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LB Powell, LLC v. Wawa, Inc.

Superior Court of Delaware, New Castle

March 27, 2014

LB POWELL, LLC, Plaintiff,
v.
WAWA, INC., d/b/a Wawa Food Market #809, f/k/a The Millville Manufacturing Company, Defendants.

Submitted: December 2, 2013

Upon Defendant Wawa's Motion for Summary Judgment DENIED

Upon Plaintiff LB Powell's Cross-Motion for Summary Judgment GRANTED

Stephen P. Casarino, Esquire, Casarino Christman Shalk Ransom & Doss, P.A., Wilmington, Delaware, Attorney for Plaintiff.

Gary W. Alderson, Esquire, Elzufon Austin Tarlov & Mondell, P.A., Wilmington, Delaware, Attorney for Defendant.

TRIAL BY JURY OF TWELVE DEMANDED

ERIC M. DAVIS, JUDGE

Introduction

This is a breach of contract action. Plaintiff LB Powell, LLC, ("Powell") alleges that Defendant Wawa, Inc., ("Wawa") breached an agreement when Wawa refused to assume Powell's defense in a personal injury action. The agreement at issue is a lease agreement (the "Lease Agreement") between Powell and Wawa. Powell is the landlord and Wawa is the tenant. The personal injury action (the "Lawsuit") was a civil action filed by James Trombetti against both Wawa and Powell. In the Lawsuit, Mr. Trombetti claimed he slipped and injured himself on ice while leaving Wawa's convenience store. After trial, the jury delivered a verdict in favor of both Wawa and Powell.

Here, Powell alleges that Wawa was required under the Lease Agreement to indemnify and reimburse Powell for the expenses arising out of the Lawsuit, including attorney's fees. Powell also contends that Wawa breached the Lease Agreement when it refused to accept the tender of Powell's defense in that matter. Defendant Wawa now moves for summary judgment and Plaintiff Powell cross-moves for summary judgment. For the reasons stated in this Opinion, Defendant Wawa's Motion for Summary Judgment is DENIED, and Defendant Powell's Motion for Summary Judgment is GRANTED.

Factual and Procedural Background

The Lease Agreement

On or about September 14, 1974, Calvin Powell c/o Commercial Industrial Realty Co. and the Millville Manufacturing Company executed the Lease Agreement. Under the Lease Agreement, the Millville Manufacturing Company leased a premises located at 2300 Carpenter Road, Wilmington, Delaware (the "Leased Premises"). An addendum to the Lease Agreement provides that the Leased Premises is to be used as a Wawa convenience store. Wawa opened Wawa Food Market #809 at the Leased Premises on October 18, 1974, and Wawa has continued to operate this store since that date.

The Lease Agreement was amended twice and remains in effect. The first amendment occurred on July 24, 1994. The parties amend the Lease Agreement again on October 30, 1998. The second amendment identifies the tenant as Wawa and was executed by Calvin Powell and Wawa. As the Court understands it, the present landlord is Powell and the tenant is Wawa.

The Lease Agreement contains the following relevant provisions. Section 1.01 of the Lease Agreement defines the leased premises. Regarding the common areas of the premises this section provides:

Section 1.01 Leased Premises

. . . The use and occupancy by Tenant of the leased premises shall include the use in common with others entitled thereto of the parking and other areas outlined in blue upon Exhibit "A" (hereinafter called "common area").[1]

Section 6.03 of the Lease Agreement contains an indemnification and reimbursement provision. Section 6.03 reads:

Section 6.03 Indemnification of Landlord

Tenant will indemnify and hold landlord harmless from and against any and all claims, actions, damages, liability and expense in connection with loss of life, personal injury and/or property arising from or out of any occurrence upon the leased premises, or the occupancy or use thereof by Tenant, or occasioned wholly or in part by any act or omission of Tenant, its agents, contractors, employees, servants, lessees, concessionaires or franchisees, other than those caused by the fault of Landlord, his agents, contractors, employees, servants or lessees. In case Landlord shall, without fault on its part, be made a party to any litigation commenced by or against Tenant, then Tenant shall protect and hold Landlord harmless and pay all costs, expenses and reasonable attorney's fees incurred or paid by Landlord in connection with such litigation.[2]

