Gifford Industries, Inc., App. v. Branchflower Properties, Inc., Res. ( 2014 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON r-o
o
c/>o
C3
j^-
"
GIFFORD INDUSTRIES, INC., ) No. 69838-9-1 OK rn
3=» _o
a Washington corporation, ) za
) DIVISION ONE
—•
^-> —
—j =£-r;r
>-om
Appellant, ) 5="
C/lp-lf-,
zs.
)
6 Wash. App. 880, 496 P.2d 548 (1972), Branchflower argued
that the exculpatory provision in the lease was not against public policy.
The court granted the motion for summary judgment dismissal of the lawsuit.
The court ruled Gifford's claims "fail as a matter of law as the lease specifically provides
that the lessor is not liable for any damage to lessee's property." The written
memorandum decision states, in pertinent part:
In this case, it is clear that the parties contemplated a commercial
lease whereby Defendant was responsible for maintenance and repair of
the roof as set forth in paragraph 7 together with an exculpatory provision
as set forth in paragraph 17. Similar to the leases at issue in Gabl, the
exculpatory provision disclaims liability of the Defendant for damage to
Plaintiff's property caused by Defendant's alleged inaction within areas
controlled by Defendant, i.e., the maintenance of the roof. Despite the
apparent conflict between paragraphs 7 and 17, the parties are free to
agree to exculpatory clauses as they wish. Plaintiff made no allegation of
negligence, gross negligence or willful misconduct. It also appears that
the bargaining positions of the parties were not unequal and the
distribution of risk was not unjust.
ANALYSIS
Gifford contends that because the lease requires Branchflower to repair the roof,
the exculpatory provision of the lease that states Branchflower is not liable for damage
to the tenant's property is ambiguous. Gifford also argues that interpreting the lease to
preclude liability for damage caused by the negligent failure to repair the roof would
render the duty of the landlord to repair the roof meaningless.
No. 69838-9-1/4
This court reviews summary judgment de novo. Hearst Commc'ns, Inc. v.
Seattle Times Co., 154 Wash. 2d 493, 501, 115 P.3d 262 (2005). Summary judgment is
appropriate only if the moving party is entitled to judgment as a matter of law. CR 56(c).
The construction of a contract and whether a contract is ambiguous is a legal question
we review de novo. Schwab v. City of Seattle, 64 Wash. App. 742, 751, 826 P.2d 1089
(1992).
"The touchstone of contract interpretation is the parties' intent." Tanner Elec.
Coop, v. Puqet Sound Power & Light, 128Wn.2d656, 674, 911 P.2d 1301 (1996).
Clearand unambiguous contracts are enforced as written. McDonald v. State Farm
Fire & Cas. Co., 119 Wash. 2d 724, 733-34, 837 P.2d 1000 (1992). Words used in a
contract are given their ordinary, usual, and popular meaning unless the agreement
clearly demonstrates a contrary intent. Hearst, 154 Wash. 2d at 504.
Courts interpret the contract as a whole and will not read ambiguity into an
unambiguous contract. Berg v. Hudesman, 115 Wash. 2d 657, 669, 801 P.2d 222 (1990);
Svrovvv. Alpine Res., Inc., 122 Wash. 2d 544, 551, 859 P.2d 51 (1993). "A contract
provision is ambiguous when its terms are uncertain or when its terms are capable of
being understood as having more than one meaning." Maver v. Pierce County Med.
Bureau, Inc.. 80 Wash. App. 416, 421, 909 P.2d 1323 (1995).
Branchflower concedes that under section 7 of the lease, it had a duty to repair
the roof. But Branchflower argues that underthe plain language ofsection 17, it is not
liable for damage to Gifford's property.
Section 7 states, in pertinent part:
7) REPAIRS AND MAINTENANCE: . . . Except for the roof,
exterior walls and foundation, which are the responsibility of the Landlord,
No. 69838-9-1/5
Tenant shall make such repairs as necessary to maintain the premises in
as good condition as they are now, reasonable use and wear and damage
by fire and other casualty excepted.
Section 17 states:
17) ACCIDENTS AND LIABILITY: Landlord or its agent shall
not be liable for any injury or damage to persons or property sustained by
Tenant or other, in and about the Premises. Tenant agrees to defend and
hold Landlord and its agents harmless from any claim, action and/or
judgment for damages to property or injury to persons suffered or alleged
to be suffered on the Premises by any person, firm or corporation unless
caused by Landlord's negligence.
Tenant agrees to maintain public liability insurance on the Premises
in the minimum level of $1,000,000 for property damage and in the
minimum of $1,000,000 for bodily injuries and death, and shall name
Landlord as an additional named insured. Tenant shall furnish Landlord a
certificate indicating that the insurance policy is in full force and effect, the
Landlord has been named as an additional insured, and that the policy
may not be cancelled unless ten (10) days prior written notice ofthe
proposed cancellation has been given to Landlord.
Gifford relies on the language in the second sentence of section 17, "Tenant
agrees to defend and hold Landlord .. . harmless from any claim, action and/or
judgment for damages to property or injury to persons suffered ... on the
Premises . .. unless caused by Landlord's negligence," to argue Branchflower is liable
for property damages caused by its negligent failure to repair the roof. Gifford claims
the second sentence of section 17 means that the exculpatory provision in the first
sentence applies only where the landlord is not negligent.
