STATE OF NEW JERSEY VS. JAHIDE LESAINEÂ (06-02-0450, ESSEX COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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-1266-15T4
MITCHELL HAFTELL, by his
subrogee, THE CUMBERLAND
INSURANCE GROUP,
Plaintiff-Appellant,
v.
STEVEN L. BUSCH and ELIZABETH
BUSCH,
Defendants-Respondents.
________________________________
Submitted December 19, 2016 – Decided March 22, 2017
Before Judges Nugent and Haas.
On appeal from Superior Court of New Jersey,
Law Division, Camden County, Docket No. L-
1070-15.
Kearns & Duffy, P.C., attorneys for appellants
(Paul R. Duffy, on the brief).
LeClairRyan, attorneys for respondents (Todd
A. Rossman, on the brief).
PER CURIAM
This is an insurance subrogation action. Plaintiff, The
Cumberland Insurance Group (Cumberland), as subrogee of its
insured, Mitchell Haftell, appeals from an order denying
reconsideration of the trial court's grant of summary judgment to
defendants Steven L. Busch and Elizabeth Busch. We reverse and
remand for further proceedings.
These are the facts developed on the summary judgment motion
record, viewed most favorably to Cumberland, the non-moving party.
R. 4:46-2(c); Brill v. Guardian Life Ins. Co. of Am., 142 N.J.
520, 540 (1995). Cumberland's subrogation claim arose out of an
October 24, 2014 fire at a three-story apartment complex in
Voorhees Township known as the Club at Main Street Apartments.
Cumberland's insured, Haftell, leased an apartment in the complex.
Defendant Elizabeth Busch leased an apartment in the same complex.
She lived there with her family, including her husband, defendant
Steven Busch. According to the Camden County Fire Marshall's
report, Steven Busch caused the October 24, 2014 fire by carelessly
discarding a cigarette on the balcony of the Busch apartment.
Cumberland paid Haftell's claim for property damage caused
by the fire and then filed a subrogation complaint on March 19,
2015. Defendants filed an answer on June 8, 2015. One month
later, on July 9, 2015, defendants filed a motion for summary
judgment. No discovery had been completed. Defendants based
their motion solely on a provision in a section of Haftell's lease
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entitled "Insurance." The Insurance clause stated, in pertinent
part:
The Tenant agrees to be solely
responsible for all loss or damage to Tenant
or their property or to any other person who
may be situated in the Apartment during the
term of this Agreement . . . including any
loss by water, fire, or theft in and about the
Apartment; gross negligence of Landlord, its
servants, agents or employees excepted. . . .
Tenant agrees to procure and to maintain
content and liability insurance as described
on Liability and Contents and Contents
Insurance Requirements Addendum. . . . Nothing
contained herein shall be construed to
supersede the common law rights of the
parties. . . .
Regardless of anything stated in this
Lease, Tenant releases Landlord from any
injury, loss or damage to personal property
or persons from any cause. Landlord shall
only be responsible for any acts caused by
negligence of its employees, servants or
agents. Tenant waives any right of
subrogation by Tenant or any insurance
company, which covers Tenant. Subrogation is
the right to be repaid for any payments made
by Tenant or Tenant's insurance for injury,
loss or damage to personal property or
persons. Landlord requires tenant to produce
proof of insurance . . . .
[(Emphasis added).]
Relying on the underlined sentence, defendants argued they
were entitled to the benefit of the subrogation waiver. In an
oral opinion, the motion judge agreed, granted defendants' summary
judgment motion, and dismissed the complaint with prejudice.
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Thereafter, the judge denied Cumberland's motion for
reconsideration. This appeal followed.
On appeal, Cumberland argues the motion judge erred when he
barred its claim against defendants, non-signatories to Haftell's
lease, based on the subrogation waiver in Haftell's lease.
Cumberland also claims the motion judge confused condominium
ownership and Haftell's tenancy, thereby overlooking legal
principles concerning adhesion contracts and disfavored
exculpatory clauses.
