Court Opinion

ID: 4172470
Source: CourtListenerOpinion
Date Created: 2017-05-30 14:11:50.793189+00
Date Added: 2024-06-11T14:54:58.064854
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                      APPROVAL OF THE APPELLATE DIVISION
     This opinion shall not "constitute precedent or be binding upon any court."
      Although it is posted on the internet, this opinion is binding only on the
         parties in the case and its use in other cases is limited. R.1:36-3.

                                       SUPERIOR COURT OF NEW JERSEY
                                       APPELLATE DIVISION
                                       DOCKET NO. A-1266-15T4

MITCHELL HAFTELL, by his
subrogee, THE CUMBERLAND
INSURANCE GROUP,

        Plaintiff-Appellant,

v.

STEVEN L. BUSCH and ELIZABETH
BUSCH,

        Defendants-Respondents.

________________________________

              Submitted December 19, 2016 – Decided            March 22, 2017

              Before Judges Nugent and Haas.

              On appeal from Superior Court of New Jersey,
              Law Division, Camden County, Docket No. L-
              1070-15.

              Kearns & Duffy, P.C., attorneys for appellants
              (Paul R. Duffy, on the brief).

              LeClairRyan, attorneys for respondents (Todd
              A. Rossman, on the brief).

PER CURIAM

        This is an insurance subrogation action.                 Plaintiff, The

Cumberland      Insurance     Group    (Cumberland),      as   subrogee    of      its
insured,    Mitchell     Haftell,   appeals   from   an     order   denying

reconsideration of the trial court's grant of summary judgment to

defendants Steven L. Busch and Elizabeth Busch.             We reverse and

remand for further proceedings.

     These are the facts developed on the summary judgment motion

record, viewed most favorably to Cumberland, the non-moving party.

R. 4:46-2(c); Brill v. Guardian Life Ins. Co. of Am., 142 N.J.
520, 540 (1995).       Cumberland's subrogation claim arose out of an

October 24, 2014 fire at a three-story apartment complex in

Voorhees Township known as the Club at Main Street Apartments.

Cumberland's insured, Haftell, leased an apartment in the complex.

Defendant Elizabeth Busch leased an apartment in the same complex.

She lived there with her family, including her husband, defendant

Steven Busch.      According to the Camden County Fire Marshall's

report, Steven Busch caused the October 24, 2014 fire by carelessly

discarding a cigarette on the balcony of the Busch apartment.

     Cumberland paid Haftell's claim for property damage caused

by the fire and then filed a subrogation complaint on March 19,

2015.   Defendants filed an answer on June 8, 2015.             One month

later, on July 9, 2015, defendants filed a motion for summary

judgment.    No discovery had been completed.             Defendants based

their motion solely on a provision in a section of Haftell's lease

                                     2                              A-1266-15T4
entitled "Insurance."      The Insurance clause stated, in pertinent

part:

                The   Tenant   agrees    to   be   solely
           responsible for all loss or damage to Tenant
           or their property or to any other person who
           may be situated in the Apartment during the
           term of this Agreement . . . including any
           loss by water, fire, or theft in and about the
           Apartment; gross negligence of Landlord, its
           servants, agents or employees excepted. . . .
           Tenant agrees to procure and to maintain
           content and liability insurance as described
           on Liability and Contents and Contents
           Insurance Requirements Addendum. . . . Nothing
           contained herein shall be construed to
           supersede the common law rights of the
           parties. . . .

                Regardless of anything stated in this
           Lease, Tenant releases Landlord from any
           injury, loss or damage to personal property
           or persons from any cause.    Landlord shall
           only be responsible for any acts caused by
           negligence of its employees, servants or
           agents.     Tenant   waives  any   right  of
           subrogation by Tenant or any insurance
           company, which covers Tenant. Subrogation is
           the right to be repaid for any payments made
           by Tenant or Tenant's insurance for injury,
           loss or damage to personal property or
           persons. Landlord requires tenant to produce
           proof of insurance . . . .

           [(Emphasis added).]

     Relying on the underlined sentence, defendants argued they

were entitled to the benefit of the subrogation waiver.              In an

oral opinion, the motion judge agreed, granted defendants' summary

judgment   motion,   and   dismissed   the   complaint   with   prejudice.

                                   3                               A-1266-15T4
Thereafter,       the      judge         denied     Cumberland's          motion      for

reconsideration.         This appeal followed.

     On appeal, Cumberland argues the motion judge erred when he

barred its claim against defendants, non-signatories to Haftell's

lease,   based      on    the     subrogation      waiver   in    Haftell's        lease.

