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filed: November 9, 1984.


No. 01898 PHL 83, Appeal from the Order entered July 1, 1983 in the Court of Common Pleas of Philadelphia County, Civil Division, at No. 762 April Term, 1978.


Robert H. Malis, Philadelphia, for appellants.

Lewis Kates, Philadelphia, for appellee.

Spaeth, President Judge, and Beck and Hoffman, JJ.

Author: Hoffman

[ 335 Pa. Super. Page 383]

This is an appeal from an order entering judgment in favor of appellee-lessee and against appellants-lessors in the amount of $600,000.00. Because we find that certain clauses in the lease agreement exculpate appellants from liability for damages allegedly sustained by appellee, we reverse the order below.

Pursuant to the terms of a May 2, 1973 lease agreement, appellee, Princeton Sportswear Corp., became a third floor tenant of Building No. 12 of a Philadelphia industrial complex known as the "Hardwick and McGee Complex" (H & M Complex). This complex was owned by appellant H & M Associates, a partnership formed by appellants Leonard and Sidney Becker. The lease was executed by appellee's president, Morton Fischer, and by Leonard Becker on behalf of H & M Associates (then known as Man-Tex Clothes, the predecessor-in-interest to H & M Associates); consisted of a

[ 335 Pa. Super. Page 384]

    form lease submitted by appellants and an addendum prepared by appellee's counsel; and provided for a two-year tenancy commencing July 1, 1973 with two options to extend the term exercisable by the lessee.

On March 30, 1978, approximately ten months after appellee had exercised its second option to extend the lease for five years, a fire of unknown origin occurred at the H & M Complex, destroying the power center and thereby depriving appellee of heat, electricity and water.*fn1 Subsequently, appellants in an April 4, 1978 letter, terminated the lease, as extended, pursuant to its terms but allowed appellee to remain on the premises on a month-to-month basis.*fn2 Appellee responded on April 5, 1978 by filing a petition for a preliminary injunction and a complaint in equity against appellants (1) seeking to compel appellants to restore electrical service to Building No. 12, (2) alleging appellants' intentional breach of the lease by refusing to repair the demised premises, and (3) demanding compensatory and punitive damages. Two days later, at a conference prior to a hearing on appellee's request for a mandatory injunction, the parties entered into a stipulation whereby appellants agreed to allow appellee to make arrangements with Philadelphia

[ 335 Pa. Super. Page 385]

Electric Company for restoring electricity to Building No. 12 without prejudice to appellee's right to seek reimbursement from appellants for the expenses incurred. Although temporary electrical service was restored by the end of April, 1978, appellee found that the electrical, heat, security and sprinkler services remained inadequate and, consequently, moved its entire operation to a new location in October, 1978.

Following a final hearing on appellee's complaint, the lower court entered an adjudication on March 14, 1983, finding in appellee's favor in the amount of $600,000.00. Appellants subsequently filed exceptions which were denied. This appeal followed.

Appellants contend that the exculpatory clauses in Paragraphs 11(a) and (b) of the lease agreement relieve them from all liability to appellee for the damages allegedly suffered by appellee as a result of the fire. Appellee claims that appellants' failure to raise expressly the exculpatory clauses in the court below constitutes a waiver of that issue.*fn3 We find this claim meritless. The validity and effect of the exculpatory clauses were raised and exhaustively discussed by both parties in their summary judgment motions, trial memoranda, and briefs in support of and in opposition to appellants' exceptions to the lower court's findings of fact, conclusions of law, and adjudication. Accordingly, we hold that appellants have not waived their right to assert the exculpatory clause defense.

Having determined that appellants have not waived the exculpatory clause issue, we now turn to a consideration of the validity of the clause.

Generally speaking, an exculpatory clause is valid if: (a) "it does not contravene any policy of the law, that is, if it is not a matter of interest to the public or State" . . .; (b)

[ 335 Pa. Super. Page 386]

"the contract is between persons relating entirely to their own private affairs" . . .; (c) "each party is a free bargaining agent" and the clause is not in effect "a mere contract of adhesion whereby [one party] simply adheres to a document which he is powerless to alter, having no alternative other than to reject the transaction entirely." . . .