The Lawsuit

On September 15, 2010, Mr. Trombetti filed the Lawsuit. From the very outset, Mr. Trombetti named both Wawa and LB Powell as defendants. Mr. Trombetti alleged that upon returning to his car after shopping at Wawa, Mr. Trombetti slipped and fell due to icy conditions, causing personal injury. Specifically, Mr. Trombetti claimed that Wawa, as the tenant, and Powell, the landlord, had a duty to clear the icy conditions on the Lease Premises so as to prevent injury. Using the Lease Agreement as support, Powell demanded that Wawa assume its defense. Wawa refused and Powell therefore undertook its own defense.

On January 7, 2013, Mr. Trombetti's case went to trial in this Court. The jury rendered a verdict in favor of both Wawa and Powell on January 9, 2013. Moreover, although the Jury Questionnaire made comparative negligence available, the jury specifically found that neither Powell nor Wawa were negligent and assessed no "percentage of fault" to either Wawa or Powell.[3]

After the conclusion of Mr. Trombetti's case, Powell filed this lawsuit against Wawa for breach of contract for refusing to defend Powell and failing to pay all Powell's costs for its defense. Wawa has moved for summary judgment arguing that it did not have a duty to defend or reimburse Powell under the Lease Agreement. Powell has cross-moved for summary judgment. Oral arguments on the two motions were heard on December 2, 2013.

Now before the Court is Defendant Wawa's Motion for Summary Judgment and Plaintiff LB Powell's Cross-Motion for Summary Judgment.

Parties' Contentions

Wawa contends that the Lease Agreement did not require Wawa to carry insurance or indemnify Powell with respect to the area in which Mr. Trombetti's injury occurred. Wawa maintains that the Lease Agreement only requires Wawa to carry insurance and indemnify Powell with respect to the Leased Premises, which does not include the parking lot or covered walkway. Further, Wawa argues that under the Lease Agreement these areas are "common areas" and are not included in the leased premises.

Wawa also maintains that, pursuant to the Lease Agreement, Powell was responsible for snow and ice removal in the parking lot and common areas. Wawa argues that Mr. Trombetti's injury occurred due to an alleged act or omission of Powell rather than Wawa. Wawa contends that the Lease Agreement does not require Wawa to indemnify Powell for its own negligence. Therefore, Wawa claims that it had no duty to defend Powell in the lawsuit.

Powell contends that, regardless of whether or not Mr. Trombetti's injury occurred on the Leased Premises, Wawa still had a duty to defend and indemnify Powell. Powell asserts that under the Lease Agreement Wawa was required to pay all of Powell's costs, expenses and reasonable attorney's fees for claims and actions arising from or out of any occurrence upon the Leases Premises or the occupancy or use thereof by Wawa. Powell maintains that, as Mr. Trombetti's injury occurred while he was Wawa's business invitee, the injury arose out of Wawa's use of the leased premises.

Powell further claims that Wawa's duty to defend Powell from suit was triggered when Mr. Trombetti filed a complaint alleging claims that factually would trigger protection under the language of the Lease Agreement. Powell argues that once facts were stated in the pleadings which demonstrated that the alleged injury was covered by the language of the Lease Agreement, Wawa had a duty to defend Powell, whether or not liability was ultimately found.

Standard of Review

The standard of review on a motion for summary judgment is well-settled. The Court's principal function when considering a motion for summary judgment is to examine the record to determine whether genuine issues of material fact exist, "but not to decide such issues."[4]Summary judgment will be granted if, after viewing the record in a light most favorable to a non- moving party, no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law.[5] If, however, the record reveals that material facts are in dispute, or if the factual record has not been developed thoroughly enough to allow the Court to apply the law to the factual record, then summary judgment will not be granted.[6] The moving party bears the initial burden of demonstrating that the undisputed facts support his claims or defenses.[7] If the motion is properly supported, then the burden shifts to the non-moving party to demonstrate that there are material issues of fact for resolution by the ultimate fact-finder.[8]

At the hearing, both parties represented to the Court that additional discovery would not be helpful and that summary judgment would be appropriate on the record as developed.

