Topp Copy Products, Inc. v. Singletary

• Decision Date: 26 May 1993
• Citation: 533 Pa. 468,626 A.2d 98
• Parties: TOPP COPY PRODUCTS, INC. and Topp Telecommunications, Inc., Appellees v. Ernest SINGLETARY and Tony Noviello, t/a Nova Construction Co. and Nova Construction, Inc. Appeal of Ernest SINGLETARY.
• Court: Pennsylvania Supreme Court

Page 98

626 A.2d 98

533 Pa. 468

TOPP COPY PRODUCTS, INC. and Topp Telecommunications, Inc., Appellees v. Ernest SINGLETARY and Tony Noviello, t/a Nova Construction

Co. and Nova Construction, Inc.

Appeal of Ernest SINGLETARY.

Supreme Court of Pennsylvania.

Submitted Dec. 7, 1992.

Decided May 26, 1993.

C. Edward S. Mitchell, Gary L. Weber, Williamsport, for appellant.

J. David Smith, Joanne C. Ludwikowski, Williamsport, for Topp Copy, etc.

Jonathan E. Butterfield, Williamsport, for Tony Noviello, et al.

Before NIX, C.J., and LARSEN, FLAHERTY, ZAPPALA, PAPADAKOS, CAPPY and MONTEMURO, JJ.

OPINION OF THE COURT

PAPADAKOS, Justice.

This is the appeal of Ernest Singletary (Appellant) from the opinion and order of the Superior Court reversing the order of the Court of Common Pleas of Lycoming County which granted summary judgment in favor of Appellant and remanded the matter to the trial court for further proceedings.

Appellant is the owner of a multi-story building in the City of Williamsport. Topp Copy Products, Inc. and Topp Copy Telecommunications, Inc., (Appellees) are in the business of selling and leasing office equipment and lease the first floor of Appellant's building. In an apartment located above Appellees' business, a toilet developed a leak, resulting in substantial water damage to Appellees' inventory stored in its leased unit.

Appellees brought suit against Appellant for the water damages it sustained in the Court of Common Pleas of Lycoming County, alleging breach of implied warranty of habitability for residential premises, breach of implied warranty for commercial premises, and negligence. Appellant filed a motion for summary judgment arguing that an exculpatory clause in its lease with Appellees effectively prevented any action against him on account of water damage caused by any broken plumbing fixture. ¹ The Honorable Thomas C. Raup, President Judge of the Court of Common Pleas of Lycoming County, agreed that the exculpatory clause was applicable and granted summary judgment in favor of Appellant.

Appellees appealed to the Superior Court, which reversed, because in its view, the exculpatory clause was not specific enough to immunize Appellant from liability for his own acts of negligence. In reaching this conclusion, the Superior Court relied on our recent decision in Ruzzi v. Butler Petroleum, 527 Pa. 1, 588 A.2d 1 (1991), as dispositive of the requirements of the law when determining the enforceability of exculpatory clauses immunizing a landlord for his own acts of negligence. Topp Copy Products Inc. v. Singletary, 404 Pa.Superior Ct. 459, 591 A.2d 298 (1991).

We granted allocatur in this matter to determine whether the specific requirements of Ruzzi are applicable when reviewing exculpatory clauses in leases and we now reverse.

It is generally accepted that an exculpatory clause is valid where three conditions are met. First, the clause must not contravene public policy. Secondly, the contract must be between persons relating entirely to their own private affairs and thirdly, each party must be a free bargaining agent to the agreement so that the contract is not one of adhesion. Princeton Sportswear Corp. v. H. & M. Associates, 510 Pa. 189, 507 A.2d 339 (1986); Employers Liability Assurance Corp. v. Greenville Business Men's Association, 423 Pa. 288, 224 A.2d 620 (1966). In Dilks v. Flohr Chevrolet, 411 Pa. 425, 192 A.2d 682 (1963), we noted that once an exculpatory clause is determined to be valid, it will, nevertheless, still be unenforceable unless the language of the parties is clear that a person is being relieved of liability for his own acts of negligence. In interpreting such clauses we listed as guiding standards that: 1) the contract language must be construed strictly, since exculpatory language is not favored by the law; 2) the contract must state the intention of the parties with the greatest particularity, beyond doubt by express stipulation, and no inference from words of general import can establish the intent of the parties; 3) the language of the contract must be construed, in cases of ambiguity, against the party seeking immunity from liability; and 4) the burden of establishing the immunity is upon the party invoking protection under the clause. Dilks, at 434, 192 A.2d at 687.

