Port Authority of New York and New Jersey v. Honeywell Protective Services, Honeywell, Inc.

• Citation: 222 N.J.Super. 11,535 A.2d 974
• Parties: PORT AUTHORITY OF NEW YORK AND NEW JERSEY, Plaintiff-Appellant, v. HONEYWELL PROTECTIVE SERVICES, HONEYWELL, INC., Defendant-Respondent.
• Decision Date: 16 October 1987
• Court: New Jersey Superior Court — Appellate Division

Page 11

222 N.J.Super. 11

535 A.2d 974

PORT AUTHORITY OF NEW YORK AND NEW JERSEY, Plaintiff-Appellant, v. HONEYWELL PROTECTIVE SERVICES, HONEYWELL, INC., Defendant-Respondent.

Superior Court of New Jersey,

Appellate Division.

Argued Sept. 14, 1987.

Decided Oct. 16, 1987.

Donald F. Burke, Jersey City, for plaintiff-appellant (Hugh H. Welsh, attorney; Donald F. Burke, on brief).

William P. Ries, Pluckemin, for defendant-respondent (Purcell, Ries, Shannon & Mulcahy, attorneys; William P. Ries, on brief).

Before Judges DREIER and BAIME.

The opinion of the court was delivered by

BAIME, J.A.D.

Plaintiff Port Authority of New York and New Jersey (Port Authority) appeals from a summary judgment entered by the Superior Court, Law Division, in favor of defendant Honeywell Protective Services, Honeywell, Inc. (Honeywell). Port Authority also appeals from the trial judge's denial of its motion for summary judgment. In a prior action, Honeywell's employee sued Port Authority for personal injuries sustained while servicing a fire alarm system on the latter's property. Port Authority then instituted this action to recover damages based on Honeywell's alleged breach of its contractual obligation to protect the safety of its employees and others in the course of servicing and maintaining the fire alarm. The judge determined that Port Authority's claim was barred by the exclusive-remedy provision of the Workers' Compensation Act ( N.J.S.A. 34:15-1 et seq.). We disagree and are constrained to reverse the summary judgment. Because we are of the view that genuine issues of material fact exist, we find that a plenary trial is necessary and we remand for that purpose.

The salient facts can be summarized briefly. John Nielsen, an employee of Honeywell, sustained injuries to his knee while attempting to service a fire alarm in a warehouse owned by Port Authority and leased to William Spencer Company. While the meager record is not wholly informative, it would appear that when the incident occurred Nielsen was attempting to reach a telephone circuit to which the fire alarm was connected by wires. The circuit was located approximately five feet above the roof of an enclosed office within the warehouse. Nielsen testified in a deposition that he was not equipped with a ladder and therefore found it necessary to climb up the outside wall of the office. When he attempted to step on the roof, Nielsen's foot went through a hole.

Following the accident, Nielsen instituted a personal injury action against Port Authority and William Spencer Company, alleging negligence in the maintenance of the building. Port Authority then commenced this action for breach of its fire alarm contract with Honeywell and sought to consolidate it with Nielsen's lawsuit. The trial judge denied the motion for consolidation. Nielsen's action was thereafter settled for $120,000, of which Port Authority paid $25,000.

Port Authority's claim against Honeywell is predicated upon the allegation that Honeywell breached its contractual obligation to protect the safety of its employees while installing and maintaining the fire alarm system. The alarm system was originally installed by Honeywell's predecessor, Central Office Alarm Company, in 1965 in accordance with a written contract between it and Port Authority. ¹ The contract, which is self-renewing and was thus in effect when Nielsen was injured, requires Honeywell "in the performance of [the] work" to "exercise every precaution to prevent injury to persons" and "to design and erect such barricades, ladders, scaffolding, fences and railings ... as may be necessary, desirable or proper...." The contract defines the word "work" as including the "supplying, installing and maintaining ... of [the] fire alarm equipment and [the] supervisory systems ... required by the specifications...." Port Authority contended, and continues to assert, that Honeywell failed to fulfill its contractual promise to protect the safety of its employees and to provide safeguards to prevent injury to persons on the premises.

In granting Honeywell's motion for summary judgment, the trial judge found, as a matter of law, that Port Authority's claim was barred by the exclusive-remedy section of the Workers' Compensation Act, N.J.S.A. 34:15-8. The judge reasoned that the statutory bar precluded a claim for contribution, that there was no express indemnification agreement calling upon Honeywell to hold Port Authority harmless for damages resulting from tort liability and that there was no special relationship between the parties upon which an implied indemnification obligation could be posited. Judgment was entered accordingly.

I.