Cumberland    also       claims    the    motion    judge   confused       condominium

ownership     and    Haftell's       tenancy,       thereby      overlooking        legal

principles       concerning         adhesion       contracts        and     disfavored

exculpatory clauses.

     Defendants counter that longstanding precedent permits a

party to waive subrogation rights, and the insurer of a party who

has waived subrogation rights cannot recover if the insured cannot

recover.     Defendants quote the subrogation sentence in Haftell's

lease — out of its context — and assert "[i]t is not limited in

any way, shape, or form and the word 'any' must be construed to

include owners, landlords, and tenants.                 Stated differently, Mr.

Haftell has no rights to subrogation whatsoever."

     We "review the grant of summary judgment 'in accordance with

the same standard as the motion judge.'"                      Globe Motor Co. v.

Igdalev, 225 N.J. 469, 479 (2016) (citations omitted).                      Under that

standard,    summary      judgment       is   appropriate     "if    the    pleadings,

depositions, answers to interrogatories and admissions on file,

together with the affidavits, if any, show that there is no genuine

                                              4                                A-1266-15T4
issue as to any material fact challenged and that the moving party

is entitled to judgment . . . as a matter of law."               R. 4:46-2(c);

Bhagat v. Bhagat, 217 N.J. 22, 38 (2014).                     A motion judge's

determination that a party is entitled to summary judgment as a

matter of law is "not entitled to any special deference[,]" and

subject to de novo review.          Manalapan Realty, L.P. v. Twp. Comm.

of Manalapan, 140 N.J. 366, 378 (1995) (citations omitted).

      When a motion involves the interpretation of a contract, the

motion presents what "is ordinarily a legal question for the court

and   may   be    decided    on     summary    judgment   unless       'there    is

uncertainty, ambiguity or the need for parol evidence in aid of

interpretation. . . .'"           Celanese Ltd. v. Essex Cty. Improvement

Auth.,   404     N.J.   Super.    514,   528   (App.   Div.    2009)    (citation

omitted).      Because the interpretation of a contract generally

presents a legal issue, appellate courts owe "no special deference"

to a trial court's interpretation.              Manahawkin Convalescent v.

O'Neill, 217 N.J. 99, 115 (2014) (quoting Kieffer v. Best Buy, 205
N.J. 213, 223 (2011)).

      A motion for reconsideration is addressed to the "sound

discretion of the [c]ourt to be exercised in the interests of

justice."      Cummings v. Bahr, 295 N.J. Super. 374, 384 (App. Div.

1996) (quoting D'Atria v. D'Atria, 242 N.J. Super. 392, 401 (Ch.

                                         5                                A-1266-15T4
Div.   1990)).       Thus,   we   review   a   motion   judge's   denial       of

reconsideration under an abuse-of-discretion standard.                Ibid.

       We begin our analysis by reviewing fundamental principles of

contract law generally, and leases specifically.               A "lease is a

contract between [the lessor and lessee] which sets forth their

rights and obligations to each other in connection with [the

lessor's] temporary grant of possession of its property to [the

lessee]."    Town of Kearny v. Disc. City of Old Bridge, Inc., 205
N.J. 386, 411 (2011) (emphasis added) (citing Maglies v. Estate

of Guy, 193 N.J. 108, 143 (2007)).         Generally, unless the parties

to a contract "intend[] that a third party should receive a benefit

which might be enforced in the courts[,]" a non-party having no

privity of contract has no cause of action based on the contract.

Rieder Cmtys., Inc. v. Twp. of N. Brunswick, 227 N.J. Super. 214,

222 (App. Div.) (citations omitted), certif. denied, 113 N.J. 638

(1988).

       Conversely,    "third-party    beneficiaries      may    sue    upon     a

contract made for their benefit without privity of contract."                 Id.

at 221-22 (citing Houdaille Constr. Materials, Inc. v. Am. Tel. &

Tel. Co., 166 N.J. Super. 172, 184-85 (Law Div. 1979)).                     "The

standard applied by courts in determining third-party beneficiary

status is 'whether the contracting parties intended that a third

party should receive a benefit which might be enforced in the

                                      6                                 A-1266-15T4
courts[.]'"     Id. at 222 (quoting Brooklawn v. Brooklawn Hous.

Corp., 124 N.J.L. 73, 77 (E. & A. 1940)); see also Ross v. Lowitz,

222 N.J. 494, 513 (2015) (quoting Broadway Maint. Corp. v. Rutgers,

90 N.J. 253, 259 (1982)) ("When a court determines the existence

of   'third-party    beneficiary'    status,    the   inquiry   'focuses    on

whether the parties to the contract intended others to benefit

from the existence of the contract, or whether the benefit so

derived   arises     merely    as    an   unintended    incident    of     the

agreement'").

