that VNO was to be named as an additional insured on most of the insurance policies.  Under the indemnity provision, Conrow agreed to defend and indemnity VNO from all claims and damages caused by Conrow, excluding any claim or damage caused by the “sole negligence” of VNO.

Conrow did obtain commercial and general liability insurance but did not name VNO as an additional insured.  Instead, it only named “Vornado Realty Trust,” the property management company, as an additional insured party.  Moreover, the policy excluded coverage for claims “arising out of the acts, omissions and/or negligence of the additional insured.”

The plaintiffs settled their claims against the defendant Langel.  Thereafter, they amended their complaint to name as a defendant their own auto insurance, NJM to seek to recover underinsured motorist benefits.

During discovery, a Conrow representative testified that the property manager instructed Conrow to locate the plowed snow in the same places as the prior contractor.  The representative had observed that the prior contractor did pile the snow in median aisles in front of the DSW store.  Thus, Conrow claimed that the decision as to where to place the plowed snow was made by the property manager, who was controlled by VNO.

VNO and DSW moved for a partial summary judgment against Conrow, claiming that Conrow had breached its contract by failing to name VNO as an additional insured and its agreement to defend and indemnify VNO.  While the motion was pending, all parties participated in a mandatory, non-binding arbitration.  The arbitrator found that the plaintiff’s injuries were caused by the negligence of Langel, VNO, DSW, and Conrow and awarded Michel $450,000 in gross damages, and allocated the damages among the defendants.  No party objected to the award and the award was incorporated into a judgment.  

In the arbitration award, the arbitrators allocated negligence as follows: 40% to Michel; 30% to Langel; 15% to VNO and DSW; and 15% to Conrow. 

Thereafter, the trial court issued its Order, denying the partial Summary Judgment Motion by VNO and DSW.  The court reasoned that the arbitrator had found VNO negligent for its own conduct.  In reviewing the indemnification provisions, the court found nothing requiring Conrow to defend or indemnify VNO for its own negligent conduct.

The court also found that Conrow had failed to name VNO as an additional insured.  The court reasoned, however, that the failure did not cause VNO any damages because the insurance policy excluded coverage for the negligence of the additional insured party.  Thus, even if VNO had been properly named as an additional insured, it would not have been covered for its own negligence.  The court noted that there was nothing in the Services Agreement which prevented Conrow from obtaining a policy excluding coverage for the negligence of the additional insured. 

VNO and DSW moved for reconsideration of that Order, which was denied by the trial court.  This appeal thereafter ensued.

The Appellate Division agreed with the trial court decision and affirmed the denial of the summary judgment as to VNO and DSW.  The Court pointed out that Conrow’s potential liability to VNO was governed by the obligations it undertook in the Agreement.  While the Court agreed that the policy did require that VNO was to be named as an additional insured, the issue was whether VNO was damaged by that failure.  The Appellate Division agreed with the trial court that VNO was not damaged.

The Court pointed out that in establishing the requirements for coverage, the Services Agreement did not state that the additional insured needed to be insured for its own negligence.  Instead, the insurance provision was designed to assure that Conrow’s negligence was covered.  The policy that Conrow obtained did not cover the additional insured VNO’s negligence.  Thus, VNO was not damaged by Conrow’s failure to name it as an additional insured because VNO’s liability was predicated on its own negligence.

The Court also noted that Conrow had an independent obligation to defend and indemnify VNO.  However, those obligations were limited to defending and indemnifying for claims arising out of Conrow’s acts or omissions.  The indemnification provision did not obligate Conrow to defend or indemnify VNO for its own negligence.  Specifically, the Appellate Division pointed out that the indemnity provision in the Agreement excludes anything caused “by this sole negligence” of VNO.

The Appellate Division found that for both the insurance and the indemnification provisions in the Agreement, Conrow was protecting VNO for claims arising out of negligent or intentional actions by Conrow and its employees.  Those provisions did not protect VNO from claims arising out of VNO’s negligent acts.  Thus, the contract was consistent with most indemnification provisions, which generally do not protect the party being indemnified from its own negligence.  Accordingly, the Appellate Division upheld the trial court decision which denied the summary judgment motion filed by VNO and DSW.

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Betsy G. Ramos

About the Author

About the Author:

Ms. Ramos is an Executive Committee Member and Co-Chair of the Litigation Department at Capehart Scatchard, P.A. located in Mount Laurel, New Jersey. She is an experienced litigator with over 25 years experience handling diverse matters. Practice areas include tort defense, business litigation, estate litigation, tort claims and civil rights defense, construction litigation, insurance coverage, employment litigation, shareholder disputes, and general litigation.

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