The language used in section 17 does not contain uncertain terms nor is it
susceptible to two different meanings.1 The plain language of section 17 does not
support Gifford's interpretation. The first sentence of section 17 limits the landlord's
1Forthe first time in its reply brief, Gifford argues that the release of liability clause is
unenforceable because it is inconspicuous and Branchflower was grossly negligent. When reviewing a
grant of summary judgment, this court considers solely the issues and evidence the parties called to the
trial court's attention on motion for summary judgment. RAP 9.12; Schreiner Farms.. Inc. v. Am. Tower,
Inc.. 173 Wash. App. 154, 158, 293 P.3d 407 (2013).
No. 69838-9-1/6
liability. The first sentence unambiguously states, "Landlord ... shall not be liable for
any ... damage to persons or property sustained by Tenant or other, in and about the
Premises."
The second sentence does not apply to the tenant's breach of contract action
against the landlord for property damage. The language in the second sentence of
section 17 is an indemnification and hold harmless provision that applies to third party
claims where the tenant is obligated to indemnify the landlord. The second sentence
requires the tenant to indemnify Branchflower from third party claims "unless caused by
Landlord's negligence." Consequently, section 17 requires the tenant to obtain liability
insurance on the leased premises and name Branchflower as an additional named
insured.
We also conclude the exculpatory provision set forth in section 17 of the
commercial lease does not make the duty to repair in section 7 meaningless. Although
section 17 limits the landlord's liability and the remedies available to the tenant, it does
not eliminate certain common law remedies for breach of the lease, such as
constructive eviction. See, e.g., McKennon v. Anderson. 49 Wash. 2d 55, 62, 298 P.2d
492 (1956) (holding that in a wrongful eviction, the tenant is entitled to recover all the
damages which reasonably resulted to him from the landlord's wrongful act, including
the expense of moving); Risdon v. Hotel Savoy Co.. 99 Wash. 616, 616-17, 170 P. 146
(1918) (holding that a constructively evicted commercial tenant may recover lost profits);
Aro Glass & Upholstery Co. v. Munson-Smith Motors, Inc., 12 Wash. App. 6, 8, 11, 528
P.2d 502 (1974) (upholding an award of damages to a commercial tenant for costs
No. 69838-9-1/7
incurred in moving equipment and stock where the landlord was found to have
constructively evicted the tenant by failing to repair a "puddling" problem).
Relying on the language of the leases addressed in Gabl, Gifford also argues
that absent an express disclaimer for negligence in section 17 of the lease,
Branchflower is liable for property damage caused by breach of the duty to repair the
roof.
In Gabl. commercial tenants sued the landlord for negligence and damage to
property. Gabl. 6 Wash. App. at 881. One of the commercial leases in Gabl provided, in
pertinent part:
"All personal property ... in the leased premises shall be at the Lessees'
sole risk, and Lessor shall not be liable for any damage done to, or loss of,
such personal property . .. caused in any manner whatsoever."
Gabl, 6 Wash. App. at 882-83. The other commercial lease provided, in pertinent part:
"All personal property on said leased premises shall be at the sole risk of
lessees, and lessor shall not be liable for any damage, either to person or
property sustained by lessees or others,.. . due to the happening of any
accident from whatsoever cause in or about said building."
Gabl, 6 Wash. App. at 883.
The tenants argued that the exculpatory provisions in the leases that state the
landlord is not liable for damages to property caused by the landlord's negligence were
"void as against public policy and should not be enforced." Gabl, 6 Wash. App. at 883.
The court rejected the tenants' argument, concluding that the "limitation of damages
where the loss is commercial is not prima facie unconscionable." Gabl, 6 Wash. App. at
884. Because the bargaining position of the landlord and the commercial tenants was
"not unequal and the distribution of the risks entailed no elements of injustice," we held
that "[t]o shift liability from the commercial tenant to the landlord without regard to the
No. 69838-9-1/8
other provisions of the lease could cause, rather than cure, inequity," and affirmed
summary judgment dismissal of the negligence claim for property damage. Gabl, 6 Wn.
App. at 881, 884. Here, as in Gabl, the plain language of section 17 of the commercial
lease limits the liability ofthe landlord for property damage.2
We affirm summary judgment dismissal of the breach of contract lawsuit against
Branchflower. Under section 21 of the lease and upon compliance with RAP 18.1,
Branchflower is entitled to an award of reasonable attorney fees and costs on appeal.3
jt.jIka
WE CONCUR:
2We reject Gifford's attempt to rely on inapposite preinjury releases in tort cases. See Vodopest
v. MacGreqor, 128 Wash. 2d 840, 913 P.2d 779 (1996) (negligence suit brought by an injured hiker arguing
the exculpatory clause in a preinjury release violated public policy); Baker v. City of Seattle, 79 Wash. 2d
198, 484 P.2d 405 (1971) (personal injury suit against a golfcourse owner and golfcart lessors where the
injured party argued that the liability disclaimer was void as against public policy); Chauvlier v. Booth
Creek Ski Holdings, Inc.. 109 Wash. App. 334, 35 P.3d 383 (2001) (negligence suit brought by an injured
skier arguing the liability release he signed was unenforceable because the language was not sufficiently
clear, was inconspicuous, and violated public policy). Markel Am. Ins. Co. v. Daamar's Marina. LLC, 139
Wash. App. 469, 161 P.3d 1029 (2007), is also inapposite as it involves maritime law.
3Section 21 of the lease provides, in pertinent part: "If, by reason of any default or breach on the
part of either party in performance of any of the provisions of this Lease, a legalaction is instituted, the
losing party agrees to pay all reasonable costs and attorney fees in connection therewith."
8