Defendants counter that longstanding precedent permits a
party to waive subrogation rights, and the insurer of a party who
has waived subrogation rights cannot recover if the insured cannot
recover. Defendants quote the subrogation sentence in Haftell's
lease — out of its context — and assert "[i]t is not limited in
any way, shape, or form and the word 'any' must be construed to
include owners, landlords, and tenants. Stated differently, Mr.
Haftell has no rights to subrogation whatsoever."
We "review the grant of summary judgment 'in accordance with
the same standard as the motion judge.'" Globe Motor Co. v.
Igdalev, 225 N.J. 469, 479 (2016) (citations omitted). Under that
standard, summary judgment is appropriate "if the pleadings,
depositions, answers to interrogatories and admissions on file,
together with the affidavits, if any, show that there is no genuine
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issue as to any material fact challenged and that the moving party
is entitled to judgment . . . as a matter of law." R. 4:46-2(c);
Bhagat v. Bhagat, 217 N.J. 22, 38 (2014). A motion judge's
determination that a party is entitled to summary judgment as a
matter of law is "not entitled to any special deference[,]" and
subject to de novo review. Manalapan Realty, L.P. v. Twp. Comm.
of Manalapan, 140 N.J. 366, 378 (1995) (citations omitted).
When a motion involves the interpretation of a contract, the
motion presents what "is ordinarily a legal question for the court
and may be decided on summary judgment unless 'there is
uncertainty, ambiguity or the need for parol evidence in aid of
interpretation. . . .'" Celanese Ltd. v. Essex Cty. Improvement
Auth., 404 N.J. Super. 514, 528 (App. Div. 2009) (citation
omitted). Because the interpretation of a contract generally
presents a legal issue, appellate courts owe "no special deference"
to a trial court's interpretation. Manahawkin Convalescent v.
O'Neill, 217 N.J. 99, 115 (2014) (quoting Kieffer v. Best Buy, 205
N.J. 213, 223 (2011)).
A motion for reconsideration is addressed to the "sound
discretion of the [c]ourt to be exercised in the interests of
justice." Cummings v. Bahr, 295 N.J. Super. 374, 384 (App. Div.
1996) (quoting D'Atria v. D'Atria, 242 N.J. Super. 392, 401 (Ch.
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Div. 1990)). Thus, we review a motion judge's denial of
reconsideration under an abuse-of-discretion standard. Ibid.
We begin our analysis by reviewing fundamental principles of
contract law generally, and leases specifically. A "lease is a
contract between [the lessor and lessee] which sets forth their
rights and obligations to each other in connection with [the
lessor's] temporary grant of possession of its property to [the
lessee]." Town of Kearny v. Disc. City of Old Bridge, Inc., 205
N.J. 386, 411 (2011) (emphasis added) (citing Maglies v. Estate
of Guy, 193 N.J. 108, 143 (2007)). Generally, unless the parties
to a contract "intend[] that a third party should receive a benefit
which might be enforced in the courts[,]" a non-party having no
privity of contract has no cause of action based on the contract.
Rieder Cmtys., Inc. v. Twp. of N. Brunswick, 227 N.J. Super. 214,
222 (App. Div.) (citations omitted), certif. denied, 113 N.J. 638
(1988).
Conversely, "third-party beneficiaries may sue upon a
contract made for their benefit without privity of contract." Id.
at 221-22 (citing Houdaille Constr. Materials, Inc. v. Am. Tel. &
Tel. Co., 166 N.J. Super. 172, 184-85 (Law Div. 1979)). "The
standard applied by courts in determining third-party beneficiary
status is 'whether the contracting parties intended that a third
party should receive a benefit which might be enforced in the
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courts[.]'" Id. at 222 (quoting Brooklawn v. Brooklawn Hous.
Corp., 124 N.J.L. 73, 77 (E. & A. 1940)); see also Ross v. Lowitz,
222 N.J. 494, 513 (2015) (quoting Broadway Maint. Corp. v. Rutgers,
90 N.J. 253, 259 (1982)) ("When a court determines the existence
of 'third-party beneficiary' status, the inquiry 'focuses on
whether the parties to the contract intended others to benefit
from the existence of the contract, or whether the benefit so
derived arises merely as an unintended incident of the
agreement'").
