The Law

No Safety Net for Negligence by Ron Davis Did an insurance policy that protected the builder during construction of a New Jersey shopping center also fully cover the center’s owners? That question loomed large after a worker was injured on the job during construction of Jackson Plaza, a shopping center in suburban Philadelphia. And the answer was not exactly what the center’s owners had planned for. The owners of Jackson Plaza had contracted with a large construction company to build the shopping center, and the construction company then hired a company for the necessary steel and iron work. That company in turn contracted with a company for the erection of the structural steel and joists. A worker for the erection company was subsequently seriously injured while working on the project. He claimed that while he was standing on a steel joist beam, it began to shake, causing him to lose his balance and fall. He further claimed that at the time of his fall there was no protection from such hazards. The worker sued the owners of Jackson Plaza as well as the contractors on charges of negligence. The contract between Jackson Plaza and the general contractor required the contractor to have general liability insurance that covered Jackson Plaza’s owners. But the contractor’s policy failed to protect the center’s owners from their own negligence. The contractor explained that it was not compelled to provide that coverage. The dispute between the contractor and the center’s owners eventually required the courts to settle the matter. And a New Jersey court found that the terms of the policy did not specifically require the contractor to furnish the coverage that would protect the center’s owners against a claim based on their negligence. Facing at least expensive attorney’s fees and other legal costs related to their defense, the center’s owners appealed the court’s ruling. A New Jersey appellate court rejected the arguments of the center’s owners, explaining, “The general contractor agreed to indemnify Jackson Plaza, but only to the extent caused by the negligent acts or omissions of [the contractor], a subcontractor, anyone directly or indirectly employed for the job or anyone for whose acts they may be liable. Thus, the conclusion is correct that the contract between the parties failed to express in unequivocal terms that the contractor would indemnify Jackson Plaza for legal fees incurred in defending itself against claims of its own negligence.” (Gale v. New Jersey Iron, Inc., 2007 WL 2385948 [N.J.Super.A.D.]) Decision: August 2007 Published: October 2007