DAVANNE REALTY COMPANY VS. THE DIAL CORPORATIONÂ (L-3517-14, PASSAIC COUNTY AND STATEWIDE) ( 2017 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court."
Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R.1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-5144-14T2
DAVANNE REALTY COMPANY,
Plaintiff-Appellant,
v.
THE DIAL CORPORATION,
Defendant-Respondent.
________________________________________________________________
Argued January 10, 2017 – Decided June 23, 2017
Before Judges Rothstadt and Sumners.
On appeal from the Superior Court of New
Jersey, Law Division, Passaic County, Docket
No. L-3517-14.
Craig S. Provorny argued the cause for
appellant (Herold Law, P.A., attorneys; Mr.
Provorny, on the briefs).
Camille V. Otero argued the cause for
respondent (Gibbons P.C., attorneys; Ms.
Otero, of counsel; Paul M. Hauge, on the
brief).
PER CURIAM
Plaintiff Davanne Realty Company owns land in Clifton that
is occupied by defendant The Dial Corporation pursuant to a long-
term lease. Prior to this action, both parties had been named as
third-party defendants in a lawsuit relating to the environmental
contamination of the Passaic River and Newark Bay. The parties
settled that litigation and plaintiff filed suit seeking
indemnification and contribution from defendant. The Law Division
dismissed the complaint with prejudice for failure to state a
claim upon which relief can be granted, R. 4:6-2(e). The motion
judge relied upon language in the indemnification clause of the
parties' lease that he determined restricted defendant's liability
for contamination from its operations to an area "in or about the
property" that did not include the area that was the subject of
the prior lawsuit, which the judge found was "over twenty miles
away." The judge further determined that the lease did not
contemplate "environmental or related damages."
On appeal, plaintiff argues that in dismissing its complaint,
the motion judge failed to recognize the parties' intent that
plaintiff "be relieved of any and all liability caused by
[defendant]'s acts" as demonstrated in their lease. It also
contends that the lease "unequivocally required [defendant] to
defend and indemnify [plaintiff] for [plaintiff]'s liabilities
arising from [defendant]'s acts." We agree and reverse.
In reviewing the disposition of a motion to dismiss for
failure to state a claim, we employ the same standard applied by
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the motion court. Donato v. Moldow, 374 N.J. Super. 475, 483
(App. Div. 2005). "In a Rule 4:6-2(e) motion, the court reviews
the complaint to determine whether the allegations suggest a cause
of action[.]" In re Reglan Litig., 226 N.J. 315, 324 n.5 (2016)
(citing Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J.
739, 746 (1989)), cert. denied, PLIVA, Inc., v. Kohles, ___ U.S.
___, 137 S. Ct. 1434, 197 L. Ed. 2d 648 (2017). "At this
preliminary stage of the litigation [we are] not concerned with
the ability of plaintiff to prove the allegation contained in the
complaint." Printing Mart-Morristown, supra, 116 N.J. at 746.
Rather, the court's "inquiry is limited to examining the legal
sufficiency of the facts alleged on the face of the complaint" to
determine "whether a cause of action is 'suggested' by the facts."
Ibid. (first citing Rieder v. Dep't of Transp., 221 N.J. Super.
547, 552 (App. Div. 1987); then quoting Velantzas v. Colgate-
Palmolive Co., 109 N.J. 189, 192 (1988)). Dismissal is appropriate
only if, after proper consideration of the complaint and referenced
documents, there remains "no basis for relief and discovery would
not provide one[.]" Banco Popular N. Am. v. Gandi, 184 N.J. 161,
166 (2005); see also N.J. Citizen Action, Inc. v. Cty. of Bergen,
391 N.J. Super. 596, 605-06 (App. Div.), certif. denied, 192 N.J.
597 (2007).
