Opinion
No. HHD-X07-CV04-4025148
January 5, 2007
MEMORANDUM OF DECISION
I.
The present motion for summary judgment, filed by the third-party defendant Hockanum Industrial Development Venture Corporation (HIDVC), was heard with a companion motion dated June 1, 2006 brought by the named defendant town of Vernon (Vernon) in connection with water damage allegations at Wiretek, Inc. (Wiretek), the third-party defendant/counterclaim plaintiff's place of business at the Hockanum Mill. A brief history is useful to understand this case.
The mill is a large eleven-building manufacturing complex constructed in the 1800s and located in Vernon. While once home to a prominent textile factory, it has deteriorated throughout the years and in 1996, Vernon petitioned the Superior Court in Tolland to appoint a receiver to collect back property taxes owed by its owner the Pittsfield Realty Company, Inc., f/k/a The Shepard Realty Company (Pittsfield). The Robert C. White Company (White) was appointed receiver on October 28, 1996 at a time when the complex had ten tenants and a cash balance of approximately $5,000.00. The property was leased at a rate of no more than $2 per square foot on an annual basis and on April 2, 1997, Wiretek entered into a five-year lease expiring March 31, 2002. White managed the property until its resignation on February 28, 2002 and the court appointed HIDVC as receiver.
On or about December 12, 2002 and January 21, 2003, water pipes in part of the mill's sprinkler system outside the Wiretek space burst and the water seeped into the Wiretek space allegedly causing damage to its property. Wiretek's insurer, the Phoenix Insurance Company paid the damage claim and then brought a subrogation claim against Vernon which impleaded Wiretek for common-law indemnification on December 22, 2004. On February 18, 2006, Wiretek filed a four-count counterclaim against HIDVC. On June 1, 2006, HIDVC filed this motion for summary judgment.
On May 15, 2006, Wiretek amended its answer and counterclaims asserting nine counts against HIDVC. Wiretek also asserted other claims against HIDVC for incidents occurring on December 30, 1999, January 23, 2004, July 2, 2004 and February 5, 2005.
II A.
The April 2, 1997 lease ran for five years expiring on March 31, 2002. The lease contained the following provisions:
¶ 9) "Lessor shall not be liable for any damage or injury to Lessee . . . or to any property, occurring on the demised premises . . . no matter how caused;
¶ 11) "Lessee, at his expense, shall maintain . . . liability insurance including bodily injury and property damage insuring Lessee and lessor with minimum coverage . . . at least $1,000,000 in liability coverage;
¶ 26) "[a]ny holding over after the expiration of this lease, with the consent of the Lessor, shall be construed as a month-to-month tenancy . . . otherwise in accordance with the terms hereof as applicable;
¶ 28) "[t]his lease is binding upon and inures to the benefit of the heirs, assigns and successors in interest to the parties."
HIDVC became lessor as of March 28, 2002. After the expiration of Wiretek's lease on March 31, 2002, Wiretek became a month-to-month tenant in accordance with the provisions of the term lease until it signed its new lease with HIDVC on July 11, 2003.
HIDVC first argues that Wiretek agreed, as a term of its lease, to absolve its lessor from any damage to its property occurring on the leased premises. As noted, the first lease with White contained the provision: "Lessor shall not be liable for any damage or injury to Lessee . . . or to any property, occurring on the demised premises . . . no matter how caused." HIDVC claims this exculpatory provision is clear and unambiguous and therefore a sufficient basis for summary judgment. See Robinson v. Weitz, 171 Conn. 545, 551, 370 A.2d 1066 (1976) ("[a] lease is a contract . . . and its construction presents a question of law for the court") (citations omitted); see also Tallmadge Bros., Inc. v. Iroquois Gas Transmission System, L.P., 252 Conn. 479, 495, CT Page 658 746 A.2d 1277 (2000) ("[a]lthough ordinarily the question of contract interpretation, being a question of the parties' intent, is a question of fact . . . [w]here there is definitive contract language, the determination of what the parties intended by their contractual commitments is a question of law . . .") (internal quotation marks omitted); Gateway Co. v. DiNoia, 232 Conn. 223, 229, 654 A.2d 342 (1995) ("[w]here there is definitive contract language, the determination of what the parties intended by their contractual commitments is a question of law") (internal quotation marks omitted). "[A] court will not torture words to import ambiguity where the ordinary meaning leaves no room for ambiguity, and words do not become ambiguous simply because lawyers or laymen contend for different meanings . . ." (Internal quotation marks omitted.) Vitti v. Allstate Ins. Co., 245 Conn. 169, 177-78, 713 A.2d 1269 (1998).
