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Azurak v. Corporate Property Investors

175 N.J. 110, 814 A.2d 600 (2003)

CONTRACTS; INDEMNIFICATION—The distinction between “broad” and “limited” indemnification clauses is no longer relevant; now, to indemnify against an indemnitee’s own negligence, the clause must specifically reference the negligence or fault of the indemnitee.

A woman was injured when she slipped on a “cheese-type” substance at a shopping mall. She sued both the mall and its janitorial company for her injuries. Before the lower court, the mall successfully sought summary judgment on the issues of indemnification and defense by its janitorial company. The basis for the lower court’s ruling was that the agreement provided a “broad form” of indemnification. Specifically, the agreement between the mall and its janitorial company contained the following provision: “Contractor shall indemnify, defend and hold harmless each Indemnitee [the Mall] from and against any claim (including any claim brought by employees of Contractor), liability, damage or expense (including attorneys’ fees) that such Indemnitee may incur relating to, arising out of or existing by reason of (a) Contractor’s performance of this Agreement or the conditions created thereby (including the use, misuse or failure of any equipment used by Contractor or its subcontractors, servants or employees) or (ii) Contractor’s breach of this Agreement or the inadequate or improper performance of this Agreement by Contractor or its subcontractors, servants or employees.”

On appeal, the janitorial company argued that the indemnification provision did not encompass the mall’s negligence. The Appellate Division agreed, concluding “that the cited language of the indemnification provision was neither explicit nor unequivocal on the subject of the indemnitee’s negligence, thus falling short of the standard” promulgated by the New Jersey Supreme Court, mostly recently in 2001.

On further appeal, the New Jersey Supreme Court affirmed the Appellate Division’s holding in favor of the janitorial company and quoted the Appellate Division when it said “we accept the [New Jersey Supreme] Court’s clear and explicit language as meaning what it says and conclude that the absence of clear and explicit language addressing indemnification for the Mall’s negligence precludes recovery for its portion of the judgment or defense costs.” The Appellate Division went on to state that prior case law that distinguished between “broad” and “limited” indemnification clauses without “explicitly referring to the indemnitee’s ‘negligence’ or ‘fault,’ ... is no longer good law.” In what it apparently hopes to be its final statement in the matter, the New Jersey Supreme Court went on to say: “in order to allay even the slightest doubt on the issue of what is required to bring a negligent indemnitee within an indemnification agreement, we reiterate that the agreement must specifically reference the negligence or fault of the indemnitee.”

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