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Ploschansky v. Edgewater Commons Partners, L.P.

BER-L-433-99 (N.J. Super. Law Div. 2002) (Unpublished)

CONTRACTS; INDEMNIFICATION— It is a bright line rule that if a party wishes to be indemnified for its own negligence, the indemnification contract must state so in explicit terms.

A developer built a shopping center and then sold it to a new owner. The contract contained a provision whereby the seller agreed to indemnify, defend, protect and hold the buyer harmless “from and against any and all claims, demands, causes of action, losses, damages, liabilities, fines, penalties, charges, administrative and judicial proceedings and orders, judgments, remedial action and compliance requirements, enforcement and clean-up actions of any kind, ...” arising out of breach of the agreement, any inaccuracy or alleged inaccuracy of any representation or warranty of the seller or out of the seller’s ownership of the property or operation of the property prior to closing.

The seller constructed a faulty handicapped ramp. After the sale, but within the survival period for the contract, a customer of the shopping center fell on the ramp seriously injuring her ankle. A jury found the seller to be twenty percent responsible, the shopping center to be forty five percent responsible, and the injured person to be thirty five percent responsible. The buyer of the shopping center argued that its seller owed it a defense and indemnification even as to the seller’s own negligence. The Court looked to what it called unequivocal language from the New Jersey Supreme Court to the effect that “... absent explicit contractual language to the contrary, an indemnitee who has been found to be at least partially at fault may not recover the costs of its defense from an indemnitor.” After that Supreme Court decision, an Appellate Division panel held that the New Jersey Supreme Court intended that a “bright line” test be used to determine “whether contracting parties intended that defense and indemnity be provided where the party seeking it was itself negligent.” That Appellate Division panel noted that the Supreme Court decision had “eschewed the consideration of a ‘broad’ or ‘limited’ form of indemnification.” Essentially, the current rule in New Jersey says that if a party wishes to be indemnified for its own negligence, the indemnification contract must state in “‘explicit terms’ that the indemnification includes the negligence of the indemnitee.” Here, the parties did not, and the claim for indemnification was rejected.

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