Employers Liability Assurance Corp., Ltd. v. Greenville Business Men's Association, 423 Pa. 288, 291-92, 224 A.2d 620, 622-23 (1966) (citations omitted). Additionally, a generally valid exculpatory clause must meet the following standards before it will be interpreted so as to relieve a person of a liability that the law would otherwise impose:

(1) contracts providing for immunity from liability for negligence must be construed strictly since they are not favorites of the law . . .; (2) such contracts "must spell out the intention of the parties with the greatest of particularity" . . . and show the intent to release from liability "beyond doubt by express stipulation" and "[n]o inference from words of general import can establish it" . . .; (3) such contracts must be construed with every intendment against the party who seeks the immunity from liability . . .; (4) the burden to establish immunity is upon the party who asserts such immunity . . . .

Id., 423 Pa. at 292-93, 224 A.2d at 623 (citations omitted). This Court applied those standards in Richard's 5 & 10, Inc. v. Brooks Harvey Realty Investors, 264 Pa. Superior Ct. 384, 399 A.2d 1103 (1979), to find that a commercial lease which provided that "Landlord . . . shall not be liable for damages . . . sustained by Tenant . . . including . . . claims for damages resulting from . . . water . . . coming through the roof . . ." was ambiguous in regard to whether the landlord was liable to the tenant for water damage allegedly caused by a failure to repair the roof because it did not state that the landlord was exonerated from liability for breach of its duties specifically set forth in the lease (including the duty to keep the roof in proper repair). Therefore, we held that such an exculpatory clause did not immunize

[ 335 Pa. Super. Page 387]

    the landlord from liability for water damage unless it was shown on remand that the parties intended the clause to have that effect.

In the instant case, the exculpatory clauses in question provide the following:

11(a) Lessee agrees to be responsible for and to relieve and hereby relieves the Lessor from all liability by reason of any injury or damage to any person or property in the demised premises, whether belonging to the Lessee or any other person, caused by any fire, breakage or leakage in any part or portion of the demised premises, or any part or portion of the building of which the demised premises is a part, or from water, rain or snow that may leak into, issue or flow from any part of the said premises, or of the building of which the demised premises is a part, or from the drains, pipes, or plumbing work of the same, or from any place or quarter, whether such breakage, leakage, injury or damage be caused by or result from the negligence of Lessor or his servants or agents or any person or persons whatsoever.

11(b) Lessee also agrees to be responsible for and to relieve and hereby relieves Lessor from all liability by reason of any damage or injury to any person or thing which may arise from or be due to the use, misuse or abuse of any or any of the elevators, hatches, openings, stairways, hallways of any kind whatsoever, which may exist or hereafter be erected or constructed on the said premises, or from any kind of injury which may arise from any other cause whatsoever on the said premises or the building of which the demised premises is a part, whether such damage, injury, use, misuse, or abuse be cause by or result from the negligence of Lessor, his servants or agents or any other person or persons whatsoever.

(Emphasis added). Paragraph 11(a) was modified by a typewritten addendum prepared by appellee's counsel, as follows:

[ 335 Pa. Super. Page 388]

Notwithstanding the provisions of paragraph 11(a) of the lease agreement the negligence of the lessor, his servants or agents shall be excepted therefrom.

Therefore, appellants assert that they are relieved of all liability under the exculpatory clauses, as modified, absent any allegation of negligence on their part. In applying the standards outlined above, we find that the clauses are generally valid because a commercial lease is involved and there was no disparity in bargaining power between the parties. The exculpatory clauses had been reviewed, negotiated and modified by both parties and their counsel. Moreover, we find that the clauses, as modified, evidence a clear and unambiguous intent to release appellants from liability for damages caused by fire where such fire was not the result of any negligence on appellants' part. Accordingly, we hold that the exculpatory clauses in the instant lease are enforceable.

Finally, we must consider the effect of the exculpatory clauses in question. Under the plain unambiguous language of the clauses, it is clear that appellants are not liable to appellee for any property damage caused by the fire in "any part or portion of the building of which the demised premises is a part", unless such fire was caused by negligence on appellants' part. Here, there can be no question that the damaged power center of the H & M Complex constituted a "part or portion of the building of which the demised premises [was] a part". Moreover, the lower court specifically found that appellants' conduct was not tortious. Therefore, because we can find no reason either to invalidate or give less than complete effect to the exculpatory language of paragraphs 11(a) and (b), we hold that appellants are not liable for the damages appellees allegedly suffered as a result of the fire. Accordingly, we must reverse the lower court's order.*fn4

[ 335 Pa. Super. Page 389]


Jurisdiction is not retained.

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