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Ligato v. Shengs Corporation

A-5398-96T1 (N.J. Super. App. Div. 1998) (Unpublished)

LEASES; INDEMNIFICATION—Where a tenant, in its lease, indemnifies its landlord against personal injury claims, the indemnification is enforceable if the landlord is not solely liable for the injury. If, after trial, the landlord’s co-defendants are found to be without liability, the tenant can seek to invalidate the indemnification clause.

A motion judge held that an indemnification clause in a lease required the tenant to indemnify its landlord in connection with an injury sustained by an employee of the tenant. On appeal, the issue was whether N.J.S. 2A:40A-1 prohibited enforcement of the clause. The statute states that an agreement purporting to indemnify a promisee against liability for damages caused by the sole negligence of the promisee is unenforceable.

The Appellate Division found many cases enforcing allocation of risk clauses in leases. Such clauses were always enforced unless they were against public policy. In this case, the injured party tripped on a bulge in a carpet. However, since the injured party named the supplier and the installer of the carpet in her complaint as co-defendants with the landlord, she was not alleging that the landlord was solely negligent. Accordingly, even though it was not yet conclusively determined which entity or entities were negligent, the Court affirmed the summary judgment finding that the statute did not bar enforcement of the indemnification clause. It was not resolved whether the tenant could attempt to invalidate the indemnification clause based on the statute if a jury later concludes that the landlord was solely negligent.

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