SUPERIOR COURT OF NEW JERSEY
OSVALDO LOPEZ and AMALIA R. LOPEZ, his wife,
TRI-PORT DISTRIBUTION CENTER, LLC, a Delaware Limited Liability Company and AMB PROPERTY CORPORATION1,
MORECOP-270 ASSOCIATES, LLC, a Maryland
Limited Liability Company; W65 BEDFORD
PARK, INC., a Nevada Corporation; FEDERAL
EXPRESS CORPORATION; and LINC FACILITY
SERVICES formerly known as Affiliated
Argued April 11, 2011 - Decided May 5, 2011
Before Judges Grall and LeWinn.
On appeal from Superior Court of New Jersey, Law Division, Union County,
Docket No. L-1204-09.
Harvey R. Pearlman argued the cause for appellants (Friedman, Kates, Pearlman & Fitzgerald, attorneys; Mr. Pearlman, on the brief).
Laurie B. Kachonick argued the cause for respondent Tri-Port Distribution Center (Connell Foley LLP, attorneys; Jeffrey W. Moryan, of counsel and on the brief; Ms. Kachonick, on the brief).
Robert D. Kretzer argued the cause for respondent AMB Property Corporation (Lamb, Kretzer, Reinman & Roselle, attorneys; Mr. Kretzer, on the brief).
Plaintiff Osvaldo Lopez, a Federal Express (FedEx) truck driver, tripped and fell in the parking lot of a FedEx truck yard in 2007. Lopez and his wife, whose claims are per quod, filed a personal injury action alleging that his accident was caused by a bar that formerly anchored a cement parking stop sticking above the pavement level. Among the defendants named by plaintiffs were Lopez's employer's landlord, Tri-Port Distribution, LLC (Tri-Port), and the landlord's property manager, AMB Property Corporation (AMB). Plaintiffs contend that Tri-Port and AMB had a duty to repair and maintain the parking lot. Finding a valid delegation of that duty to FedEx under an amended lease and sublease assigned to Tri-Port, the trial court granted summary judgment to defendants. Plaintiffs appeal.2
The relevant facts are not disputed. Lopez fell in June 2007 and thereafter had surgery to correct an incarcerated umbilical hernia. The hazard of exposed parking-stop bars in this parking lot was not unknown. Eleven months earlier, another FedEx employee was injured when he tripped over a different exposed bar, and seven months before Lopez's accident FedEx retained a contractor to replace twenty-five parking stops and eighty-five parking-stop bars. In contrast, Tri-Port and AMB had never inspected or repaired the parking lot or the parking stops.
Plaintiffs acknowledge that under our case law, if Tri-Port and FedEx agreed that FedEx would accept full responsibility for maintaining the parking lot in a safe condition, then Tri-Port and AMB had no duty to Lopez. Geringer v. Hartz Mountain Development Corp., 388 N.J. Super. 392, 400-02 (App. Div. 2006), certif. denied, 190 N.J. 254 (2007) (holding that a commercial landlord is not negligent where a lease "unquestionably places the responsibility for . . . maintenance or repair solely upon the tenant"); McBride v. Port Auth. of N.Y. and N.J., 296 N.J. Super. 521, 522 (App. Div. 1996) (same). Because the most reasonable interpretation of the various lease agreements do assign that duty to FedEx, we agree that defendants are entitled to summary judgment as a matter of law and affirm. Brill v. Guardian Life Ins. Co. of Am.,142 N.J. 520, 540 (1995).
A main lease, an amendment of the main lease, a sublease and assignments of the leases define the parties' respective responsibilities for maintenance of the premises. The relevant transactions were completed in 2004, about three years before this accident. Tri-Port purchased the property from Elizabeth Properties Limited Partnership (Elizabeth), and at the time of the purchase Elizabeth had leased the property to W65 Bedford Park, Inc. (W65) with W65 subleasing the premises to FedEx. As subtenant under the sublease, FedEx agreed to "perform, honor and comply with each and every covenant and obligation of [W65], as tenant, under the Main Lease" between Elizabeth and W65 and to be bound by the main lease "as fully and to the same extent as though Subtenant were named as tenant" in that lease. Despite the broad delegation of W65's responsibilities as tenant under the main lease to FedEx, pursuant to section N-4 of the main lease W65 remained jointly and severally responsible as tenant to Elizabeth.
Through the sale and assignments, Tri-Port not only acquired all of Elizabeth's interest in the property but also all of W65's interest, which it took subject to W65's sublease to FedEx. The transaction was accomplished through assignments to Tri-Port of the main lease and the sublease and by an amendment of the main lease to which the subtenant FedEx consented.
The assignments effectively put Tri-Port in the position of landlord and tenant under the main lease and sublandlord to FedEx under the sublease. In accepting the assignment of the main lease, Tri-Port "assume[d] and agree[d] to perform the liabilities and obligations of [Elizabeth] with respect to the [Main] Lease." Additionally, through the assignment of W65's interests as tenant under the main lease and as sublandlord under W65's sublease to FedEx, Tri-Port acquired W65's "right, title and interest" in the main lease and sublease and "assume[d] and agree[d] to perform the liabilities and obligations of [W65] with respect to the Assigned Property."