The second lease, dated July 11, 2003, contained a similar exculpatory provision: ¶ 14a "[Wiretek] agrees to . . . hold harmless the Hockanum Industrial Development and Venture Corp. . . . against any and all claims, demands, suits, or loss . . . for any damages which may be asserted . . . against it . . . by reason of personal injury, including . . . property damage, including loss of use thereof, which arises out of or is in any way connected or associated with this lease contract." HIDVC argues that the language in both lease agreements unequivocally absolves it of the type of liability alleged by Wiretek, notwithstanding allegations of HIDVC's own negligence. HIDVC argues that Connecticut courts have consistently granted summary judgment in favor of the lessor in construing exculpatory provisions similar to those in the case at hand.
In Burkle v. Car and Truck Leasing Co., 1 Conn.App. 54, 56-57, 467 A.2d 1255 (1983), for example, the Appellate Court determined that the language "[l]essee agrees to indemnify and hold [l]essor harmless from any and all liability" was sufficiently clear and unequivocal to be enforced even for the lessor's own negligence. In its analysis, the Burkle court reviewed Laudano v. General Motors Corp., 34 Conn.Sup. 684, 688, 388 A.2d 842 (1977), in which even less inclusive language was upheld: "Seller agrees to indemnify and protect Buyer against all liabilities, claims or demands . . . growing out of the performance of this contract." The Laudano court determined that there could not be "any broader classification than the word `all.' " Id. The Appellate Court, in Burkle, concluded that "[t]he lease in the present case provided indemnification for `any and all liability,' an even stronger and more inclusive provision by than the `all liabilities' language upheld in Laudano . . ." Burkle v. Car and Truck Leasing Co., supra, 1 Conn.App. 57. The lease agreement at issue in the current case (the "Lessor shall not be liable for any damage or injury to Lessee . . .") contains essentially similar language to the provisions upheld in Burkle and Laudano.
HIDVC also references several trial court decisions which follow the precedent set in Burkle. In the first case, Royal Ins. Co. of America v. Wilson Electrical Co., Superior Court, judicial district of Tolland, Docket No. CV 92 0050395 (August 15, 1994, Klaczak, J.) (subrogation claim against owners and lessors of Vernon premises leased by the defendant Rein's NY Style Deli-Restaurant ("Rein's") after electrical fire), the owners/lessors argued that Rein's expressly agreed to indemnify them for damages and expenses in their lease agreement. The relevant provisions of that lease included: "Lessee will, throughout the terms of this Lease, provide and keep in force, at its own expense, a public liability insurance policy covering the demised premises . . . against any and all liability claims" and "[t]he Lessee shall save the Lessor harmless from any liability or expense on account of any accident or injury to Lessee, or to its property . . ." (Emphasis in original.) The trial court granted the motion for summary judgment based on the decisions of Laudano and Burkle.
In Braunfeld v. Chase Manhattan Bank of Connecticut, Superior Court, judicial district of Stamford-Norwalk at Stamford, Docket No. CV 96 0150010 (October 28, 1998, D'Andrea, J.) ( 23 Conn. L. Rptr. 279), the court upheld an exculpatory provision which stated, "[t]he lessee will defend and indemnify and save lessor harmless of and from all fines . . . the lessor shall not be liable for any injury or damage to person or property happening in or on the sidewalks abutting the premises . . . and the lessee shall defend and indemnify and save lessor harmless of and from all damages or liability for anything arising from or out of the use of said premises . . ."
In Maryheart Crusaders, Inc. v. Barry, Superior Court, judicial district of New Haven at Meriden, Docket No. CV 96 0251647 (Apr. 20, 1998, Dunnell, J.) ( 22 Conn. L. Rptr. 33) (electrical fire at leased premises causing substantial damage to plaintiff's personal and business property due to defendant's improper installation of the HVAC unit), defendants asserted that the paragraph of the lease agreement which provided that "[t]he Landlord shall not be responsible for the loss of or damage to property or injury to persons . . . or for the acts, omissions or negligence of other persons or tenants in and about the said property . . . Tenant agrees to indemnify and save the Landlord harmless from all claims and liability for losses of or damage to property . . ." was clear and unambiguous. Wiretek, however, cites several cases which hold that unless the intention of the parties is expressed in unmistakable, unambiguous language, an exculpatory clause will not be deemed to shield a party from liability for his own negligent acts. See Hyson v. White Water Mountain Resorts of Connecticut, Inc., 265 Conn. 636, 829 A.2d 827 (2003), and Hanks v. Powder Ridge, 276 Conn. 314, 885 A.2d 734 (2005). HIDVC stresses that these two cases and, most recently, Reardon v. Windswept Farm, LLC, 280 Conn. 153, 905 A.2d 1156 (2006), all involve public recreational activities in which the plaintiff was forced to sign a contract of adhesion — a much different situation from commercial parties negotiating a lease agreement.
