Topp Copy Products Inc. v. Singletary

• Decision Date: 21 May 1991
• Citation: 404 Pa.Super. 459,591 A.2d 298
• Parties: TOPP COPY PRODUCTS INC. and Topp Telecommunications, Inc., Appellants, v. Ernest SINGLETARY and Tony Noviello t/a Nova Construction Co. and Nova Construction Inc.
• Court: Pennsylvania Superior Court

Page 298

591 A.2d 298

404 Pa.Super. 459

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

Superior Court of Pennsylvania.

Argued Oct. 4, 1990.

Filed May 21, 1991.

Joseph D. Smith, Williamsport, for appellants.

Gary Weber, Williamsport, for appellees.

Before OLSZEWSKI, BECK and HOFFMAN, JJ.

BECK, Judge:

Appellant-tenant challenges the trial court's grant of summary judgment to appellee-landlord based upon an exculpatory clause included in the parties' commercial lease agreement. Tenant sued his landlord to recover for property damage caused by a water leak from the floor above the premises leased by tenant. On appeal tenant raises two issues: (1) whether the trial court erred in granting summary judgment to the landlord where the lease agreement and exculpatory clause were ambiguous; and (2) whether the trial court erred in not extending the law of the Commonwealth to recognize an implied warranty of habitability in a commercial lease.

After a complete review of the law relevant to the interpretation and application of exculpatory clauses, and after careful scrutiny of the clause and lease in question, we find the clause in this lease does not exculpate the landlord from liability based upon his own negligent conduct. Because we find the landlord is not immune from liability due to his alleged negligence, we need not address the tenant's second issue regarding the recognition of an implied warranty of habitability. We reverse the trial court's grant of summary judgment to the landlord, and remand for further proceedings consistent with this opinion.

We initially note summary judgment "shall be rendered if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Pa.R.Civ.P. 1035(b). On review of a trial court's grant of summary judgment, we must determine whether there exist any genuine issues of material fact. Bobb v. Kraybill, 354 Pa.Super. 361, 363, 511 A.2d 1379, 1380 (1986), appeal denied, 513 Pa. 633, 520 A.2d 1384 (1987). In our analysis of the issues presented,

[w]e must view the evidence in the light most favorable to the non-moving party and any doubts must be resolved against the entry of judgment. In so doing, we accept as true all well-pleaded facts in appellant's pleadings and give appellant the benefit of all reasonable inferences to be drawn therefrom.

Ector v. Motorists Ins. Cos., 391 Pa.Super. 458, 463-64, 571 A.2d 457, 460 (1990), appeal denied, 525 Pa. 646, 581 A.2d 572 (1990). Although the evidence and all reasonable inferences are considered in a light most favorable to the appellant, the trial court's conclusions are given appropriate deference. Therefore, "we may reverse the trial court only where there has been an error of law, or a clear or manifest abuse of discretion." Travaglia v. C.H. Schwertner & Son, Inc., 391 Pa.Super. 61, 64, 570 A.2d 513, 514 (1989) (citations omitted).

The facts of this case are as follows. The tenant, Topp Copy Products, Inc. and Topp Copy Telecommunications, Inc. (referred to herein as Topp Copy or tenant), is in the business of selling and leasing office equipment. Topp Copy entered into a commercial lease for the first floor of a multi-storied building. For all periods relevant to this case, the landlord, Singletary, was the owner of the building and the landlord on the commercial lease. ¹ In an apartment located above the premises leased by Topp Copy, a toilet developed a leak, resulting in substantial water damage to the tenant's inventory stored in the leased unit. The plumbing fixture that broke and caused the subsequent water damage to the tenant's inventory was not located in tenant's leased unit.

Topp Copy sued Singletary alleging breach of implied warranty of habitability for residential premises, breach of implied warranty of habitability for commercial premises, and negligence. ² Singletary filed a motion for summary judgment contending that an exculpatory clause in the parties' lease agreement barred tenant's suit for the water damage caused by the broken plumbing fixture. The trial court granted Singletary's motion after determining the exculpatory clause controlled the parties' dispute. Topp Copy now appeals to this court.

Topp Copy challenges the applicability of the exculpatory clause included in the lease agreement. The clause, presented as paragraph 19 in the form commercial lease agreement, provides in full:

And in consideration of securing the within lease at the above-stated rent, the Lessee [appellant Topp Copy] does hereby release and discharge said Lessor [appellee Singletary], his heirs or assigns, from any and all liability for damages that may result from the bursting, stoppage and leakage of any water pipe, gas pipe, sewer, basin, watercloset, steam pipe and drain, and from all liability for any and all damage caused by the water, gas, steam, waste and contents of said water pipes, gas pipes, steam pipes, sewers, basins, water-closets and drains.