In the case before us, the contractual waiver of subrogation
clause is contained in a lease between Haftell and the landlord.
Defendants are not parties to that contract. Thus, the threshold
inquiry is not whether the waiver of subrogation clause is
generally enforceable, but rather whether the parties to the lease,
Haftell and the landlord, "'intended others to benefit from the
existence of the contract[.]'" Ross, supra, 222 N.J. at 513
(citation omitted). Nothing in the lease suggests they did.
Moreover, because defendants' summary judgment motion was decided
before the parties had undertaken discovery, there is no competent
evidence on the motion record from which anything can be inferred
about Haftell and his landlord's intent.
We discern from the transcript of oral argument and from the
motion judge's sparse opinion that the judge found controlling our
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decision in Skulskie v. Ceponis, 404 N.J. Super. 510 (App. Div.
2009). Skulskie is distinguishable from the case before us.
Skulskie involved a waiver of a subrogation provision in a
homeowner's insurance policy, not a waiver of a subrogation
provision in a lease. Id. at 511. The homeowner's residence was
a condominium unit, not a leased apartment. Ibid. Upholding the
insurance policy's waiver of subrogation clause, we explained:
In light of the overall purpose of the
waiver of subrogation provision in any
insurance policy obtained by the unit owner,
we discern no basis to allow the insurance
carrier of the damaged unit owner to proceed
against another unit owner, even an uninsured
unit owner. The scheme created by this
residential condominium community
contemplated no litigation between unit owners
or between unit owners and the Association.
The optional nature of the insurance scheme
does not alter the purpose of the waiver of
subrogation provision. Moreover, the
insurance carrier that issues insurance to any
unit owner with a waiver of subrogation
provision has no expectation that it will be
able to pursue a claim against a negligent
unit owner. Stated differently, when an
insurer . . . issues a policy, it does so with
the understanding that it has no recourse
against a negligent unit owner.
[Id. at 514.]
Unlike Skulskie, here we can discern no "scheme" created by
either the landlord or the residential community. Perhaps one
exists, but if it does, it is not apparent from the summary
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judgment motion record. The motion judge granted summary judgment
before the parties could develop the issue through discovery.
Additionally, unlike Skulskie, here there is no evidence
Cumberland's policy contained a waiver of subrogation.
Consequently, we cannot conclude Cumberland knew it would be unable
to pursue a subrogation claim against a negligent tenant.
Defendants' argument — essentially, that Haftell waived
subrogation against all tortfeasors — is devoid of merit. It
overlooks the issues of privity and whether defendants are third-
party beneficiaries of Haftell's lease. Defendants' argument, if
accepted, would hypothetically bar Cumberland from subrogating
against a resident from another state who, while visiting New
Jersey, becomes inebriated and crashes a car into Haftell's
apartment complex, igniting a fire resulting in the destruction
of Haftell's personal belongings. Nothing in Haftell's lease
suggests such a strained interpretation of the waiver-of-
subrogation clause.
In addition, defendants have constructed their argument by
taking a single sentence in the lease out of context, disregarding
the fundamental principle of contract interpretation that
contracts must be considered in their entirety. See Cumberland
Cty. Imp. Auth. v. GSP Recycling Co., 358 N.J. Super. 484, 497
(App. Div.) (citation omitted) (noting a contract "must be read
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as a whole, in 'accord with justice and common sense'"), certif.
denied, 177 N.J. 222 (2003).
For the foregoing reasons, we conclude the motion judge
erroneously granted defendants' summary judgment motion and
misapplied his discretion in denying Cumberland's motion for
reconsideration. Although the interpretation of the subrogation
waiver in Haftell's lease might well present a purely legal issue,
the parties should be provided an opportunity to present their
positions on the need for discovery and presentation of parol
evidence. For that reason, we reverse and remand this matter for
further proceedings consistent with this opinion.
Reversed and remanded. We do not retain jurisdiction.
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