It would be difficult to review paragraphs 9 and 14a without concluding that the contractual language is clear and unambiguous; ¶ 9 of the first lease uses the language "for any damage or injury to Lessee . . . or to any property . . . no matter how caused"; ¶ 14a of the second lease utilizes such language as "Tenant agrees to defend, pay on behalf of, indemnify and hold harmless [HIDVC] . . . against any and all claims, demands, suits, or loss . . . for any damages which may be asserted . . . which arises out of or is in any way connected or associated with this contract." (Emphasis added.) As noted in BD Associates, Inc. v. Russell, 73 Conn.App. 66, 807 A.2d 1001 (2002), "[t]he law does not favor contract provisions which relieve a person from his own negligence . . . Such provisions, however, have been upheld under proper circumstances." (Internal quotation marks omitted.) "When applied to contracts to which the parties are sophisticated business entities, the law, reflecting the economic realities, will recognize an agreement to relieve one party from the consequences of his negligence on the strength of a broadly worded clause framed in less precise language than would normally be required . . ." (Internal quotation marks omitted.) Id., 73.
Wiretek argues that General Statutes § 52-572k, entitled "Hold harmless clause against public policy in certain construction contracts," renders the exculpatory clause void. It states, in relevant part, that "[a]ny covenant, promise, agreement or understanding entered into in connection with or collateral to a contract or agreement relative to the construction, alteration, repair or maintenance of any building, structure or appurtenances thereto . . . that purports to indemnify or hold harmless the promisee against liability for . . . damage to property caused by or resulting from the negligence of such promisee, such promisee's agents or employees, is against public policy and void, provided this section shall not affect the validity of any insurance contract, workers' compensation agreement or other agreement issued by a licensed insurer."
If applicable, this provision, would presumably render paragraphs 9 and 14a, the waiver and hold harmless provisions of lease, unenforceable. The legislation refers to "any contract relative to . . . the maintenance of a building" and, of course, a lease is a contract. BD Associates, Inc. v. Russell, supra, 73 Conn.App. 74-75. Paragraph 7 of the operative first lease states, in part, that "the lessee (Wiretek) shall, at his own expense and at all times, maintain the premises in good and safe condition including . . . plumbing and heating installations . . ." Other than a reference to maintain the roof, exterior walls and structural foundations, the landlord had no duties as Wiretek agreed to take the premises "as is." The second lease, that was signed by HIDVC did have the requirement that "the Landlord, at its own cost and expense, shall pay for all major repairs and improvements to plumbing and heating systems . . ." While the argument could be made that this qualifies as "maintenance" and thus, the statute applies, neither the courts nor the legislature have interpreted § 52-572k in this manner.
As noted in Travelers Indemnity Co. v. Sonitrol Security, Superior Court, judicial district of Hartford, Docket No. CV 04-4001676 (March 24, 2006, Keller, J.) ( 41 Conn. L. Rptr. 39): "[t]he title of § 52-572k, `Hold harmless clause against public policy in certain construction contracts,' clearly suggests that application of the statute was intended to be limited to construction contracts . . . In construing a statute, the title of the legislation is an aid to statutory construction . . . The legislature, in specifically outlawing hold harmless agreements in the construction industry, showed an intention that such a practice not be deemed against public policy in other situations . . . The legislative history of § 52-572k also supports the conclusion that it is strictly applicable to construction contracts which relieve a person from liability resulting from his negligence." (Citations omitted; internal quotation marks omitted.) See also Braunfeld v. Chase Manhattan Bank of Connecticut, supra, Superior Court, Docket No. CV 96 0150010 ("General Statutes § 52-572k is applicable, as the title of the section indicates, only to construction contracts"); State v. State Employees Review Board, 239 Conn. 638, 649, 687 Conn. 134 (1997) ("The title of legislation when it is acted upon by the legislature is significant and often a valuable aid to construction" (internal quotation marks omitted)).