Topp Copy argues that this exculpatory clause is not applicable to its damage because the clause does not explicitly state the landlord is relieved of liability for his own negligence and because the clause is ambiguous when read in context with another clause in the agreement. Specifically, Topp Copy asserts that the language of paragraph 15 of the lease makes the exculpation by paragraph 19 ambiguous. ³

Our review of whether a contractual exculpatory clause is valid and enforceable involves a two part analysis. First we must inquire into whether the exculpatory clause in paragraph 19 is valid. Second, we consider whether the clause should be interpreted and construed to relieve a contracting party from liability for his own negligent conduct.

Our supreme court has held that an exculpatory clause is generally valid where three conditions are satisfied. Princeton Sportswear Corp. v. H & M Assocs., 510 Pa. 189, 193, 507 A.2d 339, 341 (1986); Employers Liability Assurance Corp. v. Greenville Business Men's Ass'n, 423 Pa. 288, 291-92, 224 A.2d 620, 622-23 (1966). The three conditions are that (1) the clause "does not contravene any policy of law, that is, ... it is not a matter of interest to the public or State;" (2) the "contract is between persons relating entirely to their own private affairs;" and (3) "each party is a free bargaining agent ... [in that the agreement] is not in effect a mere contract of adhesion." Employers Liability, 423 Pa. at 291-92, 224 A.2d at ---; see also Princeton Sportswear, 510 Pa. at 193, 507 A.2d at 341; Garbish v. Malvern Federal S. & L. Ass'n, 358 Pa.Super. 282, 302, 517 A.2d 547, 557 (1986), appeal denied, 516 Pa. 641, 533 A.2d 712 (1987); Richard's 5 & 10 v. Brooks Harvey Realty Investors, 264 Pa.Super. 384, 386, 399 A.2d 1103, 1105 (1979).

If these conditions are met, and the clause is determined to be valid, the contract must still meet four additional standards in order to be "interpreted and construed to relieve a person of liability for his own ... acts of negligence." Dilks v. Flohr Chevrolet, 411 Pa. 425, 434, 192 A.2d 682, 687 (1963). The four standards are that (1) the contract immunizing a party from liability for negligence must be construed strictly, "since they are not favorites of 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 it;" (3) the contract must be construed against the party seeking immunity from liability; and (4) the burden of establishing the immunity is upon the party seeking protection of the clause. Employers Liability, 423 Pa. at 292-93, 224 A.2d at 623; Garbish, 358 Pa.Super. at 302, 517 A.2d at 557, Rich ard's 5 & 10, 264 Pa.Super. at 384, 399 A.2d at 1103.

These seven considerations demonstrate that contracts providing for the immunity of parties from their own negligent acts are not regarded positively under the law of the Commonwealth. Under Pennsylvania law, exculpation clauses included in lease agreements will be subjected to a detailed and thorough review to determine their validity and enforceability. See, e.g., Employers Liability, 423 Pa. at 290-92, 224 A.2d at 621-23; Galligan v. Arovitch, 421 Pa. 301, 303, 219 A.2d 463, 464 (1966); Dilks, 411 Pa. at 430-34, 192 A.2d at 685-87.

The reason the law looks with disfavor on exculpatory clauses is that they excuse defendants from maintaining reasonable standards of care. Restatement (Second) of Contracts § 195, comments a and b (1981); Annotation, Validity of Exculpatory Clause in Lease Exempting Lessor from Liability, 49 A.L.R.3d 321, 325 (1973). Under such clauses defendants may be negligent with impunity. Because generally the law seeks to discourage negligence and because generally the law requires that wrongdoers be liable for their wrongful acts, the validity and enforceability of exculpatory clauses are interpreted in a limiting fashion and the language is strictly construed against the clause's author. ⁴ Galligan, 421 Pa. at 303, 219 A.2d at 464; Dilks, 411 Pa. at 430, 192 A.2d at 685.

In the instant case the trial court concluded, and Topp Copy does not now contest, that the exculpatory clause in question is valid. Trial Court Opinion, at 6-7. We agree with the trial court that the exculpatory clause does satisfy the initial three conditions required for validity. This clause, included in a commercial lease entered into between a business tenant and an individual landlord, is not a matter of public or state interest; and is included in an agreement relating completely to the parties' private affairs. Moreover, Topp Copy does not contend that the commercial lease at...