Vitty v. D.C.P. Corp.

• Decision Date: 03 December 1993
• Citation: 633 A.2d 1040,268 N.J.Super. 447
• Parties: Kenneth R. VITTY, Sr., Administrator of the Estate of Kenneth Roger Vitty, Jr., Plaintiff, v. D.C.P. CORP., J.C. Towing, Inc., Defendant-Appellant, v. The NEW JERSEY HIGHWAY AUTHORITY, Defendant-Respondent, and Joseph L. Vicaro, Veronica E. Gerardi, the Garden State Parkway Authority, Dee & Gee, Inc., t/a Conrad's, the Assembly Point and John Doe I (fictitious name used to describe an unknown defendant), Defendants.
• Court: New Jersey Superior Court — Appellate Division

Page 447

268 N.J.Super. 447

633 A.2d 1040

Kenneth R. VITTY, Sr., Administrator of the Estate of Kenneth Roger Vitty, Jr., Plaintiff, v. D.C.P. CORP., J.C. Towing, Inc., Defendant-Appellant, v. The NEW JERSEY HIGHWAY AUTHORITY, Defendant-Respondent, and Joseph L. Vicaro, Veronica E. Gerardi, the Garden State

Parkway Authority, Dee & Gee, Inc., t/a Conrad's, the

Assembly Point and John Doe I (fictitious name used to

describe an unknown defendant), Defendants.

Superior Court of New Jersey,

Appellate Division.

Argued Nov. 1, 1993.

Decided Dec. 3, 1993.

Cynthia N. Hoen, Florham Park, for appellant (Maloof, Lebowitz & Bubb, attorneys; Ms. Hoen, on the brief).

Andrew Bayer, Hackensack, for respondent (DeCotiis & Pinto, attorneys; Mr. Bayer, of counsel; Michael S. Caro, on the brief).

Before Judges PETRELLA, BAIME and CONLEY.

The opinion of the court was delivered by

BAIME, J.A.D.

The New Jersey Highway Authority (NJHA) engaged J.C. Towing, Inc. (Garage) to perform towing and wrecking services on the Garden State Parkway. As part of the agreement, Garage promised to defend and indemnify liability claims "arising out of" the license contract. Kenneth Vitty, an employee of Garage, was killed when the tow truck in which he was seated was struck by an automobile operated by a drunk driver. At the time of the accident, the tow truck was parked at an official U-turn post and Vitty was on duty. Based on the indemnification clause, NJHA requested Garage to defend it in an action brought by Vitty's estate. Garage refused and NJHA settled the estate's claim for $20,000. NJHA filed a crossclaim in which it sought indemnification for the amount of the settlement and the cost of its defense. The Law Division granted NJHA's motion for summary judgment. Garage appeals and we affirm.

I.

The salient facts are not in dispute. NJHA entered into a license agreement in which Garage was engaged to furnish wrecking, towing and road services on an eight mile stretch of the Garden State Parkway. The agreement provided that, "[w]hen requested[,]" Garage was to "patrol an assigned area." The agreement required Garage to comply with various traffic and safety regulations, including a provision which allowed it to cross the medial strip only at "official crossovers."

The agreement also contained a provision which required Garage to defend and indemnify NJHA for claims "arising out of" the license. This paragraph contained an exception with respect to property damage and personal injury caused by the "sole active negligence" of NJHA. Because of the importance of the indemnification provision to the resolution of the questions presented, we quote it verbatim:

A. GARAGE shall indemnify, defend and save harmless [NJHA], its members, officers, agents, servants, employees and assigns, the State of New Jersey, Division of State Police and its officers and employees from any and all demands, claims, liability, suits, losses, injuries, damages, judgments, expenses and costs of every kind, nature and description arising out of this License; expressly including but not limited to the cost of labor, materials, or supplies, counsel fees, cost of court, costs of investigation, experts and witnesses and amounts paid in settlement; except that this provision shall not extend to property damage or personal injury caused by the sole active negligence of [NJHA], its members, officers, agents, servant or employees.

B. GARAGE hereby releases [NJHA], its members, officers, agents, servants, employees and assigns from any and all liability and casualty claims of GARAGE arising out of this License except that this provision shall not extend to property damage or personal injury caused by the sole active negligence of [NJHA], its members, officers, agents and employees. [Emphasis added.]

Under the agreement, Garage was required to obtain insurance coverage sufficient to "completely protect [it] and [NJHA], [their] members, officers, agents, servants, employees and assigns against any and all risks of loss or liability arising out of this [l]icense." The agreement further provided that Garage was fully responsible "for all liability and casualty claims or losses" beyond the insurance coverage.

On March 28, 1988, Vitty was seated in his tow truck which was parked at an official U-turn within Garage's designated territory. Although Vitty was not engaged in towing or wrecking activities, it is undisputed that he was on duty and acting in the performance of his employment responsibilities. Joseph Vicaro, who had been drinking, was driving in the southbound lane when he sped into the rear of a car driven by Veronica Gerardi. Vicaro's automobile proceeded onto the grass median where it became airborne and crashed into the tow truck. Vitty died instantly.