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Applying this standard, we turn to plaintiff's complaint and
its allegations about the parties' lease and the underlying lawsuit
that they settled. The parties' predecessors in interest entered
into the lease in 1958. The lease required the landlord to
construct a building on the premises for the tenant's sole use and
occupation. After construction of the premises, defendant or its
predecessors were in sole possession of the property and were the
only entities that conducted operations from the demised premises.
The lease imposed upon the tenant all obligations associated
with the property. For example, at the outset, the lease stated
the parties intended that, except for the landlord's mortgage
obligation, the tenant was responsible for "all costs, charges,
expenses and damages that . . . could have been chargeable during
the said term, against the said leased premises and/or payable by
the Lessor[.]" Similarly, paragraph 4(a) of the lease imposed
upon the tenant all payments required "by virtue of any present,
or future, law, order, or ordinance of the United States of
America, or of the City of Clifton, County of Passaic, or State
of New Jersey, or of any department, officer, or bureau thereof."
(emphasis added). Paragraph 7(b) imposed on the tenant the
obligation to comply with all laws, present or future, associated
with the use of the premises. It specifically required the tenant
to be liable for "all costs, expenses, claims, fines, penalties
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and damages that may, in any manner, arise out of, or be impose[d]
because of, the failure of the Lessee to comply with this
covenant." Paragraph 10 of the lease required the tenant to obtain
and maintain liability insurance "for the benefit of" the landlord,
"protecting the Lessor against any and all liability occasioned
by accident, or disaster[.]"
The indemnification clause was set forth in paragraph 13 of
the lease. It stated:
That the Lessee shall indemnify and save
harmless the said Lessor from and against any
and all claims, suits, actions, damages and/or
causes of action arising, during the term of
this lease, for any personal injury, loss of
life and/or damage to property sustained in,
or about, the demised premises, or the
buildings and improvements thereon, or the
appurtenances thereto, or upon the adjacent
sidewalks, or streets, and from and against
all costs, counsel fees, expenses and
liabilities incurred in and about any such
claim, the investigation thereof, or the
defense of any action, or proceeding, brought
thereon, and from and against any orders,
judgments and/or decrees, which may be entered
therein.
The litigation in which the parties were named as third-party
defendants arose from an action originally commenced by the New
Jersey Department of Environmental Protection in 2005. Two of the
named defendants in that action joined plaintiff and defendant
pursuant to the Spill Compensation and Control Act (Spill Act),
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N.J.S.A. 58:10-23.11 to -23.24.1 The third-party complaint alleged
that during the period plaintiff or its predecessor owned the
subject property, defendant or its predecessors discharged
hazardous materials on the property, and that the discharged
hazardous materials migrated into the Passaic River/Newark Bay
Complex. It also alleged defendant's predecessor periodically
spilled highly concentrated detergents, which washed from the
property into the storm sewer and into the Passaic River.
Four years later, the parties settled the litigation by
plaintiff and defendant each agreeing to pay $195,000 to the third-
party plaintiffs. The terms of the settlement were incorporated
into a consent judgement that also provided that the parties
reserved their right to assert claims against any entity for
contribution and cost recovery, including claims for contribution
for "[d]ischarges of hazardous substances at or from" third-party
defendants' property sites.
Plaintiff paid its share of the Passaic River/Newark Bay
settlement amount and later filed this action seeking contribution
and indemnification from defendant. The complaint alleged
plaintiff was entitled to "contractual indemnification," "Spill
Act contribution," and "statutory contribution" pursuant to the
1
The parties here were among approximately three hundred third-
party defendants named in the underlying action.
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Joint Tortfeasor Act, N.J.S.A. 2A:53A-1 to -48. Defendant filed
its motion to dismiss in lieu of an answer to the complaint and
the motion judge entered an order on June 30, 2015 dismissing the
complaint.
Against this background, we conclude that plaintiff
sufficiently pleaded claims upon which relief could be granted if
the allegations are proven. We believe the motion judge read the
parties' lease too narrowly and failed to consider the lease as a
whole when he granted defendant's motion.