In conjunction with those assignments, however, the parties modified the main lease. That amendment was executed by Elizabeth and W65 and consented to by FedEx. It expressly provides that all of its provisions will be "deemed part of the" main lease and "incorporated by reference into the Sublease [with FedEx] as if fully set forth therein."
The amendment recognizes the assignment of the lease and sublease and specifies that W65 is assigning to Tri-Port both its interest "as tenant" under the main lease and its interest "as sublandlord" under the sublease. The amendment further specifies that Tri-Port's fee and leasehold estates will not merge and that the lease and sublease will remain in full force and effect. Most importantly, the amendment clearly enumerates the responsibilities that Tri-Port is assuming. It states that Tri-Port will assume "the obligations of [Elizabeth] under the Main Lease and the obligations of W65 under the Sublease." Notably, the amendment does not provide for Tri-Port to assume W65's obligations under the main lease.
By executing the amendment, FedEx "consented to" the assignments and Tri-Port's description of the obligations it was assuming. FedEx also agreed to "recognize Tri-Port as the lessor under the Sublease upon all terms and conditions set forth in the Sublease," which, as noted above, obligated FedEx to "perform, honor and comply with each and every covenant and obligation of [W65], as tenant, under the Main Lease[.]"
Our review of the trial court's interpretation of the agreements allocating the duty to maintain this parking lot in a safe condition is de novo. Fastenberg v. Prudential Ins. Co., 309 N.J. Super. 415, 420 (App. Div. 1998). In interpreting the agreements, we give their terms their "usual and natural meaning," Middlesex County Sewerage Authority v. Borough of Middlesex, 74 N.J. Super. 591, 604 (Law Div. 1962), aff’d o.b., 79 N.J. Super. 24 (App. Div.), certif. denied, 40 N.J. 501 (1963), read the documents as a whole and avoid interpretations that render terms or provisions meaningless. Cumberland County Improvement Auth. v. GSP Recycling Co., 358 N.J. Super. 484, 497 (App. Div.), certif. denied, 177 N.J. 222 (2003). To the extent that the documents are ambiguous, the parties' practical interpretation of them — as reflected by their actions — is a "consideration of great weight." Anthony L. Petters Diner, Inc. v. Stellakis, 202 N.J. Super. 11, 20-21 (App. Div. 1985) (internal quotations omitted).
Plaintiffs' first argument is based on Tri-Port's obligations as landlord under the terms of the main lease. They contend Tri-Port, as assignee of the landlord's duties under the main lease, had a duty to eliminate the hazard posed by protruding parking-stop bars. We reject that claim.
Under the main lease, responsibility for keeping and maintaining the premises "in good repair [and] in a clean and safe condition" is not assigned to the landlord. It is assigned to the tenant in article G, which is entitled "REPAIRS, MAINTENANCE, AND ALTERATIONS." Section G-1 requires the tenant to "keep and maintain the PREMISES, including without limitation, all . . . parking areas . . . in all respects in good repair, in a clean and safe condition . . . subject to LANDLORD'S repair obligations hereunder, ordinary wear and tear, [and] casualty." Under section G-3, the landlord's repair obligations are limited to the roof, decking, skylights, foundation, and structural integrity of the building. Thus, with respect to the parking area, the landlord has no "repair" obligations under article G.3
This broad assignment of responsibility for keeping and maintaining the premises to the tenant is consistent with the structure for payment of rent under the lease. Section D-2 requires the tenant to pay base rent plus operating expenses, which are defined to include taxes and ordinary maintenance such as clearing the parking area of debris, snow and ice, repairing and replacing curbing, and resurfacing, resealing and restriping the surface of the parking area.4
Despite the clarity of sections G-1 and G-3 and consistent with the tenant's obligations to pay for the expense of routine maintenance, plaintiffs argue that Tri-Port as landlord has an obligation to repair the parking stops pursuant to "Article K - DAMAGE OR DESTRUCTION." Section K-1 obligates the landlord to act when "the parking area or any area thereof is damaged or destroyed." Section K-1 defines the scope of the landlord's duty to repair such damage or destruction. The landlord does not have a duty to bring the parking area into "good repair, in a clean and safe condition," as does the tenant under section G-1. Instead, the landlord's obligation is to bring the damaged area "to substantially the condition [that] existed immediately prior to such damage or destruction." The remaining sections of article K provide remedies in the form of abatement of rent or termination of the lease in the event the landlord's restoration or reconstruction limits the tenant's use and enjoyment of the premises.
Read together and in light of the rent structure, articles G and K are best understood to generally divide responsibility for the premises by distinguishing routine maintenance from restoration required in the face of significant damage caused by a single event, structural failure or the age of the landlord's improvements. Section G-1 assigns the duty of keeping and maintaining the premises in clean and safe condition to the tenant, with three exceptions: "casualty," "wear and tear" and designated structural elements of the building which the landlord must maintain under section G-3. Article K, meanwhile, addresses the landlord's duty and tenant's rights in the event of "casualty" or failure of an improvement. A "casualty" is generally understood as "[a] disastrous occurrence due to sudden, unexpected or unusual cause." Black's Law Dictionary 198 (5th ed. 1979).