Appellant argues that we have applied these considerations to an exculpatory clause in a lease identical to the one before us and found it to be valid and enforceable, and that this precedent is applicable to this exculpatory clause and dispositive of its enforceability. Appellant refers to our decision in Cannon v. Bresch, 307 Pa. 31, 160 A. 595 (1932), which considered a fact pattern similar to this case and an exculpatory clause identical to that under consideration here. Appellant correctly notes that we held that the clause was valid and enforceable and determinative of the rights of the parties. The tenant in Cannon argued, as Appellees now argue, that the water damage was caused by the landlord's negligence and the clause did not relieve him from liability for his acts of active negligence.

In concluding that the clause was sufficiently precise we noted "the terms are emphatic--the word "all" needs no definition; it includes everything, and excludes nothing. There is no more comprehensive word in the language, and as used here it is obviously broad enough to cover liability for negligence. If it had been the intention of the parties to exclude negligent acts they would have so written in the agreement. This paragraph of the lease is clear and unambiguous. No rules of construction are required to ascertain the intention of the parties". Cannon, 307 Pa. at 34, 160 A. at 596.

In addition to concluding that the clause was clear and unambiguous, we specifically indicated in Cannon that the clause under consideration was not against public policy, was in a contract between persons relating to their own private affairs and that each party was a free bargaining agent. Since the landlord would always be responsible if he damaged the goods of his tenant, we were able to conclude that the exculpatory clause's very purpose was to exonerate him.

It was to be free from this liability that defendant placed the covenant in the lease, and to say that it does not have that effect is to say that the covenant is meaningless, which would be incomprehensible under the circumstances. The parties meant something by what they said in their agreement, and where they used language so definite and precise there can be no doubt of their meaning, and it necessarily follows that their intention was to release the landlord "from all liability for any and all damage caused by water" resulting from negligence unless wanton or willful ... [a]ll that the law insists on in the case of a tenant's waiver of his landlord's responsibility for losses resulting from his negligence is that it shall be plainly expressed. With that requirement the covenant of this lease fully complies.

Cannon, 307 Pa. at 36, 160 A. at 597.

Since there was only one purpose for the clause, it was found to be sufficiently precise and invokable to protect the landlord from all liability including his own negligence. Such has been our view of the validity of such clauses when they appear in leases since 1932 and, without doubt, in reliance of this rule of law, the clause appeared in the lease between Appellant and Appellees in the same form as approved in Cannon.

Rather than apply Cannon's rule of law to this lease the Superior Court chose to apply our holding in Ruzzi v. Butler Petroleum Co., 527 Pa. 1, 588 A.2d 1 (1991) as a more accurate statement of the law in interpreting the validity of this exculpatory clause.

In Ruzzi, we considered an indemnity clause in a construction contract entered into between the owners of a gasoline service station and a petroleum company. The contract covered the petroleum company's reconstruction of the service station for the owners and provided that the property owners would indemnify the petroleum company "from any and all liability for claims for loss, damage, injury or other casualty to persons or property, ... caused or occasioned by any leakage, fire, explosion or other casualty occurring through any imperfection in, injury or damage to, or by reason of the installation, use, operation and/or repair of the said equipment or of the premises." We ruled that, in interpreting the validity and enforceability of indemnity clauses the law would not recognize as effective an agreement concerning negligent acts unless an express stipulation concerning the indemnitee's negligence was included in the document. Our authority for this rule of interpretation was found in Perry v. Payne, 217 Pa. 252, 66 A. 553 (1907), which we held to be a well established rule of contract interpretation in such circumstances and reaffirmed its continuing viability.

This result is consistent with our law that has developed concerning the interpretation of clauses which relieve a party of liability for his own negligence, and as can be seen, Perry and Butler apply the general principle that the exculpatory language must be expressed in clear and unequivocal terms. In contracts of indemnity, this principle is applied with a force that requires the parties to state in express terms that the active negligence of the indemnitee will be assumed by the indemnitor.

As we stated in Perry, "The liability on such indemnity is so hazardous, and the character of the indemnity so unusual and extraordinary, that there can be no presumption that the indemnitor intended to assume the responsibility unless the contract puts it beyond doubt by express stipulation. No inference from words of general import can establish it." Perry, 217 Pa. at 262, 66 A. at 557. Thus, Perry and Ruzzi are examples of how our general rules of contract interpretation for clauses which purport to relieve a party of responsibility for his own negligence are...