On November 30, 1988, Vitty's estate instituted an action against Vicaro, Gerardi, NJHA, Garage and two taverns which had served Vicaro alcoholic beverages immediately prior to the accident. The suit against NJHA was predicated on the thesis that the highway median was defective because it sloped upward to the crossover, causing Vicaro's automobile to become airborne. Vitty's estate also pointed to NJHA's failure to place a guardrail in the U-turn area. Prior to trial, the Law Division dismissed all claims against Garage except that of NJHA relating to the indemnification agreement. The court found that Garage was bound by the license to defend and indemnify NJHA, reasoning that the accident "arose out of" the agreement. NJHA settled the estate's claim for $20,000. The trial proceeded against the remaining defendants. The jury ultimately found Vicaro completely at fault. NJHA was subsequently awarded $20,000, the amount of its settlement with the Vitty estate, and $38,960, the sum of its defense costs. This appeal followed.

II.

Garage contends that Vitty's death resulted, not from the towing and wrecking contract, but from Vicaro's drunk driving. It is argued that the phrase "arising out of" connotes causality and that its obligation to defend and indemnify NJHA was triggered only where the claimant's injuries were the result of Garage's towing activities.

We disagree. Indemnity agreements are interpreted in accordance with the rules governing the construction of contracts generally. Ramos v. Browning Ferris Indus., 103 N.J. 177, 191, 510 A.2d 1152 (1986) (citing Cozzi v. Owens Corning Fiber Glass Corp., 63 N.J.Super. 117, 121, 164 A.2d 69 (App.Div.1960); Longi v. Raymond-Commerce Corp., 34 N.J.Super. 593, 603, 113 A.2d 69 (App.Div.1955)). When the meaning of the clause is ambiguous, it should be strictly construed against the indemnitee. Ramos v. Browning Ferris Indus., 103 N.J. at 191, 510 A.2d 1152. We are nonetheless obliged to construe the clause in a manner consonant with its essential purpose and with the objects the parties were striving to achieve. Stier v. Shop Rite, 201 N.J.Super. 142, 151, 492 A.2d 1055 (App.Div.1985); see also George M. Brewster & Son, Inc. v. Catalytic Constr. Co., 17 N.J. 20, 32, 109 A.2d 805 (1954).

Within this analytical framework, we reject the contention that the phrase "arising out of" requires that the injury or property damage sustained must be the direct and proximate result of the performance of towing services in order for the indemnification clause to be triggered. Specifically, the license does not require that the claim of the injured party be directly and proximately caused by the operation of a tow truck in transit. Instead, the words "arising out of" should be construed in accordance with their common and ordinary meaning as referring to a claim "growing out of" or having its "origin in" the subject matter of the towing agreement. See Westchester Fire Ins. Co. v. Continental Ins. Cos., 126 N.J.Super. 29, 38, 312 A.2d 664 (App.Div.1973), aff'd, 65 N.J. 152, 319 A.2d 732 (1974); Minkov v. Reliance Ins. Co., 54 N.J.Super. 509, 516, 149 A.2d 260 (App.Div.1959). So interpreted, there need be shown only a substantial nexus between the property damage or injury alleged in the claim and the activities encompassed in the towing contract.

Applying these principles, we agree with the Law Division that the indemnification and defense clause applied to the Vitty claim. In reaching this conclusion, we acknowledge that Vitty's death resulted from a freak accident that perhaps could not have been envisioned by the parties. However, clearly an automobile accident involving a tow truck was a reasonably foreseeable event within the contemplation of the parties when they entered the towing agreement. Injury, death or property damage arising from an automobile accident involving a tow truck constituted an obvious risk encompassed in the activities which Garage was bound to perform. The parties agreed that this risk was to be borne by Garage, not NJHA. This was an integral part of the consideration of the contract. Although the accident resulting in Vitty's death occurred in a bizarre way, the simple and overriding fact remains that the decedent was performing the duties and responsibilities required by the contract. Stated another way, Vitty's death was occasioned by or arose out of the performance of his job-related responsibilities.

Our decision in this case is not contrary to that reached by another panel in McCabe v. Great Pac. Century Corp., 236 N.J.Super. 488, 566 A.2d 234 (App.Div.1989), certif. denied, 121 N.J. 611 583 A.2d 312 (1990). There, an electrical contracting company agreed to indemnify the general contractor respecting all claims "resulting from any act or omission of [the] [s]ubcontractor, or [c]ontractor ... related to the subject matter of [the] [s]ubcontract." Id. 236 N.J.Super. at 491-92, 566 A.2d 234. The claimant, an employee of the subcontractor, was injured when he was struck by a moving exterior elevator. Id. at 490, 566 A.2d 234. The Law Division granted summary judgment in favor of the contractor "without making any finding that [the...