Plaintiffs' interpretation of section K-1, which would require Tri-Port to do routine maintenance like replacement of dislodged parking stops, is in conflict with articles G and D, which make the tenant responsible for that work. If section K-1 is interpreted as plaintiffs suggest, then sections G-1 and D-2 have no readily discernible application.
Although we perceive no ambiguity in the main lease's assignment of responsibility for keeping and maintaining the parking lot, even if we did, the parties' conduct demonstrates that they understood that duty to be one assigned to the tenant and not the landlord. As noted above, FedEx previously arranged and paid for repair and replacement of the parking stops. If FedEx understood section K-1 to require Tri-Port to do that work, FedEx presumably would have demanded Tri-Port do it or pay for the expense of having it done. Cf. Anthony L. Petters Diner, Inc., supra, 202 N.J. Super. at 20-21 (parties to a contract "often claim more, but rarely less than they are entitled to" (internal quotations omitted)).
For all of the foregoing reasons, plaintiffs' reliance on section K-1 is misplaced.
Plaintiffs also argue that Tri-Port, as assignee of W65's interest as tenant under the main lease, had a duty to keep and maintain the parking area in a safe condition pursuant to section G-1. We reject that claim as well, because it overlooks the amendment to the main lease executed in conjunction with the assignments.
Without doubt, W65, as the tenant under the original main lease, was obligated by section G-1 to keep and maintain the parking lot and remained jointly and severally liable for that obligation despite its delegation of that duty to FedEx under the sublease. It is also true that Tri-Port accepted an assignment of W65's "right title and interest in" the main lease. But the amendment to the main lease, to which FedEx consented, made it clear that Tri-Port assumed Elizabeth's responsibility as landlord under the main lease and W65's responsibility as sublandlord under the sublease. Thus, we reject plaintiffs' contention that in agreeing to assume W65's obligations "with respect to the Assigned Property," Tri-Port assumed W65's obligations as tenant under the main lease.
Plaintiffs' claim that Tri-Port did not absolve itself of joint and several responsibility for maintaining the parking lot as tenant under the main lease lacks merit. Read with the amendment incorporated in the main lease, the most reasonable interpretation is that section N-4 of the main lease did not survive the amendment. Moreover, the performance of FedEx and Tri-Port, through its agent AMB, after the execution of these related conveyances is wholly consistent with that interpretation. Tri-Port left all maintenance in the parking lot to FedEx, and FedEx performs the inspections and work to keep and maintain it in a clean and safe condition. In contrast, Tri-Port's agent inspects nothing other than the roof and structure of the building.
In sum, the amendment to the main lease clarifies what Tri-Port meant when it agreed to take an assignment of W65's duties "with respect to" the property. Tri-Port agreed to perform the duties that W65 had to FedEx under the sublease but did not agree to perform W65's duties as tenant under the main lease. Those duties were assigned to and accepted by FedEx in the sublease, and with its consent to the amendment of the main lease, it accepted sole responsibility.
Plaintiffs' contrary reading is not only inconsistent with the most reasonable reading of the documents and the parties' subsequent performance but also contrary to any discernible business purpose the parties might have had. In interpreting agreements, courts consider the setting in which they are made and the parties' likely goals. Onderdonk v. Presbyterian Homes of N.J., 85 N.J. 171, 183-84 (1981); see Krosnowski v. Krosnowski, 22 N.J. 376, 387 (1956) (a contract is to be interpreted "in accord with . . . the probable intention of the parties" and as if the parties were practical and intent on accomplishing "an honest and straightforward" goal (internal quotations omitted)). Plaintiffs have not explained why Tri-Port and FedEx would want to have Tri-Port hold itself responsible for doing work assigned to FedEx under the sublease. Unable to conjure up a reason, we decline to strain for an interpretation that would require us to assume the parties intended that impractical result.
Having considered the arguments presented in light of the record and guiding legal principles, we conclude that neither Tri-Port nor its agent AMB had a duty to protect Lopez from the danger posed by the dislodged parking stop and exposed bar. If there was a duty breached here, it was the duty assumed by Lopez's employer, FedEx.
1 Improperly pled as AMB Property, LP, a Delaware Limited Partnership.
2 All claims against all defendants have been resolved. Plaintiffs' claims against FedEx and W65 Bedford Park, Inc. were dismissed, and the trial court granted summary judgment to defendants Morecop-270 Associates and Linc Facility Services. Plaintiffs do not appeal those orders.
3 The landlord reserved a right to make repairs neglected by the tenant, but under this court's decision in McBride, supra, 295N.J. Super. at 525-527 that reservation does not make the landlord liable for the tenant's failure to repair. Plaintiffs present no argument based on the reservation of right to re-enter in the main lease.