Opinion
1085 MDA 2022 J-S02037-23
05-24-2023
BASS PRO OUTDOOR WORLD LLC Appellant v. HARRISBURG MALL LIMITED PARTNERSHIP
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
Appeal from the Order Entered July 8, 2022 In the Court of Common Pleas of Dauphin County Civil Division at No(s): 2018-CV-06921-CV
BEFORE: PANELLA, P.J., OLSON, J., and DUBOW, J.
MEMORANDUM
DUBOW, J.
Appellant, Bass Pro Outdoor World LLC ("Tenant"), appeals from the order entered in the Dauphin County Court of Common Pleas granting the Motion for Summary Judgment filed by Harrisburg Mall Limited Partnership ("Landlord") and the order denying Tenant's Motion for Summary Judgment. Taken together, the trial court orders determined that the lease between Tenant and Landlord did not require Landlord to indemnify Tenant for the costs Tenant incurred in defending a slip and fall case. We reverse the orders and remand with instructions.
The relevant facts and procedural history are as follows. In 2003, Tenant entered into a lease agreement ("Lease") with Feldman Lubert Adler Harrisburg LP for a retail location in the Harrisburg Mall. In June 2012, Landlord acquired the Harrisburg Mall and assumed the rights and responsibilities set forth in the Lease.
The Lease includes a "General Definitions" section which defines the "Common Areas" as including, inter alia, parking areas and facilities. Lease, 9/30/03, at § 1.3(a). Pursuant to the Lease, Landlord's maintenance obligations extended to all parking lots. Id. at 6.1(c). Landlord agreed to maintain the Common Areas, at its sole cost and expense, in good and safe condition. Id. at § 6.1(a).
Critical to our analysis is that the Lease contained an indemnification provision, which provided that Landlord must indemnify Tenant for, inter alia, any lawsuit arising from the maintenance of the Common Areas:
Notwithstanding anything to the contrary contained herein, except for the negligent acts of Tenant, Landlord agrees to indemnify and hold Tenant harmless with respect to any and all claims, actions, injuries, damages, liability, costs and expense, including reasonable attorney's fees, arising with respect to the possession, use, occupancy, management, repair, maintenance or control of the Common Areas[.]Id. at § 6.1(c). This provision, however, relieves the Landlord from the obligation to indemnify Tenant if the claim arises from the negligent "acts" of Tenant. Id.
The Johnson Action
On July 11, 2017, Janet and Dale Johnson filed a Complaint against Tenant and other defendants, but not Landlord, alleging that Mrs. Johnson tripped and fell over a piece of rebar protruding from pavement while walking through the parking lot outside of Tenant's Harrisburg Mall location. Mrs. Johnson asserted, inter alia, that Tenant was negligent in failing to properly maintain the public parking lot area and in failing to "notify the appropriate entity and/or individuals responsible for repairing and/or correcting any hazardous condition or defect located in the public parking area[.]" Johnson Complaint, 7/11/17, at ¶ 27(c).
Following discovery, Tenant filed a Motion for Summary Judgment asserting that the Johnsons had not provided any evidence, beyond mere speculation, of the location where Mrs. Johnson fell, let alone the existence of a dangerous condition at the location. Thus, Tenant concluded that because the Johnsons could not prove that a specific, dangerous condition had caused Mrs. Johnson's fall, they had not presented a prima facie negligence claim.
The trial court agreed, granted Tenant's Motion for Summary Judgment, and dismissed the Johnson's claims against Tenant. At no point during the Johnson Action did the plaintiffs establish that Tenant engaged in negligent "acts."
The Instant Action
On October 19, 2018, Tenant filed a Complaint against Landlord, asserting claims for Breach of Contract and Negligence and seeking to enforce the indemnification provision of the Lease. Tenant alleged that it was entitled to, inter alia, reimbursement of its costs of defense from the Johnson Action.
Tenant filed its Complaint against Landlord during the pendency of the Johnson Action.
Following completion of discovery, Tenant filed a Motion for Summary Judgment seeking judgment as a matter of law against Landlord. Tenant asserted that the record demonstrated that Landlord breached its Lease with Tenant by refusing to indemnify it for the costs of defense of the Johnson Action.
Tenant also asserted that the doctrine of equitable estoppel precluded Landlord from asserting that it had no obligation to indemnify Tenant.
