Ultimate Computer Services, Inc. v. Biltmore Realty Co., Inc.

• Decision Date: 08 February 1982
• Citation: 30 A.L.R.4th 963,443 A.2d 723,183 N.J.Super. 144
• Parties: , 30 A.L.R.4th 963 ULTIMATE COMPUTER SERVICES, INC., Plaintiff-Respondent, v. BILTMORE REALTY COMPANY, INC., Defendant and Third-Party Plaintiff-Appellant, v. SAUNDERS & SAUNDERS and Robert Saunders, Individually, Third-Party Defendants.
• Court: New Jersey Superior Court — Appellate Division

Page 144

183 N.J.Super. 144

443 A.2d 723, 30 A.L.R.4th 963

ULTIMATE COMPUTER SERVICES, INC., Plaintiff-Respondent, v. BILTMORE REALTY COMPANY, INC., Defendant and Third-Party Plaintiff-Appellant, v. SAUNDERS & SAUNDERS and Robert Saunders, Individually,

Third-Party Defendants.

Superior Court of New Jersey, Appellate Division.

Argued Jan. 18, 1982.

Decided Feb. 8, 1982.

Avrom J. Gold, East Orange, for defendant and third-party plaintiff-appellant (Mandelbaum, Salsburg, Gold & Lazris, East Orange, attorneys; Avrom J. Gold on the brief).

J. Barry Cocoziello, Newark, for plaintiff-respondent (Podvey, Sachs, Catenacci & Silber, Newark, attorneys; J. Barry Cocoziello and John S. Voynick, Jr., Newark, on the brief).

Before Judges BISCHOFF, KING and POLOW.

The opinion of the court was delivered by

POLOW, J. A. D.

Defendant landlord appeals from a Law Division judgment awarding $45,356 to the tenant of a commercial building for water damage to computer equipment caused as a result of a leaking roof. Appellant contends that the trial judge erroneously rejected an exculpatory clause contained in the lease which, in its opinion, totally excludes liability for water damage. The judgment dismissed all claims against third-party defendants Saunders (who are also named defendants in the amended complaint) and they are not involved in this appeal.

The successful plaintiff, Ultimate Computer Services, Inc., is in the business of maintaining, repairing and reconditioning computers. The lease between Biltmore Realty and Ultimate was executed on February 1, 1973 when the building was under construction and still a shell. Ultimate leased 30,000 square feet for a ten-year term. The agreement specifically denoted that construction was not yet complete; that the lessee would examine the building prior to occupancy and accept it without any representation by the landlord as to its condition. However, the landlord obligated itself to assign to the tenant "all rights pursuant to structural guarantees and warranties received by it ..." with regard to construction of the building. The tenant was to make all repairs "except that the landlord should make all major structural repairs."

The exculpatory provision upon which Biltmore relies provides:

The landlord shall not be liable for any damage or injury which may be sustained by the tenant or any other person by reason of the elements; or resulting from the carelessness, negligence or improper conduct on the part of any other tenant or if the landlord or the landlord's or this or any other tenant's agents, employees, guests, licensees, invitees, sub-tenants, assignees or successors; or attributable to any interference with, interruption of or failure, beyond the control of the landlord, of any services to be furnished or supplied by landlord.

Plaintiff produced expert testimony that the roof was defectively designed and installed in that it lacked sufficient slope to permit adequate drainage. As a result, water would "pond" on the roof which, in turn, caused the leak that damaged the computer. The roof had been designed and installed by Gonnella Roofing Company, which had been instructed by one of Biltmore's principals to put on the least expensive roof possible. The contract between Biltmore and Gonnella required a bond as a condition for the final installment of the contract price, but no bond was ever submitted. However, Biltmore's representative received a verbal guarantee from Gonnella which covered only the cost of repairs and specifically excluded liability for damage to contents of the building.