Discussion

The question before this Court is whether Wawa was obligated under the Lease Agreement to reimburse Powell for its legal defense to Mr. Trombetti's lawsuit. This requires a determination of whether Mr. Trombetti's claim fits within language in the Lease Agreement in a way that obligates Wawa to Powell. The question becomes: (1) was there a provision in the Lease Agreement under which Wawa could have been obligated to assume or reimburse Powell for its legal defense; and, (2) did that duty arise under the circumstances of Mr. Trombetti's lawsuit. To answer that question this Court must look to the language of the Lease Agreement between the two parties.

"Under Delaware law, the proper interpretation of language in a contract is a question of law." [9] Absent any ambiguity, the Court should interpret a contract in accordance with the plain meaning of language in the document.[10]

Section 6.03 of the Lease Agreement provides for indemnity and reimbursement of Powell by Wawa. Section 6.03 consists of two sentences that address two different reimbursement situations. The first sentence of Section 6.03 relates to indemnification for certain claims, actions, damages, liabilities and expenses. Section 6.03 provides – in no unambiguous language – that Wawa will indemnify and hold Powell harmless for any claim arising in connection with personal injury arising from or out of any: (1) occurrence upon the Leased Premises; (2) occupancy or use by Wawa; or, (3) occasioned by any act or omission of Wawa. This provision obligates Wawa to indemnify Powell from any judgment arising out of any of those three circumstances.

However, under the circumstances here this provision does not create an obligation for Wawa. Unless "expense" is read broadly to mean litigation costs (expert fees, deposition expenses, etc.) and attorney's fees, Mr. Trombetti's lawsuit did not result in an indemnifiable event.

The second sentence of Section 6.03 is a reimbursement provision. "In case Landlord shall, without fault on its part, be made a party to any litigation commenced by or against Tenant, then Tenant shall protect and hold Landlord harmless and pay all costs, expenses and reasonable attorney's fees incurred or paid by Landlord in connection with such litigation."[11] In other words, if Powell is made a party to any litigation commenced by or against Wawa, Wawa is obligated to reimburse Powell for any costs, expenses and reasonable attorney's fees resulting from that litigation if Powell was faultless. This reimbursement provision of Section 6.03 is not limited to matters arising out of "any occurrence upon the [Lease Premises]" or "the occupancy or use thereof by [Wawa]." Instead, the reimbursement provision applies to "any litigation commenced by or against [Wawa]…."

The reimbursement provision of 6.03 does in fact require Wawa to reimburse Powell for the costs of Mr. Trombetti's lawsuit. As required by the language of the Lease Agreement, Powell was made a party to Mr. Trombetti's lawsuit against Wawa. Powell incurred and/or paid costs, expenses and reasonable attorney's fees as a result of the Lawsuit. At the end of the Lawsuit, the jury returned a verdict in favor of Powell – i.e., Powell was found to be faultless. Section 6.03 therefore obligates Wawa to reimburse Powell for the costs, expenses and reasonable attorney's fees resulting from that litigation.

Also, the jury's finding that neither Wawa nor Powell was at fault for Mr. Trombetti's injuries prevents Wawa from arguing that it is discharged from its duty because of fault on Powell's part. The reimbursement provision of Section 6.03 does provide that Wawa is only obligated to reimburse Powell, if Powell is "without fault on its part." However, the jury in Mr. Trombetti's lawsuit found that neither Wawa nor Powell was at fault. Therefore, that provision does not bar Powell from recovery.

Conclusion

Under Section 6.03 of the Lease Agreement between the parties, Wawa had a duty to reimburse Powell for all costs, expenses and reasonable attorney's fees incurred in connection with the Lawsuit. Therefore, for the reasons stated above, Defendant Wawa's Motion for Summary Judgment is hereby DENIED and Plaintiff LB Powell's Cross-Motion for Summary Judgment is GRANTED.

IT IS SO ORDERED.


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