We are convinced that the trial judge erred. The triadic relationship between the employer, employee and the third-party tortfeasor is governed by the Workers' Compensation Act. Under the Act, the employer "renders itself absolutely liable for the scheduled and fixed compensation to the injured party regardless of the absence of fault on its part or the contributory negligence of the employee." Schweitzer v. Elox Div. of Colt Industries, 70 N.J. 280, 287, 359 A.2d 857 (1976). Acceptance by the employee of the benefits provided by the Act's schedule of payments constitutes agreement to forsake a tort action against the employer. Ramos v. Browning Ferris Industries, 103 N.J. 177, 183, 510 A.2d 1152 (1986), citing Morris v. Hermann Forwarding Co., 18 N.J. 195, 197-198, 113 A.2d 513 (1955). The employee may nevertheless seek damages from a contributing tortfeasor, but he may not duplicate these recoveries. Schweitzer v. Elox Div. of Colt Industries, supra, 70 N.J. at 287, 359 A.2d 857. With respect to a claim by an employee against a third party, the Act is neutral, "leaving him with his common-law liability to the injured employee or, if the latter has been recompensed therefor to any extent by compensation payments, to the statutorily subrogated employer...." Id. at 287-288, 359 A.2d 857. The implicit legislative determination is that the employer's negligence, if any, shall not affect the liability relationship of the parties. This is consonant with the overall legislative policy that "negligence, whether of the employer or the employee, shall play no part in the administration of the [W]ork[ers]' [C]ompensation Act or in the incidence or amount of employer liability." Id. at 288, 359 A.2d 857.

A corollary to this fundamental policy is that because the employer is removed from tort liability, it is not subject to the provisions of the Joint Tortfeasors Contribution Law ( N.J.S.A. 2A:53A-1 et seq.). Thus, a "third-party tortfeasor may not obtain contribution from an employer, no matter what may be the comparative negligence of the third party and the employer." Ramos v. Browning Ferris Industries, supra, 103 N.J. at 184, 510 A.2d 1152. The exclusive-remedy provision precludes a claim for contribution against an employer whose concurring negligence contributed to the injury of an employee. Id. at 185, 510 A.2d 1152. See also Farren v. N.J. Turnpike Authority, 31 N.J. Super. 356, 360-361, 106 A.2d 752 (App.Div.1954); Arcell v. Ashland Chemical Co. Inc., 152 N.J. Super. 471, 483-485, 378 A.2d 53 (Law Div.1977); Ruvolo v. U.S. Steel Corp., 139 N.J. Super. 578, 583, 354 A.2d 685 (Law Div.1976); Yearicks v. City of Wildwood, 23 N.J. Super. 379, 382-383, 92 A.2d 873 (Law Div.1952).

Although a third-party tortfeasor cannot seek contribution from an employer, it may obtain indemnification where that course is specifically permitted by way of an express contract. The Act does not preclude the employer's assumption of a contractual duty to indemnify a third party through an express agreement. Ramos v. Browning Ferris Industries, supra, 103 N.J. at 191, 510 A.2d 1152. Strong public policy considerations along with the general rules governing the construction of contracts dictate that when the meaning of the indemnification clause is ambiguous, it should be strictly construed against the indemnitee. Ibid. Thus, "a contract will not be construed to indemnify the indemnitee against losses resulting from its own negligence unless such an intention is expressed in unequivocal terms." Ibid. See also Carbone, et al. v. Cortlandt Realty Corp., 58 N.J. 366, 368, 277 A.2d 542 (1971); George M. Brewster & Son v. Catalytic Const. Co., 17 N.J. 20, 33, 109 A.2d 805 (1954); Cozzi v. Owens Corning Fiber Glass Corp., 63 N.J. Super. 117, 121, 164 A.2d 69 (App.Div.1960). Subject to this principle, the parties to a contract can generally allocate the burden of risk as to potential tort liability in any manner they may choose.

Apart from express indemnification agreements, it has also been held that a third-party may seek recourse against an employer under the theory of implied indemnification. Ramos v. Browning Ferris Industries, supra, 103 N.J. at 188-189, 570 A.2d 1152. The contours of the doctrine are somewhat narrow, however. "As a general rule, a third party may recover on a theory of implied indemnity from an employer only when a special legal relationship exists between the employer and the third party, and the liability of the third party is vicarious." Id. at 189, 510 A.2d 1152. See also Hagen v. Koerner, 64 N.J. Super. 580, 586-587, 164 A.2d 784 (App.Div.1960). Cf. Adler's Quality Bakery, Inc. v. Gaseteria, Inc., 32 N.J. 55, 79-81, 159 A.2d 97 (1960). A right of implied indemnity may be created as an equitable remedy "to prevent a result which is regarded as unjust or unsatisfactory." Prosser & Keeton on Torts (5 ed. 1984), § 51 at 341. In that context, it has been said that "[o]rdinarily, a party who is at fault may not obtain indemnification for its own acts." Ramos v. Browning Ferris Industries, supra, 103 N.J. at 190, 510 A.2d 1152. The indemnitee "must have been without fault and his liability must be merely constructive, secondary or vicarious in order to make a claim for indemnification." New Milford Bd. of Ed. v....