      In the case before us, the contractual waiver of subrogation

clause is contained in a lease between Haftell and the landlord.

Defendants are not parties to that contract.           Thus, the threshold

inquiry   is   not   whether   the   waiver    of   subrogation   clause    is

generally enforceable, but rather whether the parties to the lease,

Haftell and the landlord, "'intended others to benefit from the

existence of the contract[.]'"            Ross, supra, 222 N.J. at 513

(citation omitted).       Nothing in the lease suggests they did.

Moreover, because defendants' summary judgment motion was decided

before the parties had undertaken discovery, there is no competent

evidence on the motion record from which anything can be inferred

about Haftell and his landlord's intent.

      We discern from the transcript of oral argument and from the

motion judge's sparse opinion that the judge found controlling our

                                      7                              A-1266-15T4
decision in Skulskie v. Ceponis, 404 N.J. Super. 510 (App. Div.

2009).     Skulskie is distinguishable from the case before us.

Skulskie   involved   a   waiver   of    a    subrogation    provision     in    a

homeowner's   insurance    policy,      not    a   waiver   of   a   subrogation

provision in a lease.     Id. at 511.         The homeowner's residence was

a condominium unit, not a leased apartment.             Ibid.    Upholding the

insurance policy's waiver of subrogation clause, we explained:

                In light of the overall purpose of the
           waiver of subrogation provision in any
           insurance policy obtained by the unit owner,
           we discern no basis to allow the insurance
           carrier of the damaged unit owner to proceed
           against another unit owner, even an uninsured
           unit owner.     The scheme created by this
           residential       condominium        community
           contemplated no litigation between unit owners
           or between unit owners and the Association.
           The optional nature of the insurance scheme
           does not alter the purpose of the waiver of
           subrogation   provision.       Moreover,   the
           insurance carrier that issues insurance to any
           unit owner with a waiver of subrogation
           provision has no expectation that it will be
           able to pursue a claim against a negligent
           unit owner.     Stated differently, when an
           insurer . . . issues a policy, it does so with
           the understanding that it has no recourse
           against a negligent unit owner.

           [Id. at 514.]

    Unlike Skulskie, here we can discern no "scheme" created by

either the landlord or the residential community.                    Perhaps one

exists, but if it does, it is not apparent from the summary

                                     8                                   A-1266-15T4
judgment motion record.         The motion judge granted summary judgment

before the parties could develop the issue through discovery.

      Additionally, unlike Skulskie, here there is no evidence

Cumberland's       policy      contained            a    waiver         of     subrogation.

Consequently, we cannot conclude Cumberland knew it would be unable

to pursue a subrogation claim against a negligent tenant.

      Defendants'        argument     —    essentially,           that   Haftell        waived

subrogation against all tortfeasors — is devoid of merit.                                     It

overlooks the issues of privity and whether defendants are third-

party beneficiaries of Haftell's lease.                    Defendants' argument, if

accepted, would hypothetically bar Cumberland from subrogating

against a resident from another state who, while visiting New

Jersey,    becomes       inebriated       and      crashes    a    car       into   Haftell's

apartment complex, igniting a fire resulting in the destruction

of Haftell's personal belongings.                       Nothing in Haftell's lease

suggests    such     a    strained        interpretation           of    the        waiver-of-

subrogation clause.

      In addition, defendants have constructed their argument by

taking a single sentence in the lease out of context, disregarding

the   fundamental         principle       of       contract       interpretation           that

contracts must be considered in their entirety.                              See Cumberland

Cty. Imp. Auth. v. GSP Recycling Co., 358 N.J. Super. 484, 497

(App. Div.) (citation omitted) (noting a contract "must be read

                                               9                                       A-1266-15T4
as a whole, in 'accord with justice and common sense'"), certif.

denied, 177 N.J. 222 (2003).

     For the foregoing reasons, we conclude the motion judge

erroneously    granted   defendants'       summary   judgment   motion   and

misapplied    his   discretion   in   denying   Cumberland's    motion   for

reconsideration.     Although the interpretation of the subrogation

waiver in Haftell's lease might well present a purely legal issue,

the parties should be provided an opportunity to present their

positions on the need for discovery and presentation of parol

evidence.    For that reason, we reverse and remand this matter for

further proceedings consistent with this opinion.

     Reversed and remanded.      We do not retain jurisdiction.

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