"[T]he polestar of construction of a contract is to discover
the intention of the parties." Jacobs v. Great Pac. Century Corp.,
104 N.J. 580, 582 (1986) (quoting Kearny PBA Local No. 21 v. Town
of Kearny, 81 N.J. 208, 221 (1979)). "Courts enforce contracts
'based on the intent of the parties, the express terms of the
contract, surrounding circumstances and the underlying purpose of
the contract.'" Manahawkin Convalescent v. O'Neill, 217 N.J. 99,
118 (2014) (quoting Caruso v. Ravenswood Developers, Inc., 337
N.J. Super. 499, 506 (App. Div. 2001)); see also Celanese Ltd. v.
Essex Cty. Improvement Auth., 404 N.J. Super. 514, 528 (App. Div.
2009). "[T]o discover the intention of parties to a contract [a
court should consider] the particular contractual provision, an
overview of all the terms, the circumstances leading up to the
formation of the contract, custom, usage, and the interpretation
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placed on the disputed provision by the parties' conduct.'" VRG
Corp. v. GKN Realty Corp., 135 N.J. 539, 548 (1994) (quoting
Jacobs, supra, 104 N.J. at 582); see also Washington Constr. Co.,
Inc. v. Spinella, 8 N.J. 212, 217 (1951) ("[a] contract must be
construed as a whole and the intention of the parties is to be
collected from the entire instrument and not from detached
portions" (citation omitted)).
Reading the parties lease as a whole, we conclude that its
indemnification clause encompassed plaintiff's claim for relief
as stated in its complaint. First, the lease called for the
construction of a building that was to be used by the tenant
exclusively. Second, the lease was a "triple net lease," "in
which a commercial tenant was to be responsible for 'maintaining
the premises and for paying all utilities, taxes and other charges
associated with the property.'" Geringer v. Hartz Mountain Dev.
Corp., 388 N.J. Super. 392, 400 n.2 (App. Div. 2006) (quoting N.J.
Indus. Props. v. Y.C. & V.L., Inc., 100 N.J. 432, 434 (1985)),
certif. denied, 190 N.J. 254 (2007). Third, the lease expressly
stated that it was the parties' intention that the tenant would
pay any damages chargeable against the landlord. Fourth, the
lease required the tenant be solely responsible for compliance
with any future laws and for violations thereof as well as for any
claims arising from its operations. Here, plaintiff's complaint
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stated that the alleged contamination that gave rise to the third-
party complaint filed against the parties pursuant to the Spill
Act – a law that did not exist until many years after the lease
was executed - was solely the result of defendant's or its
predecessor's operations.
Finally, the indemnification clause also expressed an
intention that the tenant would be obligated to hold the landlord
harmless from any claims for "damages and/or causes of action
arising, . . . for . . . damage to property sustained in, or about,
the demised premises . . . ." and "from and against all . . .
liabilities incurred in and about any such claim . . . ." Contrary
to the motion judge's reading of that language, we conclude that
it did not impose any distance limitation on damages sustained by
other property owners arising from contamination caused by
defendant's operations. When the lease is read in its entirety,
it demonstrates an intent to hold plaintiff harmless for all such
liabilities arising from defendant's use and does not contain
ambiguous provisions that require interpretation.2 See Hardy ex
2
The motion judge initially found the words "in or about" in
the indemnification clause to be "unambiguous." Yet, the judge
"interpreted" those three words without "read[ing] the document
as a whole in a fair and common sense manner." Hardy ex rel.
Dowdell v. Abdul-Matin, 198 N.J. 95, 103 (2009).
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rel. Dowdell, supra, 198 N.J. at 103; Washington Constr. Co.,
Inc., supra, 8 N.J. at 217.
Of course, the allegations of the complaint are subject to
the proofs developed through discovery and, if necessary, trial.
At this stage, however, it was an error to dismiss the complaint.
Reversed and remanded for further proceedings consistent with
our opinion. We do not retain jurisdiction.
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