Landlord responded with its own Cross-Motion for Summary Judgment. Landlord argued that it was not obligated to indemnify Tenant because the Johnsons had alleged that Tenant had been negligent and the indemnification provision in the Lease did not apply to claims of negligent "acts" of Tenant. Response, 3/4/22, at 7 (quoting Lease at § 6.1(c)).
The trial court entered an order denying Tenant's motion. The court concluded that because the Johnson plaintiffs had alleged that Tenant was negligent in failing to notify Landlord of the need for parking lot repairs, this alleged negligence relieved Landlord of its obligation to indemnify Tenant. Using the same reasoning, the trial court granted Landlord's Cross-Motion for Summary Judgment.
Tenant appealed both orders. Both Tenant and the trial court complied with Pa.R.A.P. 1925.
Tenant raises the following issue on appeal:
Whether the trial court committed reversible error in granting [Landlord's] Motion for Summary Judgment and denying [Tenant's] Motion for Summary Judgment pursuant to the clear
and unambiguous terms of the parties' contractual lease agreement requiring [Landlord], as landlord, to hold [Tenant], as tenant, harmless with respect to any and all claims, actions, injuries, damages, liability, costs and expenses, including reasonable attorney's fees, arising with respect to the possession, use, occupancy, management, repair, maintenance or control of the common areas.
Tenant's Brief at 5.
A.
Our Supreme Court has clarified our role as the appellate court as follows:
On appellate review [ ], an appellate court may reverse a grant of summary judgment if there has been an error of law or an abuse of discretion. But the issue as to whether there are no genuine issues as to any material fact presents a question of law, and therefore, on that question our standard of review is de novo. This means we need not defer to the determinations made by the lower tribunals. To the extent that this Court must resolve a question of law, we shall review the grant of summary judgment in the context of the entire record.Summers v. Certainteed Corp., 997 A.2d 1152, 1159 (Pa. 2010) (citations and quotation marks omitted).
A trial court may grant summary judgment "only in those cases where the record clearly demonstrates that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Id. (citation omitted); see also Pa.R.C.P. 1035.2(1). "When considering a motion for summary judgment, the trial court must take all facts of record and reasonable inferences therefrom in a light most favorable to the non-moving party." Summers, 997 A.2d at 1159. "In so doing, the trial court must resolve all doubts as to the existence of a genuine issue of material fact against the moving party, and, thus, may only grant summary judgment where the right to such judgment is clear and free from all doubt." Id. (citation and internal quotation marks omitted).
The instant dispute involves the interpretation of the Lease between the parties. "A lease is a contract and is to be interpreted according to contract principles." Hutchison v. Sunbeam Coal Corp., 519 A.2d 385, 389 (Pa. 1986). Because contract interpretation is a question of law, our standard of review is de novo, and the scope of review is plenary. Ragnar Benson Inc. v. Hempfield Twp. Mun. Auth., 916 A.2d 1183, 1188 (Pa. Super. 2007).
Our Supreme Court has set forth the principles governing contract interpretation as follows:
The fundamental rule in contract interpretation is to ascertain the intent of the contracting parties. In cases of a written contract, the intent of the parties is the writing itself. Under ordinary principles of contract interpretation, the agreement is to be construed against its drafter. When the terms of a contract are clear and unambiguous, the intent of the parties is to be ascertained from the document itself. . . . While unambiguous contracts are interpreted by the court as a matter of law, ambiguous writings are interpreted by the finder of fact.Ins. Adjustment Bureau, Inc. v. Allstate Ins. Co., 905 A.2d 462, 468-69 (Pa. 2006) (citations omitted).
B.
Tenant claims that the trial court erred in interpreting the indemnification provision of the Lease in Landlord's favor. Tenant's Brief at 16-31. It argues that the plain language of the Lease requires Landlord to indemnify it for costs it incurred in defending against the Johnson Action because the trial court in the Johnson Action dismissed the negligence claims against Tenant. Id. at 25.
Following our review of the plain language of the relevant provision of the Lease, we agree with Tenant that the trial court erred in interpreting the indemnification provision as relieving Landlord from its obligation to indemnify Tenant for the cost of defense in the Johnson action. As stated above, the Lease only relieves Landlord from the duty to indemnify Tenant when Tenant has engaged in negligent acts:
Notwithstanding anything to the contrary contained herein, except for the negligent acts of Tenant, Landlord agreed to indemnify and hold Tenant harmless with respect to any and all claims, actions, injuries, damages, liability, costs and expense, including reasonable attorney's fees, arising with respect to the possession, use, occupancy, management, repair, maintenance or control of the Common Areas[.]
