Opinion ID: 3066064
Heading Depth: 2
Heading Rank: 4

Heading: SBIC is Liable to the Previous Owners Under the

Text: Indemnification Provisions of the 1968 and 1982 Leases Both of the lease agreements that SBIC reached with the Site owners contained indemnification provisions. Under Nevada law, indemnification provisions are interpreted like any other contract provision, according to normal contract 36 VOGGENTHALER V. MARYLAND SQUARE rules. George L. Brown Ins. v. Star Ins. Co., 237 P.3d 92, 96–97 (Nev. 2010). The 1968 indemnification provision covered all claims arising from SBIC’s actions as operator of the business. It stated as follows: Lessee agrees to indemnify and save harmless lessor from and against all claims arising from any act, omission or negligence of lessee . . . or employees or arising from any accident, injury or damage whatsoever caused to any person, or to the property of any person during the demised term, in or about the demised premises . . . and will indemnify and hold harmless Lessor from and against all costs, expenses and liabilities incurred in or in connection with any such claim or proceeding brought thereon. The provision covers the homeowners’ claims for SBIC’s spills. SBIC admitted that from time to time during its operation of the dry cleaning facility “a button trap would clog and amounts of PCE would spill onto the concrete floor.” SBIC also stated that a spill of roughly 100 gallons of PCE occurred in 1982 during a filter change. The RCRA claims from the homeowners arose from these spills, and the Site’s previous owners claim they are entitled to indemnity from SBIC pursuant to the lease. SBIC contends it is not liable because the previous owners have not proved that the contamination of the soil and groundwater happened “during the demised term” of its lease. The basis for liability under the guaranty, however, is the RCRA claim that arose from conduct of SBIC’s employees VOGGENTHALER V. MARYLAND SQUARE 37 during the lease. Their PCE spills occurred during the lease term. SBIC also contends that the 1982 lease terminated any liability it might have had from the 1968 lease. The provision it points to in the 1982 lease stated in relevant part as follows: TRANSITION AND TERMINATION OF PRIOR LEASE – As has been aforestated herein, LANDLORD and TENANT have heretofore held and been in a Landlord-Tenant relationship, the same being under a lease dated April 29, 1968 and addendum thereto dated February 27, 1969. With respect thereto, upon the commencement of the lease term hereunder, said prior lease, addendum, and any rights and obligations of the respective parties arising out of the same shall be deemed terminated as if said lease as amended had expired by its term, i.e., lapse of time . . . . The 1982 lease terminated the provisions of the prior lease, but did not extinguish the obligations SBIC incurred during its term. SBIC also challenges its liability under the 1982 lease. The indemnification provision in that lease covered all obligations that were the result of SBIC violating a law. The provision read as follows: INDEMNIFICATION – TENANT hereby covenants to indemnify, save and hold LANDLORD and the leased property free, 38 VOGGENTHALER V. MARYLAND SQUARE clear and harmless from each liability, loss, cost, charge, penalty, obligation, expense, attorney’s fee, litigation, judgment, damage, claim or demand of any kind whatsoever in connection with, arising out of, or by reason of any violation of law, ordinance or regulation by TENANT or of any independent contractor, agent, or employee of TENANT while in, upon, about or in any way connected with the leased property or any portion thereof during the term of this Lease. SBIC contends that a claim for relief under RCRA does not arise out of a “violation of law” within the meaning of the provision. RCRA, however, imposes liability for failure to clean up contamination, and one who has not paid has violated the law. SBIC thus must indemnify the owners for the obligations they incurred as a result of SBIC’s RCRA violations.