The roof leaked on a number of occasions during plaintiff's occupancy. Although a major leak occurred in April 1973, Ultimate thereafter leased an additional 8,600 square feet for office space which was constructed by Biltmore. Every time a leak occurred prior to 1978, Gonnella repaired the roof at Biltmore's request without compensation. However, sometime in 1977 Gonnella advised the landlord he would no longer repair it. In mid-January 1978 water leaking through the roof caused the damage to a million dollar computer for which this suit was instituted.

Despite the numerous leaks between 1973 and 1978, Ultimate professed an inability to take any action other than its numerous complaints to the landlord, for the following reasons. It was reluctant to move out since there was no assurance that a constructive eviction would be recognized and the cost of transporting the computers to another location would have been prohibitive. Furthermore, the landlord gave assurances that the leaks had been repaired and plaintiff would have no further problems. Although plaintiff had considered various measures to protect its computers with plastic coverings, it had 2,000 machines on the premises and use of plastic materials would cause condensation which itself could damage the equipment.

In holding for plaintiff the trial judge found that the roof was defectively designed and installed in that it lacked an adequate slope. He also determined that plaintiff was not "contributorily negligent" in failing to leave the premises or cover the computers since that was impractical for the reasons set forth by Ultimate. With respect to the exculpatory clause, the court construed it as immunizing defendant from negligence only when defendant failed to exercise due care in its capacity as a landlord. The judge reasoned that defendant, as general contractor, was responsible for the negligent design and installation of the roof. He expressed the view that a general contractor "can't contract away his liability the way a landlord and tenant can within a commercial sense" because that would "be contrary to public policy." The judge also applied the rule of construction which construes contractual ambiguities against the draftsman, in this case the landlord. At one point the judge also stated that "any exculpatory clause cannot be used to absolve the landlord of its liability or the damages flowing from-this breach of warranty."

Defendant contends that the judge erred in failing to give effect to the exculpatory clause. It argues that such clauses are valid, and should be given effect if the agreement of the parties clearly spells out their respective duties. Although it contains a typographical error, Biltmore argues that the clause should be given its obvious meaning, i.e., that the landlord would not be liable for any damage resulting from its negligence. Plaintiff responds that the court correctly held the exculpatory clause applicable only to acts performed by defendant in its capacity as landlord and thus did not immunize defendant from liability for negligence in its capacity as general contractor. With respect to the typographical error, plaintiff argues that defendant, as draftsman, is responsible for it and that it would be improper for the court to change the wording of the exculpatory clause even though plaintiff acknowledges that in its present form it makes no sense.

Paragraph 11 reads that the landlord shall not be liable for any damage sustained by the tenant "resulting from the carelessness, negligence or improper conduct on the part of any other tenant or if the landlord or the landlord's ... agents ..." (emphasis supplied). Defendant argues that the term "if" immediately preceding the words "the landlord" is a typographical mistake and that the proper word is "of." Defendant points out that unless one substitutes the word "of" for the word "if" this clause of paragraph 11 makes no sense.

The intent is clear and the error is obvious. We treat it as if the typographical error had not occurred and insert the word "of" for "if." The mutual intent of the parties is determined by the language used in the entire agreement. Atlantic Northern Airlines, Inc. v. Schwimmer, 12 N.J. 293, 301, 96 A.2d 652 (1953). To the extent that questionable punctuation, inaccurate grammar or obvious verbal omissions conflict with the clear intent as expressed in the instrument, they are disregarded. Id. at 302-303, 96 A.2d 652; Casriel v. King, 2 N.J. 45, 50, 65 A.2d 514 (1949). "Disproportionate emphasis upon a word or clause or a single provision does not serve the purpose of interpretation. Words and phrases are not to be isolated but related to the context and the contractual scheme as a whole, and given the meaning that comports with the probable intent and purpose ...." Newark Publishers' Ass'n v. Newark Typographical Union, 22 N.J. 419, 426, 126 A.2d 348 (1956).

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