Lease § 6.1(c).
The Lease clearly and unambiguously relieves Landlord from its indemnification obligation only when Tenant actually engages in negligent "acts." It does not cover claims alleging negligent "acts." To accept the trial court's interpretation of this provision requires us to re-write this provision to relieve Landlord from its obligation to indemnify when a party alleges that the Tenant was negligent. We cannot and will not do so.
Furthermore, we respectfully disagree with the dissent's conclusion that Landlord's duty to indemnify is only triggered when a damages award is entered against Tenant in a third-party action. See Dissent at 3-4. The clear and unambiguous language of the indemnification provision requires Landlord to indemnify Tenant "with respect to any and all claims, actions, injuries, damages, liability, costs and expense" that arise from possession or use of the Common Areas. Here, the Johnson Action-which brought claims arising from use of the common parking area-triggered the indemnification provision.
Following our review, we find that there was no evidence that Tenant engaged in negligent acts. At best, the Johnsons merely alleged that Tenant did so. This finding is supported by the trial court's determination that the Johnsons failed to establish that Tenant was negligent and dismissal of the Johnsons' negligence claims against Tenant.
As stated above, pursuant to the clear and unambiguous language of the Lease, an allegation of Tenant's negligence, without more, is not sufficient to relieve Landlord of its indemnification obligation. Rather, the Lease requires that Tenant engaged in a negligent "act." Because there is no evidence that Tenant engaged in a negligent "act," the Lease obligates Landlord to indemnify Tenant for its costs of defense for the Johnson Action. The trial court, therefore, erred in reaching a contrary conclusion.
C.
In light of the foregoing, we reverse the trial court's July 8, 2022 order granting summary judgment in favor of Landlord. We also reverse the trial court's June 7, 2022 order denying Tenant's Motion for Summary Judgment, and we remand for the court to enter an order granting Tenant's Motion for Summary and determine the amount of Tenant's damages.
June 7, 2022 order reversed. July 8, 2022 order reversed. Case remanded with instructions. Jurisdiction relinquished.
President Judge Panella joins the memorandum.
DISSENTING MEMORANDUM
OLSON, J.
I respectfully dissent from the learned Majority, as I find that Harrisburg Mall Limited Partnership ("Landlord") was not required to reimburse Bass Pro Outdoor World, LLC ("Tenant") for the costs it incurred in defending against the Johnson Action. As such, Landlord was entitled, as a matter of law, to summary judgment. Therefore, I would affirm both the June 7, 2022 order denying Tenant's motion for summary judgment and the July 8, 2022 order granting Landlord's cross-motion for summary judgment.
The Majority sets forth a summary of the Johnson Action (see Majority at *2-*3), and I incorporate that summary as if set forth herein.
The Majority sets forth the standard of review this Court applies when reviewing a trial court order granting, or denying, a motion for summary judgment, as well as a claim involving the interpretation of a lease agreement. See Majority at *5-*6. As such, I incorporate those portions of the Majority memorandum herein.
The Majority finds that "pursuant to the clear and unambiguous language of the Lease, an allegation of Tenant's negligence, without more, is not sufficient to relieve Landlord of its" obligation to indemnify Tenant for the cost of defense in the Johnson Action. Id. at *7-*8. In so holding, the Majority conflates a party's contractual duty to defend with its contractual duty to indemnify.
I would agree that an allegation of Tenant's negligence, without more, is insufficient to relieve Landlord of a duty to defend, if such a duty existed. Nevertheless, as discussed infra, Landlord, pursuant to the clear and unambiguous terms of the Lease, does not owe Tenant a duty to defend.
Pursuant to the terms of the Lease, Landlord and Tenant agreed that Landlord would indemnify and hold Tenant harmless for, inter alia, damages awarded in a cause of action arising out of a third party's use of the mall's common areas except when the damages are the result of Tenant's negligent act. Id. at *7, citing Lease § 6.1(c). By its clear and unambiguous terms, the Lease contained only a duty to indemnify and did not specifically set forth an agreement that Landlord would defend Tenant in such a cause of action involving the common areas. As such, I cannot agree that Landlord was required to reimburse Tenant for the cost of defense in the underlying Johnson Action, which ultimately concluded without an award for damages when the trial court granted Tenant's motion for summary judgment and dismissed the Johnsons' complaint.