Moreover, in Burkle v. Car and Truck Leasing Co., Inc., supra, 1 Conn.App. 58, the court, in rejecting the § 52-572k argument noted that, "[r]ather than buttressing the argument of voidness on public policy grounds, the effect of this statute is just the opposite. The legislature, in specifically outlawing hold harmless agreements in the construction industry, showed an intention that such a practice not be deemed against public policy in other situations, for had the legislature intended to outlaw all such provisions as against public policy, it could have said so." Other than a change substituting "negligence" for "sole negligence" and other gender changes in 2001, the legislature has not amended the statute. See Ricigliano v. Ideal Forging Corp., 280 Conn. 723, 740-41 (2006) ("[a]lthough legislative inaction is not necessarily legislative affirmation . . . we . . . presume that the legislature is aware of [this court's] interpretation of a statute, and that its subsequent nonaction may be understood as a validation of that interpretation . . . Time and again, we have characterized the failure of the legislature to take corrective action as manifesting the legislature's acquiescence in our construction of a statute" (internal quotation marks omitted)).
Additionally, while exculpatory clauses are prohibited in residential leases by operation of § 47a-4, that provision applies only to residential leases. See Johnson v. Fuller, 190 Conn. 552, 558, 461 A.2d 988 (1983); Hoban v. Masters, 36 Conn.Sup. 611, 613, 421 A.2d 1318 (1980) ("These statutes [§§ 47a-l through 47a-22] were passed to aid residential apartment dwellers, and do not apply to commercial leases"). The legislature has not seen fit to mandate the same prohibitions specifically to commercial leases. The only stated prohibition in the statute applies to a requirement that a business be open on a specified day or open seven days a week. § 47a-4b.
In BD Associates, Inc. v. Russell, supra, 73 Conn.App. 66, § 52-572k is never mentioned by the appellate court as it upheld an exculpatory clause finding that the language and intent of the lease was clear. In an accompanying footnote, the court noted that the plaintiff was a business entity, there was no evidence that the landlord had more bargaining power and that the plaintiff had acquired insurance to protect himself from such losses. In the present case, there is nothing in the affidavits that would suggest otherwise.
Finally, in Best Friends Pet Care, Inc. v. Design Learned, Inc., 77 Conn.App. 167, 172, 823 A.2d 329 (2003), the court upheld the granting of a summary judgment motion which found a waiver of subrogation clause ("waive all rights against each other and against the Contractors, Architect, consultants, agents and employees of any of them, for damages, but only to the extent covered by property insurance . . .") that was coupled with a requirement to provide insurance was not violative of § 52-572k. The court stated: "[t]he threshold question and a question of first impression for this court concerns the effect of § 52-572k . . . on the waiver of subrogation provision in this standard AIA contract." Best Friends Pet Care, Inc. v. Design Learned, Inc., supra, 171. After reviewing the language of the contract and decision of other states with similar laws, the court focused on the New Hampshire decision of Chadwick v. CSI, Ltd., 137 N.H. 515, 523, 629 A.2d 820 (1993), in which that court held: "[t]hese [AIA provisions] do not present the same concerns as naked exculpatory provisions. As opposed to exculpatory provisions . . . the insurance provisions of the standard AIA contract are not designed to unilaterally relieve one party from the effects of its future negligence, thereby foreclosing another party's avenue of recovery. Instead, they work to ensure that injuries or damage incurred during the construction project are covered by the appropriate types and limits of insurance, and that the costs of that coverage are appropriately allocated among the parties." (Internal quotation marks omitted.) Best Friends Pet Care, Inc. v. Design Learned, Inc., supra, 175. It is true that the insurance provision in the subject lease is separate from the exculpatory provision but the requirement in paragraph 11 of the operative lease to maintain insurance accomplishes the same goal and thus the rationale of Best Friends Pet Care would apply.
Accordingly, based upon the above case law, whether under the Burkle analysis or the BD Associates/Best Friends Pet Care, Inc. analysis, the legislative response, or lack of response, as discussed above, to this judicial interpretation, and the lack of any evidence that the parties did not have equal bargaining status concerning the relevant aspects of the lease (including the $2.00 per square foot charge) or did not intend to enter into such agreements, this court finds that the unambiguous commercial exculpatory clauses, coupled with the insurance requirements, are not violative of public policy as discussed in Hyson, Hanks, and Reardon. See also Wagner v. Murphy Moving Storage, Inc., Superior Court, judicial district of Middlesex, Docket No. CV 040103847 (Mar. 6, 2006, Booth, J.). Wiretek negotiated and agreed to procure insurance to protect against any loss and to hold the landlord harmless for any such loss; HIDVC, as successor, is entitled to rely on this lease. Indeed, in the latter lease between Wiretek and HIDVC, acting as receiver, not only were there similar exculpatory terms but, in fact, separate additional clauses concerning indemnification, hold harmless and waiver of subrogation — not to mention an inspection of premises clause. Wiretek's acceptance of these clauses surely evidences its intent and understanding of the exculpatory provision of the initial lease. The motion for summary judgment is therefore granted.