In simplest terms, a "duty to defend is separate from and broader than the duty to indemnify" and, therefore, each duty is distinct from the other. Am. and Foreign Ins. Co. v. Jerry's Sport Center, Inc., 2 A.3d 526, 543-544 (Pa. 2010). If a lease agreement requires a landlord to defend a tenant in an action filed by a third party against the tenant, the landlord is obligated to defend the tenant if the allegations contained in the third party's complaint might trigger the landlord's liability. Selective Way, 119 A.3d at 1046 (stating that, "[t]he duty to defend is not limited to meritorious actions; it even extends to actions that are groundless, false, or fraudulent as long as there exists the possibility that the allegations implicate [liability]" (original brackets omitted)). The duty to defend continues until the landlord can limit the third-party claims such that, pursuant to the lease agreement, the landlord's liability is impossible. Id.
The determination of whether a landlord owes a duty to defend is determined on a case-by-case basis by comparing the four corners of the lease agreement to the four corners of the complaint. Selective Way Ins. v. Hospitality Group, 119 A.3d 1035, 1046 (Pa. Super. 2015).
Conversely, a landlord's duty to indemnify a tenant in a third party's cause of action, where the lease agreement provides for indemnification, does not accrue until there is a damage award entered against the tenant in the third party's action. Id. at 1049. Stated another way, if a third party is entitled to damages in a cause of action against a tenant and the damage recovery triggers the landlord's duty to indemnify under the terms of the lease agreement, then the landlord is required to indemnify the tenant for the damage award.
In the instant matter, Section 6.1(c) of the Lease provided that,
Notwithstanding anything to the contrary contained herein, except for negligent acts of Tenant, Landlord agrees to indemnify and hold Tenant harmless with respect to any and all claims, actions, injuries, damages, liability, costs[,] and expenses, including reasonable attorney[s'] fees, arising with respect to the possession, use, occupancy, management, repair, maintenance[,] or control of the Common Areas[.]
Lease, 9/30/03, at § 6.1(c). Thus, the clear and unambiguous language of the Lease required Landlord "to indemnify and hold Tenant harmless" with respect to a damage award stemming from injuries sustained by a third party while using the common areas. The clear and unambiguous language of the Lease also required Landlord to indemnify Tenant for the costs and expenses, including reasonable attorneys' fees, that Tenant incurred when the damage award to the third party stemmed from injuries sustained through use of the common areas. As such, if Mrs. Johnson were entitled to an award of damages because of her fall and it was established that her fall was related to Tenant's use, occupancy, or possession of a common area, then Landlord would be required to indemnify Tenant for the damage award, including Tenant's expenses in defending the underlying cause of action, so long as the damage award was not predicated upon Tenant's negligent conduct.
Put differently, the reference to 'reasonable attorney[s'] fees' within the indemnification clause of the Lease does not alter my conclusion. The inclusion of this language within the indemnification clause is simply to make clear that, if Landlord's duty to indemnify Tenant has been triggered, then Landlord's indemnification obligation would extend to reasonable attorneys' fees in addition to damages, costs, and other expenses incurred by Tenant in satisfying any claim that involves a common area of the leased premises and that is unrelated to Tenant's negligent acts.
The Lease, however, did not contain a specific duty on the part of Landlord to defend Tenant in the event of a third-party cause of action. See id. Thus, Landlord, pursuant to the terms of the Lease, neither retained nor assumed a duty to defend a third-party cause of action in which it might be responsible for a damage award. Similarly, Tenant, pursuant to the terms of the Lease, did not require Landlord to defend Tenant in a cause of action arising from a third party's use of a common area. Lastly, Landlord's duty to indemnify Tenant for the expenses Tenant incurred in defending against the third-party cause of action was only triggered if the Johnsons had been awarded damages for injuries Mrs. Johnson sustained while using a common area and said damages did not arise from Tenant's negligent acts. Because the underlying cause of action did not result in a damage award to the Johnsons, Landlord's duty to indemnify Tenant for its legal expenses did not accrue.
In assuming a duty to defend a cause of action in which it might become responsible for the resulting damages, a party typically retains the rights, inter alia, to receive notice of the claim, to select certain counsel to represent its interests, and to settle the matter rather than proceed to trial. The plain language of the contract and the absence of such features from the Lease in the case sub judice strongly suggest that the parties did not seek to impose a duty to defend upon Landlord. It is unreasonable, in my view, for the Majority to infer that Landlord would forgo such significant rights but accept, in blind peril, a duty to defend Tenant.
As such, I would affirm the trial court orders granting Landlord's cross-motion for summary judgment and denying Tenant's motion for summary judgment.